2011
Legislative Session: 3rd Session, 39th Parliament
Select Standing Committee on Finance and Government Services
This is a DRAFT TRANSCRIPT ONLY of debate in one sitting of the Legislative Assembly of British Columbia. This transcript is subject to corrections, and will be replaced by the final, official Hansard report. Use of this transcript, other than in the legislative precinct, is not protected by parliamentary privilege, and public attribution of any of the debate as transcribed here could entail legal liability.
REPORT OF PROCEEDINGS
(Hansard Blues)
Select Standing
Committee ON
FINANCE AND GOVERNMENT SERVICES
MONDAY, SEPTEMBER 19, 2011
The committee met at 2:49 p.m.
[R. Howard in the chair.]
R. Howard (Chair): Good afternoon. I'm Rob Howard, MLA for Richmond Centre and Chair of this parliamentary committee. I'd like to welcome everyone and thank you for taking the time to participate in this important process.
Each year in preparation for next year's budget the Minister of Finance releases a budget consultation paper which guides the committee's annual consultation process. The budget consultation paper presents a current fiscal and economic forecast. It also identifies key issues that need to be addressed in the next budget.
There are well published global economic challenges in Europe and the States. What we are seeing is that governments who have not been fiscally responsible are being punished. In B.C. we have maintained our triple-A credit rating, and we have committed to balancing our budget by the fiscal 2013-14 year. This will serve us well to protect and grow our job base.
These challenging circumstances mean there are difficult questions ahead, and we look forward to hearing from you about your priorities in these challenging times.
Print copies of the Budget 2012 consultation paper are available on the information table at the back of the room.
The Select Standing Committee on Finance and Government Services is the parliamentary committee which is responsible to conduct public consultations on the forthcoming provincial budget. Our all-party committee is required to report back to the Legislative Assembly no later than November 15 of this year.
This year we will hold 13 public hearings in each region of the province. We've also scheduled two video conference sessions to hear from residents of eight rural communities living in more remote areas of B.C. This is the third time we have tried this consultation method.
Last week we were in Vancouver. Today we're in Fort Nelson and later this week in Smithers, Prince George, Williams Lake, Kamloops and Courtenay before we journey to Victoria. In the weeks that follow we will also be meeting in Surrey, Chilliwack, Cranbrook, Kelowna and Richmond.
In addition to the 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 or audio files. Further information on how you may participate, using one of these methods, is available on our website, www.leg.bc.ca/budgetconsultations.
Committee members carefully consider all public input we receive, whether it's an oral presentation made here today, an on-line survey form, a submission in writing, or an audio or video clip. Our deadline to receive submissions is Friday, October 14.
At today's meeting each presenter may speak for ten minutes with up to an additional five minutes allotted for members' question. Time permitting, we may also have an open-mike session near the end of the hearing, with five minutes allocated for each presentation. If you would like to register for an open-mike spot, please check with Arlene at the information table at the back of the room.
Today's meeting is a public meeting which will be recorded and transcribed by Hansard Services. A copy of this transcript, along with the minutes of the meeting, will be printed and will be made available on the committee's website. In addition to the meeting transcript, a live audio webcast of this meeting is also produced and available on the committee's website. This enables interested listeners to hear the proceedings as they occur. An archived copy of the audio broadcast will be retained on the committee's website.
I'll now ask the members of the Finance Committee to introduce themselves.
B. Bennett: I'm Bill Bennett. I'm from Kootenay East, and I live in Cranbrook. Nice to be here. Nice to be back.
P. Pimm: I'm Pat Pimm, and I'm the MLA for this region — always glad to be in Fort Nelson.
J. Thornthwaite: Jane Thornthwaite, MLA, North Vancouver–Seymour.
D. Hayer: Dave Hayer, MLA for Surrey-Tynehead.
D. Donaldson (Deputy Chair): Good afternoon, everybody. Doug Donaldson, MLA, Stikine. I live in Hazelton, and I'm Deputy Chair of this committee.
B. Ralston: Bruce Ralston. I'm the MLA for Surrey-Whalley.
M. Elmore: Good afternoon. My name is Mable Elmore, MLA for Vancouver-Kensington.
B. Routley: My name is Bill Routley, MLA for the Cowichan Valley, and I live in Duncan on south Vancouver Island.
R. Howard (Chair): Thank you for joining us today. I'm pleased to introduce our Clerk, Susan Sourial. Along with us are: Arlene Carlson, staffing the registration desk; Hansard Services staff, Michael Baer and Monique Goffinet Miller, will record and prepare the written transcript of this meeting.
With that, I'll call our first witnesses. We have Mayor Bill Streeper and Colin Griffith, the director of strategic planning, Northern Rockies regional municipality.
Gentlemen.
Presentations
B. Streeper: Thank you, Chair Howard and fellow delegates. I'm speaking on behalf of the Northern Rockies regional municipality concerning our community business case.
I'd like to start off with the massive shale gas reservoir that is located in northeastern B.C. The National Energy Board and the B.C. Minister of Energy and Mines estimate that there are 78 trillion cubic feet in the Horn River. There are four major gas basins in B.C.: Liard, Cordova, Horn River. All are located within the Northern Rockies regional municipality. The Montney shale is located in the Peace River region.
Fort Nelson is the key service sector for the shale gas basin in the northern Rockies. The Northern Rockies regional municipality was incorporated in 2009. Our closest neighbour to our municipality is 387 kilometres to the south, and that is Fort St. John.
The development of the service sector for Fort Nelson, for the Horn River, lower Liard and Cordova basin. The economic benefits to the province. Analysis indicates that the industry investment of $35.9 billion in 2011 over the next 20 years will generate a GDP of $36.6 billion for northeastern B.C. and $80 billion for the province as a whole.
The estimated consumer-spending impact of $28.4 billion for northeastern B.C. and $48.8 billion for B.C. as a whole is very significant. Assuming that about 29 percent of the consumer spending is subject to the PST and that the applicable rate is 7 percent, the provincial government would realize a total of $410 million.
The estimated impact on resident investment is significant, with about one-half the total additional investment occurring in northeastern B.C. Non-residential investment in B.C. is relatively modest, with an investment of the oil and gas industry itself accounting for 90 percent of non-residential investment in Fort Nelson.
As you can see by the chart, we've outlined the industry investment, GDP, consumer spending and the amount of value there — the development of 40 percent of the Horn River's 78,000 reserves. This is not taking into consideration at this point the Liard or the Cordova.
New job creation for the development of 40 percent of the Horn River. From 2011 to 2015 it's projected that 3,900 jobs will be required, which increases to an annual percentage of 8,500 jobs for the period of 2016 to 2020. From 2021 to 2030 the job requirement will increase to a level between 12,500 and 14,000 jobs annually.
The financial benefits to the provincial government associated with the development of the Horn River based over the next 20 years — such as royalties, corporate taxes — are also projected to be substantial, as shown in the figures below. The provincial royalty period, from 2011 to 2030, is projected to be $11.56 billion. Provincial corporate taxes are projected to be $3.54 billion over the same period.
Provincial revenues for the 20 years will exceed $14 billion, as many corporations pay corporate taxes in one or more provinces. The portion of the provincial corporate tax rate that would accrue to the provincial government would depend on the tax allocation rules and their application to specific situations for particular producers.
We show, again, on another graph the royalties that could be expected and the present net values.
New job creation and development from 40 percent of the Horn River — there again, a graph pretty well speaking for itself. We have the amount of projected jobs in gas plant construction, gas plant operations, field-drilling completions and the total average number of jobs, showing where we derived these figures.
C. Griffith: Just to summarize this a little bit, the work that is being prepared and outlined in the business cases, based on an economist's research…. Mr. George Macauley has got about 25 years of experience. He's done a lot of work for the province, particularly on the royalty policies.
The research and all of this product, if you like, is based on economic models that both the Ministry of Energy and the industry itself agree on as a reasonable methodology for coming up with these conclusions.
As the mayor has outlined, this is only 40 percent of the one gas field with one basin, and you can see what the results will be over time.
Just moving on, we want to talk a little bit about the specifics of creating B.C. jobs from this development.
R. Howard (Chair): Sorry, Colin. Just to confirm. We got started a little late, so in terms of timing, we're going to fit both of your presentations into…. I'm giving you a few extra minutes here. We'll target for 3:10, so it leaves you about ten or 11 minutes, just to pace yourselves. Thank you.
C. Griffith: Moving into looking at the specifics of job creation. As you can see, there are a vast number of jobs being created here. To date, the majority of the jobs — and there are over 3,000 of them — are being held by people that are coming into this area from other provinces. These people fly in to the airport and fly directly out to the camps. You just missed a transfer this morning of about 300 people through the airport. You missed it by about half an hour.
This is what is happening, and this is the fly-in, fly-out business model that is basically driving this development to date. The genesis of the business plan, you will find as you go through, is that we need to create permanent communities in this province — right? — and we need to keep the revenues that are generated from having those employees based in this province in the province to benefit all of B.C. You are not going to see the shale gas development here take place without a service centre, and as you've seen physically today, the service companies are moving in here on a wholesale basis.
This town is just on a tipping point right now as to moving into a significant boom. That's not related to the total jobs being created. That is related to the fact that if there are 1,000 jobs moved into this area — and we are well underway to seeing that — being held by local B.C. residents, it means that the population of this community has to move from its current level of 6,000 to 10,000.
That's just for 1,000 jobs. When you get into looking at the great potential that there is for B.C jobs to be created here, it just escalates and gets very rapid, very fast. What is the key to all of this? The key is going to be the development of the community.
Just to link the job creation to provincial revenues, the mayor has outlined that over the period of development, you are going to see massive provincial revenues coming from royalties. They increase as the net royalty program kicks in, because naturally, the government is encouraging or providing the incentive of that program so the industry can write-off a lot of their upfront costs. But as those costs are written off, naturally, the province's royalty revenues start to move on an upswing.
In terms of what we've called here on this page incremental provincial revenue, if you look at the work that we've had our consultants, our economists, perform for us, you can see that if you have 3,000 jobs — and that is about 20 percent of the long-term workforce — held locally, that will generate $576 million in incremental revenues from income tax. This is over and above the royalties and the corporate taxes.
We have linked that to a bit of a scale here, and you can see how this would increase. So if you get up to 6,000 jobs being held locally, that will produce incremental provincial revenue of over $1 billion. This is of significant magnitude.
We're not going to belabour the point about Fort McMurray today, but it is a model that we have used. It's referenced repeatedly in the business case that's in front of you, and you will see the correlation. The correlation is that if you do not provide for a permanent community, you run into significant — significant — problems, both on the industry side, the government side and certainly for the quality of life for the people.
Having said that, we have developed what we think should be an outline of the collective components that need to be addressed and certainly with a big focus on the leadership that's required from the province to deal with these issues. The mayor is going to just take you through some of the components of the business plan, and we'll just take you through what we think are the necessary ingredients to see this situation successfully dealt with.
B. Streeper: The main component of our business plan is a long-term formula for provincial investment and community infrastructure, regional economical planning structure, the transition from the fly-in, fly-out model, regional economic plan, social economic planning, local employment agreements and housing subagreements and an economic monitoring system.
We look at our infrastructure. You can see that there are many aspects of our infrastructure that are completely lacking. Upgrading is needed and of the highest priority — right from our airport, recreation centre, our water and sewer. We are not capable of handling this growth on our own, as expected.
Community service development. Our mental health, medical services need upgrading. Senior housing needs, educational development, social service. Regional infrastructure development — again, the centre road access, power supply issues, heavy industrial and railway lands and industrial water supply.
Looking at the projection, we have the figures on what we have compiled as far as royalties, corporate tax, income taxes, with gross provincial income of $15.68 billion. We have the business expenses, the resource development road and provincial service expansion. Taking all that into consideration, the total business expense between $370 million to $390 million leaves a net provincial income of $15.29 billion to $15.31 billion.
