Legislative Assembly of Ontario

MINISTRY OF HOUSING

CONTENTS

Tuesday 13 July 1993

Ministry of Housing

Hon Evelyn Gigantes, Minister

Daniel Burns, deputy minister

Robert Glass, executive director, rent control programs

STANDING COMMITTEE ON ESTIMATES

*Chair / Président: Jackson, Cameron (Burlington South/-Sud PC)

*Acting Chair / Président suppléant: Abel, Donald (Wentworth North/-Nord ND

*Vice-Chair / Vice-Présidente: Arnott, Ted (Wellington PC)

Bisson, Gilles (Cochrane South/-Sud ND)

Carr, Gary (Oakville South/-Sud PC)

Elston, Murray J. (Bruce L)

*Haeck, Christel (St Catharines-Brock ND)

*Jamison, Norm (Norfolk ND)

*Lessard, Wayne (Windsor-Walkerville ND)

Mahoney, Steven W. (Mississauga West/-Ouest L)

Ramsay, David (Timiskaming L)

*Wiseman, Jim (Durham West/-Ouest ND)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Harrington, Margaret H. (Niagara Falls ND) for Mr Bisson

Marland, Margaret (Mississauga South/-Sud PC) for Mr Arnott

Poole, Dianne (Eglinton L) for Mr Elston

Also taking part / Autres participants et participantes:

Brown, Michael A. (Algoma-Manitoulin L)

Clerk / Greffière: Grannum, Tonia

The committee met at 1538 in committee room 2.

MINISTRY OF HOUSING

The Chair (Mr Cameron Jackson): I'd like to call to order the standing committee on estimates. We are here to begin seven and a half hours of estimates for the Ministry of Housing.

We're pleased to welcome the Honourable Evelyn Gigantes, the minister. Minister, you know the process all too well. In the first round, you're provided with up to half an hour for opening comments, which will be followed by the official opposition and the third party, each with half an hour, and up to 30 minutes after that will be for your response or rebuttal, to be handled in any fashion you choose. Please introduce your deputy and proceed.

Hon Evelyn Gigantes (Minister of Housing): I think most members of the committee know the deputy minister, Dan Burns, who joined me last year for the first time, I think three weeks after his coming to the Ministry of Housing, for estimates.

We've distributed, with the assistance of the clerk, some background material which members of the committee may find useful as we go through the course of the estimates, and we'll be happy to try to furnish any other materials which committee members will need.

I'd like to thank you for this opportunity to make a few opening statements. I'd like to reinforce that our one overriding goal in the Ministry of Housing is to ensure that Ontarians have access to housing that is affordable and housing that is safe and secure and meets their needs.

The Ontario housing market, like the economy, has been in a slump and it's a mistake to assume that the housing crisis is over. The crisis continues for hundreds of thousands of households. There is still a huge need out there for decent, affordable housing. With so many people out of work, the waiting list for assisted housing continues to grow.

Today, nearly 340,000 households -- that's about 25% of the renter population -- are spending more than 30% of their household income on rent. That means 340,000 households spending more money than they can afford on shelter, which means they have little to spare for other basic needs, such as food and clothing. So when the Ministry of Housing is setting its priorities, we have to consider these households, the households that are in dire need of more affordable housing.

We always have to keep this reality in mind when we're talking about housing policy. From my point of view, it really doesn't matter which government has the responsibility for housing policy, the reality of that need out there is a non-partisan fact.

An essential part of our goal to meet Ontario's housing needs is making sure that Ontario's existing affordable housing remains affordable for years to come and that this housing is also preserved for the future through proper maintenance. Those are the fundamental principles behind the rent control legislation, which has been one of the ministry's key priorities and remains so.

The Rent Control Act went into effect just about a year ago, August last year. From the beginning, our goal for rent control was twofold. We wanted to provide real protection for tenants against high rent increases, and we wanted to do this while giving landlords the flexibility they need to maintain their buildings: no more rent increases above the guideline, except in a few very specific circumstances; necessary repairs or higher taxes or utility costs; no more economic eviction; no more of the 20%, 30% or 40% increases that were experienced under the previous legislation; no more rent hikes on the basis of unwanted luxury renovations.

We also implemented a rent registry system that had existed under the previous legislation but not been implemented. That system lists maximum legal rents for all buildings of seven or more units at this point in time. Through this system, rent control has now returned about $3.6 million in illegal rents to more than 4,000 tenants.

The act is working well from a maintenance point of view as well. By early last month, nearly 1,600 orders freezing rents had been issued for almost 19,000 units. As a result, more than 9,500 tenants have got the repairs they needed.

It's also worth noting that with rent control, we haven't run into the bottlenecks and backlogs that followed the Residential Rent Regulation Act in 1987. Ministry staff were well prepared for the changeover to the new act, which we discussed in some detail in last year's estimates. Working groups developed procedures, forms, systems and staffing plans before August 10, 1992, and operational staff received extensive training throughout the fall.

With the new Rent Control Act, we streamlined the process by combining the functions of the Residential Rental Standards Board and rent review services and removed the need for a separate hearings board. Rent control will cost $2.7 million less per year than it cost to operate the rent review system previously. So rent control is moving ahead with some very tangible results.

In the area of non-profit housing, we're also moving ahead with our new program, Jobs Ontario Homes. The first 2,200 units of the program were allocated in March. We were slower getting off the mark than we had hoped, but after spending more than a year consulting on the housing framework and putting together the policy document Consultation Counts: Taking Action on a Housing Framework for Ontario, we didn't want to just slap a new program together. We wanted to try and make sure that we were doing it right.

The Jobs Ontario Homes program marks a new direction for Ontario's non-profit housing. It very much reflects what we heard during the ministry's year-long consultation on non-profit housing and it reflects a new way of doing non-profit housing.

We're designing a program that's easier for sponsor groups to understand and apply for. We're also working on other issues such as access, making it easier for people to find non-profit housing and making it easier for them to know how to get in and how long they'll have to wait for a unit. We're putting even more emphasis on how we choose the groups that develop non-profit housing. The community-based groups that develop non-profit housing are in this for the long haul.

We want to make sure that we're there for those groups. We want to give them the support they need, and we want to make sure the people who develop non-profit housing have a sense of the community they're in: real people who are interested in housing and have strong local ties.

These issues aren't new. They've been around since non-profit housing began. But we're taking the time to address the problems, and we're going to end up with a much better program as a result. I think the ministry has learned a lot about non-profit housing in the past six years -- I've certainly learned a lot in the last two years -- and we want to use those lessons to improve the way we deliver non-profit housing today and in the future.

When the province first started delivering its own unilaterally funded program, Ontario was in the midst of a housing boom. Vacancy rates were at record lows and the need for affordable housing was starkly clear. In an attempt to start meeting the high need that was out there, the previous government began its own non-profit housing program, which had the full support of the party I represent. As a result, between 1988 and 1991 there was a significant leap in the number and scope of non-profit housing, from 3,000 to 4,000 units in the previous years to 30,000 in a single program.

When our government took office, we recognized that after three years of such heightened housing activity, we needed to take a new look at how non-profit housing was working. We recognized that non-profit housing had changed over the years and that we had to change the way we deliver it. We knew it couldn't be business as usual. For the record, we started a policy review, a program review aimed at improving efficiency and reducing costs and a review of administrative issues such as conflict of interest and other related issues. All this, and I want to stress this point, is set in a framework which aims to strengthen the community involvement and community responsibility for a communitybased housing.

The policy review included an extensive public consultation, and Consultation Counts, the policy framework document that resulted from that review, set some important new directions for non-profit housing in this province. It underlines a commitment to the increased autonomy of a non-profit housing sector which has come of age and can manage responsibility within an accountable framework.

Our internal program review, on the other hand, is a careful and ongoing review of all programs of the Ministry of Housing to make sure that we're really getting value for the taxpayers' money. The program review was initiated in September 1991. The ministry review and other fiscal constraint measures will save an estimated $100 million over the next three years.

We did all this work before the auditor even began looking at the ministry's non-profit housing programs. So although the auditor had some good, constructive criticism for the ministry, which we are following up on, his report held few surprises. We were already aware of and working on many of the issues he raised in last year's report. In fact, we had reached many of the same conclusions in our own reviews of these areas. So there weren't a lot of surprises, but there clearly was a lot of work.

Some people took comfort in the auditor's report because they thought -- wrongly -- that it justified opposition to non-profit housing.

Again, the thing the auditor's report told us was that we had a lot of work ahead of us if we wanted to make sure that non-profit housing runs as efficiently and effectively as possible, while at the same time providing more scope for non-profits to operate in a context where their autonomy is both recognized and respected.

The public accounts committee is talking about taking a tour of some non-profit housing here in Metro. I'm hopeful it will convince members that the call we've heard from some quarters to put a moratorium on the construction of new non-profit housing is not one that should be heeded.

What would a moratorium achieve? It would mean less affordable housing when demand is increasing. It would mean even less work for the construction industry, which has been hit very hard by the recession. It would mean putting an end to a program that has created nearly 88,000 homes for 250,000 men, women and children.

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Just last month I was at a conference of the Canadian Housing and Renewal Association to introduce Dr Michael Stegman, who's an assistant secretary in the United States Department of Housing and Urban Development. He's a well-known academic as well as a strong advocate of community-based housing approaches. He wrote in one of his articles:

"The rationale for a community-based approach to national urban policy rests on the fact that local institutions know the community they serve and will therefore more wisely spend the billions of dollars of existing federal resources while making a positive impact on the local quality of life."

At every single opening I've attended for non-profit housing, I've met people who've told me what a difference that housing has made in their lives, and I'm sure the same is true of members of this committee. They tell me of the stability it's given their lives and peace of mind. In many cases, it's opened the road to a whole new life of feeling at home in the community, and the sense of self-worth that inspires contribution to that community.

So I don't question whether the program is meeting its goal of providing decent affordable housing. It is. But I do understand the scrutiny that the program has come under. We spend a lot of money on non-profit housing and that means we have to be very careful with those expenditures.

We're taking the cost of non-profit housing very seriously, and like every other government program, we've had to find ways to make non-profit housing more cost-effective.

Costs are a key issue, so let me take a moment to take a look at what they are. First, the province does not fund the capital cost of non-profit housing from tax dollars. These days all of the capital financing for non-profit housing is provided by private lenders. In the case of the previous government's Homes Now program, 100% of the financing for capital cost came from the Canada pension plan funds. Not now. Now it's competitive mortgage financing.

The ministry provides an operating subsidy to the non-profit housing sponsors to cover the difference between the total operating costs, which includes mortgage payments, and the rents collected from both rent-geared-to-income tenants and those paying market rents.

