2010 Legislative Session: Second Session, 39th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
Wednesday, September 15, 2010
West Meeting Room 116-117, Vancouver Convention and Exhibition Centre
Present: John Les, MLA (Chair); Doug Donaldson, MLA (Deputy Chair); Don McRae, MLA; Michelle Mungall, MLA; Bruce Ralston, MLA; Bill Routley, MLA; John Rustad, MLA; Jane Thornthwaite, MLA; John van Dongen, MLA
Unavoidably Absent: Norm Letnick, MLA
1. The Chair called the Committee to order at 1:38 p.m.
2. The Hon. Colin Hansen, Minister of Finance, appeared before the Committee, presented Budget 2010 Consultation Paper and answered questions.
3. The Committee recessed from 2:22 p.m. to 2:44 p.m.
4. Opening statements by John Les, MLA, Chair.
5. The following witnesses appeared before the Committee and answered questions:
1) British Columbia Chamber of Commerce
2) Confederation of University Faculty Associations
of British Columbia
3) Canadian Bar Association – British Columbia Branch
4) Alliance for Arts and Culture
Amir Ali Alibhai
5) Coast Forest Products Association
6) First Call: BC Child and Youth Advocacy Coalition
7) Genome British Columbia
8) Canadian Federation of Independent Business
9) Canadian Centre for Policy Alternatives, BC Office
10) BC Association for Community Living
11) Truck Loggers Association
12) Smart Tax Alliance
13) Burnaby Family Life
14) Pembina Institute
6. The Committee recessed from 6:22 p.m. to 7:06 p.m.
15) Parkinson Society of British Columbia
16) Eugenia Siormanolakis
17) Wendy Seet; Manpreet Guttmann; Anna Lary; Cynthia Stark
18) Vancouver Board of Education
19) School District No. 38 (Richmond)
20) Society of Canadians Studying Medicine Abroad (BC)
Dr. Andrew D. Thompson
Dr. David Taylor
Dr. Andrew Ignaszewski
7. The Committee adjourned at 8:48 p.m. to the call of the Chair.
The following electronic version is for informational purposes only.
The printed version remains the official version.
REPORT OF PROCEEDINGS
select standing committee on
Finance and Government Services
Wednesday, September 15, 2010
Issue No. 20
Presentation by Minister of Finance
Hon. C. Hansen
Prebudget Consultation Process
* John Les (Chilliwack L)
* Doug Donaldson (Stikine NDP)
Norm Letnick (Kelowna–Lake Country L)
* Don McRae (Comox Valley L)
* John Rustad (Nechako Lakes L)
* Jane Thornthwaite (North Vancouver–Seymour L)
* John van Dongen (Abbotsford South L)
* Michelle Mungall (Nelson-Creston NDP)
* Bruce Ralston (Surrey-Whalley NDP)
* Bill Routley (Cowichan Valley NDP)
* denotes member present
Kathy Corrigan (Burnaby–Deer Lake NDP)
Heather Warren (Committees Assistant)
Amir Ali Alibhai (Executive Director, Greater Vancouver Alliance for Arts and Culture Society)
Patti Bacchus (Chair, Board of Education, School District 39 — Vancouver)
Robert Clift (Executive Director, Confederation of University Faculty Associations of British Columbia)
Annette Delaplace (President, Board of Directors, British Columbia Association for Community Living)
Mo Dhaliwal (Greater Vancouver Alliance for Arts and Culture Society)
Jon Garson (British Columbia Chamber of Commerce)
Hon. Colin Hansen (Minister of Finance)
Matt Horne (Pembina Institute for Appropriate Development)
Dr. David Ignaszewski (Society of Canadians Studying Medicine Abroad B.C.)
Iglika Ivanova (Canadian Centre for Policy Alternatives, B.C. Office)
Rick Jeffery (President and CEO, Coast Forest Products Association)
Al Klassen (President, Richmond Teachers Association)
Dave Lewis (Executive Director, Truck Loggers Association)
Linda McPhail (Chair, Board of Education, School District 38 — Richmond)
Stephen McPhee (President, Canadian Bar Association, B.C. Branch)
Dr. David Mirhady (President, Confederation of University Faculty Associations of British Columbia)
Adrienne Montani (First Call: B.C. Child and Youth Advocacy Coalition)
Caroline Nevin (Executive Director, Canadian Bar Association, B.C. Branch)
Nancy Noble (President, Board of Directors, Greater Vancouver Alliance for Arts and Culture Society)
Monica Pamer (Superintendent of Schools, School District 38 — Richmond)
Teresa Pan (Richmond District Parents Association)
Leila Rahemtulla (Vice-President, Board of Directors, British Columbia Association for Community Living)
Alexandra Rice (Parkinson Society British Columbia)
Diane Robinson (CEO, Parkinson Society British Columbia)
Sam Schechter (Burnaby Family Life Foundation)
Bruce Schmidt (Genome British Columbia)
Tim Stainton (British Columbia Association for Community Living)
Dr. David Taylor (Society of Canadians Studying Medicine Abroad B.C.)
Dr. Andrew Thompson (Society of Canadians Studying Medicine Abroad B.C.)
Heather Tilley (Canadian Federation of Independent Business)
Craig Williams (Smart Tax Alliance)
Alan Winter (President and CEO, Genome British Columbia)
John Winter (President and CEO, British Columbia Chamber of Commerce)
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WEDNESDAY, SEPTEMBER 15, 2010
The committee met at 1:38 p.m.
[J. Les in the chair.]
J. Les (Chair): Good afternoon, everyone. You have an agenda before you, which starts, obviously, with the Minister of Finance making a presentation. That will last until about 2:30. At that point we'll take a recess and then formally start the public hearing. The minister is going to make a presentation and then will be available for questions after he's finished.
Presentation by Minister of Finance
Hon. C. Hansen: I don't intend to take a lot of time on introductory comments, because I think that probably the best use of everybody's time here is if we can get into a dialogue and questions, answers, comments, suggestions or all of the above. But I do want to start by just acknowledging that today is actually a fairly significant two-year anniversary.
Certainly, two years ago on September 12 is a day that I remember very vividly. That was the day that I tabled, for the first time as a Finance Minister, a quarterly report that actually was looking quite promising.
From the time we tabled the budget that year in February through to September 12, when I was tabling the first quarterly, we had seen a significant strengthening of our projected revenues to the province. It was to the tune of, over the course of the fiscal plan, in excess of $3 billion of additional flexibility that we had because of revenues that were firming up that hadn't been previously anticipated at the time of budget. So that was all good news.
You know, you start looking at what the economic growth projections were for the coming years. Of course, that first quarterly is one of the two times a year we set out not just our quarterly financials, but we set out a three-year economic outlook, which you do at the time of the budget and at the time of the first quarterly. That three-year outlook looked pretty promising — continued economic growth for British Columbia and for Canada and for the United States, which had certainly been fuelling the B.C. economy over that period of time.
On that September 12 date I think that was ten o'clock in the morning when we had that press conference. By about four o'clock that same afternoon…. If you had turned on a radio station and caught the four o'clock news, you would have been learning about the imminent demise of a little company that had been around longer than the province of British Columbia had been a province, and that was Lehman Bros.
By Monday, September 15 — two years ago today — Lehman Bros. was bankrupt. If you checked in on the six o'clock news that night, you would have seen the images of longtime, seasoned financial experts and employees of Lehman Bros. packing up their boxes and cleaning out their desks and heading out to their cars.
You know, now as you look back over the global economic turmoil that we've been through over the last 24 months, that was the turning point. If you go back and look at just about any of the major economic indicators — whether it's GDP growth, whether it's consumer confidence, whether it's housing sales, whether it's all of those economic indicators that we love to look at the graphs of — you can actually go back and put your finger on the middle of September 2008. That was basically the time at which the global economy started to change pretty dramatically.
First of all, I think that with the first quarterly report at that time, we actually had incorporated that additional revenue room that we were projecting on that Friday morning. We put that in as unallocated revenue. That is exactly the same thing we have done this time. It was great that we had the additional fiscal room, but there were also the risks that came with it. Sure enough, over the following three months we saw most of that additional fiscal room disappear on us.
In the fiscal year that we were in at that time, '08-09, on the Friday morning, the 12th, we had about a billion dollars of additional revenue that was being targeted. By the time the second quarterly report came down, we had to eliminate about 90 percent of that, just because of how fast the global economy was changing and how fast our revenue projections were changing. Quite frankly, we saw that, obviously, continue well into the following summer, never mind the months that followed.
This time around, I think that we are seeing those encouraging signs. We do see the additional revenues, which are overwhelmingly as a result of projected higher corporate income tax. These are numbers that come to us from the Department of Finance in Ottawa. They run the models based on their early tax returns that come in, and they provide that data to us periodically throughout the year. It is based on that data, where they have fundamentally changed their corporate income tax projections from what they had previously provided to us.
Of the $2.7 billion of net additional revenue that we are anticipating over the four years of the plan, $2.5 billion of that is because of corporate income tax. But I think that as the quarterly report sets out, it still comes with risks.
We set out risks every time we do one of these publications, whether it's the risk of a double-dip recession…. That is certainly a much bigger concern to analysts and economists globally, both in Europe and in the United States, than it was just a few months ago. I wouldn't say it's imminent. I wouldn't say it's likely. But I would say
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that it is certainly a greater risk today than it was three months ago.
The other thing is that we have the other risks that are set out. So I think we have to be cognizant of that as we look at what our options are around that additional fiscal room that we have. As I tried to set out yesterday, we are not jumping to any conclusions as to how government should best utilize that. But it gives us choices.
As I've gone around the province, and I'm sure as you go around the province with your deliberations, you're going to hear from British Columbians that feel…. It may be that we have some of the lowest tax burden on families of any province in Canada when you combine all of those taxes together. But there's still a strong feeling that people figure that, you know, "I need more money in my pocket if I'm going to make ends meet."
So things like tax reductions are a possibility because, you know, we have the fiscal room to do some of that. The other is that we hear no shortage of suggestions on how government can spend more money. I have no doubt that this year you will hear that in your deliberations, just like you do every year.
The third option, of course, is getting out of deficit faster. We have with some of it…. A small portion of the fiscal room we have, we have earmarked for deficit reduction in excess of what we had flagged at the time of the fiscal plan, but there is the option of accelerating that even more. I am very confident that given what we know today, we will meet our target of getting out of deficit by the 2013-2014 fiscal year. I think the risks of not meeting that target are very low. Not to say that they are nonexistent, because nobody has the crystal ball that can forecast the future. But that is the other option — or a mixture of all three of them, really.
I think the feedback that you get from your hearings will be very important to us.
There was one other thing I was going to touch on. I think that escaped my mind.
I just want to close with…. One of the things that came up last year when your report was tabled in the middle of November was the question of how that fits into our budget planning cycle. Our budget planning cycle started. We were already well into it. So the report of this committee typically comes when we're not at the end of the process, but we're certainly more than halfway through our budget planning process at that point.
I flag that only because I think as any of you hear good ideas and inputs or briefing notes or whatever it is that come to you from those that are presenting, I urge you not to wait until the end of the process for that. I say this in all sincerity to all of you as committee members, regardless as to whether you are a government member or an opposition member. There is no monopoly on good ideas, and I'm open to those good ideas.
Whether there's an opportunity to channel it as something from the committee — fine — without waiting until the final report, or if it's something that even individually you think is something that's a good idea that we should get involved in the budget process earlier rather than later in that process, I would welcome it.
J. Les (Chair): Thank you, Colin.
Do I have any questions of Colin?
B. Ralston: Bruce Ralston, MLA for Surrey-Whalley. I might have a few, Mr. Chair, if you'll permit me.
Great to have you here and beginning another budget cycle. Yesterday in the technical briefing the Finance official described corporate income tax, and I have a quote here. He said it can be very volatile. I think you've also spoken to that, and I'm sure you will recall back on June 24, 2009, when the news of the corporate income tax came from the Canada Revenue Agency and it was much lower than anticipated. I think you commented on that fairly fulsomely at the time.
In this document that is being circulated on behalf of the ministry, you have a line which is described as available revenues for three years out: $650 million, $700 million and $750 million.
Given that the Finance official has said that it is very volatile, I'm wondering if there is a way to quantify that. What had occurred to me as a way that might be done, and I want to put this just for your comment, is to…. There is a lag — I think, from the CRA, that's a part of the problem — of a year.
Would you be prepared to release the data series that show the magnitude of the adjustment each year as a way — either over the last ten years, or it could be over the last 20 years if you wanted to do it that way, for both corporate and personal income tax — to get a more precise measure of the volatility?
Obviously, the official has given his opinion. I think you had some personal experience in 2009 of how that can intrude on the budget-making process. So I'm wondering if you or your officials would consider releasing those data series in order to be able to let others be able to make an objective measure of the magnitude of that volatility.
Hon. C. Hansen: I don't know how to answer that question, to be honest, because I don't know how that data…. I get the numbers, obviously, because the officials, primarily the deputy minister, would brief me on what those numbers looked like from time to time. I don't know in what format they receive them. I do know, as I said yesterday at the press conference, that for these revised numbers that we have from Ottawa, when we received them, we went back and asked for their explanation as to why there is this degree of shift in the time
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since the budget numbers were locked down for the February budget.
We don't have that answer to it yet. I have had some speculation on what may have driven it, and that's that corporate losses can be either carried back three years or forward seven years. What happened last year was a lot of companies, as they were seeing so much red ink on their books, were filing against the previous three years, and there was an expectation that that would flow into the future years as well.
One explanation or speculation that has been shared with me is that it may be that forward-carried losses are not of the magnitude that was anticipated. So until, I think, we get an explanation from the federal Department of Finance, it's only speculation as to what may have driven this.
In terms of that data series going back, I can certainly raise that with officials in the Ministry of Finance, but I don't fully understand in what format they get that data. I get your sentiment of what you're trying to achieve. I'll see if there's data that we could make available.
B. Ralston: Well, thank you. I appreciate your offer there. Some objective measure of that uncertainty that's expressed by both you and your officials I think would be helpful.
The other issue I want to raise is that under the HST regime, the Canada Revenue Agency now would collect the HST on behalf of the province, a very similar or same process as the corporate income tax and the personal income tax. So I'm wondering if you anticipate a similar lag in the reporting of HST revenue. I appreciate that it may be considered to be a much more stable source of revenue than the volatility you might see with corporate tax income. Nonetheless, is that anticipated? That's sort of the first part.
The second part is: has there been any thought to looking at some of the returns from HST provinces, such as those in the Maritimes, to again get some measure of the likely volatility of HST revenue and its impact on the budget-making process?
Hon. C. Hansen: The member is correct that it is a much more stable revenue stream for governments and that the CRA has the benefit of the experience in Atlantic Canada that can help guide them. We are seeing some adjustments. Even in here, the change of revenue from harmonized sales tax has been adjusted. It's a very small adjustment as a percentage of the overall, but nevertheless, they are fine-tuning that as they get more information.
When it comes to sort of the hard data on HST, we probably won't get the first hard data until about February or March of next year in terms of revenue. What we collect is what the CRA is estimating what that cash flow will be, and we get that submitted to the province. I think it's actually on a weekly basis that we get the HST transfers from CRA. That's based on their estimates. Then that will be reconciled against the actual hard numbers, which will have approximately this eight to nine month delay on it.
J. Rustad: Colin, thank you for the presentation.
I guess, just for the record — John Rustad, MLA for Nechako Lakes.
I could go look at this in the book, but I thought I would ask this question directly because it leads to another question, which is: when you look at the overall revenues that we have — and our projection for 2010-11 is going to be $40 billion in expenditures — what percentage comes from personal income taxes versus corporate or other types of revenues that we have? If you don't have that number right offhand, then I'm just kind of curious as to how much that tax breakdown is — what those percentages are.
Hon. C. Hansen: I do. If you look at the total updated forecast for this fiscal year, we are actually just $35 million shy of the $40 billion number that we're projecting for total revenues. Of that, taxation revenue in total accounts for about $18 billion of that. That then breaks down. Personal income tax would be about $5.7 billion. Corporate income tax is now projected, because of the significant increase, at $1.5 billion.
Just to give you a sense of the magnitude of the change on corporate income tax, that's almost a doubling of what we had budgeted for at the time of the February budget. At budget we were projecting corporate income tax this fiscal of $847 million. We are now projecting $1.521 billion.
J. Rustad: So out of the total $40 billion, $15 billion, just to reflect, is what comes in, in income taxes and $5.7 of that is personal income taxes.
Hon. C. Hansen: Well, $18 billion is taxation, which includes our sales tax — formerly PST, now HST. It includes the carbon tax, the fuel tax, tobacco tax, property taxes and property transfer taxes, as well as personal income tax and corporate income tax. All of those together add up to the $18 billion.
J. Rustad: Okay. The second question I had, which is somewhat related in terms of revenue but unrelated in terms of the personal income tax, is around natural gas revenues. We've seen, over the last number of years now, a disconnect between the traditional ratio of natural gas prices to oil prices which, over many, many years used to trade within a particular range. Now that has gone outside of that.
I'm just wondering what the projections are that you have for natural gas prices and how much of our revenue comes from that natural gas price.
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Hon. C. Hansen: It is significant, and it has been volatile. At the time of budget we were projecting $698 million for natural gas royalties. We have now lowered that projection down to $532 million because of declining price.
We're seeing two things happening over the medium term in the future. One is that we are anticipating that there will be some price recovery as the U.S. economy is expected to grow, albeit slow. We will see some growth, and we will see that demand increase. So we will see price go up, but we also expect to see volume go up.
Now that we've seen natural gas and oil decoupling the way they have, the price spread per Btu is now much greater than it was previously. So it is expected that as the U.S. economy picks up and the demand for energy grows, there will be an increased bias towards natural gas. Actually, British Columbia is very well positioned to take advantage of that in the medium and long term.
J. Rustad: Could I just…? One quick follow-up on that. Just in terms of natural gas…. I know the way that royalties have been set up, particularly for shale gas, is that they're more back-end-loaded as a way to be able to cover off some of that very high initial cost of putting it in the ground.
Do you have some projections in terms of what that could mean in terms of future revenues as those back-end taxes, I guess, start picking up on those natural gas flows? It seems to me, when you look at the Horn play, when you look at what's happening up in the northeast, that we're seeing significant amounts of volume of natural gas come on stream as you have said.
With it more back-end-loaded on the taxes, that should be a very positive revenue over the next five or ten years, as that front-end discount comes through. Have you done any projections about what that would mean in terms of that percentage increase in revenues to the province in the coming years?
Hon. C. Hansen: Yes, that work has been done. It gets done in Energy, Mines and Petroleum Resources. We rely on the analysts within EMPR to provide us with the revenue projections that we build into our budget, so I don't have, firsthand, the details of that analysis, but I know it is being done.
Part of it, when you start looking at what's happening in shale gas throughout North America, is that there is going to be continued growth in supply. Some have said that one of the reasons why natural gas pricing is as low as it is right now is because there's a glut on the market. There's some truth in that. British Columbia is certainly one of the regions that's providing that supply, and we will continue to do so.
I think that as we see the demand increase over the coming years, we will see that oversupply diminish, and hence you'll see the price mechanism start to click in again to our advantage. But I don't have more detail than that with me.
J. Thornthwaite: Thanks, Colin, very much. I also appreciated your brief little history lesson on September 12, 2008.
Could you please clarify? You were talking about fiscal room and the fact that you had projected on September 12, 2008, that we were around a billion with regards to fiscal room. Then you said there was a time downward, that 90 percent of that had to be eliminated. How long from September 12, 2008, to when you determined that 90 percent of that had to be eliminated? What was that time frame?
Hon. C. Hansen: Three months. So at the time of the second quarterly report, which came out in December, we had seen just shy of $900 million of that disappear on us.
M. Mungall: Thanks very much for your presentation. You said something towards the end that actually concerned me — less about the economic status of B.C. but more about the process of this committee. You invited us to share with you some of the ideas that come across our table in deliberation prior to completing our full deliberation and recommendations, because the budget process is well underway and actually completing around November.
Of course, my concern then is that we are providing you with recommendations based on considerable public input at a time when decisions are already being made. So then I'm left with: "Well, what's the point to all this public input?" Then, further, what's the point of us chewing on it and coming forward with recommendations that ideally and historically, other than last year, have come forward with consensus? What's the point of all that if decisions actually have already been made and you're moving forward by the time we're wrapping up?
Hon. C. Hansen: As I said, the budget preparation process is probably more than halfway done at that. But the whole budget preparation cycle is incredibly complex, and it goes through ministry by ministry and looks at challenges and what projections are for things like caseloads and that. If the GDP projections come in at this, what does that translate into in employment? And if there's higher employment, there's lower caseload pressures and vice versa, obviously. Those are all part of the dynamic that the Ministry of Finance officials have to take into consideration.
The process is complex and takes time, and yes, we're well into it at that point. The big budget decisions get made after that time.
The report of the Finance Committee every year is a very important part of our considerations. The ministry
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staff — they go through it recommendation by recommendation, and they will come back to me with advice on whether things are doable or not doable, what things might cost or not cost. They will do that analysis and bring it back for all of the recommendations that you present.
Actually, if you go back over the history of the Finance Committee recommendations, there's a pretty good track record of this committee in terms of what actually gets implemented. We want to continue that, obviously.
I guess what I'm saying is that as ideas come forward, if there is any consensus, whether it's among all of you just over a coffee — whether it's part of your formal deliberations or not…. If you sort of see, you know: "Here's a good idea that somebody presented to us. Let's remember to incorporate it into the final report…." What would be even better in addition to that is: "Let's fire it off to the Finance Ministry now so they can start working on it."
If you have the opportunity to do that, I think that's still consistent with your mandate. I'm not suggesting kind of formal interim reports or anything like that, although if, I guess, you were…. You know, whatever's appropriate. I'm receptive. That's all I'm trying to say.
M. Mungall: All right. Thank you for the clarification.
J. van Dongen: Colin, you say in the brochure here that 86 percent of new spending goes into health care and education, and having been a Minister of Health you know that the single biggest percentage of the budget goes into health. Can you comment a little bit on the key factors that you look at in setting the health budget and something about the process? That's where the big money is.
I'm always concerned about the small natural resource ministries and their revenue-generation capabilities and that sort of thing being overshadowed by this big health care Goliath. Could you comment a bit on how you…? Do you rebase it every year, or do you have a certain format that you follow in determining what the health budget should be?
Hon. C. Hansen: There's actually a very good study that was done probably about six years ago now, and it talked about the cost drivers in health care. I think it was done by the Conference Board. I'm not a hundred percent sure of that, but it was one of the national organizations.
Really, what they flagged is that the cost pressures in health care are driven by inflation in terms of the cost of materials and the cost of doing business in the health care sector.
It's also driven by technology. Changing technology is a big factor because there is always something new, whether it's new medications that are extremely expensive, that can do things that we weren't able to do in the past but at a significant price. It's not just medications but it's the new equipment that is constantly coming out. Obviously, our hospitals are trying to stay state of the art, and that is a very expensive process.
There is also aging demographics, which is a big health driver for us and will continue to be so. It's the growing percentage of our population over the age of…. Typically, 75 is what they look at. We often talk about being a senior is age 65, but it's actually age 75 when you start to see the cost of health care delivery ramp up per person quite significantly.
Then the final one is in-migration to the province, whether it's international or interprovincial. Those are basically the four big factors that we would take into consideration.
The other side of that is that you have to also look at what it is around health innovation that you can do to reduce costs. I think that's part of the big challenge of the ministry.
We will evaluate what those cost pressures are versus available revenues. Obviously, the Ministry of Health never gets as much money as they would like, but then, no ministry ever does. We try to fit within the fiscal plan and allocate the resources proportionately, at least, to other ministries that allow them to deliver the services that British Columbians depend on.
J. Rustad: I just had two other quick questions. The first one was still sticking along the outlines of natural resource revenues. I'm just wondering: what sort of percentage of revenues comes to the province from our mining industry, whether that's coal or hard rock or other types of mining activities? With Highway 37 electrification and things that are going on around the province, it looks like that sector is set to grow fairly significantly. I'm just wondering what role that plays as part of the provincial revenues now and what that projected growth may be — if it's been factored into the budgetary equation.
Hon. C. Hansen: It is a pretty big chunk. We're talking about $2 billion a year. We are not projecting any…. We're looking at that over the three years of the fiscal plan as being fairly stable. We're not looking at any sort of big, significant growth in that, because it is volatile. If there were some upsides to prices, that would be nice. We'll take those.
If you look at the total natural resource revenue, it breaks down to about $530 million from natural gas royalties, about $462 million from forestry, and then the third category is just "other resource." It includes the Columbia River treaty, which is not minerals, as you referred to. It includes other energy and minerals, water rentals and other resources. I can't, from that, single out
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exactly how much the mineral side of that would be, or coal, but that would be included in that line.
J. Rustad: So $2 billion in total from that, of those broken down. Okay.
The second question I had, which is unrelated, is just around the economic growth. I know there have been some projections and worry, as you have noted within the documents you provided us, around the potential of double-dip and slowing down. Some of the projections in growth in other countries around the world have been lowered.
We've got a projection of 3.1 percent for this year, which, according to employment numbers and activity, seems to be on track. I'm just wondering about next year's projection of 2.2 percent — whether or not there have been any economists that have come out and said that that's on target, low or high, compared to what they are seeing in other jurisdictions or are predicting for other jurisdictions.
Hon. C. Hansen: What we have always done is taken the consensus of the private sector forecasters. So at the time of budget we engage formally with our Economic Forecast Council, which is 14 leading economists. For the other parts of the year what we do is we'll track about six of the economists who regularly put out updates on their projections. Some years we've actually engaged the forecast council twice, as necessary, but often it's just the one time per year.
What you've got that is built into this document with the GDP forecasts, which are on the bottom of page 4, is the private sector forecast for this year. The average is 3.6 percent growth. We are using a number of 3.1 percent. So we've always built in an added measure of prudence into that estimate, which gives us sort of that buffer in case things are worse than the private sector anticipated. You know, we are now well into this year, obviously. It's September — 9/12 of the way through the fiscal year — so the measure of difference is about 0.5 percent.
In the case of next year, the average of the private sector for 2011 is 3.0, and we are basing our assumptions on economic growth of 2.2 percent. So that's 0.8 percent of prudence that we are using as that buffer, because there are still significant risks that are there.
B. Routley: For the record, Bill Routley, MLA for the Cowichan Valley. My question is about the Stats Canada debate. There have been several Ministers of Finance in Canada that commented on the issue of the loss of the information from the long form. I wondered if you had any opinion, one way or the other, on whether there was going to be an impact on British Columbia as a result of the loss of that information.
Hon. C. Hansen: I think in terms of our budget planning, we rely on a whole range of data sets that we get from a variety of sources. So when it comes to the actual budget planning and projection, such as we have here in our three-year forecast, there would be very little, if any, of that data that would come from the census long form. It's obviously an issue for a lot of other ministries. When you start looking at caseload projections and things like that, we obviously want to have access to the best data possible.
I think there are some people that have tried to engage politically and publicly and through the media on this subject. We have taken the approach that we want to work with StatsCan and work with the federal government to make sure that we get the best data that we can for our purposes. So we're certainly watching it with interest.
B. Routley: Another question is the HST forecast. Has there been any adjustment in the new information that you're getting from Ottawa? At one point you had talked about $1.9 billion, and then we heard about a loss of $113 million less revenue, somehow. Given the latest information that you have, what are your predictions on revenue from the HST?
Hon. C. Hansen: In terms of our total HST revenue for the three-quarters of this fiscal year that the HST would be in effect for, we are now projecting $3.784 billion. Sorry, that was what was budgeted. We have now adjusted that to $3.819 billion, so it's about a $30 million-some-odd change. It's actually a pretty tiny adjustment.
There are two things that drive that. One is higher consumer confidence, which is driving higher retail sales. As a result, whether or not we continue to have the PST system in place or whether we have the HST system in place, we would have seen higher revenues just because of higher retail sales. Then the other is from some of the adjustments that the Canada Revenue Agency has made, but it's pretty minor in the scheme of things.
The $113 million that you are referring to is how…. We estimate that in the fiscal year that we are in currently, we would receive $113 million less under the HST system than we would have received in consumption tax had the old PST system stayed in place.
J. Les (Chair): I have a question, Colin. So $5.7 billion is your revenue from personal income taxes. There hasn't been too much change there from budget, and yet on the corporate side there has been a significant adjustment upward.
How do those things relate? Do you expect to see an uptick in personal income taxes that perhaps lags the increase in corporate taxes, or is it the other way around? Or are the personal income taxes not trending upward because of some of the lateral effects of the tax relief that
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we've put in place? I'd like to understand that a little better, if you can maybe shed some more light on that.
Hon. C. Hansen: I think until we better understand from the Department of Finance what has driven the changes in their forecast for us, I don't believe that we could answer that in total. Obviously, if additional corporate income is translated into dividend income to British Columbia taxpayers, then we would see that flow through, and then we would wind up getting the increased benefit of the tax on the personal tax level as well. But I think until we get more information, I can't draw that conclusion at this point.
B. Ralston: Again, looking at the document, you set out there what they describe as existing infrastructure commitments. They reach a peak in the current fiscal year of $5.6 billion and then are projected to decline fairly sharply — $3.6 billion and $2.9 billion over the two subsequent years.
One of the concerns that has been expressed by American economists is that some of the, I guess, stall in the American economy is due to the end of the stimulus, and there is a vigorous debate, of course, in the United States — which I don't propose that you engage in — about whether the stimulus, if the economy stalls in the States, might be continued in some measure or other.
I appreciate that some of the infrastructure spending was a joint federal-provincial program here in British Columbia, but are you prepared to consider in the future, should it be necessary, an expanded infrastructure program for the purposes of economic stimulus, should that be necessary?
Hon. C. Hansen: I think that is, in fact, exactly what we have built into the plan — a continuation of that infrastructure spending.
If you look at the appendix on page 59 of the first quarterly report, it actually sets out the total capital spending going back to the 2006-2007 fiscal year and forward to the 2012-2013 year — so over that six years. If you look back to the first year, we've got total capital spending, both taxpayer-supported and self-supported commercial, at $4.4 billion. When you get into these last few years, where we've had the accelerated capital programs, that's ramped up to over $7 billion last year and over $8 billion this year.
You will see that in the coming years it does not ramp right back down again. We continue to build it in, so if anything, it's coming down off that peak with the accelerated capital, but still there is a very significant dollar value of capital spending in the province.
