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

Wednesday, October 15, 2008

9 a.m.

Summit Room, Ramada Plaza, Abbotsford, B.C.

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

Unavoidably Absent: Robin Austin, MLA; Harry Bloy, MLA; John Horgan, MLA; John Rustad, MLA

1. The Chair called the Committee to order at 9:07 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 11:00 a.m. to 11:06 a.m.

5. Committee adjourned at 11:44 a.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

Wednesday, October 15, 2008

Issue No. 85

ISSN 1499-4178

[ Page 2067 ]

WEDNESDAY, OCTOBER 15, 2008

The committee met at 9:07 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 all of you here today and thank you for taking the time to participate in what we believe to be an extremely valuable process.

In preparing the estimates for the budget for 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 underlining that fiscal forecast as well as to identify key issues that need to be addressed by the public for the next 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 not later than November 15 of each year.

So far we've had public hearings in Kitimat, Smithers, Fort St. John, Prince George, Williams Lake, Kamloops, Penticton, Vancouver twice, Cranbrook, Nelson, Courtenay and Langford. This week we are concluding our public hearings with the final four meetings in the Lower Mainland — the one this morning and then this afternoon in Surrey. Tomorrow we'll be in Burnaby and Coquitlam. Then we'll 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 of the room. Information on how you may make a presentation to the committee is available on the website, www.leg.bc.ca/budgetconsultations.

Just as a reminder, any input that we receive in writing or in electronic form is given the same consideration as any oral presentations that have been made and may be made today. Due to the federal election, we have extended the deadline for written submissions to October 24.

Today we're going to hear from a number of presenters who will have a total of 15 minutes. We recommend that you try to take ten minutes and allow us five minutes for questions and answers. However, the time is yours. If you choose to take the full 15 minutes, that would be your choice. I will try to give you a heads-up when you're at ten minutes, and then I'll also give you a heads-up at two minutes should you choose to continue through.

If time is permitting, we'll also have an open mike at the end of the session. Open-mike presentations are five minutes, and there are no questions.

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

D. Thorne: I'm Diane Thorne. I'm the MLA for Coquitlam-Maillardville.

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

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

[0910]

R. Hawes (Chair): I know that John Yap and Richard Lee will be here shortly. I think they got lost on their way out here, to be honest with you.

We are also missing a couple of others who are away on other MLA business in other parts of the province.

Joining us today, I'm pleased to introduce our Clerk, Kate Ryan-Lloyd. Also, on the registration desk is Mary Newell. Hansard Services, Michael Baer and Polly Vaughan, are recording today's proceedings, and they will prepare a written transcript. As well, this is being sent out live on the Internet.

With that, I will call on the Fraser Valley Real Estate Board to make the first presentation, and that would be Marie Block and Deanna Horn.

The floor is yours, ladies.

Presentations

D. Horn: Thank you, Mr. Chairman and distinguished members of the committee, for the opportunity to highlight the Fraser Valley Real Estate Board's recommendations. Your time and commitment to the consultation process is appreciated.

My name is Deanna Horn. I'm vice-president of the Fraser Valley Real Estate Board and a realtor from Langley. I'm here to represent 3,100 realtors who live and work in North Delta, White Rock, Surrey, Langley city and township, Abbotsford and Mission.

I'm here with Marie Block, who is an Abbotsford realtor and a volunteer on our government relations committee. We're also joined by Kelvin Neufeld, the president of the Fraser Valley Real Estate Board, who is right behind me.

As you may be aware, realtors devote a significant amount of time each year to communicating with all levels of government on issues affecting the public and our profession. When there are elections, we also support local chambers of commerce that host all-candidates meetings to encourage people to vote and highlight issues of interest to our communities and our profession.

We feel that by exchanging information and working with stakeholders on solutions, we can make a positive difference in our communities. Participating in this provincial prebudget consultation process each year is one of the ways in which we dialogue with government.
[ Page 2068 ]

We'd like to start by thanking you for announcements which improve the quality of life of British Columbians. We are pleased when governments make decisions which support growth that encourages economic vitality, provides housing opportunities and builds better communities with good schools and safe neighbourhoods.

In particular, this year we applaud you for allocating funds to Simon Fraser University Surrey and offering Fraser Valley residents the opportunity to obtain a university-level education south of the Fraser River at SFU Surrey, Kwantlen Polytechnic University and the University of the Fraser Valley.

We also appreciate the government's introduction of Living Water Smart, a new water action plan which responds to our profession's concerns regarding flooding and other water stewardship issues. We thank you for enabling individual real estate licensees to form personal corporations, as this ability allows us to access the business advantages of incorporation.

For my presentation today, I'd like to talk to you about two topics detailed in our written prebudget submission. The two issues are illegal drug operations and housing.

As you may know, the Fraser Valley Real Estate Board promotes high ethical and educational standards. Our members have the knowledge and expertise to help the public make one of the most important decisions of their lives. However, we're concerned about the negative impact that illegal drug operations, or IDOs, such as marijuana grow ops and drug labs are having on housing and the public's health and safety.

Over the past two years we have met with experts in criminology, fire safety, public health, law enforcement, municipal administration, the provincial government and other groups to better understand the issue and look for ways to address our concerns. We've learned that there are on average 75 marijuana grow ops per 100,000 people in B.C. This is nearly three times the national average of 27 per 100,000. In the Lower Mainland alone, the RCMP estimate that there are at least 20,000 residential homes being used as marijuana grow ops.

[0915]

Since many of these IDOs are backed by organized crime and involve use of dangerous chemicals and alterations to ventilation, heating and electrical systems, they could easily result in extensive damage being made to properties of all types and in all neighbourhoods.

We're concerned about toxic dumps and fumes, mould, residue, and contamination of soil and building products. We're concerned about water contamination, electrical fires, grow rips, home invasions, air quality issues, damage to residential properties. These are just some of the things that we think about when we assist clients when they're buying and selling real estate, and we'd like to be part of a solution in protecting the public.

The Fraser Valley Real Estate Board is hosting a forum tomorrow morning called protecting the public, the impact of illegal drug operations on housing. It's from eight to noon at the Coast Hotel in Langley. We've invited community stakeholder groups to come together during the forum to review a White Paper we've produced and to identify solutions to protect the public. We'd like the public to be able to access key information about properties that have been identified as illegal grow operations so that they can make informed decisions when they buy and sell real estate.

We recommend that the B.C. government participate in our forum and support the stakeholders after the event in a quest to standardize reporting and remediation of the properties that have been identified as having been used as illegal drug operations. All 13 of our local MLAs have been asked to attend this event.

In addition to recognizing the significance of housing that is safe and suitable, realtors know that a healthy real estate market contributes to a healthy economy because the sale of residential properties triggers additional spending, which helps stimulate the provincial economy. When homes are bought and sold in B.C., lawyers, appraisers, realtors, surveyors and other professionals collect fees. Governments also collect significant taxes. Following a home purchase, many homebuyers make improvements to their homes and purchase household items to suit their lifestyles.

The B.C. Real Estate Association estimated, in a report released on September 2, 2008, that more than 102,000 homes sold throughout the Multiple Listing Service in 2007. They accounted for more than $4.3 billion in economic output and $2 billion in gross domestic product and supported some 28,000 jobs in B.C. Individually, it's estimated that each real estate transaction in 2007 triggered approximately $28,000 in additional spending. The impact of these expenditures echoes throughout the economy, resulting in more spending and other benefits to the provincial economy.

However, we're concerned because the local real estate market is changing. The local real estate market has softened considerably this year compared to previous years. The number of sales has declined, while the number of active listings has jumped 56 percent higher. If this trend continues, it will have a very negative impact on the strength of the provincial economy.

For this year's prebudget consultation process, we ask the B.C. government to reduce the financial impact of the property transfer tax on the cost of housing, as this would stimulate the real estate market and in turn the provincial economy. Further reduction or elimination of the PTT would also help British Columbians to access more housing options — the foundation of an individual's quality of life. We feel that everyone needs and deserves housing that is affordable, safe and appropriate, whether they choose to own or rent.

We thank the B.C. government for increasing the exemption threshold to $425,000 from $375,000 under
[ Page 2069 ]
the first-time-homebuyers plan in the 2008 budget and also for removing the financing rule that required first-time homebuyers to have at least a 70 percent mortgage to qualify for the exemption. First-time homebuyers can now pay down their mortgage by any amount in the first year of ownership without losing their entitlement to the tax exemption.

[0920]

However, we recommend, along with the Vancouver Board of Trade and the B.C. Real Estate Association, that the B.C. government increase the fair market value at which 2 percent PTT applies — to $400,000 from $200,000 — to reduce the tax burden on British Columbians purchasing a home. It's estimated that this move would impact government revenues by approximately $165 million annually. This move would align our land transfer tax regime more closely with other provinces that impose such a tax, and it would increase home construction and job creation.

As shown in the table contained in our written prebudget submission, except for the first-time homebuyers, B.C.'s property transfer tax regime is the most onerous in Canada and is exacerbated by our relatively high home prices. The provincial government is expected to collect over $1 billion in revenue through PTT in 2008-2009. That is four times more than what was collected in 2001.

We would also like to remind you about the real estate profession's longstanding recommendation to eliminate the PTT to make more attainable housing options available to families and individuals throughout B.C.

This concludes our presentation. Please review our written prebudget submission for further details on the recommendations. Many of our recommendations support concerns already raised by other members of our profession. Thank you for listening and responding to our profession's concerns.

R. Hawes (Chair): Thanks, Deanna.

Questions.

B. Ralston (Deputy Chair): On the issue of grow ops. I'm sorry I won't be able to go tomorrow because I'll be in the Finance Committee at our next location tomorrow morning.

On the issue of disclosure to subsequent purchasers, are you satisfied with the disclosure mechanisms that are in place now? Or do you think there's room for perhaps changing the requirement under the Real Estate Act — I think it is; it's been a while since I looked at it — which would require the existence of a previous grow op to be disclosed right on the title?

D. Horn: Therein lies the problem. When we go from one municipality to the other, there is no standardized reporting. So if a realtor or a member of the public goes forward to find out if that house has ever been used as an illegal drug operation, they may not be able to find it out. This is exactly what this forum is about — to show that there is no standardized reporting or remediation of an illegal drug operation, which puts the public at risk.

D. Hayer: Thank you very much. I will not be able to attend tomorrow's forum, but I'll get my assistant to attend the function.

Can you clarify the property transfer tax again? At what amount will you have 1 percent? Is it $400,000, and then you go to $200,000?

D. Horn: That's correct. We're recommending that…. Currently the tax is 1 percent for the first $200,000 and 2 percent thereafter. In 1997, when the tax was introduced, the average price of a home in British Columbia was $121,000. Today it's $440,000 on average. Obviously, at $121,000, the 2 percent pertained to primarily luxury homes. That is not the case today. The average price of a house in British Columbia is $440,000.

We're suggesting that the property transfer tax be raised — that threshold be raised — from $200,000 to $400,000, which would make it more equitable.

D. Thorne: As well on the PTT, I know that the real estate board…. I'm the Housing critic for the opposition, so I've talked to many, many realtors from across the province. I know you've been agitating on changes in the PTT for a long time. Can I just ask if you've had any movement or any sign of interest on behalf of either the government in the '90s or the government now, in the 2000s?

D. Horn: Yes. They did raise the threshold for first-time homebuyers from $375,000 to $425,000, and there were some other exemptions for first-time homebuyers. So yes, there have been some small changes — not significant.

D. Thorne: But nothing on this particular 1 percent issue?

D. Horn: No, not at all. This 1 percent has been in place since inception.

[0925]

D. Thorne: Okay. My second question is….

R. Hawes (Chair): There's only one question per customer here.

D. Thorne: Oh, there's only one question. I'll ask her after.

R. Hawes (Chair): Sorry, but we're almost out of time. My understanding is — actually, from the committee
[ Page 2070 ]
that meets on the grow ops — that there are as many as 30,000 former grow ups on the housing market today that may not be identified. They could have wiring changes that are hidden behind the walls.