The ministry doesn't start paying for non-profit housing, meaning we don't start paying subsidies, until the units are occupied. The first-year subsidy costs for newly constructed non-profit housing are about $10,900 per year. This subsidy is lower for projects which were developed earlier, and it's important to note that, over time, subsidy costs decline. Revenue from rents continues to increase while mortgage payments remain constant. The subsidy, of course, is lower for projects that were developed earlier because their initial costs were lower and they are further along the continuum of declining subsidies.

Without expenditure reductions, the total cost of non-profit subsidies this year would have increased by $235 million. That's because an additional 14,500 units approved under the Homes Now program in 1988 and 1989 are now occupied and coming under subsidy. But because of aggressive expenditure reductions the ministry will be saving $132 million in subsidy costs.

We've also achieved significant operating subsidy savings by establishing a more economical method of capital financing. To take full advantage of declining interest rates, we introduced a centralized mortgage refinancing system more than a year ago.

These initiatives have yielded a savings of about $40 million in operating subsidy costs this year alone. We've also saved money through the direct purchase of natural gas and lowering energy costs by switching from more costly electric heating to natural gas and by installing a range of energy and water conservation improvements.

Our cost reduction program has focused on tackling the operating costs of non-profit housing. The Ministry of Housing reduced its spending by $132.8 million this year as part of the government's expenditure control efforts. That's the whole ministry. And the $22.9 million saved through the non-profit program review is additional to this.

We'll be able to go through the specific figures associated with some of the material I'm mentioning later, and I've provided charts which I hope will be helpful.

We examined all ministry programs, both in terms of their value and their cost. We made a number of decisions to reduce costs: Some programs were ended; others consolidated.

The ministry is also streamlining its own operations. This includes consolidating our rent control and regional field offices, resulting in three fewer regional offices with savings just under $5 million.

We've also incorporated several cost-saving measures in the program design of Jobs Ontario Homes. These include changes to technical standards for projects. These standards will exceed Ontario Building Code requirements for only a limited number of provincial objectives, such as energy and water efficiency and ease of access for people with disabilities.

For projects coming on stream this year, we're moving towards a clear distinction between the elements that go into the calculation of unit prices, such as land value, resource group fees and construction costs. We may indeed allow additional expenditures for special features if the land costs are low. The real point is that we want to make certain that land prices are the best we can get.

We've also ensured that consultants' and resource group fees will be based on the services provided rather than on project size or total project cost.

We anticipate that the changes we've introduced will lead to potential savings of approximately 10% in land costs and program-related cost savings of up to 16%, depending on the type of project.

As you can see, we're taking the cost issue very seriously and we've made some real progress on it. We're working very hard to manage the costs of non-profit housing so we can continue to provide decent affordable housing.

As I mentioned at the beginning of my remarks, it's a mistake to think that the housing crisis is over. There are thousands of people waiting for affordable housing, even with the higher vacancy rates we've been seeing over the past year or so.

All you have to do is to speak to any local community housing worker and that person will tell you there's a growing need out there for affordable housing. Vacancy rates show only one thing: the number of units sitting empty at any given point. They're not a measure of need. When the recession hit, people started doubling up and grown children, in many cases, decided not to move out of the family home.

One crisis housing liaison worker said recently in the Sudbury Star: "There is still an affordability problem. The apartments now available are not affordable. We're dealing with people who come here from out of town and young people moving out. They're the people who can't afford the going rate."

Another housing worker, this time in Cambridge, echoed the same views. She said in an article in the Kitchener-Waterloo Record: "We don't have anywhere near the housing we should have. The vacancies are in the high-end units which are beyond most people's means, never mind the people I deal with....I have people who aren't eating some days so they can pay their rent."

The vacancies we're seeing in the market today are in more expensive apartments, not in affordable housing. Even if we filled all the vacant units in the private rental market, we still couldn't meet today's need in most places.

For example, in Metro Toronto there was a vacancy rate of 2% in April, which means there were about 4,800 units vacant. But Metropolitan Toronto Housing Authority alone had 20,000 households on its waiting list, and that doesn't take into account all the individual waiting lists being kept by non-profits and co-ops.

In the Ottawa census metropolitan area there were about 1,100 vacant units while the Ottawa-Carleton Regional Housing Authority had almost 5,200 applicants on its waiting list.

How would we address this kind of need if we had a moratorium on building new non-profit housing? The private market hasn't been building affordable rental housing for years in Ontario. The private market is having the same problem in British Columbia, even after it got rid of rent controls. Non-profit housing also addresses special needs that private market housing doesn't meet: housing for people with disabilities or special care needs.

At the ministry we watch vacancy rates very closely, but there will be ups and downs in the market. I'd like you to remember too that it takes at least two years between the okay for a non-profit development and the initial rent-up. Even with the most thorough need and demand studies, it's difficult to predict vacancy rates two years in advance. We need to make the best predictions we can and we need to react as quickly as possible when we see trends developing.

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For example, under the first Jobs Ontario Homes proposal call we didn't accept proposals from areas with high vacancy rates, such as Windsor and Kitchener. Now we've classified regions of the province into high-, medium- and low-need areas. Hamilton and Metro Toronto are still high-need areas, while Oshawa, Kitchener and St Catharines, for instance, are medium-need areas. Sponsors also have to prove the level of need and demand for the units that they're proposing.

Having said that, it's important to note that it doesn't make sense to stop building non-profit housing because vacancy rates have risen or may rise. We know there's a need for affordable housing out there and we know it's a need that continues to grow.

Governments are always being criticized for being shortsighted. Our population here in Ontario is one of the fastest growing in Canada and we're doing what a responsible government must do: We're planning for the future. Everyone recognizes the long-term benefits of a private household buying housing. That's what we're doing from a public policy point of view: We're building housing and planning for the long term.

Building non-profit housing right now makes a lot of economic sense. First of all, land prices, construction costs and interest rates are lower than they have been in years and there are thousands of construction workers out of work. This is the best time to build. Between November 1990 and the middle of June 1993, more than 70,000 jobs were created because of non-profit housing. This is assisted housing. It's not government-built housing. Everything is done by the private sector. Private sector architects do the drawings, private sector contractors hire private sector construction workers, plumbers and drafters. Non-profit housing is an opportunity for the private sector, not competition, and when it's built it's not government-run; it's run by the community-based organizations which have taken on that responsibility.

Shelter allowances, which are being touted by some as the answer to Ontario's housing problems, don't create any of these jobs and they won't meet the need that's out there. I'm surprised that people don't recognize that if shelter allowances were the answer to our housing problems you might think that the housing problems would be over by now. Our $2.5-billion shelter allowance program is five times bigger than it was just four years ago, and there are still 80,000 households on waiting lists for decent affordable housing. We spend three times as much on shelter allowances through the social assistance system as we do on non-profit housing, and we still haven't met the need that's out there. Shelter allowances and rent subsidies definitely provide short-term answers. They're part of the solution, as non-profit housing is part of the solution, but shelter allowances don't deal with long-term need.

Non-profit housing is a long-term solution. It increases the supply of affordable housing, which means it provides housing that will remain affordable regardless of the ups and downs of the private rental market. With non-profit housing, we end up with a lasting investment for the dollars we spend. With the 1992-93 shelter allowances, here we are, $2.5 billion later and we don't have one single new unit to show for it. It just doesn't make sense as a long-term response to an ongoing problem.

I talked a little bit about non-profit housing meeting needs that the private sector doesn't meet, and I think our off-reserve aboriginal housing program is a good example of that. Many aboriginal people living off-reserve face serious housing problems and we've targeted 2,000 units under the Jobs Ontario Homes program to begin dealing with some of those problems. The homes will be designed in consultation with, and operated by, the aboriginal community and we hope to see as many aboriginal people as possible working on or trained through the Jobs Ontario Homes program. We're now designing the program and we expect to have some of this housing under way before the winter.

We've also been making some innovative headway in Ontario Housing Corp. With nearly 84,000 units of public housing in its portfolio, OHC is one of the mainstays of Ontario's assisted housing. The Planning Together program in Ontario Housing is a local partnership that brings together the people who live and work in public housing to improve the quality of life in their communities.

Each of Ontario's 56 local housing authorities formed a local planning committee made up of tenants, housing authority staff and board members and community service providers. The committees were asked to look at key areas including issues such as tenant participation in decision-making, good property management, safety, security and racial issues and to create action plans. All but two of the local planning committees have prepared their action plans, and almost all of the local planning committees are now working on implementing these plans.

Housing intensification and the development of compact urban forms are among other priorities of the Ministry of Housing, particularly from the point of view of conservation of resources and protecting the environment. Bill 90, the legislation we introduced last year, will allow home owners to create one apartment in their house without specific municipal approval.

It's an economic strategy and an affordable housing supply strategy. I'll have more to say about it when the bill comes up for second reading. For today's purposes, I'd just emphasize one aspect: It is a way of increasing our affordable housing supply at little or no cost to the taxpayers of Ontario.

It's also a step that can help encourage home ownership. The income from an apartment may be just the boost many people need to be able to afford the mortgage payments on a home of their own, and everything that helps the home renovation industry will help the economic recovery.

We're working to bring home ownership within the reach of more people. For instance, a number of government land sites are accommodating a significant component of affordable ownership housing. The ministry also provides staff assistance and advice to affordable housing producers who are going through the planning process.

We've been working with the Sewell commission to explore a number of ways in which the housing policy statement could be improved to strengthen the provision of affordable housing. In cooperation with the Ministry of Municipal Affairs, we've sponsored an advisory committee to develop alternative development standards which will encourage compact, affordable residential developments.

The committee has completed its working sessions and new guidelines for development standards are being drafted. The office of the provincial facilitator has also been a key part of our government's efforts to make home ownership a reality for more people. The office was established in May 1992, and since then Dale Martin's office has been instrumental in initiating a number of administrative and policy reforms that will help streamline and speed up the planning process, and that means reduced home prices.

I'm now going to ask that Dan Burns spend a few moments to give you a bit of an outline of what's happening in the residential private market.

Mr Daniel Burns: I will be brief. I just want to make a few remarks beginning where the minister made off -- stopped. I've got my metaphors mixed here.

Ms Dianne Poole (Eglinton): What did the minister make off?

Mr Burns: The end of her remarks -- and talk a little bit about conditions in the ownership market and touch on some of the things we are doing in relation to that. Before I touch on those things, though, it would be worth stopping for a couple of minutes and recalling some of the main contextual elements that lie in the background behind the housing market.

First, demography: We all know that the province of Ontario's population continues to grow. The population of Ontario grew, between 1986-91, by more than 10%, and is expressed as an annual rate of growth of more than 2% a year.

Household formation, continuing a trend we've had for some period of time, grew even faster, by roughly 13% in the 1986-91 period and by over 2.5% a year. Of course, it's household formation that directly connects to the housing market.

We had, in the late 1980s, a tremendous rate of growth in housing supply as well, and tremendously high rates of construction, particularly in the condominium market but also in other parts of the market. With the downturn, we've had a tremendous reduction in levels of construction but not a particular reduction in the level of population growth.

