Finance and Government Services -- Issue No. 38 -- Wednesday, October 16, 2002

2002 Legislative Session: 3rd Session, 37th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES



CONTENTS

		Page

Presentations		1199
	V. Bowman
	G. Offet
	K. Veldman
	V. Candy
	C. Kinsley
	L. Hill
	L. Calder
	S. Sethen
	M. Hannah
	K. Leboe
	P. Ewart
	R. Thorn
	R. Mealey
	V. Murphy
	D. Erickson
	D. Carter
	B. Kelly
	R. McGuinness
	M. Dickie
	V. Vrsnik

Chair:	* Blair Lekstrom (Peace River South L)
Deputy Chair:	* Ida Chong (Oak Bay–Gordon Head L)
Members:	* Harry Bloy (Burquitlam L) * Jeff Bray (Victoria–Beacon Hill L) * Arnie Hamilton (Esquimalt-Metchosin L) * Brian Kerr (Malahat–Juan de Fuca L) * Lorne Mayencourt (Vancouver-Burrard L) * Sheila Orr (Victoria-Hillside L) * Ralph Sultan (West Vancouver–Capilano L) * Patrick Wong (Vancouver-Kensington L) * Joy MacPhail (Vancouver-Hastings NDP) * denotes member present

Witnesses:

Victor Bowman
Lorne Calder (Prince George Chamber of Commerce)
Vivienne Candy
Dianne Carter (Cariboo Mining Association)
Mark Dickie
David Erickson (Cariboo Mining Association)
Peter Ewart
Marilyn Hannah (President, CUPE Local 3742)
Lee Hill (President, Prince George Chamber of Commerce)
Dr. Bert Kelly (Vice-President, Northern Medical Society of B.C.)
Colin Kinsley (Mayor, City of Prince George)
Ken Leboe (President, Automobile Dealers Association of Prince George; B.C. Automobile Dealers Association)
Dr. Robert McGuinness (Northern Medical Society of B.C.)
Rob Mealey (College of New Caledonia Students Association)
Veronica Murphy (College of New Caledonia Students Association)
Gerry Offet (President, Prince George Development Corp.)
Sherry Sethen (Executive Director, Prince George Chamber of Commerce)
Rosalind Thorn (President, Northern B.C. Construction Association)
Ken Veldman (Vice-President, Prince George Development Corp.)
Victor Vrsnik (Canadian Taxpayers Federation)

B. Lekstrom (Chair): Good morning, ladies and gentlemen. My name is Blair Lekstrom. I'm the MLA for Peace River South, and I have the privilege of chairing the Select Standing Committee on Finance and Government Services. I would like to welcome you all here this morning.

Our job as the select standing committee of the Legislature is to go out and listen to British Columbians on the upcoming budget in preparation for next year's budget in British Columbia. We are mandated under the 2001 Budget Transparency and Accountability Amendment Act that the Finance minister, the Hon. Gary Collins, must present a prebudget consultation paper no later than September 15 to this committee. Gary did that this year on September 13, in Vancouver, at which time we were then mandated to go out and discuss with British Columbians their needs, their requirements and their ideas on what to do with the upcoming year's budget as well as the budgets in the outside years, in years 2 and 3.

We are on a tour of the province which includes 13 communities around British Columbia. Today, we will visit Prince George this morning and be in Fort St. John this afternoon and this evening for meetings, concluding our thirteenth stop tomorrow in Smithers. Following that, we will accept written submissions up until October 25, at which time the committee is mandated to develop and draft a report and have it presented to the Legislative Assembly no later than November 15 of this year.

With us today we have a number of my colleagues. Just before asking them to introduce themselves, I would like to introduce a couple of people we have working with us. With Hansard Services, over to my right, we have Marilyn Pollard and Jane Berry. They will record all of the words that are said here this morning and this afternoon. As well, at the back table we have Audrey Chan at the information table, and to my far left we have our acting Clerk, Josie Schofield, who is with us as well.

Our job as a committee is to come out and listen to British Columbians, and that's what we've been doing so far. We're encouraged, and we look forward to hearing what the people of Prince George and the surrounding area have to tell us here today.

With that, I'm going to begin and ask my colleagues to introduce themselves, and we'll get on with the hearings. I'm beginning to my right with Sheila.

A. Hamilton: Good morning. I'm Arnie Hamilton, the MLA for Esquimalt-Metchosin.

R. Sultan: Good morning. I'm Ralph Sultan, MLA for West Vancouver–Capilano.

I. Chong (Deputy Chair): Good morning. My name is Ida Chong, representing Oak Bay–Gordon Head. I'm the Deputy Chair of this committee.

B. Lekstrom (Chair): Thank you very much. It's now time to hear from you on what you would like to see us contemplate in the development of our upcoming report. I will begin this morning's hearings by calling on our first presenter, Victor Bowman. Is Victor with us?

V. Bowman: Good morning, Mr. Chairman and members. Thank you for the opportunity of appearing before you today. My name is Victor Bowman, and I come to you today representing neither a formal organization nor an organization that could even remotely be called political, except in the most global sense.

We're an informal network of individuals that come together from time to time, who have lived and worked and made our lives here in this region. Our political leanings range from the moderate Left to the moderate Right, at least in British Columbia standards. But there is no one I could even remotely believe was the reincarnation of either Trotsky or Attila.

We span a broad range of ages, professions, businesses and working life. Many of us have worked on large projects. Within the group are familiar faces from the start of UNBC, familiar faces from organizing the health rally of three years ago, and enterprises like that. You see these same people on library boards, on committees, coaching minor sports and doing all the other things that community believers do.

The common bond of these people is their sincere and abiding belief in the ongoing growth and prosperity of the region. It is my privilege today to share with you some of their concerns.

I know that today you will have appearing before you many pleas for recognition of particular needs. That's appropriate. I'm more than willing to let you puzzle through what you hear here and in other hearings and try to have the wisdom to sort it out, because there's never enough to satisfy everybody.

We appreciate that the task of renewing and growing our economy in British Columbia is a difficult one. We urge you to fairly consider all regions of the province, because the challenge to you is that of doing what is best for all of us above what is best for the sometimes seductive vote basket of the urban areas.

Decisions sometimes appear to me to be made in a vacuum, certainly from our perspective. For instance, B.C. Rail is important to this region. While the B.C. Rail board of directors is correctly carrying out its mandate of being a profitable, economically viable enterprise, we wonder if full consideration was given before steps such as cancellation of passenger service, intermodal service — before those services were discontinued. We wonder: if a full cost-benefit analysis that took in all aspects of the economy in how B.C. Rail is interrelated was made, would the decision have been the same? If that sincere cost-benefit analysis was made, we failed to hear of it. There is little good if short-term decisions lead to bad long-term results.

The Olympic bid, of course, gets a lot of discussion. But in general terms, it's considered a Canadian Olympics with a B.C. venue. We look at Calgary. They never looked back after hosting the Winter Olympics. It's a vigorous, growing city soon to be a million people — more than doubled in size since they hosted the Olympics. The prosperity over there is phenomenal. Few of us would argue with the impact Expo had on this province. We kind of believe that what is good for Canada is good for British Columbia and, hopefully, is good for this region as well. We believe it will be good for the whole province, provided we are all invited to the Olympic party.

There is a real and very sincere concern amongst our elected representatives and the citizens of outlying regions that there is a danger that the Olympics will take away from sorely needed infrastructure and other needs within the province. I'd like to comment. This region lives on wood. When the forest industry is strong, then we are strong. It's time that we must put more effort into developing a visionary plan that will encompass both the primary and the secondary wood-based industries. In fact, not to do so endangers the economic benefits that could be derived to the whole province from the wood industry. This vision should encompass all aspects from harvesting infested forests to producing energy from biomass by-products of that industry.

Independent electricity producers throughout the province are the future of affordable and sustainable electrical energy. Let us not stumble over short-term tradition or shortsighted decisions. The health of the resource industry will be maintained by the development of infrastructure. In infrastructure we include not just roads, bridges and railroads but also advanced telecommunications and energy distribution networks. Government does have a role to play. We need only to look at our history in our country when they introduced the rural electrification program. If you look back in history, an economic case could not be made for rural electrification, but the investment and the patience have paid fantastic dividends.

We know — as a matter of fact, it's just been illustrated by another study — that the resources of the rest of the province fuel much of the prosperity of the southwest corner of the province. While we are pleased to be a significant part of the economic drive, we have little patience if we do not see our fair share returning. We need our dividend, as well, to build our social and physical infrastructure. You need us, and you need our goodwill. With fair treatment you will have that goodwill and our energy to develop a strong and growing economy throughout the province. Thank you.

B. Lekstrom (Chair): Thank you, Victor, for taking time to come and speak with us here today. I'll look to members of my committee to see if there are any questions.

R. Sultan: It was an excellent, thoughtful and certainly tempered presentation. We do appreciate the hard times that have been inflicted upon Prince George and its citizens by problems in the forestry sector in particular. We asked three questions in the prebudget material, and the thrust of them was: if the government has some financial flexibility, which remains to be seen, should it be favouring additional tax cuts, should it be favouring additional services or should it be favouring debt retirement? Do you have an opinion on that question?

V. Bowman: I'll try to put together a composite of opinion, because certainly not all these thoughts are just my own. All of those aspects are great, but I think the group would rather see improvements to the economic infrastructure — you know, the physical infrastructure, the highways to haul the wood. They would rather see some of the money invested in the capitalization and the promotion of industry that will provide jobs. That in turn will lead to tax reduction.

R. Sultan: Do you have any particular infrastructure items in mind? Do you have a shopping list?

V. Bowman: Yes. I have the dubious privilege of driving the roads in the interior, and I sometimes think to myself: "Please bring back Phil Gaglardi." The road structure has been neglected for years — you know, patched. They're unsafe. They're well maintained, with good winter driving conditions for the most part, but they are just gradually falling apart. The concern of many of us is that the capital cost of repairing them is going to be astronomical if we don't do that duty of fixing things up as they need the repairs. Our whole house is going to fall apart.

L. Mayencourt: Thank you very much for your presentation. You mentioned a way of retaining some of the resource dollars within the region, within the

community. I imagine you're talking about a similar model that we've got in the Peace River region with the oil and gas sector. How would you see that being played out here in this region?

V. Bowman: Well, certainly the revenues that the province derives from the forest industry are significant. They do go up and down, of course, with what is happening with the international lumber market. I know that three years ago, just in the northern part of the province, about $5 billion was drawn out of the northern sector of the province. We were looking for a few million dollars to bring some doctors to town. If you looked at it, it was a small percentage.

I think one of the ways that you could do this, much as you have done in the Peace, is to say: "Fine. A certain percentage will remain within that region, be it through the municipalities, be it through the regional districts, be it through their highway-building." I think some of it should be targeted. Just like any business, you have to reinvest. You can keep on running a fleet of trucks and patching them and repairing them and then suddenly find that they all need major repairs and that you haven't got the money to do it. If you abandon areas like this region, like the northwest, like the Kootenays, and don't do those essential things and give those people a good, solid economic life, then this whole province will suffer, and suffer grievously.

Seeing none, I would like to thank you for taking time out of your day to come and speak with our committee here this morning.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Prince George Development Corp. — Gerry Offet, joined by Ken Veldman.

G. Offet: Good morning, Mr. Chair. Thank you very much. I gather that I don't have to introduce my colleague; he's at least known to the Chair. My name is Gerry Offet. I'm the president of the Prince George Development Corp., and Ken Veldman, formerly of Terrace, is our vice-president. We're very pleased to be afforded the opportunity to talk to the standing committee this morning.

Perhaps by way of introduction, I could advise you that the Prince George Development Corp. is a corporation whose sole shareholder is the city of Prince George. A board of directors directs its affairs, and it is charged with the responsibility of marketing and promoting Prince George and our region as a place to live, work and establish or expand a business. It also incorporates Tourism Prince George and the Prince George Film Commission in its mandated activities.

This morning I'd just like to deal with some basic principles that we would like the provincial government and the standing committee to consider in the budgeting process. My colleague will deal specifically with issues relating to infrastructure, tourism and film ? all very important ingredients in the economic mix in this community.

On a general basis, what I would like to talk about first of all is revenues. By way of background, I'm a former senior civil servant from Manitoba. I've served in a senior role in four different governments in two different provinces and have wrestled with the financial problems that our government is currently facing. I've seen successes, and I've seen failures. The failures, in particular, have sort of firmed up my thoughts as to how you address serious fiscal problems and how they're solved. Of course, the easy way in a resource-based economy is to do the Ralph Klein system: announce a whole bunch of cuts. Then the oil prices go up and solve all your problems before you have to implement them. I'm afraid it's not going to be that easy in our province.

The successful governments I've had the privilege of working with have approached it on a two-pronged basis. You have to do two things. You have to reduce and then control your expenditures, and you have to grow the hell out of your revenue base. You have to ensure that in reducing your expenditures, you don't reduce your capacity to grow the economy, because you want to continue to create wealth or in some cases start to create wealth. You don't want the things you're doing on the expenditure side to impact negatively on the wealth-creation side, because it's that wealth that governments tax. It's that wealth that brings us back to fiscal stability.

I guess the message I'd like to deliver is that a one-pronged approach simply does not work. Tax cuts alone simply do not work. It usually takes too long for the impact of the tax cuts to be felt to enable the industrial and commercial sectors to grow and replace that revenue. A combination of controlled expenditures, adjusting the tax regime and doing positive things to encourage the creation of wealth in the province and the growth of the wealth-producing industries seems to work the best, and I commend this approach.

What I'd suggest we look at is creating a regulatory regime that will encourage growth ? not just talk about the creation of a regulatory regime to encourage growth, but create a regulatory regime to encourage growth. That's particularly important in the resource sector, and we're right in the heart of the resource sector. We're right in the heart of what should be the solution. Secondly, ensure that the infrastructure required for industrial and resource growth is available. If we don't have the infrastructure that permits the growth, the growth isn't going to occur and the revenues aren't going to flow.

Finally, there's a need to partner with organizations such as ours to ensure that our economy grows. With that growth will come a growth of provincial revenues.

I have found it amazing in the short time I've been in this wonderful province that the provincial government seems to have withdrawn from the economic development field, and the municipal governments are backfilling it. It's classic downloading. It's Paul Martinism to its greatest extent.

So far the municipalities are accepting this responsibility notwithstanding the fact that they get the smallest bite out of increased tax revenues. The big beneficiaries of the 500 jobs that we've created in this community in the last few months are going to be the federal government and the provincial government, and those are the two governments that weren't at the table when we were recruiting a major employer. There will be a backlash, and the backlash will come in the form of stagnant or reduced revenues, and then nobody is going to achieve their target.

The second thing I'd suggest is that in the budgeting process, there's a real tendency to think in the boxes and look at the boxes. I don't care if they're departmental boxes or sector boxes. I guess to some extent people like myself are part of the problem, because we encourage our politicians to look at the departmental box, to look at the sector box, because it's more controllable that way, but the reality is that decisions made in one box inevitably affect other boxes. We see this time and time again where a decision is made to not repair a road, not construct a road, and it's made within a sector or a department box, and nobody bothers to think what the result is — if a mill or a mine can't take their production to market and the lost revenues there.

We've got to think on a more global basis and ensure that our bureaucrats tell the decision-makers, the politicians, all the implications of the decisions they make. While the Yes, Minister series — the British television series that deals with the relationship between government and the bureaucracy — is hilarious, much of it is founded in fact. If senior bureaucrats sense that the political side is going to make a decision they don't like, they usually ensure that decision impacts the politicians who make it in the most negative way. When you budget in a departmental or a sector box, you run that risk. Our suggestion is: let's broaden the approach. Let's figure out what the implications are of what we're doing.

With that, I'd like to turn it over to Ken, and he can talk about some of our specific issues.

K. Veldman: Building on Gerry's themes, I guess the primary message we have is that there is a role for public sector investment in this economy, and right now there's obviously a very strong focus on how we cut expenses, and that's only half the picture.

Let's talk about infrastructure. What you'll probably hear from a number of different northern interests is, first and foremost, about containerization on the northwest corridor. This is an infrastructure project that, pretty much right across the line, we consider our number one priority. Even though we sit here 900 kilometres away from the coast, in Prince George we consider this our number one infrastructure priority. It impacts across all sectors, and at the end of the day, the growth in our economy that's going to come from that investment makes it right at the top of our list.

Those infrastructure projects really start to run across the board and across all industries. We've had several issues that deal with B.C. Ferries and operating decisions it's made that have impacted across industries. The same thing with B.C. Rail and passenger rail decisions and certainly roads and air. We have issues within those sectors as well. The bottom line is all of those decisions are being made, as Gerry said, individually. They're not considering the global impact that it has on the northern economy.

If you take one route out of B.C. Ferries, yes, there may be a savings within that Crown agency of X amount of dollars. What it doesn't seem to realize is that X amount of dollars plays across this entire province and across this entire region in an exponential way. Even strictly from a public sector perspective, the tax dollar that comes back from those expenditures as tourists come through that route more than makes up for what's been saved in one single Crown agency. There doesn't seem to be a recognition of that big picture within the provincial government at this point.