I think the other thing that I should point out on this is the role that the commercial Crowns are playing in that capital spending. B.C. Hydro, for example, has ramped up their infrastructure in terms of expanding generating capacity around the province, etc., and updating and replacing with more modern equipment. There's a big price tag attached to that, and I think that's also part of the capital spending plan going forward.
B. Ralston: Thank you for that answer. I notice that you are referring to table A9, "Capital spending," in the quarterly report. But the document that I was referring to is the one that's being circulated more broadly to the public. So there is a considerable disparity of those two numbers.
I take it that what's referred to here is existing infrastructure commitments of government narrowly construed and excludes the commercial Crowns. Is that the difference, then?
Hon. C. Hansen: I'm not sure which document you're….
B. Ralston: The budget consultation document.
Hon. C. Hansen: Okay. The infrastructure commitments. The numbers that are on the back of the budget consultation paper are exactly the same as the taxpayer-supported capital spending that's built into that table on page A9.
B. Ralston: Okay, thank you. That explains it.
J. Les (Chair): Anybody else?
Seeing no one else, I'd like to thank you very much for being here this afternoon and shedding some light on things financial. We will work very hard in the next couple of months to produce something worthwhile for your perusal.
Hon. C. Hansen: Great. Thank you very much, and I look forward to your feedback.
J. Les (Chair): The committee will recess until 2:45, and then we will get the hearing underway.
The committee recessed from 2:22 p.m. to 2:44 p.m.
[J. Les in the chair.]
J. Les (Chair): Good afternoon. It's a quarter to three — time to get the committee underway. My name is John Les. I'm the MLA for Chilliwack. I have the privilege of chairing this committee again this year. I'd like to welcome back all of my colleagues, because we have a complete return of all members from last year as well. Welcome to everyone, and a welcome to the audience who are here this afternoon and will be participating in a few minutes.
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Prebudget Consultation Process
J. Les (Chair): Each year, as you're aware, there's a budget consultation paper that's put out by the Ministry of Finance by September 15. We discussed that earlier this afternoon with the Finance Minister.
That paper presents a current fiscal forecast and identifies the key issues that will need to be addressed in the upcoming budget. The paper provides a focus and some context for the consultations of this committee, and it also includes information on how members of the public may provide their views on budget priorities. Copies of the consultation paper are available on the information table just inside the door of this room.
Our committee is the parliamentary committee which is responsible for conducting public consultations on the forthcoming provincial budget. The committee is required to report back to the Legislative Assembly no later than November 15 of this year.
This year we are slated to hold 14 public hearings in each region of the province, and we've also scheduled three video conferencing sessions to hear from residents of rural communities in the more remote areas of British Columbia. Vancouver is our first public hearing this year, and tomorrow we're going to be in Surrey. Next week we will travel to the Okanagan and the Kootenays.
In addition to public hearings, there are a variety of ways that British Columbians can share their ideas with us. We accept written submissions by letter or e-mail and also video and audio files. Further information on how people may participate using one of these methods is available on our website at www.leg.bc.ca/budgetconsultations.
Committee members carefully consider all of the public input that we receive, whether it's oral — made here today, for example — on an on-line survey form, which is available on our website, or by submission in writing or an audio or video clip. Our deadline to receive these submissions is Friday, October 15.
At today's meeting each presenter may speak for ten minutes, with up to five additional minutes allotted for questions from members. Time permitting, we may also have an open-mike session at the end of today's hearing, with five minutes allocated for each presentation.
Today's meeting is a public meeting, and it'll be recorded and transcribed by Hansard Services. A copy of the transcript, along with minutes of the meeting, will be printed and made available on the committee's website. In addition to the meeting transcript, a live audio webcast of this meeting is also produced and available on the committee's website to enable interested listeners to hear the proceedings as they occur. An archived copy of the audio broadcast will also be retained on the committee's website.
I'll now ask the other members of the Finance Committee to introduce themselves, starting with Bill.
B. Routley: Bill Routley, MLA for the Cowichan Valley.
M. Mungall: Michelle Mungall, MLA for Nelson-Creston.
B. Ralston: Bruce Ralston, MLA for Surrey-Whalley.
D. Donaldson (Deputy Chair): Hi, I'm Doug Donaldson. I am the MLA for Stikine, up in the northwest part of B.C., and I'm Deputy Chair of the committee. Welcome.
J. van Dongen: John van Dongen, MLA for Abbotsford South.
J. Thornthwaite: Jane Thornthwaite, North Vancouver–Seymour.
J. Rustad: John Rustad, MLA for Nechako Lakes and Parliamentary Secretary for Silviculture.
D. McRae: Don McRae, MLA, Comox Valley.
J. Les (Chair): Also joining us today, I'm pleased to introduce our Clerk, Susan Sourial. With us at the back of the room is Heather Warren, staffing the registration desk.
I should also mention our Clerk, Kate Ryan-Lloyd, who's here today — but only for today, as I understand, as she is busy with other work in Victoria as well. I really want to express my appreciation to her, however, for doing all of the administrative work to date.
Hansard Services staff Michael Baer and Jean Medland are here with us today. They will record and prepare the written transcript of this meeting.
With all of that out of the way, I'd like to call our first witness, John Winter of the B.C. Chamber of Commerce. I believe he is accompanied by Jon Garson.
J. Winter: Thank you, Mr. Chairman and ladies and gentlemen. Thank you for the opportunity for the chamber to appear today before this committee and to express the views of the 32,000 businesses that we represent across the province, of all various sizes, shapes and sectors — businesses that have issues and have opinions on the government's priorities for the 2010-2011 provincial budget and what they should be.
I'd like to introduce, as well, Jon Garson, who's our vice-president of policy development with the chamber, who's here to answer any tough questions you may have.
We will be providing a written submission with the details of the full range of chamber recommendations
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subsequently. The time permitted today is not enough, in our view, to give you much of the perspective. The chamber did welcome the good news delivered yesterday in the first quarterly report, which clearly showed that the shoots of recovery are taking hold, led by much stronger corporate income tax revenues, which have improved the province's fiscal outlook by $2.7 billion since the budget of 2010.
This robust activity has resulted in government announcing that they are able to maintain current spending levels while also stating that there is $2.1 billion available over the next three years that could be used for further tax reductions or additional spending. It's within this context that the province has asked British Columbians to provide their perspective on how these available dollars should be used in Budget 2011 in three areas: funding of new programs or services, to cut personal income taxes or to reduce debt.
While the chamber will provide comments on each of these areas, our short answer is: none of the above. The chamber was disappointed to see that of the $2.7 billion in additional revenue, only $565 million is being dedicated to reducing the operating deficit over the next four years. The chamber believes that the only responsible approach is to dedicate all additional revenue to reducing the deficit, thereby reducing the burden we place on future generations and returning us to balanced budgets as early as 2011-12.
The chamber believes this is the only responsible course of action when we consider the comments made by the Finance Minister yesterday that recognized that "significant volatility still exists in the American and global markets. We need to maintain fiscal discipline." The chamber agrees strongly with this statement. With significant concern over the fledgling global recovery prevalent in the U.S. and around the world, our members are clear. To use these funds to increase government spending or to reduce revenue with such an uncertain future is both irresponsible and in fact dangerous to our future fiscal stability.
In terms of new programs and services, the chamber believes that rather than a discussion around increased spending, now is the time for fundamental reform in the manner in which government approaches spending and program funding. This is particularly relevant given the fact that we have seen a marked increase in total spending over the past six years in B.C. Since 2004 we have seen total spending rise from $30 billion to over $40 billion in the year 2010.
The chamber recognizes that much of this funding goes towards maintaining essential services. However, the current fiscal reality has highlighted the need for all spending needs to have measurable outcomes and consistent review to ensure value for taxpayers.
Nowhere is this more important than in the area of health care. With health care now consuming close to 50 cents of every dollar spent, the chamber must emphasize in the strongest possible terms its recommendation of no significant increases in health care funding without reform of the system and without specific measurable outcomes.
The chamber has consistently stated — in fact, this section was copied from our presentation last year; I'm sure it's familiar — that we must realize that simply pouring more money into that seemingly insatiable black hole of health care spending is not the answer. No matter the size of funding increase, it is never enough or simply leads to an unsustainable cycle of increased funding, leading to increased expectations, leading to calls for more funding.
We look to your committee, Mr. Chair, to ensure that any recommendations regarding health care spending must be tied to a clearly defined ability to measure improvements and outcomes and must be dependent on a clear blueprint for reform.
Therefore, the chamber recommends, starting in fiscal 2011, adopting a smart spending program that (1) introduces a coordinated approach to government spending by ensuring increases are limited to no more than the rate of growth in GDP across all government spending, including health care, and (2) reviews all direct program spending and operating costs on a four-year cycle that does not coincide with an election year to determine the cost-effectiveness of government spending.
A few comments on Crown corporations. The chamber also believes that a focus on the taxpayer value must extend to a review of the role and benefit of our Crown corporations. For too long, Crown corporations have been exempt from serious scrutiny for a combination of sentimental and ideological reasons, and this must stop.
The chamber recognizes that many Crown corporations in B.C. provide critical services for British Columbians. However, the fact that these are important services does not necessitate that these services should be provided by a public entity nor that this entity provides a better, more cost-sensitive approach than that which would be provided by the private sector.
As a stark example, participating in the retail business of liquor sales is not the rightful role of government. It simply reduces choice and open competitive markets — principal philosophies of the current government. And while the LDB's annual consumer visits have fallen 14 percent since 2004, the LDB's operating expenses have risen 19 percent over that same time frame. This inefficient operating model is symptomatic of a government-run monopoly and results in British Columbian consumers and private retailers paying higher-than-normal liquor prices and reducing economic opportunities for businesses.
Therefore, the chamber recommends that the government, firstly, introduce a taxpayer lens, which would
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allow review on a cycle that is in keeping with the fundamental planning of the Crown corporation — all Crown holdings — to see whether taxpayers' interests are better served by transferring control, in whole or in part, of a publicly owned and operated enterprise to the private sector; and secondly, introduce a new model or, at a minimum, reform the current model for liquor distribution and retail in this province that recognizes the efficiencies of a competitive free market.
Some comments on taxation. British Columbia has one of the lowest tax rates for both personal and corporate income in Canada. The government is to be commended for these actions, often taken in the face of significant criticism and opposition. When tax cuts already committed to are introduced, B.C. has, indeed, an enviable record. Whether it is personal, corporate or small business taxes, by 2012 B.C. will be at the head of the pack with one of the most, if not the most, competitive taxation regimes in this country.
In this context, the chamber does not believe that now is the time for further tax cuts. Our members have sent a clear message: now is the time to focus on returning to balanced budgets and to fiscal prudence. Therefore, the chamber recommends that the government go no further than implementing the plans laid out in Budget 2010 to further reduce personal, small business and corporate income taxes, and to the rates that were set for 2012.
The one area where urgent action is required, however, continues to be in the field of property taxation. The chamber now believes that the provincial government must step in to undertake a fundamental review of the local government's financial sustainability with a view to establishing a funding system that is fair, equitable and reflects cost of service for each taxpayer group.
In terms of debt, the chamber appreciates that much of the increases to the provincial debt have derived from the provincial government's commitment to a significant stimulus and capital infrastructure investment program. While the chamber recognizes the importance of these investments, the current economic climate necessitates that, whenever possible, we mitigate costs for future generations. As such, we were pleased to note that Budget 2010 reaffirms the government's commitment that once the province returns to balanced budgets, all surpluses will be dedicated to paying down the province's operating debt. However, this does not go far enough.
The chamber believes that the growth in both total and debt-to-GDP levels requires a focused strategy to ensure that the burden we leave to future generations is as small as possible. Therefore the chamber recommends, firstly, once balanced budgets are achieved, to legislate a requirement that the provincial budget dedicate at least 50 percent of surpluses directly to debt repayment; and secondly, to maintain this requirement until the total provincial, taxpayer-supported debt-to-GDP ratio is reduced to 10 percent.
In conclusion, Mr. Chairman, the chamber makes the following five recommendations to your committee. Firstly, focus on instilling discipline in public spending. Secondly, review the role of Crown corporations to ensure effectiveness. Third, hold to the tax cuts that are already budgeted for. Fourth, review the fiscal sustainability of local governments. Lastly, introduce a plan for tackling the provincial debt load.
Through a prudent fiscal approach and strong growth from the private sector, B.C. can see the light at the end of this recession's tunnel. It is critically important for the business community's confidence as we move forward that government show a clear and unwavering commitment to our fiscal health by focusing on the most important issue for our provincial economy, and that is returning to balanced budgets.
J. Les (Chair): Thank you, John.
We have time for one, maybe two, questions.
M. Mungall: Thanks very much for your presentation. You briefly touched on health care reform as an example for addressing provincial spending. Reform can mean a whole lot of things, so I'm just wondering if the membership of the B.C. Chamber of Commerce has had an opportunity to discuss what exactly reform means when you bring it up.
J. Winter: Well, we don't have answers. We're not health care experts. But I think what we do mean by reform is the fact that we can't continue to fund the continued growth that the health care system demands under its current system and that other options be examined to look at better ways to spend the money.
We're concerned that there is no analysis of spending, that results are not being examined and that the health care system really does not have a good fix or good handle on what it costs to deliver health care in this province compared to perhaps other jurisdictions that we've made comparisons to.
J. Garson: Just to add to that, several times we have produced a document called A New Vision for Health Care. The last one is several years old, so maybe it's time for us to refresh that. But it is available on our website, and it has some specific recommendations that have been developed in conjunction with a number of health care stakeholders, as well as with our membership.
J. Thornthwaite: Thank you for your presentation. Two things. You had mentioned right at the very beginning, and we do get this reinforced with the Minister of Finance just earlier. Do you consider that the recovery
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that has been indicated even in this past month, August, is reflective of the harmonized sales tax?
The next question is…. You had mentioned as far as a recommendation for us to be looking at property taxation with local governments, and I was wondering if you could be more specific about that.
J. Winter: I was hoping we'd get away without much reference to HST. But it was nice to make a presentation that didn't talk about it. The HST, I don't think there's any doubt, is beginning to have some effect. Whether or not it was reflected in that statement yesterday, it may be premature, because it deals with a period in advance of the July launch date.
The concern, if you like, about yesterday's optimism, perhaps, in the statement was more to do with the fact that we probably saw more economic growth in that quarter than we're going to see in the next couple of quarters. The economy is continuing to be soft. We're concerned that the surplus that's been defined in there ought not to be spent too prematurely.
The second question — Jon, do you want to tackle that?
J. Garson: As you're all aware, the province has undertaken a review of class 4 in terms of major industrial property tax rates. The perspective from the chamber is that the inequity and the unfairness within property tax impacts all the stakeholders. And then, of course, both the business community at every level, whether it be 6 or 4, frankly, subsidizes the residential ratepayers.
But we do also recognize the fact that there are some issues for local government. They are limiting their revenue means. There are some coming financial challenges for them in terms of infrastructure upgrades. So from our perspective, the very structure of local property tax is something that needs to fundamentally have a real close look at, because it doesn't seem to be working for any of the stakeholders.
J. Les (Chair): Okay, and with that, we're out of time this afternoon. I would like maybe to suggest…. You referred to an on-line document or a document that you have available on health care financing. I wonder if you could forward that to the Committee Clerk for distribution to the committee members.
J. Garson: If it works for the committee, I can attach it as an appendix to our full written submission, certainly.
J. Les (Chair): That would be great.
J. Winter: Bearing in mind it's quite dated.
J. Les (Chair): Sure, but there might be a nugget or two in there. You never know. Thank you very much.
Our next presentation is from the Confederation of University Faculty Associations of British Columbia, and we're joined by Rob Clift and David Mirhady.
D. Mirhady: Good afternoon. I'm Dr. David Mirhady. I'm a faculty member and chair of the department of humanities at Simon Fraser University, where I also direct the Language Training Institute. I'm the president of the Confederation of University Faculty Associations of B.C., otherwise known as CUFABC.
CUFA represents the professional interests of professors, librarians, instructors, lecturers and other academic staff at UBC, SFU, UVic, UNBC and Royal Roads University. One of our purposes is to advocate for a system of higher education and research in British Columbia that is of high quality and serves the diverse needs of British Columbians.
With me today is Robert Clift, who is the executive director of our organization and also a doctoral candidate in the faculty of education at UBC.
We very much thank the committee for the opportunity to make a presentation in person as you consider recommendations to government for the 2011-2012 provincial budget. We'll prepare a full written submission and submit it to you in a few weeks' time. We'll use our time today to highlight a few key issues for university faculty and to offer you the opportunity to ask questions that we may be able to answer for you in our written submission.
The first issue we wish to address is the effect of the HST on the province's public post-secondary institutions. We take no position on the advisability of the HST as tax policy. Our only concern is that the HST be expense-neutral for public universities, colleges and institutes. To this end, we appreciate your support in last year's report for HST rebates for the public post-secondary education sector and thank the government for acting on this advice.
We also appreciate your support last year for our proposal to explore the use of some form of higher education price index, HEPI, in making funding decisions for public universities, colleges and institutes. We have received no indication from the Ministry of Finance or the Ministry of Advanced Education that any work has yet been done to follow up on your recommendations, however.
As you see in the first graph that we've presented, preliminary data from the U.S. HEPI suggests that the gap between the HEPI and the consumer price index has narrowed this year. But as you will note in the second graph, this doesn't negate the fact that higher education prices in the U.S. increased by 43 percent over the last decade compared to a 28 percent increase in general consumer prices. Even in the absence of Canadian
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HEPI data, our experiences confirmed this trend in British Columbia. We'll return to these cost pressures in a few moments.
In last year's report you recommended an examination of the unintended consequences of the application of generally accepted accounting principles and practices to universities and colleges with respect to financing of capital projects. Government took heed of your recommendation and committed in the February 2010 throne speech to introduce legislation that will permit universities to opt out of the government reporting entity, the GRE, thereby avoiding the unintended consequences of the generally accepted accounting principles as apply to government finances.
As the government said in the throne speech: "We cannot let accounting policy stand in the way of our students' interests or hold…universities back from pursuing their unique areas of excellence in partnership with others."
Preliminary discussions have taken place on the parameters for such legislation, but we are very concerned that if this legislation is not in place for the next fiscal year, there will be significant negative consequences for public universities. In addition to delaying capital construction programs, the requirement for universities to balance their consolidated budgets annually, including any medium-term losses in their investment portfolios, will necessitate cutting operating budgets and therefore services to students.
The universities have very transparent accounting mechanisms which are ably overseen by external auditors as well as their boards of governors. We would very much appreciate it if the committee would reiterate its support for legislation to allow universities to be excluded from the government reporting entity and would urge the government to introduce and adopt such legislation during the spring 2011 sitting of the Legislature.
Having said this, we want to be clear that we are not seeking out for the universities at any cost. There are a number of public policy matters that must be settled first, including ensuring government funding for operating and capital expenses into the future. We believe, however, that these matters can be dealt with in time to bring forward legislation in the spring.
Returning to the matter of general funding. Although we appreciate government's commitment to protect higher education in these difficult financial times, and indeed to improve it in small ways, what was proposed in last year's budget does not fully protect higher education. It merely slows down the rate of deterioration at exactly the same time that we could be making further investments in the human capital of our province.
By allowing universities to increase tuition fees each year by approximately 2 percent, the government has been recognizing that universities need to keep pace with inflation, but it seems a matter of fairness that the government should also increase its per-student grants by an equal measure.
To demonstrate the value of such an investment, I note the August report of the C.D. Howe Institute that found that earnings premiums for college and university graduates have persisted over the past 25 years and that there is no evidence that we have produced too many graduates from our higher education institutions. I note an August report from the Association of Universities and Colleges of Canada which projects that the earning premium for male university graduates is rising. Data on female graduates will be forthcoming later this fall.
I note the September editorial in the Vancouver Sun that points out that in addition to the economic returns, university and college graduates tend to be less of a burden on the health care system, are less likely to be involved in crime, make larger financial contributions to charities and contribute more to community life. I quote from the September opinion piece in the Prince George Citizen by former Social Credit Advanced Education Minister Bruce Strachan. "At the end of the day," he said, "a well-educated population is a country's only truly sustainable resource."
We understand the limitations in the government's finances, but we won't grow the economy and improve our communities by limiting access to higher education, reducing services to students or by diminishing the quality of the educational experience.
The last item we wish to touch on before taking your questions is research funding. We appreciate the investments in research by government in a number of areas. We are concerned, however, that if these investments are not sustained, British Columbia will not achieve the full benefit from the time and money already invested to establish these research enterprises. The Michael Smith Foundation for Health Research is a prime example. We are not privy to the discussions about future funding for the foundation, and we can't imagine that government will not continue to fund it. But will the funding be enough to exploit its full potential? We fear not.
As for forestry research, the funding for the forest sciences program has not been reinstated, and we are not aware of any replacement program forthcoming. We have been advised by faculty members in forestry that we are already losing research expertise in forestry from our universities and from the public service.
In one case a forestry professor at UNBC is supervising two PhD students, neither of whom is conducting their research in B.C. One is doing research in Quebec, the other in New Zealand — jurisdictions where there is much better support for forestry research. Although we should share our expertise, with 60 million hectares of forest to manage in British Columbia, we must do a better job at home.
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As I indicated at the outset, we will be producing a full written brief that deals with these and related matters in detail. In the meantime, we welcome your questions on the matters we've raised today or on other matters in the post-secondary education sector about which we may be able to offer some information.
J. Les (Chair): Thank you very much, David.
B. Ralston: Thanks very much for your presentation. I want to focus on one issue that you've raised about universities being excluded from the government reporting entity.
The Auditor General addressed this in a recent report in August. What he said is that according to the current rules, for the universities to be excluded, they would have to no longer be controlled by the government. There are certain measures of what control means in accounting terms. Given that that's your position, have you considered that issue? What advice do you have to offer the committee on that issue?
R. Clift: The control exercised by the government is primarily through the generally accepted accounting principles. I'm going to forget the date at this point. I believe it was in 1987 that the Supreme Court of Canada definitively ruled that universities are not government entities with respect to when they were dealing with mandatory retirement legislation. So there is jurisprudence on this already, and the extent to which universities have been pulled back in within the ambit of government control has been precisely through these rules.
David made the comment about the concern that if the change, the ability to opt out, is not taken care of soon, there may be implications on the operating budget. This is one example of one of these rules. The universities right now have a mechanism for dealing with investment losses, and investment losses they expect to recoup are dealt with in a particular accounting way. I don't know the details of that, but they deal with them in a particular way that satisfies the auditors and that satisfies their boards of governors in their communities.
Under the government's accounting practices, they are going to be required to deal with any losses in the investment portfolio — not of all of them, and again, there are detailed accounting bits in here — on an annual basis. For example, if there is a university, say, that has lost a million dollars on an investment but that expects to recoup that in two years' time, it nonetheless in its current fiscal year has to show that as a million-dollar expense and has to balance the budget in order to conform with the generally accepted accounting practices. What that means on the ground is that we have to cut $1 million from somewhere.
This is the kind of thing that's pulling the universities within the control of government. The discussions, I know, have not happened yet with the Auditor General, or at least we've not been advised of that. There's a lot of discussion about what criteria would need to be met to satisfy the Auditor General.
At the end of the day, even if the Auditor General were not to agree that the specific criteria would exempt universities from the government reporting entity, we think government actually ought to take the asterisks on its financial statements — you know, to say that the Auditor General gives a qualified opinion. Exercising a qualified opinion in order to save the universities money to serve its students, we think, would be a good thing.
M. Mungall: My question is along the same lines. I was talking with Nick Rubidge from the College of the Rockies last week, and we got into this in a lot of detail. You mentioned that you had been in discussions with the government around legislation for this, because it was mentioned in the Speech from the Throne. I'm just wondering where things are at in terms of discussions around the GRE and the GAAP, to throw out some fun acronyms. What is your deadline so that you can move forward for the next fiscal year?
R. Clift: I should note that we're not in discussions with government on this. It's the universities in discussions with government, and those discussions at this point are in a preliminary phase. We've certainly expressed our interest through the ministry that as those discussions proceed, we want to be involved in a more detailed way, and I'm sure we will. But we've not been involved in those. I just want to be clear on that.
I guess the question really comes back to you. You folks would probably know better, but as I understand it, legislative counsel generally want to have the spring session preparation done by December or early January, so I guess that's the timeline we're looking at.
If legislation has to come forward — which we believe it does — those are the kinds of timelines. We can't say, because we're not privy to these preliminary discussions, that we're far enough advanced that that's going to happen, but the indications have been given to us that there needs to be a little more encouragement to get us down that road if we're going to make that deadline.
J. Les (Chair): Final question to Don.
D. McRae: Thank you for reiterating the importance to do with HEPI and, as well, the concerns over debt financing. I know that in large institutions, any large institution, when you actually work on the ground, whether as a librarian or a faculty member, you sometimes see the world a little bit differently.
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Are there ways that the government can assist universities to find some inefficiencies within their current structure and basically save them money, which would allow them to rededicate those dollars towards student services, etc., either by working with other institutions themselves or within major institutions? Looking at UBC, it's pretty substantially huge.
D. Mirhady: Well, I would not recommend micromanaging universities from Victoria. I think our comments on the last point, on the GRE, make just the opposite point — that the universities need to be recognized as distinct entities within society.
Certainly, we work in consultation with government, but as a matter of the academic freedom which is an important principle in our society, I would resist those sorts of attempts.
We've got scores and scores of people around the university who are constantly looking for ways to do things less expensively. So it is already happening.
J. Les (Chair): Thank you very much. We're out of time. We could go on, I'm sure. Thank you for coming today.
R. Clift: Just a note. If there are any additional questions the committee might have, we'd be happy to accept them and incorporate them into our written submission in a few weeks' time.
J. Les (Chair): Sure.
Our next presenters are from the Canadian Bar Association — Caroline Nevin and Stephen McPhee. Ready whenever you are.
S. McPhee: Good afternoon. My name is Stephen McPhee, and I'm the president of the Canadian Bar Association, British Columbia branch. I'm joined this afternoon by Caroline Nevin, our executive director.
As president, I am pleased to speak to you today on behalf of approximately 6,400 practising lawyers, judges and law students from across British Columbia. I'm proud to say that this is our eighth submission to the Standing Committee on Finance, and we value the invitation to participate in this process each year.
I would like to begin by taking this opportunity to thank the government for its decision to eliminate the $6 fee for on-line searches of criminal and traffic court records. Our members asked us to make a strong case for the removal of the fee that in our view not only compromised access to the justice system, but also risked increasing the in-person demand and delay in the court registry offices. We are pleased that the government listened to our concerns and made the right decision in the best interests of the public and the administration of justice.
Generally speaking, fees and the taxation of legal services is a barrier to access to justice. Like many stakeholders in the justice system, the British Columbia lawyers represented by the Canadian Bar Association are concerned about both perceived and real barriers to British Columbians accessing the justice system and its component parts.
Access to justice is a fundamental part of our legal system and the foundation upon which our society is based. The Canadian Bar Association has a legislative mandate which appears in our parliamentary charter to protect and preserve the administration of justice, and promoting access to justice is a fundamental part of that.
The government, for its part, is also responsible for ensuring that British Columbians have access to justice. British Columbians must be able to enforce their rights and seek legal remedies where their rights have been ignored or impeded. Otherwise, our laws become hollow words.
Those rights of individuals and their ability to seek redress where their rights have been impacted upon are as fundamental to the proper functioning of society as the rights of British Columbians to health care or education. In fact, it is the rule of law, the administration of justice and the ability to access justice that are the keys to ensuring that all the other rights of our citizens are protected.
British Columbia's lawyers and judges see firsthand the problems associated with limited or no access to our justice system. Lack of access to legal representation has led to increased numbers of unrepresented litigants, adding strain and backlog to the justice system and increased demand on government-funded health and social services systems when important legal problems involving families and individuals are not properly prevented or resolved.
Next week the Public Commission on Legal Aid hearings start — hearings in 11 communities across British Columbia, starting in Williams Lake on September 20 and ending in Chilliwack on October 12. The commission will engage the citizens of British Columbia in order to determine their priorities for the future.
The most recent research in this area clearly shows that increased public spending at an early stage of disputes involving citizens and the law saves money in other areas of public spending, be it in health care or other social services spending. The research also indicates that it is important that developments in legal aid include comprehensive and integrated delivery models. This means that funding for those programs that have a positive impact in another service or budget area should receive priority when public resources are allocated.
Also, when success is seen in one area of the justice system, such as in the investigation and prosecution of gang-related and other serious crimes, it's important
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to ensure that adequate additional resources are allocated to the other areas of the system that are impacted by these successes. I'm speaking specifically about court services, judicial resources and representation by counsel.
Lawyers understand the privileged place they hold in society as officers of the courts and defenders of the rule of law. We're doing what we can to improve issues affecting access to justice. However, there are two key areas that we believe the government needs to act to assist.
First, taxation of any kind on legal services creates an additional barrier to access justice and should be removed. While the HST will allow corporate entities to claim input tax credits, the full cost of the tax will still be borne by individuals, and it is individuals — such as parents involved in custody and access disputes, or injured individuals seeking compensation — that are least able to bear such a burden.
We've mentioned this concern many times before this committee, and we're willing to address this topic in greater detail at your request. However, we would like to dedicate the majority of the allocated time to speak to the issue of law student loan debt and how it is creating the unintended consequence of widening an already large rural-urban gap in legal services in British Columbia.
I'd like to highlight for the committee empirical data that demonstrates a dramatic decline in B.C. articling students choosing to practise in rural areas. Our organization believes this decline is due in large part to increasing student loan debt burden. This issue is particularly concerning to the Canadian Bar Association because it limits access to justice for rural British Columbians.
The significant decline of legal services in rural areas of the province must be addressed. There are 10,200 lawyers licensed to practise law in British Columbia. Of these, fully 80 percent practise in the counties of Vancouver, New Westminster or Victoria. Of the 263 students currently articling, only 40, or about 15 percent, are located outside of these three areas.
We know that the average age of lawyers in rural areas of the province is 50 and growing, but we also know that in some communities the numbers are significantly higher and growing. For example, the average age of lawyers in Castlegar is 62.
Compared to ten years ago, there are now almost twice as many practising lawyers between the ages of 51 and 60 — 2,864 versus 1,501 ten years ago — and more than three times as many practising lawyers between the ages of 61 and 70 — 1,115 versus 343.
The aging of the profession in some ways mirrors the changing demographics of B.C.'s population. However, the impact of the baby boom generation's aging is exacerbated by the five-year retention rate among lawyers, which has ranged from 75 percent to 80 percent. This means that in the first five years of practice, about 20 percent to 25 percent of lawyers cease to practise. Even worse, the number of lawyers being called to the bar upon graduation from law school is decreasing.