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That's led to a situation that's sometimes called, in the vernacular, "the development of a pent-up demand" or, if you look at demographics and compare the long-term numbers to the number of households that are created by a particular population, we have in the province developed just in the last three years a situation where roughly 100,000 households which would have been created by the population growth, looking at long-term trends, have not been housed by increases in the housing supply.

Those are all numbers. They accord with our commonsense knowledge that people have slowed the rate of household formation and in some cases have returned to households from whence they came or formed joint households with other people when a few years ago they might have formed a household on their own.

We have a condition in the demographic backdrop that suggests that in the coming years we will have expressed a strong demand for new housing. If we look at this year's ownership marketplace, though, we don't see a tremendous increase in new-house sales over last year or the kind of expression in the marketplace of that development of households that I touched on before. I think there are a few important reasons for that worth touching on a little bit before I turn to thinking about the next year or two and preparing for that.

The first is that we have in the population a fair amount of reluctance about making major investments connected to confidence about their own state, place and position in the economy or, secondarily, the situation of people they're connected to: a spouse, a child, a parent. We know from our own look at the marketplace and from talking to those who assess market conditions that this question of income security or job security looms large in the minds of an awful lot of people, particularly those who might otherwise be in the ownership housing market.

Secondarily, there's still in the marketplace a high level of resale housing. Looking again at the longer term, we've got in most markets in Ontario far more houses for sale compared to the annual take-up of that than we have had normally. There is a very good supply of resale houses, and resale house prices have dropped quite a lot in the last three years.

I guess as part of that we still have, at least in the Toronto market, the overhang of the condo boom which hasn't fully cleared. There is still a stock of unsold condominiums, the result of the volume of condominium building that took place in the late 1980s and into the beginning of the 1990s. So in addition to this reluctance to commit in the marketplace, we do have supply conditions in the resale market that are by historic standards generous, a generous supply, and we still have falling prices.

A year ago, most people assessed the situation as also including a reluctance based on a concern people had about whether prices and interest rates have reached their bottom. If we look at what happened over the last 18 months, that was probably a wise concern for people to have. Prices have continued to drop and of course interest rates have dropped quite dramatically, creating on the affordability side the best affordability situation we've had for ownership in a long, long time.

Casting back to the last recession and the market that arose after it, within a year or two of the recovery the demand that was expressed in that marketplace began to outstrip the supply of housing for sale and the capacity of the land development building industries to respond and we had in what was a pretty strong period of growth and inflation generally a tremendous period of price inflation in the housing market.

In this period of preparation for the next market, we think it's important that we address some of the questions of supply and cost in a more effective way perhaps than happened last time. So we've been engaged in a number of activities that are really intended to try and ensure that we have an adequate supply of developable land, both in redevelopment or intensification settings and in greenfield settings where additions to the urban area make sense around the province.

So the first important program we're engaged in is the continuation of one we've been on since 1987, and that's working with municipalities to have effective local housing policies and housing strategies that accept that they are responsible for ensuring that there is an appropriate midterm supply of residential land and that that land supports a diversity of housing form and housing at a diversity of prices.

This is a slow and difficult process, as anyone who's been engaged in dealing with municipalities about plans knows, but we are making progress and have settled, with a lot of municipalities, a reasonable framework, and hope to settle some major ones in the next year.

Secondly, in conjunction with other ministries and with the office of the provincial facilitator, we've tackled a series of issues that present timing and cost impediments to the housing production system. The minister touched on the activities of the provincial facilitator. I would also touch on the attack being made on the backlog at the Ontario Municipal Board, which is partially successful and has more to come and, in addition, on the work of our own housing advocacy and planning branch, which works with both private sector and social housing providers on an individual basis where they've got problems that need disentangling.

The minister touched on Sewell, and I just want to touch briefly on two other things. The province has announced recently new vehicles for investing in infrastructure. That's another important ingredient in ensuring there's an adequate price-competitive supply of residential land.

The final one is -- and I see Morley at the back of the room -- a project we've been doing with the provincial facilitator and with the Urban Development Institute and the regional planning offices in the GTA to try to get a solid handle on what the accessible supply of residential land is, what is in the approval process and whether we can see systemic problems in the regulatory and approval process that need a concerted effort to overcome. My expectation is that in addition to finding some points of attack we should focus on, we're also going to, in cooperation with the industry and the federal government, be able to finally produce reliable statistics on residential land availability and trends in prices.

So we have a series of activities that are intended to address the midterm supply of land, which we think is a crucial ingredient in responding to the developing pent-up demand on the ownership side. Thank you.

The Acting Chair (Mr Donald Abel): I'd like to thank the minister and the deputy minister for their presentation. We'll begin the rotation with Ms Poole. Ms Poole, you have up to 30 minutes.

Ms Poole: Thank you, Mr Chair. The minister opened her comments by saying that the Ministry of Housing has one overriding goal: ensuring that Ontarians have access to housing that is affordable and housing that is safe and secure and meets their needs. I don't think there would be any disagreement in this room about that particular goal. I think it's a very important one.

Later in the same speech, the minister talked about the reality of the need of people for affordable housing being a non-partisan fact, and that also is very true. The concern we have is that we don't agree with the particular direction of the government. All three parties in our Legislature have a very different viewpoint about how to go about providing this safe, affordable housing. The Liberal caucus has always believed that it should be a balance, a balance which involves the private sector and which involves a multitude of programs, which doesn't involve a great deal of provincial funding but does involve direction and does involve cooperation between the Ministry of Housing and the private sector.

One of the concerns I have is that the NDP government appears to remain fixated on addressing all the complicated housing issues that Ontario society faces with two programs: one being rent control, which would limit private sector involvement in the rental housing industry; and the second, non-profit housing, because the NDP appears to want everybody to live under one government-owned roof.

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Our caucus doesn't believe it's only a two-problem issue. We believe in a multifaceted approach that does provide balance.

I'd like to briefly review some of the successful programs we did have from the past which will illustrate how that balance could be brought to the housing sector.

One of the things we did as a Liberal government was to bring in, and subsequently amend and strengthen, the Rental Housing Protection Act, which was legislation to protect existing rental housing stock from conversion to condominiums. That's actually only one of the many things it did, but certainly one that was much appreciated by many tenants.

We also developed the Land Use Planning for Housing policy statement to guide municipal planning approvals to encourage affordable housing. If I may say, that particular policy statement was very well received by the municipalities; in fact, we had made tremendous inroads in municipalities implementing a number of those policy statements.

Another program was the expansion of the convert-to-rent program to encourage the construction of new rental stock out of existing buildings. Interest-free loans to encourage the construction of private rental stock under the Renterprise program was another initiative, and then there were rent supplement allocations for Renterprise and convert-to-rent projects.

One of the things that I felt was very effective which was initiated by the Liberal government was rehabilitation assistance for both existing low-rise and high-rise rental stock, particularly the low-rise rehabilitation. I think this was extremely important, given the fact that we have an aging housing stock and it is very important to ensure that tenants are not living in hovels and slums.

The Liberal government believed in development of a building industry strategy in conjunction with private sector builders to encourage private construction. Something we have certainly noticed over the past while is that the private sector is not involved in building an Ontario the way we would like it to be. We believe there should be specific strategies to encourage that again.

One of the things we had negotiated with the federal government was ongoing federal-provincial non-profit housing funding. This again is something where the federal government has recently withdrawn from the housing arena. It's made it extremely difficult for provincial governments to cope with this, and the provincial government is now stuck, if I may use that word, with bearing the full cost of housing in many cases, where before it was a shared endeavour. Certainly, I would like to see the federal government encouraged to come back as our partner in that regard.

One of the things the Liberal government did just before the 1990 election -- I think it was in 1989 -- was to update the rent legislation to discourage luxury renovations. This was certainly a problem I found in my own riding in a limited number of buildings, but where it occurred, it was quite devastating for the tenants involved. There was a new set of regulations introduced which I believe went a long way to solving that problem.

Of course the 30,000-unit Homes Now initiative was one of the large initiatives of the Liberal government. It was continued, and is being completed, by the current government.

Madam Minister, I think you made reference on page 6 of your speech to: "In the case of the previous government's Homes Now program, 100% of the financing came from Canada pension plan funds. Not now; it's competitive mortgaging financing, these days." I think what you would find if you looked at it is that the mortgage picture has changed tremendously from the boom years of the late 1980s. What is a very viable option now was not necessarily a viable option then.

One of the other things we did as a Liberal government was to develop loan guarantee programs to help non-profit organizations secure funding. Again, this is something that has been increased and continued by the current government.

We provided new funding for emergency shelters and the establishment of regional access to permanent housing committees to help deal with homelessness for people who could not access other, traditional programs.

One of the things I felt very strongly about which was initiated by the Liberal government was with relation to Ontario Housing, to ensure that women who were victims of violence were given a high priority on the waiting list and were given very quick access to housing. It's that type of program that I think shows sensitivity to some of the social programs we have today and the need to solve some of those problems.

We supported amendments to bring roomers and boarders under the Landlord and Tenant Act protection.

Something that was supported by all three parties and went through the Legislature very quickly was a bill that would allow tenants to have responsible pet ownership. Obviously, this required a pet that was not making a nuisance of itself and also related to a pet that wasn't providing allergic reaction to the tenants in the building. That was a very major issue. I think you're all familiar with the Fluffy case, where an elderly couple had been evicted from their home because they weren't allowed to keep a pet. That's a very small part, a small program, a small initiative and piece of legislation, but I point it out because it was very important. Apartments are tenants' homes, and they have a right to have a pet in their home as long as it's well behaved.

I can see Hansard is laughing over there, but as a pet owner -- I'm also a home owner, but I have a dog, a cat and a hamster. I know how my children would feel if we were ever evicted from our home, because we couldn't have those wonderful pets.

Now on to perhaps what some people would consider more weighty measures. There was a Housing First policy that was introduced which allowed the allocation of surplus lands to provincial housing initiatives. That was a major step forward as well. The Ontario home ownership savings plan helped first-time home owners buy their homes. There were land transfer tax refunds for low-income home buyers. There was an expansion of the Ontario home renewal program with a special added emphasis on helping the physically challenged meet their special housing needs.

There were certainly initiatives to develop new partnerships in housing projects with major partners, such as the city of Ottawa's residential and housing cooperative agreement. I know at that time there was also an agreement with the city of Toronto. There were also many interdenominational agreements with various churches to try to increase the housing supply. It was branching out to various partners.

Our government introduced the Seaton initiative, which unfortunately appears to have stalled, but it was an initiative which encouraged good planning and good housing initiatives. There were innovative housing projects such as Street City that were developed. There was also new infrastructure planning initiated under the office of the GTA; the greater Toronto area is now a household word, but at that time it was a fairly innovative concept to say: "We can't just look at the problems within the boundaries of Metro. We need a regional approach to this." We looked at the greater Toronto area.