I would also point to things such as marketing. It's nice to think that if we have the best province in the world, the world will beat a path to our door. Unfortunately, in the private sector, if you have the best mousetrap, without promotion and without proper marketing it still is not going to be a successful commercial venture. Whether we're talking about business marketing, investment marketing, tourism marketing or film marketing, there is a very strong need to have a strong provincial focus. From a community perspective, for me to be out there in the world trying to promote our region, it's a tough sell all by myself. I need a very strong provincial presence to be able to tie into.

That marketing and promotion activity needs to be viewed by the provincial government as an investment. With what you spend on that marketing promotion, your increased sales, even strictly from a public sector perspective of tax dollars coming in, make it a very good investment. Those investments need to be considered on the basis of return. This is not to say that every project is a number one priority. It is not to say that every project needs to be done right now. But there needs to be a recognition that all these projects and the infrastructure can be viewed on a case-by-case basis where the provincial government — and the federal government, for that matter — can look at it and say: "If we invest this much over the long haul, this is what our return is going to be." Make your decisions based on that return on investment. The return on investment should guide your priorities. Where you get a higher return should be where your priority is.

A clearly articulated strategy that outlines those key priorities based on return on investment needs to come from the provincial government. It will bring a sense of clarity and certainty to existing industry. It

will also lay the groundwork for future investment opportunities if the private sector knows what's coming down the pipe. We're confident that northern B.C. will come out right on the top of those returns on investment criteria and the projects in this area will rise to the top based strictly on an economic basis. Thank you.

B. Lekstrom (Chair): Thank you, Gerry. Thank you, Ken, for your presentation. I'll look to members of our committee if there are any questions. I'll go to Sheila.

S. Orr: Thank you for your presentation. I'm just trying to clear through your presentation and go to something you said, Gerry, that I want to clarify. If the provincial government is at present trying to create a business-friendly climate, which it's doing…. It's trying to create a more favourable tax climate and deal with employment standards and various other things to enable businesses to grow.

Now, I'm an old municipal politician from a large urban area where we handled our own economic development. In the city of Victoria we have our own economic development officer, and we've created our own film commission without government. Admittedly, government gives to the B.C. Film Commission, but I'm talking about creating economic development within your community at the municipal level.

You alluded earlier that government wasn't coming to the table on development and the business you were talking about. Can you be a little bit clearer with me on that?

G. Offet: Certainly. I wasn't talking about the provincial government not coming to the table. I'm talking about the provincial government not coming to the city. In the ten months that Ken and I have been here, we've never seen anybody from the ministry responsible for business in the region other than a quick tour that the minister makes.

I come from a background of working in provincial economic development departments where our task in other jurisdictions and jurisdictions with the same political philosophy that this government has, where the province had a significant role to play in partnership with the civic organizations. Believe it or not, cities don't relish the chore of putting up all of the money to generate taxes for the two senior levels of government with not even…. I'm not necessarily talking about fiscal assistance; I'm talking about assistance in courting outside investors, in creating the kind of atmosphere you need to attract growth.

B. Lekstrom (Chair): Well, Gerry, Ken, I would like to thank you. I know 15 minutes is a very short time frame to give a presentation and try and have all the questions answered, but again, I would like to thank you for taking time out of your schedule to come and present to us here today.

Prior to moving on to our next presenters this morning, I would like to welcome in the gallery His Worship Mayor Colin Kinsley, as well as one of the councillors for Prince George, Mr. Bruce Strachan. I have a special guest as well; I have my mom in the crowd. Welcome.

We're going to move on now to our next presenters this morning. We have Lorraine Young and Vivienne Candy.

V. Candy: Good morning. My name is Vivienne Candy. I suppose I call myself an advocate for people with disabilities in the community. For the last 20 years I've been looking at ways of improving lives for people with disabilities. I am also a senior. My presentation today is on funding options for continuing care and financial assistance for senior citizens and people with disabilities in the community of Prince George.

This presentation is about independent living. Financial security is the main ingredient for independent living. With the drastic funding cutbacks to social programs and community services in the past year in the form of schools being closed and public service layoffs, cuts in health care and community services, plus a downturn in the private sector in the main industries such as forestry and tourism, all this has had an effect on people who have relied on government assistance in the past.

People were told by the provincial government that there would be changes and cuts in services. However, many people did not think so many cuts would be made so drastically and quickly. For seniors and people with disabilities who find themselves living well below the poverty line, it is very stressful.

The following examples show income and expenses of people living on less than $1,000 per month. These are some budgets I just made out that give you some idea of what it's like to live on $1,000 per month for a senior: rent, subsidized, would be $300; transportation, $100; meals, $7 each per day, $140; prescriptions, average — that's about five prescriptions a month — $50; other medical expenses, $100; telephone, $30; other food, $200; and miscellaneous, $80.

The second, the person who would be living perhaps on their own or in their own house or in a rental house or the mortgage had been paid for: rent, $500; transportation, $60; utilities — that's equal payments per month — $60; prescriptions, average $50; other medical expenses, $50; telephone, $30; food, $200; and miscellaneous items, $50.

The next budget is for a single person with a disability living in rental housing, $786, which is what the benefit for a single person is at the present time. Rent is about $500; utilities, $60; transportation, $60; food, $120; miscellaneous, $46. That makes it up to $786.

I know what it's like to live on that $786. I did it for ten years. I was on $771, and my rent was $500 at that time. I was just living on bare minimum and really relying on people to help me.

Senior citizens who are diabetic also have to find extra money for special diets and, in some cases, pay more for medication. Where would they have to cut for expenses? Most likely, this would be on food or by not taking all their prescribed medications. The average cost of each prescription is $10. Now, that's $10 each on a very low income. Seniors or anybody that's paying a prescription rate pays $10 for up to $200. They're allowed up to $200, and then the government kicks in after that. Yet the fact is if they've got five or ten prescriptions a month, you can see that to get up to that level is rather difficult. The senior citizens example budgets are based on an average of five prescriptions, as I've said.

The increase in Pharmacare cost has meant that senior citizens have to look at other community agencies for handouts such as free meals or clothes. Seniors and people with disabilities who would see home support services at present have been notified by the northern health authority that they will be reassessed for future services.

Recently 18,000 forms with a 23-page questionnaire have been mailed to people on disability 2 that receive the maximum benefits. These questionnaires have to be returned to the Ministry of Human Resources by January 15, 2003. These forms are in three sections that have to be completed by the family doctor, the social worker and the client. It is always difficult to find doctors willing enough to complete forms for their patients. This questionnaire seems so unnecessary, as every year a report is completed by a financial worker on any changes that might have taken place, to show the justification of continued benefits.

I think, really, I can see the point of what the government's trying to do. They are trying to get their records up to date and to possibly have for the last, I think, ten years…. Every year the financial worker works with the client and gives a report on the client if there are any changes or anything like that that's happened. The fact now is that the government probably does want a medical reply from the doctor to confirm that the disability has increased or decreased or whatever. I think, possibly, I do see the reason for that.

The statement from this government that these cuts are necessary for long-term health care and other social services doesn't give much hope to people who are affected and finally have to rely on social agencies for food hampers for daily meals and clothing. I just might mention there, too, that we've recently heard that the social agencies, such as the Salvation Army and anybody else who is delivering hampers and distributing food now since the social assistance has been cut for people with disabilities, seniors and single people, are serving 365 meals a day in Prince George. Also, there is an increase that they have never seen before with seniors having to look for this outlet.

It is even more frustrating to read reports in the newspapers that over $612,500 has been spent on advertising and television announcements justifying the government cuts to health care, when hospitals and nursing homes have been closed. There is a phrase repeated by members or MLAs, the government, that the cuts will mean short-term pain for long-term gain. This could easily run into long-term pain for short-term gain.

The following are some recommendations or changes that I feel could have some impact. Tax cuts should be indexed. That's my concern here. When the tax cuts came in, as with other governments — I know with the Ontario government and also the Alberta government the same thing happened — social services were affected, and social programs that help agencies and various people in the community. I would suggest the only people who benefited in July 2000 were people in the higher income bracket. Those with less than $60,000 hardly noticed any difference. User fees were introduced. Medical premiums were increased, as well as the provincial sales tax.

In order that all people who pay taxes be treated fairly, the tax cuts should be indexed as follows: up to $60,000 — leave at 25 percent. Those with earnings over $60,000 should be 20 percent; $70,000 to $100,000 should be 15 percent; $100,000 and up, 10 percent. I think that at one time they were up at 4 percent to 5 percent. It is interesting to note that there are more millionaires in British Columbia than anywhere in Canada, so I think the people that pay over $100,000 should be reduced.

Future regional health authorities board members should be elected and not appointed. All members should volunteer their time and only be paid for travelling expenses. The administration costs are presently taking over 50 percent of the budget, which should be put towards allocation of health care services.

The provincial government should lobby the federal government for an increase in transfer payments targeted specifically towards health care. At one time — I think it was when Social Credit were in; I'm not quite sure — I believe the transfer payments were targeted towards specifics like health care and social programs. I believe that when the Social Credit were in, many people felt it was not right that that was not taking place. These were being transferred elsewhere to other programs.

Pharmacare could be nationally provided to all provinces. I believe that is in the works; I'm not sure. I know a lot of disability groups have been lobbying for that. I'm not quite sure how it could be done, but I felt that if all the provinces could work together and have a national program under the federal government, this would perhaps reduce the cost of the drugs that are being provided by each province. I understand that some of those transfer payments at the present time are going into Pharmacare.

This has really been bugging me for a long time. I'm wondering about the lottery. It seems to be billions of dollars going into the lottery funds. I know that some of it has been transferred to municipalities. They get a cut of these lottery funds, through the gaming. Some funds are also distributed on direct access to organiza-

tions. I'm just wondering if there is any way that a lottery could be set up by the provincial government specifically targeted with those proceeds going to health care.

This would be that more preventative health care education programs be provided. I was interested to read the other day that the Healthy Heart Society, I think, where the pharmacy Pfizer is involved…. Various interested parties have set this society up, which has donated $400,000, I thought it was, to the government to look at — especially for the north — how it can prevent more heart disease, heart attacks and that kind of thing, which is more prevalent in the north than anywhere else it seems.

More consultation should be made with medical personnel — that would be the BCMA and also medical staff — by the regional health authorities, as well as holding more public hearings so people can provide input. The more people work together, the more will be achieved, and hopefully, everyone will benefit.

B. Lekstrom (Chair): Thank you very much, Vivienne, for your presentation and your very well-thought-out recommendations. It's always encouraging when we hear the issues that face our province, and then it's even more encouraging for myself and members of our committee when recommendation are put forward with some ideas on how to improve things. I thank you for that.

L. Mayencourt: Just a couple of comments. Thank you. As the Chair said, we really do appreciate your effort in putting this together.

With respect to the disability level 2 forms that went out, we recognize, as you did, that we don't have complete records for people. That is the point of having people return the questionnaire to us. We also support them in doing that by reimbursing their doctor for the cost of doing that form, so that makes it a little bit easier for them.

Then your item on the lotteries and stuff. We will certainly take that idea back to the Solicitor General, who is responsible for that. Within several communities they do specific lotteries that are targeted towards the local hospital or a health care program. That's something which is available to your community as well.

V. Candy: I know. I'm just wondering if there is a way that there could be an overall lottery. I understood that the NDP, when they were in, specifically said that some of the funds — some of the share that the government receives — would be put specifically to health care and to patients. I was wondering if that was being carried forward by your government.

L. Mayencourt: Yes, it is. We target funds to health care, education, social development programs and others. There's a targeted sort of basket of services that are eligible for lottery funds, and that continues today.

B. Lekstrom (Chair): Again, Vivienne and Lorraine, thank you for taking time out of your schedule to come and present to our committee here this morning. Thank you very much.

B. Lekstrom (Chair): Prior to calling our next presenter, I would like to welcome the mayor of Quesnel, His Worship Mayor Steve Wallace. Good morning, Steve.

B. Lekstrom (Chair): Our next presenter this morning is with the city of Prince George. I would call on His Worship Mayor Colin Kinsley.

C. Kinsley: Thank you, Mr. Lekstrom — Blair. It's nice to see you back in our fair city . Other members of the committee, it's a pleasure to have you here, and a very warm welcome. We still miss those of you from local government who have gone on to other things. Some would say "bigger and better"; I say "other." I've been a proponent of local government, always.

It's our pleasure to be allowed to make this presentation to the standing committee. I'm also told that it's quite an onerous task — 13 communities across British Columbia. The volume of information you are going to receive is going to be mind-boggling, I'm sure, but it is an important information and fact-finding tour that I'm sure Minister Collins is going to very much appreciate.

We'd also like, on behalf of myself, my council members and our administration with the city of Prince George, to thank the province for developing a sound fiscal plan that is starting to chart a clear direction for the province, allowing us and the province to live within our means over the next three years. It is imperative that the province make every effort to ensure that its fiscal house is in order, and it appears that the government is in a position to do that.

Having said that, we of course have concerns for some of the small rural communities that support Prince George. Our success, I need it to be made perfectly clear, is very much dependent upon the resource communities that look at Prince George as their service centre, and that's everything from entertainment to financial, judicial, health care, education and retail. Prince George is in a very unique situation for Canada. I don't know of anybody quite the same, unless you maybe looked at Thunder Bay, Ontario. We're about 450 miles from every other major centre, so we have about 40 communities that really do look to Prince George for a lot of their services, and our success is based on their success.

Again, reiterating very quickly the sheer volume. I'll try and be brief. We've narrowed it down to just

three issues, because you're going to hear other things, I'm sure, throughout your tour.

The first item I'd like to talk to you about is rationalized use of taxes and fines. The province currently collects its taxes for specific items, several of which we could talk about. I'm going to refer just to fuel taxes and traffic fines. These revenues accrue to the province, but the municipality provides all the road infrastructure which vehicles can travel, and our municipality pays all of the costs for operating a police function. There is no government…. Well, the feds say they give us 10 percent. We're 90-10.

We also have 660 kilometres of roads in this community which we maintain and upgrade. We also have probably the best snow-removal system in the world. We actually are the secretariat for snow and ice management for the International Association of Mayors of Northern Cities, so we've made presentations in Sweden, Japan, China and the United States on what we do here.

We would recommend that the city be adequately compensated for their capital and operating expenditures and that municipalities should be given the opportunity to reinvest revenues collected from fuel taxes toward improving local road and highway infrastructure and public transit. I would implore that…. I don't know what the thoughts are like, but we in British Columbia must maintain a relationship between the province and B.C. Transit to maintain public transit so that we can effectively and efficiently transport people about and be environmentally friendly and work towards getting more people on public transit, which would reduce the burden and wear and tear on our infrastructure, of course.

Further, offset the significant cost of RCMP — it's the largest single operating cost in the city of Prince George — by directly receiving all traffic fines. I know there's comment to go from 50-50 to 75-25, but it's based on dollars, not on fine revenue. It's some kind of a formula that seems quite convoluted. I don't know what it means. We get $250,000, but I'm told the province collects about $1.2 million in traffic fines in our city.

The argument the province makes — that they should get any of it — befuddles me, quite frankly. They don't contribute to it. You can have all the fine money you want on the highways, but in the municipality you don't police, so I don't see the rationale of why those fines wouldn't go directly here. We don't want to be Macon County, Georgia, and put up speed traps to pay for our highways, but we do feel that the moneys collected should be returned to the municipality from which it's collected.

Now, if we can't do those things, I think we should look very strongly at reinstating revenue-sharing. Revenue-sharing grants were almost a historical part of this province in its relationship with the municipalities. We were cut out over a two-year period, '98-99, and lost $3.3 million at one of the most devastating economic times of our city. That came right directly out of our revenue stream. We had to pick it up in property taxes.

The next issue I'd like to quickly go over is transportation infrastructure. It is incumbent on municipal leaders to craft innovative solutions necessary to address our regional transportation challenges. As you know, our transportation network is the backbone of our local and provincial economies. We rely on it for everything from the movement of forestry products to the transportation of tourists. All industries, irrespective of what they're in, depend on our transportation system. For this reason, we believe it's imperative that we maintain an effective and competitive network to facilitate economic development.

The recent Baxter report from Urban Futures indicated that of the $33 billion in exports in this province, over $27 billion of it comes from the interior. Over 70 percent of our economic well-being is from the interior. We have to get those products efficiently and effectively to markets worldwide. With all due respect to the 604 area, there's more money, and it circulates quicker and faster, but the real money…. We either have to take it from the ground, grow it on the ground or take it from the sea, but it truly is our exports that drive our economy.

We realize we cannot expect the province to address all of our needs immediately. However, we remain proactive in our efforts to improve our transportation system by identifying where our priorities lie, to clearly send these messages to Victoria and to continue to seek creative solutions to our transportation challenges. Our community is depending on us as local leaders to show leadership on this issue. Our recommendation here is that in consultation with local government, the province of British Columbia needs to develop a provincewide integrated transportation strategy that considers all modes of travel, be it highways, ports, ferries, railways or airports.