Frequently, as I think you know, people who run grow ops — and they get caught or get ripped off or whatever — will gloss over all of the defects that they've created and then sell the property. Realtors don't know. Of course these people aren't going to fill out a disclosure accurately and disclose that they've been running a grow op.

I think what you're saying is that as soon as a grow op is detected…. I think what you're asking for is for the municipalities to get involved and, say, remove the occupancy permit and not reissue it until there has been a full inspection by certified inspectors to say that the house is safe for habitation.

D. Horn: That's correct.

R. Hawes (Chair): I do want to acknowledge that for Surrey…. I know that Surrey has a very active program. The city of Abbotsford also has an extremely active program in taking down grow ops and, I think, making sure they're remediated properly.

I'd just like to thank you for what you do, because that's a very important thing — keeping buyers safe. I hope you make the right progress. I hope your meeting goes well tomorrow.

D. Horn: We also thank you personally, as well, for your assistance to us, working through this project. We do hope to just have a standardized reporting on remediation to protect the public — realtors providing information but also protecting the public.

R. Hawes (Chair): Okay. Thanks very much.

The next presenter is the city of Abbotsford. Before we start, I'd like to acknowledge that Coun. Bruce Beck and Coun. John Smith are also in the audience.

Okay. The time is yours, George.

G. Ferguson: Thank you for coming out to Abbotsford, especially to give us an opportunity to have some input supposedly in the next budget. Of course, budgets are fairly important.

I would like to go through here, and then I'll ask Councillor Beck to make a comment with me. Councillor Smith is here also, but he's on another topic, as I understand it.

Good morning. Welcome to Abbotsford. We hope that you are having a good discussion in a community, members, of every important subject of a budget.

As you see the city of Abbotsford today, we take a great amount of pride in what the city has become. This is a result of cooperation and partnership amongst our community leaders, the city, the province and the federal government. There are many initiatives that have made the city successful, and I thank the province for their contribution.

We cannot, however, stop. If we fail to provide appropriate hard infrastructure such as roads, bridges, water, sewer systems and soft infrastructure such as sports and recreation facilities, trails and social resources, we will not remain healthy and vibrant.

Environmental stewardship and a clean airshed are extremely important as we grow and prosper. There are many areas requiring immediate attention.

The city of Abbotsford is separated by Highway 1. Our ability to move fully from one side of the city to the other is restricted by two-lane overpasses at the two busiest highways. One exits McCallum Road and Clearbrook Road. These overpasses need reconstruction to four lanes immediately. So $35 million is required to do this work, and we require provincial and federal assistance to complete these projects as soon as possible.

As a growing community and essential cog in the Fraser Valley, and as an economic engine for the province and the country, the Lower Mainland is expected to outpace the rest of British Columbia in population growth and economic activity. It is an essential component of the Pacific gateway initiative.

[0930]

While this is the case, our transportation and transit networks are woefully inadequate. Major road reconstruction and renewal is required to provide access to the Abbotsford International Airport and for efficient movement of freight, cargo and people. The road infrastructure to the airport itself includes the Clearbrook Road Interchange and an expansion of the road to four lanes. This road expansion itself will cost $50 million.

In addition, significant taxiway and apron expansion, at $30 million, is required at the airport to deal with increased traffic and new opportunities in the next ten years.

Expansion of Highway 1 is also required. If we value our environment and want to reduce reliance on automobiles, an efficient transit system linking the whole Lower Mainland to Abbotsford is required. This initiative is important and requires significant investment from all levels of government. It is, however, not too early to start the discussion.

As the city of Abbotsford has grown, the need for additional service to residents has grown. The need to adequately fund the police services and fire department…. I'm on "Providing services to residents." I might point out that you might consider that the city of Vallejo, south of San Francisco, went broke just trying to look after the requirements of the police and fire departments in that city.

I would point out that when I'm talking about police, if we were getting the same funding as the RCMP…. Our budget in Abbotsford is $33 million, and 10 percent of what the RCMP municipalities — our neighbours — are
[ Page 2071 ]
receiving would be something like $3 million. We could hire a fair amount of policemen every year on that basis.

We feel that it should be treated the same. We pay all the same taxes across the country, whether it's municipal, provincial or federal taxes. If you look at the last FCM report, they have a complete report suggesting that municipal police forces across Canada are supporting and funding the RCMP. You might take note of that article. It's a great article. It's in the last Forum magazine.

The need for additional services, coupled with the reduction of unconditional grants from the province, has exhausted our resources. The unconditional grant reduction since 1996, as base year, is approximately $70 million. The province must address this issue.

Lastly, I would like to address the need for the new court facility in Abbotsford. Discussion with the province on this new court facility has been going on for the past ten years. Our provincial and federal courts are inadequate to meet our needs. In addition, courts today need a creative programming space and require interfacing with police and community agencies to properly dispense justice.

You know, sometimes we have to wonder: do we have a justice system in Canada? Sometimes I think it's an industry.

Our courts cannot do that. The province needs to seriously consider a new justice centre that integrates and makes our justice system efficient. Partnership with the city, our police department, the private sector is also possible — possibly with a P3. We expect the province to give serious consideration to this initiative in the year 2009.

Obviously, any budget consultation brings about a wish list, and I have tried to make my brief presentation concentrate on the infrastructure funding, safety, security measures and unconditional grant reduction as priorities. Our full submission provides the committee additional information.

I wish to thank you for coming to Abbotsford this morning to listen to our challenges and opportunities, and trust you can assist us to continue to be successful.

I would like to now ask Councillor Beck to make a presentation.

B. Beck: Thank you, ladies and gentlemen. I'll be brief because I know that I'm into the mayor's time.

I'll echo the comments of Mayor Ferguson. The reason that Councillor Smith and I are here, among our many duties as members of council, is that Councillor Smith, myself and Mayor Ferguson are members of the city's audit and finance committee, a committee that takes fiscal responsibility of the local taxpayers very seriously. Personally, we take a great deal of pride from being, I think, the only audit and finance committee in all of B.C. that's received a letter of personal congratulations from Warren Buffett.

[0935]

That said, I would like to echo and draw very strong attention to the comments — one of the comments — all of which were very validly made by the mayor. That relates to our transportation issues. The city of Abbotsford is the only municipality in the Lower Mainland that has five points of entry on Highway 1. Yet statistically, as one of the fastest-growing municipalities — if not the fastest-growing municipality — in the entire province we have been woefully left behind with the highway improvements and egress into and out of our cities.

It's my hope — and I know that you will hear an awful lot of supplications for finance and partnerships not only here but throughout the province — that this esteemed group of MLAs takes this message to heart and takes it seriously.

Two years ago, in this very hotel, the mayor and I sat before the select standing committee and made a presentation. One of the points in that presentation was a request for partnership with our plan A projects. No promises were made, and I'm not looking for any this morning. But a presentation was made sincerely asking for not special treatment but rather the same treatment that other communities, both larger and smaller than Abbotsford, have come to expect.

It was very disheartening to the community leaders of Abbotsford to have, two years later, the Premier come to this very facility and make statements to the press that the city of Abbotsford never asked for funding, when in fact your standing committee transcripts from 2006 showed that clearly we did.

I'm not sure of the protocols. I'm not sure of the final process here, but I want to be very clear that the city of Abbotsford is asking desperately for vital partnerships to address the McCallum overpass on Clearbrook Road. McCallum particularly is critical in the short term for a number of reasons. It's necessary to facilitate the appropriate movement of people and goods to the new hospital, which we opened this year. It's absolutely critical to the moving of traffic in and out of our new university.

It is a vital link through Abbotsford from Highway 1 to the communities of Mission and to other communities north of the Fraser. The McCallum overpass is a woefully inadequate access point. It is a danger to public safety.

We are asking, in case there's any doubt, that we need and must have provincial assistance in rectifying that situation sooner rather than later. That concludes my comments.

R. Hawes (Chair): Just to make the record clear, the Finance Committee, while we do make recommendations for what goes into the budget…. Individual line items such as plan A, which would probably have fallen under Building Canada or one of the infrastructure programs…. The Finance Minister is not the arbiter of that, and he doesn't make those decisions.

So the money is set into those programs, and then it's up to the individual municipalities to make application
[ Page 2072 ]
to those programs to access the funds that are already there.

B. Beck: I completely understand that. I think every member of council understands that. No one on council has ever said that we were promised funding or partnerships on plan A. The discouraging comments were that we never asked. That's a distinction that I think needs to be made.

We have never…. In the course of doing these projects, we were successful. We've opened two of them — we will have opened the second one next week. The third one will open early in the spring. We've done them without any provincial assistance whatsoever in the fastest-growing municipality in British Columbia.

To be told that we never asked is somewhat different than being told that we're not getting any money. We understand that there are always going to be more demands and desires than there are resources.

R. Hawes (Chair): I guess my question, Bruce, was…. I don't know whether you made an application directly to the infrastructure fund for that money. Your ask here today isn't really an ask. There would be an application to the infrastructure fund, Building Canada, that you would need for that interchange.

B. Beck: We understand that, but we're asking that this committee take away the urgency of McCallum overpass for the region, for the city, for the public's safety.

R. Hawes (Chair): I hear you. I do hear you.

B. Ralston (Deputy Chair): I think you've made that very clear. I just wanted to ask a little bit more about the justice centre. I think a decision was made, probably for historic reasons, that the courthouse in Chilliwack be expanded and that it be the seat of the Supreme Court in its present incarnation.

Where are those discussions at? You're pretty thick on the ground here with cabinet ministers. Where are those discussions at in terms of funding for a new justice centre?

G. Ferguson: Where is it at? We're dealing at the present time in discussion with our staff. We have a committee structured, and they're dealing with the police department and dealing with members from the provincial government at the present time. But we've been doing that for ten years, and we don't seem to be able to get any results.

[0940]

The fact of the matter is that we're one of the fastest-growing municipalities, and the courthouse is totally inadequate. The Victoria staff people come over and tell us that it's the poorest courthouse in British Columbia at the present time. Of course, we want some assistance. We think we have an opportunity here to do it, and a P3 might be the way to do it.

I've heard the Premier talk about that on many occasions — that he likes to look at the P3 situation. I think we have a case here that a P3 would solve the problem for us.

R. Lee: Thank you for the presentation. We know that the Abbotsford Airport has been very successful in terms of increasing the.… More and more traffic is coming in.

Are there any industries around the logistics with the facility of the airport? What kind of industries here do you think would be the most…?

G. Ferguson: Our problem with the airport is that the land is all in the ALR, by and large. All the industry…. We have a commitment through the federal government. Anything that we do with the land on the airport has to be air-oriented to air movement and air…. A company like…. We've got Cascade. One of our largest employers is on the airport at the present time. The surrounding land…. The ALR has refused us because they look at it as pretty fine raspberry country, and of course, their proposition is to save farmland, not give it up.

So we're working on it. We have another major industrial area on the Mt. Lehman Road that we're looking at. There's about 150 acres in that development.

B. Beck: If I could just add to the mayor's answer for the benefit of Mr. Lee. Next to agriculture, aerospace and its allied industries is the second-largest employer in the city of Abbotsford. So it is a significant industry.

As the mayor mentioned, Cascade is the largest private sector employer in the community.

R. Hawes (Chair): I want to thank you very much for your presentation. It's pretty….

G. Ferguson: We've run out of time, have we?

R. Hawes (Chair): You have run out of time.

Our next presenter is Colleen Winter. Good morning.

C. Winter: I'm Colleen Winter. This is my middle son, Billy Winter. I'm a working citizen in our local school district. I'm going to read a little bit, because this is very unnerving for me. Normally I wouldn't do this.

I'm a mom of three healthy boys, and I'm lucky to have the support of a loving husband. I'm thankful for the opportunity to come and speak to you today regarding financial directives. I'm especially focused to request education restrictions and funding.

I'm definitely the parent who normally sits back, maybe complains, but always pays the bills, helps out
[ Page 2073 ]
with the fundraising committees, hires the help required to support our family and our children's education. We generally live the life of the blue-collar group making ends meet.

Working at a high school where we have experience of drive-by shootings in our school area…. We are foster parents, adoptive parents and biological parents. This qualifies me to know that our experiences are not singularly our own.

