Committee Transcript 1991-Aug-01 | Legislative Assembly of Ontario

The Vice-Chair: Good morning. The Chair is going to be a little late, so I will be chairing in his place until he arrives. It looks as if we have a quorum this morning. This is the fourth day of the hearings by the standing committee on finance and economic affairs for post-budget commentary.

UNIVERSITY OF TORONTO

The Vice-Chair: Our first group this morning is from the University of Toronto: Robert Prichard, president; Bonny Horne, president of faculty; Judith Eichmanis, president of the staff association; Peter Go, president of the student administrative council; and Robert McGavin, chairman of governing council. We have half an hour altogether. Whatever time you use in your verbal presentation will be subtracted from that half hour and the time left divided among the three parties.

Dr Prichard: Thank you very much, Mr Chairman. My colleagues and I are grateful to you and your committee for giving us the opportunity to appear and grateful that the committee is permitting these full and informed discussions of the government's budget.

You have introduced the others that I appear with. Our plan is that each of us will speak briefly from our particular perspectives. I will introduce our position by speaking for five minutes. Each of my colleagues will speak for two minutes beyond that in the hope that we will use less than half our time for our presentations, leaving the remainder of the time for any questions the committee may have.

The 1991 Ontario budget states, "It is almost universally acknowledged that the key to growth and prosperity is an educated, adaptable, motivated and skilled workforce." That is from page 79 of the budget.

The budget, as you know, also speaks to the centrality of innovation and technology research and development to economic growth and competitiveness. We at the University of Toronto endorse these sentiments entirely. We believe that investments in people and investments in ideas rank with the most important and productive investments a society can make. We believe such investments are essential to building a province committed to both prosperity and equality of opportunity and we believe investments of this kind are never more critical and more compelling than in times of serious economic difficulties, such as those Ontario is experiencing at present.

The University of Toronto is Canada's most significant university. It does the most research of any university in Canada by far. It graduates more PhDs and masters students than any other university in Canada by far. It graduates more undergraduates and more professional graduates than any other university in Canada, and it counts itself as a university among a network of great public universities across North America and around the world.

The University of Toronto is a major and very special asset of the province of Ontario, and the University of Toronto is, of course, dedicated to investments in people and investments in ideas, investments that can contribute significantly to Ontario's future. But the university can meet its obligations to provide a university education of excellent quality, indeed pre-eminent quality, only if it enjoys adequate level of public financial support.

How do we judge the budget against this requirement? First, we congratulate the government on maintaining transfer payments to the universities at approximately the rate of inflation. To have done less would have been disastrous in terms of doing further harm to a university system already seriously damaged and undermined by 20 years of inadequate public policy and inadequate financial support.

We also congratulate and thank the government for providing assistance with meeting the costs of pay equity and for providing special funds for anti-recessionary capital projects that will mitigate some of our most pressing problems with respect to deferred maintenance and hazardous materials.

I should also record our concerns. As we record our gratitude for this financial support, despite the government's revenue shortfall, we must record our concerns about the current state of financial support for the universities.

While there has been much talk about the deficit identified in the budget, there is another deficit that should also concern the government, this committee, and the people of Ontario. It is the deficit in essential support for our universities. This other deficit, as I call it, can be measured in many ways. It can be measured as $410 million a year in base financial support, a figure based on the government's own advice from the Ontario Council on University Affairs and acknowledged in the Legislature by the Minister of Colleges and Universities of this government as an appropriate measure of the shortfall in university revenue.

It can be measured as Ontario ranking ninth out of 10 provinces in support per student. It can be measured as Ontario providing only a fraction of the support per student provided to students in comparable public institutions in major American jurisdictions such as Michigan, providing 55% more per student; Pennsylvania, 74% more per student; California, twice as much per student; on average, at public doctoral institutions in the United States, 40% more per student than is received at the University of Toronto.

It can also be measured as the accumulated backlog of deferred maintenance, which at my university alone, has now reached $120 million of deferred maintenance projects, and it can be measured as the loss of positions and jobs in the faculty and in the staff, and the consequent escalation of student-faculty ratios and decimation of staff support services. This other deficit requires urgent attention. It will require more spending, not less; more investment in people and ideas, not less.

The people of Ontario understand the benefits. University enrolment has grown by 30% just in the 1980s, and the economic return to a university education continues to outstrip all other forms of labour force qualification.

In conclusion, we recommend that you endorse the transfer payments to the universities as the absolute minimum necessary to stave off further damage. We also recommend that you urge the government, as a matter of urgency, to follow through on the Treasurer's call for a plan of renewal for Ontario's universities, and that you insist as a committee that the government bring forward a plan to ensure that adequate investments are made in the universities of Ontario to overcome the other deficit so that the full promise of our institutions can be realized.

We at the University of Toronto and at other universities in the province stand ready to serve the people of Ontario. If equipped to serve to the limits of our abilities, the contributions we can make to the long-term economic strength and prosperity of the province of Ontario are enormous and enduring, and we would very much like to seize that opportunity.

The chairman of the governing council, Dr McGavin, will speak next.

Dr McGavin: Thank you for having us here today. I am in the unique position of being a government appointee who has been appointed by three different governments in Ontario: Tory, Liberal and NDP. While I have seen these changes in government, I have seen a remarkable consistency in the attitude of government to higher education. Higher education has become a low political priority. Our share of public funds has been eroded dramatically in the past decade. The youth and future of this province are being ignored.

It has reached the point where Ontario's support for post-secondary students now ranks ninth among the 10 Canadian provinces. For all of us in Ontario, the richest and greatest province in Canada, that amounts to more than an embarrassment; it amounts to self-destruction.

With the dwindling share of funds flowing to higher education, universities in this province have had to make deeper and deeper cuts in our programs. We have now cut so deeply that we are bleeding. The quality of education in Ontario is bleeding. At a time of critical faculty renewal, we are less and less able to attract top international scholars to our faculty. With this loss, we face the further loss of research funds and private sector participation in research projects, all of which would lead to more jobs for Ontarians.

As we sap the quality and vitality of our universities, more than our competitiveness is at stake and more than the future job opportunities of the youth of Ontario. Universities also contribute immeasurably to the quality of life, to research, to culture, to the learning, knowledge, justice and fairness of our society. We cannot afford to see the diminution of higher education in this province.

By the same token, we know we cannot afford to increase deficits to restore university funding. With federal and provincial deficits, we have already mortgaged the future of Ontario's youth. They are the ones who will have to pay. While we hand them a legacy of debt, we are taking away their ability to handle it by letting higher education fall by the wayside. So what Ontario's universities need is to get a better share of an existing pie. We need to reallocate funds to education and make it a top priority in this province. I think there is growing support for this, particularly when people come to realize just what is at stake.

Support for our fund-raising efforts at the University of Toronto indicates that the value of higher education is widely appreciated. Students, the University of Toronto's 270,000 alumni, faculty, staff and the private sector have contributed in the past few years $125 million to our broadly based campaign. But how can we go back for more if the society we serve keeps hearing signals that there is no future for higher education in this province? We need to pour money back into the foundations or the rest of the structures will collapse. If you do not give higher education a higher priority, Ontario will not have a future; but if you do, if you buck the trend of the past decade, the future will take care of itself.

0920

Dr Prichard: The next presenter will be Ms Bonnie Horne, the president of the University of Toronto Faculty Association.

Ms Horne: As president of the faculty association, I represent the 2,500 faculty members and librarians who work at the University of Toronto. What I want to talk to you about, which is of particular concern to them, is what is happening in terms of the quality of education that is being delivered at our institution. Quality is being sacrificed for quantity, and that has been the situation for quite some time now.

We all understand that having an education at the post-secondary level involves more than just having facts crammed into the heads of students, yet more and more, professors are being required to use methods of teaching that result in that kind of delivery of post-secondary education. Gone are the opportunities of the past where, in small classrooms, people were able to engage in lengthy and interesting discussion, where people were required to write lengthy papers and articulate their thoughts in very well-thought-out ways. You are now looking at classes of hundreds, and in some cases over a thousand students in a classroom. Just try to picture individual classes that exceed the size of the entire enrolment of the high school the students have just left when they start their undergraduate education at the University of Toronto.

It is impossible to deliver the quality that we are capable of, and that we know is the best kind of education and the important education that needs to be delivered. More and more of my colleagues are using multiple-choice tests, true-and-false answer papers in order to test the skills and abilities of the students in their classes. They find it unsatisfactory that this is the way they have to measure students' ability. They find it unsatisfactory that they cannot meet with students outside the classroom. They find it unsatisfactory that tutorial classes are now as large as entire courses used to be a couple of decades ago.

It is very important that we be aware of just what effect underfunding has had in the day-to-day life of the average undergraduate student at the University of Toronto. I hope in the short time I have been allowed that, with this particular example, I have helped give you an idea of exactly what is going on in the classroom where students from families like yours and the people you represent are now attending university.

Dr Prichard: The next presenter will be Ms Judith Eichmanis, who is the president of the University of Toronto Staff Association.

Ms Eichmanis: As president of the University of Toronto Staff Association, I represent some 3,000 administrative staff members. For us the equation is a fairly simple one: Underfunding equals less real income for the universities, equals budget cuts, equals a very overworked and severely stressed administrative staff complement, equals in some cases reduced, and in other cases less efficient and less effective services to faculty and students. So the bottom line is: Underfunding equals an inability on our part to perform in exactly the way we would like, to do the best job possible for the university. I think that is probably a factor that bothers our people even more than job insecurity, which obviously is something they are facing. They are a very loyal, dedicated group and they tend to want to spend their whole careers at the university. They want to do the very best job they can and they are being frustrated in that.

They also have this enormous job insecurity facing them. There are cuts going on, but workers all over Ontario are facing difficult times, so we are not asking for special concessions. We are asking you to believe that there is a problem resulting from underfunding and it is affecting the quality of education in Ontario. We hope you will hear and understand that.

Dr Prichard: The final presenter is Mr Peter Go, who is the president of the students' administrative council of the University of Toronto.

Mr Go: I represent over 32,000 full-time undergraduate students at the University of Toronto, and I want to briefly describe the underfunding crisis as students see it.

The quality of the undergraduate degree has been quickly eroded. Actually, for the last 15 to 20 years, there has been a progressive decline in government support of the universities. I will not bore you or alarm you, as the case may be, with lists of direct consequences of underfunding such as outdated equipment, crumbling buildings or overcrowded classrooms. Rather, I want to point out one poignant example of the deteriorating quality of education and the whole declining student experience at universities.

What has steadily occurred as a result of inadequate funding is a change from learning by a thought-provoking and problem-solving process to learning by memorization and regurgitation. Instead of low student-to-professor ratios, sufficient contact with instructors and stimulating and educational assignments, we students are now relegated to large lectures, sometimes with more than 1,600 students in one classroom, with very little direct assistance, and we are forced to learn by memorizing, on our own, lists of facts and regurgitating those facts on our exam papers.

Not only are the faculty frustrated with this kind of delivery, students are frustrated with receiving this kind of education. The multiple-choice test has never been so popular. In fact, it is now called the "multiple-guess" exam.

This is certainly not the model of quality education that is acceptable to students, parents or taxpayers alike, and it certainly does not bode well for the future competitiveness and wellbeing of our province in terms of a well-educated populace.

The University of Toronto is working very hard with what it has, to provide a quality education, but obviously we do not have enough. Students are also contributing not only in terms of tuition fees, but also in donations to the university. Last year's graduating class raised almost $500,000 in gifts to the university. We in SAC now have a trust fund that is close to $3 million to address the problem of accessibility for people with disabilities.

The faculty and administration are also trying very hard to improve the quality of our education with new initiatives and, unfortunately, scarce funding. We are, as you can see, working very hard but we have not been given enough.

Unless this government wants regurgitative learning and the decline in education at universities to continue, there must be a real commitment to the universities of this province.

I want to reiterate the comments of President Prichard and the members of our group and state that this commitment to universities must come in the form of removing the underfunding deficit.

Dr Prichard: Mr Chairman, as you can see, we are working together at the university from the different constituencies and working hard in difficult circumstances. We are not discouraged, despite our language. Indeed, we are fundamentally optimistic about the long-term possibilities for the university; but we are deeply concerned about the current situation and we want to work with elected representatives of all parties and of all the people of Ontario to develop a plan of renewal and recovery for Ontario's universities. We thank you for this opportunity to continue that effort with this committee.

The Vice-Chair: Thank you, Dr Prichard. We have about three and a half minutes for questions from each party, so we will start with the third party.

Mrs Cunningham: As usual, it is a pleasure to see the University of Toronto so well represented. I especially appreciated hearing from the faculty association and the students this morning.

The presentation, Mr Chairman, as you and I know, is not new to us, but it is another opportunity to tell the elected representatives how serious things are at the universities. Since time is so short I have two quick questions.

One is from a member of the alumni at the University of Western Ontario who has chosen not to contribute for the first time in some 20 years because of accessibility and because of the complaints that his own family members have had -- not unlike your own, Mr Go -- in that if the university cannot provide a better quality of education, maybe the reason the government is not supporting universities is that they are doing a fairly good job, but not towards the kinds of things you need, meaning money for faculties but fewer, smaller class sizes. If this is a trend that is beginning, certainly in my job as critic I would like you to comment on that.

The other one is, what kind of response have you had from this government with regard to your renewal plan which was so well presented on your behalf in the pre-budget hearings for the last budget?

0930

Dr Prichard: Maybe I could attempt a brief answer to each of those.

On the first, I think the evidence across North America is clear that great public universities depend on strong private support in order to fully accomplish their missions. At the same time, that strong private support is dependent upon strong public support, and the only way we can produce great universities in Ontario is through a combined effort of public support and private philanthropic support.

One without the other will not do the job. If our potential benefactors lose confidence that the government supports the universities, they also, I believe, will lose confidence. If there is a vote of confidence through the public sector, I believe the private sector will similarly vote with confidence.

With respect to the plan of recovery, at this point -- I want to put it carefully. The Treasurer, in his announcement of the transfer payments, indicated a need for a dialogue with the universities in order to develop a plan of renewal, recognizing the need for a multi-year plan of renewal, accepting the deficit in support of the universities and the need for a plan of renewal. At this stage that dialogue is not as advanced as I would hope it would be, and it is our position to the minister and to the government on a regular basis that there is no more important challenge facing the Minister of Colleges and Universities than the development of a plan of renewal and recovery and the gaining of cabinet support for that plan. That is the single most important challenge facing the minister.

There are other issues of concern of course in the university sector, but in our view the single most important matter for the minister and the government is to develop a multi-year plan of renewal, and it is because of this that we urge this committee to continue to watch the government's conduct in this area and to continue to urge the government to develop the plan which the Treasurer himself has indicated is required.

The Vice-Chair: I think you have about half a minute left.

Mrs Cunningham: For me?

The Vice-Chair: Yes.

Mrs Cunningham: That is unusual, is it not? I will ask my next question.

Mr B. Ward: It is so early; it is too early.

Mrs Cunningham: So early in the morning. When we were chatting about this recovery plan, part of that recovery plan was the contribution from students with regard to the tuition fees, and I am aware of other funds, Mr Go, in which students have been particularly wonderful at raising funds, especially for accessibility. The University of Ottawa is another example. I suppose I could direct my question to you.

We are asking the students to contribute in very different ways than we did a decade ago or even two decades ago. They are doing a pretty successful job. The University of Toronto is quite unique, but as I said, there are other universities. How are the students at the University of Toronto now feeling about the recovery plan and the commitment with, I suppose I would have to say, the increase in fees on behalf of students, their contribution?

Mr Go: I think, first, I will address the commitment to an increase in fees and other things and come directly to the tuition fee question.

Students are committing to things like accessibility for persons with a disability because they see value for their money. They see a jewel there that they can contribute to that they know will leave a lasting impact on the universities.

For tuition fees, for them to work in a partnership with people like Rob, people like yourselves, they want to see a real commitment also. We have come forward with a proposal that we would be willing to talk about an increase in fees if we saw a commitment from the government. As far as students at the University of Toronto are concerned, they have been frustrated because they have not seen a commitment to an increase in the funding from the government.

The Vice-Chair: Moving on to the governing party, Mr Ward.

Mr B. Ward: I would like to look at the positive benefits that our budget has implemented in Ontario, and part of that is our capital works projects and initiatives. It has been criticized by some, that either we should not have done it at all or it is wasted money.

In your presentation you mentioned commending the government for receiving some benefits from the anti-recession package. For the benefit of this committee, could you relate what projects or project was implemented through this initiative?

Dr Prichard: Yes. I stand to be corrected by one of my colleagues behind me, but I believe we received a total of just under $6 million in a combination of support for deferred maintenance projects and control of hazardous waste projects. We have a backlog of such projects, as I indicated, of over $120 million, individual projects recorded, and this has allowed us to make accelerated progress on the most urgent of those projects. They range from stopping leaking roofs to controlling loose asbestos in buildings, through to other essential repair and renovation projects right across the three campuses of the university. So this is essential support and it is for that reason that I made specific note of its importance to us.

Mr Christopherson: Dr Prichard, welcome. It is good to see you again, and your colleagues. Thank you for your presentation, and thank you for your acknowledgement of our ability to maintain at least the level of transfer payments to you and other funding partners. As you know, that was a priority for us before the budget. I think we met that commitment during the budget, and I can respect and appreciate your desire to see that level and more in following budgets.

What I would like to focus on are some of the comments that were made regarding the future of the province, the future of our economy vis-a-vis the amount of expertise we have in our province to develop the kind of specialized work, and particularly value added areas, to our economy. I would like to hear in your own words, if you do not mind, for the record and for our own edification, as concretely as possible how you would convince the public that money needs to be spent in the area of education, particularly in post-secondary, if we are to meet the needs of a changing economy where value added means so much. How would you phrase that to make the case to the public for this government to continue to make it a priority and the fact that we really, in our opinion, have no alternative?

Dr Prichard: I am not sure I can do better than the government's own budget, which states the case for the centrality of investments in human capital in an Ontario economy which is going to survive and thrive through constant emphasis on higher value added, whether in services or in products. I think the evidence is unambiguous in the major western nations of the world that outstanding post-secondary institutions are an essential element at the top end of the educational system to pull the entire quality of the educational system forward and to provide the base of highly educated people, the base of research, the base of ideas, the base of innovation around which a value added economy can grow and thrive.

I do not think we have good examples to the contrary of that proposition. We have many examples. One need only look at California and Massachusetts as two areas of very substantial economic growth arising from a direct connection with housing some of the finest post-secondary institutions in the world. We see that happening in Japan. We see that happening in Germany. We see that happening everywhere that economies are booming. We see it happening in Ontario at present. I do not believe the Ontario strategy for economic renewal and recovery which is set out in the budget can be realized without having a number of outstanding post-secondary institutions in the province.

The Vice-Chair: Moving on to the official opposition.

Mrs Sullivan: I am very interested that once again the University of Toronto is back bringing really a fairly negative message to the people of Ontario about the quality of post-secondary education.

I want to explore with you, in the base funding plan that you have put forward, the $410-million recovery program, and I just do not recall what U of T would see as its fair share of that additional money, if it became available. Where would you see priority in a renewal program? I recall programs such as faculty renewal and centres of excellence which injected some capital for a period of time, but where would you see priority as a first step in a multi-year program, and what would U of T see as its fair share of a new injection of funds?

Dr Prichard: Thank you for the question. The University of Toronto represents approximately 20% of the university system in Ontario. Depending on what the rule of allocation is, the share ranges from about 18% to 23% of various different programs, so as a rough approximation, if one takes 20% as the number, it would translate over the multi-year program into about $80 million of base financial support for the university.

What priority would we attach? The proposal made by the Council of Ontario Universities called for each university to develop an individual plan of renewal and recovery which would be developed by a joint committee of staff, students and faculty, and the funds would be held in trust until such a plan was developed and filed, demonstrating exactly how the funds would be spent. As a result, in some sense it is premature for me to say exactly what the priorities would be, because it would come from that joint exercise, but let me say what I would argue for in that process. My colleagues can speak to whether they would endorse these views.

0940

The number one priority -- the only priority, I would say -- would be that of quality. The single greatest harm to the universities over the past 20 years has been the reduction of quality, and the turnaround will have to come by focusing investments on quality. The single most important such investment we could make, in my view, would be in faculty, in faculty renewal, making more faculty members available to our students, who have increased so hugely in number, such that we could drive down the student-faculty ratio, give more individual contact with faculty members to our students and reduce the scale of the enterprise from the scale described by my colleagues to a more manageable scale, more the scale that any of you who had the privilege of attending university in Ontario once knew as what a university education meant. So for me, the number one investment would be in more faculty to provide better quality to students.

The second area of priority for me would be more support for students through student services; that is, to think only of what happens in the classroom as the core of the education is, I think, an impoverished view of a high-quality education. There is a variety of student services, from counselling to training to placement, through a variety of services which surround and support any extracurricular life of the university. Those have in some sense been hurt even more and they need to be rebuilt through a joint effort of our students and our staff.

So for me, at the University of Toronto -- and I speak only for our university and only for myself -- quality and focusing on faculty and student support services are the two things that I would assign the highest priority to, but my colleagues may want to endorse or differ on it.

Ms Horne: I would certainly endorse that. I think it was clear that my message had to deal with the first part of that. Just to give you an idea, in spite of the fact that there has been some renewal money put into the institution recently, we are looking at a 10% reduction in the current faculty over the next four to five years in order to meet the budget guidelines that the university has put forward at the moment, at a time when the enrolment is continuing to increase. So even what we view as an unacceptable situation today is going to be worse next year and worse again the year after that, unless something beyond maintaining the status quo is done for our institutions.

Mrs Sullivan: I am surprised that you have not mentioned library books.

The Vice-Chair: Sorry, I am afraid your time is up. I want to thank you very much for making your presentation today, and I know Mrs Cunningham and myself were glad you elaborated when you said the University of Toronto was the most significant university.

LABOUR COUNCIL OF METROPOLITAN TORONTO AND YORK REGION

The Vice-Chair: We will move on to our next presentation, the Labour Council of Metropolitan Toronto and York Region; Pat Clancy, vice-president, and Brenda Wall, executive assistant.

Good morning, and welcome to the standing committee on finance and economic affairs. Just to let you know, you will have a half-hour altogether for the presentation. The time you use up for your verbal presentation will be subtracted and then the time left will be divided between the three parties for questioning.

Mr Clancy: Thank you very much for having us here today. It is kind of a new role for labour to be here talking to a government that it has confidence in.

We would like to present to you our brief. I am going to ask Brenda Wall, the executive assistant to the president of the labour council, to read the brief, and then we will be prepared to answer any questions that we can answer.

Ms Wall: On behalf of the Labour Council of Metropolitan Toronto and York Region, we are pleased to have an opportunity to address this committee regarding a matter of crucial importance to our membership, namely, the Ontario budget.

The Labour Council of Metro Toronto and York Region represents approximately 180,000 members in over 400 affiliated local unions throughout this region. Our members have been hit hard by the recession and have suffered greatly at the hands of federal Tory economic policies. Therefore, we are very pleased to discuss our view of the Ontario budget and its implications for working people and the citizens of this province.

The current recession is the worst recession in Ontario since the Great Depression and has had a devastating effect on working people everywhere. Estimates of job losses in the first year of the recession range from 215,000 up to 323,000 throughout Ontario. Those are figures that have been given to us recently by the Social Planning Council of Metropolitan Toronto. Similarly, estimates in the Toronto area run close to 135,000 in the same period, March 1990 to March 1991.

These figures are hard to comprehend, yet we have certainly witnessed the effect within our labour council membership. Thousands of workers are coming to us for assistance through our Metro Labour Education and Skills Training Centre, a special workers' education centre servicing the needs of employed and unemployed workers. They are the victims of the devastation in the manufacturing sector, and in this region they are older workers, immigrant workers, workers of colour and workers with low-level literacy skills.

The elimination of manufacturing jobs is significant. In 1981, one in every four jobs was in manufacturing, in Ontario and in Toronto. By 1986, a little over one in every five jobs was in manufacturing. In the first quarter of 1991, less than one in every six jobs is in manufacturing. It has happened very quickly and it has had an effect on the entire economy. These manufacturing jobs are difficult to replace. They have traditionally been much higher-paying jobs than in most other sectors.

What is different about this recession too is that these jobs are gone for ever. In 1982, 24% of layoffs were due to shutdowns. In 1990, 65% of reported permanent layoffs were due to partial or complete closures. Business bankruptcies as well as personal bankruptcies have increased tremendously as a result of the recession.

In March 1991 the unemployment rate in greater Toronto reached 10.1%, and even this figure is misleading. What is not evident in the numbers is the amount of part-time, low-wage employment that working people now have to endure just to survive in the economy. For those thousands who are still jobless in this city, however, they are being added to the welfare rolls and the ranks of the poor and the homeless. In May 1991 in Toronto we had 124,000 people on welfare every month, 120,000 people on family benefits allowance, over 175,000 people on UI; almost one in five on some form of social assistance in this Metro area.

It comes as no surprise to us that Brian Mulroney is against the Ontario government's budget. That is because this budget is trying to do something different, trying to fight the recession rather than worry about the deficit. The federal government, on the other hand, pushes ahead with its agenda on behalf of big business. Its aim is not to satisfy the most basic social and economic needs of ordinary Canadians, but rather to maximize the profits of wealthy investors and allow them to restructure the economy according to their priorities. All of their policies and actions, which have led us into this recession, have been based on this premise.

The federal government has carried out cutbacks which have hurt all Canadians, but they have cost Ontarians most. Cutbacks to established programs, to the Canada assistance plan and other programs will cost the people of Ontario over $1.6 billion. The result is increased pressure on the provincial programs, such as welfare and social services, which are designed to alleviate poverty. The freeze on established programs financing could well mean the gradual death of medicare as a national program enjoyed equally by all of us by the 1996-97 fiscal year.

One of the major reasons for the loss of hundreds of thousands of jobs in this country, and in particular in this region, has been the free trade agreement. Let's look at the myths created by the federal government when it signed the deal.

First is the myth of job creation. The federal government's predictions for employment growth under the free trade deal kept getting revised downwards, but at one time they predicted 350,000 new jobs. Even by conservative estimates, the Canadian Labour Congress indicated that up until early 1991 there have been 226,000 job losses directly attributable to the free trade deal. This does not include those lost in spinoff industries as a result of plant closures.

As we have indicated, the effect on the economy as a whole is almost immeasurable. When people do not have jobs, they do not buy goods and services. Unemployment in the construction trades is running from 40% to 80%. Retail stores and small service industries have been closing down all over the country.

0950

The promise around our social safety net can be similarly exposed. The truth is that we have seen massive cuts to UI as well as other cutbacks and clawbacks.

We were also promised the best training and adjustment measures in the western world by the Tories, but to date the victims of free trade and plant closures are still waiting. In fact, according to the unemployed workers who come to our centre, access to training and adjustment programs is severely limited even where programs exist. Rigid criteria in the vast majority of programs and services, lack of available training seats and unnecessarily high entrance requirements are the norm. This is even worse for immigrant workers, who also face systemic racism, sexism and ageism when attempting to access programs.

Right now we are faced with the prospect of the Canada-US-Mexico free trade agreement. In our view, this will mean the same for working people in this region as the current free trade deal has meant: that is, jobs lost as companies flee south; big business pressure to limit and cut back on social programs that provide a so-called subsidy to Canadian employers; increased pressure on cultural programs and supports; and a willingness to march to the tune of economic policies dictated by American corporations. After the devastation caused by the current deal, it is hard to believe that this government is willing to submit the Canadian population to further suffering. There is no concern expressed for either the continued exploitation of Mexican workers or for the possible effects on Canadian workers. We are pleased to see that the Ontario government has come out clearly against the extension of the deal to Mexico.

The imposition of the goods and services tax by the federal government is just another example of placing the burden on to individual Canadians and away from corporations. It involves a massive shift in tax burden and represents a massive attack on working people, the poor and the general population, just at a time when suffering is at its worst.

It has become clear to all that this regressive tax is hurting people even worse than predicted. According to the GST consumer information office, the average family will pay an extra $570 a year in GST, about 50% more than predicted in government studies used to argue for its introduction.

The NDP government in Ontario has done all it can to raise objections and refused to harmonize Ontario's retail sales tax with the GST and refused to piggyback the provincial sales tax on top of it. This has meant a saving of $470 million a year, money which stays in the pockets of Ontarians.

High interest rates hurt working people and hurt the economy, despite what the federal government has claimed. They have continued with their dual policies of high interest rates and a high Canadian dollar and as a consequence have added to the devastation of the economy of Canada. They claimed that high interest rates are necessary to fight inflation, to support the Canadian dollar and to attract investment. Instead, the high interest rates have added significantly to business costs by raising the cost of capital and they have killed jobs in this country. They have maintained the Canadian dollar at artificially high levels, especially vis-a-vis the United States. This undercuts the competitiveness of Canadian goods and services in the US and adds to the devastation caused by the free trade deal.

