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
Thursday, October 7, 2010
Douglas Fir Committee Room
Parliament Buildings, Victoria, 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 9 a.m.
2. Opening statements by John Les, MLA, Chair.
3. The following witnesses appeared before the Committee and answered questions:
1) British Columbia Construction Association
2) British Columbia Medical Association
Dr. Ian Gillespie
Dr. Jonathan Agnew
3) Canada’s Research-Based Pharmaceutical
Companies (Rx&D), BC Regional Committee
4) Board of Education, School District No. 62 (Sooke)
5) New Car Dealers Association of B.C.
6) Rick Hansen Foundation
Rick Hansen Institute Mark Aston
7) Insurance Bureau of Canada
8) Mining Association of British Columbia
9) Canada’s National Brewers
10) Canadian Home Builders’ Association of British Columbia
11) Community Social Planning Council of Greater Victoria
12) ProArt Alliance of Greater Victoria
4. The Committee recessed from 12:07 p.m. to 1:04 p.m.
13) Board Voice Society of BC
14) Camosun College, Lansdowne Campus
15) BC Colleges
16) BC Coalition for Action on Alcohol Reform
Dr. John Gray
17) Greater Victoria Chamber of Commerce
18) Victoria Real Estate Board
19) British Columbia Paraplegic Association
20) Association for Mineral Exploration British Columbia
21) Greater Victoria Regional Child Care Council
Dr. Enid Elliot
22) Federation of Community Social Services of BC
23) BC Sustainable Energy Association
24) The Cridge Centre for the Family
25) Artemis Options Society
5. The Committee adjourned at 3:49 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
Thursday, October 7, 2010
Issue No. 34
* 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
Heather Warren (Committees Assistant)
Dr. Jonathan Agnew (British Columbia Medical Association)
Linda Annis (British Columbia Paraplegic Association)
Mark Aston (Rick Hansen Institute)
Jim Bennett (Victoria Real Estate Board)
Allison Bottomley (ProArt Alliance of Greater Victoria)
Lembi Buchanan (Chair, B.C. Coalition for Action on Alcohol Reform)
Jim Cambridge (Superintendent, School District 62 — Sooke)
Ian Case (President, ProArt Alliance of Greater Victoria)
Ben Chalmers (Mining Association of B.C.)
Dr. Jennifer Charlesworth (Executive Director, Federation of Community Social Services of B.C.)
Jenelle Cooper (Board Voice Society of B.C.)
Serge Corbeil (Insurance Bureau of Canada)
Guy Dauncey (President, Board of Directors, B.C. Sustainable Energy Association)
Greg D’Avignon (Canada’s National Brewers)
Bob Dawson (Canada’s Research-Based Pharmaceutical Companies, Rx&D)
Sharon Dean (Canada’s Research-Based Pharmaceutical Companies, Rx&D)
Gavin Dirom (President and CEO, Association for Mineral Exploration British Columbia)
Rupert Downing (Executive Director, Community Social Planning Council of Greater Victoria)
Dr. Enid Elliot (Greater Victoria Regional Child Care Council)
Lisa Ellis (Executive Director, Artemis Options Society)
Colin Ewart (Rick Hansen Foundation)
Dr. Ian Gillespie (President, British Columbia Medical Association)
Pierre Gratton (President and CEO, Mining Association of B.C.)
Dr. John Gray (B.C. Coalition for Action on Alcohol Reform)
Wendy Hobbs (Chair, Board of Education, School District 62 — Sooke)
Rob Hulyk (British Columbia Medical Association)
Peter Lockie (Camosun College, Lansdowne Campus)
Dave Lockyer (Board of Education, School District 62 — Sooke)
Chris McBride (British Columbia Paraplegic Association)
Manley McLachlan (President and CEO, B.C. Construction Association)
David Marshall (Chair, Greater Victoria Chamber of Commerce)
Randi Masters (President, Board of Directors, Victoria Real Estate Board)
Jo Mitchell (District of Metchosin)
Cheryl Muir (Canada’s National Brewers)
Blair Qualey (President and CEO, New Car Dealers Association of B.C.)
Jim Reed (President, B.C. Colleges)
Shannon Renault (Greater Victoria Chamber of Commerce)
Peter Sandmark (ProArt Alliance of Greater Victoria)
Dave Saunders (Mayor, City of Colwood)
Peter Simpson (Canada’s Research-Based Pharmaceutical Companies, Rx&D)
Geoff Sing (Cridge Centre for the Family)
Lillian Szpak (Acting Mayor, City of Langford)
M.J. Whitemarsh (CEO, Canadian Home Builders Association of B.C.)
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THURSDAY, OCTOBER 7, 2010
The committee met at 9 a.m.
[J. Les in the chair.]
J. Les (Chair): Well, good morning, everyone. It's time to get the show on the road. My name is John Les. I'm MLA for Chilliwack and Chair of this parliamentary committee. I'd like to welcome everyone here this morning.
Each year, as you may know, in preparation for the next year's budget, the Minister of Finance releases a budget consultation paper by September 15. That presents a current fiscal forecast, and it also identifies the key issues that need to be addressed in the next budget.
The paper provides a focus for the consultations of this committee, and it includes information on how members of the public may provide their views on budget priorities. Printed copies of the consultation paper are available on the information table at the back of the room.
Our committee is the parliamentary committee which is responsible for conducting public consultations on the forthcoming provincial budget. It is required to report back to the Legislative Assembly no later than November 15 of this year. This year, in total, we will be holding 14 public hearings in each region of the province as well as three video-conferencing sessions to hear from residents of rural communities living in the more remote areas of British Columbia.
In addition to public hearings, there are a variety of other ways that British Columbians can share their ideas with us. We accept written submissions by letter or e-mail, and also video and audio files. Further information on how one may participate using one of these methods is available on our website.
Committee members carefully consider all of the public input that we receive, whether it's oral, made here today; on line; in writing; or by audio or video clip. The deadline to receive submissions is Friday, October 15.
At today's meeting each presenter may speak for ten minutes, with up to five additional minutes allotted for members' questions. Time permitting, we may also have an open-mike session near the end of the hearing, with five minutes allocated for each presentation.
Bear in mind that today's meeting is a public meeting. It will be recorded and transcribed by Hansard Services, and a copy of the transcript, along with the minutes of the meeting, will be printed and made available on the committees website. In addition to the meeting transcript, a live audio webcast of this meeting is also produced and is available on the committees website to enable interested listeners to hear the proceedings as they occur. An archived copy of the audio broadcast will also be retained on the committees website.
At this point I'd like to ask the committee members to introduce themselves.
J. van Dongen: John van Dongen, MLA for Abbotsford South.
J. Thornthwaite: Jane Thornthwaite, North Vancouver–Seymour.
J. Rustad: John Rustad, MLA for Nechako Lakes.
D. McRae: Don McRae, MLA for the Comox Valley.
N. Letnick: Norm Letnick, Kelowna–Lake Country.
D. Donaldson (Deputy Chair): Doug Donaldson, good morning. MLA for Stikine and Deputy Chair of the committee.
B. Ralston: Bruce Ralston, Surrey-Whalley.
B. Routley: I'm Bill Routley, MLA for the Cowichan Valley.
J. Les (Chair): I'd also like to introduce our Committee Clerk, sitting to my right, Susan Sourial. Staffing the registration desk is Heather Warren at the back of the room and also our Hansard staff, Michael Baer and Jean Medland, who are recording and will prepare the written transcript of this meeting.
With that, I'd like to call our first delegation this morning from the B.C. Construction Association — Manley McLachlan.
I think, Manley, you were wondering if you could take the entire 15 minutes and talk to us. It's your 15 minutes, so you do with it as you please. But if you'd like to leave some time for questions, that's probably a pretty good idea too.
M. McLachlan: Thank you very much. I will move through my material as quickly as possible. We do appreciate the opportunity to speak to the committee. We're here today representing the B.C. Construction Association, and I'm pleased to have the opportunity to participate in this process.
I'm joined this morning by my counterparts in the four regional associations that make up BCCA. Keith Sashaw is here from the Vancouver regional association; Roz Thorn from BCCA-North out of Prince George; Debbie Hicks out of the Southern Interior Construction Association in Kelowna; and Greg Baynton from BCCA Vancouver Island, located here in Victoria.
Just a little bit about us. The B.C. Construction Association, through the four associations I've just
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introduced, represent over 2,000 corporate members active in all areas of construction across the province of British Columbia. Our member contractors build industrial, commercial and institutional structures. When we get into some of the outlying regions, they also are involved in the single-family residential. Others are roadbuilders and infrastructure builders, while others are in the manufacturing and supply sector. We literally cover the entire spectrum of the construction process.
Time does not allow me this morning to detail each of the seven recommendations contained in our submission. The construction industry is complex and intricately tied to our economy, and as such, we believe that our recommendations will not only assist our industry but also the economy in general. We thank you for the opportunity to provide them.
I do want speak directly to three of the recommendations. We have experienced substantial economic shifts over the past 72 months that initially fuelled growth in the economy on a scale never experienced before. While we were riding that wave of prosperity, we also witnessed the abrupt impact of global economic shifts beginning in October 2008.
Construction continues to be the most important sector of the economy, given the fact that nothing happens until something gets built. The best evidence of this fact is that governments have used the clear and compelling need to rebuild our infrastructure as a means of stopping and reversing the impact of the economic and financial crisis that began in 2008.
While the construction industry deeply appreciates the public sector investment in construction, it's important to consider the issues related to public procurement processes that have emerged on our way out of recession. While enhancing the economic security of our province and ensuring competitiveness is of primary importance to our members, adherence to the principles of open, fair and transparent access to public projects is paramount.
Accountability, transparent process and fairness — all qualities one sees being continually lauded by government officials. Who would argue that they are not laudable? However, the reality is that public procurement policies in B.C. are, quite frankly, a dog's breakfast.
Single sourcing is a common occurrence, or when bids are solicited, subjective, non-transparent criteria are often used to evaluate them. Public openings are a thing of the past, and perhaps most egregious of all, industry-accepted standard contracts are ignored or mercilessly amended beyond recognition.
Sadly, the industry's struggle against unfair public procurement activity has, more often than not, been a losing battle. Over and over again, despite assurances from various ministry officials and regardless of published procedures and guidelines to the contrary, offending procurement procedures are still with us.
These days public owners insert clauses into their tender documents to ensure that recent court decisions do not in any way restrict their right to accept or reject tenders for any reason whatsoever that they in their sole discretion deem appropriate.
Newly minted contracts prepared by lawyers on behalf of the public owners are cleverly designed to shift maximum risk from themselves onto the contractor, upsetting the fair balance that nationally approved industry documents strive to achieve. Is this a result of the arrogance of a stronger bargaining power, or is there something else at the bottom of this approach by public agencies?
Clearly, public agencies would like to restrict the competition by handpicking their favourite contractor for every project. They would also like to relieve themselves of all risks — as would the consultants, the designers and, yes, the contractors — by altering contracts and inserting incredibly sweeping privilege clauses.
In the area of public procurement, however, this is not an appropriate approach. It is, quite simply, not good policy for government.
Proper public procurement policies that are truly accountable, transparent and fair lead to a healthy competitive marketplace, protect misuse of taxpayer dollars and result in squeaky-clean elected officials. We all know this. I expect the public officials know this. Yet the bad practices continue in spite of all the complaints from industry, the reams of documentation detailing good policy and yes, even in spite of knuckle rapping by the courts. We have to ask why.
BCCA believes it's time that the construction industry in B.C., working with government, took some time to really understand why public officials are ignoring good advice and stated public policies instead of continually harping on their inappropriate procurement practices. Certainly, that approach is falling on deaf ears.
We would want to work together to create some real dialogue between the offending agencies and the industry to determine the underlying cause of our current procurement issues. BCCA is eager to start that dialogue, and while we maintain our support for sound procurement policies, we want to take a hard look at the concerns driving public agencies down their current path. We suspect a lot of their issues arise out of past experience, likely with a few bad apples.
We also recognize that public agencies are facing some serious challenges such as financial pressures and the loss of an experienced workforce. A great deal of expertise and understanding of the complexity of construction procurement is retiring along with the baby boomers. Newcomers to the world of public procurement are challenged by perceived risks that may attach to an unknown contractor with lower bids. It seems so much safer to hand over the procurement process to a consultant or the work to a company that successfully
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completed the last project and to tender document- and contract-drafting to some lawyers.
Unfortunately, the best intentions of the uninitiated and new to construction procurement will most likely lead to trouble — perceived corruption, higher costs and unfair contracts that ultimately land the players in court. We truly do need to talk.
The industry's needs can be juxtaposed with those of the public agencies. Working together, we can establish visibility of opportunities, attract healthy competition, ensure the best use of taxpayer dollars and stay out of court.
That sounds like a lot of accountability, transparent process and fairness to me, so it's time to make it a reality. To that end, BCCA recommends that this government work with industry to convene a forum where the industry sits down with public officials from all levels of government, including quasi-autonomous non-government organizations who need to procure construction services, and find the best approach to solving their challenges and concerns without sacrificing best practices that have evolved over decades.
The Capital Asset Management Framework is a comprehensive document that is intended to provide assistance to public agencies in finding the best capital management practices. CAMF was introduced in 2002 and contains four foundation principles that we agree with: fairness, openness and transparency; competition; allocation and management of risk; and value for money and protection of the public interest. We recommend that government adopt the Capital Asset Management Framework as public policy, not just a guideline.
That would require governments at all levels, such as municipalities and those quasi-autonomous non-government organizations, to comply with good tendering practices. To that end, we recommend that sufficient resources are made available to the ministries to create and distribute appropriate procurement tools and sample documents referred to in the CAMF to entrench the principles of transparency, openness and fairness.
This includes the use of standard tendering documents in all tendering procedures funded through public moneys, regardless of the procurement method; to build an education and training regime for public sector buyers of construction services, including guidelines regarding the circumstances in which to consider various methods of procurement and the required conditions for success; to empower the Ministry of Finance to establish credible rigour and oversight of capital spending within the provincial government and the agencies whose projects it funds; and to build a consultation framework between government and the construction industry.
The second point we want to make is around the HST. Despite the pressure from across the province to abandon the HST, BCCA believes that government must not succumb to current public pressure. The construction industry, one of the main engines of the economy, will be improved through the application of the blended tax and will benefit by over $800 million in tax savings. We believe that that translates directly into jobs. It's not just good for the economy; it's good for jobs.
The HST will make B.C. one of the most competitive jurisdictions within Canada for business investment dollars and create jobs in the province over the long term. Sales tax harmonization is critical to strengthening the economy and speeding along the recovery.
BCCA supports the Smart Tax Alliance, and we know the HST will help secure jobs for the over 800,000 working British Columbians who work for and count on the Smart Tax Alliance employers for their paycheques. While it will take some time for this tax relief to make its way through the system and be reflected in lower costs to the buyers of construction services, the benefit will accrue.
This tax will assist in maintaining the momentum created through the stimulus program and will translate, again, into jobs for British Columbians. So we recommend that government not back away from the implementation of the HST and to work with the opponents of the tax to create an honest dialogue on the benefits of harmonization to the economy and future British Columbians.
The B.C. Construction Association is pleased to have been given this opportunity to provide input. I mentioned that I've only spoken to three of our seven recommendations. We believe that the provincial government must take a leadership role to ensure that B.C. is able to maintain its competitiveness by ensuring that we have an adequately skilled workforce to meet the demographic challenges that we're faced with and the economic challenges that are coming towards us in the future. To that end, we trust that government will react and act on the seven recommendations that are included in our presentation.
In conclusion, I'd like to express our support for this process, and we appreciate this government's open and inclusive approach to budget consultations. It's commendable.
J. Les (Chair): Thank you, Manley. I have a question from John Rustad.
J. Rustad: Thanks very much, Manley, for the presentation. I've got a couple of questions. You didn't talk to this directly, but it is in your notes that you provided us with regard to hiring, employment, the amount of workforce you have available. You know, we've come off historic low unemployment. We're still around 7½ percent, which is still fairly tight by historical standards.
My question to you is: as an industry, what is the average age of the people in the industry? How are we going
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to best meet that future need? Obviously, there are many other demands within the province for employees.
Assuming that we're going to be seeing economic growth back to somewhat normal or even above normal, which is what I anticipate we'll see in the coming years, potentially you're going to see a shrinking labour force — unemployed force, that is — to be able to draw from.
I'm wondering what the best steps are that we can do as a province to try to be able to meet those needs and also to be able to attract people to the province to be able to fill future jobs.
M. McLachlan: Certainly. Thank you, John. The construction industry in British Columbia has a great resource at its hands, and that is the labour market information report that is prepared by the Construction Sector Council. This report is done on an annual basis. The information is relevant. It's current. It's based on our current level of activity in the province. The foundation for the calculations around our employment needs is vetted across the province through the four regional associations that we introduced this morning.
What that tells us is that we have, like every other industry, an aging workforce. We can quantify how many British Columbians, out of some 160,000 that are working in the industry today, will be eligible for retirement in the next few short years. That number comes in at 30,000. There are some 30,000 senior people who will be leaving the industry.
That is going to leave some big gaps in management, in supervisory positions, in the folks who run the crews. Most importantly, these are the people who train our apprentices. We know that this is going to occur despite the state of the economy. When you compare that with the demands that are created by the major projects that are currently in our inventory, we know that there are another 30-some-thousand positions, skilled positions, that will be required to meet the needs of those projects that are currently on the major projects list.
The best steps, we believe, are to continue to support the education and training in the trades sector. Continue to support the ITA and the industry training organization that has been structured. The Construction Industry Training Organization is industry's direct link into the training system.
It is going to cost some money. It's probably counterintuitive for most people to think that when we're in a downturn in the economy, we should focus our efforts on training, but that is exactly what we need to be doing in this province in order to ensure that we have a sustainable workforce and that we're also able to meet the needs of the major projects as they come along.
J. Les (Chair): Time for one more brief question and answer from Bruce.
B. Ralston: Thanks very much, Manley — always a very direct presentation.
You mentioned the capital asset management framework, and your recommendation is that it not be a voluntary code of conduct but becomes mandatory. One thing that the government did do was to make, in the capital procurement area, reference to or consideration of alternate procurement — that is, that public-private partnerships be mandatory above a certain capital value. It has shifted upwards relatively recently.
What effect has that had upon the procurement process, and how does that fit in with the framework that you speak of?
J. Les (Chair): Can you make that about 30 seconds?
M. McLachlan: Sure. The P3 issues are really related to access of local industry to those major projects. Open, fair transparency in that process is as essential as in any other process.
The capital standard does apply to projects of only a certain value. Quite frankly, given the impact of the economic situation that we've experienced, the international financiers are only interested in projects of a certain magnitude. So the reliance and the ease of using the P3 model, we believe, has certainly been interrupted. The main issue there is: how does the local industry access opportunities within a P3?
We've made the position that we feel, when the proposals are being considered, that Partnerships B.C. and the organizations actually consider integrating points, if you will, for the stated objective or the stated way that the proponents are going to engage local industry. We've actually seen that happen in Ontario.
J. Les (Chair): Okay, thank you, Manley. We'd love to listen to you longer, and I'm sure we also have more questions, but there just isn't time. I'm sure everyone understands that we have a very full agenda today.
M. McLachlan: Perhaps next year we'll get all five of us lined up, and we'll get the combined total of 50 minutes.
J. Les (Chair): Our next presenters are from the British Columbia Medical Association — Rob Hulyk, along with Dr. Ian Gillespie and Dr. Jonathan Agnew.
Good morning. You can start whenever you're ready.
I. Gillespie: Good morning, ladies and gentlemen.
My name is Dr. Ian Gillespie, and I'm the president of the British Columbia Medical Association, the organization that represents over 8,500 practising physicians and surgeons across the province. I'm joined here today by two senior staff from the BCMA, Mr. Rob Hulyk, who's
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assistant director of communications, and Dr. Jonathan Agnew, who's assistant director of policy.
I'm a psychiatrist from Victoria, where I've practised for over 30 years. I'm a graduate of UBC medical school. I'm pleased to be here today to provide suggestions for the provincial budget in 2011 on behalf of the physicians of British Columbia and their patients.
After working in mental health for three decades, the theme "Building B.C. for your family" resonates strongly with me. Having a supportive family is critical to the overall development of a child. The more we can do early on to support a child, the better off that child will be in the long run.
Even though B.C.'s economy is showing signs of improvement, these continue to be tough economic times. Health care remains the largest financial commitment by the provincial government. Therefore, we must continue to look for innovative ways to ensure that those dollars achieve the best overall results possible for patients and taxpayers. That requires both courage and the commitment to pursue new ways of doing things within our public health care system.
In the last few years we've seen new programs in primary care that are dramatically improving care and outcomes while also reducing or avoiding costs. It is with that in mind that I will outline our three priorities for Budget 2011.
First, we must continue to support and expand innovations in primary care that improve quality and outcomes. Second, we need to take that scale of change and innovation into our hospitals. Third, perhaps most importantly, we must work much harder on prevention. This is the biggest way in which all British Columbians can do their part in sustaining our health care system.
I will start by focusing on primary care. We have accumulated decades of evidence showing that a strong primary care system is the best way to ensure value in the health care system. It can be surprising to discover that you are considered to be leading the world in an area, yet that is happening right now in primary care in British Columbia.
For the last four years, through the General Practice Services Committee, the GPSC, the BCMA and the provincial government have worked together to find better ways to manage patients with chronic disease. We now have delegations from around the world coming to B.C. to find out what we're doing.
Today we are seeing remarkable improvements in patients receiving treatment for diabetes and congestive heart failure because doctors now have better tools. Over 3,000 physicians are treating more than 160,000 patients with diabetes under this program. Over 20,000 patients with congestive heart failure have also benefited. A recent study showed that these two initiatives have saved B.C.'s health care system $85 million. These savings are largely in avoided hospital and emergency room visits.
The other good news is we're just getting started. We have now over 2,800 physicians providing this type of care to almost a quarter million people with hypertension. Programs are also underway to address the challenges for seniors, particularly those with multiple chronic diseases. GPSC programs are already in place and working in the area of mental health, and we will expand those efforts in January to problem drinking.
The other good news is we are turning our attention to specialist services as well. Through the newly established specialist services committee — the SSC — the BCMA and government are collaborating on ways in which to bring the same level of success to our specialist colleagues.
One of the first programs introduced looked at ways of improving communication between specialists and GPs and improving the ability of patients to see a specialist in a timely manner. Early indicators are that both GPs and specialists are very supportive of these efforts, and patients are waiting less already.
I will leave this section with one cautionary note. We cannot afford to see patient care scattered or fragmented. It is critical that the delivery of primary care is properly coordinated, or we may lose all of the gains shown in the evaluation and research. Uncoordinated care results in duplication, unnecessary visits, missing information and so on.
All members of the primary care team are important, and we need to use those individuals to the full extent of their skills and abilities. However, what it clear is that care needs to be coordinated by the provider with ultimate responsibility for the patient's care, which in our system is usually, but not always, the GP.
Last year my predecessor, Dr. Brian Brodie, advised this committee that we need to take a serious look at how we fund our hospitals. I am echoing that call because we need to do much more to encourage innovation in this area, and we need to do so with greater speed.
For far too long we have relied on the antiquated funding process of block funding. Given that almost half of every tax dollar is spent on health care in this province, we should not be relying on a system that is slow to adapt to change, cannot provide detailed costing information and, most importantly, treats patients as an expense.
Two weeks ago the BCMA released its policy paper on patient-focused funding, entitled Valuing Quality: Patient-Focused Funding in British Columbia. We've left copies here for you.
The BCMA's overall view of patient-focused funding is that one size does not fit all. It is easy to get this wrong if the incentives are poorly designed or fail to take into account all of the clinical complexities. Therefore, everyone must have a clear understanding of what patient-focused funding entails from the outset.
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Under this system there are tremendous benefits when it's done properly. Then the system views patients as a benefit to the hospital instead of a cost. We see reduced wait times and improved access to services. Most importantly, when set up properly, the system rewards and indeed demands a good outcome for the patient.
The greatest value from this new approach to funding occurs when it engages input from the front-line medical professionals. Patient safety and quality of care must also be included as key measurement criteria. Recently we saw an announcement of patient-focused funding from the Minister of Health Services regarding improved access to MRIs. This was an example of how to do patient-focused funding right.
We will continue to watch this process closely as the ministry moves forward with its pledge to expand these types of endeavours. We hope this approach continues to provide a focus for health authorities to deliver the service to the right patient in the right way at the right time, with a good outcome. Our system should strive for nothing less than that standard.
I will now turn to my third and final point, prevention. Even though B.C. leads the country in many respects, our society continues to accumulate a very large credit card bill that our health care system will one day have to pay. Too often prevention is an afterthought, when it should be the foundation.
Think about this for a moment. What if we did not have immunizations or a clean water supply or adequate food protection? Imagine the impact on the health care system.
You can think: "Well, what is good prevention anyway?" Well, it's living the way that we want our children and our grandchildren to live and being good role models in that at the same time.
We know, for example, that childhood and adult obesity are at epidemic proportions. Research has shown that people who adhere to a healthy lifestyle, such as eating right, exercising and quitting smoking, can reduce their chances of developing common chronic diseases by nearly 80 percent. Our provincial health officer, Dr. Perry Kendall, last week called this a potential $2 billion — that's billion with a "b" — in completely avoidable health care costs.
For years the BCMA and others have campaigned for all Canadians to lower our salt consumption, yet little has changed. We see some efforts around this, but given the impact it has on our health system, we should be far more aggressive. As I said earlier, our GPSC are treating 20,000 people with congestive heart failure and 250,000 with hypertension. What if those numbers doubled? That is our predicament, and we need to be much more proactive in prevention, even if those changes are sometimes unpopular.
In June 2010 the BCMA released a policy paper called Partners in Prevention, which I will also leave with you. This paper recommends a number of initiatives for our province. Research has clearly identified some of the most cost-effective ways in which our population can reduce the burden on our health care system.
Our paper proposes that British Columbia needs to develop a lifetime prevention plan for British Columbians — a series of health services and recommendations individually tailored to each person during their lifetime. For the best chance of success, the cornerstone of this approach must be that patients are clear partners in the development and implementation of that plan.
In conclusion, the doctors of B.C. would ask you, in your deliberations, to consider the successes we have achieved in our health care system and visualize just how much more we can do.
Thank you, and I am pleased to answer any questions you may have.
J. Les (Chair): Thank you, Dr. Gillespie. We probably have time for two quick questions.
B. Ralston: Thanks very much. I'm interested in the emphasis you've given to prevention. I would have thought that one of the hallmarks of prevention would be an annual physical checkup. I've had a physician tell me that the tariff doesn't pay for that, and therefore, they're reluctant to schedule those. I've had another one tell me that: "Yes, you can do it, but you have to disguise it under some other code in the tariffs."
First of all, is that accurate? Secondly, what are your comments on that?
I. Gillespie: It is accurate that there are medically uninsured services, and an annual physical checkup is one of those.
The lifetime prevention plan looks at evidence-based approaches that can be used throughout life that can clearly be shown to have an impact on prevention, and we would support the policy that's defined in that recent paper.
N. Letnick: Mine actually is very similar in a way. As the technology changes, some things become less expensive to deliver and some things more. For instance, cataract surgery is much cheaper today to deliver on a per- unit basis.
Is the BCMA open to reviewing the whole fee schedule so that we can shift some of the resources away from those that have become cheaper towards things that are more important right now, like the prevention issue?
I. Gillespie: That's an interesting question. The whole relationship with government over fees is defined by the physician master agreement. That's due for renegotiation in 2012, and we will be preparing for that negotiation.
In the meantime, there are mechanisms that government can use to address any concerns that they
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have, and we fully cooperate with government in those discussions.
J. Les (Chair): Thank you. Unfortunately, because of time, we don't have time for any more questions, but we very much appreciate your presentation this morning, as well as the documents that you've left behind.
I. Gillespie: Thank you very much, Mr. Les.
J. Les (Chair): Our next delegation is from Canada's Research-Based Pharmaceutical Companies, Rx&D — Bob Dawson, Peter Simpson and Sharon Dean.
S. Dean: Thank you, hon. Chair and committee members. It's a pleasure to be here today. I'm Sharon Dean, and these are my colleagues Bob Dawson and Peter Simpson. We are members of the B.C. regional committee for Canada's Research-Based Pharmaceutical Companies, also known as Rx&D.
I work directly for Rx&D as the B.C. director of government affairs. Bob is with Pfizer, and Pete is with GlaxoSmithKline. Bob, Peter and I are based in British Columbia, and we are part of a large community of individuals from our industry who work and live in this province.
Let me begin by providing a short background of Rx&D. Our industry association represents over 15,000 men and women who work for approximately 50 research-based pharmaceutical companies in Canada. Rx&D companies are leading investors in private sector science- and technology-based research and development in Canada, particularly in the priority area identified by this government — health and life sciences.