I am careful and concerned about my children and certainly about the children in my community. I know that what happens to me has and will continue to happen to others throughout B.C.

This month of October 2008 I have been placed in a position that has left little choice than to put my much-needed job on hold and withdraw my middle child from school in order to meet his needs.

[0945]

I can't express my dismay and concern enough about being put in this position. I want Billy to become a productive member in society. My biggest dream for him is that he can do what he wants.

His school hasn't been able to meet this objective. You ask: "Why? How could that be?" It's because Billy doesn't have a label. He tests normal; he presents normal, except that he's not meeting expected outcomes in the time frame of a normal classroom. He has no funding, and at some point — maybe by May, just before June — he might get an adaptive program. That's how long it takes.

There will be a SEA, which is a special needs assistant, who will have to implement that plan, but because the money won't be there, he won't have that, and the plan won't go ahead anyways. I know this from experience because I've already done this last year.

Billy is not the only one in his class identified. There are at least five to seven other children also identified, which means they are not going to run on the same path the teacher needs to take in order to cover the curriculum.

We are now connected to our local U-Connect school where Billy attends classes for certain subjects on Thursdays. His class size is 11. He is getting a lot more help, and adjustments are flying at me faster than I have ever experienced. The size of class is important, but the time for adaptation is also available and quickly placed at our U-Connect school.

Teachers have been able to quickly guide a start for Billy — and with no fuss. I have seen a SEA, which is a special education assistant, in almost every class. I'm not sure of the percentage of parents leaving the regular community schools, but I do know that it is becoming more of a necessity.

A child who is identified, meaning without a label, can get through the system but can also become a big burden on society in ways we all hate to admit. Is there a study on the cost of keeping children in school versus the cost if they are out there surviving? Has the rise of under-age crime anything to do with the children not being able to get through our schools? Children do need to contribute and to connect, and they need to be in our community schools.

I'm hoping that with myself…. Hopefully, some other teachers and parents will come forth in the other meetings or later today to ask for consideration for the moneys to be given more so to the schools or…. It goes to the school districts but…. I mean, the schools need to have the money, and the classrooms need to have the money.

We need to have a class cut. We need to not have 30 kids in a classroom. We have to bring the size to reasonable. The teachers today are doing a really good job with what they have. But when you have 30 kids sitting in a classroom, and you have a good percentage of them needing to have an adapted program, I can't imagine any human being really being able to not throw their hands up in the air and just go on and rattle through a curriculum that nobody understands.

I guess the bottom line is that I'd like to see our government ensure that class sizes are kept below 20 and that the funding for special needs is based on children needing help, not on just those with a label. Every class should have a SEA who can support the teacher and implement the adaptations.

Thank you for your time today.

R. Hawes (Chair): Do we have any questions?

Thank you. I think your presentation has been very, very clear.

The next presenter is Dave Holmberg from Bobcat Country. Good morning. Welcome, Dave.

D. Holmberg: Good morning. Thank you. My name is Dave Holmberg, and I am a small-medium business owner here in British Columbia in the Abbotsford area. I have been in business here since 1975. I started as a single owner-operator. Today I employ 22 people within our organization.

We've experienced growth through hard times and good times during the 30-plus years we've been here in this business. We serve as the agricultural, municipal and construction business, primarily here in the valley but also throughout the province. The past eight years in business have been particularly good because of government policy. It has benefited the growth of our business and our people within the province of B.C.

[0950]

The Pacific gateway program will benefit many generations in the future, encouraging oil and gas exploration in the northeast of our province, and future electric power construction incentives will also benefit our people in the province.

Training facilities have been improved extensively throughout the province, and expansion of community college and university status will benefit all of us now
[ Page 2074 ]
and in the future. New hospitals and expansion of others improve our health care program. Employment levels are at record-high levels. Income and small business tax has been reduced to allow attracting new business and employees from across Canada. All the above has encouraged a very stable growth of our business and other businesses in the province.

The recent introduction of the carbon tax on all fuels is destructive and detrimental, not only to my business but to every business north of the Port Mann Bridge, as I see it. The carbon tax does not offer an economic advantage to people living north and east of Abbotsford or the Port Mann Bridge. It's definitely not a revenue-neutral tax, as it has been described.

The recent and consistent rise in fuel prices has done more to reduce fuel consumption than the carbon tax ever will. We as a business have updated our heating system, our lighting and have been consistent in recycling waste, which has reduced our energy consumption. We have purchased new and more fuel-efficient vehicles. We have participated in apprenticeship programs for our technicians without applying for government grants. We've made effort to do these things before the carbon tax ever came along.

Delivery of our products throughout the province, and particularly in the Lower Mainland, with a high fuel price seriously affects our bottom line. With the carbon tax addition, it also affects our ability to support the many charitable donations we have offered during the many years we've been in business.

At the best, what I want you to do is recommend that you remove the carbon tax altogether or, at the worst, maintain its current level and do not increase it beyond where it is now.

Just as a byline, I tell you that every week, when an individual family or person goes to buy fuel at his service station, the high fuel taxes are attributed to Gordon Campbell and the oil companies. If you remove the carbon tax, that will remove Gordon Campbell as being the cause of the high fuel tax.

We are approaching very trying economic times, and we need a government on the side of small business and all of the people of British Columbia.

R. Hawes (Chair): Thanks, Dave. That's pretty clear.

J. Yap: Thanks for the presentation and for setting the context of your ask about the carbon tax.

I'm interested, Dave, in your thoughts on the alternative to the carbon tax. I know you said that your ask is to keep it at this level if it can't be removed. Others are suggesting that it be replaced by a carbon tax on producers, on industry, on the so-called major polluters. I think it's safe to say that whoever is in government, there will be some form of taxation on fossil fuel consumption. So what are your thoughts on the other alternative, which is a tax on industry rather than one that is shared by all?

D. Holmberg: A tax on industry and on major polluters is probably a viable alternative. Suggesting a trade of carbon tax credits, etc., doesn't make any sense to me. As I've read this stuff and tried to understand it clearly, it…. I still don't truly understand it all. I've read many documents about it.

The trade mechanism, as I understand it, offers a serious polluter from some other area an opportunity to sell credits. For what purpose? It's only to create more problems on the other side of the fence.

People today are truly environmentally sensitive. They are already sensitive to the environment. It is very important that governments clearly understand that. We as a small business have done these things. The people yesterday across Canada clearly identified that carbon tax as a tax is not acceptable to the public. That was yesterday in an election campaign.

I suggest to you that there is enough tax now on fuel and on consumption to clearly take care of it.

[0955]

When gas was 70 cents…. Let's assume the tax is 10 percent. So if it's 50 cents a litre, 10 percent is five cents. If it's a dollar, it's ten cents. If it's $1.50, it's 15 cents. Come on, you guys. The fact of it is that you're taking the tax already. Inflated prices bring more money into the coffers.

B. Ralston (Deputy Chair): Thanks very much. The view that you've expressed on the carbon tax has been heard by the committee in a number of places. The Vancouver Board of Trade, for example, made the same recommendation that you did: "If you're not going to eliminate it, at least cap any further increases."

In your discussions with other business people, how widespread would you say that your view is shared?

D. Holmberg: Very much so, in that I do business with truckers — we're a major gravel industry and crushed rock business here — in the Abbotsford area. These people that move the product to and from construction sites within the Lower Mainland and throughout the province are faced with this issue as well, this additional high cost.

It doesn't sound like much when you talk about 2½ cents, but when you talk about a gravel truck that's 300 or 400 horsepower and burning about ten litres every kilometre or mile he goes down the highway, it's an extreme, extra cost that truly should not be necessary to have to pay. They are affected by it, and they don't like it.

R. Hawes (Chair): Just to set the record straight, Dave, the gas taxes are a flat tax. They don't escalate with the price. They're a fixed amount of money.
[ Page 2075 ]

D. Holmberg: I know, but provincial sales tax — 10 percent is 10 percent. If it's 10 percent on 50 cents, it's….

R. Hawes (Chair): Provincial taxes on gasoline are a flat tax. The only regressive tax is GST, on fuel.

R. Lee: One of the ideas is to collect the tax and redistribute it to, say, business and individuals. For small business, the reduction in, say, the income tax is from 4.5 percent to 3.5 percent next year, taking effect in January this year. Effectively, that's a 22 percent reduction in the provincial tax. Do you think that will balance out the carbon tax?

D. Holmberg: No. Last year I purchased, to June 30, our year-end, $178,000 worth of fuel. I didn't figure out the litres — and that's not including natural gas either, by the way — but let's assume it's 200,000 litres. That's just for my small business. That's not the trucking business. That's not the transportation business that takes product to and from warehousing to distribute it to stores, etc.

D. Hayer: If we were to eliminate the carbon tax or not increase it anymore, as you are suggesting in your papers, what happens where the funds were...? The revenues coming from the carbon tax were cutting personal income tax and business income taxes, so do you think the decrease in the income tax should be eliminated? Is that better than eliminating the carbon tax, or is it okay to eliminate the carbon tax and eliminate the tax-cut increases too — the tax decreases?

D. Holmberg: Whatever is necessary to accomplish to remove the carbon tax from the taxpayer is what is necessary. If it's necessary that you adjust the reduction in small business tax, if it's necessary that you reduce the reduction in income tax, so be it. The carbon tax is detrimental.

R. Hawes (Chair): David, I think the question was if there were another tax instead of the carbon tax — as you now see it, which is offset with income tax cuts and small business and industry tax cuts — and that was put on at the producer level so that that then trickles down and is passed down but there are no offsetting tax cuts…. The money that was raised instead would go into green projects and into green innovation.

D. Holmberg: I understand that, and I would accept that, because I'm in a small business. I'm not talking about the big business man out there that is going to have to pay that. But he's going to get an offset opportunity as well.

[1000]

Why wouldn't he get an offset opportunity? Because he's going to pay the tax on carbon — the carbon cause, I suppose you could say. And he's going to have to adjust his business, not unlike I did with my lighting and changing my heating system in order to reduce it. Charge the guy that pollutes.

R. Hawes (Chair): Any other questions? Thanks, Dave.

SBC Firemaster — Paul Adams.

P. Adams: Good morning, hon. Chair and hon. members of the committee. I am Paul Adams. I'm with the SBC Firemaster group of companies.

Just in direct relationship to the last presenter, we have an opposite point of view around carbon taxation and on the benefits that have resulted from the carbon tax and the progressive action the current government has taken on the environment. We are a small business as well, and we currently, at this time of the year, employ about 60 individuals. We contribute $2 million in wages and about $7 million in support to other small businesses.

We are here this year, after our presentation last year, to give you an update on some progress that has happened on a couple of points that we brought forward in last year's presentation, to request additional assistance and to bring forward additional problems which are resulting.

I'm sure, as you have toured the province and have witnessed the devastation of the mountain pine beetle, that you can recognize the significant impact that it is having, both within the Interior — we have locations both here in Abbotsford and in Langley as our sales bases — and on impacting our businesses profitably, in the sense that it is what provides us with the product to make the fuel, for people to make new choices in the way they heat their homes, in the way they heat their businesses and in becoming carbon-neutral.

As mentioned, we have seen a lot of initiatives come forward from this government that have been of benefit not only for the environment, but for looking at ways to diversify from our current reliance on primary lumber and the forestry industry. Some of that investment came from the $1 billion that was put into the climate action initiative. SBC Firemaster was one of the successful applicants to the ICE fund, and we received a $750,000 grant through the ICE fund to start a modular pellet plant, which will be in Kamloops and operating by the beginning of this year.

Also, last year we made requests in a couple of different areas. One was the promotion of biomass heating systems, of green energy solutions for home, commercial and industrial heating. The other was addressing stumpage rates on timber utilized for biomass production and ensuring that bioenergy can create products from unwanted, unused mountain pine beetle wood. This year we would also like to add, in addition to those two points, the need to really seriously look at the harvest and reforestation of mountain pine beetle in the province.

Some of the positive progress that we've made outside of the recommendations to the steering committee has
[ Page 2076 ]
been in direct consultation with the Ministry of Forests and with the Minister of Forests, both previously with Minister Coleman and now with Minister Bell. We have successfully got a pilot project underway, which has taken a new look at how stumpage is issued on products such as ours.