C. Griffith: Just to speak a little further on that, the estimates for the $150 million for upgrading municipal infrastructure are based on engineering studies. Those figures are not just drawn out of the air. Certainly, we know that every municipality worth its while can come up with their infrastructure deficit. That goes without saying. But the needs in this community are real, and what is happening is that the municipality for the last five years since the start of the shale gas development here has been undertaking a significant amount of planning.
The airport that you landed at today is in dire need of upgrading, and that is the focal point for the fly-in, fly-out business model. There are major structural problems with runways, with buildings, with the whole airport. It needs a major overhaul. That airport is, naturally, owned by the municipality, and so that is a major problem.
The development of the necessary residential lands and the housing to make that all work requires massive amounts of upfront funding, because the municipality certainly just cannot go in and start developing hundreds of acres that are going to be required for residential housing development and for the expansion of the population.
Medical and health services are absolutely key. Right now you can only have a baby in Fort Nelson about six months of the year. That is really, really a major, major issue. That's due to doctor shortages, and that is a reality that people here have to live with.
Certainly, if you can envisage moving the population up to the 10,000 level, you cannot have a viable community without adequate health services, and that is a major, major problem. Right now there is no way, if somebody needs any kind of care as a senior citizen, no matter how long they've lived here or the fact their family is here, they can stay in the community. They have to leave.
One of the major problems, certainly in the education, the social services…. They all have to be brought up. All the boats have to rise to have a viable community. It's not just the bricks and mortar of municipal infrastructure. You have to bring up the social services, education, health. It has to be done on a comprehensive basis, and that means that there has to be comprehensive planning.
I'm just going to swing off for a brief minute to say that to this point the province has not undertaken any economic planning for this development. I understand we're running out of time. I'm just going to go over to a quick point here, and that is about infrastructure funding and industry competitiveness.
Right now industry in this area pays tax rates of about $13. In the Peace country they're paying about $10 or $8.50, so there is already a 50 percent premium that the industry in this area is paying. In the Peace country you have the Fair Share program, which over its lifetime of 25 years is going to put about $700 million into those communities to pay for community infrastructure, and the industrial property taxes in the Peace country have been effectively frozen since 1994.
Something has got to break, because you've got two differing policies as a province being applied in one large economic industry. The communities are being treated differently. In the Peace country residential and business do not contribute to the cost of infrastructure, and certainly, that's well known by their counterparts that live here. They do not think that they have to shoulder a big role in paying for the costs of the shale gas development, so that is a major point.
R. Howard (Chair): I'll have to get you to wrap it up, Colin, if you could.
C. Griffith: Okay. In the business plan, you are going to see all of the documentation, and there are references to about seven or eight other studies and reports in the business plan. It's very comprehensive. You're going to see the investments that are required in the community, and you're going to see the positions that are outlined, of the municipal council.
Fundamentally, it is that you have an opportunity here to generate billions of dollars in provincial revenues, but you have to reinvest some of that money into the people that live here and into the communities that are here. That is, basically, what this community is looking for — fair and equitable treatment. Right now is a critical time period. There are about two or three years before LNG comes on, when this community has got to be upgraded.
Just one last word. You have winter up here, which means that you don't do construction 12 months of the year. That has to be done in the four or five months it's available, so you have something like 17 or 18 months over the next three years to try to prepare this community for the growth that's on the doorstep.
R. Howard (Chair): Excellent. Thank you, gentlemen. Now we are in a bit of a spot here. We didn't give you the time you were allotted because we got started late. We do have time at the end of our session. We had two slots that weren't booked, starting at about 4:35. So if the committee would please…. I want to be fair to the people that did show up here on time and may have other commitments. I don't know if you guys are able to stay. There were some questions as well. But if you'd like to loop back in at….
C. Griffith: We'll stay. We'll be here.
R. Howard (Chair): Perfect. Is that okay with the committee?
A Voice: Sure.
R. Howard (Chair): Next up we have Fort Nelson and District Chamber of Commerce — David Milner and Bev Vandersteen.
As you're getting set up, I'll just remind you that you've got a total of 15 minutes. Typically, it's ten for talking and five for questions, but you can go all the way through if you want. I'll give you a little reminder around ten minutes, and you can make that call.
Welcome.
D. Milner: Thank you very much, everyone. I will move quickly here. My name is Dave Milner, president of the chamber of commerce, with my colleague Bev Vandersteen. On behalf of the Fort Nelson Chamber of Commerce, we'd like to thank you for this opportunity.
We represent over 200 small and medium-sized businesses in the Northern Rockies regional municipality. We've prepared a detailed written statement in submission in speaking to you today. That will be given to you. It's attached right here, but my notes right here are much briefer.
The business and residents of the Northern Rockies regional municipality are the backbone of the provincial economy, providing hundreds of millions of dollars annually, as my colleague just explained to you, in oil and gas royalties. It experienced significant cost disparities in all areas of the cost of doing business and the cost of living, compared to other areas of the province. A litre of gas this summer was $1.19 in Kelowna; it was $1.42 here. That's the example.
The provincial budget needs to address this disparity. Local businesses are at a cost disadvantage due to our isolation, resulting in increased shipping costs to and from the Northern Rockies regional municipality, which in turn directly impacts residents as well.
We are among the coldest communities in the province, resulting in higher heating costs. When natural gas prices increase provincially, it is far more significant in the Northern Rockies regional municipality, where turning the heat down is not an option. Come back and visit us in a month, and you'll see how that's the case.
We have the highest fuel cost in the province, as was suggested, without the option of public transit. Long distances and winter temperatures require vehicles. Road conditions and distances travelled often require larger vehicles. You cannot travel the highways up here in a little Toyota Yaris. You need a pickup truck or a substantial vehicle in the wintertime. When hit with the additional carbon tax, we don't have the option of not driving. We have to spend money on $50,000 or $60,000 trucks.
Due to the above considerations, particularly the high cost of living, businesses struggle to recruit and retain qualified employees. Without solid community amenities and the means to travel to visit extended families, people do not want to move their families to Fort Nelson. We are a young community, and most residents do not have extended families in the area.
It costs as much for us to fly to Vancouver as it does to fly to Europe from our southern counterparts: $690 to fly Central Mountain Air to Vancouver; $699 to fly to London from Vancouver today.
Housing is also a challenge addressing the community, as the need to hire qualified employees outpaces the availability of affordable housing. I have a friend that wants to build a subdivision next year. He wants to buy six lots and build a subdivision. That will take half of the available lots in this community. One person, six lots, and 50 percent of our inventory is gone. So something needs to be done to create inventory, and I know our colleagues with the Northern Rockies are looking at that.
It is critically important to develop infrastructure to support the business expansion in the Northern Rockies regional municipality, particularly around the roads, the airports and other services. The businesses of the Northern Rockies regional municipality provide service to the oil and gas industry and routinely drive hundreds of miles on secondary roads, high-grade gravel roads and winter ice roads. This morning my son would drive for an hour and a half on a dirt road to go change a hot water tank at some camp somewhere else. It's a dirt road. It's filthy. You know, he takes his life into his hands when he goes out on those gravel roads.
Essentially, the citizens of Fort Nelson, the 4,000 or 5,000 permanent residents of Fort Nelson, cannot be called upon to provide the infrastructure for the 10,000 to 15,000 people that are working out there in bush. It just is not fair to the people of this community.
Due to infrastructure and housing issues, we see companies fly hundreds of people in and out — this is not exaggerated — of the airport for transportation directly to the camps on the Horn River basin. In many cases, these people are from outside the province and are taking tax dollars from the B.C. economy but are not paying B.C. taxes and are not directly spending the money in the community other than for transportation directly out of camp.
The businesses and residents of the Northern Rockies regional municipality should not bear the cost of the development of the infrastructure needed to support the gas industry. The expenses for those supports should come from royalties before they go into the general provincial revenue. In order to meet the growing needs of industry, we require the development of infrastructure to meet the demands of an increase in residences and businesses.
The Northern Rockies regional municipality has not received Fair Share moneys from the province to assist in the development of our community. I know that my colleagues from the Northern Rockies are addressing that. I know it's on its way, but I cannot reiterate enough. You folks have to be aware that the Fair Share program is an important part of our future here. Dawson Creek, Fort St. John have that, and we need it. We need our medical services building, our fire and police stations — and paying for our rec centre and our swimming pool. So those are things that the Fair Share program will assist with.
Our residents and businesses deserve to have the same access to service and amenities and cost parity as other communities in the province. The Fort Nelson and District Chamber of Commerce fully supports the Northern Rockies regional municipality in its efforts to attain Fair Share.
One last page — this is actually where we get down to the meat of our stuff here. We would support a further provincial northern tax credit to offset some of the disparity in the cost of living. I've outlined the details in our written submission, which I believe is before you here — addendum 1. I will come back to that if our time permits.
We believe that all B.C. northern residents should be eligible for an additional northern travel deduction. I'm not sure if you're aware that if your employer gives you box 32 on your T4, you can write off the cost of travel to the closest major centre. And that is important for people from the north that don't have extended family near here. So there is a federal tax credit, box 32, but it's very arbitrarily given. Your employer has to put it on your box 32. Nobody pays any money or does anything. It's kind of an unusual tax benefit, but it is something that should certainly be looked at.
Given the high cost of travel, we would support the development of a true northern travel deduction which residents could apply against their income and which would be administered in the same fashion as the northern residents tax credit — okay?
In order for the Northern Rockies regional municipality and the surrounding oil and gas industry to reach their potential, appropriate financing must be available to ensure there is road and transportation infrastructure, available housing, strong education, recreation and cultural infrastructure. I know you folks will hear this constantly: we want more money. Our businesses provide a significant portion of the provincial revenues, and residents should not be penalized by a higher cost of living and limited access to services.
That, in a nutshell, is our presentation. If I may, though, what is our bread and butter is to refer you to our addendum. Do you folks have copies of our addendum?
A Voice: Yes.
D. Milner: Essentially what that speaks to…. I'm not sure if you're all aware of what's called the northern residents tax deduction, where, if you live and work in the north, you get a tax deduction for living up here. It's a federal tax credit on your tax return. It's a deduction against income. What it effectively does is that it allows everyone in the north that has earned income to lower their taxable income by $6,000.
Essentially, what we're proposing is that the provincial government consider creating a provincial tax credit similar to the northern residents deduction which is administered across the country. What this would do is it would lower the taxable income of British Columbians — okay?
It's administered in two areas. There's area A and area B. So this applies to about 10,000 people in northern British Columbia. It applies to about 60,000 in area B, which is north of Fort St. John, across the province. So it doesn't apply to a lot of people, but what it does is that it gives them a fantastic tax deduction.
We're proposing that you bring in a provincial tax deduction but that it would only be applicable to residents of British Columbia that live in a northern area. In other words, our friends from Alberta with red licence plates — sorry, it wouldn't apply to them. Our friends from Kelowna that travel up here and work for a week and then travel home — it wouldn't apply to them. It would apply to the people that make the effort to live in the north and bring their families up here. It would save them some income tax and put a few dollars in their pocket that would compensate them for living in the north.
I'm sure, being a finance and budget committee, you all know that if you put a thousand dollars in the pocket of a taxpayer, they're going to go out the door, and they're going to buy a snowmobile or a sled, and it's going to come back to you in additional revenue, in additional taxation, and then the storeowner, blah, blah, blah. You folks know better than I that it probably comes back to you six times over. For that $1,000 or $2,000 that you're giving individuals, the provincial coffers will get more than enough back to make up for it.
R. Howard (Chair): Excellent, David. You're at ten minutes. You've got five left. Do you want to take questions?
B. Vandersteen: Questions.
D. Milner: We'll take questions.
R. Howard (Chair): Excellent.
D. Donaldson (Deputy Chair): Thanks very much for your presentation. Some very interesting recommendations. I'll make sure I read through the report you gave. The Fair Share mechanism that you mentioned that's available in Fort St. John and Dawson Creek, from what I understand, is a grant in lieu of property taxes. That was brought in, in the late 1990s by the government then. I'm wondering. You said that Fair Share is on its way to this area. I was unaware of that. Could you elaborate on that?