Over the past three years alone our member companies have invested more than $180 million in this province in their health innovation sector. While we are proud of this level of private capital investment in the province, especially during a very challenging economic period, our ability to continue to contribute to the province's medical research and life sciences sector will be more and more dependent on the direction British Columbia takes in embracing innovation in the knowledge-based economy.
The vision of Rx&D and our member companies is to advocate for policies that will bring the best innovative medicines and vaccines to Canadians in a timely and appropriate manner, improve Canada's global competitiveness and make Canada a world leader in attracting pharmaceutical and biotechnology investments, which are key components of the knowledge-based economy.
We commend the B.C. government again for reaching out to the public to seek comments and suggestions in preparation of the 2011 budget. This is our association's fifth consecutive submission to the Standing Committee on Finance and Government Services, and we're pleased to be able to participate again.
Rx&D is also fully committed to supporting the successful implementation of the B.C. Pharmaceutical Task Force report, which was endorsed by this government in 2008. Although still not fully implemented, we continue to work with ministry officials to have the recommendations put into operation in a timely and transparent way.
We also commend the government's work on the recently announced long-term pharmacists agreement that brings generic prices to 35 percent of brand. This action follows a recommendation that Rx&D made in previous submissions to this committee as an effective strategy to contain costs in the drug spending budget.
Hon. Chair and committee members, we are committed to playing a positive role in meeting economic challenges of the government of British Columbia.
I will now turn it over to my colleague Bob Dawson to present to you how our industry is prepared to work within the financial targets already set out in the government's three-year budget plan.
B. Dawson: Mr. Chairman and committee members, thank you for the opportunity to speak today.
The current service plan for the Ministry of Health projects that the departmental spending for health for 2011-2012 will be $15.7 billion. This is a significant public commitment to the management and development of our health care system. Of that budget, the service plan for the same year intends to spend just over $1 billion on PharmaCare. This budget includes the costs of generic, off-patented medicines, some of the over-counter medicines and supplies as well as the reimbursement for brand or patented medicines, which we're representing here today.
It also includes pharmacists' dispensing fees, distribution and associated costs, as well as the cost of actually running the pharmaceutical services division and the various programs and initiatives within that division.
While drugs are often cited as the fastest-growing expenditure in the health care budget, it's important to understand that the entire budget for PSD — the pharmaceutical services division — is still well less than 10 percent of the entire health care pie. And that cost curve is actually straightening out. For example, the B.C. PharmaCare budget showed a 4 percent annualized growth for the period from 2002-2007. In the 2008-2009 fiscal year, the actual expenditure for PSD was $8 million less than what was estimated.
The service plan also predicts a reduced 3 percent annualized growth rate for the next five years. In 2012, B.C. PharmaCare drug budget growth is projected to decline to a low of 1.1 percent. On top of this, the payers of the public and the private sector — government is the payer for
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the public sector — will save an additional $380 million by 2012-2013 in projected annual savings from the new generic pricing framework. This is the framework with which the service plans in place were here to support.
We also want to present to you today the message that when you look at the various cost drivers in the total health care budget, the tightly controlled drug budget is bringing added value to other parts of the health care system. Given the new treatment and technology development over the past several years, we are seeing less invasive surgery, increased use of diagnostic imaging and more specific and tailored drug treatment plans.
We are seeing better health outcomes, and British Columbians are living longer and healthier than ever before. Past experiments in reference-based pricing and mandatory therapeutic drug substitution across drug classes were introduced as a way to control costs, but real-life experience has demonstrated that these policies actually lead to increased costs and less optimal health care.
It's our position that the public investment in PharmaCare is making the health care system more efficient and effective. If we can work with the government to ensure that the patient gets that right medicine safely, in a timely manner, then more can be done to manage costs while, at the same time, improving British Columbia's access to innovation.
I'm going to pass it over to my colleague Peter Simpson, just to elaborate on where we see some of the answers.
P. Simpson: Mr. Chair and committee members, thanks for the opportunity to be here today.
As Bob just mentioned, as an industry, we're prepared to roll up our sleeves, participate in the health care debate and bring real solutions to the table. For example, our industry feels that while there's been improvement in dialogue with the Ministry of Health, there are still many opportunities for enhancement.
One key area we feel would add great value to improve budget planning and predictability would be regular, ongoing business reviews from member companies to provide detailed information about our product pipelines and future products. This forum could also be a vehicle to discuss the utilization of existing products to ensure expectations and agreements are being met, and if not, what joint government and industry strategies could be implemented to bring us back into alignment.
We also feel that this regular dialogue could provide an effective forum to discuss potential partnerships in appropriate medicine utilization and chronic disease management. Our member companies have significant resources and experience in jurisdictions from across the country and around the world. We want to bring these insights to the government, and we believe more of these partnerships will improve health for British Columbians and result in health system savings and increased investment in research.
Our member companies followed with interest the announcement that provincial and territorial Health Ministers agreed last month to review options to allow for joint purchases of prescriptions and medical equipment and supplies. We strongly support any efforts by governments to maximize the value of public funds in health care. However, we suggest there be a mechanism of consultation as proposals and ideas are being developed.
B.C. is not alone in trying to find the right balance between managing their expenditures in health care while at the same time wanting to improve patient choice and population health outcomes. As I mentioned, many of our member companies have extensive experience with other jurisdictions addressing this balance. We would welcome the chance to provide our perspective on how to maximize opportunities and address implementation challenges.
To that end, we suggest a tripartite working group be established with representation from our industry; the government, which includes Ministries of Economic Development, Health and Advanced Education; as well as members from the life sciences community, which includes LSBC, patient groups, health researchers and business sectors.
With this structure, it is our view that together we can collaboratively find ways to increase private sector investment in this province while also managing the cost growth in the health sector.
In summary, Rx&D has a strong desire to work with government. We are committed to the health, wellness and economic prosperity of this province. When it comes to tackling the tough issues, we want to be at the table, not just because we see ourselves as a concerned stakeholder in B.C.'s future but also because we feel we can bring knowledge, experience and solutions to the challenges we all face.
Thank you very much, again, for this opportunity, and we'd be pleased to answer questions if you have them.
J. Les (Chair): Thank you very much.
D. Donaldson (Deputy Chair): Thanks very much for the presentation. Your concerns about costs and willingness to roll up your sleeves is well received here. I have a specific question, though, in that regard.
From what I understand, one in five seniors admitted to hospital is due to adverse drug reaction. I don't know if that's from over-prescription or not taking the drugs in a proper manner or what the cause is. I was wondering, along those lines, whether you'd have recommendations for a health literacy program through the government and whether you'd be willing to partner, in a funding sense, to that kind of program.
B. Dawson: Absolutely. We very much support that type of initiative.
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I'll just add parenthetically that we also record all adverse drug events for our manufacturers. That's part of our responsibility, to make sure we're keeping track of it. Actually, B.C. has excellent surveillance mechanisms within some of the regional health authorities as well.
I think that kind of comprehensive public health approach is one that would be endorsed by lots of stakeholders, including ourselves.
J. Les (Chair): I don't believe there are any further questions. Seeing none, on behalf of the committee I'd like to thank you for coming again. I appreciate your presentation.
The next presenter, on behalf of the board of education in Sooke, is Dave Lockyer. I guess that'll be Dave Lockyer, et al.
I'm sorry, I don't have the rest of your names.
W. Hobbs: Good morning. My name is Wendy Hobbs, and I'm chair of the Sooke school board, 62. I have brought along some friends today. Over in the orange is Jo Mitchell. She is a councillor from Metchosin. Next to her is Dave Saunders. He's the mayor of Colwood. Next to me is Jim Cambridge. He's our superintendent. Dave Lockyer is our secretary-treasurer. Lillian Szpak is from Langford, and she is the acting mayor.
The Sooke district is very appreciative of the opportunity to address the committee. The board asks the committee to consider one very large need within our district. We are now going to let you know what our large need is, and we're going to be starting with Jim Cambridge, the superintendent.
J. Cambridge: We've identified a significant problem in terms of our community, which is the Sooke school district. Our district is basically two areas. It's the West Shore area of the capital region — which encompasses Colwood, Metchosin, the Highlands and Langford — and Sooke, which is about 20 minutes away. The way our school district is, there are two very proper areas.
The growth in the West Shore region has been significant over the last number of years, and we've had some challenges with meeting the needs of the growing population. What we've found in terms of commissioning a long-range study — we've done them for the last number of years, but we've had a more recent one done — is that the growth has become exponential. In fact, the yield rate from homes of school-age children has increased.
There are some reasons for that. One is that municipalities have put significant effort into putting in amenities that appeal to families. The price point for new homes in Langford and Colwood is very attractive to new families, and we're dealing with the growth. Compounding that are transportation issues. Where we used to have some of our students going to Victoria, now, as I'm sure many of you are aware, there is a lot of congestion along that highway, and they're staying with us in our own district, which is great. We're happy about that.
The ironic thing about the Sooke school district is that we only have two high schools — one in Sooke and one in the West Shore. Our West Shore school is Belmont, and it has to accommodate all of the growth within that region. Most school districts of 9,000 plus have three or four high schools. Just because of the way things have grown over the last number of years, we only have two, and only one can accommodate the growth area.
The district over the last number of years has asked for a second high school. We have come to the position where we've had to replace Belmont School because of seismic risks and infrastructure problems within the building.
Basically, we're stuck. We're in the position where the capital building program was stalled last year by the Ministry of Education and no new building was constructed. We're hopeful that this spring we will be able to see more money set aside for that area.
We appreciate that there are many school districts in the province that have significant needs in terms of school replacement, but our district's a bit unique. We're growing. We're one of the few school districts that continue to grow, and we have been for a number of years.
Our projections for the next five, ten and 15 years — those are our enrolment projections — show us going, in 15 years, to 148 percent of capacity for our schools, and that 148 percent capacity challenge will mostly be within our secondary school. We simply do not have enough room to accommodate the students, and therefore we have presented a business plan to the ministry.
D. Lockyer: My section is regarding the actual business plan that we've put forward with the community support, and as you can see, we have a lot of support here from our local municipalities.
Our objective is to replace the old, overcrowded Belmont — which is as old as 1953, some parts of it, and was our first secondary school — with two new secondary schools, one in each of the fast-growing communities of Colwood and Langford. The building itself, Belmont, while it scores below 50 percent on the facilities audit, is declining rapidly. We're faced with looming upgrades, which would be wasted, we believe, on a very old building that will actually, in the long run, be undersized. It's undersized now.
Our enrolment projections. There's a bit of a disconnect between us and the ministry. The ministry says: "We know who's there today." We're doing a forecast, and our community is growing so rapidly that there's going to be a large number of students that we won't be able to accommodate at Belmont. So our need for additional secondary schools is critical.
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We've submitted a complete business plan to the ministry. Everyone that reads it is very enamoured. Because Belmont strategically is not in the proper location for our district — it's actually in an area of high growth, and it's on an undersized road — our objective is to sell that property.
Now, there's always a lot of panic in the public when we talk about selling public assets, particularly schools. We're not downsizing in our district; we're upsizing. We're talking about replacing, with two new secondary schools, the Belmont facility. So we're actually looking at going from 17 acres of a facility to 22, and from 1,400 seats to 2,200 seats. So it's a substantial upgrade, and it's going to be serving students in the communities where they come from.
All of our business community members are very supportive of this plan. You can see them here today, representing our biggest growth area. They believe in the need for our two new secondary schools, so we ask you to give us that support.
W. Hobbs: In closing, this is the most pressing need for the school district but is also one of our most pressing community needs. Our local, provincial and municipal leaders are unanimous in their support for this project. This approval would be the most significant impact to our education community in decades. Our district would be able to provide new buildings and equipment for our growing educational community.
I must say at this time that we were remiss in not stating that the ministry has bought us the land to build the high school.
So basically, we're just waiting for the money to build the schools. They also bought us land in Colwood five years ago. Again, the land's sitting there. We just need the buildings, and so we really want to stress the point that this will take our community to the next level in education. Also, we'd be able to look at one of the schools being more of a technical school, one of the schools being an art school. There's also a project going forward with Colwood and an arts centre there.
We're just kind of stuck. The ministry wants us to do new and innovative things with education. If we had the buildings, we'd show everybody how to do it right. At this point, I would like to ask Acting Mayor Lillian Szpak to say a few words.
L. Szpak: First of all, thank you very much for being here today and hearing us.
As a planning and zoning chair for the city of Langford, I am involved in many relationships with the development community. I think one of our strengths is that we work very well in partnership with our development community, with the school board, with other local government, and of course, we appreciate the help that we've had from the provincial government as well in growing our community. We really put the focus on recreation for the last few years, and we're partnering with the school district in that.
Having said that, we get back to growth and the challenges that we're facing. We are a community that…. We purport to be a great lifestyle community. So we're inviting people in. We're saying: "Come and live in Langford and invest and enjoy. We're open for business."
We have a great affordable housing program. We are attracting families, and we have the highest per-capita ownership of homes in the regional district. As well, the capital regional district did identify Langford and the West Shore as the area for growth in the future. So we are looking future here, and we are looking at some serious concerns with regard to the high school–aged kids that are going to be moving up.
We're in a position of strength and really happy with the way our community is growing, but also, as leaders, we're looking at making sure that we have the right facilities in place at the right time for our community to continue to grow and to be a great lifestyle community, a healthy place for everyone.
Thank you very much, and we hope that we can talk again soon with some results.
J. Mitchell: Metchosin is one of the more outer sections of the area covered by the Sooke school district and looking for a secondary school. I'd like to say that my husband attended Belmont in 1953 when it was just an army hut, and it has served its purpose. He did very well. He went on to get a PhD, as did many of his colleagues. It served the area very well indeed, but the time has come, and we really do need a new school so badly. To see two new schools in place would be just our dreams.
D. Saunders: Thank you for everybody meeting and giving us the opportunity to speak to this important issue.
Basically, I kind of want to be blunt in that we have five municipalities in a school district that is absolutely working together to make this a priority. There's a synergy that I've never seen in our community, and I've lived in the community all my life.
We need a new high school. We need two new high schools. The province has been great in supplying the money for us to move forward with the purchase of the land. I can't say thank you enough for that. We've listened to the province in the West Shore. We want to encourage jobs. We want to encourage education. We've listened, and we've provided the opportunity for densification, for smart growth.
Very bluntly, our communities are bursting at the seams now. Our elementary schools are full, which is great. What we're lacking right now is programming. We're trying to implement several different aspects of
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programming within our school district, but having the Belmont high school the way it is, is starting to hamper the programming that we want to facilitate.
Two new high schools would be huge for our communities, and I don't think that you'll see in the province of British Columbia the municipalities and the school district working together the way we are. We want to sell the land where Belmont currently exists. Langford has done a great job in promoting the recreation so that there is a synergy of partnerships — cost-neutral partnerships — with respect to recreation. Colwood is going to be providing land to the school district. We're trying to promote an arts and culture centre right beside the new school proposed in Royal Bay.
So once again, thank you for this opportunity. Basically, if you have any questions after this, please don't be afraid to contact us. I can be reached at Colwood if you have any other questions.
J. Les (Chair): Thank you. I take it that you've all said your piece. I've time for one, possibly two questions.
B. Ralston: I represent a riding in Surrey which also, similarly, has the problems associated with rapid growth. But I'm sure you're aware that probably members of the Legislature are more aware of the Belmont high school thanks to the efforts of John Horgan than probably any other high school in the province. He raises it repeatedly in the Legislature, so you have a good advocate there.
My question is…. When I was involved in the municipal council in Surrey, there was a way of projecting future growth by looking at family allowance cheques. Families receive those, obviously, upon the birth of their child, so you get a fairly good read on intake into the system that way. You've mentioned your projection. So what are your five-year projections for the future population of the two high schools that you've proposed?
J. Cambridge: I can respond to that. Actually, I brought the whole study, and perhaps I should leave it, because it is quite detailed.
J. Les (Chair): Yeah. If you would do that. I think that's a great idea. If you could leave that with the Clerk, then we could all have a look at that, and that will leave me time for one more question from Jane — quickly.
J. Thornthwaite: Thank you very much for your presentation. It is impressive — the amount of municipalities that have gotten together with the school board, and you are all here together, even though it's a bit crowded.
My question, then, of course, because obviously you've done a good presentation, and you've sold me…. What is the ministry saying? That they won't allow you to sell Belmont? We see the ask. What's the no? Why are you coming to the Finance Committee? Where is your stoppage occurring?
J. Cambridge: No, actually we have lots of the support from the ministry. We meet regularly with the ministry. Staff there have been terrific, and the minister herself has been supportive of the program.
It's just a matter that there was no capital plan last year, and we know Surrey has needs and other school districts have needs. We're just hoping that this district makes the cut for capital planning next year. It is very important to our community.
W. Hobbs: Can I just finish off? We did meet with the minister in June — again, very, very supportive of our project — and she said that we need to wait until spring. I think we're just coming here to talk to more people, because sitting at Finance…. You know, the Finance Committee is who gives the money out.
No, there's no issue between us. She is very supportive, and we're very hopeful that in the spring we will get the money.
J. Les (Chair): Well, some of us in our dreams would like to give the money out.
W. Hobbs: I know. Just write the cheque. Don't dream. Write the cheque.
J. Les (Chair): In any event, good on you for coming here today with your very specific presentation. Well done, and thank you for coming.
The next presentation is on behalf of the New Car Dealers Association of British Columbia — Blair Qualey is here.
B. Qualey: Good morning, and thank you very much. I'm Blair Qualey, the president and CEO of the New Car Dealers Association. I'm thrilled to be here, and I'd like to thank you all very much for giving us an opportunity to share some thoughts about what's going on in the auto sector in British Columbia.
Before I go into some of those issues in my remarks, I'd like to sort of give you a quick overview of who I represent, the some 400 new-car dealers in British Columbia that will be sitting behind me here who are helping to drive the economies in 53 communities around this province.
They employ in excess of 16,000 folks, with a payroll of about a billion dollars. They sold over 150,000 new vehicles last year. The motor dealers in British Columbia have annual sales approaching $9 billion. Our members' investment in bricks and mortar in their dealerships around British Columbia is in excess of $30 billion. The tax collected from our B.C. auto industry is about a billion
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and a half dollars, made up of provincial sales tax — and, of course, the HST — income taxes, corporate tax and, of course, property tax in those 53 communities around the province.
Importantly, one in nine jobs in British Columbia is somehow tied to this sector. It's a big number across this country. Given the economic and environmental challenges continuing to face all of us on the local, national and international levels, it's essential, from our perspective, that we work with our provincial government to keep the B.C. economy as strong as possible and to protect our industry and its valuable jobs.
In addition, it's imperative to have a government in Victoria that has sound economic and tax policies in place, one that can provide the strong leadership we need through these difficult and particularly unusual times.
As many of you may be aware, over the years the government has been helpful to the B.C. dealer network by raising the threshold of the luxury tax on new vehicles, reducing many useless regulations and amending the vicarious liability regulations. Additionally, the government has reduced corporate income taxes significantly and cut small business taxes, as well, since being elected in 2001.
We're especially pleased to see the removal of the luxury tax finally, this past July, along with the protection of consumers and the creation of a more level playing field for British Columbia's new-car dealers with the non-licensed dealers we like to call curbers.
The dealers have always promoted the need for a strong and vibrant economy. A strong economy provides a healthy business sector, and a healthy business sector provides employment, which is a vital part of our economy. This is why the new-car dealers of British Columbia continue to be fully supportive of the harmonization of the provincial sales tax and the GST.
The HST is benefiting our industry in a number of ways. It's reducing costs to dealers annually by reducing the amount of paperwork and filings required. It's increasing and, thus, will increase investment by dealers, as their costs are lower. The new-car dealer industry, the auto sector broadly, is one of the most competitive on the planet, so clearly, if somebody has reduced their costs, they're going to try and undercut the guy down the street by reducing the prices on vehicles, which ultimately will be passed on to consumers.
We appreciate, over the last while since the implementation of the HST, government's willingness to work with our association and dealers on some of these implementation and transition issues, including those relating to the purchase of vehicles by non-residents, particularly those from Alberta. It's a big issue in the north, in the Peace, the Kootenays and the Okanagan. We appreciate that.
With respect to the environment and the economy, in my remarks…. I won't go into it in significant detail, but we're very anxious, as are the manufacturers, to continue the work on combatting climate change in British Columbia. Our commitment is there, and continues strongly, to work with consumers and government to find the best possible improvements to emissions from light vehicles and to increase the level of consciousness and educate consumers.
We're encouraging new and better fuels and propulsion systems. You hear on a daily basis almost of new technologies coming in automobiles, including various drive trains, plug-in electrics, hybrids, etc. It's an incredibly exciting time in the sector. Technology is offering all sorts of solutions that will be very helpful and in all of our interests in reducing climate change.
One of the issues that we've brought forward to this committee in past years…. I recall sitting here last year and talking about the B.C. Scrap-It program. British Columbia has the oldest fleet of vehicles in Canada, partly by virtue of our nice climate. However, we are faced with the B.C. Scrap-It program, which the new-car dealers helped set up, which is lacking now in funding. Government kindly provided a $15 million grant, which covered three years. They have successfully scrapped 25,000 vehicles. That milestone was just celebrated.
With the opportunity that exists to reduce the number of older vehicles on our roads and replace those with new, more fuel-efficient vehicles, I would strongly urge government to consider in its next budget a further grant to this program, which is making a significant impact, both from an economic standpoint by generating new car sales and also on the economic side by reducing emissions, as some of the vehicles that have been scrapped by the Scrap-It program are more many, many times higher than what you'll find in new vehicles these days.
Our association continues to work very hard on a number of environmental fronts with respect to conferences, programs with respect to consumer education. We're trying to do a number of initiatives within the dealerships to make sure that dealers are helping consumers understand the best ways to drive. Manufacturers are providing vehicles that now have significantly reduced emissions. We look to a very exciting time in that area.
We also would welcome the opportunity to work with government and, in particular, B.C. Hydro on preparations for infrastructure that's necessary to accommodate these new electric vehicles. I think it's an important opportunity for all of us. The incentives that were provided for plug-in hybrids, etc., that ended at the end of June, the beginning of July…. I know that government is looking at some opportunities to work on other incentivized programs around those kinds of vehicles, and we look forward to working with government on that to assist.
Just to wrap up, we had a summit last week in Whistler of our dealers from around the province. I'm pleased to
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say that the news is good from all the experts that were there on the industry. The B.C. new-car dealers are alive and well and kicking and continuing to contribute to the economy of British Columbia. We thank government for the efforts on reducing taxes and costs to business by implementing the HST. We look forward to working with government on some of these environmental initiatives, and we hope that Scrap-It will continue to receive the support of the government.
Thank you very much for the opportunity to speak to you today, and I'll take any questions, if there's time.
J. Les (Chair): Thank you, Blair.
B. Ralston: Yes, indeed, the meeting of your association and the Union of B.C. Municipalities coincided, so I did have a chance to speak informally with some of your members.
My question was about the recent reductions announced by some of the majors — GM and Ford — in their dealership network, and I'm wondering how that's playing out here in British Columbia. What's been the impact?
B. Qualey: Well, thank you for that question. As you might guess, when those announcements came out last year, we were all quite concerned about the impact in British Columbia. GM announced that 240 dealerships were going to go down. But fortunately, in British Columbia there were only a few of those. We came off much better than other provinces. Ontario, for example, was hit quite hard.
Fortunately, those dealerships that may no longer be a GM one have picked up another brand and have carried on business, so the jobs, etc., have not been lost.
D. McRae: Thank you very much for your presentation. You mentioned that there were no longer programs that encourage people to purchase hybrids or other fuel-efficient vehicles. But is there any data that you could provide that shows that now, in this day and age, we actually need those incentive programs to get people to buy those cars? Have we seen a drop-off of those purchases directly related to the lack of programs?
B. Qualey: It would seem the best motivator for people purchasing lower-emission and high-mileage vehicles is the gas price. Broadly, industry — the manufacturers and, I would say, the dealers — would be of the view that government incentives, particularly around certain types of vehicles, aren't necessary. Industry would ask government to sort of set the goalposts on greenhouse gas emissions and leave it to the good auspices of the manufacturers, who are experts in building these vehicles, to provide the solutions.
B. Routley: My question is about the HST. It's got two parts. Obviously, your association supports the HST. I wondered about the uncertainty that's caused by waiting for a year. Is there any concern by your association in that regard?
The second part is…. I see that you're talking about passing on the savings. Could you give me some specifics on what your association plans to do in that regard? Do you have any coordinated effort in that way or any plans drafted at this time that you could share with us on exactly how you're going to pass on savings to the people of British Columbia?
B. Qualey: First, your first question with respect to waiting for the referendum to come. Business is always looking for certainty in the environment in which we operate. Our members are anxious for the full discussion around HST to be concluded so that they can get on with business. We look forward to the results coming out of the referendum.
Broadly, we supported the initiative of the HST from day one, on the basis that it would reduce the…. It was good broad economic policy and will provide some of the large industries in British Columbia, whose employees come in and buy vehicles at our member dealerships…. It will offer them some savings, allow them to increase investment and hopefully increase employment, which will be good, ultimately, for our dealers.
With respect to your second point on the savings being passed on to consumers. The association doesn't pass those on. It's up to individual dealers to do that, of course. The dealers do that on a daily basis when they have savings in the efficiencies of their business in any way, shape or form. They're always trying to get a leg up on the guy down the street, the other dealer that they compete with. Anytime they can find a way to reduce their costs, find some savings, they make sure that they're trying to reduce the cost so they can beat the heck out of the guy down the street.
I think you'll see them very motivated to pass those on.
J. Les (Chair): Quick final question from Doug.
D. Donaldson (Deputy Chair): Thanks for the presentation. I had a quick question for you. Most of the dealerships I've seen in rural areas, new-car dealerships, also have a used car or pre-owned car part of the lot as well. I'm wondering if your association has done any analysis in regards to the carbon neutrality issue around the resources required to always create new vehicles versus keeping a used vehicle on the road in good condition and whether you would have any position on programs to encourage the sale of used vehicles. Perhaps instead of Scrap-It, maybe we could have a fix-it program.
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B. Qualey: It's a very good point. The industry — the manufacturers, dealers, etc. — look at these issues all the time in their businesses. Used-car sales are a big part of a new-car dealer's business, as is the repairs side of the business. They're anxious to do business in any one of those areas, as you might guess.
Industry, the manufacturers in particular, has done quite a few surveys and research studies on those. I'd be pleased to pull some of those together for you. If you'd like some of those, I'll make sure I get those to you.
D. Donaldson (Deputy Chair): For the committee.
B. Qualey: Yup.
J. Les (Chair): Good. Thank you very much, Blair, for coming today.
B. Qualey: Thank you very much, on behalf of our members, for giving us the chance to talk to you.
J. Les (Chair): Our next presentation will be by the Rick Hansen Foundation. I have two names here: Mark Aston and Colin Ewart.
C. Ewart: Good morning, and thank you for the opportunity to present to you today. My name is Colin Ewart. I'm with the Rick Hansen Foundation. This is my colleague Mark Aston from the Rick Hansen Institute.
We're here today to talk to you about the 25th anniversary of Rick's Man in Motion Tour, introduce the institute and highlight the value and local impact of the B.C. government's investments in Rick's vision to date.
You've likely heard of the Rick Hansen Foundation, which is responsible for implementing Rick's dream of a world inclusive and accessible for all. However, you may not have heard of the institute, a new organization located at the Blusson Spinal Centre in Vancouver General Hospital, an organization that is the key legacy of Rick's vision. It focuses on collaborative interdisciplinary research that improves lives and contributes to finding the cure for spinal cord injury.
Thanks to investments by B.C. governments of all political stripes, B.C. has now become a world leader in spinal cord injury research and services similar to those of cancer, genome and HIV/AIDS. This government in particular has been very supportive of Rick's vision through its financial support to date.
We want to urge you to continue to support health research such as this. While not always commercially viable, it makes a significant difference in the daily lives of people and results in significant savings to the health care system and government.
Twenty-five years ago we saw how one person could inspire many. After becoming injured, Rick Hansen was inspired to make a difference. He wheeled around the world, going to 34 countries in over two years, and inspired athletes, politicians, doctors, scientists, young people and individuals with spinal injuries to become difference-makers.
As a result of his efforts and those around him, today people look at those that have physical disabilities in a new light, the world is more accessible, and the science has become so advanced that someone with Rick's injuries would likely walk away after treatment today.
We're currently involved in the international phase of our 25th anniversary of the Man in Motion World Tour, following a very successful launch up to and during the 2010 Olympics and Paralympics. We're looking to recognize those difference-makers since 1987 and inspire new difference-makers to help advance the spinal cord injury research and accessibility agenda we have.
Between now and May 2012 you will see Rick travel to several prominent locations around the world that he originally passed through between 1985 and '87. With the help of our foundation and the institute and its partners, these places are looking to collaborate with our work in British Columbia and Canada to accelerate the pursuit of the cure and make their communities more accessible and inclusive.
