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 22, 2010
Coast Canadian Inn, Kamloops, B.C.
Present: John Les, MLA (Chair); Doug Donaldson, MLA (Deputy Chair); Norm Letnick, MLA; Don McRae, MLA; Michelle Mungall, MLA; Bruce Ralston, MLA; Bill Routley, MLA; John Rustad, MLA; Jane Thornthwaite, MLA; John van Dongen, MLA
1. The Chair called the Committee to order at 4:01 p.m.
2. Opening statements by John Les, MLA, Chair.
3. The following witnesses appeared before the Committee and answered questions:
1) Thompson Rivers University
Dr. Roger Barnsley
2) Paula Kully
3) Thompson-Nicola Film Commission
4) Thompson Rivers University Students' Union
5) B.C. Cattlemen's Association
6) Canadian Home Builders' Association Central Interior
7) Women's Contact Society
8) Sun Peaks Mountain Resort Municipality
Mayor Al Raine
4. The Committee adjourned at 6:57 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 22, 2010
Issue No. 24
* 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
Dr. Terry Lake (Kamloops–North Thompson L)
Byron Plant (Committee Researcher)
Heather Warren (Committees Assistant)
Dr. Roger Barnsley (Interim President and Vice-Chancellor, Thompson Rivers University)
Kevin Boone (B.C. Cattlemen's Association)
Patsy Bourassa (Executive Officer, Canadian Home Builders Association Central Interior)
Karl deBruijn (Chair, Board of Governors, Thompson Rivers University)
Elizabeth Forster (Sun Peaks Mountain Resort Municipality)
Judy Guichon (President, B.C. Cattlemen's Association)
Jamshid Mirzabekov (Thompson Rivers University Students Union)
Al Raine (Mayor, Sun Peaks Mountain Resort Municipality)
Krystal Smith (Thompson Rivers University Student Union)
Roland Stanke (Chair, Thompson-Nicola Film Commission)
Victoria Weller (Thompson-Nicola Film Commission)
Irene Willsie (Executive Director, Women's Contact Society)
Doug Wittal (Canadian Home Builders Association Central Interior)
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WEDNESDAY, SEPTEMBER 22, 2010
The committee met at 4:01 p.m.
[J. Les in the chair.]
J. Les (Chair): Welcome to Kamloops, everyone. We're going to start today's second meeting. I think we can dispense with the introductions of all the committee members, first of all, because Roger knows everybody anyway.
I guess, Roger, you'd like to wait until Karl gets here?
R. Barnsley: Yeah, Karl is the chair of our board. He's had a busy day, but he'll be here. I'll let him take the lead. I'd say welcome to Kamloops. We always enjoy having you folks here. It's great.
This is the chair of the board of Thompson Rivers University, Karl deBruijn.
J. Les (Chair): Good afternoon, Karl.
K. deBruijn: Mr. Chairman and members of the board, my apologies for holding you up here. On behalf of the Thompson Rivers University board of governors I'd like to personally welcome you to Kamloops once again — and for taking the time and spending the time investigating our directions and priorities for the future.
As the panel may be aware, TRU hosts more than 20,000 students — 10,000 through open learning and another 10,000 actually on campus now. Of the on-campus students, 1,500 are just beginning their post-secondary experience. This diverse population of domestic, international and aboriginal learners creates an intricate educational community that is rich in culture.
Many of the themes that will be touched upon today are consistent with last year's goals and directions. We look forward to continue working with the province on each of these files.
We've been extremely successful in running a lean and focused institution that stays true to its mission: to meet the educational needs of British Columbia. We received $21 million in capital investment from the provincial government to expand our capacity through the construction of the house of learning, the renovation of our main hall and the completion of First Nations gathering places on our Kamloops and Williams Lake campuses.
We're happy to report that our projects are on time and on budget and that occupancy of the house of learning on our Kamloops campus is scheduled for this year. Through fundraising and internal commitments, we have completed the funding package for these projects without cost overruns or construction complications. By maintaining positive private and public partnerships, TRU will continue to deliver state-of-the-art learning environments for our students and our community.
We've also continued to strategically expand our academic programming. Under the direction of a newly appointed provost, the academic realignment has been completed, including the hiring of several new deans with extensive teaching and scholarly experience and administrative accomplishments.
This new academic team will be led by our president-designate, Dr. Alan Shaver, an accomplished academic with an impressive background in educational administration at two of the nation's oldest universities, McGill and Dalhousie.
TRU has also hired a founding dean for the new law school in anticipation of our first student intake in fall 2011. We have commenced planning to create a physical space for this new school in the coming year, and we look forward to the province's input and participation in the project. This facility will house more than 300 students and their faculty and will significantly improve access to legal education and legal services for communities outside the Lower Mainland.
TRU's major academic initiatives for the upcoming year include the continued internationalization of our academic programs and the articulation of an academic plan that embraces the destination university concept, resulting in a greater national recognition. TRU will continue building upon its tradition of excellent undergraduate teaching with a focus on research and the creation of new knowledge in select graduate programs.
As we strive forward to meet the growing demands of the province's learners in an international world built on an information economy, we will continue to be a key component in the ongoing growth of this region's robust tourism, construction, mining and service industries.
In addition, TRU is pleased to report the continued growth in our open learning division. When we first amalgamated TRU and B.C. Open University, creating TRU Open Learning or OL, the enrolments of the distance division had been declining by more than 5 percent every year for seven years and were at 60 percent of capacity. However, we are very pleased to announce that as of last year Open Learning is at 106 percent capacity of the ministry's allocated target.
Also, this fall TRU-OL will again have a physical presence in the Lower Mainland when we open a satellite centre in downtown Vancouver. This access point will greatly help us fulfil our legislated responsibility to meet the open learning needs of the province.
As I reported last year, TRU World, our international division, has continued to increase international student enrolments. In 2010 we reached our highest number to date, with 1,400 students from 80 countries and regions. Tuition revenue from those self-funded international seats accounted for 13 percent of TRU's annual budget.
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On the world stage this university continues to lead the way in the recruitment and retention of international students. Our campus and the greater community are internationally recognized for providing quality education in a safe learning environment.
Continued growth in our international student enrolment has a major, significant economic impact on our region and on the B.C. economy. TRU's international initiatives fuel a large number of services and industries in the surrounding area, yet housing our international students continues to be an escalating challenge.
As government may know, TRU has very successfully utilized debt financing to build a campus to meet the needs of our learners. We would therefore once again ask for a commitment from the province to review its policy on debt financing. The ability to use debt financing to expand our residences, build a new facility for the faculty of law and expand our TRU World operation will ensure that TRU remains a leading learner and economic catalyst in the southern Interior.
While we look forward to expanding our capacity, we must also remain aware of the growing need to maintain our present infrastructure. As we reported last year — and while we understand the financial restraints our province is under — the reduction of our capital improvement grant has led us to once again defer scheduled upgrades and maintenance on a number of our core buildings.
The reduction in the annual capital allowance, the ACA, the funding for cyclical maintenance, will become a real issue for TRU in the near future. The recently completed facilities audit indicated that TRU will need to invest considerable funds to maintain its core assets and improve the environmental sustainability of our facilities. British Columbians have made a significant capital investment in TRU, and this investment must be protected.
In conclusion, we again applaud the province for its commitment to post-secondary education. At the same time, it is imperative that we maintain our institutional momentum. Any cuts to our core budgets would mean a reduction in quality and accessibility for our students and have a negative effect on the communities and the regions we serve.
We once again assure the province that Thompson Rivers University will continue to be an educational and economic driver in British Columbia. TRU is committed to working with you to provide British Columbians with the accessible, affordable and quality education they desire and need.
Just before I finish, we did bring some examples, especially of the facilities requirements, if that would be of use to the panel. Again, on behalf of the board of governors, the faculty and students of Thompson Rivers University, we want to thank you for this opportunity to meet today. We appreciate it very much.
J. Les (Chair): Thank you very much. I have a few members who would like to ask some questions.
D. McRae: Thank you very much for coming. Earlier in our hearings we had a presentation from the Canadian Bar Association. They talked about the struggle to get lawyers to go to small and rural communities. With the TRU school opening, I guess, next year, is there a focus on trying to get and retain and attract lawyers to those areas?
K. de Bruijn: Absolutely. I think that would be our focus. As the panel may be aware, we have a new dean. I just met with him last week, actually, and he is very actively focusing on specifically that, even to having articling positions in smaller towns. Many of the firms in Kamloops have satellite offices up at Clearwater or in Chase, just as examples. These would be great opportunities for students.
D. McRae: Perfect.
B. Ralston: Last year you mentioned that you were concerned about the implications of the university being in the government reporting entity, because it didn't enable you to borrow. The government apparently responded, maybe not directly to you, but did include something in the throne speech saying that they were willing to consider that.
As you know, it wasn't that long ago that the SUCH sector — schools, universities, colleges and hospitals — were moved into the government reporting entity. Further, I gather, the Auditor General — I chair the Public Accounts Committee — has expressed some reservations about how this might work, given that the usual measure is that if an entity is controlled by the government, then it should be in the government reporting entity.
Where is that discussion at, and what solutions are you offering to the government in terms of meeting your objectives yet meeting some of the important accounting principles?
K. deBruijn: I think I'd ask Roger, if the panel doesn't mind. He's much better versed in it than I am.
R. Barnsley: First of all, we were very pleased to see that in the throne speech, but to date it has not been legislated, and it's not been put into action. Let me point out that I think we are either the only or one of two provincial governments in Canada that requires that all public institutions such as this be incorporated into a consolidated government debt and through the general accounting principles. Other places have found a way to work with this. Indeed, we did up until several years ago.
When we were not incorporated in that, we could go out and develop a business plan on a new capital project,
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develop the revenue projections, carry it out and go seek lenders. Under those lending requirements, we would achieve a credit rating that would be separate and distinct from the provincial government. Based on that, we would decide whether we could go ahead with the plan and whether we were able to secure the financing for it.
Under those circumstances, we built about 15 years ago the first — I'm told it may well be the first — public-private partnership program in British Columbia. We built a residence with a local entrepreneur. It houses around 300 students. We set it up in a way that it was on leased land so that it reverts to the university after a period of time. The project at that time was $7 million. It's operated and managed to our standards, and quite frankly, it's been a magnificent partnership where we've worked well together.
We built at the time when we were a university college. Shortly after that, we recognized that we didn't have any social space on campus. We had students who didn't have a place to have proper cafeteria space because as a community college we weren't funded for that kind of space and the government didn't have that funding.
We put together a project. We built the $15 million Campus Activity Centre. Probably the replacement value would be closer to $30 million today. We have paid for that building and paid every penny of that, except now for a few million dollars, but basically have paid for it all out of the ancillary revenues that come from operating services for students — bookstores, food services and the like. No charge to the provincial government.
Ten years ago we found we had a very successful international program. We did not have the space on campus to accommodate it because the government said that you could only judge the capacity utilization of your facilities by virtue of the number of domestic students that were using them. I quite agree with that policy. I think it was an excellent policy.
They said, though, that we could attract as many international students as we wished, as long as we charged them the full value of their education. In other words, they would not have the provincial contribution.
What no one had ever done before and what we did, which I think was very noteworthy, was we decided that not only should these international students pay the operating costs of their education but they should also pay the capital cost of their education.
We determined that we would place a $1,800 amount on their tuition, and out of that we built the International Building, which cost, eight years ago, $15 million, which has not a penny of government money in it. It continues to support now 1,400 international students and the approximately 75 faculty members we hired to support the broadening programs that are made available by the $22 million we received last year in international revenues.
Five years ago we recognized that one of the great needs on our campus was residence space for students. We had, as I said, a public-private partnership that yielded approximately 300 rooms, but the rule of thumb is that you should have one room for every incoming student — not that it's only for incoming students, but that just seems to work.
We should have 1,500 residence rooms on this campus. In order to do that, we set out to find a way to do it. We found a developer. We did a business plan. We did the loan. He did the loan, in fact. We got all the guarantees in there — a very, very thorough and reliable business plan. We have now built a $45 million project on our campus that houses over 500 students without a single charge to the provincial government.
All of those projects have generated the work, the economics and so forth, and have allowed us to expand our university. Having said that, we now need to expand our International Building, because it was built to house roughly 1,200 to 1,300 students. We want to have 2,000 international students.
I might remind you — I'm sure you know — that the attracting of international students was one of the main pegs of the Ontario government's throne speech this year, and we, as a province, are very far ahead of them. We need to be there to continue this. This is a huge economic driver. The economics in this community is probably $60 million a year of direct economic impact on this community.
We need to build our International Building. Again, we need probably another $10 million in addition. When we designed it initially, we had that there. We need another 700 residence spaces on this campus.
J. Les (Chair): You had a follow-up question, Bruce?
R. Barnsley: Let me just conclude. We can't do any of that by just….
B. Ralston: He was pausing for effect.
R. Barnsley: Thank you very much. I was, indeed.
We can't do any of this under the current situation, and yet we've got this wonderful record of success. We've met everything we said we've done. We're prepared to move ahead, and it's in the best interests of this community, the students and British Columbians if we're allowed to do that. So I think our point is that we've got to get this straightened out.
B. Ralston: If I might. That's an impressive story of creative public enterprise. I suppose the Auditor General might object that with a less prudent or cautious board, that if there were financial default, the province would be forced to pick up the pieces.
Besides your record, what would you say to the Auditor General if that were the objection that was raised?
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R. Barnsley: I think you need to do the due diligence on each of these projects. You have to think about them on an individual basis. We actually brought the credit rating people in, and they did it on us, so now we've got a very strong credit rating, and indeed, we should have. I suspect that an institution that had not met its standards, that had difficulty balancing its budget year to year, would not get a very good credit rating and, on its own merits, would probably not be allowed to proceed.
We're proud of our record. We have been responsible, and our university is in a strong financial situation under often difficult times. We don't think it's in the best interests of the university or the province not to allow us to proceed on this basis.