There were substantial increases in welfare shelter allowances.

The list does go on and on, but I think I will end at that particular point in giving a list of previous initiatives to show the balance provided by the Liberal government. I want to talk about where we are today.

The previous government understood that there's a diverse range of housing solutions necessary to meet the needs. But the current government, I submit to you, is insistent on chopping back successful programs like convert-to-rent and low-rise rehabilitation. A bit later I'll give you some statistics on the cutbacks in low-rise rehabilitation so that you can see what I mean by cutbacks.

I believe the NDP promises of new non-profit housing for tomorrow are a sham to escape dealing with the housing problems of today. Quite frankly, if you're not a co-op association, if you're not a union affiliate, then the government's not interested in hearing about your housing problems or, in fact, your housing solutions.

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We haven't seen the evidence that the minister mentions about the NDP taking action to reduce the cost of both non-profit and private housing in the approvals process. The Sewell commission was originally appointed to streamline the approvals process and has just issued a final report that, if adopted, will in our view only serve to lengthen the planning process and increase the costs associated with it.

At first, we were very encouraged, and I know representatives of the building trades were encouraged, by the appointment of the Sewell commission. Now I believe those same representatives of the building industry are concerned that the report is more focused on telling them where they can't build and does very little to address the layer of bureaucracy involved in the planning process.

The NDP has appointed Dale Martin to cut some red tape, but quite frankly the verdict's still out on how effective that's going to be. We've had very little indication as to the success. His jurisdiction appears to be primarily concerned with specific government-related projects that catch the Premier's eye. So private sector housing developments are being put to the back of the line, while the NDP's pet projects get priority.

We will be looking at a number of issues in depth during the seven and a half hours of Housing estimates. One of the main ones, of course, continues to be rent control. The NDP's rent control legislation has now been in place for just a year, but it will be interesting to see if in fact the rent review backlog has disappeared as promised and whether there's a high degree of satisfaction with the new legislation. The NDP had promised to deliver a full rent control system, but what it came out with was Bill 121, which had the unique qualification of upsetting both landlord and tenant groups.

We will be looking at administration costs and how the new system is working, not only with the startup costs but whether in fact the new system is working effectively. We will also be looking at issues such as maintenance and whether the tracking system they've instituted is working, whether in fact there are fewer maintenance complaints than before and how that whole maintenance issue is being addressed.

One other extremely important issue which we will be focusing on, primarily because the government has given it such focus in its plans, is that of public housing and co-ops. As the minister noted in her remarks, the Liberal caucus did call for a moratorium. I believe her sentence was, "What would a moratorium achieve, after all?" What we're finding in public accounts and in looking at the Ministry of Housing and how it is dealing with public housing in a cost-effective way is that the ministry doesn't have a handle on what has happened in the past, while it's trying to cope with the problems that are currently present and the problems of the future.

There are statistics and information that we, as a public accounts committee, asked of the Ministry of Housing and were told last month that the earliest we could see that information would be November. It became obvious, from the lack of response to a number of our requests, that the ministry still does not have a handle on the cost efficiencies of public housing, not only what it's paying for the dollar but where those cost efficiencies have to occur and whether we in fact are getting value for those dollars.

The auditor has reported his findings, as I think most committee members are aware, with respect to the ministry's non-profit housing program. The minister's comment was that one thing the auditor's report told us was that we had a lot of work ahead of us. That actually wasn't what the written statement said. The written statement by the minister said, "The only thing the auditor's report told us was that we had a lot of work ahead of us." I submit that the auditor's report told the Ministry of Housing a lot more than that.

Hon Ms Gigantes: Mr Chair, I should have indicated at the beginning that my remarks would be as delivered.

Ms Poole: Yes, and I think I did mention that you did say this in your written statement, not in what --

Hon Ms Gigantes: Yes. The written statement was provided for your convenience. It's not what I said.

The Chair: You may wish to read that into the record but I think you're partly into that already. But please proceed, Mrs Poole.

Ms Poole: Yes. I guess my point, Madam Minister, is although you recognize that the auditor's report told you a lot more things than that one item, the ministry staff who prepared the written remarks might have had a different idea about that. I think the auditor's report provided us with a lot of valuable information about value for money and some of the areas we need to look at if we are to deliver public housing and social housing effectively.

Certainly one of the criticisms of the auditor was that, while in the late 1980s, the Ministry of Housing could be forgiven for acting a certain way to a certain extent because there was a housing boom -- the price of land was going off the scale; the need was tremendous; the vacancy rate was basically zero -- with the recession, times have changed enormously. Some of the areas of the province had in fact a significant vacancy rate, where in the late 1980s they did not. While I recognize the difficulty of delivering Ministry of Housing programs quickly, because you do need a certain length of time to get that unit built, still the auditor was very clear in the criticism that he didn't believe that the Ministry of Housing had changed with the times.

The NDP continues to advocate its non-profit housing programs as the way to help the economy improve, but I believe that if the NDP government was truly interested in supporting the economy, it could have moved to assist ownership housing with a more immediate impact on construction, instead of choosing to go the route of bureaucratic delays of complex, non-profit housing approval. So when the minister points to the moratorium we asked for as a mechanism which would eliminate construction and eliminate jobs, let me remind her that there is more than one way to create jobs in housing.

Certainly, if you look at what the home ownership aspect has to offer, if you look at what the Ontario Home Builders' Association, the Ontario Real Estate Association, what all these organizations were recommending, then it became very obvious that there were other ways to help provide those jobs. But I think the NDP has done very little to encourage private sector involvement in the housing industry in other years gone by, and no one wants to build those private rental units under the NDP's rent control legislation. The NDP is doing nothing to solve the home ownership problem.

I think, if you look at the recent statistics, they show that housing starts are not only at an all-time low this year, but they are 10,000 less than originally projected. I think our home ownership housing industry is in a crisis situation and I think it's imperative that this be dealt with by the government.

We have other comments that we'll be making on basement apartments, specifically on home ownership and the Condominium Act. We're aware that this minister doesn't have carriage of that act, but certainly we know that her comments would have been solicited. We want to ask some specific questions about Seaton, about the housing policy priorities, about the Sewell commission, building code amendments, but I will leave my comments at that and reserve for further questions in the next part of the process.

The Chair: This presents the committee with an interesting challenge. Did you want to utilize the additional 10 minutes left to you or did Mr Brown wish to use a few moments, or did you want to yield those 10 minutes or use them for questions?

Mr Michael A. Brown (Algoma-Manitoulin): We'd prefer to use it for questions, Mr Chair.

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The Chair: Then you're at liberty to use your remaining 10 minutes any way you so choose.

Mr Brown: One minute, Mr Chairman.

The Chair: That would leave you with nine minutes.

Mr Brown: Thank you for your indulgence, Mr Chair.

The Chair: The Chair recognizes Mr Brown.

Mr Brown: As Ms Poole indicated, we are interested in the issues surrounding rent control, and I guess I'll pursue that line for a few moments.

Since Bill 121 came into effect about a year ago, could you give us some indication of the cost of administration, I guess what the costs are, knowing that you're still operating the old system also, if I understand correctly. What are the costs year over year in operating the system?

Hon Ms Gigantes: We can easily provide those figures. It means we're going to have to call forward some people from the ministry.

The Chair: It's not a long distance to move.

Mrs Margaret Marland (Mississauga South): What are we going to do then? Is this going to be part of opening statements?

The Chair: It's the members' prerogative to use their 30 minutes in any way they choose. Mr Brown has chosen to make some inquiries, and the minister has graciously invited one of her staff members to respond.

Hon Ms Gigantes: This is Robert Glass, director of rent control.

The Chair: Mr Glass, you've been introduced by the minister and you heard the question, so please proceed.

Mr Robert Glass: The costs of rent control, the rent regulation program, are $32.3 million. That includes the rent control program itself, which is the rent control system and the budget of the Rent Review Hearings Board, which is winding down.

Mr Brown: And that would compare to what for the year before?

Mr Glass: It is about $1 million less.

Mr Brown: What are your projections as we go forward as the rent review act, I guess, is winding down, or do you have those projections?

Mr Glass: I have the projections, if I can find them, but we would expect as the act goes forward that the Rent Review Hearings Board would close down in the next fiscal year, somewhere around June 1994. They would spend about $1.7 million in the next fiscal year. We would expect rent control to gear up as it absorbed a number of the staff in the board to assist in the rent control program, and then we think the overall costs would decrease from the $32.328 million to about $31.2 million in subsequent years.

Mr Brown: So roughly the same figure.

Mr Glass: No, we would expect about $2.8 million in total savings over that period. Historically, rent review services, the board and the old standards board, peaked at about a $40-million budget in 1988-89, so we think there are substantial savings in the total rent control system.

Mr Brown: Could you tell me how many cases have been appealed since Bill 121 came into effect?

Mr Glass: There is no appellant function.

Mr Brown: There is no mechanism.

The Chair: The answer's zero.

Mr Glass: I should qualify that by saying we have a couple of cases, I think two exactly, where the landlord has asked for an appeal to court on a matter of law, but it's virtually zero.

Mr Brown: I'm having a little trouble here. I realize there's no appeal mechanism except to the courts.

Mr Glass: That's correct.

Mr Brown: So the total cost of administering the new rent control, Bill 121, is about $3 million or $2.8 million less than the old system, but there are no appeals to be taken into account because there are no appeals in that particular piece of legislation. Is that a fair statement?

Mr Glass: That's a fair statement.

Hon Ms Gigantes: If I could just add on that point, the two systems are entirely different systems. In the old legislation the tenant made an application which was dealt with administratively and then could appeal to the board. Under the new legislation the tenant or a landlord has a right to a hearing at the first round, doesn't have to wait to the appeal round to have a hearing.

Mr Brown: But then there is no appeal but to the courts.

Hon Ms Gigantes: It is a different process entirely.

Mr Brown: Could you give me an indication of how many review applications have been put before the rent control board since its inception?

Mr Glass: I'm glad I'm being well organized here.

Mr Brown: I have the same problem.

Mr Glass: I trust you mean the rent control branch, as opposed to the board, as the board continues to exist and as it deals with the residual number of applications. We've received 6,687 applications under the Rent Control Act, and that affects about just under 50,000 units.

Mr Brown: How would that compare to the previous year under the old act? I guess that wasn't under the old act, that was under --

Mr Glass: We have some statistical information on that. Over a period of time the number of applications is actually remarkably stable, given the fact that it's a totally different piece of legislation.

Hon Ms Gigantes: They're very different types of applications.

Mr Glass: If we go back to 1990-91 fiscal year, we received about 7,498 applications; in 1991-92, 8,300; in 1992-93, 9,200 applications.

Mr Brown: So it's ever-increasing.