Following the momentum-building announcements of collaboration in these four countries — which are Israel, Australia, China and the United States — we will return to Canada in August of 2011, next year, and with our Canadian partners we will launch a new national relay tour across Canada to recognize difference-makers in all parts of our country.
We'll travel through over 700 communities, using the Olympic Torch Relay as our model. We'll ultimately conclude the tour with a significant homecoming event recognizing the day that Rick returned to Vancouver 25 years ago.
Concurrently our global conference in Vancouver will focus on a symposium with two streams, one being the science, towards finding a cure, and obviously, progress towards accessibility. Vancouver is a great example of an accessible city. Plus we will have a trade show that will highlight how the progress, culminating at the end of the 25th anniversary, will now ripple out across the world, because we will be involving participants from over a hundred countries in the symposium and conference.
B.C. and Canadian leadership and inspiration will be on display. Our ability to engage leaders nationally and internationally can have profound benefits for British Columbians up to and beyond May of 2012. We're looking forward to partnering with and recognizing those who have been instrumental in our shared success over the years, and we're already successfully securing new partners and funding from corporations and individuals who are interested in helping.
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We plan to follow up this fall with key B.C. government ministries that we know will be interested in our plans.
I'll now let Mark speak to you about how the institute's programs are making a difference.
M. Aston: As Colin mentioned, as a result of the investments from the various provincial governments and our other funding partners, B.C. is a leader in the treatment and care of spinal cord injury, both nationally and internationally.
One of the more tangible outcomes of the investments from various provincial governments has been the Blusson Spinal Cord Centre, which is an 11,000-square-metre facility located at Vancouver General Hospital.
It houses the Rick Hansen Institute, the ICORD research team from UBC and also the Vancouver Spine Clinic. Those three entities work together towards a common vision of a world without paralysis after spinal cord injury. Enabling them to work collaboratively together in a state-of-the-art facility has accelerated the pace of change for translating discoveries into improved clinical practices. Those improved clinical practices are sorely needed, as you well know, because of the devastating effect of a spinal cord injury.
Spinal cord injury has broad-ranging physical, emotional, social and large-scale economic impacts as well. The economic impact of spinal cord injury in Canada is at $3.6 billion per year. Almost half a billion dollars a year is attributable to health care costs in British Columbia alone. We've made significant progress and advancements over the last several years, both in treating severity of injury and improving clinical outcomes. In addition, those advancements are starting to lead towards savings of some of that economic burden and those costs to both B.C. and to Canada.
I'd like to share with you an example of how we're starting to contribute to reducing that economic burden. We have a spinal cord injury registry, which is in centres all across Canada and collecting information and data on 85 percent of new traumatic spinal cord injuries in the country. That information and data is invaluable in our ability to be able to improve clinical practices. In addition, those registry sites help support the development of clinical trials. Until recently, Canada had never held a multicentre clinical trial for acute spinal-cord-injury patients.
The Rick Hansen Institute spearheaded the development of the first multicentre clinical study in Canada for acute spinal cord injury, and we're actually in the process of supporting two such studies at this point in time, with others in the pipeline ready to follow.
One of those studies is on a drug called minocycline. Minocycline has been shown to reduce inflammation at the point of injury. That reduction in inflammation has led to the improvement in physical and sensory function, which has led to the reduction in the level of disability that the patient receives. That reduction in the level of disability can reduce the length of stay in hospitals. It can also reduce the number of readmissions to hospitals, and it can reduce the economic burden on home care services as well. All of those contribute to reducing that significant economic burden both on this province and across Canada.
Now, the beauty of minocycline in this instance is that it's not a new drug. Minocycline has been around for over three decades, and so it doesn't cost the hundreds of millions of dollars and the 17 to 20 years to take a new drug from proof-of-concept to actual clinical practice. That's one example of some of the successes that we've been able to achieve to this point in time, at a fraction of the cost and a fraction of the time that new therapies would take.
Those successes have been enabled by the investments that the British Columbia government and other partners have made. Those investments have been critical to those successes, and those investments will be critical to our future success as well.
We aim to export the registry, which is a B.C.-built technology, internationally. As we speak, that registry is being established in two sites in Brisbane, Australia, and as Colin mentioned, we're also looking to expand the registry into China, the U.S. and other countries around the world. The value of that is that we get access to much larger volumes of data and information, which can help us in improving clinical practices. As well, those registry sites support clinical trials.
As the Rick Hansen Institute led this and spearheaded the development of the first multicentre clinical trial in Canada for acute SCI, we aim to lead the world and lead the development of an international clinical trials network, so that we can leverage the information, expertise and knowledge which we've developed here in B.C., largely, but also in Canada and engage other partners around the world.
For that, we need continued investment in the registry. We need continued investment in translational research projects that will lead to the ability to run clinical trials internationally. We also need continued investment to attract the best and brightest scientists and clinicians to B.C. so that we can develop an international clinical trials network headquartered in Vancouver, B.C., at the Blusson Spinal Cord Centre. Those investments will contribute to the reduction in paralysis for people with SCI. They will help us attain our vision of a world without paralysis after spinal cord injury. They will significantly reduce the economic burden on this country and on this province from spinal cord injury.
I'd like to thank you for your time. I'd like to thank you for the investments that you've made to date, and
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I look forward to continuing our partnership with you into the future.
J. Les (Chair): Thank you both. I've got a couple of questions.
J. van Dongen: Thanks very much, and I think everyone supports the great work that Rick has done in the last 25 years for spinal cord injury.
My question relates to some advice I've been given that, historically, if we look at the dollars that the Ministry of Public Safety provides…. You've got a press release here — $2 million a year. I think the source of funds for that is a victim services surcharge on traffic tickets.
Historically, my understanding is that you've shared some of those funds with groups like the Fraser Valley Brain Injury Association, who provide day-to-day support for victims of brain injury. My understanding is that they've been advised that that will no longer happen, that that is being discontinued. Can you confirm that information for me? Is there anything that could be done? These organizations provide day-to-day support. They're under pressure for funding. I just wondered if you could speak to that at all — either today, or if I could dialogue in the future on it.
C. Ewart: We'd be happy to follow up specifically with you on that.
As a result of the plans, as you said, these organizations have received money for over a decade from that fund. We're working with them at the moment. As a matter of fact, we have a meeting with them scheduled for next week to specifically talk about the plans going forward.
As we have convened experts around spinal cord injury, we are looking also to help the brain injury community to do the same — that is to convene experts and help create an actual provincial strategy that responds to brain injury. That is what we will be talking to them about next week.
It's not just a case of saying that the resources are not available for them. It's talking about what the future strategy is and what resources they need, and then working collaboratively with them to try and help that strategy be successful.
B. Ralston: Thanks very much, and I really am impressed by what is truly a cosmopolitan, international vision of work, which is something that is really to be commended.
I've heard a little bit about what are called phase 4 clinical trials after FDA approval. A new drug is tested over a long time on various populations, and you get the data back. Is that what you're speaking of when you speak of the clinical trial network that you propose to set up, or is it something different?
M. Aston: That is very similar to what we're talking about. We're talking about engaging with partners internationally so that we can help identify the most promising therapies to do studies such as that and to bring promising initiatives that we can study, but also advance them smartly and efficiently through the system. Through collaboration internationally, we hope to be able to do that.
I was in Beijing recently and Hong Kong. There is a clinical trial that is planned in Hong Kong that we're looking at to potentially start to engage with to do just that type of activity.
J. Les (Chair): Thank you both very much for coming this morning. Good work going on.
Our next presentation is on behalf of the Insurance Bureau of Canada — Serge Corbeil.
S. Corbeil: I brought my chrono watch so I don't go over time.
J. Les (Chair): No worries. I brought mine too.
S. Corbeil: I knew that.
Thank you, Mr. Chair and members of the committee. Let me begin by thanking you for giving the Insurance Bureau of Canada the opportunity to present to you our views with regard to the 2011 provincial budget. I know your task is not an easy one, and we're happy to be able to contribute to your work.
Insurance Bureau of Canada, IBC, is the national trade association representing the private property and casualty insurers — those companies that offer home, car and business insurance. Our members account for over 90 percent of the private property and casualty insurance sold in Canada.
Our industry is proud of its record of service in British Columbia. It employs some 14,000 British Columbians. In 2008, the latest figure available, it paid $213 million in taxes to the provincial government and invested $8.6 billion in the province — 63 percent of those investments in government bonds. In 2009 British Columbians received $1.8 billion in claims payments, which for the most part, went back to our communities for the services of contractors, plumbers, electricians, repair shops, etc.
Our sector has not been immune to the weakened economy. Its performance improved slightly in 2009 compared to highly unfavourable 2008 results. In 2009 return on equity increased from the previous year's 6 percent to 6.9 percent. The combined ratio, a key indicator of the underwriting performance, decreased from an unsustainable 100.3 percent in '08 to a still high, but more manageable, 99.6 percent in 2009.
Although the provincial economic outlook improved for the first half of 2010, we believe there is much uncertainty
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prevalent in the global economy, and that should keep the B.C. government cautious. For this reason, we believe that the B.C. government should focus on the long-term economic growth of the provincial economy and allocate expenditures accordingly.
We specifically recommend that the government place a strategic priority on investment programs such as infrastructure renewal and development, which will bring the highest potential returns in the future. As well, over the near and medium terms, debt repayment should be another important focus for the government.
I'd like to now talk about some policy priorities for B.C. — three areas that I will talk about. Our written submission that you have with you today will provide more details.
As you know only too well, much has been said and written in the last few months about the decision of the provincial government to introduce the harmonized sales tax. Our industry is directly impacted by the government's decision, yet we support this new tax regime. The reason is fairly simple. Just as the insurance industry is essential to a thriving economy, a thriving economy is essential to our industry's growth. Not only do we stand to gain from writing more insurance policies in a healthy and vibrant economy, but the industry also earns more investment income when financial markets are strong.
We believe that the HST is thus an important part of an approach to economic development that is geared towards achieving growth. But as I've just mentioned, the property and casualty industry is adversely impacted by the HST. It is imposing additional costs on private P-and-C insurers through operating expenses and claims costs. Since insurance products are HST-exempt, insurance companies are not able to claim input tax credits.
IBC has asked Deloitte and Touche to look at the impact. Their conclusion is that it will translate into an estimated added cost to insurers in B.C. of $14.4 million this year, reaching $32 million in 2015. If no tax relief is offered by the B.C. government, these embedded costs will ultimately be reflected in higher insurance premiums and higher tax costs to consumers.
Furthermore, in such a case, tax cascading will result in higher amounts of insurance premium tax payable. At present B.C.'s insurance premium tax on property insurance is the highest in Canada, at 4.4 percent. Removing the IPT from the purchase of an insurance policy would be consistent with the principles of sales tax harmonization, because under a true value-added tax system, products are taxed only once. Maintaining additional taxes on the insurance premiums will dilute the economic benefits that tax harmonization is expected to bring to B.C.
Before we move on to our specific recommendation regarding taxation, please consider that the property and casualty insurance industry contributes largely to government's treasury across Canada. According to a study by PricewaterhouseCoopers commissioned by IBC, our industry's total tax rate was 67 percent in 2008 compared to 30 percent for the six big banks and 27 percent for major Canadian corporations, and it was among the highest calculated around the world.
Overall, PwC estimated that the $198 of the average cost to consumers of an insurance policy in Canada goes to fixed taxes and regulatory costs.
When the latest quarterly fiscal update was released by the Minister of Finance, we couldn't help but note that he was amenable to see some of the unexpected additional revenue fund tax cuts. He also indicated that the increase in revenue was the result of higher than expected corporate taxes, to the tune of $2.7 billion over four years.
In this context, our industry is proposing a very specific way to mitigate the impact of the HST on insurers and, ultimately, on those who purchase insurance products. So in order to minimize the impact of the HST on insurance premiums for consumers, we recommend that the B.C. government reduce the B.C. insurance premium tax and eliminate it over time.
Action on the tax front is not the only measure the government can take to mitigate the impact of the HST on our industry and to bring more investments and create economic diversity. We believe the B.C. government has a great opportunity to create the conditions that would allow the private sector to contribute even more to the provinces economy.
Specifically, our industry is willing and ready to compete in the optional automobile insurance market, as you all know. However, it can not do so when one dominant government monopoly is given advantages not available to competitors. A level playing field is paramount for B.C. drivers to enjoy the benefits of competition and choice. Sadly, this level playing field does not exist.
The optional insurance market in British Columbia remains highly concentrated, with ICBC controlling about 90 percent of the optional insurance market, not to mention a protected 100 percent on the basic insurance market. The reason for such dominance by ICBC is the high market entry barriers that private insurers continue to face.
One of the holdovers from 2003 legislative changes is the intent to create a provincial automobile statistical plan. It is a key tool in being able to compete in the optional auto insurance market. In fact, the federal Competition Bureau recognized the importance of an ASP when it stated in 2008 that "basic insurance information sharing could have the greatest impact" — on barriers to entry — "when it provides the kind of broad-based claims data that ICBC's competitors need to profitably price insurance in B.C."
IBC has also identified some anticompetitive practices by ICBC that increase the challenges faced by
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any private insurers wanting to enter the B.C. market, such as the affiliated broker and screen-scraping policies. The federal Competition Bureau found that these practices were, to quote the bureau again, "potentially exclusionary."
The automobile insurance premiums charged by ICBC are on average the second most expensive in Canada, as you will see from the graph in your document. However, unlike the jurisdictions with private auto insurance, high premiums in B.C. are not justified by high claims payout. In fact, ICBC's average claims payment is the second lowest in the country.
The potential benefits of a competitive automobile insurance are tremendous and include increased capital investment in the province and a better product choice at lower prices for consumers.
This is why IBC recommends that the B.C. government establish the conditions that will facilitate greater competition in the optional auto insurance market. This can be achieved, in the short run, by proclaiming the regulation of competition sections of Bill 58 for the purpose of providing the BCUC with the ability to take action if ICBC engages in anticompetitive behaviours and establishing a useful provincial automobile statistical plan. We also recommend that the government uses its authority as the sole shareholder of ICBC to request that the anticompetitive behaviours identified are stopped.
I'd like to move on now to the topic of climate change and, more specifically, to discuss the importance of adapting to climate change. The property and casualty insurance industry in Canada is a leader in disaster recovery and a major financial contributor to those suffering losses as a result of natural disasters.
We firmly believe that a part of the solution to the increased severe weather events is to make adaptation to climate change and the reinforcement of critical infrastructure key economic priorities throughout Canada. As such, we can only applaud the government's resolve in making adaptation to climate change a part of the government's business, as stated in its adaptation strategy.
In 2009 the province of British Columbia had a fairly benign year when it comes to severe weather events. So far, the same has held true in 2010, but as the very recent events affecting northern Vancouver Island and parts of the Mainland have shown, severe weather is a constant threat. In fact, some other Canadian provinces have experienced significant losses due to severe weather.
According to PCS-Canada, a new Canadian database that tracks catastrophic loss claims exceeding $25 million, so far this year Canada has been hit by a number of extreme-weather-related events such as the tornadoes in Ontario, with estimated losses of $85 million; $90 million in losses in Saskatchewan following severe rainstorms this summer; and $400 million in Alberta in June as the result of a hailstorm.
With this in mind, and although we understand that the current economic situation is challenging in B.C., the continuous investment in meaningful infrastructure is essential. IBC wishes to encourage the government of B.C. to continue to allocate funding to help municipalities upgrade waste and surface water infrastructure.
This concludes my presentation. I would be happy to answer any questions you might have.
J. Les (Chair): Thank you.
D. McRae: Thank you very much. Good presentation as always.
A question that actually wasn't part of your presentation today but one that has come up in my office several times. Is there a jurisdiction in Canada that allows vehicle owners to move their plates from one vehicle to another, and is it a realistic opportunity in the insurance field for automobiles?
S. Corbeil: It's not something that exists currently in Canada. I know there are many discussions that are being held, I'm aware, here in B.C. I've heard the suggestion before. But it's not something that exists in Canada currently.
J. Les (Chair): Any further questions from anyone? Seeing none, thank you, Serge, for coming today.
We will move on to our next presentation on behalf of the Mining Association of British Columbia — Pierre Gratton and Ben Chalmers.
P. Gratton: Good morning. Thank you for the opportunity to speak to you today. I think our materials are being distributed presently. I'll just start.
I think you all know who we are and who we represent. We represent the producers in B.C., presently a growing sector of the economy and a healthy part of the economy with our mineral commodity prices, whether it's for steelmaking coal or copper or gold — seeing some very healthy prices, in some cases record prices. So we're an expanding industry.
I want to flag for you, as well, that we are, as MABC, in the process of looking very seriously at adopting the Mining Association of Canada's Towards Sustainable Mining initiative, which is an initiative in which member companies adhere to best-practice standards developed by industry in consultation with stakeholders. It's an initiative that has been recognized by the GLOBE Foundation, receiving an award for environmental performance, and has also been recognized through independent studies as world-leading.
Half of our membership is part of TSM, and we're working seriously now towards getting the other half on board. We see this as a really important part of our com-
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mitment to demonstrating to the public and to our key stakeholders that we are committed to best practices.
I mentioned that we're an industry that is doing very well. Last year we contributed some $7 billion in revenue. This was in one of the most difficult years that the world economy has faced, and yet we actually had a fairly good year — not as good as 2008, if you look at the PricewaterhouseCoopers annual report, but nevertheless it was actually quite a good year for our sector.
We really are sitting on some world-class resources and have a tremendous opportunity ahead of us, looking at the development of the emerging economies in Asia in particular but also Brazil and Mexico. We produce some of the commodities that they need — copper to electrify the world and our coal to make steel; molybdenum to make steel stronger. So we really do have a lot of the resources the world needs, and it's a tremendous opportunity for us.
We really are on the cusp of a major renaissance. Our slide deck says there are 19 major mines operating in B.C. We're actually at 20 now, with the opening of Willow Creek. Our brief made that correction, and we missed it here. The northeast coal sector now has four operating mines, whereas in mid-2000 there were none. That's just one indicator of the kind of expansion that we're seeing with several major new projects nearing final stages, with two major projects in construction: Copper Mountain and New Afton. I know John's really excited.
Mount Milligan, with the acquisition by Thompson Creek, is now days away, I'm told, from their final federal permit. It's almost a year since everything was concluded by the province. Then they'll be, hopefully, into full-scale construction, and we'll have another major mine in north central B.C., which will be good for your region and I think for Doug's as well, and for all of B.C.
Looking back over the past year, I think you all know that we are supporters of the harmonized sales tax. I want to share with you just a few examples to shed light on why this is beneficial to our sector. If you look at the Endako mine in north central B.C., it's in the middle of a half billion dollar expansion. It's coming at a time in the region when it's much needed, providing a lot of new business opportunities and sales in the Prince George region for suppliers and contractors and so on.
The HST has come at a time that makes this expansion more cost-effective, but also, interestingly — they are not unique — this particular mine has a profit-sharing arrangement. Actually, the half million dollars a year in annual savings that it's estimated to provide, this mine, will be shared amongst their workers as a result of the HST. You know, distributed amongst the number of workers they have it's not a huge amount of money, but it does go to demonstrate that workers themselves directly benefit in a very tangible way through profit-sharing arrangements that exist at some mines.
There's also another important example. The Huckleberry mine, as some of you may know, is scheduled to close in 2012. This is a mine that's operated since the '90s and a very important producer of copper. They have additional reserves that they've discovered, and right now they're looking seriously at the possibility of extending this mine another eight years or so.
No decision has been made, and I don't want to suggest that it will happen. These are important decisions. But there's no question in my mind that the HST improves the likelihood of a positive decision, because it makes it more competitive. That will mean the continuation of jobs and economic activity in the region.
The last example is not mining-related, but I just heard about it yesterday, and I thought it was a great anecdote. A friend of mine has just redone his roof. He had gone to the same contractor that he'd asked for an estimate from four years ago — so the exact same contractor. The total price this year, four years later, was lower than it was going to be four years ago. The explanation was because the PST was removed from all of the input costs of replacing the new roof. Now, it wasn't a big difference, but it was nevertheless a lower price, and four years later.
I think this is evidence that we're starting to see — and this is just one anecdote — that this tax, the impact on consumers, is not going to be as many people fear it might. It actually might be beneficial, certainly in certain areas. Enough of the HST, but it was worth spending some time on.
We also acknowledge the three-year extension of the mineral flow-through share tax credit and, most significantly of all, of course, the conclusion of revenue-sharing agreements with First Nations. This is a hugely significant step for the B.C. government. I think it's, frankly, groundbreaking on an international level, not just for Canada.
We do want to flag major concerns with the rising cost of power. I think you've heard from others about this, from our sector, already. The kinds of hikes in power rates that we're expecting to see over the next few years are significant, and they will certainly cut into our competitiveness as an industry. We are major power consumers.
It's a concern as well that in the last four to five years when industry has gone through tough times and had to make some important cuts in places to its workforce, B.C. Hydro has grown by some 2,300 workers. There is an issue there that we flag. We think that we can't just look at passing on…. There are legitimate expenses that we recognize, whether it's new infrastructure or upgrading old infrastructure, but the kind of rate increases we're seeing are of great concern.
Turning now to our recommendations going forward: funding for geoscience. This request has been made to this committee in the past. I believe you've
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been supportive. Unfortunately, the government has not in some years, although it was the government that initially created Geoscience B.C., which has been a hugely successful program and is one of the reasons why B.C. is recognized by the Fraser Institute as having the number one database for geological information.
Geoscience B.C. is the envy of other Canadian jurisdictions. It has a new program in place where it's requesting $10 million per year for both mineral and oil and gas geoscience information over the next three years. It's the last year we can make this request. If new funding isn't forthcoming, Geoscience B.C. will wind down, lay off staff and this, as I said, largely envied institution will be no more.
We've made this the second recommendation: just to change the statute of limitation for the B.C. mineral tax from six to four years. This is purely an administrative request, though it's the third year we're making it. It's really just to address the burden that was recognized by the provincial government a number of years ago when it changed the statute of limitations at the time for the PST from six to four years. It would imply, I believe, a small additional administrative cost to Finance when it goes to audit mining company firms. Instead of every six years, it's every four years. There is a slight increase, but it would certainly ease the administrative burden for companies.
At this point, I'd like to turn it over to Ben to speak to our climate change recommendations before we get towards the end.
B. Chalmers: Over the last several years the B.C. mining industry has made a large effort to work very closely and very positively with the B.C. government to help inform the discussion around developing a positive climate change framework that both reduces emissions in a real term and also maintains the industry's cost competitiveness.
We have two recommendations that we would like to make to you today. The first is that in terms of supporting the competitive nature of B.C.'s industrial sector, there is a lot of work still to be done on climate change and the cap-and-trade program that is being proposed by the government. We are in the process of working with the climate action secretariat to produce a study quantifying the competitiveness impacts to a couple of different options that are being explored.
The study is looking at quantifying the energy-intensive nature of the industry to prove that energy is a huge part of our business. It's in our best interests to become more efficient, but it's not without a cost. Also, examining the export nature of our business and trying to quantify how the two relate…. It will be the first study of its kind in B.C. for many industries, so it's being looked at as setting the tone for the discussion around competitiveness with the climate action secretariat. We would just urge the government to pay particular attention to the competitiveness issue, especially as industry comes forward with real numbers to help understand the issue.
The second recommendation is with regards to the carbon tax. When it came in, it was designed to be revenue neutral. However, a larger percentage of the tax credits have gone to consumers, and I believe the ratio is somewhere in the neighbourhood of industry paying 60 percent of the cost and getting 30 percent of the benefit. Something like that.
We would propose or request that when carbon tax is revisited in 2012 you consider redirecting some of the revenues from the carbon tax back to industry in the form of research and development incentives to look at new green technology.
There are plenty of examples where especially the mining industry can continue to become more efficient and reduce its emissions in terms of things like carbon sequestration; tailings and waste rock; and switching our mining fleet to liquid natural gas, although there is quite a lot of work to be done on developing that technology; increasing the use of biodiesel in our fleets as well, although there are some big hurdles to overcome in terms of dealing with cold weather and dealing with manufacturers' warranties.
So having the resources to look into some of those, to do pilot projects and additional R and D would benefit us tremendously in our effort to partner with the B.C. government to meet our targets on climate change.
P. Gratton: I'd also add that we are also engaged with the University of British Columbia on some new research looking at more energy-efficient mills. So we're always looking at new ways in which to reduce the energy required to actually do our business.
Lastly, I want to just flag…. While we do support the government's efforts to return to balanced budgets and back to debt reduction, we are concerned by the level of cuts to key permitting agencies, whether it's Energy and Mines, or Environment or the integrated land management bureau. We feel that it's gotten to a point where it's compromising their ability to get permits done. That, of course, impacts the economy.
Just by way of example, there is no longer a regional geologist working out of the Prince George office. Historically, that's a role that helps in the permitting process. That function is no longer there. In Smithers the regional geologist there is expected to retire in 2011, and there's no sign that that position will be filled once he's gone.
As the economy grows, the demands on ministries also increase. Of course, our industry started growing again really quickly. So we do feel that you're at risk of cutting off your nose to spite your face by making these
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kinds of cuts to the very ministries that are there to help the economy grow.
Some additional bodies…. I don't think it's a lot, and we don't put a number down because that's really not our job to do. It's for government to figure out, but we have recognized now that really, frankly, the cuts have gone too far.
With that, I will stop and open the floor, of course, to any questions.
J. Les (Chair): It would be nice to have some questions, but we're out of time. So thank you for coming today, and we'll talk to you again.
Our next presentation is from the National Brewers — Cheryl Muir and Greg D'Avignon. Good morning.
G. D'Avignon: Good morning. Thank you very much, Mr. Chair, members of the committee. We appreciate the opportunity once again to present to the standing committee on issues important to the brewing industry in British Columbia and its employees.
Just by way of background — I think the presentation has been distributed — Canada's National Brewers is a trade organization that represents the three largest breweries in the province — Molson, Labatt and Sleeman brewing — and also their subsidiaries, which include Brewers Distributor Ltd., which is the largest warehousing and distributor of beer in North America.
The operations for these organizations represent about 90 percent of the sales of brewing products in Canada and just over 92 percent of the sales of products consumed by British Columbians in the province.
The industry touches every facet of the economy, from agriculture to transportation, to services, IT, manufacturing, retail and hospitality. The consequences: both direct and indirect jobs in the industry are about 20,000 in the province of British Columbia. That contributes about $1.7 billion to British Columbia's GDP. The consequence of that is a result of $1.2 billion in sales in the province, which represents about 40 percent of the Liquor Distribution Branch's total of beverage alcohol sales by dollar.
The industry is really a volume-based, value-added manufacturing business. We're a just-in-time manufacturer — some of the few manufacturers that are in urban centres across the province. The consequence of that is that the industry tries to maximize the use of its capital to lower its unit costs to provide affordable and reasonable products to the consumer.
The next page is a testament to what has transpired in British Columbia over the last ten years and also what we've been through over the last 18 to 24 months. In the last ten years in British Columbia we have had a welcoming economy and a stable environment with which to do business and to invest. The consequence is that our industry has had the ability to grow in terms of capital expenditures in the province, operating expenditures and investments in community.
The industry is supportive of the HST. In terms of impact to the consumer, it's relatively small because there was a wash in the way that it was administered. But what is not well known is that about 25 percent of the production in British Columbia is actually exported to other markets, primarily the United States and Asia. The HST allows us to reduce input cost to those products and makes us more competitive on a global basis.
The last ten years, as I said, have contributed to economic growth. The most recent example of that was a $52 million capital investment in a new warehouse facility, which is state of the art for North America, and a subsequent $13 million investment that was announced just two weeks ago in that same facility. It's a green building that was built in Port Coquitlam largely on the basis of the commitment of the government and federal government to the gateway project, which enables us to have more access to markets, better infrastructure to support service to our customers and the ability to move high-volume, high-bulk goods throughout the region more effectively.
The next slide just speaks to, really, one of the cornerstones of our industry, which is community and community investment. Brewers are value-added manufacturers, as I mentioned earlier, that seek to attach their brands to an experience and a relationship. The consequence of that is that investment in sponsorship, community and charity has always been the cornerstone of building an effective beer brand and beer industry.
That page gives you a bit of an example of some of the things that our member brewers are involved in. In many instances a lot of those small community events wouldn't take place without the investment of Canada's National Brewers.
This next slide dramatically shows the consequence that I talked about in terms of economic opportunity. The government of British Columbia in 2003 changed the way that taxation applied to beer and brought it in line with other jurisdictions across the country.
There used to be six compounding taxes on beer in British Columbia that were taxes on taxes on taxes. The consequence was that if you had an increase in global hop costs or capital costs of ten cents per dozen, the consumer actually saw as much as a 30-cents-per-dozen increase in prices.