B. Vandersteen: I think that's mostly wishful thinking.
D. Milner: Yeah, a grant in lieu of taxes. I think probably Mr. Griffith and Mr. Streeper would have better answers to that. I believe Fair Share is a grant from the government, or a cheque is written to those communities. It has nothing to do provincial property taxes or anything like that. We have been actively seeking that, lobbying for it, and we believe that agreement is coming, but I don't want to say the wrong things here.
B. Vandersteen: I don't think…. The agreement isn't…. There hasn't been anything signed, Pat. You can speak to this. I know that there has been lots of talk over the years, and everybody is hopeful it's coming, but there isn't anything on paper that's promising that at this point. We certainly are very supportive of the Northern Rockies in their quest for gaining that Fair Share.
D. Milner: But they would be best to speak on that.
P. Pimm: Okay, I don't know if I'm actually allowed to speak on that as part of these hearings or not. I certainly can if somebody wants a brief on how Fair Share works and how that stuff is. I can certainly help out on that in that manner. I'm very familiar with the process.
One of the questions I have. Number 1, I do like the concept. I am very familiar with box 32 on your pay slips, and I like that concept. I'd love to see the province kick in for…. Maybe not even just this area, but there are other rural areas in the province, and I think it's a great concept. The prices of flights, like you say, to Vancouver and Victoria are incredible.
But my question, actually, is around…. You talked about the red-and-white licence plates here. Does the chamber have a good handle on how many Albertans are in the area working, out of the 2,000 or 3,000 people out in the camps right now? Can you give this committee an idea of how many of them would be Albertans?
D. Milner: Do I have a good handle? If I said 80 percent, I think that would be a conservative number. That would be to say how many trucks are out there. No, that's not right. But I drive up and down the Alaska Highway. When we say "red plates," that's what we're talking about. I would say it's 80 percent of the 10,000 workers. That would be a guesstimate — a very unprofessional guesstimate; conservative.
P. Pimm: Thank you. That gets my point across.
R. Howard (Chair): Just briefly, MLA Elmore.
M. Elmore: Thank you very much for your presentation. I can certainly appreciate the challenge of recruiting workers in terms of wages, as you mentioned in your brief, to compete with the oil and gas sector and also to find workers. You did reference the temporary foreign worker program. Not so much the folks who come in from Alberta, but are there many temporary foreign workers that come in from different countries that are employed here? What's the status of that?
B. Vandersteen: We do have several small communities of foreign workers. One of the issues that our retail sector has had has been in becoming eligible for that foreign worker program. These would be people, then, that come to the community and actually live here and become residents of Fort Nelson and provide employment services to that retail and service sector. They've been unsuccessful for the most part in getting access to that program, which puts them at a significant disadvantage when you're talking about a local person that can go out and make $30 or $40 working in the oil patch. The service sector just can't afford to pay that.
M. Elmore: Right. Because the temporary foreign worker is primarily for other sectors, not so much in retail. I'm familiar….
B. Vandersteen: That's right.
M. Elmore: Also, just the connection in terms of the ability for those folks to settle and with permanent residency in the area…. That's interesting.
D. Milner: The phrase is: "Tim Hortons won't come to town because we don't have the people to work in it." That's it in a nutshell.
If I may say one last thing. This tax proposal that we're suggesting. I have just learned today…. There may be tax experts in here. What I'm proposing…. I've been led to believe that there is no such thing as a provincial tax credit on the federal side of the income tax return. It only comes in the form of non-refundable tax credits. But I have been told by my people that the provincial government has the ability to ask the federal government to create a tax deduction. I don't know if I have time to get into detail.
R. Howard (Chair): No.
D. Milner: But there's a difference between non-refundable and a straight tax deduction.
So my proposal might take us down the path of a non-refundable tax credit, which only puts 17 cents on every dollar in your pocket. In other words, you get a thousand bucks; it saves you 17 bucks. On the tax deduction side, it puts $40 for every $100 in your pocket — 40 percent versus 17.
If I've confused you, sorry. But there is a difference, and we're kind of working on fine-tuning that.
R. Howard (Chair): Excellent. With apologies to MLA Bennett, we're out of time. Thank you for taking the time to come and present to us today.
B. Vandersteen: Thank you for the opportunity.
R. Howard (Chair): Next up we have Northern Rockies Seniors Society — Carol Seidel and Shannon Cooper.
C. Seidel: Good afternoon. Welcome to Fort Nelson.
R. Howard (Chair): We're very happy to be here.
C. Seidel: I think we're happy to say we were both born here. And with your help, I'd like to die here.
R. Howard (Chair): Not too soon.
You've got 15 minutes. I'll give you a heads-up around ten.
C. Seidel: We probably won't take that much time. You've heard today that we need a lot of things here in Fort Nelson. We're providing the province of B.C. with a lot, as well, with our local resources. We are a small community. Like yourselves…. You probably find yourselves in the era of the sandwich. You're trying to raise your children and look after your parents.
In Fort Nelson we have nowhere for seniors to go outside of the 23 subsidized, independent living units that are available, which are seniors apartment buildings. We have seven multicare-level beds in the hospital. So if you require extra care in your golden years, you will live in a hospital extended care unit, where they'll provide medical services to you.
In Fort Nelson we don't have a care home. We're calling it a supported housing project. Our society is striving to build a seniors housing project here, and we'd like to break ground next year. Our community, our municipality, has donated to us some land with a value of over $246,000. We are proposing to build a 12-unit supported-housing facility, hopefully by 2013, which would provide 12 units. What that would do would alleviate…. So those folks who are living in the 23 independent care units or other locations in the province of B.C. could be relocated to our facility.
We say: "Build it; they will come." We have the numbers here. We've done the surveys, feasibility studies. We're working on a business plan right now. Mr. Pimm knows how far a drive it is to Fort St. John. When you have to travel out to get to your loved one when you need to see them and you don't make it, it's not a nice thing. So we would like to build a facility, keep our seniors in Fort Nelson and bring prospective seniors here.
We talk about retention and retaining individuals in the workforce to live here in Fort Nelson — professionals, whatever — to keep them living here. Then let's allow them to bring their extended families here. Every day we hear: "I love this community, but we have to leave." So if we can provide a facility here where people can bring their loved ones, age-in-place…. This community was built on the backbones of a lot of these seniors, and they can't even stay here.
So we're looking to be put into the budget process or in the thoughts…. We've heard about Fair Share today. We want our fair share, and it's their God-given right that they should get some.
We do have a presentation that we're going to upload to the website there before the October deadline or whatever, but in front of you, you have our last donor newsletter and a little information on who we are and where we got started. I think you guys got to ride on our bus today that was graciously donated by the Cooper Barging family in Fort Nelson.
Everybody's businesses that are on that bus…. They are paying for that service. We have no B.C. Transit in Fort Nelson, and that bus has changed the lives of seniors and people with disabilities in Fort Nelson. Again, our local municipality has provided funding to help us keep that going on a yearly basis. It's allowed the people who are home-bound or hospital-bound or whatever to get out and about. It does provide for wheelchair access.
We can get people out and about in the community. One gentleman said that it's changed his life. When we got that bus up and running, it was the first time he'd been out of the long-term-care unit for three years. It seems like a small step, but it was a huge community need, and so is this facility, so we're really looking for your support.
R. Howard (Chair): Excellent. We have a few questions. Should we go to questions?
C. Seidel: Sure.
J. Thornthwaite: Thank you for your presentation. So you're saying that right now, if somebody is unable to stay in their own home, the only place that they can go is an extended care facility in a hospital?
C. Seidel: Yes — an acute care bed in the Fort Nelson Hospital. There are only seven beds, so if those seven long-term-care beds are full, that person will take up an acute care bed. Or they're relocated out of Fort Nelson — Pouce Coupe, Dawson Creek, Fort St. John, New Westminster. Otherwise, we do have one home care worker who works through the health care — Northern Health — who can make home visits. That's one person for a lot of people. We have people living at risk.
J. Thornthwaite: Right. So are you looking for an assisted-living facility?
C. Seidel: Eventually. We're building supported, because…. We'd like to put up 12 supported units in the first phase, and then in the second phase we'd be going into assisted living. We want to offer facilities to age in place. Currently they are building, with B.C. Housing's funding, another six independent units in midtown. Right next to that is the property that the municipality has donated to us, so we'd like to start the process of age-in-place.
Yes, we'd love this to grow into four or five or six units of assisted living. As the people's needs change, we plan to build according to….
S. Cooper: If I could just add to that, though, assisted living requires Northern Health to be on board, and they've told us…. We've met with them a few times. We don't have their support at this time to be assisted living, so we changed our mandate to provide supported housing, which means that it's pretty much the same care and everything like that, but not with Northern Health and in conjunction with our society.
C. Seidel: Not that they don't support it. Not that they're not on board. They support it, but: "Build it, and we'll bring you some help." Sure. I just only want $2.3 million.
M. Elmore: Thanks for your presentation, and yes, we got a tour around Fort Nelson and around the area in the bus. It's an excellent vehicle.
Currently there are 23 seniors subsidized units, apartments?
C. Seidel: Yes, with a wait-list of 20.
M. Elmore: And there are six additional that are being built as well — right? Then you're up for an additional 12. I'm just curious in terms of what the dollar amount was that you're looking for. It's great that you've got the contribution from the city, from the municipality, for the land. What are your other partners?
C. Seidel: Right now we're working with the BDC on a business plan, and we are working with an architect and a builder. Right now our projected cost is $3.2 million to put our structure up for 12 units, and we do have the support of…. But this can't be built on the local community. It can't be built on the retailers and the individual businesses that are here. We need some support, and we can't wait till we're done paying for the Olympics.
B. Bennett: I think I'll defer my question and just follow you out away from the table. I just had a couple of things I wanted to ask you and tell you.
C. Seidel: Okay. Perfect.
R. Howard (Chair): Okay. That does it. Thank you very much. We appreciate your time.
Next up, we have Energy Services B.C. — Laurie Dolan. Just as you're getting set up…. You've got 15 minutes.
L. Dolan: I won't need 15 minutes.
R. Howard (Chair): Okay. If you do, at around ten, I'll give you a heads-up.
L. Dolan. Sure. I knew where I was in the presentations, so I've kind of condensed it. I reiterate what everyone else has said about Fair Share and a few other things.
My name is Laurie Dolan. I'm the executive director north of Energy Services B.C. We are a member-driven, not-for-profit organization encouraging B.C. business. We have over 240 members, with a large number of these working and/or living in Fort Nelson.
These companies have ten, 50 and hundreds of employees, so we represent a large, identifiable group of the service sector in northeast B.C. who work in the Horn River basin. Industry has worked very well with us in facilitating steady work to companies in Fort Nelson, which allows them sustainability and the means to grow. Although things have been very positive, there are a few challenges.
Our service sector is in need of workers. It is hard to attract workers to Fort Nelson and to the oil and gas industry from other parts of the province. I represent Energy Services B.C. on the board of the Petroleum Human Resources Council of Canada, where we have done labour market initiatives and studies for the B.C. government. They have provided a program to displaced forest workers in B.C. to transition their skills and trades over to the oil and gas industry.
Unfortunately for us, 100 percent of these workers went to Fort McMurray, Alberta. They would not even consider working in northern B.C. or the Horn River basin development. Both of these were very foreign to them, and although they were all from B.C., they had not heard of Fort Nelson and had a negative opinion on the shale gas development.
Usually the first question they ask is, "Fort where?" to which I always respond: "No, we are Fort Nelson." There is a community about 200 miles away by air that is called Fort Ware.
A few of the negative perceptions that they have of work here in Fort Nelson is the camp situation — camps with no heat, working in unbearable cold temperatures and sleeping in your vehicle. None of these are true.
This tells me that we need to do some positive campaigning in the rest of the province to attract these unemployed workers for our members.
Unfortunately, this costs money — money we don't have. But we would love to work with the province in getting unemployed people off your payroll and onto our local companies' payroll.
Secondly, we need to supply our companies with capacity-building. We don't have a lot of resources locally here to help us. While searching for solutions, I noticed Fort St. John has some provincially funded organizations that offer support to these kinds of things. A few of them are….