So we have a crisis of aging lawyers in rural areas, and as these rural lawyers age and retire, there are fewer new lawyers arriving to take their place in small and medium-sized communities. This has a huge impact on the number of unrepresented litigants appearing before the court, which in turn costs the province untold hours and dollars in terms of delay and resources. Citizens without representation, or even indeed the availability of having legal counsel, are left without access to basic justice for such legal needs as family law, estate law or personal injury law.
As mentioned earlier, the lawyers of British Columbia are doing our part where we can. In March of 2009 the Canadian Bar Association launched the B.C. rural education and access to lawyers initiative, the REAL initiative. It is funded by the Law Foundation of British Columbia. The province places second-year law students in summer positions around the province, in communities with less than a population of 100,000 and where the lawyer ratio is less than 1 to 500.
The goal of the program is to expose young law students to the opportunities available outside of the Lower Mainland and Victoria. Our hope, and we will see the results at the end of the three-year project, is that we can begin to address the impending decline in lawyers available to serve rural British Columbia.
I'm proud to report that through the REAL initiative, we placed 11 students in the summer of 2009, and 21 students this past summer, 2010. All areas of the province were served, and each unique placement has received high praise from the local lawyers and community. In many cases these placements have lead to offers of paid articles in rural communities.
This leads me to my next request for government action, which is with respect to student loans. For the past two years when we have addressed this committee, we brought to your attention our concern about the overwhelming debt carried by law students upon graduation. Students are making economic decisions to practise in urban areas and not to practise in rural areas because of the high student loan debt upon graduation.
We applaud the government's reaction to the difficulties faced by rural British Columbians trying to access health care services by implementing a loan forgiveness program for medical, nursing and pharmacy students who move to rural areas to work. But as I said earlier, access to justice is just as fundamental as access to health care and medical services, and the lack of lawyers in rural areas has reached crisis proportions.
The CBA has responded with the REAL initiative, but the government also has an important role in helping to promote access to legal services by attracting lawyers to
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rural areas. The following actions are recommended by the Canadian Bar Association, B.C. branch.
First, we recommend that the government recognize the articling period as a full-time educational period. This is the period between class-based studies and being called to the bar to be able to practise law. Students are under the direction of the Law Society during this period. The Law Society has the authority to set educational standards and requirements, oversees the completion of the program and evaluates students, just like any other educational institution in British Columbia.
However, currently articling students must begin to repay their student loans during their articles. The financial burden to these students is preventable. We propose that the period while a student articles be considered full-time study. This would result in student loans staying in the no-payment, no-interest status for the entire 12 months of articles and then converting to no-payment, interest-accruing status for the six months following the articles.
Currently this period commences the moment university classroom studies exist. In past years there has been a lack of clarification about which level of government, federal or provincial, would be responsible for designating the Law Society as an educational institution for the purposes of administering student loans. Recent discussions between the Canadian Bar Association and the federal government have confirmed that this decision-making ability is at the sole discretion of the province.
Second, given the number of years required to obtain a law degree, we recommend that it be recognized as a post-graduate degree within the provincial student loan program so that the total loan amount allowable to law students matches that of students seeking a master's degree in any other academic discipline.
Typically, a law student would have three years or four years of an undergraduate degree before they are able to be admitted to law school to then obtain a further three-year degree. When you add articles to that period of time before they can practise as a lawyer, lawyers typically have between seven and eight years of university or other training before they can practise.
At present many law students reach the maximum loan amount years before the end of their studies, requiring them to obtain higher-interest funding, and that's increasing their financial burden upon graduation. As we have already noted, high loan debt is a significant factor in a young lawyer's decision about where to locate and practise.
Third, we recommend that the current B.C. loan forgiveness program, which forgives student loans at the rate of one-third per year for three years for doctors, nurses and pharmacists who work for three years in rural British Columbia, be extended to lawyers. These three steps are a tangible commitment to access to justice as well as to supporting our own B.C.-trained students into meaningful community practice and service to our local populations.
In closing, we look forward to reviewing your report and recommendations later this fall and hope that you will relay to your colleagues the significance of addressing these important issues. On behalf of our membership, I thank you for the opportunity to appear before your committee. I'll be pleased to answer any questions that the committee may have.
J. Les (Chair): Thank you for your presentation. I do have a couple of people who would like to ask questions, but we're flat out of time. So if committee members have some burning questions for you, I'm sure they can contact you directly.
S. McPhee: I'll be happy to receive those, Mr. Chair.
J. Les (Chair): Thank you for being here this afternoon.
Our next presenters are from the Alliance for Arts and Culture — Mr. Amir Ali Alibhai. And I'm told he's also accompanied by Mo Dhaliwal and Nancy Noble.
A. Alibhai: Good afternoon. I'm Amir Ali Alibhai. I'm the executive director of the Greater Vancouver Alliance for Arts and Culture. With me is Mo Dhaliwal, who is our treasurer, and Nancy Noble, who is the president of the Alliance for Arts and Culture.
I love democracy. Thank you very much for this opportunity. This process is something that we've participated in before, and I think that it's quite valuable.
Last year this committee made a recommendation that the arts and culture community was quite happy with, and that was to restore funding to previous levels. Although we didn't get exactly what we were hoping for, there was indeed an appropriation for the B.C. Arts Council in Budget 2010, where in the service plan there was zero there, so thank you very much. I think it does make a big difference.
I wanted to start off by sort of quoting article 27 of the universal declaration of human rights: "Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific advancement and its benefits." Arts and science were very closely related innovations in creativity, very much part of the vision of modern societies when this was written.
The right to access arts and culture, for British Columbians, is at the heart of the principle of public funding for the non-profit arts and cultural sector. There are many other reasons as well. They're economic and social, health-related, educational-related. The written document that you have contains many, many examples and has some good references. I hope you do have the opportunity, too, to look through it later. I
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won't be able to go through everything in my presentation today.
The fundamental and historical reason, however, for supporting arts and culture has been about democracy and identity. It's not a very long time that western democracies have been funding arts and culture, and they chose to do this through an arm's-length process. It was largely a response, after the Second World War, to the fact of the recognition that the arts and culture could be used for political agendas.
The principle of arm's-length funding for the arts was developed and, in fact, pioneered in Britain. That became the model for many other western democracies, including Australia, Ireland, Scotland, Canada, and that has been kind of the best practices that have been recognized.
When it was decided that western governments should be funding the not-for-profit arts and cultural sector, the values that were invoked were values of freedom of expression, of equal access, of distinct identity. In more recent times cultural diversity has become really important. Community development also has become an area that the arts have become quite involved with. In fact, a lot of innovation has taken place in British Columbia in that area.
I recently read a book called No Culture, No Future by Simon Brault, who is the vice-chair of the Canada Council for the Arts. He refers to access to culture as the democratization of culture. It's a very interesting read if you have the opportunity. It's not a very long read.
The government in British Columbia, in the years leading up to the Olympics, really did invest quite a great deal in cultural infrastructure and in the arts community. There was extra funding provided so that artists and organizations could create new works in partnership with federal and municipal governments — and the private sector, in fact — and VANOC. That allowed our artists to shine.
In 2009 B.C. Scene took place at the National Arts Centre in Ottawa, and British Columbia artists were celebrated there. Some of our artists are visual artists — like Rodney Graham, Jeff Wall, Stan Douglas, Bill Reid, Robert Davidson — who are known internationally, and they're celebrated around the world. It's something we can be very proud of.
I don't know about you, but if you saw the opening ceremonies and witnessed Shane Koyczan's poem, We are More…. I was really moved, and I think many people were really impressed and really touched by that performance. In that poem he talks about Canada as being an experiment in the making.
I think that the innovation and the creativity that comes out of the not-for-profit cultural sector, that is not driven solely by market forces, is key to that. It's the R and D, very much. It's the language we've been using for the creative industries and the new knowledge economy that is evolving. Other provinces and cities, like Ontario and Toronto in particular, have really taken on that identity quite seriously.
In the last two or three years there has been a lot of instability in the arts community — and for the B.C. Arts Council, in fact, as well — because the level of appropriation has not remained stable. What's happened is that money has been found elsewhere. For the last two years…. Last year gaming money was cut, and that money that was cut was provided to the B.C. Arts Council. It created all sorts of confusion and chaos within the arts community and for the B.C. Arts Council.
This year, more than halfway through the year, the $7 million from the arts legacy fund was allocated to the B.C. Arts Council. That's really helped. That was a great thing for the arts community and for the council, because now it can actually move ahead with its strategic plan. Its budget is now about $16 million with that allocation, which still falls short of the $19½ million that was available in 2007-08 at the high-water mark. But because it's come late, planning and stability has really been a challenge for the arts community.
The B.C. Arts Council's own strategic plan has been put on hold several times, and many organizations find it really difficult to plan. I know organizations that, knowing there was a 53 percent cut to the B.C. Arts Council in Budget 2010 — at the beginning, announced in February — sort of planned for that and then found out that the cut was in fact much deeper because it was not an across-the-board kind of manner in which the B.C. Arts Council was able to make the cut due to their own strategic plan and their own plans for that money.
Besides stability in funding, I think what we also need is a renewed vision. The world has changed drastically, and we're not the only sector affected. We need to sit down and think about a big vision, a big picture, moving forward in terms of the arts and the knowledge economy and the opportunities that are there, our cultural diversity. There are many opportunities and things that we need to talk about.
Recently I was quite impressed by the plan that came out of Saskatchewan, and I would recommend anyone to look at that. We certainly need our own made-in-B.C. plan, but it's a wonderful document, and it's one of the documents that I've seen that addresses status-of-the-artist legislation.
We recommend that a stable and significant appropriation be allocated to the B.C. Arts Council and that it be equivalent, roughly, to this year — the $16 million provided this year — and that the legacy funds be on top of that so they can actually enhance what's going on in the community and move forward with the pretty ambitious strategic plan that they've laid out.
I'm going to quote the Hon. James Moore, Minister of Canadian Heritage. He recently said, about two weeks
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ago: "Any government which says it has a plan for economic recovery and doesn't have a plan in place for arts and culture doesn't have a plan for economic recovery." This is an idea that is being recognized by many countries and governments around the world.
One of the surprises we found in our research preparing for this — it's on page 4 — was we looked at some data that was available at Stats Can, and Hill Strategies provided some of this information for us. We crunched the numbers, and we tried to do a comparison between different provinces on a per-capita basis, just comparing operating direct funds to arts organizations and artists — not capital projects, not libraries, not tax credits. We've tried to keep it as much of an apples-to-apples comparison as possible, which, as you probably know, is a hard thing to do with provincial data, the different reporting that goes on.
We found, and we were quite surprised, that B.C. was actually dead last. This is before the cuts, by the way. We were at $9.67 per capita. The national average is $27 per capita in terms of direct funding to operating organizations.
So I think we have a lot of work to do in this province in order to even get to the next per-capita spending, which is Alberta, at $20.81. We've calculated that since the cuts have been made, it's about $6.54 per capita currently in B.C.
I have a few recommendations that I will leave you with and then take questions. Our key recommendations are as follows. We have four of them.
One is to support public funding for the not-for-profit arts and cultural sector — just in principle in terms of a role for government.
Second is that arts and cultural organizations, including heritage and community-based organizations and individual artists, must be supported with arm's-length public investment through the B.C. Arts Council that is stable and sufficient to support the council's strategic plan and which is more in line with the per-capita expenditures found in other provinces and regions of Canada.
We also would like to recommend that the government continue to allocate the arts legacy fund — this year it was $7 million — to the B.C. Arts Council in the next two fiscal years. It's been promised for three years to supplement the council's base appropriation.
The fourth recommendation is to restore the amount of funding for arts and cultural organizations supported through gaming revenues and to honour the social contract with British Columbians regarding the expansion of gaming. In the appendix there's sort of a history of gaming. It's something that….
I should take a special note to mention now that many organizations that aren't eligible for B.C. Arts Council funding, because they're either non-professional — although the B.C. Arts Council does fund community-based groups as well…. But especially culturally diverse organizations, volunteer-run organizations, really small organizations around the province have relied on gaming funds.
Museums — and there are hundreds of museums around this province — have in past years relied solely on gaming funds. That budget has been cut by 60 percent since 2008. The effect on the ground is the most devastating that I've seen.
The alliance represents 350 arts organizations and individual artists in greater Vancouver. I hear every day, not just from our membership but from organizations around the province, that the loss of your gaming funds has had a huge impact on them. Some of them are talking about closing down. Some of them have found innovative ways to collaborate with other organizations. But it's had a profound effect, and that would be a very strong recommendation — to restore that amount of funding.
J. Les (Chair): Thank you very much. I have time for one quick question from Doug.
D. Donaldson (Deputy Chair): Thanks for the presentation and the recommendations. I take to heart your bringing up the B.C. Arts Council. I want to ask you a question about the consultation. I know that the president of the B.C. Arts Council recently resigned because of what she felt was a lack of consultation between the government funding and B.C. Arts Council.
You describe a lot of the cuts that went on. Can you describe to me what kind of consultation occurred between the government and the Alliance for Arts and Culture around those cuts? I always think it's important that you get the knowledge from the people who are the most affected in order to make those kinds of decisions.
A. Alibhai: Last fall — and Nancy and Mo were both part of this — there were two meetings that we had with Minister Krueger in Vancouver. We had invited group representatives from different arts organizations to come and talk about….
The first meeting was very much about what goes on and that this is the value of public investment in our organizations. Then there was a second meeting that took place at the alliance offices where Jane Danzo was present and so was Gillian Wood, who's the director of the B.C. Arts Council. It was an opportunity to again hear from another set of organizations, because in both meetings we only had time for about 20 organizations at a time to speak.
That was the extent of the direct consultations with the government regarding the impact on greater Vancouver organizations.
I know that the minister did meet with other organizations in the province as well. He met with the Assembly
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of B.C. Arts Councils, which has members all across the province, and the B.C. Touring Council as well.
J. Les (Chair): Okay, thank you. We're out of time this afternoon. We very much want to thank you for yours.
We will move to the next delegation. On behalf of the Coast Forest Products Association, Rick Jeffery.
R. Jeffery: Good afternoon, Mr. Chair, Deputy Chair. Having gone through this a few times, you've got a much briefer presentation from us, and I'm prepared to entertain more questions.
You have in front of us a shortlist of recommendations. First and foremost, we're going to start with the HST. It's a very political issue, but your committee is not supposed to be so political. So we'll just talk about what the HST means to the forest industry.
First of all, on the coast it's $50 million a year off the top in savings. For the entire industry it's $130 million annually. The thing you have to know about that is that we can't recoup most of that because 95 percent of what we sell is outside of British Columbia. We can't charge our customers in Asia or the U.S. the PST. So it's $130 million to the bottom line. It's a job-killing tax that impairs investment.
From a coastal perspective, we have difficulty financing our business because our ROCI is not so great. Net earnings are non-existent, so we don't have money to reinvest in the industry. And previous to the HST our marginal effective tax rate was 29 percent. If you want to see money walk the other way real quick, 29 percent will do it for you. Under an HST regime, that number goes to 14 percent and makes us a much more attractive place to invest. By the way, of those three things, government has the most direct effect on the marginal effective tax rate.
Benefits to us, the sector as a whole. When I talk about the sector, I mean the industry, the communities, the workers that are dependent on the industry. It lowers our operating costs; improves our cash flow; lowers our marginal effective tax rate to 14 percent, as I said; and preserves existing jobs and working family incomes in very trying times. It will assist us in the economic recovery, which we think is about two and a half years away, and I'm happy to answer questions about that.
Investment will allow us to improve productivity and competitiveness, encourage job creation and investment in job creation. It's also, very importantly, compliant with the softwood lumber agreement. There are precious little things that government can do to help us as an industry that don't run us into softwood lumber implications.
In summary, it's good for us, good for our employees, good for our communities and crucial for the long-term competitive prosperity of the industry.
I'll get to the recommendations, then, and start with HST. Our request from this committee is that as you understand the benefits of HST and how they much outweigh the negative impacts, you inform the House and the public, through your deliberations, of the benefits of this measure. I think it's incumbent upon you as the Finance Committee to do that and certainly will help in the discussion that this province is going to have up in front of the referendum.
Other things that you can do on the taxation front that can help us are mostly around tax credit. We need to invest in innovation, new markets, new products, new technologies, new equipment, GHG reduction technologies. That all costs money. If you can give us tax credits with carry-through provisions, it's the most effective and efficient way in a market economy to spur that kind of investment.
We'd also ask you to work with the federal government on capital cost allowance. It's their bailiwick, but any help from the province is always useful.
Municipal taxes continue to be a problem. You've got a class 4 review going on now. We'd request that you expand that to all other non-residential classes with a view to overhauling the whole system. We've continually asked for that every time we've been in front of this committee.
We also suggest that you should be looking and recommending that government provide transitional assistance to those communities that want to do that.
Don, this one…. I guess this isn't your riding; it's the riding across from you. But Powell River and Catalyst are in discussions about a made-in-Powell-River Catalyst solution to the tax problem they have there. Powell River is in a difficult spot where they need transitional funding from the province to get them from where they are today, which is taxing their class for industry at unsustainable rates, to a level where they're sustainable. You guys can do that through loans, non-refundable loans, if conditions are met, those kinds of things. They need help to make this stuff happen. You should be helping them.
President Obama just announced the whole initiative around research-and-development tax credits. We should be looking at that here, again to fund product development, the move into biofuels, greenhouse gas reductions measures that we need to be doing, those kinds of things. It's a stimulus package. It works.
We have low levels of R and D here in the forest industry because we've been in the worst market conditions we've ever seen since 2006. There's precious little money for this kind of stuff. We need to do it for the long-term health of the industry. You can help.
On the program spending side, I can't tell you how much the $21 million that you put into forest innovations investment every year is helpful to the industry. It allows us to ensure market access and develop markets
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in our offshore markets and get us diversified away from the United States.
One thing you should know is that for every 40 cents that FII puts up, the industry puts up about 10 percent, and the federal government puts up 50 cents. So you're leveraging that $21 million into $50 million. That's essential stuff for us to be growing our markets. The growth that you've seen in China is directly related to our activities in China. Those activities are funded by FII. You need to continue to fund that program.
You also need to look at funding use of wood in non-residential applications through things like Wood First, targeted research and development and creating some synergies in the research institutions that we have in this province, which are world-class — UBC, UNBC, FPInnovations, BCIT and the like.
On the policy side we're extremely concerned around our Western Climate Initiative. B.C. is in negotiations with the rest of the partners there. There are offset regulations and emissions targets and regulations. Those need to have oversight so we can ensure that whatever we agree to doesn't harm British Columbia's competitive position. And in my industry, that's big business.
We've been talking to the government about First Nations and how to get First Nations much more involved in the forest industry. What we found out through that process is that when the treaty negotiators go to Treasury Board for a mandate, in that mandate, the amount of provincial land that's being put up in the deal is valued at zero. Oh, the province owns the land, so it doesn't cost you anything, so you're valuing it at zero. You're also not accommodating or accounting for the cost of compensation for the displacement of existing rights holders, should that happen.
We don't think that's very smart. It doesn't reflect the true cost of treaties and is not going to get us good treaties. So we need to look at that.
The rest of them I'm not going to go through. They've been on this list that you get from us every year, so I'm happy to take questions.
J. Les (Chair): Thank you very much, Rick.
B. Ralston: Thanks very much. I appreciate the suggestions, particularly the ones that relate to research, but I did have a question just to help me understand your position on the HST. You did give a number there. I looked at some of the interpretation bulletins for the PST. For example, like in logging, I think for all the machinery that's used on the cutblock, there was no PST. I went to the milling side. Pretty well any machinery or equipment, computers — any material inputs there — seem to be PST-free.
Would it be possible for you to provide some detail to kind of flesh out that $50 million a year number that you referred to in your presentation so I could better understand that issue?
R. Jeffery: Yeah. Well, just in a first blush, without giving you a detailed breakdown, throughout the value chain of the supply chain, PST gets piled in and piled and piled in. We truck something. We buy an oil filter for a truck. It all gets PST in it — the lawyer's bill, all that stuff. It's all in there. That's where the cumulative effect of that comes in.
It's not on the big-ticket items. But it is $130 million off the bottom line every year. And you know what? We've lost $410 million in the last quarter, so we can ill-afford to have $130 million being taken off the bottom line every year. And on the upside of that…. So that's how it is. It's just that cumulatively it gets buried in at every stop along the way, so it makes it a little bit more difficult to track.
The numbers we gave you are right out of the government's own calculations, so I can refer you back to that, or I can send you what you did.
D. McRae: Thank you very much for coming today. I've heard good news in the Interior about mills opening and ships increasing, which is always good to hear. I haven't heard the same good news always on the coast as much as I would like. Any projections on the coast for some new mill openings or ships improvements?
R. Jeffery: Well, I will point you to Monday afternoon when Western Forest Products opened their Ladysmith mill and then tie that back to comments I made on FII. That mill is 100 percent dedicated to the China market, so that's a good-news story.
What I will tell you is that we didn't shut down a lot of mills. The mills that got shut down were shut down not for capacity issues but for economic issues. They were on their way out. What we did was curtail capacity, and that capacity is coming on. In my own association we've seen about a 40 percent increase in logging and lumber manufacturing this year over last year. I knew that last year was the lowest we'd ever seen. We've got that.
I will say that we do have one challenge on the coast, and that's that we are an old-growth industry. We are reliant on old growth to drive the product values or mill realizations. We need to be able to support the wages and the forest practices and operate in the train that we operate in. Nobody wants to pay less, and nobody wants to cut corners on forest practices. We have to try to drive those values.
On the second-growth side, which is an increasing amount of the resource, you need $40-to-$45 logs delivered in front of our mills to be able to compete with the Interior or the Pacific Northwest in the commodity world. And our average log cost in the second-growth
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world is about $60. So we need to figure out…. So we've got Cow Bay, Teal-Jones, Ladysmith all running on small logs, but they are not manufacturing at full capacity of the second growth that we have on the coast.
We need to invest. That's why I've got the R-and-D piece in here and the tax credit piece in here.
We need to figure out what to do with those $60 logs — new products, new markets — and then convince somebody to come in here and build those mills. They are not going to be second-growth mills. They are not going to be commodity mills. They are going to be engineered-wood-product mills and moving up the value chain, because we need to drive those values on the coast to support the wages and the practices and to be able to operate in the train that we find ourselves in.
J. Rustad: Thank you very much for the presentation. I only have a quick question, because I think we're just about out of time. You may not have a quick answer, so if you'd like to e-mail us and….
R. Jeffery: You know me, John. I like to blab.
J. Rustad: Well, since I know we're close to out of time, if you can e-mail it, that would also be appreciated. That is, one of the things you had talked about is the fact that there hasn't been a lot of investment. Obviously, when companies are losing money, it makes it very difficult to consider capital investment as well as other types of investment.
In the mining industry we have a flow-through share tax credit system, which helps them to be able to raise money to do exploration and to do other types of things in the mining sector, say. And I'm just wondering if you've ever considered, as a forest industry, looking at that type of model and whether something like that would be advantageous or whether it would be too much of a….
R. Jeffery: No, that's essentially when we say to you, "Look at these tax credits for plant modernization" and that kind of stuff. That's essentially what we're thinking about. That's the model. The mining guys and the oil and gas guys — those are the models. We don't explore — right? But if we can look at flow-through tax credits to promote the building of these new mills and that kind of thing, that's the kind of idea.
J. Les (Chair): Okay. Thank you very much, Rick.
R. Jeffery: My pleasure. Good luck in your endeavours.
J. Les (Chair): See you next year.
R. Jeffery: I'll see you before then.
J. Les (Chair): Our next presenter is Adrienne Montani from First Call: B.C. Child and Youth Advocacy Coalition.
A. Montani: Good afternoon. Thank you for the opportunity to present to you. Hello to you all. I'm very happy to be here, and I'll jump right in.
We represent a broad coalition. First Call does. It's a non-partisan coalition of about 90 partner organizations from around the province and hundreds of individuals in communities around the province as well, all of whom come together because they want to see the rights and well-being of our children and youth given the highest priority in the government's budget deliberations. So that's our raison d'être.
The slides I've given you are just sort of some informational ones that contain some of our recommendations. I will be presenting a more full brief by the October deadline, but just for today, to give you our top-level thoughts….
Our advice to you today arises from the expertise and the firsthand knowledge of these coalition partners. I should say that I hope lots of them individually will come and speak to you about their particular issues. I'm going to give you kind of some high-level messages that we all agree on, because we have education and child protection and health and everything in our coalition. So this is some high-level agreement we have.
Our recommendations also reflect the growing mountain of empirical evidence, both Canadian and international, about human brain development, about the causes and consequences of health inequities, of lifelong harmful effects of growing up in poverty, the importance of public education in a democracy, the value of the social services sector to a healthy, productive society and the cost-effectiveness of prevention.
That's some of the research base upon which we base our recommendations. Even more fundamentally, we remind you that children have rights and that by signing the UN convention on the rights of the child, B.C. has committed to be responsible for promoting, protecting and supporting the implementation of those rights.
You won't be surprised to hear me start with a call for this committee to recommend that B.C. adopt a comprehensive poverty reduction strategy with legislated targets and timelines for the reduction of child and family poverty.
Growing up in poverty is known to be one of the most significant risk factors to children's long-term success and well-being. B.C. has had an unconscionably high rate of child poverty for several decades, through good economic times and bad and through various governments. We have yet to bring it down to what it was in 1980 or 1989, and we remain above the national average.
We have seen a decline in child poverty rates from the peak of 2003 in the most recent figures, which are 2008,
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but we know that with the impacts of the recession, unemployment rates, personal bankruptcies and welfare caseloads have all spiked. So we are concerned at what 2009 will show.
We also know that the heightened vulnerability created by living in poverty is disproportionately affecting aboriginal families, lone-mother families, immigrant and refugee families and families with children with disabilities. As research by many of our health partners has pointed out, the burden of preventable health inequities alone is already costing us in health services and lost productivity.
Reducing income inequality, or the gap between the rich and the poor, in B.C. is one of the key recommendations for addressing the issue of health inequities and rising health care costs.
Some of our detailed recommendations to bring down the rate of child and family poverty include: raise the provincial minimum wage to $11 an hour and index it; increase income assistance rates to allow an adequate standard of living and index them; put in place a publicly funded high-quality and accessible child care system; build more social housing; reduce financial barriers for getting a post-secondary education, particularly for low-income students; and assign a cabinet minister with the authority and responsibility to ensure that the poverty reduction strategy, when adopted, is implemented and achieving its targets.
Knowing that a majority of B.C.'s poor children have parents in the labour force, we would ask you also to recommend that government look at its contracts with service providers, both non-profit and for-profit, to see if living wages are paid to all contractors' employees. Leadership on this issue is crucial to avoid the problem of government indirectly paying poverty-level wages and contributing to the rise in children's vulnerability levels while paying for services to reduce vulnerability. So it just doesn't make sense. We don't want to be contributing to the problem that way.
I probably don't need to remind you of the research evidence making the economic case for investing significantly more public dollars in supporting early childhood development. I hope you've all become aware of that research.
Last year in our remarks we referenced the report by the human early learning partnership out at UBC, their 15 by 15 report, which was commissioned by the B.C. Business Council, which costs out the lost GDP growth for allowing young children's vulnerability rates to remain unnecessarily high.
This week the Vancouver Board of Trade published yet another authoritative report on the importance of early childhood investments for crime prevention and productivity. To quote from there:
"There is already enough credible data to indicate that for many interventions, the cost is significantly less or greatly less than the benefits that can be achieved. Investing in these interventions is good public policy. Diverting children and youth from a life of crime achieves outstanding positive results in terms of both social and economic dimensions, including costs borne by government."
Unfortunately, on the early childhood front we've been waiting for the better part of a decade for a promised comprehensive early years plan from the Ministry of Children and Family Development. First Call's Early Childhood Development Roundtable has developed a framework for use by government to guide early childhood investments, and specific recommendations are available. It's in a report on our website. I'm happy to send it to you, if you'd like.
HELP's 15 by 15 report also makes detailed recommendations and calculations of the investments needed to reduce vulnerability. We are strong supporters of the enhanced investment in full-school-day kindergarten. We recommend the upcoming budget contain a significant investment in a comprehensive early learning and care plan for children now under five. We urgently need to start building a universal, affordable and high-quality child care system to replace the largely parent-funded, increasingly fragile and inadequate patchwork that we have now to allow parents to work and give children a good start.
B.C.'s fiscal policy must take the mounting evidence about the importance of early years investments, investments in prevention and reducing inequities created by growing income inequality into account if we are serious about improving outcomes for children and building a healthier, more prosperous society for all.
One obvious way to act upon this evidence is to make sure the dollars needed to maintain and enhance crucial support services for families who are raising children and for the direct services that children need are there in the 2011 budget. Cutting social services or thinking that government spending on a social safety net is optional or discretionary funding to be trimmed when budgets are tight is exactly the wrong response.
Government has a critical role to play as a funder of social services through the not-for-profit sector and directly in child protection, in public education and in health promotion, and the evidence and wisdom of making these social investments with our tax dollars is absolutely clear.
Therefore, we are looking for the 2011 budget to enhance the budgets of the ministries most relevant to children and youth services in order to reduce things like wait-lists for therapies and assessments; to reduce social workers' caseloads; to restore services in public schools that are essential to the success of the most vulnerable students; to expand specialized services for at-risk youth; and to provide sustainability to essential community-based child, youth and family support programs.
The next budget should also include financial commitments for an ambitious poverty-reduction plan, in-
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cluding a comprehensive plan for a system of early childhood development supports and services that is accessible to all families.
We repeat our message from last year. Tax cuts that reduce government's ability and our collective ability to provide the necessary supports and services that children, youth and families need are not helpful or wise. It is top-income earners who have benefited most from these tax cuts, from most income tax cuts, while low-income families benefit little because they already pay a small amount of tax and they lose access to social supports that are then cut. So then we will all pay later.
Thank you again for your attention, and I welcome your questions. We will give you a more detailed brief with research links and stuff a bit later.
J. Les (Chair): Thank you very much, Adrienne. Sure.
J. Thornthwaite: Thanks very much, Adrienne. My question is…. Obviously, now you're very well familiar with the all-day kindergarten — 50 percent this year, 100 percent next year. The implementation of all-day kindergarten, obviously, is in response to groups such as yourself, as far as promoting the many, many reasons why we should be investing in early education.