The government in 2003 simplified that and based it on a volume tax, which does a couple of things. It takes away the hyperinflationary nature of pricing. It creates a more competitive price environment. It allows consumers the opportunity to have more purchasing power, and it allows people involved in the industry — namely licensees, hospitality industry and others — to have more margin — the ability to actually invest capital in their businesses and get a return on that capital.
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So as you can see, from the time that that tax change took place, we've had growth year after year in British Columbia, including last year which, arguably, was one of the most difficult economic periods in the province's history. What we have seen — and I'll caution the committee — is that in the first six months of this year we've had a very soft environment, which we attribute to three things.
One is that we had a very wet, cool spring and, despite what our sales people will tell you, weather does play a significant role in our success. Secondly, there was a bit of a lag after the Olympics. I think people's discretionary income was spent in about a three-week period of time. And the last impact is that there has been some confusion in the marketplace, which has ultimately impacted consumer behaviour. I think the confusion around the HST, quite frankly, has made people leery about making investments and has undermined consumer confidence that was already fragile.
Recently, some of the changes to drunk driving laws in the province — which we support — have added to the confusion. In fact, 0.05 has been an administrative penalty in this province for some time. It's just that the consequences of that have changed. I think that as those misunderstandings and consumer confidence return, we will see a stronger industry going forward.
The next page just gives you a bit of a sense that British Columbia, despite the progress we've made, still has among the highest taxes in the world for beer. Some 51 percent of the retail price that consumers pay continues to go to the federal or provincial governments. As I said earlier, it's a volume-based tax, so it gives you a bit of an example — on the right-hand side — what the impact of that would be on an average 12-pack of cans The brewers or net brewer…. Not only is that to produce the product, warehouse it, distribute it, but we also look after all of our environmental responsibilities in terms of taking our containers back, managing our footprint and producing what I think is one of the greenest industries in the province.
Revenues from beer sales last year were $468 million from the markup, totalling more than 50 percent of the revenues to government from the Liquor Distribution Branch. About 44 percent of beer sales, in dollars, go through the private liquor retail system channel. An additional 20 percent go through what we call on-premise or licensed establishments — bars, restaurants and others.
Beer is unique, and certainly our members are unique in that we manage the entire supply chain for the government of British Columbia. We take orders from all the customers in the province. We take their money prior to distributing it. We warehouse and distribute that product individually to almost 5,000 customers in the province, and we also go back and get the empties from them and bring them back to our facilities. Every night we transfer that money to the Liquor Distribution Branch. So it provides an economy of scale and a savings to the Liquor Distribution Branch, which is reflected in the cost base for beer.
The consequence of that is that 60 percent of all the beer that gets consumed in the province never gets touched by the Liquor Distribution Branch. In fact, it's managed by the beer industry specifically.
Two points that I think the committee should be aware of in terms of trends that will ultimately have an impact is that the Liquor Distribution Branch retail side of their business continues to decline on a customer count basis. From 2002 through to 2009 it declined by about 13.5 percent, which represents about six million fewer customers than in 2002. What that means is that when you've got static cost at a retail level and lower sales and lower number of customers, the cost per unit goes up.
So as a result, for every dollar that's spent through the Liquor Distribution Branch, that's one less dollar government gets to fund health care, education and the other important services in the province.
There was an uptick in 2010, we believe because of the economy. People were making destination purchases that were a little bit less expensive at the Liquor Distribution Branch on the whole. But we see a bit of softness again at the LDB this year in terms of consumer behaviour. That's because B.C. is becoming what other provinces have from a retail consumer perspective, which is a convenience purchase. There's always an easier or a better opportunity other than the LDB in many communities.
The consequence, as I said earlier, is that the LDB operating expenses, despite the fact that there's been a six million consumer drop in the number of customers going to the stores, continue to go up. For every dollar that the LDB spends, it's another dollar that doesn't go to net government revenues.
The next slide that I just want to quickly spend two seconds on is our commitment to responsible use. One of the things the beer industry has done well for at least 40 years is to ensure that our products are used responsibly. We do that through research, awareness and partnership programs that aren't just on a local level but on a regional, a provincial and a national level. It's money that we invest to ensure that our products are consumed in a reasonable and responsible manner.
We've got a motto in our industry that we share liberally, which is that there are three times you shouldn't drink: when you're driving, when you're underage or when you're pregnant. A lot of the programming — these are just some programs that we've run recently — focuses on those three things. One example is the Canadian Foundation on Fetal Alcohol Research that the beer industry funded with a million-dollar grant to try to further
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awareness, prevention and research to eliminate this preventable disease.
We're in-market right now in all of your constituencies with a joint program with ABLE-BC, which are the private retailers in the province, to try to ensure that consumers aren't consuming alcohol while they're pregnant. You'll see those posters and other point-of-sale materials in your constituencies through the month of September, which is international FAS month.
As I mentioned earlier, one of the hidden benefits that the beer industry brings is our approach to environmental sustainability. We have the highest container return rates and stewardship program of any steward in the province of British Columbia. So 94 percent of all our bottles and cans come back. That's almost 600 million containers per year.
When you incorporate that with the aluminum that comes back, with the cardboard packaging that we get back in combination as well as plastics, pallets and other materials that we get back, we diverted just this last year 54,000 metric tons of waste from B.C. landfills.
What that amounts to, in terms of our activity, is that we've had greenhouse gas reductions equivalent to 10,789 cars in the province in the last year alone. Nationally, when you take a look at numbers, the industry has been very good about reducing its energy consumption as well as its greenhouse gas emissions, the latter dropping by 60 percent since 1990 and energy consumption dropping by 46 percent.
Water consumption, which is a key component of our business, has also declined by 70 percent with the use of recirculation systems, biodegradable oils and lubricants and other approaches to water conservation.
The key element that we wanted to talk to the committee today about is the focus that the province of British Columbia has brought to bear on ensuring that products are used responsibly. B.C. is never a prophet in its own land, as many of you will know when you're dealing with the media, but it should applaud itself in terms of the proactive approach that it has taken on ensuring that beverage alcohol is used responsibly.
B.C. is a leader and has been a leader for over 20 years in the programs and approaches that they have taken. We have a social reference price in this province, or a minimum price, that we believe should be indexed, and I'll speak to that in a moment. There are very effective coordinated programs and awareness campaigns to prevent and ensure the responsible use of products.
We have very strong — in fact, the strongest — drinking and driving laws in the country. We have regulated outlet regulations and processes that are effective. We have training programs for servers that are responsible for ensuring that overconsumption doesn't take place. We have effective fines and structures, and we have a current volume-based taxation approach that works.
The key component, we believe, of all of these actions is what's called a minimum price or a social responsibility price. It's something that has been advocated for some time. We have had one in British Columbia since 1992. It's endorsed by the World Health Organization. It's endorsed by Canada's national strategy on alcohol — to adopt minimum prices, meaning that you cannot sell below a certain price in the province.
What that does is it avoids things like binge drinking, or a term that is used in the industry, preloading, where you get young people that will go and consume vast quantities of product in a short period of time to avoid paying costs when they go out. It's dangerous behaviour. So the consequence of that is that B.C. needs to index its social reference price to keep pace with inflation and keep pace with the market.
The next slides really just give you a reference point in terms of where B.C. is at with respect to other jurisdictions. We haven't had a change since 2007. You can see that most other jurisdictions have an annual review and/or annual indexation.
The other component…
The Chairman is giving me the time out.
J. Les (Chair): Pulling the trapdoor any minute now.
G. D'Avignon: I'm going to be one second.
…is that most jurisdictions have both a retail minimum price as well as what we call an on-premise minimum price. B.C. lacks an on-premise minimum price as well. So our advice, from a responsible-use perspective, would be to implement an on-premise minimum price, which means that you can't purchase a drink below a certain amount in a bar or restaurant, and to index the minimum price at retail to ensure responsible use by retail consumers.
J. Les (Chair): Okay. With that, we've got to let you go, Greg. Your time is a little bit more than up, actually. Thanks again for a good presentation.
The next delegation is from the Canadian Home Builders Association. M.J. Whitemarsh is here. Good morning, M.J.
M. Whitemarsh: Good morning. I trust you can hear me.
J. Les (Chair): Loud and clear, as always.
M. Whitemarsh: What you have in front of you is a rather complex document that we have prepared for this committee. Rather than walk you through it, because that will take more than the time that I have allotted, what I will do is ask you to turn to section 9. The conclusion is there. It's not very often you start with the conclusion, but we'll go from there.
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We committed to this government last year that we would look at the renovation industry. The renovation industry will put $7.1 billion into the economy of British Columbia this year. What the impact of the HST would be on the renovation industry, government didn't really know, and neither did we, because there's a certain portion of renovations that wasn't impacted by HST, and certain amounts of it are. We undertook to do that. We've done a very concise report. It's under tab 10. Scintillating reading. I'm sure you'll all want to read it tonight before you go to bed.
What I can tell you is this. Of the $7.1 billion that renovations will create in the province this year, 26 percent is underground. That is people who do not pay income taxes, do not get Workers Compensation, don't have liability insurance and usually go and do jobs for cash. The amount of money that the government is losing on that 26 percent that goes underground is huge.
The rest of it that is there…. We can now tell you that in a renovation, 36 percent is a management fee of sorts, and another 32 percent is what's paid to subcontractors. So 68 percent of the cost of a renovation is now impacted by the 7 percent of the HST that wasn't before because there wasn't the provincial sales tax portion on that particular amount.
We are respectfully requesting that the government look at this, because renovation is a huge impact to our GDP — $7.1 billion this year for renovation and $6.8 billion in new homes. The Canadian Home Builders Association of B.C. represents both markets. What we are asking for is a 2 percent permanent renovation tax credit on the portion of the renovation industry that is now subject to the HST. The money goes to the consumer. It goes back into the consumer's pocket, so the consumer then has the money to spend on other things.
We're also asking that that amount be increased to 4 percent if it's a green renovation. So if that family or that homeowner is doing a renovation that actually reduces the impact on the grid or reduces the impact of energy efficiency, then they should be rewarded by getting more of that money back.
The other thing is — and you should have also been given a sheet for our upcoming housing affordability symposium — we also committed last year, when we talked about tax pyramiding, which is tax on tax on tax on tax, which happens every time a house is built….
Property transfer tax is a great one. You look at raw land. Raw land has property transfer tax — and I know, John, you've heard me say this before — when it's transferred over from the farmer to the developer. When the developer puts it into lots and they're sold to the builder — property transfer tax. When the house is built on it and the purchaser purchases it — property transfer tax. So we are also asking that that triple taxation on that same piece of land be curtailed somehow so that we are not triple-dipping in the same thing.
Again, as always, we believe that marginal land from the ALR should be removed. I am not talking about arable land that could at some point in time be used for agriculture. This is land that will never be and has never been used for agricultural use, and there's a lot of it. We ask that the government just take a lot at that, determine where it is and get some land supply out there because, especially in places like the capital regional district right here and in the Lower Mainland, it is really, really stymied with the amount of available land.
We asked last year when we made our presentation to have the threshold of the HST increased from $400,000 to…. We wanted $600,000. We got $525,000, and we were grateful for that. We also asked that that be indexed.
Those of you that were around in '91 when the GST came out will remember that the federal government did promise to have the GST indexed. It has never been, so that ceiling is still between 350 and 450. In the province of British Columbia that negates 92 percent of the purchasing population from getting any rebate on the GST. We don't want that to happen with the HST, so we respectfully request that the HST on new homes be indexed.
We also believe that because housing and renovations have such a huge impact on the GDP of the province and provide so many jobs — and you will notice as you leaf through this that I've put several charts in that actually prove the importance of it — we should have a housing secretariat. As this point in time we report to the Housing Ministry. The Housing Ministry under Rich Coleman has done a wonderful job of the social housing portfolio in this province. But we need something that we can report to so that there is a free flow of information back, and that doesn't happen in a lot of instances.
For an example, I can tell you that a very important paper that was going forward on climate action came across my desk on a Thursday and a report back had to be done by 9 a.m. on Monday morning. So you know what I did that weekend. That shouldn't be happening. There should be a freer flow. It's not because people don't want to; it's a time constraint. A housing secretariat would help stop that.
I know that you have several questions. As those of you who know me know, I'm always available anytime, so it doesn't have to be within here. I'm pretty sure I've met each and every one of you more than once.
J. Les (Chair): Thank you, M.J. Indeed, we have some questions. The first one is from Norm.
N. Letnick: Thanks, M.J. It's great to see you again. Could you talk to us about — I wouldn't want to call it the black market — the people who do home renovations that don't have HST numbers and are doing it for cash?
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Do you have any recommendations as to how we can reduce that without changing the tax structure?
M. Whitemarsh: Yes. What happens now is that you are enabled an income of $30,000 net before you have to get a GST number and declare that you actually do collect GST on anything that you do. That rule will now transfer over to the collection of the HST, because it's very much federal-centric.
So what we believe and what we have asked the Finance Minister to do is to represent this province by asking the federal government to ensure that each and every Canadian that does do work for themselves be required to have an HST number with absolutely no minimum requirement. So zero to $30,000 — yes, you still have to file; you still have to get a number. That in itself would help curtail the black market.
B. Ralston: A similar question. I notice in the material in the back that you speak about — I think at tab 10 — how the underground economy is still an ongoing problem. I think one of the successes of the federal program was the HST registration. As you know, if someone doesn't pay those taxes, they generally don't pay WCB, CPP, UIC and other statutory deductions. The contract is usually not a written one. There are all kinds of problems there.
Would you support…? I understand there are some good renovators, but there is a certain part of the market that's served by the underground economy. Would you advocate a joint task force of CRA and other players to make this a priority, along with this deduction, were it to be granted?
M. Whitemarsh: Yes is the short answer. Our national association has been working with CRA for many, many years to try and do something about the black market. CRA's response to that was to come out with the contract reporting system, which has been a dismal failure at best. I can't remember the numbers off the top of my head, but it's something like…. They get about $2.1 million from the honourable contractors that do fill out the reporting system. But what it costs them to put that out there is somewhere in the neighbourhood of $6 million or $10 million. So there's a huge discrepancy there, and it has not been a success.
So a task force that would help to curtail that and do something about it — absolutely. We've worked in partnership with CRA to do the get-it-in-writing campaign so that people actually do get contracts and do it.
But I can tell you from experience that there's not a week goes by that we don't get a call at our office. Unfortunately, it's usually some poor old person that has been duped by some contractor that comes along and says that they will do a job much cheaper if they pay cash and pay it upfront. Then they're left with the job not done, and that's just not right.
M. Mungall: Thanks very much for your presentation. As the owner of two heritage homes, boy, I can talk about renovations.
M. Whitemarsh: And you did. You told me that before.
M. Mungall: My question is around the 2 percent and moving up to 4 percent on Build Green B.C. renovations in terms of a rebate on the HST. I'm just wondering how you came to those numbers.
M. Whitemarsh: We know and accept…. We want world-class education. We want world-class health care. We know that government needs money to cover those things.
We came with the 2 percent because at 2 percent…. Well, no, let's talk about the 4 percent.
People always work better when you encourage them to change what they're doing. If we are saying that we want to reduce our carbon footprint by 331/3 percent, we need to start with people that will do that if they're going to renovate. If they do a green renovation, they have the ability to do that with a lot of simple things that they can do.
Sometimes it's just choices. Do we choose this, or do we choose this? Unfortunately, a lot of green things right now are still more expensive than the regular things. If we can incent people to go that way, then they should be incented by more of the amount.
If you look at the amount of the renovation with the 2 percent, it still leaves a good amount of residual income from the HST that will be collected. I can't quote the numbers, Michelle, off the top of my head, but they certainly are in the report. It's just something that would reward good behaviour and get them to go greener sooner.
D. Donaldson (Deputy Chair): Thanks for the presentation. We're in the 15th month now of the HST being announced and the fifth month of it actually being implemented. I'm wondering: on your 2 percent and 4 percent tax credits, have you been able to have meetings with the Minister of Finance on those ideas? What indication are you getting that those two income tax credits will be soon coming?
Secondly, on the marginal agriculture land, would your association then be in favour of…? What the Auditor General's report recommended is that there's not enough financial support for the Agricultural Land Commission, and therefore things like looking at non-productive land and what to do with it aren't being taken care of in a timely — or even any — manner whatsoever. Would you support the recommendation of having more resources for the Agricultural Land Commission?
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M. Whitemarsh: I think the boundaries that were put on the Agricultural Land Commission are ready to be refreshed. I think it was a good thing at a good time for a good reason. As with anything, I think it can always be looked at as things go on. Things evolve; times change. We're looking now at more and more people moving into high-density areas where there is less and less land. Housing is not getting any cheaper.
What we are doing is forcing our young people to bring up families in highrise condominium projects and other living places when they could and should be probably living in single-family homes. That's a personal opinion, not the opinion of my association.
Yes, at four o'clock yesterday afternoon I met with the Finance Minister, as a matter of protocol, to deliver this document to him. As he always does, he wanted to know: "What's it going to cost me?" He has the paper. I directed him to the sections in it that actually show what the income increase will be with the HST on renovations and what the purported 2 percent and 4 percent will net.
It's a guesstimate on our part, because we don't know which part of renovations will be green and which will be ordinary.
I think it's fair to do it on the portion that is now subject to the HST, because if you take 2 percent from the 7 percent, government is still getting 5 percent. If it's 4 percent, they're still getting 3. But it's the means to an end, and it gets us to the 33 percent reduction in carbon footprint.
J. Les (Chair): Final quick question from Bill.
B. Routley: The people of B.C. have yet to be heard from on the vote on the HST, as you're aware. I wondered if you had any comments in this brief with regard to the uncertainty that that causes your organization in any way. As an organization, do you have any recommendations with regard to the impact that it's having on new home construction and other business as well? Is there anything in this report on that?
M. Whitemarsh: No, but I can give you some papers before I leave. We just actually did tabulations and cross-sections of what the true impact of the HST is on new homes. I'll be happy to leave those with you before I go.
I spoke to our association in Kelowna on Tuesday night. What I advised them to do was to get out and mount a marketing campaign themselves so that the voting public in British Columbia will actually know the truth of what the impact of the HST is.
The fact is that in a place like Kelowna, in the Okanagan, you're looking at 0.5 to 1 percent increase in price. It really is quite negligible, when you start looking at the fact that now our builders can get an input tax credit which is far greater than they ever got before, as can trades and suppliers and those others that provide goods and services that go into the purchase of the house.
As long as we are diligent as an industry and ensure that people pass along those savings as they go down — knowing that 68 percent of the province is well under the $525,000 threshold for new homes and that there is no HST on resale — then it behooves us as an industry to get out there and actually make sure that we are getting the savings that are there.
Again, if you go back to when the GST came in, in '91, we did have a 12 percent manufacturers tax before that. At that time, I worked for a manufacturing company that did kitchen cabinets and architectural millwork, and we physically removed the 12 percent from every product that we had in our factory, before we added the GST on. That's exactly what should be happening now.
J. Les (Chair): Thank you, M.J. — appreciate the time you took.
We will now hear from the Community Social Planning Council — Rupert Downing.
R. Downing: Thank you, Chair and members of the committee. I'm the executive director of the council, and I also direct a national research program on community economic development, for the Canadian Community Economic Development Network. The council has been working on quality-of-life and affordability issues with stakeholders from every sector of our region, and we're just about to celebrate our 75th anniversary of serving the people of the capital region.
What I wanted to share with you today…. We will be providing a written brief inclusive of answering and responding to any questions that members of the committee have today, and of course, we're available to discuss and answer questions at any other time as well. The point of the presentation today is to suggest some evidence-based policy directions to prevent and reduce poverty, for the consideration of the government in planning their 2011 budget.
One of the significant findings of our research in this region is on the serious challenges to affordability of living in the region for many families and people. For example, some of the key trends….
More than one in four families with two children earns an income that is less than required to sustain an adequate quality of life. The hourly wage required for two parents working full-time to sustain a family with two children is now $17.31 an hour, and this has increased by 10.75 percent in five years, particularly because of the rising cost of rental housing.
Nearly half of tenants of market housing are paying 30 percent or more of their income on housing costs, and the bottom half, the poorest households, have only 21.4
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percent of the region's household income. So there's rising inequality between people in the region and, indeed, between communities in the region.
Based on these and other provincial trends, we believe that the B.C. government should, in its 2011 budget, heed the call by many agencies, the provincial health officer and municipalities to put in place a comprehensive poverty reduction plan. Our participation in national research suggests that progress is being made in those provinces — for example, Quebec, Manitoba and New Brunswick — that have developed poverty reduction plans and that are encouraging local or regional action on joined-up solutions to the interrelated causes of poverty.
We're committed to matching provincial action with a regional action plan on preventing and reducing poverty. Again, from our national research it's clear that outcomes are achieved when both provincial strategies and local ones are in place.
The good news is: we believe that many of the pieces of the solution are already being worked on or are even in place, both within provincial policies and programs and in regional initiatives such as the regional housing trust we have here to tackle housing supply and affordability.
What's lacking is a horizontal, across-government and across-agency approach that's evidence-based and strategic to key vulnerabilities and populations at risk of falling into poverty.
One of the key areas that we think we need to pay to attention to here in the region but also provincially is, of course, housing affordability. As I've mentioned, we have initiatives already in place in our region, such as the trust and the Coalition to End Homelessness. What we'd like to see is the government providing matching investments and working for solutions across the different silos of the departments that affect some of the issues that we face.
Another area that we've looked into is the rental assistance program of the B.C. government. That's an excellent source of rent subsidy for working families who rely on market rental housing. However, our recent study of the program suggests that it's undersubscribed because of defects in its design. When it was announced in 2006, it was expected to help something like 20,000 working families in the province, but so far only about 7,000 families have been able to participate in it.
There are some problems simply with design, not in intent and not in policy — just in terms of some of the rates of subsidy, some of the eligibility requirements and the constant annual reapplication process that's involved.
We also welcome the Minister of Housing and Social Development's invitation to come up with solutions around home ownership affordability. The Home Builders Association questions around the property transfer tax are, I think, good ones that the council would support.
In terms of income and employment, one of the most structural aspects of poverty is its absolute inevitability for those on income assistance and disability benefits and for many working at minimum wage. So we do support an increase in those rates.
Also, we support strengthening our small business sector. We work in a program called SkillsPlus, which works with 200 employees, at the moment, of small and medium-sized enterprises in the region to strengthen on-the-job-training for the sustainability of those businesses, those jobs and those employees in those jobs. We think the transfer of labour market programs for the province is an excellent opportunity to try and innovate in similar kinds of programs that are targeted to small business development and employment retention.
Community economic development is another aspect of poverty reduction. There is little hope of progress in reducing poverty without creating sustainable economic opportunities appropriate to those who are most at risk of falling into poverty. That is a major focus in our region.
We have just launched a microcredit program here, with the support of the United Way, that provides small loans to people in poverty to create their own enterprises. That's a locally designed model that builds on successful international examples like the Grameen Bank in Asia.
Through our credit unions and programs like Enterprising Non-Profits, we are also creating a new generation of social enterprises in the non-profit and cooperative sector that combine social, economic and environmental benefits. We think some of these social enterprises are a cutting-edge model of tackling poverty and creating economic opportunity.
From evidence from other regions, this kind of approach to supporting community economic development using the non-profit, cooperative and small business sector really is proving to be successful. In Quebec over $750 million has been leveraged in capital investment from private and public sources in what they call the social economy, which is part of the provincial government's action plan for collective entrepreneurship.
In Manitoba, New Brunswick, Nova Scotia and many other provinces as well, provincial policies are deliberately creating incentives and supports for social entrepreneurship and community economic development. We believe that the government of B.C. should explore similar policies and programs, sitting down with stakeholders in the sectors involved to create a made-in-B.C. approach to creating a supportive environment for community economic development.
Food and agriculture is another area. We convene a round table on food and agriculture, which involves growers, farmers, producers, processors, retailers, restaurateurs, chefs and social agencies concerned with
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food security. What we're trying to grow is a sustainable food system that reduces the transportation of food into the region from other sources which, of course, has a climate change and greenhouse gas emission issue.
We used to source over 50 percent of our food on Vancouver Island from local sources. It's down to about 10 percent now. We want to try and grow livelihoods for farmers and increase food security and the availability of quality locally produced food for our citizens.
In terms of children and youth, we have a number of suggestions that will be in our brief. We are particularly concerned about the socioeconomic outcomes of children in the care system. Of course, that's young people who we, as a society, have been responsible for the care of. But their socioeconomic outcomes later in life as young adults are quite terrible compared with the general population. We think there needs to be a major initiative to try and deal with that circumstance.
We think tuition costs are obviously a big pressure on affordability for students. There are other stakeholders that probably are going to be giving you advice in terms of some of those issues that are better able to talk to that.
One small piece that we would suggest is that there used to be a program, which was started here in British Columbia and spread to other provinces, that provided tuition credits for young people to do community service projects with non-profit organizations. Tuition credits were provided based on people successfully completing voluntary work in their community that benefited local communities.
We think that was an excellent, very cost-effective little program. Unfortunately, it no longer exists in our province. We think that's one that's worth taking a look at again. It will be very popular with young people and the non-profit sector.
Child care is obviously a big issue. The kindergarten announcement the B.C. government has made is I think an important step forward. Again, I think there are some opportunities to sit down with some of the stakeholders in the child care sector and learn from some of the initiatives that seem to be successful in other jurisdictions.
Quebec is the only jurisdiction in North America that has a comprehensive child care system that is provided through parent and cooperative and community-run child care providers. We think that's an excellent example that we can learn from.
My conclusion is really two major points. A major barrier to addressing poverty in the province is the lack of an integrated cross-government strategy that all stakeholders can work with and contribute to, to change policies and programs to address key barriers to getting out of poverty. A horizontal joined-up strategy is needed to address interrelated social and economic issues, co-constructed with stakeholders.
Secondly, there are many regional and sectoral stakeholders willing to leverage their efforts and investments with the province in such an approach to maximize cost-effectiveness and outcomes at the local level that in aggregate will impact the overall indicators of poverty and affordability for the province as a whole.
That is my presentation today.
J. Les (Chair): Thank you. I have several members who have questions, starting with Norm.
N. Letnick: Thank you for your presentation. The C.D. Howe Institute did an analysis of marginal effective tax rates in the country and, specifically, in B.C. I'm just looking at a graph here on my laptop, and it shows that between $35,000 and $50,000 a year in income, people and families have the highest marginal effective tax rate — over 60 percent in some cases — and the rest of the incomes above that cover around 40 percent.
So my question has to do with what do you determine as poor when you say we have to reduce poverty. Is that area between $35,000 and $50,000 income for a family with children considered as part of that demographic that you're talking about? Maybe one solution would be to lower taxes for that specific demographic and bring them in line with the other marginal effective tax rates for the rest of the population.
R. Downing: Yes, I think that's an excellent point. What we tend to do…. We measure a basket of essential goods and services, such as housing, that a family has to invest in and track, from year to year, what the changes are in the costs of those items and then look at what the income data is saying about what kind of income families are earning.
Marginal tax rates are, I think, a very important focus in terms of trying to relieve affordability pressures on exactly that group that you're talking about.
J. Les (Chair): Final question from John Rustad.
J. Rustad: Thank you for your presentation. I actually found it a very good presentation. I'm looking forward to that as written, as well, so I can review it.
I like your idea of tuition credits for students volunteering, doing community work. For that side of things…. I think there'd actually be a little bit of concern with regards to how many hours students would end up committing versus their studies.
The question I have…. You mentioned minimum wage. You mention that as being one of the things that can help with the poverty situation. I think about childhood poverty in particular. B.C. used to have the highest minimum wage in the country in the '90s and yet childhood poverty went up by 38 percent. That level hasn't
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changed in the minimum wage, and in the 2000s the childhood poverty level has actually dropped by 12 percent or more, depending on the numbers you're looking at.
I'm just wondering how you relate the minimum wage component to that overall poverty level.
R. Downing: That's a good point. I'd have to ask some of my backroom research folks to perhaps respond to that. We'll take a look at that and try to respond in our brief.
My off-the-top-of-my-head response is that I think it's young single people that are most affected by minimum wage rates. A lot of the people that rely on those jobs are young people entering the labour market for the first time or for the first period of their working lives. There are some worrying data and trends around younger single households and the degree to which they're in poverty, and also the way in which they kind of struggle to actually make any progress in the labour market.
J. Les (Chair): All right, Rupert. We'll have to leave it there. We look forward to your further written submission.
Our final presentation for this morning is from the ProArt Alliance of Greater Victoria. We have Allison Bottomley, Ian Case and Peter Sandmark.
P. Sandmark: Good morning. I'd like to start by thanking the standing committee for this opportunity to make a presentation, and in particular to thank the committee for your recommendation last year to restore arts funding. No doubt that had a role in restoring some $10 million in arts funding this year.