Sci-Tech North is currently offering great workshops on why innovation is important to the region — professional development. There's also a Rural Secretariat office in Fort St. John which has access to information on grants and programs. There are also B.C Association for Community Living offices in Dawson Creek and Fort St. John.
Too often these valued services don't make their way up to Fort Nelson. We are 387 kilometres from Fort St. John or a $400 return flight. So in order for our service sector members and members of the community to participate in any of these events, they would have to take three days off work and provide the cost of gas or airfare plus hotels and meals. This is a real disadvantage to the residents here.
Our members need this information and need to obtain it locally. I would ask you consider supplying Fort Nelson with some of this.
Our members work hard and add respected value to our community. We have generations of workers and companies here. We are good at this work and enjoy it. We choose to live here and are committed to continually making Fort Nelson a great place to work and live.
We would like the opportunity of working with the provincial government to help accommodate some of these solutions. We are a community that you would be pleasantly pleased to work with.
Just one example of how our residents can come together for a cause is the Relay for Life. A few years ago Fort Nelson raised close to $60,000 in this one-day event. Unfortunately, 100 percent of that money left the community.
R. Howard (Chair): Thank you.
B. Routley: Yes, thank you for your presentation. I definitely get the picture that everybody in the community seems to be working together to try to promote the community, and you're to be commended for that. I can certainly understand why, having toured the plant today. Of course, we do have a nice, sunny day, and I know it's not like that all the time.
L. Dolan: Oh, it is. It's always like that.
B. Routley: However, one of the issues to attract workers…. I used to represent forest workers, so I've been through the process of downsizing of mills and logging operations and have talked to workers about transitioning to other communities. I will happily tell people that I know that there are jobs available up here.
One of the issues, of course, that comes up is accommodation, so obviously, that's an issue that people would want to know about right away. Is that one of the infrastructure problems that you have right now? Do you have low-cost housing available for service sector workers?
I mean, obviously, you could….
L. Dolan: It's cheaper than Vancouver. I'll tell you that.
B. Routley: Really? Okay.
L. Dolan: I think Bill and Colin will be able to talk about that. The town did a great job on the official community plan, and I think that the mayor and council are very knowledgable on where we have to be in a few years.
Right now there is the fly-in, fly-out model. We have thousands of people in camps, and these camps are magnificent. If you walked into the lobby of the hotel here, there are two camps out that rival that lobby and the entire facility, so it's not a bad place to stay at all, with great food.
You know, in a quick fix, there is that. But there are companies that are really struggling in building and maintaining a presence here because of the lack of employees and skilled workers.
B. Routley: Is there a shortage of workers right now? I mean, I saw that with the community plan, there are these new projects going ahead that will require additional employees. Do you actually have positions that are not being filled, or is the situation that you're finding plenty of workers from Alberta at this juncture?
L. Dolan: Well, you only have to look at our Fort Nelson News. A little under two years ago it was not odd to find no jobs in the Fort Nelson News on a Wednesday. Now there are, I think, between two and three pages of them.
They're not getting filled, and they're crucial jobs for our community to keep working in those kinds of jobs. We really need to do something in that.
P. Pimm: Thank you very much, Laurie, for your presentation. Certainly, I'm familiar with the issues that have been in this area, but it's great for my colleagues to hear some of this stuff.
I just wanted to give a little background on Energy Services B.C. What Energy Services B.C. is…. It's not a government operation. This is the former northern contractors association, so this organization represents all of the contractors in this area. They have a good membership of the contractors, and that's the only way that they get any funds.
Certainly, it's a good organization. It represents all of the contractors of the area. Both you, Laurie, and your counterparts in the Peace River regional district are a doing a great job. We're working to get some support for you. Trust me.
L. Dolan: Good, thank you.
D. Donaldson (Deputy Chair): Hi. Thanks for the presentation. You mentioned that you have 240 members, a large number of these working or living in Fort Nelson. How many aren't living or working…? For the ones that aren't living in Fort Nelson, is there a gap there of service delivery that you could identify for future jobs, and is there training associated with that that's required?
L. Dolan: Our members are…. We're Energy Services B.C. Anybody in B.C. can join our membership. We have a large membership, of course, in Fort St. John and Dawson Creek, with the Montney play. But a lot of those services go between. A lot of the companies are working there, working here. So we don't have an exact number of where the majority of their work is. Although, the Horn River basin, of course, is a huge place, so we've experienced that growth with the service sector.
So you're asking if we've logged any information on how to train, how to recruit? Is that what you're…?
D. Donaldson (Deputy Chair): I'm looking for a potential labour market gap in the companies that, perhaps, aren't located here and if you see that there is a training requirement around that.
L. Dolan: There is, and the only body that I really work with on that is the council. They get federally funded, and they have a lot of money for training and information. In the last year they have recognized B.C. That's why I'm on the council. Before there was never anybody from B.C. It's an Alberta-based one, but it is Canadian. There are people from Atlantic Canada on the council. It's bringing to light some of the issues in B.C.
We just did…. The province of B.C., I believe under Advanced Education, gave money to do some studies. Training is another huge one. That's the only outlet right now that we're working with to accommodate that.
D. Hayer: We actually toured the Spectra Energy Fort Nelson operation today with the mayor, Bill, and director, Colin, and with MLA Pat Pimm. It was very interesting to see that and how they're saying that they can't find the workers too. The mayor was telling me…. He said: "Look, if you have people come here tomorrow, they'll find work tomorrow." But most of the people in the Lower Mainland, my constituency in Surrey-Tynehead….
I did know that Alberta has a lot of jobs up there. I didn't realize how quickly and easily you can find a job within the trades field here too. So I think part of our job will be trying to promote in our areas in the Lower Mainland, especially young people, that if they want to come here, they can earn a good income and live in a nice environment. I appreciate your presentation. It was a very good presentation.
L. Dolan: There is a big culture difference between, let's say, Fort Nelson and Saltspring Island. I mean, you may as well be in Borneo for all the understanding between two communities like that.
I do get calls. There are a lot of agencies in Fort Nelson that get calls from workers, skilled workers. But again, there are the logistics of getting that worker up here and matching him to an employer. We just haven't got that far yet. We know everybody is looking for workers, but for somebody to travel all the way up here…. They're usually on the Greyhound, get off the Greyhound and then go: "Now what do I do?" We just don't have that service here. So there are a lot of services lacking, but there is a lot of heart here.
R. Howard (Chair): Excellent. Well, thank you, Laurie, for taking the time to come and present to us today.
Next up we have Fort Nelson Hospital Foundation — Carla Peace.
C. Peace: Hello there.
R. Howard (Chair): Welcome, Carla. You've got 15 minutes in total. At about ten minutes I'll give you a hint, and you can either take questions or keep going.
C. Peace: I am Carla Peace. I'm the executive director from the Fort Nelson Hospital Foundation, and I'm very happy to be here to speak with you. I wasn't sure I wanted to come or how this is going to work. But I'm here, and all should be good.
The hospital foundation has been around in Fort Nelson for the last five years. We're a very young organization in the midst of hospital foundations and fundraising and all that kind of stuff. Basically, the mandate of the Fort Nelson Hospital Foundation is to assist the Fort Nelson Hospital to improve the care that we're able to give to our community, whether that's new equipment or improvements to patient comforts. We work together with the administration of the hospital and with our board of directors to make those improvements. We do that through different fundraising events that really involve the whole community.
The board of directors from the Fort Nelson Hospital Foundation and I think of what we do as not only improving the care and giving more money to the hospital but really improving the social aspect of our community through our events. We have a charity bed race that happens once a year, a ladies golf tournament and now the Horn River Basin Charity Hockey Tournament. So we really do a good job of improving the community spirit, offering opportunities to improve the community spirit — and to put that money and make awareness of what's needed in the hospital.
Fort Nelson is very grateful to the B.C. government for providing money to health care — as their responsibility to what you guys do. We really appreciate that. Our hospital has done a very good job of maintaining equipment and maintaining the building. It's been fantastic with the local money that comes in and the money that comes in from the hospital foundation.
I always hear from the public, of course: why are we buying all this new equipment when we have a shortage of doctors to be able to perform? I'm here today to tell you, as a constituent, to continue to keep that box open, to think about how to improve what services we can. In the last 20 years since I've been a resident of Fort Nelson, it always seems like there are less services, less surgeries, less physiotherapy — all those kind of things.
So we as constituents and as government need to think outside the box as to how we can improve those services. We'll do our part to help improve the equipment and the patient comforts that are there. You'll do your part as government to make sure that the building is good and all that kind of stuff, but we all need to work together to be able to bring those people to our community.
As you've heard from the other people, this is one of the best communities in B.C., from what we all feel, anyway. It's just a matter of getting those people in the door, and we'll keep them here. We'll make those relationships and keep them here. It's just a matter of getting them here. So we hope that we can continue with Northern Health and with government as partners to make those improvements.
R. Howard (Chair): Thank you, Carla. I have the Richmond General Hospital in my riding, and the hospital foundation I'm very familiar with. I just encourage you…. Such a great way to get the community involved with the hospital. The contributions they make — of course, with a much larger population base to work from…. They're producing magnificent results. I think Richmond General just upgraded their MRI to one of the top in the country as a direct result of the foundation's efforts. I applaud your efforts and encourage them.
B. Bennett: Thanks for your presentation. Does Northern Health consider contracting with physicians here in Fort Nelson so that they're not totally dependent on fee-for-service?
C. Peace: At the hospital foundation our mandate is purely to enhance the equipment that we have. I'm not sure what Northern Health has negotiated with physicians. I really don't know.
B. Bennett: One of the things we've done in my rural part of the province is use some of that money…. Instead of using it on equipment, we've actually used it on enticing or recruiting physicians — couples in one case — and providing some benefits to them for having decided to move to the small town. It's about the same size as Sparwood. Then the health authority stepped in and signed them to contracts instead of having them depend totally on fee-for-service.
That's why lots of physicians hesitate to go to a small place. It's because they don't think they can make a good enough living. I was just curious as to whether the Northern Health Authority had looked at that. You might want to talk to them about it.
C. Peace: That was our hope as the hospital foundation — thinking outside that box — and that was one of the things that we came up with also.
D. Donaldson (Deputy Chair): Thanks for the presentation. One indication of a resilient and stable community is people, women, being able to have their babies in a community and then people staying around long enough that they're actually buried in the community as well. With the doctor shortages, do you see any indications of problems ahead for women being able to have their babies here?
C. Peace: Absolutely. Right now we have about a half-time service with physicians. There are definitely significant periods of time where people have to leave the community on their own nickel to be able to have children elsewhere, so that's definitely a concern. I think right now maternity services is closed till the middle of October.
I'm sure MLA Pimm has heard that time and time again.
P. Pimm: Thank you, Carla, for that presentation. It's a serious problem. It's one that is part of the larger picture, as well, and part of the presentation that the community made earlier. I think it's all part and parcel of building a better community and building a more attractive community and one that we can attract professionals and educators into.
Bill touched on the point that I wanted to bring up as well, on the contract situation with the doctors. Obviously, you guys haven't gone down that road. I think that something we have to do as a government is look at some ways of servicing rural British Columbia. Whether it's Fort Nelson or whether it's other rural areas of the province, we have to be able to figure ways of getting folks into those communities.
M. Elmore: Thanks for the presentation. Besides the challenges around the doctor shortages, physician shortages, are there other projects or priorities that are pressing for the foundation in terms of your targets or plans or identified priority services?
C. Peace: You know, right now the hospital foundation has a very short list of needs from the hospital. The hospital foundation has…. I don't know. I guess we've done a very good job of funding for the hospital and made ourselves…. We have a very short list. Basically, because our mandate is very specific to the hospital, the outside services haven't come under our jurisdiction or our realm.
So to answer your question, no. We have no big plans, because the hospital has done a good job of spending their provincial money and their local money, to put that to work in the hospital.
R. Howard (Chair): Excellent. We have one more.
D. Hayer: How much money do you normally raise every year? I was talking to your mayor earlier, and he donates all his money, ever since he was the mayor and councillor, to the local community. How much money does your organization raise every year?