Mr Glass: There is a reason why the number of applications increased in 1991-92, 1992-93. You may remember that we went forward with the registry project, and that resulted in a number of applications being initiated under that program. But generally speaking, the number of applications has been between 7,000 and 8,000.

Mr Brown: So what kind of a backlog are we looking at in the system now?

Mr Glass: I would like to avoid the word "backlog."

Hon Ms Gigantes: That's the B-word.

Mr Brown: I wouldn't.

Mr Glass: I didn't think you would.

We have 5,147 rent control applications on file outstanding as of the end of May. It's difficult for me to determine how many of those are backlogged for about three reasons.

First, there are a number of applications that we can't deal with under the new legislation until applications have worked their way through the old legislation. In other words --

Hon Ms Gigantes: Until we clear up the mess from your legislation.

Mr Glass: Yes, base rents.

The Chair: Now, Minister.

Hon Ms Gigantes: Well, that's the truth.

The Chair: I thought his opening comments were quite kind to you.

Mr Brown: I wasn't editorializing, Mr Chair.

Mr Glass: The minister may make those remarks.

The Chair: Yes, you've only got 18 more months to do them in, but that's fine. Proceed.

Mr Jim Wiseman (Durham West): The Chair is editorializing and trying to be a prognosticator.

The Chair: No, the Chair will attempt to be fair.

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Mr Glass: The second reason was that we had to gear up for the new program. We had to hire the staff and train them. The third reason is that we're still working through some of the procedures under the new legislation, so there's a bit of a learning curve in there.

The number of applications on file has stabilized in the last month or two, and we would expect it to be on the decrease. I'd like to get the number of applications on file down to about 2,500, but I'd be guessing at this point, because I'm not sure how the system will work, how long it will take to hold hearings, how many delays will be requested by the agents who are operating on behalf of the landlords or tenants, and other procedural delays that might occur.

Mr Brown: I'm not sure that you're the person to ask, but I'm interested in the average rate of increase adjusted for inflation over the last five years in our rental housing stock in Ontario.

Mr Glass: Of rents?

Mr Brown: Yes, on average.

Hon Ms Gigantes: In the total market.

Mr Glass: I think I would have to pull those statistics. They are available. I think they're in CMHC data, if I'm not mistaken.

Hon Ms Gigantes: We have information here. I don't think they're adjusted for inflation.

The Chair: Perhaps we can leave that as a challenge for staff to report back to the committee at the earliest opportune moment. Thank you very much, Mr Glass, and thank you, Mr Brown. The Chair recognizes Mrs Marland for her opening comments.

Hon Ms Gigantes: Mr Chair, we could provide some preliminary information.

The Chair: No, I think the Chair has indicated that we'd love to receive it in printed form. The Liberals' time has been completed and we're now recognizing Mrs Marland.

Hon Ms Gigantes: Mr Chair, I do intend to provide some answers in oral form too.

The Chair: Well, you know you've got 20 minutes, which you're biting into at this very moment, left to you. I would like to recognize Mrs Marland. Please proceed, Mrs Marland.

Hon Ms Gigantes: On a point of order, Mr Chair.

The Chair: There are no points of order in this committee.

Hon Ms Gigantes: But I understood you to say that we could answer in written form; you're not requiring us to do written answers, I hope.

The Chair: No.

Hon Ms Gigantes: No. Thank you.

The Chair: We'll give you further clarity as you require it, Madam Minister. Mrs Marland, please proceed.

Mrs Marland: We have witnessed a mind-boggling increase in the budget of the Ministry of Housing since the Bob Rae government took office in September 1990. In fiscal 1990-91, the Housing ministry's total budget was $655 million. This year it was $1.143 billion. That's an increase of 75% in just three years. By 1995, the ministry's budget will have doubled under the NDP administration.

Remember that since the NDP was elected, we have been in the grips of this country's worst recession since the Great Depression of the 1930s. Throughout this period, the inflation rate has been low. At present, the annual inflation rate for Ontario is just 1.6%. In private sector housing, there has been substantial price deflation. Thus, the Housing ministry's spending increase of 75% since 1990 is truly astounding.

As we all know, after the NDP government's irresponsible spending spree, Ontario's deficit threatens to devour the lion's share of the province's revenues -- even more than the health care budget. In response, the Bob Rae government is cutting $2 billion through the expenditure control plan, $2 billion through tax increases and $2 billion through payroll cuts. While the principle of restraint is one that my party advocates, we are concerned with the haphazard, Band-Aid approach of the social contract legislation and the damage that a $2-billion tax grab is inflicting on our fragile economic recovery.

What we really need is structural change: a smaller, more efficient government which administers only the programs that we need and can afford. No ministry, including Housing, can be excluded from this downsizing, restructuring and reviewing of priorities. Like the rest of the public sector, the ministry must reduce its payroll costs by 5% as a result of Bill 48. As well, the expenditure control plan is supposed to cut $133 million from the Housing budget for 1993-94, a saving of about 10%. But that's not enough -- not nearly enough -- when the Housing ministry's budget has grown by 75% since the NDP took office.

To achieve greater savings, the Ministry of Housing would have to scale back the non-profit housing programs which have accounted for the ministry's huge budgetary increases. For instance, why didn't the ministry prevent the future expenditure of $200 million a year by cancelling the 20,000 units of non-profit housing that were promised in the 1992 budget? Those units, part of the Jobs Ontario program, will start to come on stream this year.

Clearly, non-profit housing must be the focus of our attention when examining this year's estimates for the Ministry of Housing.

The public accounts committee has just spent several months working with the Provincial Auditor and the Ministry of Housing officials, trying to decipher what is happening in the non-profit housing programs. The auditor, you will recall, concluded that there were insufficient controls in place to ensure that non-profit housing projects were built only where needed and at a competitive cost. In particular, he found the following:

(1) Non-profit housing was built in areas where there were high vacancy rates and little demand for market rent units because the need and demand studies were not thorough.

(2) The cost of projects approved in 1990 and 1991 increased despite a significant decline in land prices and construction costs after 1989. Projects approved in 1991, totalling $1.16 billion, would have cost over $200 million less if approved costs had dropped in line with market prices.

(3) Projects were made more costly by (a) approving purchases using highest-and-best-use appraisal values; (b) failing to examine recent land transactions before approving land values; and (c) not using competitive procurement practices whenever possible. Another $64 million could have been saved by consistently using competitive procurement practices.

(4) Operating agreements were not yet in place for completed projects, and 25% of the finished projects that were reviewed lacked approved operating budgets.

(5) It was not clear whether the most needy were being housed in an equitable and efficient manner because of multiple waiting lists and inconsistent placement criteria and referral practices.

Some individual cases of mismanagement and abuse were astounding. For instance, a non-profit group paid $2.85 million for less than two acres of land, based on both an outside and ministry appraisal, yet the land had been purchased two weeks earlier by a related sponsoring group for $250,000 per acre. Thus, the sponsoring group made a profit of $2.3 million. All previous recent sales in the same area were under $300,000 per acre.

The Ministry of Housing disputes some of the auditor's conclusions, which were based on models rather than actual figures, since the actuals were not available. Yet the ministry is still unable to provide much of the information needed to substantiate its claims. In a letter to the Chair of the public accounts committee, the Deputy Minister of Housing, Dan Burns, said:

"The ministry was asked to provide actual costs for projects developed during 1989, 1990 and 1991. This information is available in each of our regional offices but the ministry has lacked the ability to consolidate it in the appropriate manner."

The Provincial Auditor, in a letter to Mr Burns, has stressed that while it is important to get accurate figures on past spending:

"I would like the primary focus of your ministry's effort and my office's future audit work to be on having the necessary systems and procedures in place to ensure businesslike management and financial control of units yet to be delivered. In this regard, the steering committee has asked me to write to you to determine whether your information systems have improved sufficiently to be able to provide the requested information for projects approved in 1992 and 1993 to date."

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Mr Burns's response says that the ministry's longer-term plans are to integrate its two major data systems in order to compile and produce project data. By the end of 1993, he anticipates being able to produce reliable and available information on all non-profit housing projects both past and future.

I am pleased that the Housing ministry will soon know not only what we have spent on non-profit housing but also what the tens of thousands of new units are likely to cost. It is mind-boggling to think that the ministry is expanding the non-profit housing program without knowing what the cost will be to Ontario's taxpayers.

On this subject, I have some further questions for the minister and Mr Burns. Why is it that when I requested the cost projections for non-profit housing subsidies two years ago in this same committee, your ministry was able to provide the answer the next day? Secondly, if you don't have the systems in place to estimate costs beyond the current year, how did you derive the current year's estimates? Are these estimates likely to be reliable?

Returning to the estimates, the ministry summary on page 3 shows that the largest spending increase on the operating side is for housing operations, the cost of which will grow by 12% or $106 million compared to last year. Similarly, on the capital side, the cost of housing operations will rise by 26% or $23 million.

Looking further at what is behind these increases, we must turn to the expenditure details for the housing field operations branch which administers social housing programs across the province.

Comparing the interim actual figures for 1992-93 to the 1993-94 estimates, operating costs for housing field operations will rise by 19% or $108 million. This includes an 18% increase in salaries and wages, a 43% increase in transportation and communication and a 19% increase in grants for non-profit housing.

I would think, Madam Minister, that the social contract partners will be very interested to realize that there's an 18% increase in salaries and wages in your ministry's estimates. When the provincial non-profit housing programs were considered separately from the joint federal-provincial program, the year-over-year increase in grants is an astounding 44%.

In these hard times and in today's environment of low inflation and falling interest rates, how can the government possibly justify these huge expenditure increases?

My party's concerns about the management of the non-profit housing program and the cost of non-profit housing subsidies are well documented. We have asked the minister to cancel the non-profit housing that has been promised and has not yet come on stream. To help people who cannot find affordable and suitable housing, we advocate expanding the eligibility for shelter allowances, which are presently available only to social assistance recipients.

The subsidies for non-profit housing are extremely expensive, because taxpayers are subsidizing not only the rents that people pay, but also land purchases and construction. The PC Party says let's not use our limited revenues to subsidize bricks and mortar. Just subsidize the people and let the private sector look after supplying the housing stock.

Let us look at some examples. The Minister of Housing recently said that the average monthly subsidy for a non-profit unit is $942. Some of the individual projects I have raised have much higher subsidies; for instance, $1,924 a month for bachelor apartments on Coxwell Avenue in Toronto. The Provincial Auditor estimated the average subsidy for new non-profit units to be $1,042 a month.

Now, consider the shelter allowance alternative to non-profit housing. Such a program pays the difference between what a household can afford, no more than 30% of its gross income, and the cost of appropriate accommodation.