Previously we fell under the same classification as a lumber producer. When the grade rules changed back in 2006, we saw a 4,800 percent increase in the amount of stumpage that we were paying. When you're dealing with products such as firewood, kindling and pellets, the profit margins are not there to be able to actually absorb that.

[1005]

The changes to the stumpage were in part due to the softwood lumber agreement. Obviously, when you're not producing softwood lumber and you're producing energy products, there should be a different view of how stumpage is addressed.

Without getting into too many details, basically we now have a guaranteed stumpage rate on the fibre that comes into our yard. It's the same fibre that we've been using for 25 years. It's unwanted by the lumber industry, and it is basically without having a local convenient place for somebody to manufacture a secondary product from it. That increases shipping, and it increases cost to the primary producer.

Our pilot project has been supported by all areas, and we would request that resources are put towards the Ministry of Forests in order to be able to provide the same type of program to other secondary manufacturers, biomass producers.

When we talked last year about the promotion of biomass heating systems, there were some projects that got underway, which were helpful. One is the provincial wood stove exchange program, which we sit on the steering committee for, which is targeting old wood-burning technology and getting people to replace those inefficient appliances with efficient ones.

However, there seems to be some contradiction in government policy promoting high-efficiency but carbon-producing appliances, such as natural gas and oil. Although we certainly see the benefit and actually sell those types of appliances ourselves, we see that it has created an unlevel playing field between biomass heating systems, such as wood and pellet fuel, and natural gas and oil.

Just for a simple calculation. When you're dealing with producing energy out of fossil fuels, you're looking in the range of ten times more carbon produced than you are out of wood-burning fuels due to the natural absorption of carbon dioxide during the growth of the forest. So we would request that the LiveSmart B.C. program provides the same types of rebates and PST exemptions on high-efficiency wood-burning appliances, such as pellet fuel, and any wood-burning stove that produces less than five grams per hour of particulate. I've outlined those suggestions for you in the document that we put forward.

That would allow us to compete with natural gas. It would allow us to compete with oil-burning appliances, and it would create better consumption of mountain pine beetle wood here in B.C.

In addition to the stumpage problem that we've been facing with forestry — as I mentioned, we are currently piloting a project with the Ministry of Forests — there is certainly a great deal of difficulty for us in reliance upon primary lumber producers. Primary lumber producers are the major licence holders in the province, and obviously we've seen a big downturn in primary lumber production due to the housing declines both here and in the States.

In order to make sure that we can continue to provide solutions to this unwanted waste wood, we need to be able to access it, and we need to be able to access it affordably. There are currently limited or no licences available for producers such as ourselves in order to be able to actually harvest fibre. We see there's a benefit in getting into some kind of sublicence situation where a company like ours can have a long-term harvest licence under a primary producer, utilizing their infrastructure.

Again, this would require significant investment by the government in order to look at issues such as silviculture costs. Again, we are very positive about changes, such as a tree for a tree, that have been put forward by the government. But without people actually cutting down the unwanted fibre, those trees just simply aren't getting replanted.

There's also a huge battle now for this waste fibre that's in the bush. The pulp and paper market is reliant upon the primary lumber producers in order to be able to make pulp and paper products. So now there is fierce competition for those residues coming from primary lumber, which pushes the price up, which pushes the cost of production up.

[1010]

Again, when we're dealing with very low-profit-margin items such as firewood and pellets, we have a difficult time surviving. The government really needs to look at the situation that's on the ground.

We understand that there is considerable federal money put into the mountain pine beetle situation, but a lot of that money is going into infrastructure such as airports. Again, very welcome to see those changes happening — the Gateway project and others — but at the same time we've got to deal with the real, on-the-ground situation of dead trees and replanting them.

I think I've got enough detail in my actual paper here to leave it there.

R. Hawes (Chair): Thanks very much.

Do we have any questions?

D. Thorne: I just have one probably stupid question, but I'm going to ask it anyway. I think this is a great
[ Page 2077 ]
idea. I love the idea of using all this stuff we've never used before. I don't profess to know anything very much about this issue.

But if you use these pellets and different types of fuel, would it prevent house fires, chimney fires and things like that, or would it be subject to the same kinds of safety issues?

P. Adams: The Canadian safety standards…. You know, appliances that are constructed today all meet safety standard requirements, but everything that you utilize in the way of a solid-burning fuel appliance requires maintenance. So when you look at pellet fuel, you see no visible smoke. When you look at high-efficiency wood-burning stoves now, there is no visible smoke other than on startup.

You look at Europe as the model. We ship 90 percent of pellets manufactured in North America to Europe. We ship them down the west coast, through the Panama Canal and across the Atlantic. We can do that at profit due to cap-and-trade systems that have occurred on the European side. To me it makes no sense to make that environmental footprint when we have this massive market that is untapped here in North America.

We've been in this business for 25 years. It's not something new; it's just basically something that has not been domestically promoted. With initiatives such as carbon taxes and making people make changes in their behaviours, we're starting to see our market grow domestically, and that's key to dealing with the mountain pine beetle.

R. Lee: I may have missed something. I understand that for the mountain pine beetle wood, the stumpage is really low — probably 25 cents….

P. Adams: See, part of the problem, Richard….

R. Lee: I have a question, actually. You mentioned competition on that wood fibre. There are also technologies — for example, cellulosic ethanol technology, that kind of thing. Do you think there are advantages to locating both facilities together so that you can utilize the fibre in a more efficient way?

P. Adams: There are a lot of different approaches. To your first point on the cheap fibre coming from mountain pine beetle wood, the problem again is that the primary producers don't target dead stands of wood. They target green stands of wood to maintain their lumber quality. So when we get the residues from that, it's below what they want, but it still falls into what's called grade 2. So grade 2 is actually lumber.

In our own stratum, we were seeing up to 50 percent of the fibre coming in as being grade 2, which changed our actual stumpage rate from 25 cents a cubic metre, which used to be in place when there was a grade 3 ruling. All of our fibre was coming in as grade 3 or grade 4, and we were paying a flat 25 cents. We've seen that change and go up to $12 a cubic metre — so from 25 cents to $12 a cubic metre. And we were not the intended target of that stumpage. It was targeted to make a fair trade agreement with the United States on lumber.

To deal with the location of bioenergy production, part of what the ICE fund has done for us is allow us to introduce new technology, which has downsized a pellet plant, made it mobile and allowed us to put it into communities where they have mountain pine beetle. It also makes it movable, so we can move it from one community to another community. We can produce locally for a local market, but we need assistance in growing those local markets.

B. Ralston (Deputy Chair): In the second-last page you have a suggestion about what you call a new system of sublicences to, I think, make harvesting the kind of wood that you're talking about easier. Can you just explain that a little bit in the brief time that we have available?

[1015]

P. Adams: Well, there are currently some temporary non-renewable licences in place that actually do this. There are programs such as Forests for Tomorrow, which are targeting basically unwanted stands of fibres, so we can get a reharvest rate. We do work with programs like those, but there's no long-term licence in place.

For us, we are completely dependent on the primary staying in place, and while the primary is in place, they're targeting the wrong stands of fibre for biomass production. It's standing there rotting basically, emitting greenhouse gases as it does so.

We're looking to be able to harvest underneath the primary licence holder, to have a long-term contract in place so that we can do that, and therefore we're going to get better reforestation rates faster. We're going to have a rejuvenated lumber and secondary industry into the future, creating diversity.

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

The next presenter is the British Columbia Landscape and Nursery Association — Werner Knittel and Hedy Dyck.

Welcome.

W. Knittel: Mr. Chair, committee members, thank you very much for the opportunity to present to you here today. With me is Hedy Dyck, who is our nursery industry manager, responsible for all of our major government policy and regulatory issues.

I'm here today representing the B.C. Landscape and Nursery Association. We like to refer to ourselves as the original green industry and have been in business as an association for well over 50 years. We represent over 800 companies in British Columbia. They include a wide variety of firms from the ornamental nursery growers
[ Page 2078 ]
through to garden centres, landscapers and arborists as well as forest seedling nurseries.

H. Dyck: Our members reside in every area of B.C. We have everything from forest seedling nurseries up in Telkwa to landscape suppliers in Richmond, B.C., all through the Island, all through the Interior.

Our industry generates almost a billion dollars of revenue for B.C. The wholesale nursery itself employs over 3,500 part- and full-time people. This also includes the new seasonal ag workers that we are pulling out of Mexico and Guatemala. Our gross payroll is about $61 million. We produce over $200 million worth of nursery stock, and it is renowned for its good quality. We ship it right across Canada and North America.

There are 12,000 workers in the landscape industry, with a further 1,300 in the garden retail sector. That would be garden centres. That does not include the big-box stores. It's about 60 percent of our stock that goes across Canada and North America. A lot of it, the larger stuff right now — the caliper trees, the big stuff — is what's actually going the most. Everybody wants an instant garden.

W. Knittel: We're a very proactive industry association. We are self-reliant whenever we can be. As an example of that, several years ago the nursery growers received some proceeds from a one-time payout for a risk management program in 2001. It was approximately $1.5 million, and rather than keep that as individual nurseries, they donated that entire amount to the association. That is now sitting in a managed trust that is being used for our industry association as seed funding and to do research and other critical work on behalf of the entire industry.

It is an industry that has developed a very strong association, a strong history of trying to be as self-reliant as we can and of taking care of our own issues wherever we can. However, there are areas that the industry simply can't deal with itself, and we don't have the power to control that.

[1020]

Certainly, one area is that of the high fuel prices that we've seen over the last year. I know they are declining right now, but they're still exceptionally high. Certainly, the economic downturn in the United States…. As Hedy pointed out, we are a very, very trade-dependent industry, and we've been hit extremely hard by the high Canadian dollar and now the decline in the housing market in the United States as well as a downturn in the Canadian economy.

Certainly, two of the major inputs for our nurseries and our landscapers and everybody else…. If you look at fertilizer and plastics for containers and everything else, those prices are dependent on where oil is. They've been incredibly high and have deeply eaten into the margins of all our companies.

Our producers are trying very hard to pass those along to their customers. But in this particular market, like other Canadian exporters, we're faced with relatively cheaper imports now coming in from the United States. We have nursery growers in Washington and Oregon who can now ship product into Canada cheaper than we can grow it here.

We strongly support the carbon tax as a broad policy. But I have to say that it has certainly raised the price of all of our green products. We're proponents of strong environmental standards and policies, but if you look at the carbon tax right now and its impact on production and the delivery of all our materials to our customers here in B.C. and across Canada, it has certainly had its impact.

This increase is counterproductive to encouraging consumers to purchase plants to offset their carbon footprint and to decrease their greenhouse gas emissions.

H. Dyck: Because of the high costs, we would really like to have the PST removed from all products sold to agricultural producers. The reduction in the PST would be a meaningful reduction in cost for our people. The present system is a list of exempt and non-exempt products, but it's very inconsistent. One example I show here is gravel. If gravel is spread by a truck, it's exempt. If gravel is put in a pile, it is not exempt.

There are other things. We have to have gravel for our planting beds. We need it for safe roadbeds. Because of the high rainfall in the Lower Mainland of B.C., we need drainage. I don't know if any of you have heard of Phytophthora ramorum, which is a new disease to B.C. that could also threaten the forests. We have to have gravel to make sure that our beds are high enough to minimize the risk of getting this disease.

So little issues like these are things that you don't normally hear about, but the removal of the PST on issues like the gravel and other issues would certainly help the bottom line.

The PST system does not allow for innovative uses of traditional vehicles, particularly in this case Gators. Gators are considered a recreational use. In our industry they're little workhorses. They're more economical and more environmentally friendly than the big tractors are, and we use them for all kinds of things, whether it's moving implements or moving nursery stock or carts. But Gators are PST-able. They're not exempt. They should be exempt for an agricultural producer, just like a tractor, because they do the same work.

Another inconsistency is greenhouses. Greenhouse structures are PST-exempt, and greenhouse glass is not. Well, who uses greenhouse glass other than greenhouse growers?