The last item is downloading. The proposed community charter hopefully will change the way the municipal government operates. It will set in place a new approach to the relationship between the province of British Columbia and local governments, one of respect and increased empowerment. It should be simple, concise legislation that balances broad new municipal abilities with increased public accountability. I would suggest that it should not, however, provide an avenue for the province to discontinue programs and services which local governments and its citizens come to depend on, on a regular basis. Nor should it provide an avenue for the provincial government to expect these programs and services will be provided by local government.

An example of recent downloading is non–life threatening wildlife-human encounters. Historically, the province would respond to these types of calls. It has been proposed that the province will no longer respond to these situations and that we'll have to rely upon our municipalities or our police force to respond. A second very quick example is highway landscape and maintenance policy along provincial highways.

This summer a decision was made by the Ministry of Transportation to withdraw landscape maintenance along provincial highways, but for safety reasons, for tremendous civic pride and our desire to attract tourism, the city of Prince George decided to do the mowing on both Highways 16 and 97. We've added it to our regular mowing schedule at a very large cost, and the taxpayer is paying twice — paying a fuel tax and paying their property tax. This is an example, just one, that has happened within the city of Prince George.

Our recommendation here is that we believe the province is not adhering to the concept of not downloading services to the municipal level. This has got to stop if the existing cooperative relationship between the province of British Columbia and the city of Prince George and other local governments is to be maintained. The challenges facing the government are, I know, severe — they truly are — but I think we can meet those challenges together, and I don't think any decisions, irrespective of what comes up in terms of cost-cutting, should be done in isolation. Once again, that's why we appreciate this opportunity today.

I thank you for being allowed to make this presentation. I look forward to both a reply to these concerns and a continued commitment from the province to work with us in solving our mutual concerns.

B. Lekstrom (Chair): Thank you very much, Colin, for taking time out of your busy schedule to come and address our committee here today. I will look to members of our committee, and I will start with Joy.

J. MacPhail: Of my two questions, one is on public transit and the other is on drinking water. What is the growth in the use of public transit in Prince George, and what is the future of public transit in Prince George?

C. Kinsley: It's actually quite challenging in Prince George, the reason being that we have so many four-lane roads leading everywhere and lots of parking. I brought up the board of directors of B.C. Transit to see at first hand what some of our challenges are. They went away, they said, with a new appreciation of what we had. It's very difficult to get people on public transit because of the road network and because of the parking.

Also, we have a vehicle culture here. If you drive around, you'll see two or three vehicles in every driveway, so getting them on is tough. We're relying primarily on the student base, and what we're looking at doing is partnering with school district 57 through B.C. Transit itself.

The administration. For those who don't know, I also sit on the board of B.C. Transit, along with Mayor Walter Gray from Kelowna, from the interior municipal systems. Kelowna is doing quite well at getting students on board, so we're going to try and do the same thing.

We have actually taken the bull by the horns as a city and have allocated a $40,000 budget allocation to get a consultant to come in and work with us on how we can better put people in those buses. We have a modern fleet. We have five Dennis Darts, the small ones, and we've got a couple of fairly new 40-footers, all with kneeling capacity and all of that, but with not enough people riding on them.

This consultant is going to show us ways that we can better market them. Maybe our pricing is wrong. Maybe we need to go in innovative ways of monthly passes. Maybe we have to cut a deal with UNBC like I think they did at UVic. The student body votes on it. Part of the tuition is a bus pass. We're going to look at all those innovative ways to do that, Joy. Right now we as a city are subsidizing transit by about $1.2 million, and that's joined with about $1 million by the province through B.C. Transit.

J. MacPhail: The other question was around drinking water. Transportation infrastructure, I see, was addressed very well here. Have you had a chance to review whether there is going to be new infrastructure necessary because of drinking water legislation?

C. Kinsley: I don't believe so. I'm going to take a chance and let you know what I do know. I think it to be accurate, because I've talked to our engineers about the proposed legislation and how it would affect us.

We have got an incredibly advanced drinking water system here. We have some of the best water in the world. We make some of the best beer down at our local brewery, too, if you're staying the night. We have a lot of safety in place, as well, to look after protection, especially since Walkerton and terrorism and all of that.

We're fairly confident that there won't be a large infrastructure cost to us. We already do some pretty substantial testing, I'm told — daily, weekly, monthly, all of the different categories. There will be some costs associated with that proposed legislation, but I'm told by our engineering staff that it's not that onerous.

R. Sultan: Thank you, Mayor Kinsley. In the section of your brief titled "Downloading," where you talk about the community charter, the written text contains the phrase, "It offers simple, concise legislation," but the words you actually said were: "It should be simple, concise legislation." Should this committee attach any significance to the change in the words you have chosen?

C. Kinsley: When we prepared this over the last couple of days, we put it in a manner of how we

wanted to do it. Then when I read it and wanted to make my presentation, there had been some changes, like the delay until next spring. That's why I changed the wording in my comment. I changed it in my text but not in the one I handed out. I did that in a couple of places. You'll notice some additions I put in. Here and there in "Downloading," I put "hopefully." It's a matter of presentation.

R. Sultan: My colleague on the panel whispers to me that your answer is yes.

C. Kinsley: Yeah, that's something we politicians could learn to do: just say yes and no. I'm making a presentation to the chamber of commerce at lunchtime, so I'm just getting in the mood — getting warmed up.

A. Hamilton: Mayor Kinsley, on your issue No. 1 in regards to the fuel taxes, the province now does contribute pretty well 100 percent to infrastructure and to transportation. What we have to do is get more money out of the federal government, because they take the lion's share. In actual fact they contribute very little back to the province, which determines that we can't return it to the municipalities.

In regards to the direct receipt of all traffic fines, that is something we are exploring, as you know, and is a commitment we made in our election plan.

C. Kinsley: I couldn't agree more, Mr. Hamilton, on the role the federal government has to play. We, along with our colleagues with the Federation of Canadian Municipalities, have been lobbying as long as I can remember. I was on that board for three years back in the early nineties. We started it then. Of course, you know what the Kicking Horse Pass is like.

B. Lekstrom (Chair): Colin, again, I would like to thank you. I know 15 minutes isn't a great deal of time to put across all of the information, but I think you've done a terrific job. Thank you for coming, and thank you for having us in your city.

B. Lekstrom (Chair): We'll move to our next presentation this morning, which comes to us from the Prince George Chamber of Commerce. We have Sherry Sethen, Lee Hill and Lorne Calder with us today.

L. Hill: Good morning. Thanks for having us here today. I'm Lee Hill, president of the Prince George Chamber of Commerce for 2002-03. As I've been saying around, that's about five months to go. Thanks for the opportunity to present our comments and suggestions re the budget and financial plans for British Columbia. We have presented an extensive document for your perusal; however, I would like to hit some of the high points.

It is important that budgets are not limited to simply dollars and cents or a balance sheet but include an element of sensitivity to the underlying effect on people. The fact that our provincial government is consulting through this process rather than dictating is certainly a positive step to produce an open government that has not gone unnoticed by the Prince George Chamber of Commerce.

A number of larger economic development projects necessary for the north and rural B.C. are essential for the government to exceed their revenue targets. Some of the key needs for the north are: the port of Prince Rupert — covered in the report on private partnerships; exploration of the Nechako basin oil and gas; mining development; first nations land treaties; and offshore oil and gas exploration. Any improvement to forestry, such as doing away with waterbedding and the resulting supertax, will assist the government in meeting its revenue targets. Simply going to a market-based sale of logs without addressing the levelling of the existing price throughout the province will not solve the problem. The result will be that the price of logs will be the same wherever they are purchased in B.C.

An economic diversification plan for the rural parts of B.C., area code 250, is critical over the next two to five years to assist the outlying areas as they try to attract much-needed investment and expansion.

As I said, first nations land claims issues must be solved. Infrastructure — which includes health, education and transportation — must be such that it supports the needs of industry and the citizens of B.C.

If there is a surplus generated through additional revenue sources or through efficiencies in expenditures, 50 percent should be allocated to paying down the debt. The Prince George Chamber of Commerce would encourage you to balance the budget by looking at revenue creation, rather than further cuts, wherever possible. Through efforts to strengthen the forest sector, encouraging mining and oil and gas exploration, and building a container port in Prince Rupert, we feel that the necessary revenues to offset some of the social issues will be realized.

In the end, we encourage you to stay the course and strive for a balanced budget as soon as possible, but remember that the overriding principle is meeting the long-term vision of the province.

B. Lekstrom (Chair): Lee, thank you very much for coming and presenting to our committee here this morning. I'm going to look to members of our committee to see if there are any questions regarding your presentation.

L. Hill: We have submitted a more detailed report. For sure, you've got all that in front of you.

Possibly I could ask a question. With the prebudget consultation paper, we've asked some direct questions. I'll go to the second and third in a combined question. If there's a modest surplus in '05-06 for the province, what would your ideas be as to the investment of that surplus? Where would you recommend the province invest that money?

L. Hill: Initially, I think the surplus we'd look at…. Look at medical, transportation and education, in that order, depending, of course, on the economy and depending on where things may shift, and the various levels of how we would look at them.

B. Lekstrom (Chair): All right. I will look to other members. I'll go to Ralph.

R. Sultan: I'm curious. As members of the chamber of commerce, what is your impression of the economic impact of the University of Northern British Columbia's presence here in Prince George? As we travel around the province, we are visiting many communities that have colleges and universities, but here we have a living case study of the economic impact of a university. Is it large, small? Is it kind of nice, but not really that important?

L. Calder: Extremely important to the city of Prince George. I would hate to have seen the results of the last five years if it wasn't here. It definitely provided a very strong economic diversification for this community as a whole. I think it's very strongly supported by Prince George and the surrounding areas. They've been very progressive-minded with regards to developing programs that are needed in the north, such as the oil and gas type programs they put into Fort St. John.

We've been very supportive of a number of their initiatives and stay in contact on a regular basis. I would hate to have seen this community, based on the current resource cycle having been hit, if it wasn't here.

J. MacPhail: I was very interested in your paper. At the end, you talk about economics of clusters of Prince George. I confess this is a new proposal for me. It makes sense, intuitive of common sense. Are you working within the community to promote either a cluster or a cluster of clusters? It's very interesting.

L. Calder: I know that the development corporation as a whole had a paper done a number of years ago that talked about economic clusters. The community as a whole also realizes that its primary industry is forestry. We've been very strong proponents of the forest industry as a whole, as a cluster, as a specialty area.

I guess what we're looking for as a community, though, is the new cluster, the new initiatives that might generate a little more economic diversity. We need to have a kind of balancing act with regards to that, but we realize as a community as a whole that we're resource-based, whether it be mining or forestry or support services for the outlying areas. We can't lose sight of that. The economic clusters as a strategy is very strong.

J. MacPhail: The community is working on, like, city government and the business world and….

L. Calder: Actually, Colin's speech today, I think, is around the resource sector in importance to the city of Prince George. We can't lose sight of that. I guess if we were looking for new opportunities, the knowledge-based industries are still very high on our list. There are definitely some environmental-type initiatives out there that could potentially become a stronger growth cycle for Prince George and be on the leading edge of that. We're in a region that needs that type of attention.

I see no further questions. I would like to thank you, Lorne, Lee and Sherry, for taking time out of your schedule to address our committee. As with all of the presenters, everything will be given due consideration in the development of our report, which is due to be presented to the Legislative Assembly no later than November 15. I thank you.

S. Sethen: Excuse me, Mr. Chairperson. I only gave a partial submission to the rest of the panel. If you would like all of the appendices, I certainly can produce them and have them back to you. If you would like the full document, I'll go back to the office and do that. I just didn't want to overburden you with paper.

B. Lekstrom (Chair): I can make sure all committee members get that, if you would like. That's no problem.

B. Lekstrom (Chair): For our next presentation this morning I will call on Marilyn Hannah. Good morning.

M. Hannah: Good morning. First, I'd like to start off by thanking you people for inviting me to speak here. I'm here as a citizen. I'm also president of my local, and I sit on the executive board of CUPE British Columbia. We have some concerns about what is happening in this province. Some of the things I'm going to say I'm sure you will have heard before, but you'll hear them again and again and again.

Before you were elected, you promised to cut income tax for the bottom two tax brackets. When your

cuts were announced, they benefited high-income earners far more than low-income earners. Those low-income earners have long since seen their tax cut eaten up by things like eye exams, increased MSP premiums and the increase in sales tax.

Last week my local coordinated a drive for the food bank. As we coordinated this, we thought: we know what we'll do. We'll call the churches asking for donations. We found out that the churches were already making donations. Then we thought: well, we'll go to Overwaitea, and we'll go to Superstore, because they'll be able to help. But they're already doing that. We found out that it isn't just St. Vincent de Paul that is feeding the poor in this town. It's the Salvation Army, the Lutherans, the Mennonites, the Sikhs, and it isn't stopping.

One of my members sits as the chair on St. Vincent de Paul. They have unprecedented numbers of people showing up for food. They have families showing up for food. They're no longer giving hampers to single people unless they're handicapped or a senior. We've had seniors who, after they've paid their bills and gone down and picked up their medicine, have had to go to St. Vincent's, and they feel like they're begging for food.

I really want you people to look into this. When I talked to one minister, he said: "You have no idea how many people in this town are needy." I'm absolutely convinced, after this food drive, that it's insurmountable. Something has to be done.

Your government also said that the evidence was indisputable: when income taxes go down, revenues go up. The documents that CUPE obtained through freedom-of-information requests show that your government knew, within days of the election, that the proposed cuts would sink provincial finances and force cuts to health, education and other public programs. One briefing note, dated May 31, 2001, predicted that only 24 percent of the revenues lost through tax cuts could be recovered from economic activity. Another document, from June 2001, showed that the cost of the provincial tax cuts would rise to $2.87 billion by 2006. Yet you claimed publicly that the cuts would pay for themselves. I think it's deceitful, and it certainly wasn't mentioned in your New Era document.

Now you've painted yourselves into a corner with your tax cuts. You could've chosen the high road and said: "Okay, we were wrong. We may have to modify our position a bit." Instead, your government started acting like a bull in a china shop, madly cutting services in every direction with little planning and little thought about the effect those cuts could have on the people and the economy.

You promised a top-notch education system, and what we got were larger classes, fewer support staff and fewer services for special needs students. I'm the president of a K-to-12 local. We have classes in this school district…. We've got a leadership class over at D.P. Todd with 38 students in it. We have schools that may be in a low economic neighbourhood, but students that would have had teaching assistance last year don't have teaching assistance this year. The classes are larger, and what is the impact going to be down the road on kids? If we don't follow early intervention practices…. Everybody knows that you can memorize a song a lot easier when you're four than you can when you're 40. These kids need the help, they need it now, and it isn't there. There is not enough money in the education system.

We've had a complete halt to building any new schools in the province. When there's a declining enrolment, I can understand why you're not building new schools, but what about schools that are falling apart? Now we've got schools that are hawking their wares. This school district has gone to the Orient. This summer they had students in Prince George taking courses. Don't you think that the money for education would be better spent in your own hometown instead of having to go all over the world trying to bring in more money?

You promised high-quality public health care services that meet all patients' needs where they live and when they need it. Now you have to call 911 if you have a heart attack. I hope your phone is working. We've heard of married people — 90-year-old married couples — being separated. You promised a thriving private sector economy that creates high-paying job opportunities. What we got was a blacklisting of unions, $6-an-hour jobs for young people and a fire sale on our assets.

Last year on November 18, I was in Vancouver. I went to the Tampopo restaurant. When we were there the waitress was running all over the place, and I said to her: "You know, you'd better slow down. You're going to injure yourself. It will be a WCB injury."

She said: "Oh, you don't know the half of it. As soon as the government brought in the $6-an-hour wage, they cut my wages back." She'd worked there for three years. In that period of time this waitress had a group come in. They ran up a $510 bill, but they only tipped ten bucks. Her boss got angry. He took all her tips for the day.

Here we have a young Asian woman. Her English isn't that good. Do you really think she's going to lodge a complaint with employment standards? I'll tell you what has happened. You won't find me crossing the door of the Tampopo restaurant. My sister won't, my cousins won't, and anybody that I've told this story to will not be crossing it either.

We've got 16-year-olds booted out of group homes, cuts to income assistance, mentally ill patients being asked to fill out 28 pages of forms to get benefits, children losing their child care counsellors and the closure of group homes for the most vulnerable. I don't know what time you're leaving this town today. Walk around

the streets — this area and head up Queensway — if you're here tonight, around 6 o'clock. We've got young kids hooking on the streets of Prince George.

You promised environmental protection. What we got was a drinking water action plan that had no action in it — certainly no money, cuts in all areas in environmental protection and the downloading of responsibility. A lot of people don't know what is actually happening to the waters. We don't have tertiary sewage treatment in all areas. We have raw sewage dumped right into the waters — Georgia Strait. We're getting all kinds of hormones that are going into the water. A lot of the soft plastics, when they decompose, turn into gender-bending chemicals. We're having heron eggs that will not hatch. We have alligators that cannot mate because their penises are too short. We've got salmon that lose their way. They don't know how to go back to where they came from. Their eggs aren't hatching.