Let's go back to those bachelor apartments with the subsidies of over $1,900 a month. The average rent for a bachelor apartment in Toronto east is $450. Say that a single person who occupies a bachelor unit earns the minimum wage, about $12,000 a year for full-time work. With a gross monthly income of $1,000, that person should spend no more than $300 a month on housing. Using a simplified model, if that person finds a bachelor apartment that rents for $450 a month, the rental supplement would be $150, if it fully bridges the affordability gap. That's a far cry from $1,900 a month to subsidize a non-profit bachelor apartment.

Moreover, there is no shortage of bachelor apartments. Right now, there is a vacancy rate of 4% for such apartments in the city of Toronto. Indeed, bachelor apartments have both the highest vacancy rate and the highest turnover rate of any type of rental accommodation. Here is yet another example of the auditor's finding that non-profit housing is being built where there is no need for it.

The minister likes to point out that the province already spends $2.6 billion a year on shelter allowances for 611,000 households that rely on social assistance. At an average of $354 a month per household, that's still a lot cheaper than the average non-profit subsidy of $942 a month.

A new study called The Cost of a Shelter Allowance Program in Ontario by the respected housing economists Clayton Research Associates Inc provides current reliable data on the cost of extending the shelter allowance program. Greg Lampert, the Clayton economist who prepared the study for the Fair Rental Policy Organization of Ontario, concludes that to provide a rental supplement to the 279,000 Ontario households which are in core need of housing assistance would cost about $383 million a year. That works out to just $114 a month per household. Assuming that 200,000 families chose to take part in the program, a realistic participation rate, the cost would be $275 million.

Let's look at the cost of subsidizing the non-profit units that haven't been built yet. According to the deputy minister's figures, at the end of fiscal 1992-93 about 86,700 units had been built. By the program's maturity, 133,000 units will have been built. That's another 46,000 units still to come on stream.

As I explained earlier, the Ministry of Housing says it doesn't yet know how much it will cost to subsidize all those units, but let's try to estimate. The auditor said it would cost about $200 million to subsidize the 20,000 units promised in last year's budget. At the same rate, it would cost $460 million to subsidize 46,000 units of non-profit housing.

So here is the comparison: house 200,000 households for $275 million a year with shelter allowances, or house 46,000 households for $460 million a year in non-profit housing.

That means the government could cancel the 46,000 non-profit units, proceed with the shelter allowance option and help everyone who qualifies for and wishes to take part in the shelter allowance program while still saving $185 million a year. Yet the Minister of Housing stubbornly ignores this option in her ideological blindness.

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I'd like to look at the arguments the minister uses to support non-profit housing and reject shelter allowances.

First, she says that non-profit housing construction creates jobs. That is true, but options this NDP government won't consider, such as rent decontrol combined with a broader shelter allowance program, would result in the private sector's building rental units and creating jobs, in addition to reducing the costs of housing subsidies. We must remember that the mortgages to pay for non-profit housing will be a burden to this province and its taxpayers for 35 years. There is a limit to what Ontario's taxpayers can afford.

Second, the minister says that providing shelter allowances is like subsidizing landlords. That is a ridiculous argument. It's like saying that if welfare recipients buy their groceries at Loblaws, the government is subsidizing Loblaws.

Third, she says that without non-profit housing there would be no affordable housing. The Clayton study makes short shrift of that myth, showing how much more affordable shelter allowances are than non-profit housing subsidies. Also, as I just pointed out, if the government would proceed with rent decontrol the private sector would build more rental housing.

The minister will recall that I released the new Clayton study on shelter allowances in the Legislature on June 21, 1993. I'd like to remind her and this committee of some of its conclusions:

(1) A shelter allowance program would allow assistance to be provided to all those in the needy target group who wish to apply. Right now, families can wait years to be placed in assisted housing.

(2) A shelter allowance program would allow tenants to remain in their current housing if they choose, close to their families and friends, child care providers, schools, places of work and other conveniences.

(3) Shelter allowances avoid the problem of low-income ghettos which can occur in social housing projects which do not have a mix of incomes.

Non-profit projects do have a small number of market-rent tenants, but the ratio of subsidized tenants to market-rent tenants has increased to the point where non-profit developments are at risk of the serious social problems which are evident in Ontario Housing projects. With a low demand for the market-rent units, resulting in an 8% vacancy rate for such units, it is becoming harder and harder to maintain an income mix in non-profit housing.

Since the minister has now had some time to consider the Clayton report, I would like to hear her response to it. I know that her ministry also makes use of Clayton's expertise, so I would expect that she will give serious consideration to the Clayton study and the conclusions it draws.

While we're on the subject of shelter allowances, I would also ask the minister to clarify some figures that her deputy minister provided to the public accounts committee in response to questions I raised. Specifically, I asked for a breakdown of how many shelter allowance recipients reside in non-profit housing, how many in public housing and how many in private sector accommodation. I would like to receive figures that account for all households that receive a shelter allowance through the program operated by the Ministry of Community and Social Services for social assistance recipients.

My question may have been ambiguous since the figures Mr Burns provided add up to 72,000 households, whereas approximately 611,000 households receive a shelter allowance. The Housing estimates aren't much help, of course, since the Ministry of Housing does not administer the shelter allowance program for social assistance recipients.

I am requesting these figures because there is some confusion when we compare shelter allowances administered by one ministry with non-profit housing subsidies and rent supplements administered by another. If, as Mr Burns's letter says, 13,100 households that receive a shelter allowance reside in non-profit housing, then there are at least two housing subsidies for these families: their shelter allowance and the subsidy for the non-profit unit.

Does the shelter allowance program provide a rent subsidy to social assistance recipients who reside in private sector accommodation only, or is the subsidy provided to those who reside in non-profit and public housing as well? Do some social assistance recipients receive both a Comsoc shelter allowance and a housing subsidy through the Ministry of Housing? Are there figures available for the combined housing subsidy costs of the programs administered by these two ministries?

Will I get the answers to those questions I'm raising?

Hon Ms Gigantes: Yes, you will. I'm not sure they'll all be provided verbally this afternoon.

Mrs Marland: That's fine, as long as you can tell me when I could expect them.

Moving on to another issue, I would like to ask the minister a few questions about rent control.

Minister, you've heard from landlords that because of Bills 4 and 121 they can no longer afford even the essential repairs and maintenance that their aging housing stock requires, since they cannot recover the cost of major work through rent increases.

This is a very dangerous situation, especially when coupled with a non-profit building boom that taxpayers cannot afford. An editorial in the Oshawa Times predicts that:

"The non-profit buildings will depress market rents to the point where it will make no sense for a private owner to invest in maintaining or improving a building. The only way for a landlord to make money will be to keep costs down by allowing the building to deteriorate. Eventually, the costs will be low enough to justify the low rents and the building will be ugly, dirty and unsafe.

"As the private market deteriorates, there will be even greater demand for newer, cleaner non-profit housing.

"We will be stuck with a syndrome that will eventually drive private operators out of everything but the very highest end of the rental market. We will eventually end up with nothing but luxury condos and public housing. We can't afford the subsidies and we can't afford the damage this will do to our community."

It is no wonder that the editorial board of the Oshawa Times in concerned about the impact of non-profit housing on the private sector: Oshawa has an 11% vacancy rate for rental housing, yet non-profit housing is still being built there.

This editorial reminded me of an interview between Bob Rae and Michael Melling, then chair of the Federation of Metro Tenants' Associations, in the fall of 1989, when Mr Rae was Leader of the Opposition. Mr Rae said that he wanted to encourage a non-profit model of ownership. When Mr Melling asked him how to get the current private rental stock out of the hands of the large owners and into the hands of non-profit organizations and tenants themselves, Mr Rae said:

"You make it less profitable for people to own it. I would bring in a very rigid, tough system of rent review. Simple. Eliminate the exceptions and loopholes. There will be a huge squawk from the speculative community, and you say to them, `If you're unhappy, we'll buy you out."'

He also said, "We need a government program of purchase."

This is the course this socialist government has charted, all right: a rent control system that is putting the private sector out of business, combined with a proliferation of government-owned housing. But it has become obvious that Ontario taxpayers simply cannot afford to build and subsidize non-profit housing as an alternative to private sector rental accommodation. The NDP's housing policy is a disaster.

I can't help wondering why this government doesn't look at what another NDP government, that of Premier Roy Romanow in Saskatchewan, has done with respect to rent control. Last October, Saskatchewan's Residential Tenancies Amendment Act, 1992 removed the last vestiges of rent regulation in that province. The government recognized that economic conditions were ripe for rent decontrol with a collapsing economy, high vacancy rates and landlords that were competing for tenants. If you talk to landlords in Ontario today, many of them will tell you that's exactly what they are facing.

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There are examples of other jurisdictions which have successfully phased out rent controls; for instance, British Columbia. British Columbia removed rent controls in 1984, after an 18-month transition and after appointing a rental ombudsman to ensure that tenants were fairly treated. Since then, BC's rent increases, without rent controls, have been slightly less than in Ontario, with rent controls. As well, BC maintains a rental vacancy rate of just over 2%, similar to that in the Toronto census metropolitan area. Thus, BC's current NDP government is backing away from its election promise to reintroduce rent controls.

You'd think, then, that the Ontario government would reconsider its housing policy, yet the Deputy Minister of Housing, Mr Burns, recently stated during the public accounts committee that non-profit is "a government policy to try and create significant vacancy in every rental market. That's what disciplines rents, creates a situation that gives consumers choice in the marketplace." Is an 11% vacancy rate high enough for you, Mr Burns? Will you still believe that you are giving consumers choice when there is very little rental housing to choose from in the private sector? Do you think everyone who can't afford to purchase a home or live in a luxury rental apartment wants to live in a social housing development? Is this your vision of housing for Ontario? This is decidedly not the vision of many traditional supporters of the NDP.

The people who have come to me with concerns about government-owned housing usually live in NDP-held ridings. Many have traditionally voted NDP. However, they don't want more non-profit housing, because their inner city wards already contain a concentration of social housing projects. For instance, I have heard from residents of the South Riverdale, Bloor Junction and Parkdale neighbourhoods of Toronto. Some of the residents' concerns include: the high density of the proposed projects; poor planning, for example, building projects on contaminated land that will require expensive rehabilitation to meet residential soil standards; overcrowding of existing schools and services; ghettoization from concentrating poor people in their neighbourhoods, when many of these neighbourhoods already suffer from a high rate of crime, particularly drug-related crime; and the loss of industrial jobs. For instance, one project being proposed as a high-rise would be located adjacent to a smelter with a smokestack that is shorter than the proposed building. If the smelter is required to install a new smokestack to accommodate the non-profit development, it will be the straw that breaks the camel's back. The company will move this smelting operation to the US, taking about 500 good-paying industrial jobs with it.

Some of the non-profit developments already built in these neighbourhoods are examples of the problems the auditor has discovered. For instance, a few people made huge profits by buying properties, then selling them to non-profit housing corporations for ridiculously high land prices. These residents point out that there are moderately priced vacant units in the private housing stock where people could live if they qualified for shelter subsidies.

