Committee Transcript 1991-Aug-27 | Legislative Assembly of Ontario

The Chair: The standing committee on finance and economic affairs on the budget review will resume the hearings here in Cornwall. Our first presenter will be the Ontario Federation of Labour, Mr Gord Wilson, president. Welcome. You have one half-hour.

Mr G. F. Wilson: First, on behalf of the members of the Ontario Federation of Labour, all 800,000 of them, I want to thank you and the members of the committee for giving us this opportunity to appear. As you will note, we have a rather substantive and lengthy submission. I propose not to read it but rather to attempt to highlight the points contained within it.

The submission really is broken into five subject areas or subheadings, but before beginning to highlight those parts of the total submission, I want to make an observation. In dealing with the question of the budget, it occurs to us that if the objective of a government is to attempt to secure a future and some prosperity for its citizens, then surely the focus has to be on improving the conditions of that citizenry, recognizing as well that those citizens residing within the boundaries of this province have limited, if any, mobility.

Therefore, recognizing that, the government must deal with a public policy framework that does not, I suggest, attempt to enhance the mobility of capital, therefore strengthening its leverage and bargaining power in its dealings with the province. In other words, we ought to find ways, if we possibly can, to break out of the cycle that currently is in effect where a capital formation would come to the government of Ontario, or indeed anywhere within this country, and suggest these are the conditions upon which it is prepared to make investment within the province.

Our difficulty of course is that with no other source of capital we find ourselves having to meet those conditions as they play us off, for example, against the northern states in the United States or perhaps even as far south as the Carolinas or those areas where they would be negotiating with other foreign jurisdictions in opposition to us. I just want to make that observation. I will attempt at the end to address that point and perhaps members of the committee may want to explore it.

The first subheading appears on page 1 and deals with the economic climate. If I can just quickly go through the situation, if you compare the current recession we find ourselves in with that which we experienced in 1981-82, we find that in this province in the past year we have lost about 214,000 jobs as opposed to 89,000 at the height of the recession of 1981-82. That is a minus of about 4.3% in employment level higher than what we experienced in the recession of the early 1980s.

Second, I think it should be noted that Ontario, more so than any other jurisdiction, has been adversely affected. The job loss in Ontario is twice that of the national average and quite frankly counts for about 80% of the jobs that have been lost across the country.

The third observation in that first subsection is that the recession we are undergoing is certainly not a cyclical recession. It is a structural recession as a result of a made-in-Canada recession. When one looks at the layoffs that are taking place within our province, given our reliance on a branch plant economy with regard to the manufacturing sector, 65% or roughly two out of every three layoffs that take place are as a result of partial and complete closures. What is significant about that figure of 65% is that by comparison in 1982, in the depth of the 1981-82 recession, workers laid off accounted for 24% as a result of complete or partial closure. We now have two out of three workers without any jobs at all to return to as opposed to the last recession where slightly lower than one in four did not have jobs to return to.

It is also interesting to note that when you analyse where those closures and layoffs have taken place, the majority of them are non-union, low-paid jobs. Many of them are jobs that do not come near the average industrial wage in Ontario. Therefore, I argue that to argue that simply a simple-minded approach of reducing wages and social costs of the employer will somehow keep those plants here is not true, as they have taken flight to the United States and Mexico. Many of those jobs, the majority of them, are non-union jobs and low-paid.

It is also interesting to note the economic climate as it applies to bankruptcies. Bankruptcies in business are up 73% in 1990 over 1989. Personal bankruptcies are up 83% in 1990 over 1989. The indications are that 1991 will be worse. When one looks at January and February of 1991, the statistics that are in there, that accounts in the first two months of 1991 for about one quarter of all of the bankruptcies that took place during 1990. If we stayed on that course, we would probably be about 50% higher again in 1991 over the already horrendous bankruptcy levels in 1990.

The second phase of our submission begins on page 4 and talks about the role of the federal government, which I suggest has completely turned its back on this province and certainly the people within it. If one wants to look for evidence, I suggest that perhaps the most startling evidence appears with the cap that the federal government has applied in established programs financing and the Canada assistance plan across the country with the three major provinces, but more specifically in Ontario. It is a cutback in federal funding to Ontario of about $3.6 billion. It is startling as well, when one looks down the road, that in the next five years it is estimated those cuts will total about $15 billion, with about $11.2 billion of that $15 billion under the established programs financing and the other $3.8 billion being under the Canada assistance plan.

I refer you to page 8 of our submission. There is a chart which has projections by the National Council of Welfare of federal cash outlays for health and higher education. You can see the federal government wants to completely abdicate its responsibility, in that by the year 2006 its transfer payments for health and education are projected to zero.

The third aspect I would like to raise is the free trade agreement itself. We all are familiar with the debate. We need not spend a great deal of time on it this morning other than to indicate that the jobs that were promised have not been forthcoming. There has not been any training, as promised by the Prime Minister. In fact, the federal government has gone the other way in cutting $100 million out of the Canadian Jobs Strategy from that budget. We have seen cuts in unemployment insurance, both in the time period in which people can quality for it and the benefit period itself, and at the same time a further burden placed upon employers and workers in an increase in the premiums for unemployment insurance. Effectively what has taken place there is the federal government now has liberty to establish its own economic and fiscal policy and then not to have to take any of the blame, in that it is withdrawing from its responsibility of providing funding on the unemployment insurance program.

The goods and services tax, we have estimated, will cost consumers in Ontario approximately $9 billion or about $570 per average family. The GST, again, is another policy generated at the federal level that shifts the tax burden, which is already unfair, even more heavily upon the average citizens in our province.

Although it is not in our brief, it is interesting to note that when you look at a Statscan report on national income and expenditure accounts -- and if anyone wants to note the number of the report, it is 13-001 -- in looking at the percentage of revenues garnered by the federal government from both the corporate sector and from personal income tax, 28% of the total revenue of the federal government came from the corporate sector and 26.5% came from personal income taxes in 1950. The reason I raise this point is to show that the GST further aggravates that shift, in that in 1989 corporate tax as a percentage of federal revenues accounts for only 9.7%. In other words, it dropped from 28% to 9.7%, and personal taxes have increased from 26.5% to 53.7%, so there has been a considerable shift over the 39-year period, placing more and more taxes on the average earner and personal income taxes as opposed to the corporate sector.

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Finally, of course, the role of the federal government, in looking at its fiscal and monetary policy, the artificially created interest rates and overvalued dollar, which is responsible for those high interest rates, has surely done tremendous damage within the export sector of Ontario, in that it has made it almost impossible for a number of employers and their companies to be competitive with our trading partner south of the border.

On page 14 we raise the issue of the Ontario budget. Essentially, it is our view that the Ontario government made a choice. They decided not to fight to the deficit. They wanted to fight the recession. We interpret that as an attempt by the provincial government to protect the citizens of this province from the policies, which I view to be irrational, extrapolated and presented by the federal government.

When one looks at the Ontario budget, although there has been a considerable amount said about its weaknesses, as suggested by others, it is interesting to note also that a number of rather notable authorities have come to the defence of the provincial government with regard to the budget. The Conference Board of Canada, I am sure all of the committee members are aware, has been supportive of the Ontario government and pointed out that there is a latitude of about only $640 million dollars in new money that was spent. The Conference Board report, for your information, is appended to our submission.

In addition, we have another appendage, which is from the Canadian Centre for Policy Alternatives, where 59 economists from across the country have as well spoken in support of the government's action. You are aware -- and it is contained within our brief -- of some commentary by John Kenneth Galbraith with regard to the budget. Although it may seem surprising to some, the Toronto-Dominion Bank itself has indicated support for the government's action.

So I argue on behalf of our members that we interpret the Ontario budget to be the government complying with its duty to protect the citizens from the ravages of the policies that have been generated at the federal level.

Now, there has been a great deal said about the deficit. I am turning to page 17 of our documentation. I think it is important to put the Ontario deficit in perspective with what is happening in our country. First of all, the current government was faced with a $2.5-billion deficit when it came to power in 1990. We all are aware that this is the worst recession since the Great Depression. The government is facing falling revenues as a result of more and more workers becoming unemployed and, of course, closures, partial and complete. There is more strain on the falling revenue side as more and more personal and business bankruptcies continue, and the cuts in federal transfer payments. On the other side of the ledger, they are facing increased costs in health and education and in trying to support those who are unemployed and have gone into bankruptcy. The instrument by which they attempt to do that is through social services. People often are critical of social services. I think it is important to recognize that within Ontario, 42% of social assistance beneficiaries are children. People ought to keep that in mind when they are critical of social service expenditures.

I guess the question to be asked those who detract from the budget is, if there are to be cuts, what is to be closed, what is to be cut? I mean, are we talking about cutting schools, are we talking about hospital beds? If so, the people who are the detractors ought to have the courage to stand up and say where that is going to take place so that we can debate something that is before us rather than some theory.

I would refer you again, if I can, to page 19 of our submission, which talks about the question of the deficit in perspective, and I think what is important in the chart that appears there is that the per capita expenditure in Ontario is much lower than either the federal government or the governments of Alberta and Saskatchewan, if one wants to find some comparison.

It is also important, I think, to remember when we look at page 20 of our submission, what it costs to service the debt. The federal government, which is most critical of the Ontario deficit, spends 36 cents of every dollar right now to service the debt as opposed to the 10 cents that the province of Ontario is spending, projected to be about 11.6%, and of course higher than only the provinces of Alberta and British Columbia with regard to servicing.

I think the final point raised in our brief -- it begins on page 23 -- talks about, where do we go, how do we get out of the morass that we are currently in, what are some of the measures that are within the provincial government's purview to take, and additionally, what voice should it be raising in the national debate around where Canada should be going within this new global competitive model?

I am reminded of an old Chinese proverb, if I could take just one moment to tell you what it is. It is a very practical proverb and it says, "If you don't change your direction, where you're heading is where you're going to end up."

I think what we see before us is a track record of federal government fiscal and monetary policies that have led us to a point, and if we are to continue to apply the same mechanisms to the situation, then surely it is reasonable to assume that where we will end up will be in a position at least as bad as we are currently in or perhaps even worse.

I think what we have to do in this province somehow is find a way to reduce our vulnerability to external forces, and the only way that could be achieved, I think, is to take a look at what has happened in the stronger economies in the world, whether one looks at Japan -- that is one model, and certainly one which I do not totally subscribe to. But if we are talking about, how one finds a way to survive within a global economy -- and Ontario of course has to be considered in that context, given that we represent about a third of the population of this country -- one can look at what is arguably the strongest economy in the western world, which is that of West Germany, or now Germany.

Of course, there are examples throughout Europe and Scandinavia of countries that have found ways to generate capital from within and by doing that have reduced their vulnerability to external forces and have been able to get to their objectives of picking what it is that they can compete upon in a world market, not on a basis of, "How do we drive down wages, how do we drive down salaries, how do we reduce the costs of social services?" but rather have taken a much more humane approach in arguing that there are ways by which we can create not only a high value added export market but also a considerably strong domestic market by generating capital from within.

There are available to us, where we want to pursue them, a number of mechanisms to generate some of that capital. For example, within this province there is a considerable amount of money residue within private and public sector pension funds. We have not utilized anywhere near fully the process of attempting to generate community capital funds, nor have we dealt with the question of worker investment funds where workers can be full participants in the economy, or the concept of worker and community buyout such as we have seen in both Kapuskasing and Sault Ste Marie.

Obviously, in order to be competitive, one understands that we also need a massive public infusion of dollars into Canadian-based research and development, which is going to give us the technology, which is going to allow us to get on to the market those products which we require to support our economy, and so we have to look seriously at where we make those investments in research and development and at the same time train to the highest possible level the training skills of our workers and managing skills within our economy.

Of course, part of this can be achieved as well in using the leverage of a tax system which addresses that question and where there can be rewards for those who are making a commitment to this province as opposed to those who like to take what they can and run.

I often am puzzled by the view that somehow we have to be attractive to investment and that is the only way we can survive. When one looks at the numbers in the period 1980-89 in Canada, for every dollar that was invested in Canada from external sources, $5 went out. In other words, in the period 1980-89 -- and this is again a Statscan figure; I do not have the reference but I can certainly mail it to the committee if any of you wish to have it -- there was $9 billion in direct foreign investment in Canada and $45 billion which was exported outside of the country.

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I think a tax structure within this province perhaps might address the question of giving some latitude to those profits generated in this province that can be directed into a commitment to Ontario and that way provide some incentive for more investment capital to be available to those entrepreneurs to want to generate product development within our province.

Finally, the observation I would make to the committee on behalf of the membership is that I really think the labour movement in this province and the people I represent view themselves as wanting to become a full player within the economy, and that does not mean employee stock ownership plans where in fact workers generate investment capital for a corporation and then, of course, have nothing to do with it or do not have any input in the decisions that are made about that corporation.

I think the model followed in West Germany is probably, to my mind, the most suitable for Ontario, and we should keep in mind the flexibility that an economy like that allows not only workers but employers. I would draw to your attention something I am sure that most of you know, that it was not too long ago that under the system in West Germany workers there, in concert with their employers, having looked at their competitive edge and the manner in which they deal within the global model, said, "We have to find a way to increase beyond where we already are in our training capacity and the effect that it has on our ability to compete," and a deal was cut where workers gave up a fifth week of vacation and dedicated that to additional training. It is an enormous amount of training, even that one additional week on top of what Germany already does, when one compares that to the training that takes place in this province and in this country.

The point I want to make here, however, is that flexibility to get to that adjustment quickly within their economy could only come about in that the partnership was a real partnership between the main players within the economy, government, workers and employers, and that can work. When one compares Germany and its position in the European Community and Ontario's within the North American market, we can get to some of those objectives, providing that the partnership is in fact a true one and not one of simply tokenism.

Let me just conclude there in the short time that we have left and respond to any questions that anyone might have.

Mr Kwinter: I have a couple of observations and then I want to ask you a question.

I do not think it is valid whenever you are comparing the debt burden to compare Ontario with Canada; it would be different if Canadians were a separate entity and Ontarians were a separate entity. Canada and Ontario are the same, and the taxpayer who is carrying the weight of the Canadian debt is also carrying the provincial debt. I think it is valid to compare other provinces, because they are separate; we are comparing them. So I do not think that is a valid comparison.

What I want to do is talk about the debt. In this year's budget the cost of the debt is $5 billion. Just to put that in context, that is more than this government spends on the ministries of Agriculture and Food, the Environment, Housing, Industry, Trade and Technology, Labour, Municipal Affairs, Natural Resources, Northern Development, Skills Development, the Solicitor General and Tourism and Recreation combined. Just the debt service costs more than all of that. That is $5 billion this year. Next year the debt service, by the Treasurer's own calculation, is going to be $6 billion, the year after it is going to be $7 billion and the year after that it is going to be $8 billion.

When you look at the budget, the total expenditures over the next three years are not going to increase at all in real terms. If you take the cost of the debt and you see what is left with inflation, it is going to be exactly the same as they are spending now in real terms, which means that by the year 1995 they will be spending more on their debt than they do on the Ministry of Community and Social Services, which is one of the big numbers.

How do you rationalize that? This is a projection that is showing a 10% increase in revenues every year, which I suggest is optimistic. This year the revenues were down over last year and I do not expect that there is going to be a 10% increase this year, which is what the Treasurer has projected.

How do you deal with your members? How do you deal with those people in society who are disadvantaged who would expect that in better times they will get more help, when in fact there is not going to be any money to help them because the only thing that is happening is the debt service is increasing and that is it? How do you respond to your members when they complain about that?

Mr G. F. Wilson: First, on your opening comment about the comparison with the federal government, I can recall Mr Wilson, prior to the election of this current provincial government, speaking of his debt service being in the mid-30s. So it is a fair comparison to argue against those who have been the loudest detractors within the political forum of the provincial government deficit. It is a little bit like the pot calling the kettle black on this one.

Mr Kwinter: I agree you can compare politicians, but I am saying when it comes to the amount, we as Canadians have to pay both of them.

Mr G. F. Wilson: I agree. There is no argument about that. But what I was saying was, when the detractors federally are arguing about the amount of the Ontario deficit and you compare it to their own, surely there ought to be some principle which says that if you are in a more prejudiced position, you ought not to be arguing that point.

On the cost of service, I accept what you are saying about the escalation of the cost of servicing the debt, which are the projections of the Treasurer, but I guess the question I come to is, what is the alternative? You just cannot say that part of the population of this province disappears for a while when most of your costs are incurred in those social services that people require during bad times.

I do not agree with you that times are going to get better if we continue to do things as we currently do. I think unless we can find a mechanism to insulate ourselves, not in a traditional barrier sense, but rather engage in trade with the United States, which is our largest trading partner, admittedly, and to find ways, as other jurisdictions have done, to make ourselves less vulnerable to influences that come to our borders -- I think that is achievable.

The argument I am trying to make on that point is that to continue down the road following the practices and the theories that we have put in place about investment and capital will not get us to a better position 5 or 10 years from now than we are in now. We will always be marching to the tune of someone else's drum. I think Ontario has the capacity, with its population and with the natural and human resources that we have here, to change that. I think we can get to something better.

What I am here to say to you and to others in the business community is that I am prepared to work, as a labour leader, with any business or organization that is prepared to make a commitment to this province. I have had it up to the gills with people who have come in, ripped off this province and left us hanging high and dry. I think there is a far more noble and practical pursuit that we can engage in, and that is to work together.

If you look at small-town Ontario, everyone who is in business in main street Ontario who is in the private retail sector or the private service sector is completely dependent upon the salary levels and the income of the people within that community. That is what they exist on.

Mr Villeneuve: Thank you for a very articulate presentation. Quite obviously you have done this many times before.

I have a little difficulty with a made-in-Canada recession. I have heard my government colleagues mention it at every occasion in the Legislature, when indeed the United States and Europe are going through a recession. We may have a made-in-Canada recession, but no one has ever shown me why it is strictly made in Canada, as some people would like us to believe.

None of us likes the GST, but of course the alternative was to leave the 13.5% manufacturers tax on. You did not touch on that one.

What I would like to know from you, sir, is that with the very large increase in provincial deficit -- $9.7 billion this year and a total of some $35 billion additional -- do you feel that this will make us more competitive with the US or with other parts of the world which we have to compete in? Do you feel this will indeed reduce our taxes? We are the highest-taxed jurisdiction in North American right now. Do you feel additional deficits will help?

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Mr G. F. Wilson: I do not think you establish the health or the wealth of an economy based upon singularly focusing upon the deficit. Ontario was in a far better position prior to the signing of the trade agreement by the federal government. You do not put in place a policy which makes capital more mobile within a North American, western hemisphere market and give it more leverage to say to us, "This is the cost of doing business in Ontario." In other words, we have to accept their agenda.

I think if you compare Ontario prior to the trade agreement and measure the effect of the trade agreement -- and we argued this for three years across this country, that Ontario would be the economy that would be ravaged, because of the structure of our economy, under a trade policy being advanced by the federal government. If you track back, why do we have a large deficit federally? It is because Mr Wilson and Mr Mulroney, as a direct measure of policy, offloaded approximately 30% of the national debt into foreign hands. Before that, we could deal with it; it was just money we owed each other. We could change the rules and push the buttons and move the levers.

Now we are faced with a situation where we have to be responsible to foreign investors to the extent of 30% of our national debt. That means we have to guarantee they are going to get the return that is promised to them when they invest in this country, and that means we have to have a high dollar. You ask any Canadian businessman or any Ontario businessman who is trying to export into the US market from the mid-range and small-range manufacturing in our province how they are making out with a high buck. Most of them are having trouble hanging on and many of them have already gone.

So it is the question of trade policy that is the essence of the health of an economy rather than the question of what the current deficit is, which can be addressed once one finds a way to establish an economy that is healthy by retiring the dependence on the expenditure side that people have and being able to garner further revenues for the provincial government.

Mr Villeneuve: I suggest to you, sir, that indeed the province of Ontario is going in the very same direction as the federal government and we will be faced with the same dilemma much sooner than we want to believe.

Mr G. F. Wilson: I do not think so because I really do not think this federal government has much of a life left in it.

Mr Christopherson: I would like to follow up on a comment you made regarding your desire to work with business, and particularly those businesses that are prepared to make a commitment to Ontario. We would be interested in hearing your opinion on what this government should do and what actions we can take that would foster that relationship and begin that process of co-operation, to start it happening.

Mr G. F. Wilson: I think part of the process is already under way. To give credit where it is due, it was begun under the previous provincial government; that is, the Premier's Council which has now been rejigged and broadened, I think, to include more interests within our society around the table. It is a good forum between business, workers, academics, scientists and others to discuss a direction for Ontario.

I think what has to come from the provincial government is a signal that it sees workers not as part of the problem but rather part of the solution. I suggest that has been one of the things that other governments, in Europe for example, have recognized, that workers can be part of the solution and workers' unions could be part of the solution too, and have been. We can provide a source of capital.

If I could just give you a quick example of that, if I am a worker walking down the street in Sudbury or North Bay I would be more apt to want to invest in a community development fund that can be utilized to provide investment capital for entrepreneurs in that community as opposed to buying an RRSP in the Royal Bank, where that money may well find itself being invested in a shopping centre in San Antonio, Texas. To me that makes no sense whatsoever.

The provincial government ought to do all it can to bring together the players who have a commitment to this province. When I look at who that is, it is the people who live here, who expect their children are going to live here in some fashion, who are going to conduct their business here. If that is true, we have to recognize that in order for us to survive in Ontario, we have to bring those people together in a partnership which recognizes that our first objective is to generate wealth for the province and, concurrent with that, talk about how that wealth is going to be distributed fairly throughout the province. If we can get to that, I think we will be in a much better position for future generations in this province.

The Chair: Thank you for your submission.

CORNWALL ENVIRONMENT CENTRE

The Chair: Next is the Cornwall Environment Centre. You have one half-hour for your presentation.

Mr Milnes: My name is John Milnes and I am an environmental scientist working as chairman of the public advisory committee for the remedial action plan in Cornwall. Perhaps I should explain to you briefly that an environmental scientist is someone who has studied environmental impacts balanced against economic capability to remove and/or prevent those impacts.

The area of concern for which my committee is responsible is the St Lawrence River area at Cornwall, as designated by the International Joint Commission and managed under the Canada-Ontario agreement.

Again very briefly, I will describe the St Lawrence River area of concern. It is quite simply a swelling in the river commonly known as Lake St Francis. It is at the confluence of three nations -- Canada, the Mohawks of Akwesasne and the United States -- two provinces of Canada, Quebec and Ontario, and New York state of the United States. It could be said that it is an extremely complex jurisdictional area in which we are working.