D. Donaldson (Deputy Chair): Thanks for that presentation. I'm familiar with TRU. I had a couple of sons attend the institution, so maybe I helped to build the capital fund as well. I don't know.
I had a question about access. We've heard from a number of post-secondary institutions in our deliberations so far that wait-lists have been an issue. My question to you is: is there a wait-list for students trying to get into courses at TRU, and has that been increasing, decreasing? What's the trend?
R. Barnsley: Let me tell you. The fact is we have wait-lists on programs that have limited access, competitive access — nursing, social work. Those are not entirely flexible, as you know, because they're very expensive programs, and we have a defined number that can get into those. There are indeed waiting lists there.
With regard to the general programs of arts, business, tourism, and so forth, we are able to expand capacity. But let me point out that the expanding of capacity…. I'm going to say something that will not make a lot of people happy.
When I came here 12 years ago, we had a very, very difficult situation. Tuition fees had been frozen for a time, and what it meant was that we had to put strict limits on all of our programs, because as we entered more students, there was not sufficient money from the tuition to expand the instructional resources they needed.
The balance you must get is to have the marginal revenue from new tuition fees to allow you to expand the capacity of the institution. When that does not happen, you have to draw lines, and we're very close to that. I bring that out to this group, that you will have to keep an eye on that, because as tuition is only allowed to grow at the rate that it's growing at, and if we need more and more capacity, we may not be able — in fact I predict we will not be able — to have a flexible capacity that will allow that to happen.
In those days, I might add — and it's quite ironic when you think about it, but I stand by this because it's on the record — we had the students society asking to have tuition fees released because it was taking students five to six years to get courses, because there was no capacity. We're not at that stage now, but I say this on the eve of my retirement that I give that out as a…. It's amazing what you can say on the eve of your retirement, when you're not in politics.
I really do raise that for you as an issue that must be attended to as you progress.
J. Thornthwaite: Thank you very much. Unlike you, I can't say very much. We're already kind of…. We're not in a popularity contest here.
You had said in your brochure here that 13 percent of your budget is from international students. Is that…? Okay. So with this goal that you have to increase your international students — and I know that that is a priority, and I understand the reasons why — what would be the percentage that you would want? What is your goal as far as international students, given the progressive plan that you're working on?
R. Barnsley: It's a very good question. Right now we think 20 percent is the right number. But you evaluate this as you go on, and you just can't grow it overnight. The growth you've seen has been a 5 or 6 percent increase a year. I think when I came here the enrolment was 5 percent; now it's 13 percent. That's over a 12-year period. We'll see this grow. Probably, if we look out five, six, seven years, that's when we would hope to get to 20 percent by and evaluate it at that time.
The key is that you have to have…. We have a great many resources and infrastructure to support the international students. It's not that they're just put onto the campus. We have special counsellors that their fees allow us to pay for. We want to build it in a very methodical, integrated and comprehensive way.
N. Letnick: Dr. Barnsley, just following up on your comment regarding tuition, we've heard two student groups, and maybe from a third today behind you….
R. Barnsley: I'm sure you will.
N. Letnick: They would like tuition fees rolled back to 2001 levels. If that happened, what impact would that have on the quality of education at your institution for students?
R. Barnsley: Well, nothing would happen if the government would fund the difference. I mean, this is a zero-sum game. This is not rocket science, so I think you folks should make up where you want to put your resources — or the citizens of British Columbia's resources.
J. van Dongen: Now that you're a university as opposed to a college — and I know that the delivery model for
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colleges involved class sizes that limited out at around 35 students — are you revising the delivery, at least on some courses, to focus on more students in the courses where that's suitable, like the other universities are doing?
K. deBruijn: I think there has been some adjustment in that, but I think TRU is really truly committed to keeping the class sizes sensible and manageable. I personally as board chair have attended meetings of board chairs from all across the country, and I hear stories of classes of 500 in the first year and that kind of stuff. Certainly, there are no plans…. That's one of the key strategic goals of Thompson Rivers University — to have good class sizes, where students have contact with the professors and that kind of thing.
A balanced approach to that? Absolutely.
J. van Dongen: But a balanced approach should require some consideration, because we have courses…. I went through courses at UBC that had 300 students in them, and if you've got good professors, you're probably delivering better education. So I think we have to look at those things. You know, you can't be a university and not look at those sorts of things in terms of improving the delivery and maximizing the value of good profs. So I raise it as a question.
J. Les (Chair): Any further questions from anyone? Okay.
As usual, thank you both very much for coming. Are you going to be retired before we come back?
R. Barnsley: Well, I was going to say, John, with any luck, this is the last time you'll have to put up with me. That's luck on my part, anyway.
J. Les (Chair): It's not necessarily lucky for us. You've always been a great inspiration.
R. Barnsley: Well, I must say…. I should just add, too, because it probably will be the last time — in fact, my wife says it definitely will be the last time — I really appreciated the commitment of the MLAs, coming here to hear this every year. It's been a valuable exercise for us. It makes us focus on what our priorities are, and I hope that you've found our input valuable. Thank you all very much.
J. Les (Chair): It was. Thank you. Congratulations.
Our next presenter is Paula Kully.
P. Kully: I hope you don't mind. I'm not quite an eloquent public speaker, so I've had my notes here…
J. Les (Chair): You're doing fine so far.
P. Kully: …and will probably just read from them.
You know my name. I just wanted to thank you all for taking the time to let me and other people in our community speak to you about our budget.
To begin with, I'd just like to say that in general I'm very happy with the way our province has been run over the past nine years. Our economic and fiscal standing remains strong despite some challenges in our global economy, so that's obviously good fiscal planning on behalf of our government.
In regards to the previous speaker, I work for the Kamloops 2011 Western Canada Summer Games right now. That's not why I'm here. I'm not representing the games, but I just wanted to say that the university is a partner for our games, and they have been awesome. Without the university, we wouldn't be able to hold the kind of event that we're going to be able to here in western Canada. So it's a great profile not just for Kamloops but for our province as well. Just a little plug for our university there.
Anyhow, I've lived in rural B.C. for about 17 years, and for the past 12 I've worked in economic development and municipal government. Like I said, I currently work for our games, so I've had a really good opportunity to get in touch with people living and working in rural B.C.
When I say "rural," I mean outside of the Lower Mainland. There's a real line there. I'm sure you all realize when you're out and about in these sorts of forums that people outside of the Lower Mainland have very different issues to deal with. So although I'm presenting to you as an individual today, my work really has given me insight into the way other people in our community feel and think about things.
Some of the issues that have been presented to me from friends, family, other people that I've worked with are in health care, of course. That's a really big issue here in Kamloops right now, in particular with the hospital sterilization equipment. People are really feeling that this issue has great urgency — that we can't just not do something about it. It has to happen very soon.
Kamloops is a health centre for a greater region, and many of the people from areas north of here, such as 100 Mile House or Williams Lake, are referred here to Kamloops for specialist appointments and even surgery. So our hospital is really serving a much larger population than the city and the general outlying region. We really, I think, need to work with government to bring it up to a standard where it's doing what it could be doing.
On a broader scope, really there's a need for more doctors. Right now there are approximately 85,000 people living in Kamloops, and 1,100 of them do not have a family doctor. I know this from experience. We just moved here about two years ago and were so fortunate to get a family doctor, just because I wouldn't leave it alone and happened to get on a waiting list for a doctor
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that was coming down from Prince George. But something I was told by Interior Health is that there are approximately 1,100 people that do not have a family doctor. So that's putting much bigger pressures on the walk-in clinics and the emergency wards here.
Education is also another obvious issue. People are generally understanding when there's a need to restructure and make cuts when the cost of education is going up and enrolment is going down. But on this issue, there are two things I want to point out.
The formula for funding education in rural B.C. cannot be the same as in urban centres. The logistics of running a school in small towns is completely different. For example, busing costs are higher, as schools serve a larger region. It's unrealistic in many cases to close schools where enrolment is low, because the alternative can mean two-hour bus rides for kids as young as six.
I think we need to investigate new alternatives, such as Sun Peaks has done. When faced with the possibility of losing their nearest elementary school, concerned parents partnered with the school district and developed a balanced education centre at Sun Peaks. I've attached a copy of a recent article that was in our Kamloops daily so that you can have a review and see what that's all about.
Secondly, I personally believe our province's education system and curriculum need a major overhaul. I have two kids. Both of them have graduated, but their years in school were not full of fun and learning. On the contrary, it was a struggle, and they were both just doing time because they knew they needed to get their high school to get into university or college. I have to say that some of the issues they encountered just weren't acceptable. There were teachers that really shouldn't be teachers, and they were learning things that just aren't relevant for kids in our kind of a world today.
Social service is another big issue that keeps being brought up time and time again. I believe there are people in our social service sector that are really falling through the cracks. There are people that don't have a noticeable mental or physical disability, and they just end up, like I say, falling through the cracks.
I did have a personal experience with a friend of mine who had schizophrenia, and he used to be independent, could live on his own. When health care cutbacks were made, he was no longer able to maintain on his own. He was put into sort of a group home, and he really has consistently gone downhill from that time on.
I don't have any answers. It's just something that I think needed to be brought forward. The professionals are the people who really need to find the solution to that.
Additional funding for rural communities has always been a big thing on my mind, having lived here for about 12 years. When I say "rural communities," I mean places like Kamloops but also places like Little Horsefly, 100 Mile House — those small communities that are generally resource-dependent. When they're struck with an issue such as the current forest situation, they really suffer to make ends meet and for there to be jobs and everything, in those sorts of communities.
I've seen from past experience, though, how a little bit of money into these places can make a huge difference. People that live in rural communities are just very resilient. Sun Peaks is a perfect example of how you can partner with them or give them just a little, and they'll turn that investment into three times what it initially was.
Something else that came up with a lot of young people I talked to was the minimum wage, increasing the minimum wage. That's something that's sort of been put on the back burner for a while. I think that with the HST, this is a perfect time to reinvestigate that. My understanding is that businesses will benefit greatly from HST, and this would be good opportunity to maybe reinvest some of that money into their employees. A lot of these people are our youth, people going to university, starting off their own lives. If they're making more money, it's less of a burden on them as far as debt goes. It makes them better productive citizens in the long run.
Finally, I hope the province will continue to invest in expanding our trading partners. People see and understand the benefits of trade with other countries outside of the U.S., and initiatives such as the Asia-Pacific gateway have strong, strong support. That's an excellent initiative, and I hope you guys keep on putting money into that.
So that's it. Very quick — it wasn't ten minutes, by any means. If you have any questions, I would be happy to answer them.
J. Les (Chair): Thank you, Paula.
N. Letnick: Thank you very much for your presentation, Paula. I did find the Sun Peaks article interesting. It's good. Thank you for bringing that.
You said, and I'll quote you here: "teachers that shouldn't be teaching." That kind of rings a bell. Some of us have been teaching in our lives, and others around the table are school trustees, and right now we're practising our vocation in politics.
Could you give us an example or some examples and then, given the collective agreements that we have in place and the power of trade unions — the BCTF, for an example — any ideas of how you would get rid of teachers that shouldn't be teaching? Obviously, that's where you're headed, I think, from your statement.
P. Kully: That's a difficult one, and just for the record, my mother is a teacher. She taught for a long time, and she was a good teacher. She never taught in the schools I went to. I went to school later with friends that had her as a teacher and said that she was fabulous. I actually have a
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lot of teachers in my family, so it's not that I have a thing against teachers. It's just that both my kids did have some really bad experiences.
I know that when I went to school, you had issues. You had personality conflicts with teachers even then. But these kind of went outside of that. I mean, my son was publicly humiliated in front of his class. In that case, the principal did step in and the teacher was removed, but she just went into another school.
I think there has to be some accountability. It's like any other profession. If I don't do my job right, I can be fired — right? There just has to be some standard that has to be set. This affects people for the rest of their lives. Anybody who's ever had a bad situation or an issue with a teacher…. You understand how it can carry on for the rest of your life.
My daughter, in fact, didn't finish high school. She is taking the rest of her classes through COOL School because she had such a difficult time with a teacher. It wasn't here in Kamloops. It was in the community that we lived in before coming here. And she's brilliant. She's a smart girl. She's not trouble or anything.
What I'm trying to say is that for somebody like her who is having issues with somebody, a teacher…. You know that it's a real problem. I don't know what the solution is. I'm not a teacher, and I don't understand the collective agreement to the degree that you would. But I just think there needs to be something to make people accountable, no matter what profession they're in — right?
J. Thornthwaite: Thank you very much for your presentation. You've hit a lot of chords here — and, in particular, your focus on the uniqueness of rural communities that a lot of us from the Lower Mainland don't appreciate.
What I'm really interested in is the Sun Peaks school and the partnership agreement. I'm reading your little article here. I'm wondering what the long-term plan is to maintain that, to continue on, and whether or not the municipality itself had contributed. You've said that this is an education society in the school district. I'm just wondering if the municipality has kicked in any….
P. Kully: I believe they have. Obviously, the person who can answer that is Al Raine, but my understanding is that the municipality has, to some degree. They've done some fundraising, and I believe they have private industry, private business that has also contributed to the school. So it's really a quite unique, interesting, new innovative idea.
J. Thornthwaite: It sounds like a good idea for many other rural communities to prevent school closures.
P. Kully: And they're using resources that the school district already has in place — the COOL school, which is on-line learning. So they have a teacher in the classroom helping kids to work through the COOL school curriculum. They only go to school four days a week, and the fifth day they have fun — like they do all the great things that there are to do in Sun Peaks. So when they say it's like a unique learning experience, it really is. It's bringing the fun back into education.
J. Thornthwaite: Yeah. Sounds like a good idea.
D. Donaldson (Deputy Chair): Hello. Thanks for your presentation. I'm from a small rural community in the north, and I had a question about your point No. 4. Can you give examples or stories you've heard of how forest fires have placed additional financial burdens on communities — surrounding Kamloops, for instance?