We have to clean up our waters. Water is our most precious resource. A lot of people think it's up for sale, and it is being sold every time we see somebody that's got a bottle of water. We should be able to turn on our taps and have clean, safe, pure water. We wouldn't then be having all of these plastic bottles that are clogging up the dumps or being recycled. As they recycle, they produce more carcinogens into the atmosphere.

CUPE has nothing against the private sector, but the private sector is not everything. Because a service is public does not mean it has no value. Our members bring competence, dedication and a sense of pride in the services they provide to their communities.

Public sector services developed because we recognized as a society that we would all benefit from them, that we had an obligation to invest in our health, our safety and our future through public services. These services also developed because we found out that delivering them publicly was the most effective and efficient way to do it. It still is. You can say the private sector is more efficient, and you are wrong. It is for other reasons that you want to get rid of the public sector.

One of the privatization moves that you people are making is the privatization of the liquor stores. I've heard people say: "Why should the government be involved in the sale of liquor?" I'm going to ask you: why wouldn't they?

There is no other drug that causes more problems in our society than alcohol. I'll bet you there's not a person in this room whose life has not being adversely affected by alcohol. We've cut social workers. We've got young kids doing alcohol. They're doing drugs too, but alcohol is…. Heroin, apparently, is safer for you than alcohol because you can still think coherently. You don't hear of people going out and getting into a car accident and saying that they were high on heroin. It's usually: "What, were they drinking?"

I don't want people to be able to go to a grocery store and pick up booze. When they're making a profit on it, what is going to stop them from selling alcohol to younger kids? When I went to school, the drinking age was 21. Now it's 19. We've got 19-year-olds who are immature and are giving it to 16-year-olds. There's a major alcohol problem in this province, and privatization is not the answer.

When the Premier spoke to the Union of B.C. Municipalities a few weeks ago, he pointed out that 88,000 new jobs had been created in British Columbia. Where are those jobs? How many people have more than one job? How many people are going down to St. Vincent's because they're getting the minimum hours of work?

About one-third of the jobs in this province are union jobs. In effect, we feel you're saying you don't want one-third of the workers of B.C. to be getting paid what they are. You don't want them to have the wages, benefits and working conditions that give them a small measure of security in their lives.

Most of the workers in my bargaining unit make between $12 and — I think the top job is — $21 an hour. We don't have the tradespeople. We're not overpaid. Most of us are sessional. Last year I grossed $32,000, and I am in the second-highest pay bracket.

Yes, our members do things. They coach hockey teams; they volunteer for youth groups; they become involved in community organizations. We don't want our jobs to be replaced with $8- or $9-an-hour jobs. The more money you make, when you get better benefits, you have a higher standard of living. It's proven. You're not a drain on the province, you're probably healthier, and you put more money into the economy. When you put more money into the economy, you're helping somebody else. The money our members make stays in our communities, where it is spent on local businesses. With public services you don't have the inexcusable situation of taxpayers' money being sucked out of the economy and sent to a head office in Brussels or Hong Kong. It just doesn't make economic sense.

We think it is wrong to tell all manner of public agencies across this province that they have to be more competitive, and we think the people of the province agree that it is wrong. It's okay to ask for efficient delivery of services but not okay to turn public services into a business. Our schools are meant to educate, not to get into the business of education. Our group homes and care homes are meant to provide shelter and comfort for those that are disadvantaged, young or elderly or frail or mentally ill. They aren't meant to be a cash cow for some multinational firm.

B. Lekstrom (Chair): One minute. I was going to say the presentations are 15 minutes. I'm just trying to keep on schedule.

Anyway, vending machines. If they're selling pop, they're selling liquid candy. Schools are getting into it so they can get some more money, but then they're isolated. They have to stick to those products.

With regard to privatization of services, we are entering a brave new world of international trade agreements. There is no doubt that those agreements are designed to pry control of our resources and our public services out of our hands. This is the truth. Once control of water or power or education or health is gone, it will be gone forever. The B.C. advantage will be nonexistent. Those in the federal government or this provincial government who say otherwise are simply spinning a tale of deceit.

Passing responsibility for public services on to another level of government or to a charity or simply abandoning it altogether and letting the chips fall where they may is neither responsible nor intelligent. Your government has the responsibility to ensure that British Columbians are healthy, safe, well-educated and that they can have a place to go. How far can a government go? It's a chilling question to me.

Widening the gap between the rich and the poor is not good for any of us. The poor are not going to go away and even less so if we eliminate services that will allow them to make themselves whole. What makes us wealthy is investment in education and training. What makes us strong is public investment in services and infrastructure that support business and communities. We agree that British Columbia must have a strong economy.

We agree that governments and public employees are accountable to the taxpayer, so let's talk about accountability. That is something your government has spoken a lot about in the past year and a half. If you are truly committed to that concept, we offer the following challenge. Keep track of not just your deficit but your cuts. Put in place systems that will let us know how many died from that heart attack as they were airlifted from the roof of a closed hospital. Benchmark how many low-income students give up post-secondary education because they can't handle the tuition fees. Set up a system of public accountability for your own actions. You're quite happy to impose it on municipalities, school boards and agencies.

While we are on the subject of challenges, I would like to offer one last challenge. I challenge each of you to go a whole day without uttering the word "flexibility." I believe it is wearing a little thin.

In closing, it is an important choice to support strong communities. To have a heart and a soul, communities need public services and they need jobs. The choices you are making are killing jobs. They're killing our economy. They are killing our communities. The choices you make are about what kind of world you want to live in. We believe you need to rethink your choices for the sake of British Columbians.

B. Lekstrom (Chair): Thank you, Marilyn. As I indicated earlier, I know 15 minutes is a very tight time frame in which to get the information across. I thank you for presenting to our committee today. Unfortunately, with the time constraints that we are under, I am going to have to not allow questions at this time. Again, thank you for taking time out of your day to come and present to our committee.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Automobile Dealers Association of Prince George. With us is Mr. Ken Leboe.

K. Leboe: Good morning, ladies and gentlemen. My name is Ken Leboe. I'm the current president of the Automobile Dealers Association of Prince George, and I've been an auto dealer in Prince George for the past 33 years. I'm here this morning to speak on behalf of the Automobile Dealers Association of British Columbia.

Much of my presentation this morning may be repetitious to you. That's part of our strategy. We want you to remember it.

Our association consists of over 350 franchised new vehicle dealers in British Columbia. This dealer group covers every region of the province and currently employs over 16,000 people in communities, small and large, throughout the province. Collectively, and significantly, we generate annual economic activity of over $10 billion. This activity proves of great benefit to the province in that it generates over $1 billion in tax revenues, assisting in the funding of the programs that British Columbians require and expect.

This morning I would like to outline in general terms some of the facts, concerns and hopes of our members. There have been positive changes in the new vehicle dealer industry in the past couple of decades. A mature business environment has emerged. Our members range from small to medium-size family-owned businesses to very large organizations such as the Pattison Group. Whether larger or smaller, our members are professional and highly regarded by their consumers and the communities they reside in. From the modernization of retail and service facilities to the employment base, sponsorship of a variety of community activities from hospice to hockey, our members have invested and participated in the economic and social activity in every region of the province.

The increase in professionalism in our industry over the last number of years has been largely due to a voluntary approach by our members and others, such as independent automobile sales and leasing organizations and recreational vehicle dealers. An industry coalition formed over the last three years, the Motor Dealer Standards Association, has attracted over 225 dealers who are dedicated to continually improving consumer protection and professional business practices applications for our businesses.

On a completely voluntary basis, roughly 1,600 sales representatives and dealers have taken accreditation programs and signed codes of ethics. This has been a very significant step for our industry and for the consumer. I'll get back to the reference of professional standards.

The government is on the right course in many areas. We take this opportunity to acknowledge some important initiatives. Raising the ceiling on the so-called luxury tax from $34,000 to $47,000 represented a great first step in helping thousands of families and small businesses who require trucks, SUVs, minivans, etc., to go about their day-to-day family and/or business activities. Our members urge the government to completely eliminate the so-called luxury tax in the next budget.

The government's changes to the Labour Code and employment standards legislation have been welcome news. We also anticipate the improvements in and governance of the WCB in coming months. A renewed business climate along with a renewed economic climate will create sustainable jobs. Our members are examples of those who are poised to create those jobs. We anticipate that government will enhance employment standards legislation expected later this fall that will appropriately address all the realities of sales representatives operating in a commission sales environment.

The government's will to reduce regulatory burden on business is also a positive start. We encourage the government to repeal the motor dealer licensing regulations, which will be addressed through other consumer legislation such as the Cost of Consumer Credit Disclosure Act.

We look forward to a positive outcome of the ICBC core review. Our association is on record with the position that ICBC should remain. What we do want to see is a mandate that requires ICBC to be accountable for full disclosure as required under the law by others. In simple terms, ICBC should be required to disclose all the benefits, rights and, yes, the responsibilities to the policyholder. With consumer protection a concern for this government, we request this be done. Has anyone actually seen an ICBC policy? If you ask, you may be told to look up the legislation and regulations.

We are pleased that industry involvement is a part of competency-based skills training programs for young people with a desire for trades and technical apprenticeships. We urge the Minister of Advanced Education to include representation from the auto dealer industry in the design and development of these programs. Next to the construction industry, ours is the largest employer of apprentices in B.C. Yet to our knowledge there is no representative of this industry on the advisory council set up by the Ministry of Advanced Education. As future employers of these apprentices, we are in a position to best identify training curriculum required and to ensure the training is relevant to current industry practices and innovation.

Continuing on and reiterating about professionalism, we have major concerns. We believe that the government past and the government present have not heard us. Our major concern relates to the direction we feel that government is progressing on self-regulation of our industry.

B.C.'s new vehicle dealers have been proactive in bringing professionalism to the forefront. The Automotive Retailers Association and the Recreational Vehicle Association of B.C., along with our association, have joined together to help rid our industry of negative images. Their own time and effort, along with their own resources, resulted in the Motor Dealer Standards Association, a voluntary, industry-driven, made-in-B.C. entity comprising consumer and motor dealer representatives. Government did not dictate the formation of this council. From the ground up, the MDSA was formed to train and certify individuals.

The reason the industry took this initiative is very understandable. We have a big stake in the enforcement of high industry standards and consumer-oriented practices. What we want is a level playing field. We want the bad actors put out of business. We want the consumer protected from those who do not operate within the boundaries of legislation, regulation and disclosure. We want those who make no community investment, who prey on the naïve and the uninformed consumer, out of business. These are the entities, the people, who cannot be tracked down after the sale when there is customer dissatisfaction or even worse. We also want the private sellers to be held to the same standard of regulation and disclosure as our dealers.

With respect to industry self-regulation, we have long advocated several principles and initiatives. Firstly, we believe industry can do a better job of policing itself than can government. Limited resources and government's accountability for the entire spectrum of consumer protection are factors that point directly to the logic of self-regulation. This government has stated its desire to steer and not row. Here is a prime opportunity to demonstrate that will. We cite the model of the Ontario Motor Vehicle Industry Council, a successful public-private partnership that has been in place since 1997.

Secondly, we are advocates of a new, improved and updated Motor Dealer Act along with regulations dealing explicitly with any issues that deal with our industry, including the motor dealer customer compensation fund.

Thirdly, we have a belief that the planned, self-regulating industry council should receive its operating authority out of an enterprise-oriented legislation, such as a new Motor Dealer Act. Under this model, the motor dealer standards council would receive delegated authority from the Motor Dealer Act and would take over all regulatory functions from the government.

The cost of such regulation, investigation and compliance, dispute resolution and dealer licensing would be for the account of the industry, not the B.C. taxpayer. The council would financially exist through revenues earned by services it supplies to industry, not

with government funding. Again, we believe this is a direction government wants to take.

Our industry has a great impact on the overall economic health of this province. We strongly believe that both the new Motor Dealer Act, along with its regulations, and the new motor dealer standards council should be under the jurisdiction of a ministry with the purpose of promoting enterprise rather than one with a policing role as has been the case.

We have advocated for a generic consumer protection act, one that protects all consumers in B.C. without differentiation, whether they buy a computer, a toaster, a house or a car. More recently, we have advocated for the introduction of a used vehicle information package. We have urged that this package be introduced by the new self-regulating industry council as a means of self-funding. Private sales in B.C. account for one-third of all vehicle sales transactions and, consequently, are beyond the reach of any regulatory oversight.

Such a package would have several benefits. It would protect consumers, rid the industry of unwanted elements and add to government revenues through the elimination of false values. Here's the explanation. First, the used vehicle consumer would get a full picture of damage and lien history prior to purchase. It would strengthen the integrity of the vehicle registry system. Secondly, it would create a more educated consumer, heighten scrutiny over the vehicle ownership and transfer process, and lessen the effect of fly-by-night operators and their practices. Currently, there seems to be no consumer protection mechanism in place that deals effectively with the curber. This program could be become very effective in the elimination of shoddy business practices from the totality of the B.C. auto market.

Thirdly, there is a potential to generate significant income benefit to the province. Widespread underreporting of factual sales price in the purchase transaction represents the current system. In Ontario this type of program generated $100 million of new revenues in the first year of operation. We feel that conservative estimates for B.C. would generate $20 million. I'm sure this government can find a place to spend it.

We sincerely believe this program would be of great interest to the consumer, industry and government. Once the motor dealer standards council is up and running, this package will be considered a key component of its consumer protection programs.

In conclusion, the auto dealer industry is a major economic driver in this province, and it represents a significant source of tax revenue. For our member dealers, an optimistic net income would be in the order of $2.50 per $100 of sales before tax. To earn this a dealer must acquire the facility, hire and train personnel, pay the heat and light, invest in inventory, etc. For this government, the average earnings for each $100 of transaction are $7.50, assuming no trade-ins, and more on some higher-priced vehicles or three times the earnings of the dealer.

It is logical that government, in the interest of economic advancement, would pursue the initiatives that promote the health of the auto industry, reduce red tape and protect consumers from less-than-honest business practices. For many years now we have been seeking a governing body that takes us into a new era and takes into account our industry as a mature industry, a reputable industry and a professional industry.

There are successful precedents in what we are seeking. The real estate industry, for one, has had the responsibility to self-regulate through the Real Estate Act. Functions of licensing and regulating agents are delegated to the Real Estate Board. The insurance industry, for another, is regulated by the Financial Institutions Act. The Insurance Council of B.C. acts to license its insurance agents. The Ministry of Finance has delegated to both the Real Estate Board and to the Insurance Council of B.C. the responsibility of protecting the consumers' interests and for regulating their respective industries according to professional business standards.

The government recognized that real estate purchases and insurance purchases have an important economic nature. The time is now also to recognize that the second most important purchase outside the home, a vehicle purchase, deserves the same respect. A self-regulated authority by an economic-oriented ministry is the answer.

The optimal scenario for self-regulation of our industry is a streamlined legislative package and a level playing field in which all stakeholders of the industry observe the same standards of conduct. We therefore urge this government to act upon issues brought forward today. We desire a self-regulatory council that is represented by government, consumers and auto dealers alike. Any proposed legislation should address the issue of private sellers.

As a significant part of the B.C. economy and employment base, our industry wants an opportunity to shine, to show what we are made of. That is the Premier's urging, and we concur. Give us the tools, and let us go to work.

B. Lekstrom (Chair): Well, thank you very much, Ken, for taking time out of your schedule to come and speak with our committee here today.

Again, unfortunately, our time constraints are very limited with the time we're facing, so I'm going to have to not allow any questions to be put forward at this time in order to get to our next presenters.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Active Voice Coalition. Peter Ewart is with us.

P. Ewart: I'd first like to clarify. My name is Peter Ewart. I'm an instructor at the College of New Caledonia. I'm here speaking as an individual, not for the Active Voice Coalition, as the Active Voice Coalition is in the process of developing various policies itself. I'm speaking as an individual.

P. Ewart: I would like to start my presentation by stating that I think the three questions that presenters are being asked to address are begging a much larger question. If that is the case, what is this larger question, and how does it apply to those of us who live and work in the north?

I believe that this larger question should be posed as follows: what is the long-term vision for the north and for the province as a whole? I believe this question has not been clearly presented or articulated by the current provincial government, and I don't see it in the consultation paper either. Just in case you think I'm being partisan, I would also venture to say that previous governments have had similar problems in posing this question regarding the north. I'm not saying that it's an easy question. However, when we look at it, it is a very fundamental one. Where do we want to be?

This absence of vision or even strategy was revealed several months ago when the chair of the Liberal northern caucus announced, after some pressure, that the caucus was developing a strategy for the north. The development of such a strategy at such a time is akin to closing the barns doors after the cows have left. The provincial government is already implementing and imposing massive and severe infrastructure and other cutbacks throughout the north. Even before a transportation plan is in place, we have the shutting-down of passenger rail service to the north and the threatened ripping-up of the rail line into Tumbler Ridge.

Simply put, I believe that the provincial government does not have a strategy or a vision for the north, except to have it continue to serve as a lucrative source — a cash cow — for stumpage, royalty and tax revenue. Furthermore, it's compounding the problem by dismantling infrastructure.