Over time, the aquatic ecosystems of the area have become impacted by contaminants, metals and chemicals, from both upstream and local sources. The degree of endangerment might best be seen through the United States Environmental Protection Agency national priority list, or NPL. On the NPL, this area is listed as 48th. To put this into perspective, perhaps it should be stated that the infamous Love Canal, a much more publicized environmentally endangered area, is listed at number 200 on the NPL. The degree of endangerment thus places this area as being 152 places worse than the Love Canal.

It is easy to talk about economic impacts and depressions, but they really do not mean too much until you have been grossly affected by them. Here in Cornwall, the people really know what economic instability is all about. They have had to live with it for so long.

Many politicians see the Ontario north as being constantly depressed, and well it may be. Eastern Ontario, the forgotten corner of the province, has very similar characteristics. However, there is a compounding factor which makes matters worse. Eastern Ontario, and particularly the Cornwall area, is constantly on a economic roller-coaster. This perpetually throws the economic stability of the area up and down according to the winds of economic change occurring within the province or country.

It is even further compounded because the area is at the mercy of two or three large industries. Each of these industries creates area economic instability by virtue of its own reliance upon export markets to sustain production. Quite obviously, all this has a serious psychological and economic impact on the people of Cornwall and area. When we relate this to the 1991 Ontario budget, there would appear to be little for us to cheer about. However, I believe this budget does provide some hope.

The critics, particularly the opposition politicians, as one would expect, have been widely opposed to such a large deficit being imposed upon the people of the province. In my opinion, it is simply a judgement call which will be proven right or wrong by history. In reality, we all borrow money, whether as ordinary citizens, farmers, small business or large industries. The gamble is the amount which we borrow and our ability or inability to discharge the debt.

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When we see the fiscal performance of past provincial governments, with their small-borrowing approaches and inability to build equity in the good times, I can only believe it is worth the gamble to try another approach. My hope is that we have not begun a process which will be constantly perpetuated. Of importance is the need to build up financial resources when we are in good times. Past provincial governments have failed to do this.

When an incoming government inherits a large debt and enters into the process of governing at a time when the entire world economy is depressed, it takes innovative methods to maintain important services and build growth to enable us to climb to new economic thresholds.

The government has indicated it will be moving on a number of fronts to secure and create well-paid jobs. Here in Cornwall, we would be just delighted to have jobs, any kind of jobs.

We have tried to help ourselves through the fact of our environmental problems. We have recognized there is a need for more and more environmental research. We have even discovered that nowhere in the world are studies undertaken to specifically address research in large rivers. We have proposed that an institute of environmental sciences dedicated to large-river research be located here in Cornwall. There can be no question that Cornwall needs something more than an industrial base if it is to sustain itself in any way. We are hopeful that the provincial government will see this as being part of its strategy to "provide secure and well-paid jobs" for the people of Cornwall. This would tie together the economy and the environmental approaches of the government and in effect kill two birds with one stone.

Perhaps I might make comment on the environmental sector of the budget, since I do have some particular concerns with the approaches being adopted.

When we talk of all those good things such as the 3R program, we are only talking motherhood matters. We need innovative approaches if we are going to succeed in the areas of both the economy and the environment. I do not believe the environment portfolio is being sufficiently innovative. It must be treated to innovative strategies similar to those being applied to the economy by the Treasurer of Ontario.

To increase provincial taxes on gasoline and diesel fuel is to severely impact those who can least afford it. Gasoline taxes do not simply mean increases in personal automobile costs; they mean compounded costs across the entire stratum of living. Increased fuel taxes are a precursor to overall cost increases throughout the entire spectrum of purchasing. This can only badly damage the economic structure of the province and at the same time hurt the poor in a disastrous manner. Further, such economic imbalances create industrial economic incompatibility to export Canadian products.

The government has tended to protect the wealthy with its unsound environmental practices related to gas guzzler taxes. To simply double the gas guzzler taxes is bordering on being unreasonable. We should be imposing a specific gas guzzler tax aimed at changing environmental behaviours. It is my belief that automobiles with eight-cylinder engines, excluding trucks and vans, should carry a $2,000-a-year large-car tax.

In a similar vein, the matter of gasoline-related costs might well be seen in the same light as the decision of the Treasurer to go with a large deficit strategy. It is necessary to try something different. Past Ontario treasurers have heaped taxes on gasoline and diesel fuel to the point where this forced Canadians to go to the United States to buy their fuel. My different approach would see a real price imposed on those rich enough to pay for impacting on the environment through a large-car tax.

It is wrong to use something as a taxable item upon which the economy of the province depends in order to be competitive in the export market. In fact, such is the state of our fuel taxation. It is sorely impacting on the internal markets of the province, and of the country for that matter.

I would reduce the tax on gasoline and diesel fuel not only to assist the economy generally but also to ensure that those who cannot afford the high gas prices do not subsidize the style of living for those more affluent members of the public. This would truly be reducing disparities and ensuring that the costs of economic adjustment are not being borne by those least able to shoulder the burden.

Still on the matter of budget influences on the environment programs, it would seem to me quite the wrong time to be investing $48 million for the Let's Move transit expansion program. Until we have educated the public to be more receptive to being transit minded, we cannot hope to achieve a transit-oriented society.

Such a process of changing behavioural patterns of people has to be a very long-term goal. It is premature to be trying to increase transit systems until such time as the public is ready to accept the concept. It would seem to me there are more important economic issues to be considering.

The three-part plan to address the impending waste management crisis also causes me great concern. Establishing a new public sector agency to find and establish new landfill capacity is totally degenerative and unacceptable thinking. There is no way we should even think of new landfill sites. We should be earnestly looking at the alternatives.

The most logical alternative is to extract those materials we can economically recycle and the balance of our waste should then be turned into energy production through some form or process. It would be a matter of poor fiscal and environmental management to perpetuate the use of landfill sites. We must look at the alternatives and in so doing we must take our heads out of the sand.

The old methods of waste destruction, such as incineration, have been greatly improved. While the old incineration methodology caused so many environmentalists to shake in their boots, the skill development in incineration technology makes this form of waste management state of the art as well as being environmentally and fiscally desirable. There are presently in existence European incineration processes which are both environmentally safe and energy producers, turning waste into electrical energy.

These processes could be installed by private companies charging a per-ton rate for disposal and not costing the province anything to run. Municipalities will be paying for the services they need in accordance with today's practice of making the user pay.

Unfortunately, it would seem our Minister of the Environment is opposed to incineration processes except in the case of hazardous waste destruction. It seems to me that ordinary household and industrial wastes are less dangerous than hazardous wastes. Reducing, reusing and recycling are the products of thinking from the last provincial government and we need to infuse new thinking which will take us into the new realms of environmentalism coupled with economic capability, so that we might really move towards sustainable development.

On the energy front, we should be looking at approaches which have been proven successful elsewhere. The energy-efficient-message approach is unproductive. What are needed are environmental actions consistent with socialist practices, making available those energy-efficient lamps at no cost rather than causing the low- and fixed-income people to be denied the chance to purchase a means to lower energy costs. How can any pensioner or welfare recipient afford to buy the new energy-efficient lamps at $20 to $25 a piece?

To briefly visit another subject, I would like to touch on the matter of education and the proposals of the government for education. If we are truly working towards greater equity, then we must recognize the inequity of educating people for something they cannot have. These are the outdated approaches of past governments. We must not continue to fool people into believing we can create a return to the labour-dependent days. There can be little doubt in the thinking mind that the need for physical labour is constantly decreasing. For every 100 jobs that are lost today, we can expect possibly five to become available again.

We have moved firmly into a technological era and are rapidly closing in on a new time frame which might best be described as a technocracy era wherein the technology we already have is applied to the welfare of mankind as a whole.

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With this in mind it is most important we stop wasting our financial resources on the traditional teaching approaches, including the retraining of unemployed persons. What on earth is the use of retraining when there are still no jobs available? It is a matter of good fiscal management to recognize where to invest. In my opinion, it is total mismanagement to continue investing in the present education format.

In order to leave time for questions, I will briefly summarize. My greatest concerns are fiscal waste associated with the environment, namely, not rethinking our positions relative to improved technologies involving waste management; and education, chasing shadows through continuing with outdated educational approaches; and energy conservation, using approaches which deny the poor the access to monetary savings from energy-efficient lamps and appliances.

I will close my presentation saying I believe the government may generally be on the right track with its fiscal policies. The phrase "sustainable development," commonly associated with the environment, is also applicable to government management of our financial resources. I have a sense our financial resources are in good hands.

Finally, this committee has a golden opportunity before it. You have visited a city which is economically depressed. We have found we are in a heartland of potential development, namely, our hopes for an institute of environmental sciences. We seek your support for our concept in the hope that we can put economic recessions behind us once and for all. At the same time we seek to put Cornwall, Ontario and Canada on the world's scientific map. We are ready and willing to face the challenge before us, but we need help. Please help us, the people of Cornwall, to help ourselves.

Mr Villeneuve: John, thank you very much for a very refreshing presentation. You did not attack federal government or provincial government policy, you were positive, and in those areas that affect this community the most, fuel and taxes for instance, which is our biggest problem right now, incineration, waste disposal and education. Those are three major topics.

On fuel and taxes, the main problem we have, the cross-border phenomenon, is because fuel is so very much cheaper, particularly in Akwesasne. We have seen this government not only raise the deficit but raise the taxes on fuel. The Americans are putting two million bushels of grain every day into the production of ethanol, which we know would reduce the greenhouse effect by some 40%. This provincial government has still resisted that. I want to ask you about that and about incineration.

On incineration, to tip a ton of garbage in these communities costs you between $120 and $140 a ton. As a farmer, I cannot get $100 a ton for corn, grain or barley. What are they saving this land for, garbage disposal sites? The economics would indicate that is the best use right now. I would like you to comment on that and on education. You, as a long-time educator, accept that the system is not working right. Could you comment on those three very important aspects of your presentation?

Mr Milnes: Certainly. In the first place, I believe we have to be more innovative in our approaches to the environment. Simply to keep dumping waste materials into holes in the ground has to be unproductive. It is not only a waste of land. We take for granted the huge area we have in Canada, being the second largest country in the world, that we can use or misuse the land at will.

The second factor is the leaching capabilities of anything we dump into that hole in the ground back into our ground water and hence into our human frames. It is absolutely unacceptable to be using those processes which we felt were okay in days gone by when we had less knowledge of environmental impacts.

To my mind, we have to avoid the strategies being put out by environmental activists, extremists, who are trying to influence the direction of government through their activism and their extremism. We have to have a balanced, moderate approach to environmental costs and environmental involvement, because if we are not careful we are going to actually deny environmental movement forward simply because it is too expensive. We have to look at the alternatives.

I recently visited a plant at the invitation of a company to make an environmental assessment of that plant. It was an incineration plant. I know our provincial minister is opposed to incineration of waste. I believe it is the responsibility of all politicians in the provincial government to attempt to sway the thinking of that minister to a more rational approach.

I believe personally the minister has been influenced by people who are close to her who have backgrounds from the extreme environmental point of view and I think that is dangerous. I went to Connecticut to see this particular plant bitterly opposed to incineration processes simply because I was versed in the old approaches of incineration, the old practices. The plant I visited was four years of age and I went around that plant with a fine-tooth comb. I could find no leaks in the plant anywhere at all, I could find nowhere where they were covering up, and the whole of the facility was the equal of the Transport Canada Training Institute federal government building in Cornwall. Anyone could be proud to have such a facility.

There were nine people from Canada on that occasion. I was perhaps the only person asking specific questions of a scientific basis. The questions I was asking were relative to fallout from the stack, emissions from the stack. I looked at everything including the distance from the stack, the control of emissions, the recording of emissions, the topography influence on those emissions to their fallout. Not only did I get all the verbal answers I requested, since then I have had a substantive amount of written documentation from various organizations, various knowledgeable bodies, confirming what I felt to be a very thorough and scientific process.

On the matter of education, I have, as Mr Villeneuve has indicated, been an educator for many years and I have been very concerned because I have been one dealing with learning disabilities. It is my opinion that we are on the wrong trend when we continually perpetuate that which has satisfied us since the evolution of the religious orders creating our education schemes.

I think we have to go into a new mode of education where we go into a twin-fork approach. The twin-fork approach would take us to providing education for those who are going to be the dollar earners and those who will not be the dollar earners and recognizing that both have a right to an education base. We would have to build bridges between those two entities to allow for transfer at different educational stages in their development. But by and large we have to educate based on the premise that we no longer hope for full employment or anything close to it. We are fooling ourselves and we are fooling society as leaders of the society when we try to make people believe that jobs are around the corner.

Mr G. Wilson: Thank you for your presentation, Mr Milnes, I found it thought provoking. I agree with your approach that we have to be moderate in the things we come up with. I must say the last comment seemed to be a bit immoderate, and tying it to your comments about cutting off training seems like a rather immoderate approach as well, especially to those people who need training. To drop them, perhaps, without at least suggesting the alternatives looks a bit extreme. However, you also could not include everything in your program.

I want to pick up on a couple of things you said, though, about the 3R program being a motherhood issue. I am not so sure we are at that stage yet. The thing about incineration is that if the 3Rs took root, then there would not be so much to incinerate, and some of the programs you have in mind that would be the result of incineration then would not be there. I think the whole idea is that we want to conserve our resources. Incineration does not allow for that. In fact, it encourages the opposite; there seems to be no problem then with disposing of our resources because we can always burn them. I just would like to get your idea then on the education that would be needed, because I see a difference here. You think we genuinely have to educate for conservation and you say transit is not at that stage yet, that people do not accept the need for mass transit, which sounds to me like an educational issue, but on the other hand, you seem to be removing the need to educate on things like the three Rs, so could you just clear up that confusion?

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Mr Milnes: Let me say that when I talk about retraining, I have gross concerns, particularly in an area like Cornwall, where we may take 10, 12 or 15 people and retrain them for an electrical trade when there may only be two jobs currently available for electricians and the projection of electrical opportunities may not exceed five. Then because of the economics of education today, I feel we have to have classes of a size which are economic, so we educate 10, 12, 15, 20 people in a retraining program to give them an opportunity to have a skill development sufficient to deal with that trade need. I think that is an unfortunate situation.

I believe also in many cases we have to recognize that the people who are unemployed at this time may not be suitable for retraining for other trades. It is a gross assumption that people have a capability to diversify their skill ability and their intellectual ability to varying sources and various modes. I have a very strong conviction that we are doing the wrong thing to make that assumption. So many people are going through the process and failing. What we are doing is generating failure rather than success. I think it is better to acknowledge that we cannot educate some of these people for doing that which we would like to see them do and say there are no jobs available for them, in the first place, or the limited number of jobs will not cover all the potential schooling we are going to give and, second, the incompatibility of people to flex, particularly at a later stage in life.

Mr Cleary: I thank you for your presentation, John, on behalf of your committee. I know your committee has been working hard for a considerable time now. I am pleased my colleague had mentioned the problems we are having with fuel tax in the area and the problems it is causing us. I was pleased that your group had the opportunity to meet with the federal government. I was a bit disappointed that we did not have the same opportunity with the provincial government, but we did have a brief meeting with Richard Allen, who promised to get back to us later on. Hopefully that same meeting will happen in Toronto and you will be able to make the same presentation as you did to the federal government. I know the Chairman is eyeing us here for time, so I guess I had better cut it off at that.

The Chair: Thank you for coming before this committee with your presentation. It was very informative and we will be studying it more closely. They were different viewpoints.

ONTARIO HOSPITAL ASSOCIATION

The Chair: The next group to come forward is the Ontario Hospital Association. Good morning. I would like to welcome you to the committee. You will have one half-hour for your presentation. Near the end try to keep some time for questions and answers from the three parties. If you would not mind identifying yourself and your position for the purposes of Hansard, you may begin.

Mr Birkness: My name is Brian Birkness. I am the volunteer chairman of the Ontario Hospital Association. With me is Gordon Cunningham, the president of the Ontario Hospital Association. We have local representation here with us today: Clarence Marshall, the chairman of the board of Brockville General Hospital, and Viviane Campbell, the director of finance of Glengarry Memorial Hospital.

Thank you, Mr Chairman, for the opportunity to appear before your important committee to make the case for a sounder approach to hospital financing in the 1990s. We hope our remarks here today will make a worthwhile contribution to your deliberations and those of your fellow committee members on how best to budget for the many needs of the people of Ontario. It is no small challenge you face, as we who face budget dilemmas in our areas of service to the people can confirm. It does not look like it will get any easier in this decade for you or for us, but the decade's budget woes where hospitals are concerned can be reduced through the application of four key principles. That is the key message I want to give to you today.

What are these principles? First, there should be a recognition that hospital administrators have clearly demonstrated they know how to manage the system. They have continued to meet public expectations for increasingly complex quality health care in the face of shrinking financial resources. This can only be achieved through good management and a spirit of innovation. Second, hospitals need a commitment from the province to review the role of hospitals in our health care system so that their maintenance and development can be approached in a planned way with priorities and expectations clearly spelled out. Good managers need to know what is expected of them not just from year to year, but from month to month. We all have to agree on a new or revised definition of what a hospital is, a definition worked out among government, hospitals and the public.

Third, boards and administrators need a more rational approach to funding hospitals, starting with announcements of allocations and changes in funding formulae as early as possible in the budget process. Current ministry funding practices make it almost impossible for hospitals to budget with the degree of accuracy or confidence required to meet the current needs and the innovations required by rapid advances in health care. Fourth, hospitals cannot operate without a long-term planning framework, of which capital funding is a major component. We need an indication of the government's long-term plans for capital funding.

Summing up, hospital administrators are saying: "Give us the tools and we'll do the job. The public will get the quality health care it deserves and the province will be assured it is getting the best value for the health care dollar." That appears to me, and I hope you agree, like a pretty good prescription for the relief of some of the budget headaches we face together in the next decade. We are here to rally support around two central issues: first, the need for hospital and health care funding to be approached in a more planned and considered fashion and second, that government thinks through and provides for the costly burdens it places on hospitals and others before introducing new programs and initiatives. Our association predicts that the 1991-92 fiscal year will show serious shortcomings on both these counts.

Desite the ministry's instructions to hospitals to bring in balanced budgets, we already know that many hospitals across the province, despite herculean efforts to do otherwise, will be projecting the unwelcome experience I spoke of earlier. For instance, 17 chronic care hospitals are projecting deficits ranging from $300,000 to $5.7 million per hospital. The only way to balance budgets is to cut beds, lay off staff and curtail services. All these actions have serious implications for the delivery of health care to the people we serve.

There is more than dollars and cents behind the bookkeepers' columns and the accountants' figures when it comes to hospital spreadsheets. There is human deficit behind the numbers, one that is measured in terms of unmet health needs and one that is also measured in the stress and professional compromises imposed on health providers whose ideals of compassionate and competent care are continually lessened by budget cuts and an ad hoc approach to hospital financing. There is no pride to be found in balancing a hospital's books if the hidden deficit is at the expense of patient care, not in a province as fortunate as Ontario, where people have come to expect the highest quality of health care and have been willing to pay for it through high taxes.

We are not just saying, "Throw more money at us and all will be well." Of course funding would be welcome, but we also appreciate the province's flat revenues in this recessive period. We also are fully appreciative of the fact that the 9.5% granted hospitals this year was larger than hospitals in other jurisdictions received and larger than that of many of our companion public services in Ontario which also depend on the public purse. We thank the government for that, but the fact is that hospitals are still left $368 million short of the money they need just to hold the rocky ground left behind by years of similar shortfalls.

Hospital costs are rising because hospitals are expensive to run, not because hospital costs are out of control. In the last decade, the hospitals' share of the global health dollar has shrunk from 48.1% to 43.7%, while payments to physicians and the Ontario drug benefit plan continue to expand. Hospital funding grew at an average annual increase of 11%, compared to 13.4% for payments to doctors and 19% for the drug plan in the 10-year period from 1980-81 to 1990-91.

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The seeds of hospital funding problems were first sown when the federal government decided its massive deficit had to be reduced and began the gradual reduction in transfer payments to the province. This approach forced similar approaches at the provincial level. Rapidly rising health costs, of course, have been the big target. Sure enough, when the squeeze began, hospitals trimmed where they could and began to introduce many cost-effective and innovative systems in an attempt to maintain the quality of care and the compassionate level of service demanded by Ontario's sophisticated health consumers. We saw trends developing towards more outpatient treatment and day surgery to avoid costly hospital stays. We saw hospitals banding together under OHA auspices to develop purchasing programs to further cut costs. We saw community hospitals signing creative support agreements, ending duplication of services in some areas and encouraging the development of centres of excellence in others.

These and many more innovations came on stream as trustees and administrators accepted the challenge of running hospitals in a more efficient and cost-effective manner, a challenge made all the more difficult because of constant shifts in funding policies and a lack of overall planning at the provincial level. The facts speak for themselves. Since 1975, hospitals' share of the overall health expenditure has decreased by 14.6%, not taking inflation into account. Yet compared to 1980, hospitals last year cared for 96.3% more Ontarians in outpatient clinics and 5.1% more Ontarians as inpatients. These statistics speak to growing efficiency and the competent way hospitals now run their affairs.

Yet still they face massive funding problems and deficits as fact of life. Hospitals are hurting and if they hurt, so do the people who turn to them for professional and compassionate solutions to their health needs. While trying to do their best with less, and often succeeding, hospital planning is often sent off course by the imposition of new legislative programs and initiatives without adequate funding for their absorption into an already strained system. I speak of such things as the employer health tax, occupational health and safety legislation, pay equity, rising costs of unemployment insurance, workers' compensation and the CPP, the goods and services tax and similar initiatives. The value and worth of such programs are not being questioned. Hospitals are as socially conscious as anyone else and play their part to ensure the success of any program designed to improve the commonweal, but we do question the imposition of new cost burdens on hospitals without considerations of how hospitals can pay for them.