C. Peace: In the past five years the hospital has done about $1.3 million, so it's about $150,000 a year, depending on what project it is. It's very project-specific. It's not like a big community where you can raise a million dollars in one specific campaign. Last year we were, I think, $150,000, and the year before. We celebrated in June 2006 — in the last five years a million dollars raised. That's a pretty big target for us.
D. Hayer: Was that money from businesses or individuals or a mix?
C. Peace: It's a mix. Yeah. It's a huge mix. The statistics for charitable organizations are about 80 percent personal money, but in our organization it's about 60 percent corporate money — just because of the busyness of the industry and the generosity of the companies that are here, for sure.
R. Howard (Chair): Excellent. Carla, thank you so much for coming out.
Next up we have the Horn River Producers Group — Kellen Foreman.
Welcome, Kellen. You've got 15 minutes in total. Ten for speaking and five for questions is typical, but you can use all fifteen if you like. I'll give you a little heads-up around ten.
K. Foreman: Sure. So first of all, I guess, thank you for having me here. In case any of you don't know who the Horn River Producers Group are, they're a group of ten oil and gas companies. They're the ten largest companies that operate in the Horn River basin shale play. The reason this group was formed was to kind of help coordinate, collaborate, share ideas and technologies, and work on overall development so that we could do things most efficiently, looking at the environment with the least amount of impact as possible. That was the goal of creating the group.
If we can step back maybe five or six years in Fort Nelson, I'd just like to talk a little bit about the state of the economy. The forestry industry had been a very large part of the economy up here until about five or six years ago. At that point two of the bigger mills shut down, and there were 550 to 600 jobs that were immediately lost within a number of weeks.
For a town the size of about 5,000 people — Fort Nelson — that would have been absolutely devastating, but just by sheer luck, the discovery of the Horn River shale basin took place at exactly the same time, and luckily, all those jobs that were lost could be absorbed into the oil and gas industry. So if you're looking at the unemployment rates, real estate prices and overall population of Fort Nelson, there was a very minimal impact of those mills being shut down, which is a great thing.
Fast-forward five years to today's date, and the economy again in Fort Nelson looks fairly healthy. There is the lowest unemployment in northeast B.C. — 4.2 percent. It's something that everyone here should be happy about. In speaking on behalf of the Horn River Producers Group, I think a lot of that has to be attributed to the oil and gas development that has been taking place up here.
The proposal that all of you have in front of you is dated about six months back. It's something that…. Our group went to MEM, which is the Ministry of Energy and Mines that I'm sure you're all familiar with. It's a proposal that we put forward to them. Basically, what we're looking for is a means to help develop and coordinate efficient infrastructure into the Horn River basin.
If you look on the last page of the proposal, there's a map that kind of highlights the two main routes that we have currently into the basin. There's one going up along the west coast, which is Highway 77, and there's another road that kind of travels east before it heads north. Both roads kind of go all the way around the Horn River basin.
If we go back to 2003, there was a huge initiative put in place to help incent infrastructure and access into the Horn River basin to support development. The main project there was the SYD road. A large amount of money was put forth to fund that road over a five- to ten-year period.
Looking at today and what we know now and where that road is, there are a number of things that industries looked at in terms of: is this the right answer, is spending money on that road the most economical thing we can do, and does it make sense for development into the Cordova basin and the Horn River basin going forward? In doing a very thorough analysis, the answer we came up with is: no, that's not the best use of money spent.
What our proposal puts forward is moving a portion of the funding that's earmarked for that road and moving it towards building a central access road. The central access road, as we've been calling it, would be a road that goes straight from Fort Nelson, north into the centre of the basin.
Our proposal is basically asking that we move some of that funding into the centre road, and industry, upon that commitment…. We're going to put in another equivalent amount of money, which is $50 million. It's a very substantial amount of money that industry wants to and is willing to commit in order to develop proper infrastructure into the basin.
If you look at, potentially, a 30- to 40-year development plan, all of these roads are going to spiderweb themselves together. What we want to do is put together the right plan right now, spend the money and get the commitment from industry. There's not one single partner in industry that's willing to front the cash. Without a partnership and a commitment from the province, this road wouldn't go forward.
In terms of what this means to the province of B.C., and northeast B.C. in particular, there's a $50 million commitment that industry would be putting in that wouldn't otherwise be brought into the area. Why we're wanting to do this is that we're spending a huge amount of money on the current routing of the roads.
It's seven hours to get into the middle of the basin and back. With that huge distance, we're having to keep people in camps up there. Just more road is more fatigue, more accidents. A longer stretch of road is harder to maintain. Things of that nature.
With building a new road, we'd be incenting, first of all, a large amount of capital that would be going into new jobs to build the road. And industry would like to completely maintain the road going forward, so there'd be zero liability at all for the province for a road.
We want to put a large investment into the road right away and keep maintaining it, so there are going to be local jobs on the maintenance side and on the capital side for installing the road.
I think that pretty much summarizes what we're looking to do. The proposal itself has gone in through the Ministry of Energy and Mines, and they're looking at alternatives and looking at the feasibility of this.
At the end of the day, we're not asking to steal money out of the general fund; we're looking to move funds that are earmarked for an existing road and spend them more wisely. At the same time, industry will add in a larger portion of funding.
R. Howard (Chair): Okay. I've got a number of questions, so if we could be as brief as possible.
B. Ralston: I appreciate that these are estimates. You've given a figure of $100 million gross. The material we just received a little while ago, earlier in this presentation, from the regional municipality put the cost at $25 million from government and $25 million from industry, for $50 million.
I know they're estimates. Are we talking about the same thing here, or is there some explanation available?
K. Foreman: I was largely behind all of the economics on this and doing the cost estimates. Every single number has been…. The entire cost of the road, including bridges, is $100 million.
B. Ralston: So this $50 million is outdated, then?
K. Foreman: I believe so.
B. Bennett: Maybe it includes $50 million from the SYD.
A Voice: Yeah.
B. Bennett: That'd make a hundred.
B. Ralston: It doesn't say that in the material we've been given.
D. Hayer: Thank you for providing input. You can provide a billion-dollar investment in the province. We appreciate that.
The road, when you're looking at it…. I was looking at the map. Is the geography very similar to that, or would the road be more safe or more dangerous if you were to make it directly, compared to other parts? How long would the road be, approximately?
K. Foreman: Before it's constructed…. In terms of safety and how it's constructed, the blue road that's called the Komie would be built very close to those specifications. There are a lot of parts of the SYD, which is the orange road, that aren't built to the specifications that we'd want to have the central road to. If you're asking whether we'd be building it to a safer spec than what's currently there, yes.
In terms of when we plan to put this on line, we would like to start construction, maybe, at the start of 2013, and a couple of years to build the entire road. So hopefully, 2015-2016 would be when we'd want the road in place.
D. Hayer: How many kilometres, approximately?
K. Foreman: From Fort Nelson to point A on the map is just shy of 80 kilometres.
R. Howard (Chair): Before I go to MLA Donaldson, can I just confirm? The 50-50 funding arrangement, then, is 50 by the Horn River Producers Group and 50 from government? This is the $50 million that MLA Ralston referred to.
K. Foreman: Yes, $50 million from government, but the $50 million from government…. We're not asking for you guys to find $50 million somewhere else. It's moving the funding from the SYD funding.
R. Howard (Chair): Got you.
D. Donaldson (Deputy Chair): Thanks for the presentation. I hope you can shed a little light on how road construction costs work in your industry and in this proposal that your group is bringing forward.
In the forest industry, when forest companies construct a road, there are abilities to recoup that cost, either through lower stumpage, tax credits or tax incentives. So the $50 million you refer to that industry's putting in. Are there means for the industry, then, to recoup that $50 million through such means as well?
K. Foreman: The $50 million the Horn River Producers Group would be inputting…. You're wondering if we would…?
D. Donaldson (Deputy Chair): Are there tax breaks on that or other ways that…?
K. Foreman: We wouldn't be looking for tax breaks from the government on that. But it would be a producers group–owned road on which we would provide and charge maintenance. So if there are other oil and gas companies using the road that didn't put up initial capital, they would be paying a higher fee to use the road.
There are structures out there, P3 structures, where a third party puts up the capital, and they want it recouped. For the most part, it's going to be the companies, the producers group, using the road, but if there are other oil and gas companies using the road, they will have to pay a slightly increased fee to help on the capital side.
We're not looking to the government for recouping those costs. That's completely amongst industry.
R. Howard (Chair): Thank you. I've got three minutes and four left on the question list, so let's be brief, if we can.
J. Thornthwaite: Thank you for your presentation. Right now you're talking about two partners. What about the federal government and other potential partners? I don't know what the situation is here. And support through First Nations — I'm just wondering where we're at with that.
K. Foreman: At this point our group has only taken the path of wanting to partner with the provincial government in terms of moving funding that's already earmarked for the SYD. We haven't looked at the federal piece.
If the provincial government decides that's a better route for them or this doesn't fit within what their vision is, then that's a route we'd be willing to look at. But at this point we're wanting to really just move funds from SYD that we think maybe are not being best spent there.
M. Elmore: Just in terms of…. Currently the SYD is under construction. You're proposing that the money from that project be moved to the central access road.
K. Foreman: A portion.
M. Elmore: And then what would the status of the SYD be?
K. Foreman: It's still necessary, and it's still going to be used. We've looked at it and don't think that all the money in the funds is necessary to provide a road that is going to provide adequate support for the Cordova basin and some of the compressor stations and the Jean Marie. We think that we're leaving adequate money to provide a road that will meet the needs of the traffic that's going to be there.
We're going to reduce traffic on that road substantially if we were to put in a central access road. Industry would be taking a lot of the weight off maintenance and things on the SYD going forward. We'd manage all that in the central access road and reduce traffic on the SYD.
B. Bennett: Mr. Chair, I've been up here three times in the last two years and have heard pretty much the same thing each time, which speaks well of the people presenting and not so well of us, who are supposed to be listening.
I hope that when the mayor and the CAO come back up, we can have kind of a discussion with them and try and focus in on what sort of a recommendation in our Finance Committee report we might be able to provide to government that would go to all of the recommendations we've heard here today, because there's a theme.
The theme, I think, is that there is this great economic opportunity — some of which is going to happen anyway, because the world needs the gas, but a lot of which is not going to happen for B.C. It's going to happen for Alberta or perhaps in some cases southern B.C. communities unless government steps in and decides to get involved with the road, with the infrastructure, with the health care facilities and everything else.
We've only got one more presenter, I think. Hopefully, at the end we'll have a chance to fashion some kind of verbiage around a recommendation that everybody here could support.
R. Howard (Chair): So 30 seconds to MLA Routley. Then we've got to wrap it up.
B. Routley: Well, I think you answered my question. But just for greater certainty and clarity, the SYD road…. You've already had funding approved is what you're telling us. You've simply decided — the ten companies involved — that taking $50 million from that project, moving it over to build this road…. Then you're going to provide matching funds. Is that going to do the job for both roads? Is that what you're saying — that both roads are going to get done and you're not going to be back here looking for more in the future?
K. Foreman: Our proposal is, yeah, if we get $50 million moved, industry is taking care of the rest of the central access road. If it's 120, we'll have to pay 70. We're asking for $50 million, and we'll cover the rest and cover the maintenance going forward. We do believe that for the activity on that road the remaining funding would be adequate over the near term for sure. If gas prices somehow shoot up to $10 or $11 per Mcf, there might be more development going in the Cordova basin, which would be using the SYD. But at this point we don't believe that activity is there and won't need all of those funds put into the road.
R. Howard (Chair): Thank you, Kellen. We really appreciate you coming out and presenting to us today. We used up your time and a few minutes, I think.
Next up, Jim Campbell.
Welcome, Jim. You've got 15 minutes in total — typically ten for you talking, five for questions. But you can go all the way through if you want. At about ten minutes I'll give you a heads-up.
J. Campbell: I've prepared a submission. I'll probably just read it to the group.
Mr. Chairman, committee members, thanks for taking the time to listen to me. I'm James Campbell, partner and president of W.J. Sand and Gravel Ltd. I would like to thank you for the opportunity to speak to an issue I believe is dear to the hearts of many small business owners in northeast B.C. Please indulge me for a minute for some brief background information.