The ability to plan on a complex level is one of the qualities that distinguishes us as a species from other life forms. Yet this remarkable talent lies wasted in the present political and fiscal atmosphere.

Let me say a few things about this region. The northern part of our province, of which Prince George is a part, is composed of hard-working, industrious people who are among the most productive in the world in terms of natural resource, commodity and other forms of production. This region alone, with its relatively small population, produces enough dimension lumber to create over 600,000 homes a year, not to speak of huge pulp and paper, oil and gas, metals and minerals, fishing and other industrial output. This comes from a very small population, relatively speaking.

The revenue that leaves this region for provincial and federal coffers is colossal, amounting to billions of dollars every year in the form of stumpage, oil and gas royalties, taxes and other payments. Indeed, as David Baxter of the Urban Futures Institute has pointed out, 80 percent of the revenue from international trade is generated from the rural areas of the province and 20 percent from the lower mainland.

Despite this tremendous production of wealth, the north is in crisis. The softwood tariffs imposed by the U.S. government are putting huge pressure on the forest industry. The provincial government is currently in the process of implementing massive infrastructure cutbacks for the region — everything from schools, parks, health, social services, education, transportation and so on. This is having an extremely negative effect on the economy of local communities.

Unemployment is chronically high. Businesses are failing, and the infrastructure is falling apart. While the amount coming back to the region in terms of infrastructure is being slashed, the revenue that flows out of this region southwards to Victoria continues on in billions and billions of dollars.

The revenue outflow is one serious problem. Another problem is what I would call arrested economic development. The foundation and infrastructure for natural resource extraction on a large scale was laid down 35 or 40 or 50 years ago, but there has not been a next step, despite the fact that we have all the ingredients in place for a next step. Thus, we have in the north a well-developed primary forest industry but a minuscule value-added sector. In the pulp and paper sector it's the same thing. We have a well-developed primary pulp and paper industry, but the value-added sector is just not there.

We have an oil and gas industry that produces a huge amount of product but little manufacturing based on this oil and gas industry. We have aluminum production, but we don't have aluminum manufacturing. Coal and other minerals…. We look at Tumbler Ridge, the millions and millions of tonnes of coal that go to Japan. Where does it go? It goes to their manufacturing industry. It leaves the province. It doesn't go to ours. We use machinery from all over the world, but very little is actually produced here. There's little machine-tooling industry to speak of, an industry which is at the core of any independent economy. If you want to have an independent economy in this world, you have to have a machine-tooling industry. We have abundant hydroelectric power, but instead of powering our own industry, much of it is shipped abroad to the United States.

That brings up a further problem. We have an economy that is not well-rounded and diversified. It depends mainly on foreign markets, especially the U.S., and not on the well-developed domestic market. Some people are trying to change that, but it's a difficult process without the support of government.

In short, we are living off the fruits of a tree that was seeded long ago. We need to plant new seeds. This

is where vision comes in, and a plan based on this vision. How do we arrive at such a vision and such a plan? Will it be arrived at by ministers and bureaucrats huddled in Victoria? I really don't think so. We supposedly live in a democracy, but this democracy is in a state of arrested development also, I would suggest. Despite being producers of the wealth, peoples in the community in the north have little or no say over economic development. Well, I have a democratic idea here. What about developing a plan for the north and a plan for the province from the people in the community upwards, involving businesses, labour, first nations, community groups, etc. — in other words, drawing upon the talents and wisdom of the people who actually work here, who actually produce the wealth that pours into government coffers?

Questions should be posed. Where do we want to be as a region in ten, 20 or 50 years in terms of industrial and other forms of development? I can guarantee you that you would see a very different plan coming out of this region if we followed a bottom-up process.

Furthermore, once a vision and plan were developed using that process, the people should have the right to discuss it thoroughly. They should also have the right to approve it in the form of referendum or whatever. For the people to develop a vision and plan, not just some things but everything needs to be on the table, including forest tenure, timber licensing, how much stumpage and royalty revenues stay in the region and how much leave, and what kind of infrastructure we should have and so on. This type of policy development from the ground up is exactly what the organization I belong to, the Active Voice Coalition, is calling for. People acting on nature are the source of all wealth. The people should also be the fountain of policy and vision.

What should be the elements of a vision? That should be up to the people of the north. Here are just a few ideas that come to mind immediately. For example, I believe in a vision for the north that there still will be an important place for the primary forest products industry, but secondary and tertiary industries must be consciously fostered and developed. This would mean an extensive and intensive value-added wood industry and value-added pulp and paper industry. This would mean a forest products machine-building industry. If little Finland can develop its own machine-building industry, so can we. With the technology that exists today, manufacturing can be intensively developed at the same time as being environmentally sensitive.

There will be oil and gas and metal- and mineral-processing industries, but there should also be a diversified manufacturing industry that utilizes these materials, doesn't just ship them off in raw form. There will be an opening-up of the domestic market within Canada and British Columbia for wood, minerals and other products. We will undoubtedly continue to have a substantial foreign trade, but by having a solid domestic market we can't be held for ransom. The things that are happening with the softwood are just one chapter in being held for ransom. There are other things that we can be held ransom to in the future.

There will be a modern, thriving infrastructure including health, education, social services and transportation. I might add that it is often presented that health, education and social services are somehow a drain on the economy. This is not true. They are value-added to the overall economy and vital for the growth and prosperity of the region and the province.

You may have noticed that I haven't made mention of the areas that are so much in the limelight these days — i.e., tourism, financial services and the IT industry. These areas, for some reason, are seen as the saviours of the provincial economy, but I just want to bring in a bit of a counter-idea on that. If you really want a strong economy, these industries like tourism and financial services can only be adjuncts to strong commodity-based industries, at least in the north. For it is commodity production, whether at the farm or factory level, that creates real value upon which all other values are based.

Tourism revenue, such as the Olympics, is based on value that is created elsewhere. It has a vaporous quality to it. Financial services do not create the same kind of real value as commodity production does. Much of what we call the IT industry — and people should look into that — is not really hard industry. It's not actually commodity-production industry. It's a form of business service and does not have the same strength as actual commodity production.

In other words, what I'm talking about is a development of an all-sided, diversified economy that has a strong domestic foundation and that has at its heart commodity production. We have the ingredients for this. We have the raw materials. We have the power — all of these things. Countries throughout the world would give their eye teeth to have access to the things that we have in order to build a modern industrial manufacturing economy.

Just to conclude. Those are just a few ideas. We need a vision and a plan based on this vision for the north and for the province as a whole. The source of this vision should be the people in the communities who create the wealth. Therein lies our hope, and therein, I believe, lies the context for your three questions.

B. Lekstrom (Chair): Thank you very much, Peter, for presenting to our committee. I would just like to possibly make a comment.

You made a comment earlier on in your presentation about B.C. Rail and the issue of Tumbler Ridge and the track going to Tumbler Ridge being lifted. The factual information actually is that it is a piece of track that goes from the Bullmoose load-out to the Quintette minesite, which has been decommissioned and isn't in service. The line into Tumbler Ridge is sound and working right now. I've dealt with that issue. I've had a number of calls on it. It does fall within my constituency. I just wanted to verify….

B. Lekstrom (Chair): You bet. I'll look to members of the committee for questions.

P. Wong: You spoke a lot on regional strategy and how to stimulate the economy in this region. We also heard about a cluster of economy in the Prince George area. You also highlighted the importance of secondary and tertiary industry. What do you perceive that the government should do to stimulate and encourage this kind of industry?

P. Ewart: First of all, what I think should be in place is a process where the actual discussion starts at the community level, where the people have a sense that what they say and the ideas they put forward will actually become policy. That will produce input.

The second part is that we have to put things on the table. There's a huge amount of revenue that's leaving this region. It has for years and years. That has to be looked at in terms of what share the region is getting back and how that can be changed to reflect the fact that if we're contributing all of this revenue to the province, which we are, we have to look to the future. Otherwise we risk the fate of some of the oil-producing countries where they talk about how, once the oil runs out, they haven't built up anything in place of it. We need to do those two things: firstly, start the discussion at the local level and go upwards; and secondly, put everything on the table. That's what I believe in: putting everything on the table.

For example, there's a lot of talk about the Olympics and the money that's going into it and so on. What about if we're looking at investment — if we're talking about $6 billion or $3 billion or whatever — what kinds of things could be done in terms of the development of secondary and tertiary industry?

There are some people who say: "Well, government shouldn't be in the business of charting direction for the economy." I believe that's just not the reality. If we look at countries like Japan, Finland, the United States or whatever, there is a lot of consciousness that goes into things in terms of where we're going to go.

P. Wong: You look down to the south. I understand that there are stimulants such as setting up a foreign free-trade zone. I'd like to hear your opinion on that.

P. Ewart: Setting up a foreign free-trade zone, for example, here? In terms of having a position on a foreign free-trade zone, that would be something that would certainly be considered. I think it's an idea that some places in the world have taken up as a way to further develop things. I believe there's some in Asia and so on. Whether or not we would take it up as a region, I think that's something that would have to be looked at. We'd have to look at it along with other strategies and other plans in terms of where we want to go.

What we have to have in mind, though, is that it's not enough just to rely on the laurels of the past and to say we're producing these raw materials and we're producing the revenue. The province was taken one step forward 35 or 40 years ago. We have to look toward this other step, and it's a big step. If we don't keep that big step in mind, all we're going to do is just toll the bell and continue to just produce what we've done in the past. There's no legacy for the future.

B. Lekstrom (Chair): Peter, I know there are other questions. Unfortunately, our time is very constrained here this morning so that we can get to all of our presenters. Again, I would like to thank you for coming out this morning.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Northern B.C. Construction Association. With us is Roz Thorn. Good morning, Roz.

R. Thorn: Good morning. Mr. Chairman and members of your committee, we do appreciate the opportunity to again participate in our government's prebudget consultation. I would like to once again just give a brief introduction of our association.

The Northern B.C. Construction Association is an umbrella group of eight local associations operating throughout northern British Columbia. Our member associations operate in Fort St. John, Dawson Creek, Prince Rupert, Terrace, Kitimat, Smithers, Williams Lake, Quesnel and Prince George. Through this affiliation we represent some 300 firms that are both union and non-union and who operate as general and trade-specific contractors as well as suppliers and allied service firms to our industry. They are primarily involved in what we call the ICI sector of the industry. That's industrial, commercial and institutional as opposed to residential, although there is some crossover particularly in the smaller communities.

We are responsible for putting in place and servicing the material infrastructure required by all segments of our society, such as building and servicing bridges, highways, mines, mills, office buildings, retail and commercial establishments, manufacturing facilities, ports, airports, schools, hospitals and multifamily housing.

We're one of four regional associations that comprise our umbrella B.C. construction association, and together we represent provincewide viewpoints.

I think, as most of you are aware, we identified five key areas last year that, in our view, are imperative to get B.C. building. That was a slogan that we have been using and continue to use. These are private invest-

ment, quality, efficiency, infrastructure and Workers Compensation Board. We feel that they all require continued efforts to bring this province to a point of attractiveness for investment.

Relating to private investment, we again applaud your government's initial steps in reducing taxes and initiating a review of regulation and red tape soon after taking office. We are concerned, though, that the regulation review appears to have faltered. We feel that a renewed effort is required to meet government's objective of reduction in this area by one-third within your time lines.

Additionally, we feel that attention must be paid to the amount of new regulation being added. In this regard, we are very concerned that the proposed community charter will do just that — add more regulation, albeit at another level. Additional downloading of new responsibilities on local governments certainly is not the route to take to reduce regulation.

Local government will be given new latitude regarding licensing fees, taxes and other innovative methods of raising moneys. Our industry is concerned that this may result in an increased lack of standardization across the province, with each municipality creating their own rules, codes and standards for construction. Being competitive with our neighbours is absolutely necessary in order to keep business in this province and also to encourage new investment.

Construction volumes continue to plummet in northern B.C. The first half of this year saw building permit values decreased by 40 percent over last year. Currently, we're operating at 40 percent of the volumes that we saw five years ago. The industry will not able to sustain itself for much longer. Most of our communities will end up without sufficient qualified contractors and workers to undertake projects once we see a turnaround.

As you are no doubt aware, the economy in the north is very much tied to the resource sectors. Needless to say, this fuels the province's economy, as well, to a very large extent. In this regard, we encourage your government to continue to work tirelessly on trying to solve the softwood lumber dispute with our southern neighbours, as well as the pine beetle epidemic.

Efficiency. Your government's stated commitment to return to open public tendering was heartening to our industry. We continue to see this as a key area where government will be able to trim costs. The need for increased government accountability and efficiency in the purchase of construction continues to be demonstrated to us. Policies and procedures for tendering and contracting had eroded significantly over the past decade. Unfortunately, we continue to see that erode. We require, and the province requires, strong, established and reliable construction practices in order to retain a strong, established and reliable construction industry.

Accountability is a key ingredient in a democratic society. Government is given a responsibility which carries with it the obligation to render an account. In the economy at large, competition is an important driver of efficiency, choice, innovation and economic growth. Government must recognize the business environment within which they, too, must operate and must remain accountable to the people to ensure that their tax dollars are spent wisely.

We all recognize that government bodies in B.C. are facing increasingly tight budgets. The need to efficiently allocate scarce resources is critical. In order that the taxpayers can receive the best possible services, agencies must focus on their core activities and seek to outsource others to private industry.

I'm pleased to attach our B.C. Construction Association paper entitled Outsourcing = Best Value for the Taxpayer. It provides a variety of benefits of outsourcing along with the many arguments that we hear, on a daily basis, against contracting out. Additionally, the paper includes some specific examples of concerns we have received from contractors around the province.

While on the face of it the use of own forces can often be made to look competitive with the private sector, the reality is that costs can easily be buried. Agencies often obtain subsidies that are unavailable to others, all at the expense of the public purse. Reducing this type of activity by outsourcing would go a long way towards reducing government spending.

We believe that government's business is not to be in business in the performance of construction projects and major maintenance and upgrading work. This association advocates the use of responsible contractors to quote on, administer, supervise and coordinate all phases of construction projects. We urge all levels of government to use to the fullest extent the capacity, skill, experience and resources of the construction industry and to avoid the practice of performing work with own forces and equipment.

We further strongly recommend the provincial government establish a policy that whenever funds are to be expended, including when there is a contribution of provincial government funds to a municipal project, the provincial government agency, municipality or regional district utilize the public tendering system to contract out the work. We were most dismayed to learn that under the capital asset management framework, all requirements for the use of the B.C. standard construction contract and front-end document were abandoned.

Over many years the construction industry in the province advocated for a standard document, which was finally adopted in 1996 following extensive consultation with industry through our provincial organization, the B.C. Construction Association. Although not perfect, it certainly streamlined operations and provided owners of each party's obligations and liabilities. Additionally, it provided a standardized front-end document and required use of the provincial bid depository system for trade contractor bids in excess of $100,000.

Standard practices and procedures translate into good business and cost savings, we believe. They provide equity for all parties by appropriately apportion-

ing liability and ensuring the most transparent and accountable use of public funds. The provincial government, as trustees of our taxpayer dollars, must be able to monitor and ensure the use of accepted tendering procedures whenever such dollars are involved in a construction project. We believe this is sound policy.

Requiring that standard policies are adhered to guard against hidden preferences, lack of transparency in the contract award, and inequitable and oppressive liability and indemnity clauses, all of which have the potential of leading the parties into conflict. We strongly recommend support for government to work with the industry through our B.C. Construction Association to reintroduce a standard document and tendering procedures.

Infrastructure. Here we reiterate the industry's position, as put forward by our provincial organization, that improving the infrastructure of our province should be a high priority of government. A strong economy is not possible without a strong backbone of roads, bridges, water supply and sewage. If we expect to compete with other jurisdictions, we require an efficient infrastructure network through which trade and commerce can effectively and efficiently function.

A strong infrastructure should also include proper maintenance of our public schools and hospitals. Public funds must be spent carefully and effectively and only on those projects where a need has been clearly identified. Fiscal responsibility is essential. However, care should be taken not to disregard the value of maintaining and strengthening existing infrastructure. At times you must spend to save. We urge government to support those capital projects that are necessary for the province to maintain and, where possible, improve upon our current infrastructure.

We applaud your government's work in pursuing public-private partnerships as an alternative method for delivering infrastructure needs. Our industry sees the potential in this innovative approach to public construction. At the same time, we caution against choosing alternate delivery methods over traditional, except where it can be clearly established that there will be a significant savings for government. Regardless of the delivery method chosen, we strongly recommend the use of industry standard construction documents and established tendering procedures, as we outlined in the previous section.

Quality. The construction industry relies on a strong, effective apprenticeship in a trades training system to ensure we can meet the demands of private industry and government in the future. We are beginning to see skills shortages in some of our trades now and see a severe skills shortage looming on the horizon. An aging workforce, losses to other jurisdictions with healthier economies and fewer entrants into our apprenticeship system because of lack of work all contribute to this situation.

A strong industry-led apprenticeship system must be developed. We recommend that government work with the construction industry to deal with this significant problem and give due consideration to industry initiatives designed to address the training for the construction-sector apprentices that comprise 50 percent of our apprenticeship system.