The new product introductions. We've asked over and over again for exemptions for some of these new things, and every time it goes through the approval process, it gets turned down. So what we need is a real overhaul of
[ Page 2079 ]
the system so that anything that an agricultural producer buys for the farm is PST-exempt.

We would also like the removal of PST from all green plants to be purchased by consumers. The province of B.C. has a very, very strong environmental policy, and we strongly support it. The problem is that a lot of the land that is developed…. We have a burgeoning industry in terms of the homeowners and home-building. To mitigate that, what we would like is the PST removed from the green plants so that people that are living in those homes can actively go out and afford to buy more plants to minimize their own carbon footprint and the greenhouse gases.

The removal of the PST from the green plants would help to green all of B.C. Trees for Tomorrow and all those kinds of programs that your government is proposing would cost less if you remove the PST.

[1025]

W. Knittel: The ornamental nursery industry is challenged by the high input costs and very tight margins, as we've both already discussed. Again, the economic downturn is going to continue to affect production and, as a result, our ability to move into new markets and to continue to expand and hire all of the people that we have. Certainly, the uncertain times that are ahead of us over the next two or three years are causing all of our nursery growers and landscapers to really take a pause, holding back some of their investments, because they really don't know what's going to happen here.

At the same time, our industry knows it has to invest. It has to be ready for the future. As Hedy has pointed out, things like the Trees for Tomorrow program and all of the other programs that support the planting of trees and green plants in support of the environmental cause that we all support here…. They recognize that it's important. They recognize the key role that they can play.

But we can't do it alone. We look at the PST as being a barrier to that, and we'd like to suggest strongly that the Ministry of Finance take a hard look at its policies around that and eliminate that particular barrier. I think this will certainly work. I make no bones about it. It will certainly support the industry, but it'll also support the green plan of the government that I think the population in general supports.

Let me end it at that point and answer any questions you may have.

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

B. Ralston (Deputy Chair): Thanks very much for what was a quick overview of your industry. I appreciate that.

I did have a question. You talked about some anomalies in the PST system. The Ministry of Small Business and Revenue, I believe, had a public go-round. It went around the province and made some commitments about attempting to rationalize problems and just the application of the PST.

I'm wondering: did you participate in that? Or were you satisfied with the results of that review of the PST?

H. Dyck: The B.C. Ag Council has been speaking for our industry to the ministry in question. All of our questions, particularly the PST exemption list, get filtered through the B.C. Ag Council.

B. Ralston (Deputy Chair): Okay. They're here later this morning, so I'll ask them.

H. Dyck: Yeah, they are. They're here in an hour.

J. Yap: Thanks for your presentation. The carbon tax. You've expressed support for the way that the carbon tax has been structured, and you're proposing targeted PST reductions. Have you, for your industry, done a costing of whether the suggestions you're making here on PST exemptions would reduce or offset the carbon tax?

H. Dyck: Yes. Again, there are no precise numbers available with regards to the nursery industry and how much the PST and the carbon tax would offset. We generally think, going through the B.C. Ag Council, that one would outweigh the other, so it would kind of even it all up.

W. Knittel: I think they estimate around $24 million a year. Unfortunately, the Ministry of Finance is not able to break it down for our sector, but that's for all of agriculture right now. We represent 15 or 20 percent of that, so it's not a huge amount. For keeping the businesses alive and keeping the businesses growing and as an investment in the green plan, I think it would be a worthwhile move.

J. Yap: That figure is the PST?

W. Knittel: Yeah.

R. Hawes (Chair): Through the presentations that we've had to date, there have been a number of presentations suggesting we look at harmonizing GST and PST and that the tax credits through the production cycle be applied, just as they are on GST, so that the end user, of course, winds up paying the tax. But it's only a one-time tax at that point. Would that be something that would be of assistance, if it were considered?

W. Knittel: It would be. As Richard knows, in my previous life I was with the Canadian Manufacturers and Exporters. We were very strong proponents of the harmonization of PST and GST.
[ Page 2080 ]

Just going a little bit by memory from that presentation, it costs the B.C. industry about a billion dollars a year to administer two separate tax systems. If you could harmonize those and eliminate that, there would be a huge saving right there. Again, if our nurseries and everybody else could then treat all taxes the same way and pass that through, that would certainly help the industry out.

[1030]

We haven't put that in our proposal right now, partially because the harmonization didn't receive great support during the last round-table discussions and the discussions I had with the minister of the day. It just wasn't going to be accepted, but I do know, in talking with some of the senior ministry staff…. They've asked us to continue to quietly push that. I would say that the industry would be very much in favour of that.

R. Hawes (Chair): So this is a quiet push, then?

W. Knittel: Sometimes the quiet push works a little better than a sharp stick.

R. Lee: With the harmonization, are there any products right now actually charging…? They pay for the GST but not the PST?

H. Dyck: I think some things that are not charged…. I'm not sure about the PST, but I know things like seeds are not taxable. Ornamental plants generally are. I think sometimes vegetable seedlings are not, but it depends on who it's sold to as well.

R. Hawes (Chair): I guess the only thing I can tell you is that on behalf of some of my constituents, I have had some battles regarding the greenhouse industry and things that are taxed and things that aren't — components of greenhouses. In Ontario they're called hoop houses. Net houses. If the nets are purchased at the same time…. If they're not, then they're not exempt. There are 2-by-4s — taxed.

H. Dyck: Heating systems are PST-able, and ventilation systems are not. It's just….

R. Hawes (Chair): Yeah, I get it.

W. Knittel: Your point is valid. The harmonization would ultimately, I think, be the best way to go. It's a question of whether or not right now there is the will to move along that line. I think the solutions are there over the long term. I think the benefit is there for the province in the long term.

If I recall, Mr. Chair, one of the objections was the fact that the province didn't want to give up its taxing authority to the federal government. I can appreciate that, but I think we could probably follow the Quebec model and be the lead taxation body and resolve that issue.

R. Hawes (Chair): Well, your time has eroded. Thank you very much for your presentation.

Our next presenter is ARPA Canada — Mark Penninga.

Welcome, Mark.

M. Penninga: Good morning. This will be a bit of a shift from the previous presentations. It'll be a bit more of a philosophical look as you plan for the upcoming budget.

My name is Mark Penninga, and I'm the director of ARPA Canada. ARPA is an acronym for the Association for Reformed Political Action — Reformed as in Reformed churches. Thank you very much for this opportunity to speak to you on behalf of the Association for Reformed Political Action Canada.

We're a non-profit organization devoted to promoting political awareness and action among Canada's Reformed churches. We uphold the truth of God's word, and we believe that it must apply to every sphere of life, including public life. We're convinced that British Columbians will experience freedom and prosperity if we uphold justice, truth, accountability, fairness, responsibility and other principles that should be basic to our governance and public life.

I'd like to begin by expressing our gratitude for the work that you do in serving British Columbia. We're well aware of the difficulties that you face in making important decisions about how public finances are spent. Having previously worked for an MP in Ottawa, I'm well aware that our public officials sacrifice much of their lives for this work, so we're very grateful for your service, and we uphold you in our prayers regularly.

Promoting responsibility. ARPA Canada is not another interest group. Our message for you is not another demand for more money towards the things that we care about. On the contrary, our message to you is to promote responsibility both for the public and for the B.C. government itself, especially as it prepares for its budget.

The recent economic crisis is far from over. When we look at it in hindsight, I'm sure we'll all learn from the mistakes that have been made, but there's something that we can learn even before it's over. The lesson that we must learn is to be fiscally responsible with what we have been entrusted with. We should avoid spending money that we don't have and work towards eliminating debt.

[1035]

These are age-old economic principles that ultimately derive from the Bible. Thousands of years have testified to their truth, yet we're so quick to forget them and reap the consequences. We don't like to hear about our responsibilities. That explains why we keep hearing about our rights — rights to affordable housing, child care, welfare and a host of other demands.
[ Page 2081 ]

But human rights theory is unanimous on the fact that rights cannot function without corresponding responsibilities. We urge the B.C. government to show leadership by calling the citizens of B.C. to exercise our responsibilities towards each other first. By extension, we call on you, our lawmakers, to limit your role to the responsibilities that you have been entrusted with, not the ones that some would like you to be entrusted with. This takes long-term planning with vision, instead of following trends, fads, popular opinion or short-term scares — i.e., climate change.

This is a broad call to action, but it has specific implications. Let me give a few examples relating to current government policies or ones that you're considering.

First, child care and early childhood learning. The first responsibility that must be promoted is the obligation for parents to raise their children if they are able to. No doubt there will be circumstances where this is not possible.

But the B.C. government should not be taking away parental responsibility even if there are calls for that from the public. In the throne speech this past February 2008 the Lieutenant-Governor announced that the B.C. government was launching the B.C. Early Childhood Learning Agency, and it was given the mandate of exploring the feasibility of expanding early learning programs in B.C.

One part of this would make kindergarten for five-year-olds full time, all day, but then also extend it to three- and four-year olds — by 2010 for four-year-olds and by 2012 for three-year-olds. We're very disappointed that the B.C. government would make this a priority. Regardless of the possible educational benefits of institutional care for young children, the evidence of which is questionable, the government should not be spending money in a way that takes the responsibility of care away from parents.

Our concerns should first and foremost be for the well-being of children, not the economy or the workforce. We wonder why the government would want to promote kindergarten for three- and four-year-olds if it is trying to be prudent and save money. Why would it want to encourage parents to leave their homes and let the state care for the young children? One reason may be the lobbying of the early childhood learning advocates, who see this as a solution to declining school enrolment.

Putting children in child care and letting the state pay for it will promote the child care industry and bolster public school enrolment. It will also encourage more parents to leave their jobs as stay-at-home caregivers to pursue other employment.

The problem is that this is a denial of the responsibility of parents to raise their children if they are able. Children should not be the ones to suffer so that the education system can guarantee its budget. This may be offensive to some, because much of our society has bought into the idea that we should be able to do whatever we want, as long as it doesn't cause noticeable harm.

As was noted already, if everyone is just pursuing their rights or privileges and abdicating their responsibilities, then the rights themselves will disappear because there is no foundation supporting them. There is no one left to give them these rights.

Health care. The second example of the lack of responsibility is how our health care system pays for services because they're politically correct, even if they're not medically necessary. The federal government requires that provinces provide medical services that are medically necessary.

There is no way that terminating an unwanted pregnancy is a medical necessity. Pregnancy may be viewed as a problem for some, but it is almost never a medical problem. On the contrary, it is a medical miracle, and many couples pay thousands of dollars to increase their possibility of becoming pregnant.

Isn't it ironic that we pay for our own ambulance rides during a medical crisis but the government covers the cost of a life-ending procedure that is not even medically necessary? So why are the over 14,000 abortions performed every year in B.C. paid for by the B.C. government?

The answer is obvious but sad. A vocal minority demands that they be able to make choices without responsibilities, and our leaders refuse to take the public pressure and speak up, even if they're completely within the law to do so. What you think of abortion is not the issue here. The issue is whether our budget should be paying for it, even though it is clearly not medically necessary.

[1040]

As an aside, just think of the benefit to the education system if over 14,000 more babies were born every year in this province. Isn't something wrong when we push three-year-olds into school to take the place of those who were never born? Instead of funding abortion, our province should be funding adoption so that the huge wait-lists of parents waiting for adoptions can be decreased.

Provincial debt. As a responsibility to our children, we should be paying off our $33 billion provincial debt. Our debt is equivalent to stealing from our children so that we can enjoy our lavish living now. Just as citizens are required to pay off our personal debts with regular payments, the B.C. government should take the provincial debt seriously by making regular payments towards it. We will all benefit from the money that is saved by declining interest expenses.

Education. We're grateful that the province recognizes, at least to a degree, that parents should be the primary educators of their children. We're thankful that you provide independent schools with partial funding. These schools are very valuable to the province. They provide quality education while promoting parental responsibility at all stages.
[ Page 2082 ]

Justice. B.C.'s Human Rights Tribunal has become a national and international embarrassment. Instead of protecting human rights, the tribunal has become a means to intimidate and squelch freedom of speech and freedom of religion.