P. Kully: Actually, the bulk of the fire, as you know, was up in Williams Lake, which is my former hometown, and I still have a lot of friends who live up there and work within the city. I think that, as far as finances go, it really depleted the emergency services budget, so anything that happens over and above that, I imagine, will be in the red.
I know that the province and the country — the feds, for that matter — really contributed a lot, so I think that they are safe in that regard. For example, I know that there were street projects that were put on hold during that time. Everything was put on hold during that time. The budget implications…. As I say, I know with the emergency services like the fire centre, it really put quite a restraint on their budget, so anything new won't happen this year, for sure.
J. Rustad: Thank you very much for your presentation. I've just one quick comment and then a question just around education. We were talking about teachers. As a former school trustee, one of the stats that I heard — I think I've got this stat right; it's one that was quite surprising — is that in the last 25 years with a system that has some 35,000 teachers, one has been removed for cause. That's pretty surprising. I know we have some very, very good teachers in the system.
P. Kully: Oh yeah, absolutely.
J. Rustad: The results are phenomenal, but that kind of record is a little surprising, so I sympathize with your comment around that.
However, one question I wanted to have is around rural schools, rural communities. We have been doing some stuff with small community grants, with Towns for Tomorrow — those sorts of things — to try to get additional dollars into the communities. I am just wondering:
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are you looking for government to come in and spend money, or are you looking for us to take some of those programs that we have put in place over the last number of years and expand them?
P. Kully: Oh, I think the latter. I think the programs that you have in place right now, if they're working — you know the old saying that if it's not broken, don't fix it — expand on them. I don't think any of these communities are looking for a handout. You know, I find, also, rural people are quite proud. They have an attitude that they can do it themselves.
As I said before, you know, to give them the resources and some extra tools…. You will get big dividends on that.
M. Mungall: Thanks very much for your presentation, Paula. I actually am one of the MLAs on this committee that comes from a rural area in Nelson-Creston.
We have a lot of isolated, small rural schools that are not very much unlike the Sun Peaks one that you bring up. I would say that not one of them ever saw that government money was a handout, but definitely an investment.
My question actually isn't about education. I'm going to turn to a different recommendation that you brought up, which was minimum wage. One of the recommendations that have been coming forward for several years is to increase the minimum wage to $10 an hour, but one of the things that I keep hearing when I go out to communities is: will $10 even bring us to the level of a decent living for people on lower incomes?
I'm wondering: in your conversations with people and in your experience, is $10 an adequate level, or do you see it needing to be higher?
P. Kully: I would say to be higher. I mean, $10 would be great. It's $8 right now — right? So that's an increase of $2 more an hour. I guess I'm looking at it more from of a perspective of youth. Those are the people that talk about the minimum wage to me, so I'm thinking of kids. They probably aren't expecting $15 to $20 an hour for an entry-level job, but $10 would be awesome. They would be able to save a little, put away for university and be able to put themselves through without incurring a huge debt.
That was the direction I was coming from with that. But if you're looking at somebody who's trying to support themselves off minimum wage, ten bucks an hour is not going to do it. I would say $12 would be the very bare minimum.
J. Les (Chair): Thank you very much, Paula. It was good to hear from you.
We'll next hear from the Thompson-Nicola Film Commission. We have, I believe, Victoria Weller and Roland Stanke. Go ahead, Roland.
R. Stanke: Hello, and thank you for allowing me to address the Select Standing Committee on Finance and Government Services. I'm Roland Stanke. I'm the mayor of Clinton and a director of the Thompson-Nicola regional district board of directors.
I'm here today in the capacity as chair of the Thompson-Nicola Film Commission. With me today is Vicci Weller, who's welcome to field all the questions later on, and who's also the executive director of film for the Thompson-Nicola Film Commission. She's also the president of the Regional Film Commissions Association of B.C. I can see why they bring in acronyms.
The Thompson-Nicola Film Commission is a full-time, full-service film commission. It's supported through regional taxation and an annual provincial grant of $30,000 for an average budget of about $200,000. Our film commission represents the Thompson-Nicola regional district of 11 municipalities and ten electoral areas. It's governed and funded by the TNRD board of directors.
Our film commission is very successful, as its return on investment averages about 1,400 percent annually. In the last ten years, it has realized an economic impact of more than $68 million in the local economy, spent in the rural towns and rural communities and employing those hardest hit by economic trends. Beyond immediate economic impact, filming in the interior has generated additional income for government services, private land and business owners, as well as the tourism sector.
The reasons for our success are threefold. The first reason is our locations, particularly our deserts and grasslands. The TNRD had doubled for Afghanistan, India, Africa, Mexico and many states, such as Arizona, New Mexico, Nevada, Utah, Colorado, Idaho, South Dakota, Wyoming and California. Conversely, our greatest competitor, however, is the southwest U.S., especially New Mexico, as well as the Canadian provinces of Ontario, Quebec and Saskatchewan.
The second reason is our proximity to Vancouver, which is the third-largest production centre in North America. The third reason is provincial support by way of sustaining film tax credit programs and funding British Columbia Film and the B.C. Film Commission.
From a provincial perspective, the TNRD Film Commission has been instrumental in successfully marketing and attracting domestic and foreign productions to B.C. that may have considered filming elsewhere.
However, we're here to tell you today that our future success is threatened. From a domestic perspective, there's a decline in the number of B.C.-owned productions, and this is negatively impacting our bottom line. For example, instead of the TNRD hosting two to three B.C.-owned projects this year, we've had none. Research has indicated that the decline is not because our locations aren't suitable, because the demand is still there. It's because there are
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approximately 40 percent less B.C. productions than in previous years.
In-person and telephone interviews have revealed that domestic producers are challenged by the Film Incentive B.C. programs' lack of competitiveness due to the narrow gap of only 2 percent between the production services tax credit and the film tax credit. The only Canadian production we've hosted this year is a Nova Scotia–owned feature film, which was not a B.C. co-production.
Another challenge is a lack of funding for research and development, which has exacerbated the situation. Maintaining the status quo will have far-reaching and disastrous consequences for our film industry, not just in Vancouver but also in the TNRD, due to infrastructure loss and our talent leaving the province.
Therefore, we urge you to enhance the Film Incentive B.C. tax credits program for TV series and feature films to a competitive level, as recommended by the Canadian Media Production Association. As well, we support the Motion Picture Production Industry Association's recommendation that all post-production facilities be eligible for the DAVE credit.
We also recommend the establishment of an intellectual property development fund, as recommended by the Canadian Media Production Association. Not only will funding support B.C.-owned production companies in research and development, but it'll also promote storytelling from Vancouver and B.C. regional points of view, instead of having movies and television shows depicting only American and Ontario stories.
In closing, from a regional perspective, we thank you very much for sustaining the regional, nearby and distant tax credit programs, as it is a significant component of the financing package required for filming in the TNRD.
Since the TNRD's greatest competitors are Ontario, Quebec and Saskatchewan and the southwest U.S., the recoverable HST has helped level the playing field by essentially eliminating the 7 percent provincial sales tax, which other provinces did not charge. Again, we thank you for your support in that area.
As well, we're thankful for our annual regional funding grant and hope it'll continue. Nonetheless, due to the competitive nature of the film industry, the dollar being at near par and the current economic climate, we must be ever-vigilant and creative in our strategic tactics in maintaining and growing B.C.'s domestic and service film industry. If we're not competitive with our incentives, the projects simply won't come to B.C. or the TNRD.
Thank you for your time and your consideration.
J. Les (Chair): Thank you very much, Roland.
N. Letnick: Thank you very much for your presentation and the positive impact that you and your group have on the economy and the culture in this area.
You talk about competition, and you also talk about tax policy, and you mentioned the three letters — HST. What would happen with jobs in this area if Ontario continued with their HST and B.C. decided not to?
V. Weller: Did you say HST?
N. Letnick: Harmonized sales tax. Ontario and B.C. currently are in a harmonized sales tax with the federal government. There is a process in place now where we'll have a referendum in a year or so.
V. Weller: Oh, what will it do if it goes away? It will definitely hurt the film industry. There's no doubt about that. The HST is very good for the film industry because it is recoverable and it also gets rid of the PST — that 7 percent. If you take away the HST, therefore, it would hurt.
Are you going to replace it with something else? Are we going back to the old way of PST and GST?
N. Letnick: Have you had any opportunity during the last year, leading up to this point, to look at the job implications of the HST?
No? You haven't done that analysis?
V. Weller: No.
J. Thornthwaite: Thank you very much. You answered one of the questions I was going to ask.
The next one after that. Obviously, the HST has sent us in a competitive environment in comparison to Ontario and other provinces. You mentioned New Mexico in the United States. Besides the dollar, what other avenues could we do to assist our competitive nature with the United States or other states?
V. Weller: There's one proposal on the floor. I believe it's from MPPIA. It is that you also include, and I think we mentioned it, that the post-production is in the DAVE credit. One of the things that we find is that if a production doesn't want to come to B.C. because it doesn't want to film here for whatever reasons, they still can do their post here and qualify for the DAVE.
We're finding if we expand it to include all post-production, then it makes us even more attractive to productions that will not necessarily shoot here but certainly do their post-production, which can now be with all the digital effects. You just look at the credits. It could be more than the actual production cost.
J. Thornthwaite: We did get a presentation from Mammoth and Lions Gate Studios when we were in Vancouver, and that's kind of the same thing that they had said. So that would be sort of the last remaining major hurdle that you would like the provincial government to….
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V. Weller: I think that, and also expanding it to include writers. When you're developing, you can rip through writers and have various writers, and that's a lot of money going out the door, especially when there's no income coming in. So any help in that development phase is something that's really vital.
That's a big stumbling block, especially if you're sitting here in intellectual property land trying to think of a great story. It's a great story. It takes place in Williams Lake, and it's such a strong story. Who can write it? It just costs a lot of money to develop that. It's our writers that speak to our stories, and I think that's a real big cost, especially in development.
D. Donaldson (Deputy Chair): Thanks for the presentation. It's very nice to see a regional district still supporting a film commission and, also, to have an executive director of a film commission in a regional district is impressive.
V. Weller: Who washes her hair.
D. Donaldson (Deputy Chair): Yeah. We feel lucky today.
My question is around…. You mentioned, Roland, the annual regional funding grant. Perhaps you could describe the momentum, the awareness that the organization has built in the area and, if the organization isn't able to continue, how long it takes to build that kind of momentum up or an awareness around the film industry in a region like yours.
V. Weller: Want me to answer that?
A Voice: Sure, go ahead.
V. Weller: Well, I made the analogy years ago when somebody said, "You missed this production," and you're coming on. It's kind of like a train. Things are going along good, but if you stop it, it takes a long time to get it going. Everybody is producing film — you know, universities, new film-makers every year that want to go set the world on fire. We're trying to meet them every year.
When you stop, you have this whole generation, year after year, who don't know who you are and what you're doing. So to re-educate everybody once you've stopped is very, very difficult.
One of the moments that I think is fantastic is when we were filming 2012 out here in Savona. Remember when — I don't know if you saw it — all the big meteors are blowing up everything? That's beautiful Savona. I'm sitting there with the director, and he says: "This is really nice." I said: "Yeah. Did you know that just two kilometres up the road is where they filmed An Unfinished Life with Robert Redford and Morgan Freeman?" He says: "Get out of here." I said: "Yeah. We just did Andromeda Strain just over there. You see that hill? That's where — remember? — we had the helicopters and blah blah blah."
There we are in Savona with one of the best producers. If you look at the name Mark Gordon, you look at Criminal Minds, Grey's Anatomy. You start looking for that credit. He's everywhere. He's as big as they get, and he's sitting in our area, and I'm telling him all these stories.
Then if it stops and nothing is said and the region goes away, then essentially, you've lost what you've built up, and it takes years and years and years to grow that momentum again.
J. Les (Chair): Good. Thank you very much, both of you, for your presentation.
V. Weller: Oh, and on a personal note, since you're Finance, the B.C. promise…. My daughter is special needs, with autism, and there's a great program that you supply $6,000 a year to families of autistic children. Thank you, thank you, thank you.
My daughter is reaching 19 years old, and I'm starting to cry because the money is going to go bye-bye. Thank you for all those years.
R. Stanke: Thank you for giving us that opportunity.
J. Les (Chair): Our next presentation is from the Thompson Rivers University Students Union — Krystal Smith and Jamshid Mirzabekov.
J. Mirzabekov: Hello, everyone. My name is Jamshid Mirzabekov, and I'm the vice-president, external, of the Thompson Rivers University Students Union. On behalf of our members, I'd like to thank you for the opportunity to provide input into the 2011 provincial budget.
Our goal today is to speak to you about the budget priorities of students and their families in the Kamloops region. Thompson Rivers University Students Union represents approximately 10,000 members studying at TRU. We are also members of the Canadian Federation of Students British Columbia, with a collective provincial membership of over 150,000 students.
Today we're here to present the concerns of students and their families and provide some solutions to secure the economic stability of our province. Students are the future workers, taxpayers, users of public services and participants in the British Columbia economy. Making an investment in students is making an investment in B.C.
It is a critical time in the history of our province. People around the world face recessions, and double-dip recession is a very real concern. It is clear that B.C. can no longer rely on natural resource extractions as the sole means of economic stability. To be competitive on a national and international scale, B.C. needs to diversify its economy by developing a skilled and educated workforce.
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Today's post-secondary graduates are the individuals who will shape our economy in the future, and we cannot afford to neglect the skills training and education of these future leaders. Unfortunately, rising tuition fees and the lack of financial assistance have increased the barriers to achieving a post-secondary education to the point that lower- and middle-class British Columbians are much less likely to get that important education and training.
If students today are unable to access post-secondary education, they will also be unable to contribute to the province's income tax base in the future. It has been argued that the single most important step to revive our economy from economic recession is to increase the provincial tax base. Educated populations draw less on the public purse through health care and social services and, at the same time, are much more likely to contribute more to public finances through higher levels of income tax in the long run.