It is in the context of all these regressive economic policies imposed upon us by the federal government that we must view the Ontario budget. We believe that it is a step in the right direction, not only for our members but for the entire population of this province. In the context of the recession and federal government cutbacks, the provincial government had to make some tough choices. In putting the wellbeing of people before the deficit, they moved in the opposite direction to the Tories. Mulroney's answer is to raise taxes and cut services, making the recession worse. The answer of the Ontario government is to fight the recession through:

Sustaining and creating 70,000 jobs, so the province lost 260,000 instead of 330,000. Or, if you take the larger figures that we have heard recently, lost 330,000 instead of 400,000 jobs;

Undertaking the most aggressive anti-recession effort in all of Canada through increasing overall spending by 13.4%;

Creating the $700-million anti-recession program. When combined with the contributions of local government and agencies, total spending will exceed $900 million;

Maintaining health care and education despite cutbacks from the federal Tory government;

Responding to the need for action in such areas as worker protection, pay equity, social assistance reform, affordable housing and the environment;

Putting spending power in the hands of Ontarians. By not imposing the provincial sales tax on the GST, $470 million will be left in the pockets of consumers in 1991 and enriching the Ontario tax reduction for low-income earners;

Creating a $215-million social assistance reform package that is designed to provide benefits for those who are in greatest need, to help people get into the labour force, to increase fairness and accessibility and provide further relief to overburdened municipalities;

Providing providing tax relief for the poorest of Ontarians by initiating the largest enrichment program in the history of the Ontario tax reduction program. This $50-million enrichment means the number of low-income earners whose Ontario income tax will be eliminated or reduced will increase to 700,000 for the 1991 tax year;

Allocating $48 million in 1991-92 to help lay the groundwork for self-government and resolution of land claims for support for research and negotiations; $30 million to be spent on community infrastructure such as waste and sewer systems; and $5 million for 400 new child care spaces on reserves;

Allocating an additional $12 million for new shelter beds and enhanced services for women who are victims of domestic violence and an increase of more than $8 million to expand and enhance services to women and children who are victims of sexual assault;

A sum of $125 million will be made available to Ontario's transfer agencies, to both major and other agencies, to assist them with the cost of pay equity;

An unprecedented level of provincially supported housing activity for the development of another 10,000 non-profit housing units which will cost the province approximately $150 million in annual operating subsidies when completed.

Big business spokespersons, the media and the opposition parties have all criticized the budget for its deficit. When the NDP came into government, it discovered that the budgetary surplus confidently predicted by the Peterson Liberals was a $2.5-billion deficit. Since then, facing the worst recession in 50 years, the government has made tough choices while managing taxpayers' money carefully and compassionately.

In all of the discussion of the province's budgetary deficit, little attention has been paid to its causes. Most of the deficit comes from the financial reality of the recession: falling revenues, increasing costs in health care, social services and education. A very large part of it is the impact of federal transfer payment cuts. The cumulative impact of federal cutbacks in established programs financing is costing Ontario $3.6 billion in 1991-92 alone. Last year, provincial revenues fell at the same time as more people required social assistance. We have documented the situation in the Toronto area above.

Ontario's projected deficit of $9.7 billion is moderate if considered in perspective with the record of recent Conservative governments. The Ontario deficit is comparatively low in terms of total spending, in terms of gross domestic product and in per capita terms with other provinces and with federal governments under Conservative governments. The Ontario Federation of Labour has documented this in its brief.

Spending now is critical to stimulating economic growth, to responsible fiscal management and to helping our fellow citizens in difficult economic circumstances. As the figures above demonstrate, Ontario spending is not out of control. In fact, it is less than other provincial governments spent to get out of the last recession.

Ontario's public debt charges, the interest cost of carrying its debt, are low as a share of its total revenues. The federal government spends 36 cents of every dollar of revenue as interest on its debt, spending which only serves to benefit investors and bond dealers. In contrast, Ontario spends less than 10 cents of every dollar of revenue on interest costs, less than every province except Alberta and British Columbia. These costs will rise to 11.6 cents next year, still far below the federal rate and less than the debt charges of most provinces.

Ontario lost its triple A rating, but so did the Liberal government when it first came to power. They did not regain it until four years later.

The Ontario government has got a bad rap for this budget from much of the corporate press, but there are many other who believe the government is to be commended for its initiatives. Working people in our community believe that this budget is a step in the right direction, and there have been others who have indicated their support, including the TD Bank, with its guarded support, and recently the Conference Board of Canada, and even more recently than that a list of progressive economists including Mel Watkins and other high-profile economists in this country.

In conclusion, we would like to thank the government of Ontario for holding public hearings on the budget and providing us with an opportunity to present our views. Our members are well aware that Ontario's economy, like others around the world, is undergoing, and needs, restructuring. We want an efficient economy which provides secure, well-paid jobs at high levels of employment. We want an economy which is highly productive yet is environmentally as well as socially sustainable, an economy in which the benefits of growth are shared fairly. In our view, this budget is a major step in the right direction. It represents an investment in the people of Ontario to lay the groundwork for sustainable prosperity in the 1990s.

1000

The Vice-Chair: We have about three and a half minutes per party for questioning, starting with the governing party.

Mr Christopherson: There has been a lot of concentration on the deficit number of $9.7 billion itself. Many in the business community are hollering that this is going to weaken the economy so badly that business, along with its money, will flee to other places. The net result will be a loss of jobs. As an organization that represents 180,000 working people, a credible, sophisticated organization which has the means to research and do its homework on these matters, why does it not share this vision of impending doom with regard to jobs in this community as it relates to the budget?

Mr Clancy: I do not think we can really say we do not see some impending doom, but we really do not see that impending doom being caused by the spending of the government in its first budget. We do not see that getting into a deficit is the reason why we are going to lose jobs in Ontario.

I think we have a much worse enemy than any deficit the Ontario budget could have created, and that deficit happens to be the gentleman who sits in Ottawa and constantly tries to erode the whole protection we have as a country as far as workers are concerned. We have lost more jobs because of the free trade agreement than we will ever lose by any deficit the province is going to create as a government.

With the impending free trade deal with the Mexicans and Americans, we are still going to have that kind of problem. On a positive note, we feel the government has moved forward in the area where it could move forward and supported workers in the public service, and in supporting workers in the public service it at least has shown to other workers that we have a government that is interested in workers.

It is sad that the government does not have the opportunity to do some of the things in the short time it has been in government that we expected it will be able to accomplish in the long term, as far as job protection and other things like that are concerned.

Mr B. Ward: Since these hearings have taken place this week, I have been amazed at the number of groups that have come out in support of the budget and of diverse backgrounds, from accounting and from social groups. Just yesterday a business organization came out and commended the Treasurer.

We had one economist give a brief. I was a little concerned by his view of a particular segment. I would like to focus on the impact the federal policies would have on Ontario, and you touched on it. This economist, from a well-known brokerage firm, stated that the high dollar and high interest rates really did not have much of an impact on Ontario's economy. I was just wondering if you can expand on what you stated. What is your view of that comment?

Mr Clancy: I am not sure who the economist was, but I think we have run into a situation, again with high interest rates, and not, as economists and the government like to say, high interest rates that the market determined; but high interest rates foisted on us by the Bank of Canada that were put there mechanically. They were not interest rates that had anything to do with what the marketplace was doing or anything else. Those interest rates certainly made it difficult in Canada and especially in Ontario in the area of construction, house building and things like that.

I really do not want to constantly criticize the federal government, but with the economic policy of the federal government, what else can you do in this country but criticize the federal government? It certainly has done more than any group in the world to destroy the fabric of Canada, both economically and socially. Those kinds of policies have left it impossible, really, for an economy to grow.

With putting that kind of cap on the ability of an economy to grow and then undermining that economy even more, and the people who depend on that economy, the workers of this country, by allowing a free trade agreement where we made a level playing field for the Americans but forgot to put a spot on that level playing field for Canadians, I am not sure anybody can say that interest rates really did not impact on the slowdown of growth in Ontario. I am not really sure what that economist said, because I have not heard any of his remarks, but you cannot have a manufactured interest rate that has nothing to do with the marketplace that is not going to stifle the economy.

Mr Phillips: I was interested in your opening comments about the confidence you have in the government. This was just a bit curious to me. When the government came in, I think the unemployment rate in Ontario was the lowest in all of Canada. Now there is a lower unemployment rate in at least four of the other provinces, in spite of Mulroney and all those other things. So the working people of Ontario, which is everybody, I guess, will also be looking at the ability of this budget to kind of turn the economy around. I guess that will be a measure that we will probably be talking about with you next year.

I think we have kind of seen two kind of responses to the budget now. There is a pattern emerging from these hearings. One group will come and say, "Listen, the budget is going to do nothing to get the economy rolling again, and all those who rely on the government for assistance are going to be worse off because there won't be the ability of the economy to fund their programs." Others say: "This budget is great. It will get the economy going. We love it." It is a bit like forecasting weather, because probably we will not know for another year, but how will the government sustain your confidence? What will things look like a year from now as a result of this budget that the labour council of Ontario will say, "Yes, this budget has worked"?

Mr Clancy: I do not want to try to use a crystal ball. I think we really have to take a look at what this government has done initially in saving about 70,000 jobs in the public service, what it has done in providing incentives for construction and for work programs in a period of time when the economy was in a downspin and everybody was saying to the government, "You can't spend money." I think a government with the intelligence to take a look at what really needed to be done and the courage to do that is a government that gets confidence from workers.

One of the reasons we really do not see the great swell of confidence from workers is because really, with great respect to the press and those people who own the press, this government does not get the kind of publicity the opponents of this government get. It is far easier in this society, with this government, which is doing things that are non-traditional in the role of the governments we have had since I was a boy, Liberal and Conservative governments -- this government has taken some initiatives to try to help working people in this society through this difficult period of recession. Not so with Conservative or Liberal governments that have been around since I was a young fellow. I think that gives us a great reason to have confidence in the government, and not only confidence in what it is doing today, but confidence in what we see it will be able to do in the future because of those kinds of initiatives and that kind of thinking.

The Vice-Chair: We only have time for a very brief question and a brief response.

Mr Phillips: How would we explain the unemployment rate, then, going from the lowest in Canada?

Mr Clancy: That is very simple to answer. I really wonder why somebody who deals with the public interest, as you do, would not know the answer to that. First of all, the unemployment rate is geared to the fact of the competition created by free trade, the competition that is being created by the fixed interests that have caused companies to leave and go wherever they thought there was a better climate to do business, to Mexico, to the United States, those kinds of things. The previous governments protected the workers from allowing that to happen.

Mr Phillips: But that would be true across Canada.

Mr Clancy: Not so much as here, because this is generally the base of Canada.

Ms Wall: If I could just complete the answer to that question. If you look at the past year, it is not the Ontario government that created that rise in unemployment. It started during the height of the recession. Early 1991 is when it really started to hit. Those factors have nothing to do with the Ontario government. They have to do with the federal government's policies and, combined with the free trade agreement, the recession.

1010

Mr Sterling: I guess if I were a businessman and had money to invest, I would look at various areas I could make profit in. We have had evidence in this committee that business is getting a return of about 4% profit on the gross domestic product of this province at this time. While wages have increased significantly over the last 20 years, profits have dropped significantly for business owners.

We have a budget in Ontario with a $9.7-billion deficit, a $7.8-billion deficit over the next few years. If I am an investor and am looking at this jurisdiction, I am saying: "I can only make 4% on my money if I come here. I can only expect higher provincial taxes because this government is running up the debt." Why would you invest in Ontario if you had some money to place here?

Mr Clancy: If I were an investor and looked at the 20-year record you just spoke about, I would probably be more convinced that this could be a place where I could invest. In 20 years, if my ability to earn interest on my investment put me in a position where I was down to 4%, because 20 years ago it was a hell of a lot more than that -- I do not know the exact figures, but I also know what wages were 20 years ago. Corporations were making more money than that 4%, and I am taking your figures of 4% as being accurate. If the governments of this province have put us in that bad position and I were going to be the investor, I might be hesitant, but not on the record of this government. I think I would be more hesitant on the record of the governments that put that kind of situation in place.

I do not see how you can lay 20 years of history on a government that has been in place for nine months. The government is creating a deficit that it feels comfortable it can reduce over the next few years by $2 billion. I think that is really a comfortable position for somebody coming in as an investor. I think that is something that would be comfortable.

We have been overtaxed for years, but I do not think it was this government that put in the taxes that have overtaxed us for years. If I were really concerned about investors, I would be coming here from a different perspective. I am here representing workers, not investors, and as far as the people I represent, this government is doing something the other governments did not have the courage or the initiative to do. From this we will see a stronger economy grow in Ontario, and it will grow on the basis of those kinds of initiatives. That kind of stronger economy is going to attract, not detract. Investors are going to come to this community to invest their money. I do not see anything this government is doing right now that is going to drive away investment. I think there are a heck of a lot of other things that have happened, not by this government, that have caused investment to go south.

TORONTO-CENTRAL ONTARIO BUILDING AND CONSTRUCTION TRADES COUNCIL

The Vice-Chair: Our next presentation is by Tony Michael, business manager of the Toronto-Central Ontario Building and Construction Trades Council. Do we have a couple of other people making the presentation?

Mr Michael: One other, I guess.

The Vice-Chair: I guess this other person is no stranger to these committees either.

Mr Michael: He is not a stranger to me either.

The Vice-Chair: If Mr Michael and Mr Majesky would like to begin your presentation.

Mr Michael: As usual, I will read it out and have questions after. To the Chair and members of the standing committee on finance and economic affairs, the Toronto-Central Ontario Building and Construction Trades Council is pleased to submit our views and those of our council members on the issue of the 1991 Ontario budget. The council represents approximately 40,000 construction workers in the industrial, commercial, institutional and residential construction sectors. It is composed of 31 affiliates.

My name is Tony Michael and I represent the Toronto-Central Ontario Building and Construction Trades Council, whose major construction unions are facing a devastating amount of unemployment. Unlike the last recession, there have been no federal initiatives to create employment as a stopgap measure. When coupled with the Tories' financial cutbacks of transfer payments, construction workers are deeply affected. Many of them are reliant upon social assistance for the first time.

We would like to start off by saying categorically and unequivocally that we, as 40,000 unionized construction workers in the Toronto-central Ontario region publicly support the initiatives taken by the current government in its 1991 Ontario budget. We want to make it crystal clear that we totally disagree with some of the spokespersons of the business community who have been sounding off alarm bells and spilling crocodile tears regarding the increase of the provincial deficit.

The name that quickly comes to mind is Conrad Black, whose only claim to fame in Ontario was the selling off and dismantling the Dominion store chain. Conrad Black's blatant attempt to cheat thousands of employees of millions of dollars of surplus pension funds clearly exposes him as a fat cat with no social conscience.

Therefore, we are very sceptical about the current criticism led by both the media and the other provincial opposition parties, considering this government inherited a financial mess from the previous Liberal government to the tune of approximately $2 billion. Compounded by the federal government's high interest policy, the GST and the disastrous free trade agreement which in reality have caused havoc in the Ontario economy, we take this criticism with a fair dose of scepticism and think the old adage, "People who live in glass houses shouldn't throw stones," is totally applicable to the rhetorical lambasting of the political opposition parties.

Clearly this government had two choices. One was to cut back on government funding and plunge the province even further into recession, which is already in a disastrous state, or it could do the responsible thing and try to kickstart the economy with some badly needed infusion of government funding of crucial segments of the Ontario economy, which is exactly how the Conservative government under Bill Davis responded to the recession in the early 1980s.

It is kind of odd that there are two perceptions about the Ontario economy and the current provincial deficit. On one hand you have some corporate spokespersons being very critical of the budget, whereas the Conference Board of Canada, not exactly left wing, is very positive about the 1991 budget. One clearly has the option of either listening to the Conrad Blacks of the world or the prestigious Conference Board of Canada. We think the latter is a more credible source of financial analysis with respect to the government's budget.

Before we address the specifics of the Ontario budget, we think it both important and relevant to discuss the role of the federal government because we feel some of the major problems in Ontario are a direct result of the Mulroney government's fiscal and monetary policy. It is ironic that the state of the Ontario economy is a direct result of the USA-Canada free trade agreement that has virtually decimated the manufacturing sector in Ontario, ie, a loss of approximately 240,000 jobs. This was further compounded by the federal government's slavish adherence to high interest rates and their infamous revenue-neutral goods and services tax, which has been an unmitigated disaster in certain sectors, ie, the housing sector and construction in general. What we find hard to swallow is the federal government policies which on one hand virtually brought the current Ontario economy to a standstill, while on the other the GST is a federal cash cow bringing in billions and billions of tax dollars above projected GST revenues. At the same time the federal government is actually cutting back on transfer payments to provinces in the areas of health, education and social programs. This GST revenue is generated by taxing consumers and average Canadian taxpayers while virtually leaving the business community off the hook in terms of its corporate responsibilities.

1020

We also agree that by putting spending power in the hands of the public by not imposing the provincial sales tax on the GST, $470 million will be available for consumers to spend in 1991. This kind of economic stimulus, when coupled with the sustaining and creating of 70,000 jobs and an aggressive anti-recession effort, instils confidence in the private sector. It acts as a catalyst for further investment and helps to level out the worst effects of the recession on construction.

It surely gets one to wondering what Mulroney's vision of national unity is if, in the final analysis, the working people of this country are losing jobs in record numbers as thousands upon thousands of firms are going bankrupt. This, in real, human terms, means that tens of thousands of Canadians have to suffer the many indignities attributed to unemployment.

We believe the Ontario deficit has to be seen within a larger context, and within that larger framework we do not see how the government has any other choice but to increase government spending and increase the provincial deficit.

This is a made-in-Canada recession. High interest rates and the high dollar caused the recession to hit Canada first. The long-range indicators in the United States are predicting a slow and uneven recovery. In particular, the industrialized northeast will be the last to receive the benefits of recovery. This slow and uneven recovery as predicted usually has a mirror-image effect in Canada. One can expect, then, that Ontario, the major manufacturing centre in Canada along with Quebec, may have a similar sluggish recovery.

You have no doubt been bombarded by statistics showing this is the worst recession Ontario has experienced since the 1930s. Without repeating the statistics let me make it clear that one cannot view this budget without taking into consideration the severity of the recession. From our particular point of view, that of construction, the major industrial restructuring occurring simultaneously with the downturn in the economy has implications beyond the manufacturing sector. It directly affects construction. One needs only to look at the housing market and the fact that the government has less money to maintain and improve the infrastructure.

We now want to turn to specific items in the budget which we think are very positive for us as construction workers. Let us start off by saying we welcome the budget initiatives regarding affordable housing, especially in the co-op and non-profit housing sector, which will provide 20,000 much-needed jobs in the housing sector. We say this for two reasons. First, these housing units address the serious question of housing affordability. Second, this type of economic stimulus also provides for much-needed jobs in the housing sector.

We also welcomed the announcement of another 10,000 non-profit units over and above the original allocation of 35,000 co-op and non-profit units, which we think is another positive aspect of the budget. We applaud the provincially supported housing initiatives. The development of another 10,000 non-profit housing units has a tremendous and positive effect on the construction industry. Building statistics indicate that for every unit slightly over two jobs are created. In addition, one must see the initiatives in housing as having a ripple effect on the economy. It creates a demand for building materials, for the construction of roads, sewers, watermains, etc.

In summary, we are extremely pleased with the social housing initiatives, but we also think it both timely and appropriate to say that we also do not think the role of the private home builders should be either overlooked or underestimated in the overall housing sector, especially in a mixed economy such as Ontario. There is a very important role for the private housing market, and the question of affordability is an issue that has to be addressed by this government and by the private housing sector. We do not think it is an either/or situation when it comes to housing. We believe social housing and market housing have a vital role to play in the Ontario economy.

While we are on the issue of housing, we also have many reservations about some of the major impediments or issues facing the housing industry, especially the question of municipal lot levies. We say this because this whole question of municipal education lot levies, development charges, is seriously hurting the housing sector and is producing a negative impact on the whole concept of affordability. Thus, we think this government should seriously look at this issue.

Last, the whole question of streamlining the land approvals process has to be seriously looked at, because the present land approval process negatively affects the delivery of social housing as well as market housing. We urge this government to seriously review the whole land approval process. Furthermore, even though it is not a direct budgetary issue, it ultimately has long-term effects on the housing industry in terms of Ontario capital expenditure, both public and private.

We welcome the government's commitment to provide $4.3 billion in capital expenditures for public facilities such as schools, hospitals and transportation systems, plus the additional $300 million in capital funding allotted for schools committed for 1994 and 1995, which we feel will provide a much-needed stimulus to the construction industry.

One final comment on the capital expenditures which concern us is the whole question of revising the currently outdated provincial fair wage policy. We, as unionized construction workers, are very much concerned about the current outdated provincial fair wage policy which, for your information, is now five years out of date. Moreover, we urge this government to revise and update the provincial fair wage policy as well as making sure that any new provincial fair wage policy is both monitored and enforced.

As construction workers, we welcome the initiatives on the employee wage protection program and we think it is high time employees now have some protection against pay claims by bankrupt employers and businesses. We also welcome the labour market adjustment initiative to help workers access and re-enter the job market and improve their skills.

We welcome the $700-million anti-recession program which, when combined with the local municipal government agencies' contributions, will total approximately $900 million. Just for your information, this $700-million program is presently being implemented, resulting in the creation of thousands of unionized construction jobs across Ontario. As construction workers, this represents responsible government, as it represents concrete advances in terms of actual new construction created from the government's anti-recession program and not rhetoric.

In essence, we feel very positive about these specific budget initiatives and for the record we commend the Ontario government for also introducing specific policies which will address the following issues: prevention of violence against women, financial assistance to farmers, helping and addressing the very special and unique needs of the aboriginal people and the people in the north, provision of loans and loan guarantees to small and medium-sized manufacturing firms, and we very strongly support the municipal programs regarding the whole environmental question.

We are not suggesting it is the duty of government to recklessly try to spend its way out of a recession. As James Frank, chief economist and vice-president of the Conference Board of Canada noted, a decreased deficit would have had an adverse effect on the economy in Ontario and in Canada. In fact, the deficit is modest, especially when one considers the conservative figures which were used in projecting the continued deficit over the coming years.

As you know and have no doubt heard from other presenters, most of the deficit comes from the financial reality of the recession: falling revenues and increasing costs in health care, social services and education. These ongoing costs have been exacerbated by the federal cutbacks.

If one considers the Ontario deficit comparatively, in terms of total spending, gross domestic product and in per capita terms, with other provinces and with the federal government under the Mulroney Conservatives, the present deficit fares well. This is one case where a comparison is not odious but instructive.

In summary, we think the 1991 provincial budget is by and large a very positive budget and we want to go on public record as being supportive of both the budget and the provincial government. Thank you.

1030

The Vice-Chair: Thank you, Mr Michael. We have about three and a half to four minutes per party for questioning, starting with the official opposition.

Mr Kwinter: Mr Michael, I was a little disturbed by some of your comments in that all the wisdom seemed to be on one side. In other words, everything anyone else said that was opposed to what you say is bad and what you say is good. I will give you an example. You talk about the financial mess of the previous Liberal government to the tune of approximately $2 billion. I do not want to quarrel with that. I mean, the number was a manufactured number by the Treasurer and whether it is a true number or not, there is no sense arguing about it. The point is, why is a $2-billion deficit, whether it is true or not, a mess, where a $9.7-billion deficit is not a mess? It is a great thing. It is wonderful. It is something that you encourage.

Mr Michael: One reason is that a $2-billion mess was a lie. It was never announced or never presented.

Mr Phillips: It was what?

Mr Michael: It was a lie, because we were told through the media and through other sources that there was money there, not a deficit.

Mr Kwinter: The point is that when you project a deficit, as you do in your business or any other organization, it is a long-term plan of what you expect will happen. Every business, every organization at the end of that time, if it is lucky, and it really is luck, is bang on. Usually they are out. They may have either overestimated or underestimated.

I suggest to you, sir, with respect, that the $9.7 billion, come March 31 next year, will not be the number. It will be some other number. If they are lucky, it will be lower, and my prediction is it will be considerably higher. You do not say the Treasurer was a liar. They use the best information they have a year ahead of time as to what they think is going to happen.

My question is, when you talk about these things, there are contradictions throughout. On the one hand you say it is a made-in-Canada recession and on the other hand you talk about the problems in the United States and its recession. Did we have any impact on the recession in the United States? All of these things impact on the credibility of the arguments.

Where would you be without James Frank? Heaven must have sent him, because every single presenter who is supporting the budget zeroes in on James Frank and totally discounts everybody else. They discount the rating services, they discount every other organization that is critical, as if to say: "What do those guys know? James Frank is the man who knows everything about anything. If he says it's great, then we think it's great too."

Mr Michael: We could have quoted Galbraith too, I guess. We left him out because I guess he now lives in the United States, but he is a Canadian. I guess we could have quoted Mel Watkins and a few others, but we just stuck with the one.

Mr Kwinter: Totally impartial.

Mr Majesky: I guess, Monte, with great respect, if we had quoted Mel, you would have said, "There was some socialist that you sneaked in through the back door." I thought the comparison was quite credible, Conrad Black versus the Conference Board of Canada. The brief very clearly said, "Would you take Conrad Black's vision of the world or that of Peters?" We opted for that of Peters. You can take that for what it is worth, but that is what we said in the brief.

Mr Kwinter: Why do you have to exclusively zero in on two individuals, either one?

Mr Majesky: I guess if we had the time, we probably could have come up with others, but the brief happened to use them.

Mr Phillips: Just a quick question, and that is around jobs, which I think are quite important to your members.

Mr Michael: That is what we were talking about.

Mr Phillips: Only a year from now will we know, but in June every single province in the country improved its unemployment rate except Ontario. In June Ontario's unemployment rate went up. So at least maybe there is a question that says in terms of the economic stability and growth in the province, the government may not be on the right track. I know it may be a little bit early. In terms of your members getting jobs, are you convinced, Tony, that this budget is the budget that will ensure that your membership has the best economic outlook?

Mr Michael: It is the best we have on the table right now, yes.

Mr Phillips: It is the only one.

The Vice-Chair: I am sorry, Mr Phillips. I cannot allow you to continue. Your time is up.

Mr Phillips: A year from now, I guess we will know.

The Vice-Chair: Moving on to the third party, Mrs Cunningham.

Mrs Cunningham: Just sort of a philosophical statement to start with. I think all of us realize that things are not easy in Ontario right now. There is a lot of unemployment, even in the construction trades. I am from London and have met with a lot of small business people who are involved in construction and with their workers who do not have jobs. We were particularly happy to get a couple of road projects in the city. One of them is still being held up. It has been held up for eight months because of the environmental issue that we are dealing with the government on with regard to noise and pollution, which we have been through for two whole years. The city has had to spend $200,000 for more studies which will not do anything, and our construction people are not working, even though that program has been announced. There has been no money spent, and we cannot get started on a major construction program.

I do not think the problems we have in Ontario are going to be solved by standing up for one party or another party any more. I think it is going to take all of us working together to come forth with solutions for the very significant problems that we have. I am the mother of two boys who had jobs in the construction industry for the last four summers, and they did not get them this summer. That is how bad things are in London. I am speaking from the heart, obviously.

Mr Majesky: What is the question?

Mr Michael: I guess if all the parties were working together as they should be, then we would not be here today.

Mrs Cunningham: No, I do not think it is that simple in Ontario. I must say that I have been an opposition member here for four years now and I think I have had a positive contribution. I do not think that if we continue bashing any government, the previous government -- I am a Conservative and I am saying this -- we are going anywhere in Ontario.

I am happy for your remarks on page 8 where you talk about the private housing market and say you think the role of private home builders should not be either overlooked or underestimated. They will be speaking to us later on today, so we will hear from them.

I am pleased you have noted some of the initiatives of this government, but I have been here for four years and all of those programs have been supported in the four years I have been here and I hope they can be supported more.

I will say that the one thing that has been missing in the briefs before this committee, with the exception of the last one, is a cry from the public for efficiency in government. That, I think, is missing, and I think any member here would agree with me that we have a lot of work to do in providing efficient programs that support the real world, and that is the world of work, so that we can be competitive. That is the kind of stuff I was hoping to see, some ideas. On the other hand, there are four or five suggestions that we will take to our caucus as a result of your brief.

I guess I am not asking questions.

The Vice-Chair: You are making a comment; fine.

Mrs Cunningham: I have four or five positive suggestions from it, and I will take it and raise it as an opposition member in assisting the government in your policies. So I thank you for that.

Mr Michael: On behalf of the council, I also thank you.