As the committee is aware, there's been a huge surge in activity in what was once thought to be a declining industry — the search for natural gas. New technologies have unlocked a resource in North America which rivals the Middle East as a potential energy reserve. We can pause to consider the prophet of innovation, Mr. Joseph Schumpeter, who was a professor of economics at Harvard University from the 1930s through until the '50s.
He has given us two insights into the modern world in which we live, the first being the term "creative destruction," which he described as: "Each new technology which comes to pass destroys the one which preceded it." He used to like to ask if anyone knew a telegraph operator. I like to ask: when was the last time you actually spoke to a live telephone operator? As you can see, this reality creates a lot of turmoil in our world as we constantly strive to keep abreast of the changes.
The second contribution he gave us was a solid understanding of how an entrepreneur drives us forward by creating new technologies, which cause this Schumpeterian destruction. We're witnessing some of those even as we speak in North America and in the global energy markets.
For those of you who are not aware of it, it wasn't ExxonMobil or Royal Dutch Shell which created the horizontal drillings, well packer and multistage fracturing combination that we use today to drive our industry forward, but rather a company in the United States known as Mitchell Energy and Development company, a producer who during the 1980s and '90s developed a technology which released untold volumes of gas locked in a formation known as the Barnett shale. This ability was cultivated and nurtured by the dream of George Mitchell, whose entrepreneurial spirit has changed natural gas from a fringe fuel in the '80s to an energy supply to fuel the future.
I've spent a lifetime in the gas industry, and I'm very bullish on its success. As such, I'd like to call the committee's attention to a disparity that exists in our world here, which can impact much of what is going on today. It deals with small business access to our land base and natural resources and an uneven playing field that punishes the small operator and favours the large multinationals.
How can that be, you ask. Well, the province deals with all aspects of access to our land and resources. We had the foresight to create an organization known as the British Columbia Oil and Gas Commission, which has been charged with approving applications and regulating the oil and gas industry.
I work in the industry as a construction consultant and deal with the surface land process known as applying for access and drilling lease development. That uniqueness has given me the chance to compare the processes we use as well as the process which governs the small operators such as the gravel business.
There's no comparison between the two. The gas operator applies for their surface development approvals and submits an application, complete with reports generated by professional consultants which address any issues arising from the impacts on the environment, health and safety. It then incorporates those recommendations in the application. Typically, the application is approved within 90 days.
A small operator in a gravel pit, base camp site or other development that supports large resource projects submits their application for land access to the approval agency, typically FrontCounter B.C. The approver can take up to 120 days before they even acknowledge your submission, let alone whether they will consider it for approval.
Then it has to cross the desk of several different ministries for consideration and can take up to two years before a decision is made, after which we need to further apply to other ministries for more approvals, such as Northern Health, Ministry of Mines or Ministry of Forests. Each of these approvals can require review by the First Nations, and this redundancy adds a backlog to the First Nations lands office. Each reviewer needs time to consider the application and respond with the appropriate permitting. This can add another six months to the process if they're overworked and underfunded.
My personal experience on one gravel pit application was to submit for an investigative use permit. Then it was, finally, four years before I received the final approval.
I understand that the new Ministry of Forests, Lands and Natural Resources is trying to deal with this, but my experience with the new process is that it is understaffed. When the approvers are also the compliance and enforcement officers, you can see they're soon drawn into a conflict of interest by trying to wear too many hats. As well, they do not have the time to be both entities.
Application review is further delayed by using this system. We desperately need to rework the whole process to speed it up, and I feel we should change the mission of the ministry to one of approving development, not one of considering if it will even happen.
It is a foregone conclusion that resource development — whether ecotourism, service industries that support resource development or aggregate and resource developers — should proceed as per the LRMPs. Applications should not be mired down on a desk for many months as if they do not even exist.
We need development to fund our provincial education, health and community programs. These small business operators tend to get overlooked in the rush to encourage large-scale development projects.
I sometimes feel the approving agency is considering if one business has a better chance of success than another, but I caution that that's the selecting of those who may survive and those who may not. We simply cannot know this. If the government of Texas had tried to determine which company would be a success or failure, Mitchell oil may never have got off the ground and we would not be having this discussion.
The new Forests, Lands and Resource Operations branch may be able to change the focus of the approvals operation to one of the approver and regulator, not to one which considers applications for review.
I ask you to consider this. There are several trips made during the course of the week by large chartered aircraft bringing a transient workforce into this community to be housed outside the community in the large construction base camps. Natural gas operations pay provincial royalties, and this workforce pays its taxes and spends its net income in its home community, whether it is on Vancouver Island or in Edmonton, Alberta. That is great, because as the tide comes in, all the boats will rise with it.
But remember, the small entrepreneur in a community like Fort Nelson pays taxes in Fort Nelson and, in large, employs the people who live in Fort Nelson. Each of these employers and employees contribute to the total local economy by paying taxes and making purchases in Fort Nelson.
Hamstringing development by these companies can only prove counterproductive if we let it continue. As well, please consider that the government of British Columbia loses out on royalties and taxes not paid because the business cannot get up to speed in a timely manner. The tragedy of this is that we'll never know how much is lost because the regulatory and approval hurdles are in place, restricting entrepreneurial development, as there is no way of tracking this potential loss.
There is some work being done to try to smooth this process. Mr. Jim Little of Mackeno Ventures, a retired lands branch manager, professional and experienced in the allocation of lands and resources and working as a land agent consulting firm, has been working to find some resolution. I believe some of the committee members are familiar with his work.
We feel that there may be room for the OGC to assume the role of approver of aggregate development permits. The bulk of the gravel consumption in the north is for the oil and gas industry, and they have a system to assist the oil companies with approval, but this does not extend to the small gravel operators unless they commit to only an oil company and only for small quantities.
Thank you for your time, and I'm more than willing to answer any questions you may have.
R. Howard (Chair): Excellent. Thank you, Jim.
M. Elmore: Thank you for your presentation. I'm just curious to know: in terms of the timeline, has there been a change? Has the process lengthened? Is it becoming longer in terms of the approval process, in your experience?
J. Campbell: My experience is that, yes, it has become longer. When we first started initiating a few of these aggregate permits…. I think that was even prior to the LMWB or whatever they've changed the lands branch to. At that time they would help you, walk you through the permit. They were there to take your hand and guide you through, somewhat like the mines branch was doing with new mines applications to try to encourage development.
Since that time we've gone through several changes. I can't speak for the rest of the province, because I'm familiar with northeastern B.C. but nothing south of Prince George, but it would appear that the process is becoming much more complex.
Even when you take the time to follow the process used in the oil and gas industry to engage professional consultants like habitat biologists and professional agrologists to assist you with reports and whatnot in your application process and submit those to give a sense of the impact on the land base and the environment, it still makes no whether or withal with the application process.
It's stalled out. You'll submit. You'll end up listening to requests for more information, submit the request, and then you'll end up with a response that suggests that there's not enough information here yet, or you have failed to fill this form out properly, or there can be any number of different excuses.
It seems to be bogged down, and I think in large part it's because there has been a surge in activity, but there hasn't been a surge in the manpower put in place to deal with these applications.
Pat, you probably know something about this. I'm thinking in part it's a lack of ability of the people involved in the process to manage the workload that they've been presented with.
B. Bennett: I've a tough question for you. Can you take a stab at quantifying the losses to the private sector and the Crown in terms of economic activity that does not happen because of the flawed permitting process? I mean, just relate it to your own experience in your own business. What you have not been able to do? Who have you not been able to hire? What money have you not been able to spend because you couldn't get permits? Is it significant?
J. Campbell: Yeah, it can be significant. As it stands at the moment, we're kind of patiently working our way through the system. But in this industry, with the cascading effect brought on by somebody in the gravel industry…. This works, as well, to camps and catering and stuff like that, because there's a lot of potential out there for small business operators to get involved in this large gas play in northeastern B.C., not just Fort Nelson but in areas like Tumbler Ridge, Hudson Hope, Dawson Creek, Fort St. John.
I didn't want to turn this into something where I was pleading my case, because it's not just myself. There's more to it than that. But in an instance like this my group stands to probably not be able to capture, say, three months' worth of work for up to 30 trucks, and you're looking in the millions of dollars of gross revenue for the companies involved. Out of that, of course, the government gets…. Say if we were to try to move 100,000 cubic metres of material directly, the royalty would be $350,000. And I'm just one operator. I know there are others out there that are struggling with that.
So the government's loss is $350,000. The man-hours lost or going to some other operation…. The oil and gas industry is very innovative. If they need to do something and they can't supply through a normal channel, they will come up with a new solution, one of them being this matting process that they've been using a lot. But it doesn't work well. It works great for….
You put the mats down and drill the well off it, but when it comes to the actual operation of the site down the road, it's very expensive because the mats rent for a large amount of money and they tend to get busted up and worn out. Whereas if you have an access in place — and everything with the oil and gas industry is access, access, access — you'll have to maintain that access, and to do that you need a source of aggregate, which is difficult to find in northeastern B.C., especially in Fort Nelson. And by not letting the small business people move forward with their operations, you hamstring the oil and gas industry as well.
So the cascade effect is huge, and I couldn't even begin to put a number on it. That's why I say it's a tragedy, because we don't know what the number is, and we can't actually know, when something doesn't come to pass, what the end result of that can be.
R. Howard (Chair): One last real quick question. We're out of time.
D. Donaldson (Deputy Chair): Thanks for the presentation. Very disturbing scenario you describe in the unlevel playing field and small business being the backbone of the communities, really, in the north.
The reorganization of the ministries into Ministry of Natural Resource Operations over a year ago was supposed to deal with, and FrontCounter B.C. was supposed to deal with, these kinds of permitting issues that you describe. The fact that it's not working — do you attribute that to lack of staffing or just the fact that the reorganization isn't working?
J. Campbell: My guess. I was involved. I spent four years on the oil and gas advisory committee, so I watched the Oil and Gas Commission come into play to where it is today, which is, I think, a very vibrant, very functional organization. I think that we have to see the same thing in the Natural Resource Operations. We have to go through the growing pains.
I think staffing's an issue. Experience may also play a part of it, and I think they've been inundated with applications. Of course, I don't know what their level of activity is, but my guess is that they've been inundated with applications for different things, and they work on it on a case-by-case situation and the like. But I think that there are several problems there that they have to look at and try to deal with.
R. Howard (Chair): Okay. Thank you, Jim, for taking the time to come out. Appreciate that.
J. Campbell: It was great talking to you guys.
R. Howard (Chair): Anytime.
Next up we have Radar Road Transport — Rick Seidel. You've got 15 minutes — typically, ten for you talking and five for questions. I'll give you a heads-up around ten, and you can go right through or take some questions.
R. Seidel: Awesome. I'd like to welcome everybody to Fort Nelson. Is this everybody's first time coming here? Has everybody been here before?
B. Ralston: I was here about 30 years ago.
R. Seidel: Thirty years ago?
R. Howard (Chair): Some have been here; some not.
R. Seidel: Great. I'll give you some insight into who I am. I'm a local boy that's been born and raised in Fort Nelson. Me and my wife, Carol, run a ma-and-pa operation. We've just grown to 40 employees. We work in the industry in the oil patch. That's all I've done my whole life is work up here. Transportation. I've worked for some other local companies — the Coopers, in Fort Nelson — and recently I've started my own company, in the last 15 years, and started doing my own thing.
As you guys have probably heard, the broken record is the infrastructure of our roads. In my safety meeting that I had yesterday with my employees I asked my people: what's the most dangerous part of their day when they go to work for me? And it's leaving our driveway. That's the problem that I guess that we keep having.
We keep hearing the stories of our SYD road. We keep talking about Highway 77 with the single-lane bridge that we deal with and the shoulders on that road. The SYD road — three to four weeks ago we killed another person. So we ask the question: what's a human life worth? I guess that's the question I have to ask you people when you leave here and go back to the south and you guys sit down and discuss what's going to go on. That's my biggest worry. That's one of the things that I would bring up to you. That's some of the stuff that you've already probably mostly heard.