In regard to the Workers Compensation Board, we applaud the government passing the legislation aimed at making workers compensation more sustainable and are looking forward to working with the newly established Construction Safety Association of B.C. to assist in safety training for our industry.

As a point of information, our Prince George Construction Association, located in this community, will again be hosting a safety symposium for all of northern B.C. for construction-related firms and buyers of our services in late March of next year.

We do have a concern, though. We've just been informed that WCB is again proposing to increase employer assessment rates, which we see as taxes, by up to 20 percent for the year 2003. As you are well aware, employers pay the full cost of workers compensation, and it becomes another payroll tax on their companies. We believe that it is important to allow time for the new legislation and other proposed changes to work.

The 2003 rate increases are the result of the rising costs of WCB claims and WCB administration. These rising costs have been partly concealed for several years by higher-than-expected investment returns. Increases running as high as 20 percent are simply not realistic, given the fact that contractors have contract commitments in many cases that extend one or two years into the future. These companies are unable to go back to their clients and raise that contract price. Other industries also face similar problems with the long-term contracts for their goods and services. Increases such as these from WCB do have a dampening effect upon the already stagnant B.C. economy.

There are also serious questions about cost-effectiveness of WCB, and those continue. The recent performance has not been encouraging. As was recently pointed out by the employers forum, operating costs increased by 24.2 percent from 1999 to 2001. During that same period, claimant service costs rose 37.2 percent, and employer services jumped 68.3 percent.

We recommend that government direct WCB to freeze the assessment rate increases for 2003. We believe there are a number of specific actions that government can take to reduce those costs and improve service. We suggest that the ministry staff work with our Council of Construction Associations, which was formed specifically to deal with WCB issues, to look at ways and means to make WCB more cost-effective and more responsive to the needs of workers and employees.

In conclusion, I reiterate this association's support for your government's open and inclusive process that provides us the opportunity to speak with you today. We believe that our recommendations will not only help our industry but will help to return the province of B.C. to a vibrant economy that is competitive with other jurisdictions and is a place where business wants to invest. Thank you very much for the opportunity.

B. Lekstrom (Chair): Thank you very much, Roz. I'm sure there would be questions, but again I'm going to have to apologize for the time constraints. I know we do have presenters following you that I'm sure have busy schedules, and we're about 15 minutes behind schedule. I would like to thank you for taking time out of your day to come and present another well-thought-out presentation.

R. Thorn: Well, thank you. If there are any questions, my business card is in the folder circulated to you. Please do not hesitate to get in touch with us.

With that, we are going to move on to our next presentation this morning, which comes to us from the College of New Caledonia Students Association. With us we have Rob Mealey and Veronica Murphy.

V. Murphy: Wow, it must be a very long day for you guys. You have another trip to go to Fort St. John after this. Welcome to Prince George.

I'd to thank you for the opportunity to present recommendations on behalf of the student population of the College of New Caledonia. The CNC Students Association represents over 4,500 students and is committed to advancing the interests of the student population. This involves the goal of maintaining a post-secondary education that is accessible to all, is of high quality and has the support services necessary for students to succeed and excel in their studies.

Today I'm going to be talking about the present and future for students at CNC and for post-secondary education in the northern interior. I will provide recommendations to the Finance Committee regarding post-secondary and student-related spending.

I'd like to commend the B.C. government for reinstating funding for previously deferred building projects for post-secondary institutions. Northern communities will especially benefit from this. Not only will it be a local economic boost, but it will provide more accessible education. This is a good start to the necessary process of restoring funding to post-secondary education in B.C.

First, I will discuss the role of accessibility. On average, people with a post-secondary education in Canada will pay $50,000 more in taxes over their lifetime than people who do not have post-secondary education. These graduates will thus have more money to spend in their communities, on their families and on their standard of living.

Unfortunately, financial barriers, such as increases in tuition, place education out of reach for many lower-income families. I implore the committee to look at accessible post-secondary education as an investment in the future of B.C.

How can accessibility be increased? I'd like to recommend that the first step be taken: that the government legislate a reduction in tuition fees for the 2001-02 levels and work towards the continual reduction of fees.

Second, I would like to talk about funding. In regions such as Prince George, there are numerous barriers to an accessible education that go beyond the problems of increasing tuition fees. The projected three-year budget for post-secondary funding to institutions amounts to a reduction in funding once you factor in inflation. Add this to the demand for a balanced budget at a college that has been running a deficit, and the result will be unrealistic budget constraints.

Now at CNC specifically, my college, the inadequate funding and demand for a balanced budget have required a restructuring of many student services, which I feel has had a negative impact on not only accessibility but student services as a whole.

The budget for the CNC day care was reduced. The day care program for infants was eliminated, and the number of spots available for children was also reduced. The cost for day care services has been raised, and many student parents can no longer even afford the CNC day care services that are still available. This is a serious threat to accessibility for those students.

The Centre for Student Success plays an integral role in the services at CNC. It provides seminars on study skills. It provides alternate venues for writing exams, and it is an excellent resource for improving student performance. Since the three-year budget has come into effect, staff has been reduced by 75 percent.

The essay-critiquing program has been removed. The centre can longer afford to tailor seminars for specific departments. The hours that the centre is open have been reduced as well. For the hours that the centre is open, there are ten hours during that week when there isn't even an English instructor available.

The library at CNC has an excellent selection of resources, databases, Internet services and study areas. Students can rely on a positive environment and superior assistance when they enter the library. However, when balancing the budget the college was forced to cut staff. Library hours have also been reduced. Students are not only inconvenienced, but they are being denied access to many of the services they need in order to achieve excellence in their programs.

The apprenticeship programs have been reduced, even though there is a growing need for skilled workers in the coming years. As well, co-op now provides services reduced from last year.

Perhaps the most significant blow to post-secondary education at CNC is the reduced services in the continuing education department, known provincially as the part-time vocational activities program. This service is unique to CNC in that it is funded sepa-

rately from the college. Unfortunately, this program has also been severely hit by cuts.

Continuing education, otherwise know as CE, provides training and services for rural and urban centres as well as for the non-traditional students seeking employment-related training or upgrading. Continuing education assists individuals in the often difficult and intimidating process of returning to school. It has helped many people improve their lives and obtain an education. This is a program that directly improves accessibility for those who need it most. It tailors the training options to industry needs. It creates a synergetic resource to the province.

I encourage this committee to lobby for a restoration of funding for part-time vocational activities, both provincially and on a federal level. Without adequate funding, a valuable resource in this province will be lost.

It is difficult for students to complete their programs of study. Many need these valuable services to assist them in this endeavour. I recommend that the government lift the freeze on post-secondary institutional grant funding and fully compensate institutions for inflation, salary increases and tuition fee reductions. I also recommend that the government restore provincial funding to part-time vocational activities and lobby for federal restoration of funding.

I also recommend that the government provide adequate funding for institutions in order to reinstate and further develop support services that ensure student success. In a region such as Prince George, that's very much a necessity.

Lastly, I would like to examine the role of student employment programs. Last year the government eliminated funding for work study, Student Summer Works and the youth community action project — to name but a few. These programs were designed to assist students with the cost of post-secondary education and to help students gain relevant experience in the workforce. These cuts eliminated 11,000 student jobs in B.C. These jobs were eliminated under a new-era platform of eliminating business subsidies. However, these programs were created and intended for students and their assistance, not businesses. Therefore, I recommend that the government reinstate funding for student employment programs.

In summary, British Columbia is in a potential position to capitalize on the advantages of accessibility and to further the needs of industry, economy and, most importantly, its inhabitants. I recommend that the province closely examine the benefits of improving accessibility to post-secondary education. Funding needs to be restored to student employment programs to offset the costs of education. Tuition fee increases are counteractive to accessibility and are not a viable long-term solution. The quality of education is decreasing due to the funding problems, and the financial burden of these inadequacies cannot be placed upon the students. Funding to post-secondary institutions must be restored and fostered as an investment in B.C. Thank you.

B. Lekstrom (Chair): Thank you very much, Veronica and Rob. I will look to members of our committee for questions. I'll begin with Joy.

J. MacPhail: Thank you very much — an interesting presentation, factually based. This may be a question you can't answer. Sometimes we hear from the college directly, but we're not today, so let me ask you this. One of the issues facing the forest industry is workers in transition from forest-based employment to new training. The vocational programs, the part-time, that you…. I'm sorry. The term is "part-time vocational"?

V. Murphy: The programs are called part-time vocational. It's a provincial term. Actually, I do believe that encompasses an entire department, called continuing education, at my school.

J. MacPhail: Okay. Do you have any knowledge of whether this is the type of program where more mature workers who are moving from one set of employment to another would get their training?

V. Murphy: I'll check with what information I have here. Rob, do you know anything about it?

R. Mealey: I can comment. Actually, I have some personal experience with this. My father went through a similar program on Vancouver Island in trying to transition out of the forest industry, which, as of course you know, isn't doing so well these days. The majority of forest workers who require training do go through this program in order to get their skill level up to the level required in order to enter standard college and university classes.

H. Bloy: Thanks for your presentation. Do you have a higher enrolment this year at your college? Is enrolment up?

V. Murphy: I can't comment on that. I'm really not sure. I do know that certain programs were reduced, and other items were cut. Primarily, I feel that services have been a main issue for students at CNC as well as class size. I know that my professors have had to take

on a larger class size and workload — for instance, only offering one class in one slot as opposed to splitting it up into two different slots. Does that answer?

H. Bloy: No, not really. We've had a number of presentations from students around the province, and they say there are more classes available at UBC and SFU and other facilities, and there are more teachers. They were pleased with the tuition increase.

R. Mealey: I would argue that in terms of CNC, they might have increased some classes in terms of maybe more English classes — that kind of thing. Other classes and other programs have been drastically reduced. For example, we're looking at the possible elimination of electronics. If it weren't for a huge backlash within the community here, CNC would have eliminated their second-year electronics program, for example. I think that on average, 70 percent of the graduates in that program are successful in finding a job with the first year.

Also, the services students need have been drastically reduced at colleges such as CNC. In terms of enrolment numbers, we're still waiting for the college to collect those numbers and provide them to us. As far as we understand, there is not a huge increase in enrolment.

V. Murphy: If I may add to that. As well, I think CNC is in a predicament where it's not a major attraction of the university as opposed to SFU or UBC. Thus, having an increase in tuition, for instance, did not really increase their revenue in any reasonable amount. All it did was help to offset the budget they were trying to balance.

Students never saw any benefits to, for instance, something like a tuition fee increase. I do believe the college was actually awarded an extra half a million dollars in funding, but that still did not alleviate the specific problem of CNC's service cuts.

R. Mealey: In fact, we would argue actually that students, our members, are actually paying more for less.

V. Murphy: I am. It's a fact. I am paying more this year for less services than I received last year at a lower tuition level.

B. Lekstrom (Chair): Veronica and Rob, possibly I'll just throw one question out myself. Does your association have a number in mind as to what amount government should invest in post-secondary? Right now I think it's roughly that a student covers 18 percent of their cost under the post-secondary. Does your association have a number it should be lower than that or higher than that?

R. Mealey: We don't have a specific number. However, we are in full support of the report provided by the Canadian Federation of Students. We believe tuition fees need to be reduced immediately, with the goal of eliminating tuition fees in the near future.

As committee members probably heard from various presentations throughout your trip through the province, we see Europe as an excellent example of where this province should go. I think we're in a unique opportunity for this province to show leadership in Canada by reducing tuition fees even further and to adopt a European model, where many European countries have seen the benefits of free education for their citizens and how it's benefited the economy. I'm sure you've heard Ireland or Denmark as an example — that kind of thing. We think this province could show excellent leadership by going down that same road as well.

B. Lekstrom (Chair): Maybe a quick follow-up on that. Certainly, we've heard that before. Part of the prebudget paper asked for recommendations. If we were to try and achieve that, do you have a recommendation as to where that funding would come from, what other area of the budget? It would take a substantial amount of revenue to do that.

R. Mealey: I think, quite frankly, one of the things that may be happening in terms of this report is that the committee is committed to reviewing the tax system. One thing I would urge the committee to look at is in terms of how taxes are levied on people. Under a truly progressive tax system, I think those who make more should be paying more in taxes. I think the same with business as well. Although the committee probably feels we need to reduce taxes even further, I would argue that in the short term, there may be some political benefits to reducing taxes. However, in the long term, I think the socioeconomic impact would be great. I think the committee should look strongly at the damage that has been done in the first place by the tax cuts and possibly recommend reviewing the tax cuts to find this extra funding.

I would argue that when you look at a budget as a political item, basically we have to look at what the priorities of B.C. are. One of the handouts you've received is a poll that was done late last year, 2001, and it shows that the majority of British Columbians fully support fully funding or appropriately funding post-secondary education. They also support the fact that 73.5 percent said they would actually give their tax cut back if they knew the money would go toward post-secondary education.

B. Lekstrom (Chair): Again, Veronica and Rob, thank you for taking time to come and speak to our committee here this morning. Again, thank you very much.

V. Murphy: Thank you. I hope you enjoy the rest of your trip through northern B.C.

We're going to move on to our next presentation this morning, which comes to us from the Cariboo Mining Association. With us we have Brenda Dunbar, David Erickson and Dianne Carter. Welcome to the hearings.

D. Erickson: Good morning, ladies and gentlemen. Thank you for inviting us here. I would just like to mention a few notes here we never put in our Cariboo Mining Association letter that I think all you people have here — just real quick.

Placer mining has been going on and viable for 150 years in B.C. Early this spring we got a letter from the government stating that they were going to see whether placer mining was going to be viable in the twenty-first century. Well, with the rules and regulations we're getting, I don't see that it's going to be. We need some changes.

One other reason: why has the mining industry departed the province of B.C. in the last ten years? There's too much red tape and rules and regulations. Two mining seasons have passed in the placer mining industry. This is a very viable, quick industry. You can start up in a matter of a couple of weeks. You can employ anywhere from one person to 30 in camp and move from a few hundred yards a week to thousands of yards. It's a startup industry that can go right away. When the price of gold goes, you guys will be inundated with people wanting to do placer mining, but with the rules and regulations, they are not going to come. We have a very serious problem here. This is my own opinion.

What we'll do here with the Cariboo Mining Association…. You have this newsletter here. We've just more or less stated a few facts there. The mining industry in British Columbia is in a state of dire emergency. The placer mining industry, in particular in the Cariboo region, is heading for a total collapse. At this time, we would like to point out some of the issues and concerns that we feel need to be changed or revised in order for the mining industry to survive the twenty-first century. Title security is similar to freehold.

Excuse me. How many people here know anything about the rules and regulations in placer mining and that? See, I could be taking up a lot of time here with nothing to help you people with. In short, it has gone from a little booklet to pages. If you go through here, you'll see where there are 71 pages of the federal Department of Fisheries rules and regulations for somebody that wants to go and pan with a little small pump and a sluice box — ludicrous.

We just can't carry on like this. The hard-rock industry is in the same state. They have lost properties that they spent hundreds of millions of dollars on. The property was taken away from them to make the Tatshenshini Park. We had the Royal Oak issue. Big mining companies see this happening in the province of British Columbia. Do you think they really want to come back? The B.C. government has really, really got to do something to get the mining industry going again in British Columbia. It's very bad.

I could continue on with this if you want to read through it with me, but if it doesn't mean much to you it might be a waste of time. What do you think, Blair?

B. Lekstrom (Chair): I think it would be important for you to continue, but I think the key for us is to listen to British Columbians and learn from them. I can tell you that the 79 elected MLAs don't have all the answers, and we learn a great deal from the people we speak to. I would ask you to continue.

D. Erickson: All right then. Title security is similar to freehold. It says under here: "Lease of placer minerals, which is renewable every ten years but can be cancelled with one year's notice, must be abolished. Reinstate old PML title." Right now we can only keep a property for one year. Who will invest, haul equipment in, set it up or do anything when he's only got one year? It's not good.

A placer claim — renewable again every year. These two tenures, the lease of placer minerals and placer claims, have to be replaced. The placer mining lease, which was renewable every 20 years and could be renewed for another 20 years, had strong tenure and title provisions in the lease agreement as well as entrenching the rights to mine under the lease. The 20-year tenure system gave the placer miner the security needed to acquire the investment needed to bring his mine into production. The one-year renewable system does not give the placer miner or their investors any form of security. All tenures can be cancelled by the taking with no compensation.

Mineral tenure. Hard rock is renewable every year. This one-year renewable system does not give the miner or their investors any other form of security. All tenures can be cancelled by the taking with no compensation. Examples are Cream Silver from Strathcona Park; Getty Resources, Royal Oak; Tatshenshini Park. This went worldwide. This did not go just in the circles of British Columbia. It went worldwide to mining companies. When they see that happen, do they want to invest hundreds of millions or millions of dollars in the province of British Columbia? I'm not in the political arena, so I don't know what happened there, but when somebody and some mining companies put that kind of effort in and then lose it, it's bad.