Recent legislative changes have delivered a series of shocks that now see our hospital system grappling to meet expenses from strained and sometimes non-existent resources. Pay equity is but one example. While they are fully supportive of the goal of the legislation, hospitals are still trying to come to grips with the budget impacts of this program. The government has announced a $125-million fund to help public service bodies finance the program costs. For the hospital industry alone, pay equity represents additional costs of some $50 million annually. Yet hospitals have been told by the Ministry of Health it will not apply to Management Board of Cabinet for its share until the latter part of the fiscal year. The uncertainty about what funds will be available to hospitals for pay equity makes budgeting extremely difficult. Many hospitals also are facing difficulties with the settlement they reached with the Ontario Nurses' Association. While it was a costly settlement, it was one that was obviously needed to ensure a good supply of highly qualified nurses and to pay them equitably in comparison with other professionals. We are still waiting for the results of a comprehensive ministry survey to determine which hospitals are particularly severely affected. It is essential that those hospitals receive additional funding for this fiscal year. Hospitals are now close to halfway through the fiscal year and none knows with any clarity how much money it will have. But the impact of the agreement does not stop at this year. There also may well be an effect on negotiations with other unions and possibly on the entire salary and wage structure of hospitals. These costs must be factored in as government begins work on the next budget exercise. Failure to deal realistically with these inevitable increases will see further service cuts, which will be damaging to the quality of health care in communities across the province.

Right now we are deeply concerned with another government initiative, the Ministry of Labour's health care facilities regulation under the Occupational Health and Safety Act. Our preliminary studies indicate that the cost of implementing the new regulations is upwards of $150 million. Increases in annual operating costs are expected to be around $13 million. This would represent the most significant government-related cost ever imposed on the hospital sector, and to date we have had no indication what funding the government is prepared to give, if any, to help hospitals cope.

Naturally we are worried, given the funding history of similar legislative decisions. We are as anxious as government and the labour movement to improve working conditions for workers in the hospital sector, but given the strong signals that hospitals are going to have to make do with less, we maintain the new regulation must be phased in, and come with the substantial operating and capital funds needed to make it a workable reality. The Ontario Hospital Association is fully prepared to work with government on a plan to phase in the regulations in an orderly, manageable way.

Hospitals have little flexibility in generating additional revenues. Government must be prepared to pay the costs of the social and service improvements it deems are needed. This is even more critical now that hospitals have become more cost-effective operations. Innovation and creative management will only absorb so much; after that come more bed closures, staff layoffs and reduced spending.

Returning for a moment to the issue of generating revenue, let me remind you that many hospitals have taken advantage of the business-oriented new development program introduced in 1982, which has encouraged them to develop revenue-producing programs and services, such things as parking lots, rental space in their facilities for retail activities, professional offices and other innovative ventures. As many of you may know, the Ministry of Health recently placed a moratorium on this program pending a policy review. The minister indicated concern that some schemes being suggested by hospitals were putting hospital assets in jeopardy.

We think review of these programs are healthy, and OHA is pleased to co-operate with this one. Clearly there is a need for guidelines and policies that will ensure the protection of hospital assets, but we urge the government to guard against discontinuing a program that has opened the way for some hospital to finance some of its operations through innovative programs, thus reducing the call on the public purse. The elimination of BOND would just add to the budget problems hospitals now face.

Lest this presentation seem nothing but a catalogue of complaints, let me hasten to add that the Ontario Hospital Association has cordial relations with the Ministry of Health and that we work in partnership at all levels within the ministry to resolve many issues. There have been positive changes. One is the transitional funding initiative, which attempts to relate funding to the actual level of care and service delivered by hospitals. Hospitals are working closely with the ministry on the development of these new funding formulae, which hold the promise for a more equitable distribution of funding across the system. But even in the transitional funding program, late payments compound hospital budget problems and hamper an otherwise promising program.

Concerns over pay equity, transitional funding, the cost of government legislation and policies and other budget difficulties I have reviewed here form the heart of a special session attended by more than 150 board chairs and CEOs in May of this year at OHA. These men and women express their frustration at trying to budget in the face of so many unknowns and share the difficult decisions they have faced about having to make further service and staff cuts in their already lean operations. I told that gathering that I felt hospital financing had reached a crossroads in Ontario, and I repeat that sentiment here. OHA believes, and so informed the minister in a June 20 meeting, that the time has come for a much greater emphasis on planning in all areas of health care, and specifically for hospitals.

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The role of hospitals is obviously changing, along with commitments to adequately finance hospital capital and operating needs. It should not be allowed to happen by default, risking the loss of valued resources and services and leading to impaired health care for the people of Ontario. The people of Ontario and the thousands of men and women volunteers who built one of the finest hospital systems in North America have a right to see their legacy protected and enhanced. OHA and its members are ready to work with government and other stakeholders to ensure that any transition preserves the best and builds to an even higher level of service to the people of Ontario.

Hospital voices must be listened to. Some advocates of the community-based approach see it as an all-embracing solution to mounting institutional costs and are not prepared to listen concerning the very real role hospitals now play in caring for this sector of the population and the even more vital role hospitals will play in the future in a well-balanced continuum of care.

The government now intends to conduct a review of chronic care facilities. While we heartily endorse a review of chronic hospitals, we are extremely concerned that the new terms of reference for the study do not include site visits to hospitals. In fact, data will merely be gathered through statistics and random sampling. The terms of reference as laid out are unacceptable to OHA and to the Council of Chronic Hospitals of Ontario. Hospitals cannot be ignored.If a true examination of the care-giving role of chronic hospitals is not undertaken, the study will misrepresent the needs of the community and waste the government's already strained funds.

Modern chronic care hospitals are not the warehouses of the past. They are places of advanced, compassionate care where research leads to many new breakthroughs, improving the quality of life for the elderly and disabled, both in the community and in institutional settings. They are a vital element in the spectrum of a comprehensive long-term care system and must be adequately funded for operating and capital.

I should underline that OHA and its member hospitals across the province welcome the move towards community care. We are more than willing to adapt hospital services and programs in a rational, well-planned way to facilitate a more enlightened approach to caring for the disabled and the elderly. Hospitals will always have a vital role to play in the continuum of care.

As the government outlined in its agreement with the Ontario Medical Association, a joint management committee will be set up to examine health care practices and relocation of health funding. These are serious matters that are far beyond the scope of physicians alone to deal with. They involve all providers and consumers. It is imperative that OHA be a partner in the process that will have a major impact on hospital management and operations.

We recognize that the entire health care system, along with the hospital sector, is in a period of turbulence and change. Governments, health care providers and the public are scrutinizing expenditures to ensure value for their dollar and a high quality of health care. Hospital boards and CEOs have been no less diligent in that scrutiny and have met the challenge in innovative and productive ways. They are equal to the challenges the future presents, given the tools, resources and clear directions that form the bedrock of good management practices.

In conclusion, thank you again for the opportunity to make the case for Ontario's hospitals before your committee. We hope our remarks on the need for a new look at the role in financing of hospitals and the need to think through the cost implications of new programs on the system have widened public understanding of the very real dilemma hospitals face.

We also hope we have indicated there is a large fund of goodwill in the hospital community. We ask only that we be listened to and consulted. We are ready to sit down with all sectors of the wider health care community to reshape the system to meet the changing needs of the people of Ontario into the next century.

Mr Christopherson: Gentlemen, I thank you for your presentation. This, I believe, is the third opportunity I have had since being in office to meet with your organization and talk about your concerns. I suspect we will continue meeting for many years to come on this important issue.

As you know, we deliberately, in our budget, did not flat-line transfer payments to our funding partners, which has been the approach in the past to recessions and tight monetary times, particularly with special emphasis on the health sector, education, municipalities, boards of education. However, what we have been hearing from mostly business groups -- but not all business groups, some individuals -- chambers of commerce, is that the reason we have a deficit in this province is that the NDP government did not have the political courage to bite the bullet and just say no to groups such as yours and municipalities and others. In fact, a number of them have come forward and said that what we ought to have done and should be doing is a 10% to 20% cut across the board in every area. The basic premise for this is that the idea that we should spend money we do not have is unacceptable and we ought to be looking at the bottom line. That is the argument that comes forward from those groups.

As you are one of the recipients and benefactors of the approach we have taken, I would like to hear what your response would be to those who make the case to us that this is the road we ought to be going down.

Mr Birkness: We would be pleased to meet with any business group and show it how funding has been reduced to the hospital sector and how the hospital sector has been coping with that and the kind of management capability we have in hospitals to provide the services that have been demanded by the citizens of this province. If they are prepared to cut services and cut beds, we will also be prepared to show them what the effect of that kind of reduction will be.

In this province what we want to do is find innovative methodologies of delivering those services, hold the line on our cuts in funding for hospitals, and retain and maintain the quality health care service we have in this province. I would reiterate that we would be more than pleased to meet with any one of those business groups that come before you and challenge what Ontario hospitals are doing in terms of providing management in their hospitals.

Mr Kwinter: What impact does technology have on your budgets? I am thinking of things like magnetic resonance imagers and CAT scans and whatever is coming around the corner next week or next month. How does that impact on you and what kind of pressures does that put on you?

Mr Birkness: Of course technology has substantial impacts on hospitals. There is probably not a hospital board in the province that would not want to have the very best technology in its hospital. The truth of that is that Ontario hospitals have not been able to keep up with technology, and I do not have to go through the comparisons of the technology that is available in the state of New York compared to the technology that is available in hospitals in Ontario. Nevertheless, I believe the citizens of Ontario, the patients in our hospitals, have the technology that is required available in the province as required and as necessary. There are large demands to keep up with technology.

Our doctors are coming out of medical schools with new and better skills, accustomed to using this new technology, and are demanding that the hospitals they go to have that technology available to them. So these are some of the problems that hospital management has to deal with, and we also have to clearly make fair determinations of where that technology should be available.

The other side of that coin is that some of the technology has allowed us to remove inpatients and treat them on an outpatient basis, such as arthroscopic surgery where people are coming in as day patients. It is just amazing the technology that has been developed in the last 10 years and how hospitals have changed. We see that almost 97% increase in the amount of outpatient services and a great deal of that is due to this new technology.

So technology to us is a boon, and on the other side it certainly increases the tremendous demands on finances for hospitals and on capital funding, which of course we are not receiving.

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Mr Sterling: I am always amused by the New Democratic Party in terms of drawing the health care question into the final question when you are going to go to your constituents as to whether or not you are going to spend more money to take care of them, because probably the health care system would be the last social service that any of my constituents would give up.

However, we now find that taxpayers in Ontario work for over seven months to pay their taxes and are left with about five months to pay for their own discretionary income, and therefore we are caught in a problem here. You cannot go on for ever justifying more and more services to the people if in fact we are now working seven months for the government and five months for ourselves.

You mentioned in your presentation that the increase to you this year by the government to the hospitals was about 11%, I believe your figure was. If you took out the government-imposed programs, be they federal or provincial, what is the real increase to the hospitals this year? Do you have that figure?

Mr Birkness: The general economic adjustment that we requested was a 9% increase and what we got from government was a 6% increase. The balance of the adjustment that was a total overall of 9.5% was a Ministry of Health formula adjustment of 3.5% that was provided for hospitals for changes in health delivery services for a variety of different programs, but the economic adjustment basically was 6%, if that was your question. We got 9.5% actually.

Mr Sterling: And your mandated costs were what?

Mr Birkness: Our projected requirement was 15% to meet the general economic adjustment of 9%, the Ministry of Health formula of 3.6% and extraordinary adjustments, which included the employers' payroll program and other programs such as that, of 2.4%. So in order to meet the government programs and an economic adjustment, we needed 15%, and received 9.5%.

The Chair: I would like to thank you for your submission to this committee.

ONTARIO SECONDARY SCHOOL TEACHERS' FEDERATION, DISTRICT 21

The Chair: The Ontario Secondary School Teachers' Federation, District 21, come forward, please. I would like to welcome you. You will have one half-hour for your presentation and in that one half-hour you can leave some time at the end for questions and answers from the three political parties. If you would not mind, for the purposes of Hansard, please identify yourself and your position.

Mr K. Ward: I am Ken Ward, president of District 21, OSSTF. With me is John McEwen, our second vice-president and chair of our educational finance committee, and Richard Roffey, chair of our political action committee. On behalf of district 21, OSSTF, we would like to thank you for this opportunity to be part of the democratic process.

District 21 represents virtually all of the teachers of secondary schools with the Stormont, Dundas and Glengarry public board and some teachers with the separate board, secondary division.

John McEwen is recognized as one of the foremost authorities in Ontario on educational finance and he will review the impact of the budget on Ontario's publicly funded schools in general and Stormont, Dundas and Glengarry in particular. Before he does this, however, Richard will discuss the budget in the context of the financial situation which dictated it. Our submission proper begins on page 5. The executive summary at the beginning is for those who will not take time to read the whole report.

Mr Roffey: Before we get into the budget specifics, perhaps we should take a look at the Canadian context in which this budget finds itself. The Ontario budget cannot be perceived without examining the greater Canadian context within which it is confined.

The consequences of the policies of the federal Conservative government as they affect the Ontario economy, Ontario government revenues and the finances of Ontario residents and their families cannot but put education in Ontario under extreme stress now and for the foreseeable future. There is a strong connection between the effects of the high Canadian dollar, high interest rates, the goods and services tax, free trade and constitutional uncertainty on the economy of Ontario and the ability of that economy to adequately fund our schools.

The government in Ottawa has had a significant role in determining the size of the 1991 Ontario deficit. First, there is the federal government shortfall of $3.6 billion in grants for social services. The graph on the next page provides a picture of the gradual withdrawal of the federal government in the fiscal life of Ontario. In addition, the policies of the Ottawa government, which have led to the downsizing or closure of many Ontario enterprises and the consequential unemployment and dislocation, have reduced provincial revenues and created the need for additional provincial expenditure.

Now, in the face of the misery it has helped to create, the federal government is gradually getting out of the business of providing direct assistance to people and being the social buffer between the haves and the have-nots of our society. The unemployment insurance reforms and the infamous clawbacks are examples of Ottawa's attempt at disinvolvement.

If Ontario had heeded Ottawa's call to pass the federal cutbacks through to the populace in the form of higher taxes and reduced services and if Ontario had ignored the greater social service expenditures required by the recession, then indeed we would have had a situation in which all social services in general and education in particular would be in great difficulty.

The great, brooding shadow which is invoked to justify the federal cutbacks is the federal debt. Conventional wisdom attributes debt to overexpenditure. Tory dogma asserts that the debt is a problem they inherited from the Liberals and they are dealing with it. The graph on the previous page suggests something quite different. The Liberal endowment of debt mushroomed under Tory fiscal policy, not because of excessive increasing expenditures; mismanagement, not expenditure, is the culprit.

The high interest rates set first by the Liberals, then by the Conservatives, pushed the debt into the stratosphere. The Tory tax increases heaped upon the poor and the middle classes have just balanced out the breaks given the rich and the large corporations. Unfortunately, the shift of tax burden to the middle class has occurred in a period when the middle class has shrunk in proportion to the whole and its share of the nation's wealth has declined. In this fashion, the Tories have given ordinary Canadians higher taxes, stagnant government revenues, less service and a larger debt.

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The federal government has created an environment in which the average Canadian can see his or her economic life being threatened. In short, the social contract of Canada is being shredded. The great danger is that the present Conservative government in Ottawa is creating a fiscal climate in which it may become impossible to re-establish the human programs that we presently enjoy. One can easily see the institutionalization of a new feudalism related not to land and castles but to financial wellbeing. We see the beginnings of this trend in the constant reminders that we will have to live with fewer social programs in the future in light of the new god of survival, competitiveness.

It is amazing to see the focus always put on social programs as the only cause for non-competitiveness, and by implication the present recession and all our present economic woes. This kind of thinking could in its most benign be thought of as being simplistic but in its present form must be considered dangerous and is indeed one of the factors which threatens the very existence of the nation.

The people have been forced into a siege mentality by a government that has little or no concern for the welfare of the common citizen. One manifestation of this behaviour on the part of the federal Conservative government is to try to blame the people for the present situation. The injustice of the Ottawa rhetoric is obvious. Our present woes are the result of a recession made by the government of Canada.

It is unfortunate that in Canada we do not have a mechanism for a litigated action against the federal government on behalf of the people. If there were such a possibility, then the federal government as it is presently operating would indeed be found in breach of contract.

It is ironic that the storm of criticism that the NDP government of Ontario faces for its budget has its genesis in the fiscal mismanagement of the federal Conservative Party. It is doubly ironic that this budget, which is designed to blunt the effects in Ontario of those selfsame Tory party policies, is being greeted with outrage by self-styled fiscal conservatives. The NDP government is being criticized for mismanagement when it is the NDP government that is helping protect the people of Ontario from the harshest consequences of the present actions of the federal Conservative Party.

Perhaps it would be interesting to note at this point -- I think it was reported in the Standard-Freeholder last night -- that 10% of the population of Ontario is on welfare. I would say that is probably courtesy of the federal government and its unemployment insurance policies.

If I could present some of the Ontario context in which this budget finds itself, it is well known that the recession has struck Ontario with particular force. This government has made it clear that it has chosen to soften the impact of the recession upon Ontario residents rather than cut expenditures and raise taxes to provide a balanced budget. We support this policy for the following reasons.

Ontario has the capacity to take on additional debt. The cost of servicing the Ontario debt will consume 11% of the expenditures of the Ontario government, far less than the crushing 35% of expenditures which is the debt service load of the government of Canada.

In spite of the rhetoric of its critics, the total debt as planned in the 1991-92 Ontario budget is not large in the Ontario context. If debt is measured as a percentage of gross national product, the NDP government debt is about the same size as the Ontario Conservative debt of 1983-84 and the Liberal government debt of 1985-86.

The tax increases and expenditure cuts recommended by Ottawa to Queen's Park would cause, in addition to the misery inflicted upon a populace already bloodied by the recession and the consequences of Ottawa's fiscal malfeasance, a further tightening up of the Ontario economy. The consequences of a deliberate deepening of the recession in Ontario would be a further shortfall in Ontario tax revenues. Ironically, the fiscal course recommended by the wizards of Ottawa and their fellow travellers has the potential of providing a deeper and less productive deficit than that found in the present Ontario budget. I will refer you perhaps at this point to the appendix, which is a newspaper article describing exactly what happened to the federal government in relation to that policy.

There is a considerable human and economic cost to the policies of the Ottawa Tories. American studies have indicated that each per cent increase in that country's unemployment rate can be associated with 318 additional suicides, a 2% increase in the mortality rate, a 5% to 6% increase in homicides, a 5% increase in imprisonments, a 3% to 4% increase in first admissions to mental hospitals and a 5% to 6% increase in infant mortality rates. Although no Canadian data is available to us, there must be an equivalent impact in this country. It is important that Ontario attempt to reduce the casualties created by Tory fiscal policies.

A portion of this budget deficit may be attributed to the anti-recession program. In addition to the economic and employment benefits provided by such a program in a time of recession, Ontario is adding buildings, roads, etc, which are urgently required.

For example, the $91 million for school repairs and renovations given to the publicly funded school boards is welcome relief in the context of an accumulated Ontario capital deficit of $4 billion for new and refurbished pupil spaces. In SD&G alone, the public board will receive $1.67 million in grants towards additions, renovations, alterations and the installation of an elevator for the handicapped. In addition, the separate board is to receive $1.35 million for renovations, new roofing, boilers, sewers and windows. These grants, along with locally raised revenues, will provide over 2,100 person-weeks of employment in the united counties. Given the hard times we are now part of in this region, we are facing timely expenditures that are necessary for the prudent operation of our schools.

Mr McEwen: The first budget of the Ontario NDP government did not allocate substantial new grants to schools. In fact, as the two graphs on the next two pages indicate, the 1991 budget allocated a slightly smaller portion of the whole expenditure to school grants than had been in the Liberal budget the year before, and those school grants supported a smaller portion of school costs than the year before. As the graphs indicate, the budget allocation to school grants is consistent with the pattern of decline in provincial grants to schools established and maintained in nine Conservative budgets and six Liberal ones. This is a considerable disappointment. On the other hand, school grants did not receive the kind of surgery advocated by the federal Prime Minister and the other critics of the NDP government. For that, we are extremely grateful.

As noted in the next section of this brief, grants to the Stormont, Dundas and Glengarry public board of education did not follow this provincial pattern. The grant increases provided by the NDP government resulted in an increasing provincial share of school costs, with corresponding savings to the local ratepayers. This additional funding has had an important impact on the united counties.

Moving on to my discussion of the SD&G situation, I would draw your attention to the graph on page 17, which shows the way in which the government's share of local school costs for the public board has increased for the first time in many years. In past years, property tax revenues have had to increase at rates greater than the increase in expenditures to compensate for the declining grant share. This year, the reverse occurred. This allowed the public board to provide adequate funding to operate its schools with a moderate tax increase.

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The year 1991 has been another year of plant closings and loss of employment in the region. It has also been a year when many municipal governments in the region have had to impose large mill rate increases. The extra school grants were therefore timely, easing the tax burden at a time of some difficulty.

How should the NDP government approach school finance? We would hope that the NDP government continues to ignore calls for across-the-board cuts in educational and social services expenditure. We believe that the Ontario government must base its school funding decisions on a careful consideration of the following:

1. What are the educational services that should be provided in a publicly funded system?

2. What is a reasonable expectation of the costs to provide those services?

3. What is the financial impact of government-mandated educational initiatives?

4. Is it possible to restructure the delivery of administrative, transport and other educational support services to provide the same educational opportunity at less cost?

5. What is the appropriate portion of the provincial budget to allocate towards school grants?

6. What funding structure can best advance the competing goals of equity of educational opportunity and local autonomy?

7. Are there other sources of local revenues which school boards could access?

These criteria are not new. Committees of the Legislature have heard them before from groups representing education's stakeholders. We hope this committee will recommend to the government that criteria like these be adopted as the basis of the provision of grants to schools.

It is generally accepted that the expenditure of public funds for education is a worthwhile act. As the graph on page 20 shows, there continues to be in Ontario strong public support for increases in educational expenditure at rates above the rate of inflation. Those who advocate cuts at any cost are a small minority. Indeed, they are smaller than the group of Ontarians who believe Elvis Presley is still alive and smaller than the group who believe Brian Mulroney should be Prime Minister of Canada. The strong support in Ontario for increased school expenditure is not surprising. Parents understand the relationship between education and success in life. Economists and business persons understand the connection between education, productivity and growth.

Paradoxically, although support for increased educational expenditure remains strong in Ontario, the portion of our personal incomes which we devote to elementary and secondary education has declined steadily over the last 20 years. This is indicated by the graph on the next page. One consequence of this decline is that all the states and provinces which border Ontario spend more money on elementary and secondary education -- as measured by the proportion of personal income committed to the purpose -- than we do. This is shown in the graph on page 23. Is Ontario neglecting an important social investment? The behaviour of our neighbours suggests that this is indeed so.

At this point, I would like to ask the president of the district to provide the summary of our brief.

Mr K. Ward: To recap, then, the Ontario budget must be looked at in the Canadian context: the high Canadian dollar, high interest rates, the GST, free trade, constitutional uncertainty, slashed transfer payments, breach of the social contract and the homegrown recession. In addition, it must be viewed in the Ontario context. Ontario can absorb the debt. The real debt is no larger than during previous governments. We support the Ontario government's attempt to negate the devastating effects which the federal policies would have on social programs.

We have four main recommendations: The 1991 budget plan of the Ontario government be supported as a sound response to the difficult times currently facing Ontario; decisions on education funding must be made in a comprehensive way on the basis of need; educational funding must increase in real terms, and the dependence of school funding on local taxes must be diminished.

Mr Chairman, honourable committee members, thank you for listening.

Mr Kwinter: I just want to question you about the methodology you are using in some of your graphs.

Why would you select percentage of income as being the criteria? I will give you an example. Let's say that in Ontario the average person earns $20,000 a year, and let's say in Newfoundland the average person earns $10,000 a year. You talk about the percentage of income. It would seem to me that a more valid comparison would be expenditure per student, and then you could say, "We are spending less per student than someone else is." But when you start going across the board with all of these percentages of incomes, to me it does not have any relevance because you do not know what they are.

Mr McEwen: There is a significant problem with using expenditure per pupil. I have used that in the past, but the problem is that in a high-wealth area such as Ontario -- relatively, we still are a high-wealth area -- costs are also much higher. And I do not mind telling you that if you paid me the salary of a Newfoundland teacher, I would not be teaching because I could not afford to live here in Ontario on the salary of a Newfoundland teacher. But a Newfoundland teacher can afford to live in Newfoundland, in some circumstance. So using percentage of personal income washes out the variances in costs.

When we are comparing with the American jurisdictions, it also deals with the nasty question of the exchange rate. You can make an American comparison seem whatever you want it to seem if you simply use dollars per pupil.

Furthermore, it is a measure of the commitment of a community to its education system, and in that sense the commitment of the Ontario community to its education system is less than that of any of its neighbours. Indeed, although I have not shown this in the data, it is currently less than any other province in Canada.

Mr Villeneuve: A statement was made that the deficit this government is projecting is no worse than those for previous governments. Are you aware that by the 1994-95 fiscal year, we will have effectively doubled the provincial debt? Do you still hold by that statement?

Mr McEwen: Using the figures supplied to us by the Ministry of Treasury and Economics, measuring the deficit as a portion of the gross provincial product, that is so. After all, if we look at the gross provincial product of some years ago, it was somewhat smaller than it is today, even in our tightened times. That is a much more valid comparison than to do it in raw terms.

It is for the same reason that we have borrowed from the Economic Council of Canada the graphs that look at the federal government's performance in terms of the GNP, not in terms of absolute values. You can see that the federal government's track record on the debt, as a portion of the GNP, is very poor when compared to Ontario's.

Mr Villeneuve: So you agree with what the federal government has done and want the provincial government to come to the lowest common denominator.

Mr McEwen: I believe the federal government has created a fiscally irresponsible debt in the sense that unlike the debt of Sir John A. Macdonald, which purchased the railroads, this federal government's debt has purchased absolutely nothing except human misery.

Mr G. Wilson: I want to say that your presentation here is very informative and speaks for itself, and talking about fiscally irresponsible, I think in particular the highlight is the social irresponsibility of the federal approach to our economy, as you point out on page 12 with the American view, that you think probably applies to Canada as well, about the results of the kind of straitened circumstances we are heading into here.

But I do want to ask, since you raise a number of very pertinent questions about the future of our educational system, what you think are some of the ways of answering those questions and what the role of the OSSTF might be, the role of the school boards and the role of the provincial government, in highlighting these questions in the communities. Have you given that some thought? Are there examples here in the area that you can point to of taking these questions to the community?

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Mr McEwen: We participate, through the Ontario Teachers' Federation, in the Stormont, Dundas and Glengarry Industry-Education Council. That provides us a forum where labour, industry and education locally can find out about each other's mutual needs and deal with the difficulties we have. My colleague Mr Roffey also is involved in other forms of community education that deal with helping the community to come to grips with the local context of education and the kinds of decisions that have to be made for education here.

The Chair: Thank you for your very informative brief here. It looks at what the budget was, what it has done to date and how it is going along. Thank you for your submission to this committee.

CITY OF CORNWALL

The Chair: I would like to call on his worship the mayor of Cornwall, Mr Phil Poirier. Welcome, your worship. Sir, you have a half an hour for your presentation. Could you leave some time at the end of that half-hour for questions and answers of the three parties.

Mr Poirier: Thank you very much, Mr Chairman. Good morning, ladies and gentlemen and welcome to Cornwall. On behalf of my colleagues on council, it is indeed a pleasure to be able to have the opportunity to address this committee. I am sure the summer has been a busy one for the committee and you are looking forward to the reinstatement of the House.

If additional copies of the brief are needed, I have brought extra copies. I will not read the brief completely. I will go through the executive summary and, towards the second-last page, some specific recommendations. I am only too happy to try and answer some questions.

The city of Cornwall is a relatively small community tucked away in a corner of Ontario. Traditionally an industrial centre, the city in recent years promoted the diversification of its business community. Recent economic pressure, a continental recession, rapidly changing global markets and cross-border trade issues have combined to create a severe disruption of this community's economy. Despite these economic pressures, the city has continued to aggressively market Cornwall as an attractive business location. These efforts have been, to a large degree, very successful. Interest in the city from manufacturing and service sector firms has continued to rise for the past several months. At the present time, the city is currently dealing with close to 100 firms in varying sizes with various interests.

Unfortunately, this unusually high amount of potential new business development has not translated into positive announcements and new job creation. The city's economic development department is currently assisting interested firms considering Cornwall as a potential new business location. Some of these clients have maintained a dialogue with the city for over 12 months. One common element that the department has been able to identify in its dealings with these clients is the inability or reluctance of these firms to make a final site decision. Unfortunately, the city has very few tools to assist these companies in their decisions and is actually prevented by legislation from doing so.

In simpler words, the current situation could be likened to the efforts of a small business entrepreneur. Imagine if you will that a retail store has been opened in a very strategic location. The business has been well advertised and accordingly the store has generated a very healthy amount of customer traffic. Unfortunately, despite a store full of customers, no goods are being sold. It would appear that although the merchandise in this fictional store is attractive, the store has nothing special to offer even interested consumers. Obviously, some form of promotion is necessary to transform the browsers into satisfied customers.

It is Cornwall's position that the time is right to offer companies considering a business location in Ontario, specifically eastern Ontario, an attractive incentive to assist them in making a final positive decision. Cornwall, like its sister communities throughout the province, continues to work very hard to secure new economic development and new job creation. It has become clear that municipalities cannot complete this task without the assistance of its long-time partner, the province of Ontario.

At the present time, Ontario's competitiveness as an economic region is being weakened by its reluctance to match its competitors' actions. Ontario businesses are currently being solicited by US economic development officials and are being enticed with lucrative financial packages. If this process is to be allowed to continue, then Ontario will continue to see a negative growth in all sectors and a permanent loss in new business activities.

Cornwall would like to extend an invitation to Ontario to immediately implement a program that will provide some form of financial incentive for new business development. Briefly, the reinstitution of the interest-free loan program offered by the Eastern Ontario Development Corp should be a priority. Strong consideration should also be given to the development of a program to assist businesses to offset relocation and manufacturing startup expenses. Assistance programs relating to training and workforce improvement should be maintained and perhaps expanded.

The following brief will explain the rationale behind the city's position. Cornwall has always been fortunate to have an excellent working relationship with the various provincial ministries and offices relating to economic development. The time appears right for both parties to work together to strengthen the relationship and to work together to meet the increasing competition from outside regions.

If I may be permitted to ask the committee to go to the second-last page, please, there are some specific recommendations I would like to discuss with the committee.

Cornwall is the most easterly centre in Ontario, uniquely situated on the borders of both the province of Quebec and the state of New York. Cornwall's strategic location has played an important part in this development of eastern Ontario's industrial heart.

The 1990s will be a decade of pivotal changes for Cornwall and the surrounding regions that depend on the city for so many services. A number of important projects and trends have begun to develop, and the city's future prosperity will depend on the ability to manage these events.

The ongoing process of the rationalization of manufacturing operations will continue to have a profound effect on Cornwall's industrial sector and thus on the overall local economy. Projects aimed at assisting in the diversification of the economy, such as a downtown revitalization and waterfront redevelopment, will only succeed with an accordant shift from an industrial economic base to a commercial/service sector economic base. As the province begins construction of a new downtown office complex, the opportunity for the Ontario government to play an integral part and vital role in this economic diversification will never be greater.

At the same time, there exists an incredible potential for the expansion and restructuring of Ontario's industrial base. Progressive companies involved in both traditional and new industrial sectors have demonstrated an ability to react to changing developments in both technological and market fields.

In the past two decades, the importance of economic development has been recognized throughout North America. Accordingly, almost every identifiable region has an established marketing program. If Ontario is to maintain its current industrial base as well as develop its fair share of new business development, then the province must be willing to meet its competition head on.

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The environment for business to grow and prosper in Ontario is no longer as attractive as it was. Continuing changes in society will mean that a more equitable balance between the environment and development concerns must be struck. At the same time, the province must indicate to new and growing businesses its desire to partner and share in their success.

It is the specific recommendation of Cornwall that Ontario immediately implement a process whereby some program of financial assistance is established to provide incentives for new business development. Briefly, the reinstitution of the interest-free loan program offered by the Eastern Ontario Development Corp should be a priority. Consideration should also be given to a program to assist businesses to offset relocation and manufacturing startup expenses. Assistance programs relating to training and workforce improvements should be maintained and perhaps expanded.

The information between the summary and the recommendations just goes on to expand and substantiate some of our reasoning and rationale as to the conclusion that we in Cornwall have taken. I would only be too happy to try to answer, to the best of my ability, any question the committee has. Thank you very much for being so attentive.

Mr Villeneuve: Your worship Mayor Poirier, thank you for being with us this morning. You have a rather unique problem here. I realize we have lost a lot of industries. We may well have some coming back in, thanks to the way your city and your employees are operating, but cross-border shopping remains, I think, the biggest problem we have here.

This government, in its wisdom, saw fit to increase the fuel tax and also to go to a deficit of almost $10 billion this year and an eventual additional deficit of $34.8 billion by the fiscal year 1994-95. The increase in fuel tax, which renders, I believe, a $30 gas fill-up here in Cornwall, equates to a $20 gas fill-up in Massena and a $16 gas fill-up on Akwesasne, which is situated between New York state and Ontario. You have not really come to the real problem of that. Do you feel that doubling the deficit in four years can indeed, according to some of the people who made presentations, actually reduce our taxes? What is your feeling on the additional taxes which compounded the problem that faced this city immediately?

Mr Poirier: The problem we face in Cornwall is not different than in the province. With regard to the cross-border issue, I am fortunate to sit on a task force with 14 other mayors. We are very pleased to see that the government has indeed seen fit to allocate a startup of $50,000 to each community. That will help us market. That is only a Band-Aid approach. But the problem is the total package of the way we do business, not only from private enterprise, but as a government.

As you know, in Alexandria, in Glengarry, no more than 30 miles from here, we had the fifth-largest trucking company in Canada declare bankruptcy. When we have in Ontario, for instance, deregulation, high cost of fuel, high dollar and what not, which have affected the trucking industry dramatically, when we have a crippled trucking industry in our province, what I do not understand, as a mayor or as a business person, is to institute additional taxes when it needs all the help it can get. That is what is compounding the problem.

We also know that when it comes to cross-border shopping, the motivating factor or the catalyst that drives people over to all of our neighbours to the south is gasoline. That is what drives them and that is what brings them to buy alcoholic beverages and food and what not. But it really relates back to the cost of doing business in our province. The cost of doing business in Ontario today, in comparison to other provinces or the rest of North America or the rest of the world, is not as lucrative. For instance, my colleague the mayor in Massena, which is no more than 15 minutes from here; my colleagues the mayors in Potsdam and Malone, which are all within half-hour driving distance -- I can substantiate letters approved by their respective councils which will give them one year, 2 years, 5 years, 10 years of free taxes.

We all know the advantages of doing business in Ontario, but the prime motivating thing that is happening in our province, as I see it, is that it is too expensive to do business. In all fairness to respective governments in the past, today or in the future, we have all compounded that problem because we as individuals, politician, leaders, individual citizens have demanded too much on the Treasury. What we are faced with now is the reality of whether or not we want to sustain the economic base we have, put in a productive day, be prepared to put in eight hours' work for eight hours' pay, be fair and tax the corporations. But by the same token, we cannot be flirting with guaranteed income supplements to our workers; we cannot guarantee 14-year-olds welfare payments any more, and so on. You know, "We have tax."

It alludes to your question, Mr Villeneuve, but the problem is such that if we are going to retain what we have, we have to be more competitive and we just cannot keep taxing people. There are very difficult decisions for municipal leaders, provincial leaders and federal leaders. The answer is to say no, but to put the money where it is, not giving welfare to 14-year-olds.

Mr Villeneuve: In 1985, there was documented and substantiated evidence that taxpayers and indeed residents of Ontario had a 10% tax advantage over residents of our neighbouring province of Quebec and therefore we attracted business. We understand now, based on a survey that was done near the end of 1990, that we are at a 2% disadvantage. We had a presentation in Ottawa from an accountant that would suggest to any potential client, if he were to have an alternative to set up a business in Hull, Quebec or in Ottawa, which would be the best. The accountant inevitably said you would have advantages by going now to Quebec because of taxation advantages. That puts you and your city at a very great disadvantage in that we now have Quebec which is advantageous for business to set up there and of course we have New York state, as you have mentioned, which is providing terrible incentives for people to go there, and yet the city of Cornwall, situated where it is, has to compete and it is most difficult.

We have talked about the cost of fuel and the $50,000 Band-Aid to simply promote the city. What would you feel is the next most important aspect in this dilemma that faces you as the mayor of this city and the residents of this city? it certainly includes the residents of the riding I represent.

Mr Poirier: In my opinion, what we have to do is work very diligently to retain whatever jobs we have today, and that has to be a partnership. We just cannot rely on the government to do it for them. Private enterprise and government have to come to the reality that we have to retain what we have. Where there is an opportunity to lure whatever investment -- commercial, industrial or otherwise -- into our province, I believe we have to start looking at the weak sisters of our province.

I envy my colleagues in northern Ontario; I envy the development that is taking place in northern Ontario at various locations of reinstituting various provincial agencies. Eastern Ontario has never had the luxury or the programs. We had one lousy little program, the eastern Ontario redevelopment thing and that was wiped out. The Ministry of Industry, Trade and Technology, in my opinion, has to be beefed up to the point where there is a prospect or even the smell of a prospect, whether it be Europe, Asia or whatever, we have to make sure that our trade offices are well staffed across the world, that people out there are aware that Ontario is still one hang of a good place to do business.

We have to acknowledge, in my opinion, that people create jobs and jobs create taxes. If we do not have a base of people who are working, who are paying taxes, we do not have taxes to pay whatever social programs are available. We have to realize that to expand the quality of life, whether through social programs, health or education, universities and colleges, we need money, and where are you going to get the money? Money comes from profits and profits come from jobs and productivity. The emphasis that has to be placed in this province by all levels of government is to create an atmosphere where people in the world and within -- we have more barriers in Canada than we do in Europe; Brewers' Retail, for instance.

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Mr Jamison: Thank you for your presentation. I found it interesting in the area of development. Obviously every avenue has to be explored on how we can try to accomplish the very things you speak of.

Since this is a budget hearing, I would like to turn to the budget and ask you a question or two concerning the budget. I know there are people who have presented here who are pro the initiatives that have taken place in the budget and there are people who have expressed negative views. I would like to ask you as the mayor of Cornwall a question that relates to transfer payments. Transfer payments seems to be a large issue, whether federal transfer payments or provincial transfer payments to municipalities. If in fact, as some detractors have indicated, we had not transferred moneys to the municipalities, in particular Cornwall, what would the effect have been on your town, coupled with the lack of, say, an anti-recessionary program? What kind of effect would that have had on Cornwall itself?

Mr Poirier: It would have had a very negative effect because of the cost of operating the municipality. If we look at court security, if we look at the legislation in regard to social services -- I was speaking to our chief administrative officer yesterday and we just gave the directive to cancel all overtime. Our department of social services, as of yesterday, has spent all of its 1991 budget and we are getting a burnout effect from our staff, God bless them -- and our case loads.

The transfer payments have not concurred with the relationship of what the provincial and federal government have demanded or forced us to do. So what happens is that we only have one choice, which is to raise the taxes or borrow more money. I must say 1990 was the first time in many years in the city of Cornwall that we had a deficit, but I see now with the proposed legislation coming down the pike that there will be greater demands on the local treasury. There is just one of two things that will happen. First, the taxes will have to be increased to pay for those services or the services will not be able to be implemented or, second, they will just be cut off.

So transfer payments are being downsized from the senior levels of government to the municipality, relatively speaking, to balance their books, but what is very frustrating for a community like Cornwall. We get memoranda, you know. For instance, we had one about one month ago: "You will now have to police the waters around the city." It is not our jurisdiction. Those are the small items, but if that was mandated by law, we would have to go out and buy a boat and get additional police officers and things like that. The rationale behind all of these are very good, but can we afford it?

Mr Jamison: Certainly part of your presentation was concerning the cross-border shopping issue. It is certainly an issue that has developed over a number of years; it did not happen overnight. We found ourselves in a position where we are struggling with that situation. I attended the meeting of mayors with you and we were successful in taking an initial step in trying to deal with that particular problem, but beyond that I wonder what kind of effect you noticed. To me, there seem to be two stages that really heightened the problem. One was the free trade agreement that seemed to place in people's mind that attitude. I know in hearings this committee had, we found that people indicated and communities indicated that there was a dramatic and almost immediate increase in cross-border shopping upon the implementation of the GST. Is that what you found here in Cornwall?

Mr Poirier: Yes. Free trade is an area of involvement that has just acted as a catalyst. As every January 1 comes around, we also know that list of trade is expanding that. The GST was just another catalyst or another spoke in the wheel that gave citizens of Ontario an excuse, if you wish. Mr Cleary: I was going to touch on the gas and fuel tax, but my colleague Noble has pretty well tossed that around so I will go on to something else I know is very important in this part of eastern Ontario, the interest-free loan program. You say in your brief that you were dealing with some 100 industry and service providers. I agree there is great interest in the area. In your opinion, how many of those people you are dealing with would take advantage of that portion of the interest-free loan program if it was now in place?

Mr Poirier: Ninety per cent of them. We have looked at various incentives, only because it is stimulated by competition by Quebec, by northern New York.

Mr Cleary: That is true, because I deal with a lot of those too in this area, and they seem to see what we can offer here in this part of eastern Ontario and then they compare it with our neighbours to the south. I know that was a very popular program and it would be great for this area.

Mr Poirier: I cannot endorse it enough.

Mr Kwinter: I would just like, if I have a couple of minutes, to tell a story because I think it really impacts on some of what you said and points out that there is more to it than just the incentives.

When Goodyear decided it was going to locate in eastern Ontario, it came to us when I was the minister and we found a site for it. The site we found for them was not the site they wound up in. We kept trying to put them into the site we had found. It is no secret, it was Morrisburg, because we thought it was a good site, it was better for them. They wound up in Napanee. When we told them we did not think the Napanee site was as good as the site we had for them they said, "That's fine, but that's where we're going." No amount of pressure on us to move them would move them. When it was all over I signed on behalf of the government. I asked the chairman of the board, "Why did you go to Napanee?" He said: "It was very simple, our biggest customer was General Motors. They told us they wanted us to be within an hour and a half's drive east of Oshawa. They didn't want to get caught up in the traffic in the Golden Horseshoe. We took a look at sites and we found that Napanee had the best technical high school in eastern Ontario, and that's where we went because that's where we're going to get our workers, that's where we're going to get our people trained, and that was the decision. Notwithstanding any other considerations, any other inducements that other communities offered, that is where we chose to go."

I think it really points out that there has to be more than financial incentives, because there is no one who cannot match your offer or undercut it. You get involved with what is known as a mug's game. If you are just going to be offering financial incentives, then whoever bids the lowest is going to get it if that is the determinant. Then, of course, you are stuck. We have seen a lot of the New York state communities that have given tax incentives, tax inducements, free taxes for a number of years. The plant moves in. They burden the community with all the services they require, but they are not paying for them because they have been given these inducements, and somewhere down the line, some of the biggest companies around decide they are moving. So they move out, you are left with the facility, you are left with everything that goes with it, and there are some very serious problems.

I just wanted to say I appreciate the problems Cornwall has, but there has to be more than just financial inducements, because anybody can offer financial inducements. Then you are getting involved in the bidding game. You have to develop some unique attributes which Cornwall has in its location and its workforce and all of those things. I just wanted to comment on that because I do not think financial inducements are the answer.

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Mr Poirier: Very quickly, I agree with you. It relates back to what I alluded to at the beginning, because in half an hour you try to highlight them, but it goes back to the social and educational structure. I remember when I went to high school in this community, there were woodworking shops, machine shops, carpentry shops, printing shops and what not. I am told the average bricklayer in Ontario is 54 years old. Talk to any contractor. Try to find a drywall applicator.

I am told that only approximately 15% or 20% of high school students go to post-secondary. What do we do with the other 80% who are basically computer-illiterate, who have absolutely no taste for the skills of the hand, whether it be plumbing, sheet metal workers, high-pressure welders? I grant you, when we look at the arts and the liberal arts, it is great. But look at the millions of dollars that are being funnelled into our education system. With all due respect to the students, if they are business entrepreneurs, what have we educated them for?

The Chair: I would like to thank you, your worship, for your presentation before this committee.

HELENA MCCUAIG

The Chair: The next presenter is Mrs McCuaig. I would like to welcome you here to the standing committee on finance and economic affairs and for the budget review. You have 15 minutes for your presentation. If you can leave some time for questions at the end for the three parties.

Mrs McCuaig: I am Helena McCuaig. I live near Alexandria. I am an elementary school teacher in Alexandria. I decided to come before you this morning because I want you to know that I am afraid of the future of this country. I think that its very existence is threatened by federal policy, and I for one am pleased that Ontario is not falling in line with the economic policy of the other nine provinces.

We are fighting a man-made recession that is crippling all of Canada, but particularly Ontario. It is taking the future from countless members of the population. In this past Sunday's Citizen the headline read, "A Million on Welfare." They were talking about 961,000 people, or 10% of Ontario's population, that has been reduced to accepting handouts. Add to that another 10% on unemployment and we begin to see the magnitude of the crisis. Besides these statistics, we add those who are struggling to hang on to their farms and their family businesses. I am pleased that the committee decided to stop in Cornwall, because we in eastern Ontario -- and I mean this far eastern region, not the Kingston area, not the Ottawa area, but those of us who live on the Quebec border -- seldom have the opportunity to tell government people where we are at.

We have been fighting unemployment, alcoholism and abuse for years, and now even the few industries we depended on are going or gone. Alexandria is the largest town in the counties of Stormont, Dundas and Glengarry. We had what we believed were safe industries. They did not pay really high wages, but they seemed stable and permanent. Then in June, GTL, one of the largest of Ontario's transport lines, declared bankruptcy under the combined pressures of deregulation, free trade and the recession. I must here state that I realize deregulation, free trade and the recession go right back to the federal government.

I was disappointed, in fact, that the budget did not include some tax concessions to the trucking industry. Next Brown Shoe, another major employer closed down its doors this summer. Alexandria Moulding has cut back its Alexandria operation and moved part of the plant to the USA. Carnation has threatened to relocate some of the work to the United States. Farley Windows is establishing itself across the border. The list goes on and on. Out in the country, cash crop farmers are looking at prices closer to the 1930s than the 1990s. All of this has had a detrimental effect on the local businessman. Most Friday nights Alexandria looks like a ghost town.

I said I am an elementary school teacher in Alexandria. I have lived in that area most of my life. I grew up on a farm, and most of my family is still farming. I hate to see what is happening to the area. When the school closed in June, many of the parents connected to our school were facing layoffs. Many will be on unemployment, and after that, what? This September our school will begin to feel the impact of job losses. Children from homes where parents are feeling a great deal of stress are not happy children, and we in the education system must cope with the impact of this emotional instability.

I do not come before you as an accountant or an economist; I come as an individual to say that Ontario cannot turn its back on its people. The federal government has sold us out. We, as the most industrialized province, are losing thousands of jobs to the United States through the free trade agreement. Our dollar is too high, and you discussed before cross-border shopping. I believe that if the Canadian dollar was devalued to some extent, we would solve that problem a great deal. Our interest rates, while dropping, have done their damage. I realize this is federal jurisdiction, and we here cannot change it. However, the Ontario government must do what it can to help us through this recession and back on the road to prosperity. I am pleased that the government decided to put money into job creation and that it did not cut back on grants to municipalities and education. Right now, very few home owners could absorb the increased taxes that would result if the province had put all of its emphasis on a balanced budget.

This is not to say that I agree with a permanent deficit, but it seems only reasonable that we can borrow in bad times to pay back in good times. If, at this time, the provincial government should cave in to the pressures of those demanding a balanced budget, we would be facing grave social problems down the road. We cannot let our farmers go under, and we cannot afford to lose our local family businesses. We cannot let our children carry the burden of destroyed hopes and dreams. These are the only hope of a renewed Ontario.

As a footnote, I see that even those who complain about a deficit say that taxes should be decreased on gas, and they should increase farm payments. That ends my submission, but I feel very strongly that this government must help its people. This government cannot let eastern Ontario go under, and this government must put more emphasis on helping the agricultural community.

Mr G. Wilson: I would like to ask you, since you are an elementary school teacher, particularly about children. We have been told that many of the people on welfare, many of the people in poverty, are in fact children. Part of the thrust of our budget is to make sure that the investment is there for the future; that is, if we do not make sure the kids of today are well-educated, you are going to be even worse off in the future. I would like you to comment on what it means in your particular setting in the school to have the funds necessary to make sure that you can do your job.

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Mrs McCuaig: If we could have billions and billions of dollars, I would say that education is the most important element in the development of this province. Some people commented about the fact that there used to be woodworking, and there used to be all kinds of things. As budget restraints came in, as the money went down, we had to let teachers go. We closed some of the best woodworking centres because there were not the finances to keep them going. We had excellent home economics classes, which to me are very important because every individual has to know how to balance a budget, every individual has to know how to cook a nutritious meal. That type of thing had to be taken out of the education system because of budget constraints. Under the present conditions, I do not see how we can put them back. But to cut down further on education would be a disaster because we cannot compete in an international market unless our people are prepared for it.

Another thing I feel, as more and more people end up on welfare, we are taking their pride away. We are telling them they have to accept handouts from we who are better, who are able to do it, and I think, as a government, we have to look at this issue and we have to say: "Well, what can we do to get these people employed? What incentives can we make so that these people will go back and go off the welfare rolls and out of the welfare cycle?" I think the education system has a great role to play in that. We have to realize that these children are brought up in an environment where welfare is acceptable, and we, as an education system, have to look at that and develop a concept where they want to go into jobs.

Mr Cleary: You touched on problems in the agricultural community and I know that you do that on account of where you live. Most of the members at Queen's Park have been getting pressure from the different farm organizations about some of the problems they are facing this season, particularly in small grains, and I think we have an all-party agreement now at Queen's Park that we will have a couple of days of hearings and bring in these farm groups to listen to them. Hopefully after we have those hearings, something will happen to help them through this crisis they are in this year. I think if they do not get a bit of help this year, many of them may not be in business next year. I just wanted to make that comment.

Mrs McCuaig: I agree with you wholeheartedly, and I think the way to go about it is the way that we are doing. Go to the farmers, go to the farm groups, have them suggest ways of improving the situation. They know where they are at and they know what they need. But at the same time, you have to remember that when on the one hand you say, "We have to have a balanced budget," and on the other hand you say, "We have to make moneys available for better education, we have to make moneys available for farm help," we cannot have our cake and eat it too, and I believe the present government is trying to walk the fine line between being fiscally responsible and overspending or underspending. I believe that the men and women who are there realize the situation we are facing. Unfortunately, we cannot change what the federal government is doing, but I believe that we need major changes.

Mr Villeneuve: Mrs McCuaig, it is great to see you with us today, and thank you for coming. At this time last year, we were both right up to our ears in an election campaign, you for the now government and I for my party. It was a very interesting scenario, particularly when we went to an all-candidates debate. You, being a farmer as well as a teacher -- and I do not know which comes first; I think you are both, and one is as important as the other -- are aware that agriculture got a 3.5% increase by the New Democratic government of Ontario. At the same time, all the employees within that ministry got a 6.8% increase, which effectively leaves a net increase to agriculture in Ontario, when we are faced with the most difficult times in memory, of $19 million.

The growth through responsibility and individual participation program does not come into effect till next year, and the net income stabilization account program will also come in. A lot of people are disillusioned or have been led down the garden path. We had people who made presentations yesterday that there was a $100-million increase in the budgetary funding of the Ministry of Agriculture and Food, which is not the case.

The new jobs that were supposed to have been created by this budget may well be out there, but you and I know they did not come to Glengarry, Stormont or Dundas or anywhere in eastern Ontario. Agriculture is of utmost importance to our area, and you have recognized that and I think have actually put forth the scenario that is very much in evidence in eastern Ontario. In agriculture, what has to be done now to help us?

Mrs McCuaig: I think now they need short-term aid. We need money out there to help the farmers, especially cash crop farmers.

Mr Villeneuve: You are in the production end of things. I have been pushing very hard for the production of ethanol. The Americans are producing ethanol to the tune of two million bushels of grain a day. Here in Ontario we are still waiting to see if it works. We know it works. It works in other provinces of Canada. This would at least create a market for grains that right now have no market. I say, and I think you will agree with me, that this government should be listening and that industry would be a natural to eastern Ontario, so let's get on with it.

The Chair: I would like to thank you for your presentation here before this committee.

CANADIAN PAPERWORKERS UNION

The Chair: The next group is the Canadian Paperworkers Union. Would they come forward, please. You have up to one half-hour for your presentation, and during that time please wind up leaving some time at the end for a question-and-answer period. The clerk will hand out your written submission to the members of the committee. If you would not mind identifying yourself and your position for the purposes of Hansard, you may begin your presentation.

Mr Guenette: I am Denis Guenette. I am staff representative for the Canadian Paperworkers Union, and I welcome the committee to Cornwall. I am glad to see that this government is making a real effort to reach out to the people of Ontario by holding public hearings across the province on the budget. I personally represent about 2,000 workers from the Trent Valley to Cornwall, or the easternmost tip of Ontario along the St Lawrence River. The Canadian Paperworkers Union would like to thank your committee for the opportunity to outline the views of its organization on the recent Ontario budget. The Canadian Paperworkers Union, CPU for short, is a national union that represents workers in a variety of industries, primarily manufacturing companies whose principal raw material is wood. In Ontario, CPU represents 22,000 workers in pulp and paper mills, sawmills, board plants, corrugated box plants and many other industries.

Perhaps the most remarkable aspect of the 1991 Ontario budget is the reaction to it by the business community and the business press. Shock and outrage seem to permeate most of their statements despite the reality of a rather conventional budget. Even granting that the budget deficit is somewhat on the large size and that everyone would prefer it to be smaller, the level of hysteria attained at times has been rather puzzling, given that Progressive Conservative governments have often incurred deficits of similar magnitude in the past without eliciting the same apparent outrage.

Could it be that it is not the size of the deficit itself that matters but rather who benefits most from the shortfall in revenues? The much larger deficit incurred by the Mulroney Progressive Conservatives at the federal level is, in large part, due to tax breaks to corporations and very high-income earners. Not surprisingly, concern for that deficit is quite mute in business circles and certainly does not reach the level of consternation attained when a much smaller deficit is incurred by an NDP government to alleviate hardship for working people during a sharp economic downturn. For example, the projected Ontario deficit of $9.7 billion for 1991 represents 3.4% of the provincial gross domestic product, whereas the federal deficit for 1991 represents 4.5% of the national gross domestic product, nearly one third more.

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Turning to the 1982-83 period, when the Progressive Conservatives were in power in Ontario, the total provincial government debt stood at 17.4% of the gross domestic product at that time, compared to 18.3% in 1991 under the NDP. This gap is quite small, given that the 1990-91 recession is far more severe in Ontario than was the one that occurred in the early 1980s. The current recession is the worst to hit Ontario since the Great Depression of the 1930s. Job losses in the province have totalled 214,000 in the first year of this recession compared to 89,000 in the first year of the 1981-82 recession, a drop of 4.3% in employment compared to a drop of 2.1% in 1981-82. In a normal year, the Ontario economy gains about 100,000 jobs. Ontario's rate of job loss in this recession has been twice the national average and has accounted for 80% of the national loss in jobs.

The catastrophic policies of high interest rates, the high dollar and free trade inflicted upon our country by the federal Conservative government are largely to blame for the massive job loss our province faces today. In the Cornwall area, job loss among the workers represented by CPU has been about 10% since the start of the recession. We are facing cutbacks in all our locals, including two near shutdowns where the workforce has been reduced by up to 95%. On Thursday of this week, we are having meetings with Domtar, one of the largest employers here, and there are further cutbacks to be done at Domtar.

The number of manufacturing jobs in Ontario has dropped by 97,000 in the last year compared to a drop of 76,000 in 1981-82, a drop of 9.9% in manufacturing jobs compared to a drop of 7.25% in 1981-82. In this recession, 65% of major layoffs are due to permanent plant closures, compared to 24% in the last one. Needless to say, the Cornwall area has had its share of permanent plant closures.

The exceptionally high job loss in the manufacturing sector is particularly disturbing. A healthy manufacturing sector is at the core of our capacity to produce wealth and provide a high standard of living to workers and to all the citizens of Ontario. For example, manufacturing provides one in five of all jobs, and these jobs are much better paid than average. In December 1990, manufacturing workers in Canada earned an average of $614.36 per week, one fifth more than the average of $523.41 earned by all workers. The gap is greater if just hourly paid workers are considered.

In addition, the manufacturing sector supports many tightly linked jobs in the service sector. The transportation, communication, utilities and business services sectors are particularly dependent upon manufacturing. Statistics Canada estimates that, across Canada, 250,000 jobs depend directly on the forest-based industries and that an additional 600,000 jobs depend on them indirectly, for a total of 850,000 jobs. This gives an idea of what the downstream effect on job loss in at least one area of manufacturing would be.

The erosion of jobs in manufacturing is of great concern to us. In fact, one reservation we have about the budget is that additional resources should have been allocated on a major initiative to develop value added manufacturing industries in this province. Certainly this is needed in the forest products sector, which is far too reliant on commodity products such as wood pulp, newsprint and commodity lumber.

Perhaps one of the most misleading aspects of the anti-budget rhetoric is that the $9.7-billion deficit figure is taken completely out of the current recessionary context. Any Ontario government, be it NDP, Liberal or Tory, would have had to face a substantial deficit. While it is true that at the cost of considerable hardship to tens of thousands of Ontarians the deficit could possibly have been $1 billion smaller, this is hardly reason for such a shrill reaction on the part of opponents of the current government.

In fact, the largest part of the $9.7-billion deficit is due to the recession. Lower revenues, the impact of federal government cutbacks in transfer payments and higher welfare costs account for about $5 billion of the deficit. Another $3.2 billion of the deficit is accounted for by expenditures needed to maintain levels of service in existing programs. Only a small portion of the Ontario deficit, $1.5 billion, is for new programs or services put in place by the NDP government, such as the social assistance reforms and the wage protection fund. In fact, even this figure may be overestimated. James Frank, chief economist with the Conference Board of Canada, estimated the figure to be about $640 million.

We encourage deficit critics to supply the public with the list of hospitals and schools that should be shut in order to reduce the size of the deficit. Perhaps they could also provide us with the names of the children who, in their view, deserve to be condemned to abject poverty by social assistance cuts. Let me remind you that 40% of those who depend on social assistance are children. How many homeless eight-year-olds do the budget balancers want to see aimlessly roaming the streets of our cities and towns?

Surely the US free market experience of social cutbacks should be warning enough for us in Canada. The lesson from the south is simple: If you let your transportation system deteriorate, if your cities are unlivable, if you tolerate a destructive waste in human potential of poverty, if you cut back on health and education, then the alleged savings in government cutbacks come back to haunt you, not only socially but also in lost economic potential.

CPU supports the maintenance and expansion of the social safety nets. We are proud to be part of a trade union movement that has fought hard for decent pensions, universal medicare, unemployment insurance, workers' health and safety, equality for women and environmental protection. Every one of these measures has been fought tooth and nail by employers. We recommend that employer groups and the political parties that represent these interests do a little soul-searching before they embark on a campaign to reduce everybody else's wellbeing.

Clearly, CPU believes the government acted properly in maintaining current social spending. CPU supports the government's employee wage protection fund, which guarantees wages, severance and termination pay owed to workers if their employers go bankrupt. We also support other government initiatives such as pay equity for women workers, the building of subsidized housing, income stabilization for farmers, maintenance of services in our hospitals, schools, colleges and universities, the initiative to settle native land claims, increased financing for adult literacy programs and new funding to combat the cancer of racism.

We also support the government's $32-million increase in funding for training and assistance in finding work for laid-off workers, although given the critical state of the economy, the magnitude of the job loss, as well as the federal government's cutbacks in our unemployment insurance, we had expected more support in this area.

In conclusion, the Canadian Paperworkers Union believes the negative reaction to the Ontario budget is misplaced. The size of the budget deficit is a direct consequence of the worst economic downturn to hit Ontario since the 1930s. The government has reacted by alleviating hardships on working people by maintaining social programs and necessary services in education and health. It has not fallen into the destructive trap of allowing our infrastructure to decay. It has not callously decided to force thousands of people into desperate poverty as has been done in the United States.

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When the economic recovery comes, Ontario will be set to benefit from the upturn. Of course, the Ontario economy is constrained by the conditions established by the federal government. On this score, it must be said that our economy will rebound all the more quickly the sooner our country is able to rid itself of the federal government and its destructive policies.

Mr Kwinter: Mr Guenette, thank you very much for your presentation. I notice on page 12 you say, "In fact, the largest part of the $9.7-billion deficit is due to the recession." When you take a look at the budget, how do you account for the fact that the government projects that over the next three years, after this year, it is going to have an $8.9-billion deficit in 1992-93, an $8.4-billion deficit in 1993-94 and a $7.8-billion deficit in 1994-95?

There is a common misconception that this number is staying constant and it is coming down. At the end of this year the $9.7-billion deficit will be transferred to the debt. It will be gone; it will be part of the debt. Next year the Treasurer is coming out with a budget about which he says he is going to have an additional deficit of $8.9 billion, and after that year that will get transferred to the debt. The cost of servicing that debt is going to go up by about $1 billion every year. How do you account for that, when everybody predicts and the Prime Minister has already declared and Bob Rae has already agreed that the recession is over? Why are we going to have all of these additional deficits?

Mr Guenette: The simple answer for that is that I am not an economist. I know the problems that are out there with the people I represent, the hardship we have to go through with cutbacks, the hardship we have in trying to get people retrained and everything else, and something has to be done. My union is quite prepared to work to be part of the solution and basically that is where we stand. We are not economic experts.

Ms M. Ward: Thank you for your presentation. You represent workers over quite a wide area.

Mr Guenette: Trenton to Cornwall.

Ms M. Ward: Yes, right. What I would like to ask you is what you see for the future of this industry. Mr Kwinter just told you, I think, that the -- no, he did not say the recession was over. He said Mulroney said the recession was over.

Mr Kwinter: And Bob Rae said it.

Mr Villeneuve: Bob Rae said it.

Mr Kwinter: He agreed.

Ms M. Ward: The recession being over does not mean that things are beautiful right away. It simply means that you have stopped going down; the decline has stopped. It does not mean you are back to where you would have been if the recession had not occurred. I think this is something that has to be acknowledged, just to get back to where we would have been if we had kept on growing and not gone into a recession.

That is what I wanted to ask you about, where you feel your members are going to be over the next year or so. They are certainly not going to be all back to work, I do not imagine. Given that some of them may have been laid off more than a year ago, will they be running out of unemployment insurance benefits because of the cutbacks we have seen in UI? Do you expect that more of them will be forced on to welfare in the near future? What circumstances are they going to be in?

Mr Guenette: You are quite correct in stating that there are a variety of my members out there who are at different stages, even though the recession is supposed to be over, like I said in my presentation. Domtar is announcing more cutbacks this Thursday. So we are being hit with more cutbacks and people will have to go on UI, and if it does not turn around, they will have to go on welfare.

We also have workers who have been laid off for over a year. The company has moved. I know personally quite a few of them who still have no job. There are some right now we are presently working on where the company just left town and we are working hard in trying to see what we can do.

I think the most important part of it is that there is going to have to be retraining of these workers. To give you an example, Columbia Finishing Mills, which is a small industry in this town, a few months ago went on a work-sharing program for which it applied. In their application they made the statement that they were the only Canadian bookbinding manufacturer in Canada. Unfortunately, since then an American company has bought them and manufacturing has been transferred to Tennessee. Regardless of the skills that these people have, now there is no work available in Canada, let alone in Ontario. So retraining programs are going to be very important for these types of workers.

The Acting Chair (Mr B. Ward): Thank you for the presentation and for taking the time to come and make us aware of the CPU's position on the budget. I am glad to see that you have stated you are willing to co-operate to find a solution for our economic troubles.

The committee recessed at 1206.

AFTERNOON SITTING

The committee resumed at 1400.

LEO COURVILLE

The Chair: The next presenter is from the NDP riding association, Mr Leo Courville, president. You have one half-hour for your presentation. Can you leave some time for questions and answers?

Mr Courville: I am pleased to have the opportunity to appear before you this afternoon to give you my views with respect to the 1991-92 provincial budget. I note on the agenda that I am designated as the NDP riding association president. This clearly gives you the advantage of knowing where I am coming from. Notwithstanding this affiliation, however, I would like to speak to you more from the perspective of a practising lawyer and member of the community in Cornwall and the area.

Cornwall is a community that has been plagued -- I am sure you have been told this by other people appearing before -- by a steady stream of plant closures over the past year and a half. By some estimates, we have lost as many as 1,500 jobs because of these closures. The types of plants that have closed include a wide spectrum of activity ranging from engineering and machinery production to chemical production through to textile, rubber and paper plants. I understand that many of the individuals who lost their jobs through these closures have now found other work in the Cornwall area.

I would like to commend the government on its initiative in assisting many of the people affected through plant closures, in this area and throughout the province, through some of the budget measures, including the allocation of $32.5 million in training and assistance for laid-off workers and another $32 million for adult literacy programs.

In this regard, a grant of $600,000 for an assessment centre for the Cornwall area will be used to allow employment counsellors and educators to assist people in career placement here. The allocation of about $215 million this year for social assistance reforms, which include assisting low-income and part-time employees, is most beneficial to Cornwall.

This is true for a number of reasons. First, many of the jobs associated with a number of closed plants were paying wages of $15 an hour or greater. I understand that a fair number of people who have lost such jobs have now had to regain employment at a much lower hourly wage of between $5 and $9 an hour.

Until there has been extensive retraining of these people, and only if their circumstances allow for it, so that they can move into more skilled occupations, this form of temporary assistance is absolutely necessary. It will assist not only the individuals affected directly through their own job losses but also all of the small businesses and community enterprises dependent on the purchasing power of these affected employees.

It is also noted that francophones in Stormont, Dundas and Glengarry will receive $152,000 to improve social services delivered in the French language.

A number of specific capital projects will create needed employment opportunities. The awarding of a provincial grant in the amount of $447,535 to the Mohawk council of Akwesasne to build a small business mall next to the toll booth on Cornwall Island, in conjunction with the federal government, through the community Futures program will allow the Mohawk council to move into new areas of employment and wellbeing for its people. This kind of funding continues in the direction started in November 1990 when the Mohawk council received approval for grants totalling $25 million over five years from the governments of Canada, Ontario and Quebec to fund some 11 projects, including a home for the elderly, an arena, a justice building, a business training centre and health and community recreation centres.

I believe these kinds of projects will go some distance towards lessening the tension that has sparked into open conflict on the reserve during the last year and has caused many of our native friends a great deal of stress.

The awarding of $413,830 by the Ministry of Industry, Trade and Technology, under the eastern Ontario community economic development program, to assist Cornwall in undertaking a $1.5-million project to reopen a two-block downtown area to vehicle traffic is noted as well. Many of the merchants whose businesses front on the mall are convinced that this will do a great deal for them in their businesses by opening the flow of traffic in the area.

This project, taken in conjunction with the new $30-million government building, which could house as many as five provincial ministries as well as local civil and criminal courts, may well provide a further impetus to assist the sluggish local economy at this time.

Tourism and recreation in the area has received a boost with the allocation of $1 million to upgrade Upper Canada Village and the various provincial parks. The construction of a new $1.5-million travel information centre will also assist in providing hundreds of person-weeks of employment.

Further infrastructure upgrading for various Ontario Housing Corp projects will also benefit Cornwall. Recent grants for housing, in the amounts of $690,000 and $678,000, were announced on April 25 and May 3 of this year. In addition, the government has provided an interest-free loan of $49,000 to logement La Nativité and has co-signed as guarantor, in effect, on a loan of $3.3 million for the Cornwall Non-Profit Housing Corp to undertake a project which they estimate will provide 600 person-weeks of employment. A grant of $286,400 has been made to St Joseph's Villa to link the extended care facility to apartments for residents in the villa. This will improve accessibility to a number of services for these residents.

In addition to the $2.9 million for road construction in the united counties adjacent to Cornwall, the government has provided $1.2 million to the Cornwall Transit Corp to finance 26 newly acquired buses and electronic fare boxes associated with these vehicles.

Even though the federal government has cut transfer payments in the order of $1.6 billion to Ontario, the provincial government would seem to be committed to maintaining its own level of funding to local school boards and not passing those costs on as a result of federal cutbacks. In Cornwall this is most apparent in the recent announcement of the government's plan to spend $7.1 million in expanding the physical facilities presently shared by the SD&G public school board and Catholic school board at the twinned physical facilities of General Vanier Secondary School and St Joseph's school. Within this particular funding proposal the public school board will receive a $2-million new double gym and $567,000 to compensate for classroom space lost to the Catholic board.

In addition to helping resolve this long-standing impasse faced by both school boards with respect to the facility at General Vanier and St Joseph's, the government has approved a number of school projects locally as part of the anti-recession program. These include the expenditure of $42,000 for the installation of a lift for the handicapped at Seaway District High School in Iroquois, $600,000 for an addition to the Eamers Corners Public School, $700,000 for renovations to the East Front Public School and $425,000 for Sydney Street Public School -- all of these are in Cornwall -- as well as $785,000 for Morrisburg Public School. The local school boards will have to pay for only about 25% of these needed renovations.

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While this assistance is most welcome, I respectfully submit that the government could further assist the local taxpayers by pooling commercial-industrial assessment between the public and separate school boards on a province-wide basis, as they do in Manitoba at this time, by basing the general legislative grants for subsidizing per-student costs on an approved-cost basis that is based on the average actual costs in the province. Cornwall is a relatively poor part of this province and it requires all the assistance it can get from some of the wealthier parts of the province. These are proposals that may assist in that regard.

Again, notwithstanding the cutting of transfer payments by the federal government to the province in the amount of $1.6 billion, Cornwall has been able to receive a level of transfer payment funding which has allowed it to maintain a modest tax increase of about 5% for the citizens of Cornwall this year.

In the area of health care, any responsible government has to maintain cost-effectiveness in the spending of the health dollar. This means essentially maintaining a balance between dollars spent on acute bed hospitalization on the one hand and those spent on preventive medical applications and home care on the other. In the last three years, some $24.7 million has been expended in the expansion of facilities at the Hotel Dieu Hospital and the general hospitals in the city. The government has recently announced a $100,000 grant for Cornwall's healthy lifestyles program. The recently established placement co-ordination service has been funded in the amount of $250,000 to assist people to find appropriate residential settings for their needs. There has been a $55,000 grant for the establishment of an air ambulance for the Hotel Dieu Hospital in Cornwall as well.

There have been difficulties faced, I believe, by all hospitals in this period of declining government revenue and increased needs. This has meant that some of the hospitals have closed acute bed wards for some period of time in the summer when many of their medical personnel are on vacation. Within the Cornwall context, it would appear that there is a need for a better integration of the existing hospital facilities providing for acute care needs in the city. Before the government can expend further funds in this area, it would be judicious, I believe, for the hospital boards to apply themselves towards rationalizing and integrating their various services. This is especially so when decisions must be made with respect to the acquiring of costly new medical equipment.

One problem that has presented itself in dramatic fashion in the last few years in Cornwall is that of cross-border shopping. At a recently held meeting of the Ontario Municipal Board to inquire into Cornwall's plans to implement a wave-pool-based aquatic leisure centre, it was revealed that a recent study had been done pertaining to cross-border shopping at the Cornwall crossing. An official of Canada Customs testified at the hearing that the number of declared items on a particular day in June 1991 -- I believe it was actually June 4, 1991 -- compared to the same day a year earlier, had increased in excess of 1,000%. That just gives us an idea of the magnitude of this problem.

The solution offered by the province, of establishing a fund of $5 million to assist affected border communities, seems to be most appropriate in dealing with this problem. The tax structure in Canada, as we know, is fundamentally different from that in the United States, in that our taxes support publicly funded hospitalization and medicare. It is logical, therefore, that selective tax exemptions for border communities is an inappropriate means of dealing with this problem, in that they must lead eventually to an undermining of the very base that provides all Canadians with the present standard of living that we enjoy.

In Cornwall, there has been recent co-operation between the chamber of commerce and the Cornwall and District Labour Council to form a Cornwall Business Council. We see this as a very hopeful development. There has been an undertaking of a local survey to examine specifically the products being purchased through cross-border shopping. This also is an example, I think, of a local initiative to lessen this difficulty. But in reality there is only so much that a local community can do. I believe that ultimately the help needed will have to come from the senior levels of government.

In conclusion, it is apparent that the extent of the recession in the Cornwall area has been both widespread and deeply felt. The reliance of Cornwall on small- to medium-sized manufacturing plants that have come in recent years, primarily from the Montreal area, has meant that we have been particularly vulnerable to closure and relocation of such plants when the combined effect of high interest rates, a high-valued Canadian dollar, the free trade policy and the GST, have fully impacted on this community.

The need to diversify the Cornwall economy by bringing in a much greater public sector presence is certainly recommended. You have heard, I think, from another witness during your stay in Cornwall -- John Milnes. I believe he has spoken to you with regard to the possibility of establishing an environmental institute in Cornwall to study the effects of pollution on the Great Lakes-St Lawrence water system. In so far as this may provide a centre for attracting environmentally based industries, this may well provide an opportunity for the type of diversification that we need to ride out these kinds of recessionary troughs. I note that the provision of some $131 million to assist businesses through new applied research and technology is there in the budget. This may be one source for the kind of funding that we need for this type of institute.

The overall direction of this budget, I believe, is a correct one for the times that a place like Cornwall is experiencing. Without it, the impact of the recession on Cornwall would have been much greater than it was. Thank you for allowing me to speak to you today. I am prepared to answer any questions that you may have.

Mr Villeneuve: Mr Courville, thank you very much for your presentation. With all due respect, you have outlined a lot of the things that had been budgeted for in previous years and allowed for, and which this government saw fit to continue. I certainly appreciate that. It is great that you have outlined them. There was a great deal of pomp and ceremony after the election when, I guess you were second best to my friend John Cleary. Who was the eastern Ontario NDP power broker? Are you still that person?

Mr Courville: I have no idea what that means, Mr Villeneuve. Maybe you can explain in your own words what you are referring to.

Mr Villeneuve: There was a great deal of concern even on the floor of the Legislature that Mr Courville was the person one should see to obtain favours from the government. I believe you made statements to the paper that yes, you would be quite willing to travel to Toronto and do those things. Is that still your mission?

Mr Courville: I am sorry, sir, I did not make those statements and anybody who says that I made those statements is not telling the truth. It is as simple as that. I have never made a statement saying that I would be willing to travel to Toronto to make representations.

Mr Villeneuve: There were write-ups in newspapers that certainly insinuated that. I was just wondering what your particular position was.

Mr Jamison: On a point of order, Mr Chair: We are here to ask questions on a report given by a presenter. I find that this question deals in no way with the report that was prepared by the presenter.

Mr Kwinter: Mr Chairman, on a point of order: If a former NDP candidate can present himself and read the government's program, we have a right to comment on it.

The Chair: Mr Jamison, we will let him carry on with Mr Villeneuve.

Mr Kwinter: You cannot have it both ways.

Mr Villeneuve: I will get right back on track. The provincial government saw fit to bring in some increases in fuel taxes, along with a fairly substantial budgetary deficit. Do you feel that this will any way address the problems of this community? They are particular to this community, with the community of Akwesasne, which is a tax-free residence for North American natives. How do you react to that?

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Mr Courville: I agree the Akwesasne situation presents unique problems for this area. A number of approaches may be taken towards offsetting the effect of the advantage presently given to the dispensers of fuel on the Akwesasne reserve. I believe the fact that many people go to the United States to purchase fuel may well be a factor that leads to other shopping in the US.

I noticed this morning -- I caught the tail-end of your comments with respect to Ms Helena McCuaig -- your reference to the production of ethanol. I think that in itself warrants a considerable study. I do not know to what degree cost would be involved in developing a feasible distribution network. Certainly the base in Stormont, Dundas and Glengarry and the neighbouring counties is such that it would be, I think, something worth considering. If ethanol can be produced as a viable substitute for, or at least a competitive product to, the products that are being sold on Akwesasne, that might assist in the problem. But I have no ready answer for that. I appreciate it is a very difficult problem.

Mr Villeneuve: The mayor expressed concerns that we no longer have through EODC an interest-free incentive for businesses in eastern Ontario. That is of concern. Cornwall has a unique problem, because fuel is the catalyst. Once the consumers and the customers are over there, certainly they are going to be buying. When we increase the taxes -- and we did have a 10% advantage over the province of Quebec five years ago taxwise; now we have lost that. We are in a net deficit position. It even exacerbates the problem for this region. It is not an easy one to solve, but added taxes will not solve it. Large budgetary deficits, in my opinion, can contribute only to higher taxes.

Mr G. Wilson: Thanks a lot for your presentation, Leo. It is very thoroughgoing and provides us with a lot of information. As my honourable colleague pointed out, the newspapers provided us some information. But, as you suggested, it is not always accurate in what it says. Certainly that has been part of our experience with our budget. Some papers have tended to highlight some questionable aspects of it.

You mentioned something about the co-operation between the Cornwall Chamber of Commerce and the Cornwall and District Labour Council forming the Cornwall Business Council. I was wondering whether you could elaborate on that and say what it is doing --

Mr Courville: My understanding is that there was an attempt to come to terms with a number of problems facing all residents of Cornwall in the current recessionary period, whether they were small business-oriented or labour-oriented,. One of the areas that the newly formed council focused on fairly immediately was the problem of cross-border shopping. I guess there were suggestions as to how this council might enlist the full co-operation of the community to deal with that. I am not apprised of the latest recommendations of the council. I know they have encouraged a survey to be undertaken of specific products and the pricing of products on both sides of the border, and what could be done to encourage the greater purchasing of those products in Canada. I certainly see this as the kind of initiative that has to be taken at the local level. I think that in and of itself, it will not be sufficient. The real assistance has to come from the province and the federal government.

Mr G. Wilson: It seems to be an encouraging development. You do not always think of the chamber of commerce and labour council getting together on an issue. That would seem to suggest that when you have a problem that affects the whole community, you can find areas of co-operation that can lead to rewarding results.

Mr Courville: Certainly. The gravity of the situation in Cornwall may have well produced this. It is certainly a welcome development.

CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 1000

The Chair: The next group to appear is CUPE, Local 1000, Ms Linda Poirier. You have up to one half-hour for your presentation; try to save some time for question and answer. Would you identify yourself and your colleague for the purposes of Hansard?

Ms Poirier: My name is Linda Poirier and I represent CUPE, Local 1000, as the employment equity chair in division 6, eastern region. That covers an area from Vankleek Hill to Peterborough and north to Cobden. I also represent the members in my work unit as a steward. I will let my colleague introduce himself.

Mr Menard: My name is Bob Menard. I am the senior education and publicity officer for CUPE 1000.

Ms Poirier: On behalf of the Canadian Union of Public Employees, Local 1000, my colleague and I are pleased to have the opportunity to make a submission to this committee. Government spending and accountability are important issues to our members. As an introduction, I want to give you some information about the union I represent. CUPE 1000 represents 20,000 workers at Ontario Hydro who are responsible for the generation, distribution and maintenance of Ontario's electrical system. Our members live in communities across the province and work in occupations including nuclear first operator, maintenance trades and clerical technical functions.

Our interests in government spending are many. A healthy economy in Ontario means the continuing need for electrical generation and continued job security for our members. Programs sponsored by the government that create jobs and stimulate industrial growth are positive actions from this perspective. In addition, because our members value the communities they live in, there is a broader concern for government actions that ensure these cities, towns and villages maintain their viability through economic growth and development.

Our members, like most Canadians, are concerned about the quality of life that all members of society experience. Governments can do much to ensure the social safety net is maintained and available for citizens who find themselves without adequate support in tough economic times.

While it has probably been said during these hearings, it is important to note that those tough economic times are certainly a reality in Ontario at this time. Hundreds of thousands of jobs have been lost. Welfare rolls are increasing at the same time as the dollars to pay for these impacts are declining. This creates a formidable challenge for the government of the day.

To its credit, the current government has not succumbed to the cost-cutting alternative that seems all too popular in this day and age. Ontario's government has chosen to view increased expenditures in tough economic times as an investment in Ontario's future. Rather than placing thousands of workers in the intolerable position of no job, no money and no future, the NDP has chosen to use its recent budget as a way of showing that people matter in this province. While there has been some criticism of this approach, from CUPE 1000's perspective sustaining the economy through government spending is the only choice to make while the impacts of changing trade relationships and federal government cutbacks work their way through the system.

As a result of the government's actions, most of CUPE 1000's concerns have been addressed. Money is available for job development and for temporary support to those most adversely affected by the recession. That means we can look towards economic growth in the future to keep our communities viable. It also means that the government has shown it intends to prevent the creation of a society that is divided into the haves and the have-nots. Finally, it means that the services our members supply will continue to be necessary for the future prosperity of Ontario.

With your permission, I would like to turn this submission over to my colleague, Bob Menard, to complete.

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Mr Menard: From our perspective, there are some areas that need emphasis to ensure the fair and equitable society that we all agree is our goal. As an example, the government should be placing emphasis on addressing the issue of pay equity so that the benefits of this legislation can apply to a broader segment of society. At Ontario Hydro a recently negotiated pay equity plan will soon deliver increases to employees in female-dominated jobs. This highlights the inequities that can exist in a workplace, even where a formal collective bargaining relationship has existed for over 50 years.

While the government should be congratulated for taking a valiant stand to fight the recession, it will come as no surprise to anyone that more work still needs to be done in the area of social service agency funding. CUPE 1000 and Ontario Hydro have established a joint employment assistance program that uses community agencies as the referral target. In many areas, particularly northern and other remote locations, the necessary services are simply not available.

The final point we wish to make in this brief has to do with the government's approach to setting policy. Under previous governments, some levels of the labour movement experienced difficulty in having their views heard as part of the consultation process. This does nothing to serve the public interest. It is our position that we should be given every opportunity available to be consulted on issues, either as part of a broader labour coalition or on a one-to-one basis with the appropriate government group. Due to the complexity of the issues and the complexity of government operations, it is critical that the government of the day seek out our input, not vice versa.

During the course of these hearings much has been said about the role of government and business in meeting the challenges of the changing Ontario economic scene. There is also a valuable role that labour can play to ensure things get back on track as soon as possible.

For our own part, CUPE 1000 has been actively pursuing a more co-operative relationship with the employer. As a public sector union representing workers of a crown corporation, we feel we have a responsibility to ensure a reliable, efficient electrical supply to improve the industrial competitiveness, as well as represent our members' interest. Several projects are now under way in the corporation that attempt to balance these two goals that will hopefully pre-empt the need to use more traditional adversarial approaches to resolving employer-union disputes. If successful, CUPE 1000 -- and I should add Ontario Hydro -- will be able to take some pride in the fact we have made our own unique contribution to the betterment of Ontario's overall prosperity.

In conclusion, it is CUPE 1000's position that the New Democratic government has made a smart and reasonable choice in its recent budget. While we have pointed out several areas where we have particular concerns, generally speaking, the government of the day has shown it can make the right choices for the betterment of the people who live and work in Ontario.

Mr G. Wilson: I would just like to get a couple of details first. What is the makeup of the workforce for CUPE 1000, men and women, respective numbers?

Mr Menard: Approximately 25% of our bargaining unit is female.

Mr G. Wilson: This is then a recently undertaken attempt, is it, at the employment equity program?

Mr Menard: The reference was to pay equity.

Mr G. Wilson: Oh, pay equity.

Mr Menard: Yes.

Mr G. Wilson: I see. I had also underlined the paragraph on the second page: to stimulate growth. I will just read it, it is short: "Our interests in government spending are many. A healthy economy in Ontario means the continuing need for electrical generation and continued job security for our members. Programs sponsored by the government that create jobs and stimulate industrial growth are positive actions from this perspective." I am just wondering how active your union has been in consulting with governments in the past, and can you mention anything specifically in what you have done or maybe, Mr Menard, through your educational program, has this been a component of your dealings with your membership?

Mr Menard: I am not clear on the question.

Mr G. Wilson: What kinds of programs have you thought we should be developing to create jobs and stimulate industrial growth?

Mr Menard: The kinds of things that make sense to us are industries that first of all, as was mentioned earlier this morning by Gord Wilson, are committed to this province. Second, I think it is important that the industries that should be brought into the province should be focusing on sustainable development, industries which take advantage of the technology and the skills of our workforce to create the kinds of products that will be available and useful on the world market, rather than simply dealing with raw resources. Any more detailed than that I would not be able to supply at this time, but generally, they should take advantage of the fact we have a province where there are a lot of skilled people, where there is a lot of potential for growth, where there is certainly the need to have people locate, and taking all those factors into consideration, adding them up and looking for people who could supply that kind of work.

Mr G. Wilson: It strikes me that Ontario Hydro began with that kind of co-operation between government and business and workforce, of course, that it was a public institution. I am just wondering, does the tradition continue? Do you still feel that you have an active role in the --

Mr Menard: There is a reference later on in the brief that talks about the co-operative efforts we are trying to establish with Ontario Hydro in terms of ongoing labour relations. Basically, what we are trying to do is to say that we supply a very valuable service to the economy of the province, and frankly it makes a lot more sense for us to get our act together internally and keep that in our minds as an important goal.

Once we have established that as the goal -- and we have in a number of different instances -- and once we have gotten over the hurdle of the employer being willing to take advantage of the knowledge and the expertise the employees have in suggesting ways of achieving that goal, we have had very good results in terms of setting aside and resolving things that in the past might have led to severe and prolonged labour problems. Everybody is very sensitive about it right now in terms of it being a new project, just starting out, trying it out, getting along; and there is certainly a lot of fears on either side. But generally speaking, where we have tried these kinds of procedures, they have been very, very successful. They are driven by two things: (1) that we have a service to supply, and (2) that the people who work there, the people we represent, have an awful lot to contribute to making that a viable, reliable, efficient business.

Ms M. Ward: I wanted to ask you quickly about the joint employee assistance program. You say CUPE and Hydro have established this jointly, and you use community agencies as referral targets. I wonder if you could give me an example of some of the types of services. You also say that some necessary services are not available. What is the usage and what is the need?

Mr Menard: You have to understand that one of the principles of any employment assistance program, particularly when it is a joint program, is that confidentiality is very important. So we do not collect statistics of usage.

What I can give you is some anecdotes --

Ms M. Ward: No, I meant the type of service.

Mr Menard: Yes, I can give you some anecdotes of the kinds of things that we have experienced. Things as simple as being able to get marriage counselling in some communities. There is either nothing available or it comes with a fairly heavy fee because it is done through private people.

Other things get a little more complicated, such as substance abuse: being able to arrange for treatment that does not require a lot of travelling, a lot of time away from work, a lot of unnecessary activity; being able to find people the kinds of counselling they need in their communities. Those are two examples that stick out.

We have instances in both cases where we have had to go to great lengths to make accommodation. One of the things we try to do is get the service supplied without a lot of activity. It is sort a quiet, confidential "Let's talk about this and we can connect you to a social service agency." If it is not available, we have to get in touch with the employer, and then a whole bunch of other people get dragged into it, and you start having troubles with your confidentiality, and people have experienced on occasion some lengthy waiting periods. If they were in an economic situation where they could not afford to pay for private counselling, they would have to wait a fairly long time to get access to it.

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Mr Kwinter: In your presentation on page 4 at the bottom of the page, you say "We feel we have a responsibility to ensure a reliable, efficient electrical supply to improve industrial competitiveness as well as represent our members' interests." Do you not agree that as well as reliable and efficient it should be economical?

Mr Menard: Yes.

Mr Kwinter: I would say that one of the comparative advantages that Ontario has enjoyed over the years is the availability of relatively inexpensive hydro, which has given us a competitive advantage over many of the other areas that we compete with. Would you agree with that?

Mr Menard: Yes.

Mr Kwinter: Okay, could you tell me your comments as to how you feel, as a member of a union that depends for its very existence on the health of Ontario Hydro, about the government deciding to use hydro as an economic tool? I will give you two examples. One, notwithstanding that the minister responsible said she would not buy uranium from Elliot Lake because the cost was prohibitive, the government made a decision that notwithstanding that we will continue to have Hydro buy that uranium at prices that are not competitive.

Two, the situation up in Kapuskasing where Hydro had said they would not buy this power plant without an environmental assessment, the government has said, "Yes, you will buy it," and as a result put $130 million at risk. All of these things impact on the cost of hydro eventually because the mandate of Hydro, I am sure you know and you will agree, is to provide hydro to the consumers of Ontario at cost. That cost depends on what your costs are. The minute you add these extraneous political forays it is going to increase the cost, which means everybody is going to be paying more for their hydro. As a matter of fact, Hydro has already said its rates could go up substantially. That of course would put us at a competitive disadvantage, which is going to impact on your membership because you are not going to be around. How do you respond to that?

Mr Menard: That is a good question.

Mr Kwinter: I am looking for a good answer.

Mr Menard: We will see what we can do. One of the things I think is unique about Ontario Hydro -- and answering both your questions, one about the economics and then your statement about the cost -- is that as a crown corporation the mandate includes, in my mind, also the responsibility of looking at a broader public good. There is a close association between Ontario Hydro and the government, and it has been recently strengthened. Apparently in these instances the government has felt things were needed to improve the social climate, the economic climate, in certain locations, and they felt the best people to deal with those issues were in fact the electrical energy experts of the province, Ontario Hydro. So they have made that kind of decision.

In terms of the overall impact and Ontario Hydro's viability, it is true it is a business, it has to be economical, it has to be efficient. But that mandate of supplying electricity to the province also includes taking a look at those kinds of things that are necessary to deal with issues beyond straight economics. I guess one of the things we could talk about in that reference would be supplying electricity to northern communities and communities where it would never be economically viable to run a line and deliver electricity. Ontario Hydro takes on that responsibility as part of its broader mandate of making sure there is a certain level of quality of life in this province.

So, those things you mentioned, while they are immediate and they do add a lot of dollars, have to be taken into consideration when you look at the corporation's overall operations.

Mr Villeneuve: The former minister, Jenny Carter, agreed that if indeed a 40% increase in the cost of hydro was to occur in the near future, "Well, if it has to be, it has to be." Now, 40% is quite a substantial increase. How do you as a group of unionized employees feel about that? Is there anything you can do to alleviate this for the long-suffering taxpayer and users of hydro in Ontario?

Mr Menard: Yes. I mentioned earlier that we are trying to deal with the employer in a more co-operative fashion to, first of all, resolve some of the difficulties we may have had in the past in terms of traditional labour-management disputes. What that leads to, and Ontario Hydro will confirm this, is a better-quality product and it leads to better productivity because then you have people coming to work in the morning who feel good about what they are doing, who have the obstructions that may have been in their way in terms of getting their job done removed and who overall deliver a much better product in terms of their skills. This has only been a recent thing and I could not give you a specific percentage as to what kind of impact it will have in the overall cost of electricity. But I can certainly tell you that from our perspective, if it works, you are going to see a much more effective corporation, a much happier employer and a much better product overall.

Mr Villeneuve: Mr Milnes, who is a highly respected environmentalist, was here this morning and he spoke of waste to energy. I believe in Bristol, Connecticut, he visited a certain generating plant where the waste from a 250,000 population generated enough hydro to run a city of 15,000 homes, which is basically the size of the city of Cornwall. This is waste to energy, non-recyclable waste. Would you be supportive of a project like this?

Mr Menard: I am not in a position right now to talk about those kinds of changes to the corporation's mandate. I will give you the concerns we would have about those kinds of things. First of all, one of the things we would want to ensure is that there was some kind of public ownership of that facility, because we are very strongly committed to the belief that public is better than private when it comes to energy production. There are a whole bunch of different factors that go into that, and we feel very strongly about the need to keep that control available. There are a number of other alternatives that are being looked at as well. We have not yet discussed with the corporation what our position might be on that.

Mr Villeneuve: One final question. I refer to the statement that my colleague Mr Kwinter referred to, "to ensure a reliable, efficient electrical supply to improve industrial competitiveness as well as represent our members' interests." I remember about six months ago a very professionally done pamphlet was received by all employees of Ontario Hydro which strongly encouraged them to support the government financially and to actually be card-carrying members of the NDP. Is that part of your mandate?

Mr Menard: There is possibly a bit of misinformation on that particular topic. What we were doing was asking our members whether or not they felt it was important for CUPE 1000 to affiliate to the New Democratic Party. We never asked them to join the party per se, and we never asked them to make financial contributions. We had a referendum and the majority of our members felt that it was a sensible thing to do at the time.

Mr Sterling: How much money will your local be supporting the NDP with?

Mr Menard: The affiliation fee is 20 cents per member per month and the local has chosen to affiliate 50% of the members, to pay affiliation fees based on 50% of our membership. At the time that we affiliated it was 9,300 employees who are union members that we were calculating on, so it would be something in the neighbourhood of $1,800 a year, if my math is right.

The Chair: I would like to thank you for your presentation.

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ARTHUR CARKNER

The Chair: The next presenter is Mr Arthur Carkner. I would like to welcome you.You have 15 minutes for your presentation. If you wish, you can leave some time near the end for a question-and-answer period.

Mr Carkner: My name is Arthur Carkner and I live in rural route 1, Winchester. I wanted to make some remarks today about the impact of the budget on Dundas county, the area where I live. I have not made a very formal presentation, but I will touch on some of the areas that have a particular impact, like health care, education and pay equity.

Mr Kwinter: Mr Chairman, on a point of order: Can the record also show that this man was the NDP candidate in the last election?

Mr Villeneuve: No, in 1987.

Mr Kwinter: In 1987? Sorry.

Mr Villeneuve: It seems like ages ago, Art.

Mr Kwinter: I think it is important.

Interjection: It is important?

Mr Kwinter: When you consider that today we have heard from three of them.

The Chair: I have to say, we have not asked whether they are Liberal or Conservative or New Democrat.

Mr Kwinter: No. But if they were candidates, I think it is important.

The Chair: You can ask that question in the time you ask questions of the presentation, if it is in the presentation.

Mr Christopherson: Mr Chairman, to some degree it is not unlike the Tory candidate who came forward. It was acknowledged in the presentation. I think if somebody wants to raise it in his questions, fine.

Mr Sterling: One Tory and a dozen NDP.

The Chair: Okay. Let's give the gentleman time to make his presentation and questions can be asked of him. Continue, please. Sorry for the interruption.

Mr Carkner: I barely got started, but I will attempt to continue, thanks.

The criticism that I have read about the budget centres on some of the high-cost aspects of it. When you look at a rural area like ours, there are a number of aspects in the provincial spending which are quite important. There are not a lot of choices of jobs in small communities and what jobs there are are important to people.

Despite the welcome I received from Mr Kwinter, I do not intend simply to say what is good about it. I would certainly like to say there are things that I would like to see more of in future. I am appreciative of the fact that the provincial government, in a time of economic difficulty, is continuing to spend money. There are a number of people in our area who are commuters to Ottawa, for example, and they are faced with the fact that whenever the economy is difficult, the federal government does not wish to meet its legal obligations in terms of pay equity. The province has not chosen to follow that particular course.

When you look at people who work in things like the Ontario Hydro office in Winchester or various provincial institutions in the county, it is important to those highly female-dominated groups of employees that they can get justice even when economic times are difficult.

That has had a two-edged effect, however, on things like the Winchester District Memorial Hospital. The pay equity settlements for nurses, which I think are overdue, also put particular pressure on the only hospital in the county, and just as it is a fair distance to get down here for a committee meeting, it is a fair distance for people to go to any urban area to get health care. Community-based health care is quite important, so while local residents, I think, were in favour of nurses getting fair treatment, it continues to pose a problem for the hospital in terms of its funding.

If the provincial government were to feel, due to the criticism, that it could no longer afford to meet its social obligations, I think it would fall particularly harshly on rural areas. Yes indeed, I am and have been a candidate. However, I am someone who has grown up in that area, and my family goes back there for many generations, so I think I have as much right as any other citizen to speak to this committee.

When we look at the effect of pay equity on local people, I think it has been beneficial. When we look at the effect that the federal cutbacks have had on a number of local residents, they have been primarily negative. When we look at the fact that the local association for community living -- formerly the association for the mentally retarded, and of which I am secretary -- has had its funding continued this year and continues to be funded, this has certainly not made any local residents rich; but when you look at the fact that these local residents were earning in some cases half as much as people doing the same work in urban areas, it was particularly important that the funding was continued in difficult times. These are people who were not rising quickly when times were good, and to see them slapped back when times are difficult economically would have been very unfair. The tax rates, after all, are the same in rural areas.

I am glad to see there has been some money allocated for education, but again we have our particular problems in rural areas because of distance and because of the low property tax base. In our particular area, for example, although the township of Winchester is a recognized bilingual area, we have a great deal of difficulty, because the public school board only provides French-language education in the city of Cornwall. We raised this with them when they made this decision, and they said we could bus our kids two hours each way to get that choice in education. It is the same two hours from that end of the riding to the other end as it is back. It is the same distance both ways, but they do not seem to want to truck their kids two hours in the morning and two hours at night.

Yes, there is a recession on, and yes, things are difficult, but in rural areas, provincial spending on things like education and health care and pay equity have been quite important and remain quite important to local residents.

The other aspect I think is regrettable about the education is, as I have said, we do not have the property tax base. There is a certain irony in the fact that there is a sufficient tax base to, let's say, provide for education in a public school in French in a well-to-do suburb of Toronto when it cannot be provided in a recognized bilingual area in eastern Ontario where in fact people have neighbours who are francophones and people aspire to work in both Cornwall and Ottawa, which are areas in which not only government institutions but commercial institutions expect to have bilingual staff.

Those are some of the things that I think are good. Some of them are continuations of previous policies instituted, for example, by the Liberal government, and I appreciate they have not been cut back. You will forgive me for mixing a bit the federal and the provincial perspective, but when you live close to Ottawa, sometimes both levels of government are quite significant. We appreciate that pay equity was brought in, and not simply introduced by the NDP, but continued. In the federal realm, for example, pay equity was legislated, but during a previous economic downturn, salaries were decreed, and that fell particularly harshly on female employees.

These are the points that I wanted to stress today. I realize that it is a difficult time economically. None the less, I would like to bring it quite sincerely to the attention of all committee members here that cuts made in spending have a disproportionately harsh effect in poor rural areas. While I am not suggesting that we are a raggedy-ass area, on the other hand Dundas county is not an area that has high employment and the publicly funded institutions here are quite important to people.

I would like to give the opportunity for questions now. As I say, it is not very formal, but quite a sincere set of comments.

Mr Villeneuve: Thank you very much, Art. Thank you for taking time and coming to make your presentation. You touched on the Winchester District Memorial Hospital. It is having some very difficult times, it has an operating deficit of some $500,000 and it just cannot seem to pick it up. We had the Ontario Hospital Association this morning tell us that the new labour law being contemplated by the provincial government will simply contribute to more problems. They also told us that the legislation requiring some of the things you have touched on, ie, pay equity, employee health tax and all the rest of it, was basically mandated to them with nowhere near enough funding.

This is a problem for our school boards, for our hospitals. We are in an assessment-poor area, and you have touched on it and you have explained it very eloquently. Do you really feel that this $9.7-billion deficit, culminating in an almost $35-billion new debt for the province of Ontario in four years, will indeed address some of the problems you have touched on, or will it simply mean more taxes for our children and those that will be coming into the workforce?

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Mr Carkner: I would like to contrast it with the approach of the other level of government in our area, the federal government. What they are saying is that because it is a difficult time to raise taxes because the economy is low, even when you can show that women have been discriminated against you can continue that discrimination because times are difficult. So when times are good you underpay them, and when times are bad you simply have a better excuse to underpay them.

It will be difficult to pay off the debt because we have been faced with a high-interest-rate policy, and I think that is a major contributing factor. When we look at our country and at the infrastructure in terms of roads and schools and hospitals, none of these things were built and none of them could have been built on double-digit interest rates. I would say that the public sector has the same right and obligation to spend and borrow prudently as any individual does, but the notion we get now that individuals can have a mortgage and companies can have an operating loan but governments can never borrow to finance health, education, social spending, roads and so forth, is simplistic to the point of foolishness.

Mr B. Ward: I will be very quick. I would like to thank you for taking the time to come out and express your views when it comes to our budget and our initiatives. I would like to point out the process of the selection of individuals such as yourself. There was a subcommittee formed of the main committee here, consisting of one Liberal, one Conservative and one New Democrat. They went through all the applications and made the decision on who would be allowed to present and who would not, because obviously we had more people who wanted to contribute and little time to do it in. I think that Mr Kwinter and Mr Sterling were part of that selection, were they not?

Mr Kwinter: On a point of order, Mr Chairman: So far today we have had three former NDP candidates. We have the president of an NDP riding association coming up next. The point I am making: When these names came forward, they were just names. You had the obligation to say, "You should know that these three guys were NDP candidates." That is my point. He has every right to come forward, but he also has an obligation to say, "Look, I should tell you that I was an NDP candidate."

The Chair: Mr Kwinter, could I ask the clerk here a question? Was there anybody cut here from Cornwall?

Clerk of the Committee: No.

The Chair: There was no one cut from Cornwall. Everybody who had put his name before the list is appearing.

Mr Kwinter: Then that defeats his argument that we had a choice. Everybody who came forward came forward.

The Chair: That is correct. I just wanted to get the record straight.

Mr B. Ward: My question to you is on the budget. When you are talking to your friends and neighbours, is it the feeling that we are on the right track, based on the other discussions? I know they are concerned about the deficit. I think everyone is.

Mr Carkner: It is a rural area. There are a lot of people who are concerned about the deficit, but they particularly value things like the hospital. There have been community fund-raising drives, and people just know they cannot raise enough money through brownie sales or concerts and things to fund it. I would say that the people in our area have conflicting feelings about it. They do not like to see a budget, particularly with the kind of interest rates we pay -- it is a frightening sum of money. On the other hand, those are services that people need and value.

A. TREVOR TOLLEY

The Chair: The next person to make a presentation is Mr Tolley. I am sorry for the change-around we had from this morning till this afternoon, but I am glad you accommodated us because of the problem we had this morning. You have 15 minutes for your presentation. If you can, leave some time at the end for question-and-answer period.

Mr Tolley: Very good. Before anybody asks me, I will say that I am president of the NDP riding association for S-D-G & East Grenville.

Mr Villeneuve: And a good one, too.

Mr Tolley: Thank you very much, Noble. It has been a pleasure to oppose you for so many years. I have been in politics, in fact, a little longer than some of you. I think I have been in this position for 15 years. But I would also qualify it by saying that I live in Williamsburg township, which is one of the most Conservative areas in the riding. Even Ed Lumley could not get many votes in Williamsburg township.

Mr Villeneuve: With Johnny Whittaker at the helm.

Mr Tolley: With Johnny Whittaker at the helm, yes. But nevertheless, the voters of Williamsburg township have been happy to elect me as a councillor despite my views and despite their views, and I think they are reasonably happy with me. So perhaps my positions are not as entirely partisan as my title might suggest.

But having said that, I would like, first of all, to thank you for the opportunity of addressing the committee. I want to speak about the budget as a resident of the county of Dundas, an area that suffers from chronic unemployment, and as a municipal councillor from Williamsburg township, where, along with other members of council, I have a responsibility for deciding the level of taxation in our municipality.

I want first of all to outline the currently accepted wisdom concerning economic problems of our time, which has been the basis of the criticism of the budget, and to show the bad results that such economic thinking have produced at the federal level. I want then to point out that the NDP has had the courage to turn its back upon the currently accepted economic wisdom to take a different approach, and I want to show the good this has done in our region.

In order to give a true picture of the impact of the budget in this framework, it is necessary to rehearse a few well-known facts concerning the budget. Any proposal for expenditure can be assessed only in the light of alternative possibilities. In the case of the NDP budget, a very clear alternative has been widely canvassed: that of a balanced budget. This was the choice the NDP government could have made had it considered it a wise one.

The decision not to take this course was, as you all know, not a profligate one. The proposed deficit of $7 billion was occasioned first of all by a predicted fall in revenue brought on by the fall in economic activity due to the recession, a fall in revenue of around $3.7 billion. In addition there was a fall in transfer payments from the federal government, brought about by the federal government's attempts to handle its own economic deficit. This drop in transfer payments amounts to $1.6 billion.

I should like to return to these two points shortly, but for the moment I would remark that for the NDP government to bring in a balanced budget would have been to react to these cuts in revenue by passing them down the ladder, either by cutting its own programs of spending in the province or by cutting its grants to municipalities. This would have resulted in a worsening of the economic situation throughout Ontario, a lengthening of the recession, and many problems for municipalities, quite apart from the obvious human suffering that would go along with that type of program.

The criticism of the relatively small deficit of the Ontario NDP government -- relatively small in comparison with that of the federal government and some other provincial governments -- has been that it is fiscally irresponsible. This has been the view of the business sector and of many economic experts. Not all economic experts, however, have been critical. John Kenneth Galbraith, an economist of high standing and one whom Pierre Elliott Trudeau admired and quoted, contended that the NDP government was the only one doing the right thing in this recession: spending money on activities that would, through wage payments, put money immediately back into the economy so as to stimulate economic activity.

This essentially Keynesian view has a long history of economic respectability in this century, but unfortunately it does not represent the dominant economic preoccupation today. Inflation has become the reigning concern, a concern very proper in times of prosperity. The present federal government's economic policies have been dominated by an unwavering concern with inflation, which in recent years in Canada has not been a major problem.

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The present governor of the Bank of Canada, on appointment, announced his intention to put an end for ever to the problem that has been with us for as long as can be remembered. With inflation at a very low level, he announced an aim of zero inflation and put up interest rates. When external factors did generate an inflationary pressure worthy of response, he had no option but to raise interest rates higher, generating a potential recessionary pressure. When he attempted to correct for this by lowering interest rates slightly, there was a run on the Canadian dollar because financial markets could perceive no economic reason for his change of policies. In this lay the seeds of the present recession. Interest rates rose in response to rising US interest rates, and the excessively high differential was maintained as the federal government emphasized its commitment to fight inflation even when it was certain that the incipient recession would bring down interest rates, and even when the higher interest rates had the effect of increasing the servicing costs of the already dangerously high federal deficit.

The origins of this deficit seem now forgotten. In fact, the comparatively low federal deficit in the 1980s was made the strangling monster that it is by the universal and ill-focused concern with inflation in that period. Canadian interest rates rose to 18% and 22% in those days, making payments on the deficit unhandleable. The focus was on the money supply then defined by economists. As interest rates rose, the money supply seemed strangely recalcitrant. Economists have since decided that the money supply was wrongly defined and targeted at that time. The result was a bad recession with a fall in revenue and an outrageous cost of servicing the federal deficit that resulted, by the end of the recession, in a deficit that was quite manageable. Yet this course of policy, fighting inflation by raising interest rates whatever the circumstance, has remained a respectable economic course in financial and business circles and of the Conservative federal government.

In fact, however, some economic organizations of great respectability have come out to say that we cannot pursue this policy of controlling inflation by raised interest rates, leading to recession and widespread economic hardship. It is like proposing partial asphyxiation as a remedy for hyperactivity. It reminds one of 18th-century medicine, where the remedy for fever was to bleed the patient by the application of leeches. Some patients got better; they had the stamina to survive both the treatment and the disease.

In this framework it seems to me that the NDP government is not to be blamed for ignoring the problem of inflation in a time of recession and in attempting to stimulate the economy by a mild deficit. We can imagine what the consequence would have been for eastern Ontario had they not: Government programs would have been cut back and grants to municipalities decreased. Government programs, both of direct payments and those with the government as employer, are very important in this area. The St Lawrence Parks Commission, for instance, is an important employer. So too are municipalities.

In Williamsburg township, where I am a member of council, our main expenditure is on roads. We are very proud of our road program. By prudent management we have the highest percentage of blacktopped roads in the united counties. A cutting of government grants would have meant a cutting of employment on road work. In fact our road grants were enhanced, with the resulting expansion of our blacktop program. This made a notable contribution to economic activity in our area.

This may sound as though we are rolling in gravy at provincial expense. This is not so. Of every tax dollar collected by Williamsburg township, approximately 66% goes to the school board, 11% or so goes to the united counties, and the township keeps about 22%. The demands of the school board have gone up, as have those of the counties, in part due to the higher demands for welfare payments due to the recession. Williamsburg township, in part because of its road grants, was able to keep its portion of tax collected the same as in 1990 in actual dollars collected. This was salutary by any standards, but it also had the effect of putting less pressure on people's disposable incomes, again sustaining the amount of money available in the local economy.

I have tried to show that the recession and the federal deficit were in large measure due to a mishandled and unswerving preoccupation with inflation. The NDP has courageously turned its back on such policies and has taken the unfashionable course of stimulating economic activity, the only real source of economic well being. This has been felt in our region by the fact that government expenditures in the region and grants to the region, so important to its economic life, have not been reduced and have, in some cases, been enhanced. We feel that the NDP is to be congratulated.

Mr Villeneuve: Thank you for coming and making, I think, an excellent presentation that was not all negative. It was in great degree positive and we appreciate that, Trevor. The major problem here is that you say "a relatively small deficit." Well, $9.7 billion is relatively small when compared to the Ontario economy, but by the year 1994-95, according to Mr Laughren's budget, we will have doubled the actual total amount owed by the province of Ontario. We will be going from approximately $40 billion now to some $75 billion or $80 billion, depending on how clear the forecasting is. That starts to be substantial, I suggest to you, Trevor. We all say that the federal government is not handling the deficit right. Well, we will have whomever is the government following this particular government, facing basically the same problem that they now face at the federal level. Do you not think that is alarming?

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Mr Tolley: Well, Noble, there are a few things I would like to say in response to that. First of all, it seems to me that, as I tried to indicate here, the real difficulty of managing the federal deficit has arisen from the fact that the federal government has pursued this high interest rate policy which has really hit back upon them, so that the cost of servicing the deficit has gone up and up. I would certainly, myself, be disturbed to see a similar scenario work out in Ontario. I appreciate the remarks you make concerning the predicted possible increase in the indebtedness of Ontario which is, in itself of course, not laudable, though in connection with the policies with which it is associated it could be seen as justified. However, when one looks forward to a predicted increase in debt, for instance, one also has to look forward to it in terms of the predictable increase in the gross provincial product and also the predictable decline in the value of money. So if one has scaled it down in terms of those things, it would perhaps be less frightening than it seems to be. It does not seem to me to be a completely frightening or negative thing.

Mr Cleary: I would like to thank you for your presentation, Mr Tolley. It was one of the better ones we have had today. I did not realize that Williamsburg is only keeping 22% of their tax dollars. I did not realize it went that low.

Mr Tolley: You share your puzzlement with many of the voters because when you go around to see them they say, "Why are my taxes so high? I do not get this, I do not get that." If they turned over the tax bill they would see the pie diagram on the back. What was the reason for your observation?

Mr Cleary: I have followed that very closely in the county system for many years and I had thought the majority of them were around 27%, but I could be wrong.

Mr Tolley: Yes, that is the case. And I myself proposed to the council that we should attempt not to increase our cuts this year, even though it is not going to have a tremendous effect for the residents because the school board is having to take more, and so are the counties. But we are taking, in dollar terms, the same as we took last year.