Some of my issues that I have right now, which I'd like to bring up, are with our transportation industry. I try to travel back and forth to Alberta, and I have a lot of problems. I ask the question: why? We are all Canada, and yet between Alberta and B.C. we're still a follower. We're not a leader in the industry at all. One of my biggest frustrations is that it seems like our permitting system for my guys….
Are you familiar with how the system works? Let's say I haul a load from Alberta to B.C. At the border I land there and bring across a wide load or an overweight load. I have to phone a permitting centre, if I can get through to that centre. I have people that sit for an hour or two hours on the phone. Sometimes we can't even get through to get a permit.
Do you know what happens next? The guys get mad and don't buy a permit. They carry on illegally. If I catch them, then I've got to shut them down. Then we give them a few of these and tell them it can't happen. Sometimes you can't always be there to do that. It seems to me that our system is failing us, and that's something that needs to be reworked and looked at.
With our transportation industry, with the systems that we have…. We have what's called the new west partnership. Is anybody familiar with that? It's supposed to be something that's coming in, but nobody has come to Fort Nelson and talked to us and asked us our needs. It seems to me that's what it's all about — what the people need in this area. That seems to be something that doesn't get paid attention to.
I want you to know we really appreciate you people coming to talk to us, because it means lots. I mean, finally somebody is coming to listen. That's probably my biggest issue — that we're a follower in the industry right now, behind Alberta in the rules and regulations.
Just recently we can get on-line permits now. This is something that just came up. We talk about the permitting system. We still can't abandon the system that we have for a phone system, because if we can't get through on line, we've got to try and get through on the phone. That's something that's very important to me on the permitting system.
With our weights and measures, the scale systems, the amount of axles and stuff, we still are behind Alberta on our rules. That's something that has to be overhauled and brought together and made the same.
That's about it.
B. Bennett: I find a lot of similarities in what you're saying with where I come from. I come from the southeast corner. Even though you might think it's a long ways away and quite different, we've got the coal industry there and lots of big stuff moving back and forth on the highways there. We're tucked in right next to Alberta, not all that far from Lethbridge and not all that far from Calgary.
I fought with the ministry over the years with wide loads and heavy loads and bridges and all that kind of stuff. Just out of curiosity, are you a member of the B.C. Trucking Association?
R. Seidel: I'm a member of the Northern B.C. Truckers Association.
B. Bennett: And do you folks meet on a regular basis with the ministry?
R. Seidel: Sometimes we try, but I'm stuck in the north. I find the same frustrations to get our points across. It's a broken record. We've played it over and over, and it just doesn't seem to get any further than where we're at.
B. Bennett: I don't have enough time to get right into it with you. But I do want to say the reason that this committee is here, as far as I'm concerned, is your MLA Pat Pimm. He's the one who pushed hard to come here, so that's why we're here.
R. Seidel: Thank you. I appreciate you showing up, and it means something to us little guys out here. If we save one life out here, then it's all worth it, in my mind.
M. Elmore: Thanks for your presentation. It certainly brings a unique perspective in terms of the realities and challenges of running a business and also what it's like for employees on the road in the transportation sector. So it's really a valuable perspective.
I was just quite alarmed to hear your mentioning that there was an accident on the SYD road. We heard just an earlier presentation on priorities for building a central access road into the Horn River and maybe not focusing so much on the SYD road.
Generally, yeah, if you could share with me, I'm interested to hear just the quality of the roads, I guess.
R. Seidel: We don't have a "quality of roads" in Fort Nelson. I mean, all our roads are lacking hard, and for some reason…. The SYD road is always the broken record. We've been rebuilding that road….
Truthfully, I'd like to invite any one of you to come for a ride in one of our trucks tonight. Take you for a ride just to see what it's like. You won't like it. I'm serious. It's awful.
I send my guys out every day. In fact, right now, as we speak, I have five trucks out there working. And in that, you have to remember the fatigue of those guys that come in every day and the mental anguish those people go through of beating those trucks — the cost that goes to us.
Of course, then we have the anguish of three weeks ago when that accident happened. We did not know who it was. We sat for 24 hours waiting to see if it was one of our people, because we couldn't tell.
Unfortunately, somebody got a bad phone call that night because of the dust hazard on that road, which was stopped, of course, Monday morning, after the death. Then they went in and watered the road, and now it's been calciumed. So we keep asking the question over and over: why?
We were told we were going to get $185 million. Is that the number we were told we were going to get?
Some Voices: Oh, 187.
R. Seidel: But truth be known, from kilometre 121 of the SYD road north, nothing has been done. It's the same road that we dealt with five years ago, ten years ago, 15 years ago.
I just don't know how many more deaths we have to have before we stand up and say: "Hey, something has to be done." Our roads need attention in this country, whether it be the SYD or we build another centre line road. The centre line road is probably a great idea because, in my mind, it'll release a tension off that road. But it's the same story. I don't know.
What you people are thinking right now is: "Well, if we borrow funds, we're going to rob Peter to pay Paul." But you know, it's the same road. The SYD road deserves the attention too. We've had a lot of equipment hauled over it. It's a resource road. It's made billions and billions of dollars, but, to me, nothing is ever put back into it.
M. Elmore: Just in terms of your comments, your suggestions in terms of aligning more with the rules and regulations in Alberta, you mentioned the ability to apply for permits on line. Do you have any other specific suggestions in terms of the Alberta…?
R. Seidel: Our permitting system. It's close to being where…. It needs an overhaul. We need more people involved. I'm not sure if it's a staffing issue that's down there, but my guys get mad. I mean, it's something simple, and I'm sorry it has to come to something that gets to get brought up, but it's one of those things.
The government's losing out because people aren't buying the permits because of that fact. They just say, "To heck with it," and don't buy them because, they say: "What's the sense? We can't get through anyway." That's what my drivers have said. You have to…. He's telling you that it's not the way it is.
I try and explain to my people: "If you have an accident and you don't have a permit, then we're liable. At the end of the day, that's why we have a permit to drive down that road with a wide load." If you can explain that to some people….
But how many people don't believe in that and just go without it? That's where I believe that that system needs to be reworked and made so that it does work. I'm not sure why it doesn't now, but it's the same old problem. We could phone the central permitting centre right now. I'd say it's probably a good chance that we'll sit for 20 minutes to an hour on the phone to try to get a permit.
M. Elmore: Any other specific issues in terms of the differences?
R. Seidel: Our transportation with the legal axle weights and our configurations. That's where we need to really line things up. We're just getting close to what they can do with some stuff, but we're still a long ways away. We still don't recognize all the axle groups that Alberta rolls back and forth with. We still don't….
Do you understand when I say "axle groups"? Do you people kind of understand that? No? Maybe?
Interjection.
R. Seidel: Well, when you have an axle group, you're allowed so much weight on an axle group. Say in B.C. we're allowed tridems — okay? — a tri-axle unit, and in Alberta they have, like, 16-wheel units, where they can pack more weight but more wheels are on the ground. Alberta doesn't recognize it. We've asked: "Well, why?" There's no difference between the border. When you hit the Alberta border, there's not a….
R. Howard (Chair): You mean B.C. doesn't recognize it? You said: "Alberta doesn't recognize it."
R. Seidel: Sorry. Alberta recognizes it, and B.C. doesn't.
R. Howard (Chair): Okay.
R. Seidel: We're not allowed to go with the weight groups and stuff like that. It seems to me that seems to be a huge issue. We talk about the new west partnership. Nobody has come up here and asked us our needs up here, and that's part of the stuff.
R. Howard (Chair): I'll move on, but just to interject, the on-line feedback is also an excellent way. If people can't get up here enough, you've got to take advantage of that communication.
D. Hayer: What I understood from the last presenter about the SYD road is that if you were to transfer some of the funding, the new road would take away some of the traffic on that. Then both roads will be of better quality, and they will still maintain both roads to a better quality than what it is now. That's what I understood from the last presenter.
Just in a little bit more detail. When you talk about the axle weight, that's a good example. But if there are some other examples you can provide by e-mail or in the questionnaire….
If you want more detail, maybe talk to your MLA, Pat Pimm. He's one of the reasons we are actually here in this town listening to you. I'm glad to be here to listen to your problems, but I think if you can provide some more details — what differences we have between Alberta and us, especially for the trucking, how we can make it easier — that would be good.
B. Routley: Yes, hearing these difficulties seems to be a common theme of the bottlenecks that too many small businesses are finding in bureaucracies these days. At least, I'm hearing that kind of thing as well. So it is frustrating to hear that people are not being listened to and that you are waiting for 20 minutes to an hour to get a permit with a system that should be working.
Could you tell me how that compares with Alberta? The other question I had was: do you pay a toll of any kind for using the SYD road now?
R. Seidel: In our permits we do, yeah. An overweight permit is designed…. You're paying on the amount of weight you haul and per the distance.
B. Routley: Okay. So what kind of cost is that for a truck that's hauling from Alberta to British Columbia? Can you give me an idea of what you're actually paying for a service that you have to wait 20 minutes to an hour for?
R. Seidel: What kind of service? Some of those permits run up to $300 to $500 to haul a load for that distance. See, if I stop at the border and have to wait for a permit, it's anywhere…. It depends on your distance, but $300 to $500 for a large load if you're looking at, say, a load close to 50 or 60 tonnes.
One of the things with our roads — like you guys are understanding — is we still cross an army bridge on the Liard Highway in the north that was used by the army for temporary crossings. We're still using that. I have some of my workers that come up here from the Lower Mainland and I've put to work in Fort Nelson. They've asked me if it's safe to cross it. I don't know what it is. They actually were pretty scared when they first come to it, and you've got to laugh and say: "Well, we've been crossing it for 15 or 20 years now."
R. Howard (Chair): Excellent. Time's up. Thank you, Rick. I appreciate your time.
Now, as the committee knows, we had our first presenter that we had shortchanged a little bit of time. We had asked them to come back, so we have one time slot left. I will give the committee a heads-up that we do have one open-mike slot at 5:05.
We're pleased to offer you, gentlemen, the 15 minutes that we shortchanged you, but we'll have to keep it to 15.
B. Streeper: Thank you very much for visiting us again.
I'd like to start off with a few housecleaning items on MLA Bennett's comment about the Northern Health and the doctors. Our regional municipality supplies a doctor with a house — unconditional, one year, no rent, no cost.
We recently had a doctor here. She was here for three years. She rented the house for $1 per year for three years. At the end of the three years she decided she was going to stay. We sold her the house for the same value we paid for it. We made absolutely nothing off it.
We are prepared as a regional municipality to help bring doctors to our community, which are badly needed. We will support them. We will rent an apartment, we will rent a house, or we'll buy a house for them to live in.
B. Bennett: What about putting them on…? You guys wouldn't do this, but the health authority would put them on contract instead of….
B. Streeper: We can't seem to get much of that help up here at all. So we've gone and done it ourselves — the housing. We pay for it. The taxpayers of Fort Nelson pay for their housing.
To go a bit on the permit issue, yes, I also have families involved in the transportation, and they literally will park a driver on the side of the road trying to get through to the government to get a permit. It's actually a very ridiculous case. Again, I can sympathize with Mr. Seidel. An hour or an hour and a half is very common.
C. Griffith: First off, I wanted to clarify that I do not know how to add and subtract, or the difference between adding and multiplying and dividing, so the mistake on the SYD estimate here was mine. It should probably be $100 million. I said $50 million. Anyhow, that's all I'm going to say on that, and I don't want to take any questions on that point.
D. Donaldson (Deputy Chair): Your first mistake this year. That's all right.
B. Streeper: I'd like to go back to our business case here. As we presented and as you have seen, Fort Nelson is standing on the edge of probably one of the biggest booms in industry that this province has ever seen. It's something that will be very beneficial for Fort Nelson, the Northern Rockies, the province of B.C. and even Canada.
But I've got to stress to you that we cannot bear the cost ourselves. Our infrastructure is behind. We're working with infrastructure that was laid back in the '50s and '60s. Things have changed.