Placer and hard rock. Placer and hard-rock regulations should be separated because they're more or less entirely different. We wash the gravels on the surface. Hard rock goes underground, so there's a lot more involvement — more money involved, more training involved. It's way more involved and way more intense than it is in the placer industry. The placer industry could be a ma-and-pa operation and go up to a 40-

or 50-man camp or even higher than that, but it's not as intense as the hard-rock industry is.

Work permits. If incorrectly completed, the forms must be returned to the applicant within three days. Correctly completed work permit forms to be returned to the applicant within ten working days with the work permit. No notice-of-work permit required to do hand work on staked claims.

Placer claims must have unlimited production. Remove the 2,000-metre cap. Could do GPS work for this consideration — prefer the reinstatement of the old PML rules and regulations. What this here one has done…. It's a small individual that wants to…. You've got to apprentice. You've got to learn to do your deal, whatever it is, like anything. If you want to be a mechanic or an electrician, you've got to more or less apprentice. People go out, and the first investment is a little steel gold pan, plastic gold pan, to get involved. Now they have so much paperwork to go through — to hell with it. They're on their holidays. They don't want to do it. That has really hindered the up-and-coming generation of people that want to go into the placer mining industry.

Placer claims production. Back to (e) there: remove the cap at 2,000 metres. We have a $3,500 bond. Common sense tells anybody who's a businessman — and you usually are if you have equipment and loaders and excavators around — it costs you $1.75 a yard to produce the material you're testing to see if there are any values in it, because your bond is $3,500, which again makes it unfeasible more or less.

Notice of work for testing must be flexible, not site specific, and should include the one-window approach, as no one knows where the gold values are. We fill out these notices of work, and we've got to be very specific about where we want to go testing and doing something. I would appreciate that. If somebody could tell me where it is, I wouldn't go testing all over the place. I would go to the spots I'm told it's at.

Federal Department of Fisheries. The DFO must be dealt with aggressively by the ministries, as they have been negatively controlling the mining development in this province. The provincial bureaucrats have allowed the DFO to operate under heavy-handed tactics to disallow mining on all fronts while pretending they are assisting in mining development. The mining industry was the first industry that got British Columbia going in the 1850s. There were probably 100,000 people in the Cariboo area here, where we are situated now. Now there's next to nobody doing any mining. Again, on rules and regulations, it just gets too harsh, too many rules.

Hand-panning. There are up to 71 pages of DFO regulations for hand-panning, as I mentioned a few minutes ago — 71 pages of regulations. What was once covered in one paragraph has now grown from seven to 71 pages — not only mining with equipment, which has been bogged down with excessive regulations and enormous stacks of paperwork.

Zero tolerance for water with silt. Water with silt is not defined as effluent. The miner needs the flow of water to be at the same level as other industries. Zero tolerance for silt has added costs for enormous settling ponds in order to filter water through the sands before it enters a water source. The regulations need to be the same for all industries such as pulp mills and municipalities, which are allowed to discharge their effluent — not silt water — into a watercourse, reducing their costs for water disposal.

Zero tolerance for silt water has added in excess of 40 percent to the cost of all mining in British Columbia. This is building large settling ponds, removing thousands and thousands of yards of overburden, piling it, putting matting in it so it doesn't leak and running an assortment of settling ponds so the water becomes clear enough that it can go back into the creek, which everybody pretty well does. But we forget about what one rainstorm will do in all the watersheds in British Columbia. There's no amount of miners in North America that can make the mess of one little rainstorm.

D. Carter: Could I just say something? I was down in Horsefly, and the salmon were swimming. They couldn't even lay their eggs, because there was no silt. All there was, was rocks. They couldn't lay any eggs, because there was no silt for them to lay their eggs in — thousands of fish just dying, not being able to lay their eggs.

D. Erickson: Permit approvals. Hand-panning permit can take up to three months. Equipment permits can take up to six months. The mining season's over with. The placer mining industry in this area starts out, roughly, in May and ends, roughly, in October. It can extend and be shortened here and there. Placer and hard-rock production permits in excess of 500,000 cubic yards can take up to three to five years. The bureaucrats will have you believe that these permits are handed out on the same day or in short order, but in reality they take much longer.

The environmental review process, which can take an infinity to get through, can cost over $750,000. An example is the Prosperity gold project, which began its review in 1995 — still going on.

All active mining operations — this would be nice — would be exempt from fuel and lube taxes by using work permit numbers to qualify. We had that in the seventies and in the fifties.

I'm 62 years old. I have placer-mined since 1957. We've had three hard-rock companies and probably four placer operations going, and everybody's pulled out. I'm the only one left.

Bonds. Reclamation bonds for one hectare or less disturbance have increased from $2,500 — which was ridiculous; we didn't even have that ten years ago — a test site to $3,500 to do exploration work. The bureaucrats have arbitrarily raised the bonds required to do

D. Erickson: Bonds are…. We can go through this really quick here. Reclamation bonds. Delay in bonding. When we go through some of this other stuff…. You people can read all this.

One other thing that we have here is native land claims. Ordinary individuals shouldn't have to deal with that. That's why we have government. Government should be dealing with this. Ordinary individuals don't want to deal with native land claims. I have a chum who's just down in southern B.C. there — Yale. He's involved in a $100 million operation that's all tied up because of land claims. You know what's going to happen? My opinion is those people are pulling out. Fantastic operation going on down there — they're just walking away from it.

Please note that the CMA and all our members do not like map selection or paper staking. We feel it's only opening new concerns and problems. This is a real can of worms. Every piece of property in North America is staked with a post in the ground. We now want to change this to paper staking. You go out in the bush. That's great. Where are you? You don't know where you are. I don't want to reinvent the wheel, but we cannot seem to get through to the people that this is what we want. A silly thing is going to happen. Large organizations that got a million dollars or more — how much ground can they stake over the Internet on their computers and tie up and shut down half the province of British Columbia's mining industry? Very quickly — in so short a notice, you won't believe what happened. This is what's going to happen if we go to paper staking.

Anybody remember Greenpeace and a few other organizations? They could tie up millions and millions of acres in British Columbia, and nobody's going to do anything. There's going to be no mining. They own the ground now. Thank you very much.

B. Lekstrom (Chair): Well, David, thank you very much. You have a lot of information. It's very difficult to get it in, in that short time frame, but you've brought up some interesting points. I can certainly forward this to our Minister of Energy and Mines, the Hon. Richard Neufeld, and make sure that he is aware of the issues you've brought before us here this morning. Again, thank you very much for taking time out of your day to present to us.

D. Erickson: Thank you. One little blurb I will say. Mr. Neufeld has already got this. Stan Hagen — we talked to him. We're not hearing anything. The placer mining industry in British Columbia probably has over 15,000 people involved in it. Now our membership is way down — very, very low. People want to hear some good news before they come back in, and we can't give them anything.

I will call on our next presenters this morning, who are with the Northern Medical Society of B.C., Dr. Bert Kelly and Dr. Robert McGuinness. Good afternoon.

B. Kelly: The Northern Medical Society would like me to thank you for the opportunity to speak to you today. Time is short; we'll keep our message brief. We have two core things to say, you'll be happy to hear. We come unarmed. We have no PowerPoint, and we have no statistics to give you today. We thought we'd just really chat to you and let you know what's happening here.

J. MacPhail: Sir, it might be your accent. Pull the mike closer, will you, please?

Two years ago in June of 2000, the people of this city and Vanderhoof and Quesnel had a large health care rally. There were 7,000 of them that came out to support the Northern Medical Society in its efforts at the time to secure proper health care for the region. As northern people do, they weren't only supportive; they were prescriptive. They gave us two directives to take away with us from that rally and act upon.

What they asked us to do was establish a centre of excellence in northern and rural health care based in Prince George, and that was to include an appropriate referral centre — no heart transplants or anything like that. It was to include what we're supposed to have already, which is a northern trauma centre, but we don't. They also asked that it would include a cancer treatment facility for the northern half of the province.

The other thing they told us to do was acquire a medical school at UNBC. The logic there was if we couldn't recruit physicians to the north, then we should train our own, and this seemed to be a very reasonable thing to do.

We've made some good initial progress. I think it's a credit to the government that the northern medical program has gone ahead in conjunction with UBC medical school. That's progressing — so much so, in fact, that we expect our first med students in Prince George in the fall of 2004.

The implementation of this plan, of course, presents us with certain challenges. To do it adequately, we're going to need the personnel, we're going to need the infrastructure, and we're going to need adequate fund-

ing. I have to say that today we don't have any of these, so we are facing a short time line and major challenges.

If you look at this concept that they gave us two years ago, we can maybe break it up into three components. The first would be the establishment of an academic faculty, the second would be the establishment of a clinical faculty, and the third is the northern health authority itself. The academic faculty is a creature of UNBC and UBC, and I think we can probably just leave that to them.

The clinical faculty. Well, what do we mean by a clinical faculty? Really, what that's all about is the fact that doctors are taught hands-on clinical medicine by MDs, not by PhDs, not by social workers and not by anybody else. It has to be done by physicians. There's no other way to do this.

Who's going to constitute the clinical faculty? In a sense, that's going to be the local physicians and surgeons, mostly in Prince George — hence our great commitment to it. We have to have adequate clinical staff to do the teaching. That means in the absence of our ability to train our own, we have to recruit. We've been successful at recruiting, and I'm going to tell you a little more about that later.

The third item, the third component, is the northern health authority. That was created by your government. We think it was a wise move. It rationalized an awful lot of fiefdoms and various other structures throughout the north. They chose wisely. I think they selected a good board, and they've got an excellent chairman in Harry Gairns of Prince George.

The NHA's role in the grand scheme of things will be, of course, to supply the infrastructure. It will supply the hospitals. It supplies the beds. It supplies the X-ray machines, and so on and so forth.

Yet we have to tell you that we think the NHA has been seriously underfunded from the start, and the current cuts that are being applied across this region will make it such that the NHA will not be able to deliver basic health care. I think they're asking right now for 20 percent across the board. There may be areas where they can winnow out 20 percent, but a lot of our services are lean as it is, and there is no 20 percent to be taken.

If we were to look, say, at three of our most successful areas of operation over the last two years, one would be the recruitment of physicians. Our own association has formed a committee which works with the northern health authority's recruiting consultant. He's hired part-time. He's from the woods industry. He has been amazingly successful. In the past two years we managed to attract to this city 32 physicians from all over the world, really. We've got another 15 in the pipeline.

Because of budgetary constraints, last week we lost our consultant, and they took the budget away as well. Until we can train our own people in Prince George, we are dependent on the ability to recruit.

I think it may be of passing interest to note that a comparable jurisdiction in Australia has been trying to recruit for the same period, and they got one reply from some poor benighted soul in England who ended up not going. Our efforts have been very successful.

If you look at surgery, it's another area we run that's lean and mean and runs very efficiently here. We have ten operating rooms in the hospital. We're funded to run five. In order to recruit the surgeons, we're going to need to deal with the problems up here and train the doctors. We're going to need seven. Again because of cuts, they're looking at four. We can't survive on four.

The lab is another case in point. Our laboratory and X-ray services here are lean and mean. They've done a fabulous job over the years. I've been in this region, incidentally, for 27 years now. They've done an amazing job. There is no 20 percent cut to be made. I think Dr. McGuinness, who's the head of laboratory services, will speak about that in a moment.

I think our first point to you, the point that we would like you to consider and perhaps help us with, is that the northern health authority has been seriously underfunded from the get-go. I wonder if you folks would have any ability to investigate that and see if, in fact, when this whole thing was organized at the beginning, we weren't given the short end of the stick.

You have to take into account the geography. We do extend from Quesnel to the Yukon border and from Alberta to the ocean. We do cover two-thirds of British Columbia. It's a monstrous region. Nobody knows if it will work yet, but I think you chose some very good people. If it can work, they'll make it work.

I think the last thing I'd like to discuss with you is this. If the NHA is crippled and is unable to provide even the basics for the people of the north, then how can it provide the infrastructure required for this centre of excellence that the people have told us to build? Clearly, it can't do that.

That leads us to the second message to you, which is simply this: that any northern centre of excellence is going to require additional funding over the basic NHA allowance. It can't be done without that.

Our society agrees with the people of Prince George that they have in fact provided us with the long-term solutions to staffing medicine in the northern two-thirds of this province. We would ask you to look upon it not just as a cost to the system but as an investment in the future of British Columbia. We think that if this were properly funded, an awful lot of people in this city and beyond will work very hard to make this a reality. I'm certainly convinced that our medical school and centre of excellence here could easily become a world leader in northern and rural medical care within ten years.

Right now you look around, and we read about $600 million for Olympic Games and so forth. That's going to put B.C. on the map, and it's going to inject the economy and so forth. Maybe it will. I really don't know these things. What I can tell you is that if you do fund this centre for the north, we have the capability of building something that Canada can be proud of. It's not something that's just going to be good for the next

two or three years. It's something that's going to be good for the next 200 or 300 years. I would ask you to give this what help you can.

R. McGuinness: I don't really have too much to add to what Dr. Kelly had to say. Maybe I could just sort of summarize what he was talking about.

First of all, I think the direction the government is taking in general, in the selection of five regional health authorities and a provincial health authority, is the right direction. I think the individuals they selected for the board of the northern health authority are excellent.

However, I think it comes back down to a basic funding issue for the northern health authority itself. Now, some figures that I came across in December, when it was first announced, showed the funding for the various health authorities and the population. I think our funding is about $345 million for a population of about 345,000. That works out to approximately $1,000 per person in the north.

What I find very upsetting, given all the circumstances and difficulties we have in recruitment and retention of not only physicians but nurses and other paramedical personnel and the establishment of a medical school to improve the situation here…. The funding that we have in the northern health authority per population is less than the other health authorities. I don't know what the logic was. If the committee could look into that to verify that and to correct those problems….

I think that what Dr. Kelly mentioned was the role of the Prince George Regional Hospital in the provision of health and diagnostic services throughout the north. I think it's very important that this centre, particularly with the medical school to come, be strengthened and be able to provide these services throughout the north. If this facility fails, the health care in the entire north is going to fail.

B. Lekstrom (Chair): Thank you very much for taking time. I will look to see if there are any questions of our committee. I will go with Ralph and then to Joy.

R. Sultan: Dr. McGuinness, what would be the approximate funding requirement for the new centre of excellence and medical school?

R. McGuinness: I think at least what we'd like to get would be equal to what the other health authorities have at this time.

R. Sultan: Are we talking several hundred million? Can you give me a ballpark?

R. McGuinness: I would say $50 million to $100 million. I have to get the numbers myself. I'm trying to get them. It's one of the problems we have. We're busy physicians. I came across this on this website last December, as I mentioned. To try to get accurate numbers is very difficult. I've gone to the Ministry of Health. The website is very difficult to interpret and to find your way around. I'm trying to get these numbers from other sources.

J. MacPhail: Through another committee we did receive information that the Ministry of Health will be publishing budgets by regional health authorities. That should assist in your task a little bit.

Thank you for the presentation — some excellent points. I was curious to know about primary care reform. My memory may be failing me here, but I believe there was an initiative to look at primary care in a rural northern setting. Is that project still ongoing, do you know?

B. Kelly: I know that one or two of the smaller places have got salaried structure now, where before they had fee-for-service. As far as I know, they are quite successful. Again, I would like to see a costing of that, because I'm not convinced myself that the government is in fact getting the best value for money. I'd like to see the numbers before and after. A lot of these salaries are really quite lucrative, and there's a lot of time off that certainly we never got. There are a lot of perks and benefits, and you don't have to pay your staff. It always worries me when people that have never had to meet a payroll…. I always worry about that.

But you know, that's a huge area. I think primary care reform will come in some form or another, no doubt. I sincerely hope we don't copy the Brits and have a National Health Service. Someone was telling me they are right now trying to recruit 5,000 MDs, so I don't think theirs has been a particularly successful model. The Canadian model takes a bit of a beating. I think Canada has delivered health care very well over the years I've been here, and I do believe we can go on being a leader here. I don't think we have to follow.

B. Lekstrom (Chair): Dr. Kelly, Dr. McGuinness, thank you for taking time out of your busy schedules, I'm sure, to come and speak with our committee this afternoon. Thanks a lot.

B. Lekstrom (Chair): Our next presentation this afternoon comes to us from the Chartered Accountants of British Columbia: Mr. Mark Dickie. Good afternoon.

M. Dickie: Thank you very much to the committee for allowing me the opportunity to speak. I'm a char-

tered accountant and a member of the Chartered Accountants of British Columbia, the Chartered Accountants of Nova Scotia and the Canadian Institute of Chartered Accountants. I served in public practice in Halifax and Toronto before moving to Prince George in 1990. I remained in public practice until 2000, at which time I left KPMG to work with a client that primarily served the forest industry.

In January of this year, by which time our business was severely reduced as sawmills cut costs to ride out the trade dispute with the United States, I left employment at the company to reduce costs and provided services on a contract basis as needed. I have not been overly busy. I'll get right to the point. Despite the fact that I've lost my job and may therefore be expected to be critical, I believe the government of British Columbia is on the right fiscal track to return the province to prosperity.