You had mentioned just briefly about the children under five. I noticed in your presentation you talking about child care — in other words, universal child care — but could you be more specific on what you're talking about — under five?
A. Montani: For under five? Yeah. Well, that would be a comprehensive plan of support for early learning and care. Of course, the child care part is because most parents work, and so they need more than a full school day. Certainly for the younger kids, they shouldn't be in school. They would be in some kind of play-based learning situation. We're looking for an investment….
Actually, I was just at a presentation this morning. The Child Care Advocates Coalition, one of our partners, and the Early Childhood Educators of B.C. are developing a plan. They'll be presenting it, I think, to government. They're taking it out to community right now, trying to look at an integrated system of early care and learning that could be based in community, some of it based in schools.
That would be the choice of communities and building on what's already there — to have early-years centres in every community, sort of built on elementary school catchment areas, where there would be both family support kinds of programs as well as, of course, non-parental care situations for children whose parents are working.
B. Ralston: Thanks very much for your ongoing advocacy on these important issues. One of the ways this committee works is by making recommendations. If you were to…. This may be a difficult thing to do, but you've set out a number of programs — the comprehensive poverty reduction strategy. You've talked about the 15 by 15 report commissioned by the B.C. Business Council. If you were to put one at the top of the list in terms of a recommendation of what you think would have the most impact, what would you recommend?
A. Montani: Well, I don't think they're separate, actually, but I think I'd probably say a poverty reduction plan because it creates such vulnerability. But then, what's in a plan? I mean, that's where we say that we need a comprehensive poverty reduction strategy for the province. It's going to have to include some element of early learning and care, better child care and early learning. It's going to have to reduce vulnerability at that end. It's also going to have to look at income supports. It's going to have to look at education.
All of the recommendations of various things we've touched on here hopefully would be in a plan. It is a cross-ministry effort. There's no magic bullet. There are many things we need to do on the income side, on the reducing-vulnerability side, on the education side for future generations. Make sure youth attach to the labour market and are prepared for the future economy.
J. Les (Chair): Final question to Michelle.
M. Mungall: Thanks very much, Adrienne, again. Like Bruce, I'll just echo the thanks for the ongoing work that your organization has been doing on that issue of a poverty reduction plan. In the handout and in the presentation you mentioned that there are quite a few other jurisdictions that do the poverty reduction plan, and you listed the ones in Canada. Of course, they're far beyond Canada. In fact, a lot of western democracies are jumping on board this because it has been quite successful.
Do you know — we don't have time now, maybe, to go into a lot of detail, but perhaps you could provide this in your written submission — the type of successes that other jurisdictions are having with the poverty reduction plan regarding early learning and so on?
A. Montani: Certainly. In our full brief I can provide some links or some evidence from some other countries. In some cases they haven't needed to have a poverty reduction plan recently because they've had one in place a long time.
I'm thinking of Sweden or some of the, specifically, Scandinavian countries which have very low child poverty rates because they have in place some of the things that we were asking for here. Certainly, we can provide some evidence from the U.K. and other places. We'll see what we can find. Thanks for the question.
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J. Les (Chair): Thank you, Adrienne. You were very efficient in your presentation.
Our next presenters are from Genome British Columbia — Alan Winter and Bruce Schmidt.
A. Winter: Thank you, Mr. Chairman, Deputy Chairman and the committee. We appreciate the opportunity for being here today. We've talked individually to a number of you, and we appreciate, in committee, this particular opportunity. With me today is Bruce Schmidt, whom many of you have met. Bruce was a founding director of Genome B.C. back in 2000, and we appreciate his support over the years. He has helped us in this area.
In summary, just jumping right into the presentation, what we have provided to you is a corporate presentation that we provide to the government in explaining what our background is, if you like. I'm just going to pick from that, Mr. Chairman, to give you kind of a sense for the Finance Committee.
But what we'd like to do, in summary, is — looking at your document, Building B.C. For Your Family — advocate, really, the theme of investing wisely for the future of B.C. Really, the questions we'd like to answer today are: why Genome B.C., and why now?
At the bottom of page 1 we've provided a little bit of the background that deals with: why genomics?
This is sometimes seen as a specialized science, but I think, as the Deputy Chairman knows, biology to some extent is dealing with all of the sort of megatrends that we see — whether it's population health, whether it's clean energy or whether it happens to deal with climate change or adaption to that, production of food, etc.
These are all major issues which to some extent in B.C. get translated into our sectors — the sectors, for example, being health, forestry, fisheries, environment, agriculture and, even, in terms of dealing with processes, in terms of mining or acid rock drainage or all of these things. To some extent, it's molecular biology being translated into a sustainable world, and that happens in sectors.
That's the job that we have: to pick out, in a fairly hard-nosed way, research that will apply in British Columbia and be translated through to some advantage, either for a government user or for industry users in the province itself.
So many of the challenges we see, we try and work on. The top of page 2 really is just dealing with the fact that we were founded ten years ago. Michael Smith was the founder of Genome B.C. and, partly through the Human Genome Project, saw this opportunity.
Since then we've had two five-year programs. The first program was $69 million. In those days it was 50 percent federal government, 50 percent province. And then we changed that — the first in Canada, really, to change that model — to say that if we're going to really invest we would ask the province only for 25 percent of the total, but we'd ask the province upfront. Then we would go and leverage that money with industry, with academia, with international players such as the Gates Foundation, etc., and we would still compete for federal dollars.
The bottom of page 2 is really trying to deal with: why Genome B.C.? Over the last five years what have we done with the province's money?
We had a target of $300 million. We've attracted $316 million into the province. That was with a $75 million contribution from the province. So we've attracted about $241 million in external contributions — relative to population, the most successful province. In other words, we attract over 25 percent of all federal dollars into British Columbia. That's partly because life science sectors here are very strong. Scientists are strong; industry is strong in those areas. We're not building cars or something else that, for example, Ontario would do better in.
We have collaborations with over a hundred industry and international groups. Around every project we try to get pharmaceutical companies or others to put money into those particular projects — or mining companies or whatever it happens to be — and to do that in terms of project by project, with over a thousand jobs created at this point. The Vancouver Board of Trade looked at that. We try and focus on the sectors that make sense to British Columbia.
The top of page 3 really gives you a picture of the current strategy. That current strategy is: for the five-year plans we take the province's dollars, we compete for federal dollars, and we make up another 25 percent through international institutions and industry.
On the right-hand side of that, the criteria we established at the beginning of 2005 were to match B.C.'s key economic concerns, leverage contributions from other organizations and maintain partnerships across the province — in other words, don't spend it all at UBC. And we've done that. We've managed to bring in, in fact, teams of people or teams of groups right across the province. You can see the government investors in Genome B.C.
The top of page 4 has just many of the co-funders that we bring into the programs, and at the bottom of page 4, as we mentioned, it's trying to make sure that across the province there is the capability in each of these areas, each of the sectors. Whether it's the bee producers association or whether it happens to be Teck Corporation in Trail or whatever, those are organizations that get involved in the projects at different places.
The top of page 5 is interesting just because we did a study to say: what happens to that $300 million that we spend in the province during that five-year process? We don't choose projects based on this economic analysis, because what we really want are the results of the projects.
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But even during the five years that we undertake this research in the province — and this was all done externally — as you can see in the yellow box, it leads to significant person-years of employment and contribution to GDP. Interestingly, it also leads to direct tax feedback, if you like, to the province of nearly the amount that the province originally put in. Of course, that's only because we're able to leverage those dollars through federal and international contributions.
At the bottom of page 5 we deal with, really, the way forward for us, and this is that in each sector we bring together industry or government or the users in those sectors. For example, forestry is not only the forest industry but also the government, in terms of replanting the forests, etc. We try and do that and make a strategy around how we actually apply genomic technology or molecular biology technology to those sectors. That goes into a strategy. That goes out with our request for proposal, and then projects get awarded on a basis of "Can we meet that strategy?"
You can see on the subsequent pages — and I won't go through them all — examples that have come out of that approach. These are examples where industry or government are involved as users, where we have scientists addressing specific issues.
In health, on page 6, we deal with adverse drug reactions for children, for example, or transplant patients where anti-rejection drugs are toxic. In terms of population health, we have projects, actually, in H1N1 and tuberculosis. Obviously, we had experience in SARS.
On page 7, as we move to agriculture, in UNBC — and with people in Prince George…. We've been dealing with bee colony issues in the Okanagan; with wine industry questions; in mining with Teck Cominco and Imperial Metals at Mount Polley, for example; industrial contaminants; and breaking down toxins. Interestingly enough, the U.S. Army is quite interested in this one, and our Department of Defence, because the same technology breaks down explosives. In areas like Chilliwack, etc., there has been interest in remediating some of those areas.
In environment — working with Vancouver Island University and the shellfish industry and with chemicals in municipal wastewater in trials…. That's been an interesting area. In forestry we've put a significant amount of effort, again, internationally, with Sweden and other areas. The USDA has been quite involved with us in terms of advanced biofuels. I noticed Rick Jeffery's discussion from the Coast Forest Products Association in terms of investment and research, which will help these areas. It's quite interesting for us. Novozymes is a partner there as well.
In fisheries — this one we could talk about for quite some time — it's looking at host-and-pathogen interactions. Sea lice is a pretty emotional issue. We're trying to bring some science to that. Management of wild fish stocks — it's not going to happen till we really understand the biology and we understand the impact of environment on that. Society and ethics we spent a fair amount of time and effort on as well, dealing with the Science Teachers Association throughout the province.
So that's trying to explain: why Genome B.C.? The next question is: why now?
Just at the top of page 10, as you can see, the three plans…. The first plan was $69 million, which we exceeded; the second was $300 million, which we exceeded. We believe we can, over the next five years, do about $340 million, even in tough economic times, by attracting that much money into the province, but we need the province's help. The province needs to be the lead investor for us to go out and take those dollars and multiply them.
We were very thankful to receive $50 million towards the current 2010-2015 plan in 2008, because we briefed the province…. Not that we saw the economic downturn coming, but we saw the election coming, and we said, "You know, we must get out a year early," and thankfully, that was a smart thing to do.
So we very much appreciate that, and I should make sure that the committee understands how much we appreciate that, especially during these tough times, because it has allowed us to go out internationally and tell people we have that money in the bank, so we're willing to look at this longer-term research.
Where we invest — as you can see, at the bottom of page 10 — is between industry, academia and government. It's bringing those three groups together, both on our board and with our particular projects.
Also, page 11 really gives you this long-term view — which we wrote down ten years ago, actually — of the difficulty, to some extent, of bringing science into end results — commercialization. The first two plans I've described. This current plan, the 2010-2015, is really strategic investment for application. What you've seen, as I've gone through examples, is where we would want to invest.
The outcomes of that plan are really three things. First is that this research is taking place across B.C. in these sectors, and associated with that, it really is a stimulus to the economy. All of this money goes into salaries throughout the province, and that happens immediately, and as you can see, there's feedback directly to the province in the way of taxes.
We build the capability so that when we hit these issues, there are people to call on. The third is we leverage those funds and do that with industry and with venture capital links.
The conclusion of all of that is, at the top of page 12, that we very much appreciate the $50 million that we have. That has given us really a great start to being able to put this plan together. If we leverage that $50 million
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the way we've done in the past, that's about $200 million in total. We believe we have the opportunity to increase that to $340 million, but that requires an additional $35 million from the province to accomplish that — about $7 million a year — and that would result in, then, the incremental $140 million.
I think more importantly, to some extent, it's not only the investment of leverage dollars. It's the fact that if we look at each of these sectors, the time is right to invest in those particular sectors because the issues that are coming up are ones that we can deal with. We have that capability for technology development to be able to do it.
We summarize just by saying: "Invest wisely for the future across B.C." That doesn't mean to say always Genome B.C., but we hopefully get your support for that because we've appreciated what you've done for us, and we thank you very much for it.
J. Les (Chair): Thank you very much.
J. Rustad: Thank you for the presentation.
In terms of cash flow of those kinds of dollars, as you know, we are still running a deficit. We haven't got the ability, like we did in 2008, to be able to allocate those dollars that came from capital surpluses that we had.
If there was a commitment to it, with the money flowing, say, in year 3 or 4 of the plan, would that be able to meet what you're looking for, rather than trying to flow the dollars in today's budget? There's no guarantee, of course, that we'd be able to achieve that, but the reason why I'm asking that question is because we hope to be back to balance by 2013-14 and possibly earlier than that. There may be an opportunity at that point, from any surplus, to be able to flow those kinds of dollars.
A. Winter: Yes. It's a very good question because to some extent we have to realize we are in a different environment. Obviously, what we present to you is our request. How you come back about the best way to do it might be that sort of thing.
I think the main thing is that there is a commitment. I think our board is very concerned that we don't go out and, if you like, have a five-year program with the Gates Foundation or something like that if, in fact, the dollars are not going to be there, because we would never be able to do it again.
The issue, as you point out, is not the fact that we necessarily need the cash tomorrow, but we do need to have either cash in the bank or a commitment to it to be able to lever those particular dollars.
In terms of cash flow, I would say probably two years out is kind of where we start to need that money, if you know what I mean, in terms of…. We will have by then, over the period of time, exhausted the initial $50 million in terms of commitments, and we would be in to the point that we would start to draw down, if you like, on the cash needed at that time.
I hope that answers your question.
D. Donaldson (Deputy Chair): Thanks for the presentation, again, and it's good to hear some of the updated information.
Quickly, just two questions in one, John.
The 2010-2015 budget — have you received the 50 percent federal portion or commitment to that?
Secondly, I'm very interested in the mining aspect for where I come from up in Stikine. The issue of tailings ponds. It's a very rudimentary approach that industry takes towards tailings ponds. I'm wondering. I don't see many of the…. Perhaps you can point out to me the co-funders worldwide that are part of your partnership, if there's a mining company in there, and what kinds of things you see on the horizon around remediation of the toxins in tailing ponds that perhaps would make mining more feasible in some areas.
A. Winter: Quickly, on the federal government. The federal government funds Genome Canada in the same sort of way that we're funded as well, so in regular increments. They have had, in the last budget, significant investment, $75 million, and we're hoping that that will continue into the future, obviously. And we're now competing for that $75 million with our portion, if you like, of the $50 million. That is continuing, and we anticipate that to continue.
We've also had quite a bit of success going directly to the departments, actually, on individual projects, where they see a need to involve themselves. There has been co-funding from the federal government, and WD has invested $10 million over the last several years as well. There's a significant ability, if you like, to pick that up in various ways, but Genome Canada would be the way we compete for those particular funds.
In terms of mining, the two companies who are most involved with us at the moment are Teck Cominco and Imperial Metals, and that's partly because they've been prepared to put money into particular projects. We also have a small project with Chile at the moment, where they have two or three companies involved on an international basis. Japan's Sumitomo, I think, is the company most involved there. That's interesting both in bioleaching and in remediation, so those are the two areas.
We can follow up with you directly, Mr. Donaldson, if you like, on that particular one.
D. Donaldson (Deputy Chair): I'd appreciate that.
J. Les (Chair): Thank you very much for your presentation.
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Our next presenter is from the Canadian Federation of Independent Business — Heather Tilley.
H. Tilley: Thanks very much. First of all, I wanted to share with you some of the facts about CFIB and who we represent. We are 10,000 members strong here in B.C., representing mostly small and medium-sized businesses in all sectors of the economy. Our policies and mandate are taken directly from our membership. One member gives you one vote. Our sales team renews our membership face to face every year, which provides real accountability and ensures that our policies reflect the reality of life in a small business.
I'd like to start off by providing some context about the state of the economy from small business's perspective. This slide represents the latest results from our monthly Business Barometer, and that was issued last week. The index measures small business owners' confidence in their own businesses' performance in the near future. The index is widely reported and has been proven to be a strong indicator of the performance of the economy as a whole.
While the B.C. outlook often trends higher than the national average, this month has actually shown that the B.C. index dropped significantly. This does raise some concerns about small business owners' confidence in the provincial economy. If they're nervous, they are less likely to hire staff, buy new equipment and borrow for expansion.
A few more results from our Business Barometer survey. Only 32 percent of businesses report that the state of the economy is good in B.C., while 23 percent report it as being bad. Not surprisingly, tax and regulatory costs are the top concern. It's also important to look at the employment trends. Now more businesses are looking to decrease employment than they are to increase it. As a result, any measure that would increase hiring costs would be detrimental.
Small businesses did their utmost to hang on to employees during the recession. While the public sector expanded their ranks during the recession, the private sector cut jobs. However, those jobs were not shed universally. Bigger business shed almost double the percentage of jobs than small businesses. When you look at the graph, you'll notice in the larger businesses that it was about a 7.8 percent decrease, whereas for small business it was about a 4 percent decrease. That was using StatsCan data.
Getting into our prebudget survey. We conduct a survey every year of our B.C. members in anticipation of the consultations. We had over 700 responses via Web to questions on the debt, spending priorities and regulation, among others.
First of all, our members say that returning to a balanced budget is very important and should be accelerated. They said that the focus should be on reducing spending to reach balance sooner, not on increasing revenues. While the preference was for reducing spending in non-priority areas, such as government administration, a fifth of the members supported reduction in spending in all areas. About 30 percent agreed that the current timeline is correct — i.e., getting out of deficit in 2013-14.
As health care and education continue to see increased budgets, we asked small businesses to weigh in on whether they support this as a spending priority. This actually caused a split in the vote, with slightly more members not agreeing that health care and education budgets should keep increasing while we're in a deficit position.
Members overwhelmingly support a long-term debt reduction plan. While there are measures the government undertakes in the short term to allocate surpluses to the deficit, there does not appear to be a long-term plan in place to repay the debt. With interest payments representing about 4.3 percent of provincial expenditures, small businesses see the long-term value of debt repayment. So 83 percent say that they support a legislated long-term debt repayment plan.
Members have very practical concerns about the level of debt the province is carrying. They are mostly concerned about government's limited ability to invest in infrastructure and projects in the future as well as about the transfer of debt to the next generation of taxpayers and the future tax liability on their business. Only 4 percent of members have no concerns about government debt.
As well as looking forward, businesses reported on how they were impacted by current measures. Just to highlight a couple, members are split on the impact of the HST on their business — their response likely more a reflection of the industry that they are in. Overall, about 31 percent said it had a beneficial effect, while 49 percent said it had a harmful effect. The increase in the carbon tax continues to cause difficulties for members, about 73 percent saying that it's harmful, while the increase in the personal tax exemption was welcomed, as was the reduction in education property taxes for major and light industry properties.
We also asked members to identify their priorities for tax relief. We asked them to select only three responses. The highest on the list were personal income taxes, the provincial portion of the HST and further increasing the basic personal exemption.
A strong majority of members support the government passing legislation to make red-tape control permanent through legislation. This will be a very positive measure to mark ten years of leadership on regulatory reform.
In conclusion, these are our key recommendations. The government must set an overarching vision for
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B.C.'s economic competitive advantage. This should go beyond matching national tax rates and thresholds, and create real incentive for business investment and expansion. The government should continue to reduce spending, to accelerate the return to balanced budgets. A long-term debt repayment plan should be implemented. Finally, the government should make red-tape control permanent through legislation.
Finally, while we didn't touch on municipal issues much in the survey, municipal issues are the top priority of our membership. The province has a role to play in this, one that we will explore further in our written submission.
Because the property tax unfairness for small business has grown over time, with no correction in sight, we're calling on the province to take action to protect local jobs and our local economies. On average, small businesses in B.C. pay about three times the property taxes as a resident on the same value of property but actually use fewer services. In some cases — like Vancouver, Coquitlam, North Saanich — it's five, six or seven times as much. We recommend that this gap be limited to two times and that the government take action if the municipalities will not act.
Finally, we asked our members to provide some feedback to the Finance Minister on the upcoming budget. We actually received 27 pages of feedback, which we'll provide in our written submission. There are some really interesting quotes in there, and here's a small selection of some of the others.
Finally, our complete written submission to the committee is forthcoming. We'll have a bit more details on our recommendations and more specific recommendations on individual programs and policies in the written document.
If anyone would like further breakdowns of our survey results, we can do them by industry code, size of business, area of the province — that kind of thing. We are able to do so and more than willing to provide that information to you.
J. Les (Chair): Thank you, Heather.
J. Rustad: Thank you very much for your presentation. I'm just wondering. The statistics you've taken on everything that was in here — what date did you actually collect those statistics from?
H. Tilley: The survey?
J. Rustad: Yes.
H. Tilley: That was conducted at the end of August. We sent it out on August 30, and we cut it off September 10. So it's quite recent.
J. Thornthwaite: Thank you for your presentation. I also have a question. On page 6 you've got "Reaction mixed on recent measures" as well as "Priorities for tax relief." We had the Minister of Finance in here earlier talking about how we're cautiously optimistic moving forward. One of the main things that I noticed your members are really key on is reducing the personal income tax rates.
I'm wondering if that dovetails with the opinion here on the HST, given the fact that if we were to get rid of the HST, the Premier and the Finance Minister have said that we would have to either increase income taxes, increase the deficit — which your members have said you definitely don't want us to do — or cut services, which your members have also said, with regard to health care, that we don't want.
The answers to these questions don't mesh.
H. Tilley: Yeah, that can be the case when we have these…. Sometimes it'll say…. It's a perception, sometimes, as opposed to the reality on the ground. I know that B.C. has among the lowest personal income tax rates for lower-income levels. At the same time, there are ways to…. That's what impacts members the most, when they say they're looking for tax relief. A lot are sole providers, and that's where they see their income.
I'm not sure that really answers your question. I mean, I understand that there may be contradictions in how some of this information can be interpreted. The implementation of the HST…. Often they're answering on behalf of their customers, not necessarily them as consumers and not always as business owners, because they haven't had quite the time to absorb how it's going to impact. They haven't gone through a remittance process or anything like that, so they're not quite sure how it impacts.
J. Les (Chair): Final question to Bruce.
B. Ralston: On the state of the economy, the Business Barometer index, you said that B.C. is now below the national average. How would you interpret that on behalf of your members?
H. Tilley: Well, we saw quite an increase prior to the implementation of the HST. We were thinking that it may be some purchases that were happening right before the transition date. This is a two-month moving average, so this represents July and August data. That would have been right after the implementation of the HST.
Maybe it's decreased spending. It is concerning, because B.C. has been above average for quite a while — many years, actually. It is a bit concerning. It could be the HST. It could be other factors. We're not entirely sure.
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J. Les (Chair): Benjamin Franklin's autobiography. Is that…?
H. Tilley: I saw that one. That was funny. I thought you'd get a kick out of that one.
J. Les (Chair): Is that a major tome?
H. Tilley: I don't know. I didn't look it up.
J. Les (Chair): Is it a weekend's reading or what?
H. Tilley: I'm not sure. It came from one of the retail shops.
J. Les (Chair): Thank you very much, Heather, for coming today.
Our next presentation is from the Canadian Centre for Policy Alternatives, and presenting again this year is Iglika Ivanova.
I. Ivanova: We're distributing some material. I prepared some bullet-point summaries of what you are about to hear that you can use to follow along as I speak.
Good afternoon, and thank you, Mr. Chair and committee members, for this opportunity to once again appear before this committee and present our views and recommendations for the 2011 B.C. budget.
The Canadian Centre for Policy Alternatives believes that the provincial government's top priority for the 2011 budget should be to improve the quality of life of all British Columbians by building a more just and sustainable economy. This means ensuring that as the economy recovers from this recession, prosperity is shared by all. It also means tackling pressing social problems and stepping up to address the key issues of our time: climate change and growing inequality.
The B.C. economy has just been through its deepest recession in 30 years. Despite significant improvements over the first six months of 2010, we have not yet returned to pre-recession levels of employment or output. Our economic fundamentals are weak, and leading private sector forecasters are now lowering their growth forecasts for 2010 and 2011.
Perhaps the most serious downside risk for the B.C. and Canadian economy over the next year lies in the weakness of the household sector. Record high household debt levels in the face of interest rate hikes, a weakening housing market and relatively high unemployment rates will restrain consumer spending levels in the near future. Employment is the main source of income for the majority of B.C. families, but a quick look at the B.C. labour market reveals high unemployment and a notable shift from full-time to part-time work, which hardly bodes well for household incomes in the near term.
While total employment in B.C. is nearly back to pre-recession levels, the unemployment rate remains high, at 7.3 percent in August, and is projected to average 7.6 percent in 2010 and stay well above 7 percent in 2011 — a far cry from the pre-recession low of 4.2 percent in 2007. Above and beyond high unemployment rates, household incomes are threatened by a notable shift from full-time to part-time work. Statistics Canada data shows that part-time employment has been replacing full-time employment in B.C. for the last two years and now accounts for almost a quarter of all jobs in this province.
In this labour market poverty and economic insecurity remain real threats for many families: 60 percent of Canadians are one paycheque away from financial trouble, according to a new survey from the Canadian Payroll Association released last week. Given the high mortgages that many British Columbians carry, this number is likely to be even larger in B.C. Without a real increase in household incomes, consumer spending will no longer be able to drive the type of strong economic growth that we experienced in the mid-2000s.
The slowing global recovery and the high Canadian dollar are bad news for our exporters. In the context of a slow global recovery, with both domestic demand and global demand for our exports losing steam, the CCPA recommends an economic strategy for B.C. that invests in our greatest resource of all, our people, and that takes bold steps to support the greener economy for our province.
Well-funded, high-quality public services and social programs benefit all British Columbians and contribute to greater equality of opportunity among families with very different incomes. Providing access to high-quality education for all children, opportunities for adults to upgrade their education or retrain later in life, affordable child care and subsidized social housing are only a few examples.
A made-in-B.C. rural development strategy is needed to diversify the narrow resource base of our rural economy. Investments in value-added processing, in research and development and in sustainable infrastructure will bring improvements in productivity and set B.C. up to become a leader in the green economy of the future.
By now you must be thinking: can B.C. afford such a bold public investment strategy? A quick look at the B.C. fiscal situation demonstrates that we are well-positioned to make these investments. We ended the 2009-2010 fiscal year with a deficit, but this deficit was $1 billion less than projected in that year's budget.
Moreover, the Minister of Finance has just announced $2.7 billion extra windfall revenues over the next three years that were not anticipated in the 2010 budget. Provincial debt levels remain affordable and are among the lowest in Canada. The B.C. government has
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obviously got considerable fiscal room to invest in a just and sustainable future for all B.C. families.
In light of that, the CCPA recommends the following budget priorities for 2011. First, we think that you should invest the recently announced revenue windfall in a comprehensive poverty reduction plan. Polling shows that the majority of British Columbians support such a plan.
Combatting poverty is the perfect investment during what is likely to be a slow recovery. It will provide an immediate boost to the provincial economy, and it will produce considerable savings for the province over the long run. I say "savings" because we all pay for our high rates of poverty and homelessness.
A study published in late 2008 by the Ontario Association of Food Banks calculated that the cost of poverty in Ontario to society at large is between $32 billion and $38 billion, or about 6 percent of Ontario's GDP. These costs come in higher costs to the criminal justice system, in lost productivity and lower school success and particularly in terms of higher health costs.
Six percent of B.C.'s GDP is almost $12 billion. If the cost of poverty in B.C. is in the same ballpark, it would be considerably greater than the investment required to dramatically reduce poverty and homelessness.
Spending priorities on this front include increasing income assistance rates to meet actual costs of living in this province and indexing them to inflation. The province should also invest in creating about 2,000 new social housing units annually, a rate that will meet the needs of the population.
The CCPA strongly discourages using the windfall revenues to offer personal income tax cuts, as this will squander the opportunity to boost the economy while addressing B.C.'s major social problems. Tax cuts will not build affordable housing, create new child care spaces, improve access to post-secondary education for low-income youth or reduce our greenhouse gas emissions. It's strategic public investment that will do all these things.
Secondly, the government should fund an expansion of community-based prevention, seniors care and mental health initiatives. Adequately funded, these services have the potential to greatly improve the health and well-being of British Columbians while taking the pressure off the most expensive part of our health care system — emergency rooms in hospitals — and generating savings for the province over the long run.
Budget 2011 can further improve public health care by providing dedicated funds to scale up successful pockets of innovation within the public system, of which there are many.
Thirdly, we recommend that Budget 2011 invest in green infrastructure and green jobs. As stimulus-funded major infrastructure projects come to a close, capital investment should turn to greening B.C.'s physical infrastructure instead of providing subsidies to the oil and gas industry that directly contradict B.C.'s climate action plan. The government should focus on rebuilding B.C.'s physical infrastructure to be more sustainable, invest in a massive expansion of public transit, and support research and development into new green technologies.
Budget 2011 should also restore gaming grant funds to the arts and to social service providers that were cut as an austerity measure during the recession. This will represent a minimal increase in the $40 billion provincial budget, but it will have tremendous benefits for communities, families and service agencies.
If we are to build a more just and compassionate society and make B.C. truly the best place on earth for all its citizens, additional revenues will be required above and beyond the recently announced windfall revenues. We need to have an honest discussion about taxation and corporate subsidies in this province.
The CCPA recommends establishing a fair tax commission to objectively assess the B.C. taxation system. The commission would make recommendations for meeting provincial revenue needs in an equitable way that is consistent with our economic development and climate action goals.
All taxes and natural resource royalty programs should be on the table. The fair tax commission should look at how much of the taxation revenue comes from personal versus corporate taxes and how these taxes should be divided between income, consumption and other forms of taxation.
In the interim, while the fair tax commission is deliberating, our recommendation is to rely on temporary deficit financing. The rate of return on that repayment is the savings in the interest payment on that debt. It's currently between 4 and 4½ percent.
The strategic public investments we recommend in this submission will generate higher rates of return over the long run and therefore represent better investments for the province. Given the current low interest rates, we are at an ideal time to borrow in order to invest in a more just and a healthier province.
This concludes my remarks. I'll be happy to answer any questions.
J. Les (Chair): Thank you, Iglika.
B. Ralston: Well, you and the B.C. Chamber of Commerce seem to agree on one thing — that now is not the time for tax cuts. Mr. Winter, on their behalf, said that their view was that we should use any surplus revenue to return to a balanced budget as soon as possible and use 50 percent of any surplus in the future to pay down debt.
Obviously, from what you've said, you disagree with that. Can you explain why?
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I. Ivanova: Yes, I do disagree with that, and I believe the CCPA will back me up on this. Essentially, it's what I said last. It's that there is a rate of return on paying back the debt, and it is the interest rate you have to pay on it. It is currently…. According to the first quarterly report released yesterday, interest rates on long-term borrowing are 4½ percent and expected to stay around that.