The recent case involving Mark Steyn and Maclean's magazine highlights the fact that our tribunal wastes an incredible amount of public money investigating cases that they should never be dealing with. The vague B.C. Human Rights Code has given the tribunal far-reaching authority because basic rules of law are thrown out of the window in the tribunals.

Much more can be said about this, but this isn't the place. For the purpose of the budget consultation, we urge you to get rid of the B.C. Human Rights Commission, and let the regular courts carry out justice.

Thank you very much for taking the time to hear these comments. We realize full well that they're neither popular nor politically correct. We urge you to stand up for what is right rather than what is popular.

May you be given much strength and wisdom as you work to represent British Columbians in our Legislature.

R. Hawes (Chair): Thank you very much, Mark. I think your presentation is pretty clear. I don't know, as how there's…. No questions for you. I think we know exactly what you're asking for.

The man who has been patiently waiting — Coun. John Smith, former school board chair for Abbotsford and banker extraordinaire.

J. Smith: Retired banker. And I'm glad I'm retired from banking. I want to tell you that. It's a real pleasure to be out of that business in these days.

Good morning. I want to echo a comment made by a previous presenter. I really appreciate the work that you do. Whatever party you're in, I know it's a huge amount of work. It's a huge sacrifice. Just think: you paid some of your own money to get this job. I mean, good grief. That's commitment.

Thanks for the opportunity to present my views to this committee. I'm John Smith. I'm a city councillor in Abbotsford. I'm a director of the Fraser Valley regional district and hospital board. Prior to my election to the city council in 2005, I was an elected school trustee for 24 years and board chair for 12 of those years.

I have deep roots in this beautiful community and am involved in many other community organizations, including chair of the Abbotsford Hospice Society.

In my capacity as a city councillor, I am the chair of the Abbotsford Social Development Advisory Committee, which is known as ASDAC. ASDAC includes an active membership of about 60 individuals and organizations working on many aspects of our social issues. It was formed about two years ago. I was the first chair, and I'm serving now in my second term as chair of that group of incredibly energized, dynamic people who care a lot about this community.

I'm here today to present my views on the challenges facing our community in the area of health care in general, and mental health and addictions in particular.

As you are no doubt aware, our region is served by the Fraser Health Authority, the largest and fastest-growing health authority in British Columbia. A rapidly growing and increasingly aging population presents huge challenges to our society and to our provincial government. These challenges translate into significant demands on our provincial treasury, and I want to talk about some of those challenges.

[1045]

But first, the good news. We're really proud of our brand-new, 300-bed regional hospital and cancer centre, just opened seven weeks ago. We, the communities of the Fraser Valley, contributed over $80 million towards the capital cost of that facility.

We are pleased that B.C. Housing, through Minister Rich Coleman, recently announced $22 million for two new facilities, two complexes, totalling up to a hundred housing units for homeless or at-risk-of-homelessness people, together with operating support for the next 35 years. These facilities are being located on city-owned land.

Our city has pioneered new bylaws whereby private operators of supported-recovery houses can become licensed for up to ten residents within residentially zoned areas. We have recently approved 11 such operations, which is about twice as many as exist in the entire city of Vancouver.

We had, by the way, some 50 unregulated operations in this city, and it was chaos. A lot of the residents were being exploited by unscrupulous landlords. We had some pretty sad situations and unacceptable, unsafe situations, so we had to deal with it. Many other communities are now looking at that legislation to copy it and to bring order to this chaotic situation.

B.C. Housing has also provided capital and operating funds for several other privately operated supported recovery facilities. Psalm 23, a faith-based non-profit group, and Spirit Bear lodge are both designed to assist women with addictions problems. The new ten-bed Spirit Bear facility is already full with young women and has a wait-list of another ten young women.

We have a commitment from B.C. Housing for another 100 affordable housing units on the old MSA Hospital site. Our city has recently established a fund for affordable housing, which has already attracted about $750,000 in donations. Our local Salvation Army has received increased provincial support for their homeless shelters. Our city has been cited as being one of the most generous communities in all of Canada, with an average donation of $620 per person — Toronto being second, at $360, and Vancouver third, at $340. We are a community of generous, caring people, and we have much to be grateful for.
[ Page 2083 ]

We are also a community suffering from the impact of crime, drug addicts and homelessness. There is a perception, supported by research conducted by criminologists from our local university, that the illegal drug industry is the underlying cause of much of our crime and some of our homelessness.

There is also a widespread perception that the provincial government has failed to adequately meet its responsibility for the care of people suffering from mental health challenges. Many of our 250 homeless people suffer from dual-diagnosed mental health and addictions challenges. There are many more people suffering from addictions who, while not homeless, present huge challenges to the city of Abbotsford, impacting our parks, our policing budgets, our courts and our hospital.

Three years ago I was a patient in the emergency ward of the old MSA Hospital, suffering from the sudden onset of massive internal bleeding. As I lay there for four days and nights, I was shocked at the number of homeless and/or addicted people being admitted to what was an extremely overcrowded emergency room. I understand that the average cost of one patient in an emergency ward exceeds a thousand dollars a day.

With all beds full and crowded into the walkways, it was a real revelation to learn that in excess of 50 percent of the emergency cases were in fact homeless people or drug addicts. For me, a bank manager, this was a revelation comparable to a blinding flash on the road to Damascus.

Three weeks later I underwent major surgery for colon cancer in Vancouver General Hospital. The contrast in service delivery and facilities between VGH — which, as you know, is operated by the Vancouver Coastal Health Authority — and MSA, operated by the Fraser Health Authority, was like night and day. The ratio of patients to nurses was significantly greater — that is, worse — in MSA. The equipment and support facilities at VGH were considerably better. I might add that the loving care from nurses and doctors was the same in both operations.

This raises the first of my concerns. Why is Fraser Health, with the fastest growth in B.C., funded at a lower operating level per capita than the Vancouver Coastal Health Authority? Surely, this cannot be justified.

I fully recognize that health care costs are a huge part of the Finance department's budget. All I ask for is equitable funding for Fraser Health comparable to the Vancouver Coastal Health Authority.

[1050]

One of the outcomes of inadequate operating funds is the inadequate services for mental health and addictions within the Fraser Valley. This shows up in homelessness and unnecessary admissions to emergency rooms, where the taxpayer ends up paying considerably more for services than might otherwise be the case.

It costs a minimum of over $900 per day for the most basic services in an emergency room. That's not the average; that's the minimum. Dealing with the problem closer to the cause would be far more cost-effective and would provide much greater chances of a successful intervention.

Other alarming disparities were revealed in our region by the following data. Community mental health clinicians' caseloads are significant — about 50 to 60 percent more than benchmark. The benchmark is 30 to 40 clients per clinician, whereas the caseload in the FHA area averages about 60 to 70 cases. Mental health housing is a significant need for Fraser Health Authority and a priority for their mental health and addictions strategic plan — which, by the way, I have. I have all sorts of material from them.

At present most of the emergency shelter and B.C. Housing units are in Vancouver. Fraser Health has only 20 shelter beds, which significantly impacts the homelessness numbers and the need for a collaborative strategy to meet the housing needs of this vulnerable population.

The ratio of psychiatrists to population in the Fraser Health Authority is one of the worst in the province and is half of Vancouver Coastal Health in terms of overall numbers of psychiatrists. Fraser Health has significantly greater population — 34 percent of the province's population — and is the fastest-growing health authority in the province.

The biggest challenge in mental health and addictions in the Fraser Health Authority is in building capacity in acute psychiatry, in community mental health and in housing for our population. They're working hard to reduce barriers, improve access, but are challenged to meet the increasing complex needs of a fast-growing population, and they're constrained, effectively, by the budget issue.

Fraser Health Authority mental health and addictions are well organized and demonstrate an ability to deliver against their strategic priorities. The new acute psychiatry beds and services in the new Abbotsford hospital are a recent example. They are partnering with a number of communities as opportunities present and are working with the city of Abbotsford as we develop our homelessness strategy.

However, it is somewhat disconcerting to learn that Fraser Health Authority is unable to fully use the newly created capacity at the Abbotsford Regional Hospital due to a lack of operating funds.

While the city has established a process enabling private and non-profit organizations to operate supportive recovery houses with up to ten residents, which I earlier mentioned, these facilities are not an adequate substitute for provincially licensed and regulated supportive recovery facilities, staffed by professionals and offering the full range of supportive services. We need many more such fully licensed and regulated facilities, which will require both capital and operating funds.
[ Page 2084 ]

We also need a ten-bed sobering centre where individuals suffering from alcohol or the effect of serious substance abuse can be properly cared for and protected while regaining sobriety. Such a facility would reduce admissions to emergency wards and/or police cells.

My concerns are summarized as follows. We lack adequate operating funds for the Fraser Health Authority, especially in the area of mental health and addictions. This region lacks adequate funding for psychiatrists. We lack adequate licensed regulated facilities offering supportive recovery services. We lack low-barrier licensed and regulated facilities for many chronic cases of substance abuse and/or addictions.

Detox facilities represent only a partial solution. They are a short-term band-aid, the first step to recovery. We need long-term, properly staffed living accommodations and professional support to stabilize the resident patient and to begin the often long-term process of rehabilitation back into society. We need capital and operating funding to establish a sobering centre in Abbotsford.

Thank you for listening to me. It's appreciated.

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

D. Thorne: It's interesting — and I've heard this before — that you point out the difference in the operating funds for Vancouver Coastal and Fraser Health, where I also live, in Fraser Health. How do you track that? Is there a dollar figure per resident, or are you just making an assumption?

[1055]

J. Smith: There is a dollar figure.

D. Thorne: What is the dollar figure?

J. Smith: Ordinary folks like me can't get their hands on it. I've talked to Fraser Health finance. They tell me there are dollar figures. In fact, they know what they are. The Ministry of Health holds those figures very closely to their chest. They don't release that data. They should release that data, I would suggest.

I have a lot of experience in fighting for adequate funding for the Abbotsford school district, which had been penalized by its rapid growth. There had been a rather rigid, inflexible system of funding up until about 1992, 1991, which didn't take into account massive growth districts, and we were, therefore, at the bottom of 75 districts that then existed.

When I went to bat against this issue — and we did win this eventually — we did get equitable funding. We had to have the funding formula completely changed — taken apart and redesigned — to have a model that had drivers in it that took growth and all of its many costs into account. There were so many disparities. It was shocking. We needed an independent auditor to find that, and in fact that's what the government ended up appointing — external auditors.

There is a similar situation, I suspect, in Fraser Health Authority. It is the fastest-growing district. It has not kept up with Coastal Health.

I can tell you that I was told to go in to Vancouver General rather than have my surgery locally, by all the smart people who knew better. They said: "Go to Vancouver General. You'll get better service." It was night and day. I can't describe it any other way. It was just night and day — a ratio of three patients to one nurse on my ward. I understand in MSA that it's like eight to one. If you work nurses that much harder….

I talked to nurses that lived in Langley who were looking after me in Vancouver. I said: "Why don't you go to MSA?" They said: "Are you kidding? Why would we? They work you to death there. Morale is in the ditch there." The morale was different. The morale will always be different if you work your staff to death or you have unreasonable expectations of them. It will always be impacted.

I'm a just recently retired bank manager. I know about how you can impact morale in your workforce and how you treat your staff with respect. You get 150 percent effort from them when you do that. I saw such a difference in morale. Nurses, in those quiet, reflective moments at two in the morning when they're giving you another shot of painkiller, talk to you about their innermost feelings.

We need to deal with this in Fraser Health Authority. We need to have this formula fixed. I know it's a health authority issue, and you'll quickly say that to me. We give them so much money; they manage their affairs. But it's the government that has got to change that funding formula. The Finance Ministry has to.

R. Hawes (Chair): John, I think those of us who live in the Fraser Valley recognize that there is a per-capita funding differential that's problematic.

I know one of the answers, though, that we get given, just for your own information, is that there hasn't been a formula where funding follows the patient. So you went to VGH for your operation. That actually would've been funded out of Vancouver Coastal Health Authority, and so does all of the tertiary care that's given for people around the province who fly into Vancouver for treatment. It comes out of their budget, which is one of the reasons that we're told they have what we hear to be higher….