Prioritizing post-secondary education has a spinoff effect on producing individuals that are much more able to contribute to the public good while drawing less on public services.
Students are also future economic participants of our province. Large purchases in real estate and the automotive sector are good indicators of the economic viability of the province. Theoretically, students graduating from post-secondary education should be the individuals embarking on adult life and making these purchases. Unfortunately, students in British Columbia are graduating with the highest level of debt in the country. Instead of mortgage and car payments, B.C. graduates are struggling to make payments on their student loans.
If we want to solidify our economic growth into the future, now is the time to invest in post-secondary education.
K. Smith: Hello. My name is Krystal Smith, and I'm the campaigns coordinator for the Thompson Rivers University Students Union. Our first recommendation for a prosperous British Columbia is a legislated reduction in tuition fee levels prior to 2001 — there you are, Norm — and the development of a provincial framework for tuition fees that includes specific regulations regarding increases and decreases.
Financial barriers have been well recognized as the primary barrier to receiving a post-secondary education. Over the last ten years those financial barriers have only become more of an obstacle.
At Thompson Rivers University tuition fees have tripled since 2001. That's an increase of 16 times the rate of inflation. That means it is 16 times more difficult for a student to go to school today than it was at the beginning of the millennium.
Due to this increase in fees we also saw a demographic shift and an overall declining enrolment, which led most institutions to reduce entrance requirements.
This may have enabled more students to enter into the system, which is good, but that entrance was based on the ability to pay rather than the ability to succeed.
A reduction in tuition fees not only means opening access to a greater proportion of British Columbians but the ability to increase educational quality. We recommend a reduction in tuition fees to levels set prior to 2001 and development of a provincial framework for tuition fees, including regulations regarding increasing and decreasing.
In B.C. financial aid is almost entirely based upon student loans rather than a system of grants. In fact, B.C. is the only province in Canada without a system of provincial needs-based grants. Students in British Columbia receive up to 60 percent less non-repayable financial aid than students in the rest of the country.
At the same time, graduates in B.C. also carry the highest levels of student debt in the country, at an average of $27,000. This has a dramatic impact on the ability of students to successfully complete their programs.
Students who receive a grant are 40 percent more likely to graduate than students who receive only a loan. In other words, providing a student with a grant as opposed to a loan is a better return on the initial investment, as they are more likely to complete their studies and then use their training in the workforce.
As graduates, those students making up only 22 percent of the population will contribute 41 percent of income taxes and receive only 14 percent of government transfers. It is clear that non-repayable student financial assistance is a good public investment with a high-quality return rate.
We recommend the immediate creation of a system of provincial needs-based grants and the elimination of interest on the provincial portion of student loans to make attending post-secondary education a reality for low-income people in this province.
Our final recommendation is the return of per-student funding to levels prior to 2001 — there you are again. Tuition fees are neither an affordable nor an effective means of funding post-secondary education. The most effective way to fund post-secondary education is through per-student government funding. It ensures both access and quality to our institutions. At TRU between 2003 and 2009 per-student funding decreased by 23 percent. Despite a tripling in tuition fees, the overall impact on TRU was a net decline of 22 percent in per-student funding.
Improper funding leads to revenue losses at universities, large class sizes and lower-quality education. At a time when a quality education is an imperative for our province, we cannot afford to neglect the investment in the post-secondary education sector.
In closing, this government has repeatedly stated its goal to make B.C. the most educated jurisdiction on the continent. If we are to achieve this goal, it will require investment in our post-secondary education system, from undergraduate education to graduate studies to
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vocational training. It will require that we ensure that all people wishing to study in British Columbia have access to education regardless of their income. It is our position that adopting these recommendations will move the province towards affordability for post-secondary education in British Columbia.
J. Les (Chair): Thank you very much, both of you, for a good presentation.
M. Mungall: Thanks very much, Jambo and Krystal, for your presentation. It's good to see you again. Like I said, thanks especially for the tables and the charts and everything. It makes it really easy to digest.
Having toured TRU — you know what? I can't recall if I've seen whether TRU has a food bank. If it does, I'm wondering if you know the stats of that food bank.
K. Smith: Well, the students union runs the food bank, not the institution. We have gone through about four vanloads in September alone. Unfortunately, we ran out of food this year at this time. We are going to be doing a food drive in the future, but we are referring people to the Kamloops Food Bank because it is accessible for students.
M. Mungall: High demand.
K. Smith: Yeah, there is.
Also, thank you all for coming here. It's a pleasure to see you all today. I know you're probably tired.
J. Les (Chair): No, it's not that late in the day yet.
D. McRae: Thank you very much for coming.
There are two stats I'd like to have. If you don't have them, perhaps you could provide them. What percentage of B.C. students require formal financial assistance? It's pretty hard to measure things like credit card debt and informal loans from parents, but in terms of student loans. Do you guys have that information?
K. Smith: I don't have that at my fingertips, but it's definitely something I can get for you. I'll get your e-mail address on the way out, if that's all right.
D. McRae: Perfect. Thank you very much.
The other piece of information I was looking for is…. Other provinces have larger grant programs than British Columbia does, and that's fair enough. But I was wondering if at the same time you could provide, as well, some facts and numbers based on how much those dollar amounts are in various provinces across Canada.
K. Smith: I also do not know the answer to that question, but I will get that for you.
D. McRae: By all means. I didn't expect you to have them, but if you could provide them, I'd be much appreciative.
J. Mirzabekov: We can absolutely provide that — yeah.
J. Rustad: Hi, and thank you very much for your presentation.
I've got a couple of questions. There was a study that was done that…. Stats Canada just put out some stuff which showed the percentage of students attending university — in other words, the percentage per capita of the students going to university — comparing it across provinces. Saskatchewan had a higher percentage of students attending than Manitoba, yet Saskatchewan had higher tuition fees. In Ontario there was significantly higher participation than in Quebec, yet Ontario had almost double the tuition fees of Quebec.
I'm just wondering if you've looked at any of those stats and whether you've been able to come to any conclusions as to why there's a higher level of participation when you have higher levels of student tuition.
K. Smith: We actually have looked at some of those stats, and we have seen a higher level of participation in our province, specifically when you look at…. When all of you — or some of you who are new, maybe not — made adult basic education free, we saw participation rates skyrocket. That is actually in our document on page 7.
We have seen that, where in other provinces there are increased participation rates. A lot of that breakdown is also due to other provinces having grants and upfront money and different systems like that for students. So they're less afraid of debt aversion and going into huge amounts of debt than students in B.C.
J. Rustad: Then, if I may, just a follow-up question. The second question I have is…. You're both good speakers, and you're going in and getting an education. One day down the road, who knows, five or ten years from now, you may be on this side of the table making decisions about our provincial budgets and trying to balance all of the challenges and issues that arise.
We do have some additional dollars that the Finance Minister has said over the next three years are available. How would you balance the issue of taxes versus the issue of funding for services? And if you think about it from this perspective, the health sector would like to see some more money; the education sector would like some more money; the post-secondary education system would like to see more money. You know, everything would like to see some more additional dollars.
So if you look at the breakdown, if you're going to take a dollar and put it into the system, you're going to get 8 percent or 10 percent of that dollar coming to post-secondary education, given that 15 percent or whatever
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it was out of the 25 percent that's spent on education would go to the K-to-12 system.
At that ratio, and with the amount of dollars that you are suggesting we need to be putting into the education system, where would we come up with those dollars? And if it needs to be higher taxes, where would you recommend those taxes come from?
Those are decisions that down the road, if you're sitting on this side of the table…. Those are the types of things we need to be thinking about. It's very easy to say we need to be putting more money into something, but we need to know where that's going to come from. It would be great to hear a suggestion as to how you think we should balance that.
K. Smith: Okay, great. So I would say that investing in post-secondary education, you actually see people drawing on other public services less — like education, people tend to recycle more and different things like that.
With investing in education, you also get gains. People usually are bumped up into a higher income tax bracket, and then they're going to be paying more to you, and hopefully, you can disperse that money evenly throughout all of the services, or increase one service that you definitely want to have more participation in. Does that make sense? Sorry.
N. Letnick: Thank you for your presentation. I especially thank you for the way you've presented it. It's fresh, and I'll keep it and read it in detail later.
Following up on John's theme of choices, one of the things that you asked for in here, and other student groups have asked for, is just to lower tuition fees across the board.
There are some well-to-do families that have their children in post-secondary education. To do a tuition fee reduction would also help them as opposed to targeting limited funds — because we all have limited funds, as you've heard — to people who perhaps don't have as much money, disposable income.
My question to you…. You don't have to answer today. Give it some thought if you want and submit by October 15. If we had to make a choice, given limited resources, would you prefer that we target needs-based grants — in other words, target people based on their income, some grants to pay off tuition fees? Or would you prefer to waive loans for specific vocations, which we're doing right now, but you want more money?
For instance, if you were going into nursing and you're willing to work in a rural community that needs nurses, we pay off the student loans — right? So would you like more money in that area? It provides a specific service for the province and the community, so the dollars are targeted. Or the third one, which is a broad-based tuition fee reduction.
Given that we have to make choices here, I'd like to know what your feedback is. If we have limited dollars, which one of those three would you prefer that we choose?
J. Mirzabekov: In my opinion, I would say that establishing a provincial needs-based grant system would be my choice in this case. Why? Again, going back to the point that loans are not the way to make post-secondary education an affordable fact, because students gaining loans makes it hard for them to graduate from post-secondary education.
Even the ones that graduate, they graduate with a huge burden on their shoulders. Statistics have shown that an average student that takes out a $28,000 loan to complete a four-year degree, saying that on average it takes about ten years to pay off that loan, the students are paying back about $40,000 within that ten years, which is a huge financial burden.
In my opinion, I would say establish a provincial needs-based grant system that will offer money up front for students to go and get post-secondary education and in turn they will be returning back into the government by stimulating the economy, having higher income levels and paying back through taxes.
K. Smith: I'm just going to comment that that is really just a band-aid fix on a problem. We need to invest in post-secondary education. We need to increase funding, we need a reduction in tuition fees, and we need upfront grants for low-income students.
J. Les (Chair): Final question from Bill.
B. Routley: Just as a follow-up, I'd certainly agree that it would be my view that the province needs to look seriously at addressing the issue of needs-based direct grants.
I come from the Cowichan Valley and heard an interesting proposal by a student who said that she agreed with a democratic process and that one of the ways to deal with needs-based modelling could be to have the students decide.
I just wondered if you had any opinion. Or maybe it's too new a concept and you would want to go back and ask the students what they think about such a thing. It's a follow-up on the question.
I think that needs-based…. To target the money to the people who need it the most, one of the issues is the concern about potential abuse or somebody claiming that, for example, they come from a family that is well-to-do and suddenly claim they're out on their own and have no money. How do you deal with that issue versus someone who legitimately wouldn't pursue an education at all if it wasn't for a direct grant?
K. Smith: I am unclear on what you're saying by students choosing who…. They would vote and choose who got money and who didn't? Is that…?
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B. Routley: It's a potential. It was just an idea. Somebody floated it out as an idea for assessing funding. We live in a democracy, and students want to get engaged in democracy early. I'm delighted that you're here making your presentation. Does the idea of that scare you? Or does it excite you as an idea, to actually deal with…?
It would be tough. It's almost like what we have to do. We sit and listen all day to people. There are a lot of needs out there. We live in a pluralistic society with a lot of demands and needs, and a lot of them are very, very important and compelling. But it still comes down to tough choices at the end of the day, so who should make the choices? Do you prefer that somebody else do it, like the government?
K. Smith: I have never really thought of students voting to see who gets money and who doesn't. Initially I think if we have a student loan system, we could put grants into there, and it could be assessed through greatest need.
J. Les (Chair): It looks like we're out of questions, so thank you both very much for coming.
J. Mirzabekov: Thank you all for listening, and thank you for your time.
K. Smith: And good luck on the long road ahead.
J. Les (Chair): Earlier this afternoon we were joined by the local MLA, Dr. Terry Lake. He's still here with us. I would just like to recognize his presence.
Our next presentation is from the B.C. Cattlemen's Association — Judy Guichon and Kevin Boone.
Whenever you're ready, Judy.
J. Guichon: The British Columbia Cattlemen's Association would like to say thank you very much to the Standing Committee on Finance for this opportunity to present the needs of the British Columbia cattle industry.
The British Columbia Cattlemen's Association has been the official voice of cattle ranchers throughout British Columbia since 1929. For over 80 years the association, whose membership is close to 1,200 ranchers, has represented the interests of the beef cattle producers in British Columbia.
The purpose of the B.C. Cattlemen's Association is to promote, encourage, protect and develop the cattle industry in British Columbia in an environmentally responsible manner. Although times have changed since 1929, the B.C. Cattlemen's Association direction remains the same: to maintain and strengthen the sustainability of the B.C. beef industry.
The past decade has been extremely challenging for the cattle industry in all of Canada, and this government has been very engaged in working with our industry in trying to regain our viability through the support programs. The support has come mainly in ways other than financial, but without some financial help, cattle producers will continue to exit the business, and the industry will continue to flounder.
Success will not come with money alone. Putting the money to work in the right places at the right time will allow us to be competitive in the global market, thereby providing economic stability.
We believe that the structure is in place to put our industry back on track, but we need the help of the federal and provincial governments and the support of this committee to achieve stability.
K. Boone: We're going to tag-team it a little bit here. I'm going to take over and give Judy's poor fledgling voice a bit of a rest here for a couple of minutes. We're going to go into a few of the areas that we have recommendations for.
Before I go into that, first I want to recognize the work of the government in this past year with the development of the Ranching Task Force, which Dr. Lake co-chaired, and the successes that we are having and achieving from them. As Judy pointed out, not everything comes from money, but hard work and regulations and looking into the development and the proper legislation into these and just working together has made a huge difference in our industry already.