On the other side, you have investments that you could be making with this money, and you have to look at what rate of return you expect on these investments. I would argue that investments in poverty reduction, education and green jobs will bring you higher rates of return than the 4½ percent you will earn on the debt.
That is why we don't believe that you should be putting the money into debt at this stage. You should be putting it instead into improving quality of life for British Columbians.
J. Rustad: Thank you very much for your presentation. One of the things you mentioned in your presentation was subsidies to oil and gas and how you feel those should stop.
The oil and gas sector, particularly shale gas, which is what the tax royalty regime is designed for…. It's lower at the beginning to allow for the recovery of costs and then higher at the back end of production for these wells that produce for 30 to 50 years.
What we saw in Alberta when the royalties changed was a 30 percent drop in exploration, and then those dollars moved primarily to British Columbia. Alberta is now in a situation where they're changing their tax regime to match what we are doing, because they need to be able to attract back that investment.
The oil and gas sector is part of $2 billion in revenue that comes to the province, $530 million directly from natural gas. If we were to change the subsidies, as you suggest, and see that loss in investment, that would mean a significant drop-off in resource revenues for us. How would you suggest replacing those revenues in terms of how we would meet our budgetary needs for the future?
I. Ivanova: First of all, I'm not sure that there would be as much of a drop-off if we eliminated some of the subsidies. Because oil prices are increasing, we will need this natural gas. We're running out of resources. So the point that someone will want to explore these natural resources doesn't mean that we have to sell ourselves to the lowest bidder immediately.
Natural resource revenues — let me see if I remember correctly — are about, maybe, $2 billion a year. We will not lose all of them if we eliminate some subsidies. It's easy to raise other taxes or to look at other sort of longer-term investments.
D. McRae: You talked in your presentation about a debt-to-GDP ratio, and right now I think we're, in 2010-11, at about 17 percent. In the early 2000s we were at the mid-20 percent. If you're advocating we actually dedicate more dollars towards either not paying down debt or having debt because interest rates are low, is there sort of a debt-to-GDP ratio that you would say would be acceptable for the Canadian Centre for Policy Alternatives?
I. Ivanova: We haven't really looked at a target number. Obviously, you cannot grow the debt forever. There are certain limits that you should respect. It does depend on the interest rate.
I mean, in the '90s there were very high interest rates. That's why debt was considered a problem in most of Canada. Right now we have low interest rates. Seventeen percent is pretty low, I would say. Look at what the average is in Canada. Maybe something just below the average would be acceptable.
M. Mungall: Thanks very much, again, for another annual presentation. Just kind of following up on what Bruce was talking about and what you've been talking about around debt management and return on investment, so to speak. Say if we're paying 4 percent interest on debt and if we take money and put it into social services — let's use housing as an example — we might actually see a better return than that 4 percent.
Just because I can pull this number out of the top of my head — and it's based on government research, actually — that's a 33 percent cost savings if we actually start building social housing and putting people who are homeless into social housing. It's a 33 percent cost savings to the entire government system when we look at health care, social assistance and judicial services. So there's a really good example of how we have a cost savings that actually exceeds what we would be paying in debt.
Do you have any other examples of that nature? And because we don't have a lot of time, if you do, if you could include that in your written submission.
I. Ivanova: Yes, we will absolutely include them in the written submission.
The other one I can think of, off the top of my head, is what I mentioned — looking at this Cost of Poverty report from Ontario that had a very high profile advisory board on it, including Don Drummond, the former chief economist of TD Bank. He was backing that up and really wanted to promote this idea that it's not just the poor that pay for poverty. It's the whole society, and it's government as well.
Because we don't recognize these costs formally, we have tended to underinvest in poverty reduction in this country. This report was his attempt to try to quantify the costs. At the CCPA we are doing something similar for B.C., which will be forthcoming in the near future.
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J. Les (Chair): Thank you very much, Iglika.
Our next presenters are from the B.C. Association for Community Living, and representing that organization are Annette Delaplace, Leila Rahemtulla and Tim Stainton.
A. Delaplace: Good afternoon, and thank you for the opportunity to present to you today. My name is Annette Delaplace, and I am the president of the B.C. Association for Community Living. I'm here today with two other board members: Leila Rahemtulla, our vice-president, and Tim Stainton. We are all parents of children who live with developmental disabilities.
The B.C. Association for Community Living is a provincial non-profit federation that includes thousands of individuals, families, volunteers and over 70 community-based agencies dedicated to making sure that people with developmental disabilities are able to enjoy their right to lead active and productive lives in their communities.
As you will see in our submission, we are here today to voice our concerns regarding inadequate funding and to share our stories and the stories of other families, which represent the ever-growing number of children and youth with special needs and individuals with developmental disabilities that are waiting for services.
L. Rahemtulla: As Annette said, my name is Leila Rahemtulla, and I am a parent of a 21-year-old and a 19-year-old. My son, who's 21, is living with Down syndrome.
First of all, I'd like to acknowledge all of you, and the committee, for this important process — it is a really great way for us to be able to have our voice be heard, and we really do appreciate this process — and also for inviting us to be a voice for people and families who are impacted by developmental disabilities.
I wanted to speak a little bit about our appreciation of the recognition in the past of looking at wait-lists and the past commitments that were made in trying to address them. It seems that as we've gone through the years, we haven't actually addressed the wait-list need. In fact, I think we're on the upward swing again, and they're starting to grow again.
A concern that I have about this is that for every individual on the wait-list, the past practice has been that we'll try to have at least every individual have one service. This should really only be viewed as a first step. If you're providing a person with one service, that may not be what they need or what that family needs.
Even if an individual is off a wait-list, we can't assume that this person's needs are being met. And if we look at the numbers who are no longer on the wait-list, I think we're distorting the data. We're distorting the need that's out there. So we really need to be mindful of that.
I've met countless families who are transitioning their children from the Ministry of Children and Family Development into adult services, and they're extremely fearful. They're fearful for the supports that are going to be there. They're fearful for their jobs, of losing their homes, of losing their children to care because they just don't have confidence that the supports will be in place for them as they go through transition in their lives.
I think it's important for us to look at what Canada, with the support of all the provinces, ratified in the UN convention on the rights of persons with disabilities. That happened in March of this year. Honouring human rights doesn't imply providing one support. This should not be the benchmark of having addressed the need. We need to look at article 19 of that convention, which guarantees the right of people with disabilities to live independently in the community with the support they need to do so.
So what does that mean? I believe that means that children with special needs be successfully included within their home schools. I think it means aging parents and family members can ask for help without guilt or shame or fear of losing their family member to government care, which is what we witnessed in Quebec, with the tragedy of two brothers who lost their lives, one being disabled. He died because his brother died. He died in the home. It was a very tragic event. It happened because this young fellow, who was the caregiver for his brother, was too afraid to ask for support because he was afraid he would lose his brother to government care.
It also means that adults with developmental disabilities have support in education and employment. My son is developmentally three. He's just learning how to read and write. He does not have access to a program that can help him do that, and I know that that's his freedom. If he can do that, if he can learn to communicate with people, he has access to community and to a life. But there's nothing for him.
For many people, providing these opportunities is a springboard for them to find meaningful work, gaining independence and achieving their potential as citizens.
I appreciate that these are tough times and that many people will be coming forward, hat in hand. Ours is to ask to provide supports that honour the human rights of the individuals and families that we're representing. We can't forget that they are a very vulnerable population. There are so many people and so many families who don't have a voice. They're not even aware of this process or able to come here, because they can't get support for their children to be here presenting today.
It's our role at BCACL to speak on their behalf and to ensure that their voice is heard and that the budgets are balanced not on the backs of one of our most vulnerable populations, but that we're doing the right thing as British Columbians.
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T. Stainton: Again, thanks for the opportunity to speak with you today. I'm going to talk a little bit about education, and I'm sure you're probably hearing a lot about education in the course of your travels.
The cuts in education, the strain that a lot of the school boards are under, are pretty well known, I think, at this point. What may be less known is that often the first victims of any squeeze are children with special needs. I'd just like to read to you briefly from an article that appeared in the Province on the 13th of this month about a young man, Christopher Diaz.
"…was looking forward to taking classes in Spanish and physical education in the regular curriculum but came home disappointed last week, when he was not allowed to participate because the classes were full and priority was given to mainstream students. They're putting him aside in the basement. He's being isolated from the other kids. He's not interacting with the…mainstream students, which I think is very important for the development of my child."
That story is fairly typical of the things we're hearing.
My own son, who is ten…. In the first week of school his educational assistant was ill. Most school boards aren't filling in those positions when aides are ill. In many cases that means that's a lost day of school or a half-day of school. In our case it was a half-day of school for our son. But we hear stories like that at the association from our advocacy lines over and over again.
For many families, that means that they're looking to private schooling. You hear a lot of calls for private schooling around disability. For many of those parents, that's not because they don't want their kids in our schools and integrated into our schools, but they've lost faith, and they're desperate.
They know that there's a very short window for kids to get educated. If the developmental window closes, they're going to be dependent on the state for the rest of their lives.
The economics of it, from a long-term perspective, aren't particularly good. I think, as Christopher's story says, the social implications not just for the Christophers and my son but for the other children are that they're not learning what a diverse community looks like if what they're seeing is: "Oh, those kids go to the basement."
I think the other economic argument here is that many, many parents, ours included…. Families often have to choose one parent who won't work, or who won't work full-time, because they know that there are going to be days when their kids aren't able to be in school, where they're not supported. I would say a very high percentage….
Certainly, there is research on this, on families with kids with disabilities. One of them does choose to stay at home because they don't have any other choice. That's lost tax revenue to the state. It's lost development for that family. Again, it's a short-term gain for long-term pain from an economic point of view.
We have in our brief a number of recommendations around education. As Leila had mentioned, the issue around transition for kids moving out of school is a critical one and needs to have specific funding to make sure school boards do that. At the moment there's a very good program and plan in place, but that's not being backed up with funding. So on the ground, it's not happening for those kids.
Obviously, in our view, there needs to be a significant increase to funding specifically for children with special needs in the schools. We know that school boards are actually subsidizing the funding that they're getting for special needs. In the words of one administrator: "We pretty well have to double the funding we get for special needs in order to actually meet their needs in our schools."
Lastly, on a long-term basis, I think at the post-secondary education level our teachers are still not being trained to be inclusive teachers. There isn't the funding for the education in the universities that train our teachers to provide that. Those are our three specific recommendations.
I'd just like to close my little section again with a reference to the convention on the rights of persons with disabilities. Article 24 explicitly says that all students have a right to access inclusive, quality and free primary education and secondary education on an equal basis with others in the communities in which they live.
The squeeze in funding that, as I say, I feel is being felt much harder by families of people with special needs is moving us away from that goal. Certainly, if the current trends continue — after a long period of, I think, making a lot of progress in this area — we're looking at a situation where we're going to lose that progress. If those kids don't get the proper education now, they're going to go into the adult system and they're going to have a lifelong dependency on the state.
A. Delaplace: I'd just like to spend a moment talking about supports and services for children and youth with special needs outside of the education program. These services would include infant development programs, supported child development programs, respite and the At Home program. There are currently thousands of children and youth on wait-lists for these services.
I don't know if I can really explain to you how important the services our family has received have been to our family and to our daughter. We've been very fortunate as a family to have received services, and we feel that part of receiving those services is a responsibility to come and discuss those services with you, to let you know that when they are in place and when they are well-funded they work so very, very well for our children.
The information we received through those services, the skills we learned, the understanding we developed, created a foundation — or a framework, if you will — for
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our daughter's life. The access to physiotherapy, vision consultants and nursing were invaluable in ensuring her health and well-being. We have been lucky enough to receive those services, and I am grateful for that. But I can only imagine what others must go through without the supports that they need.
In the last few months I have been hearing more and more stories of families who are in crisis, mothers whose only option was to put their children into foster care to get the supports they needed and countless parents who have had to quit their jobs because their child can't get the support he or she needs.
The 2009-10, 2011-12 budget included an investment of $38 million for children and youth with special needs. So $11 million was allocated for the 2009-10 year, $13 million for the next year and $14 million for the year after that. While this investment was very much appreciated, it was not enough to address the number of children and youth waiting for service.
In 2010 we asked for immediate further investment of $19 million to address the needs of children and youth with special needs and their families on these wait-lists and wait-lists for urgent therapy services, infant development programs, supported childhood programs and respite care. We did not see that increase, and we are seeing children waiting for these programs who are aging out before they get any access at all.
The families that we are talking about today…. Their situations, their children's situations are complex and dynamic, and they need well-funded and appropriate supports that are delivered in a timely manner.
What is so important for you to know is that when these supports are in place, they do work very well. When supports are timely, it takes a system of supports from being a system that is funding crisis — and there isn't anything more costly than crisis — into a system that is sustainable and one that has enormous lifelong impact for our children and that ensures stability for our families.
We have known for a long time that investments made early in a child's life make good economic sense. Today, however, we not only have an economic responsibility, but we also have a legal obligation. The preamble to the U.N. convention on the rights of persons with disabilities states that the family "is the natural and fundamental group unit of society and is entitled to protection by society and the state, and that persons with disabilities and their family members should receive the necessary protection and assistance to enable families to contribute towards a full and equal enjoyment of the rights of persons with disabilities."
In the last provincial budget new investments required to protect the rights and dignity of children and youth with special needs, adults with developmental disabilities, and their families were not seen. We need your help today to push our province back on track. As a civil society, we have a legal, moral and financial responsibility to invest in the future of people with developmental disabilities in B.C.
Investments today in disability supports, employment, income security and education will save millions of dollars in future crisis intervention costs. Keeping children and youth with special needs, adults with developmental disabilities and their families strong and supported has real economic benefits in terms of health, independence and inclusion.
In closing, I would like to thank you all once again for giving us the opportunity to present to you today. We believe that the best system of support is the system that is responsive and is open to the input of the citizens who require its services. Families, individuals with developmental disabilities and the many incredible people who work with us look forward to working with you to make this vision a reality. Thank you very much, and we'd be pleased to answer any questions.
J. Les (Chair): Thank you very much. I have time for only one question.
B. Ralston: You talked about the recommendation that was made — at the bottom of page 3 — in November of 2008 by the committee. I think you've covered that. I gather that you would like or were suggesting that that recommendation come forward before.
But the one that I did want to ask you to address and perhaps explain the rationale for is on top of page 8: "We previously recommended that the government consider changing the earnings exemption rule and provide increasing support for shelter for our most vulnerable citizens, income assistance recipients and people with disabilities." You go on, and there's some rationale for that. Can you explain why you think that's important to suggest that the committee recommend again?
T. Stainton: I think B.C. has traditionally been one of the higher rates, in terms of income assistance. We're now, I think, third in the country. Even at our maximum rate, we're still looking at people being significantly below the low-income cutoff, the unofficial poverty line of the country. So the basic rates, while generous in comparison to some provinces, are still meaning that what we're doing is allowing people to live in a lesser level of poverty, but still in poverty. That's the basic argument.
The asset limit is a deterrent to people to actually…. Many of our folks with developmental disabilities are now looking to try to develop for themselves some asset base. I know that the province has exempted the RDSP funding in future from the asset limits. But that is a barrier to people actually making their own gains in their life, and the limit is relatively low.
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The earnings exemption rate. Again, a lot of our people episodically engage in the workforce, so they're often in a position of turning down work because of that limit. They may not be able to work every month at that level, but they're not able to make those strides into more regular engagement with the workforce because of those limits.
The arguments are varied, depending on the item, but we think the significant changes, rather than simply increasing the benefit level, would actually encourage people and support people to move off benefits through some of these small structural changes to the benefits.
J. Les (Chair): Thank you very much for coming this afternoon. We appreciated your presentation.
The next presentation, on behalf of the Truck Loggers Association, is Dave Lewis.
D. Lewis: Thank you very much. This is becoming an annual event.
Once again we always appreciate the opportunity to come and present to the Select Standing Committee on Finance. I'm the executive director of the Truck Loggers Association. I know many of you through our work with government.
For those of you that aren't familiar with the Truck Loggers, we represent independent business working in the coastal forest industry. Our membership includes every type of participant from each sector — manufacturing and harvesting. We represent everyone from an individual that walks around in the bush to a pulp mill and everything in between. Our 450 members employ roughly 8,000 people in coastal B.C.
The independent business sector accounts for the majority of investment and employment in coastal communities. It's responsible for approximately 70 percent of the entire coastal forest economy. The average size of our business may not be as large as a major licensee, but in total, when you figure out their contribution, we actually make up a significantly larger contribution to our coastal economy.
It sort of irks us a little bit when the licensees are considered the industry. We know collectively that it's the small business people that make up the industry. This imbalance extends to employment, government revenues and annual investment in terms of capital.
I think that it's incumbent upon us as presenters, when we're invited to this forum, that we acknowledge that our current problems have arisen largely because of a shortfall in revenues, not often an overexuberance in spending. I think that we really need to focus a little bit, in terms of our comments, on how to expand the revenue side rather than simply asking for more costs.
While everyone who comes before you has very valid and heartfelt reasons for being here, I hope that you look at our presentation as some solutions to providing more revenues to help support some of those asks.
I'm going to divide my comments into two separate discussions. The first one will deal with improving our current revenue situation, and the second one will be planning for the future, or the recovery of the forest industry.
I'll start by saying we feel that the current government has taken a variety of meaningful steps to assist the forest industry in this recent crisis we've faced. The first has been the introduction of the HST.
Without getting into any of the personal issues about notification and all that sort of stuff, given the softwood lumber agreement, there's really little that any government can do with regards to assistance to our industry. This was probably one of the most if not the most significant action that they could take to help our industry. We are a global competitor. We export 95 percent of our product, and as such, this is a huge aid to our industry as we struggle to be competitive. So that's been a major help.
In terms of developing foreign markets, part of the reason we're in the crisis we are is our past reliance on the United States. With the housing crisis that went on there, all of the work that's been done over the past decade to try and develop markets overseas and look at product lines is starting to pay some dividends. I'll talk a bit later about the consequence of that, but that's been fantastic work.
Recently there's been some reorganization within the ministry in forests. To funnel back down to the bureaucrats, we've really found a difference, a shift in attitude. We find that now it's acceptable for some of the bureaucrats, especially within an organization like BCTS, to be supportive of what industry is doing and to try and work collaboratively to be efficient and to create revenue. I think that's a win-win for everyone. Inefficiencies are bad for everyone. So that's been very positive as well.
Some of the suggestions that I might make to improve revenues right now to the Crown. Within the BCTS auction system, they collect revenues for the Crown. They're responsible for about 20 percent of the total Crown timber harvest. The two main objectives of BCTS are to maximize the benefit to the people of B.C. and to provide accurate data that's used to set stumpage rates for the remaining 80 percent.
We don't feel that BCTS operates purely in a market-based manner, which it's supposed to, and it therefore cannot provide accurate pricing signals for the majority of B.C.'s timber. A simple example would be the rate of interest that's charged by revenue branch on unpaid stumpage accounts. Now, I believe this is a blanket rate charged for anyone across the province. However, different industries have different risk profiles.
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I think if you were to look at your average logging contractor, with $10,000 down they bid a sale. They may have no assets. They can go in and log the sale. They may not pay their subcontractors; they may not pay their stumpage account. They may have bid excessively high, which is why they don't pay for it.
At the end of the day, they're charged prime plus 3 on unsecured credit. I don't know a single bank out there right now that will lend to a logging company for unsecured credit at prime plus 3. Now what that does is it creates a tremendous imbalance for those other people outside of that process, and that's setting the market rate for those other companies that are trying to operate outside of that.
It basically displaces an advantage that well-capitalized, well-run businesses have when they bid because it allows a less capitalized, sometimes nefarious person to bid in alongside them because they have cheap access to capital which they would not have otherwise in a market-based system.
We feel some components of their structure encourage speculative bidding by those, as I mentioned, with little ability to pay their full stumpage when markets stall or fall. What this does on the 20 percent of timber is it gives this illusion of high bids and high prices. However, when that high price is then translated over to the remainder of the operators on the 80 percent, it makes a lot of that timber uneconomic, because it's really not a realistic bid because the conditions aren't the same.
What happens is that the timber often isn't harvested. There's a high bid. A portion of it is taken — the best timber. The rest is left behind. B.C. Timber Sales has spent a tremendous amount of time and money on developing timber, developing roads. They have millions of dollars tied up, and the sale never gets finished.
While they've received an extremely high bid per cubic metre, the cubic metres aren't harvested, so the actual revenue that's returned is less. Then, that translates into the 80 percent because the bid was too high, and it impacts them as well. We really need to look at some of this.
My recommendation is that we have greater restrictions, controls and limitations on the bidders who are entrusted with the harvesting of Crown timber. And just so we're clear, these are my members. They are typically my member profile that bids into this. So this is a case of us trying to find the best path forward for the entire industry. Largely, the 80 percent of the timber is held by major licensees. It's not held by our guys. So we're trying to get our house in order in terms of an industry.
My formal recommendation would be that…. After submitting two detailed papers, in 2009 and 2010, we've recently been informed that government will be looking into a review of BCTS to examine some of these issues. I'd like your committee to acknowledge its support for such a review in order to help increase the revenue to the Crown and improve the accuracy of the data that's being collected.
The second thing that I think we need to look at is expanding the ability to export logs that have been manufactured for foreign markets. Last year we harvested less than 60 percent of our sustainable harvest levels. That has a huge impact on Crown revenues.
Crown revenues within the last few years were up as high as $1.3 billion. Last year MOFR — Ministry of Forests and Range — and BCTS combined lost $380 million — a $1.6 billion shift. And we're not harvesting 40 percent of our timber. So when all these other presenters come up and ask for spending, there's a big hole right there in my mind.
I think there's a bit of an urban myth that continues to be held as truth by many — that exporting logs is exporting jobs. For instance, on our north coast there is an abundance of timber that could be exported to buyers overseas who would pay prices to justify the harvest of that timber. However, there aren't any domestic processors that are willing to pay enough to justify that harvest.
The end result is that you have nothing happen if we block those exports. To me, it just seems silly, because the timber's not going anywhere if we don't export it. It's not creating any jobs here. We're actually losing jobs because we're not getting the timber-harvesting jobs, we're not getting the transportation jobs, and we're not getting any of the rent that comes from that.
I think that the government has already taken some steps to facilitate the harvest of timber in these regions, but I think we should look at expanding some of those options, alternatives and opportunities. We've engaged with the newly created competitiveness and innovation division within the ministry to bring about some of these changes.
Some progress has been made, but we'd like to see a little bit more of that and an expansion of that. Once again, we think that will help drive revenues for the province. We'd very much like this committee to acknowledge their support for further efforts to raise Crown revenues by changing some of the current restrictive and unproductive regulations governing the export of timber.
My final focus will be on planning for the recovery. There's a saying that the surest way to starve is to only worry about your next meal. I think that the thoughtful and successful policy-maker won't focus all their attention on a current crisis. They'll sort of look ahead and say: "Okay, how are we going to deal with things when they do turn around?"
I don't see product demand as being our limiting factor in the future. Both federal and provincial governments place a strong focus on market diversification and development, as I said earlier. I think our ability to provide the raw materials to manufacturing plants is going
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to be the weak link in the chain. Two major issues that I see facing us in this regard are our diminishing supply chain capacity and the lack of investment in our commercial forests.
In terms of supply chain capacity it's basically been devastated over the last few years. These typically are the people I represent. We have trouble attracting capital. More to the point, most of the people who run these businesses are in their late 50s or early 60s, and they're not looking to invest again. They don't have their sons or daughters working in the business, for the most part, and they don't have people with capacity to take over. They don't have exit plans or exit strategies.
When you look at the labour force, as well, the average age of the forest worker is over 50. That doesn't bode well for down the road, and we're not seeing a large amount of people looking to come into the industry.
In terms of equipment and parts, we're not seeing research and development. We're not seeing innovation. We're not seeing supplies. Companies are focusing their efforts somewhere else. A lot of the equipment that we have is being exported to New Zealand, where they're doing well. We're really going to face a crunch when the time turns around and we're expected to just turn the tap on and have all this timber delivered to our manufacturing plants, because it's not going to be there.
I think what will happen is that we're going to fight over these limited resources in the future. It's going to increase our production costs to solve these challenges. It's going to make us less cost-competitive. I think that if there's any sort of gap once this turns around, the demand we've created is going to get filled by other jurisdictions. I think that's going to leave us having invested a lot of money for nothing.
I think we really need to turn our heads to this notion that the supply chain capacity is also important in terms of our revenues in the future. What I'd request is that your committee acknowledge its support for the resources that continue to be allocated towards developing markets overseas — I think that's really useful stuff — but also look at ensuring that our supply chain is considered within that study and ensure that it's capable of meeting demands in the future.
Before I came up, I found this in my bag. It's a five-hour energy drink, and it's sort of a little like an investment, I think. It costs a little bit up front. It's often a bit unpalatable. I think it says on the label somewhere that depending on the severity of the future consequences, it might be worth every penny of it. I imagine that with your schedules, some of you would kill for one of these right now.
That turns my mind to investing in our future forests. If we're going to continue to increase our level of service in areas such as health care and education and social services, I think it's essential that we enhance our current sources of revenue. In B.C. 93 percent of our timber is owned by the Crown, but on Vancouver Island 22 percent of our timber harvest comes from private lands.
I think it's essential that we preserve the ability of these lands to contribute to our financial well-being, and to do that, we have to have constant investment. We're presently not seeing that.
In terms of Crown land, I think the question that has to be asked is: at what point and under what conditions would the Crown be prepared to invest in its own lands? Current economic conditions have ensured that the Crown has little money or appetite in doing this.
The other option would be to have those who have short-term licences invest money in them. That would be the licensees. However, they're also in dire financial straits. Also, the truth is that there's simply not enough trust that they're going to reap the benefits of that investment because of what we've done with takebacks and access to timber.
So that means that there's going to have to be some form of Crown incentive, subsidy or contribution in terms of upfront money or monetary commitment if they hope to get corporate interest to invest. I think we're going to have to create some differential circumstances to entice a corporate entity to invest in government-owned lands or else the Crown will have to take that on themselves.
I think there are four major areas where government impacts investment: how they regulate the investment in terms of environmental and operational challenges, how government taxes the investment, how government restricts trade and product choices, and how government impacts or guarantees a certainty of the investment.
The bottom line is that landowners can't expect a tenant to invest on their behalf, at least not with the current level of uncertainty we have. I think there's a lot of great work that can be done around that, and will come.
In terms of private commercial forest lands….
J. Les (Chair): You're going to have to wrap it up, Dave.
D. Lewis: Okay. I've got half a page.
I think the question is: at what point and under what conditions would existing private land owners be prepared to invest? Private forest land requires no designation. It doesn't require public or First Nations approval. I suggest that it will be easier to accomplish this goal than attracting investment into Crown tenures. I think a concerted effort could be made on the private land front.
My recommendation would be that this committee acknowledge their support for an initiative to be undertaken that seeks to understand what it would take to incent investment in both Crown and private commercial forest lands in B.C.
Thanks. Sorry for running late.
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J. Les (Chair): Thanks, Dave. That's all right. Unfortunately, I don't have any time for questions. We are running pretty tight for time. I will note for committee members that Dave has helpfully included his business card with his e-mail address, so people should feel free to send him all the questions they might have via e-mail.
D. Lewis: Absolutely.
J. Les (Chair): The next presenter, from the Smart Tax Alliance, is Craig Williams.
C. Williams: Thank you for this opportunity. My name is Craig Williams. I'm the vice-president of the Canadian Manufacturers and Exporters, B.C. division. Just as background, CME is the largest industrial trade organization in the country, representing about 20 percent of Canada's GDP — $600 billion a year in shipments, about two million jobs in the manufacturing sector. Eighty percent of those employees are in small and medium-sized enterprises, even though we do represent the large guys as well.
I'm here as a member of the Smart Tax Alliance. The Smart Tax Alliance is a non-partisan alliance of 30 B.C. business and industry groups formed to support the job-creating benefits of the HST. A complete list of the Smart Tax Alliance is in your formal submission that will be sent out.
We support the HST and what it's going to accomplish for our industries, for investment in long-term growth. The CME in particular has been an advocate of HST here in British Columbia for well over ten years and has been part and parcel with what's been happening across the country on HST. We think this is the most significant tax call that's happened in decades. We'd be very concerned if something happened to that, in terms of its impact on B.C.'s competitiveness, especially with Ontario moving that way.
The alliance represents a wide cross-section of industries, employing over 800,000 people, which is almost half of the private sector employment in the province. Our alliance includes everyone from forestry and mining, retail and construction to groups like ours who represent B.C.'s large and small manufacturers and exporters.
Why do we support this, the HST? Businesses in B.C. need certainty around harmonization. We welcome the certainty the referendum will provide next fall. It's going to provide for some open dialogue as opposed to what's transpired this fall, or recently. With a year until the vote, my hope is we'll get all the political churn out of this and talk about the facts and the impact on the province and the citizens of B.C. The upcoming referendum is a great opportunity for us to discover the real facts.
We've already seen a positive impact of HST on the film industry. We also think that we're seeing this trickle-down effect into our manufacturing sector, and investments are being made now into facilities. Lowering the cost of doing business in British Columbia is important for long-term investment by business and job creation. Many economists have spoken to this, but I'm an engineer, so I don't understand most of that. At the end of the day, it's jobs and reinvestment in the company.
Simply put, HST is critical. It's good for jobs. We've already talked to our members. We're expected to create over 100,000 jobs in B.C. in the next ten years, $10 billion in investment. Healthier business and more working British Columbians translates into a wider and stronger tax base that supports the highly valued social services we have in this province.
This is not just a Vancouver-centric issue. In manufacturing, for example, half of the manufacturing jobs are in Metro Vancouver. The other half are around the rest of the province. We'll be getting that message out over the next little while about how important it is to job security and job growth.
In the construction industry we expect to see about $880 million in savings; $210 million for transportation; about $140 million for forestry; about $80 million for mining, oil and gas. That's the annual savings in operations. Manufacturing expects to see $140 million in production costs. That means we'll be more competitive globally in our export business, and that's very, very important. That's the dollars that flow into this province in exports, where it really counts as opposed to internal churn.
It will allow B.C. people to save on transportation, capital costs, power costs and new investments. There's quite a well-developed correlation between productivity and the standard of living in a jurisdiction like British Columbia or anywhere in the developed world. B.C. is lagging and falling behind Canada in productivity, and Canada has fallen behind the United States. The HST is a very important measure to start addressing that productivity issue.