The Vice-Chair (Mr Ted Arnott): Mrs Marland, I hesitate to interrupt you, but your time has expired.

Mrs Marland: Excuse me, I've been talking for 33 minutes; I started, on my watch, at five to, and it's 27 after. I have the times of the other speakers earlier, and the NDP took 40 minutes. I have two minutes left.

The Vice-Chair: I'd be delighted to hear the remaining two minutes.

Hon Ms Gigantes: I don't know how the Liberals feel, but I'm quite happy with that.

Mrs Marland: Some of the non-profit developments already built in these neighbourhoods are examples of the problems the auditor also discovered. For instance, a few people made huge profits by buying properties, then selling them to non-profit housing corporations for ridiculously high land prices.

These residents point out that there are moderately priced vacant units in the private housing stock where people could live if they qualified for shelter subsidies. As well, they would like to see more opportunities for affordable home ownership in their neighbourhoods, a form of tenure that this government does nothing to assist or promote.

So far, I've discussed three key issues that are of great concern to the Progressive Conservative caucus: (1) unaffordable program expansion, poor management and insufficient cost control in the non-profit housing programs; (2) an expanded shelter allowance program as a more affordable alternative to non-profit housing; and (3) the damage caused by rent control and our wish to phase out rent regulation in Ontario when the economic conditions are appropriate.

My PC colleagues on this committee and I have several other issues and questions to raise with the Minister of Housing and her senior officials. However, we will leave them until we come to the rounds of questions after opening statements.

The Vice-Chair: The minister now has 20 minutes to respond.

Hon Ms Gigantes: I was going to point out to the member for Mississauga South that I had made an agreement with the Chair earlier, which I should have explained to the committee, that if we ran over in our opening statement we would cut back in our replies.

Many issues have been raised here by the spokespeople for the opposition parties. I'll try to deal very briefly with some of the ones where matters of information have been requested and also just make a few quick comments about the approach that has been taken by the opposition parties towards our policy outline and the questions that have been raised about spending.

I think, as we go through these, it will be helpful to members of the committee to take a look at a sheet which is headed "Multi-Year Expenditure Reductions," which has included in it a series of columns which can be run through in detail. Particularly, I would call upon the help of members of the staff of the Ministry of Housing to do that as we go into the estimates further, because it explains how we have addressed questions of cost control in various ways and I think it will be helpful to members of the committee as they look at it later.

I have been, of course, quite aware that there has been opposition in this Legislature, opposition by certainly the leader of the Conservative Party and in a less clear way the leader of the Liberal Party, to the current government program to expand non-profit housing. Now, the source of that opposition, particularly with the Liberals, is one that is quite intriguing.

We were told by the chief Liberal spokesperson earlier that the Liberal Party supports policy for the Ministry of Housing that doesn't involve a great deal of money. She neglects to note, of course, that it was the completion of the Homes Now program by this government that added $288.5 million to the costs of the operations of the ministry, for which we do not either complain or apologize. We think it's a good investment. It's curious, however, that she did not note that it is a great deal of public money and it was supported by the Liberals.

What has come between then and now, as it were, to change her mind and the minds of Liberal members on this issue is a matter of great mystery to many of us, and it will be a matter of great interest to the public as this issue gets discussed in public over the next few weeks, months and years, because we do intend to continue with the expansion of the non-profit program.

We have not been insistent, as the Liberal critic suggested -- or the person, Mrs Poole, sitting in for the Liberal critic -- on cutting back good programs at the Ministry of Housing. We have cut back some programs. We have not been insistent on cutting back good programs; we've cut them back because when we compared the value of certain programs with the value of certain other programs in a time of severe fiscal restraint, we've decided that some had to be cut back. We have carefully weighed which programs we cut and thought very deeply and long about their value and how we could provide alternatives where that was available.

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She also said, which is patently untrue, that in terms of housing needs in this province, only co-ops or union affiliates are groups to which this government pays attention. I think that the many municipal non-profit organizations and private non-profit organizations in Ontario would be utterly amazed by that statement, which I intend to acquaint them with. It is patently untrue and unacceptable.

She asked whether there are fewer maintenance -- no, in fact it was her colleague; I forget the name of your riding, Mike.

Mr Wiseman: Algoma.

Mr Brown: No. Algoma-Manitoulin. Careful.

Hon Ms Gigantes: -- whether there are fewer maintenance complaints under the Rent Control Act than there were under the RRRA. There are more, because there is finally, under the Rent Control Act, a way of dealing with those complaints, and tenants are beginning to become familiar with that and to use that mechanism.

Public accounts: I will ask Dan Burns in sessions to come to comment with more detail about the information exchange which has been requested by the committee and which has been discussed with the Provincial Auditor, and what information can be made available when. We'll be glad to provide a detailed description to committee members on that subject.

The Liberal member, I believe for Eglinton, had mentioned that there had been a drop in residential housing starts in 1993. I would draw to the attention of the committee that in fact the CMHC analysis of housing starts in Ontario indicates that it has been a slowdown in the early part of 1993 production of non-profit housing which has accounted for the drop year over year.

To turn just briefly to the comments that have been made by the member for Mississauga South, I've got a note here that says, "Figures for three-year growth." This was the earlier comment she had made in her presentation in which she cited a growth of 75% in the ministry accounts over a three-year period, which I'm sure we'll want to look at in greater detail. She suggested that the ministry had disputed the auditor's comments. I would not describe what has transpired that way.

There has been a discussion between the ministry and the auditor as it became clearer what the auditor's needs were for his analysis. We have certainly made every effort to make it clear to the auditor what kinds of information are available in the systems at hand, what kinds of information we are changing the systems to produce, and taking his guidance about the important direction of the work, which he suggests should not be mainly historical at this stage but should move on the basis of what both he and the ministry feel need to be in place in terms of information systems in the future work. Again I'll ask Dan Burns later to comment on this, because I'm sure it will come up again.

There has been an indication by Mrs Marland that we'd had nothing but increasing cost in the non-profit program over the last couple of years to three years. I'd just point out to her that in fact we have seen some real signs that there have been decreasing costs. In the completion of the Homes Now allocations, within the same budget that we had set out initially in Homes Now or the Liberals had set out initially, which was revised when this government came to office and endorsed by this government, we found that when we came to the end of the allocations process, there was still enough money in the program to go ahead with allocations for another 1,881 units. In fact that program produced not 30,000 units, but 31,881, which is an indication that cost-effective measures were being felt within the expansion of that program.

Mrs Marland talked a good deal about the shelter allowance alternative and referred to the Clayton study, which is indeed an interesting study. It is one which I think bears a good deal of care in analysis because the way that Mrs Marland is reading it is that we could solve the problems of all people who have difficulty with the cost of accommodation by simply giving each household $114 a month.

The fact is that when we have provided shelter allowances for people in need in Ontario, the cost of those currently is around $340 a month. The rent supplement programs within the Ministry of Housing, about $80 million worth of them, cost about $460 a month. These are the kinds of programs that have been proposed as alternatives, and $114 a month will obviously help a lot of people who are not now being helped, but it would also be an add-on program, and I would like her to suggest where she thinks that the extra money will be coming from.

If we were not building non-profit housing, in a lot of cases we would be providing extra funding for people who are on social assistance so that they could pay their rent and we would be providing that funding through the shelter allowance component of the social assistance system. We know that this year the shelter allowances will cost the government about $340 per household, and if we were not providing assistance through the Ministry of Housing accounts for rent-geared-to-income assistance, we would be running an extra over $300 million a year in social assistance costs.

It is indeed a wonderful notion to think that we would extend assistance to people who now do not get assistance in the housing field. But I want to point out to her this is an add-on, and if you add on the cost of assisting all those people at the rate of $114 a month year after year after year after year and you haven't increased the supply of housing, it's going to be very difficult for the person receiving the $114 to find a bachelor apartment in York at $450 a month. There are only so many that rent for $450 a month in York. It may well be the average rent, but there are not new ones being built at that rent and there aren't that many that are vacant at that price.

This is something I would expect a representative of the Conservative Party to understand. It's the old law of supply and demand, and you can't just simply be increasing the effective demand, which is what you're going to do, if you increase the amount of income people have to spend on shelter, without increasing the supply and expect that market is going to be able to deliver to the people who have had an increase in their income.

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We have to keep increasing the supply, and as it is not happening through private construction -- and it's not happening through private construction in British Columbia either -- then it is essential and a very important governmental responsibility to make sure that the supply does increase.

We can afford to do that as a government because we can afford to mortgage over a 35-year period and not have to make a profit, and that's essentially what we do. We borrow money and we pay it back, and we assist people in paying their rents. We would have to assist a number of these people in any case, either through social assistance or by assisting them directly with rent-geared-to-income housing.

We do what a private developer can't afford to do, because a private developer has the need to make a profit. We don't build the housing; the non-profit sector does. We provide the financing over 35 years. We don't have to get a payback in five years or 10 years, and that's why it makes good sense for the public to be doing that kind of investment.

Mrs Marland also suggested that in fact we were creating an intolerable situation for existing landlords in the rental market because market units were being created along with rent-geared-to-income units in non-profit housing developments.

There have been vacancies in market units because operating under the constraints of our program, which I believe have been too inflexible in this regard, non-profit organizations have not been allowed to lower rents the way that landlords in the private market have been allowed to do.

They have been required to keep up rents at a level which had been calculated when their developments were rented first, which at that point were market rents and were comparable to units in the private market. In some cases they're no longer comparable, because private market landlords have actually lowered rents in some cases, so there have been some vacancies.

I should also point out to Mrs Marland that if we took all the market units that are created in all the non-profit developments around this province, it would be 2% of the market units in this province. In many cases they are high priced. In many cases they have been vacant, and they are not competition for private landlords. The vacancy rate I think is an indication of that.

Interjection.

Hon Ms Gigantes: No, I'm going to continue, because I just have a few more moments. We can come back to that, Mr Chair.

The Vice-Chair: The minister has three minutes to conclude her remarks.

Hon Ms Gigantes: I want to provide an immediate answer to one question which has been raised by Mrs Marland. I thought that we had provided her with information in written form on this, but she had asked about the relationship of social assistance and assisted housing.

The figures I have in front of me indicate that 43% of households which are living in public housing -- in other words, Ontario Housing Corp housing -- are in receipt of social assistance, and 52% of households which are in rent-geared-to-income units of non-profit housing receive social assistance.

She was trying to indicate, I think, by her questioning that in fact there was some kind of double-dipping going on here. Let me just say, Mr Chair, that it's very important that members of this committee understand clearly what's involved. There's no double-dipping. If there is not payment through the rent-geared-to-income component of our housing program, then it gets paid through social assistance. If a person in receipt or household in receipt of social assistance is living in assisted housing, then the rent charged is 25% of income, period.