J. Smith: And I heard that also from Fraser Health Authority finance people. They told me that. But the facts are that as long as you keep half the number of, say, psychiatrists here compared to Coastal, you're going to get people going in there. Let's transfer them to our region and have…. I don't want you to rob Coastal Health; I ask you to fix our problems.
[ Page 2085 ]

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

B.C. Food Producers are not here yet. We'll take a brief recess until five after.

The committee recessed from 11 a.m. to 11:06 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): We'll call the committee back to order. Our next presenter is the B.C. Food Producers Association — Pieter Vanderpol and Nico Human.

N. Human: Thank you for the opportunity to be here today — the B.C. Food Processors Association. We always have to explain this. It’s processors, not producers. The producers are the farmers. We are the people who take their food product from there and process it. It's a fairly new organization. I'll quickly run through the document. I won't go through all five pages, but I'll do some highlights.

It is about four years old. We have 123 current companies signed up, and we represent the whole industry from small to medium to large companies with up to and more than 100 employees. We work closely with the other parts of the supply chain. You'll listen to the B.C. Agriculture Council, for example, next. We work with the small-scale processors, Western Canadian Functional Food, as well as other provinces, like…. Alberta Food Processors are well established. They're about 40 or 50 years old already — their association.

The industry generates $6.7 billion a year. It has consistently been B.C.'s second-largest manufacturing sector, but there are indications that it is in decline. Most of our processors are small. The government tells us there are 1,200 companies, but that includes mom-and-pop operations that may be just doing some fruit in their back yard and selling it at the farmers' market. Our focus is more on the bigger companies, up to 100 employees. Fish, dairy, poultry, meat and beverages are the major ones.

Some of our major highlights are with worker safety. Our association has worked with WorkSafe B.C. to form the B.C. Food Processors Health and Safety Council. That's now a spinoff, and it's running very successfully. For energy management, we've entered an agreement with B.C. Hydro Power Smart to help with energy efficiency for our processors. We are currently also working with Terasen Gas to do something similar.

Labour. We've just had a successful visit with the Minister of Advanced Education and Labour Market Development, Minister Murray Coell. They've supported the request to include the processing occupations under the provincial nominee program. This will mean that our processors' labourers who have come from other countries and who have shown themselves to be exceptional workers can now apply to this program and become Canadian citizens down the pike.

As far as the meat industry enhancement, the BCFPA is pleased to report on the success so far of the meat industry enhancement strategy and the meat transition assistance program in working with slaughter plants seeking provincial licensing.. MTAP provides assistance with capital costs and MIES, which is the enhancement strategy, with licensing and related issues. We have people sitting across the province helping the processors get up to the standards to get licensed.

MIES's key goal is to ensure access to adequate provincially licensed slaughter capacity, defined as 50 new or existing facilities plus mobiles for eggs, meat and poultry. Currently we have 21 plants that have full licences, and 45 more are in progress. We are working on those files.

As far as branding goes, the B.C….

P. Vanderpol: Can I interject here for one moment?

N. Human: Certainly.

P. Vanderpol: This one has been really important for our association. After the crisis we had with the BSE…. There are a number of plants in British Columbia that had absolutely no inspection whatsoever, and of course, that's bad for the whole industry.

[1110]

So the government took the initiative and came to us and said: "Will you help us to deal with this challenge of having these facilities licensed?" Of course, a lot of these people had no money to do that, and so we've been very happy to be a part of that process.

It has also been good for our association, because the food-processing industry is so incredibly diverse in British Columbia. You know, we're…. The Lower Mainland, then we've got the Kootenays, and then we've got the north, and then we've got the islands. There are so many very small operations, so it was very difficult for us to really get established. This helped us, so we were able to help in that initiative, that safety program. We'll come back to it later.

I mean, this is an important one that we feel we can really contribute and have contributed, and we want to come back to that a little bit, because it certainly isn't…. We've had phase 1, and now we're working on phase 2. This is a pretty big one as far as we're concerned.

N. Human: Thank you very much, Pieter. Pieter has been on the steering committee right from the word "go" with the MTAP program.

The next one is the branding one. The BCFPA is with the B.C. Agriculture Council, leading the charge of a provincial branding program. A background study has been completed, and currently we are in the process of putting together the governance model with the aim of a formal launch with government sometime, probably, in the summer.
[ Page 2086 ]

P. Vanderpol: If I can interject here, too. That is one that's a real…. You know, we used to have the Buy B.C. program, and that was very, very successful, but we really…. The majority of the people believe that we can't do that kind of thing anymore — isolate B.C. from the rest of Canada when we're trying to integrate and work closer with other provinces. So it's something that we need to struggle with and actually replace the Buy B.C. program.

N. Human: Then, some challenges. I'll go very quickly. The first one is about the economics — rising input costs, etc.

Secondly, on top of all these pressures, the B.C. government provides limited support for food processing in comparison to other provinces. Fish processing, for example, is specifically excluded from virtually all programs, and "Food" has been replaced by "Lands" in the name of our Ministry of Agriculture. The province's farm assessment process discourages on-farm processing as well, which makes it very difficult. Most sustainability and local food system initiatives are access-to-healthy-food-oriented and lack science and business considerations.

The money meant to flow to our agrifood industry is funnelled through a third-party delivery agent, currently sitting on a nest egg of $55 million. That causes some challenges to us.

Also, our Agriculture Ministry's budget represents 0.2 percent of the agriculture's gross domestic production, whereas Ontario and Alberta have agriculture budgets over 1.2 percent. The ministry has 168 staff and only one person to support our industry — one full-time lady. She works hard from Victoria, but she cannot get to all the different things that we need from her. If we compare that to Saskatchewan, they have 522 staff, and they have three units of people dedicated to market development and food production. So there are certainly some challenges there.

The next paragraph. The recent listeria outbreak in a federally registered processing plant puts the B.C. provincially licensed system under more scrutiny. The provincial system is smaller, and we really believe in it. It's health-focused rather than international trade–focused, and it's intended to help meet the ever-increasing demand for local food. Short supply chains and regionally based facilities support climate action as well as disease control. A multinodal system of small plants is easier to troubleshoot or shut down if problems are found.

The challenge of small regional plants in achieving compliance, shifting from an informal economy to a fully regulated one, from barter to business, involves a high level of effort and cost. In dialogue with as many as ten agencies, our meat industry enhancement strategy has learned to work with this, but the scope of the licensing effort has grown significantly.

The recent meltdown in financial markets also means that it will be harder than ever for plant operators to service their debt. Then, the provincial branding program is slowly getting going. However, the background study indicated that we need $4 million per annum to do it. Currently, we have a commitment of $1.15 million per annum for three years from the B.C. Ministry of Agriculture and Lands. We need more to have a real impact around the province.

[1115]

Quickly, what the province can do. The first one is to include the seafood industry. I think I mentioned that. Include transitional support for food production and distribution and new safety and healthy eating programming. Support a regulatory environment that allows for growth and sustainability.

Evaluate the third-party program delivery model. Fund the provincial branding program to the level that was shown is needed to make an impact — namely, at $4 million per annum. Continue active promotion of the different programs between healthy diet and improved health and sustainability.

The next bullet. The government could include agrifood awareness in its communications.

The next one — maybe Pieter wants to mention something there — is broadening tax-exempt status and incentives for food processing inputs.

And then the biggie is that we're working on….

P. Vanderpol: If I can just…. It brings in so little money for the coffers, and it's a real pain for us to administer, because food is exempt. We get a lot of exemptions, but there is a little bit of stuff that we still have to pay PST on. There must be a better way to collect that money than PST.

N. Human: Then the big one is the B.C. agrifood innovation and commercialization centre. We're working very hard on that, and we've got all the role players around the table. But for this one we need significant support in the future.

Then, at the bottom of the page. For the province to make the meat inspection regulation work, our current recommendations for the next fiscal list. First of all — and we've had some debate on the first words — pay off the accumulated debt. We need some sort of an interim structure to help these plants who have gone the extra mile to get licensed. They now sit with an accumulated debt of $22 million, and that makes some of them not able to carry on. So we need to put our heads together on how to address that.

We need to support the building and promotion of a prototype at $1.5 million and continue the meat industry enhancement strategy for another year at $1 million but help them with business management support services at $1.5 million — all these plants. Then, perhaps have
[ Page 2087 ]
a communication and marketing program tied in with "pick me, pick B.C." for meat.

Then on the last page, the big one, where we really need the different government departments to come together, is tackling an array of deal-breaker issues around provincial ministries in an integrated way through cabinet and, perhaps, the Premier's office.

For example, regional districts demonstrate support for siting and development of provincial abattoirs and ensure SRM waste can be handled locally.

Agricultural Land Commission establish that slaughter, as harvest, is a primary farm activity.

The Ministry of Environment include composting in the slaughter waste code of practice with a threshold below which the organic matter recycling regulation does not apply.

The B.C. Centre for Disease Control support integrity of the provincial licensing system by publicly supporting the system itself, as well as training inspectors in provincial requirements and enable better planning for sharing records.

The CFIA stop defaulting to the federal level that they're used to.

The health authorities be more proactive with regard to enforcement against illegal slaughter.

And lastly, the Ministry of Healthy Living and Sport and the Ministry of Agriculture and Lands promote provincially inspected meat to the retail trade and assist with business management and marketing.

We just want to conclude by thanking you. Our purpose is to help our industry achieve economic prosperity and sustainable, safe production in a balanced B.C. food industry. We appreciate the government's partnership role in that. We enjoy working with the government, and we appreciate this opportunity to make a submission.

R. Hawes (Chair): Thank you very much. Time for a few questions.

B. Ralston (Deputy Chair): The recommendation that you talked about for a B.C. agrifood innovation and commercialization centre was one that the committee put in its report last year as a recommendation. I just wanted to give you the opportunity to talk a little bit further about it.

As I understand and recall from last year, the main comparison you were making was with what the Alberta government has in a similar centre in, I think, Brooks, Alberta.

Could you just maybe expand on the benefits of establishing such a centre to the British Columbia economy?

N. Human: Yes. At this stage we've gone quite a way down that road already. We've completed the feasibility study. We've compared it with the rest of Canada.

In this document you'll find, I think, 37 similar centres existing in one province. Quebec has got 37 centres to help them with their food technology and commercialization, whereas in British Columbia we don't have a single one.

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In Alberta they have four, of which Brooks is one. The Guelph technology centre is another. What happens with us is that if we need services in these areas, we need to go to those centres to get our processors serviced, so we take the dollars outside the province.

We now have all the role players around the table. We're in the process of putting together the governance structure, and we need to go to the next phase. We're working with all the different educational facilities in the province as well as the processing facilities to make this a possibility.

The upside of this is that we have things down the pipe, like sodium requirements, like trans fat requirements. We can't do that research and that applied commercialization in-province at this stage, so we have to run outside.

R. Lee: My question is on PST exemptions for food-processing investment. My understanding is that the machines are PST-exempt already.

P. Vanderpol: A lot of it is exempt, and it's still a worry. We have to keep track of all the stuff, and it's a lot of administration for very little money that we pay, and there's got to be a better way of doing it than what we're doing. That's what we're suggesting.

R. Lee: So there is certainly investment that you want to be included in that exemption as well.

P. Vanderpol: Yeah, so the whole PST for food processors…. I mean, it doesn't make sense.

R. Hawes (Chair): Okay. Before you go, just a clarification. The third-party delivery agent sitting on a nest egg of $55,000…. That third-party delivery agent is…?

N. Human: The Investment Agriculture Foundation.

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

N. Human: Thanks for the opportunity.

R. Hawes (Chair): The next presenters: B.C. Ag Council — Steve Thomson and Garnet Etsell. You're on.

G. Etsell: Thank you, Mr. Chair, and thank you, ladies and gentlemen. It's indeed a pleasure to be able to present to you. I should just explain the audience behind us. We actually happen to be having our board
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meeting here today, so we've taken a break to do this. I think they're here, first of all, to make sure that I say what I'm supposed to say but, more importantly, to hear your response to our recommendations.