Mr Jamison: I apologize for coming in a little late. I have a question and it deals with the amount of money that has been spent on infrastructure, housing, whatever. Just to get an idea, would you be able to tell me what the situation would be without this type of assistance in spending?

Mr Michael: Just very basically, it would be a heck of a lot worse. Taking one example, there is the creation of 20,000 jobs by the starting of the 10,000 units. That goes on. There are other examples of the same thing that would not have got started. There are a lot of developers sitting on very expensive land and it is costing them X thousands of dollars per week just to keep sitting there. This incentive initiative has got them going. They are building this kind of housing on that kind of land. That puts our people to work and it puts private industry into a working mode. So yes, there are all kinds of things that have started from that point. Some may say, "Well, it is very small," but listen, a little bit is better than none at all. This is exactly what we are very pleased to see.

Mr Majesky: Let me draw it into even sharper focus, because Monte and Gerry and I have been around before. Local 183 of the Labourers, about 17,000 strong --

Mr Michael: One of our affiliates by the way.

Mr Majesky: One of the affiliates of the building and trades council. Probably we are looking at 60% to 70% unemployment. Those are figures that I have never seen in my 25 years in the construction industry in Toronto.

Mr Kwinter: Is that now?

Mr Majesky: Right now.

Mr Michael: We have 40% unemployment.

Mr Majesky: Yes, so these 20,000 units in our area -- clearly understanding, and I am not politically stupid, that there was an initiation on the part of the previous government, but these kinds of initiatives at least take the sting out of that to put these labourers back to work. We have labourers who have never seen welfare in their lives, ever, culturally and for a whole bunch of reasons, who are on our welfare, so these kinds of things, when you look at them, are real and very positive. I am not saying that they are 100% back to work, but 20,000 units puts some of the guys back to work, and the units are built by the private sector. They build it and the private sector are the builders, so they are both happy in that respect. I do not want to belabour it. That just puts it into a clearer focus.

1040

Mr Michael: Many of these construction workers have run out of UI benefits, and it did not help to have those cutbacks that came through recently, because it put them on the welfare rolls. As Wally just pointed out, many of these construction workers have never experienced that kind of humiliation, if you wish. They want jobs at what they are good at, at what they are trained for and so on. This is kick-starting it, if nothing else, getting in the right way.

Mr B. Ward: We were told by Local 183 that because of the initiatives, unemployment has turned around into employment.

Mr Michael: Exactly.

Mr B. Ward: Just a quick comment on your thoughts for the future: Do you feel that it is going to take the co-operation, as Diane said, of all three players -- business, labour and government -- working together to solve our problems and tackle the challenges that lie ahead?

Mr Michael: Absolutely, very much so, and all three parties in the House must co-operate to get this economy going, but we may have to wait until 1993.

Mr Majesky: The other part is that you cannot tackle the housing industry in Ontario if you are going to be talking about high interest rates or whether it is going to be a 95% down payment. These are federal initiatives, so it takes two levels of government. This government cannot deal with down payment, so it takes three parties. Business, labour and the feds have to be on board. Whether they are or not is for another day's discussion.

Mr Michael: We appreciate the difficulties you are having in trying to wave magic wands to get things going here on a provincial basis when the federals are opposing you from start to finish.

CITIZENS FOR PUBLIC JUSTICE

The Vice-Chair: Our next presentation is from the Citizens for Public Justice, Gerald Vandezande, public affairs director. Welcome to the committee, Mr Vandezande. We have approximately one half-hour altogether and whatever time you use up in your verbal presentation will be subtracted from the time for questions, which will be divided between the three parties. Perhaps you would like to commence your presentation.

Mr Vandezande: Mr Chairman, thank you, on short notice, for allowing us to appear before your committee. I have given the clerk a copy of my notes for comments this morning. I assume they have been distributed to the members of the committee. I have also given the clerk copies of previous presentations that we made to the standing committee in 1988 and 1989 because I think they are still relevant. I only gave the clerk one copy of each, but perhaps they can be duplicated because I am sure that both the government as well as the opposition members would be interested in reading some of the proposals, one of which was endorsed by the 1989 standing committee, namely the proposal for a roundtable.

A brief word of introduction about Citizens for Public Justice. It is an independent, non-partisan organization dealing with the development and advocacy of public policies from a biblical life perspective. We have dealt with questions of energy policy, social policy, tax reform, human rights, including the native self-government issue, and have served as advisers to the Assembly of First Nations and other native groups.

There is a slight correction under item III, the reference. In addition to From Welfare Dependency to Social Responsibility, the brief we presented in 1988 is entitled Toward Economic Equity and Social Justice For All.

I have also given to the clerk a major proposal that we made to the federal government in February 1986, which hit the headlines, which received the endorsement of all the churches in this country, as well as the trade unions and a number of business organizations, and which demonstrated that by an $11-billion shift within the federal budget we could make major strides towards, if not entirely, eliminating poverty in this country and at the same time create a net 295,475 new jobs.

We had extensive discussions with the Department of National Health and Welfare as well as the Department of Finance. There was no disagreement as to the accuracy of the figures that we produced but whether, ideologically or otherwise, it was an appropriate thing to do. The reason I mention it is that we have, from time to time, done extensive research as to what might be done to bring about a more meaningful economy that does indeed do justice to the various socioeconomic needs of the Canadian people. It is from that perspective that I, in a non-partisan way, want to bring some issues to your attention this morning.

I want to share with you that I am an accountant by background. I used to be employed with the Bank of Montreal and with Ethyl Corp for a total of over 10 years. Figures fascinate me because they demonstrate where a people's priorities are, including a government's. That is why we participate in these and other provincial governments' hearings, because economic and social needs must be met if we are to continue to be the kind of strong and free country that we ought to be and can be. That is why we participated in the hearings of the Social Assistance Review Committee and played a major role in putting forward some specific recommendations.

I urge the committee to look at that report once more. I remember meeting with Premier Peterson, who at the time totally endorsed the report and agreed with our approach to it, as well as key members of the Conservative and New Democratic parties. My hope is that much more can be done in a non-partisan spirit, as Ms Cunningham stressed just a few minutes ago, so that we not take partisan shots at each other but tap into the best resources, insights and experience that we have in Ontario to bring about economic and social justice that does justice to our shared responsibility as Canadians to help meet the needs of people.

In that context we recommended, and this committee endorsed, that, "The government establish a provincial roundtable on social policy and the economy, to provide for the integration of social and economic policies." That roundtable, which was recommended in April 1989 by your committee, has not yet been established. We would strongly urge, because it received nearly unanimous support of the committee, that you once again make that recommendation, because unless we integrate economic and social policies we will not have the kind of balanced development and sensible approach to budget-making that is essential in order to eliminate poverty, unemployment etc.

Major steps have been taken by Premier Bob Rae, following up on Mr Peterson's initiative, that there be two Premier's councils, one dealing with the economy and quality of life, the other with health, wellbeing and social justice. We still strongly believe those two councils should work in tandem and should themselves be integrated so that we get integrative recommendations. Too often people in government, as well as in the business community and social networks, have polarized the question of economic versus social needs. I think you cannot have a balanced development of human life and of the economy unless you integrate and look at the issues at the same time so that you have a simultaneous recognition and realization of some major things that need to be done.

I draw to your attention, on page 2, the basic fundamental objective for reforms that the Transitions report recommended and that was basically accepted by all parties. I think that fundamental statement should also again be drawn to the attention of the government, particularly the Treasurer and the cabinet ministers responsible for setting the priorities of the 1992 budget.

1050

This committee itself endorsed that approach by Transitions and recommended the complete implementation of stage one -- major steps have been made in that direction -- and also recommended that there be a cross-ministry cost-benefit analysis and, again, as I mentioned earlier, the establishment of a provincial roundtable. I think we need to move to that.

I looked at the list of people who appeared before this committee in the past and this year and I do not see people off the street appearing before your committee. I got up this morning -- I live in a comfortable home -- could enjoy breakfast, came here, had a coffee at the taxpayers' expense, can have lunch today. We sit in an air-conditioned room and all of us probably will have one or two weeks' vacation this summer with our families. There are hundreds of thousands of people who cannot have any of that this morning. In a few minutes I will draw your attention to some major reports that have been produced by the federal government, as well as by citizens of Ontario, to remind us of that bitter reality.

The reason I say that is that unless we realize that in a few months from now many hungry, homeless and unemployed people will again roam the streets of Toronto and other communities throughout Ontario and unless we realize that we all have an obligation, both government and the non-government sector alike, to come to grips with those socioeconomic ills and injustices, we really are not living up to our responsibility as a people.

That is why, on behalf of Citizens for Public Justice, I remind you of four cornerstones that we think are crucial. I want to read them into the record. These four cornerstones have been previously submitted to the former Premier, Mr Peterson. We have discussed them with Mr Rae as well as with spokespersons for the Conservative Party at the time, Mr Brandt and others, and they all agreed that they made eminent sense.

Human dignity is the first one. The right of all people to be treated with love and respect should go without saying.

Second is mutual responsibility, the duty of each to contribute to the community and the duty of the community to care for, and share with, all people.

Third is economic equity, the right of all persons and communities to worthwhile work, fair employment conditions, adequate education, health, housing and income security provision.

Fourth is social justice, the right of all persons and communities to full participation in the life and decision-making of Canada, and Ontario of course, and to adequate access to basic resources, within the context of our communal calling to practise responsible stewardship -- I call that environmental responsibility and integrity -- so that we move towards sustainable development and a stewardly, responsible economy. In short, what we need is socioeconomic responsibility based on stewardship by all and justice for all, putting people and the environment first.

In that context, Citizens for Public Justice want to make the recommendation that you as a committee strongly recommend to the government to make the elimination of hunger and material poverty the number one priority of public policy and, second, strongly urge other provincial governments, and especially the federal government, to establish the same priority within the context of an integral socioeconomic policy approach that takes into considering the cornerstones about which I spoke just a minute ago and the need for the development of an economy and the meeting of social needs that does not make for lopsided, profit-oriented development but really thinks in terms of a responsible economy that meets the needs of all the people.

In that context, I think it is up to the government to demonstrate full employment -- and by that economists allow, as you know, for a 3% to 4% unemployment rate -- as well as affordable housing; a guaranteed adequate income, which is as old as the Macdonald report which produced those massive volumes on the future of Confederation; as well as better human support services such as accessible, quality child care, which was also recommended in the Transitions report.

I think this commitment should be demonstrated by further changes in the provincial budget, through recommendations from the provincial roundtable and the two councils I mentioned which the Premier has appointed. I think the roundtable should be representative of the various major stakeholders in both the economy and social policy so that there is this co-operative approach about which the Treasurer has also spoken, about which Ms Cunningham spoke a moment ago and which Mr Peterson took some initiative on when he was the Premier.

I think we need that kind of review of past policies, current policies and long-term policies so that we can say that together we are moving forward to the kind of just and responsible society that Canada so desperately needs. Ontario could be an example. In that context, it is our conclusion -- and I have spent a fair bit of time going through all these records -- that the 1991 budget could have done more to attack the province's serious economic ills and grave social injustices, by giving clearer, more specific preference to the elimination of homelessness, hunger, poverty and unemployment.

I want to remind you of the 1966 Canada assistance plan agreement that was entered into by all the provincial governments and the federal government. Two of the objectives formally subscribed to by all the provinces 25 years ago were the prevention and the removal of the causes of poverty and, second, that we remove dependence on public assistance. Those were the stated official objectives of that intergovernmental agreement between the federal government and all the provincial governments.

It is our submission that this preamble should be revisited, not by changing it but by affirming it, as part perhaps of the constitutional talks that are currently going on, and by implementing policies that will meet those stated objectives. We cannot continue to say to the rest of the world that Canada is a beacon for democracy and the kind of society everyone should copy if we cannot prevent and remove the causes of poverty and dependence on public assistance. We must make strong efforts in that direction. In that context, I want to draw to your attention, simply for the record -- I will not read all of the recommendations -- three reports I think this committee may want to take a hard look at.

The first one, called Women and Poverty Revisited, by the National Council of Welfare, a body sponsored by the federal government, came out in the summer of 1990. It is a major report with very helpful recommendations that need to be looked at. Again, it comes from a non-partisan point of view where all the stakeholders in the economy from different ideological perspectives worked together on the development of recommendations.

The second report, The Canada Assistance Plan: No Time for Cuts, dated winter 1991, again a report by the federal government's National Council of Welfare, just came out.

Third, I want to refer you to a report by the task force on food banks, called Not by Bread Alone: A Strategy to Eliminate the Need for Food Banks in the Greater Toronto Area. There are 49 very good recommendations in that report, again prepared by a non-partisan group representative of the entire community, even having the endorsement of Conrad Black and others who said, "We've got to eliminate suffering in the streets of Toronto."

We say that from our perspective as a Christian organization on the basis of the principles of compassion, equity, fairness, freedom and justice for all people. We believe that is crucial. Those are not just hollow slogans. Those are principles that we deeply believe in, that we seek to practise in our own lives. We all fall short, but we think that through a non-partisan, multiparty -- that is, involving the entire non-government sector as well -- this can be accomplished.

In that connection, I want to make a couple of comments in closing. As I listen to my friends, relatives, colleagues and others in the marketplace, and even listening to the discussion this morning, I think this committee could make one recommendation I developed this morning: we must help people understand the budget.

As an accountant, I used to prepare profit-and-loss statements and balance sheets. We distinguished between two kinds of expenditures: expenses, such as are incurred in running this meeting, and investments. In the last budget there was, I believe, as much as $4.3 billion in capital expenditures. Those are not expenses. We all know that, but the public does not know that. I think what we need in this province is a balance sheet showing the assets, the capital investments that governments in the past and currently are making, in distinction from expenses, money that is being spent to run the government, to meet the needs in terms of social assistance, housing, you name it, so that people know that when we mortgage, we are mortgaging investments.

1100

Let me clarify that. When my daughter and her husband bought a house -- and by the way, they were fortunate enough to buy it because relatives came to their aid by scraping together a down payment -- they could buy a house on a $35,000 income. So when they bought it in 1989, they spent $175,000 while their income was $35,000. Do we say that they had a deficit of $140,000? Of course we do not. We say that was an investment. They took out a mortgage. Their cash flow clearly was short, so they got a mortgage. What I am saying is, they did not engage in deficit spending. Over against the investment they made there is a liability.

What I am suggesting is that, in the budget, clearly distinguish between investments for which there are assets, and then if there are liabilities opposite that, demonstrate that in a provincial balance sheet. Then make sure that the revenues indeed cover all the expenses as well as the debt charges so it is clear what the financial picture really is. I say that because that will help people understand. I am not advocating limitless deficit spending at all, but unless we get a clear picture, we will not know where we are going.

In that context, I want to stress that government alone cannot solve and must not try to solve all the issues. I think the non-government sector must do and can do much more. Perhaps I can say more about that later. Thank you.

The Vice-Chair: Thank you, Mr Vandezande. We have about three minutes per party for questions. Mrs Cunningham.

Mrs Cunningham: You always give us lots to think about. We have worked together certainly since I have been at Queen's Park and I thank you for your input.

One of the statements we heard earlier in the week from one of the economists was of great concern to us because we were actually told, and we know from reading, that right now if we take a look at the big picture, we are looking at a federal government that has a tremendous debt and deficit. There are tremendous complaints that the transfer payments are not significant, are not helpful, that they have been cut back, yet those transfer payments I think made up about a third of the deficit this year. At the same time, we are looking for investment in Canada so we can pay off our debt. Unfortunately, we are looking at foreign investment in order to have the money to pay off our debt. We are going into debt every year to a greater extent. We were told there is as much as $45 billion in Japanese investments this year in our country. I am no economist, but I am a good listener, and that is one of the reasons that the interest rates are so high.

All of us I think are interested in solving the problems of poverty. In order to do that, in my office and in my former work as a social worker, a teacher and a school board trustee, anybody I talked to in my offices wanted to work. Things have never been worse in my constituency office. I am going home this afternoon rather than being here because I have so many appointments to talk to people before the weekend. People have a hard time getting through the weekend when others are on holidays and doing things and they do not have the money, as you described.

This is a tremendous challenge we have in this country, from depending on foreign money to keeping our cash flow and our country running. It is a reality. Last evening, I listened to students, and they said the public of Ontario is the least informed constituency as to the real challenges we have.

You heard the former presenters who chose to take partisan tacks, as others have, one way or another. I do not care what side they are on. What is your solution to all this? We have been working at it for years. Most of us are here because we represent a public that we care for.

Mr Vandezande: That is why I emphasize the importance of a non-partisan approach. You cannot simply lay the blame for the current situation at the door of a particular party.

Let me just be complete. What we all tend to do is say, "We need a sustainable prosperity." That is throughout this document. Previous governments have said the same thing. With all my respect for the attempts of all governments, that is not what we are interested in or ought to be interested in. We ought not to be interested in sustainable prosperity but in a sustainable economy. There is a difference.

This ever-increasing obsession with, "We must be prosperous," is wrong. That is a reduction of the meaning of life to material progress and being well off. What we need to do is look at the development of a new lifestyle that does not talk in terms of prosperity but simply being able to live meaningfully. That may mean for all of us a reduction in income, those of us who make a substantial income, and for governments to reduce their expenditures where they really do not count, and to ask ourselves, "Does this investment, does this expense, really contribute to a meaningful life for all citizens?" That does not mean that there ought not to be profit and wage earning. Of course there should be. But when you put the emphasis in a one-dimensional way on prosperity and do not talk about human wellbeing, then you get this obsession, this rat race, for more and more money and more and more profit, without asking what it does to the environment, what it does to people's needs in the community.

That is why, in that context, I think a strategy towards debt reduction both at the provincial and the federal level would be extremely important. At the time when the GST was introduced and when we met with some cabinet ministers in Ottawa, I said: "I am sure if you put it to the Canadian people, both as a provincial and a federal government, that we need to eliminate debt in this country and that certain taxes are going to be targeted towards that goal, Canadians won't bitch. But if you continue to waste as much as you do -- " Let's face it, the Nielsen report demonstrated that $45 billion annually went by way of subsidies to the business community, the same business community that often says government should cut back on its deficit spending. Take $45 billion out of the federal budget and guess where you are heading.

My point is, let's examine our spending priorities. On the basis of a commonly accepted value framework, let's develop new principles and priorities and then help the Canadian public to understand what budget-making is all about, or more important, what life is all about and how we can then meaningfully go forward together. We do it on the Constitution now, after we have gone through three years of crisis. Let's hope we can also do it on the economy.

Ms M. Ward: Thank you for your presentation. It is certainly a thoughtful one and not simply in cold economic terms.

On the last page of your presentation you say, "the Ontario government has presented a budget that is quite defensible, considering the pressing plight of our poor and powerless neighbours." I would like to ask you what you feel the effects on our society would have been if we had not maintained spending on services, if we had attempted to balance the budget as some of our critics say we should have done, which I think would have led to more unemployment. Certainly it would either be increased taxes or fewer services. What do you feel would be the effects of that and how would you answer the critics?

Mr Vandezande: Let me put it positively. It is my deep conviction as a Christian that it is a government's obligation to protect the poor and the powerless, to come to the defence of the weak and the vulnerable. We as parents and grandparents do that. When our children and grandchildren and neighbours cannot make it, we come to their aid. When people in the Third World are starving to death, we become more generous.

What I am suggesting is that the government has the responsibility to see to it that there are no poor among us, but not by itself. The private non-government sector has its own responsibility. So my challenge to all three parties, as a non-partisan spokesperson, is make sure that in the wealthiest part of the world we demonstrate that we can practise solidarity, can practise social justice, can practise the kind of community where we really come to the aid of the underdog by appealing to each other's responsibility, by sharing our resources.

1110

I think critics owe it to governments to come up with alternatives, and that is why I tabled with you different documents. It would have been easy for me to blast every one of you. There is enough evidence in all these reports to say that all three parties have failed. That does not help very much.

I come here this morning to challenge you to the best of my ability, and will be glad to do further research. I hope you take a careful look at the documents I have tabled in order that we can move forward together out of a spirit of common commitment to Canada and to its people, so that we put people first, the environment first, social justice first, and on that basis, build the kind of national unity, the kind of country that is genuinely strong and free where all people can live in dignity because they experience each other's solidarity, community, love, you name it. I think it can be done, but that means dropping of partisan hats and working together.

Bob Rae said it in his speech shortly after his in-laws passed on. He raised the question at his major speech in Waterloo, and I think we should hold him to it. What do we owe each other? I think we need to ask ourselves that, and this committee might well want to launch a more public education event, asking people, "What do we owe each other, and what can you contribute?" Ask not what I can get out of Canada, but ask what I can do for Canada, and especially for those poor, powerless and vulnerable Canadians who just a few months from now will again be sleeping in bus shelters in downtown Toronto.

Mr Kwinter: Thank you, Mr Vandezande. I want to commend you on your thoughtful and passionate presentation.

In your recommendations, if you could just expand for me on your ideas, you call for the government of Ontario to demonstrate its leadership by committing itself to full employment and a guaranteed adequate income. How would you propose that this would happen?

Mr Vandezande: In the document I tabled with the clerk, which is, I think, dated February 1986, there are detailed proposals on how that could be done.

Mr Kwinter: Could you just briefly tell me?

Mr Vandezande: Yes. Investment, I think, is where it is important that we do some careful checking as to what kind of investments are most productive when it comes to the creation of jobs.

We have just gone through the Gulf war. Investments in the defence industry are among the poorest you can imagine. Every economist is in agreement on that. Investments in housing, investments in child care, I think are very legitimate investments, because unless our children receive the kind of care they are entitled to, we will go nowhere. So child care is much more productive, because it is labour-intensive, than heavy technology investments. So when the government gives grants to the private sector, or subsidies or tax breaks, it should ask: "What are you going to do with it? What kind of jobs are you going to produce?" It should also monitor the use of those moneys.

When I read the other day that the Massey-Ferguson plant is leaving Canada after it had gotten loans and subsidies of hundreds of millions of dollars, I would like to have an accounting of how many jobs it produced. And why are they not repaying those loans?

My wife used to be a social worker -- well, she still is, but she worked on the front lines. When some people, through a mistake of their own or through the bureaucracy, got too much money, they had to pay it back. Why do the corporate welfare recipients not have to give an accounting of how they use their money for the creation of jobs? Why can they leave for the United States without giving an accounting of what they have done with Canadian taxpayers' money?

What I am pleading for is that when we give tax breaks, when we hand out money, when we grant subsidies, let us ask: What it is for? Does it create jobs? Does it contribute to human wellbeing? Let us monitor, let us call them to account, and if they cannot produce, then let us not do it. I think it is crucial that we come through on that.

We need to look to those areas where labour-intensive job creation programs that contribute to human wellbeing indeed are worthy of investment, but if they are environmentally negative, socially useless, etc, let us not do it.

The details are in our February 1986 proposal. I hope the government has enough money to provide you with a copy of that, Mr Kwinter.

But our government had no trouble finding, quickly, close to $1 billion to finance our involvement in the Gulf war. Let's assume for a moment that was a legitimate enterprise. I have my serious questions around that, but that is not the issue. Can it find within its ideology $1 billion towards the elimination of poverty in socially, economically responsible investments that lead to job creation, so that you indeed strengthen the economy, eliminate injustices and enable people to participate in the life of the nation? If we can borrow money -- that is what the government did -- to finance a Gulf war involvement, can we not also borrow money, if that is what needs to be done, and I think Canadians are willing to pay taxes, in order to wage a war on unemployment and poverty?

I think we need to come to grips with those fundamental value challenges. If we do not, we will continue to get trapped by this ideology that constantly talks about prosperity without asking whether it contributes to human wellbeing in the elimination of injustice across the board.

The Vice-Chair: Thank you, Mr Vandezande, for your presentation this morning. Unfortunately, your time is up.

Mr Vandezande: It is unfortunate.

Mr B. Ward: An excellent presentation; thank you, sir.

TORONTO ARTS COUNCIL ARTS AND THE CITIES

The Vice-Chair: Our next presentation will be from the Toronto Arts Council and Arts and the Cities, Tom Hendry, policy director and consultant.

Mr Hendry: You just had one accountant; now you are getting another one. There is an old vaudeville joke where a man goes to the doctor and the doctor says, "Have you had this before?" and he says, "Yes, I have." The doctor says, "Well, I can tell you that you have it again." Here I am.

The Vice-Chair: Just before you begin your presentation, Mr Hendry, we have about a half-hour altogether for the presentation. Whatever time you use in your verbal presentation will be subtracted from the time for questioning, and the time for questioning is divided equally between the three parties. If you would like to commence your presentation.

Mr Hendry: A sort of overlay theme for what I wanted to talk to you about today is the notion that we have paid a lot of attention in the past to a physical infrastructure. In Ontario it has been one of the bases for our success in terms of material wealth. But we have not paid that much attention to the spiritual infrastructure. In terms of my own involvement, I put the arts and the cultural sector at the very centre of the spiritual infrastructure a society has to have if it is to have goals and do all the things the gentleman preceding me was talking about.

Culture and the arts as an area of service delivery for governments at all levels is very recent. It did not begin, really, until after the Second World War, when the Massey commission came up with the idea of the Canada Council, which went into operation around the end of the 1950s. In the 1960s the provinces got into the act and in the 1970s the cities began moving slowly into the support of the arts.

But because it is such a new area of service delivery, it is at all levels given something less than parallel areas of activity. I was recently at a conference of recreation directors, and one from a large BC city said: "You don't have to do any arguing with us. We know that the arts, if they are viewed as an aspect of recreation, do not get anything like the share the other aspects of recreation get."

Just as a general comment, I am in touch with the arts communities in about nine cities in Ontario through Arts and the Cities and I work directly with the Toronto Arts Council. Certainly there we have about 250 organizations which the city subsidizes and some 300 individual artists, and the general opinion, naturally, of what the government did this year for the Ontario Arts Council is extremely positive.

1120

At times like this, I am sure you are well aware that the private sector tends to get very gun-shy, and the private sector is right now in Ontario the largest single source of assistance for the arts, apart from the artists themselves. They are still the primary subsidizers of the arts through forgone earnings. I will not go into how low their earnings are, but you do know that our artists are on a par with pensioners in terms of disposable income.

We noticed the budget for the Ministry of Culture and Communications this year was $332 million in total and that out of that comes 43.5% for the Ontario Arts Council, which is 13% of the ministry's total spending, and I would like to commend the government for doing that. There is sort of a law called Feral's law among people who are students of subsidy. A Quebec professor by the name of Josette Feral propounded a thesis that in general, of money designated for the arts and culture, approximately 10% goes to the arts and 90% goes to culture in various manifestations, quite often to facility support and things like that. But at 13% you are three points above Feral's law, and that is very good. We would certainly like to see the eventual pattern be something like 20% of ministry spending on direct investment in the arts.

The total budget for the province, I note, is approximately $53 billion. The MCC budget is therefore about 0.06%. There is a general feeling among those of us who, as I say, are students of subsidy that it would not be an unreasonable target to suggest that the government of Ontario, which is not terribly high in the order of spending of provincial governments on a per capita basis on the arts, think of a target of 1% of budget for the arts and culture. That would be a difference of approximately $200 million in this present year.

I would point out, by the way, that what the previous gentleman said about people being willing to pay for certain things if they know that the money is going for is borne out in fact. The Macaulay commission, which reported to the government of Ontario in 1984, did a fairly extensive survey among white-collar people and blue-collar people, and it found out that both groups were in favour of considerably increased provincial spending on the arts and that they were willing to pay a tax of up to $25 per taxpayer if it was designated to go to the arts and to nothing else. This is partly explained -- I think it was Decima that did it -- by the fact that a lot of the people who were talked to are people like myself.

I come from an immigrant family. My family came to Canada because they wanted to give their children opportunities they could not afford in the country in which they were born, and a lot of the respondents to the survey see an increased profile for the arts and increased emphasis on the arts as something of great benefit to their children, something their children will get here in Canada that they would not be able to afford in the country of their birth.

So we would very much like to see in future planning the notion being taken into account of the arts and culture being a very new area of service delivery, that when budgets are cut in order to get rid of the deficit which has been incurred people remember that they should be cut selectively and that some areas should in fact be increased in order to be brought to the same level of maturity as are other portions of the provincial budget.

In terms of per capita spending, right now Ontario spends on direct aid to artists approximately $5 per capita. In the city of Toronto the rate per capita is $20. We pay $5 through our payment to Metro, which is given out by the Metro cultural affairs department, and a further $15 per capita is spent through the Toronto Arts Council and through other agencies and departments of the city, notably the parks department and the St Lawrence Centre, which gives subsidized rent to the companies which play there. This investment helps to sustain an economy of about $200 million annually now. That is the non-profit sector of the arts.