My name is Peter Sandmark. We're here today on behalf of ProArt. I'm joined by my colleague Allison Bottomley — together we're co-coordinators of ProArt — and Ian Case, who is president of ProArt as well as the general manager of Intrepid Theatre, which runs the Fringe Festival and other festivals — very successful events.
ProArt, the professional arts alliance of greater Victoria, is an association, a non-profit society of 16 professional arts organizations in greater Victoria. I'll just run through them for the record: the Art Gallery of Greater Victoria; the Ballet Victoria; Belfry Theatre; CineVic; Intrepid Theatre; Kaleidoscope; MediaNet, which I work for; Open Space; the Other Guys Theatre; Pacific Opera Victoria; Story Theatre; Theatre SKAM; Victoria Film Festival; Victoria Conservatory of Music; the Victoria Jazz Society; and the Victoria Symphony, whose director is here today. Mitchell, thank you very much for coming.
Well, we're here today to urge you to increase funding to the B.C. Arts Council and to restore the gaming cuts that have been cut.
A. Bottomley: The question of why does culture matter…. Sir William Rees-Mogg, the former chairman of the Arts Council of Great Britain, stated: "The arts, like education, health and social security, are universal goods that ought to be generally available regardless of ability to pay."
The economic, social, health and educational benefits to our communities created by investing in arts and culture by all levels of government are well-documented and supported. Public funding helps to ensure that the arts touch the lives of as many people as possible by keeping admission prices affordable and the arts experience accessible.
The arts help children do better in school, keep downtown areas vibrant and improve health in seniors.
Learning Through the Arts, a three-year national research study conducted by Queen's University, concluded that involvement in the arts contributed to student achievement, as much as 11 percentile points higher in math. Some 90 percent of parents reported that the arts motivated their children to learn. Teachers, parents, artists and administrators talked about how the arts motivated children, referring to the emotional, physical, cognitive and social benefits of learning in and through the arts.
According to the Conference Board of Canada, many educators also believe that creative activities provide positive learning experiences such as helping to improve communication skills, promoting creative thinking, contributing to improved literacy and language development through libraries and reading programs, and helping to develop information technology skills critical for employment in the knowledge economy, as creative activities often involve information and communications technologies.
Arts programs for youth and seniors measurably improve the lives of participants, visibly fostering healthier communities and addressing issues of youth at risk and elder care.
I. Case: When the cuts came down from gaming to the B.C. Arts Council in recent years, ProArt took it upon itself to do a survey of its membership to find out what those cuts would mean to the professional arts organizations within our region. We came up with the following statistics. I'll only skim over some of them, because I'm sure that you'll all sit down and read the report that we've given you.
ProArt companies had to reduce staff and programming, and the equivalent of over 22 full-time positions were lost. One company alone says that 300 hotel rooms will be lost because of cuts. These hotel rooms would generate at least two restaurant visits per room night, meaning over 600 fewer meals being served by local industry.
Jazz festival, the Victoria Symphony and the Art Gallery of Victoria all say that they will have to eliminate or severely limit their outreach programs. Those are
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usually free programs for youth and children, and these are programs that take art directly into schools. Tens of thousands of British Columbians will lose the opportunity to participate in the arts.
Many organizations will postpone renovations, upgrades and maintenance that would provide work for carpenters, masons, plumbers and other tradespeople. Fewer sets will be built, which will mean fewer purchases of hardware at building supply stores. The cuts to gaming alone mean hundreds of thousands dollars that will not be spent in our community.
I think that brings up an excellent point about the arts. Funding that flows to the arts flows directly back into the community through wages and through the purchase of materials and spending on things like promotion and advertising.
In the current climate created by the cuts, previously stable arts organizations have been destabilized. The groups are cutting back and adjusting. But if that climate continues, there is the very real possibility that we will see even more arts organizations close doors permanently, and many programs already in jeopardy will have to be scaled back or cut altogether. This will result in lost jobs, lost revenue to communities and to the province and the loss of a creative community in our province.
Now, why should we care? What's important about the arts? The arts are our doorway to self-perception, to change and to awareness. Arts affect the health, education, safety, literacy, longevity, livability, vibrancy and humanity of our communities. It is well-proven and it is well-documented in many, many studies across the world.
Provincial cuts to arts funding have put this vital contribution to our communities in jeopardy. Smaller communities with significantly less choice in arts programming will suffer most as these programs close or are scaled back to the point of being inconsequential to the people of those communities.
Think about how arts change people. We all probably learned to read by reading literature, by picking up a comic book or reading a book. That's how art affects our lives. Your ability to sit down and read this brief is partly due because of how arts and culture has touched your life.
Seniors. I've had many, many experiences of people telling me how arts have affected their lives. I think about a play-reading that happened recently in Victoria. A group went into a seniors residence. It was a facility where seniors are hospitalized, essentially. They performed the reading of a play, and they came up and talked to the actors afterwards and said that that was the first time that that residence actually felt like a home, because for the first time art had been brought into that home.
The young woman who came and saw a show at Uno Festival decided at that point to run for arts prefect for her school. She was successful. She decided that her mandate was going to be to make sure that for everyone, regardless of what their career choice was going to be, whether they wanted to be a fireman or an astronaut — it was important that the arts should be a part of their life.
I also think of the woman who came to one of the shows that we presented three years ago during our presentation series, a series which we had to cut back significantly this year because we lost over $61,000 in gaming funds. She came to that show to experience a show about a person who had lost a parent.
It was only through that show, she told us, that she was able to experience that grief and share it with others. That is the power of the arts — to change minds, to transform ourselves, to make us think and to react and to be better people through that experience. That is what we stand to lose. We stand to lose the quality of life, the expression of ourselves, the discovery of our own meaning and the purpose of our existence, our humanity.
Arts funding is not about numbers. It is about our humanity, and it is that human equation that makes B.C. the best place on earth. Without arts and culture in that equation, I'm not sure what we can claim to be.
P. Sandmark: During the recession other provinces did not cut the arts. In fact, some provinces actually increased their support, such as Ontario, recently in the news — $100 million they increased. Quebec, Alberta, Newfoundland, the federal government, as well, all increased their investments.
In B.C. provincial funding from all sources makes up an average of 7 percent of the operating budgets of performing arts organizations for example. This is the lowest in Canada. The national average is 13 percent. In Quebec that average is 26 percent. We've included a chart for you, which is taken from Statistics Canada. It ranks the operating grants for arts and culture organizations. Now, it's from 2007-2008. It does rank British Columbia last at $9.67 per capita.
Operating budgets are very important to understand, because it's the infrastructure. This is what supports the arts infrastructure. We're less than half than the next-closest province, which is Alberta. Of course, that's before the recent cuts. If we take those cuts into account and the $10 million that's been returned, we can estimate this number will be now about $6.54. So we're even worse off than we were then.
We want to underline that this is really a crisis for the arts and culture sector. Action has to be taken to correct the situation. We urge you to make a recommendation for the government to act, because B.C. residents support that support for arts.
I'm going to quote from Ipsos-Reid, the book by Darrell Bricker and John Wright, We Know What You're Thinking:
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"British Columbia is the place for local arts and culture. People agree emphatically that funding for the arts should not be left up to private business and foundations but should get a boost from local governments; 91 percent of B.C. residents praise the selection of arts and cultural events and activities in their community. It's the only region in Canada where there's complete agreement with the idea that a vibrant cultural scene is great for the local economy."
Arts and culture is a good investment. James Moore, federal Heritage Minister: "There's a strong fiscally conservative argument for supporting the arts." Without it we would be "culturally and economically soulless."
The arts are a growth industry that more than pays for itself, financially and through its many social benefits. As we've stated, public investment in the arts results in healthier, happier, economically competitive and livable communities. The public investment in the arts results in stronger creative industries such as software as well as tourism and social profit sectors — similar to what we heard earlier from the previous presentation.
This has been confirmed by studies for over 20 years. I've included a footnote to a British study from 1988, The Economic Importance of the Arts in Britain. So this is a well-established fact. The only study of the British Columbia government showed that every dollar invested returns about $1.05 to $1.36. It's kind of a zero-sum game, where the money invested will come back and get diffused through the community.
We have a large percentage of artists in our communities. The arts and cultural sectors combined with B.C.'s creative industries generate $5.2 billion each year and employ 80,000 people. We have the highest number of artists per capita in the country — nonetheless, they are largely below the poverty line — in Vancouver, the largest concentration of any major city in Canada; in Victoria, the second-largest. Seven of the top ten municipalities with highest number of artists per capita are located in B.C.
Growth in employment in the arts and culture industry was 81 percent higher than the 32 percent growth in the overall labour force from the period of '81 to 2001. So it is a growth industry. Investment is used to leverage other sources of funding, such as government, foundations, private donors. Many of those sources make their decisions based on the level of investment by the province. By reducing the investment, the province is endangering the support that other sources could provide art and culture.
I. Case: I think what we're really talking about here is stabilization, about stabilizing what has become an unstable sector or industry in our province. In the past few years we've seen funding swing wildly. We have seen gaming being withdrawn and put back in some places.
As members of the Finance Committee you will certainly understand that arts organizations require stable funding in order to plan and offer cultural programming. Arts and culture doesn't drop out of the sky or grow on the trees. It requires a lot of planning and a lot of forethought. Right now in the current climate it's very, very difficult to make that kind of a commitment to planning for the long-term future of the arts and culture of this province.
With those things in mind, I would like to read our recommendations.
We reaffirm our recommendation from two years ago to urge the governments to increase B.C. Arts Council funding to $32 million, effectively doubling the amount allocated for this year.
We urge the provincial government to restore gaming grants to the 2008-09 level and to revise the criteria in consultation with the arts community.
We recommend that the provincial government maintain an arm's-length relationship with the B.C. Arts Council through the Ministry of Tourism, Culture and the Arts.
We recommend that the B.C. Arts Council begin offering multi-year grants to arts organizations to develop stability for arts infrastructure.
We recommend that overall provincial government funding on arts and culture should eventually be doubled so that B.C. would at least achieve parity with Alberta in per-capita arts funding.
We recommend the creation of a capital program for arts and cultural organizations to own and renovate their facilities and venues.
And if I may be so bold to add a recommendation, for the first time ever the government is collecting HST, a provincial portion of sales tax, on every single theatre ticket, any admission ticket to an arts event. This is a completely new thing, and I would actually recommend that we be exempted from the HST. It is severely impacting our ability to sell tickets and to draw new audiences.
J. Les (Chair): Thank you, and with that, you're exactly at 15 minutes and out of time. We appreciate your presentation this afternoon. We missed the music, however.
P. Sandmark: They had a gig — playing on the street, probably.
J. Les (Chair): The committee now stands recessed until 1:05.
The committee recessed from 12:07 p.m. to 1:04 p.m.
[J. Les in the chair.]
J. Les (Chair): Good afternoon. Our first presentation this afternoon is from the Board Voice Society of B.C., and representing them is Jenelle Cooper.
Good afternoon to you.
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J. Cooper: Good afternoon. I'd like to thank you for the opportunity for citizens of B.C. to talk to you about the upcoming budget. It's something that's very important from our perspective as Board Voice.
I'm chair of the Mary Manning Centre here in Victoria. Our agency is a member of Board Voice. We're a new organization that formed last November, after a year of planning by a number of dedicated community board members. It was set up specifically to reflect the views of volunteer governors of community social services, in contrast to voices that were already out there, like the federation, ED networks and things like that. This is specific to the governors.
We formed the organization because we determined that social services need to be better understood by government and by our communities as being critical to the well-being of our communities. There are many hundreds of social service agencies across the province providing a host of programs to citizens, from early childhood development to community programs for senior citizens and everything in between — youth justice, mental health, family support, services for victims of domestic violence, employment support, housing support, child care, immigrants and refugees.
Social service programs operate throughout our communities. It's a web of caring, without which our communities would be bleak indeed. It wouldn't be good for people, and it wouldn't be good for business. In fact, one in three British Columbians will actually use social services during their lifetime, so even within this small group here we anticipate that in some way, it will touch your lives.
We recognize that these boards and their thousands of volunteer governors were responsible for billions of dollars of spending every year in B.C., yet there was no forum through which we could discuss those concerns and ideas. We had to find a way to leverage the commitment of community leaders so that they could forge a voice that would be heard in their communities and also across the province — hence, Board Voice.
Over the course of this past year, our first year in operation, we've been steadily building the organization and promoting the objectives of Board Voice throughout the province. We've brought groups of boards together in local communities to discuss interests that are across the boundaries of particular agencies, which is a new strategy — to get boards to talk to boards instead of having it worked at a clinical level, where the EDs will talk about services to other EDs.
We've provided training opportunities for board members to become better governors, and we've talked about the issues to politicians, senior public servants and other related organizations, and commented publicly on issues as diverse as the budget, the municipal pension plan, the census and the impact of HST on community agencies and their clients.
Today we wish to bring three key points forward for your consideration. The first is the importance of community services to the well-being of our communities. Can you imagine what our communities would look like with no daycare centres, no community health centres, no services for people with disabilities and no supports for senior citizens? The public is beginning to recognize that these programs are basic, not just to the folks who are receiving the services, but it's critical to the overall health and well-being of our communities.
A recently released poll notes that 87 percent of respondents in B.C. agreed that community social services — like mental health services, support for seniors and drug and alcohol counselling — make our communities safer and better places to live. Yet in the past year, for example, we saw health authorities closing community mental health and addictions programs with little or no community consultation. We wondered who was looking at the unintended consequences and the impact of the changes to services or plans for people receiving those services. From what we understand, there was no integrated consultation.
So what will happen to those vulnerable citizens? They'll have to rely on far more expensive acute care services when illnesses become more than they can handle. They'll fall into deeper problems — problems that will manifest as increased costs in the emergency room, acute care psychiatric services and police and justice services.
Almost two in three respondents in the survey felt that the level of funding for social services is too low.
The second point I want to make is that community social services are cost-effective, and they are good for the economy. In the poll I just mentioned, 87 percent agreed that it's smarter and more economical to tackle social problems early. If we spend more on community social services now, we're going to spend less on policing, jails and hospitals in the future.
This tells us that people are beginning to understand the social determinants of health. This is one of the key advocacy planks of Board Voice. In an op ed on this topic in January, Anthony Ostler, our board chair, stated that any savings that are realized by cutting preventative community programs will last only as long as it takes for the person dependent on that support to fall through the cracks and require more critical care.
A couple of recent examples in a report released by the Justice Institute of B.C. offered some tangible clinical stories, or vignettes, about how these changes can impact. For youth at age 18, the benefits of preventing the costs of dropping out of high school, avoiding the costs of heavy drug use and avoiding costs resulting to the individual and society from the individual becoming a career criminal amount to a discounted present value of between $2.6 million U.S. and $5.3 million U.S.
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A 2002 report prepared for the Learning Disabilities Association of Canada gauged the costs of learning disabilities, estimating that the total cost differential from birth to retirement at age 65 between a person with a learning disability and a person with no cognitive difficulty would be almost $2 million. The average total cumulative cost of criminal justice services per person with learning disabilities from age 12 to age 65 is estimated to be nearly $110,000 more than the average for the population as a whole.
More and more researchers are beginning to assess the costs and benefits of investing in the disadvantaged, and we'll begin to see studies which address the real costs of poverty to our society. We need to continue investing in our community social services to help achieve more cost-effective outcomes.
Finally, I want to ask you to support the community part of community-based social services. Most of you have likely served on boards of directors in your communities and are familiar with the value added to your communities by volunteer boards. Decision-making by committed community volunteer members helps to build community capacity and resilience. This involvement helps to knit the community together in ways that are not always discernible.
Clearly, volunteer governors play a role in fundraising, consciousness-raising and citizen involvement. We want you to recognize the intrinsic value that board governance brings and consider ways to support this decentralized, volunteer-governed approach to service management. We need procurement rules that are geared to support and sustain this community-based approach.
To summarize, Board Voice requests that your committee consider the inherent value in the social service sector infrastructure and services as a key to improving community health and well-being. We seek your commitment to adequate, appropriate funding for the sector and hope that you feel able to make a recommendation to the government that there is a need for more collaboration when current agency funding is anticipated to change. We also request that procurement rules support building and sustaining a community-based system of services.
In conclusion, the governors of social service agencies from across the province are working diligently on your behalf to support our communities, and we ask that the government recognize and support us as we perform this invaluable volunteer service.
J. Les (Chair): Thank you, Jenelle. We have a question from Bruce.
B. Ralston: We were up in Courtenay, and we heard from the Comox Valley Transition Society. One of the points they made was that they didn't feel it was a wise choice for the government to put out for tender contracts to provide social services, particularly where the agency had been well established — I think, in the case of that society, doing the same work and audited and cleared — for about 20 years. Has your organization — and I appreciate that it's a new organization — taken a position on the impact of the tendering process on the provision of social services by your member agencies?
J. Cooper: There hasn't been a position taken as yet, but it is under discussion, because one of the issues that's been coming up over recent months and years is the issue of…. There are so many social service agencies out there. Do we have too many?
The discussions that we're having with boards is that we're concerned that putting things out to tender will invite more agencies or more organizations to form and apply for funding rather than actually looking at what is in existence, what's working, using a community planning strategy to look at the needs within the community and engage the actual services that are currently functioning to see how we can better serve communities.
J. Les (Chair): John, you had another question?
J. van Dongen: If I could follow up, then, because Bruce asked the question I was going to ask. I would like to ask Jenelle, then: given the fact that there are sometimes concerns within government about the number of agencies they're dealing with, is that something your organization is going to engage in or is engaged in — trying to foster a constructive, community-based dialogue on how to get some alignment in terms of the organizational structure providing the services?
There is something to be said sometimes for larger agencies that are well organized and well developed to provide a range of services and have one administrative structure, etc. I think Abbotsford Community Services in my community is an example of that.
I like your submission. I just think that trying to be proactive from the organization's perspective might be helpful to your relationship with government.
J. Cooper: To give you an example, next Wednesday night here in Victoria, Board Voice is hosting, and I'm facilitating, the fourth in a series of workshops that we've been holding here in greater Victoria for volunteer boards of directors from social service agencies to come together and talk about these issues.
The theme for next week's meeting is actually "Building relationships." It's about getting boards to work together and consider other administrative advantages, through amalgamation, through co-location, through becoming a bigger agency with multiple services.
We've got some presenters coming from Boys and Girls Club and from…. I can't remember off the top of
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my head now who else is coming. They're talking about projects that they've been working on. We're trying to get the boards to think outside of just the survival of their individual agencies, to look at the broader community picture.
J. van Dongen: That's great. Thank you.
J. Les (Chair): Thank you, Jenelle, for coming this afternoon. We appreciated your presentation.
The next person we will hear from is Peter Lockie from Camosun College, the Lansdowne campus.
P. Lockie: Thank you very much for the opportunity to participate in today's prebudget consultation process. I'm the vice-president of administration and the chief financial officer of Camosun College, whose mandate is to provide students with advanced skills and education for employment.
I've given you a copy of this presentation and a copy of this "Fast Facts" sheet, which sort of captures the college highlights over the last year in a simple form.
B. Routley: And a pen.
P. Lockie: And a pen, absolutely. Yeah, I'm hoping you'll take some notes and it'll find its way into the final report.
We do recognize and are sensitive to the fiscal challenges that the province faces. We are committed to play our part in building B.C. for the future. More people are turning to the college for advanced skills and education for employment. As more do so, we face both financial and physical challenges to provide those services to them. If those issues aren't addressed, that limits our future ability to meet our community's needs.
The current level of demand probably comes as no surprise to you, but it is placing unprecedented pressure on capacity at colleges, and our college in particular. Last year, 2009, we had record enrolment numbers with a utilization rate in excess of 100 percent of the ministry target, which is the first time in a decade that that has been achieved. And 2010 is continuing that trend.
Just a snapshot of our college. We serve over 18,000 learners in the southern Vancouver Island and southern Gulf Island region, 94 percent of whom report that they are satisfied or very satisfied with the experience and the education that they get here, according to a survey that's done.
We have over a hundred different programs. We're very comprehensive: arts and science, business, engineering, trades, health and human, exercise, access and indigenous education. We have two main campuses. We're one of the region's top ten employers — over 900 employees and an annual budget in excess of $100 million.
In addition to having an economic impact in our service area in excess of $800 million annually, a recent study showed that 86 percent of our grads remain in this region to live and work after completing studies, and 97 percent remain in B.C. Clearly, this provides significant evidence that there's a significant impact to the economic and social well-being of the province from our college's activity.
The economy is beginning to recover but in some areas faster than others. Our enrolment this year is up 4 percent over last year, which itself was up 7 percent from the previous year. So we really are operating at full capacity.
We have wait-lists in some areas, like health sciences, nursing, dental hygiene, dental assisting, some trades areas and other pockets around the college. We're seeing an increase in demand for retraining from adults coming back seeking retraining, more disabled students looking for courses, and more immigrants coming and looking for courses. We also have strong demand within the region above the regional aboriginal population rate for aboriginal programs.
One of the challenges we face is that with scarce capital money, some of our students are learning with outdated equipment and technology. That makes providing the skills they need for the modern workplace a challenge. In order to keep delivering more cost-efficiencies, we do need to modernize our facilities and upgrade our systems.
One of our top goals is the construction of a new centre of excellence in health and wellness. That's long been a priority of Camosun, and this vision is for a new state-of-the-art health sciences, essentially, teaching and learning facility at our Interurban Campus, next to the highly successful Pacific Institute for Sport Excellence, which is gaining a sort of national and international reputation.
How have we responded to budget challenges over the last few years — flat operating grant funding, the tuition cap policy and the reduction of the annual capital allowance, which is used to maintain and renovate our buildings? It was cut by 75 percent last year. It has meant that we've had to undertake some fairly extraordinary measures to maintain the range of educational services and programs that our students demand.
In the past few years, we've gone through — a bit like yourselves — a lot of budget consultation and annual cost-reduction exercises. We've implemented educational cuts and administrative cost savings, particularly in the areas of staffing, travel, energy management and office supplies. In fact, we've made reductions which annually are in the $2 million to $3 million range. So we've done a lot. There's not a lot more that can be done, if truth be told.
We have a mere five requests to government that we'd like you to consider in your report. The first is that we
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require sustainable operating grant funding. This is just the notion of flat funding. Obviously, we welcome the fact that our budget has not been cut, but in an environment where our costs are rising faster than the revenue, flat funding puts us in this situation of an unbalanced budget that we need to address and make cuts.
We're seeking an increase to our operating grant to accommodate inflationary costs and other contractual and unavoidable increases to our operating budgets, or again we'll face having to make some cuts that will inevitably compromise program and service quality at a time of extremely high demand. It's a very challenging item.
Secondly, in support of our regional needs, we'd like government to make a new funding commitment to support increased access and success for the aboriginal, immigrant and disabled student populations.
Thirdly, at the earliest opportunity we want government to start to restore the annual capital allowance, which was cut by 75 percent last year. As I've said, we use it to maintain our infrastructure. So deferring maintenance can be done in the short run, but in the long run, we'll just build up problems which will be even more expensive to fix.
Fourthly, we'd like government to look ahead and plan for major capital. Again, I mentioned that our top priority is the construction of a centre of excellence in health and wellness, but we do feel that there has been a bit of a lack of commitment beyond the short term, which is somewhat understandable. But we really think we need to look out a few years and plan for that as much as possible.
Lastly — exciting topic for the afternoon, after lunch — there are changes coming in accounting standards that are being applied to our sector, and we just need government's commitment that any budgetary consequences of these changes will be mitigated in a way that doesn't impact us by having to reduce our programs or services. So it's an accounting technical point, but if it translates into us having to do things to balance our budget that will have unintended impacts, we want government to be aware of that and commit that that is not part of their objective.
In conclusion, we are the primary provider of advanced skills and education in this region. Investing in the college is vital to our future economic health and B.C.'s future economic health.
Camosun is a great investment. It returns $3.80 for every dollar invested. We remain committed to working with our community to further the economic health here and to keeping our programs and services at levels that our students demand.
Thank you for your time. I'd be pleased to take any questions that anyone has.
J. Les (Chair): Thank you, Peter.
B. Routley: I am particularly troubled by the news that you have wait-lists in areas such as nursing and dental hygiene and trades training. What would it take to clear up these roadblocks?
I'm aware that even on the province's own website we have up to 30 percent of the nursing jobs that are waiting four months or longer to be filled. So there are already starting to appear shortages. We're all very aware of the baby boomers and the high demands that that's going to have on health care, and I'm alarmed that we're already seeing a situation where your college is turning people away at the very time that we should be preparing.
If we were looking forward, now is the time to make sure that we're funding the appropriate services to make sure that we're preparing for the future. Apparently, that's not happening.
Do you have any idea of the kind of level of funding…? I assume that means that there would be additional classroom space needed or facilities to support that.
The follow-up question is…. Point 1 on sustainable operating grant funding, which I assume is your priority because it's number one…. What kind of percentage is that roughly? Do you have an idea of what you're falling short of in terms of ongoing sustainable operating grants in terms of a percentage of your overall funding?
P. Lockie: Sure. The answer to the health sciences, and it's across the board to some extent, is twofold. As you identified, it's facilities, capacitywise, as well as funding. They are quite expensive programs because people are taught in rather small numbers.
Part of the rationale behind our health building…. We have looked ahead at VIHA's, the local health authority's, people plan, and there's a clear graph that shows their needs graphed against what is available. Part of our goal, the rationale for our new building, is to try and meet those needs. Again, it's looking out to the future. This won't be solved overnight. It's the next five to ten years.
We think that we need more physical capacity to take more students. We're essentially full, is the simple answer on the facilities side. On the funding side the ministry knows the funding that would be required for nursing programs, if we take that program. There are also issues with practicum placements in hospitals, as well, and getting appropriate spots for students that need to be managed.
We are producing record numbers of nurses. It's not like they've been cut back or whatever. There just is almost an insatiable need in the health system, and we've got more students than we can accommodate for that.
Just to go to your operating funding question. Essentially, we get in the order of a $50 million grant at the moment, and our budget will rise somewhere between $l million and $2 million just standing still, with
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incremental costs of things that go up — whether it's hydro or staff moving to the next increment or the cost of benefits going up or MSP going up or pension contributions going up, all of which need to be found. They're not new services or whatever. It's simply paying the existing staff that are there.
So to flat fund poses a challenge each year.
N. Letnick: Thank you for coming. I used to coach business simulation teams that competed with Camosun College — a good college; good results.
P. Lockie: It is, yeah.
N. Letnick: I won't tell you who kept winning.
Could you talk to us a little bit about differential tuition? Is there an opportunity at the college level for you to charge a different tuition for those skills that are most in demand in the economy — for instance, the one's you mentioned like health and whatever — and then use those funds to invest back into capital infrastructure.
P. Lockie: We believe so. The tuition cap policy came in about five years ago, and it froze everybody essentially at the model that they had at that time with essentially 2 percent incremental since that date.
So what it embeds in is any flaws or weaknesses in the rating, if you like, of program by program. We would support the idea of taking a look at the policy. The short answer is yes, there are areas where there could be a market-driven adjustment, and we'd be very open to having those discussions.
J. Rustad: Thank you very much for your presentation. One of the things we've heard from many of the colleges and universities is around the unintended consequences of fiscal policies such as GAAP, and what that is doing.
I want to repeat the question to you that I've given to other colleges and universities. You have a lot of expertise within your college, and I'm wondering if you can look at that issue and make a recommendation around how it should be structured to be more successful for colleges and universities. You don't have to give that answer now, but if as an institution you could look at that and provide us with some information, that would be much appreciated.
P. Lockie: I would just say — and I agree with you that it's something we need to do — that the ministries involved, Finance and Advanced Ed, are working with us in a sort of transition plan. So this is not a cry in isolation. We are working together. It's just a little bit unknown at this point.
J. Les (Chair): And a final question from Doug.
D. Donaldson (Deputy Chair): Thanks very much for the presentation. Just looking at a theme here, we heard from the president of North Island College around the fact that because of lack of capital funds, the biology labs were still…. Only 16 people were able to be accommodated, and not great equipment. So there was a bottleneck there. They couldn't offer enough biology courses, for instance, to ladder into the science programs, and she found it fairly contradictory, considering that the minister had declared this the Year of Science.
I'm wondering: in your bullet point around scarce capital funding and how some of the students are learning with outdated equipment and technology, which makes providing advanced skills and education for employment a challenge, can you give me some ideas of how that's playing out, and a specific example of that?
P. Lockie: Well, I think the simplest area might be nursing — a good example, where hospitals are becoming highly technical. Our campus was built 40 years ago or whatever, so when we bring in mannequins — there's a lot of learning now around electronic patients, rather than real patients — it's actually costing us more to retrofit the room for mannequins than it is to buy the mannequin equipment, which seems extraordinary.
It's indicative of our facilities not being set up for the contemporary needs of learning. You can't teach and train students on equipment that isn't out there in the hospitals. That would be an example, I would say.
They’re changing their practices as things emerge, perhaps in any field. I'm not a specialist in that.