We have member companies who are 100 employees, 80 employees, and they see opportunities to save between $50,000 and $100,000 a year. That means they can either invest in new products, or they can hire new salesmen, or they can go further afield and be more competitive. It means they can grow their business and hire people. That's important to making our businesses more competitive here.
Eliminating the HST. Despite the long-term benefits of the HST, consumers are challenging the very existence of the tax. I guess that's not a…. It's like in California. You ask somebody if they want a new tax, and they say no. The reality is that it would be a big mistake to reverse the HST. Businesses have already committed time. Their systems have changed over. To retroactively change that would be a huge cost, besides the government costs and
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waste. These tax savings are already being worked into their investment plans for the future.
Eliminate the HST and the public debt or other taxes would have to increase for our services. Something's got to go. The $1.6 billion will be going back to Ottawa.
In conclusion, the HST will make B.C. a much more competitive jurisdiction in Canada for investment dollars and create jobs in the province over the long term. We have no doubt about that. It's been proven out in the other jurisdictions across this country in which we've been involved.
Sales tax harmonization is critical to strengthen the provincial economy, especially as we come out of this recovery. It's not just a Vancouver issue; it's across the province. We think it will help secure jobs, and it's also something that…. For people with their paycheques in small communities and large communities, it will be important for them. The Smart Tax Alliance is the way of bringing industry together to support that message.
That's it. Any questions?
J. Les (Chair): Thank you.
J. Rustad: Thank you very much for your presentation. One of the issues that has come up and the question that has come up with the referendum is that it creates the uncertainty in B.C. in terms of capital investment.
HST is designed to be able to have an input tax credit on that kind of investment, on those expenditures. Do you think that companies will hold off on making those investments, or do you think that companies will actually try to gain the benefit of that HST investment by actually accelerating potential investment in that period of time that the HST would be available to them?
C. Williams: We've had some discussion. There's no clear and definitive answer. It's almost like before the anti-HST bill went out. Some people started accelerating investments before HST, and some were going to hold off.
We see what happened with our members and some of the general business communities. This HST was going to make things so that investment decisions that were sitting in abeyance were going to get accelerated now. This could be the thing that pushed it over the edge.
I think most people have the belief that when the facts come out about the HST issue, it will move forward in some form or another. To penalize B.C. business and make us noncompetitive would be just so disastrous, so I think there will be confidence in moving forward. I don't see it as really throwing that much upheaval, if it's got a year's time to go.
M. Mungall: A lot of what you've presented here and a lot of the information that is flowing around the HST are very contradictory in a lot of ways. You make the point here that savings will turn into investments, and you give some numbers around what the savings will be per industry. Now, there are other jurisdictions with the HST, so surely, I would assume, there's some analysis that would actually show that the level of savings turns into investment.
Could you say that $880 million of savings by the construction industry will turn into $880 million of investment? Do you have that type of data?
C. Williams: No. Actually, anecdotally what we've done is…. If people are able to save money, then they can invest.
M. Mungall: So it's theoretical?
C. Williams: Well, it's theoretical on what's going to happen in the future because it hasn't happened. But in other jurisdictions that's where the numbers come from — across Canada where HST has gone into place. That's how the numbers are developed.
M. Mungall: Sorry to have interrupted you there. I just meant the investment…. Those savings would then turn into an investment — right? One of the key arguments I'm hearing from you is that the savings will turn into investment and that that's good for the province. So I just want to be sure that that is based on data coming out of other jurisdictions where we see large savings — that it's going to be a large investment.
C. Williams: Well, investment can be things like investing in new employees. The example I used about a small company that had 100 employees…. For $50,000 they can hire a new salesperson to go out, and that's an investment. It's not the same as investing in new productive facilities, but that's an investment. Or an investment in new product development — they can put new products that they can take to market and grow their business that way.
M. Mungall: And this is what I meant by…. My further question was: is it theoretical? I'm wondering if you have data that supports that conclusively from other jurisdictions.
C. Williams: Yes. All the development was done by the Smart Tax Alliance and the economics people at Simon Fraser. Jon Kesselman supported that, based on the other jurisdictions in Canada. Obviously, it's theoretical here because it's just rolling out now, but that's where it comes from.
J. Les (Chair): Okay. We have to leave it there because we're out of time. Thank you very much, Craig, for coming this evening.
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We're going to move right along to Burnaby Family Life. On their behalf, Sam Schechter is here.
S. Schechter: Thank you, Mr. Chairman and members. It's a pleasure to be here this afternoon.
There's a handout going around. It briefly lays out who we are and what we do, and there's a brochure that lays out the programs that we deal with. Basically, we're a community social service agency that's been around in Burnaby since 1971. We provide 101 different programs on a budget of $3.4 million annually. It goes up a little bit every year as we gain new funding and new partnerships, and we are trying to expand our program offerings every year as well. The fact sheets basically lay out the Coles Notes version of who we are.
I particularly want to draw your attention to the second page, on who our clients are. Burnaby's got a population of about 220,000 people, give or take, since the last census. We had 3,308 clients in our direct program areas, but that does not include those programs that we offer in partnership with others, where they register with one of our many, many partner agencies.
So you're looking at a pretty good percentage of the population registering for a program in any given year, 30 percent or more of them registering for more than one program. Again, that's only in our direct service offerings. We have about 20 other partner agencies that we offer services with, and many of those clients will be registering with those partners.
Burnaby is an extremely diverse community, as the stats note: 98 cultural backgrounds amongst our clientele and only about 38½ percent of them being so-called English Canadians, for lack of a better term. We have a huge clientele, a relatively small staff, a relatively small budget, but we manage, I think, to do quite a lot of good for our community and surrounding communities. We are not exclusive to Burnaby. We offer services to surrounding municipalities. We are not exclusive.
I also want to note that the provincial government is our largest funding partner — over a quarter of our budget — so thank you to the province for making possible much of the work we do. That funding directly contributes to an enormous amount of programs, a number of clients coming in who otherwise would not have the support they need in a community where they desperately need it.
If I can move on to define our clientele a bit differently. It's easy for me to give you statistical information about who our clients are, but I'd like to explain our clientele in a more qualitative way. So I'm going to ask members of the committee to think of your favourite childhood memories, to think back about time spent with your grandparents, time spent playing Little League and winning a game, time spent opening birthday presents.
Now take those all away. Instead, replace those with memories of being uprooted from your home, of being abused by a parent or a family member, of witnessing parents hitting each other and yelling at each other, of emotional abuse, of coming from places where conflict is common in the dissolving communities from where they come, and of possibly losing one or both of your children at an early age because of abandonment, a fatality or other cause.
That's where a lot of our clients are coming from. When you peel away a lot of those statistics, it becomes a much more human story. Members of this committee are very accomplished, established members of our society who have contributed a great deal and who have a great measure of success. That's to be congratulated.
Think about the people who helped you get where you are today — the mentors, the teachers, a coach, a pastor; whoever it may be to you who helped you get where you are today — and take that person away too. Instead, imagine that person being abusive, taking advantage of you financially or causing you deep pain in some other way, causing you suffering and loss.
There is such a stark reality between those two life experiences. Most of our clients come from the darker side of that reality. That's what I want…. It's easy to quantify who our clients are and how many there are, but the qualitative representation of who our clients are is people who desperately need support, because it's never been there for them before — quite the opposite.
We recently had an agency-wide staff meeting where people came up and shared stories about who their clients were, and there wasn't a dry eye in the house. I don't have time to go into it today, but it is extremely severe — some of the backgrounds our clients come from. But they find success here. They find success through support, through help, through the compassion and dedication of the front-line staff that help them in our agency, partner agencies, government and other people just in our society.
Moving on, I want to talk about social cost versus social investment. I heard one of the earlier speakers mentioning it. It seems to be that every speaker mentions that more government spending will save you money. I know you have your priorities, and that's a difficult part to choose. As Descartes said, "Governing is not for mere mortals," which we all are, so it's an unfortunate reality that you have to choose.
I do want, nonetheless, to walk you through the sort of tragic reality of the cycle that we work with. One of our major service areas is counselling: a number of counselling programs for women who experience abuse in the home, children who witness abuse in the home, other forms of counselling. We have a number of counselling programs.
Let's take, for example, the children who are in this situation. The most persistent symptoms that they will
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face in adulthood from abuse, witnessed or suffered, include suicidalism, suicidal tendencies, cyclical violence, drug use, self-harm, anxiety, post-traumatic stress, depression — all of these leading to lost productivity.
There's a tremendous economic cost on lost productivity that comes with social plight. People who go untreated are less able to engage with society and are more likely to draw on government assistance for longer periods of time.
Our entire counselling program cost approximately $292,000 in the last fiscal year, or a little over a dollar a person in Burnaby, and that funding comes from the provincial government.
I want to examine for a moment the cost of not having that program in a hypothetical but tragically common scenario. If we start with a child who at childhood is physically and/or emotionally mistreated by her parents and enters school with behavioural problems, immediately she starts being referred to school counsellors, behavioural therapists. She receives a modified education program, possibly an educational aide, an assistant. All of these are additional expenses to the public purse.
One of her parents has an alcohol addiction. It's going untreated. It's getting worse, and they start physically abusing her and her other parent. The police and courts are becoming involved, also at the public purse. One day she comes to school with visible bruises, and the social worker becomes involved, also at the public purse.
The behavioural problems are persisting, and in her first year of high school she starts to experiment with narcotics. In an altercation with a schoolmate, she attacks this person and is sent to a youth detention centre, also at the public purse.
In what would be grade 11 she becomes pregnant and drops out of school. Without good role models, the cycle of abuse starts to continue because she has weak parenting skills. She doesn't have the role models she needs. She doesn't have the support in the community she needs, and she has little or no marketable job skills because of the life that she has gone through to date.
This directly impacts the public purse because she's collecting income assistance and trying to get into social housing and relying on all these public services that are essential for her but that may be….
This is the hard part for the social service community. We can't measure, when we help a person, that they don't cause the cycle of abuse in the future. It's impossible for us to counsel somebody and prove that that counselling resulted in no abuse or no drug and alcohol addictions and problems. That is our problem.
But the research is quite compelling. For example, research presented last year to the B.C. Business Council called 15 by 15, the short title of the research, made the specific case that children who enter the school system with high levels of early social vulnerability are costing our economy billions in GDP growth because they do not come out of school with any marketable skills. Their parents are forced to spend time out of work caring more for them and taking care of behavioural problems. They end up drawing on more social services. There is a huge economic cost.
I have the full title of that research available. It was presented to the B.C. Business Council. I will be making a written submission at a later date, because I had 48 hours to prepare for this submission, and I will include the name of that study at that time.
It's far better to repair social harm and empower people to start pursuing employment and paying taxes into the social safety net than to go untreated and draw continuously on the social safety net.
I want to change gears a bit and get away from qualitative discussion and make a very direct request. That is that most of our funding is awarded through the competitive request-for-proposal process. I'll talk about one of the challenges there in a moment.
Imagine for a second that you've lost the ability to set the provincial tax rate. Yikes. You also only find out what your next year's budget is going to be a month or two in advance of when ministries are expecting the funding to start coming in, and you have that preparation time to allocate all your funding. That's the reality we live in with the current RFP process. How can we guarantee the long-term continuity of our programs with such little notice on the funding being awarded?
A case in point is that on a small RFP, we submitted the bid on a deadline last week. The beginning date for the funding is October 1. We still haven't found out if we got the proposal. We're going to find out somewhere between tomorrow and October 1 if we've won funding. We have to hire somebody to carry out that work in less than two weeks, make sure that they're up to speed on the project, make sure that they're up to speed on what the responsibilities are and get them going — and be done by the end of the fiscal year, March 31.
We need greater certainty in the RFP process. We need more lead time for things to be announced. When we win a bid or lose a bid, it would be great to have six months' notice, nine months' notice so that if we lose a bid on a service we're currently offering, we can help transition those services to whatever partner agency or other agency won that funding.
We can help prepare our employees for new employment within our agency or possibly with a partner agency. We can help our clients transition from the services that they depend on, and sometimes critically so, from receiving them at our agency to receiving them at another agency. To simply sweep the carpet out from under us on such short notice is not only catastrophic to us but traumatic to our clients, to our staff. There's a real cost to that. I implore you: we need greater certainty in that process.
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Also, three to five year contracts would be fantastic. The provincial government plans out their budgets years in advance. Municipal governments do the same. School boards do the same.
We would love to be able to have an idea, with some certainty, what our budget will be in fiscal 2011-12. We have very little ability to do that. We cross our fingers and hope that the funding projects we are going to be bidding on in January come back to be rewarded to us again in April.
We hope that we are able to continue offering services to the community. That certainty would be a tremendous benefit in terms of the amount of notice we get on whether or not we've won funding and the longevity of the contracts.
Next I want to talk about capacity-building. We have a little bit of a pet peeve in our industry, which is that administration is a dirty word.
We tithe program funding for administration because we have to. My presentation today comes out of the administration budget. The provincial government requires us to have a website where we advertise programs through which we win funding. That comes out of administration. We need to do audits for our funding partners. We are a registered charity; we have to report to CRA. We're a society; we have to meet the obligations of the Society Act. We have all of these costs, and administration becomes a dirty word.
We want to build partnerships. There's no capacity-building budget for us to build partnerships with the non-profit sector, with government or with the private sector, which we want to do. It's hard to convince a private sector partner to give us a million dollars over three years to provide them with child care services that they want at their corporate headquarters when we can't afford proper business cards because we're afraid of spending money on administration.
We can't build a proper business case because we have no money to prepare a proper business case. How do you ask for a million dollars in funding when you can't prepare a proper business case? We need to be able to safely say: "Yes, we spend money on administration. Yes, it's valuable." We have to do it. We need to present to you our issues. We need to present audited financial statements, an annual report to our partners. We have all these needs.
It is not a dirty word. If we are to expand capacity, find our own funding streams, our own revenue sources to build private partnerships, to build capacity to help our community more independently of the public purse, in fact, we need to be able to safely say, "Yes, we spend administration money on this," or, dare I say, receive some funding for capacity-building that is specifically oriented towards that goal.
In conclusion, I do want to thank you for your time and remind you of three key points. Our services are saving the public purse money and helping thousands of people every year in a community that desperately needs it, that's desperately diverse. Second, we would love to have greater certainty around the RFP process, the outcomes, the funding cycle. Third, we need to be able to build our capacity. We either need funds for capacity-building or some acknowledgment that the money we spend on administration is a vital component of our sector.
We are lean. We are efficient. We save money. People say we can't operate like a business? We operate less expensively than a business and with more outcome — 101 programs on $3.4 million dollars. That's less than $35,000 per program. We need acknowledgment that we can spend money on that capacity-building without worrying about the negative consequences.
J. Les (Chair): Time for one quick question from Bruce.
B. Ralston: Thanks very much for a very passionate presentation there. I did have one quick question. One of the funders, I think you said, was the B.C. Gaming Commission, and you were speaking of uncertain funding. Do you have any experience that you want to share there?
S. Schechter: Yes. The B.C. Gaming Commission grant has declined. I'm sorry. I don't have the exact amount on hand, but it has declined substantially. At one point it was as high as approximately a quarter-million dollars. We're now well below $100,000. I don't have the exact figure, but I know we are well below $100,000.
That was a ripple through the sector. It was a shock wave. The consequences of that, in terms of client registration, were felt. We did have a dip in client registration, program offerings. There was a consequence to that.
J. Les (Chair): Thank you, Sam.
Our next presenter, from the Pembina Institute, is Matt Horne.
M. Horne: Good evening. Thank you for the time. My name is Matt Horne. I'm the director of the B.C. energy solutions program at the Pembina Institute. For those of you that don't know us, we're an environmental organization focused on energy and climate issues in Canada.
My remarks tonight are going to be focused on the carbon tax and how we can make it as fair and effective as possible — a tool to take action on climate change. I recognize that taxes can definitely be a challenging subject, but they can also be a huge economic and environmental opportunity if we get them right.
To start with, I'd like to offer two high-level messages. This is, in general, deliberating on your recommenda-
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tions for the budget. First of all, I think most of us are on the same page — that climate change is a massive challenge we're facing and that the solutions to deal with it are also going to have to be on the same scale. So I'd just urge you, in your recommendations on how we can use the budget to deal with climate change, to think big.
That sort of applies to the carbon tax, it applies to looking at subsidies for oil and gas, and it applies to looking at efforts to increase retrofits of homes and buildings across the province. There are lots of opportunities in there.
I'd also encourage you to put fairness front and centre when you're looking opportunities to address climate change. Just making sure that all British Columbians have an opportunity to be part of the solution is going to go a long way in building support for what I think has to be a collective effort.
Narrowing my focus to the carbon tax, I should start by mentioning the handout that you've been provided with. First of all, my apologies for not having the colour versions of those. We've just finished them — an outreach tool we'll be using over the next year to talk about the carbon tax with British Columbians. Hopefully, they'll be useful for our discussion tonight as well.
The first three pages really just look at carbon taxes in general and at how the Pembina Institute thinks they should be done. The last page offers an assessment of B.C.'s approach.
There are two specific reasons for spending my time on the carbon tax tonight. The first is that I think if you talk to any climate expert in Canada or around the world, they'll tell you that having an adequate, economy-wide carbon price is really a critical piece to effectively dealing with climate change.
It's not a silver bullet, but it is an integral piece. I think B.C. has definitely shown leadership in putting that in place, and I think now the time is right to take the next steps in making it better.
The second is that the Carbon Tax Act requires the government to provide a three-year plan, on the carbon tax, for how revenues would be collected and how revenues would be spent from the carbon tax. What that means for the 2011 budget is that the government will have to say what the 2013 price is going to be.
I guess it's up to you and up to the Finance Minister to decide what the price will be. It could go down; it could stay the same; it could go up. But it has to be designated, and it also has to designate what will be done with the revenues.
I'd like to offer four specific recommendations on ways we think the carbon tax can be strengthened in the 2011 budget. You can look at the table on page 4. The first is to continue increasing the carbon tax above $30 per tonne after 2012.
I think we're just starting to see some initial examples in shifts in the way businesses and organizations are making decisions between clean and dirty energy options. A good one, I would cite, is Whistler's recent decision to invest in solar and geo-exchange heating at their Meadow Park community centre. It's actually quite a neat project, and the business case for that was in part driven by the carbon tax.
The handful of success stories — and, definitely, there are not enough of them, in my opinion — we're starting to see are really just the tip of the iceberg in terms of the opportunity that's out there across the province.
We also know from provincial modelling that if we stop at $30 a tonne, we're not going to tap into those opportunities. In many cases the gap between clean and dirty energy is still too big. If we sort of stall out at $30 a tonne, for example, we're not going to be tapping into those opportunities.
Modelling that the Pembina Institute commissioned from Mark Jaccard's modelling group at Simon Fraser University looked at climate scenarios for Canada. Our results showed that it would need $200 a tonne by 2020 to achieve results that help Canada contribute to a global effort to combat climate change.
To put that in a B.C. context just from a revenue perspective, if B.C. were to apply that by 2020 and also to achieve its targets, we'd be looking at about $8 billion a year in revenue.
The second recommendation is to invest a portion of any new carbon tax revenues in projects that reduce emissions. This would be a departure from the current revenue-neutral model that the carbon tax is structured on.
I think there are two good reasons for making that departure. The first is that we need capital to invest in major projects like transit and the infrastructure to fuel electric vehicles. Those are investments that aren't going to be driven by market forces. I think there needs to be public involvement in those investments.
Second, based on focus groups and all the polling I've seen and talking to people, British Columbians do want to see a portion of what they're paying in environmental fees linked with solutions. It doesn't actually need to be a huge portion, based on the modelling piece I mentioned that we've done. We looked at a scenario where about 20 percent of revenues were put towards climate solutions. You're able to finance pretty big, impressive projects across the country just to really enable that transition to a low-carbon economy.
The third is continuing to increase protection for low-income families. I think that wisely, when the carbon tax was implemented, it initially did implement low-income tax credits for low-income families to protect them from the adverse impacts of rising energy prices. Unfortunately, what's happened is that those low-income tax credits haven't been rising as fast as the carbon tax has been rising. I think, simply, what we have to
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do is to make sure, as the carbon tax increases going forward, that there is adequate protection for low-income households in the province.
There are different ways to accomplish that. I think a simple option is just making sure that the tax credits increase at an appropriate rate. Other options would be looking at investments or programs targeted at low-income families.
There's actually a really neat example in Surrey: the Greenbrook social housing units. That was a recent investment from the province. It's not tied to the carbon tax, but it is a social housing project where the province invested in solar energy panels, geothermal and energy efficiency investments. They were able to cut the carbon emissions and the carbon tax payments from the units by 90 percent. So there are definitely opportunities out there and models that we can look to.
The fourth recommendation. This one's a little bit more technical in nature, but it simply comes down to this. The carbon tax should apply to all sources of climate pollution equally, where we can measure them. It currently applies to all the fossil fuels consumed in the province, which is about three-quarters of the province's emissions.
Where it doesn't apply is to what's called non-combustion or process emissions — things like methane decomposing from landfills or, in the natural gas sector, when we strip CO2 from raw natural gas and vent it at processing plants. Those emissions are not covered by the carbon tax, but they have the same impact from a climate change perspective.
What that means is that for those places where there's no carbon tax, there's no incentive to reduce the emissions. That's really the main reason why we have the carbon tax in place. Many of them now are being accurately measured and reported through the province's greenhouse gas reporting act. We don't see any reason why they can't be covered by the carbon tax.
To illustrate the importance of that decision, if we looked at where we do have good data and good measurements on the relatively narrow slice of emissions that aren't covered by the carbon tax currently but could be, we'd be looking at between $200 million and $300 million a year next year in carbon tax revenues. Put another way, there's an approved proposal for EnCana to build a gas-processing plant near Fort Nelson, the Cabin gas-processing plant. Under the current rules, if that project was built today, it'd be basically a $30 million giveaway to EnCana.
In conclusion, I'd like to reiterate my high-level points. I really encourage you to think big in terms of opportunities to address climate change through the budget and also to put fairness front and centre in your deliberations.
On the carbon tax specifically, there are four clear opportunities to strengthen the tax so it's fair and effective. Those would be continuing to increase it above $30 a tonne, investing a portion of new revenues in projects that reduce emissions, continuing to increase protection for low-income families and applying the tax to all measurable sources.
Thank you. I'm happy to take any questions, and good luck with the rest of your consultations.
J. Rustad: Thank you very much for your presentation. I've actually got three quick questions, and I'll make them as quick as possible — if you don't mind, Chairperson.
The first one is fairly straightforward. Is greenhouse gas and climate change your number one environmental issue?
M. Horne: For me personally and for the Pembina Institute, yes.
J. Rustad: Okay. That was kind of a self-evident question, but I thought I would ask it anyway.
The other two questions that I have…. The recommended increase to $200 per tonne — how does that compare to carbon taxes in Europe and, in particular, places like Sweden that have had a carbon tax now for 15-plus years?
M. Horne: It's hard to make a direct comparison. B.C.'s carbon tax is actually more broadly applied already than…. There are a number of exemptions in the Swedish or Norwegian model, for example. But I think the equivalency is that Sweden is roughly, currently, $100, and Norway is, I believe, about $120 or $130. Denmark and some of the others are lower, in the sort of $50-per-tonne range.
J. Rustad: The last question on this is also…. You're recommending that a portion of the carbon tax go towards large capital projects in the reduction of carbon. Is there any other jurisdiction, particularly those that have a carbon tax in place in Europe, that is using carbon tax for those capital projects?
The idea, in the research I've read on carbon tax, is that it's designed to be offsets so that it would be revenue-neutral to government and that government wouldn't be able to use it for — I hate to say this — pet projects. In jurisdictions in Europe I haven't found any that have used a portion of carbon tax for doing that. I'm just wondering if I missed something in my research, or whether we would be groundbreaking to do something like that.
M. Horne: Sure, I can give three examples. In Norway some of the investments they've made in carbon capture and storage and some of the projects they have in the North Sea have been funded by their carbon tax.
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A bit closer to home is the Regional Greenhouse Gas Initiative, which is a cap-and-trade program but a comparable carbon-pricing system for electricity in the northeast U.S. All of their revenues are restricted for investments in renewable energy and energy efficiency. It's a much smaller price but the reverse of B.C.'s model.
Then even closer to home is the Western Climate Initiative. If that program gets up and running, I guess the rules that have been structured as part of that program would see a portion of revenues go towards investments.
J. Rustad: Yeah, but that's through something that would be cap-and-trade, as opposed…. Cap-and-trade is different in terms of how they're implementing some of those projects, as opposed to the carbon tax. Carbon tax was designed to be, like I say, revenue-neutral and to incent activities that you wanted to see and disincent things that you didn't want to see, whereas cap-and-trade has gone towards capital projects. So I just wanted to distinguish between the two.
M. Horne: Yeah. So if you're focused specifically on carbon tax, then Norway would be the one example I would cite.
J. Les (Chair): Thank you very much, Matt.
For us, it's dinnertime. We don't have much of that, so we need to move on.
Thank you for coming. Appreciate it.
We're recessed until 7:05.
The committee recessed from 6:22 p.m. to 7:06 p.m.
[J. Les in the chair.]
J. Les (Chair): Our next presenters are from the Parkinson Society of British Columbia — Alexandra Rice and Diane Robinson.
A. Rice: Good evening. I am a volunteer member with the board of directors of the Parkinson Society of British Columbia. I've been on the board since 2006, and for the last two years I've been vice-president of the board. I joined the Parkinson Society of B.C. because my dad has Parkinson's. He was diagnosed 12 years ago at the age of 50. As my day job, I am a criminal prosecutor with the Department of Justice.
D. Robinson: I am Diane Robinson. I'm the CEO of the Parkinson Society of British Columbia, and I've been with the society for five years.
A. Rice: We're here to discuss a funding proposal for the Pacific Parkinson's Research Centre. The reason I have an interest in this is because my dad has been a patient at the PPRC since he's been diagnosed, and we'd like more British Columbians to have access to the centre.
I'd just ask you to flip to page 2 of the deck here before you. Page 2 is entitled "Parkinson's Disease." As you can see from the slide, Parkinson's disease is a debilitating disease which can make the lives of people suffering from it misery.
Initially when my dad was diagnosed, first he had a tremor that you could see in one of his hands. Also, his facial muscles were affected, so he couldn't really show any expression. He couldn't smile. Increasingly, over time he's had difficulties walking. Sometimes he can walk very well. Other times he can't walk at all, so he'll be on his way somewhere, and then he'll simply be frozen. He won't be able to walk, depending on whether his medication appears to be working that day.
In addition, he has problems balancing. He falls a lot. Some of these falls have been bad. Recently he cracked a rib when he fell.
But the symptoms which have caused him by far the most suffering are very severe depression and very severe sleep deprivation. He will go days, weeks with only sleeping a couple of hours a night. Obviously, the sleep deprivation affects the depression and exacerbates all the symptoms.
What I can say about Parkinson's disease and my dad is that it has dramatically affected his life for the worse. He's a totally different person, if any of you has ever known anyone who's depressed. And it has had a profound effect on the whole family. Our lives are totally different. As my mom puts it, our family has Parkinson's disease.
If you could flip to page 3, please. Parkinson's disease has a direct impact on the health care system, as patients require a range of medications and health care services. When symptoms are not managed well or as the disease progresses, patients have longer and frequent stays in hospital, and they also may require assisted living.
Could you turn to page 4, please. The needs of a person living with Parkinson's disease are complex. First of all, they take a range of medications. My dad is like a walking pharmacy. He takes his Parkinson's medication, antidepressants, medications to help him sleep.
Now, all of these medications have side effects. Side effects need to be addressed. The medications have a negative interaction with other medications. That needs to be addressed. As well, as the disease progresses, the medications need to be adjusted, and over time the medications lose their effect. All of this needs to be monitored very carefully by someone who specializes in the area.
Also, aside from medications, depending on their symptoms, people with Parkinson's disease seek ser-
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vices from a number of other allied health care providers. Social workers, for example — so important.
I mentioned depression with my dad. That's very prevalent. And there's depression that's a symptom of the disease. It's a neurological disease which affects your brain. Also, there is depression arising from the fact that "I can't walk anymore, I have a tremor, I look different, and I've lost my job" — all of those kinds of things. So social workers are important to address the social, emotional, economic consequences which result from having this debilitating disease.
Speech pathologists, for example — critical. When you see someone who has Parkinson's disease, the most obvious thing is that they have difficulty walking because their muscles become rigid. The same thing happens with the face, and that affects people's ability to talk. Obviously, a speech pathologist is needed for that.
As well, the muscles in the larynx stop working. People have difficulty swallowing. In fact, complications arising out of difficulty swallowing are the leading cause of death in people with Parkinson's disease. I can't emphasize enough the importance of the allied health care practitioners in treating the diverse symptoms we have here.
If you could flip to page 5. As I stated before, my dad has been a patient at the PPRC for 12 years, since he has been diagnosed. We are so lucky here in Vancouver to have the PPRC. I'll just highlight that it is designated as a centre for excellence, and it's only one of two facilities of its kind in Canada. The other facility is in Toronto. I'll also highlight the fact that the PPRC sees patients throughout all of British Columbia.
If you could flip to page 6, please. The current wait-lists at PPRC are "way too long," and those are my dad's words.
Many people living with Parkinson's disease can manage their symptoms very well and live high-functioning lives. However — and I've seen this happen — people's symptoms can spiral out of control very quickly. So they can all of a sudden become practically paralyzed, unable to eat, unable to communicate, extremely depressed, unable to cope. They can go from being employed to unemployed, living independently to requiring assisted living very quickly.
My point is that when you are dealing with people who are this vulnerable and whose symptoms are so complex, you simply cannot have them waiting for months on end for appropriate care. That's the challenge that's facing the centre right now.
If you could flip to page 7, please, which is what brings me here today. That's to outline a proposal for $500,000 a year so that the centre can hire an additional five staff members. The proposal would be to hire two full-time nurses, one full-time social worker, one full-time physio and one full-time speech pathologist.
If you could flip to page 8, please. It's our view that the additional staff will have a number of positive effects. No question — it's going to help patients. It's going to reduce wait-lists and allow more people to visit the centre. It's also going to allow for a team approach to treatment.
People will have more access to the physio and the social worker, who are currently only part-time, by bringing them to full-time. As well, it will allow the centre to hire a speech pathologist for the first time. Currently there is no speech pathologist at the centre. All of the staff at the centre will be specialists in Parkinson's disease, treating only Parkinson's disease patients.