We do recognize the commitment that was put there to the marketing initiative and achieving this in the past couple of months, so we are extremely grateful for that. But there are some areas we feel that we need some definite help with and that it is the responsibility and in the best interest of the government to look into these.
There are three key areas that we want to focus on today that we feel are imperative for the provincial government to create and support and establish the groundwork for our industry to be self-sufficient.
Currently we have a predator control program in place, but it's in place as a pilot program. We need to change this and make it a permanent, stable program. Predators are preying on our ranchers' livestock at alarming rates. Our ranchers are very concerned about the escalating losses from carnivores, particularly as this wild predator program does not have stable funding.
The program has operated for eight years on a pilot basis with funding from a variety of sources. The program requires approximately $500,000 per year to operate effectively. It provides an invaluable service to the public of B.C. by removing problem predators. We focus on the predators that are a problem not only to us but to nature.
We are able to get the wolves and the bears that are preying on our animals and not on the natural wildlife — the sick, the worn animals — that they would normally be in a natural environment. The program only uses
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mitigation when necessary, and a large part of the program is focused on helping producers to minimize their predator problems.
Since 2009 the program has expanded to cover other forms of livestock, such as sheep, llamas and some of the guard animals that are needed to maintain these livestock programs.
The program has filled a void left by the Ministry of Environment's decision in 2002 to focus on wildlife culls that are a threat to human safety. The Ministry of Environment has played a key role in directing the work of this pilot program and has indicated that the program has been very effective in dealing with or removing offending predators.
Since 2002 B.C. Cattlemen's Association has been administering a predator control program under permit with the Ministry of Environment and has been very successful at dealing with the problem. While the permit is under MOE, funding for the program has been through other sources and as pilot programs. The program needs to have stable funding so the livestock producers have the assurance that the problem is being addressed on an ongoing basis that is acceptable to society.
Our recommendations for this would be that the B.C. provincial government provide the stable funding necessary to make the predator program permanent; recognize this as a societal problem, as wildlife habitat gets pushed by development; and recognize the efforts of the B.C. Cattlemen's Association to focus on problem predators rather than blanket removal. We feel that predators and wildlife are part of the Crown's responsibility, as they are considered Crown property.
The next issue that we would like to deal with is the Growing Forward participation. In 2008 the Growing Forward agricultural policy framework initiative shared by provincial, federal and territorial governments was established. It has been made clear to the agricultural sector that we must utilize these programs as they are set out under this agreement.
Our industry welcomes this structured format but feels that the B.C. government has been reluctant to participate in some of the programs because of the 40 percent financial commitment required from the province to trigger the funding. The commitment appears to be viewed by government as an expense which cannot be met due to the economic pressures the government is facing.
The western alliance initiative is making strides to harmonize interprovincial trading regulations and marketing initiatives. In order to remain competitive with producers in Alberta and Saskatchewan, BCCA believes it is necessary to also stabilize and standardize the industry support programming.
One recent example of the inadequate program delivery is the 2009-10 drought assistance. British Columbia did not make an official request for drought assistance to the affected areas for federal funding in coordination with the other two western provinces. B.C. Cattlemen's would like to submit that this commitment is not an expense but an investment in not only provincial agriculture but also in the economic recovery of the province. A 40 percent provincial investment will return a 60 percent infusion of federal cash into the province's economy and help to ensure some stability to our industry.
While we have recently seen the government utilizing the agriflexibility portion of the fund, and we applaud them for the long-term investment this will give our producers, BCCA remains concerned over their unwillingness to participate in the AgriRecovery program.
Our membership has suffered extreme losses over the past few years from drought. Because the initiative was designed to compensate for uninsurable disasters such as grasshopper and pasture losses caused by drought, we have made several requests for the government to trigger AgriRecovery but to date have not been successful in our bid. Without the cooperation of the provincial government to invest in this program, producers have been forced to disperse all or part of our herds in order to survive.
The ranching industry is losing producers and cattle at an alarming rate, and we are told that if we need assistance, it must come through the programs available. Yet when we present the evidence and the request, we are informed that there are no resources available to participate.
B.C. cattlemen understand the financial restraints facing the government, but we would encourage them to look at the benefits derived from the investments in the programs and bring federal funding to the province and allow stability for one of the industries that built the province.
Our recommendations under this would be that the B.C. cattlemen would request that the provincial government utilize the programs that they have established with the federal government wherever necessary to invest in the future of agriculture in British Columbia. To standardize our industry support programming with others in the western alliance we feel is also very imperative to being able to compete on an equal basis with the other provinces.
With that, I'll turn it back to Judy to bring our third key point to you and our concluding remarks.
J. Guichon: The third key point is forest and range, and this is a subject that's very dear to my heart. The majority of the land that B.C. ranchers depend on to supply forage for their livestock comes from Crown land that is shared with the forest industry.
The ranching industry recognizes the importance of the forest industry to the province and that we must work together on managing these lands for both interests. Range infrastructure, however, is a problem.
It takes approximately 80 years before a forest is ready to be harvested. Livestock and timber are not competing
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uses; instead they are compatible. Between logging events, the livestock industry is able to utilize the forage produced until the forest canopy closes once again. Consideration should be given to the tools necessary to allow the livestock industry to be successful while the forest continues to grow healthy trees for the lumber industry.
Most of the present infrastructure is decades old and is crumbling. Serious consideration needs to be given as to how to replace and restore the provincial assets that are in place and needed to conduct proper range management.
The B.C. Cattlemen's Association submitted a proposal to Minister Bell in November of 2008. We proposed to establish a range development fund, and we still see merit in establishing such a fund to address the repair or replacement of Crown range infrastructure.
The fees assessed for range use by ranchers contribute a substantial amount to the provincial budget. We feel strongly that if a portion of the tenure fees went into such a fund, the needs of the producer and the government could both be fulfilled in a fair and equitable manner.
Fire rehabilitation protocol. Protocol and funding are also needed to be made available for fire suppression and rehabilitation. There's a need to recognize and protect the assets present in a fire area during the suppression stage as well as provide the resources necessary to rehabilitate the range once a fire has passed.
Adequate planning and funding at critical times have the potential to not only protect the viability of the ranching sector but also save millions in restoring the range to its natural state, which will benefit both sectors as well as the environment.
Past experience with fires has taught us that timely rehabilitation limits the infestation of invasive plants, stops soil erosion from wind and run-off and rebuilds the soil's fertility and composition. This allows for natural reforestation.
We would recommend…. The B.C. Cattlemen's Association requests that the provincial government make the necessary investments to rebuild the deteriorated infrastructure on Crown range through a stable budget allocation or by establishing a range development fund. Establish a provincewide wildfire rehabilitation protocol with dedicated annual funding as part of the annual protection budget. This protocol should require a mandatory reseeding of burned areas and fire guards, as well as immediate replacement of burned infrastructure such as fences and corrals.
In summary, we thank you for this opportunity to meet and to outline these key areas that the B.C. Cattlemen's Association feels will go a long way towards helping our industry regain its viability. We understand the government's need for fiscal restraint and accountability. Therefore, we've kept our request to a minimum, asking that the most practical solutions be implemented quickly.
The B.C. Cattlemen's Association would like Kevin to finish.
K. Boone: Sorry, Judy. We spend enough time together that she has picked up my personal illnesses along the way. I'm better now, though.
The B.C. Cattlemen's Association would like to submit that agriculture and the B.C. cattle industry play a very important role in the economy, environment and in the production of one of our most basic needs: food.
We encourage the leaders of our province and this committee to give serious consideration to the requests outlined today, as these suggestions come directly from the ranch business owners and their ideas of what the province can do to assist them in being successful.
When it comes to considering where valuable and available moneys are directed, it isn't all about the use of dollars but about how we put the dollars to use. The B.C. Cattlemen's Association would like to thank you for the opportunity to present our views and answer any questions that the Select Standing Committee on Finance may have for us.
J. Les (Chair): Thank you. A number of questions, starting with Don.
D. McRae: Thank you very much for your presentation today, and also thank you very much for coming down to Victoria last year. Much appreciated. I know your industry has had challenges, whether it's provincially, nationally or internationally. It's not been easy in the last several years, but I thank you for your efforts.
I really like your predator control program request. It's easy. It makes sense. There's a dollar amount attached to it. The problem with No. 2, Growing Forward participation…. Is there any chance…? I know it's tough. It's an as-needed sort of ask. But is there a ballpark dollar amount you could attach to that if you put your mind to it? Just so we have a rough idea of what we're asking. And I think the same could also be said to No. 3, but in particular, No. 2 is what I'm wondering about.
K. Boone: Yeah, on No. 2, this would vary from year to year of course. We are planning, actually, to make a request for this year once again, and there are several considerations that we have put forward on this.
This year the drought in the Peace, right down through the Vanderhoof area and right down into the Cariboo Chilcotin, has been extreme. We feel that, in talking with our producers, they've probably lost a good two months, possibly in some areas three, of grazing ability. So the pasture portion of it would be necessary.
Being as it's been about four years throughout the entire province at one point or another of drought in some areas, and there hasn't been assistance, one of the things that we've been told in the past is that it's very
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hard to create and decide on where the boundaries are for one area versus another.
If we were to take the losses in those areas this year, it would probably run in the neighbourhood of about $100 per head. What we would consider would probably be a more fair and equitable way of doing this — because other ranchers have suffered throughout the province in past years, and they're still regaining from it — would be to apply to have it put out throughout the entire population of cattle throughout the province at $50 per head.
Right now our stats show that we have just under 200,000 head of cattle, so it would be about a $10 million project as such. So it would mean a $4 million project for the province and a $6 million infusion from the federal government, at those numbers.
D. Donaldson (Deputy Chair): Thanks very much for your presentation. The cattle sector and industry is a very important part of where I live in the northwest. I share your concerns about food production in the province that you've outlined here.
I have a question. An earlier presenter in the agriculture sector pointed out the decline in funding towards agriculture in the province. I believe, from some of the analysis I've done, the amount of money that the government puts into programs around the Ministry of Agriculture on a proportional basis is one of the lowest in Canada.
My question is around two areas that I've heard about that I'd like to get your views on that weren't mentioned in this. One would be…. You talked about marketing initiatives. The B.C. branding and the Buy B.C. program that was eliminated — whether your association feels that kind of initiative would be beneficial to producers.
Secondly, what I've heard in my area is — and it relates to the forage question — a cutback in funding to address invasive plants in our area especially. I'd like to hear if that's the case in your area as well. You know, in the northwest we're just able to be on the brink of being able to curtail some of these invasive plants, but without that steady, stable funding in that program that seems to be cut back this year, I don't know what's going to happen. But what I hear from the experts is that we're going to be faced with an even huger problem around them.
So if I could get your aspects and your point of view on those two topics.
K. Boone: I'll look after the marketing. Judy is our resident expert on invasive plants, so she's much more qualified to handle that.
On the marketing end of things — very interesting question. One of the initiatives — the agriflex initiative that I talked about, that you did initiate — is towards us establishing a marketing program for the cattle industry. It is extremely welcome. We feel that without a proper marketing base and without the ability to put that forward — it takes funds to do it — then, we're just back-pedalling and we're a commodity-based product.
One thing that we did do in just the last couple of weeks is we ran a very successful program. Actually, some of the MLAs attended with us.
Jane, it's great to see you here.
We did it through some of the Lower Mainland Overwaitea stores. We did a small survey with the customers at the time. One of the questions was: "Do you see more value in knowing that your product was a British Columbia product?" Of the survey results, 92.5 percent came back that yes, they did.
They didn't necessarily distinguish that it had to be within 100 miles or that it had to be completely raised within British Columbia. We have to look at the restrictions that are on us within the province to be able to fully finish, economically, our cattle here within the province. Grass only grows certain months of the year. To make completely grass-fed cattle is extremely hard and challenging because we don't have grass 12 months a year.
There's an advantage to moving cattle into Alberta. They have the built-in infrastructure for feeding the grain. It's more economical to feed grain to cattle to fatten them out. We can do it in a shorter period of time and get a higher quality of meat produced in the end. It's much cheaper to move a truckload of cattle to Alberta to have them fed than to move the seven truckloads of grain into British Columbia required to finish that truckload out. So on an economic basis, that's the way it works.
But we have some initiatives in place with the traceability section, where we're now able to start to track our cattle from birth to finish.
We feel that part of our marketing strategy will be to be able to utilize that information to pass on to the consumer. Whether it's completely bred, fed and finished in British Columbia or whether it's B.C.-bred, Alberta-fed, they all will combine so that we can give the consumer the choice. What we feel is important is that the consumer gets that information so that they can make the choice.
We're on a supply-demand commodity, and by giving them what they want, they have the choice to pay more or less for it.
J. Les (Chair): Weeds.
J. Guichon: Invasives. Well, I can tell you that if you stop spending the money, you lose every cent you've spent. You've got to keep on top of them.
There are sectors who have written off the southern part of this program. Someone within the Ministry of Forests at one time said that it's too late. We battle continually. Personally, I spend $10,000 a year on battling invasive plants, out of my pocket. I get some of that back from the regional district programs. Some regional districts
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have excellent programs. But it's a huge battle, and we can't slack. We can't ever slack. John and I had a long conversation in the middle of a fair one day about this. It hasn't got better.
J. Les (Chair): John never has a short conversation.
J. Guichon: You're right. If we don't keep after it, any money we've spent is wasted.
J. Les (Chair): So here's the deal. I've got six more people on the list here. If on this side of the table we have short questions and on your side of the table we have short answers, we can do it.
M. Mungall: First, I just want to say that your $10,000 a year on dealing with your weeds makes my few hundred dollars on my dandelions…. It makes me feel a lot better.
J. Guichon: Dandelions are good.
M. Mungall: Yeah. I'm totally not surprised. I was nodding when you were saying that 92 percent of the people that you surveyed at that event were saying how they felt better when they knew the food was coming from B.C.