That would be an area, and trades would be another area, where green practices are changing, and there's new need for different equipment, different approaches. If your whole infrastructure was built decades ago, you tend to have the equipment of that time, and it's no longer relevant, in some cases, to the new order.
J. Les (Chair): All right. With that, Peter, we're out of time. Thank you for coming today.
Our next presentation is from the B.C. College Presidents, and Jim Reed is here.
J. Reed: Good afternoon. I'll start off by admitting that I didn't know that Peter was going to be presenting before me. The best-laid plans sometimes….
Actually, I was chuckling to myself, because we've prepared a template — as you've no doubt probably picked up — with our colleges, and we've asked them to sort of follow that and hit some key messages and bring in their own college perspective to it. So when I walked into the room today and saw Peter, I said: "Gee, my job is to wrap it up." When I was listening to him, he was saying all the things that I'm about to say to you, so I'm not going to bore you with repeating a lot of those things.
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I'm going to try and zero in on some things. I'm going to sort of move a little bit away from the script because I think you've probably heard it in one form or another in your travels throughout the province.
I have handed out a one-page, double-sided piece here that essentially captures the essence of what I'll be talking about briefly. I'm going to really cut my opening remarks, quite brief.
I think the important part is to really come back to the discussion that I was listening to just a few minutes ago. One of the things that is becoming very apparent, whether you're looking nationally or provincially, is this looming skills shortage, the skills gap that we're going to be facing very soon.
If we just look at the recent labour market information provided by the government in a new labour market model that they've been working on, it indicates that 1.126 million job openings are expected for B.C. from 2009 to 2019. This is a huge number, but more importantly, over three-quarters of those job openings are expected to require some post-secondary education.
You compare that to today, which is that about 65 percent of jobs require a post-secondary education. So that suggests to us that there is really not only going to be an increased demand for college graduates and the type of graduate we produce, which…. You'll hear it, and you may have heard it already in your travels. We're really in the business of producing graduates with advanced skills and education for employment. That's our niche: producing graduates with advanced skills for employment — job-ready, moving in and having those skills.
In fact, we've been experiencing a recent phenomenon, which is that we are actually having students come to our colleges who already have a degree. So post-degree, coming to the college, getting some further training so that they can transition more effectively into the workplace. It is a recent phenomenon that we see is likely to grow significantly over the years.
Our job, as I've mentioned, is really to produce those graduates with those advanced skills. We're trying to respond at a time when there is actually increasing demand, today, and we don't see that demand changing. Recent government statistics indicate that the jobs in health, trades, transportation, equipment operation, and natural and applied sciences are growing faster than any other occupations. Emerging opportunities also exist in green and digital economies.
Our colleges provide those highly skilled people for all of those areas, and we see that not only continuing but increasing significantly. We feel that we are uniquely positioned to respond to B.C.'s labour force challenges, going forward. Really, part of our job is to adapt our institutions to the changes that are taking place and emerging trends that are happening within not only our communities but our regions. We see us as being a vital cog in the economic and social development of regions throughout British Columbia.
We have to remain very connected with what industry's requirements are, what our community's requirements are, and adapt our programs to fit those particular needs of the community and respond and provide that type of graduate with the advanced skills for employment that are so vital to the community but to industry as well.
I'll just give you a couple of examples on how some of our institutions are responding to changes or needs that are starting to pop up in different parts of the province.
In the north Northern Lights College has established a Centre of Excellence for Clean Energy Technology, working very closely with the oil and gas industry. It's like it's connected at the hip in terms of the development of that particular initiative.
In the Okanagan we have a centre of excellence in sustainable building technologies and renewable energy conservation, a very major new development. It was part of the strategic investment program at a new campus being built in Penticton. But this new development in the Okanagan, for instance, is now becoming a world-leading-edge development, and it's getting a lot of attention worldwide. Kudos to the government and the federal government for stepping up and supporting that development.
In the Lower Mainland our colleges actively partner with the media and film industries as well as the tourism, hospitality, health and technology industries, working very closely with and integral to those industries. On Vancouver Island we're working closely with the construction, marine technology, tourism, health and sport management industries.
Those are just some examples, in different regions of the province, of how our colleges are attempting to really respond to what industry's needs are, what the community's needs are.
After unprecedented enrolment growth that we had in 2009, which in a lot of ways…. If you look at it, over cyclical sorts of things, when there is a recession or downturn in the economy, traditionally, normally, you'll get significant spikes in enrolment because the jobs aren't there. The people will go to a college or a university because the jobs aren't there, or they'll be looking or coming back for some retraining in order to be relevant.
We're continuing to experience very strong growth in our enrolment, and many of our institutions are experiencing wait-lists. Peter was just alluding to a few of those areas. Demand is highest in the areas of technology, health, business, trades and university transfer programs. Of course, wait-lists exist in many of these programs. It's really important, as institutions throughout the province, that we find creative ways in which we can actually respond not only to those shifts and those increases in demand but
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the changes in the types of demands that are coming to our institutions.
One of the things that I would like to raise for you and not really get off-script but put a little bit more emphasis on…. I think it was a question that came up for my colleague who was before me. It was around equipment. I have to really appeal to you to think about…. I've been working with the colleges for seven or eight years. In those seven or eight years, in the trades area, we have had one sort of significant boost in funding in one year, and that had to be shared with 15 or 16 institutions.
It wasn't significant, from my perspective. It was $5 million in year-end funds. We have been steady state or less in terms of our equipment renewal in this province for many years. It's not a criticism. It's a reflection of how, when budgets are tight, the things that are usually easy…. I mean, even in your own business, you look for the areas, and you ask: "What are discretionary things that we can do without for some period of time, that we'll then come back to it when we have more money?"
We are trying to train and educate these people for industry and for the changes in industry, the changes in our economy, a knowledge-based economy. We're training them and we're educating them on equipment that is outdated. It's not the equipment that those people who are then moving into that industry are actually expected to be able to operate.
We need to have a significant change in terms of how we renew our equipment within our public post-secondary institutions. We need to be educating and training these people with the latest technology and the latest equipment so that they're job-ready and productive as soon as they enter the workplace.
A couple of weeks ago the province of Ontario announced a three-year $60 million equipment renewal program for colleges, the 24 colleges in Ontario. I would really like the committee to think about it. Perhaps this would be an area…. If we're talking about the shifts and how our economy is shifting to a knowledge-based economy, the need is for people that we're putting into that economy with advanced skills and are very productive. We need to be looking at where we make the right investments. One of those investments, I would say, is in that area, in the equipment area.
Our colleges are vital in helping to prepare B.C. for the looming skills gap. There are two major shifts happening. I had either the pleasure or displeasure of turning 60 this last year. The first bullet I'll be talking about…. The first baby boomers turn 65 in 2011. I'm one of those baby boomers. I don't turn 65 in 2011, but I'm not that far off. There are many millions of Canadians and many hundreds of thousands of British Columbians who will follow that first baby boomer in 2011 that turns 65 and who are ready to retire now.
We have that issue that we're facing. We have also our economy moving towards a knowledge-based economy. It's sort of the perfect storm. It's setting us up for a significant challenge moving forward in terms of a major, major skills gap that this province and this country is going to face. We need to really have a strategic, concerted effort to address it not only in the short but in the long term. We need to be looking at the long term, and we can best leverage our resources within the public post-secondary system on a long-term planned approach.
How we've been responding to some of the challenges that we've been facing, particularly budget challenges…. We say this respectfully, because we know everybody has been facing these. The province has faced significant challenges.
We have, in the last couple of years…. My colleague before me alluded to some of the challenges from an operational point of view. Another sort of hit that we took over the last little while was that we had an 85 percent reduction in our annual capital allowance, which is basically the amount that you put into institutions to maintain the facilities from an operational point of view. They're all the public works and renovation things. It's just keeping your assets up to the right level of efficiency.
We've had to adapt and respond to that as well as the extraordinary measures we've had to take to respond to the increased demand for programs and services. In the past year many of our institutions have collaborated and looked for ways in which we can share services — look for more efficiencies within the system; partner up, whether it's from an equipment procurement point of view; new program delivery — and we continue to look for new ways in which we can do that.
We're also stretching our capacity as far as we feel we can properly stretch. Many institutions are double- and triple-shifting their operations. We're overloading classrooms and running late-night and weekend classes. Ironically, at a time when we're trying to respond to some of the increased demands, particularly in the trades area, and we know that this looming skills issue is there, we're facing — it was in the three-year budget profile of the Industry Training Authority — a potential significant cut in trades training funding for this next year. We're asking that, really, attention be given to that.
Our main ask, and my colleague Peter earlier referred to this, was fundamentally that we need a sustainable operating base. We need to address those administrative and accounting issues. I do have a submission here that we made to the Deputy Minister of Finance on how we think this can be addressed. I'm happy to leave it with the people at the back here. But it needs to be addressed, because the bottom line is that it will impact access for students. Our only way to be compliant to the accounting requirements will be either to cut programs or services.
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I'm asking the committee to consider recommending that we restore the annual capital allowance to pre-2009 levels and think about a long-term capital renewal plan, which I think is absolutely essential.
Finally, I really think we need to address and have a special strategy in terms of getting new funding commitment to support increased access for our aboriginal students, immigrants and disabled learners. It's from that pool, including affected young people, that our skills gap is going to be addressed.
I'll stop there.
J. Les (Chair): You certainly will, because you're out of time. Thank you.
Our next presentation will be from the B.C. Coalition for Action on Alcohol Reform. Presenting will be Dr. John Gray and Lembi Buchanan.
L. Buchanan: Thank you very much for this opportunity. The B.C. Coalition for Action on Alcohol Reform was created in January 2010 to address the urgent need to reduce alcohol-related harms in our province.
The recommendations of the coalition are contained basically in two reports: Public Health Approach to Alcohol Policy by our provincial health officer, Dr. Perry Kendall, and Alcohol Pricing, Public Health and the HST from the University of Victoria's Centre for Addictions Research B.C.
In December 2008 Dr. Kendall encouraged the government to undertake a cross-ministry approach to addressing the role of alcohol in our society to reduce the health and social harms of alcohol while maintaining economic and social benefits. Dr. Kendall is quoted very extensively in this article on our initiative in today's Vancouver Sun.
In 2009 director Dr. Tim Stockwell of the Centre for Additions Research suggested that the introduction of HST provided an excellent opportunity to reverse the increases in alcohol-related deaths and hospitalizations, and yet there's been no political will to implement any of the recommendations despite significant health and safety benefits.
I am told that our liquor taxes are the highest in the country. But if one compares the price of alcoholic products across Canada, we are in line with everyone else. It's the price that matters. We can no longer afford to simply disregard the concerns of our municipalities that bear the enormous burden of social and economic costs of alcohol abuse. Our coalition has contacted every city, town, district and village as well as a number of organizations in B.C. asking them to advocate on behalf of their citizens and members. There's appendix A attached with the list.
On September 30, 2010, civic leaders spoke with one voice at the Union of British Columbia Municipalities annual conference supporting the resolution brought forward by the city of Victoria asking the government to develop an alcohol harm reduction strategy. That's in appendix B.
We are drinking more. The rapid expansion in the number of liquor stores has contributed to the increase in consumption and revenue. Nevertheless, the increase in harms has also been significant. Alcohol consumption has increased at a faster rate in B.C. than the rest of Canada. Residents of B.C. consume 1.4 billion standard drinks per year. The largest drinking segment of our population is young people, ages 18 to 24. The annual cost of alcohol abuse is $2.2 billion, or $536 per person, the highest per-capita cost in Canada.
Alcohol-related harms in B.C. are increasing. Let's not forget that the harms of alcohol abuse affect us all. The shortfall between the annual direct costs associated with alcohol abuse and revenue from its sales was $61 million in 2003. Those of us who like to drink are not paying our own way. We have every reason to believe that the gap is growing because of the rapidly increasing costs of health care and police services.
At the conference we learned that the city of Surrey spends nearly 49 percent of its property taxes on policing costs — 49 percent. And 30 percent of all criminal activity is attributed to alcohol. Hospital ER departments face an enormous burden from alcohol-related injuries and diseases. The hospital emergency rooms in Surrey receive 30,000 alcohol- and drug-related incidents annually.
Underage drinking is a huge problem in our province. Risky alcohol use is common amongst 15- to 17-year-old youth, with 30 percent of males and 20 percent of females. We're talking about young people that are 15 to 17 years old, underage drinkers that are binge drinking at least once a month, putting themselves and others at risk.
Current pricing policies encourage risky drinking practices. Coolers look like pop, and they taste like pop. They are also cheap. The majority of coolers that are the favourite beverage of young women contain 7 percent alcohol, making them almost 40 percent to 60 percent more harmful than moderate and lower-strength coolers. There's a chart in appendix C with the information.
We are concerned especially about young women who are at risk of alcohol poisoning because they are not aware of the harm posed by these high-strength coolers. In a recent article on binge drinking, the Globe and Mail reported that a petite 14-year-old Vancouver girl passed out after drinking several coolers at a party and had to be rushed to the hospital to have her stomach pumped. This is not an isolated story.
I'd like to ask Dr. Gray to talk a little bit about mental health and mental illness issues.
J. Gray: Thank you very much, committee. I worked for the provincial government for over 20 years in the mental health division of the Ministry of Health. There,
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the impact of alcohol abuse on a wide range of acute and chronic mental and physical health problems was always a major concern and continues to be.
People with mental illness and substance abuse problems are often homeless because these individuals, because of their condition, have great difficulty accessing housing and treatment in our health care system.
Some stats on this issue. More than 50 percent of people with mental health problems are also heavy drinkers. Alcohol abuse may exacerbate symptoms of mental illness or indeed trigger new symptoms. Lastly, alcohol abuse also complicates the course of treatment for persons diagnosed with serious illnesses like schizophrenia and bipolar.
L. Buchanan: I'd like to talk a little bit about our recommendations.
(1) One of them, the first, most important one, is increase the price of high-alcohol-content coolers, ciders and beers to reduce alcohol-related harms. Beer is a prime example where price incentives encourage risky drinking practices since 8 percent beer is significantly cheaper than the moderate 5 percent or low 3 percent products by the same manufacturer. Appendix D has a chart with the prices and amount of alcohol in each product.
(2) Set $1.50 as a minimum price for a standard drink. You'll see on the charts for the beers and the wines that neither of the highest-ranked products meets that standard. A $1.50 minimum price for a standard drink works out to $7.80 for a bottle of wine, $9 for a six-pack of beer and $26 for a bottle of vodka, gin or whisky.
We're not recommending any major, huge increases across the board in taxes. We just want to make sure that the higher-alcohol products don't have price incentives for young people and chronic alcoholics.
(3) Index the price of alcohol to inflation. I don't know if you've noticed, but alcohol beverages are actually cheaper today relative to other consumer products. Implement a small levy based on a standard drink, and use the proceeds to enhance treatment, prevention and research. This is something that Dr. Kendall has promoted. The evidence is overwhelming that pricing policies that reflect alcohol content are the most effective means in reducing alcohol-related harms.
The evidence is overwhelming that these prices will help out. Saskatchewan has taken the lead in Canada as far as implementing social reference pricing, which is linked to the amount of alcohol in each product. This initiative has already reduced public intoxication in low-income areas in Saskatoon, according to its police.
The B.C. Coalition for Action on Alcohol Reform is asking the government of British Columbia to start factoring public health and safety concerns in its decision-making process, to encourage consumers to make safer and healthier choices. If we don't take action today, it's going to be that much harder tomorrow.
In the meantime, the harms will continue to escalate. As it is, our government is struggling with increased health care costs and our municipalities are overwhelmed by policing costs. Alcohol pricing policies must be guided by principles that minimize harm and promote public health and safety.
B. Ralston: Thanks very much. I believe it was last year or the year before that we had a presentation from Dr. Stockwell, who talked about the Australian example where I think they've done exactly that. But I wasn't aware of the Saskatchewan example, so I'm wondering if you could just explain briefly what they've done in Saskatchewan and how that works.
L. Buchanan: Saskatchewan implemented the social reference pricing policy on April 1 this year. Out of 2,100 products in their listing, it only affected about 36 products that have high alcohol content. Again, we're talking about beers, 8 to 10 percent; ciders, 7 percent; coolers, 7 percent. The majority of coolers sold in our province, the vast majority, are 7 percent.
I'm trying to figure out why our government is enabling young women in particular to get impaired at a faster rate than their boyfriends who are drinking 5 percent beer — because most of our beers are 5 percent, so certainly…. The article here also quotes Jim Engel, who's responsible for the pricing initiative in Saskatchewan.
B. Ralston: Thanks very much. Then just to…. I mean, social reference pricing is a little bit of jargon that I don't really understand. On those products that you mentioned, then, the price is increased. Is that what the effects of the policy…?
L. Buchanan: Social reference pricing means that we tax alcohol as per unit of alcohol. Alcohol is alcohol regardless of what product it is. Young women actually think that these coolers are less intoxicating than the beer that their boyfriends might be drinking. It's really looking at the amount of alcohol, pure alcohol, in a product and taxing the product accordingly.
B. Ralston: So the price of those products goes up then. Is that right?
L. Buchanan: That's correct. It's not a matter of taxation. It really is a matter of pricing, because my understanding is that in British Columbia the government sets minimum pricing for products.
B. Ralston: Thank you. I'm not disagreeing with you. I just wanted to be clear about what it was you were proposing.
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J. Les (Chair): Seeing no further questions, I want to thank you for your presentation.
L. Buchanan: Thank you for the opportunity again.
J. Les (Chair): You bet.
Our next presentation is on behalf of the Greater Victoria Chamber of Commerce — Shannon Renault and David Marshall.
D. Marshall: Chair, members, thank you very much. My name is David Marshall. I'm the chair of the Greater Victoria Chamber of Commerce. With me is Shannon Renault, who is our manager of policy development and communications. On behalf of the chamber's 1,500 members and the 22,000 employees that they are engaged with, we wish to thank you for this opportunity to contribute to the budgeting process for 2011.
The chamber in Victoria is the voice of business in the capital region. We are one of the largest chambers in the province, we are arguably the most active in policy development and advocacy, and we're accredited with distinction by the Canadian Chamber of Commerce. We understand well how you do your business.
I wish to start by saying that as a chamber we are in favour and supportive of the harmonized sales tax. Without getting into the associated politics, we do believe that the tax policy is a good thing and will bring long-term economic benefits to the province, but in the short term its implementation affects industries differently, with the tourism industry being one of those experiencing some of these adverse impacts.
Our first two recommendations this afternoon present mitigation strategies for the tourism industry that could be undertaken at the provincial level and without reference to the agreement with the federal government.
Our third recommendation addresses infrastructure needs in the capital regional district, an investment that we believe will have a positive impact on our economic growth.
At this point I'd like to invite Shannon to present the details of those recommendations.
S. Renault: I think I'm going to start off with the mitigation strategies regarding HST. The removal of PST from business inputs has been estimated to save approximately $2 billion for business in British Columbia. Businesses will also be able to claim back their input tax credits on the provincial portion of the HST that they pay out in the course of business operations.
Given the tax savings to business, the government has opted to restrict a small portion of the ITCs to larger businesses in the province for the first five years of the HST regime. This practice is called the recapture of input tax credits and will apply to all companies with annual taxable sales in excess of $10 million.
There are four areas of RITCs. They include specified areas of road vehicles, energy usage, telecommunications, and meals and entertainment. The RITC will be phased out beginning July 1, 2015, by 25 percent per year until it is fully phased out in 2018. At that time all businesses will be able to claim 100 percent of their ITCs.
The areas where ITCs are recaptured represent less than 3 percent of the total ITCs available to large companies. Revenue to the government from the recapture of input tax credits has been estimated to be $118 million in budget year 2010-11 and $162 million in budget year 2011-12. Both the benefits of ITC savings and a majority of RITCs will come from businesses in the larger sectors in the province — mining, forestry, oil and gas, transportation, construction, manufacturing.
The benefits of HST and the added ITCs are not realized in the same way for highly service-oriented sectors of our tourism industry. As you know, tourism companies will charge HST to their customers on services that have previously been subject to GST; however, the inputs to their businesses are primarily labour, which provide them with very few ITC opportunities. Of those ITCs they have, their usage of energy will not be allowed under a specific and very curious treatment of energy as an ITC for the tourism industry.
At this point I'm going to depart from the detailed notes that you have before you so that I can paint a bit of a word picture for you for this problematic tax treatment.
Let's say I'm the owner of a company, and I manufacture tables. In that production I use energy to produce those tables. I, as the owner, am permitted to claim the expense of the energy that I use to produce my products for resale — that being the tables — as an input tax credit. I'm not allowed to claim the energy that I use to heat or illuminate my place of business, but I am allowed to claim the energy that I use to produce my product for resale.
However, if I'm a tourism business and I produce a wonderful experience for you or I produce a fantastic meal for you — so that's my product for resale — I am not permitted to claim the expense for the energy that I use to produce my good or service for resale.
Why? It's because the province has specifically excluded energy usage in the tourism business as products that are eligible for production costs.
Now we have a combination of three conditions. We have a business where the tourism business is charging their customers more tax. They don't have substantial ITC savings because of the high labour portion of their expenses. On some of those ITCs they do have, they're not allowed to use them, so there is a specific tax disadvantage to tourism businesses. Your notes contain examples of the types of tourism operators who are specifically disadvantaged relative to other businesses in B.C.
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While the dollar value of RITCs for tourism businesses no doubt represents a small portion of the projected RITC revenue to government, that same dollar value represents a significant hardship to the tourism businesses that are directly affected.
The recommendation from the chamber of commerce is to introduce a provincial tax rebate or credit program that follows the same phase-in calendar as the RITC schedule that is outlined in the provincial-federal CITCA agreement. That schedule, for you, is enumerated in your briefing notes.
Secondly, I want to move on to the issue of funding predictability for tourism. The funding environment for destination marketing has changed significantly with the introduction of the HST and the restructuring of Tourism B.C.
Prior to the HST, funding for provincial and regional marketing was provided through a dedicated portion of the 8 percent tax on accommodation purchases in British Columbia. The HST replaced both the 5 percent GST and the 8 percent hotel room tax, which essentially did away with a stable and predictable funding stream for tourism marketing.
The chamber of commerce supports a funding formula for tourism that provides stability and reliability through a performance-driven pool of funds allocated specifically for tourism. It's critical that funding for tourism marketing not be a part of the government annual budget appropriation cycle in terms of competing funding requests. Rather, it's advised that the performance-based formula be protected in legislation, making the funding levels predictable for the industry.
Funding levels, as per previous amounts allocated to TBC, should be committed to tourism funding to the Ministry of Tourism, Culture and the Arts. The unpredictability of annual appropriation outside of legislative protection jeopardizes the ability of DMOs, both the internal provincial body and the six regional bodies in the province, to implement the multi-year marketing strategies that are required to achieve marketplace recognition and industry growth. Funding must be predictable so that the industry can execute the marketing that's necessary for success.
The recommendation from our chamber is to set funding for the provincial destination marketing organization at the minimum levels as per the previous formula allocation for TBC and to protect that performance-based funding through legislation.
Finally, I want to turn our attention to infrastructure investment on the south Island. Infrastructure that leads to longer-term economic growth is important to the economies of different areas of the province, and we know that the government values infrastructure investment that builds towards the future. Notable high-profile examples of investments are in the Canada Line and airport expansions around the province.
In the provincial capital, investments in infrastructure show exceptional promise for future prosperity, and we wish to highlight two specific projects that are worthy of attention in the 2011 budget.
First, an extension to the runway at the Victoria International Airport has been projected to add another $37 million annually to Victoria's economy through a ready market — ready to come to and from key European destinations such as France, London and Germany. These markets have some interest in one-stop flight packages, but the prospect of direct connection is extremely desirable.
The airport authority has estimated that, through an extension, they will see 36,000 new international passenger trips from London in the first year; that that will increase to 48,000 by year 5; and that, respectively, an initial 75,000 trips from France will increase to 100,000 within five years.
The extension of 1,400 feet, which will bring the total length to 8,400 feet, is estimated to cost $41.2 million. The Victoria Airport Authority is ready with its one-third contribution, and we understand that the federal dollars will match a provincial contribution. The chamber urges the provincial government to contribute a one-third share of funding to this important transportation connection for Vancouver Island in Budget 2011.
A second project, and my last item, is the rapid transit system for the capital region. Rapid transit will help to ease the growing congestion in the capital region and encourage workers to make their homes in the more affordable Western Communities of our region, with the assurance that transportation to and from their jobs will not be an issue. The planning stages of the project are moving ahead quite nicely with B.C. Transit and the community, and it's important that the project funding be assured in Budget 2011 so that the project can move forward.
In closing, we'd like to acknowledge the number of tax revisions that the province has made over the last number of years, which has positioned B.C. to best weather the recent economic downturn that the country has experienced. At this time of recovery we encourage the government to turn its attention to those industries that are particularly challenged.
J. Les (Chair): Thank you. Norm has a question.
N. Letnick: Thank you for your presentation. I know tourism is very important to the people here and all across the province. Just a question on funding predictability. The Premier announced in his speech at UBCM in Whistler last week, I think it was, that the hotel room tax would continue. Is that something different than what you're asking for here? I assume it is. If so, could
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you explain again why you should get a dedicated piece of the total pie when most of the other organizations in the province have to support their claims on an annual basis?
S. Renault: To your first question. I believe the reference was made to the additional hotel room tax, which is the 2 percent additional hotel room tax which was on top of the hotel room tax, therefore additional. That is to fund the community destination marketing organizations. That is not the place from which the budget came for the provincial destination marketing organizations or the regional marketing organizations. That particular piece of money is for the small community ones, and we were pleased to hear of that. This is a different piece of the puzzle than that is.
To answer your second question about what could be viewed as special treatment for tourism as compared to some other industries in terms of yearly appropriation, it's simply because the marketing cycle with tourism is not a yearly affair. It really is about a five-year window to capitalize on markets to Canada and, clearly, to B.C., which is our concern.
Having invested so much in our province for the Olympics, which showed us to the world, it's imperative to follow up on that with the type of marketing that capitalizes on that investment and brings those visitors. That is always a couple of years out from the Olympics itself.
That's a specific, but in general terms the provincial and regional destination marketing organizations need to be considering a window of four to five years, and the year-long appropriation cycle just doesn't allow for that.
B. Ralston: You mentioned rapid transit. In the announcement made in January 2008 the then Minister of Transportation talked about rapid bus for the lower Island. I understand that there is a debate here in the lower Island about rapid bus or light rail. Has your organization taken a position on that?
D. Marshall: No, we haven't, and we're involved with and engaged with B.C. Transit in their work. We support it. We appreciate that where they are right now is making that decision. Having established the corridors, they'll now turn around and look at which technology best satisfies the demand. We support them in that process, but we have not taken a position on the actual technology to be used.
B. Ralston: Do you expect to take a position at some point?
D. Marshall: I can't answer that at this point in time.
J. Les (Chair): Safe answer.
D. Donaldson (Deputy Chair): Thanks for the presentation and the example of some of the burdens of trying to figure out the HST system as a tourism operator in your association. My understanding is that the RITC room has been used up by some of the activities that you talk about in here. So in your recommendation are you suggesting this rebate or credit beyond the RITC? Is it a new mechanism you suggest?
S. Renault: No. It's a little different than that. I agree with you that the exemption room, which I think was a 5 percent exemption that the province was allowed in the early stages of figuring out the agreement, has certainly been reached, and there is no room on that. The CITCA agreement has been assigned with the federal government, and there is no lateral movement on that for two years' time.
What we're referring to is actually a tax initiative within the provincial government that would exactly mirror the RITC phase-out schedule within the CITCA agreement without violating the terms of the CITCA agreement itself.
So actually, it's a provincial tax move completely within the jurisdiction of the province that has no impact on that exemption level that you referred to, but the result of this suggestion would be that it would neutralize the challenge in the RITC-CITCA agreement that is currently in place.
J. Les (Chair): Okay. Thank you both very much for coming this afternoon.
Our next presentation is from the Victoria Real Estate Board — Jim Bennett and Randi Masters.
R. Masters: Good afternoon, everybody, and thank you very much for giving us this opportunity to meet with your committee today.
The Victoria Real Estate Board wishes to acknowledge the work of the British Columbia Real Estate Association in bringing to your attention the growing concern about housing affordability in this province. Buyers in B.C. continue to face among the highest housing costs in Canada. This is not a new issue in greater Victoria, but this year's introduction of the HST has added a new twist, bringing with it what we believe is an additional burden of unfair taxation.
The HST will have a substantial negative impact on buyers of newly constructed homes, especially single-family detached homes as well as higher-priced condominiums and townhomes. You have heard separately from our provincial body about their recommendations for improving the property transfer tax and for indexing the HST new-home rebate threshold so that this relief measure will keep its value in the coming years.
We urge you to carefully review the points made by our provincial association, as we believe the current
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housing taxation policies have a negative psychological impact on the marketplace that is hard to overcome.