Additionally, adding two nurses will help leverage the resources of the neurologists. That's because nurses can do things, for example, like renew prescriptions — those types of tasks. By freeing up the neurologists with the nurses, they can take on additional complex cases and spend more time with patients.
It's our belief that improving patient care will have a positive effect on the health care system generally. Simply by providing appropriate care to these people, they'll have less frequent and shorter stays in hospital, they'll stay employed longer and they'll have longer independent living.
If you could flip to page 9, please. Speaking on behalf of the Parkinson Society British Columbia, we support this proposal in its entirety. It's a key priority for the society, and that's because the current care options for people living with Parkinson's disease in British Columbia are extremely limited.
We're confident that the additional staff will significantly improve the quality of care given to people living with Parkinson's disease in B.C. And of course, the staff at PPRC will be pleased to work with the government to provide data tracking the success of the improved level of care.
Just to recap, we support this proposal. We know it will improve the lives of patients. We know it will have a positive effect on the health care system generally. That's why we support it.
J. Les (Chair): Good. Thank you very much.
J. Thornthwaite: Thank you for your presentation. Excuse my ignorance, but I have a question. If we did what you're asking for, are you saying, then, that people like your dad, who were or maybe are functioning members of society, would be able to go back to being functioning members of society? Is that the difference you're looking at — that you can actually reverse the symptoms because of the treatment?
A. Rice: Oh absolutely. On a number of occasions my dad's symptoms have spiralled completely out of control. Our family has been in crisis. Then it can be as simple
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as adjusting medication. Maybe there's a negative interaction of one medication with another — that kind of thing. So it can help people who are currently not functioning, as well as prevent people who are functioning well from entering into decline. So both of those things, yes.
D. Donaldson (Deputy Chair): Thanks for your presentation. Like Jane, I didn't know a lot about the centre or your society, so thanks for that. I'm just trying to get it straight in my head — the relationships. So your society is a separate organization from the research centre that's affiliated with UBC. They get their funding through Vancouver Coastal Health, through the Ministry of Health Services.
Has the research centre, as well, made this case? Is this their case that they're making to Vancouver Coastal Health for this kind of increase in staff support, and you are backing that and supporting that case?
A. Rice: I think Diane would like to answer.
D. Robinson: If I may. Yes. In fact, we work very closely with the centre because of the fact that they are the only really true centre for people with Parkinson's. So we have been in conversation with them about how we can improve their condition.
I will tell you that they are at UBC, and they have basically room…. Maybe the entire space is the size of this room. They are poor cousins of many others.
We've worked with them to try to improve their physical plant and, as well, to help them in getting funding for additional staff. We took it on because one of the missions of the Parkinson Society of B.C. is advocacy for people with Parkinson's — the 11,000 in B.C.
A. Rice: If I could just add to that. Yes, we are two totally separate entities. We are a volunteer board who has a number of mandates, which include education, support services — that kind of thing.
D. Robinson: And our society does not have anything to do with medication. We don't have professionals on staff, in that regard.
J. van Dongen: Thanks very much for your presentation. What is the current budget for the centre?
D. Robinson: Right now they probably operate with a little over $200,000, which comes from Vancouver Coastal Health. I have not been privy to their entire budget and their entire funding. As you well know, doctors and researchers have sources where they apply for funding around the world, basically.
J. van Dongen: But is the purpose of the centre treatment first as well as research, or are you talking strictly research?
D. Robinson: No, absolutely not. It is 80-20. Research is 80 percent; 20 is clinical treatment. They have four neurologists on staff right now, and their time is divided between research, because that's also how we can get money.
J. van Dongen: One final question. As a society, do you support the centre in various ways on the treatment side? Are you providing some services to patients with Parkinson's?
D. Robinson: Not hands-on services, but we provide education, awareness, support services through information materials and so on. What we do do is support the centre through giving them funding, but not for the staff. It is, in fact, for the chair. We have supported two chairs at the Parkinson's centre, which is a neurologist that is the chair and then does clinical work and research.
J. Les (Chair): Thank you both very much for an interesting presentation.
D. Robinson: Thank you for the opportunity.
A. Rice: Thank you very much for having us.
J. Les (Chair): Thank you for coming.
Our next delegation is Eugenia Siormanolakis.
E. Siormanolakis: Good evening, members of the committee. I'm here today because I just want to be heard — that's all — with regard to what my issues are. I brought today my new immigrant husband, who left Greece in 2007. I promised him a better life. Who would have known that he would have been better off in Greece, even with their crashing economy? He owns land there; here we only have goals or dreams to own our own house.
I also brought my little girl, Eleni. I am saving up as much money now for her private school and university, as I have no faith in the Vancouver school board–run education system. Eleni, my daughter, also won't see a brother or sister, as it's literally unaffordable to send two kids to a good university and give them a better life. This little girl plans on becoming an archaeologist so that she can find Alexander the Great's tomb and become wealthy and perhaps buy her parents a home in their late 70s.
The top three areas of concern that my family is facing that I wanted to discuss along with you, along with simple solutions, are in the area of small business, af-
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fordable housing and equality among immigrants. As a prelude, I want to state to all of you that I am in this financial situation all thanks to a little Crown corp called WCB, back in the day.
In 2001 I was injured in my family business, and WCB didn't fulfil their obligations to ensure I was healthy. These non–medically educated case adjusters can say all they want. I know the truth. I was there. I did the long appeal process and went all the way, as far as I could.
Unfortunately, it didn't go my way, leaving me with a monetary loss of over $75,000 in treatments, therapy and lost wages for the three to four years that I walked with a cane. Instead of me having savings so that I could buy a house, I have a lower back that's 75 percent better.
WCB got away with this and does it to thousands of people. I should have been covered by the premiums my family was paying to be covered over the 37 years that they've had their business. I should have been. Why have mandatory coverage if it's not there to protect every employee?
The first area I wanted to discuss was the small business. At what cost does more and more foreign investment mean when in the end it just pushes out the small ma-and-pas? Most absentee landlords don't have a clue about the community they just bought in or don't care about their tenants, and they pretty much get away with bullying small ma-and-pas and then also force these huge lease agreements upon them. It's either pay the greedy overseas landlord what they want or lose everything that you've invested your life into.
On Cambie Street some are being forced out by these absentee overseas landlords, who in some cases have tripled, and in one case demanded five times, the previous lease amount.
Easy solution. If landlords fall under an absentee criteria, then perhaps tax them higher to shelter and protect this province's biggest investment, which is the hard work and people's life investments, otherwise known as the engine of the economy, which is small business. Then offer a better tax rate to local buyers of these commercial buildings, who understand how important it is to have these small ma-and-pa places in the community along the business improvement areas.
The second issue is regarding the housing for middle-class and mid-wage earners. Just because I make under $50,000 a year does not mean I have to live in a mouldy, dirty, depressing housing complex or basement suite on the East End. When will something be done for the middle class and families who are just on the edge of just getting back up on their feet to save up, and they're almost ready to buy?
I don't want to give rent to a greedy landlord, which will only pay off his mortgage, and live in a cold, damp basement suite or mouldy, leaky condo and deal with unjustified rent increases or eviction.
An easy solution: more money or resources or partnerships awarded to reputable housing foundations to build family-friendly housing for family incomes between $35,000 and $60,000 — and not just build them in East Vancouver or south Vancouver. All we ask for is a clean environment, family-friendly neighbours and a safe place to call home.
The third issue is equality among immigrants. When I sponsored my husband to bring him to Vancouver, I thought: "How hard could it be? Look at the millions of Asians and those from all over the world that have come here." What I discovered along this journey is a lot of inequality. Did you know that an arm of the provincial government insists on catering to a few select immigrants first and foremost?
Enter ICBC. My husband has a Greek licence. He can't drive in B.C., which puts even more strain on me. For my Greek husband to be licensed, he has to pass a knowledge test, then a road test. It costs me $35 every time he attempts the knowledge test, plus I have to arrange and pay for a translator to come. That's another $100 to $150. My husband has failed three times thus far. Do the math.
He has failed because he can't study the rules of the road in Greek unless I pay for it out of my own pocket and explain every fine detail of the book. My Greek is fluent but not technical, and if I was to explain it to him, I'd probably kill him, just because it's difficult.
The thing is, though, if he was from Far East Asia, Asia or South America, he could practise the knowledge test on line as many times as he wanted in the various languages offered — I think the knowledge booklet is also translated in nine languages — then spend the $35 to take the exam.
See my point? Immigrants from certain areas get treated like first-class-priority citizens, and if you're not from a priority country or continent, get ready to pay and pay a lot more. So my government is catering to select immigrants and giving them an unfair advantage. My blood boils.
Do these people make better drivers by practising on line over and over again, learning it in their own language and then taking the test for $35 without speaking a word of English? I don't think so. Do they pay less than my husband will in the end? Hell, yes. When they get their licence, do they get their jobs faster than my husband will? Hell, yes.
What you've created is a system where these language-privileged people don't even have to learn English to drive or get a licence, and the bottom line is that they get jobs faster in the end.
Yet my husband has to go to school until he finishes his English, the ELSA English-second-language program. He has to finish it until he goes to level 5. At level 5 you have a better command of English, and then you
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could go out and take the test without a translator. But while he goes to school, it also means less income for my family.
Until ICBC and the government realize what they're doing is wrong — maybe human rights wrong, maybe Charter of Rights and Freedom wrong — I won't have a chance to get my husband a better job. He was a farmer, and ideally, he could be employable as a landscaper, gardener or employed by a parks board. That all requires class 5.
My solution is simple. Offer all the languages or none at all. Perhaps it maybe needs more media attention to push it, because it's not fair. It's not.
Finally, another inequality that I've noticed is with the English-as-a-second-language schools program. It took a whole year for our daughter to get into a child care class at the ELSA school where my husband goes. This meant I could not work during the day. Many people of Asian descent were getting into the child care program one after another, so my very frustrated husband went and asked the school receptionist why other kids were being accepted and we still waited.
They told him our daughter could start in a few months. Infuriated, that same day I went to the office. Honestly, I don't think they were prepared for a woman speaking fluent English to investigate this so-called wait-list.
I was told by a very nervous, scared employee that our daughter could start the following week, not in a few months. Then when I got home, I received a call telling me she could start the program the very next day.
Was there someone jumping the line? No. It was countless people jumping the line, with Asian school staff perhaps catering to the Asian clientele. These programs are funded by all three levels government, so it's either fairness for all or shut the doors. If you only want some, then you shouldn't have invited the world. My solution is to, obviously, provide more funding, as immigrants are coming from everywhere. Provide more funding for the child care so that if one parent has to work full-time….
They can't have these wait-lists. They can't have a wait-list. That's one year that I couldn't go to work while my husband went to school part-time so that he could pay the mortgage by working in the evening. It's simply not fair.
How happy is my life right now? I can't buy a house, thanks to the previous ten years of dealing with the WCB. My husband can't drive, which puts an…. I do everything. I do everything.
My daughter, at age two, is discriminated against because of her race. The job market — yes, it's slowly recovering. But once a month, first and end of the month, I'm sweating. I'm saving to barely stay afloat for my daughter. I'm not saving for me. I'm saving for my daughter.
WCB, ICBC, ELSA — they've provided me the opportunity to be here and vent. Thank you for listening.
J. Les (Chair): Thank you.
Does anybody have any questions?
I think you've explained it pretty carefully and pretty succinctly. Thank you very much for coming.
I'd just like to recognize in the gallery the MLA for Burnaby–Deer Lake. Kathy Corrigan is here this evening.
Our next presenters are Wendy Seet, Manpreet Guttmann and Anna Lary.
Come on up.
W. Seet: Good evening. I brought some friends with me to have some support. I'm here to speak about the supported child development program, or SCDP. It's a program that provides consultation, support and extra staffing support for children in daycare, preschool and after-school care and has made it possible for many children with disabilities to achieve milestones that they may not have thought possible.
I would like to thank the committee for giving us the opportunity to present this issue that is so important to any family with a child with a disability in this province. I would also like to thank the government for providing the programs that it has, as they have truly changed many people's lives. Great things are being done, both to help people with disabilities succeed in achieving their personal goals but also in promoting an inclusive society.
Spencer Beaudry is a great example. Spencer, who is turning 19 and has cerebral palsy, just graduated from high school and SCDP. He's now attending Langara College with a goal of becoming a journalist. Like most young men, he also plans on getting married and eventually having children of his own. He has had the opportunity to benefit from the extra support outside of school all of these years, which has helped him achieve this success.
Spencer's evidence speaks highly of what this program can do if people are able to access it. The SCDP recommends extra staffing support for children in out-of-school settings, based on the individual needs of each child. It is able to provide the support only if funding is available. Regardless of funding availability, the SCDP consultants visit these settings to provide strategies for inclusion of a child with extra needs.
The funding for this program provincewide has not kept up with the demand for services. In June Burnaby had a wait-list of 74 children who were assessed, and it was recommended that they required extra staffing support but were not able to access it. Currently Vancouver has 298 children on this wait-list.
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What this means is that these children will be denied opportunities to be included in activities that typical children participate in, as it may be too difficult for a daycare or preschool to give that child the additional support needed to participate. These children will also experience additional safety risks, as they often do not understand danger at the same level as their age peers while trying to keep up with them in play situations.
All too often, daycares or preschools are not able to handle a child with special needs without extra staffing support in place. Families are turned away, and their children are denied the opportunity they need to be included, to have the experience of learning in a group setting, or to make social connections with their peers at all. The social effect aside, it will make it that much harder for these children to transition into preschool or kindergarten.
Parents often have to give up careers to stay home with their children, as there is no other alternative for child care. Families are emotionally and financially stressed and often fail as a result of the additional demands placed on them with no respite. Other children in these families are often not given the attention they deserve, as parents' lives are consumed with concern for the child with additional need.
If children with special needs are not able to participate in group settings such as daycare, their typical peers also miss out on what it is like to have a friend with Down syndrome, cerebral palsy, autism or any other differences. This experience has a huge impact on how typical children see others and promotes a culture of goodwill in helping each other to succeed. The foundation of the inclusion model is that all people are welcome and are able to participate in society, and it starts with children.
My daughter Kate has Down syndrome and requires support. She is No. 62 on this wait-list. What that means is that she will not have support in her daycare for approximately two years, by which time she will be in kindergarten and will have missed a huge window in her early development.
It has been proven that early intervention has a huge effect on a person's ability to contribute and become independent later in life. It has also been shown that money invested in early intervention gives a much bigger return if employed before children enter the school system.
In reference to a recent report that was just in the paper this week: "A dollar invested in early childhood yields three times as much for school-aged children and eight times as much for adult education." Another long-term study cites that costs associated with children on the autism spectrum are reduced by 65 percent by using early intervention therapies.
It only makes sense, socially and economically, that we would want to make every effort to ensure that the most is being made of these early years, as the payback is immense on so many levels. Early intervention makes transitioning to regular classrooms easier in elementary school as well as later transitions into high school, continuing education, and eventually into independent lives in the workforce, paying taxes and voting like everyone else.
In the short term, increased funding will provide employment, allow preschool, daycare and after-school care to deliver better-quality care and safer care for all children, and show immediate results in intellectual development of all children with special needs. Parents will be able to return to work, and the tax revenue from that alone will recover a large portion, if not all, of the costs of the extra funding.
In the long term this will save the education system money, save money from social programs and save the avoidable stress, misery and hardship on parents, siblings and families. It gives people the skills they will need to contribute to society and the workforce, and it promotes a culture of inclusion.
Most importantly, it gives people with special needs the pride, self-respect and dignity that come with being independent and included in society. These are things that no one should be denied.
For these children to be included as contributing members of society, they need to have access to extra support so that recommended strategies can be implemented to provide opportunities when they are young. This is key to making the model of inclusion work.
I have highlighted my daughter's situation, but her story is only one of hundreds of children who have been wait-listed, and we are only one of the hundreds of families facing the same challenge. I will leave you with stories of many other families so that you can understand how the shortfall of services has had a personal impact on them. It can be seen from this small sample that individual success or failure can be strongly linked to the availability of early intervention and support services provided by this program.
There are approximately 40 SCDPs across the province, and each of them has their own wait-list. Each of these programs has varying levels to which they require funding, as cited earlier — 74 in Burnaby, 298 in Vancouver.
To operate effectively, the provincial standard of cases per consultant at the SCDP has been set at 25 to 35, but currently they operate at an average of 49 cases each. This is nearly double what the province recommends, and it's unacceptable. The minister for child and family services has said that the recent increase in B.C.'s population is to blame for the shortfall, but people who are new to B.C. have children, pay taxes and vote also.
We would like to see the funding of this program increased to keep pace with the demand for services. The
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wait-lists need to be eliminated across the province. Parents who already face additional challenges that I have not even spoken about should not have to be denied access or have to beg for support so that their children will not become a burden on the system later in life.
Parents and families on these wait-lists feel abandoned by the government. They feel that the government does not care about them or their children. They all work hard, pay taxes, vote and do as much as they can to balance their lives — all the while in constant fear of what may happen to their child in the future. As one father said: "Even when I die, my eyes will still be open."
More often than not, they are fighting so hard just to keep their heads above water that they are unable to see what they can do to help improve the situation for their children. Will their child have the opportunity to go to regular classes in school, make friends and have a positive impact on people's lives; go to college and be a journalist or some other profession; or get married, have children and be a genuinely valued and included member of society? Currently it really depends on where you live and what the wait-list is like there.
Nobody wants to see their children denied opportunities to be included, no matter where they live. The positive effects of early intervention are similar, whether you live in northern B.C., the Interior or Burnaby. Along the same line of thought, it should also not matter where you live. Access to service should be available provincewide.
There are so many reasons to provide this funding. It makes economic sense. It makes social sense. It makes common sense. I would like to emphatically ask this committee, on behalf of families across the province, to act proactively and invest in supported child development programs so that services can meet the demand.
There is overwhelming evidence that it will pay for itself many times over. If these wait-lists continue to grow and children are continually denied help, we are all going to pay for it later, and that price will be a lot higher than any savings we might see today.
Remember, all our children will be paying that bill for the rest of their lives. Is this fair to them? Again, I thank you for listening.
J. Les (Chair): Thank you.
D. Donaldson (Deputy Chair): Thanks very much for the very heartfelt presentation and the information you presented.
It might be too big a question for your particular circumstance or group, but do you have any idea how much extra investment it would take to reduce these wait-lists to the levels that you have talked about in your presentation?
W. Seet: I've actually requested a number from the Burnaby program, and over the weeks, they've been crunching and crunching. They keep telling me that there are so many variables. But today I had a conversation with the supervisor, and she thinks it would be about a million dollars for just the Burnaby program.
B. Ralston: I'm not familiar with this program. Obviously, I should be more familiar with it.
W. Seet: It is a wonderful program.
B. Ralston: It's administered by the Ministry of Children and Family Development. Have there been any changes in the level of support to the program over the last several years? Has it increased or decreased?
W. Seet: The main crux of it is that the funding has not kept up with the increase in demand. It is a wonderful program. Their focus is on inclusion and safety and ensuring that anyone with a difference gets to be a part of the community the way everyone else is.
A. Lary: It's strange. Last year in Vancouver there was no movement in the wait-list for funded after-school care spots. Not a single spot became available. My daughter is somewhere in the 60s or 70s. That's where she was this summer. They figure she'll age out of the program before a funded spot becomes available.
The same thing about having "funded" associated with your name — the child can either have funding associated with their name or they can go to a funded spot.
B. Ralston: In your view, then, it's an effective, well-organized program. It's simply that there's not enough funding to let people get access to it in a timely way. Would that be…?
W. Seet: I think so. I mean, the consultants were awesome. They were way over capacity. Like I said, the consultants recommended between 25 and 35. At the average of 49, the coordinator of the program actually had a caseload of 91. They do a wonderful job of coming out and consulting.
J. van Dongen: Just a follow-up question to Bruce's question, a question to Anna. If a funded spot became available for your child, what's involved in that? What comes with a funded spot that you say is not available to your child today?
A. Lary: A funded spot means my daughter could go to after-school care so that I would stop having to pay a nanny to take care of my daughter. I work full-time.
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J. van Dongen: So that's — what? — two hours, or what's…?
A. Lary: After-school care also includes before-school care. I know it's funny. It bridges the time between when a parent is at work and when the child is at school. My daughter's kindergarten is from nine o'clock to three o'clock, and I work from eight to 4:30.
J. van Dongen: It's before and after school so that you can pick your child up. Okay.
A. Lary: Yes. In August and July and September I paid about $3,300 a month in child care and therapy for my daughter, so it's a lot.
W. Seet: Just to be clear, even if this funding became available, we are still responsible for the cost of child care, so I pay for my child to go to daycare. But what this funding does is that it allows them to hire another person…
A. Lary: Yeah, it's not free.
W. Seet: …based on the number of hours that the program recommends. It pays for that staff person to be there. It reduces the ratio and makes the room more manageable.
M. Guttmann: For a group-licensed daycare like ours, we have four children to one teacher. Our son is probably one of the youngest that's been referred to the program so far. I was noticing developmental delays around nine or ten months. He's now almost three, still non-verbal, hitting, scratching, pushing the kids around.
The Centre for Ability and our worker were able to find emergency funding. Now, I don't know what that is. It may mean that I have jumped the queue a little bit, but they've been able to bring someone in for three months to provide one-on-one care to help him with his speech, his social interactions and his development. Then we'll see where he is in December.
B. Routley: My name is Bill Routley, the MLA for the Cowichan Valley. I thought I would share with you, just so you know that one of this committee has a grandson with autism. He's now 11 years old. When he was 2½ or three, I remember lying underneath the swing set to try and get eye contact with him. I remember how concerned our family was that we might never hear him tell his mother, "I love you," or some of the things that most parents take for granted. Until you've been through that yourself, you don't understand; you don't get it.
I don't know myself. My grandson has improved dramatically at 11 years of age, but I still don't know what's going to happen to him when he's a teenager. I certainly know, with the speech pathologists, the limited treatment that he has received. He has received some, and I'm very grateful for what he did receive, but I also agree and know that there could be a lot more. There are so many tragic stories of families suffering.
We spent a lot, too, to help him along the way. Do you have any idea of some better solutions? I know you've got recommendations. Do you have ideas of how this could be dealt with in kind of a team approach, or whatever? I've often thought there needs to be….
While I know my grandson benefited from being in with other kids, he also very much benefited by being there with the speech pathologist. There are just not enough of them. There is a real shortage of specialists in that area, and not enough teachers. I've had constituents in my area…. Just in the last couple of months I've had two with autism phone me and tell me about how their children are having problems with teachers and the educational aides in schools.
I don't know what the solutions are. I know we've got to throw more money at it, but we have to also think about a different kind of structure, because what we're doing isn't working. I don't know what that looks like, but you're certainly pushing on an open door with me in terms of trying to figure out how to help. I'll be there advocating along with so many others.
There are a lot of valuable issues in the province, let me tell you that. We hear a lot — everything from people living in poverty to, certainly, special needs — just so you know that there are people here that understand and care.
A Voice: Can this mom speak? She actually has a really good solution that I couldn't fit into this.
C. Stark: I'm Cynthia Stark. I'm actually going to be in Surrey speaking tomorrow with my personal story, but just to address that question, I really like the autism funding unit model. It's direct services. They provide X amount of money based on your age and diagnosis, and the parent chooses which that child needs. The parent usually knows what's best — if they need speech, if they need OT, if they need extra support in a child care setting.
I was super lucky in Vancouver. Up until my son was 9½, we had the most incredible services. Then when we moved, we lost everything. So I think a good solution with the funding we have, without adding more funding, would be to basically use the funding model we have that works, which is the autism funding unit model, and let the parents decide what is best for their kid with that amount of money.
That way no one is on the wait-list and everyone gets at least an equitable amount — maybe not the amount they need, but at least something. It's so uneven right now.
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Some kids are getting…. My son was so fully supported until 9½, and now nothing. So that's just not fair.
I think that every child needs as much as they can. It would also take out a lot of paperwork and a lot of the administrative cost, which is, I think, why they set it up that way in the first place.
J. Les (Chair): Okay, and you're coming back tomorrow, you said?
C. Stark: Yes.
J. Les (Chair): Great. Well, thank you, all of you, for coming this evening. Certainly, you've given us something to think about.
Our next delegation is from Vancouver school board — Patti Bacchus, the chair.
P. Bacchus: Thank you, Chairperson and committee members. I appreciate very much this opportunity to come and talk to you, especially while you're still fresh on your very gruelling schedule.
My favour to you as a committee is that I've done a very brief brief — two pages. I'm just going to preface it with some comments, and I just have to take the opportunity that just came up with the discussion of special needs and supporting students with special needs, because I'll be referring to that in one of our five recommendations.
Talking about throwing money, needing a different model…. I have to tell you, in the education system, what has happened is that we're, in effect, spending less money in real money per year over year than we have.
We have had a model that has had a reasonable level of success, but each year we're taking away components of that model. In Vancouver several years ago, there was an autism team working for the district that could support teachers, support staff in schools with strategies, IEP planning, interventions — that's gone. That was gone several years ago through cutbacks.
We have had great success with teachers collaborating, working with our inclusion consultants, again, doing similar kinds of work, education programs. Those are gone. We lost more this round of budget cuts this year.
Our school district — I'm sure you'd probably hear similar stories from virtually every school district in this province — spends more than double what we're currently funded by the province on special education. It's not keeping up.
The example of autism. We get about $17,000 in what we call supplementary funding to support a child with autism in the public school system. The cost of a special education assistant is about $50,000 a year. Many students with autism, particularly when they're younger, require full-time, one-to-one support. So already we're at three times the cost.
They require that speech language pathology. They'll require psycho-educational assessments just to qualify for the government funding. That requires district psychologists.
They'll require a resource teacher to support their classroom teacher in carrying out their educational plan. They'll probably require some extra counselling, some extra supervision and some requirements from the school administrator to ensure that all of the paperwork is fulfilled.
Those costs are steep. But it can be very effective. I see it all the time. I'm a parent myself of a child who's…. We've been through this. I've worked with parent groups. I've seen tremendous results. And I would argue passionately that the costs of not meeting these children's needs are going to be much, much higher in the long term than providing for them when they're in the school system.
We can make students independent for the most part. They can get out into the community. If we fail them now, they won't. I'm seeing it already in the second week of school. I'm getting calls from parents whose children are in what we call district programs. They are a segregated program, the idea being that that is their base, and they would be integrated where it is to their benefit. If they can participate in PE in an elective course…. Some students have an affinity for mathematics who might not succeed in other classes.
It's getting more and more difficult for that to happen. Parents are being told: "There's no one to support your child when they go out into the PE class or the math class or the music class or the language class" — whatever that child's particular interest or passion may be. So we're already cutting off opportunities.
We're seeing it happen. We've certainly warned the Minister of Education. This problem has been there for many years. It's getting worse by the year. This year is probably going to be among the worst we've seen since back in probably 2002-03. I do caution: we will pay for this if we don't address it.
It's not a matter of: "Throw money. We need a new model." We have one of the most successful school systems in the world. It's not a broken system. It's a very effective system, but it's a system that is malnourished, that is struggling. You can't starve it and expect it to continue to perform.
We rank up there with the top systems around the world. We need to keep investing in what works. We need to be able to provide that professional development time that, again, we've had to cut year over year and particularly this year where teachers collaborate on strategies that work, where they share ideas and come together. We can't afford to provide them even the release time to do that anymore.
There's nothing in what I'm going to tell you that's really unique to Vancouver. We tend to get a lot of atten-
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tion. We tend to get response. But I talk to trustees across the province. It's the same story over and over, and I suspect that your next presenters will tell you some similar things.
These funding challenges for school boards are not going to be solved by closing a few schools; by increasing rental rates to daycare centres, as the minister has suggested; by tearing up contracts with the cafeteria workers. Those are not going to be the solutions to the public education funding crisis.
This is a time in history where education is probably more critical than it has ever been to individuals and as a society. We have an increasingly knowledge- and information-driven economy. The 20 percent of students who still fail to graduate have very bleak prospects — far more than any other generation to head out into the world without a high school graduation.
We will be paying the costs of not fulfilling the needs of our most vulnerable students — whether they're special education, whether they're students living in poverty. We certainly see that in Vancouver. We have among the poorest children in the country, we have some of the wealthiest in our district, and we have everything in between.
Those most vulnerable children are aboriginal students, special education students, students who live in poverty, have unstable housing. They're the ones who really bear the brunt of this current economic situation — not just through the schools but through all the other supports that have been available in the past to them and have been cut back through other grants and reductions. It is an alarming situation that I think is probably close to a crisis point.
Vancouver school district since 2003 has made about $67 million in accumulated spending cuts. That's that gap between where our costs have grown — and mostly they're provincially determined costs: the salary increases, the benefit increases that are negotiated provincially, pension plan contributions, MSP, all of those increased costs that aren't funded — compared with the increases in funding that we've had.
So we hear the message: "More funding than ever." Funding is here; costs are here. There's that gap. Each year it gets a little bit bigger, and where do we have to go? We have to balance our budget. So where do we have to go? We have to go to what we do — which is services to students. We keep doing that year over year, and we need to reverse that trend. We cannot keep doing it.
We don't have a broken system. It isn't in need of radical reform. It's a system that has been proven to be among the world's best. We need to take care of it. We need to attend to it. We need to invest in it.
No question. There's always room to improve, but it's very difficult for us to move forward with improvements when we're constantly trying to put our finger in the dyke and find ways to carry on.
I'll move now into my brief, which you have. We could have written you many, many more pages, but I know that's probably not what you need. You need concise and clear statements. I've done a little preface just setting the district's scenario. Again, these would apply…. I don't speak for anyone but Vancouver, but you will find the same story provincewide.
Our first recommendation, our key recommendation. The province must provide stable, predictable and adequate funding to enable school districts to fulfil their responsibility to provide continued equitable access to quality public education.
Unpredictable funding and unfunded cost increases require school districts to spend significant time and resources on balancing budgets each year instead of strategically planning the most effective use of funding to support students. This chronic underfunding also makes it increasingly difficult to fully support success for students, as valuable programs and staff positions are further reduced in order to balance budgets.
The second recommendation. At a minimum, all negotiated or provincially mandated increases including salary, benefits, pension contributions, medical premiums and new requirements such as carbon emission calculation and carbon offset purchases must be fully funded by the province.
The province does not currently provide funding for net cost increases of employee salary increments — that's when staff move up their own salary grids within their categories, and that has been a significant cost for us in net costs — or increased costs of benefits such as CPP, EI, WCB, extended health and MSP. In addition, inflationary costs for goods and services and new costs imposed by the province, such as the requirement to calculate and report our carbon emissions and carbon offset purchases, are also not funded.