The hundred-mile diet and B.C. products are hugely popular in my area, where the Creston farmers…. I come from Nelson-Creston. I spend a lot of time on the flats visiting the beef growers there, and now we finally have Creston beef burgers over on the Nelson side. Their popularity totally outstripped the hotels', the providers', initial projections, so the demand is hugely there. I was going to ask about the Buy B.C. program, but Doug stole that.
So I will just ask a question about the cattle industry's percentage of the agricultural GDP in our province, just so I have an understanding of its contribution to the overall GDP.
K. Boone: Of the beef section?
M. Mungall: Sorry. Cattle.
K. Boone: Currently right now we're about $250 million of direct sales per year. It's about $380 million total sales. I think that's how it works — total contribution. Those are off the top of my head. I can get actual figures for you if you'd like.
J. Guichon: Yeah. I have them, but….
J. Les (Chair): Those kinds of questions…. If you can send us that information through e-mail, that would be great, and then it'll be distributed to all the committee.
B. Ralston: On page 5 you refer to range infrastructure. You talk about: "Most of the present infrastructure is decades old and is crumbling." What do you mean by infrastructure in that context? Usually, where I come from, we think of bridges and roads. Maybe you can explain what you mean by that.
J. Guichon: Fences.
B. Ralston: Maybe next time, for people like me, just say "fences."
J. Guichon: Fences, corrals, waterholes.
J. Les (Chair): Keep the cows from running away.
J. Guichon: Yeah.
J. Thornthwaite: Thank you very much. I can tell you that I did talk to the manager of Save-On-Foods shortly after your visit, and he was really positive about that whole project that occurred at Save-On and getting the folks out there to know where their food comes from…
J. Les (Chair): I'm sure there's a question there somewhere.
J. Thornthwaite: …which leads me to my question. You've said that to disperse all of…. "Without the cooperation of the provincial government to invest in this program, producers are being forced to disperse all or part of their herd in order to survive." I'm wondering if you could be more specific as to what that means.
K. Boone: We can go back to 2003. Our numbers in 2003 were about 230,000 head of cattle in British Columbia at that time, and that's after coming through the drought of 2002. There had been a pretty big sell-off prior to 2003. With BSE, our herd built. The producers were forced to keep up.
We hit a peak in 2005 of 320,000 head of cattle within British Columbia. Since then, because of the declining income and the fact that the declining marketplace…. Not all countries have been open to us for our borders. We're strongly dependent on an export market in our industry, so producers, in order to pay the bills — to pay the power bills, to pay the gas bills, to pay the feed bills — have been forced to liquidate herds just to keep ahead.
Banks have gone so far, but when your cows drop from being worth $1,600 a head to overnight being worth $200 a head, which is what happened on May 16, 2003, it's very hard to go to the bank and say: "Invest in our industry. Invest in our operation."
As a result, the ranchers have found it a necessity to sell off. It's made it very hard for them to be able to bring the younger generation in, so as a result we've seen our farms downsize or go out of business where the young
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generation can't take over. There's not enough in it for the neighbouring farms and ranches to buy them up and take up the flack in it. So we come to a point where we will lose critical mass, and we are losing critical mass. Without profit, there's no incentive for them to stay in the industry.
J. Guichon: If I could just answer your question specifically about drought, though. I generally in the winter try and make it through with feeding 15 to 20 days for my cow herd. Last year I fed 40 days. I just didn't have…. There was no regrowth. We hadn't had any moisture since the previous May. My next-door neighbour Agnes sold her whole cow herd because we were starting to do damage to our grass. We just had to downsize. I'm down by 100 head.
The same thing is happening in the Peace this year. Our grass is recovering right now a little bit, finally, but I've been trucking water over 12 miles each way for my yearlings. I had to send two-thirds of my yearlings to Alberta because we've had no snow, so none of our lakes have replenished. We've been stressed by drought throughout the Douglas Plateau and down around the Princeton and Similkameen area. A large part of the province has had repeated years of drought stress.
J. Rustad: Thank you very much for your presentation.
Two quick questions. One: I'm just wondering what the impact of HST has been on the cattle industry. The second is the predator program. Predators are a big issue, not just for cattle but also for the wildlife. Quite frankly, the most effective way to deal with them isn't the most pretty way to deal with them from a public perspective, in terms of just eliminating the predators and the problems.
I'm just wondering. How effective…? Here you've said that the program has been effective, but if we were to take a more direct method in terms of dealing with predators, would that help solve the problem or would you actually have additional problems in the sense that you would end up with larger wild animal problems eating your hay crops?
K. Boone: On this one, I'll take predators and you can take HST.
J. Guichon: I'll take HST. I bought a new truck the day after the HST came into effect. The agriculture industry will benefit. We are actually just preparing a policy statement to make it public from our industry how much we do appreciate…. We've lobbied long and hard for the removal of PST, and the HST is beneficial to our industry.
K. Boone: And to deal with the predator…. Part of the reason for the success of the program that we have right now is that we are cognizant of which animals we remove. We remove the problem ones. If we take them all out or a portion of them, the ones that get left behind tend to be the rogues with no leadership and no ability to go forward. They become more of a problem, whereas if we take out the ones that are just killing livestock….
There are those wolves, for example…. And I'll concentrate on wolves because wolves are our major issue. Bears and coyotes do create some problems, but they're more easily handled than wolves. Wolves are fairly cunning and smart.
If we get the ones out that are concentrating on the livestock, the ones left behind tend to protect and keep those out of the area, so they actually protect our herd, and at the same time they help the wildlife herd by eliminating the sick and the wounded and the weaker wildlife that there are, so you end up with a healthier herd of wildlife as well. So it's all in keeping nature in balance.
I guess if we went back to before we were here, there weren't as many wolves around because they only produce as much as they can eat. By bringing cattle or livestock in, we make a more ready food source for them, so the actual numbers of them increase. It's to keep them in check.
As far as the statement about it doesn't necessarily look like a pretty picture when we get rid of them on a wholesale basis, I have often thought that I would like to show the public the pictures that come across my desk every day of what these wolves do to our cattle and how they tear them apart.
It is not an easy death. A lot of them are wounded; they aren't killed. Their hind end is virtually pulled out of them. Their intestines will be ripped out from the back end. They may survive for a week out on the range in that condition until they finally succumb to it and die.
There's nothing pretty about any of it. If we can concentrate and focus on the ones that are a problem, we'll have a much better control program and a much more balanced environment out there for them.
J. van Dongen: Three quick things. On the predator control program I would like a little bit more information, particularly how it works and how it saves the Ministry of Environment money on the control side. On the AgriRecovery program, I'm interpreting here that the government has never used that program.
Just to confirm, you're certain that some of the events that you're saying are eligible for that program are truly eligible, and in other provinces they're being applied for.
You're comfortable on both those points? We've never used the program.
K. Boone: We used it once — it was about a $150,000 program — when we had a tuberculosis reactor up in the Vanderhoof area. It was utilized to compensate some of the ranchers.
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J. van Dongen: How long has AgriRecovery been in?
J. Guichon: Since 2008.
K. Boone: Yes, 2008, the Growing Forward.
J. van Dongen: One final question. Has there been any cost-benefit analysis done by anyone on the investment in fencing and other infrastructure — a benefit-cost analysis on that, what you're asking for from the government.
J. Guichon: Not to my knowledge.
K. Boone: I don't think there's probably been an official one done. The one thing that they're so important about is the intermingling of herds. There are so many different breeding programs out there between one ranch and the other, and herds need to be kept separate. As well, there's the cost of the sorts and where they'll wander to in the meantime, and the damage they can to do to areas that they shouldn't be in.
J. Guichon: I have built a lot of fences on my range because we run a little bit differently than a lot of people, but it allows us to control the cattle so that the trees are free to grow with minimal cattle impact.
J. van Dongen: I'm just thinking that we maybe, as an industry, need to look at that. That's all I'm saying.
J. Guichon: Yes, we could.
B. Routley: The predator control program — does it apply also to Vancouver Island? I had a fellow come into my office and raised a concern about the predator control program not doing enough in the south Vancouver Island region and certain kinds of livestock not being covered. Do you know…? For example, are sheep now covered? Do you have a list of the kind of livestock that are covered?
K. Boone: Yes, we now cover sheep, horse, goats, cattle, llamas. Some of the guard animals, like guard dogs, are also covered. The Island is covered with it.
One of the issues that we ran into, especially early this spring, was that the funding agency we were using for the current pilot program we're on put some stipulations in that waffled. So we had no program for about three months. There was about a three-month period that we had no mitigation happening, and there was some definite feedback on that. The Island got hit.
Just as a note on this, the program we ran up until the current one that is being funded through IAF, Investment Ag Foundation, we've switched a little bit. We changed our method of compensation to the mitigators. We went from having about five mitigators throughout the province to where right now we have 18. We're covering the province very well.
We've also cut our cost for dealing with one of these problem predators from about $5,500 per animal down to less than half of that. We're down to about $2,500 to $3,000 on the current program, so we've created some efficiencies. We're working with different organizations, like the trappers. Also, we're working very closely with conservation right now, trying to come up with some solutions to make it a more effective and efficient program.
J. Les (Chair): Okay. We've gone way over time, but I know your industry is having some real challenges, so I think it's a good investment of time. Thank you both for coming out, and Judy, get well soon.
Our next presenters are from the Canadian Home Builders Association Central Interior — Patsy Bourassa and Doug Wittal.
D. Wittal: Good afternoon, Mr. Chair and committee members.
The British Columbia residential construction and renovation industry will generate 133,300 person-years of employment, $6.8 billion in wages and over $1 billion in provincial and federal tax revenue in 2010. The overall value of the residential construction and renovation industry is $15.1 billion.
In the Kamloops area alone the residential construction and renovation industry will generate 3,230 person-years of employment, $165 million in wages and over $28 million in federal and provincial income tax revenue this year. The overall value of the residential construction and renovation industry in our area is $363 million.
The above estimates of impacts illustrate the importance of residential construction in generating jobs, wages, investment and significant government revenues. We know that activity in a residential sector and resulting economic benefits may vary significantly from year to year. These variations occur because of changes in local housing market conditions and also because of policies of federal, provincial and municipal governments. They have a great potential to affect the housing activity.
The Olympics positioned our province for economic growth, but in order to attract the finest and brightest people to live, work and play in our province, and specifically for us in this region, we need to ensure that housing is affordable and available going forward. These are various economic factors that will certainly affect local housing markets in 2010 and beyond.
We are seeing more economic activity locally in 2010 than we saw in 2009. What we don't see is a strong, positive, stable housing industry going forward over the next few years. Changing mortgage rates, global economic conditions that filter down and impact job creation and employment, shortage of service land, the end of tax
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credits for home renovations, and the winding down of social housing and infrastructure stimulus programs in the near future are some of the reasons why.
Other significant ones are government-imposed taxes, fees, levies and other charges, including the implementing of the harmonized sales tax. We feel that the provincial government needs to be aware of the possible negative impacts of housing-related policies on housing affordability and choice, and the consequences of such policies for overall economic performance and government revenues. We appreciate the opportunity to consult with government and to be heard.
We know that our provincial organization has regular meetings with government on the issues we have identified and recommendations we have put forward for your consideration.
Our recommendations are based clearly on housing affordability — that is, lowering housing costs or removing barriers of entry for all British Columbians. Housing affordability is a complex issue that is impacted by numerous issues. Some of these issues can be addressed through industry; some can be addressed through government. But all can be addressed through collaboration between government and the industry.
The issues that we specifically address and provide recommendations for in this report are the harmonized sales tax, current implications; and maximizing housing stock, home renovation tax credit.
Harmonized sales tax. Since the introduction of the HST, the housing market has demonstrated that the sky has not fallen. This is in part due to raising the threshold to $525,000. However, the implementation of the HST is still confusing to many in our industry, and certainly to the consumer.
What we don't want to see with the referendum being discussed is people deciding to wait to build or renovate until after the referendum is finished, expecting to see it voted down. To ensure a strong future, we believe that measures need to be put in place to mitigate any long-term negative impacts. We recommend that the threshold needs to be adjusted biannually to align with the new housing price index based on a survey of CHBABC builder members and their short- and long-term production plans.
To further curtail the underground economy, all British Columbians conducting any type of business should be required to register for HST, with no exemptions. To encourage construction of purpose-built rental properties, investors should enjoy the same tax neutrality thresholds as new homes.
Within the next two years conduct an analysis of increased government revenues through the implementation of HST and, as the economy grows and provincial deficits are offset, consider a reduction of the provincial sales tax portion of the HST.
We believe that the harmonized sales tax should be based on fairness and should minimize market impacts. Given the higher dollar values of housing and home renovations in British Columbia, careful consideration should be engaged before exuberating the already high value by adding additional taxes.
The home renovation tax credit. Residential renovation in British Columbia generates $7.1 billion in economic activity and employs 62,300 workers. This sector also generates $3.18 billion in wages and makes a significant economic contribution to every community of the province. In 2010 it is estimated that the provincial government will receive a 67 percent increase in tax revenues from the renovation sector due, in most part, to the introduction of the harmonized sales tax.
Renovations are a significant part of our construction business in the Kamloops region as well. Many builder members do both new homes and renovations as part of their own business. We know that the federal home renovation tax credit greatly aided the local economy here and curtailed the renovation black market. With the substantial impact that HST is having on the cost of home renovations, we are seeing a negative trend based on consumers wanting to keep their homes under the $525,000 threshold.
A home renovation tax credit is essential to encourage the upgrading of existing housing stock, to strengthen a post-recession economy and to minimize the potential growth of the underground cash economy. Over the past year CHBABC contracted a third-party research report that clearly illustrates the economic significance of renovations and the need for a tax credit. The report points out the following.