R. Hawes (Chair): I think you'd better be careful what you say. They look like a pretty surly crowd.

G. Etsell: Agriculture, of course, is an important sector in the patchwork that makes up the province. If you take the whole sector, including processing and retail, we represent 2.3 percent of the provincial GDP and 14 percent of the provincial workforce.

The industry is growing. Our revenues went up in 2007 by 3.8 percent. That's the good news. The bad news is that our costs increased 8.2 percent.

We compete with other provinces and jurisdictions that provide a much higher level of support than B.C. In fact, B.C. has the dubious position of being the second-lowest supporter of agriculture. Of the GDP that's generated in the province, 2.3 percent is returned to the sector by the province. In New Brunswick, which is the lowest, it's 2.1 percent.

We're concerned on two levels about this. First of all, we're concerned that you, the politicians and the bureaucrats, may actually take pleasure in that number. You may actually think of it and use it as a measure that indicates that you're managing the province's money expeditiously.

We're concerned, as an industry, that the critical mass of the Ministry of Agriculture is not being maintained, and that's where we come at this low level of support for agriculture.

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There are a number of key areas that BCAC would like to present to you today. It's interesting that we were preceded by the food processors, because there may be a little bit of overlap. We want to talk about the provincial sales tax policy revision and, of course, the carbon tax, and then we have some comments as well on the federal-provincial agreement and the implications that it may have on government spending.

Last year we put forward a proposal to this committee on a tax exemption proposal. The proposal was developed. It was solidly endorsed by industry and supported by the Ministry of Small Business and Revenue. It was ultimately not accepted. However, in your budget documents there was an indication that there would be a willingness to continue to look at options.

As originally proposed, it was a rebate model, which would be of significant benefit to the industry. It would be an economic stimulus, and it would be a very important step in the government's continued objectives of regulatory streamlining and red-tape reduction.

The concern, I believe, and the reason it did not get accepted, was because of concerns over administrative burden and cost. To address these concerns, the council would like to put forward the following recommendation — that the process for exemption be switched from an exemption list to a non-exempt list and that the Ministry of Finance and Ministry of Small Business and Revenue enter into consultations with the B.C. Ag Council to develop this list with a view to implementation in 2009.

This approach would retain an exemption approach. It would deal with retailer and producer concerns on the management and interpretation of a very difficult and unresponsive exemption list. It would meet government's objectives in streamlining regulation. It would provide an economic stimulus to agriculture, and it would also help offset the negative impact of the carbon tax.

Speaking of the carbon tax, we have a few comments. The economic impact. The direct cost of the carbon tax to the agricultural sector in year 1 is $10 million. That doesn't begin to account for the costs that are being passed on by our suppliers. Our suppliers may well say to you that they aren't passing it on. I have e-mails from my suppliers saying that they are, and to them it truly will be revenue-neutral.

Primary agriculture. We are price-takers. We are not price-setters, and we do not have the ability to pass the cost of the carbon tax on.

The BCAC recommends first of all that the proposed incremental increases to the carbon tax be withheld until a full economic impact is undertaken and until a fully functioning, efficient carbon offsets market is implemented and operational.

Secondly, that the provincial government change its approach to revenue neutrality and provide mechanisms to make the carbon tax collected available to sectors and businesses that are impacted by the imposition of the tax.

Thirdly, that the province implement a refundable tax credit program that provides incentive for installation of technology to assist in meeting greenhouse gas reduction targets, and a research and development tax credit program to support research into technologies for greenhouse gas reduction and climate change adaptation.

Now, if recommendation 1 is not politically palatable, the following two recommendations are being proposed as interim steps. Firstly, that the province consider a carbon tax rebate system for products exported out of B.C. into jurisdictions that do not have a carbon tax in place for domestic production. After all, we are competing with other jurisdictions that do not impose a carbon tax.

Secondly, that the province implement a program, utilizing a refundable provincial tax credit process to recognize the ecological goods and services provided by the agricultural industry through the sequestration
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of carbon in grasslands, forage, ranges, wetland areas and agricultural planting in orchards, nurseries and vineyards.

I'd like to touch on the Growing Forward federal-provincial agreement. As you know, agriculture is a dual jurisdiction, federal and provincial, and it's cost-shared on a 60-40 split.

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The provincial government must ensure that the budget for the Ministry of Agriculture and Lands has adequate funding to provide for full participation in the next round of the federal-provincial agricultural policy framework, Growing Forward, to ensure that B.C. receives full benefit of the federal programming initiatives that will be available.

Somewhat associated with this — and following the federal election results which just happened — both of the leading parties, the Conservatives and Liberals, had announced coming up to the election that they would endorse and would implement a $500 million regional flexibility program. This is designed to position the industry to reduce the reliance on business risk management programs that form a large part of the agricultural spending.

The B.C. share of this proposed program would be between $35 million and $40 million. It is assumed that to access that, the province would have to match on a 40 percent cost-share basis. This translates into approximately $16 million in new provincial funding. Given the current low level of provincial funding commitment to the industry, this will require an increase in the B.C. MAL budget allocation.

The recommendation is that the provincial government provide funding to the B.C. MAL to provide for full participation in a regional flexibility fund to access to this strategic investment that will assist in moving the industry away from the reliance on business risk management programming to focus on strategic investment and innovation.

It's important for us to recognize that agriculture plays an important role in improving the health of our citizens. As such, it's important that we have a continued program of investment and financial support from the Ministry of Health to achieve this objective.

The B.C. branding initiative, focusing on Buy B.C. and the local food production announced in the provincial ag plan, requires additional commitment beyond the currently announced funding in order to implement a successful program. I reference Buy B.C. only as an example. It's the program that we have had, but whatever we call it, we need to have a B.C. branding program to encourage our citizens to buy local and to buy healthy food.

I'd just like to comment very briefly on the Pacific carbon trust. When the Premier rolled out his climate change initiative, he made a very concerted effort to make the point that agriculture is a solution provider to the climate change initiative. For us to be a solution provider, a key part of that is a carbon offsets market. The Pacific carbon trust will provide some of the initial work in establishing the framework of what that market will look like and how it will function.

We've attached to your documents a submission that we made to the Ministry of Environment intentions paper. This details some of the concerns on the current approach, which will negate active participation by the industry. We can make the process so complicated and so costly that agriculture really, truly will not be part of the solution.

Just one other comment. We've got a farm assessment review going on, and we, BCAC, will be participating in that process.

We would welcome your questions.

B. Ralston (Deputy Chair): Thanks very much. We have heard throughout the province a lot of comments, understandably, on the carbon tax. I did want to ask you about your PST policy revision recommendations. I don't quite understand what would be the benefit or the advantage of flipping from an exemption list to a non-exempt list. What's the advantage of doing it that way?

G. Etsell: Well, twofold. To small business it would be a huge benefit. That list is a cumbersome list. It's an archaic list, and we keep adding to it one or two or three items a year. I used to work for business on the retail side. It is a cumbersome list to manage.

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On the agricultural side, a taxable list would be a much smaller list to manage and could, in effect, give us the same benefits that a rebate system would give us but without the administrative cost burden.

S. Thomson: I just wanted to add that we think it's just a much more manageable process because it would be much more specific — a narrower list, smaller. It would be easier for the retailers to interpret and understand. Right now we're getting all sorts of feedback. We have frustrations with the list. The retail small business community probably has as much or greater frustrations with the current approach than producers do.

So we see a sort of flipping it on its head and saying: instead of having this great big exemption list, you have a narrower, tighter list of non-exempt items, and that's what you interpret and pay the tax on. Then all other farm inputs that aren't on the non-exempt list would be automatically exempt, and you don't have to worry. If we get new technology coming in, new input, we don't have to go and try to get added to the list. It would automatically be there.
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So we'd only look at things that are non-exempt. It would just be a much smoother, easier process to manage for all parties.

R. Hawes (Chair): This morning we had the landscape and nursery industry suggesting…. And we've had other presentations throughout the province about harmonizing GST and PST and then allowing the input credits, which is, I guess, what your rebate system is. Would that be something that would be of benefit in terms of the harmonization.

G. Etsell: No, absolutely. No, I think agriculture would be supportive of that kind of approach. Effectively, it's what we were proposing last year. We weren't proposing the harmonization, but it would give us the same result on the PST side, which is what we were proposing last year.

S. Thomson: We've made submissions in the past, a number of times, promoting harmonization. There has always been the response that that has been a non-starter, and government hasn't been prepared to go that route, for whatever reasons. We don't fully understand those. It just has been something that they haven't been willing to look at up to this point.

We have been trying to look for a means that accomplishes somewhat the same within the existing system. If harmonization with the GST was an approach, then I think that that's something we'd be fully supportive of. It would clean up a lot of the problems, but it does take the political direction and decision to do that.

R. Hawes (Chair): I have one more question about your last bullet here, about the ALR and your objective of ensuring productive utilization of land assessed as farmland that's in the ALR. As you doubtless are aware, there's lots of land captured in the ALR that has no agricultural properties. It's just not suitable for farming.

Then there is other land…. We had a request this morning from the city of Abbotsford, which is looking for land to expand the airport. Do you have a position at all on things like looking at the expansion of the airport, which would require land from the agricultural land reserve?

G. Etsell: BCAC is in the process of developing such a position. We have members that have different views on this, ranging from wanting no ALR to not wanting to see a single piece of property being taken out of the ALR. I think it's important to realize, though, that agricultural land does not necessarily have to be class 1 land. We've got a lot of intensive agriculture that can use non–class 1 soil.

R. Hawes (Chair): Since I don't see other questions, my final question…. I've raised this before. The regional districts are mandated by law to produce a regional growth strategy, yet there is no requirement within the regional growth strategy to have an agricultural component or an agricultural plan. Would this be something that you think should happen? They lay out what the growth pattern is going to be — which obviously has impacts on agriculture — for the next, say, 40 years.

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G. Etsell: Well, if we really take sustainable agriculture as being a desired goal, of course we need to have an agricultural plan on a regional basis.

I just want to respond, though, if I can, to your question about the ALR. Agriculture is generally very supportive of the agricultural land reserve. A caveat to that is that we have to be able to have a profitable industry. When the ALR was put in place, there were all sorts of promises in terms of the level of support the government would provide to agriculture as a concession to farmers having to tie their land up in the agricultural land reserve. Our graph on the first page really shows what has happened in terms of that level of support.

It's not just your government. It's been happening ever since the agricultural land reserve was put in place. We've seen this dwindling level of support. It's an embarrassment, quite frankly, at the national level to come from a province that is the second-lowest supporter of agriculture.

D. Hayer: My question is on the PST and the GST — if you combined them as one. I know that you have made a presentation in the past. Do you have any idea if that will have very strong support from your membership — putting them together into one or merging them together? Or would that have split support? Where would they really sit?

Part of the problem for the government, when they translate that, is that maybe the general public doesn't really want it to do that. On the other hand….

G. Etsell: You're really talking about the harmonization…

D. Hayer: Yeah.

G. Etsell: …of the tax — the GST and the PST.

S. Thomson: Yeah, I think there would be strong support. Initially when the GST came in, there were concerns about the process and things, but everybody has learned and is comfortable working with the current input tax credit system under GST. I think that if you harmonized them, and the province went down that road, you would find a lot of support, and it would address a lot of the
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current problems that we have with managing a separate specific exemption list.

We've tried over the last number of years to try to find a way within the existing system to make it more manageable and to streamline the regulation. The things we've proposed — the refund approach — we thought we had lots of support for, and we did, both from our membership and within government. But for a couple of reasons, they deferred the decision on it or decided not to proceed with it, left the door open and said that they were willing to continue to consider it.

We've come back with a process now, or a step, where we think that flipping it on its head and dealing with it from a non-exempt approach as opposed to an exemption list makes a lot of sense within the current framework. If you're willing to look at a harmonized approach, then I think that we'd be very supportive and more than willing to continue discussions with government along those lines.

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

We now come to the open-mike portion of the meeting. Is there anyone who is looking to make an open-mike presentation?

Seeing no one, we are going to adjourn to Surrey at four o'clock this afternoon. Those of you who haven't had enough of these discussions could meet us in Surrey and welcome three or four more hours.

The committee adjourned at 11:44 a.m.

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