These unfunded costs represent a significant portion of the accumulated $68 million in operating expended reductions in just the Vancouver district since 2002-03. These unfunded costs are projected to increase for our district in 2011-2012, the next school year, by close to $6 million — $5.93 million is our current staff projection — and by $6 million the following year.
In order to meet their spending obligations on these items, districts must divert spending from other important areas, such as the budgets that support children in classrooms. We simply cannot afford to take more funding from our operating budget to cover these costs without increasing these reductions to support for students.
Our next recommendation. Our numbering has been mistaken. It's actually the third recommendation. The province needs to review and increase supplemental funding grants for students with special needs. Grant amounts should be based on functional assessments of learning needs — in other words, based on what specific
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supports a student needs to successfully access education. The current model, which is based on medical assessments, does not consistently reflect individual student need for support.
The Vancouver school board allocates more than twice as much to supporting students with special needs than the province provides in supplementary funding. Despite that, service levels continue to be inadequate for providing for each student's learning needs.
The need to provide increased funding for increased maintenance and upgrades to address the needs of aging school facilities — our province should increase funding for ongoing maintenance using industry maintenance standards as a guide. Funding for school building maintenance levels has generally been approximately 25 percent of industry standards, and that's according to the Building Owners and Managers Association — what they recommend in terms of how much you should be investing in your school maintenance.
The VSB's aging stock of buildings is at risk of accelerated deterioration due to minimal maintenance levels. Our ability to carry out necessary and preventative work has been hampered not only by insufficient funding but from last year's abrupt cancellation of the annual facilities grant and the subsequent only partial restoration, where it was spread over two years. Levels must be increased and must also be stable and predictable.
We must have a real plan to eliminate child poverty in B.C. — this is our final recommendation — and ensure that all families have access to affordable, quality child care. The correlation between child poverty and failure to succeed in school is strong.
Despite the VSB's allocation of additional resources through our inner-city schools programs and CommunityLINK, the needs of our students far outstrip our available funding to provide support. A comprehensive provincial plan to address child poverty and to make quality child care accessible and affordable would enable increased numbers of students to succeed in school.
On behalf of the Vancouver school board, I thank you for this opportunity to present our recommendations.
J. Les (Chair): Thank you very much.
M. Mungall: Thanks very much, Patti, for a very succinct presentation. You don't know how much we do appreciate it.
You're absolutely right to say that a lot of the things you're talking about occur all throughout the province. I know that I've heard it from many school trustees throughout the province, not the least of which is my own, in my area, which is school district 8. I hear the exact same things that you were pointing out.
Just going specifically to the issue around child poverty. Right here you say "a comprehensive provincial plan." Could I infer that the Vancouver school board, then, would be interested in seeing a provincial poverty reduction plan in general?
P. Bacchus: Yes.
J. Thornthwaite: Thanks, Patti. Could you be more specific as to how you want to change the funding model from a medical assessment to a functional assessment for kids with special needs?
P. Bacchus: The current model that's used is based largely on a diagnosis of a child — for example an autism diagnosis, which is a very broad category. As we know, that can go from a fairly high-functioning, fairly independent student who needs minimal assistance to quite a profound full-time requirement for significant support, perhaps even medical support — complex situations. Right now there is no additional funding provided, for example, for students with learning disabilities.
The students themselves vary quite significantly over time — even an individual student who in grade 1 might require full-time support in grade 12 might require very minimal support. There's a lot in between. There is nothing that really reflects what that child's actual needs are.
We develop IEPs, but they don't correlate with the funding. So you can sit down with specialists, with school staff, with the teacher, with the parent, in some cases the child, and come up with an educational plan. There is no connection with the funding. We have the funding piece on one end. It's not a spending model; it's a funding model. But it's really disconnected from the classroom reality.
We need a more realistic way of looking at what this particular individual child needs in order to succeed. That's not going to be simple, but there are ways that you can do it with technology and checklists and different types of approaches. But what we're seeing is the disconnect between the funding piece and what is actually required on the other end.
J. Thornthwaite: Can I just supplement? So you're basically requesting not just the medical diagnosis but to take it further. I understand. I know that autism spectrum. So you're saying take that so-called diagnosis but assess them additionally for what each individual person can actually do, and the funding should be connected to all of those particular categories. Is that what you're saying?
P. Bacchus: To an extent. It wouldn't necessarily have to be done for each child over and over. There could be a model developed that would address what a child with autism in this kind of functioning area requires to succeed in school and at different phases of development.
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We've had some of these discussions. I think some of it is actually happening provincially at the Ministry of Education, and we do support that. We've discussed it sort of locally, how the funding piece is a little bit, "Here you go. Here's your lump of money. Go figure it out," and it really has very little connection.
There are ways, I think, that you can look at it with educators. I think it is important to work with the educators on what does a typical child with autism — high functioning, low functioning, mid functioning….
That expertise is available, but we need to discuss it with the people who actually deliver education in schools — what is it they require to fulfil a student's needs and enable them to learn and what are the pieces of that, and then what is the costing of that — as opposed to saying someone who is diagnosed with autism is eligible for something, or the district is eligible, in effect.
J. Thornthwaite: Is there another jurisdiction that is your kind of ideal model?
P. Bacchus: I'm not aware of what they are doing in other jurisdictions.
D. Donaldson (Deputy Chair): Thanks for your presentation. You actually answered one of my questions, which was: "How's it going this year compared to last year?" We hear that more money is being spent in education than ever, and yet that's just the spending side of it. The cost side often gets ignored. You pointed out that costs are going up faster than the revenues that are being put into the system. If I heard you right, you said that gap is widening. Thanks for that clarification.
My question is around one aspect of that, and that's the carbon neutrality legislation. Could you fill me in a bit more on how that's going?
I understand, and I agree that there are good reasons for trying to become carbon neutral in our society; however, the resources didn't seem to be there for the school districts to be able to do that.
Is it simply around carbon offsets, or were there structural changes that had to happen at facilities as well, and how are you dealing with that right now?
P. Bacchus: The situation we're in is there are a number of steps. One is it begins with the requirement to calculate our carbon emissions — not a simple task. We'll be using the province's SmartTool, and we have to pay — I believe it's $44 a student — for the privilege of using the web-based tool that belongs to the province to calculate how much money we're going to have to spend. So that, right off the bat, is costing us, I think, in the neighbourhood of $45,000 a year.
We now have to hire someone because of the complexity and lengthy data that now must be input — everything from fuel use in our fleet of vehicles to building types, heating types. At a time when we're asked to reduce administrative costs and focus resources on the classroom, we're spending a lot of time and effort to put this information together.
We're in a dilemma in Vancouver. We have, as I have referred to, an aging stock of buildings, outdated buildings. We do rely on our annual facilities grant funding to make building component upgrades that would bring us toward carbon neutrality, and we absolutely support going in that direction. However, we don't have the funding to make the kind of changes in many cases that would make a significant impact on carbon.
We're doing a lot of work in sustainability, everything from composting and working in the schools, working with students. We've put in solar panels and got grants. But the real emission savings often come from your heating systems, your windows. That requires investment.
We were in the midst, a year ago right now, of grappling with what to do with a sudden cancellation of $11 million. We got a letter on a Thursday saying: "It's not coming." We'd already been carrying out the work that summer. It put us in a crisis as we were trying to do school start-up — how we were going to finish.
We had situations where we had schools that were, in one particular case, stripped right down for a seismic upgrade. We were going to use our facilities grant funding to go in and upgrade its 80-year-old electrical and component system, and that was AFG money we suddenly didn't have. We did find a way to deal with that, a very one-off special case, because it was absurd. But that's the kind of situation that we're….
Then, of course, once we calculate this, we will be required to…. We're now already accruing a cost of carbon offsets, which I believe is in the case of a few hundred thousand dollars a year that it will cost the district, with minimal ability to actually move toward…. We're fully cooperative and wanting to work toward that goal but being penalized financially for a situation we have no financial means to prevent.
That money — using the SmartTool, paying someone to calculate, buying carbon offsets — is coming out of classrooms. It's not going to make it a lot easier for us to get there. We'd like to work more. Where is that money going to be going and, in fact, is it going to be coming back to school districts to enable us to upgrade those buildings?
B. Routley: Would you have any data at all on the increasing numbers of special needs kids? One of the things that I'm concerned about is that there seems to be an alarming trend towards more and more autism. Certainly, the Vancouver school district should have a lot of data going a long ways back on what percentage of the student population had special needs ten years ago, for example, as compared to today. Obviously, that would lead one to have a whole lot more cost.
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P. Bacchus: That information is available, actually, from the province's Ministry of Education. They have enrolment data — very good charts, actually; very usable — on their website. It has all the enrolment stats by categories, and the autism category is category G, under special education funding.
What we've seen in Vancouver, say over a five-year span, is approximately that students with autism would have represented about 6 percent of our enrolment five or six years ago. They're now 8 percent. At a time, in real numbers and as a percentage increasing, when overall enrolment is decreasing slightly, the numbers of special education students in actual numbers and as a percentage are both increasing, which also increases that funding pressure as that gap….
We try to go in and, as I say, spend double — more than double — on special education than we're funded. It becomes a bigger piece of the overall operating budget. That increasing trend we see worldwide; it's not unique to B.C.
J. Les (Chair): Okay, we're out of time. Thank you for coming this evening.
The next presentation is educational in nature as well. From the Richmond school district we have Linda McPhail, who's the chair; Al Klassen, president of the Richmond Teachers Association; Teresa Pan, who's an executive member of the Richmond District Parents Association; and Monica Pamer, who is the superintendent of schools.
L. McPhail: Good evening, committee members. My name is Linda McPhail, chairperson, board of education, Richmond. With me at the table are Monica Pamer, superintendent of schools; Al Klassen, president of the Richmond Teachers Association; and Teresa Pan, executive member, Richmond District Parents Association. We are very appreciative of the opportunity to present our views regarding the provincial budget and fiscal policy for the coming year.
As chair of the board of education, president of the Richmond Teachers Association, executive member of our Richmond District Parents Association and superintendent of schools, we represent a larger group of stakeholders in our school district, including school administrators, the Canadian Union of Public Employees and excluded staff, some of whom are attending as spectators tonight.
We are all united in supporting the statement of philosophy for Richmond school district, which reads:
"The Richmond school district is dedicated to providing opportunities for all students to develop the attitudes, skills and knowledge which will enable them to enjoy a productive and satisfying life and to be positive, responsible participants in our democratic society and the global community.
"As trustees, administrators, teachers and support staff within the school system, we share this mission with the students, parents and community whom we serve. It is teachers, administrators and support staff who create opportunities for and provide assistance to students, and it is their knowledge, skill, energy, creativity and compassion which support and nurture our young people in the process of education. Their success, however, is dependent upon the existence of a common vision, which results in collaborative action on the part of all concerned."
The Richmond school district holds a common vision that strongly supports an inclusive culture of collaboration and positive, open relationships with our stakeholders. That is why we are all here together tonight. We feel deeply invested in public education and committed to providing the best possible learning opportunities for the students in our diverse community.
Our local elected board of education has been doing their part to be open, transparent and consultative with the community that they represent. As the attached materials indicate, they have conducted public meetings on the budget development process, advocated on behalf of the school district and celebrated our students' successes. They have also posted information regarding the budget and related school district functions on the district website and strived to be accountable for how resources are used.
In the coming year the school district plans to review all aspects of our organization to ensure that we are using the resources we have in the most effective way possible.
To meet the challenge of diversity, we are committed to supporting an inclusive environment for students and their families. We believe that as an effective governing body, the local board of education represents the public in public education and keeps the school district consistently focused on serving our community through how we school their children.
Here's a brief overview of some of the key attributes of the Richmond community. The Richmond school district has an enrolment of approximately 23,000 students. The population of the city of Richmond is approximately 185,000.
Our students are high achievers, and 91 percent of them graduate six years after entering grade 8. This is noteworthy, as our community is very diverse in terms of languages, backgrounds and income. Currently 6,629 students, or 28.8 percent, are identified, for funding purposes, as having English as a second language. In addition, 12,992 Richmond students, or 56.4 percent, come from households in which English is not the primary language spoken.
At last count 45 percent of Richmond residents were Canadian by birth, 54 percent were landed immigrants, and 1 percent were living here on work permits. On the last census the city had the lowest percentage of households speaking primarily English in British Columbia. This is a somewhat unique feature of the Richmond community.
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Despite a high average income, 23 percent of families in Richmond live at or below the poverty line. According to data gathered by Dr. Clyde Hertzman for the human early learning partnership, children in Richmond face the same range and severity of social, economic and educational challenges as those in other Lower Mainland municipalities.
Results of the 2006 early development instrument indicate that 29.5 percent of the 1,341 kindergarten students were vulnerable or scoring below the vulnerability threshold on at least one domain assessed.
Richmond's schools enrol a total of 1,894 students with a special need identified according to ministry guidelines, and a significantly larger number are actively receiving extraordinary support. Except in very extreme instances, all students in Richmond are fully included in all aspects of the educational program and school life, regardless of their needs, abilities or background.
T. Pan: We are all united in supporting the proposals we are making to the committee tonight. You have asked the public: should government continue to protect core services such as health and education and, if so, how should government increase revenues to pay for these services?
The answer to the first part of that question is a resounding yes. The fact that these are core services that determine the quality of life for British Columbians makes that imperative. How that is done is the job of government to determine. Our comments are based on our belief that public education as a core service is the foundation of a democratic society and sustainable economy. As such, it warrants adequate and stable funding that provides opportunities to improve and meet the challenges of learning in the 21st century.
L. McPhail: Our recommendations address our top priority, adequate and stable funding. Government has consistently stated that funding for education has increased, while student enrolment has decreased. While the funding has increased, so have costs, as these representative examples from our 2010-2011 budget demonstrate.
While the Richmond school district received $2.4 million more funding for 2010-2011 than they received in the preceding year and the per-student funding is 27 percent higher than it was in 2000-2001, we note the following: 69 percent of that increase relates to increased enrolment and labour settlement funding, the latter increasing as a result of the number of students increasing. These moneys are therefore earmarked for the additional costs associated with classroom instruction.
Approximately 20 percent of the increase is due to salary differential funding. However, in 2009-2010 the district lost $1.1 million in salary differential funding midyear. The increase received for 2010-2011, approximately $800,000, therefore does not cover the loss in funding we experienced this year.
None of the $2.4 million addresses the following 2010-2011 additional cost pressures: carbon offset costs, MSP premium increases, teachers pension plan employer share increases, deterioration in facilities because of no annual facilities grant funded in 2009-2010, energy cost increases. These rising costs are a constant reality for school districts and rapidly erode any stated increases in funding.
Along with inadequate funding for rising costs, we are deeply concerned about the stability of government funding for education. As outlined above, grants such as the annual facilities grant of $4 million were arbitrarily removed in the 2009-2010 school year and then only partially restored, to the tune of $1.8 million to date, for 2010-2011.
Salary differential funding of $1.1 million was withheld 2009-2010, resulting in additional budget reductions midyear. Inadequate funding coupled with unexpected reductions after the year has begun create a sense of instability in the school district that detracts from our primary focus on providing a high-quality education for our students.
New initiatives are an additional factor in our concerns about funding. Government has already introduced exciting opportunities for young learners, such as StrongStart and full-day kindergarten. Potential new initiatives include learning opportunities for three- and four-year-olds and reforming schooling for older students to meet the challenges of learning in the 21st century.
We feel positive about these new initiatives and want to work with government to make them a reality. This enthusiasm and creativity is difficult to sustain in a budget environment that is uncertain and characterized by ongoing staff reductions and fewer supplies and services. The hope and promise in these initiatives becomes eroded by the fear and uncertainty surrounding government funding for education.
Therefore, our recommendations are that government should recommit itself to stable and predictable funding, which was a campaign promise that has not been fulfilled, and should specifically commit itself not to engage in midyear clawbacks of funding as it has done for the past two years. At a minimum, annual facilities grants should be reintroduced at previous levels and should be aligned with the fiscal year for school districts to prevent erroneous identifications of balances as surpluses. New initiatives should be fully funded rather than funded by reducing existing budgets elsewhere.
A. Klassen: We understand the harsh reality of the global economic situation and the budget challenges that the province continues to face. However, public
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education is vital to our future. Continuing to increase the strain on school district budgets, and thus on our personnel, must eventually result in less support for students and weakened student achievement.
Our staff cannot continue to pick up the slack. We submit that the real costs of the education system and the genuine harm done by failing to adequately fund it must be acknowledged and addressed. There is no better investment in building a stronger British Columbia.
L. McPhail: The Richmond school district motto is: "Our focus is on the learner." Help us keep our focus. On behalf of the board of education in Richmond and all of our stakeholders, thank you for this opportunity tonight.
B. Ralston: Thanks very much. It's striking how much commonality there is between your presentation and the presentation we've just heard from the chair of the Vancouver school board. But my question was a different question.
There's been some recent discussion about what's called the 21st Century Learning Initiative, and I understand that it's something that's being considered in some school districts in the province. I don't think the minister has made any formal announcement about it, but I understand part of that involves a major rethinking of what secondary schools do, including drastically reducing the number of in-school teachers and increasing the number of apprenticeships and out-of-school experiences for students as they get older.
Obviously, this would have a major impact on education in the province and on the budgeting for that kind of a system. I'm wondering whether there's anything that you could assist me with in terms of beginning to understand that and to get some sense of the direction this may be headed in the absence of any formal announcement by the minister.
L. McPhail: I'll let Monica Pamer, our superintendent, who has been in on some provincial discussions, answer that.
M. Pamer: Actually, what you said tonight is probably more than we've heard officially yet, but certainly some of those indications are there in the sense of personalizing learning for secondary students, connecting their learning with the outside world more closely.
We haven't gotten down to getting specific enough about it to say: "Okay, what does this mean in terms of our bricks and mortar and our staffing?" We're listening very carefully to see what exactly this initiative entails. So all that we have is pretty much the same information you do, perhaps even less specific than what you said tonight.
But we would agree that there is considerable impact in whatever unfolds there if it unfolds in the way that it's been primarily, and sort of in a preview way, described. However, the financial implications of that — if that's the case, we have to sit down and work those through when we actually know what those reforms consist of.
From our perspective, we don't have any official information on that — just some early hints.
D. Donaldson (Deputy Chair): Thanks for the presentation. It's very powerful to see such a coalition make a presentation like you did tonight, so I congratulate you on that, and I congratulate you on your graduation rate. It's very impressive, I know, from the school districts that are in my constituency and considering that 56.4 percent are coming from homes where English isn't the first language being spoken. That's good work. Congratulations on that.
I have a question around the uncertainties that you describe around funding and whether you see those uncertainties leading to inefficiencies that therefore even create more of a funding problem when you're not certain about funding and whether it leads to inefficiencies.
Secondly, I think it was about $300,000 that I saw in the salary differential funding. It was $1.1 million last year, $800,000 this year, so about $300,000. Is that having a direct impact on the classroom environment?
L. McPhail: I'll speak to the uncertainty first. You know, we have really amazing staff from the administration office to teachers to CUPE to administrators. We work hard to prepare our budget. It takes us several months to prepare our budget, and we do that wholeheartedly — trustees working with all our staff — and when you have the midyear reductions, those are really difficult. You've already passed your budget. You're already implementing your budget, and the cuts come in December.
That causes our staff from all levels anxiety because we have to then recast our budget. That may mean making adjustments to classroom services — not classroom teachers, but supporting services during the year — and that does have an effect.
Perhaps, Al, you'd like to talk about it from a staff point of view. Staff are anxious.
A. Klassen: Well, staff obviously know what's going on. We pride ourselves on trying to get all the information to teachers that we can, as Richmond is very much an open and inclusive district, as you've heard.
The inability to plan, to know what your budgets are, to figure out what you'll be doing next or where the money's going to come from for many of the things that are going on in schools does have a huge effect — on the teachers themselves, the EAs, everybody throughout the whole system.
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From my vantage point, having been in my position as president of the Richmond Teachers Association for about the past ten years, I've seen a real erosion of money in the system. We are losing personnel after personnel, year after year. It is definitely impacting on the system. We know that success or graduation — all the rest of it — is starting to flatline. I was predicting this years ago, in terms of saying that if you don't put money in the system, this is what's going to happen.
I think we were out by a bunch of years. I think the personnel from trustees on down to CUPE workers are really trying to make it work, but you cannot keep on slapping band-aids on top of band-aids in terms of making the system work. You've heard both from our presentation and the previous presentation, the previous speaker, what kind of money is being lost to the system year after year after year.
That does have an effect. Teachers feel it. Other staff feel it. You can't make the system work in that kind of a scenario. We're losing lots going to other places. We're laying off teachers — young teachers that we'd like to keep in the system. All those things have a great effect on the system itself, on the education.
Kids experience it as well. They want to see the same teacher come back next year. They want to do lots of things after school. If teachers are not happily engaged, they're going to withdraw; they're going to disengage from being able to provide the richness to the program. You will get a lot of the mechanical stuff going on, but you won't get the richness that really drives our public education system.
What makes it unique? It's the personnel. It is the personnel that come forward and invest themselves, invest their lives, into the system. When we disrupt it to the level that we're seeing here through lack of stable, committed and ongoing adequate funding, that's what you're going to get. So I'm not surprised by the declines; I'm not surprised by what's happening in the system. We do need more money in the system.
J. Thornthwaite: Thank you for your presentation.
A specific question, Linda, on No. 2, your recommendation about the annual facilities grant. Can you explain to us, if we were able to align the funding with the fiscal year for school districts to prevent erroneous identification of balances as surpluses, how that would affect your reporting system, how that would affect your funding model, how that would affect your ability to utilize and maintain the funds? Can you just explain that a little bit more?
L. McPhail: Sure. Right now the Ministry of Education runs on the government fiscal budgeting while we go the school year, so September to June. When you come out with your final budget, your balances at the end of the year — at the end of March, I believe it is — we still have April, May and June of schooling. So what looks like a surplus really are committed funds.
We see that as unjustly being noted for having surpluses. I can tell you that at our last board meeting we passed our 2009-2010 budget, and we had a $160,000 surplus in a $180 million budget. That's not very much money left over. We spent every single penny that we got. We've talked with our accounting staff, and if we were in alignment together, it would just make easy reporting, for sure, and budgeting as well.
J. van Dongen: Thanks for your presentation. Could you just explain? You said 20 percent of your budget goes to salary differential funding. I don't understand what that is. I wonder if you'd just explain what that issue is.
M. Pamer: Salary differential is a grant that you get which helps compensate for the price of your least expensive teachers and your most expensive ones. It's a grant that is based on a formula and you have every year. I think the problem here was for us it would have been $1.1 million — not the highest in the province, but it was money that we assumed was coming, because it always had.
Suddenly it wasn't coming, and that was a December realization. So we were at the point where we'd have to go and reduce staff midyear, which you don't want to do. It really destabilizes things for children. We had to go and actually claw funds back from the schools, reduce budgets and sort of scrape together that funding.
As it says in here, this year we got $800,000, but it didn't make up for that midyear clawback that we had to do, and it wasn't the full amount. It is a formulaic compensation for differences in your salaries.
J. Les (Chair): Thank you all very much for coming this evening.
Our next presenter is Dr. Andrew Thompson, with a supporting cast.
A. Thompson: Thank you very much for allowing us to come tonight. These are my colleagues, Dr. David Taylor and Dr. Andrew Ignaszewski.
The issue that we want to discuss tonight is the issue of Canadians who elect to study medicine overseas. It's an important issue to all of us, and it is an important issue to all the people of British Columbia. There have been two prior commitments given in throne speeches to provide funding to bring people back that are studying medicine overseas, and it's time to translate the commitment into some real action.
In June 2010 the Minister of Health stated that the government of British Columbia would provide a family doctor for every single patient in British Columbia by 2015. At present, even in major metropolitan areas,
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many, many patients are having difficulty finding a family doctor. This deficit has significant repercussions in the health care system. Many of these patients end up in the emergency department that could be otherwise dealt with on an out-patient basis.
Our society was formed about a year ago, and it's formally incorporated now. We've enumerated 275 British Columbians who are studying medicine overseas. The majority of them are studying in English-speaking countries. It roughly breaks down into a third in the U.K. and Ireland, a third in Australia and New Zealand, and a third in the Caribbean. Despite an overwhelming desire on their part to return to British Columbia, very few of them ever do.
We know that nationally about one-quarter to 1/6 of all Canadians studying medicine overseas return to Canada. The situation is considerably more grim in British Columbia. Last year, as of July 2009, there were 91 Canadians studying medicine abroad who finished their residency training in Canada. According to our analysis of the data, only one was in British Columbia out of a whole population of 91.
What is preventing them from coming back? First of all, there is a significant amount of protective regulations which do not allow them easy access to the system. The second thing is that there is inadequate capacity for residency training in British Columbia to accommodate these doctors.
B.C. needs currently about 1,000 more physicians in practice. This is the result of actions that were taken about 15 years ago, when an economic model became quite popular that said that the cost of health care related to the number of doctors you had, and if you could just get rid of the doctors, the costs would go down. It doesn't work that way, believe me. It gets more expensive, not less expensive.
At any rate, in British Columbia as of July last year, 139 international medical graduates finished their training on July 1, 2009. Of those, 116 were foreign nationals here on visas. Of the remaining 23, only one was a Canadian who had studied abroad in an English-speaking country. This is a significant issue.
The reason I was going to point out about the 139, of which 116 were foreign nationals on visas…. In essence, UBC is selling graduate medical education to foreign governments, and that's the source of the funding for those positions. We believe that there is a capacity there to teach, but the funding capacity does not exist for Canadians that want to return.
We believe that it would be appropriate to fund about 50 more residency positions in British Columbia and that there would be a very significant net saving to the province in health care costs. It costs about $500,000 for the province to educate one undergraduate medical student to the point of being a doctor. These are people that have funded their own education and often carry heavy student debts.
I'm just going to leave it at that. It's late at night. You've been busy all day, and I don't envy you your jobs. I'm happy to answer any questions you have.
J. Les (Chair): Certainly.
B. Ralston: I'm feeling a bit like an intern at the end of the shift, maybe.
Anyway, I just want….
A. Thompson: We understand that.
B. Ralston: I thought you might.
Looking at the international medical graduates, just to be clear, then, these are people who've completed medical education at UBC and then are admitted. So these are not foreign-trained professionals — because that's debate that we're familiar with, certainly in my part of the world, in Surrey — who have received their medical education elsewhere, not necessarily in English-speaking countries, per se, and then come here as medical graduates seeking residency. That's a different category, then. Is that right?
A. Thompson: Correct. Yes. To clarify that, of the 23 positions, 22 of those would have been people that graduated from medical school elsewhere that were not Canadians when they got their medical education, I guess.
B. Ralston: Okay. So now to my question, then. You say that what's preventing them from coming home — and these are Canadians who've received their medical education abroad in the way that you've described — are protective regulations. Could you just expand a little bit on that? I think Bernard Shaw said that every profession is a conspiracy against the public. Maybe we could get a little clarification.
A. Thompson: Okay. This is — believe me — a mind-numbingly complicated topic, because there are many, many different parties involved in regulating these things. But the problem is not the College of Physicians, and the problem is not the British Columbia Medical Association. I'll let you draw some conclusions as to where the problem lies. Just suffice it to say….
I'll give you one example of something that we've managed to change recently. UBC and the Ministry of Health do not consider a British Columbian studying medicine in England to be a resident of British Columbia. They may file taxes, they may cast absentee votes in elections, and they may have a permanent address in British Columbia, but until recently they were not considered residents of British Columbia.
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There are 18 positions set aside for international medical graduates, but they could not access those positions because there was a stipulation that you had to be a resident of British Columbia. Now, UBC has just changed that, at our request. That's one of the millions of roadblocks that are put in the way.
We're trying to get rid of a few more, but the one we're here to talk about is money, and that's why we're here.
J. Les (Chair): Which is the bigger problem?
A. Thompson: The regulations.
J. Les (Chair): I thought so.
D. McRae: Two questions, if I may. How do we measure the quality of the overseas schools? Obviously, some are very well regarded. Others — how do we know?
A. Thompson: That's an excellent question. Virtually all these students are studying in UN-approved medical schools. That doesn't mean all that much. We know that some of these medical schools are very good, probably better than UBC, and some of them are not so good. We think that medical authorities should be relying on objective assessments of that in the licensing exams, and we think that there should be a level playing field for everybody.
Currently if an international medical graduate that is a Canadian wants to come back, they have to go through three sets of exams, and a Canadian going into the intern-matching service doesn't have to take any exams.
D. McRae: A second question, if I may — just a what-if kind of scenario. You mentioned earlier that regulation was definitely a barrier to residency in British Columbia for our students overseas. Let's assume for a second that we are able to find the funding for 50 more students to come in to British Columbia and have their residency here. Is there any appetite amongst people — say, the universities — if it came down to moving through the system faster, because they may wait, if they had the dollars to pay almost like a supertuition fee to do their residency in British Columbia? I know it's not preferable.
A. Thompson: The other major disincentive is what's called a return-of-service agreement. Interestingly enough, the taxpayer funds medical education at the undergraduate level, which is where the vast majority of the money is required.
If someone graduates from UBC, they have absolutely no return-of-service obligation to the society. If someone graduates from Cambridge or Oxford who is a Canadian and comes back, they're assessed by the government of British Columbia as owing $108,000 here for every year of postgraduate medical study that they engage in. These people have assumed very significant debts getting their education overseas, so this makes it a very unattractive proposition.
Now, other provinces do not do that. When I said this is mind-numbingly complex, health and education are both provincial responsibilities, and every jurisdiction has different rules. The only province that currently has an open matching system with no return-of-service obligation is Manitoba, and they have a lot of Canadians from overseas going to Manitoba to study.
I personally believe that it would be much better for all parties concerned if we just simply opened it up and took the best people we could get.
J. Les (Chair): It looks like an opportunity for some benevolent dictatorship or something.
Any other questions?
Thank you very much. It's the kind of presentation that gets one just slightly angry. I'm not sure it was a good one to end up the day with.
A. Thompson: If you think you're angry, talk to me later.
J. Les (Chair): Those are the only scheduled presentations. I don't believe we have anyone else who wants to make a presentation, so we will adjourn for today. Tomorrow morning we reconvene at nine o'clock in the Tynehead Ballroom at the Sheraton Hotel Guildford in Surrey.
The committee adjourned at 8:48 p.m.
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