Estimates place the cost of the underground cash renovations to governments in the billions of dollars per year. This includes lost GST and HST as well as evaded income taxes, employment insurance premiums, Canada Pension Plan contributions, workers compensation premiums and building permit and inspection fees.
With the introduction of HST in Ontario and British Columbia, further rapid growth in the underground cash economy is inevitable unless governments act. A report by the Altus Group in 2009 estimated that 26 percent of all renovation activity is underground. Considering the size of B.C.'s above-ground renovation sector, this represents a total loss of income tax revenues to both the federal and provincial governments of approximately $552 million annually.
The positive results of the federal tax credit of 2008 clearly showed the benefits of this initiative. Consumers were asking for receipts from their renovators. A provincial tax credit system for renovations would offset the loss of tax with additional taxes generated from documented jobs completed and will diminish the unprofessional and, in many cases, unskilled renovators who impact negatively the whole industry.
CHBA Central Interior encourages the provincial government to look carefully at our housing industry
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and ways to encourage new home-building and renovators in this sector. Consulting with our industry directly will give you the information you need to make well-informed and good decisions for the province. We are the grass roots and know firsthand what is happening in our areas. We are the ones who experience first the effects of the government decisions related to our industry.
One quote that just came out from Sherry Cooper from BMO: "The recent weakness in home sales has taken an axe to the housing-related categories." So it's evident what is happening out there, and we're feeling it right here in the trenches.
At the end of the day government decisions that hurt the housing industry hurt the government and overall good of our province. We look forward to continuing to work closely with government to ensure, going forward, that housing is affordable and accessible.
M. Mungall: Thanks very much for your presentation. My background is supporting communities in addressing homelessness. Substandard housing is one of the biggest issues that communities are facing in terms of addressing homelessness. A lot of people who are living in substandard housing often find themselves on the street later on.
Anyway, a quick question. I'm wondering if you have any projections of how the home renovation tax would be able to address substandard housing in B.C. in terms of bringing those homes up to code.
D. Wittal: Actually, that's a great question. I think that goes back to some government grants that were available a while ago. I think that there should be a renovation tax credit to…. It's not necessarily to the elders, because there are people who can't afford it that aren't older. I don't know what that number would be. But that's a great thing to help not really the homeless but just getting your houses up to code.
P. Bourassa: Well, I can tell you that our organization is very involved with the homelessness initiative here in Kamloops. We've been involved for the last five years and moving forward. Non-profits are the ones that normally manage a lot of these subsidized homes, so the renovation tax credit could be available to non-profit organizations as well as individuals.
M. Mungall: Sorry, I wasn't saying subsidized but substandard — substandard homes, which is what you were bringing up in your presentation. I'm just thinking that a home renovation tax credit would be a huge incentive for a lot of private landlords to renovate their properties and bring them up to code in a way that is affordable, so they don't have to turn around and charge exorbitant rents, which then further exacerbates the homelessness problem.
I'm wondering if you are able to throw together some numbers. Obviously, you don't have them today, but if you could throw together some numbers and possibly project the extent to which tax would provide incentive to renovate homes in this province.
D. Wittal: I think what was proven, too, just with the last $1,350 tax credit that was given is that one small number single-handedly brought the housing industry out of the dumps. That turned the economy around immensely, just for $1,350.
So not necessarily that same number — especially if you're dealing with apartment dwellings or whatever, that number should be higher — but if that was brought back in, that single-handedly would bring up the renovation business.
P. Bourassa: It could be that the federal government will have some statistics on that, because that was a federal tax credit. It was just unbelievable. I mean we could tell right here immediately that that came into effect.
It was just unbelievable, the people that were taking advantage of it. Even when they didn't really understand that $10,000 was the ceiling and that they were only going to get a maximum of $1,300, people still liked the idea of being able to get some money back. It was unbelievable how much business it generated.
Perhaps if we go to our national counterpart, we'll be able to get some stats on that. I don't think it would be difficult to extrapolate that on a provincial basis.
J. Les (Chair): We've got to get back on track, guys.
D. Donaldson (Deputy Chair): A brief question. Thanks for the presentation and the information you supplied. Your concern on page 2 regarding people waiting to build or renovate until after the referendum is held…. Will you be able to say, then, that your association would be in favour of moving the referendum date up, rather than waiting for a year from now, to alleviate some of those concerns that you've outlined here about the delay?
D. Wittal: Absolutely. I mean everyone right now is on standby mode. Our housing, in our part for us personally, has come to a grinding halt. I'm talking about entry-level homes starting at $350,000. That tap has turned off. They're waiting. We need it moved up, and quickly.
N. Letnick: Thanks for your presentation, Doug and Patsy, and for coming.
Black market. Are there any other jurisdictions that you know about that are successful in curtailing the black market in home renovations? If there are, do you know what they're doing that doesn't require government subsidies or tax credits?
D. Wittal: I don't.
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N. Letnick: If you find it, could you send us some information?
D. Wittal: Okay.
J. Thornthwaite: Just a quick one. There was an article in the Vancouver Sun today about the sharp increase in housing starts. They were talking about the reason being low interest rates and British Columbia's quick recovery — well, we're not quite there yet — at least from the recession. I would assume that that would also apply to here. They were talking here about Vancouver, Victoria and Abbotsford.
I was wondering if you could comment on that.
D. Wittal: Well, I think that's a 100 percent different market than where we are anyway, so we can't go by what Vancouver and Victoria….
Who wrote that article?
J. Thornthwaite: It was the director of the Centre for Urban Economics and Real Estate, Sauder School of Business.
P. Bourassa: I'd just like to speak to that, because it's the perception of the consumer. It's not reality. It's reality to them because it's their perception. And it's because we haven't done a good job, both the government and even our industry, at explaining it. We've been confused as well.
We just got back from provincial meetings the other day. Actually, Cameron Muir, who is the economist for the B.C. real estate associations, has been trying to explain this situation. We are finding that people are saying: "Ooh. We'd better wait, because chances are that maybe it will be repealed, and then we'll save 7 percent." So he's been on TV and radio saying: "Look, you may think you're going to save 7 percent. You likely won't, because it may not be repealed. Interest rates are going up, and there are other mitigating factors."
I think there was a huge push in the Lower Mainland on that, and then people were getting on the bandwagon. It's just the perception that we've got to overcome with joint, proper, clear, simple communication.
B. Ralston: Your position is that the introduction of the HST, which is supposed to be collected on home renovations, will drive and increase the underground economy. Is that what you're saying, then?
D. Wittal: Yes.
J. Les (Chair): Okay, those are all the questions we have for you folks. Thank you for coming this evening.
The next presentation is on behalf of the Women's Contact Society, Irene Willsie. Go ahead.
I. Willsie: I'm the executive director of the Women's Contact Society. The Women's Contact Society has been in operation in Williams Lake since 1982. We're a women-focused organization, and we provide services to women and their families, including trauma counselling, employment, mentorship, food security, legal advocacy and child care.
I'd like to tell you a story about Williams Lake. There are three parts to it. There's the bad, the good and the extraordinary. Williams Lake is a city of approximately 12,000 people. We serve a large surrounding area that includes 11 aboriginal bands. The economy is resource-based, and we've been severely affected by the mountain pine beetle.
Historically, Williams Lake has racked up some less than favourable statistics and a tarnished reputation in areas such as high crime rates. We've been known as the crime capital of Canada.
We've topped the list of the crime severity index. High rates of alcohol and drug use. High school dropout rates are high. Low infant birth rates. High rates of domestic violence. Low literacy rates. A high number of children identified as not ready for kindergarten when they get there. A high number of vulnerable children in schools. We have gang activities, and we were the location of residential school crimes.
All these problems are true, and it paints a pretty ugly picture. It paints a picture of a community in decline. These are not new facts. It's not something that's happened in the last two years.
You would assume from this story that it was a terrible place to live, but it's only part of the story. Several years ago individuals and organizations started collaborating to address the root causes of violence, crime and homelessness. We believed and we have proven that working together works better.
It started small, and it has continued to grow. Community-based social service agencies started. We've invited provincial ministry staff, local government staff, politicians, police, education, health, business. They're all at the table now. There are still vacant chairs in some areas, but we know we are making a difference.
Committees focused on youth, community policing, social planning, women's services, early child development, violence prevention, seniors, food security, restorative justice and domestic violence are all active, and all include service providers, volunteers and community leaders.
We know we're making a difference because crime stats are starting to level off and are actually dropping in some areas. More people are asking for service. More people are attending awareness events.
We also know that we're only scratching the surface of what needs to be and can be done, because existing services are carrying caseloads that far outreach their capacity. There continue to be significant gaps in service.
For example, we have RCMP-based victim services, community-based victim services, a transition house,
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Stopping the Violence counselling and outreach services — all to support victims of violence, primarily domestic violence.
The only services for domestic violence offenders are a very limited, short-term group treatment program and corrections services. These services are only available to convicted men. In response to this gap, the community-based service providers, RCMP, the Ministry of Children and Family Development, corrections and volunteers have joined together to explore innovative ways to address the gaps.
It was recognized that the traditional way of handling violence-in-relationship cases was not a solution and offered no corrective action or education for victims or offenders. The effects of violence in relationships on children were not really a consideration.
Community partners recognized the failure of the current practices. As a result, other responses were considered. In 2008 a small amount of government project funding was received, and that was used for training in the area of the risk assessment and peacemaking circles. Following this initial training, community partners expressed an interest in applying a modified circles strategy to selected low-risk violence-in-relationship cases.
In 2009 a Williams Lake protocol for a coordinated response to violence in relationships was implemented. The protocol is an agreement providing greater collaboration responses to violence in relationships by police, Crown counsel, corrections, child welfare and victim services. The protocol started with these mandated agencies only due to security and case management concerns. However, the process was supported by community-based agencies, and it was used as a starting point.
That protocol has now been evaluated, with positive results. As a result of the evaluation, it has been recommended that additional coordination and collaboration be undertaken, including community-based support services, addictions and mental health. The circles-of-strength concept has been developed. Facilitators and mentors have been trained, and they are now working with their first two cases. This is a work in progress, but we believe it's a learning process, and we think it's a positive step in the right direction.
There are similar examples of coordination and cooperation and collaboration in the areas I outlined earlier. They all experience overextended programs, gaps in services, heavy reliance on volunteers. They all look for creative and innovative ways to enhance services. This part of the story paints a much more positive picture of Williams Lake. It gives hope and inspiration to all those involved.
The final part of the story is the citizens. Their incredible generosity and dedication to community organizations have torn down barriers between themselves for the benefit of clients. Businesses are supportive in terms of donations and in-kind services. Members of local government have joined the collaborative process.
Williams Lake is full of people who came to Williams Lake at a young age to kick-start their career or make a fast dollar in the forestry or mining industries. Now those same people are retired and still living in Williams Lake. There's something about the place that just gets under your skin.
First Nations people have suffered abuse and violence at the residential school and continue to struggle with poverty, isolation and many other challenges. However, their commitment to their communities and their territories is strong and unwavering.
This part of the story tells you that Williams Lake is a good community and wants to be a better community. We need social programs and services that adequately meet the needs, are flexible enough to meet the unique needs of our communities, meaning Williams Lake and the surrounding communities; that take a holistic approach to family needs; that invest in strengths; that support and heal victims; and that support and educate domestic violence offenders, to bring down the rate of reoffence and to reduce poverty. We need to build on existing coordination and collaboration, increased participation by government services and increased funding for coordination.
As I was driving from Williams Lake today, I passed through several road construction projects that will improve road safety and access to the Cariboo. This type of investment is important, and its benefits are numerous. I appreciate and applaud the action by the government.
British Columbian governments have found a way to accomplish some pretty impressive events and projects, including beautiful and safe highways in rugged and challenging terrains such as the Sea to Sky Highway. They've protected and rebuilt the Pacific salmon fishery, and they captured the world's attention at the Winter Olympic Games.
I challenge this government to truly make British Columbia the best place on earth to live by increasing coordination and collaboration for domestic violence services to ensure comprehensive and responsive services that ensure women's safety and healing; increasing victims' services to ensure service is provided in a timely and sensitive manner; reinstating legal aid funding to ensure all families have access to appropriate and adequate legal advice and representation in family law matters; implementing adequate programming to effectively address the behaviours of domestic violence offenders and reduce the number of individuals reoffending; reducing child poverty so we are at the lowest rate in Canada rather than the highest; implementing a provincial child care program as Quebec has done; investing in early child development and education such
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as Norway and Sweden have; ensuring that all British Columbians have safe housing; and ensuring that long-term, comprehensive and adequate addiction and mental health services are available in all communities.
These investments in humanity will improve economic performance, reduce crime, reduce health care costs and improve education outcomes. It's not the easy decision. It's not the popular decision, but it's the right decision.
In closing, I answer the three questions this consultation is posing: yes, fund new programs and services; this is not the time to reduce debt; and do not cut personal income taxes.
J. Les (Chair): Thank you very much, Irene.
M. Mungall: Thanks very much, Irene. If we had more time, I could ask a lot of questions. It's a very good presentation.
Maybe I'll just touch on one question, and that is your first bullet point: increasing coordination and collaboration for domestic violence services. One of the things that's going on right now is that we have B.C. Housing administering transition homes and then we have the Solicitor General administering victim services. Historically those two had actually been together. Would you like to see those two come back together?
I. Willsie: Yes.
M. Mungall: Okay.
I. Willsie: When I say coordination, that's coordination at all levels — coordination at the ministerial level and coordination at the local level — because really good coordination and collaboration means really good service to clients. But it doesn't happen easily. You don't want to take counsellors and support people away from doing their important work to coordinate a meeting or coordinate a case management conversation.
B. Routley: Having come fresh from a meeting in the Cowichan Valley about the problems with violence against women, and certainly against children too — the families in crisis — I'm very interested in the circles-of-strength concept that you're working on.
We've got a local men's group, and a lot of the issues that come about as a result of impacts on women and children with violence in families is that there need to be supports for men's groups. We've got a men's group in the Cowichan Valley that came to me and said: "There's no funding." There's more funding for other things, but almost nothing for men's groups, and they have to go cap-in-hand.
Would you agree that that would be part of the solution? Was there any talk in your community about that? Or could you explain a little bit more about the circles-of-strength concept?
I. Willsie: I have to be quick. There are more services for female victims than there are for offenders — okay? The majority of these situations are female victims, male offenders. However, it's not 100 percent. There are the reverse.
Services for offenders are very, very thin, and they're nonexistent for men who are not convicted. However, the first time police are called to a residence is the best time to intervene and put supports in that home. It minimizes the violence that the children witness. It nips the problem in the bud, so your severity does not escalate, hopefully.
We need those programs where offenders at the beginning level are given help and education and learn how to change their behaviours.
J. Les (Chair): Okay. Thank you very much, Irene. We are out of time, so we need to move on.
The next presentation is on behalf of the Sun Peaks Resort municipality. Representing them is Liz Forster and His Worship Mayor Al Raine.
L. Forster: Thank you very much for coming out and listening to our concerns tonight. My name is Liz Forster. I'm a realtor in Sun Peaks and own a real estate company, Sotheby's Realty, in Sun Peaks Resort. I wanted to present some real estate concerns to you this evening. His Worship Al Raine is accompanying me to give me a boost. I'm certainly not an accountant; I'm just a realtor. But I do have some significant concerns for resort properties in general.
Sun Peaks is a growing, developing resort, not like Whistler where there are lots of rentals and it's well-established. We have some unique concerns throughout the province as other tourism development projects go.
One of the concerns I have with the HST implementation is that in these resort properties there is no rebate, generally speaking, when someone buys a property, because most properties are not primary residences there. Most are rental properties. So there is no rebate for primary residents, and there is no rebate for rental properties either. If you're building a new rental property, because it's not someone's home, there is no rebate given. Most buyers are paying the full 12 percent on top of the purchase price.
If the rebate threshold could be applied to investment properties as well as primary residential, then it would likely stimulate the growth in the resorts. There's no doubt that the imposition of HST has had a direct impact on sales.
We also should recognize at this point the previous presenter, about the construction industry. It has a direct impact on Sun Peaks Resort because construction is slowing down considerably, and that impacts jobs there and also throughout the Kamloops region. We're definitely
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being impacted with the increased costs with HST. It's a real disincentive, especially for recreation projects.
When the HST was introduced, the property transfer tax stayed, and that consequently feels like double taxation. People feel that it's just too much. One recent sale we just had was a property for $777,500. That was purchased by an Australian. He had a great time in Sun Peaks Resort and wanted to come back and purchase a property there, so he bought this one sight unseen.
Good Australian dollars coming in is a really nice investment in our resort, and we really want to encourage this. But on top of that price there was a tax bill of $93,300, bringing the total up to $884,300 — $13,500 in property transfer tax and $93,300 in HST, the total then being a 13.74 percent tax on top of that sale.
Many of these international buyers are just shocked when they see how the taxes start racking up, because there is not really a rebate for most people. It directly affects the number of sales. If it could be eliminated, I think it would stop the feeling of injustice. I hear over and over that it's double taxation. People are just stopping. In certain cases people are going ahead, but definitely the number of sales is suffering directly.
It's worth, at this point, looking at what the maritime provinces did when the HST was implemented there. Their property transfer tax in New Brunswick is $65 plus one-quarter percent on the purchase price. Of course, ours is 1 percent on the first $200,000 and 2 percent on the balance, so a big difference. Nova Scotia is $83.50, and then zero to 1½ percent after that. In Newfoundland the property transfer tax is $100, and 0.4 percent on the purchase price. It's interesting to note that Prince Edward Island, which is very dependent on tourism, did not harmonize the tax.
We would like to ask that the property transfer tax be eliminated and just have the one tax.
The other point is that when the property transfer tax was implemented…. Since then, of course, house prices have gone up significantly. I have an example for you of someone who just sold a property in Sun Peaks. This person purchased four years ago, and since then, of course, we've had the recession. She's lost the value appreciation in her place. But on top of that, the HST came in, and she was one of the people who had purchased as a business. Then because of that, there was a further effective devaluation of 7 percent.
I can get into the problem of use of the property in recreational areas as well at this point. It's so complicated. I deal with this every day. Before this presentation I called my accountant at KPMG for advice. He really didn't feel comfortable giving me some advice because it's so complicated, so he referred me to a tax specialist in Edmonton.
I spoke with him on Monday morning. When we started talking about the complications of how the property is used and whether you have to pay the tax, the HST or the GST previously, he said to me: "My head is spinning." I felt a little bit better. He was complaining: "It's Monday morning."
It's so complicated even for him to understand and for me to understand. How can these people who are purchasing properties here have a hope of understanding? If they're purchasing a property in a resort and it's not their primary residence…. If it's residential use and they use it more than 10 percent of the number of nights it's been rented, then they must pay the tax.
Some people have paid the GST. It's only payable once, as long as there's no change of use. But down the road, if they go to sell it to someone who is not going to use it that often…. This is so complicated to tell you this tonight. I won't expect you to really understand everything, because even the tax specialist had his head spinning about this.
It used to be, several years ago, that people interpreted it that you could use your property personally 10 percent of the nights it was available for rent. Over a year that would be about 36 nights. For most people with recreational properties, that was sufficient and reasonable, so they didn't have to pay the tax. They could defer it, basically, and register for GST then. But now the way it's interpreted is not the number of nights it's available for rent; it's the number of nights that it has been rented.
In Sun Peaks you can generally expect 60, maybe a hundred nights a year. It's a developing resort. So that brings personal use to maybe six to ten nights a year, and that just doesn't work for most people.
The other complicating factor besides that is, every time a property is sold and resold, some people might want to use it for 30 nights a year, for 60 nights a year, and others less than that. So then you get into a change-of-use problem. As soon as there's a change of use, the tax can be assessed again.
So it's very complicated, and putting in for the input tax credits drives people away. They don't know what to do about it. Especially, international buyers are completely overwhelmed.
This person I started off telling you about who has owned the property for four years and is now selling it got caught in the recession, which is just a sign of the times. But the timing of the HST, for her, was brutal because her property had not had the tax paid. But other people that have exactly the same property bought at the same time, used it a little bit more, paid the tax, and now the two properties are listed — two identical properties purchased at the same time.
She just lost 7 percent of her value on top of what she already lost in the recession, but compared to the competitors that she has her property listed with, another 7 percent. So it seems like the two people are being treated completely differently, whether they use it for two weeks
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a year or one week a year or six weeks a year. It's just very, very confusing, complicated.
She said to me that although she had a pleasant, positive experience with our real estate services…. She had a very positive experience. She loves Sun Peaks. But she said: "I will never buy property in Canada again." I have seen this happening more and more with international buyers. They feel victimized by this tax. And by the way, they're not feeling welcome, and they just leave with a poor taste in their mouths.
At this time we have the disastrous timing of the HST on top of the poor economic times. So what I would ask you tonight is: do we really want to turn away the international dollars that are being injected into our B.C. economy for tourism to provide jobs, to build rental properties, to attract tourists who are going to use them and spend their dollars while they're here using the properties? This is what we see happening.
That sort of ends my real estate portion. But Al has something to say.
A. Raine: I actually have another subject, but I don't know how much time we have, Mr. Chairman.
J. Les (Chair): We don't have much, Al, but maybe take two or three minutes, if you can touch on it.
A. Raine: Maybe just overall, I would say that the first reaction may be to say: "Well, people who can afford a $779,000 house — we shouldn't worry about them paying another $120,000 in taxes." But it's really the people who built the house, the people that are in the construction industries, the people that operate in the resort. They're all being impacted by this.
There's no question that there are people out there for whom another $100,000 doesn't really make a big difference, but they're not huge numbers. Those are small numbers. As soon as you add a 13 percent tax onto people's properties, that impacts the number of places that can be sold. That impacts the number of people that are going to work in the resort.
One side I can understand. People say: "Well, don't worry about the rich. They can afford to pay. Shouldn't worry about the rich." If it isn't good value, especially for foreigners…. They're comparing the value they can get in the United States, the value they can get in Japan or Europe. I mean, they can buy anywhere. When they're coming to British Columbia, especially to winter resorts, they're comparing it to other places in the world. They have a choice. If we make it too expensive, we just lose that business. We drive our tourism business smaller.
I did want to talk about an HST issue, but I won't go there because it's too complicated. Perhaps I could send you as a committee a short paper on it. But needless to say, the tourism industry has been hit hard by HST because we never paid PST on lift tickets, on ski lessons, on many of the services that are in the resort. I think we probably should feel blessed. I think, generally, the industry's kind of saying it's probably our time to pay our fair share.
We got away with something for a long time, but now everybody is going to pay the same tax. But we need to think about the impacts. For Sun Peaks Resort Corp., $1.5 million in additional taxes for next year — one little ski area. For the province of British Columbia, $21 million in additional HST tax on just the winter resorts. That definitely has an impact, and the industry has said: "We'll live with that, but we need some help on the foreign tourist side."
This is all added to the costs of taking a vacation in Canada and, as you know, export items are zero-rated for HST. So if you sell a product outside of Canada — zero-rated — you don't pay the HST, because if you paid the HST, you wouldn't be competitive. We might not sell our product, and people back home wouldn't have a job.
In the tourism industry there are tour operators who sell Canada in foreign markets. They're much like somebody selling to an export market. They're selling against other countries. Unfortunately, the federal government has kind of changed how that worked. Those operators used to be GST-exempt through a very complicated method, but the federal government changed that, so they all have to pay the HST up front.
They put in the most administratively crazy idea. It would qualify for one of Michael Campbell's goofy awards. They call the program the foreign convention and tour incentive program. The program ended up being a disincentive, and very few people ever applied because they figured out that it would cost more than the 5 percent rebate just to fill in all the forms and make the application. But at 12 percent and 13 percent we now have a new problem.
The real problem is that none of that is being passed on to the consumer. We put a program in place to let the consumer in a foreign country buy the package exempt of tax, but we put in such a complicated administrative rebate system that nobody can afford to give the tourists the rebate because, first of all, you don't know if you're going to get a rebate. Four or five months go on from the time the customer buys the package to when you might see a rebate. It's just totally ineffective.
I would say: "Please think about our industry." Our industry isn't…. Yes, people would say that it's elitist. You know, rich people going…. Hey, we all take vacations. A lot of the people that come to Sun Peaks Resort aren't millionaires and billionaires. They're ordinary folks. But what's really behind Sun Peaks are all the people that work there — the people that build the resort, the people that work in the resort. We have to stay competitive.
We don't mind paying our fair share. We just have to be competitive. We want an even playing field.
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J. Les (Chair): Okay, thanks very much. I've got three questions, starting with Doug.
D. Donaldson (Deputy Chair): Thanks very much. Very interesting presentations from both of you. Al, you mentioned about the rebates not necessarily being passed on and administratively the HST causing some more problems in that particular example, which is counter to what we often hear around the HST.
My question is around the sales and the direct impacts on sales that the HST has had. We heard that from the north mainline Okanagan real estate association on recreational properties as well.
A little different question. The international destination marketing that Tourism B.C. used to do, and you've talked about the international buyers…. Do you feel that with Tourism B.C. having been cut, cancelled, eliminated, that has also had an impact on the sales that you've seen decline?
A. Raine: Perhaps I should answer that one. I'm also involved in Tourism Sun Peaks.
I would say that the jury is still out on that issue, because we haven't seen exactly how the marketing money is going to be spent or how that is going to work.
Please don't think that we think the HST is the only thing that has kind of hurt the tourism industry. We recognize that the value of the Canadian dollar is significant when you're in foreign markets. It's now 25 percent more expensive than it was four years ago to take a vacation in Canada, just on the currency alone against most countries. The recession has hurt big-time.
It's a combination of all these things. But we can't do much about the dollar. We can't do much about the recession. We need a break where we can have breaks, and I think that's why we're looking at saying that on the foreign tourist side and for foreign buyers, the rules should be level. There shouldn't be this idea of: "Well, the rich people can afford to pay. We'll gouge them a little bit, and it won't matter." It does matter.
N. Letnick: Thank you again for your presentation. I sympathize with the issue of getting the HST rebates for these export markets — well, import markets, I guess. I'll look into that.
My question has to do with the property transfer tax. You actually started by saying that we should look at removing the property transfer tax. So here comes the billion-dollar question. The property transfer tax brings in about a billion dollars a year.
L. Forster: Right. Where are you going to get it from?
N. Letnick: You got it. So $40 billion is our annual budget, and a lot of the requests we get from people at the table are to reduce their costs — whether it's schools, post-secondary, more money to health care. So you know where I'm going. Where do we get the money from?
I'll make an assumption that you don't want to just increase the debt and make our kids pay it off 20 years from now. So do we increase the income taxes, corporate taxes? Or do you have another solution besides reducing services?
A. Raine: I think our answer would be simple. I suspect that a year and a half from now we're going to look back and say: "Wow, HST brought in a whole bunch of things that we didn't even anticipate." I know that nobody anticipated that the ski industry would pay $21 million more as a result of HST.
N. Letnick: I don't know if I made it clear — the property transfer tax.
A. Raine: Yeah, but on the property transfer tax, it's the same kind of issue. What we're saying is: "Be reasonable." I mean, there was no tax at the same level that there is today. The person in recreation property isn't getting any advantages.
N. Letnick: Okay. So you're saying that the increase in the economy will drive more money into the harmonized sales tax and use that money to offset the property transfer tax? Okay, that's an answer. Thank you.
J. Les (Chair): Thank you for that presentation. It has certainly given us something to chew on.
It's now right around seven o'clock. We've got to get to Cranbrook tonight yet, and it's already eight o'clock there. So we're going to adjourn the meeting at this point.
The committee adjourned at 6:57 p.m.
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