Today our board would like to focus on our local marketplace and how the housing sector here could contribute to a greater economic stimulus if the government recognized its importance and took a number of proactive steps.
We know that from the research the Altus Group, based in Toronto, conducted, for each residential MLS transaction in British Columbia, an average of $60,200 in additional consumer spending was generated between 2006 and 2008. In the Victoria area our members facilitated over 7,200 residential transactions in 2009. That translated into over 430 million additional dollars pumped into the local economy. One can easily see from this example the positive impact that the housing market has on the Canadian economy as a whole.
Further to this, you may have seen the article in last Friday's Globe and Mail headlined "Slowdown in Housing Activity Threatens Recovery." The article noted: "The housing sector that helped pull Canada out of the recession now threatens to derail the recovery, as a slowdown in sales and construction acts as a drag on economic growth."
The article goes on to quote CMHC, to show that housing-related activity, including the rental market and the sale of existing homes, now accounts for almost 20 percent of gross domestic product in Canada.
In the time left I'd like to offer four key recommendations that we believe the provincial government could implement next year to take advantage of the positive economic benefits resulting from a vibrant housing marketplace.
(1) More funding for housing-planning resources should be made available to local and regional governments. At present CMHC reports that 84 percent of current apartment condominium builds are going to only two of our 13 local communities. We wonder what the other municipalities are doing to encourage more housing for their neighbourhoods.
(2) We recommend that the Finance Minister consider new-housing construction and renovation incentives to invigorate this important segment of the market.
(3) Accept the recommendation from our provincial association to reduce the impact of both the property transfer tax and the HST. Such a move would give a psychological boost to the new-home marketplace.
(4) Boost the economy in 2011 by recognizing the substantial impact in terms of job creation and income tax revenues that are generated by the spinoffs from home purchases in an active housing market.
In closing, we appreciate the opportunity you have given us to present our thoughts and recommendations and trust you will give them careful consideration.
J. Les (Chair): Thank you very much, Randi. Several questions, starting with Bruce.
B. Ralston: You may not have the answer to this question, but I would be interested in a written response later if you aren't able to answer it now.
A recent article in the Globe and Mail spoke about an agreement reached between your national body, the Canadian Real Estate Association, and the combines investigation branch relating to the marketing of real estate services. They didn't give a great deal of detail. I'm wondering what you know about that and what you think the impact will be on the marketing of real estate services.
R. Masters: Yes, I do. I can comment to a degree on this. It is pending litigation right now, so we as a body here…. All the boards across Canada have not been supplied with the terms of the agreement, but it is with regard to our MLS system. It's not marketing. It's our MLS system. I can say that.
Here in British Columbia we have already, for many years, had in place different models of brokerages, with varying levels of fees, fee structure and services offered, so we in British Columbia do not really believe that the impact of any agreement coming out of this Competition Bureau and Canadian Real Estate Association is going to overly impact us. We feel it will be much like business as usual.
N. Letnick: Thank you for your presentation and the fine work that your associates do around the province. Could you describe to us what the current state of real estate sales of new homes is in Victoria? Is it going up? Is it going down? Is it staying steady? And if it's going….
Then the second question would be: what is the impact of the bust in the States regarding housing prices? In other words, a lot of people from Alberta tend to move to B.C., but with the low prices of houses in the States, are they now tending to move south instead of coming west? Maybe that has a reason for dampening the amount of sales.
R. Masters: Well, your first question — I can pretty well address that on a personal level. I do a lot of new-home sales. I do a lot of new-home condominium sales. It has definitely impacted it. I had one recent experience with a buyer. When we sat down and did the calculation of the impact not only of the property purchase tax, the PTT, on an $849,000 home but the additional HST, he literally said, "I am not doing this," and walked away from the transaction.
N. Letnick: I guess I must have miscommunicated my question. Do you have any statistics that show whether the trend of new homes is going up — the sales? Is it getting stronger, weaker or staying the same? Nothing to do with the tax implications.
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R. Masters: All right. No, as of yet we don't, because it was just brought in on July 1. We have started it through our own board. We have just started a statistic to try and measure that. Right now we don't, other than that CMHC sees stats on starts, which all of you, I'm sure, are familiar with.
J. Les (Chair): Just as a follow-up to Norm's question, that buyer that walked away from the deal — was that a local buyer buying their residence, or was it a…?
R. Masters: A residence. It was a house.
J. Les (Chair): It wasn't a second home or anything like that?
R. Masters: No. It was a move-up home for them, and they just walked away.
J. Les (Chair): Well, the property purchase tax, of course, was unchanged from previous, and there would have been a marginal increase, then, as a result of the HST.
R. Masters: Yes. It's a little more than marginal — the increase of the HST implication on that house, yes.
J. Bennett: Could I just elaborate on the last question? The other side…. You asked about sales, but I think another indicator that we've all been keeping an eye on is housing starts, and I will just say that for August in the CRD we're running ahead of a ten-year average in terms of starts. For August we have not yet seen the impact of the expected downturn in the number of starts. It's still quite healthy, and by the end of the year we'll be expected to be above average. So on the housing starts side, we haven't seen a downside yet.
B. Routley: I just wondered if your organization had any comments about waiting a full year to find out the results on the HST. There was nothing in your submission on that — the uncertainty about the HST. Does it impact on sales or your organization in any way?
R. Masters: Like I said in my earlier response, it just came in, in July, so we're beginning now to really start to measure this. Again, as Jim mentioned, the August starts were up. There are a lot of homes that were under construction at the time that the HST came in, and those new homes are coming on line now onto the market. A lot of builders don't tend to market until the house is almost substantially completed.
I think, over the next coming months and into the new year, we will have a much clearer picture of exactly the extent of the impact, if any, but what we are hearing right now is virtually the word on the street, much like I reiterated to that gentleman, about how our members are using transactions at that point.
B. Routley: Really, the question comes down to: would you rather see the public vote sooner than later? How about that? It's simpler.
J. Bennett: I think the government should probably answer that question.
J. Les (Chair): Any further questions from anyone? Seeing none, I'd like to thank you for your presentation.
Then we will carry on with a presentation from the British Columbia Paraplegic Association — Chris McBride and Linda Annis.
Go ahead, Linda.
L. Annis: First of all, I'd like to thank everyone for allowing both Chris and me the opportunity to come and speak to you today.
I first would like to introduce Chris. Chris is a new member of the B.C. Paraplegic team, a real find for us. Chris has his PhD in neuroscience with the University of British Columbia. Prior to joining BCPA, he was the managing director at ICORD, which is the leading institution for research on spinal cord injury and is also located in Vancouver. He has also been the director of the Rick Hansen Institute.
Chris is going to lead you through the presentation, and then we'll answer any questions that you might have.
C. McBride: Thanks, Linda. I feel like I'm having PhD defence flashbacks.
The government of B.C. has long provided critical support to people with spinal cord injury in this province, including through the B.C. Paraplegic Association. As you may have heard, in our recent past we've faced some serious challenges in terms of our funding and our ability to operate in the old way that we had been.
We've had to undergo a significant transformation over the past year or so to develop a new and sustainable approach to our service while maintaining a meaningful service to the people that we serve.
Before starting on the update portion of the presentation, I just want to take a moment to remind you of a few facts about spinal cord injury in this province. Currently there are approximately 5,200 British Columbians living with spinal cord injury, with about another 120 to 180 new cases added to that each year. That may not sound like a big number, but the economic and psychosocial impact of those injuries is actually quite significant.
A recent report commissioned by the Rick Hansen Institute estimates the cost of spinal cord injuries as ranging from $1.6 million to $3 million over an individual's
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lifetime, which means that each year the economic burden of spinal cord injury grows by approximately $300 million in B.C.
We believe very strongly that BCPA, through the services that we provide, can help improve people's lives and reduce that burden, both economic and psychosocial.
I started my job about four weeks ago, and I joined the BCPA at a very unique time in its history in terms of both the organization's history and the history of the world that we live in presently.
As I mentioned, we just lost a million dollars from our annual budget, which represents about a third of our annual budget. I won't win any favours from my not-for-profit colleagues, I'm sure, when I say this next comment, but it's actually been a very great opportunity for us to look at some new ways of doing our business, apply some innovative thinking to really modernize the service that we provide to move into the 21st century, essentially.
Where are we going with this new direction? The BCPA was formed over 50 years ago with the belief that the lives of people living with spinal cord injury could be improved through the shared knowledge and experience of those living successfully with spinal cord injury. As we prepare for our future, we're going to look our past, capturing the magic of what was once referred to as members helping members, while taking advantage of today's technology to build connections and engagement in entirely new and exciting ways.
We refer to the two core approaches that we're taking through this as peer programming and information services. That simple premise of members helping members we now call the peer program. It's a unique niche that BCPA fills within the province.
Peers, if you are not familiar with that term, are basically people with spinal cord injury. They can be paid, or they can be volunteer. We have both employed in our services. These people impart the wisdom and experience they've gained over the years. They can be role models. They can be sources of valuable information. They can motivate and connect in unique ways that only they can.
It's simple things like meeting at a basketball court or at a café and just talking about how they manage their bladder. "Oh, I didn't realize that I could actually get on an airplane." The basic sort of information that most of us wouldn't think of can be so valuable and change their lives in really significant ways.
The peer programming that we provide is being complemented by our information services, and very much like the province of B.C., we believe in the importance of building a knowledge-based society. We will leverage a lot of the initiatives and infrastructure that have been put in place here in British Columbia, such as the provincewide broadband infrastructure, to help us deliver ongoing information services with a far better reach than we ever had before.
I think it's important to note that we no longer provide the traditional case management work that we used to. We've struggled over the past to work within the health system, but we realize that here in B.C. we have a unique and quite wonderful, actually, tertiary system established for spinal cord injury that allows the development of dedicated specialized acute care and rehabilitation services for people with spinal cord injury.
Unlike other provinces across Canada, where the CPAs are very much embedded within the health system to help a person navigate and transition through it, that service just isn't needed here. We have the required expertise already present within the health system. But we can, and I think it's important that we do, work with the health system.
We can complement the work that they're doing by providing specific content, expertise and that peer component that is so important in, particularly, a family's initial challenges that they face through the initial parts of the injury and then in the person's life as they proceed through their journey to the rest of their lives, really.
We could also complement a number of excellent provincial information services such as HealthLink and the nurse line through our content expertise that's provided through our Infoline telephone and e-mail information service and the open on-line SCI information database that we've just launched on our new website.
The interconnectedness of our peer and our information services can be demonstrated through initiatives like Employment HeadStart, actually funded through the Ministry of Housing and Social Development, which utilizes our peers and our information services to deliver education modules that help people with spinal cord injury develop strategies for finding a career and finding satisfaction in the careers that they do find.
This is actually very important work, considering that only 36 percent of people with spinal cord injury actually return to work.
As I said, our transformation over the past year has really pushed the organization into the 21st century, but we need to continue the momentum to ensure we create services and programs that continue to meet the needs of people with spinal cord injury in a more robust way. I think one important aspect of that will be the building of community, and that's the community of people with spinal cord injury, our partners with whom we work and, basically, all of the stakeholders that can be involved and help us to achieve our common goals.
In particular, we realize the importance of incorporating the new social networking and social media that are available to us to harness the power of the wikinomics term of "peer production." We can now connect with people in ways that people back 50 years ago could only have dreamed about.
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We do find ourselves starting anew at a base level of service and capacity. In order to more effectively serve the province, we'll need to grow strategically. We'll need to build our volunteer base. We'll need to grow our technology infrastructure. We'll need to develop social enterprise strategies to develop new and independent sources of revenue. We'll need to expand our knowledge base.
In order to do all this, we'll need to develop and enhance our partnerships with a broad spectrum of stakeholders, including the excellent world-leading community service groups here in B.C., such as B.C. Wheelchair Sports, the Neil Squire society, Sam Sullivan Disability Foundation.
We'll also work closely with our research partners at ICORD and at the Blusson Spinal Cord Centre and with groups like the Rick Hansen Institute and Rick Hansen Foundation, the health system, public and private partners and, of course, the province of B.C.
As Linda mentioned, I come from the world of research, and I can tell you that there is no cure for spinal cord injury. Despite the steady advance in knowledge, care and technology, there is not likely to be one in the near future, which unfortunately means, I think, that the BCPA will remain relevant for some time to come.
I think there is a good deal to be hopeful for. With the help of BCPA and its broad circle of peers, partners and collaborators, we can build vibrant, engaged communities through services and programs that will increasingly enable people with spinal cord injury to achieve independence, self-reliance and full community participation.
I think that together we can achieve our vision of a world without barriers for people with spinal cord injury.
J. Les (Chair): Thank you.
D. Donaldson (Deputy Chair): Thanks for the presentation and the information that was a great complement to the one we heard this morning from the Rick Hansen Foundation.
I had two questions. One was sort of for clarification on the information services. I'm not sure if I heard you right, but you mentioned the provincewide broadband services. I think you probably know that there are many rural communities that don't have broadband, so there isn't a provincewide broadband network.
C. McBride: Yeah. We are for the initiative.
D. Donaldson (Deputy Chair): All right. And the other one was…. I appreciate trying to put a positive outlook on things, and of course, in these times that's oftentimes what has to happen. But the loss of a third of the annual budget — can you describe to me what loss of service that involves? You said you're now at a base level of service. So what is it that you're not doing that you were doing before?
C. McBride: That's the rehab consultant business that we used to be in, where we used to try to work within the rehab in acute settings to help case-manage, essentially, individual cases of spinal cord injury. That was a very costly business, and it was one that we struggled to make work with the health systems. So there was a lot of time and energy in trying to make that work.
Clearly, I think that we can be far more effective if we're not trying to work within the health system but work with the health system.
L. Annis: If I might just add one comment too. When our reduction in revenue occurred, it also forced us to take a really hard look at how we were spending some of our funds. We've done things like closing bricks and mortar around offices and putting people into a home environment to work.
We had offices — bricks and mortar — throughout the province. We now have people around the province. We've been able to, by doing that, spread out to even greater coverage. So places where we didn't have representation before — like Quesnel, Williams Lake, Fort St. John, Nanaimo and soon to be Kamloops — we now have people there.
J. Les (Chair): Any further questions from anyone?
Seeing none, I want to thank you on behalf of the committee for coming today.
Our next presentation is from the Association for Mineral Exploration of British Columbia. Gavin Dirom is here.
G. Dirom: Good afternoon. Thank you for having me. I appreciate it. I spoke to this committee last year, and for my first time I found it a very good and quite interesting process. So I look forward to even some discussions today.
I know my counterpart, my colleague Pierre Gratton from the Mining Association of British Columbia, spoke to you this morning. Just to clarify our various roles, the Association for Mineral Exploration of B.C. — which from this point on I'll just simply call AME — represents some mineral explorers here in British Columbia and, frankly, around the world. We have 4,000 members, 300 corporate members. Our mandate, our goal, is to see successful, responsible exploration lead to the discoveries that ultimately will lead to a new mine here in British Columbia and, obviously, elsewhere. But we're going to focus on B.C. today.
The title of my presentation is "Explore for more British Columbia," which is a bit of a campaign that we'll be rolling out, come Roundup. The notion is that
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we have tremendous geological assets here in B.C. which we can demonstrate and prove, that this is the place to explore and develop new mines and that now is the time to reinvest in our strengths.
With that, if you can follow along, please, with the deck, I'll highlight certain pages. I'll start off with a simple one on page 2. If we run out of time, I put the five recommendations at the very front.
Simply put, we feel the minerals division under Energy, Mines and Petroleum Resources is underfunded. The recommendation is to fund it back to a level commensurate with 2008 levels, which is approximately $14 million, in order to service the growing demands of mineral exploration community here and the public in B.C.
The first ask incorporates a request for this committee to consider $5 million towards the B.C. geological survey as the custodians of the geological database and the ones that represent the public interest with respect to the mineral potential of this province.
The second part of that first ask is public outreach and education, essentially the marketing side of the geological database and of the importance of the mineral potential here in B.C. — when we're in discussions with First Nations or NGOs and going through land use processes, that we have the Crown doing good work in terms of public education in that respect.
The second recommendation is to invest $5 million into Geoscience B.C., and I'll cover that more fully in a minute. The third one is to continue the good work on reforming environmental assessment and permitting here. That does lead into the federal realm, obviously, but we're very pleased to see that work continue.
The fourth recommendation is to make stimulants such as the exploration tax credit or the flow-through share program permanent. This is sometimes contentious and so forth, but what we see is that the dates continually change. It's not a partisan issue; it's an important economic stimulus issue. That'll be our fourth recommendation.
Finally, the fifth one is aboriginal training and capacity-building, specifically in exploration and mining.
With that, I'll continue on here. One highlight I touched on was Roundup. It might be interesting for this committee to know that at that one event that we've hosted every year for the last 27 years — this is where explorers, prospectors, miners and investors come together — annually we see about 6,000 delegates. That one event over a week brings in about $4.6 million into the economy alone. We do this every year and intend to do a very good one again this year. A small sales pitch on that one.
Slide 4, competitive advantages. Number one is that we have the safest industry in British Columbia on the mining and on the exploration side. We're very, very proud of that and worked hard with labour to make that happen all through the '80s and '90s. We're certainly there, and we work hard to maintain that. I think we should all be proud of that as British Columbians. Certainly, we are as an association.
This province is underexplored. Yes, we have been exploring and mining for 150 years, but it is still vastly underexplored. This is a huge province with tremendous geological and mineral potential, and I don't think we should ever lose sight of that. It's a vast province, 96 million hectares, and don't forget that it's highly wrinkled with mountains, so the surface area is incredible versus what you might see in Ontario and Quebec.
On top of that, we have a world-class public database for the geosciences, and yes, it was rated number one back in 2005. We need to get back to that number one position. We have fallen down from number one, but it's still world-class. This is the time to reinvest in our geological database, in the B.C. geological survey.
Great infrastructure in roads, rail. Obviously, we're working on the power lines, such as Highway 37 — excellent example of how we partner, how we build coalitions, in a positive way to benefit the public at large. The proximity to Asia-Pacific markets, I know, is nothing new to this committee.
Top producer of copper, molybdenum and coal. And you have the revenues from mining, which you heard from Pierre this morning — a significant injection into the economy. With gold prices, I'll just, as a sidebar…. Gold prices today are just…. I mean, what are we at? I think we're at $1,336 an ounce. This is the beginning of a potential new gold rush, and we want to maintain that momentum. This is the rebound. It's happening, and we need the support of the government to go forward.
I'll highlight quickly the B.C. centre of excellence for the cluster phenomena. In this province we have academia together with government, with industry and the technical side, with the financial community and certainly with the legal community. You don't see that anywhere else in the world. We have it here in British Columbia.
We have a natural business cluster that we need to grow and foster and nurture, so I just want to highlight that. It's an incredible number — hundreds of companies, numerous, and thousands of employees that are working hard in the area of mineral exploration and mining this province.
With that, I'll just give you a state of affairs. Canadian exploration typically captures the majority of the dollars from around the world. That's been declining. Part of it was due to the economic crisis. However, part of it is to do with our national policies and even provincial policies. I'll touch on that here shortly.
We are still seeing the remnants of the global recession. It is still challenging to raise money. Yes, the gold price is moving, and silver and so forth, but for the jun-
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ior explorers and for a lot of the prospectors, it is very challenging to raise money in order to explore. It's a high-risk venture. The numbers are anywhere from…. One in 1,000 deposits will actually become a mine one day. The figures are there. I won't go through them. You have them in front of you.
If we look at page 8, the B.C. share of the Canadian exploration has been decreasing. This is more of just a cautionary note that we cannot become complacent in terms of attracting investment to this province. We must always be mindful that it's not necessarily just the economic crises that we go through as a world. It's often how we sell our wares and are marketing ourselves as British Columbians in attracting investment.
We are having challenges in the permitting side. We are having challenges on the First Nations side on the land base and so forth. There are good people working hard to make that a smoother process, but that is a reality. That's why our proportional decrease had occurred, vis-à-vis other Canadian jurisdictions. Because of that, the Fraser Institute has come out fairly negative, and we've declined in our rankings.
On the upside, hundreds of projects are underway. Millions of dollars are being spent. I'm not going to put out an exact figure, but arguably at least another $100 million more than what occurred last year in spending. Last year was very much a down year. Just over $150 million was spent in B.C. exploration. This year we're looking to perhaps double that.
The opportunity is there. This is where we need to be smart and have government contributing to that opportunity.
Seven major projects are underway. These are the ones that are potentially benefiting this province by way of taxes, by way of jobs and so forth.
If you look on slide 11, please. It's return on investment in mineral exploration. For every dollar invested, the long-term return on investment is approximately a hundred to one at a minimum. If you get to a goldmine like an Eskay Creek, it's very much larger.
Short to medium return on investment — approximately five to one. This is occurring in regional areas. This is occurring outside the Lower Mainland and Victoria, of course, in areas that are arguably depressed, in aboriginal communities and so forth. This is a huge injection into the local, regional economies of B.C.
An interesting number there. Over the last 150 years about $600 billion has been created in gross revenues from mining activities — a significant number. The benefit return on investment of exploration of these deposits is phenomenal. The point is that this is the proof point to geologists everywhere around the world. We have the geological minerals and potential here to produce such world-class mines.
Obviously, I'm putting a plug in for our sector. Exploration is the lifeblood of mining. Without exploration, you no longer have the mines. Access to the land is critical in this respect, and that's why we're challenged. We need to explore, if possible, as much land in a responsible, successful way, whereas once you've made the discovery, a mine is relatively small and focused and produces great wealth. It's a very challenging economic engine to push over, and that's fantastic. But in order to get there, we need vast amounts of land to explore.
If you look at slide 12, this just gives you examples. I won't go through them all, but specific case examples of mines that have produced tremendous wealth or are continuing to produce tremendous wealth here in the province. If you look at Highland Valley, a world-famous mine in copper and gold, producing well over $50 billion in gross revenues to this province. Eskay Creek, a very small goldmine, produced well over $8 billion during its lifetime for this province.
The ask. Back to the first request, ask or recommendation. It's to reinvest to 2008 levels into the ministry, into the minerals division specifically. Their budget has been dropping. It's now at $10.74 million. It's projected to go to approximately $9.92 million.
This is occurring at the same time when the demand is increasing for prospectors and explorers, and for the public to need the support and services of this division. On top of this, the personnel were cut. These are experts that very much support and service the industry, highly respected and competent people that we're losing and this government is losing. We recommend that we invest back into the minerals division, back into the people that can support this sector. The point being that the minerals are in the public interest, in the public domain, and obviously the Crown has a responsibility to manage that.
Slide 14 is quite compelling. Now, this shows a table of the comparative investment made into the Ministry of Forests versus Energy, Mines and the mineral and mining division. Now, this is not to disrespect the Ministry of Forests; it's just to highlight the investment that this government is choosing to make and the return on investment.
It's quite phenomenal. If you have Ministry of Forests funded at the level of $700-plus million, the return on that to the economy is significant: upwards of $6.3 billion in GDP. However, the return, arguably, when you do the math quickly, is about 8 to 1.
Similarly, when you do that for Energy, Mines you'll see that it's closer to 200 to 1 or even, in the case of the minerals division specifically, 289 to 1. I think, arguably, the benefit of these government divisions and ministries to the people of B.C. is significant, and therefore, the budget should be commensurate or somehow more proportional to the need and demand of this sector.
The ask, again, the recommendation, is $14 million towards mining and minerals division, including the
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$5 million for B.C. geological survey and $2 million for public outreach and education.
The second recommendation is reinvesting in public geoscience. This is specifically Geoscience B.C. We have two entities. We have the survey, and we have Geoscience B.C. Currently, they are both potentially underfunded and not likely to contribute or survive in a very meaningful way. We need both to be resourced appropriately and adequately, and basically two halves create one solid whole.
Geoscience B.C. is industry-led, publicly funded, and it's the high tech effort on geoscience. It's been stimulating exploration in a significant way — millions of dollars, $10 million to $15 million on a conservative level. George Macauley has been doing reports on this, as you have probably heard from Pierre this morning. Even a discovery at Huckleberry mine, for instance, has demonstrated that they'll be able to extend their mine life for many, many more years.
There are hundreds of jobs at stake, and I think it is certainly in the public interest to continue that investment in Geoscience B.C. They have an initiative called the "Data for Discovery." It's focused on both oil and gas and minerals. The request here, to be specific, is on the minerals side, of $5 million annually.
With that, I'll just wrap up and say, obviously, thank you very much for the continued effort on the reform on the permitting and the EA efforts. The gap in decision times you have in front of you. It's quite telling as to the gap between the federal government and the provincial government decisions.
Finally, stimulants. Whether it's the tax credit or the flow-through, as I mentioned, they've existed for many years. It's a non-partisan issue. We ask that they be considered to be made permanent or at least at the same date. We have one coming due 2017, another one due come 2013. For the investment climate we need them to be consistent.
With all due respect, Chair, I'll stop there and take any questions.
J. Les (Chair): No, you won't, because you're out of time. Thanks for coming though. Appreciate it.
The next presentation is from the Regional Child Care Council. Enid Elliot is here.
Ready whenever you are.
E. Elliot: I brought some cookies this afternoon.
J. Les (Chair): You did.
E. Elliot: Good — to pass around. This is not a bribe; this is just an inducement to stay awake. I made them just this morning, anyway. See, I figured a little sugar would help.
J. Les (Chair): Already you're the best presentation we've heard.
E. Elliot: I am Dr. Enid Elliot, chair of the Greater Victoria Regional Child Care Council as well as chair of Artemis Options Society, which unfortunately had $48,000 cut to its early childhood program for young mothers this year. As you might imagine, I'm a bit discouraged sitting here.
For the past 11 years now the Regional Child Care Council has monitored the early childhood situation in the Greater Victoria region. By early childhood I mean preschools, child care, part-time care, childminding — all the services that support children before and after school and their families.
We've done reports, cost analysis, collected parents' stories, kept statistics on the openings and closures of facilities for young children. In other words, we have our ear to the ground monitoring the situation in our region.
I am sure that you're aware that child care is an issue throughout our province. Victoria is no different, except that with rents high here, there is even more pressure for both parents to work. The high rents also push the cost of child care even higher.
With over 60 percent of women with young children in the workforce and the cost of living squeezing young families, child care has become part of many families' lives. At present we deal with a fragmented, irrational system. In fact, it's not really a system at all.
Some steps have recently been taken to support parents and children. All-day kindergarten and StrongStart provide some programming for children, and we have an opportunity to build on these programs to create a first-class system of early childhood education which combines care and learning. Without care we cannot learn, and without an opportunity to learn and grow we do not know how to care about our community.
At present what exists is confusing, and there are several misconceptions. The first misconception is that parents have a choice. Imagine young parents living in Sooke, because housing is cheaper in Sooke, and they begin to look for child care. Their baby is nearing a year old and has learned so much already.
The baby's mother has finished her teaching degree and was substitute teaching when she became pregnant. The dad is a landscaper in Victoria. Mom has been caring for the baby at home and has been offered a part-time teaching job at a nearby school. It seems ideal because she would like to spend time with the baby, and working part-time would allow for that.
Mom and dad would like the baby to be nearby in the neighbourhood; after all, she is only a year old. They download the information. There's plenty of information on line that tells them what to look for, how to find a quality situation for their baby.
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They get the list of licensed places. They've learned that licensed programs provide the best care on the whole. They want to choose the best place for their baby, where she can continue to learn how to be a learner and feel her own value within the community.
They start calling. No spaces. There won't be spaces for a year or two. No choice. No one will even take their name. The employer will only wait another week. They have someone else lined up if the mother can't take the job.
Feeling desperate, the parents put an ad in UsedVictoria for child care, for someone to care for their child. They must pick between a young man who's vague about what he's done before and a young woman with two children of her own.
The young man seems a bit spacey, and the young mother is screaming at her own children as she pulls away from the interview. The employer wants to know in three days, and there's no time for another interview let alone a criminal record check.
Misconception No. 2 — let's let the private market handle child care. We do have small private centres here in our region, owned by an individual or individuals, providing the owner-operator with a salary. The better ones are owned by qualified early childhood educators who work in their programs, hire staff and make a living.
Others hire qualified early childhood educators to run the program and still take money for themselves. Anyone can do the math on this one. With children under three, the ratio of educator to child is 1 to 4. When children are over three, the ratio changes.
Salaries are the main cost of child care. Parent fees pay the rent, staff salaries and some toys. Clearly, parents with more resources can afford the child care where workers are paid better and, thus, probably stay longer on the job, have more materials and work harder.
This past spring while doing practicums for Camosun College, I found that some centres, in order to cut costs or because they could not find qualified staff, were running with only one qualified educator and that the other staff that made up the ratio were assistants who maybe had one course in early childhood.
Many of these centres were a less than adequate example of good care and learning for children. Working with a group of children takes education and practice.