While you may have little direct control over a settlement of the softwood lumber dispute, by reducing taxes and controlling spending you have taken the measures within your control to make British Columbia a more business-friendly place in which to invest. This is paying off and will continue to do so in the years to come. While my wife and I may eventually, albeit reluctantly, have to move from Prince George if a position requiring my skills does not arise soon, I have infinitely greater confidence now than I did two years ago that there will be options in due course.

Your request to those of us who asked to make presentations to the committee was to address three issues: first, changes that should be made to spending targets in the fiscal 2003-04 budget; second, fiscal priorities for available funds in fiscal 2005-06; and third, allocation of available funds in fiscal 2005-06. My response is directed more at principles that should be applied in addressing these issues than at specific spending priorities and may be fairly simply stated as: first, always aim for a balanced budget; second, reducing debt should always be a top priority; and third, continue to foster an environment that will attract business to locate in British Columbia.

On the first point of a balanced budget, I know it is unlikely the budget will be balanced in the current or next fiscal year and that the issues facing the forest industry will make the task more difficult than you may have anticipated when you embarked on the plan last fiscal year. The very fact that there are drivers of our economy that are largely beyond our control, however, is the best support for the importance of fiscal responsibility.

We know that at the best of times, the forest industry, which forms such a large and important part of our overall economy, is very cyclical. If we spend to the level of revenues we expect in good years — let alone beyond those levels, as we did in the past eight years — we face financial disaster when the inevitable downturn occurs. It is then, and for many years thereafter, that services we've come to expect to be provided by the provincial government and that we need most, such as health care and education, are most at risk. I therefore urge you to stick to your plan of balancing the budget at the earliest possible date and mandating a balanced budget annually thereafter.

I know this cannot be accomplished without spending cuts, and these inevitably will be painful for some and likely all British Columbians. When considering where cuts should be made, I believe it is most important that basic health care needs — in particular, our emergency health care — be at least protected and enhanced if necessary to protect the health of our citizens.

Second, with respect to debt reduction. As with balanced budgets, proper debt management strategy would dictate that we pay down our debt during good times. Debt can become a crushing burden in the budget process, particularly during a recession when a growing percentage of shrinking revenues is required to service it, even if interest rates are low. If interest rates rise, the burden can become overwhelming. Accordingly, I urge you to develop a debt management plan that provides for application of a significant portion of any budget surplus, including the funds available for fiscal 2005-06, toward debt reduction.

Third, with respect to the business-friendly environment. Like the rest of Canada, British Columbia has a small and widely dispersed population relative to the land mass it occupies, thereby increasing per-capita infrastructure costs. Our best hope for future prosperity for all British Columbians is to attract more people to share in those costs.

In the classic case of the egg preceding the chicken, I believe that we will only succeed in attracting skilled people if there are jobs requiring their skills to draw them here. That means we must become the location of choice for those industries and businesses that will enhance our standard of living. I believe we did the opposite in the past eight years. Having butchered the goose that laid the golden eggs, we are now paying the price for our arrogance.

Creating a business-friendly environment doesn't mean giving the store away. Left to its own devices, business will take more than it will ever give back. That's why we have unions and governments: to maintain a balance between the various interests so that no one party benefits at the undue expense of others. What it does mean is creating an environment in which business is a partner with labour and government in growing the economy, can reasonably anticipate its operating costs and is not unduly hampered by red tape.

For example, one critical element of cost control for business is understanding the tax environment in which it operates and knowing that the tax structure will not impair its competitiveness with similar businesses in other jurisdictions. To be attractive to business, we therefore have to offer at least as low and probably a lower tax rate than other jurisdictions with which we compete for those businesses, particularly Alberta, Ontario and the Pacific Northwest United States.

Furthermore, businesses have to know we are committed to maintaining the tax advantages that enhance their competitive position. No matter what our current tax rates are, if we foster an environment of uncertainty about the future direction of tax rates, businesses will be reluctant to make significant capital investments in British Columbia, and the jobs that go with that investment will be lost. To enhance our business-friendly environment, I therefore urge you to adopt a policy of specificity in tax planning, to be clear in its communication and to be constantly vigilant of what competing jurisdictions are doing with their business tax structures to ensure we remain competitive.

In closing, whether it is balancing the budget by reducing spending, redirecting funds to debt reduction or improving our competitive position and attracting new businesses by reducing business taxes, British Columbians, at least in the short term, are likely to see less program spending by our provincial government. I urge our government and my fellow British Columbians, however, to look at this as an investment in the future and also not to automatically assume this means we will receive a lower level of service.

At a recent annual general meeting of a local society, which provides a vital service to children and families with provincial government funding, both management and the board of directors expressed how much better they are able to function with less government interference in daily service provision. It just may be that reducing government oversight will result in better services rather than worse.

B. Lekstrom (Chair): Thank you, Mark. I'll look to members of the committee to see if there are any questions regarding your presentation.

B. Kerr: Mark, I imagine you're saying this not just as a chartered accountant but as Mark Dickie.

B. Kerr: You redeemed yourself. One of the other members of our profession spoke at another meeting that we had. Thank you. I don't think I could have said it better myself.

B. Lekstrom (Chair): With that, Mark, I see no further questions. As I've indicated to the previous presenters, I thank you for taking time out of your schedule to come and speak with us today.

B. Lekstrom (Chair): I will call on our next presenter, who is with the Canadian Taxpayers Federation, Victor Vrsnik. Good afternoon, Victor.

V. Vrsnik: Good afternoon. The Canadian Taxpayers Federation of British Columbia is pleased to present its 2003 prebudget submission. I'll just get right into it. To reverse some of the downward economic trends stemming from the 1990s — such things as declining investments, outward migration and deficit financing — we strongly believe that the provincial government should stick to its fiscal plan. The commitment to a balanced budget by 2004-05 has the full endorsement of the Canadian Taxpayers Federation.

Upon reaching a zero deficit, the provincial government should commit to a multi-year debt repayment schedule, with revenues annually transferred into a debt retirement fund and then from the fund towards the debt.

We regularly conduct surveys of our members. In 2002 our supporters were surveyed, and when asked what British Columbia should concentrate on in terms of budget priorities, the overwhelming majority was for a combination of balancing the budget and reducing taxes — by 76 percent.

Some concern still exists still the speed of the fiscal plan and the speed by which it's being carried out. Since the election, the provincial government is still far from meeting its targeted economic reforms. There's a backlog of reforms in auto insurance, energy, municipal issues, the Forest Practices Code and the core services review that we believe is forcing some delays in the province's economic recovery. It's the hope that this submission will help nudge the government onward with its ambitious yet manageable reform agenda.

The CTF acknowledges the far-reaching and positive impact of economic reforms accomplished thus far. The badly needed 25 percent personal income tax cut places B.C. ahead of all provinces with the lowest tax rate in the first two tax brackets.

The elimination of the capital tax on non-financial institutions will help restore investment and improve productivity.

The dividends tax relief may already be paying off. The 2002-03 provincial budget is revised from $8.4 billion to a $4 billion deficit, and we've seen job creation climb to 88,000 new jobs in the first eight months of the year.

Housing starts are on the ascendant, and retail sales are strong. We still believe, though, that market reforms to the forestry industry and access to untapped oil and gas reserves off the coast will further bolster the B.C. economy.

When CTF supporters were asked if they favoured offshore drilling of oil and gas off the coast if it can be done with environmental safeguards, 88 percent said yes; 7 percent, no.

The aforementioned benefits, stemming in part from the province's reform package, are only the thin edge of the wedge. More promising payoffs from structural changes are yet to come.

Meanwhile, the cautious pace of reform has failed to address some of the economic challenges that face British Columbians. The burdens from tax and regulatory environment during the 1990s had a devastating impact on productivity and capital investment, where British Columbia lagged behind the rest of the country.

Migration patterns also witnessed a reversal of fortunes as British Columbians quit the province for better opportunities in Alberta and elsewhere. After 1996 the three subsequent years saw over 31,000 more people leave the province than move back into British Columbia. The migratory outflow is significant insofar as it represents potentially lost tax revenues for the provincial government, tax revenues that would have helped balance the budget and allowed for a lighter tax burden spread among the taxpayers that stayed in the province.

The CTF recommends that the British Columbia government continue to improve on provincial economic conditions by staying the course on its three-year fiscal plan. The government should commit to a balanced budget within two years and thereafter legislate a debt repayment schedule. The government should allow for the drilling of oil and gas off the coast if it can be done in a safe manner.

Competitive taxation. Despite recent cuts to personal income taxes, CTF members are unconvinced that the province's total tax burden is on the decline. The 2002 Supporter Survey shows that 61 percent of respondents believe that B.C.'s tax burden actually increased in 2001-02. Only 26 percent of respondents felt that the B.C. tax burden actually decreased. The sentiment likely stems from the February budget, where health care premiums went up 50 percent, the sales tax went up from 7 percent to 7.5 percent, and tobacco tax rates increased from $22 to $30 per carton.

Meanwhile, some notable tax cuts occurred that should help stimulate investment. The capital tax on non-financial institutions was eliminated, and the small business tax rate threshold was raised to $300,000. Overall, though, the net tax increase from the February budget was $736 million in 2002. Providing the government is successful in balancing the budget within the next two years, the new tax relief measures should target individual income tax or provincial sales tax reductions.

The 2002 Supporter Survey shows that members gave highest priority to eliminating individual income taxes. In the survey 40 percent of respondents selected personal income tax cuts as the first priority, followed by sales tax cuts — 36 percent. Revenues permitting, the B.C. government should reverse tax increases from the February budget or restore the equivalent tax takes through other effective tax reductions.

Streamlined spending. The CTF applauds the passage of the Balanced Budget and Ministerial Accountability Act. The balanced-budget law requires significant spending restraint over the next two years, when the province projects a zero deficit. According to the latest three-year fiscal plan, total spending is scheduled to fall 6 percent, or $1.5 billion, between 2001 and 2004. When divided over three years, the spending cuts amount to about a billion dollars per year.

Now, while some have argued that spending restraint will precipitate a recession in British Columbia or deepen the economic slowdown, it should be noted that a $500 million annual spending reduction represents less than 4/10 of 1 percent of B.C.'s $127 billion economy.

When CTF supporters were asked whether B.C. cutting its overall budget by 5 percent by 2005 was too little, about right or too much, 83 percent responded that it was too little, 28 percent said it was about right, and 4 percent said it was too much. Clearly, CTF members favour provincial spending restraint.

The debate in B.C. over the proper size of government should begin with an analysis of public sector spending relative to the economy. The cost of the British Columbia government to its citizens is significantly larger than the have provinces. In Alberta provincial spending relative to the economy is 13.9 percent. It's 14.4 percent in Ontario, and in British Columbia taxpayer support for government spending represents nearly 20 percent of the economy.

In the 1990s British Columbia was a lone exception among provinces in terms of rising public sector costs. Public sector wage and salary bills rose in British Columbia from $4.5 billion in '91 to $7.5 billion in 2001, which represents a 64 percent increase — an increase far greater than in Alberta or Ontario, where their public sector wages and salaries grew by 21 percent and 8 percent respectively. Incidentally, B.C.'s public sector salary increases were above and beyond the annual rate of inflation.

Unlike the rest of the country, the average number of public sector employees has actually grown over the past decade. Between '91 and 2001 the number of public sector employees steadily grew by 16.8 percent, while Alberta witnessed a 20 percent decrease, along with a 12 percent cut in Ontario.

B.C.'s average public sector salaries have risen on the high side of the Canadian average. They're consistent with Alberta and Ontario, but the public sector cost to the economy is far greater in British Columbia. Public sector wages represent 5.8 percent of GDP, compared to 3.3 percent in Alberta and 3.4 percent in Ontario.

A few more stats here. When measured as a percent of the total population, the number of public sector employees in British Columbia is the highest in our three-province comparison at 4.4 percent in 2001, compared to 3.9 percent in Alberta and 3.1 percent in Ontario.

Public sector wages in health are on the high side, as well, for a province carrying a $4 billion deficit. Most of the increased health spending is attributable to generous contract settlements in favour of British Columbia physicians and nurses. Overall, compensations in the health care sector will cost B.C. taxpayers over a billion dollars annually.

The cost of government and the public sector on B.C. taxpayers is disproportionate to government spending and public sector costs in Alberta and Ontario, the two provinces where you can expect to lose B.C. citizens or potential investment dollars.

Lately an effort to curb public sector expenses has yielded some results. Between January and March of

2002, phase 1 of the workplace adjustments indicated the province released 3,500 public service employees. Of those, 2,877 left voluntarily. Only 610 were actually forced to leave. These adjustments still pale in comparison to public sector workplace reductions that occurred in most other provinces during the 1990s.

Health care reform. We believe British Columbia is anything but remiss in terms of health care funding. The only provinces to spend more per capita are Prince Edward Island and Newfoundland, two provinces heavily subsidized through equalization payments. Health care in B.C. gobbles up 46 cents on every provincial tax dollar collected.

The change to Pharmacare exemptions will help contain rising health care costs. The government hopes to save, I believe, $90 million per year on top of a $720 million drug budget. By adopting the means-tested Pharmacare plan, the government has managed to briefly contain what seems to be uncontainable.

If you look at the current rate of health care spending, health care could consume 50 percent of the provincial budget by 2007. At this rate, based on health spending increases and average budget increases over the past four years, health would consume 100 percent of the whole budget by 2022.

The scenario is avoidable if Ottawa and the provinces lock arms to bring the Canada Health Act into the twenty-first century. Opening up health care to innovation and private service providers, as other European countries have done, can save money and improve on quality service delivery.

CTF supporters were asked: "Do you support or oppose the establishment of private medical services and insurance to co-exist along with the public system?" Eighty-eight percent supported them; 8 percent opposed them. A recommendation is that the government improve quality of health care and cost-effectiveness by establishing more private medical services and insurance to operate in tandem with the public health system.

Privatization. Privatization and public-private partnerships, alternative service delivery, are widely used throughout the world. Privatization has increased, in particular, over the past two decades. Worldwide, government-owned enterprises now constitute only 6 percent of global gross domestic product, compared to 10 percent 20 years ago. Over 100 countries have divested government-owned enterprises to the private sector.

CTF recommends widespread privatization and public-private partnerships to promote competition, entrepreneurship and efficient and cost-effective services. The provincial government should attempt to steer the economy, not row it.

In closing, the B.C. provincial budget is more than just a catalogue of facts and figures. It's a public policy decision that affects the lives of everyday individuals and families. We believe the government is obliged to consider not only the short-term impact but also how reforms outlined in the budget will help subsequent generations of B.C. citizens. With that in mind, the government should remove the internal structural obstacles to progress, productivity and prosperity for British Columbia. Thank you.

B. Lekstrom (Chair): Thank you very much, Victor. You put forward a lot of information in a short period of time. I will look to members of our committee to see if they have any questions.

If in our ideal world, by some lights, British Columbia's share of government and the total economy was to be reduced from, say, the 17 percent to 19 percent that it is currently, depending on your measures, down to the 14 percent more typical of Alberta and Ontario, where do you make the cuts?

V. Vrsnik: Our recommendation was not that government spending be reduced from 19 percent to 14 percent, but that public sector costs should be brought in line. Public sector spending in British Columbia is nearly 6 percent of GDP and 3.5 percent of GDP in Alberta. The obligation or the burden is on the provincial government to find ways to move public sector activities into the private sector.

If I were to put the question back to you, I would ask: can you tell me of one government service that cannot be delivered by the private sector? It's a rhetorical question. I don't mean to put you on the spot. I'm sorry.

An investigation and a review of all public service spending would be appropriate to identify how we could bring our public sector costs in line with Alberta and Ontario and bring down total government spending so that we are competitive and attract more people into the province. We reverse those migration trends from the late 1990s and bring in a lot of investment dollars.

B. Kerr: Yeah, Victor, but what do you consider public service? Who is in that mass of the public service that makes up that 19 percent?

V. Vrsnik: That's 5.8 percent, I believe. Public employees of the government.

B. Kerr: Would that include Crown corporations like, say, people who work for B.C. Hydro?

V. Vrsnik: Yeah. Hospitals would. Schools would be municipal or a local level of government. To be honest, I can't answer that question. I'm still new to British Columbia. I don't have a total handle on how school divisions fit into the government public sector, if they are paid from…. I'm from Manitoba, and we have local school divisions who pay school trustees, teachers and principals. I'm not sure if that's the same model in British Columbia.

B. Lekstrom (Chair): Well, Victor, I see no further questions from members of our committee. Again I would like to thank you for taking time to come and present to our committee.

V. Vrsnik: Mr. Kerr, I could look into that and get back to you. I'm sorry that I didn't have the answer for you.

B. Lekstrom (Chair): That concludes our presenters today in Prince George. We do have an open-mike session. My understanding is no one has approached to address the committee in the open-mike session.

With that, prior to closing, I would like to thank the people of Prince George and surrounding area for coming out and speaking to our committee here today. I'd like to thank them again. It's a beautiful area of the north. I love travelling through it. I've been in the north all my life, and to be able to travel with my colleagues through the north is hopefully a good experience for them. Thanks very much.

Committee Staff:	Audrey Chan (Assistant Researcher)

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES