Legislative Assembly of Ontario

MINISTRY OF ECONOMIC DEVELOPMENT, TRADE AND TOURISM

CONTENTS

Wednesday 23 October 1996

Ministry of Economic Development, Trade and Tourism

Hon William Saunderson

Mr Brian Wood

STANDING COMMITTEE ON ESTIMATES

Chair / Président: Curling, Alvin (Scarborough North / -Nord L)

Vice-Chair / Vice-Président: Cordiano, Joseph (Lawrence L)

*Mr TobyBarrett (Norfolk PC)

Mr GillesBisson (Cochrane South / -Sud ND)

Mr JimBrown (Scarborough West / -Ouest PC)

Mr Michael A. Brown (Algoma-Manitoulin L)

*Mr John C. Cleary (Cornwall L)

*Mr TonyClement (Brampton South / -Sud PC)

Mr JosephCordiano (Lawrence L)

*Mr AlvinCurling (Scarborough North / -Nord L)

*Mr MorleyKells (Etobicoke-Lakeshore PC)

Mr PeterKormos (Welland-Thorold ND)

*Mr E.J. DouglasRollins (Quinte PC)

Mrs LillianRoss (Hamilton West / -Ouest PC)

*Mr FrankSheehan (Lincoln PC)

*Mr WayneWettlaufer (Kitchener PC)

*In attendance /présents

Substitutions present /Membres remplaçants présents:

Mr MonteKwinter (Wilson Heights L) for Mr Cordiano

Mr Gary L. Leadston (Kitchener-Wilmot PC) for Mr Jim Brown

Also taking part /Autres participants et participantes:

Mr RosarioMarchese (Fort York ND)

Mr TonyMartin (Sault Ste Marie ND)

Clerk / Greffier: Mr Franco Carrozza

Staff / Personnel: Mr Steve Poelking, research officer, Legislative Research Service

The committee met at 1537 in committee room 2.

MINISTRY OF ECONOMIC DEVELOPMENT, TRADE AND TOURISM

The Chair (Mr Alvin Curling): Can we start the estimates? Just a comment that the minister won't be here on Tuesday, and we could start on the Wednesday. As of today, we will be starting on Wednesday. Do we have unanimous consent to that?

Mr Monte Kwinter (Wilson Heights): I don't understand.

The Chair: The minister and staff will not be able to be here on Tuesday next week, and we will start back on Wednesday.

Mr Kwinter: Which means we will not be sitting on Tuesday.

The Chair: No.

Mr Kwinter: But we're still going to get the full hours.

The Chair: You'll get the full hours anyhow. Is that all right?

Interjections.

The Chair: I was just saying that the minister and staff are unable to be here on Tuesday, and we will not sit on Tuesday. We'll sit on Wednesday, but those hours will be added on. There's no loss of any hours on this.

Mr Tony Clement (Brampton South): So Tuesday the 29th there's no meeting.

The Chair: No. Is that all right? Agreed.

Where we left off yesterday, the rotation stopped at the Conservatives, and we will start off with the Liberals.

Mr Kwinter: I had an opportunity in one of the rounds to go over some of the remarks the minister made in his opening statement, and I didn't get to finish them all because of the time allocation. There is an area that has really bothered me. I'm not trying to be confrontational, I'm just trying to get some sense of how this thing is going to work, and I've not heard anybody explain it, certainly to my satisfaction.

I want to refer to Hansard in which when we talked about VLs, the minister said, and I quote: "I think we're going to make VLs legitimate, legal and aboveboard. We've got at least 20,000, we are told, illegal" -- Hansard calls them "VLs," but I assume VLTs -- "underground, and that's doing the community no good. So we're going to bring them out of the closet, so to speak, and I think this is the right way to do it." That is a quote from the minister, and I have no quarrel with him saying that, but I don't understand how that works.

At the present time there's an estimate, because if they are underground and illegal, I can't imagine that everybody knows how many there are or else they would close them down. But there are estimates that there are about 20,000 illegal VLTs. What I don't understand is how the addition of another 25,000 is going to suddenly make these 20,000 go away. It would seem to me that if a VLT is illegal, then at least you have half a chance of finding out that they're illegal because any VLT today is illegal, and what happens is that when you legalize them, if you can't control them now when they're illegal, how could you possibly control them when they're legal, and who is going to be able to determine which ones are legal and which ones are illegal if right now you have no ability and no facility to deal with the illegal VLTs that are there? Could you respond to that for me, please?

Hon William Saunderson (Minister of Economic Development, Trade and Tourism): Yes. First of all, it's 20,000 VLs that are going to be ultimately placed at racetracks, at charitable gaming establishments and then in the licensed premises. The police have given us that figure of 20,000.

In your concern as to why would people stop using those illegal ones even though there are so-called aboveboard ones available, first of all, I've been told that the payoff on the underground VLs is not comparable to what the payoffs will be, so the win is not as great, and in other words whoever has those VLs is taking more of the bets. So I think that the payoffs are more real and fair in the way we would do it.

The other thing is that certainly the policing would be stepped up on the illegal VLs, and the police, quite frankly, are well-informed and know where they are. It's very difficult to stop people from going there, and it's their feeling that it will be a lot easier to do this once the legal ones are in operation.

The fact that the licensed premises will lose their licences if they don't operate their facilities properly I think sets a bit of a tone for people to operate correctly and not deal with minors, and the police will have probably a facility to get at the illegal VLs. The fact that it's a much more realistic payoff on the legal VLs will probably deter people from using the so-called underground ones.

Mr Kwinter: Do you really believe that?

Hon Mr Saunderson: That's what we're led to believe.

Mr Kwinter: I'm not asking what you're led to believe, I'm asking what you believe. I mean, does that make any sense to you?

Let me give you a scenario. If I was running an illegal VL -- and you're telling me that there are 20,000 of them out there, estimated -- I would welcome the idea that suddenly there's going to be another 20,000 legal ones, because it's going to make it far more difficult for anyone to determine whether one is illegal or whether one is legal because they are now a fact of life, whereas right now, you tell me the police know where these are but they can't do anything about it, which is also an astounding statement. If they know where they are, why don't they just go in and confiscate them? They're illegal. The question is --

Mr E.J. Douglas Rollins (Quinte): They're not illegal until you start to pay out with them.

Mr Kwinter: A VLT that is used for gambling is currently illegal, and if they can't control them now, how do you expect them to control them once there are legal ones alongside? To suggest that people are going to come in and say, "What is the payoff on this?" and "It isn't quite the payoff that I need. I'm going to go somewhere else" also really defies credibility.

The people who use these things are using them because they are in a bar or they are in a restaurant. They're in a situation where this is just another adjunct to their evening's entertainment, and I can't believe any scenario where someone is going to get up and walk out because they've calculated on their calculator, "If I go four miles down the road and find a legal one, it's going to give me a slightly better chance on the odds."

The other thing, of course, is this much-talked-about study by the police, with the chief of police of the city of London chair of this committee. We've seen selected excerpts from it, but there is no question the police feel that with the increase of legal gambling, there is a corresponding increase in illegal gambling, and that is something that happens. It happens because suddenly it becomes more acceptable. All you have to do is take a look at what's happening with charity casinos.

When I was the minister -- I can tell you there were no charity casinos on the scale that are here now -- it was a constant challenge to police, and to make sure that the charities that were supposed to be getting this money were getting it. There was just far too much of this money being siphoned off before the charities even got it. In many cases the charities didn't get anything. They just used their names to circumvent the requirements for a licence and they didn't get any money. I'm sure the deputy will remember those situations very well.

I'm suggesting to you that when you get on this slippery slope of gambling, you are getting into a whole new league. You are getting into a position where there are people who are in various levels of the criminal element, who see this as a wonderful opportunity to make money, and I still have not been satisfied, with all due respect to your response, that somehow or other putting in legal VLTs is going to eliminate the illegal ones. I would suggest to you, and the indications are from people who have looked at this in other jurisdictions, that the minute you start putting in legal VLTs, you literally open the floodgates to more and more illegal ones. I'd like your response to that.

Hon Mr Saunderson: First of all, I think we have a much better understanding of the gambling industry. I think the casinos that have been erected in Ontario have been well-run, and we are well under way on that subject.

Coming back to the VLs, the legal machines will have a government sticker on them, and as I said to you, the payoff will be much more reasonable, we are told, on the machines that are operated through the Ontario Lottery Corp. If an illegal machine is found in a licensed establishment, the threat is there to remove the liquor licence, and I think, as well as having a sticker, it's going to have a machine that will be readable on the screen that it is a government-controlled machine and that the payout is therefore regulated by Ontario. I may be repeating myself a bit.

To go back to when we talked about the hospitality section, I think they welcome a regulated environment. Obviously, some of these machines are in some licensed establishments. We don't see them, but we hear they are there. The people who play these games would much rather be playing in a regulated environment, and I think that yes, they may exist for a while, but in the long run they will tend to disappear over a period of time. I don't think the illegal VLs will disappear immediately. I think we'd be fooling ourselves if we said that, but given the fact that we've had a good experience with the casinos, we will use that same experience to make sure there's a proper atmosphere for how these games are played. Yes, I agree that these illegal VLs may exist for some time, but I think in the long run -- it takes time to make a change, but I think people would much rather be involved in this in a regulated atmosphere.

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Mr Kwinter: When you talk about your good experience with the casinos, that's a very easy situation. You've got three casinos in Ontario, one at Rama, two in Windsor, and it's a controlled atmosphere. You control everybody coming in, you control everybody going out. It's very, very easy to say we have a great experience there, because it's very easy to control. You don't have to be a rocket scientist to control that.

But when you have the situation where these things are going to proliferate throughout the province, there are going to be some at racetracks and that's going to compound the problem a little bit because you're not going to have the same kind of control at a racetrack that you had at a casino. You're also going to have them in licensed premises and in charity casinos. All of these things provide opportunities for abuse, and human nature being what it is, there's going to be some. Of course, there are going to be law-abiding operators who are going to stick to the letter of the law and everything is going to be fine, but there are going to be lots of them -- not lots of them, but some of them -- who are not.

The question I want to ask is, in your projections, and I assume you've made some, otherwise I can't believe you would go ahead with the program, what is the anticipated profit for Ontario on the VLTs? I know that just before the last election, all the parties were being lobbied by people who were trying to get the contract for providing VLTs and were telling us about these huge amounts of money that the province was going to be able to generate in tax revenues as a result of the VLTs. Could you tell me what that figure is that is projected for the 20,000 VLTs that are going to be put into service?

Hon Mr Saunderson: Yes. Before I do that, you seem to imply that control at casinos is rather easy. It's not really. It has to have a real level of sophistication.

Mr Kwinter: You're making my arguments. Don't tell me that.

Hon Mr Saunderson: And we have that level of sophistication. I've toured the casinos and the back rooms and I know how they operate, I know how carefully they watch what's going on.

By the way, the gross revenue generated that will come from VLs when they're all in place and operating is expected to be around half a billion dollars. That's a little bit more than the Windsor casino generates. We've been able to do the casino situation well. I see no reason why we won't be able to do VLs properly. I guess it's your thoughts against my thoughts, but I feel comfortable that we will have a proper system in place.

As you know, wherever the licensed premise is, in other provinces there is an enclosure where the machines usually are and they are forbidden to allow minors, defining a minor as under 19. I've seen them at the airport in Winnipeg, as you no doubt have too, and I think we are going to make sure that because they're out in the open, the people who play those games are adults. Running the risk of losing your liquor licence is a huge cost to business.

I feel that my confidence isn't misplaced. Basically people obey the law, generally speaking. There are some bad occasions -- we all know about those -- but I think they will be law-abiding people on the whole and use the VLs that are available to them. Only time will tell.

The Chair: I think we've run out of time for you, Mr Kwinter.

Mr Kwinter: It goes so fast.

The Chair: Yes, our time goes pretty fast here.

Hon Mr Saunderson: When you're having fun it goes fast.

The Chair: Mr Marchese, you have your opportunity to have some fun now.

Mr Rosario Marchese (Fort York): Oh, not fun, a discussion, a dialogue, which could be entertaining.

Mr Saunderson, I have a few things. I want to touch a bit on the casino issue and then touch on other matters having to do with jobs, generally speaking, and how that connects to your own ministry and government particularly and generally.

What we did with casinos was to set up one pilot project, and we began with that in Windsor, on the basis that we needed to study it for at least three years to get a good sense of the effects the casino would have on individuals and on communities and the extent to which criminal elements could be involved and how we might contain that or prevent it from happening if possible. The point was to establish a pilot and not to have casinos all over the world because we know by other experiences that generally it's a problem and if you proliferate them, you're likely not to be able to contain the problems that come with them.

What you're doing, however, with the VLTs is rather a bigger matter. They are going to be all over Ontario, and I'm not sure you're proceeding on the same basis as we did. You say we've had good experiences with the casinos as if to suggest that we studied the matter around casinos. Now we know everything is all right and we can now get into VLTs generally across Ontario and it will be all right because we have the experience of casinos to teach us how to contain whatever problems might follow from that. Is that the argument you are using?

Hon Mr Saunderson: Yes. But before I do that, I just realized that I neglected to say one thing. When VLs were introduced in Quebec, according to the police there, most of the illegal machines ultimately disappeared because of increased police enforcement, police looking for abuse of the privilege of having VLs and liquor licences together. I wanted to mention that.

You established the Windsor casino, and I think very correctly, as the pilot project. I think it's to your government's credit that it has worked out very well and it has given us a lead on how to do other casinos. I might say, by the way, that we are now creating an industry in Ontario based on the casino where trained people are now able to move to other casinos in Ontario and, hopefully, the machines will come to be manufactured in Ontario. We're trying to have that happen.

The VLs will be introduced gradually just like you introduced the casino idea gradually. As you know, and I think I mentioned earlier, the VLs will be introduced first at the racetracks where I think it's very easy to keep control and keep a watch and see how things are going there. Then they will go to the charitable gaming operations, and again you can watch for problems as this happens. Ultimately, I think there will be about 10,000 or a little less than 10,000 go to the licensed establishments. By the way, that does not mean that every licensed establishment is going to have one. I think it's going to be the more reputable licensed establishments, not every little place that has a liquor licence.

Also, we can use the experience from other provinces. There are many other provinces in Canada that have done this. They are being very cooperative with us and we can study what their experiences have been. Yes, there can be problems from time to time, and we're looking forward to having access and learning from those provinces. So that's our thought process on that.

Mr Marchese: You mentioned that you would gross half a billion. Is that once all these VLTs are in place over whatever period of time, however many there are in totality?

Hon Mr Saunderson: That's what will happen. It will be the total gross when things get in place.

Mr Marchese: Right, and all of that will be in place -- how long again?

Hon Mr Saunderson: I think it's going to take a couple of years. We announced it in the spring budget and we are now coming to the end of 1996. It strikes me that it would be three or four years, but I really have not had a clear discussion with the people at the lottery corporation about this.

Mr Marchese: These estimates are drawn from experiences in other provinces? Is that it?

Hon Mr Saunderson: Yes.

Mr Marchese: You say not every establishment will get it. Who determines who will get VLTs in their establishments?

Hon Mr Saunderson: I think people will apply. We're not at that stage yet. There are only, I think, something like 17 to 20 racetracks in Ontario, and we still have not settled on the number of charitable gaming houses or establishments. We've got to get them into the racetracks first. I think that's going to be next year's event probably, and we'll watch that happen. A year for each step makes some sense, although that hasn't been finalized yet.

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Mr Marchese: I'm not sure what your own personal view is on that, and maybe you've stated that, but I'm not a big fan of these things. The extent of my gambling has to do with buying a Lottario ticket. That's about it. It's like me smoking once a month, that kind of thing. I'm not a smoker and I don't classify myself as a gambler. I really believe it's a problem in terms of the effects it has on people and on communities. Do you have a personal view yourself, Mr Saunderson, of these machines?

Hon Mr Saunderson: I have a pretty open mind to the way life is changing. I think back to when I was growing up. We weren't allowed to play cards in my house on Sunday, and that's when we visited an elderly aunt. But I think times have changed a lot, and I have watched the times change. When we first started, when gambling was even considered in this province, I thought back, "Where else is it done?" It was done in some states but the original was the great casino in Monte Carlo.

But since when I was younger, I've watched the entertainment dollar be competed for by so many different areas, whether it's sport, theatre or what have you, and part of entertainment is gambling. We have the major gambling casinos in Las Vegas, which is not only gambling but a nightclub atmosphere. People's tastes have changed.

I've seen people at the Windsor casino, for example -- yes, there are the professional gamblers, but there are many people who go to experience it from time to time. It's a night out. You can eat in these establishments. The restaurants in Orillia at the Rama casino are very good. They may spend $100 on gambling and, to me, that's no different than buying theatre tickets, which are not cheap, and going to see Phantom of the Opera or something like that. People seem to be demanding new forms of entertainment and it's documented whether some are advisable or not, but anyway.

Mr Marchese: I'm not quite sure about that. I'm not sure if things have changed all that radically in terms of people's desire to gamble 30 years ago or 20 years ago or 10 years ago. My sense is that there's always a desire in some people to gamble. There's no doubt about that. That's why I supported one pilot as a casino.

You might have two or you might happen to have three, I suppose, but as soon as you proliferate these things, you're making it part of the culture. You're almost encouraging it. I believe it to be a profound mistake. Whether it's VLTs, the more you proliferate these things, the more you create the need, just as in this consumptive society we create needs where there may not be any and then we normalize it and we pretend it's all right because everybody wants it. I profoundly believe it's a mistake for governments to legitimize and proliferate these machines, but I won't ask for your comment on that because it may be a matter of a difference of opinion, I'm not sure.

I want to get into the issue of jobs. Unemployment has gone up in this province, and the policy of the Conservative government of course was to make jobs in this province better. We have seen the private sector laying off people in massive numbers. Couple that with government's desire to lay off so that they can operate as a corporation and we're seeing the private sector laying people off and the public sector laying people off and we have incredibly high unemployment. Under your policies, we should have seen a better job market, but it's gotten worse.

Mr Rollins: There's 99,000 more jobs than a year ago.

Mr Marchese: Unemployment has gone up, Mr Saunderson. I'm not sure what that other colleague is saying over there. What's your response to that?

Hon Mr Saunderson: Just before I do, I want to say that gambling, just to finish up on that subject --

Mr Marchese: But I already finished on that.

Hon Mr Saunderson: I haven't, though.

Mr Marchese: I realize that, but I asked you another question. Please respond to that.

Hon Mr Saunderson: I have to work within time constraints here. All I want to say to you very quickly is that gambling has gone on. Even in the Bible it's referred to. The Romans gambled on horse racing, and so it has gone. I just think --

Mr Marchese: I appreciate that. Times haven't changed.

Hon Mr Saunderson: No, times haven't changed, but the form of gambling has changed, and I think, as a result of our policy on VLs, that the charities are going to much greater beneficiaries than they were in the past. We all have our personal views on gambling, and that's all I want to say about that.

As to your question on jobs, let me just say that we're very proud of the job situation in the province at the present time. Yes, we from time to time have blips, as the Prime Minister calls them -- he called the most recent downturn in jobs in September a blip, and I would agree with that -- but generally speaking, the figure I use, because I think it's the right one, since the election there have been roughly 105,000 net new jobs created in Ontario. As you know, that's quite an improvement over the last five years where, when your government was in power, there ended up being 10,000 fewer jobs than when you started. But to give you your due, you were going through some difficult economic times.

I think our policies are working, though. I've had the pleasure of being out just in the last three weeks at seven different plant openings or expansions or ribbon cuttings or new announcements, and all of this is not jobs now but jobs down the road. I think the bigger the backlog of construction that's going on to build additions or new plants, those jobs are going to be there down the road and are going to be very pleasant surprises. That's just an opening statement.

Mr Marchese: I appreciate that.

Hon Mr Saunderson: I'm happy to come back to it.

Mr Marchese: I just want to engage you a bit in this regard. I know that you and all of your members in this committee and the government are proud of your record and policies. I recall when we as a government used to quote figures about jobs we were creating, your colleagues who were there at the time used to make fun of those figures. Never once did they acknowledge the recession. I understand that. You do now in government, which is nice.

Hon Mr Saunderson: I would have acknowledged it even then.

Mr Marchese: You might have.

Mr Rollins: So would I.

Mr Marchese: So would a few others, they say now. In government they tend to be magnanimous. But in opposition -- we used to quote all the statistical numbers of job creation we were engaged in, because we put some bucks into job creation -- and your members used to make fun of those numbers. Now you quite proudly talk about your numbers and how many jobs you're creating, and I talk about the fact that unemployment has gone up, and of course you don't deal with that. You deal with the fact that you have created some jobs, however indirectly you're creating them, while I say unemployment has gone up in Ontario.

The problem for me is that I worry about those people who are unemployed, which is not to say you don't worry about them, but who is worried about how we take care of those people who are unemployed? The unemployment records are very high, they will continue to be high, and these people are on the streets. It's nice for you to talk about the fact that you think there are going to be additional new jobs, but I'm not very optimistic about that. When I see the numbers going up, I'm worried about your policies and how they are reflected in those unemployment numbers. How do you speak to the fact that unemployment has gone up? That's the first question, and then I'll come back to the whole issue of the public sector losing jobs and how you think that's helping the economy.

The Chair: You may have to come back to that on your next round. If the minister can comment in 10 seconds, that would be quite appropriate for me.

Hon Mr Saunderson: First of all, we have decided that we are not going to give cash, write cheques to businesses. We want to create the right business climate, and I'll talk more about that, because we can come back to this subject if you'd like.

The Chair: You're very cooperative, Minister.

Mr Rollins: I've got a couple of things I want to comment on. One of the first things that these people are talking about, job creation, down in the little area of Quinte, just east of us -- I guess it would be in Gary Fox's riding of Prince Edward-Lennox-South Hastings -- there's a native reserve and there's a little college down there, and they have started to deal with unemployment by teaching the natives to work for the casinos.

My goodness, they put on a course down there for about six weeks and they can graduate about 19 people at a time. They have already graduated their first class, and those people are all working in casinos or those kinds of establishments. It's one more good news thing that has happened down in our area, and I know they've got other classes being filled, three or four. They can only accommodate 18 or 19 at a time. It's a first nations college down there that's doing it, and it's one more thing that I think through your ministry has been helped somewhat.

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Last spring, through the St Lawrence Parks Commission, I had the privilege of representing you in opening Old Fort Henry in Kingston. There again, that establishment has turned around somewhat to where they are spending some of the dollars we as a government are putting into it so entrepreneurs and individuals going into that place to sell memorabilia can generate some more work in the private sector, and I comment very much on that.

One of the questions I would like to have you address, and I know the silos of one ministry and another ministry are a little bit different than what they have been in the past, but it bothers me muchly that in tourism one of the biggest things that we really pride ourselves on in Ontario is that we need to look good, and our tourists coming into the province have unfortunately had to drive along the 401 without the grass being cut in those areas. I know it may not be a tourism thing as much, but is there any way, through your ministry, we can help the highways ministry to see whether we can make that improvement along the roadway to make our visitors feel a little more at home than we have in the last summer or two?

Hon Mr Saunderson: I appreciate your comments, Mr Rollins. I would like to start off my answer by saying I'm going through your area tonight to end up in Kingston. I will be meeting with the Fort Henry people tomorrow morning at 8 o'clock for breakfast, and I'd like to let you know that they are trying to have the private sector annually contribute $200,000 to keep the fort operating and all the things that people like, such as the guard change and those things.

I spoke to Mr Gerretsen and said to him that I hope that because of his close relationship with the city of Kingston and with Peter Milliken, who is the Liberal MP from that area, that the federal government would also see some way to do something that would encourage the financial security of Fort Henry.

I'm going to meet with the St Lawrence Parks Commission people also tomorrow morning, because as you know, there is this concern about keeping the atmosphere at Upper Canada Village very clean and very pioneer-like, yet we do have to have some revenue producers nearby, so we're trying to make that all work.

On the highways that you've alluded to we are going through a new signage process, privatization of signage, and I referred a little bit to that the other day. I think the signs are going to be very good-looking and yet will be done by the private sector, and those people who want to appear on the signs will appear at their expense.

I think you raise a good point about cutting the grass. We drive around and we notice the wonderful trees and the colours that change, and we do notice the high grass from time to time. That is the responsibility of the Ministry of Transportation and I have really not discussed that with the minister, but I would be very happy to do that if you would like me to. I undertake to do that, because there's no doubt that it does create a good impression on people when they are entering our country and our province.

Mr Rollins: I would appreciate that, Minister, because I think it does, particularly for our out-of-province visitors, really help out.

I also was surprised to learn this spring, when I was down to Old Fort Henry when they opened it, that over 100,000 people a year visit that establishment. It's a pretty phenomenal number of people, and a lot of that number are Americans. I think if those people can come in and we can make them feel welcome and shake a few nickels out of their pockets while they're here, it certainly helps the economy of Ontario. Just anything we can do to keep encouraging that St Lawrence parkway to be privatized but still keep open would certainly be an asset to eastern Ontario and, in turn, to all of Ontario.

Hon Mr Saunderson: Your point is well taken. These are really provincial treasures and it would be a shame to not make sure that they survive. I'm convinced they will, by the way. As you know, we've been trying to have the private sector step in a lot more to all aspects of business, including tourism. If we can do partnerships with them, I think that's the right way to do it.

Tourism is new to the ministry, number one, but, second, it is a very interesting adjunct to the ministry in that every location in Ontario, regardless of its size and what kind of geography it is or how it fits into the municipal structure, always creates its own map. We're probably overmapped in this province or overinformed because we put out something, then the municipality does and then the little museum does. Even in Toronto this happens. Everyone has a very good idea of how best to publicize their area, their region or their facility.

It's going to take time to try to eliminate some of that duplication, but what we're trying to do in the process is to get more partnerships between the private sector and the government. Supposing it's the town of Collingwood. Why wouldn't all the ski developments put an advertisement in the map of Collingwood? Everybody wins in that situation. I find this is the biggest challenge for me in the tourism industry, to try to get people to pull together and not pull apart and not be in conflict from time to time.

It's a marvellous industry. It's our fourth-biggest export industry, and you point that out. You want people to be impressed when they come into the province. It has created somewhere in the neighbourhood of 225,000 direct jobs and probably another 150,000 indirect jobs in tourism. Tourism is not what it used to be; it's much more year-round now. There were times when the snows came and the city people all stayed home. That doesn't happen any more.

We have a marvellous industry and I'm happy to say that we are touting this industry and our province when we travel abroad to make sure that we have proper people representing us in, say, Japan, Germany, England or France, doing the brochures to get people to come to Ontario.

I don't know if you're aware that I'm going to Japan in the middle of the month. I know we are going to be meeting with the people who represent us in Japan, trying to get more tourists here. As you know, it is happening. When the Keidanren people were here a couple of weeks ago, we made darned sure that they got over to the Niagara region, for example, and saw what tourism is about in that region.

Back to the grass: I will go to Al Palladini and talk to him about that.

Mr Rollins: Thank you.

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Mr Wayne Wettlaufer (Kitchener): Minister, for a number of years I've been particularly interested in the Ontario Lottery Corp. I may ask you some questions today that you may not be able to answer and I understand that. Perhaps your deputy minister will be able to answer them, and if not, I would be more than happy to have them answered at another time.

One of the things I noticed on page 6 of the estimates briefing book, the Ontario Lottery Corp had actual revenue interim, 1995-96, of $645 million. By the time the year-end came in, the net income was $626 million, but that's only $19 million off. The revenue estimates for 1996-97 are shown as $736 million. In the Ontario Lottery Corp's annual statement, the Ontario Lottery Corp showed a 4.9% increase for Pick 3 last year -- I'm sorry. That was for Lotto 6-49, a 4.9% increase; Pick 3, a 9.6% increase. All the other products showed a decrease in sales: 24.8% for Wintario, 15.4% for Lottario, 22.5% for Celebration and 7.9% for Ontario Instant Millions.

One of the things I would ask whether or not we would consider eliminating some of these products that showed a decrease in sales. The second thing I would be concerned about is having an estimate of over $100 million over last year's revenue when in actual fact the products are decreasing. Those are some questions. I have others as well, but if you want to answer those, if you can. I'm not sure you can.

Hon Mr Saunderson: Yes, you're right. You've got an interest in the Ontario Lottery Corp, a great interest; so have I, because it produces a lot of revenue for the province. My budget figures for this year are about $702 million for the year that we're in. The actual figure for 1995-96 that I have is $665 million, and I think that's pretty close to what you were saying.

But you're asking about some of the games that are played. There's a business case drawn up for each game and I think they have just eliminated --

Mr Clement: Wintario.

Hon Mr Saunderson: Yes, it was Wintario. They just eliminated that one because, we're told, people tend to tire of games. They want to have a new one and they like the arrangements of the new games and the old ones are not as -- I guess everybody likes a new challenge. So they make a business case for each of these games.

I can't give you by rote the business case for each of those games. I'm happy to get those things for you, if you'd like.

Mr Wettlaufer: Any time, sure.

Hon Mr Saunderson: Yes, we will look into that. But the board is the one that makes the decision and we've appointed recently to the board, within the last six months, four very good business people. These are people who are solid business people and have very good analytical skills. So we'll try to get the case for each one of the games, if that's what you'd like.

Mr Wettlaufer: I'd appreciate that very much.

The Chair: As part of the Liberal time, Mr Cleary.

Mr John C. Cleary (Cornwall): I want to go back a little bit to tourism. I've been involved a lot in it in the last 25 years and worked with a lot of different groups. We've run into a lot of brick walls and I have a memo dated September 11, 1996, from the Ontario Tourism Council, which I must say does not paint a favourable portrait of the minister.

The memo states that you have headed in your own direction without consulting the tourism industry and that you've adopted a door-slamming-in-the-face approach with the group. From the written document that has been forwarded to my office, as well as discussions I have shared with one of the council members, they are agitated that you rejected outright the Ontario tourism marketing corporate plan, a plan on which hundreds of people, a lot of them in eastern Ontario, involved directly in the tourism industry, had worked for several years, a plan which has fostered the support of professionals involved in the trade: travel and association members representing over 20,000 tourism business owners and operators as well as 400 individual business operators and owners from every area of the province. Yet, despite the tremendous level of support, you apparently completely rejected the plan to create the Ontario Tourism Marketing Corp. They are very upset with you that you did not even bother to consider alternative options, just a resounding, "No, get lost."

I would like to know why you turned this group down and if you are willing to work with this group at all.

Hon Mr Saunderson: First of all, I'm used to harsh words now. I wasn't when I first got into this business, and I was sort of shocked the first question I received in the House from Mr Kwinter. I thought, "Gee, I didn't know life was like this here." Over the 15 or 16 months I have been into this new career, which I like very much, I'm used to people saying I don't know what I'm doing and things like that. I think I do know what I'm doing and I think I'm doing it the right way.

However, to answer your question, I guess you got that memo from somebody who didn't necessarily like the way we handled things, but we had the Ontario Tourism Council under Mr Michael Beckley. It was established by the previous government. They made their study and came to us, and they wanted us to establish a not-for-profit Ontario Tourism Marketing Corp, which you referred to. We felt that we could not, in all honesty, turn over the tourism budget -- granted, some of these people have been successful in the tourist industry -- we did not think that we could commit all of that money to a group which had not necessarily had a track record on doing this type of work for us. So that was it, and we decided that we were going to ask the industry to help us in the formation of a minister's task force that would be a new public-private sector partnership and that would form the foundation for a new partnership with the industry. That would be the first step to increasing Ontario's competitiveness in the industry.

Over the next four months, as we get this under way, we wanted to get a five-year strategic tourism marketing program, provide input into the 1997-98 ministry tourism marketing plan and develop a strategy for Ontario to lever additional Canadian tourism funding -- that's the Canadian tourism commission, which operates from Ottawa -- and also we wanted to get the private sector more involved.

I guess if somebody wants to say that they don't approve of what we're doing, it's their privilege to do that, but I really think this is the right way to go.

Mr Cleary: The task force is just putting people off for another length of time, you know. You said four months.

Hon Mr Saunderson: Well, no. This will be up and running in time to provide input to the marketing plan for 1997-98, and we're halfway through this year. We've gone through a great shake-up with tourism because of bringing it into this ministry, and still I think what we've come up with is a good team in our ministry doing tourism under the capable leadership of Jean Lam, the ADM responsible for that, so the downsizing that went with it I don't think has hurt us.

Our job now is to market Ontario, not only for tourism but as a place to invest and do business and expand here, and we're in the process of coming up with, and hopefully will be able to announce soon, a new marketing plan in which tourism will be very much involved.

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Mr Cleary: I know a lot of the residents of eastern Ontario spent a lot of time and they're very disappointed, and I would hope that someone would listen to them. Maybe Ms Lam will listen to them if you have no time for them.

Hon Mr Saunderson: I have to say that eastern Ontario will be well represented on our task force, and also, I've spent a lot of time in eastern Ontario since being elected, on tourism.

Mr Cleary: But what have you done in eastern Ontario? Name me one thing you've done. You told me in the House, but I didn't see anything yet.

Hon Mr Saunderson: We've gone down there and we've listened to what these people really want. Believe it or not, it's been a long time since a minister of tourism has actually been out and listening to what people have wanted, and we've been told that's true, so I --

Mr Cleary: That is not true.

Hon Mr Saunderson: That's what I'm hearing. Anyway, I feel that my job and our job is to go out there and listen and travel down into these regions and meet with them. The eastern Ontario people have seen a lot of me and my ministry, including my deputy and the ADM, and also Mr Grimmett, who is the parliamentary assistant, has been down there a lot.

Also, I have to tell you that not all of the tourism industry was as cutting as what you've just read to me. The OTMC was not the unanimous choice of the people who were involved with it.

All I can tell you is you'll have to take my word that we're paying attention to all regions of the province and that includes eastern Ontario. In fact we took out with us to California, San Jose to be specific, 10 companies from the Ottawa-Carleton area and also the Ocedco chairman and two of the Ottawa-based universities, and they all had a chance to talk about their region, and they didn't necessarily talk about the information technology industry. They talked about tourism and they talked about education, and I think that was a good way to expose people on the west coast of the United States to your region.

Mr Cleary: I happened to be around here for a little while, and I know the former minister under the former government and his parliamentary assistant, Dan Waters, were in eastern Ontario a lot, because I was at the same meetings they were. Hugh O'Neil was the Minister of Tourism and he was down there a lot, so I don't know how you could sit there and say that.

Hon Mr Saunderson: I was told that, for instance, when I'm going to Kingston tomorrow and talking to Fort Henry and the St Lawrence Parks people, they're rather surprised that they're going to see a minister.

Mr Cleary: You ask those people you're meeting with if those other ministers didn't meet with them, because I was there. I know and I'm not that forgetful.

Now I want to talk about the St Lawrence Parks Commission. I'm sure you knew that I would raise this issue because I've been getting vague answers from you, and I want to get down to the reopening of the parks that are closed. I know that several private sector proposals have gone in to the former government and this government. The previous government blamed successor rights. Now that you have almost one and a half years under your belt, I don't see that you're producing any results either. Back on April 2 this year, you stated that you were working on very innovative and creative ways to manage the facilities and that when the summer was finished we were going to have a very prosperous season in eastern Ontario. On May 3, you stated, "I want you to know that the government is trying to open these parks, and I'm very hopeful that a lease can be reached."

Then there's Noble Villeneuve, an individual who should particularly be interested in these parks, because they're right in his backyard. Over two years ago, Mr Villeneuve stated: "We have to get these parks open next year. One way or another, let's get these parks open in the springtime. The private operators can do a good job. Reopen the parks. I hope that the government addresses this before the summer of 1994." Of course, that's when he was in opposition, but it's a little bit different now.

In any event, you and members of your cabinet have said the parks should be open. You've even clarified that the private sector would be the most likely resource, and ever since you've come to the committee you've been talking about the private sector. I wholeheartedly support you on private sector investors. If you and your colleague from S-D-G & East Grenville and supposedly government can support reopening the parks through the private sector, I suggest that then you do something. You have already let a summer go by and these parks are still closed. This would have meant a lot to eastern Ontario, lost summer jobs, lost tourism dollars, and those tourism dollars could have come not even from within the boundaries of Ontario; they could have come from the province of Quebec and the United States if those parks had been open. Lost opportunity for investors, spinoffs in the economy. Will you commit here today that you will do everything in your power that for those parks, something can be done through the private sector for the 1997 season?

Hon Mr Saunderson: I hope those parks are going to open. We're talking, for the others who aren't familiar with the two parks, about Raisin River and Charlottenburgh parks.

Mr Cleary: Three of them; Lakeview Heights too.

Hon Mr Saunderson: Yes. We want to have the best climate for business so that your St Lawrence Parks Commission, which you're very fond of and I can understand why, will get more interest in leasing its closed parks. Unlike the last requests for bids, the crown is now exempt from applying successor rights, which increases the commission's flexibility to lease parks. I'm pleased to let you know that the commission is working with the Charlottenburgh township as an example to develop a lease to operate Raisin River park in 1997 and to look at the future of Charlottenburgh park as well, and the other one you mentioned.

We hope that Charlottenburgh township will follow up, because they're seriously considering operating the Raisin River park in 1997 and we're going to work with them to make this happen, we hope. I know that you've been very concerned since 1990 on this situation and I know you asked me a question about it as well. I can understand your concern.

Mr Cleary: It's good for jobs, very good.

Hon Mr Saunderson: It means jobs, yes, but I think what we have done, and I would just like to remind you that in my opinion the tourism business is the quintessential small business in Ontario. We've done a great deal to help small business and I think it's starting to work, because I spent some time in some of our tourist establishments this summer and the fact that we have lowered the income tax, the personal tax rate, does leave more money in the operators' pockets. The fact that the minimum wage has been frozen allows temporary employment, particularly students in the summer, to be hired easier than they were. The fact that we're eliminating the employee health tax on the first $400,000 of payroll, I think that's a big benefit to small business and it provides them with up to $10,000, depending on their payroll, of working capital.

We're certainly making an effort to help the small business. As I say, that is the backbone of the tourism industry, small business. If we can get partnerships in that community you're talking about --

Mr Cleary: You have them.

Hon Mr Saunderson: If it all works out with how our people were working with them, then we would like to reopen them. I guess St Lawrence Parks since 1980 closed eight park sites. This is including the three that you're talking about.

Mr Cleary: I know where every one of them is, yes.

Hon Mr Saunderson: Once again, we would like to get some public tendering going to get people involved in these parks. But some of the proposals were rejected; people did not want to bid on them.

Mr Cleary: I know the municipality has been dying to meet with you, and I've sent those letters over.

Hon Mr Saunderson: When I'm down that way, I would like to meet with them too, believe me.

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Mr Tony Martin (Sault Ste Marie): I'd actually like to follow up on that line of questioning, because I think it's a good one. We need to sometimes focus specifically on areas where this government has a responsibility to give leadership, where this government has a responsibility to make decisions but they're dragging their feet and they're not making the decisions and they're not giving leadership. If you don't, at the end of the day we miss the opportunity to create jobs and to stimulate the economy. I want to just for a few minutes, if I might be allowed to be parochial, raise a couple of issues that are closer to home but have some provincial ramifications.

One of them is the issue of franchising in Ontario, an issue that I've raised as a private member in the House and brought a bill forward and also that I've talked with the Minister of Consumer and Commercial Relations about and have gotten some response from him, but it seems to me that he probably needs some support from his cabinet colleagues. The franchise operation I'm referring to is the Loeb situation, where right now in Ontario, particularly northeastern Ontario and eastern Ontario, we have a situation where Provigo, which is the parent company out of Montreal, has decided that it's not making enough profit from its stores in Ontario, which are primarily in the northeast and east of the province. There are 100-and-some stores. I'm speaking specifically here today about 22 of those operations.

There's a move by Provigo to turn a whole lot of these stores into corporate stores, corporate franchises, which means less economic activity for the communities in which they are located. It means that no longer will these stores be run and managed by a franchisee who lives and actually spends money and pays taxes in a particular community. Twenty-two of these Loeb franchisees have been forced into a situation where they're now taking their parent, Provigo, to court, because there isn't a level playing field for them and the agreement that they entered into when they first signed the contract with Loeb and Provigo is not being honoured in the same way that they expected it would be.

They have come to me because they have this personal concern. My whole community has rallied around the two stores in Sault Ste Marie because these stores are seen in my community to be an excellent example of what it means to be a good corporate citizen. They are a major employer and they are a unionized workplace and treat their employees as best they can, given the profit margin that they are allowed by Provigo. The community appreciates the fact that these companies participate in the life of the community in many significant and interesting ways in a charitable nature, by providing opportunity for different community organizations to use their space and to use wagons that they've designed to cook hamburgers and hot dogs and to sell them to the public, any money made through that venture to be turned over to the charity that's sponsoring on that particular day.

Another point that I need to make here is that these corporations have also found it within their purview to be helpful, on a couple of occasions that I know of, to labour groups that have gone on strike in our community for better wages and working conditions. I remember one situation where the Golden Mile Loeb franchiser, Mr Larry Cairns, actually came to a picnic when the workers at the Sault Star were on strike and with a number of community leaders served hamburgers free to the families of the people on strike and sold them to others who came in support. At the end of the day, he turned any money that was made that day by the sale of hamburgers over to the striking workers so that they would be able to buy groceries and pay the rent while they had this dispute.

So in my community you have a unique circumstance where management and labour and the community have come together. My community wants to support Loeb in its battle with the larger entity of Provigo, out of Montreal, and have come to the government to ask for a very simple piece of legislation to be put in place. They call it the fair franchising practices act. It's an act that's in place in other jurisdictions, in England. There is a bill that was passed in Alberta and also in Quebec, but Ontario isn't covered. They're asking you, Minister, and your government to help them -- this is the small business sector in our province -- by providing a level playing field so that they can continue to contribute to the economy of our province and the communities in which they're located in a positive and constructive way.

Are you aware of this and will you be willing to support your cabinet colleague the Minister of Consumer and Commercial Relations, who has given some positive vibes so far, in bringing this forward as quickly as possible? These folks stand to lose their stores on November 2. Because they took the courageous step of actually going to court to protect their rights, the parent company has now told them that they're walking away from the agreement that they signed, their contract, and they're going to be out of their shops on November 2 unless something is done. Are you willing to support your colleague in cabinet to protect the small business sector in this province and to take some action that will be positive in this respect?

Hon Mr Saunderson: First of all, I'm certainly concerned about small business, as we all are. This is small business week. There are great statistics about small businesses. Basically, of all the businesses in Ontario, 98% of them are small businesses if you define small business to be 100 or fewer employees.

This franchising subject that you've raised is really the responsibility -- and I think you acknowledge that -- of Mr Tsubouchi in CCR. This matter may be coming before the courts. I'm just not sure where it stands at this stage. Because of that, it's inappropriate for me to comment on this particular situation you're talking about. I know, from talking with the Minister of Consumer and Commercial Relations, he is interested in the franchise issue per se, and I know he's dealing with it because I've heard him raise the subject from time to time.

I'm certainly supportive of small business and I'm sure that Mr Tsubouchi -- and I hope you've raised this with him, by the way --

Mr Martin: I have.

Hon Mr Saunderson: Good. I know, therefore, that he will be dealing with it, as he deals with all franchisers and franchisees.

Back to the small business section. I just want to give you my assurance that this government is very supportive of small business, for all the reasons I gave a little while ago. I'm not going to waste the time going through that all again, but we are very concerned and we know that they are great engines of growth and job creation.

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Mr Martin: We're certainly agreeing on that level. I guess where we're disagreeing to some degree, and following up on the questions that were asked by my colleague in the official opposition, is that this government has to take some action, though, to both protect and encourage the small business sector in this province in a world that is increasingly more and more aggressive and more and more becoming a place where the bigger gets bigger and the smaller gets smaller or disappears altogether.

That's just not in the issue of management versus labour, it's also in the big business-small business sector. We have a perfect example here where you have a big corporation, Provigo -- a huge corporation, Provigo -- putting the squeeze on small entrepreneurs living in our communities, investing all of their money, putting all of their energy and effort into making sure these stores are successful. Then, at the end of the day, because they have the gall to stand up and say, "We're not being dealt with in a fair and equitable fashion and we're going to take the only recourse that's available to us, which is to go to court," they turn around and say: "You're going to take us to court? Okay, we're going to pull your licence. We're going to take your store away from you." All of the effort and energy that they've put in, all of the investment they've made in this store is down the river.

When I brought this before the House a little over a year ago, there were two operators at that time, one in Blind River and one in Elliot Lake, who were on the verge. They've lost their stores. The one in Elliot Lake was a really sad story. They came in, moved from Ottawa to Elliot Lake, sold their house, mortgaged their future on this opportunity they thought they had with Provigo running a store in Elliot Lake. They gave every ounce of energy that they had to that store, but the wife got cancer, and because of that the same effort wasn't being put in by her and also to some degree by the husband because he had to spend some time and was concerned about his wife's health. They decided that they weren't getting enough out of that particular franchisee, so they told them that they were discontinuing the agreement, they were going to take the store away. These folks have now disappeared; they're gone. They lost their store.

The same thing in Blind River, the Larry Cairns operation in Sault Ste Marie. He moved from Blind River to Sault Ste Marie to a bigger store and left his store to his son. His son has lost that store, and now stands a chance of losing the store that he moved to.

These are examples of small business people, people that you hold up as the future of this province, being attacked by big business, being eaten up by big business. All they're asking of your government -- and I asked through a private member's bill that your government defeated well over a year ago, and now the Minister of Consumer and Commercial Relations has graciously agreed to look at it.

I think as Minister of Economic Development and Trade, you have a direct responsibility to go to him and say, "Let's move on this and get it done right away, quick, so that these folks have another table to go to," which is what they prefer to do rather than going to court to resolve some of these issues that really are, when you sit down and look at them, quite simple. It's a question of the parent company wanting more out of the operation than these folks are able to give and still make a living.

I ask the question again. Will you, as the Minister of Economic Development and Trade, in this the week of small business and with your obvious concern about small business and its future, go to the Minister of Consumer and Commercial Relations and say to him, "We need to get this legislation on the table immediately"? You have a commitment from our party and through Mr Jean Lalonde of the Liberal Party to move on this as quickly as you can get it into the House, but it has to come into the House before we can do something with it. Will you make a commitment today to doing that?

Hon Mr Saunderson: I will certainly speak to the minister. As I say, it could be this case is before the courts, and if it is, I really can't comment on it. But I will certainly speak to Mr Tsubouchi and reinforce your concern, because you've already spoken to him about it.

Mr Martin: Yes, I have, but I need you to speak to him.

Hon Mr Saunderson: You have my word, I'll do it. Look, I'm a small business supporter. I started a small business in 1971 with about nine and a half people, so I know what it's like to be starting -- it's true. We had one person only working half a day. That's all we could afford, and I wasn't the half. I am concerned and I know what it's like to make that gamble when you leave an established situation to strike off on your own with a couple of other people. It is a concern for anybody doing that.

I did go through a list of things that we're doing as a government for small business. As I said, I spoke at the board of trade last night on small business and --

The Chair: With that enthusiasm, Minister, I'm going to ask Mr Clement now to take over.

Hon Mr Saunderson: Fine.

Mr Clement: Can I defer to my colleague Mr Wettlaufer, who had not completed his cross-examination?

The Chair: Definitely.

Mr Wettlaufer: Thank you, Tony. Minister, again I have a couple of questions which you may not be able to answer today, and I understand that. No problem.

Relating to the Ontario Lottery Corp, their salary costs run approximately 40% to 50% of their administration costs. When I was in business before coming into this game, I was in a service industry and my salary costs were roughly 40% of my total administration cost, and that was in a business where there was tremendous competition and tremendous service work involved.

Prior to that, when I was an executive with a company, our salary costs were about 18% of our overall administration costs. I look at the Ontario Lottery Corp and it has no competition, it has little or no service. I wonder if their salary costs aren't a little exorbitant. I notice as well that they had a five-year plan a few years ago. I don't know, although I should, what the progress is on that five-year plan and whether they have revised it to make a change in their salary level as well as their staffing levels.

Hon Mr Saunderson: You said your salaries in your business were 40% of your total --

Mr Wettlaufer: Administration.

Hon Mr Saunderson: -- administration costs. I can't tell you what our salaries are.

Mr Wettlaufer: I know.

Hon Mr Saunderson: Would you like us to find out for you?

Mr Wettlaufer: Yes, if you could get them for me.

Hon Mr Saunderson: Yes. Sometimes in small business salaries as a per cent of administrative costs can be quite low so that at the end of the time, if there is a profit, the profit can be taken out as a dividend, which gets better tax treatment than salaries. In an operation like the lottery corporation, where there are no dividends per se, as in a privately held corporation, I imagine that salary costs could be a relatively high per cent of administrative costs. I think we'll have to look into that, and we will.

Just on the subject of the lottery corporation, after being elected, we found $36 million of expenses that weren't necessary, in our opinion, and indeed we have cut those out. You will recall that some of it was printing up the winning numbers in the newspapers. We thought that wasn't necessary, and the lottery corporation still goes on. There might have been the odd complaint or concern at the time, but we have heard nothing more since, so people now live with that. It just shows you, though, how you can save money, doesn't it?

There is a major review under way regarding the lottery corporation right now because we're quite aware of other potential savings that are there. We will get you that figure of what salary is as a per cent of administrative costs.

1700

Mr Clement: You've anticipated my question somewhat, Minister. I was going to home in a little bit on the Ontario Lottery Corp as well. If I can share with you the bare bones of a local story, perhaps this could be included in your current review of the corporation. I don't want to get into all the gory details, but I have a constituent who has had a very negative kind of experience with the Ontario Lottery Corp.

There's a lot of "he said, she said" kind of thing about whether a lottery terminal was promised for her particular business or whether it was not promised. I can tell you this, though: Having dealt with some of the officials of the lottery corporation, they have done their best to explain to me some of their current business practices. I appreciate their explanations but, having come from a bit of a business background myself -- I'm not trying to second-guess -- some of their conclusions raise my eyebrows.

If I can give you an example, I've got correspondence from one of the fellows over at the OLC who said they don't really generate a lot of ticket sales on Sundays. I find that somewhat counterintuitive. I think you could probably sell a whole bunch of lottery tickets on Sunday if you put the terminal in a place where people are buying their chips and their pop and so on.

Without getting into the gory details, because it is not my place to do that here, I want an assurance from you that in your review of the Ontario Lottery Corp there will be a comprehensive review of their business practices, whether they are actually modern business practices, whether they make sense in the times in which we live. If you can give me some assurance as to that, that would be very much appreciated.

Hon Mr Saunderson: This review I talked about with Mr Wettlaufer which is under way, there's a tender out to get people from the private sector to be with us and do this, so it's not a review that's being done from within but from without. I think that's probably the assurance you need to have, that this is really an independent review. Obviously, current modern business practices will be considered when they're doing this.

Mr Clement: I think the whole goal that we're trying to do is increase sales. Obviously, the more sales you have the more revenue you have, and presumably people who -- we're not twisting their arm to buy the ticket, so if they find not only new products but new ways to service the community that likes to buy lottery tickets, presumably everybody is happy. If that could be one of the criteria one uses to assess whether business practices are up to date or not, based on my limited knowledge of this field, that would be probably a good thing.

Hon Mr Saunderson: You have our assurance that we're having a really sensible look at this.

Mr Clement: Mr Chairman, do we have a bit more time?

The Chair: Yes, you have about seven more minutes.

Mr Clement: I think the minister, at a couple of points during this afternoon's hearings, has alluded to the fact that he has been trying to reorient his ministry to accomplish many positive things for the business community in Ontario, whether it be small business or big business. I'd like to give him the opportunity right now to explain in a bit more detail what he is zeroing in on and how perhaps the estimates reflect that and how perhaps future spending patterns will reflect that.

Hon Mr Saunderson: I'm glad to have this chance to outline the ministry a bit. We're trying to run the ministry like a business and we really have four departments within the ministry. If we're running it like a business, every business has a product or a service it is selling or marketing. Then of course, once you've got that product -- it could be legal advice or investment advice or selling goods in a store -- you have to have somebody go out and sell that, so you have to have a team of marketers.

I'm just going to go through this and then come back to each division. Once having got your product out there being used by people, you have to have people who service the people who use your goods or service. Then of course, back in the head office, you've got to have some administration to run the books and make sure that you stay in a profitable position.

The Ministry of Economic Development, Trade and Tourism is truly a business. Our product, the service we provide, is the advice that has been built up over many years by the people in the ministry that we can provide based on experience as to how to help businesses thrive in this province. These people are out there listening to what people's concerns are, the clients they're servicing.

As a matter of fact today, Mr Clement, I had the privilege -- and I enjoy it -- of meeting with our field staff. There is something like -- how many were there? -- about 60 of our field staff who are out in the field dealing with business. We had them all together today -- and I think it's a two-day session -- and I had a chance to speak to them today. I really was able to say to them: "Look. You are my eyes and ears out there with the business community." They're probably not dealing with the big, big businesses, which can handle themselves quite nicely, but they're out there dealing with, I think, the small and medium-sized businesses and not in the major areas like Metro Toronto but out where all the information isn't necessarily available.

What we're able to offer those people is, as I say, lots of advice on how to do a marketing plan, a financial plan, a business plan and if they want to expand, can we help them? If they want to locate a plant somewhere else, do we know areas where there might be an old plant building available? That's the type of thing we're doing. So that's the product and I look on ourselves as a management consulting operation there.

We have the staff of people at marketing. We have the people out servicing all the businesses that operate in Ontario and back in the head office we have an administrative operation. The product and the service that we provide really is under the aegis of an ADM, Peter Sadlier-Brown, who is with us today. Our marketing team is under Grahame Richards, another ADM who's with us today, and between himself and Jean Lam, another ADM who's with us today as well, they sort of look after the servicing and the marketing and then under administration Brian Wood is another ADM.

I might point out that this ministry had seven ADMs or assistant deputy ministers at the time we were elected. Then we brought tourism into the fold and we now have only four ADMs. I don't know, Mr Clement, if you're aware of this, but we have reduced our staff by somewhere in the neighbourhood of 35% and our spending by over 50%. The big reduction in our spending is that we eliminated being a cheque-writing ministry and we no longer give grants to individual businesses.

There are some other things we do that I think are very important for economic development to happen in Ontario. I think we're hoping to create networks and partnerships in sectors. As an example, the wisdom exchange, which I have referred to before in this committee, I think is essential where small and medium-sized businesses have a chance to get together and -- well, at the last meeting we had there were about 300 of these companies. They get together for a day and they exchange their problems and their solutions to helping each other. Gone are the days when people jealously guard their trade secrets. They want to help other businesses because when all the businesses do well, then it's a win-win situation.

The Chair: You could expand on that a little bit later on, Minister. Mr Kwinter.

Mr Kwinter: You've just made some comments that I hope to get to today. I may not, but I certainly want to explore.

I want to get back to the VLTs, and I hope you don't think I'm harping on this, but there's a reason. Quite frankly, what you've just said in response to Mr Clement is something that I have felt for some time and something I feel quite sad about. I wasn't being facetious when my colleague the member from Algoma-Manitoulin came to me before I left for Russia and said: "I'm going to estimates. What do you want me to ask the minister?" and I said: "Ask him what would happen if this ministry closed? Would anybody notice?" As I say, it wasn't a facetious comment. It's a concern that I have. It is not an accident that you must feel that you're the Maytag repairman in the Legislature: No one asks you any questions. The reason I don't ask you any questions is, nothing is happening to ask you about. I want to get back to that a little later on.

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But I want to stick with the VLTs because I really feel that in the next round of cuts this ministry is in danger of disappearing, but the one thing that will stay is some emanation that will deal with the casinos and deal with the VLTs because it's a profit centre; it's a revenue base. Contrary to what the present Premier and the then leader of the third party said during the election when he said, "We don't have a revenue problem; we have a spending problem," it's obvious that anybody who's ever looked at a balance sheet knows that you can deal with one or the other but you can't do it in isolation. If you can increase your revenues, of course you don't have to decrease your spending, and that obviously the Premier has found out. Suddenly where he was actually threatening at one time to shut down the casino in Windsor, he is now promoting it and saying, "This is great and VLTs are great," because they're generating a lot of revenue. This government needs as much revenue as it can possibly get, otherwise it's going to have some very, very severe problems that are going to exacerbate the problems it's already encountering.

That's why I want to get back to the issue of the VLTs and to --

Hon Mr Saunderson: Can I respond to what you just said about --

Mr Kwinter: Not quite yet.

Hon Mr Saunderson: All right. Not on VLTs but just on the ministry.

Mr Kwinter: No. Here's my concern. You suggest that the 20,000 VLTs that you will put into service are going to generate about $500 million, which is a half a billion dollars a year, which is significant when you consider that the Ontario Lottery Corp revenue estimates are $736 million. So you've got an amount that is not too far out. You're looking at a significant amount of money.

The point I want to make is that those 20,000 terminals are going to generate an estimated $500 million. The authorities -- when I talk about the authorities, I don't know what authorities, the police, somebody -- have estimated that there are currently 20,000 out there. That's an estimate. There may be 30,000, 40,000; who knows? If they're illegal and if they're underground, how do you know how many there are? They're estimating that there are some numbers out there.

I can tell you that a business that generates $400 million a year is a significant business. It is a business that is worth pursuing. So when you make the comment that the reason you're going to be able to eliminate the illegal ones is because you're going to give a higher payout and that will make the other people go away is absurd.

The reason they're paying out whatever they're paying out now is they have no competition. They have decided arbitrarily, "Here's what we pay out," and what difference does it make because they're the only game in town. That the minute there are legal VLTs, whatever the payout the government is making, they will match it. Why not? It's a $400-million-plus, $500-million-plus business for them because there's no reason to expect that they will take in any less in the illegal market than you will in the legal market. It's just like the underground economy. To suggest that the underground economy is not as profitable as the aboveground economy again is absurd. As a matter of fact, it's more profitable because they don't pay taxes; they don't do a lot of things. They just rake in the money.

What is going to happen is you're going to have a situation where these VLTs are going to generate a great deal of money for the illegal sector and will be operating in a parallel way with the legal ones. I am still not convinced that there is any mechanism in place or any capability of dealing with it. To suggest that once you get the legal ones you're going to be able to do this, that and the other thing, again I don't understand how that happens when it would be much easier to police it when there are no legal ones than it is to police it when there are legal ones. I wouldn't mind a comment on that.

Hon Mr Saunderson: I just have to reiterate what I've said before. Before I do, I just thought, you did refer to me as the Maytag repairman in the House. The reason the Maytag repairman never got any phone calls was because all the Maytags work. I think Ontario is working very well. I just beaver away very quietly over at my ministry making sure that business is properly serviced. We help where we can, that we get out there and promote our province, we get the jobs happening now, the economic climate is good. As the Maytag repairman found, when things are working, you don't get many calls, but I also think, of course, that I don't get many questions in the House because they're so afraid of the brilliant answers that I usually give in the House.

Mr Clement: As the record shows.

Hon Mr Saunderson: The record shows that, as Tony Clement says, and so do the newspapers say that. So I just thought I would mention this.

Anyway, coming back to the VLTs, once again I understand your concerns. We only can say that we have the experience of other provinces who have had VLTs for a while, we are working with those provinces to learn the difficulties. As we said, Quebec's experience is that there are fewer illegal VLTs when things are well-regulated. I'm sure that people want to use our VLTs rather than the illegal ones, because they're properly regulated, there's integrity to them and people have confidence in how we have run the casino system and they will have that same confidence about the VLTs.

I might conclude by saying charities will receive 10 times now from the VLTs once they're in operation compared to what they receive under the Monte Carlo casino nights, as they were called.

We could debate this VLT thing and I understand perfectly your concerns, but we are doing things in a systematic, careful way, which is a mark of this government, and we will not change that.

Mr Kwinter: If I could just pursue another area in this same sector, at the present time there are three casinos that are running in Ontario and they are under management contracts with experienced operators. Could you tell me what plans are being made for who is going to operate the VLTs? Is this going to be operated by the Ontario Lottery Corp, or are you going to have a private sector group operate them on behalf of the lottery corporation and the government?

Hon Mr Saunderson: We have in process right now an appointment; an appointment has been made. We issued an RFP based on a concern that we were not properly prepared and we had to learn the system and all of that. We put out the RFP and we did not get a proper response, so we put out an invitational tender to four firms with excellent business experience: Price Waterhouse, Deloitte and Touche, Richardson Greenshields and RBC Dominion Securities, and an adviser was selected. We are just entering into a contract with that person right now. The name of the person is Richard Stackhouse, who is a just-retired partner from Price Waterhouse. His job will be to make sure that we go about implementing the VLTs in the proper way, and we'll obviously call on the experience of other provinces. I think that should put your mind at rest somewhat to know that an outside person has been now hired and contracted with, and the implementation plan will come back to us from him.

Mr Kwinter: I appreciate your answer, but I'm not quite clear what Mr Stackhouse's role is. Is he to advise the Ontario Lottery Corp on implementation, or is he to advise on getting a private sector contractor who will in turn run the VLTs?

Hon Mr Saunderson: He will advise the government on the proper way to implement the VLTs.

Mr Kwinter: Which means it is possible that he could recommend that this be given out to a private sector operator.

Hon Mr Saunderson: I suppose that's possible. I've been reminded by the deputy of the context of the Criminal Code. To the extent that the Criminal Code would allow that, it's very possible that there could be other people involved, if that's what you're asking.

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Mr Kwinter: What I'm trying to do is find out what the process is going to be. You've gone out and you've got Peat Marwick and RBC and Deloitte Touche, and I assume they are the ones who came up with Mr Stackhouse.

Hon Mr Saunderson: Mr Stackhouse comes from Price Waterhouse.

Mr Kwinter: What was their role -- RBC, Deloitte and Touche and Peat Marwick? What were they retained for? What were they supposed to do?

Hon Mr Saunderson: We chose them to respond to this tender that was put out. From each of those companies we expected we would find one or two or three people who are familiar with the industry. It turned out that Mr Stackhouse was --

Mr Kwinter: It wasn't a trick question. I was just asking, was their role to find a Mr Stackhouse?

Hon Mr Saunderson: Yes.

Mr Kwinter: And that's who they found.

Hon Mr Saunderson: Yes.

Mr Kwinter: His role is now to find someone else, to find an operator or to recommend that maybe the government itself should take it on.

Hon Mr Saunderson: He will come back with an implementation plan on how it should be done. It'll give us some options, as government always comes up with some options.

Mr Kwinter: Without in any way predetermining what he's going to recommend, because we don't know, if he were to recommend -- this is the whole reason for my questioning -- that there is no capability in the Ontario Lottery Corp to do it, that it doesn't have the expertise, that we should in fact engage a company in the same way we got Carnival Tours to run Rama, if he were to recommend that we really do need an independent operator with the expertise, is that selection going to be made by public tender or is he just going to make a recommendation and the government's going to say, "Here it is"?

Hon Mr Saunderson: I think we have to wait for him to make his report on how to implement this thing.

Mr Kwinter: Why would you have to wait?

Hon Mr Saunderson: Till we hear what he has suggested, we don't know.

Mr Kwinter: I admit I'm presenting a hypothetical situation, but surely, given the amount of money that is involved in this particular sector, you would think that you would have no trouble in saying that whatever his recommendation is, if we're going to be calling on some private sector entity to take over this thing, it will be a public tendering process so the process is transparent and people will know how this was awarded and it isn't some sweetheart deal where suddenly we find that a whole range of Tory hacks are running a company that is going to have the keys to the treasury. That's all I'm getting at. I'm not in any way predetermining how it's going to happen.

Hon Mr Saunderson: I can't guess what he's going to recommend. The man is an extremely qualified individual. We're going to wait for his recommendations. He might recommend exactly what you're talking about; we don't know. I can't answer any more than that until I see what his recommendations and plans are. I think that's a fair answer: We don't know.

Mr Kwinter: With all due respect, I'm not asking you to determine what his recommendation is going to be. All I really want to find out and all I really want to get on the record is that of course, if he recommends that we have to go out to the private sector to get an independent operator responsible to the government or responsible to the Ontario Lottery Corp, that process will be public and transparent. I don't see why you can't make that commitment.

Hon Mr Saunderson: To the extent that I am able to, I would say that is likely what would happen. Yes, it would be, so that people could say, "We have confidence in that decision, in the process."

Mr Kwinter: That's all I'm asking.

Mr Martin: I find absolutely fascinating that this is the way we're going with this. I find quite disturbing the question mark that is now beginning to be put in front of the whole integrity of the lottery corporation, which I thought was going to be doing this thing. I thought that was part of the announcement, that the lottery corporation was going to do this. In Sault Ste Marie of course it could be a little parochial. We were very excited, because it meant more activity and more work and a contribution to the economy of our community. So this is quite a revelation here this afternoon and will be of tremendous interest to the folks back home when I get a chance to tell them, and be assured that I will.

You've brought into question now the whole operation of the lottery corporation, some of the questions from the members of your caucus around this review that's happening. I had no idea. Did you know that the lottery corporation was under review?

Mr Kwinter: No.

Mr Martin: I didn't.

Hon Mr Saunderson: All I can tell you is that it's a normal program review, as any government should make a review of any organization or program it's involved with.

Mr Martin: Are there terms of reference? Could we have a copy of that?

Hon Mr Saunderson: Can the ADM answer that?

Mr Brian Wood: Brian Wood, the assistant deputy minister, corporate services. A tender is being released this week, and as soon as it's released we certainly will give you a copy of the terms of reference. No problem. The tender to select the outside consultant will --

Mr Martin: So there will be a review tendered this week to an outside consultant to look at the whole question of the lottery corporation?

Mr Wood: Yes, the role and mandate and the program review of the lottery corporation.

Hon Mr Saunderson: Mr Martin, before you go on, because you were going to say that you would be talking to the people back in Sault Ste Marie, I want you to understand that this is not in any way questioning integrity. That's what you said. This is not a question of integrity, what we're doing as far as the review is concerned, nor is the fact that we've got Mr Stackhouse in any way a form of questioning the integrity of the lottery corporation. The lottery corporation has never been involved in VLs before and therefore we should make sure we get the best possible advice. A normal process of all our programs and agencies is to get the best businesslike approach, and that's what we're doing. But to go back and say that we're questioning the integrity would not be true and I would not want you to be embarrassed by making a statement like that.

Mr Martin: Don't worry about me and being embarrassed.

Hon Mr Saunderson: I do worry about you.

Mr Martin: I'm concerned about your view of the lottery corporation, because the lottery corporation, in the six years that I've been directly involved with it as the member who represents Sault Ste Marie, and in previous years living in Sault Ste Marie when I've watched it grow and develop, has been a model corporate citizen.

Hon Mr Saunderson: We agree with you.

Mr Martin: It has contributed significantly to the economy of both this province and our community. I find it quite shocking here today, by way of the questions that have been asked, because this is the first time it's been raised. This is the first time that this red flag has gone up for me, and then the comment to the member of official opposition re the whole question of the lottery terminals and the fact that where we thought the lottery corporation was going to do that, now we find there's this other process in place at the same time as there's a review of the lottery corporation, for which we don't have the terms of reference yet. I will be looking for those and watching for those with great interest and great anticipation over the next couple of days. When did you say they'll be out?

Mr Wood: Probably Thursday.

Hon Mr Saunderson: Before you go on there, I want to make one thing clear: We review all programs in my ministry. If we haven't done it, we will be. That is only good business practice, and we run our ministry like a business.

Mr Martin: You can put any spin on it you want.

Hon Mr Saunderson: It's not spin.

Mr Martin: I'll put my spin on it. Ultimately, my community and this province will judge just exactly what it is that you're doing and why you're doing it and what you're doing, because it leads to some other interesting questions that we won't get into today, but be assured they're coming at you soon.

The $35 million you say you've taken out of the operating side, do you have any detail on that, like where it comes from, how that came about? Could you give me something?

Hon Mr Saunderson: I gave you one example of it.

Mr Martin: I don't want one example; I want a breakdown of the $35 million and where you got it.

Hon Mr Saunderson: Sure, we'll give you the detail of it.

Mr Martin: How soon can I have that?

Hon Mr Saunderson: Probably within 24 hours.

Mr Wood: We will give it to the clerk. We can table it here.

Hon Mr Saunderson: We'll bring it here and then you can see it.

Mr Martin: I don't know if you know this or not. I had, with the cooperation of some other people -- the labour council in Sault Ste Marie, the chamber of commerce, the economic development corporation and what's known as the round table in our city -- all the senior elected political people: the federal MP, myself, the Algoma MP and MPP and the mayor -- a study done last year of the impact of decisions made to that point economically on Sault Ste Marie re the whole question of downsizing. Without considering the lottery corporation, because we couldn't get any figures and numbers for it -- it is very good at what it does and very --

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Mr Wettlaufer: Doesn't it tell you something that you couldn't get the numbers from them?

Mr Martin: No, all it tells me is that this is a corporation that is more interested in delivering the product it's asked to deliver than it is in being involved in the political machinations of people like myself.

Mr Wettlaufer: Jeez, I haven't been involved in politics as long as you but I'm not as naïve as you are.

Mr Martin: The $35 million: The study that we undertook said that by way of the cuts in Sault Ste Marie we, when it's all said and done, will probably lose upwards of 1,700 jobs in Sault Ste Marie alone, and that's not considering this. By way of the 22% that you took out of the income of people on welfare, the most vulnerable and fragile in our community, that was another $12 million out of the economy of Sault Ste Marie.

Now if you're telling me -- and this is where I'll be interested in the numbers, the specific numbers, where you got that $35 million -- that you took $35 million out of the operating side, which really is people employed, wages -- most of the money spent, I would suggest, if it's anything like other government bureaucracies that deliver programs, is in the area of salaries and wages. So you're talking $35 million. We'll say even half of that; we'll say another $18 million.

So if you put $35 million with $12 million, which is what we already figured out was coming out of the economy, which is $47 million, and now put another $18 million on top of that, you're looking at $60 million to $70 million a year out of the economy of Sault Ste Marie by way of decisions of this government. That's going to have just a devastating effect on small business, particularly the retail sector.

I've made this point in the House by way of a couple of speeches I've had the opportunity to deliver: In 1994, when we had just come through the restructuring of Algoma Steel and St Marys Paper and the Algoma Central Railway, Sault Ste Marie thought that it had been through the worst of the challenge that it would face as it came together to restructure and develop a new strategic plan and get its feet under it as it moved towards the next century. People felt good about that because there was a big cloud hanging over the city and we had pushed that aside. The Christmas of 1994 in Sault Ste Marie, in the retail sector, was the best that we had seen in a long, long time, because people were working. People were working at Algoma Steel, people were working at St Marys Paper, people were working at the ACR and people were working in the public sector.

They were pretty confident, because of the work that we had done and some of the direction that the government at that time was going in, that those jobs would be secure and that they'd be there for a while, and so they were spending. The consumer confidence in Sault Ste Marie was high and the retail sector in my community was happy and did well. In January 1995 in Sault Ste Marie the sun was shining. People were feeling good. The economy was starting to really take hold and get better.

But the Christmas of 1995, which was the end of that year, the first year of your taking office, the first year of your government in power in Ontario and the cuts, the reduction in money to the poorest in our community, the cuts in services and the diminishing of jobs into so many sectors that we in Sault Ste Marie were a centre for delivery in the whole area of Algoma, were so significant that people stopped spending because they were no longer confident -- a whole whack of them -- that they would have jobs in 1995 or 1996.

The economy, because of that, was stunted. Where we thought we had got rid of the big cloud and the sun had come out, all of a sudden there was a bigger cloud over us, and today I find out that one of the new foundation pieces of the economy of Sault Ste Marie, which the previous Liberal government had courageously decided to move to Sault Ste Marie because of the new technology and a new interest by that government in making sure that we spread the economic benefit of the government plant across the province, is now in jeopardy: the lottery corporation.

We don't know what you're going to do with it. We don't know what this review is going to do. You've already taken $35 million out. We're told today that the delivery of the VLT program that you're introducing, which we disagree with totally --

Hon Mr Saunderson: Look, I cannot let this go on. Mr Chairman, I have to say something.

Mr Martin: Mr Chair, do I have the floor or not?

Hon Mr Saunderson: I just want to make a comment.

Mr Clement: Are you going to rant and rave for the whole 15 minutes?

Mr Martin: Why not? It's my 15 minutes. I can do whatever I want.

Interjections.

Mr Martin: I've already got the answer. Have I hit a raw nerve here?

Hon Mr Saunderson: No.

Mr Clement: It's all a conspiracy, Tony.

Mr Martin: Is the truth that hard to take for you guys?

Mr Clement: You are making up the truth in your own mind.

Mr Martin: When we start to touch the core, when we start to touch the bone of this thing, you guys rise in indignation and you won't let us have our time? Is that what you're saying?

The Acting Chair (Mr E.J. Doug Rollins): No, you have your time. You keep on talking. We'll cut your time off in three minutes.

Mr Martin: Now what I'm hearing is where the people of Sault Ste Marie, in partnership with government, in partnership with the financial interests and everybody who had an interest in the long-term viability of the major industrial foundation pieces of our community, are going to have to go back to the drawing board because one of the pieces that we thought we could be confident would stay in place, and in fact grow, because the lottery corporation was expanding and getting into new products and marketing and letting people know if they won or they didn't win in all kinds of creative ways, we're not doing that any more.

I don't know what studies have been done, what information was available to you, on what basis you made the decisions that you did to cut the already cut $35 million, but now you're entering into another period of review and we don't know what that's going to mean. We don't know what the terms of reference are, we don't know who is involved in determining what those terms of reference should be and, in particular, the community of Sault Ste Marie, which has a tremendous interest in anything that would happen to this very valuable piece of infrastructure that we have been the beneficiary of in so many significant ways, doesn't know what's going to happen.

I guess the question is, by way of allowing you at least a minute, what is the future for the lottery corporation in Sault Ste Marie?

Hon Mr Saunderson: Quite frankly, Mr Martin, I think you're just trying to get misrepresentation on the record, because the OLC is not in jeopardy and it's just sheer fiction that you would even try to go back and tell those people that it was. I want to read that into the record and say to you that you refer to that $35 million that we cut. We cut it for efficiency.

I don't know what you did when you were in government, but when we're here in government now we're making sure that the money is spent properly, and if there's any way we can cut spending, we're going to cut it, provided it makes sense. That $35 million, and you'll see the list, was cut because it made sense and it was more efficient. I did allude to one of the things that was in that $35 million, which is a fairly large piece of money, which was advertising lottery results in the newspapers. That's not costing anybody a job. To our way of thinking, it makes good sense. We do better for less.

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I want to also get something else on the record here, because you referred to VLs a few times. What we set up on VLs will be proper; what we do with VLs will be done with integrity; what we do with them will be done within the law and in a businesslike manner. I want to get that on the record because that is our goal, and I don't want anybody to go out of this room thinking differently.

The Acting Chair: Okay, that's the time up. We'll turn it over to Mr Clement.

Mr Clement: Thank you for the opportunity to have the floor. Our minister is a gentleman. I aspire to his ability to turn the other cheek, but I would say to the member for Sault Ste Marie that I'm proud of a government that reviews all of its agencies, boards and commissions and businesses.

I personally don't see the role of government as saying, "We're going to review some things, but other things are sacred cows." As soon as you start to do that, that's the thin edge of the wedge for practices to develop, over time, encrustations like barnacles on a ship, a ship that is sinking in the middle of turmoil. When you have that occur, that's when problems start. Perhaps I could say that's how we got into this mess as citizenry, as a province, in the first place.

I don't think it's a slap in the face to the citizens of Sault Ste Marie or any other community in Ontario to say that we are reviewing the practices of the Ontario Lottery Corp as a segment of the Ministry of Economic Development, Trade and Tourism to ensure that the money is spent wisely, that there is accountability by those officers and directors to the people of Ontario, that the taxpayers' trust in that institution is justified, that they are adhering to not only legal principles but ethical principles, and I'm not casting any aspersions on the OLC. That's the same review that should go on in every other department and every other ministry in this government of Ontario. I just want to put that on the record because I'm still aspiring to be as much of a gentleman as the minister is, so maybe that gives me a bit more latitude to put that on the record.

Having said that, perhaps the minister would like to comment on that, but I did also want to give him an opportunity to complete his review. The last time we had the go-round, you recall, Minister, we ran out of time to complete the review of what the structure of your ministry is going to be to do the things that the people of Ontario have dictated should be done by this ministry. You've got a couple of strains you can comment on from my perspective.

Hon Mr Saunderson: I just would like to make sure that it gets on the record that the terms of reference for the Ontario Lottery Corp review, which you referred to and I referred to you, Mr Martin, will be lodged with the committee next week. Everybody will have a chance to see that.

I spent some time describing the ministry as it was set up and I think you have a pretty good idea of what the ministry is now doing. I'd like to deal with the financial aspects of the ministry, number one, under the direction of Mr Wood, the ADM. He is making sure that all our programs are reviewed. He is, in effect, a controller of the so-called company as well as making sure that our spending is correct and proper in the ministry. But I think it's important to have this ongoing review of all programs. You agree with that -- I just heard you say it -- and we've been talking a lot about that today.

In no way is this singling out any particular program or scheme of things. It really is just to make sure that we're getting value for money, and I think that's why we got elected. People were so upset with the deficit that had been allowed to roll up from $44 billion to $100 billion. They liked what we said, that we were going to take a look at all aspects of spending.

That's why the Red Tape Review Commission with Mr Sheehan, who is in attendance here today, is accomplishing a great deal. Business likes this and indeed any regulations that we can find and eliminate to make doing business in Ontario easier -- boy, I'm all for that. That's one aspect of what our ministry is doing and that is doing a proper accounting of our programs.

The field staff, I think, is very important. As I said to you, I look on them as my eyes and ears, or the ministry's eyes and ears, or the government's eyes and ears on what's going on out in Ontario. As you know, we've stopped making cash available to businesses, and when they come back to us and tell us that there is a concern about access to capital, that somebody is having a difficult time, say, with the bank he or she deals with, we now have in place a system to look after those comments that come back from the field.

I had a very interesting job going out to see all the CEOs of the five major chartered banks which are located in the greater Toronto region. I'm convinced, after talking to them, that if a person is legitimate and has done a proper business plan, a financial plan, a marketing plan, all that goes into making a business operate well, access to capital is available. That's the type of thing, though, that, when most field people come back and say, "We think some work should be done in this area," it gives us a chance in the ministry to go out and make sure that access to capital is available and other things like that are available to companies.

If they are having difficulty with their banks, I encourage those field officers to come back to us and tell us that. Then I will go to those banks and say, "Look, when we create the proper business climate for you to be profitable," and we know that the banks have been profitable, "then we expect the banks to be cooperative." Not to make bad investments, by the way, but not to be difficult. We all know the bank stories we hear about somebody being refused a loan or their loan being called, and I think it's only right that we monitor all of this to make sure that business is being treated properly. That is an example of one of the ways our field staff is helping our businesses out there get access to capital.

Another thing it is important for our field staff to be able to help on is importing and exporting. Whether it's a foreign government or even our own federal government, there are certain barriers to importing and exporting goods. As I mentioned, at the wisdom exchange one of the most intriguing sessions I attended was the one on how to export goods to India. There was a man from India, now a Canadian citizen living in Ontario, who has got great advice to give to companies that want to export to India. That's another example.

We also feel that sometimes businesses need to be shown the right way to provide, as I said, business plans in order to get more capital. Within the ministry we've got the people who can help them prepare that.

Also, and moving on to marketing the province, as some of our people do, how does the province work with potential investors? We've just had a classic example of how you can work with a potential investor. A company that is now going to locate in Listowel from Japan, in the automotive parts industry, was looking for a place in which to locate a factory. We found I think it was 12 locations for that company, then we worked with the company, took their representatives around to these locations throughout Ontario, and they settled on Listowel. We certainly have a role to play in working with potential investors, whether they are Ontarians, people from other provinces or from abroad. That's what our field staff can do, and I think they do it very well.

It's important that the ministry also play a role in helping entrepreneurs develop in this province. We have to create the facilities where businesses are encouraged to help budding entrepreneurs. We have some of these facilities that we help with. There's one in Ottawa that we have certainly helped set up, the entrepreneurial centre down there for the Ottawa-Carleton, or Ocedco, region. There's one in London as well. We're trying to get more of these entrepreneurship centres established so that the small business people can really get help.

There's nothing like a successful businessperson coming in and giving advice to somebody who wants to start out. Basically, advice isn't what they need; they need courage to make the move. When we can say to people who want to start businesses in this province that we've got the right business climate and that we're working for the small business person, I think that gives a good push to that entrepreneur to get started.

We have, in this same area of marketing in the province, the Canada-Ontario Business Call Centre, known as COBCC. It's a single telephone access point to information on federal and provincial government programs and services. We expect that 225,000 people will use that service the year that we're in right now.

Student venture capital programs help the entrepreneurs again. These are students 15 to 29 years of age who want to own and operate a summer business. The summer is now over, but they received loans of up to $3,000 from the Royal Bank, and they were guaranteed by the student venture capital program. This program tends to wind down when the summer concludes, but it was delivered in conjunction with the Royal Bank, just so you know that it wasn't the government on the line. In 1996, by the way, 412 loans were issued, and that created 600 youth summer jobs.

As you know, we have small business publications and the self-help offices that Mr Spina has been very involved with, getting these counters established in those constituency offices that wanted them. Then we have small business seminars, which are being delivered through the self-help offices. There's a small fee for these, in the $15-to-$20 range. We estimate that 450 of these seminars will be delivered this year to an audience of about 10,000 people.

That's helping the entrepreneurs and marketing the province. The other thing on marketing is that we are establishing the business ambassadors program. It's to do with our grand marketing program, which will be announced shortly. That means people who want to help us sell Ontario will have the ability to and the wherewithal in the form of a kit and speech, statistics, whatever they need, when they travel to spend some time helping to market the province.

The Chair: I know you've got a lot more to say.

Mr Saunderson: Yes, I could go on for a long time tonight.

The Chair: That is about the time allowed for the Conservatives.

We stand adjourned until Wednesday after routine proceedings.

The committee adjourned at 1754.