But wait a second. There is subsidy. But subsidy does not cover the cost of child care. Most centres, especially the licensed good ones, charge over the subsidy rate in order to pay their staff more than $10 an hour. Subsidy fell behind a long time ago, and all the good centres charge over and above subsidy to cover costs of their staff and materials. And this family would not qualify for subsidy.
Corporate child care has sometimes also been posed as a solution. But it has been shown to be a poor answer for child care. Parent fees are the revenue which pays salaries, rent, materials — and dividends. Again, the math seems simple to me. For our family to afford a space in a licensed child care group facility, much of the mother's salary would go to child care costs.
Myth No. 3 — informal care. Let's go back to our family who's looking for care on UsedVictoria. At the last minute they find a neighbour who is home with her three-year-old daughter and a friend of her daughter. She lives nearby, is calm and loving. With a sigh of relief, the mother begins her job. All is settling out well.
One morning, after the baby is well settled and happy, the neighbour calls to say that her mother has had a heart attack in Ontario and that she must go and care for her. She has a flight leaving tomorrow and can no longer look after the baby. Our family is back looking for child care, experiencing the stress of balancing work and family. The baby will have to adjust to another situation that may be as good or better — or may not be.
Myth No. 4 — the only learning that counts is in school. Another myth is that learning only happens in school. Children are learning all the time. Try and stop them. They learn all those words that you wish they wouldn't.
What are children learning in these situations? They are learning that they don't matter to us as a society and that we don't really care how they grow into their identities as learners or value them as members of our community. Academic skills are a fraction of what children learn. To be able to learn these important skills, children must have confidence, assurance that they matter and see themselves as learners. These qualities make those academic skills easy to master.
Myth No. 5 — which I must admit my daughter, who has a 1½-year-old, suggested to me — is that babies are a blessing. Indeed, for each parent, babies are a blessing often. For our family living in Sooke, they feel their baby is a blessing. But in their situation of having to support themselves and their family and not finding the care they desire for their baby, their baby becomes a burden.
Every family wants a safe, rich, nurturing place for their child. We have heard from families that are deciding not to have a second child because finding child care is so difficult and expensive. I hope that we can begin to treasure all our children and provide spaces for them to take their place in our communities.
Young parents not finished with high school may care for their children under three, in order to be prepared to get the education that will help them succeed. While teen pregnancy rates are down, there are still young women under 19 having babies. But young parent programs in our region have either been closed or cut drastically.
We would, hopefully, welcome these young people into their new role as parents and provide a welcome for their babies to help them begin life in the best possible way. Children do not come with an on-off switch. If we
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are not going to care for the children in our communities, then perhaps we need to invest in research to find an on-off switch. [Laughter.] I'm just kidding.
A sensible, coherent, integrated system of early childhood education that provides choice, provides a high calibre of care and learning opportunities and that is affordable to parents would allow the economy to flourish, would allow communities to flourish and would provide opportunities for our young families to flourish.
A couple of years ago we did a cost analysis of implementing a system of child care for this region. I have given everyone a copy of that. The briefing note, which I imagine the Child Care Advocates of B.C. spoke to you about, probably in Surrey…. I imagine you have a copy of this. They mention the cost analysis which we did.
They have used our report to inform their strategy. What they propose moves us towards a sensible system that will support children and families.
Thank you for giving me the opportunity to share with you.
J. Les (Chair): Thank you.
Are there any questions from anyone?
J. Les (Chair): The recipe for the cookies.
E. Elliot: Oh yeah. It's a secret.
J. Les (Chair): It would be. Rightly so.
B. Ralston: Thank you very much. I haven't had a chance to read the paper. I notice that Lynell Anderson is an author, who's someone that….
E. Elliot: Yes, we hired her to come and help us.
B. Ralston: Very highly respected and very capable in the field.
What is the capital investment that's required and the ongoing operating cost in this plan that you propose?
E. Elliot: Well, I think, basically, what we came down to was that it would be a similar cost per child as it is for the school system. This would be to provide either full-time or part-time care, depending on what families wanted for a child. As well, it would include children who have diverse abilities, so it might need extra support. We tried to juggle all of that.
She came up with a figure that is similar to…. It's two years old now, so I must admit that I'm not keeping the figures in…. What she came up with is very similar to the cost of implementing the school system.
J. Les (Chair): I see no further questions. Again, thank you for coming this afternoon. In particular, thank you for the cookies. They were great.
E. Elliot: Well, I hope it sees you through the rest of the afternoon.
J. Les (Chair): I suspect it will.
The next presentation is from Jennifer Charlesworth, who is with the Federation of Community Social Services of B.C.
J. Charlesworth: Good afternoon. Thank you for the opportunity to present some information and suggestions to you today. I'm Jennifer Charlesworth. I'm the executive director of the Federation of Community Social Services of B.C. You might see Federation of Child and Family Services. That was our name up until about a year ago.
I've worked in social services for 33 years, and I've been engaged in the public service, in the non-profit sector, in the philanthropic sector, in academia and also in the business subsectors of this industry of social service. As such, I bring to this discussion today a great passion and commitment. Thirty-three years is a long time to be in this field. But I've also got some practical experience and suggestions to share with you.
What I'm going to do today is provide you with a very brief introduction to the federation but, most importantly, to the people that we serve and the work that is being done out there. I hope that this will inform you and increase your understanding about why I think it's important for you to pay close attention to the situation facing community-based social services in British Columbia as you develop your recommendations to government. I'm going to propose two specific issues and two concrete actions.
The federation began as the Federation of Child and Family Services in 1982. That means we've been around for 28 years. We deliver services to the agencies in your communities that are working on behalf of children and youth, families and vulnerable adults. We emphasize the importance of a community-based focus to social care, and we want to ensure that there is capacity within the communities to provide an infrastructure of care so that all sorts of other things can be positive in people's lives.
The agencies that we represent provide services across the lifespan, from prenatal supports for vulnerable mothers to seniors services. They provide the basics of life, ranging from food security to social housing and supported housing. They support healthy child and family support programs. They help people participate in the labour force and build their skills to sustain their families and contribute to communities.
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We serve people with developmental and physical challenges and build a more inclusive society. Our agencies are also providing services on the other end of the spectrum: intensive treatment and rehabilitation services in the youth justice area and in addictions services, etc.
This is valuable work regardless of the metrics you choose. I know we all come from different places and we value different kinds of information, so I'm going to share with you different metrics. Hopefully, one will resonate with you.
Metric 1 — public perception. There is a copy in the folder of a just-released public opinion poll conducted by Vision Critical, Angus Reid, and it offers the following: British Columbians highly value community social services — 90 percent of British Columbians. Now, you should know that when we did a survey similar to this — a collective did a survey similar to this ten years ago — it was not nearly that high. So the awareness of the importance of community social services is growing.
I think it's because people fear what is being lost. They agree that community social services make their communities safer, a better place to live, and that preventive services reduce cost and the societal burden of family breakdown.
British Columbians feel that the current level of funding is too low. Two out of three citizens believe that we are not investing as much as we should in community social care, and British Columbians also prioritize community social services over reducing the debt in tough times. That's three out of four respondents agreed that we need community social services now more than ever.
Metric 2 — community reach and influence. Our member agencies are working in over 150 B.C. communities, and our sector will directly touch 70 percent of the population at some point in their lives. Most of our agencies, as I'm sure you know, are governed by boards of directors. Many of you have sat on these boards. There are business people, accountants, lawyers, principals, academics, parents, community volunteers. These are people that have a deep sense of responsibility for a healthy community, and their reach and influence is significant.
Metric 3. My agencies alone employ over 6,000 people and 4,200 volunteers. That's a significant labour force. Our sector employs more people than forestry, mining and fishing combined. In terms of labour force development, 90 percent of our workers are degree-prepared or diploma-prepared. This is a career, not a McJob.
Metric 5 — economics. Our agencies represent $450 million in community investment. That's a lot of money, and that's money that cycles and fuels communities, because this is a high-touch industry. Salaries are the primary use of that money, and people use their salaries to purchase things in communities. So we are an economic driver.
Metric 6. Eighty percent of the funding comes from federal, provincial or municipal governments, but 20 percent comes from community donations, philanthropic organizations, fees for service and social enterprise. That's a lot of money that is being generated in order to support community services, and that makes government's investment go further.
In terms of a return on investment — or metric 7 — many of you will have heard an ounce of prevention is worth a pound of cure, or a dollar spent now in the early years saves seven later on. Where would you rather put your money: a short-term counselling program for children who've witnessed family violence, or chronic mental health care for the adults suffering from post-traumatic stress?
My own children in my own family have been recipients of just this service, and I can tell you that my children — my two young daughters, 16 and 18 years of age — are vibrant, secure and have a very positive future because they received those services in a timely way.
Wise investment — this is metric 8 and the final one before I move to the issues and the recommendations. The increase in the health care budget alone this year is $2 billion. That's more than the total ministry budgets for all but a few ministries.
We could finance another whole Ministry of Children and Family Development just with the increase in health care spending. We call health care spending the Pac-Man, as it gobbles up precious resources and limits our options in other areas of investment, be that environment, economic development or social care.
I understand that there are limited funds, but we have to spend wisely, and we have to figure out ways to waylay the Pac-Man. Social services are one of those ways. There is a huge body of evidence pertaining to the social determinants of health, that health needs are driven as much by social indicators such as poverty, housing, early childhood supports, etc., and if we do not invest in those early interventions, then it costs us dearly in acute and chronic health care costs later.
I hope that this helps to frame the value of community social care. This year I'm even stronger in my belief because I have been out there in the communities consulting with hundreds of people on various aspects of social service, and I've had some insight into what's going on in communities around this province.
That takes me to one of two issues that I'd like to bring forward, the first one being erosion of the social care infrastructure. This past year has been hard on community social services. Community and philanthropic contributions have declined, agencies have lost gaming funds and government ministries and health authorities have had to reduce or eliminate services and contracts.
You'll see that amongst our 120 agencies we've documented $6.3 million in losses. While that's about
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2 percent, when you add in the fact that there have been no cost-of-living or inflationary increases, as well as there are higher admin costs, the net effect is probably closer to 3½ or 4 percent in reduced capacity. Urban agencies have had more significant reductions, many of my agencies reporting 9 percent to 10 percent losses.
Now, this comes at a time when demand for services is increasing, and you should know that the child population is also starting to increase. We've come out of a time where our child population was decreasing, and it's increasing. Hard economic times are stressful, and those who are unemployed or underemployed face greater risks. Those who are already on the margins are further disenfranchised.
We have what we call the perfect storm: declining investments, increasing demands, a fragile economy and a health care Pac-Man. As I said, I've just spent a lot of time going around the province, and what I consistently hear, whether it's from government staff members or community services representatives, is that the flesh is long gone; we're now cutting into the bone.
I urge you to recommend that the investments in the social development ministries for community-based social services be sustained at no less than current levels plus a 2 percent operating increase for this year. These budgets simply must not be cut this year. These agencies that are delivering services are doing their very best, and there is no further erosion to the social care infrastructure that can be sustained.
The second issue that I wanted to address, and final recommendation, pertains to how decisions get made and wise investments. Decision-making about where funding is spent is critical, and you have the right and the responsibility to determine where to put public funds to ensure that positive, socially valuative outcomes are achieved.
This is difficult work. I understand that. Complexity is part and parcel of this area. However, what I have noticed in this past year, with many services being cut, is there are what I would call unintended negative consequences that I believe will result in increased drivers and cost pressures over time.
The decisions that are being made appear to be uncoordinated and, I would say, haphazard, and the result is that the impacts further down the road are going to be very real. For example, there were significant reductions in mental health and addiction services. What ends up happening is that many of those services were supporting parents who were just on the edge but were continuing to parent.
What we're now seeing, through our agencies, is families breaking down, children impacted, and their needs at home, school and community escalating. It requires more intervention in the schools. It requires more intervention in the community. They are showing up in places where we haven't seen them show up before. That adds to the burden and the costs of care.
These are young people that may well come into care, but prior to this their family was hanging together because they were getting some timely mental health or addiction services. That's one example. That's probably the area where there have been the most acute losses.
This past year, as ministries faced budget challenges, decisions often appeared to be made in isolation from the other social development ministries and community interests. We do not have a comprehensive and coordinated social policy agenda or framework in B.C. that could provide a platform for improved and informed decision-making. In the absence of that, people are left making decisions on a narrower set of criteria — what is specific to their area of interest, their program area or their ministry area — rather than on a broader vision and agenda for social development.
This leads me to my next recommendation that the select standing committee urge government to establish a comprehensive, coordinated social development framework for British Columbia and that the ministries be required to assess the impact of funding or program decisions on the broader social development agenda prior to implementation.
There have been structures and processes in years past where something similar to this was done. In my experience, having been there under various administrations, I believe that there were some more thoughtful decisions being made. I don't underestimate the challenge ahead trying to deal with a fragile economy. However, my hope would be that the wise investments are being made.
I think it's also the time in history to enter into a different kind of conversation about what matters to citizens and what role government can and should play to create the conditions for prosperity.
J. Les (Chair): Thank you, Jennifer. We've got a couple of questions.
M. Mungall: Thanks very much for your presentation. In your recommendations you suggested holding the line and a 2 percent operating increase. I'm also wondering, though, your thoughts on the B.C. gaming grants and the impact that that has had on social services throughout the province and, of course, the rippling effect that it's had out in communities.
J. Charlesworth: It's an excellent question, and I think there's a good example for me. It's one of those things that has really been poignant for me when I think of the haphazardness of decisions, because there have been true losses in gaming through community social services around the province and a great deal of instability as a consequence of that.
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What ends up happening is there's a lot of scrambling and a lot of unintended consequences. The gaming contributions…. Again, if there was a broader vision and direction around social development and social policy, then the decisions around gaming and what the priorities would be, would be based on something that had some legs and that was connected to the other dots. Right now gaming has been pulled, and things unravel as a consequence.
Now, gaming is not a huge funder of community social services, but there are a lot of programs that only survive because of gaming contributions. So even that small amount, when you're on the edge and when you're cutting into bone, starts to dismantle a system.
I'll give you a concrete example. There was a sweet little program that delivered mobile child care for seven or eight different agencies in the Lower Mainland. When a program was being run for parents, this mobile child care provider would go and provide the child care so that the parents could fully participate. This was in an area with a high number of immigrant-serving agencies. That $20,000 contribution was lost. I think it was a gaming grant, but if not, it was a contract. What ends up happening is the viability and the participation of hundreds of families in those programs…. They can no longer participate, because they can't get child care.
It's that kind of thing, and $20,000 goes a long way. That's a lot of what the gaming grants do.
J. Thornthwaite: Thank you very much for your presentation. I'd like to get a little bit more detail from you with regard to your comment that "ministries be required to assess the impact of funding or program decisions on the broader social development agenda." Specifically, what are you asking, and how would you suggest they do that?
J. Charlesworth: Okay, great question — thank you.
There are a couple of things that occur to me. This is one of those times for a conversation across party lines around what is the broader social development agenda. What do we want to try and create? It may well be a select standing committee or something along those lines on social development. It would be a place to start. You'd begin to have a different kind of conversation and pay attention to the evidence before us.
There is a lot of research evidence. I'm a PhD, and I can spend a lot of time talking with you about those kinds of things. That would inform an agenda and some of those priorities from an evidence-based perspective.
From that, I think that once there is a platform, then you create a social impact analysis or an impact analysis structure. Previously I served under two administrations as director of cabinet operations. There were cabinet submissions, and there were particular requirements within cabinet submissions, for example, that required that kind of impact analysis before things went forward.
There were also deputies' committees of social development that would take a look at these kinds of things and connect the dots. So for example, if in the Ministry of Health they were contemplating a significant change in the delivery to addiction services, they would have to come before their colleagues and do some kind of analysis on "if they did that, what might happen over here?"
No one can make decisions in isolation, so having that kind of information exchange…. It slows down the process. I get that. On the other hand, I think it's better than dealing with the unintended consequences down the road and then having to go back and restore things at much greater cost later on.
J. Les (Chair): Thank you, Jennifer. I think we'll have to leave it there now. We've run a little over time, actually. Thank you for coming.
We have three individuals who have asked to speak to the committee. As we know, they will get five minutes each. We will start with Guy Dauncey, who is with the B.C. Sustainable Energy Association.
G. Dauncey: I was told this morning I had ten and five, so I'll have to squeeze it in. I will be doing a full written presentation before the deadline next week.
I'm president of the B.C. Sustainable Energy Association. We represent around 700 businesses and individuals and organizations in the whole field of clean energy, green buildings — part of the clean energy revolution that's happening in B.C.
I have six particular thoughts to put to you, or items relevant to the budget. The first is around the carbon tax. Climate change continues. It's not gone away, I'm afraid. Just because a few skeptics made a big fuss about some leaked papers and leaked e-mails, it's still a very severe issue. We're still heading towards a 4-degrees-Celsius increase in temperature by midcentury. We have already taken a $30 billion hit with the impact of the pine beetle in the forests. The last time the world was 3 degrees warmer, the global sea level was 25 metres higher.
The Lower Mainland is extremely vulnerable. Richmond, Surrey and Tsawwassen are all at sea level, including the airport and the I-5 — the entire commercial core of the Lower Mainland.
To continue the leadership that B.C. is giving on climate change is essential. B.C. is a leader in North America. The current carbon tax and the current traction at the municipal levels is significant, and the results that is bringing are considerable. The current carbon tax has not got any planned extension beyond 2012 at the moment.
We want to argue, along with the Pembina Institute — we share our thoughts on this — that the rise should
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continue beyond 2012. It should increase, ideally, to reach $200 a tonne by the year 2020, which is a rising by $20 a tonne. It's equivalent to a 48-cent surcharge on a litre of gasoline in 2020. So it's not an actual, big impact at the pump for households, because we saw more than that increase just in the summer of 2008.
We'd also recommend, instead of making it 100 percent neutral, that government retains half of that income and uses it to finance major investments in green jobs and green, clean energy movements. The revenues in the last year when it was $15 a tonne were $540 million, so the revenue in 2020 will be $7 billion a year at $200 a tonne, half of which — $3½ billion — we're saying could be available to the government for investments.
The second of the points regards buildings. There are two points on buildings. One is that the current LiveSmart incentives actually have no programs whatsoever for landlords or tenants in large, multi-unit residential buildings. Speaking with Marg Gordon, who is the executive director of the B.C. Apartment Owners and Management Association — we'd run a program called green landlords, trying to tackle this — she said a lot of those buildings have not had any kind of refurbishment in 57 years. So the lowest-income people often live in the least efficient buildings in British Columbia.
We are working on the technical side of that through our green landlords program to resolve the split incentives problems, but there are two financial impacts here. One is that the LiveSmart program needs to address the needs of renters and landlords. The only provisions for that were under the federal ecoEnergy program, which has been scrapped, so there is nothing whatsoever for landlords, apart from maybe in a townhouse, under the LiveSmart program, which is very prejudicial to people of lower incomes.
The second point on buildings is that with our HST point-of-sale exemptions, we're currently subsidizing heating in B.C.'s homes to the tune of $200 million a year. I say subsidized, because everything else now has HST on it except heating in buildings, so it becomes, in effect, a subsidy on heat in those buildings.
That $200 million a year sends an artificial signal that people can carry on living in wasteful buildings and carry on using wasteful practices and not bother to make their buildings efficient.
If we took that $200 million a year — and this is information from the tax policy branch about the number available here — and put it in a dedicated healthy buildings fund worth $200 million a year, we could increase LiveSmart funding tenfold, $200 million a year, and establish a $50 million energy efficiency loan fund. We know that when you invest in that, you're getting a 4 to 7 percent return on investment on those investments on, say, commercial buildings.
We could provide a 50 percent subsidy on all insulation installed in B.C. and free insulation for everyone over 70 or anyone who gets an HST rebate, which is exactly what they're doing throughout the whole of Britain at the moment. We could give grants to First Nations to enable them to have efficiency trainers and facilitators around their buildings and continue incentives to solar hot water, in pursuit of the government's existing 100,000 solar roofs goal, purely by lifting that exemption on buildings, which I gather was put in place by specific lobbying from a specific company to put that incentive in place.
It's contradictory to use the allowed point-of-sale incentives for HST to subsidize fossil fuels at the same time as the government is trying to drive down greenhouse gas emissions and to encourage the whole green economy and the green jobs that go with it. It's just a contradictory policy impulse.
J. Les (Chair): Thank you, Mr. Dauncey. Your five minutes are up. You did say, however, that you're going to follow up with a written presentation soon.
G. Dauncey: Yeah, you missed all my transport ones.
J. Les (Chair): We will look forward to that. Thank you.
Our next presenter is Geoff Sing, who is here on behalf of the Cridge Centre for the Family.
G. Sing: Good afternoon, and thank you for your commitment to this committee. I talked to Mr. Routley in the washroom. "If it's Tuesday, you're in Williams Lake." Thank you for what you're doing.
My name is Geoff Sing. I'm with the Cridge Centre for the Family. I'm the manager of brain injury services for our society. I wanted to just share with you about brain injury and homelessness. I know you've had a presentation from Doug Rankmore in Kelowna, and you'll have one from a group in the Fraser Valley.
I just wanted to make you aware of a position paper that we've put out — The Mind of Homelessness — and bring about an awareness of the prevalence of brain injury. Our colleagues from the CPA said that there are about 150 to 180 new spinal cord injuries. In B.C. there are 8,000 to 14,000 new brain injuries per year.
We looked at the homelessness situation in Victoria. We took a study, and we extrapolated the numbers from a study in Ontario. Survivors of brain injury and homeless — the number is 52 percent. Here's an even worse stat that we found in this study. Of those people who are homeless and brain injured, 70 percent had a brain injury and then became homeless.
We need to invest. What I'm recommending for the standing committee on this…. Our funding comes from Health. It's not just a health issue. It's Health, social ser-
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vices, the Solicitor General. I talked to the city of Victoria police, and 25 percent of their budget goes to downtown-core issues. If we invest in support for survivors, we will be better off for our community in the long run.
It's this analogy. The acute care component for brain injury is a sprint. The life after brain injury is a marathon. But we can be successful.
I want to give you one scenario to think about, please. Some of you know the name Joseph Centis. Joseph Centis murdered his wife in Nanaimo. I'm not sure if you knew that he had a severe brain injury. We interviewed Joseph to come down to live at MacDonald House, the place that I manage. They said no. He was living with his wife. They had six children. Then the downhill cycle started.
I'm not justifying what Joseph did at all. She filed for divorce, sole custody of their children, all the family possessions. They were near-millionaires. He was a successful businessman prior to his brain injury. So angry, he went out and murdered his wife.
What do we have? A woman murdered. A man in jail for the rest of his life. Six children in family foster care.
I give you this picture: Shannon Wiley. Shannon had a severe brain injury as a result of a snowboarding accident. I met her. She was on the sixth floor of Victoria General Hospital. She was so impaired that during her rehabilitation…. She was down at the Gorge Road Hospital. One day she went for a walk. She fell into the water and nearly drowned.
After five years of investment at a family care home, rehabilitation, she is now back as a paramedic for us in B.C. In fact, she works for the Cridge Centre for the Family for one of our contracts.
If we invest in survivors and rehabilitation, we can be successful. They can be contributors.
The last picture I want to show you. You've got to read this. This is good stuff. Trevor Greene, a captain in Afghanistan. If this is not the best picture of hope after brain injury, I don't know what is.
Brain injury is forever. We used to say it's lifelong. They're severe. I'm a survivor of brain injury myself. But if we invest in survivors, we can be successful. They can be contributors to the community instead of the difficult situations that we have in the downtown core of Victoria, downtown core of Vancouver. You guys are seeing it up in Cowichan. You're seeing it in the Fraser Valley. Homelessness. The prevalence of brain injury.
We know the stats for brain injury: 80 percent in the prison system. Divorce after brain injury — well over 95 percent. We have another program within the Cridge: services for women and children escaping relationship violence. Unfortunately, I'm guaranteeing you that most of those abusers are survivors of brain injury.
It can be done. We just need to consider to invest in survivors.
J. Les (Chair): Thank you very much, Geoff. You're bang right on five minutes. Good for you.
Our final presenter, I believe, is Lisa Ellis, who is with the Artemis Options Society.
L. Ellis: This is it. This is the final one. Are you still awake?
L. Ellis: Good. Thank you very much for having me. My name is Lisa Ellis. I'm the executive director of Artemis Options Society. We work with girls who have left school for various reasons, including pregnant and parenting teens and their children. I'd like to make it more real to you, perhaps, by telling you a little bit more about our society and about the impacts of funding cuts to our society.
We've been running since 1971, offering programs. For the last 20 years we've been working with kids who are pregnant or parenting and supporting their children. Back in the 1980s I was a student in GAP, and our Options pregnant parenting centre offers support to the teen girls who are in the girls alternative program. It made such a difference to me that I'm here now. Before then I was in bad circumstances, out of school, doing all sorts of things that are definitely on the path to not being here.
Soon after arriving there at the program, I realized that it was my place. It was a place where I was respected and where I belonged. I was able to get the skills to go on to university and to dedicate my life to kids like that. So I now have my master's in counselling and my special ed degree.
In the meantime, very soon after I finished that program, I had my daughter. I stayed on the board of directors for that program for many years because it was so important to me. When my daughter hit 15, things went really bad for her. I won't get into her details, but I can tell you that it was the scariest time a parent could have. By 18 she was pregnant and in a very unhealthy place. As I said, the worst imaginable place as a human being is to be the parent of a kid you're scared for.
Luckily, Options was there, and she joined that program. Within a very short time it made the same powerful difference it had made in my life. She was able to turn things around so that within nine months she not only had a healthy baby, but she also had graduated. Considering she had left school quite a bit before that, that was a huge feat.
She went on, three years later, to get her bachelor of commerce. At 24 she's now a business owner, happily married, a house owner and the parent of a very well-adjusted, happy five-year-old, my granddaughter, who also went through our daycare.
I'm letting you know that this is an amazing program to me personally. I've since become the executive director
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and have been lucky enough to witness incredible changes in many, many girls' lives and the lives of very vulnerable families.
The girls who come to Options Child and Family Centre, the girls who go through GAP, aren't just girls who got pregnant. That tends to be part of what's going on for them. Most of them have been in foster care. There's been poverty, a lot of abusive relationships, addictions, mental health issues — the whole gamut. This is part of what's going on for them.
They come to our program, and they're able to get the support for counselling. They get support to do a self-paced academic program. They're able to learn loving parenting skills, nurturing parenting skills. Their children are taken care of down the hall so that the parents can feel comfortable to be finishing up their graduation requirements while their children are happily nurtured.
Then parents are also mentored within the program to learn how to nurture them, how to attach to them, how to take care of them and to be strong and healthy families. When the girls sometimes aren't able to do that, we're able to still provide….
When children sometimes are taken into care, we're able to provide support to help them come back out of care by providing supervised visits, providing skills and doing everything we can to support them to be strong and healthy families.
Unfortunately, last spring we got the out-of-the-blue news that our funding by MCFD had been cut by nearly 50 percent, and $48,000 is an enormous blow to a very small society and unsustainable within our small society. It would mean half of our staff gone. It's just not something that we could sustain.
Over the years we were lucky enough to put some funding aside, and right now we're living off of savings for a year. We're really fundraising like crazy and hoping that we're able to keep it together long enough that there's a change and that people are able to see that this is something that needs to be saved and the funding needs to be restored to.
There are so many faces and kids I can tell you about, so many families. They've gone on to be social workers. They've gone on to have healthy, strong families. There are so many people, including myself, my daughter and so many girls I know who say that this program saved their families, and it saved their lives. For $43,000, it seems like an awful waste for all those girls. I'm hoping that you consider restoring the funding for this program.
I hope that you consider the impacts these small programs are making in real lives, in preventing much bigger problems. If we can invest in these kids now, when they are so motivated to be as good a parent as they can be, it will make lifelong changes.
Again, I thank you very much for being here. If you're able to, as an individual, we have a fundraiser coming up. We're fundraising like crazy. Options Child and Family Centre is having Rock Options next month, so I'd be happy to sell you tickets for that.
But you know, it's just too important to be doing bake sales for these kids. This is something that needs to be supported in a bigger way, and we can't just keep fundraising for it. We need your help.
J. Les (Chair): Thank you very much, Lisa. Appreciate you coming this afternoon.
That concludes our list of presenters for this afternoon.
Doug, you wanted to say something?
D. Donaldson (Deputy Chair): I did, Chair. I wanted to say on the record that I received news this afternoon that a young, wonderful woman from Hazelton just won her second gold medal. She won one in Beijing, and she just won the wrestling gold medal in the Commonwealth Games in India. I wanted to put that on the record.
J. Les (Chair): Very good. We're all proud of her, as you know.
That concludes this afternoon's presentations, and we will reconvene tomorrow morning at nine o'clock with some more video conferencing presentations.
The committee adjourned at 3:49 p.m.
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