Of course, we look at the town across the Alberta border there, and we compare ourselves somewhat to what they're doing. We won't be as big as that, but it was proven over there that industry first and infrastructure second does not work. There were very big problems created in the other community over this.
What we're trying to say is: the proof is out there. Alberta has done the proof; they've done the research. You have to put the infrastructure in first.
We cannot put the infrastructure in with our existing taxation as it is now, and we cannot take our taxation and put it to the industrial people that were here. For one, we've got many cases. We've got a letter from Ida Chong that says we can't do it.
We already have a higher tax rate than the South Peace. You see the $8 compared to the $13. It's not making it competitive. If we were to raise the tax rate, which would put it up in the neighbourhood of $24, industry can shift this money instantly. If we end up taxing them to the limit to support all our local needs, I promise to you that money will be shifted away to other projects.
We've shown you the aspect of what the provincial government is going to make off income tax, what they're going to make off sales tax. We've shown you what the provincial government — you have the figures there — is going to make off this project.
We need help to make this project successful. We need to make this community one of the best communities in the northern part of the province. We have to be the service community for the Horn River. We must make the Horn River competitive. We must make Fort Nelson competitive.
I will quote the words from our Premier. We must make this a family-first community. The only way we can do it is for us to have infrastructure in place, recreation in place, to attract the families to do these jobs. And those families can be families from B.C.
We discussed it earlier today — the job opportunities that are here to bring the families north. But the infrastructure — the roads, the water, the sewer — have to be in place to get them to come up here.
I hope you can take this and look at it. The money is there. You are getting paid back the money that we will get for this infrastructure. We have been left alone for many years. This town at one time was on the verge of bankruptcy, when we didn't have the taxation money to support this town.
The Peace River district has had concessions laid there that were never laid upon this community. The reasons — we can go on forever. But it wasn't done. It's time. I think we've got to make amends. We need to go ahead. We have been promised by our Premier that something will be done. I think the time to have that done is now, and it's time to have it done quick.
You went today and saw our community centre, and you saw a hole where the aquatic centre is going to go. I'm sorry, but right now I do not want to go to the public of this community and ask them to increase their taxes to pay for this type of infrastructure, when we've heard for many, many years: "Let's turn the valve off." I don't like that scenario, and I don't want to do it. I want to make Fort Nelson and I want to make B.C. one of the most prosperous provinces in Canada. I want to make us number one for a long time.
It's through conditions like the Horn River, the Liard, the Cordova — and the last two haven't even begun to be explored yet — that are going to take us up into a world-class situation.
We talked with Spectra today on the CCS, where they're going to sequester carbon back down into the formations. This is world technology that has been created right here, and it's up to the province of B.C. to come forward and say, "Yes, we need to help that community out," or all we can do is to go ahead, and then, when it's a complete mess, we'll just give it to you.
Any questions? I'll take them now.
D. Donaldson (Deputy Chair): Thank you for the presentation and the tour today. I mean, the opportunities you describe in a town going from 6,000 to 10,000 are immense, and the challenges are immense, as you've laid out as well. I recollect former Premier Lougheed and former Premier Klein, in reference to the Fort McMurray development, saying: "Too much, too fast." You've pointed out some of the pitfalls that we need to learn from there. It disturbs me that the province has not undertaken any direct planning like you outlined in your presentation.
My question is on the…. I take it that from "infrastructure development," you also mean community services development. On the provincial service expansion that you've outlined in this document, the numbers there on infrastructure — is it operational service delivery? Is it per annum? If it's not, if it's capital, then what would you estimate per annum to deliver the services that are required?
C. Griffith: This is, I think, the critical point here. We did this up just to illustrate the point that the province needs to take a longer-term business plan approach to the development of this area, based on sound long-term planning.
Certainly, we've read all of your documents about the budget consultation process, which indicated that the province has got a hole they've got to fill and that there are short-term austerity and restraint issues out there. What we did this for was just to illustrate that you have to look at the development of this resource in this community over a longer time period in order to get to the point.
The point is that over time the province is going to reap billions of dollars of benefit, and there are some upfront costs that cannot be set aside just because we happen to have some tough times currently. That was the point of this. This is all — and it says right on the chart — illustrative.
These are not researched numbers. A few of them are, but the bulk of them are basically just some estimates to illustrate that regardless of having to put three, four or five hundred million dollars into the community and the resource infrastructure and the services that are the responsibility of the province, as well as fixing up and aiding the community, the province is still going to be looking at major, major long-term benefits in terms of job growth, in terms of provincial revenues.
I think the other point is that this basically could be only half of what could happen, depending on world market conditions for natural gas. Remember, this is 40 percent of one of three shale gas basins — right? This is why we haven't got too specific.
Going back to your question specifically, these are really rough guesstimates, just to throw some numbers in there so that we could illustrate the point.
The point is that regardless of how much you have to put in, within reason, to provide the services, fix up and take a holistic view to developing a viable community, the province is still going to be light-years ahead because of this resource development. But you have to build a viable community, and there have to be investments made into the infrastructure as an essential part of doing business.
The unfortunate part, just to close, is that as you've heard from the various community groups, everybody then has to deal with the province on an isolated basis — every agency, every ministry separately. What you end up with is that you go to one ministry and you hear: "We've got restraint." You go to the next ministry, and it's the same story over and over again. What we think this begs for is some process where there's some centralized planning on the part of the province, where you can say: "This has to be a priority." Everybody has to feed into it and be part of the planning process.
P. Pimm: Thanks for your staff. I've heard a little bit about Fair Share today. Can you explain what Fair Share actually is and how Fair Share in the oil and gas industry is different than in other resource communities, for example?
C. Griffith: It would be my pleasure. Just to give you a little bit of background, I was involved. I was the chief negotiator for the municipal coalition through all the phases of the Fair Share program, so I know it intimately.
Fair Share was predicated on one very simple premise. It was a baseline study done in 1990 by a gentlemen by the name of Peter Adams, who was a former director of taxation policy of the province, whom we engaged.
The baseline study was to compare the oil and gas regions of the province to the forestry regions from a property tax perspective. After the research was done, the conclusions went like this. I'm just going to give you the highlights. In northeastern British Columbia 8 percent of the oil and gas industry was incorporated tax base that was available to support the communities — 8 percent.
If you went to the forestry assets in British Columbia and all of the forestry communities, 92 percent of the forest industry was incorporated. Once the property is incorporated, that means it's fully taxable — right? — to support every community service, whether it's roads, policing, recreation, whatever. That was the structural problem, and it is the basis for the Fair Share program.
In 1994, 1997 and 2004 the municipal coalition went to the province and said: "We want access to be able to tax the industry directly for support." Just like the forest communities can levy — the municipal councils have the discretion to determine what needs to be levied against those — they wanted the same thing.
The province, in all three stages, said: "No, we have an overriding policy not to increase industrial taxes that is going to supersede anything that you want, so the policy is going to stay in place. No provincial tax increase on industry or no authority to tax industry — period." That policy stayed in place, rock firm, for the last 25 years.
What the province did then, to satisfy the municipalities, was say: "We are going to provide you with a grant in lieu of access to that tax base." So Fair Share is not revenue-sharing. Fair Share is a grant in lieu of access to the industrial property tax base, the oil and gas property tax base. That's all it is. It is not revenue-sharing. It is to solve one specific problem with the oil and gas communities.
The biggest issue, if you like, that is outstanding is that in 2004-05 when they negotiated the last 15-year version of that program, the Northern Rockies was a signatory to the agreement. There was an actual MOU signed that laid out the process and the steps by which the negotiations would take place.
The goal was clearly stated. It was to once and for all resolve the industrial property tax issue for northeastern B.C., and in the end the province offered to only provide the program in the Peace region and excluded the Northern Rockies. There has never been any actual response to exactly why that took place, but it doesn't matter. In the business case you will find all of the comparative research that shows that there really was no rationale for that decision.
Does that answer the bulk of it?
P. Pimm: Yeah, thank you very much.
R. Howard (Chair): Excellent — a good point to end. We're out of time. So we'll….
B. Streeper: Can I have one more minute?
R. Howard (Chair): You've got 45 seconds.
B. Streeper: Okay, I'd just like to say that MLA Pat Pimm and MLA Bennett are both familiar with this. They've both been briefed on this. The main thing we're asking, when you get back to Victoria and you're sitting in your committees, is if somebody asks, you say, "Look, we know a little bit about that. I think it's time we're fair to those people up there," and do it.
The Premier has said that something has got to be done. We're just asking to get it done. When you're talking to other colleagues down there, say: "You know, I think we've got to speed this little thing up for the north." When it comes time to raise your hands…. When Bill and Pat raise their hands, if you could raise them right along with them, we'd appreciate it.
R. Howard (Chair): Thank you both for taking the time.
We have one last piece of business here. We have an open mike — five minutes for Dr. John Stainer.
Welcome, doctor. You've got five minutes.
J. Stainer: Thank you, all of you, for coming up. It's good to see what provincial politicians look like. You seem to be quite human.
B. Bennett: Appearances can be deceiving.
J. Stainer: I'm a retired biologist, and I've been living up here since I retired from a job in Fort Nelson. I was president of the Lamplighters Association for two years, which has just finished up. I'm the past president now. The Lamplighters — the other seniors organization in this town — come from a completely different direction. We don't compete. Most of our members belong to both organizations.
We were given the old Northwest Hotel repeater station building about 20 years ago for use as a seniors centre, and we've been developing it from that point view. It's a historic building. It's been a little difficult to change into a hall with the kind of facilities we need. It's really strange construction.
The association asked me if I would come here and listen to the proceedings, and then if I thought there was something that needed to be said, to say it. So I have a little list.
The first thing concerns medical travel. One of the things that I notice in Lamplighters is that we get some real problems with medical travel. Now, we do have the Northern Health bus, but that has a limited schedule, and it is difficult for someone — particularly someone who is short of money — to accommodate that and the hotel bills and all that kind of stuff. So use your imagination a little bit here.
Now, you people live in Victoria part of the year. Fine. You live in Victoria, and you have to get to a specialist, and your medical specialist is in Hope. But on top of that, at some times of the year it's 40 below zero, and we've got whiteout between here and where we go. So we'll put that onto your trip as well. And then we'll age you all quite a bit, and we'll take you up to about 90 years old. It's a scary situation.
We have people who have to travel four times a year down to Fort St. John to have their pacemakers serviced. Now, that doesn't take very long. But why can't we be bringing the requisite specialists and equipment into Fort Nelson — right? There are parts of the world where they have a facility they can use to bring in this specialist and that specialist — not just for seniors, but for everyone in the community — so that you don't have to have this lot of expensive travel.
Add onto that, that a lot of these older people can't drive or won't drive long distances — can't drive at night. But then you add onto it — some of them are driving anyway. It just scares me that a 90-year-old might be driving down to Dawson Creek, Grande Prairie, when the temperature is 40 below zero, alone. That's really something that needs to be addressed.
Costs, of course, are another thing. It costs us plenty to get down there. The bus is a help, but there are still hotels and all that kind of thing. Every time I go out, it costs me 500 bucks.
Ease of local movement. It's very difficult for seniors to move around the community in the winter — a lot of things they can't do. There's a real need for more public transportation than we presently have.
Another thing on the list here — and it really affects all of us — is the connection to the south. This summer the Pine Pass has been knocked out, essentially. Back in the days of W.A.C. Bennett and Phil Gaglardi they made a really good start at the highway infrastructure of this province, but there is now need for more redundancy to the north. It's not enough for us to have a route going round either by Grande Prairie and Hinton or by Highway 37, which was closed by fire and flooding, too, this summer. There is a real need for that.
Those are just two or three things I noticed that hadn't been addressed this afternoon.
So thank you for your time. Thank you for coming up here, and have a safe trip home.
R. Howard (Chair): Excellent. Thank you, doctor.
Thank you, Fort Nelson, for making us feel welcome and showing us a great deal of community pride.
So we'll adjourn this evening and start up tomorrow morning in Smithers.
The committee adjourned at 5:12 p.m.
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