I think that those are the main items that I can touch on at this point, Mr Chair. I should point out that there is, for Mrs Marland's thoughts on the subject, a real basic difference between the housing market in Saskatchewan and the housing market in either British Columbia or Ontario.

In British Columbia, the rental construction pattern has been very much the same as it has been in Ontario, and the large cities in British Columbia, Vancouver in particular, have the same kinds of features in terms of the rental market as a city like Toronto or Ottawa. The measures that are undertaken in Ontario are, I think, appropriate to Ontario's situation.

The Vice-Chair: Thank you, Minister, for that response. We now go into questions of the minister, starting with the Liberal Party, the member for Algoma-Manitoulin. You have 10 minutes, to the Liberal caucus.

Mr Brown: I would like to use a question, and I've been told by other ministers of the crown that it is appropriate to ask questions about your own riding. I would like to identify a problem that we have in the riding of Algoma-Manitoulin, in particular on our first nations.

I have been just recently discussing with the chief of the Wikwemikong unceded first nation one of the biggest problems they have in their lands, and that is a tremendous lack of housing available on reserve. I know there are some jurisdictional problems and I would like the minister to tell me and, through me, Mr Manitowabi and the other chiefs who are representing the first nations in my constituency, what specific steps the Ministry of Housing is taking to deal with a situation that only could be described as crisis on reserve.

Hon Ms Gigantes: I really don't feel competent to respond in any great detail to that question. I would point out to the member, and I'm sure he already knows, that the federal government does have a responsibility in the area of on-reserve housing, which it has acknowledged even if it hasn't met.

What we have done as a provincial government is to work with the federal government to provide some infrastructure investments that have assisted living conditions on reserve lands in Ontario, but we have not entered into an active program of developing housing on reserve.

Two thirds of people of aboriginal descent in Ontario live off reserve, and many of them also live in housing conditions which are harsh, to put it mildly. It is for that reason that we have reserved 10% of the Jobs Ontario Homes program units, as a minimum, to applications from aboriginal groups living off reserve in providing off-reserve housing.

Mr Brown: I appreciate the reply and understand some of the difficulty in the jurisdictions. I would point out that Chief Manitowabi indicated to me that the first nations believe that the very program that you just mentioned is discriminatory against the people who are living on reserve, and that in fact it encourages aboriginal people to live off reserve. There's a real crisis of people wishing to come back to the reserve whom there is not any opportunity to house.

He sees, maybe incorrectly -- and I think he and I would both agree that there's a problem off reserve and we're thankful it's being addressed. But if you can understand what I'm trying to say and what he told me, it is that they see that as a program that is encouraging people to leave reserve rather than to come to reserve. I think you could appreciate the distinction that he's making.

Hon Ms Gigantes: I think you could appreciate too that even to say that a minimum of 2,000 units will be developed as aboriginal housing is not going to meet the off-reserve need and that it is certainly not going to provide any kind of stable temptation for people to leave reserve quarters to come looking for that housing.

I think that we could, with ease, devote all 20,000 units to aboriginal housing and still not meet a need which has not effectively been met in Ontario because there have been extra access problems for aboriginal people. To put it in a brutal word, I think there's been a lot of discrimination about access by aboriginal people to assisted housing in this province. One of the responses that we feel is necessary is to assist aboriginal communities living off reserve to develop housing which they control.

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Mr Brown: I appreciate all that, and I don't think I disagree with any of it, but the problem really is that the growth rate, at least in the first nations I represent, is astounding.

Hon Ms Gigantes: Can I just point out to you that we've watched the federal government withdraw from non-profit housing creation in this province now, and if we are to take on responsibilities which are primarily federal responsibilities on-reserve in this province, I think we would see the federal government happily withdraw. Personally, I wouldn't endorse that approach. I think the federal government has to take a responsibility, and we have indicated in tangible ways and with a lot of money -- I can't give you the exact amount, but it is in the millions of dollars -- that we're willing to work with the federal government to provide infrastructure improvements that will make community life on reserve more acceptable.

Mr Brown: I think I said at the beginning that I understood the jurisdictional problems and I certainly understand about the withdrawal of the federal government, and I'm not very happy with that either and have indicated that, as has my federal colleague, the member who represents us in the federal Parliament. But if you're Chief Manitouwabi or any of the other people living on these reserves, the problem exists, and while we quibble about jurisdictional matters, it's getting worse.

Hon Ms Gigantes: I'm interested that both you and your colleague on the committee are saying you regret the fact that the federal government has withdrawn from the federal-provincial non-profit housing program. Yet on the other hand, when we do a non-profit housing program in this province, you say we should put a moratorium on it. I find great inconsistency there. Is it only good when the federal government does it?

Mr Brown: To be fair, Minister, I was speaking specifically about the responsibilities on the reserve, which, as you and I both know, until this date have always been considered to be solely federal.

Hon Ms Gigantes: We have taken on a great deal of responsibility that others might question, in fact, on reserve, which is to invest a lot of money in cooperation with the federal government in infrastructure, which is sorely needed.

Mr Brown: So I can take it from that response that the ministry, other than urging the federal government to do more in terms of actual housing, not infrastructure, is taking the view that on reserve, Ontario will take no responsibility.

Hon Ms Gigantes: No. On reserve, we are not going to initiate a housing program when there's a federal responsibility there. You'll find a difference of opinion on this, but in many cases, the people who live on reserve would agree with that position.

Mr Brown: I thank you for your frankness.

Ms Poole: First of all, my apologies for my absence while I had to speak in the Legislature but I have asked for a copy of Instant Hansard, so if the minister had any questions or comments, or the member for the third party, for that matter, I'd be happy to address those tomorrow.

In the meantime, I'd like to ask some questions about non-profit housing. First of all, the Conservative caucus has been advocating for some time that we go to -- I'm not sure I should say a solely shelter allowance program, but certainly a primarily shelter allowance program. Has the ministry estimated what this would cost?

I had understood that the Conservatives have said that the cost of providing of 279,000 core-need households with shelter assistance would cost only $383 million a year, which is $1,368 per household. Do you have any statistics or any estimates on what you believe a shelter allowance program for Ontario would cost?

Hon Ms Gigantes: If you take the number of core-need households, which we do know, which is in the 330,000 range, and take the current cost of a rent supplement program administered by the Ministry of Housing, which is costing about $460 per household per month, and you multiply, that would be our estimate. The proposal that is contained in the Clayton report would ease the financial situation for hundreds of thousands of households, nobody denies that, but if it is an add-on program, or even if it is not an add-on program -- I don't know if it's being proposed as a substitute for the current rent supplement program; a substitute for the shelter allowance program that currently exists. It's not quite clear from the report itself. However, at $114 per household it doesn't lift those households out of core need. Let me just say that.

Ms Poole: One comment that was made to me was that if you have a situation where rent controls are eliminated at the same time as you went to a shelter allowance system, you would actually have an explosion in costs for the Ministry of Housing in what it had to pay out for shelters. I'm just wondering whether you have done any investigation beyond what Clayton Research has provided. Have you done any investigation of the ramifications of going to a shelter allowance system? I understand what you are saying. You are saying we already have Ontario Housing. We have public housing right now where people are in those units, where they will continue to be subsidized. I have not heard that the Conservative Party wishes this to be totally disbanded for the existing shelters. But taking that into account, if you were to go into a shelter allowance program for anybody over and above who is already in existing, for the balance of the 330,000 core-need families, have you done an analysis of what the impact would be of a shelter allowance program?

Hon Ms Gigantes: It depends on what level you implement the program. The Clayton report is proposing a certain level which, from what we can gather from the report, would be an add-on to the current rent supplement programs and the current shelter allowance program. If we increase the number of households that have $114 per month more income, and if indeed that money is spent on housing, it will create pressure in the market. It will create upward pressure on rents. That's quite obvious. It's all very well to say that the average rent for bachelor apartments in this municipality or that municipality is at the level of y dollars per month, but if there are more and more people looking for that apartment at y dollars per month, then there will be upward pressure on the price of that apartment.

Ms Poole: Perhaps ministry staff could give us an estimate tomorrow. I've been doing some rough calculations based on 330,000 core households at $460 each, but I'm not confident in my abilities in mathematics; it was never my strong point.

Hon Ms Gigantes: Oh, don't underestimate yourself.

Ms Poole: A misplaced zero or two can make a very significant -- I've narrowed it down. It's either $1,000,330,000 or $133 million, and I don't think that's quite good enough. Give me a calculator every time.

Hon Ms Gigantes: We'd be glad to provide you with some estimates. We have an estimate in the Clayton report. I'm sure their calculations are correct. Dan wants to say something.

Mr Burns: I just want to be clear, if we're going to have a couple of calculations done. Obviously, we have looked at Clayton and have some acquaintance with the academic literature on shelter allowances.

Mrs Marland: The answers to her questions are in my speech, but she doesn't have a copy of them yet.

Hon Ms Gigantes: No.

Mr Burns: If you want an answer to the question, what shelter allowance would fully eliminate core need -- I understand your question to be that -- looking at the same group of households Mr Clayton looked at, that's one question.

Ms Poole: That's correct.

Mr Burns: Another question might be, what would the cost be if all households in core need got shelter assistance equivalent to what they would have gotten if they were fully dependent on social assistance? Or some question like that, because some of the people in core need are social assistance recipients now in the private sector in terms of housing. You have to unbundle some of the assumptions.

Ms Poole: Right. If you have the 330,000 estimated core-need households and you deduct the social assistance recipients from that, the social assistance recipients would primarily be receiving a rent-geared-to-income supplement.

Mrs Marland: It's only 279,000 core need to start with in the Clayton Research.

Mr Burns: He looked at people in core need who were renters. There are others in core need who would be eligible for social assistance, for example. It's just that once you get below the surface of the question, it becomes a bit complicated. It's not, "If you fully funded it, what would it be?" a one-number sort of answer. But I think we could put out a few assumptions and give you some sense of it.

Hon Ms Gigantes: Most households that receive social assistance do not live in assisted housing. There are about 660,000 persons in receipt of social assistance in Ontario. Do I see a negative sign back there? That's right. Roughly 220,000 are in assisted housing, either through rent supplement payments or Ontario Housing Corp or non-profit housing.

Mr Burns: I'm not sure that's absolutely it, but we'll do our best to give you some building blocks for that calculation you'd like to make.

The Vice-Chair: Thank you, Deputy Minister. It now being past of the clock, we will adjourn. The Liberal caucus has completed 15 minutes of questions. We will lead off tomorrow with the Conservative caucus. I want to thank the deputy minister and the minister's senior staff for being here to show support for the minister and in assisting in answering questions. This committee stands adjourned until tomorrow, Wednesday, July 14, immediately following routine proceedings.

The committee adjourned at 1802.