We estimate that approximately 125,000 people in the Metro area are either fully or partly employed in the arts or in arts-related work in industry. For example, my next-door neighbour has a software company called Alias Research. One of its most recent big jobs was to design the special-effects software for the film Terminator 2 with Arnold Schwarzenegger. It also provides all the software for the design and testing of Volvo, Toyota and most of the major Japanese auto manufacturers. All of his employees are in some way arts-related. They are people who are design specialists, visual artists, and who can put things that are two-dimensional into the three-dimensional possibilities that software offers now.

I would like to mention one thing that a lot of people forget in terms of where increased spending on the arts should go. Our theory of arts subsidy goes back about 3,000 years. It goes back to the Roman Empire. The policy of the Roman Empire in cultural terms was a very simple one: No citizen of the empire should be disadvantaged culturally because of distance from the capital. That is why you find Roman theatres all over Britain and France and Germany and Spain. Wherever the Roman Empire went, they built cultural infrastructure and they put on their plays and all sorts of things in order that all citizens of the empire should have access to the same cultural experience that the people in the capital were having, and ideally that is the aim today of cultural subsidy and the arts subsidy, to get rid of disparities and inexperience.

What we would like to think about for the future, because obviously things are going to get better, is that we begin to think more about moving out from Toronto. At the present time we have, as I pointed out to you, a fairly highly developed arts industry, if you will, here in Toronto with an economy of about $200 million. We also have what are called the cultural industries, which are video and film and commercial music, all that sort of thing, which are probably about six times or so -- four to five times, at least -- the size of the non-profit economy. But in the remainder of the province, the experience of the arts is nothing like what it is in Toronto.

I would like to suggest to you that there is room for an examination of models that have worked elsewhere to cause a diversification of culture and to form partnerships; in the case of the state of New York and the county governments, partnerships whereby each put up money and a good deal of very healthy development was stimulated all across New York state.

It began in the mid-1970s when Governor Rockefeller brought in very heavy funding for the arts. He insisted that of the money that was going to the arts, an appropriate portion should go to Manhattan, where most of the major arts critical mass was situated, but that the remainder should go out on a per capita basis, on a county system, that arts councils should be set up in each county and that the county itself should match some of the money from the state government and begin programs, begin residencies, bring artists into the community and retain artists who normally leave for somewhere else.

Statistics Canada projections show that over the next 20 years the only three areas of growth in the whole country are Toronto, Montreal and Vancouver. Everything else is going to be slowly cannibalized because people are moving to those centres of interest, of population, of employment, of all the good things that cities are supposed to offer. Not much is being done to make life more interesting and a more viable thing in some of the smaller centres.

1130

I would like to also note a model that should be borne in mind, I think, by anybody who is doing budgeting. It is this: Here in Ontario we have a dandy system of public libraries. We have very good access wherever you are in Ontario to a pretty good supply of books, thanks to a library system which has been built up over the years because an appropriate amount of money was spent on that library system. I will just give you a few figures.

In 1988 the city of Toronto paid something like $26 million towards the library system. During that year there were visits by about five million people to the libraries. That same year, the city supported the arts to the extent of about $11 million. Coincidentally, it commissioned a study by Environics which turned up the information that there were about 11 million visits to arts and culture manifestations that were in some way supported by the city of Toronto. Each visit to the library cost the city $5; each visit to the arts cost it $1.

I am not suggesting in any way that the library system is overfunded; au contraire. I think they probably, like everybody else, are in need of some money. But you can make some money once you obtain a degree in library science as a librarian and, as a result, we have good libraries well run. You can have the same amount of training as an artist and your chances of making a living that in any way would be commensurate with that of a librarian are pretty small indeed.

This is not to suggest that libraries be reduced in budget, but rather that we must begin to think that if we pay out the money we will get the results. And the results, in terms of the spiritual infrastructure, would be very, very good for this province and especially for those parts of this province outside of Toronto and the other main centres.

We would like to see, as I mentioned, arts support go to 20% of MCC budget, but I doubt that can happen unless the MCC budget itself gets somewhere close to 1%.

In Ontario there is a network of community arts councils, some 60 or 70 of them, which have joined together and have an association. This would certainly provide a network with which to work in terms of trying out, let's say, a pilot project in matching funds with municipalities.

There is a further very strong network called OAAG, the Ontario Association of Art Galleries, which has probably about 30 members across the province who are very well based in their communities and which would offer an ideal basis for a local community arts board to give out grants. What I am suggesting is that what we have to do is to find a way to empower citizens in small centres to make decisions in those centres about the arts.

Leadership must come, I think, from the province to the smaller centres, because on their own there just is not enough impetus. They need to be in a position of spending 50-cent dollars or 75-cent dollars or something like that in order to get going. The whole policy can certainly come from the arts sector, but the leadership must come from the provincial government.

A further area where we can see a great dividend being paid to the province would be to find ways to extend the network of community centres by attaching to them some sort of modest cultural premises. It could be two big rooms. I know in every country in Europe there are what they call "maisons de la culture" or "Kulturhäuser" or something like that. These are mixed-use buildings where you can go and take aerobics or lose weight or you can go to a play or whatever. I think it would be very, very helpful if the community centre system across Ontario had the possibility, from its municipalities and perhaps matched by the provincial government, of somehow adding some more space dedicated to the arts so that a neighbourhood play could be put on in the neighbourhood or a neighbourhood artist could show her or his work in the neighbourhood to the neighbours. Art begins as a very personal thing, and right now it is so institutionalized that you must make the jump from the neighbourhood almost to the Art Gallery of Ontario, with nothing much in between.

A key priority right now for Toronto, and I think it is going to be spreading right across the province, is to set up effective interaction between organizations like the Toronto Arts Council and artists who were formerly marginalized, artists from culturally specific backgrounds: native artists, Hispanic artists, Caribbean, African background, Central American, some from Europe. We have a whole lot of people who for one reason or another, because of language barriers or because they felt the system was not for them, have not been interacting with our subsidy-giving bodies such as the Toronto Arts Council.

We are now undertaking a large program of induced interaction with those communities. We have added members of those communities to our board of directors and to our decision-making committees. It seems to be working out well, but that is something which is going to cost some money. Again, it is going to have to be borne in mind in the future that in terms of equity you should treat people equally, but that does not mean treating them the same. You do have to take special care to be able to approach some people in cultural terms that are relevant for them.

Another priority for us is a growing focus on individual artists all over the province. Individual artists are the unit of creativity. In the long run, the most important aspect of culture is not what is in the museums but what is coming out of the individual artist's studio or the individual writer's typewriter or, in these days, computer.

Finally, a great priority is to inject something more of the arts into education. That is going to cost some money and a good deal of goodwill. As I pointed out, we have about 125,000 people in Metro earning some or all of their living from the arts or arts-related working industry. Every one of them began their arts education after they left school. If we are indeed trying to design an education system that prepares people for working and living, we are missing out if 5% of the Metro population never spend five minutes learning something about the eventual field in which they are going to work.

That is really all I had to say. Rita Davies, our director, had planned to be here but was unfortunately called out of town. I was supposed to be accompanied by Tomson Highway, the playwright, but he was unable to make it, so I have been carrying the ball myself. If you have questions, I will be happy to try to answer them. If I do not have the information here, I will be happy to send it to you.

The Vice-Chair: We have time for one brief question from each party and, hopefully, a brief response as well.

Mr B. Ward: Just briefly, out of the budget, what would you say is the best opportunity for arts in Ontario?

Mr Hendry: Out of the present budget?

Mr B. Ward: Related to the budget.

Mr Hendry: I think they made the very wisest of decisions in putting the extra money into the hands of the Ontario Arts Council. They have a very good record of disbursing the money evenly and fairly. They operate on an arm's-length basis so you can be reasonably sure the decisions being made are not politically motivated or anything like that. They have been in need of strengthening for a very long time. They are right now at around $43.5 million, and we would sure like to see them up to about $80 million in budget, which would be about $10 per capita.

The Vice-Chair: The official opposition? Any questions?

Mrs Sullivan: I think we will forgo questions.

The Vice-Chair: Third party, questions?

Mrs Cunningham: We are fine.

The Vice-Chair: Thank you very much, Mr Hendry, for your presentation this morning.

Mr Hendry: It has been a pleasure.

1140

ONTARIO HOME BUILDERS' ASSOCIATION

The Vice-Chair: Our next presentation is from the Ontario Home Builders' Association, Al Libfeld, president, and Ian Rawlings, first vice-president. You have approximately a half-hour of time altogether. Whatever time you use for your verbal presentation will be subtracted from the time for questions, which will be divided equally between the three parties. So if you would like to commence, Mr Libfeld.

Mr Libfeld: Thank you. Mr Rawlings will be joining me momentarily. My name is Al Libfeld and I am the president of the Ontario Home Builders' Association. OHBA is a professional association that represents builders and developers as well as contractors and subtrades in the housing industry. A couple of years ago our member companies employed nearly 200,000 persons. That number has fallen to what we estimate is a little over 100,000 people now.

I want to take a couple of minutes this morning to talk about the general state of our industry. Then my colleague Ian Rawlings will take over and outline the sorts of steps we believe should be taken to establish economic conditions that will ensure the health of our industry and prosperity for Ontario.

The recession in the housing industry really started around the Toronto area about 18 months ago. By the second quarter of 1990, there were clear signs that it was spreading across the rest of Ontario, and by the third quarter of 1990 new home construction in Ontario had essentially ground to a halt. In April and early May of this year there were some signs that the market was starting to pick up, but for a lot of builders right now those signs are a memory.

I think we are just entering a recovery phase, but it is a very fragile recovery. In light of this, I would like to partially redirect the focus of this morning's discussions. Rather than look at specific details in the budget, we will examine some of the steps the government should be taking to ensure that the recovery can be sustained.

The demand we started seeing in April was for lower-priced starter houses. This came from first-time buyers who had been forced out of the market in 1988-89 and were looking for an opportunity to get back in. Lower prices, and just as important, lower interest rates, gave them that opportunity.

Last year, we built nearly 63,000 houses in Ontario. This year we will be lucky if we build 52,000. To get that number, we will need a steady recovery for the rest of the year.

Before Ian discusses some of the steps that will help ensure that this recovery is lasting, I want to make one last point about the housing industry. The prosperity of Ontario is directly related to the housing industry. We employ more people than any other single industry. Most of these people are working in well-paid jobs. Every house that is built creates a year's employment for roughly three people. The drop in housing starts from 93,000 in 1989 last year cost over 100,000 jobs. The nature of our industry sometimes makes it difficult to see what is going on. We do not concentrate our labour force in large plants, so layoffs are not as visible. Laying off a couple of trim carpenters or not having work for a roofing crew does not get the press coverage that closing down an assembly line does, but when 1,200 builders are doing the same thing across the province, the layoffs add up.

The flip side is also true. When these companies start hiring, it does not take long for the benefits to start working their way through the entire economy.

Ian Rawlings is from Ottawa. He is currently OHBA's first vice-president and will be following me as president later this fall. He is going to talk about some of the things that will make sure we can start hiring back the jobs that have been lost over the last couple of years.

Mr Rawlings: Good morning, ladies and gentlemen. Even though your backs are to the sunshine, I know your minds are going back to the lovely weather out there, so I will try and be brief. I think what we want to touch upon are some of the specific issues.

As I see it, there are basically two things that determine the affordability of a home: the cost of the unit and the cost of the money that is used to purchase that unit. I think we appreciate that the cost of money is essentially a federal issue, so there is not much point in taking a lot of time to discuss it this morning. I would, however, urge you to make the case to the federal government that we need consistent economic policy and low interest rates. With regard to the issue of affordability, I would also urge you to take the opportunity to have the federal government follow through with the much-discussed 95% financing, allowing 5% down payments on new housing.

The cost of money has a dramatic impact on affordability. Our estimates indicate that for a one-point increase in the rate of mortgage money, the size of the mortgage that a person can carry is reduced by about 7%. The consequences of that impact are that in many cases the individual or family has to scramble for a larger down payment. It may mean they buy a less expensive house or a house that is less convenient in location. The worst event, of course, is that it often means they just do not buy at all. We have some tables that give you a view of the relationship between interest rates and housing starts. We will leave those with you. I think the trend is there and obvious to see.

The other side of affordability, of course, is the cost of the house. Here we are not just talking about the cost of bricks and mortar but the cost of land as well. I think it is fair to say that in this specific area the provincial governments and provincial policies do have an impact. There are two main areas in which provincial policies could contribute significantly to containing the cost of housing. One is the planning and approvals process and the other is the tax system. I would like to talk a little bit about both of those.

We have, on occasion, heard many people indicate that, with the passing of the baby boom, the demand for housing that we saw in the 1980s is something that will not be repeated. I think that is too simplistic. We can anticipate a fairly healthy net growth of population, something in the order of 100,000 people a year over the next 20 years; and we certainly know there is still a segment of that baby boom that has not made a purchase decision, so I downplay the arguments that the demands we have seen in the past are something we will never see again.

There is no question, then, that if we do not have a continued and generous supply of land, demand will quickly drive up the cost, and if we do not have the means of bringing serviced lands on stream more efficiently, this will compound the problem.

We have indicated to the government that we are very happy to see the commission set up that Mr Sewell is going to chair, to look into the whole process of planning in the province. We believe that the streamlining of the approvals process is something that can be done and will be compatible with safeguarding social and environmental issues.

There are clearly redundancies in the process in this province. They have been there for years. They continue to be there. They serve to do nothing more than slow the process down.

1150

We think the public interest must include ensuring a supply of land that will avoid run-ups in the cost of housing. This can be done with an approvals process that works more efficiently than the one we have today, so we look forward to working with Mr Sewell's commission on this important task.

The second area I want to touch on concerns the tax system. The current structure does not provide any incentive for municipalities to assist in the development of low-cost housing. In fact, I think it is fair to say that for the most part many of the interests of the municipal governments are served by encouraging both industrial and commercial development and perhaps high-end or high-priced residential development. This pattern of development clearly requires the fewest services and provides the richest tax base.

The Development Charges Act that was introduced by the previous government, I think, was a recognition that there is an imbalance in the tax structure; but in our view the Development Charges Act does not offer an effective or fair remedy to that imbalance.

I think the government, in undertaking the review of our broad tax system through the Fair Tax Commission, has taken a step in the right direction. Our concerns with the Development Charges Act are well documented. I am not going to go through them with you today. I believe you are familiar with them. We hope that we will have an opportunity to explore this issue with the fair tax working group that will be formed to look into the issue of property taxes.

I have talked in a general way about ensuring a supply of serviced lots through the approvals process and the methods of taxation to pay for development, but I would like to be a little bit more specific.

Our association has consistently maintained the position that timely development of infrastructure is essential if growth is to be properly managed.

I do not want to go through all the arguments today, but I think from every point of view, social, environmental and economic, the best time to develop infrastructure is ahead of all other development. It is the least expensive way to do it. You are not playing catch-up, and it gives you the most control over the growth.

We have supported the concept of a sewer and water agency that was proposed in the 1990 budget. We believe it was an important step towards realizing the goals and the objectives of managing both infrastructure and, consequently, growth in the province.

The Treasurer has said, "We will make a major commitment to maintain and improve the infrastructure of Ontario with increased capital spending." I do not believe this is a problem that can be solved simply by throwing money at it. I wish it were that easy. We hope the government will take a serious look at the objectives and mechanisms that were proposed in the sewer and water agency.

Finally, I want to refer to an issue that is less tangible than the ones I have been talking about, but one that could have no less an impact on our plans for Ontario's future.

It is my understanding that the Fair Tax Commission will be looking at the general question of the economic impact of taxation. We are glad the commission is tackling this issue, but we respectfully submit that the Treasurer may want to consult a much broader cross-section of the population of Ontario on this issue. Perhaps this could be done through the commission.

I believe, our association believes and our industry believes that it is time for each of us in Ontario to step back and take a long, hard look at ourselves and our province. We need to ask what we are putting into the province, what we are putting into Ontario, and we need to ask, perhaps more important, what we hope to get out of it. I think we have to find a way to put those answers to those two questions together.

We believe that, if there is a single issue that could set the economic mood in Ontario over the next couple of years, this may be it. I hope the government will consult with the people of Ontario on a broad base and set a course that reflects their wishes and concerns, their hopes and their aspirations.

On behalf of our 4,000 member companies and the over 100,000 individuals they employ, I would like to thank you for taking the time to listen to our ideas. I hope we can have an opportunity to move forward with dialogue with the government on our ideas, and that in a short period of time we will be able to come back to you again, and speak to you on behalf of 200,000 employees in our industry. I believe we have to look forward and deal with where we go from here.

Mr Libfeld and I will try to answer any questions you might have.

The Vice-Chair: We have approximately five minutes per party. We will start with the official opposition.

Mr Phillips: I have a feeling, and I would like your thoughts on it, that an important factor in the housing market is the overall economic activity in the province, and that right now we are looking at heavy unemployment, as your document shows -- 9.5%; I think it is now up to 10.2%. I just wondered about your comments in terms of the budget's ability to get the total economy rolling again, and whether the house builders have any advice for us on that.

I think we are finding that we are guessing. We have one group that comes to the committee and says, "Listen, the budget is great." Another group comes and says the budget is not great. We are trying to reach a conclusion on what it is going to look like a year from now.

I would just appreciate your feeling on, first, what impact does the overall economic activity have on house demand? Second, is this the kind of budget that is going to get the Ontario economy rolling?

Mr Libfeld: Economic situations have a great effect on the housing market as evidenced by the last two years of very few sales. That is quite obvious. It is like any other industry. If we are in a recession, if we are in tough times, if interest rates are high, we will have a poorer market and we will not build the quantity of homes that are needed and are wanted within the province.

As far as the budget goes, we are not economists. We do not have the modules to look to see whether or not the billions will translate into more homes built or not, but we can only wait and see like everyone else.

Mrs Sullivan: I had a question relating to the infrastructure matters that you raised, and I note that you particularly underline the importance of the water and sewer corporation which the government has not at this point addressed, although I gather that the chairman is still sitting in an office without knowing whether he is going to be able to continue or not.

Part of the infrastructure, as well as water and sewers, of course is the provision of schools in communities. You oppose the Development Charges Act in terms of providing that kind of infrastructure. What do you see replacing it and where do you see the funding coming from?

Mr Rawlings: First of all, let me say you are quite right. We have opposed the aspect of Development Charges Act that applies to education development charges. I think it is also fair to say, if I can give us a plug on the positive side, that our industry has been consistent in that we see the purchasers of new housing participating at some level with the cost of providing infrastructure.

Quite frankly, we do not have any magic formula to provide capital for education facilities in our province. I do not think, however, it is a question of finding another group or another source to target.

I believe our industry is consistent in its view that the issue of education in the province is just too important to draw funding to support it from one specific segment of the population.

I believe it is a fundamental philosophy that has been held in this country and this province for a long time that education is important and everybody shares equally in the price and the cost of supplying education. The other aspect that goes with that philosophy of course is that everybody has equal access to education.

We see the education development charges having a fundamental impact on those philosophies. We see the education development charges creating, I believe, no small rift once again between the different religious groups in the province as to how we fund education. I think it is a sorry means of raising capital for something that is so critically important to us as a province and as a country.

Mrs Sullivan: So your recommendation would be to go back to the income tax base.

Mr Rawlings: If that means it goes back to a broad tax base, then that in my view is the equitable means of dealing with the critical service of education.

Mr Kwinter: I want to get back to my colleague Mr Phillips' questions about the mood of confidence. You are in a unique industry in that I do not think you have any shortage of customers who would love to own a home. The problem is, can they afford one, can they meet the mortgage requirements, do they have the down payment? Relatively few have cash when they go and buy a house. Because of the fact that when they buy that house they are also making a major commitment which may extend over 20, 25 years, to pay for that house, there has to be a certain confidence that they are going to have the ability to continue those payments. What is the mood out there? You are out there selling houses; you are talking to people. What do they feel? Do they have that confidence? Are they concerned about it?

Mr Libfeld: After two years of very little sales, we had an extremely strong spring where quantities of homes were sold throughout the province. Presently, in the summertime, it is going through what we call the summer doldrums, but what happened in the spring gives us optimism that once the summer breaks we will have a reasonable market coming into the fall and into the new year. There are a lot of factors. Interest rates are down and a lot of the bad news, so to speak, is behind us or getting behind us. It is important, as Ian mentioned earlier, that interest rates stay down or go lower.

Mr Sterling: I know you are not an economist, but this morning we had the Toronto-Central Ontario Building and Construction Trades Council. Although I do not think they profess to be economists either, these are people I guess you hire, a great number of these people, because they represent 40,000 unionized construction workers in the Toronto-central Ontario region. They say, "Categorically and unequivocally we, the 40,000 unionized construction workers in the Toronto-central Ontario region, publicly support the initiatives taken by the current government in its 1991 budget."

I guess my concern is that if people who might not feel that same kind of support are not making the equivalent statements on the opposite side, then perhaps the public will get the wrong impression overall. Does your organization categorically and unequivocally support this budget?

Mr Rawlings: That is a question, is it not? Without dodging your question, because I would hate to do that to a member from my home town in the Ottawa area, let me put it this way. I spent long years working for a public real estate company, and I think it is fair to say there were some hard lessons learned in the early 1980s as the public real estate companies burdened themselves with debts to a level far beyond what they were capable of ever dealing with. I think those lessons were hard learned for most of those people, and for those that did not learn them, some of them are not around today. So I think in that context, we have to be very careful about the whole issue of debt.

Mr Sterling: Not to prolong that issue, the other area I am very much concerned about is that when new governments come in, there is a tendency for them to change the bookkeeping system so that basically they cannot be compared to previous governments, previous administrations. Mr Laughren has said he is going to create the Ontario capital fund, giving the impression to the people that a certain amount of the budget, perhaps as much as $4 billion, will be going to capital works. However, he does not include in his accounting procedure depreciation for public works which are depreciating because of physical deterioration etc. Being in the building industry, you would well understand that buildings do depreciate in real value. Perhaps the land increases in value, but government's land does not increase in value in a real way as private land does. Do you think that is a fair method of keeping books?

Mr Rawlings: I will repeat Mr Libfeld's statement that we are not economists. However, certainly dealing with things such as municipal infrastructure, it is to me frightening that there still remains a large number of municipalities that have not yet realized they are sitting on a tremendous asset of infrastructure and they continue to not deal with it as an asset and look for a proper return on that asset.

There is a large number of municipalities whose sewage treatment facilities do not operate on the basis that they pay for themselves. The water treatment facilities do not pay for themselves because they are something you deal with when they break, but you do not treat them as an asset. I guess that is an indirect response to your question.

When we are talking about infrastructure that can be depreciated over a long term, that is one part of the solution, but it really comes down to a broader sense of treating our infrastructure and our capital investments in a far more businesslike way, and in many cases I think it is appropriate.

Mr Sterling: I think he points out in his document that in the early 1960s about 10% of the budget at that time went towards creating infrastructure. The 1960s was a great time for building highways, as you may now recall. Now it is down to about 4%.

My concern is that the public does not get the wrong idea in terms of capital expenditures, that you are building a new sewer system and you say, "Okay, that's new and therefore shouldn't be today's expenditures, but should be depreciated over the next 20 years." But, as you know, the city of Ottawa has a tremendously precarious sewer and water system which has not been repaired or taken care of for the last 25 years, because municipal politicians chose not to face that situation.

In my view, those assets should be depreciating at a very rapid rate right now and if you do not put one side of that on the books, then I think the public will get the wrong view in terms of the capital operating account. Anyway, that is not a question; that is an opinion.

Mr B. Ward: What do you think about that?

The Vice-Chair: I am sorry, the five minutes is up. We will move on to the governing party, Mr Christopherson.

Mr Christopherson: Welcome, gentlemen. It is good to see you both again. I appreciate the time you have taken to put together your brief and for coming forward.

I would like to ask you if you categorically and unequivocally condemn every single word in the budget? No, I am being very rhetorical. What I would like to ask you, however, is along the lines of the approvals process. It is interesting for those of us sitting here that in your presentation, and I would like to quote: "We believe the public interest includes ensuring a supply of land that will avoid run-ups in the cost of housing. This can only be done with an approvals process that works more efficiently."

That comes from you as the Ontario home builders, and before you, earlier this morning, we heard from the building and construction trades council that -- of course, I have lost it. Sorry, I do not have my finger on it. I moved it to be a smart-aleck and lost my quote. However, they made a similar statement regarding the lands process and talked about the need to expedite that process to bring on more housing.

My question to you is twofold. First of all, in light of the fact that you seem to have a common ground there and that this government has attempted to make co-operation and partnership a cornerstone of decision-making for the future, albeit people can argue how successfully to date -- in that spirit, would you feel comfortable in working with the labour organizations to that end in conjunction with government? If so, could you maybe throw out a couple of the concrete ideas you are looking at when you talk about streamlining the process and whether there is a dollar figure attached?

Mr Libfeld: Ian and I will both answer that. Number one, the reason we have common ground is that a lot of those 40,000 members of the group you met earlier work for our firms in various capacities. Some of them, quite a few of them today, are not working and are looking for employment elsewhere, or they have just got back to work and want to keep their jobs. They understand supply is important. Without the quantity of land in the system we cannot deliver all the choices of homes the purchasers in the province want.

Within Ian's brief he mentioned that a water and sewer corporation could possibly answer some of those problems as to the infrastructure, who is going to be paying for it and how it is going to be paid, and get up to speed and make a commitment towards infrastructure that has not been made in probably 20 years in this province. We have systems that date back to Confederation, and it is really serious. As far as the points on the approvals process, Ian will answer.

Mr Rawlings: Yes. I am not proud. Anybody who understands the issue of the approvals process to the extent that they realize it is a disaster, I will work with them to try to improve it, quite frankly. There is no question there are any number of opportunities we have taken as an industry to meet with successive governments and give them our ideas; specific, definitive, cogent, clear ideas on what you could do; some no cost, no consequence; some that might take a little more conviction to solve some of our problems. We will continue to do that. We welcome any opportunity -- that is my business. I am an urban planner and it is frightening to me the process I deal with every day. It is a mess, and it can be fixed. It can make some dramatic improvements in our industry and in the way we do business. The best opportunity to have some meaningful impact on the issues of affordability, the issues of protecting our social interests, our environmental interests, is to sit down and deal with the approvals process. No question, I am convinced.

Mr B. Ward: I have one other question. The Fair Tax Commission is forming working groups to examine different segments of the tax sectors in the province. Have you requested participation on those working groups?

In your brief you mentioned that the recession in the housing industry occurred in the Toronto area 18 months ago and then, in the second quarter of the 1990s, spread. It is always easier to examine our past than it is to project the future. What do you feel were the leading economic indicators that created the recession 18 months ago?

Mr Libfeld: To answer your second question first, GST, free trade, high interest rates.

Mr B. Ward: But GST did not come in until 1990.

Mr Libfeld: But the threat of GST and what it meant -- your first question again was?

Mr B. Ward: So GST and interest rates started going up.

Mr Libfeld: There was uncertainty as well as the recession.

Mr B. Ward: The other question was about the Fair Tax Commission.

Mr Libfeld: We have representation on one of the committees that is meeting now and we have requested representation on other committees as well.

The Vice-Chair: Thank you very much for your presentation, Mr Libfeld and Mr Rawlings. This committee is recessed until 1:30, when we will have the next presentation.

Mr Libfeld: Thank you very much for the opportunity of meeting with you.

The committee recessed at 1214.

AFTERNOON SITTING

The committee resumed at 1340.

The Vice-Chair: We are running a little bit behind. We do not have everyone here, but we have representation from all three parties and I guess we should proceed or we will get even further behind.

REGIONAL MUNICIPALITY OF PEEL

The Vice-Chair: Our first presentation this afternoon is by Frank Bean, chairman and chief executive officer of the regional municipality of Peel. Welcome to the committee. You have approximately a half-hour altogether. Whatever time you use in your presentation will be deducted from the time for questions, which we will divide equally between the three parties. If you would like to commence.

Mr Bean: Thank you very much. I would. I will not take near the half-hour for the presentation. I believe members of the committee have copies of my presentation. I would like to walk you through it, and I will be brief.

First, let me thank the members of the committee and you, Mr Chairman, and the clerk for allowing Peel to be represented today to make this presentation on a nice, sunny summer afternoon. I am sure many of your constituents and probably many of mine believe we are on a long summer's recess and are unaware of the work that gets done in committee. If they would only watch question period. It is too bad they do not really have a better understanding of what work is done at committee.

I am sure every member of this standing committee is painfully aware, some more than others, maybe, that the 1991 Ontario budget is a very contentious document. According to pollsters, the public and credit rating agencies in Canada and the US do not like the budget, and social service interest groups who advocate increased spending do not think the budget went far enough. I imagine James Frank from the Conference Board of Canada must sound like a voice in the wilderness about now.

Some observers might try to explain the widespread public discontent over the budget as an unavoidable byproduct of the governance process in a large and diverse province like Ontario. After all, governance in a democracy is all about compromises and tough policy choices that do not necessarily please everyone or even anyone.

To be sure, the post-honeymoon reality of governance in Ontario can explain part of the public's negative reaction to the budget. However, I believe the negative reaction signifies much more than the end of the Rae government's honeymoon. I believe public honeymoons with government in Canada ended a long time ago. The public has become far too cynical for honeymoons. Now they judge us, your government and my government, day by day and issue by issue.

In the case of the 1991 Ontario budget, my colleagues and I believe the public views the $9.7-billion deficit and the spiralling accumulated debt, $77 billion by 1994-95, as evidence of too much government, unreasonable levels of taxation and needless duplication. In my view, the public views constantly expanding deficits as an easy way out, an admission that its children's taxes are going to pay for today's services. The typical taxpayer, Jane Q. Public, does not run her personal finances in this way. I have learned to be ambivalent. She lives within her means and tightens her belt when times are tough, and she expects governments to do likewise. From John Q. Public's perspective, it was bad enough hearing about multibillion-dollar deficits from Mike Wilson. Now the public is learning the deficit virus is spreading from Ottawa to the province.

I suggest that if provincial politicians put their ears to the ground and listened to the public, something we municipal politicians do pretty darned well, they will hear the beginnings of a stampede towards an obvious solution to big government and persistent deficits, a province-wide tax revolt. We are all hearing rumblings of that out there right now. On this question of revolts, municipal governments can act as distant early warning systems for other levels of government. Let me tell you, we are picking up plenty of activity on our political radar screens.

The tax complaints we hear about most often focus on two main issues: inadequate political accountability and needless program duplication. This entanglement is a big part of the solution on both issues.

Governments in this province, all governments, are going to have to sort out the existing mess of entangled roles and responsibilities. Governments are going to have to simplify the way they deliver and finance services. They need to demonstrate to the taxpayer that they can deliver value for the tax dollar. Right now the taxpayer finds it nearly impossible to hold individual governments accountable because it is unclear exactly who is responsible for a given service. Welfare funding is a perfect example, or maybe I should say an imperfect example, of our entangled intergovernmental relationship. In the middle of a recession, Ottawa cuts its share of welfare funding by capping payments from the Canada assistance plan, thereby causing a hike in provincial and municipal welfare contributions. Shortly thereafter, the province's budget increases its basic social assistance payment rates -- 20% of which we municipalities must fund.

I suspect the municipal taxpayers do not care or even know about the federal cap on CAP or the provincial welfare rate increases. All they know and care about is the property tax increase that flows out of these policy decisions their elected councils had nothing to do with. If governments are going to correct this accountability problem, all three levels of government, federal, provincial and municipal, are going to have to work together to disentangle their respective roles and responsibilities. Disentanglement will permit voters to make informed choices about the quality and indeed quantity of public services they receive. Democracy in a federal state like Canada demands no less than informed choices.

I say to you that if the province really believes in disentanglement -- and this is something I have talked about for many years and, I suggest to you, through various governments -- the process that led to the Back on Track welfare reforms is the wrong way to go. While not strictly part of the 1991 budget, Back on Track clearly illustrates the need for careful consultation by the province on programs where responsibility is shared between different levels of government. In that sense, the Back on Track process provides a lesson on process for future provincial budgets.

In more recent days, I will give some credit to the ministry, the government. In my view, they certainly have not changed their philosophies about Back on Track and I do not think this minister ever will. But they have realized they cannot accomplish some of the things they thought they could by August, and that in recent days there has been, and I hope will continue to be, some dialogue with municipalities and AMO, the Association of Municipalities of Ontario, on how this will or can be implemented. But even that is after the fact and not before the thing was mandated.

I have come to the conclusion many of their recommendations make the welfare reform process more complicated and more adversarial for persons applying for assistance. In many ways, Back on Track, far from disentangling and simplifying what now can be an inhumane, bureaucratic maze, will entangle and further complicate the delivery of welfare, aside fom the costs.

Peel supports many of the recent changes that have given the poor a more reasonable allowance to live on, changes that have also provided recipients with financial incentives to work. However, the single greatest step towards welfare reform still lies before us. The province needs to fund 100% of welfare programs from the progressive income tax base and allow municipalities to fund hard services on the property tax base. In this way, income can be properly redistributed by the province, and benefits can be standardized province-wide. I am not suggesting there is a free lunch for us and the municipalities either. I think we should pay our way, but I think there should be discussion on how we can disentangle.

I must say I was disappointed to see that the 1991 Ontario budget had nothing to say on the issue of provincial-municipal disentanglement, yet we had much input prior to the budget's coming down. Even a statement of support in principle would have been helpful. However, I am marginally encouraged that discussions between the province and AMO on disentanglement are continuing to move forward. I will be even more encouraged when the province broadens the process and deals directly with regional chairmen to remove general welfare assistance from the property tax base in exchange for regions taking on additional hard-service financing.

1350

Make no mistake. Disentanglement is the number one priority on the regional agenda, not just my region. I just returned from a meeting of regional chairmen last week and it is something we were unanimous about. A successful disentanglement exercise is necessary if tax revolts across the province are to be avoided. Disentanglement is not a partisan issue; it is simply a question of good government. I urge all parties in the Legislature to support this much-needed reform.

On the question of fighting the recession, municipal governments understand the province's determination to be seen to be doing something constructive. Recessions hurt people in very real ways. Families are split and careers are shattered. Recessions are a serious business. Fighting recessions should also be a serious business.

Accelerated capital works spending is a time-honoured method of stimulating a weak economy. Surely the bond rating agencies, the Bay Street types and the public at large understand this and consider debt financing of tangible capital assets as an investment in the future. The problem is that the Treasurer's $6.3-billion increase in 1991 spending features only $1.1 billion in capital spending.

In the minds of our old friends Jane and John Q. Public, it might be acceptable for people and governments to borrow money to finance a new house or a new car. However, borrowing money to pay for the groceries is not deemed good financial planning by any stretch of the imagination. Premier Rae was not elected to provide programs taxpayers cannot afford to pay for. The public expects tough choices about resource allocation and understands that services are not free. "Pay as you go" has to be the philosophical rule of the day when it comes to provincial and municipal budgets.

We now see signs the recession is easing, small signs, albeit. When the economy recovers, will an extra $35 billion in provincial debt over the next four years be a help or will it be a hindrance? It seems to me that governments that choose to buy into a view of the economy, that have an obligation to buy in all the way, stimulate weak economies with deficit-financed spending and moderate strong economies by running budget surpluses. To continue running large deficits though an economic recovery would be economically irresponsible and, I believe, ultimately politically disastrous.

I guess the lesson I urge this standing committee to take away from the ongoing debate about debt and recession-fighting strategies is the following: Governments that want to intervene in a weak economy had better be awfully sure of their timing and had better be willing to make tough spending decisions during the subsequent recovery. Time will tell if the current government is up to this fiscal challenge. If the Ontario government fails to meet the challenge of being fiscally responsible across a whole business cycle, the credit worthiness of all governments in the province may be adversely affected. This is a particular concern for Peel region. We are one of a select few municipal governments with a better credit rating than the province. Peel's credit rating is triple A on both boards, the highest possible designation. It has been for some time and continues to be.

As we all know, "competitiveness" is the new economic buzzword. The budget contains a policy paper on this subject. I am told the government of the day does not like the word "competitiveness." They see it was a code word for staff cuts and wage rollbacks. I, for one, like the word "competitiveness," balanced by a concern for social justice. I like the notion that wages should expand only as quickly as productivity improves, that is, CEO wages as well as factory wages. The decline in Canadian competitiveness concerns me as a Canadian citizen and as a holder of public office in a prosperous community. I agree with the Premier that key actors in the economy, business, government and labour, need to work together to improve our competitiveness.

Municipal governments have a significant role to play in Ontario efforts to remain economically competitive. To the extent that provincial-municipal disentanglement will make Ontario's governments more efficient, economic competitiveness will be improved. Just try to be competitive without first-rate water and sewage services. Just try to be competitive without a comprehensive road system to haul goods into the American market. Just try to be competitive without properly planned communities.

Most important, just try to be competitive without governments committed to balanced operating budgets and reasonable tax and regulatory policies. Disentangled municipal governments can be a part of the competitiveness solution because we can provide the least amount of the necessary government at the lowest possible cost. Municipal governments must and do balance their operating budgets every year. They borrow money only to finance capital works like roads and sewers. Debt-servicing levels are strictly regulated by the OMB.

This commitment to "pay as you go" financing is not the product of elected municipal politicians who are somehow more disciplined or visionary than their federal or provincial counterparts. In fact, municipal fiscal responsibility is largely the product of legislation. We are legally obliged by the Municipal Act to balance the budgets -- many of you who have been at the municipalities well know this -- so this is what we do. We balance budgets, and we would not want it any other way. This legal requirement protects our politicians from themselves during weak moments when interest groups are pressing hard for new programs we really cannot afford. That did not happen in your day, Mr Stockwell.

Mr Stockwell: No, it never happened in my day.

Mr Bean: I suspect there may be a lesson here for all governments to consider, the lesson of legally mandated budgets. Operating budgets should balance over the life of a business cycle, perhaps over a five-year period. It might be easier for federal and provincial politicians to allocate resources if they built some budgetary fences around themselves. Fences that guarantee a "pay as you go" approach would win out in the medium to long term. Legally mandated limits work for municipalities. Perhaps they could work here or in Ottawa. Such limits may be the only way to ease public cynicism over the ability of governemts to manage the country's finances.

To summarize, let me say I think all levels of government have to do better. We have to do better. Our programs need to be simplified and made more efficient. Our various roles and responsibilities need to be disentangled and made clear to the taxpayer who bankrolls our efforts. Our budgets need to balance over the longer term of an economic cycle, and debt should only be used to finance capital investments, not operating expanditures. In short, governments need to govern in the name of the general good, not in the name of any particular special interests.

As an aside, I do have some good news. I should not preach disentanglement unless I practise it, and indeeed in Peel we have for some time. We are seeing some signs where not just our area municipalities work more closely with us but our school boards, and in working out purchasing and combined tendering processes, there is a way, and we are finding a way within our responsibility and indeed the authority that we have, without permission from any other level of government. We can and must practise what we preach, so while I preach, and many of you have heard me maybe far too often over a dozen years talking about this kind of thing, we in Peel and our constituent municipalities and other levels of government are seeing some signs of progress. It can be done.

I hope my comments are somewhat helpful to the committee and the government. I hope the next year's provincial budget reflects the schooling in real-world governance the NDP government is now receiving. I hope I do not need to appear before the committee again next year and at least have the same message.

Let me say to you that I think the bottom line in my presentations as they come before the various committees at Queen's Park -- through various governments, I underline again; it is not just this one -- is communication. We have asked for that for a very long time, through various ministries, through various premiers. We believe even though sometimes the pill is bitter, we can deliver the services to the taxpayer. At least we can say we were part of it.

It is easy to blame another level of government, and all of us do that far too often. It is easy for you to blame the feds and us to blame you and everybody blames everybody else, and I can tell you, and you know, that your constituents are saying, "A pox on all your houses, because you're all to blame," and, you know, we are.

We want to do our part in Peel. My colleagues in other regions also want to do their part. We are happy to meet with committees and ministers at every opportunity, through AMO, through a regional chairmen's group and individually.

Thank you, Mr Chairman. That is the full cup of my comments. I am available.

1400

The Vice-Chair: We have approximately two and a half minutes per party, starting with the third party.

Mr Stockwell: The $700-million program was bandied about quite often by the government and its suggestion was that it would be an anti-recession program. How did that work in Peel? Was it an effective use of the money? Did you start new programs that would not have been done previously?

Mr Bean: The short answer is no. There were no new programs started that were not scheduled anyway.

Mr Stockwell: I have not talked to a municipality that has not given me that answer. So in effect it is a capital works program, but it is very difficult to get a capital works program up and going in a few short months, as I would see it.

Mr Bean: Exactly.

Mr Stockwell: The other question is disentanglement. I hear that quite often. I agree with balancing your budget during a term of five years. The trouble is that provincially we do not really know how long the term will be. But I do not disagree with that. I also agree that debenturing, as municipalities term it, capital works at the provincial level should be the only thing borrowed for. Your operating budget you should pay as you go.

The disentanglement makes a rather interesting debate. You are suggesting maybe the municipalities could take over roads work and the provincial government could take over social services.

Mr Bean: Sure. What I am saying very succinctly is that if we want to develop, and Peel does, and we are, then we should be able to pay as we go. If we want to bring new development in, we should be prepared to pay a bigger share of the hard services, where we have some control. If a municipality cannot afford to do that or chooses not to do that, then it chooses not to develop as quickly as we would. At least we have some control. With welfare, of course, we do not.

Mr Jamison: Thank you for your presentation. In your presentation I hear the word "restraint" and so forth. You mentioned as you gave your report the freeze from the federal government, which showed a cutback in their --

Mr Bean: A cap on CAP.

Mr Jamison: That is right. When we met with AMO just a few short days ago, AMO lauded our ability to make a transfer in a difficult time. Couple that with the tax coalition group, or groups, that are out there and I would like to ask you, what in fact would you have had to do as a municipality if that 5% increase in transfers to the municipality was not there? What would you be doing at this point in time, or how would you have dealt with that as the region of Peel? Again, it was interesting to hear AMO laud the government for doing that. What it would have meant to your taxpayer group in relation to the coalition is what I am talking about.

Mr Bean: Let's take Peel this year. We had no increase in our property tax base on all line departments save and except welfare and police. The police are more than half of our budget and we had a sizeable increase in police. In all the other departments, including social services -- that is seniors and day care and all of those things -- we came in at a zero increase in our budget. We then had to come up to about 6% because of welfare and part of the police.

So to answer your question, if the kick had been more severe to us, we had no choice; our property tax base would have had to make up the differential. With the trickling down, if you will, from the feds to you and you to us, we would really have just been in worse shape than we were. We were in bad shape because of welfare and we would have been in worse shape.

I guess what I am flagging in here is that I am saying to this government, have a very serious look at Back on Track, because if you think this year was bad, wait until you see what municipalities say to you next year with Back on Track implemented, which is going to make it worse.

Mr Jamison: My question was, what would it have meant to your ratepayers?

The Vice-Chair: Sorry, Mr Jamison. I have to move on to the official opposition.

Mr Bean: A couple more per cent.

Mr Phillips: Two quick questions. I really appreciate your thoughtful presentation, and the budget is going in a direction that is not consistent with your recommendation in that there are four years of very substantial deficits.

My first question is, I think this budget was designed to kind of get the economy going again. I would like your feeling on how well you think that will work in terms of getting the economy going. I ask you particularly, because you are historically in the fastest-growing area in Canada and you will see either a pickup or a slowdown probably faster than anybody.

On my second one you may not be able to give me an answer today, but I would appreciate your thoughtful comments on the capital account fund proposed in the budget, which says that the province should be spending $5 billion to $6 billion a year on capital and therefore will spend $15 billion to $16 billion over the next three years but will only show about $1.2 billion in expenditures. I would like your thoughts on both of those.

Mr Bean: I think the second one is much more difficult and I will probably want to reflect back on it and give a more thoughtful answer to the committee another day.

But you are quite right. The region of Peel, and the other one is the region of York, are the two fastest-growing regions and we see indicators more quickly, although in Peel we are fortunate that our growth is not just single large industries; there is a good cross-section. I hope what this province has done will show some stimulation.

I guess the point I would make to you is that I think there has to be dialogue. Just as our treasurers all talk to each other and our chief administrative officers all talk to each other, I believe the government, the ministries, should be getting the dialogue from the municipalities, both at AMO and through various committees of treasurers, as an example, while they are thinking about legislation. We talked about that when your party was in government. I think we could help shape the legislation and then at least we would have to take some responsibility too.

So the short answer to your first question is that I hope indeed it is going to work. I think we see some signs in Peel now that there is some turnaround. There are some positive things in the building industry right now in Peel. We are very large in housing. We have a large housing department. So there are some positive indicators on the horizon right now.

On the second one, I think I would like to get back to you on it.

The Vice-Chair: Thank you, Mr Bean, for your presentation today.

1410

ONTARIO TRUCKING ASSOCIATION

The Vice-Chair: Our next presentation is from the Ontario Trucking Association, David Bradley, president; John Sanderson, vice-president of corporate development; and Paul Hammond from Muskoka Transport Ltd. Welcome to the finance and economic affairs committee on post-budget hearings. You will have approximately half an hour overall for the presentation. Whatever time you use for your verbal presentation will be subtracted from the time for questions, which will be divided equally between the three parties. So if you would like to commence your presentation.

Mr Bradley: We are pleased to be here this afternoon. I would just like to indicate that John Sanderson is the vice-president, corporate development, at CP Trucks in Willowdale; He is not with the Ontario Trucking Association. He is a board member. Paul Hammond is the president of Muskoka Transport in Bracebridge; that is a smaller, family-owned company.

We did appear before the committee back in January, and you will recall at that time our message was that the trucking industry was reeling from the impact of deregulation at both the federal and provincial levels, from the impact of the recession and from the impact of the government of Canada's monetary policy, the high dollar and high interest rates.

At that time we were seeing bankruptcies in the trucking industry escalating, we were seeing employment decline and we were seeing the flight of trucking companies involved in the transborder business, at least part or all of their operations, to US bases. While we put a number of proposals and issues before the committee at that time, really our message was two key things, "Please, don't raise taxes on this industry at this time and please, if you can, find the way to provide some short-term, temporary relief to save those jobs and to maintain this essential service in the province." We met with the committee, as I mentioned, and also with the Treasurer and other people in government.

What has happened since January? Things did not get better through the course of the winter and continue to this day. Bankruptcies in the Ontario trucking industry in 1990 were up 156% over 1989. For the first five months of 1991 they are up again, by 74% over the same period in 1990. Employment in the trucking industry declined by over 9% in 1990, and that is against a national average drop of 2%. So the trucking industry, I think, has been more severely hit, particularly in this province, than other industries.

As I mentioned, we have seen the bankruptcies up 74% but really starting to hit in terms of the family businesses and some of the major employers in the trucking industry. Since January we have most recently seen Taggart Transport in Perth close its doors. That is a 70-year-old family business. It employed 260 people at the time of closure. A couple of years ago that company employed about 500 people.

In the same part of the province, in April we saw the bankruptcy of GTL Transport, one of the top five trucking companies in Canada, throwing in excess of 600 people out on the street in Ontario.

As well, we saw Bill Thompson Transport, an innovative and efficient carrier in St Thomas go bankrupt. That company employed 500 people in Ontario.

The flight to the United States of trucking companies involved in the transborder business has continued unabated. It is not something they want to do but is something they have been forced into doing. Now most of the major transborder carriers would have a US subsidiary. I mention to you that the growth now in the transborder market is going to be on the US side. Interesting. You take the example of Bill Thompson Transport. It went bankrupt in Ontario and is now operating out of Pontiac, Michigan, employing US drivers, using US equipment and paying taxes in the United States.

Against that backdrop then, you can see why we as an industry were somewhat shocked and felt somewhat betrayed by the April budget in which the Treasurer announced a 31% increase in the tax on diesel fuel. He indicated at the time that he was aware of the industry's problems and that there was a recession on, so he would stage that tax increase in two parts, a 1.7-cent-a-litre increase on the day of the budget and a further 1.7 cents a litre to come on January 1, 1992, but still a 31% increase in the tax on fuel.

As you can imagine, that has a significant impact on our industry. In many operations fuel represents up to 30% of operating costs. We estimate that when the full tax increases come in that is going to add $2,000 in tax cost per truck per year to operate that vehicle.

What the committee needs to understand is there is no real ability at this point in the trucking industry to pass that cost along to the consumer. We have a hyper-competitive state and I think the government recognized that in terms of bringing in the moratorium on intraprovincial licences. But that is not going to have an immediate impact. It is a significant gesture, but we still need time. We cannot pass those costs along to the consumer.

Nor is there really any scope at this point in time for the industry to absorb that kind of cost increase. Profit margins are thin or non-existent. The trucking industry in Ontario has been operating at a loss for the last three years. For many companies, many family companies, many owner-operators -- the one-man, one-truck operation -- currently hanging by a thread, this tax measure contained in the budget is going to force some of those already on the brink of failure into bankruptcy. I cannot say to what extent it had an impact on Taggart and some of the other ones I have mentioned. Certainly there are a lot of factors that go into this, but it is a factor none the less. It is also one that is taking away from many companies right now the hope of surviving during the current period.

The Treasurer indicated in his statement bringing down his budget, however, that the reason he was bringing in this tax increase was in the interest of fuel efficiency and fuel conservation. In other words, it was an environmental tax. In the trucking industry we think it is a laudable goal to be trying to improve fuel conservation and efficiency, and certainly our industry has been working hard over the last couple of years to clean up our act with respect to the environment and to do a better job than we have been doing, but we have been doing a good job and I do not think that has been fully recognized.

There are some other factors that I think need to be taken into account, because while the goal of improving the environment may have been the justification for this tax measure, I argue that really the tax measure is going to work in the opposite direction and is going to impede the ability of the industry to improve its environmental performance.

The reason for that is that there has been a lot of work under way with respect to fuel emissions from the heavy trucks. Recently we have been meeting with truck engine manufacturers. There is data contained in the brief that will show you there are two pivotal years. One is 1991 and the other will be in 1994, where the engine manufacturers have had to adapt to new standards -- these are the Environmental Protection Agency standards in the United States -- for emissions from heavy trucks. These have not been adopted as legal standards in Canada, but the manufacturers here are voluntarily complying with those.

The 1991 heavy truck engine is emitting 50% less emissions of NOx and particulates. In 1994, when the next round of improvements comes into being, you will again see further significant reductions in emissions. There are some very exciting things under way. As well, by 1993 or 1994 we are going to see the introduction of clean diesel fuel in the trucking industry. That is a low-sulphur-content diesel fuel. In fact, we will see a reduction of 90% in the sulphur content of diesel fuel by weight. As well, by the mid-1990s we are going to see the introduction of particulate traps. These are traps that will appear on a truck and will, in effect, capture any emissions that are still getting out at that time.

These are exciting things on the environmental front. However, they do not come without a cost. The new truck engine I mentioned currently is an increase of about 15% over previous model years; the new clean diesel, when it comes into being in the mid-1990s, is estimated to add up to five cents a litre in increased cost on diesel fuel; and particulate traps will add about $15,000 to the cost of a truck. Expensive stuff.

The other side of the coin is that when one talks about fuel efficiency and fuel conservation, I guess the justification for the tax was: "Penalize them. Put a cost on that pollution and they will have to become more fuel-efficient." The fact is that since OPEC, the trucking industry has doubled its fuel efficiency, a remarkable performance, but now, as the engine manufacturers are moving into making cleaner, less-emission engines, there is a tradeoff between fuel efficiency and fuel emissions. The facts are that the technology will not permit further substantive increases in fuel efficiency, certainly not on the order of those we saw in the 1970s and 1980s. If you want improved reduction of fuel emissions, you are not going to get further major improvements in fuel efficiency.

There will be some scope for further improvement. That can come through driver training, new tires, aerodynamic flaring, those kinds of things, but substantially the technology is such that there is not much more they can do with the truck engine for the foreseeable future to get much more efficiency out of it. In effect, the tax is a penalty to which the trucking industry is not going to be able to adjust. It is as simple as that.

1420

I have mentioned the cost of these new engines and that 1991 is an important year and 1994 is an important year. The bare facts are that very few, if any, truckers right now have the money to invest in this equipment. Most of the equipment that you would find out on highways is mid-1980s vintage. Adding a further tax and taking away whatever profit there is in the industry now by virtue of this tax measure is simply going to make it that much more impossible for the industry to meet this environmental challenge and, at the same time, to invest in equipment that would assist us in our competitive situation. Newer equipment is more productive. They should be somewhat more fuel-efficient, the 1991s, than what is available in the mid-1980s models.

Look, if we really do want to keep this essential service, trucking, in Ontario, if we do want to maintain those jobs and try to bring some stability to the industry and if we really are serious about the environment, then do not just give us words on paper about fuel conservation; understand and work with the industry in trying to bring about those technological enhancements.

Our recommendation to the committee would be that you recommend to the Treasurer that he repeal the 31% increase in the tax on diesel fuel. I realize that is difficult for Treasurers to do, but again, if we are serious about the environment, if we are serious about the jobs, then let's get on with the business of making those things work. As well, when we visited with you in January we recommended that the government introduce a temporary exemption from the retail sales tax on heavy trucks and trailers, parts and labour. That, I will remind you, is something that was introduced during the 1982 recession for the trucking industry. We are asking that it be introduced again.

Both of those measures, I think, would help. They would not solve the problems of the trucking industry -- not all of them are the provincial government's responsibility -- but they would certainly help to put the industry on a more viable and competitive footing and, at the same time, help us to meet the environmental challenges that lie ahead.

Our response at the time when the budget came out was that we thought it was insensitive and regressive with respect to the concerns of the trucking industry, and we still believe that to be the case. Other people said stronger things or took even stronger action. You will recall the blockades of May. The Ontario Trucking Association does not do its business that way. We launched the "Axe the Tax by Fax" campaign to try to bring all those involved in the industry -- the workers, the unions, the carriers, the suppliers -- to the attention of the Treasurer. He did meet with us, and discussions are ongoing with his officials, but I certainly think a recommendation from this committee would go a long way in terms of maintaining a viable domestic trucking industry in Ontario.

I thank you for the time. We welcome any questions you might have.

The Vice-Chair: Thank you very much for your presentation. We have about four minutes per party. We will be starting with the governing party.

Ms M. Ward: Thank you for your presentation. I wanted to ask you basically for some background information -- it might be in here, but I do not see it, flicking through the pages -- about the relative freedom to do business in Canada and the US. My understanding, under the deregulation that went on under both the federal and provincial governments, is that US carriers are free to operate here, to bring goods here and to move them from province to province. I seem to recall that you do not have the same right. You may have in certain states, but you do not have the right throughout the United States for a Canadian truck to transport goods to the United States, pick up goods there and move them to another state, whereas the American trucking companies have the right to do that here under the deregulation that went on under part of the free trade agreement. Then the previous provincial government introduced some legislation which was to more or less parallel the federal legislation. Could you give me some background on that?

Mr Bradley: Yes. Essentially, you are correct, although, as with most issues in trucking, it is a little more clouded than that. The United States deregulated its interstate trucking industry in 1980, which meant it was easy for Canadian truckers and for American carriers to get licences to operate into and out of the United States for cross-border trucking. In Canada, in 1988, the Canadian federal government deregulated inter- or extraprovincial trucking here in Canada, which gave anybody easy access to licences to operate into and out of Canada. So in that sense it was more or less equal from a licensing situation. In Ontario, however, they took deregulation one step further and deregulated intraprovincial trucking, that is, movement within the province.

In the United States they never followed through with that second round of deregulation. Currently, only seven states are deregulated, and they are places like Arizona, Wisconsin and Alaska. None of the contiguous northeastern states are deregulated. In fact, they still maintain regulated environments, which means it is next to impossible for a Canadian or anyone to get a licence to operate, say, between points in Michigan or between points in New York.

There is the licence aspect of that, but there is also a customs and immigration aspect, and there are restrictions on Americans operating within Canada, just as there are restrictions on Canadians operating within the United States. Certainly, the licences are available and under certain limited circumstances they can conduct what is called cabotage here.

Ms M. Ward: That would make the Canadian costs higher, in the sense of a Canadian truck company going down there and taking goods, and the American company bringing goods up here and then doing some local shipping, you might say. The local component of it would reduce their costs of shipping up here, would it not?

Mr Bradley: The Americans have a cost advantage over Canadian trucking companies, so to the extent that they compete with us on the transborder market, they are able to take advantage of that lower cost base, and to the extent that they would be able to operate intraprovincially, which is limited, then they would be able to take advantage of it there. But there are not too many Americans right now who are operating intra-Ontario. Those who are have set up operations here.

Mr B. Ward: I want to go back in the past a little bit. In the 1980s, I can recall a number of protests against the federal government, against deregulation, privatization, a number of federal policy issues. It seems to me -- I am not a trucker, but I do have a neighbour who is a trucker -- that what is killing the industry is the implementation of deregulation on top of free trade, on top of a high dollar, high interest rates, because the licences increased massively under deregulation. I was just wondering if your organization in the 1980s publicly supported or publicly opposed the implementation of deregulation and/or free trade.

Mr Bradley: We publicly opposed. However, when those things became a political reality, both at the federal level and here in Ontario, we tried to make the best of a bad situation by working with the legislation to try to put some safeguards in for the industry and also to ensure that we had a level playing field before we entered into deregulation. That has not happened, and some of the things we forecast at this table three years ago, sadly enough, have come true.

But at the same time, while the federal government has a major responsibility here, I would not let the Ontario government off the hook to say, "It's all Ottawa."

Mr B. Ward: I am not saying that.

Mr Bradley: Ottawa has to do something, but the provinces essentially regulate transportation in this country, and tax transportation as well. I come back again to the tax measure, that a trucker, whether he is an interprovincial or intraprovincial trucker, still pays the Ontario diesel fuel tax.

Mr B. Ward: Does the trucking --

The Vice-Chair: I am sorry, Mr Ward. The time is up.

Mr Kwinter: I would like to raise some questions about your efforts to try to lessen the impact of the budget. I recall that when you appeared before us in the pre-budget hearings you had severe problems then. You were looking for some sort of government help to allow you to stay competitive, to allow you to stay in business, and then as a result of the budget, whatever problems you had were exacerbated by this 31% additional cost.

When the Treasurer announced that, I immediately rose in the House to question the one aspect of it, which was the gasguzzler tax and what it would do to automobile production in this province. He then said to me it was of no impact. He saw no reason to change it and notwithstanding that he would look at it, he would expect that he would not change it. He said that publicly. The Minister of Industry, Trade and Technology said exactly the same thing: that it had virtually no impact on production of automobiles. As a result of an intervention by Bob White -- who initially approved it until he started to get feedback from his members -- it was changed, and they made a total about-face. My question to you is, do you not have access to the same kind of clout to get them to rescind this thing for the truckers? Obviously, any business that is in trouble and then suddenly has a 31% increase in one of its major costs can only suffer worse than it was before. What progress, if any, are you making in trying to get this changed?

1430

Mr Bradley: Obviously, we also took note of what happened with the gas guzzler tax and it was quite distressful to us. That was part of the motivation behind Axe the Tax by Fax. When we met with the Treasurer during that week it was not only OTA but we also had representatives of the trade unions, from the trucking industry, the owner-operator associations and suppliers. We have met with the Treasurer. We are continuing to meet with his advisers. We are bringing the same case forward that we brought to you, but there has been no decision yet. There is another study under way right now in the trucking industry and he has indicated he wants to wait until that study is released some time in early September. I cannot answer your question about why for them something happened and something did not happen for us, an industry that is suffering just as badly and seeing jobs leave the province. I do not know, and it concerns us.

Mr B. Ward: Just a point of clarification: I think the statement was made, "It is an immediate increase." and I do not believe that is true. I would like that clarified.

Mr Bradley: No, it is. Half was midnight on April 29, the other half will be on January 1, 1992.

Mr B. Ward: So it is not immediate.

Mr Bradley: Not immediate, no -- 15% now, 15% later.

Mr Stockwell: It never ceases to amaze me with this government that when someone comes in and wants to talk tax increases provincially, the government members want to talk about federal politics and deregulation. I think they have missed the point. Clearly the whole point of your deputation here was to try to emphasize the fact that taxes were draconian by nature. The letter you received from the Treasurer was interesting. I guess you slept easier when you got this letter, because he is going to do a study. That must make you feel a lot better, because you are going to have it back in July. I see in your report that with these tax increases we are going to be the third highest tax jurisdiction in North America, so they are going to do a study to see if you are right. Any comments on the study yet?

Mr Bradley: The study is something the Ministry of Transportation embarked upon some time ago when the minister of the day wanted to get a handle on the transborder competitiveness situation. I anticipate that study will show that Ontario-based carriers are at a competitive disadvantage with their US competition.

Interjection: Yes, that is part of the puzzle, but the problem is not only --

Mr Stockwell: So what? Have they promised to do anything about it should they get back a study that says, "Yes, we are the third highest"? So they do a study -- big deal. Have they given you any commitment that they are going to act on that study?

Mr Bradley: No.

Mr Stockwell: No. So it is just empty promises.

Mr Bradley: Time will tell, but obviously we would like to see some immediate action.

Mr Stockwell: Take my word for it, you have got a bag of air on that one. The next question I had is: You made your appeal obviously vocally or on your fax campaign; have you had any meetings subsequent to that with any of the ministers or ministry officials?

Mr Bradley: Yes, we have. As I mentioned to you, discussions with the Treasury people and the Ministry of Transportation are continuing.

Mr Stockwell: Last, I personally think this environmental stuff was just a red herring. I think this is just a tax grab, plain and simple. It is a nice way to grab some more money and apply it to a deficit that was $9.7 billion, which would probably be at $11 billion if they actually used real numbers. Have you been able to convince the ministry that you are embarking on the environmental concerns it had some years ago, that you are working diligently to ensure that truckers are cognizant of the environment and are doing their best to ensure that the diesel fuel dilemma you are faced with should not be hinged on environmental --

Mr Bradley: That is the focal point of what we are trying to bring to their attention. Whether we have been successful I guess we will find out if the government sees fit to make an adjustment on the diesel fuel tax side. You used the words "tax grab." You may use those words; I will not at this present time. But it would seem rather strange to me, given the facts we put forward. In fact it is our belief that this budget impedes our ability to help in enhancing the environment. What was the purpose of the tax? Is it really to help the environment?

Mr Stockwell: I do not think anyone buys that.

Mr Bradley: Because if it is, it was the wrong measure. You either adjust it or it is to raise revenue.

Mr Stockwell: You can take some comfort in the fact that obviously their policies are written in pencil, because Bob White got them to erase the car tax. Potentially if you can bring enough pressure on this government, they may erase this. I doubt it, but they might. So continue pressuring them; you may be successful.

The Vice-Chair: Okay, thank you very much for your presentation today. We appreciate your coming before us.

CANADIAN AUTO WORKERS

The Vice-Chair: Our next presentation will be from Canadian Auto Workers, Local 1967, Nick De Carlo, president. Just to go over the procedure, I have approximately a half-hour for the entire presentation. Whatever time you use for your verbal presentation will be subtracted from the time for questions, which will be divided equally between the three parties. So if you would like to commence your presentation.

Mr De Carlo: Our local has 3,500 members actively employed at McDonnell Douglas and an additional 800 members who are retired. The current government must be applauded for having the courage to invest in new efforts to create jobs in this province. It must be applauded for not attacking the social services and the health care and education system that protects my membership and all the people of Ontario.

A massive attack on the deficit would have been the easy way out, the way favoured by business and the wealthy. Notice how companies repeatedly run to the government for handouts, money they somehow feel is rightly theirs, while they blame the rest of us for forcing up government spending and creating the deficit. The wealthy owners and directors of these companies take more pay and tax breaks while they object to the workers, who pay most of the taxes, increasing or even maintaining their pay. Workers, according to them, are supposedly ruining the country. Attacking the deficit was not the route chosen by this government. They did not listen to the business class on this issue and we can be thankful for it.

None the less this report is critical of the Ontario government for not going far enough in addressing those issues that will build an alternative to the economic deterioration that is facing the province and the country today. The government of the day did not attack or deal with the issues that will develop the democracy necessary to give the people of our province a real say in their future. They did not take a direction in taxation that would shift the tax burden away from workers and put it more fairly on business, as they promised they would do. The Ontario Federation of Labour as well as unions and locals affiliated to it, as we are, have been and will be making presentations to this standing committee. This presentation agrees with the basic premise of those presentations, so we want to start with some quotes from the Ontario Federation of Labour.

The Ontario Federation of Labour makes the following points regarding the economic climate, the worst recession in 50 years. The point there is that manufacturing jobs have dropped much more dramatically -- the statistic is missing on the brief -- compared to jobs that dropped 7.2% in 1981 and 1982. Ontario's rate of job loss has been over twice that of the national average, accounting for 80% of the national loss in jobs. Many of these jobs are gone for ever. In 1990, 65% of reported permanent layoffs were due to partial or complete plant closures. In the first five months of this year, 59% were due to partial or complete plant closures. By contrast, in 1982 only 24% of the permanent layoffs were due to shutdowns. The remainder were the result of companies temporarily reducing their numbers of employees.

1440

Manufacturing jobs are hard to replace. The average wage for manufacturing jobs in Ontario is $630 per week, considerably more than the industrial average of $542 per week; and the average in the service sector, where most of the jobs have been created over the last decade, is $511 per week.

We are experiencing major industrial restructuring as well as a downturn in the economy, and I do not think that fact is much in dispute.

The role of the federal government: Mulroney economics and the recession. Ontario's 1991 budget does try to do something different. As Treasurer Floyd Laughren said, "We had a choice to make this year -- to fight the deficit or fight the recession. We are proud to be fighting the recession."

Unlike the federal government, the Ontario government did not abandon its responsibilities to working people, their families, and their communities. Let us look at what the Mulroney Tories have done. Cutbacks: Federal government cutbacks hurt Canadians in all provinces, but they have cost Ontarians the most. Cutbacks to established programs, to the Canada assistance plan and other programs, will cost the people of Ontario over $1.6 billion this year alone. The result is increased pressure on the provincial programs, such as welfare and social services, designed to alleviate poverty.

The freeze on established programs financing could well mean the gradual death of medicare as a national program enjoyed equally by all Canadians by the 1996-97 fiscal year.

The Canada-US free trade agreement: Three years into the Mulroney-Reagan trade deal, we have lost hundreds of thousands of jobs -- especially highly paid manufacturing jobs -- and seen dozens of plants and factories close. The same people who brought us the Canada-US free trade agreement are at it again trying to integrate the economies of Canada, the United States and Mexico.

We support the Ontario government's position. The Ontario Ministry of Industry, Trade and Technology said, "A possible trilateral trade deal between Canada, the United States and Mexico would be a harmful extension of an already flawed Canada-US free trade deal."

The goods and services tax: The GST is one more dimension of the Tory big business agenda for Canada. It involves a massive shift in who pays tax in Canada, from corporations to individuals. The GST will be paid by consumers to the tune of about $9 billion a year in Ontario alone.

Since its introduction, it has become clear that the GST is hurting people even worse than predicted. According to the GST consumer information office, the average family will pay an extra $570 a year in GST, about 50% more than predicted in government studies that were used to argue for its introduction -- Globe and Mail, May 3, 1991.

The GST is the wrong tax at the wrong time on the wrong people. Although a provincial government cannot get rid of it, the NDP government refused to harmonize Ontario's retail sales tax with the GST, and refused to piggyback the provincial sales tax on top of it. That decision alone is important for our members and for the people of Ontario.

High interest rates: For years the federal government has kept interest rates high, claiming this was necessary to fight inflation, to support the Canadian dollar and to attract investment. High interest rates, they claim, are essential to lowering inflationary pressures which, among other things, force interest rates up.

They have got it backwards. High real interest rates hurt working people and hurt the economy. They add significantly to business costs by raising the cost of capital, and they kill jobs.

In the meantime, of course, high interest rates maintain the Canadian dollar at artificially high levels, especially vis-a-vis the United States. This undercuts the competitiveness of Canadian goods and services in the United States, and adds to the devastation caused by the free trade deal. Amazingly, it is the Tories and their big business backers who complain the loudest about Canada's lack of competitiveness.

Cutbacks affecting social services, free trade with the United States, a North American free trade agreement, the GST, high interest rates -- this is the sorry legacy of the Tory government in Ottawa.

It is these difficulties that working people in Ontario have to overcome. The provincial government's budget helps us in our fight.

The Ontario 1991 budget: fighting the recession. The Ontario budget moved in the opposite direction to the Tories. Mulroney's answer is to raise taxes and cut services, making the recession worse.

The answer of the Ontario government is to fight the recession:

By sustaining and creating 70,000 jobs, so that the province lost 260,000 jobs instead of 330,000 to federal government policy.

By undertaking the most aggressive anti-recession effort in all of Canada through increasing overall spending by 13.4%.

By creating the $700-million anti-recession program which, when combined with the contributions of local government and agencies, will bring total spending exceeding $900 million.

By maintaining health care and education despite cutbacks from the federal Tory government.

By responding to the need for action in such areas as worker protection, pay equity, social assistance reform, affordable housing and the environment.

By putting spending power in the hands of Ontarians -- by not imposing the provincial sales tax on the GST, $470 million will be left in the pockets of consumers in 1991 -- and enriching the Ontario tax reduction for low-income earners.

By creating a $215-million social assistance reform package that is designed to provide benefits for those who are in greatest need, to help people get into the labour force, to increase fairness and accessibility, and to provide further relief to overburdened municipalities.

By providing tax relief for the poorest of Ontarians by initiating the largest enrichment in the history of the Ontario tax reduction program -- this $50-million enrichment means the number of low-income earners whose Ontario income tax will be eliminated or reduced will increase to 700,000 for the 1991 tax year.

By allocating $48 million in 1991-92 to help lay the background for self-government of native peoples and resolution of land claims, for support of research and negotiations, with $20 million to be spent on community infrastructure such as water and sewer systems, and $5 million for 400 new child care spaces on reserves.

By making $125 million available to Ontario's transfer agencies -- both to major agencies, such as municipalities, school boards, hospitals and universities and colleges, and to other agencies -- to assist them with the cost of pay equity; plus an unprecedented level of provincially supported housing activity for the development of another 10,000 non-profit housing units, which will cost the province approximately $150 million in annual operating subsidies when completed.

Ontario's deficit in perspective: In all of the discussion of the province's budgetary deficit, little attention has been paid to its causes. Most of the deficit comes from the financial reality of the recession: falling revenues, increasing costs in health care, social services and education. A very large part of it is the impact of cuts in federal transfer payments. The cumulative impact of federal cutbacks to established programs financing -- health and post-secondary education -- and to payments for social services under the Canada assistance plan is costing Ontario $3.6 billion in 1991-92 alone.

Ontario's projected deficit of $9.7 billion is moderate if considered in perspective with the record of recent Conservative governments. The Ontario deficit is comparatively low in terms of total spending, in terms of gross domestic product, and in per capita terms with other provinces and with federal Conservative governments.

Here is a chart which breaks down, by region, the deficit, the share of spending, the share of gross domestic product, and the per capita. I will not read the figures. I think they are clear and they can be referred to.

Spending money now is critical to stimulating economic growth, to responsible fiscal management, and to helping our fellow citizens in difficult economic circumstances. As the figures above demonstrate, Ontario spending is not out of control. In fact, it is less than other provincial governments spent to get out of the last recession.

Ontario's public debt charges -- the interest cost of carrying its debt -- are low as a share of its total revenue. The federal government spends 36 cents of every dollar of revenue as interest on its debt; spending which only serves to benefit investors and bond dealers. In contrast, Ontario spends less than 10 cents of every dollar of revenue on interest costs -- less than every province except Alberta and British Columbia. These costs will rise to 11.6 cents next year, still far below the federal rate, and less than the debt charges of most provinces.

In summary, there have been actions taken that actually tend to stimulate the economy, which is the exact opposite of the budget initiatives of the other governments in Canada.

Those are all facts and information that have been presented by the Ontario Federation of Labour, and ones that this presentation supports.

There are many, as I am sure the members of this committee know, who are praising the Ontario government for taking that action. The social planning council refers to some in its presentation to this committee.

"The budget was a confidence builder," says chief economist and vice-president of the Conference Board of Canada, James Frank. Reducing the deficit "would have led to a significant delay in the recovery and contributed to further increases in unemployment, bankruptcies and lost output.

"I believe most people in Ontario, including many business people, have had enough of the recession and the weak housing starts, sluggish automobile sales, dropping employment and increasing bankruptcies.

"Had measures been taken to hold the line on operating expenditures, which rose by $5.2 billion, or on capital expenditures, which rose by $1 billion, we could easily have ended up with a much longer recession," Frank says.

"I think it is a move in the right direction to do something for a province that has been particularly hard done by in recent years," says Informetrica Ltd president Mike McCracken.

1450

From a CP newswire story, April 30, 1991: "Ontario's new-fangled socialist government has brought an old-fashioned style of economics back to the Canadian political scene with its first budget. Despite a record $9.7-billion deficit that has business and federal politicians crying disaster, that traditional thinking may be just what Ontario needs to survive the worst recession in half a century.

"`It's absolutely the right thing to do in a recession,' says John Smithin, an economics professor at York University's business administration faculty in Toronto. `Instead of taking money out of the economy, they're pumping more back in. This is a welcome change from the way Canadian governments have reacted.'

"Albert Breton, a University of Toronto economist says: `The NDP's $9.7-billion deficit isn't a monster. Obviously the business community reacts from a perspective that is unfounded practically in macroeconomics,' he said. `I think the NDP did okay.'

"Although Breton said he does favour deficit financing as a rule, `We're in a deep recession, and I don't think it's done anything that is damaging to the economy -- on the contrary. Because of a recession that's outside any government's control, any Ontario government regardless of stripe, would have had to run a deficit or dramatically slash programs.

"`In fact, only $1.5 billion of the NDP's budget is new spending. And only 11% of each dollar Ontario takes goes to pay off interest on the debt -- compared with 30 cents on the dollar that the federal government spends to pay interest on its accumulated debt.

"`Former US and British leaders Ronald Reagan and Margaret Thatcher also helped to bring deficits into disrepute with their anti-tax, free-enterprise economic policies; but other countries -- including Japan, with the most successful capitalist economy in the world -- followed Keynesian policies,'"

Inevitably, there must be government intervention in an economy, particularly one like the current Canadian economy, if we are to develop control over the economics of the country. This requires some basic changes, which cannot take place overnight. This presentation argues that the government of Ontario must take the first steps in that direction.

There are three aspects that need to be developed: (1) a community and worker role in developing the economy; (2) a method for bringing together the expertise, resources and planning necessary in order to develop alternatives; and (3) a source of funding.

These three aspects can be applied on the levels of small communities, municipalities and regions. They can be applied in an overall development plan or they can be applied more specifically to plant shutdowns or to cases where conversion may be necessary for environmental reasons.

Let's take a look at plant shutdowns. There have to be legislative changes made to require companies to provide information and to explain the basis for closing down an operation. This would give the community, the workers and the government the right to take a look at it. They should have the opportunity to establish that the plant does not need to close and to take the appropriate action or, if it is established that the operation is not viable, to develop alternative uses for the plant.

In the case of a small plant, the immediate community, including the workers in that plant, through the union that represents them, should first of all be guaranteed an explanation. The provincial government should then be prepared to provide expertise to that community and the workers to assist in developing a plan. The expertise should be in areas such as financial and market analysis, engineering, transportation, research, etc. The government can tie into universities, community colleges and various training programs to provide this expertise. There can therefore be a process of consultation and evaluation that would develop a plan to keep the operation going or to convert it.

In the case of larger industry, the workers and the provincial government should be guaranteed an explanation for the closure. The provincial government should set up a task force composed of experts from government, academia and the communities and unions affected. Their role would be to develop a plan for maintaining operation or conversion.

In the case of whole sectors that are jeopardized, like transportation or the aircraft industry, the government could approach unions and have them involved and ask them to come up with alternatives, again providing expertise for analysis and assessment.

In the longer term, permanent elected boards should be set up on a community and municipal level which are mandated to develop work projects and industry in their respective areas. In this case, rather than waiting for plants to shut down, they would take the initiative to create jobs and new production. They would combine involvement of workers and communities with planning and expertise in order to develop new jobs and new opportunities for the community.

The goal in these task forces or local planning groups and boards would be to develop democratic involvement and participation. It would be to find alternatives which do not penalize the workers or communities involved. The involvement of unions and communities is essential because it gives people a real role in determining their own future. Involvement of the people is what this country should be all about. Involvement will build enthusiasm and participation in any efforts to transform or redevelop. This enthusiasm and participation will ensure that the alternatives actually work. Involvement can also ensure that proposals and developments are environmentally sound and beneficial to the community. They can also, I believe, be used as a basis to do some research and build co-operation in term of new types of production, environmental alternatives, any number of things that we do not really put much into in terms of research and development.

But plans are not enough. In many cases, funding and investment will be required.

On a larger scale, money can come from two sources: taxing corporations and developing investment pools. Ultimately, corporations will have to be forced to pay their fair share of taxes. That will go a long way towards eliminating any deficit.

It can be argued that if we tax corporations, it will speed up their movement out of the province. That is a real concern. On the other hand, we will be for ever at the mercy of these corporations if we do not do something. In the immediate future, tax loopholes should be closed and the government should prepare the groundwork for a minimum tax on corporations.

Investment pools can also be developed. This would require a method for providing a guaranteed return, much like savings bonds, and/or a tax deductible investment for citizens who put money into the pool. The pool would have to be properly managed and have a range of investments in order to ensure its viability. They would be mandated to provide low-interest funding for projects outlined above.

Money from these investment pools would be available to fund worker and community projects for converting or maintaining a plant or for investment in operations that might otherwise shut down. Funding would be made available to elected community boards to initiate local projects which would develop jobs.

A process of worker and community involvement, combined with innovative means of funding and a step-by-step restructuring of the tax system, can start a process which will in the long run set the basis for a true Canadian- and Ontario-based economy. It will diversify and develop our economic base, develop expertise and create skills and jobs.

It will also give us, as workers and citizens of the province, a stake and involvement in our own future. As it is now, we are at the mercy of international companies that constantly blackmail us at the workplace level and at the government level. And it will alleviate a tax burden that our members are finding increasingly difficult to bear.

Our members are being taxed more and more. The increasing taxation provides no real guarantees.

There is no doubt that the business agenda internationally and in Canada is to deregulate the economy, cut social services, reduce environmental and safety standards, lower wages, and deskill the workforce. There is no doubt that they will use their powerful economic clout to do just that. Governments, presumably the most powerful institution in the country, responsible to the citizens of the country, are vulnerable to this power, and will be increasingly so unless steps are taken to turn things around.

The budget, praiseworthy for staving off the business agenda, is only partially in the right direction. It is clear from some of the steps promised but not taken, for example, taxation of corporations, that the government is vulernable to pressure from business, which controls investment and the media.

The government of Ontario needs to have the courage of its convictions. It has to come up with new and creative ways to give our province back to us, the citizens. Unless they are able to come up with radically new strategies to get back some measure of control over our vast human, social and natural resources, then our choices will continually narrow as we are forced to bid on fewer, less-skilled jobs and an increasingly marginalized and unbalanced economy. If it fails to address these issues, it will ultimately disappoint the workers who have supported it.

I would just add at the end that the plant I represent has a workforce of 3,500. In the 1950s, it had 15,000 people and it designed and built the most advanced plane in the world. In the period of time since then, we are now at a point where we are a subassembly plant essentially. We manufacture wings that are sent to California. We do none of the research and development. Though it creates jobs, it is nothing compared to what we used to have. It is a very graphic illustration of where the country has come, the choices that we had and the choices we failed to make and, if we continue on this path, where we are going to end up.

Also, in the aerospace industry right now, the potential sale of de Havilland and whatever will happen with that, again, it is a real attack on an industrial base and one of the few areas where there is research and development left in our country. I feel very strongly that if we do not start addressing these problems, although it is important -- the action has been taken around the budget because it does offset some of the problems we have -- there is a lot more that has to be done.

1500

The Vice-Chair: Thank you for your presentation. We have time for about two minutes for each party, and I believe we are starting with the official opposition.

Mr Kwinter: I get conflicting messages. You tell me on the one hand 15,000 employees have gone down to whatever the number was, and you are talking about big business. Throughout your whole presentation, it is anti-business. Big business is bad, these guys are terrible, you are glad they did not give in to the business agenda, we have to make sure that everything is back in the hands of the workers.

On the other hand, you are complaining that big business is moving out, cutting back, shifting. When I was the Minister of Industry, Trade and Technology, I brought Honda to Alliston, I brought Toyota to Cambridge, I brought Suzuki to Ingersoll, and I brought the paint plant to Oakville. In total, it created about 6,000 jobs, but in every one of those sort of sales pitches we were competing with other jurisdictions.

Unless there is an environment to bring those people here, to create the kind of jobs you want and the jobs you are saying we are losing, you are not going to get them. So you have to come to some kind of terms with the fact that as much as you hate big business, they are the same guys you want to create the jobs you want. How do you deal with that?

Mr De Carlo: I think the whole report addresses that issue, and it is interesting that the point you are making is exactly what I am talking about.

The presentation I made points out that as long as we are at the mercy of precisely that argument, where we do not have any alternatives but to bid whether Honda or Toyota or General Motors or Fiat is going to come here, we do not have much of a future because our future is dependent on somebody outside the country, at whose mercy we are left.

The alternative is to develop a pool of capital and to involve the people of this country, who are quite capable of building an economic future for our country, in a process that will build the research and development, the infrastructure economically in the local level, so that eventually we will be able to develop our own companies and our own solutions to these problems. One final thing. There is no doubt that companies are leaving, and you said why: because they are looking at the issue of competitiveness or whatever, and we have to take that into account. We cannot just overnight change that, but we have to build some alternatives or we are finished.

Mr Stockwell: Where did you mention competitiveness in here?

Mr De Carlo: I do not know. Where did I mention it?

Mr Stockwell: That is what I am asking you. You just spent a whole bunch of time talking about crap, in my opinion, and this is pap. All you are missing is the seven-year program, us living on communes and developing a manifesto.

Where did you talk about competitiveness? You never even answered the question.

Mr De Carlo: Which question?

Mr Stockwell: Competitiveness.

Mr De Carlo: What about it?

Mr Stockwell: How are we going to attract industry if our tax positioning and our potential for attracting it is being undermined by provincial governments and their tax hikes? How are you going to attract anybody when you cannot compete?

Mr De Carlo: I am sorry, but I guess you missed the point.

Mr Stockwell: I guess so. I guess I totally missed the point. In fact, probably 80% of the people in the province missed the point here. I mean, the NDP could have written this, for crying out loud. They probably did.

The Vice-Chair: Moving on, the governing party. One question.

Mr Jamison: Thank you for taking your time and making the presentation. I think everyone should have the opportunity to do that and should be well received at this committee level for taking the time and putting together a report, whether it be acceptable or not to any individual on this committee.

My experience with the Ministry of Industry, Trade and Technology -- and I would like to preface what I am going to say, preface a question really in these terms, that I am pleased to see you have connected the policies of various government levels to the situation at hand. When I met with, for an example, the steel industry in this province, an industry that is not able to get up and move as readily as other manufacturers -- if I asked them to identify one problem, it is the problem with export markets in conjunction with the level of the dollar.

Having said that, what are your feelings on that particular question and, coming back to our budget, with the $700-million expenditure on infrastructure in this province? Do you feel that may have shortened the recession we are in?

Mr De Carlo: Yes. I think that is a point made in the report that, yes, it helps to shorten the recession. Although I guess that is what it does, it helps to shorten it, it does not really lay the basis for the future in terms of preventing similar situations from developing.

As far as the dollar goes, I believe the policy should be for lower interest rates and to allow the dollar to drop lower. The problem is we are in a vicious circle, though, because the whole issue of interest rates and money flowing in and out of the country and the level of the dollar is very much tied to what kind of economic base we have in the first place. In the short term there are different policies that can be taken to alleviate this. I think the whole idea of the Mulroney government is the pure idea of competitiveness and it does not really solve our problems.

On the other hand, if we do not build up these economic alternatives in terms of the future economy, then we will still be to some degree at the mercy of the international flow of money in and out of the country and we will not be able to adapt our interest rates or our dollar in the way that necessarily suits us as a country.

The Vice-Chair: Mr De Carlo, thank you very much for your presentation. Unfortunately, the time is up.

1510

CANADIAN ENVIRONMENTAL LAW ASSOCIATION

The Vice-Chair: Our next presentation is from the Canadian Environmental Law Association, Ken Makuch, counsel. Perhaps you would care to come forward. Before we begin, just a reminder: There is a half-hour time limit and whatever time you use for your verbal presentation will be subtracted from the time for questioning.

Mr Makuch: I would like to clarify the role I will be playing here today. I am an environmental lawyer who represents clients who are generally citizens' groups. That has been the Canadian Environmental Law Association's role for some 21 years now, so the gloss I will be putting on my remarks is specifically with regard to environmental concerns as they are addressed by the budget and in a peripheral way on the free trade agreement. My presentation will take about five minutes. I have a script I have prepared and will read to you. It should leave ample time for questions at the end.

The Canadian Environmental Law Association has worked on the side of environmental protection for approximately 21 years. Through that period we have witnessed many promises by governments at all levels to address public demands for greater action on environmental protection.

The long-awaited green plan turned out to be somewhat of a disappointment. This seems to be part of the federal government's agenda to dismantle its federal responsibilities on the environment and shift the burden to the provinces. In effect, it amounts to an abdication of fiscal responsibility for social wellbeing and environmental protection. The inevitable result has been greater pressure for spending by provincial governments -- of course the Ontario government -- at a point in the business cycle where it seems that it is most constrained in trying to do so. Unfortunately, there is little room for austerity, given the myriad of environmental problems we face as a nation. However, our latest government has made some humane choices that will pay off in the long run.

As to the budget itself, there are three issues. The first I will deal with is energy, the second, solid waste, and finally a few remarks on free trade -- .

Ontario's industries continue to argue for cheap supplies of energy from Ontario Hydro megaprojects, and they suggest they will cease to be competitive to the extent that does not happen. Of course, that will result in job losses. We are very concerned about that, but it would seem the production of energy is really an inherently polluting activity, especially nuclear energy. So we would like to see it go another way. It would appear that our arrogant misuse of resources has stolen economic security from future generations and left them a legacy of poisoned air, land and water.

We call for the more efficient use of energy resources. I believe that would benefit corporations as well, and it would reduce environmental strain. It also makes solid economic sense and I will explain why.

We use more energy per capita in this province and per unit of economic output than most areas on the planet. That includes nations with stronger economies that we are attempting to be competitive with. Therefore, the budget proposal that $10 million be allocated for energy efficiency is an environmentally and economically sound approach.

The NDP's decision to halt further expansion of nuclear energy facilities also makes sound fiscal, as well as environmental, sense. The taxpayers will be saved millions of dollars, subsidies for reactors that have generally operated at only 60% of capacity. You would hardly call that efficient.

Nuclear energy is prohibitively expensive. It costs twice as much as energy generated from fossil fuels and up to 12 times as much as energy derived from efficiency improvements. At this point, nuclear advocates tend to suggest that more Darlington-sized reactors would reduce the risk of global warming, the impacts of which environmentalists like to prognosticate. But in tight budgetary times it would be fiscally irresponsible of the government to invest in new meganuclear generating stations. dollar spent on efficiency is seven times more effective in curbing CO2 emissions, which are the major cause of global warming. For that reason, those moneys should not be spent on nuclear power.

As well, one can only imagine how large government expenditures would be once the bills for the secondary costs of nuclear energy production came due. Consider the dollar values associated with the long-term expenses of health care for uranium miners and reactor employees, as well as citizens affected by radon gas exposure, the cleanup of sites polluted by radioactive mine tailings, the costs of waste disposal and, finally, dismantling and capping obsolete facilities.

On the issue of solid waste I have only a few remarks. We support many of the initiatives taken by the government in the area of waste reduction and management. I have been very critical of a few endeavours Mrs Grier has undertaken lately to the extent that they affect public process, so my biases are not completely with the NDP. Landfills and incineration both result in damaging impacts on the environment. Waste must be minimized through the 3Rs -- reduction, reuse and recycling. The proposed Ontario waste reduction act will also go some distance in dealing with solid waste measures and we hope it is a progressive approach to garbage.

In the budget, the government announced it would be doubling its financial contribution to municipal 3R programs. As well, $28 million is being set aside for new and expanded blue box and composting programs. These are areas that should not suffer from austerity. Commitments to 3Rs should be incorporated into industrial and economic plans and that is already being done. My experience on the national packaging protocol indicates that industry is very willing to get involved in these measures because ultimately they are cost saving. That is what 3Rs is all about, making garbage disappear, and the cost associated with the infrastructure of garbage disposal also disappears.

Now a word on free trade and then I will wrap it up. Federal government policies have played a large role in limiting what the Ontario government can do with respect to the recession. Whether they will play out to some economic prosperity is still left to the winds in some ways. It seems that the goods and services tax and the free trade agreement have been responsible for keeping us in a recession while the US has started to climb out. We support a critical analysis of the free trade agreement but we do not necessarily believe in abrogation of the trade agreement in principle; it needs some modifications.

We have monitored some of the subtle and not-so-subtle effects, and through my participation with federal government people the assurances are being given that environmental costs can be dealt with if they become subject to the negotiations of the North American free trade agreement. That is what we are hoping.

It seems the free trade agreement also poses a serious challenge to national sovereignty over natural resource management and environmental protection. This is something not discussed very often. It would appear that projects, for instance James Bay II and the Mackenzie Valley gas pipeline, can cause significant environmental damage. The necessity of serving export markets is not something I would object to in principle because it means money and jobs, but I submit there are processes that could take place that would allow for a more environmentally safe approach to all of this.

Similarly, there is a problem with harmonization. Generally what happens in harmonization talks or discussions during free trade agreements is you have harmonization downward of environmental regulation. That has happened under GATT with an institute called Codex, which is really seeking lower health and safety standards that everyone in the international community can live by.

The effect is that countries with higher standards, like Canada, are really being induced to adopt lower standards, and that is something our citizens simply should not be putting up with.

One example would be pesticides. Under the free trade agreement, the negotiations taking place suggest that we will probably be going down to a US standard. That raises obvious concerns because the US uses seven times as many pesticides as we do, and I would imagine most of those pesticides cannot meet our standards. That is where some tinkering would be required with respect to the free trade agreement.

In conclusion, the abovementioned concerns reflect overall support for the environmental initiatives undertaken by the Ontario government over the past nine months. We recognize that in recessionary periods it is irresponsible to demand massive expenditures on environmental protection and natural resource management. However, committee members should realize that when push comes to shove we advocate greater expenditures rather than fewer expenditures on the environment, even in recessionary times. Given the mandate of this committee, that is not something I want to discuss in any detail. I give my shopping list out to other people.

That is essentially the substance of my presentation. I am willing to entertain questions, of course.

The Vice-Chair: We have approximately 15 minutes altogether, about five minutes per party. Unfortunately, I have lost my place. I believe we started over here last time. Okay, the third party.

Mr Stockwell: No questions.

Mr B. Ward: Just a quick comment from an environmental standpoint: Do you think our government perhaps is moving along in the right direction in the budget, but should be moving at a faster pace?

Mr Makuch: I think my expectation is that even given all the lobbying that environmentalists have done for various reforms, the budget is quite restrained in some of the measures we are calling for. I would cite specifically expenditures for improving enforcement activities within the Ministry of the Environment. From speaking with their staffers, those people seem to be working night and day to try to get their jobs done, and still it is being left to non-governmental organizations like ours to take polluters to court.

I do not think anyone would object in principle to the idea that polluters should pay for environmental harm, but the real problem becomes one of enforcement. I would much rather be doing other things besides going to court and helping the MOE with those sorts of prosecutions. I would like to see funding in some areas that have not been dealt with.

Mr B. Ward: There has been criticism by some groups or organizations about government spending during tough times, that it should be cutting back, etc. How would you respond to that criticism in your request that you think additional funds should be added to the Environment ministry.

Mr Makuch: I think the criticism from the business community that deficits definitely are a negative inducement to investment is valid. Nevertheless, it would appear that Ontario has decided it wants to take a lead role in environmental protection measures and in developing strong environmental policies within the business community. That is the way the world is going.

The United States is adopting a similar tack and my perception is that in international trade agreements some room will be made for environmental measures in the future. So to the extent that Canadian businesses are encouraged to comply with stiffer environmental regulations, they will have a stronger competitive advantage internationally. It will mean our goods will not be the subject of trade restrictions caused by a poor environmental process or industrial environmental processes.

1520

Ms M. Ward: I would like to take a slightly different approach -- rather than the regulatory and penalties and so on, more of a positive -- and ask you to comment on what you might see as opportunities for new product development and new technologies in the environmental area, whether you see any of that going on, and where there are new industries or where there is an opportunity for new industries springing up to develop new processes for the protection of the environment. Basically, is there an opportunity there for new businesses in the environmental field? What is there now and what do you think there could be? How might government contribute to that?

Mr Makuch: I suppose there are three areas I can think of right away in which Canadians can take a lead role.

In the first place, citizens seem to be very interested in programs like blue box programs. What that means ultimately is that if we are involved in our disposal processes to the extent that we are making them disappear, industries themselves will take on that mantle and will be encouraged to be more environmentally sound in their practices. If those programs were introduced in the industrial area and came out of that enthusiasm the public has, then I suppose the positive impact is that we would cut down on a number of the normal costs associated with industrial or commercial activities.

In terms of offering opportunities for new industries, it would seem to me that in the area of recycling there are a number of industries developing and coming on side as a result of some of the measures being taken by the Ontario government. It would seem that a lot of garbage that actually goes into our disposal sites can be recycled and used. Industries with creative impetus can use those materials as a way of developing all kinds of new products, certainly in the area of rubber products; witness the number of tires being disposed of daily. All that new creative energy can certainly be put into developing our recycling industries, and the number of uses that come from disposable products like tires is quite incredible.

There is an expansion area there that can take place and is already taking place. Next to that, the number of environmental consultants, environmental lawyers and people who are becoming experts on the environment is increasing all the time. That would seem to me to generate a lot of money within the economy. I think as well that a number of US and European firms are starting to turn to Canadians for the wisdom we are developing and the programs we are using.

Those are all areas I think can contribute to our economic productivity in the province.

Mr Hansen: I know we are talking about municipal taxes and you really have not hit on it, in a sense, on the recycling. Recycling is great, but it costs money. What municipalities are complaining about is the cost of recycling. We are looking at reducing the amount of recycling; in other words, something you reuse again in that particular area.

I notice you mention nuclear conservation. If you conserve $1, it actually returns $7. I sort of missed it; I was leaving the chair. I am looking at cost savings. In other words, for industry that comes to Ontario, if we are in a conservation mode then that costs less for business to operate here in Ontario because of the cost of hydro. Could you go into that? It was just a short sentence there.

Mr Makuch: I think the basic idea is that as consumers, not industrial consumers but residents, we are energy pigs. In the industrial sector, in the commercial sector, for much too long it seems as though the costs of producing energy have really been subsidized by taxpayers themselves. In other words, we are even charging energy prices that are lower than the actual costs of producing energy. That is something Hydro is trying to rectify.

But the basic idea I am getting at, and the one that you are referring to, is that if we can become a world leader in terms of energy-efficiency initiatives, and we are heading that way, then we will be able to show industries that want to locate in Ontario how they can achieve production levels that are the same as they might be elsewhere, but it will be cheaper because we will have the energy conservation infrastructure in place that allows their energy costs per unit of production to go down.

Mr Kwinter: Mr Makuch, I would like to ask you about the feature of the budget that dealt with the environment as it relates to automobiles. When the Treasurer first made his announcement on what he claimed was an environmental measure, he imposed the gas guzzler tax that was supposed to inhibit the purchase of cars that had emissions over a certain level. There was a feeling among environmentalists that if they had instituted a program to get rid of automobiles that were over 10 years old, they would get rid of 50% of the problem.

As a result of representations that were made to him by the industry and by the head of the auto workers' union, they rescinded that tax and have now applied it to virtually all cars. Of over 200 automobiles, I think there are less than 10 where, without getting a tax, you give a $100 credit if you buy that car. Do you feel there is going to be any impact on the environment as a result of that measure?

Mr Makuch: This certainly is not my area. I guess I could make a few general comments and then ask you to clarify the end part of your concern. It would seem to me that the way of automobile industries and the way of economies based on automobiles is quickly passing us by, but I am not one of those environmentalists who would suggest we should get rid of all our cars and develop mass transit systems as the only means of getting around in society. We must recognize the reality that a lot of people depend on the production and use of automobiles for a living.

Within larger municipalities like Toronto there are obvious problems created by automobile congestion. Some measures should be taken to reduce the amount that we use cars. I think that can be accomplished by measures other than taxation, although it seems that taxation works in a very direct fashion to inhibit the use of automobiles. My position on the use of cars generally is that cars do contribute to global warming. That is creating a massive problem in terms of climate, perhaps not for our generation but certainly for our children and their children. So some measures have to be taken in that area.

It would seem to me, though, that aside from taxation, there may be other measures as a way of dealing with the problems of global warming. The earlier measure in which very large automobiles are being taxed, or automobiles which use a disproportionate amount of fuels are being taxed, seems to be a wise measure. As to whether or not one wants to do that with subcompacts, if that is what you are suggesting, I have a little bit of trouble with that idea.

1530

Mr Kwinter: If I can just clarify it for a minute, if you buy a Bentley Turbo at $220,000 and you have to pay a tax of $4,000 --

Mr Stockwell: It is $7,000.

Mr Kwinter: All right, $7,000. I think the person who is going to buy a Bentley Turbo is not necessarily going to be deterred by the fact that instead of paying $220,000 he has to pay $227,000. He will go out and buy it. He will gripe because he is paying what he considers to be a ridiculous tax, but he will buy it.

On the other hand, to tax virtually every car in Ontario at a minimum of $75 -- as I say, with very few exceptions every car has at least a $75 tax on it. What is the purpose of that $75? It cannot be an environmental tax, because someone is not going to say: "I'm not going to buy that car. I'm going to buy another car." You are not going to get everybody in the world driving these little cars. The point I am trying to get at is that even though this tax is being sold as an environmental tax, it has nothing to do with the environment. I was just wondering if you had any ideas of a more effective way of dealing with the problem.

Mr Makuch: Again, I am not going to try to second-guess people who are experts in the area. On your first point, it seems to me that perhaps the cars that are the most expensive should be taxed the highest simply because the people who can buy the most expensive cars are the ones who are least hurt by that form of taxation.

Your second suggestion seems to indicate that if it is only a $75 tax, then it is not going to do much good anyway, so perhaps you are suggesting it should be a $300 tax or something. I do not believe that is what you would suggest for a moment. But the idea that it should be the same for every type of vehicle regardless of the kind of efficiency that is packed into its design does not seem to me to make sense on the face of it. I am certain there are people within the NDP who could explain better why that policy is being invoked.

Mr Kwinter: The point I was really trying to make is that I think they are kidding the troops. If you want to raise some extra revenue, just say: "We're putting an extra $75 on every car," a minimum of $75 on virtually every car. Do not tie it into the environment when it has nothing to do with the environment.

Mr Makuch: If I could just respond very quickly, I think it has to be understood that by taxing vehicles and calling it an environmental tax, you are calling attention to the fact that vehicle usage does cause negative impacts upon the environment. To the extent that is happening, it is an environmental tax and it is packaged and sold that way.

I suppose my second comment is that if McDonald's is introducing quasi-effective measures and calling them green measures, then if we are not going to prohibit McDonald's from calling them green measures, we certainly should not be preventing our governments from calling them green measures.

COALITION FOR THE SUPPORT OF THE SOUTHEAST ASIAN YOUTHS

The Vice-Chair: We will now move on to the next presentation, by the Co-Alition for the Support of the Southeast Asian Youths. David Chu is a counsellor and Tom Wong a student. Welcome to the finance and economic affairs committee and post-budget hearings on the budget, the hearings on the budget afterwards.

Just to let you know, you will have approximately a half-hour altogether. Whatever time you use for your verbal presentation will be subtracted from the time for questions, and the time left for questions will be equally divided between the three parties.

Mr Chu: First I would like to introduce myself. My name is David Chu and this is Tom Wong. We are both members of the Co-Alition for the Support of the Southeast Asian Youths. I am here also in my capacity as a youth employment counsellor for Metro Youth Job Corps. We are pleased to have the opportunity to present our views on the provincial budget. We believe the budget was a positive action during this period of time and support other organizations that back the budget, such as the Social Planning Council of Metropolitan Toronto.

This budget provides the indication that the present Ontario government is concerned about its citizens during these recessionary times. Funding is needed to assist in the alleviation of the short-term emergency situations of high unemployment, permanent loss of jobs and shortage of affordable housing. The budget provides some funds targeted towards job creation and retraining for laid-off workers, but I find that youths have been excluded from this budget. In these recessionary periods, it is extremely harmful to exclude this group. During times of recession, the job market becomes tight for these youths and there is more competition for the jobs.

The State of the Child in Ontario report provides documentation highlighting the stresses these youths face. Support structures have to be expanded to assist these youths to go as far as possible in the educational system. The strong correlation between high level of education achievement and high income levels are understandable. Housing, social and family support and financial support are required in assisting youths to stay in school.

Youths who are no longer in the educational system require assistance as well. School dropouts and early leavers require assistance through the opportunity of participation in training and apprenticeship programs to provide skills for these youths to obtain productive work in an increasingly technological workplace.

My position as a Metro Youth Job Corps employment counsellor allows me to have contact with a disadvantaged consumer group. This group does not have a powerful, concerted voice. The view from the front lines is not pleasant.

I am quoting the latest unemployment figures published by Statistics Canada this spring. The employment rate for the 15- to 24-year-old group for males is 20.3% and translates to about 94,000 jobless. Add the unemployment figures for 15- to 24-year-old females and that is another 10.6%. The unemployment figures for this 15 to 24 age group would be 144,000 in Ontario. The actual unemployment may even be higher, as many of these youths would have long given up searching for a job.

The Toronto Star had a recent article entitled "Jobs in Centre of City Drop by 6,000." This just reinforces the plight of the youths who are in the Metro job corps program. These youths tell me they want to work, that they want a job, but there is just not enough work available to them that they have adequate knowledge and skills for.

There has been an indication from the federal government that as the major funder of our program, it would tighten up on its spending, that spending restraint was in order because there were tough economic times. Canadian Jobs Strategy was cut $100 million and job training programs, which include youth training programs, are threatened. The provincial government is required to offset the federal pullout.

The provincial government should be applauded for its efforts; $32.5 million for training and assistance in finding work for laid-off workers is a positive step; $32 million for adult literacy programs, with an emphasis on training in the workplace, is a good investment. New legislation to ensure fairness in the workplace for aboriginal people, persons with disabilities and members of visible minorities was a step in the proper direction, as well as a new system for advocacy to protect the rights of vulnerable adults. These are encouraging ventures to assist a depressed population.

New education and training partnerships must be created for the youths, because in the planning of policies to reduce disparity, the youth population is probably the most needy. Please ensure that the cost of economic adjustment is not borne by those least able to shoulder the burden, this province's silent youth population.

Mr Wong: CASSY is an umbrella organization that is composed of agencies or individuals who service or who are interested in working with the Southeast Asian youth population. We believe our role is to assist Southeast Asian youths, particularly the Cambodians, the Chinese, the Laotians and the Vietnamese, to access existing services and to advocate the creation of new services if the required service is unavailable.

CASSY members have produced a report entitled The Unattached Youth: Lost Between Two Cultures, A Study of the Southeast Asian Immigrant Youth in Crisis. The literature is clearly in agreement that the greatest threat to identity is not the feeling of belonging to two cultures, but of belonging to none. The Southeast Asian youths at risk lost between two cultures is becoming more and more evident. They are referred to as unattached youths. These youths are susceptible to a number of key problem areas: family relations conflicts in terms of life decisions and role reversal, problems in school, problems in peer relations and youth gang criminal activity. Intervention with this population requires that the traditional methods be culturally sensitive, while practices may need to be transformed to be culturally relevant.

It is crucial to understand some of the cultural backgrounds and systemic obstacles that Southeast Asian youths face in Canadian society. Southeast Asian youths face cultural and linguistic barriers in seeking services. The documents, Family Services for All, A Summary of Actions: Access to Health and Social Services for Members of Diverse Cultural and Racial Groups in Metropolitan Toronto and the Multicultural Resource Guide: Mental Health and Related Services, establish the problems the ethnocultural communities have in obtaining services from mainstream social service agencies. The mandate of the mainstream agencies is to service everyone, but they fail as they only service one ethnocultural group, those who are Anglo-Saxon. That is from Family Services for All and A Summary of Actions.

There are some excellent ethno-specific social service agencies. Unfortunately, the ethno-specific agencies are underfunded and must spend precious staff time resources to work on project proposals due to the lack of permanent operations funding. The problem of overutilization by the minority population means that there are waiting lists and that clients suffer.

We have a list of recommendations. Perhaps Dave could read that.

1540

Mr Chu: We would like to have greater co-operation among the school boards to provide more English-as-a-second-language programs for youths and their families; greater emphasis on activities that promote more interaction with the police force and the youth population; co-operation between different levels of government and the private sector to create more employment opportunities for disadvantaged youths; recognition of the need to involve youths themselves in the formation of new training programs and policies; training programs to assist service providers to be more culturally sensitive to the fast-growing ethnically diverse population; more accessible, culturally sensitive and linguistic services for the ethno-specific and age-specific populations. These are our recommendations.

The Vice-Chair: Thank you very much. We have approximately 15 minutes altogether for questions. I believe we are starting with the governing party this time.

Ms M. Ward: Thank you for your presentation. I do not know if this is really a question or not, just tying your recommendations back to something you said. In your comments you said the mainstream agencies service only Anglo-Saxons. Maybe you can expand a little bit on that and give us some examples or something. Also, in your recommendations you are calling for training programs for service providers.

I guess the reason I picked up on that is that in one particular part of my riding I would say there are people from almost every country in the world, and I know it is one of the problems the agencies have. There is a neighbourhood service; Flemingdon Neighbourhood Services happens to be there. They happen to be next door to me right at my office. I know one of the problems they have is getting translators and so on, and they do worry about whether they are reaching the people who need their services. They certainly try to provide service to people of all cultural backgrounds, but I know they do recognize the problem.

Do you feel that is really a widespread problem, that such agencies are not reaching all cultures and linguistic groups? Where do you see the training programs being provided and under what auspices?

Mr Chu: Maybe I can address the second part. We did not write what we were saying about the specific agencies not providing services. It is in a report.

Ms M. Ward: No, I did not mean to say, "This agency does not do it." I did not mean at that level.

Mr Chu: Right.

Ms M. Ward: How serious do you see that part as being?

Mr Chu: Just from my experience at a large community centre that services the east end of Toronto, we have a lot of oriental clients, but we do not have the different dialects needed to satisfy all our different population. Many times a person with a specific dialect is not registered in the demographics or is not highly visible and comes in who we cannot serve. We have no way of assessing what we could do with that client. It is just a problem.

Ms M. Ward: Would it be possible to have a floating pool of translators or people who could communicate who could be used by different agencies? How do you see a solution to it, because obviously you cannot have someone in each agency who can speak each language.

Mr Chu: No, we were asking for more ESL, and we were also saying that a lot of the mainstream agencies do provide the service and we do not want to cut that service. It is just that they should be the ones who train the people with the language skills, and then in that way we could maybe have this pool, but as such we do not have this now.

Mr Wong: Perhaps I could sort of tackle the first part of your question. I will provide an example. For instance, in some cultures they are not very straightforward in the problems. For instance, a woman goes to see a doctor and she says she cannot sleep at night. She feels she has bad spirits. Naturally, a medical doctor who is trained in the western method of medicine is going to wonder, "Perhaps we should do a psychological profile on this woman." Now, the reason why this woman said it was a spirit thing was because in our culture they are not very straightforward with their problems. She could be having problems with her husband, marital problems, but marital problems are a shameful thing. You do not bring it outside your family. A doctor who is trained just in western medicine probably would not catch on to that and would think that perhaps this woman should be psychologically assessed.

Ms M. Ward: So it is cultural sensitivity training that is needed for the people at the agencies also.

Mr Wong: Certainly training and linguistic skills are required, both in combination.

Mrs Sullivan: I would like to start with some questions. You indicated that you were funded by the federal government. Can you tell us what the level of funding from the feds has been?

Mr Chu: It has been 83%.

Mrs Sullivan: Where does your other funding come from?

Mr Chu: Metro.

Mrs Sullivan: So you have not received funding at all from the provincial government.

Mr Chu: No.

Mrs Sullivan: How many clients do you serve?

Mr Chu: My personal case load this week is about 60.

Mrs Sullivan: How many would the agency serve?

Mr Chu: Our unemployment unit, with the summer programs on now, is probably double, almost 150.

Mrs Sullivan: Did you say 150?

Mr Chu: This month.

Mrs Sullivan: Okay, 150 young people; good. How do you work with existing institutions, whether they are social service agencies or places like community colleges, in terms of introducing students into post-secondary education, or with the high schools? Do you have any kind of relationship with them?

Mr Chu: Yes. That is considered a successful bridging. Anybody we can put back into the education system we are encouraging. There is just a long period of time where a lot of these people have left school and have no intention of going back or they have been out so long they have problems catching up. There are also problems with language and literacy that make it really hard for them to catch up.

Mrs Sullivan: I was interested in your support for initiatives in the budget in relation to laid-off workers and so on. As I read the budget and see the impact of that assistance, it is really only for those people who have already been entered into apprenticeship programs. One of the areas that we see as being difficult is that there are no new positions opening up for apprentices, nor is there any initiative to attract new apprenticeship positions. Are you seeing the same thing?

Mr Chu: Yes. We are finding private businesses just do not have the time to train anybody without the skills. The skill levels these people entering at the apprentice level have just do not have any advantages to the business that is offering an apprenticeship.

Mrs Sullivan: The other thing I was kind of surprised at related to your comments on the injection of funding into the economy for job creation. Do you understand that funding injection was all for very short-term jobs?

Mr Chu: Yes.

Mrs Sullivan: Certainly through that period of time we have not seen a decrease in youth unemployment, and those jobs which were funded were largely in the construction sector, whether it is water and sewer or roadbuilding, in areas that do not traditionally attract youth. I guess what I am asking you is, where do you see the initiatives that are particularly important to you in this budget that you have indicated you support?

Mr Chu: I am not saying that I see they have actual moneys this year. I am seeing that there is a commitment that they support the underprivileged and people in need at this time. I have also seen that they have a commitment to do something in the future for the disadvantaged and I am hoping they keep in mind that the youth population does not have a strong voice. One of the reasons I am here today before this committee is to voice that concern. This is what I deal with daily. They tell me they want to work. They just have no way of doing this.

1550

Mr Phillips: I will follow up a little bit on that. Before the budget came out, and the Hansard will show I raised the issue of youth unemployment in the House, I had been terribly worried about it. I pored through the budget. There is not one mention in the budget of youth unemployment. Youth unemployment right now has doubled. It is up to 20% and for me is a major concern, because if young people do not see an opportunity for hope and a future, we run the risk of losing a generation.

You people are very close to this thing. In what way do you see jobs being created for young people as a result of this budget, and is it beginning to have an impact now on the clients you are dealing with?

Mr Chu: In some of our job training programs it is just making our clients a little more competitive. I mean, there is not a lot of full-time employment, but there is a rise in part-time. That is encouraging.

Mr Phillips: There is a what?

Mr Chu: There is a rise in the part-time employment figures. These people are now getting at least some hours on weekends, which they were never able to get before, maybe because of some of the laid-off positions and downsizing.

Mr Phillips: In terms of the future, the next two to three years, because the budget is kind of a longer-term document too, did you see things in there that will create jobs?

Mr Chu: Yes. I saw the commitment that they did want to put some effort into creating new education and training partnerships and I am encouraging that these partnerships should be with the community and the private sector.

Mr Wong: I would like to add a quick comment. Yes, I totally agree with you that youth unemployment has increased over the summer. I know this from firsthand experience. A lot of youths are desperate for any jobs out there and unfortunately there are none. I think the problem is more highlighted for the minority youths, because they face a bigger restraint in that they have cultural and linguistic barriers. There are some employers who would not want to hire minority youths, and that has been documented in many reports.

Mr Stockwell: I do not understand what your point is. We all know there is youth unemployment and we know it is high. What is this budget doing to alleviate the situation and what do you recommend we do to alleviate the situation? What is the point in retraining somebody if no job exists?

Mr Chu: It does not exist at this time, but we are hoping that somewhere, in some way the economy will pick up so there will be job openings. A lot of these people we are talking about, the youths, have no job experience whatsoever. They do not have a place to stay. They are telling us they need education and affordable housing in order to keep a job.

Mr Stockwell: But what is the point? They are not getting a job anyway. There are no jobs out there, you are telling me.

Mr Chu: We are making a job for them.

Mr Stockwell: What is that?

Mr Chu: In getting a job, in training themselves to be --

Mr Stockwell: That is noble and I like the term. Everyone always uses that term and it is a lovely term, except it does not put food on the table.

Mr Chu: It works.

Mr Stockwell: You have to get a job.

Mr Chu: Yes, and it is a job that can do it.

Mr Stockwell: It is not just the recession. The plant closures you are talking about are permanent plant closures. They are not layoffs any more. You think maybe we are losing a lot of jobs because of overtaxation and uncompetitiveness?

Mr Christopherson: And maybe the recession?

Mr Stockwell: I said the recession up front. Yes, maybe the recession, but maybe we are overtaxed. Maybe businesses do not want to continue. Maybe we are not competitive. Has that ever crossed your mind?

Mr Wong: I disagree. Although they may be trained right now in positions that will not be offered as employment after the training program is over, at least it gives the youths something to do that will help with their self-esteem. Right now a lot of these youths feel they are losers, that nobody is willing to help them. Through a training program like that, it helps boost their self-esteem. It helps them interact with other youths.

Mr Stockwell: I am not arguing that point. That is good, that is noble and it is a good thing to do. But at the end of the day they finish these retraining programs and there are no jobs available. What was the point?

Mr Wong: Certainly some training programs have job-searching skills and that would help them afterwards.

Mr B. Ward: It gives them a chance.

Mr Stockwell: I understand all this stuff. I understand it gives them a chance, job-searching skills. The question I am asking you is, where in this budget to do you see any real job creation? Where have you seen any job creation happening in the last 10 months? You came in to endorse this budget. Show me in this budget where we see some job creation.

Mr Chu: I do not see money specifically laid out for new jobs, but what I see is a commitment that they want to at least listen. What I am saying right now is we have to do something for them. I know there are not a lot of jobs. I feel for the clients I have now. They tell me this daily. But it is better for them to learn and at least get some kind of job-readiness training to be prepared for the actual event that there is a job.

Mr Stockwell: Okay, I agree with that. I agree with what you are doing. I guess I have got a bone to pick with the government.

You service 150 kids right now. What is your budget to service 150 kids?

Mr Chu: Our budget for kids? We pay them $5.40 an hour.

Mr Stockwell: No, what is the budget that you receive from government?

Mr Chu: I am not sure on that. All I know is the breakdown of it.

ONTARIO CONFEDERATION OF UNIVERSITY FACULTY ASSOCIATIONS

The Vice-Chair: Our next presentation is from the Ontario Confederation of University Faculty Associations, Bill Graham, president, and Marion Perrin, executive director. We will begin the presentation. Welcome. We have approximately half an hour for the presentation. Whatever time you use for the verbal portion will be subtracted from the time for questioning, which will be divided equally among the three parties.

Dr Graham: Thank you for inviting us to appear before you. With me is Marion Perrin, who is the executive director of OCUFA, and Heather Webster, who is on our staff. In May 1991, OCUFA received an invitation from Conservative Party leader Mike Harris, urging us to join him in a "fight." He exhorted us to "tell the Premier what (we) think of his $53-billion budget by making a presentation to the finance and economic affairs committee of the Legislature." OCUFA is, of course, no stranger to this committee. We make yearly presentations as part of the pre-budget consultation process.

In recent years our submissions have lamented the declining government commitment to higher education and have urged increased financial support to the province's universities. We have cited surveys conducted by the Ontario Institute for Studies in Education which show public support for increased education spending. In one study, almost half of those who supported increased funding said they would do so even if it meant higher taxes. We have urged the government to consider the imposition of a minimum tax on profitable corporations and have suggested that revenue thus generated be spent in areas such as education and health.

It would be highly inconsistent, then, for us to be in concurrence with Mr Harris's view that the government ought to cut taxes and reduce government spending. We believe the NDP government had no choice but to respond as it did to the recession and to the widespread misery it has produced. The fact cannot be ignored that the economy of Ontario is in desperate straits largely because of the ruinous policies of the federal government. The enmity of the business community toward the Ontario budget is thus, we believe, misplaced.

It is encouraging, however, that there are voices of reason within the business sector. We note that Conference Board of Canada economist James Frank has called the budget a "confidence-builder" which will help lead the province out of recession. Economic consultant Michael McCracken also approves of the budget, calling it "a move in the right direction," and corporate consultant Ted Ball has said that critics of the budget have not been completely fair.

Ball pointed out to a group of executives recently that $5 billion of the deficit is directly related to the depth of the recession -- reduced revenues, cuts in federal transfer payments, increased welfare costs due to unemployment and so forth -- while $3.2 billion represents the cost of maintaining existing services. Only $1.5 billion is being spent on new services. We agree with Mr Ball's conclusion that there is nothing wrong with deficits if they represent investment in "initiatives which will enhance our future ability to create wealth."

1600

OCUFA applauds the government's attempt to assist the victims of recession and to set the stage for economic recovery. We are particularly pleased that the government has made equity and fairness a priority in its approach to government. We have written to congratulate Mr Rae and the Minister of Colleges and Universities, Richard Allen, on initiatives they have taken with respect to native education, improved campus safety and violence against women.

When the government first made its announcement with respect to funding for the province's universities, OCUFA was disappointed that the funds provided fell short of the very substantial amounts needed to begin to make up for past shortfalls. We recognize that the NDP has been more generous than other provincial governments and also that the government's ability to do more is seriously impaired by the decision of the federal government to freeze transfer payments to the provinces. This policy will cost Ontario's universities and colleges a total of $1.4 billion by the end of 1995. It is crucially important for the government of Ontario to make major financial commitments to post-secondary education, and at the same time to fight federal cutbacks in transfer payments.

It is astonishing that the federal government is pursuing such policies while at the same time saying that it acknowledges the important role higher education has to play in enabling Canada to compete more effectively in global markets. Harvard economist Robert Reich has explained cogently the significance of economic globalization in his highly acclaimed book The Work of Nations. Reich argues that as money, technology, ideas and jobs flow ever more freely across national borders, all that will remain rooted within national boundaries are the people who comprise a nation. It is the knowledge and skills of its citizens which will be the nation's primary assets and a nation that does not invest in its people will not prosper.

Reich challenges conservative economic theories which favour lowering taxes for the wealthy, making cuts in public spending and reducing budget deficits in order to create a pool of national capital for investment. He also challenges the widely held view that national economic activity is divided between the public and private sector and that the public sector spends the money while the private sector earns it and invests it. Reich believes that the increasingly unimpeded movement of capital worldwide means that "reductions in public spending and tax cuts for wealthy...investors are coming to have little direct bearing on how much private capital is invested in the nation's factories, equipment, and research and development."

On the other hand, he states: "There is...a growing connection between the amount and the kind of investments that the public sector undertakes and the capacity of the nation to attract worldwide capital. Herein lies the new logic of economic nationalism." Reich argues that the knowledge and skills of a nation's working people and the quality of its infrastructure "are what makes it unique, and uniquely attractive, in the world economy. Investments in these relatively immobile factors of worldwide production are what chiefly distinguish one nation from another; money, by contrast, moves easily around the world."

"A workforce that is knowledgeable and skilled at doing complex things, and which can easily transport the fruits of its labours into the global economy, will entice global money to it." As people's knowledge and skills increase and experience accumulates, "a nation's citizens add greater and greater value to the world economy -- commanding ever-higher compensation and improving their standard of living." Without proper knowledge, skills and infrastructure, however, "the relationship is likely to be the reverse -- a vicious cycle in which global investment can be lured only by relatively low wages and low taxes. These enticements in turn make it more difficult for the nation to finance adequate education and infrastructure in the future."

It can no longer be disputed that to succeed in the knowledge-based global economy, Canada needs a better-educated population. The federal government's recently released discussion paper Learning Well...Living Well recommends that by the year 2000 Canada double the number of its post-secondary graduates. It is simply not possible for Canadian universities to further increase their capacity without a significant infusion of funds. The education of Canada's young, and the further education and retraining of those already in the workforce, is taking longer and costing more.

At present, 22% of the jobs require 17 years of education and training, but it has been estimated that by the end of the decade 50% of jobs will require this amount of preparation. The jobs of the future, then, will require a higher level of knowledge and skills, knowledge and skills which will become outdated approximately every five years.

Failure to make the kind of investment in education and infrastructure that has been advocated by Reich and others will result not only in economic disaster, but in social turmoil as well. Reich further notes that American society is becoming less equal and less just, the rich getting richer and the poor getting poorer. The widening gap in American incomes is directly related to levels of education. In 1980 male college graduates in the United States earned 80% more than high school graduates; by 1990 the gap had nearly doubled.

Particularly disturbing in Reich's work is his description of an increasingly polarized American society, where the "symbolic analysts" -- that is, those who enjoy a high standard of living because they are in jobs which add high value to the world economy -- are steadily "disengaging" or "seceding" from the rest of American society. These people are increasingly choosing to live in suburban or exurban communities where they enjoy vastly better schools, housing, health care, recreational facilities, municipal services and safety and security than do most Americans. Reich notes that the same phenomenon exists with respect to wealthier neighbourhoods within large cities:

"Several (American) cities have authorized property owners in certain upscale districts to assess one another a special surtax for amenities unavailable to other residents, like extra garbage collection, street cleaning and security. One such New York district...raised $4.7 million from its members in 1989, of which $1 million underwrote a private police force of uniformed guards and plainclothes investigators. The new community of like incomes, with the power to tax and the power to enforce the law, is thus becoming a separate city within the city."

OCUFA does not believe this is the kind of society that is appropriate to Ontario, or to Canada. We urge our leaders at both levels of government to abandon the type of thinking which favours greater concessions for the wealthy while cutting public services. It is vital that we think instead of making the kind of educational and infrastructural investments which will improve our people's standard of living by enhancing the value of what they contribute to the world economy.

Along with more public investment, Canada and Ontario need to consider the question of tax reform. OCUFA urges the federal government to introduce a tax system that is more fair and responsible. This might include initiatives such as restoring progressive income tax rates, increasing tax rates and closing tax loopholes for wealthy individuals and corporations, abolishing the GST and introducing a tax on net wealth and transfer of wealth. We also urge that the federal government guarantee in the Constitution the provision of shared funding to the provinces for health, education and social assistance as part of a Canadian social contract.

On the provincial level, OCUFA looks forward to the findings of the Fair Tax Commission. We repeat our call for the creation of a minimum tax on profitable corporations, with a portion of the revenue thus generated being allocated to universities in the province. It is only fitting, since corporations are major beneficiaries of university education and research. We note that while the business community is prone to fly into a frenzy at the suggestion of higher taxes, tax rates are seldom a consideration when businesses make location decisions. The cost of property, the availability of skilled labour, the ease of transportation and the supply of energy are cited by business as more important variables.

In conclusion, OCUFA reiterates its approval of the general direction of the initiatives announced in the Ontario budget and urges the government to resist conservative cries to reduce the deficit at the expense of public expenditure. In fact, we believe that the government must do much more in the way of investing in education, job training, infrastructural development and social services. We urge the business community and the conservative thinkers in government to abandon the vestigial thinking which is the true source of our uncompetitiveness and join with more progressive thinkers in making Ontario a place of social justice and sustained economic prosperity.

In other words, we want to point out that there is a direct correlation between the level of education, knowledge and skills and the people's wealth and prosperity, and that you cannot have a wealthy and prosperous society without having a well-educated society in our day and age. Education is the key to economic and social wellbeing.

1610

The Vice-Chair: Thank you very much for your presentation. We have approximately six minutes per party for questioning. We will be starting with the opposition.

Mrs Sullivan: I was interested in the highly articulate brief from your association relating to the budget. You may know that this morning we heard from the University of Toronto, and yesterday from York University, about their responses to the budget. Much of their feeling was comparable to yours, although in both cases the universities themselves were more dramatic.

In the case of the University of Toronto, it was not only the university itself that was represented; it was the faculty association, the student council, the administrative associations and so on that were involved in their presentation. It was a universal presentation. They commented directly, and highly negatively, relating to the fact that there had been no more than the transfers to the universities at the rate of inflation, plus minimum capital transfers for such things as asbestos removal and so on. In other words, there were no initiatives to meet what everyone in the university has described as underfunding of more than $400 million, on an annual basis, to base. You have not mentioned that at all in your brief and I am quite taken aback by that.

Dr Graham: I do not believe we have not mentioned that. We have appealed to the government to put more money into education, including post-secondary education. It is certainly true that provincial expenditures in 1991-92 have grown faster than grants to universities. I think the universities received about 8% of revenues this year, if you take the direct grants plus the employment equity subsidy, whereas the total budgetary expenditures were up by about 13.4%. We do not dispute that whatsoever.

What we certainly look forward to and expect this government to be sensitive to is the increasing need for highly educated people. It is no longer the case that a high school education can provide an adequate base for people earning jobs and producing wealth in our society. We continue to be, as we always have been, critical of the funding levels for the support of post-secondary education.

We do recognize, however, that there is more than one component to this problem. It is more than simply a question of the provincial government doing something. As you know, the federal government has been cutting back dramatically in the cash portions of the transfer payments, which has seriously affected the ability of all provincial governments across the country to support their post-secondary educational institutions. You will note that in one of our graphs, the total loss as a result of the freeze in transfer payments is, up until 1995, $1.4 billion. That is a lot of money taken out of this province's ability to pay.

We want to stress that this government should do everything it can in concert with other provincial governments to see that there are some changes made. These discussions are coming up in September, apparently, in connection with the national unity debate. We expect to see our government at the table arguing vigorously for increased transfer payments, and then passing the results of those payments on to post-secondary institutions in Ontario.

Mrs Sullivan: You do not see a dichotomy in your own quite effusive support for the budget and the fact that none of the needs of the universities were addressed in it?

Dr Graham: I would not say that none of the needs of the universities were addressed in it. There were some very good initiatives undertaken by the Ministry of Colleges and Universities. We want to applaud them for their initiatives regarding native education and regarding what they have done for women's safety. We think more has to be done. We certainly are not applauding the level of funding. We are encouraging this government to spend more on higher education. We do not think it is adequate, of course.

Mr Phillips: What we are finding in these hearings is kind of two camps, as you might expect. One group, like yourself, comes in and says, "Hey, the budget is pretty darn good," and then the other camp comes in and says -- the challenge I think we face is that we will not know for a while. We will not know for maybe a year or two years. It is a bit like forecasting the weather a year from now, storms or sunny weather.

I appreciate what your association is saying, that you like the budget. The concern other groups have is that there are two sides to the budget. There is the spending side, and then there is the revenue side, how to raise the resources to do all the things that we want to do. I think the troublesome part of the budget for many people is a belief that the federal government is bankrupt. If you think you are going to get a lot more money out of them, forget it. Realistically, they do not have money. You are not going to get much more money out of the federal government.

I guess you are pretty much convinced that this budget is in the the long-term best interests of your group and will create the economic wellbeing in the province that will be able to fund the necessary investment. If a year from now we are back here sitting, as we probably will be, what will be your expectations about the economic climate in the province that this budget will create? I think the budget calls for 4% real growth next year and some substantial increases in taxes to do the things that it wants to do, but how does your group see the economic wellbeing next year?

Dr Graham: Of course, we are not crystal ball gazers any more than the government is. When you say that we applaud the budget, we do applaud the direction of the budget. We do not applaud everything in the budget. We do not support the levels that post-secondary education is receiving. We think post-secondary education should receive higher levels of funding than it has received. But we do support the overall direction that the budget is moving in; that is, using whatever moneys are available to create wealth.

We would hope that over another year's time there would be some results. I do not think we ought to go on a one-year scale on this. I think, certainly from what economists in our university sector have been saying, that it may take longer than a year to climb out of this situation. Perhaps you have seen the paper that was written by a number of economists in the universities in Ontario to comment on the general direction of the budget.

Mr Phillips: I am not sure I have seen that.

Mrs Sullivan: Mel Watkins's group.

Dr Graham: I think you are going to see that it will take longer than a year to see a turnaround. Generally what we want to see is the Fair Tax Commission also going to work on our situation.

1620

Mr Sterling: I always find the presentation of statistics somewhat amusing in terms of how people take percentages of whatever and put them together, and that kind of thing. I wonder if you could provide for me and the committee the actual increases in university funding over the last five-year period; in other words, take 1984-85 as your base year and start from there, and provide the committee with an actual amount that you have received.

The other part I would be interested in knowing is how the enrolments have been increasing over that period of time, because I think there is a considerable part to be put forward by that.

I attended two universities for two different degrees, one in engineering and one in law, and now I have two kids in university. I sit here and say, would I rather have my kids taught in a classroom of 250 or 500 or whatever, or would I rather have them saddled with a long-term debt situation which they are going to have to face and pay up? Because I am going to come to the end of my working career in maybe 10 or 15 years.

Mr Christopherson: In three years.

Mr Sterling: Not three years. You guys should be worried about that. I have been elected five times, fellows.

Mr Phillips: Here is your insurance policy right here. You are here for a long time, Norm.

Mr Sterling: I guess what bothers me, and I think what bothers my kids, is, is there no plan to pay this off? As Mr Phillips says, you may complain that the federal people are not transferring money here, but there is a good reason for that. They have no more money. They are in a desperate financial situation. We in this province have increased our spending at an enormous rate over the last five years. We are supposed to be one of the richest provinces in this country, so what do you do if you are in their position? You have to throw it back on somebody else's shoulders. That is done. You have to face it. So what is the plan to pay this back? How are we going to pay it back?

Dr Graham: Pay which back?

Mr Sterling: They are planning $9.7 billion for this year and then $8 billion next year, then $7 billion and $7 billion, or whatever it is.

Dr Graham: Our argument is that education is one of the highest wealth-creating conditions any society can have. I think general studies will bear out that the better educated a society is, the higher its production of wealth and the higher its standard of living. You can look at this across Europe, across Asia, and see that the general standard of living and the general wealth of a country have a direct relationship to the level of education in that country and to how seriously that particular country takes higher education and the training of its citizens and its workforce. These are the people who generate and create wealth and add to wealth in the global economy.

Mr Sterling: I do not know whether I might challenge you on that or not challenge you on that. I think there are a lot of other factors involved. The motivation of individuals is an important factor as well, regardless of the intellectual capability and the education a person has received. But what concerns me is that we have everybody coming in front of this group and saying, "Your investment" -- in your children, for example -- "is important because you will save money because of that." "Your investment in day care is important because you are going to save money on that." Our investment in preventive health measures is going to save us money, and your investment in higher education is going to save us money.

I listened to all those arguments when I was a minister in Mr Davis's government, and I have not seen the saving of money yet. I do not know whether our government, if we were still the government, would have saved any money, but somewhere along the line the buck has got to stop. There has to be a line drawn. When do we draw that line? You have a vested interest in your community and the people who are receiving public dollars. The majority or 100% or 80% of your money comes through this channel. But I do not understand how groups and universities -- it is tough, but your professors are earning $60,000 or $80,000 or whatever it is they earn. There are a lot of people out there who are earning a heck of a lot less than that or who do not have jobs. How can you come at this time and say, "We ain't got enough"? Is there not some kind of burden upon those of us who do better to say; "I've got to tighten my belt. We're just going to have to spread out what we have a little thinner"? I do not understand that. Am I way off base?

Dr Graham: It would seem to me that you are because you are not thinking about how wealth is created in this society. Our argument is that wealth is created through the direct correlation between education and skills development of a people in that country, so we are not talking about a small sector of people who have been traditionally associated with universities. Universities have in the past been rather elitist institutions, educating the sons mostly and later the daughters of the middle or upper class or wealthier classes. In fact, universities and community colleges have to be much broader in their accessibility to a larger range of people. That is certainly the case.

We are talking about a situation in which, as I said, high school is no longer an adequate form of education for the creation of wealth in this country. You cannot have a highly developed society without having a pretty highly educated workforce. That is simply a fact of the kind of knowledge-based economy we are moving into at the end of the 20th and beginning of the 21st century. It seems to me that we simply have to have another look at education and say that higher education is not simply something to add to the income of a few people, but something to add to the income of the entire citizenry and to raise the level and standard of living of the entire population.

Mr Christopherson: Thank you very much for your submission. I do not thank you just because you are speaking positively towards the budget, but because I think you have presented a fair, reasonable and balanced professional opinion.

I notice members opposite laughing and smiling at that comment, which just underscores what their approach has been with everyone who comes in and supports the budget: It is either that these people are economically foolish and do not understand because they cannot conceive of the higher concepts of the economy, or they have a vested interest and are coming in and doing the government's bidding. We have approached these hearings with a great deal of excitement at the opportunity to have a diversified representation of the province come in and explain why they think this budget makes an awful lot of sense and why running a deficit, which is no one's first choice, is the right thing to do and why, quite frankly, this is a good budget for bad times.

What I would like to ask you ties into what Mr Sterling has talked about. I am pleased that he got into that area because that is the kind of thing I wanted to ask about, the idea of investment. The people from the University of Toronto made the same statement this morning, and I guess they could be charged with the same self-interest that you have been confronted with. But what I would like to ask you is, as professionals, are you aware of models of monitoring or of evaluating, in concrete dollars, money that is invested in higher education and skills development and the resulting wealth generated at the end of the system?

I say that because government spending is different in the 1990s than it has been in the past. A lot of the deficit generated by the federal government, quite frankly -- I am not being partisan -- was to serve political needs because it greased squeaky wheels. We do not have that luxury. Money that we spend has to give a return to the entire province, to the entire economy, or we are in deeper trouble than we are already in. Are those models available? Is there a standard model that is accepted that we could use as a government, and that other governments would use also, to show that money spent is actually money invested and here is the return at the end of the day?

Mr Graham: There are a number of studies, including Professor Reich's book which I recommend to you. We could perhaps come up with some other studies or models which we would be happy to pass on to you.

1630

Mr Christopherson: It is a valid question Mr Sterling raises; that is, just about everybody who comes in says this is an investment in the future. The reality is that we have to look at spending that way, but we all deserve some kind of evaluation that we agree on ahead of time to see whether or not we are getting that return or whether indeed it is just political expediency.

Dr Graham: Professor Reich's book is one that I recommend to you. It has been a highly acclaimed book. He is a professor of economics at Harvard University, a well-respected, by no means left-wing, Mel Watkins or whatever, economist and nevertheless recommends what we have quoted from his book.

Mr B. Ward: As we close off this first week of hearings, I cannot say I have not been surprised with the number of groups coming in to give presentations both for and against. We have received very diverse groups in support of the budget, business organizations, social organizations, individuals, labour organizations. Perhaps you could tell us a little bit about OCUFA. I understand it is representative of 12,000 members from the teaching, research and professional library staff throughout Ontario.

Dr Graham: That is right. We are a confederation of the faculty associations in the 15 universities and other associated institutions in Ontario. We represent on behalf of the faculty associations and faculty members in our Ontario universities. We do not represent community college teaching staff, but we represent the professors and academic librarians, most of them, in Ontario. We represent them to the government and we are in constant contact with the Ministry of Colleges and Universities. We are consulted regularly by the ministry on matters relating to universities.

Mr B. Ward: Your organization feels our government is on the right track.

Dr Graham: We believe the general direction of the budget is on the right track. As I emphasized before, we certainly want to see a continued and expanded commitment to post-secondary education in the upcoming budget. We are quite afraid that there might be further cutbacks in post-secondary levels and we think that would be disastrous.

The Vice-Chair: Thank you very much for your presentation today. We just have a couple other points of business to take care of before we adjourn. One of them is something I wanted to bring forward. Unfortunately, I do not feel I should do that sitting in the chair, so I am going to ask Ms Ward to come forward to be Chair while we get to this one point of business, and if there is any other I will come back into the chair, if that is all right.

Mr Sutherland: The one thing is that I believe it was on Tuesday I indicated that the leader of the third party had suggested he wanted to balance the budget. Mr Sterling took strong exception to that and used unparliamentary language; he withdrew it. But realizing that Mr Sterling has been around here a long time and his memory is probably very good and sometimes my memory is not, I went back and I checked through all the Hansards to try and find whether I could substantiate that from documentation. I guess it kind of turns out that we were both right, Mr Sterling.

Mr Sterling: That worries me. Can I object? If I am in the same boat as this guy, I am in trouble.

Mr Sutherland: On June 25, 1991, Mr Harris read into the record a petition. It was a petition by a resident of Hamilton, the one by the male nurse, and it had several thousand signatures. The petition indicated: "We will not tolerate any more tax increases. The proposed budget would push the accumulated debt.... Ontario is already the highest taxed jurisdiction...." Then we have the following sentences: "The taxpayers of Ontario want the provincial government to know that we want a balanced budget now. We do not want increased spending. We do not want higher deficits." Then Mr Harris says, "I too have affixed my signature to this petition and I congratulate" the person who got this petition together.

Mr Sterling: Boy, are you reaching.

Mr Phillips: You are supposed to say you are sorry.

Mr Sutherland: No, what I am saying is that, affixing his name to the petition for a balanced budget plus his indications --

Mrs Sullivan: No, every member must sign his petitions.

Mr Sutherland: No, you can present it without affixing. At any rate, let me say that was the only reference I could find in the Hansard, so we will leave it. That is the record and I just wanted to have that put forward, as that is the record. We will let those people judge whether he directly said it and whether he believes in that or not. I just wanted that correction brought forward at this time.

Mr Sterling: If I had searched the records as diligently as the member has and came up with so little evidence -- I do not believe it is any evidence of Mike Harris saying he wants a balanced budget -- I would have apologized. That is all I have to say.

Mr Phillips: If I might add, I listened carefully to Mr Harris and I honestly do not remember him ever even implying he thought the budget should be balanced this year.

Mr Sutherland: Okay, as I say, that is the only reference I found there. I just wanted it put on the record that this is how it is, and people can judge from there.

Mr Jamison: Did he ever use a figure?

Mr Sterling: No.

The Acting Chair (Ms M. Ward): Did you want to comment on that, David?

Mr Christopherson: Not on that one; another matter. We all want to get out of here. I am not going to hold us up.

To clear up some unfinished business, during the Labourers' International Union of North America presentation there was a discussion about Mr Frank and whether he was on his own or whether he was representing the council. It was an important point. We all agreed to have it researched. We have a report from our researchers which indicates Mr Frank has said he is representing the position of the Conference Board of Canada and I would suggest, or I would like to request, that we send this to the presenters with a covering letter acknowledging that question was clarified and attach it.

Mr Sterling: I could not quite understand the wording of the sentence regarding the phone call you had made. I talked to Mr Frank and pointed out that since personal opinions are not published by the board, the article can be construed as representing the position of the board.

The Vice-Chair: Would you like clarification on that?

Mr Sterling: Yes. What does that mean?

Mrs Sullivan: It means a job next week.

Mr Rampersad: It is very simple. The board does not publish personal opinions. Consequently it is to be taken that Mr Frank would not say outright that this opinion was the opinion of the board, but he hinted very strongly. The logical conclusion is that since personal opinions are not published by the board and since this is a board publication, therefore it is construed --

Mr Kwinter: If this man is representing the conference board, why would he not come out and say, "This is the opinion of the conference board"? Why would he suddenly say, "I won't come right out and say that but it can be construed." That is absurd; it either is or it is not. Why would he not say: "Absolutely. I speak on behalf of the conference board"? Everybody who comes forward says, "The conference board says this," and he is saying, "I'm not exactly saying that, but it can be construed that the conference board is saying that." What is the deal with him?

Mr Sterling: So there is no conclusion.

Mr Christopherson: Come on, do not play games.

Mr Kwinter: Play games? I am serious. Why would he not come out and say "Yes, of course this is the opinion of the conference board"?

Mr Christopherson: If anything he should say, "It should be construed," not, "can be construed," because there is no other conclusion.

Mr Kwinter: Why would he not come out and say it?

The Vice-Chair: Order, please. Mr Sterling, you have the --

Mr Christopherson: Can you imagine the heat he is under from the right wing? You know it.

The Vice-Chair: Mr Sterling has the floor.

Mr Sterling: I want to ask the researcher, you asked Mr Frank outright if this was an opinion of the board. Is that correct?

Mr Rampersad: I asked him first if it was his opinion or the opinion of the board.

Mr Sterling: And he would not answer the question.

Mr B. Ward: What did he say?

Mr Rampersad: I am afraid I cannot tell you word for word what he said, but his point was, the good diplomat that he was, that the board does not publish personal opinions.

Mr B. Ward: So anything published is the opinion of the conference board.

Mr Rampersad: This particular publication is a publication of the board.

Mr B. Ward: There we go. Good enough for me.

Mr Rampersad: And the board and what is published in this --

Mr Christopherson: But David should have used the word "should," not "can." You concluded there is no other conclusion to reach. Therefore, when you advised us, instead of "can be construed," there is an argument used --

Mr Kwinter: Yes, but you said he would not come out and say it was not --

The Vice-Chair: Okay, hang on a second. Let's have some order back here. Ms Ward.

Ms M. Ward: Everybody else is giving their opinion on this and I would like to give you mine as to why he is saying -- you asked him whether it was his opinion or the opinion of the conference board. The way I would interpret your reply, he is basically saying: "Don't be so blank-blank stupid. The board does not publish personal opinions, so obviously it is the opinion of the board."

Mr Sterling: I do not agree.

The Vice-Chair: We have the issue on record that Mr Christopherson raised.

Mr Christopherson: They are not crazy and they are not on our payroll. It must be a mistake. Right, guys?

The Vice-Chair: Mr Christopherson put on the floor that we should send a copy of the report back from research to the Labourers' International Union. That is the issue we are dealing with.

Mr Sterling: I disagree with that, because the report does not indicate that Mr Frank was confronted with saying, "Is this the conference board opinion?" Mr Frank refused to answer that question.

The Vice-Chair: You are changing it just to send what is here.

Mr Christopherson: No. That is all I said before, to send this here, with just a covering letter that, "Further to discussion you heard at the meeting, attached please find the results of our research department's discussion with Mr Frank," and then let them draw their own conclusions so that we do not spend taxpayers' money debating semantics.

The Vice-Chair: Okay. If that is fine, then seeing no other formal business -- no one has any questions for the clerk at this stage with any of the information they have been given for the touring? Okay, we are now adjourned. We just have the subcommittee to meet a bit.

Mr B. Ward: If any questions should arise, we can call them tomorrow, right?

The Vice-Chair: Yes.

The committee adjourned at 1643.