DELORES JENSEN

The Chair: I would like to welcome you to the standing committee on finance and economic affairs on the budget review. You will have up to 15 minutes for your presentation and at the end, if you could, leave some time for a question-and-answer period.

Mrs Jensen: My name is Delores Jensen, I am a senior citizen in the area and I want to welcome everybody to Cornwall. I have a written presentation; I will read it to you. I believe this is the worst recession that has ever hit Ontario in my lifetime. A recession in Toronto means a depression in Cornwall. This area has been devastated by free trade, unemployment, bankruptcy, the GST, the high dollar, cross-border shopping and major controversies.

There is a saying in Cornwall that the province ends at Kingston. We here in Cornwall are hoping this trend will be changed soon. After having lived in Toronto most of my life I tend to agree with this saying.

I was very impressed with and proud of the budget. This budget is necessary and Mr Rae had no other option. During a war, deficit financing is acceptable. In this area we are at war with poverty. Cornwall has one of the lowest pay scales in the province, that is if you are lucky enough to still have a job. It is the reason that many of the residents of Cornwall are forced to go out and find jobs and return at retirement. We all care very highly for our city, but we do have a lot of problems.

Mr Laughren made the choice to fight the recession instead of the deficit. Now, Mr Mulroney is proclaiming 1992 a growth year. This would not have happened without Mr Laughren's courage, vision and foresight. Ontario has 37% of the population and 40% of the gross national product. Tough choices will have to be made in the end.

In Ontario we have another problem lurking ahead. Our social assistance system is being jeopardized by the federal government capping transfer payments to the province. During free trade negotiations, social programs were called subsidies. This is just another step toward depriving citizens of our social programs. My reason for approaching this board is to focus attention on the senior population in our city. The population of Ontario seniors is said to reach 14% in the year 2001. In Cornwall, the future has already arrived. We reached 14% in 1988 in Cornwall. We want to impress on the provincial government that Cornwall and area is in great need of help with senior problems.

In 1988, the area had 6,712 persons over the age of 65; 4,122 were women and 2,590 were men. In the three united counties there are 8,687 seniors. Ontario has over one million seniors and the seniors are the fastest growing group in our society. Maybe it is time to have our own caucus at the political level.

In Cornwall we have 14 small seniors' clubs. Most of them are operating on linguistic, religious or political lines. The lack of employment opportunities has left many women retiring in a very vulnerable position. Nearly two thirds of seniors here in Cornwall are women. Unfortunately, illiteracy has helped to maintain and encourage abuse of the elderly; 68% of seniors in Cornwall are designated as functionally illiterate. This situation causes exploitation of the elderly in many forms: physical, mental, medical and financial. Being able to live in a secure and safe environment is a concern for seniors.

A more innovative approach is needed in the area of housing for seniors. Infrastructures must be reinforced if we wish to have seniors remain in their homes. Programs available to seniors such as the Ontario home renewal program, non-profit housing, home sharing and support homes should be publicized to make seniors more aware of the possibilities.

Many of us who have retired have quite a few productive years ahead of us and we would like to volunteer and help our fellow seniors. Mr Rae made a commitment at the Ontario senior conference in Kingston that long-term care and support services would be implemented. It is now long overdue. Self-reliance should be encouraged for seniors so they stay in their homes as long as possible and delay institutionalization. Respicare and support should be available around the clock and not from nine to five.

Incentives for care givers or family members, such as tax incentives or a salary, might be pursued. Homemakers or attendants deserve a decent wage. They will be in greater demand in the future. Most of them are looking at this as part-time work; we have to start having them look at this as a job they can stay in. The wages have to be adequate.

More participation in recreational and sporting activities might make sure seniors stay well as long as possible. Publication of a local information guide or newspaper advertising is needed. Caring and sharing programs could be developed as the need arises, such as a telephone reassurance program to assist seniors staying in their homes. Public meetings with our board of health and legal help are needed for seniors.

The city of Cornwall has major difficulties recruiting doctors. Instead of incentives to doctors, one of the local hospitals should be designated as a geriatric and gerontology centre with proper staffing, specialists, equipment, diagnostic centre and a lot of new programs. This happens in Toronto all the time where they actually have special groups like that. Maybe our American friends would be ready to come, in the same way as the Rudd clinics, Shouldice, all these places where they encourage Americans to come over.

Seniors and disabled persons have no ministry of their own. Several ministries can be involved in any one project. A piecemeal approach has been developed. Many programs are duplicated and overlapping is evident. Respect for the public purse is scarce.

Grants under $30,000 are not recorded in the public accounts registry; this encourages abuse. If tough choices have to be made, this is the area where most savings could be made. Stricter criteria are needed. I attended an elder centre conference in a plush hotel in Toronto where 80% of the people there were administrators and 20% were seniors. Price was a hindrance for seniors to get there.

I have travelled quite often in Scandinavia where secular humanism has built a social system that is respected worldwide. Division should be discouraged in our area. Emphasis should be placed on senior needs. The task is immense. Volunteering should be encouraged and respected. More open meetings and community involvement are in order. The government cannot do this alone. With our own senior ministry it will be easier to see if seniors are getting their fair share, which they have earned, and if funds are spent effectively. This is a necessity because if you look at all the programs, there is overlapping and all kinds of things happening to the seniors. Thank you for your time. If you wish more information, I will answer any questions.

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Mrs MacKinnon: I wish to thank you for coming forward, Mrs Jensen. You are the first one I have heard to come forward in defence of seniors. Being a senior myself, I really do empathize with you and I want to congratulate you for a wonderful presentation. I would like to ask you whether you could tell me what services are available in this general area for seniors.

Mrs Jensen: It is piecemeal. I happen to be French Canadian. There are divisions along political and linguistic lines. We have all kinds of small clubs but nothing that is big enough to make a difference. Everybody has his or her own program. I am sure all your ministries are giving money to senior programs, but how do you know the same money is not given by another ministry for the same project? This is what I have found is happening. In fact, right now we have here in Cornwall an administrator of a hospital asking for money for seniors' programs, which tells you how far the seniors' money has been used. Seniors and disabled, because they do not have their own ministry, are being taken advantage of when money is requested and there is an overlapping in every ministry.

We do not have a centre like you have in Brampton or anything, only a small church that is closed most of the time. There are only one or two and they do not work. Mr Cleary is very aware of that.

Mrs MacKinnon: You are aware that there is a ministry that the seniors do come under?

Mrs Jensen: There is an office; there is no ministry. I think that is where the fault lies. I think we should have our own ministry and all moneys that are requested should be going through that ministry and then you would not have all this overlapping.

Mr Villeneuve: Thank you very much, Mrs Jensen, for an excellent presentation. The statistics were most interesting. We know this part of Ontario. The riding I represent, which surrounds this city, has a higher percentage of seniors than just about anywhere in the province and it makes it all the more difficult to deliver Meals on Wheels and homemaker care when you have many miles to go between calls.

Mrs Jensen: I realize that.

Mr Villeneuve: I am not sure what homemakers are being paid right now. Could you tell us what, to your knowledge -- and quite obviously you are very knowledgeable -- they are being paid now and what do you feel they possibly should be getting as opposed to what they are getting?

Mrs Jensen: I think most of the homemakers are getting very low wages, $5 to $6 an hour, and that is not a job most people would look at as a job for the future. Most people who go as homemakers have to have a certain amount of qualifications somehow --

Mr Villeneuve: Compassion.

Mrs Jensen: -- and compassion and love of your fellow man. I think maybe we should be looking at $8 to $9 an hour as a half decent wage so that people would stay in the job where there is not that much continual change; there is more permanency in it.

The Chair: You did really well. You used up your whole 15 minutes up. Thanks for appearing before this committee.

Mrs Jensen: I was hoping to get a question from Mr Cleary.

Mr Sterling: We ran out of time.

Mr Villeneuve: Sorry I took so much time.

RICHARD HICKERSON

The Chair: The next presenter is Mr Hickerson. I would like to welcome you to the committee. You have up to 15 minutes for your presentation and, if you can, leave some time at the end for a question-and-answer period.

Mr Hickerson: Ladies and gentlemen, I would like to thank you all. I really appreciate this opportunity to speak to you today. It is strictly on my own behalf, John Q. Citizen, ordinary guy on the street, whatever, but in my view there is a real need to counterbalance the one-sided criticism I have been hearing and you have been hearing of the recent Ontario government budget. There is a need to counterbalance a lot of this criticism with what I call common sense and some realism. I hope I will have time to get through my presentation.

The Chair: You can use all your 15 minutes on your presentation.

Mr Hickerson: If I do not, I will skip through paragraph to paragraph and quickly. I have a tendency to be a bit long-winded by nature anyway, but I will skip to the end if I have to.

The Chair: If you do not get through it all, the clerk here will have a copy and she will be reading it over for part of the report.

Mr Hickerson: Very good. I am glad about that because I may not get through. This is the kind of thing that gets me going as an ordinary citizen. I am trying to understand what is going on in the world and in my own province. I am trying to understand the tremendous changes going on in the Soviet Union, and this is what I see in the paper. I will just read you a couple of headlines to show you how much confusion there seems to be about what is actually going on and how difficult it is for the ordinary citizen to understand.

This is the Standard-Freeholder, our local newspaper, the issue of Monday, August 26: "New Democratic Era Begins in USSR," rather an interesting headline I would suggest. Take a second look at that one. Here is one that will really turn you upside down if you are an ordinary citizen trying to understand what is going on in the world. I turn to the editorial page and I see under the little heading "World Today" by Mr Derek Nelson a title, "Retreat from Socialism Isn't Easy." That throws a real curve at me as a reader and as a person trying to understand and I say, whoa, what is going on here?

So I get my books out. I read the main articles in the Encylopaedia Britannica on capitalism, on socialism and on Marxism. I spend two weeks plowing through this material to try to get a grip on what is actually happening in my world. My comments are in the light of my two weeks of study -- very interesting stuff. Of course we are going through a very interesting time and it impacts on Ontario as it impacts on every other part of the world, and we had better be awake to know what is going on.

Socialism is frequently spoken of today as if it were incompatible with democracy. The corresponding fallacy is to identify capitalism with democracy, so you have a double whammy, double heresies going on here. Both these errors can be cleared up with a proper understanding of what democracy is and what socialism is. Socialism refers simply to a society in which the economic means of production are not controlled by private individuals. Democracy refers to a type of political organization in which representatives are elected by the people and in which majority rule generally prevails. It is quite possible, therefore, for a society to be both socialistic and democratic -- a great revelation there.

In states which are totalitarian, the state is glorified and considered as more important than the individual. In democracies, however, the individual is seen as more important than the state. The danger in democracies is that the majority can, if unchecked, exercise a form of tyranny over the minority which is just as evil as any kind of despotism. Equally dangerous is the kind of tyranny that can be exercised over the many by a powerful few who have most of the real power very simply because they own the means of production.

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The most terrible effect of capitalism has been to depersonalize and dehumanize relationships between people, making them more like machines, units of production, and people become an impersonal kind of labour force. What a way to dehumanize people. Now we are not even people any more; we are a force. This annoys me to no end, the terminology, but it is classic. This is what is happening to us. We have to be aware. Instead of human values and human needs we have machine needs and technological needs which seem to come to the fore. That seems to be the driving force, not human needs but technological needs, profit needs, competitive needs etc.

No political system is, of course, above criticism. I do not care how good it is. We have not found a perfect one yet, obviously. Capitalism itself is certainly not perfect, although I do not think it gets enough close scrutiny and attention and it does not get questioned or challenged often enough. It is taken as the status quo and it is taken as unchanging and unchangeable and there is nothing any of us can do to improve it. It has already reached the state of perfection.

If the fans of the capitalistic approach give themselves permission to criticize other systems, then they must be a little more willing, perhaps, to accept the legitimate criticism of those who can still see the real weaknesses of capitalism. Although not necessarily wrong in themselves, some of the values in capitalism are pretty thin. They do not reach to the highest parts of human beings. They do not inspire us to our highest levels of ability and growth. They are too thin for us. We are not completely satisfied with that. We are restless and looking for something better because we see these disadvantages every day. I will move on to the next paragraph and I will let you just read for yourselves. Ethics and economics have not mixed too well in the historic evolution of our capitalistic system. Despite this, the value and dignity of the human person still lies at the heart of any economy based on justice. People are subjects, not objects. It is about time they started being treated as subjects and not as objects, as they sometimes are. They must take priority over both capital and technology in any kind of just economic order. People are meant to be agents of their own destiny, not simply pawns. The common good of all must take precedence over vested self-interest. This is why economic strategies aimed at maximizing profit, power and domination are distorted models for true growth and development. They put profit and things before people and are therefore immoral. Might never did make right and you have to be a moral idiot to say that it did.

The old Darwin thing of survival of the fittest, what kind of world is that and who wants to live in that kind of world where everything is based on survival of the fittest? What does that do to the poor and the disadvantaged and minority groups and what does that say for our whole approach to human beings? Good heavens, surely we can do better than that.

Here is an interesting one, right out of the Brittannica, ironically, in the article on capitalism. This particular paragraph threw me. "It is the society which invests more in its people that will advance more rapidly and truly inherit the future. Many economists maintain that in the long run larger resource allocation to the public sector, especially to education, basic research and investment in people generally, heightens the prospects for sustaining high rates of economic growth. A society which can casually disregard the fact that over 10% of its workers are relegated to the trash heap of unemployment and which can, with a straight face, call 6% or 7% unemployment `full employment'" -- I love the terms that these economists use.

I wish I could find an economist who only had one hand because then he would never be able to say, "But on the other hand." If we could only find a one-handed one, it would be so great. I am no economist but I love reading what these fellows write. Some of it is incredible. It really boggles your mind. I suppose they are wiser than I am in their special field. But there are economists who see beyond the way things are now and who are looking for that, who say, "How can we, as a social, caring, humane society, call 7% unemployment full employment?" That is a real trip, that one is.

I am not against true progress. I am not against profit. When I start talking like this, everybody says: "What's the matter, Dick? Are you against profit?" I am not against profit. I am against exorbitant, extravagant, outlandish profit, where profits are never controlled but wages are always controlled. We have to control things like rent -- I heard the lady -- rent and everything. We never put controls on profit, though. It is okay for people to gouge each other and to exploit each other right to the hilt -- no limit on profit. There is something wrong with that philosophy, in my books anyway.

I do not define progress solely in terms of profit. True progress must improve the lives of ordinary people, not simply add to the wealth of the wealthy. That is not progress. The basic human needs of the many must take precedence over the wants of the few. I will pass over the rest of that next little paragraph to save a little time at the end maybe, and I will just read you the last paragraph.

The Chair: You have two minutes left.

Mr Hickerson: I will just do my last paragraph.

The Chair: Summarize.

Mr Hickerson: No, that is fine. This is why a social democratic government -- and let's face it, this is a first. We have not had a social democratic government in Ontario ever before. They seem to be starting to pop up here and there in Canada, now and again. We are starting to realize that maybe there is a better way. Maybe there is another way of handling things. This is why you find the NDP in Ontario more likely to use deficit spending in a time of crisis. We were -- and I do not know if we still are but we were -- in a time of crisis, the deepest depression since the 1930s. This was no fun. So what did they do? Deficit spending. This is a traditional strategy and approach by -- I do not care if it is Canada or anywhere in the world. Any social democratic, responsible government in a time of crisis is going to stand up and do this kind of thing because it puts people before profits.

I know it is hard to understand. I know we are not used to it yet because we have not seen it all that often. What is truly refreshing about the recent Ontario budget is that people, accustomed to being low on the list of priorities and to being treated like objects and commodities, units of production under capitalistic schemes, pawns to be exploited and manipulated by an impersonal, uncaring system often based largely on greed -- finally a breath of fresh air. After all this time of living under that other cloud, all of a sudden, we get a government that says: "Whoa, we are going to give people the priority. We are going to put them first. We are going to let them come forward, right to the head of the class." With this government that is what it promised us, and that is only what it is delivering, putting people first.

This is why I would like to take this opportunity to thank the government of the day for coming through with its promises and putting people where they really belong, and that is at the head of the class. When you put people first you feel good. Do you know why? Because it is right to put people first. That is where people belong.

1550

The Chair: Thank you for appearing before the committee. Sorry you ran out of time.

Mr Hickerson: That is okay, it is just my long-windedness. Thank you very much.

DOWNTOWN BUSINESS IMPROVEMENT AREA
CANADIAN SHOE RETAIL ASSOCIATION OF CANADA

The Chair: Would the Downtown Business Improvement Area please come forward? Mr George Assaly, welcome to this committee. You will have 15 minutes for your presentation.

Mr Assaly: That is fine. I may not need it. I not only represent the Downtown Business Improvement Area, I am also representing the Canadian Shoe Retail Association of Canada, which represents 6,000 shoe retailers across the country, the majority of which are in Ontario. I am the chairman of their committee on cross-border shopping, and that is basically why I am here to speak to you.

I am going to be open about it: I am sure many of my confrères on the committee and in our industry and retailers have said: "Look, George, you are wasting your time. This is just an exercise in futility; they will not listen to what we have to say." But I am the old-fashioned type and I still believe that if we have something concrete to present to you, it may influence you the next time you are getting together to discuss a new budget. I still believe that the politicians of our province, and of our country, have the best interest of all of us at heart.

I am here to speak to you, basically, on cross-border shopping. It has been, as many of you know, a real disaster for the province. I am not talking about just the border communities. I was at a meeting yesterday in Toronto -- I just got back about 3 o'clock this afternoon or shortly before that -- speaking to people who are retailers in Sault Ste Marie and Sarnia, Thunder Bay and particularly the area that some of you are from, the Hamilton triangle, where it has almost reached a crisis. It is no longer just a border problem. This insidious thing that is happening has stretched throughout the province.

I can tell you that this afternoon there are special buses leaving Owen Sound to drive to Buffalo for people to shop. There are special buses running from Sudbury three times a week for people to shop in Buffalo. I do not think the government has yet appreciated exactly what is happening. Your minister has said that it is a very complex problem and it cannot be solved with just a Band-Aid solution. I agree it is a very complex problem and it is going to take more than just overnight to solve our problems of the high dollar and distribution systems and all these types of things, but the problem has been studied to death.

There are reports by Ernst and Young, by Coopers and Lybrand, by everybody. We have done one here in Cornwall just recently where 400 constituents have been surveyed. We have all the details. We know who is shopping, what they are shopping for, why they are shopping. It is not necessary for us to study it any more. It is time that some action take place and we mean getting some real help from the government.

The Ministry of Industry, Trade and Technology has set up a task force on cross-border shopping. I have been sitting on that committee for MITT for 18 months now. Under the previous government they were very generous. They gave us $50,000 from Mr Kwinter's department, which was really not a great deal of money, but at least it was $50,000 to help three communities in the province. It was just a very small amount, but at least we thought it would help.

In the next budget under the new government, we asked for $200,000. They said it was too much, so instead of cutting us back to the $50,000, the last budget gave us exactly nothing -- a big zero from the new government, down from the $50,000 we had from the previous government, and yet a committee like that is asked to do something to help stop a $3-billion haemorrhage in our province.

So far we know of 14,000 jobs that have been lost in Ontario -- your government figures, not my figures. That is what your people are telling us, 14,000 jobs lost in Ontario from cross-border shopping. If there were 14,000 jobs lost in the steel industry or in the automobile industry, or the industries that some of you represent in your communities, there would be panic in the streets. But we are retailers and it does not seem to matter. Those 14,000 jobs are families. Those are taxpayers. The communities are suffering.

Our figures show that in Ontario alone in 1991 the loss in tax revenues -- and these are government figures -- federally, provincially and municipally, will be approximately $500 million. If you lose $500 million, how are you going to keep up the services we feel we are entitled to in the present situation? The best health system, the best education system, everything that we have got is the best in the world. How are we going to keep it up if we start losing something like half a billion dollars in one year?

I do not have to tell you the figures. This year, 1991, will show that there will be 100 million one-day crossings to the United States, 60 million by car and another 40 million by post office. Every time somebody is allowed a $40 parcel to come across from those catalogues, that is like somebody shopping for one day, and believe me, they are more than the $40.

Something has got to be done. Your minister says: "It's too complicated. We have to study it again." We say there is a solution. It may be a Band-Aid, but when you cut your finger, you put a Band-Aid on it until you get to the hospital to get it stitched up. You apply something right away. We damned well have to have something applied now or we are going to haemorrhage to death from that cut.

There is only one solution to do right away, and I know you are going to say that because of the bureaucratic problems that arise from it, it cannot be done for another six months or eight months, or until there is another budget, but my God, you have got to think about it for the next budget.

You raised the gasoline tax a cent and a half a litre in the last budget, to bring in $221 million, I understand. Is that correct, Mr Chairman, $221 million, and another $221 million in January? Our people tell us, through your department, that you not only are not going to get the $221 million but the gasoline revenues in tax dollars are going to be below that, because there is such a leakage.

Olco, one of our budding oil companies in the country, tells us that across Ontario its retail sales are down by 50%. In Sarnia they are down 83%. The only way you are going to get those dollars back -- it is a simple matter of trying to figure out that if you sell more, you are going to get in more dollars. We are saying that the gasoline tax has to be reduced. Forget everything else at the present time. You have to reduce that gasoline tax so that the cost of a litre of gasoline in Ontario is only six to eight per litre cents more than it is across the border. It not only will stop the trigger -- and that is the trigger that sends everybody across the border, believe me. You know it and I know it. I do not have to tell you the gasoline is the trigger. Mr Cleary tried with a private bill to get the gasoline tax reduced along the borders. It is now not just along the borders, it is throughout the province.

We are saying if you reduce the gasoline tax to where we can compete in tax dollars, the increase in sales in gasoline is going to be so phenomenal that you are going to make up for the reduction. You will make up the $221 million extra you wanted, plus the trigger that sends people over there to shop when they are getting gasoline. You are now going to get your Ontario sales tax for those billions of dollars that are being sold over there, all those billions of dollars that are going to the States now. You are going to get that 8%, so try and figure it that way. You are not only going to lose a gasoline tax by not lowering the gas, you are also losing that 8% on all those items being bought in the States. You are also losing in the municipalities, the businesses going bankrupt, the people going on welfare who are in the retail business, not maybe the owners but certainly the employees.

1600

The Chair: Sir, you have four minutes left. Do you want to have a question from each one of the parties --

Mr Assaly: I will stop. There is my point, you have got to lower the gasoline tax.

Mr Sterling: I think we have normally allowed groups half an hour and as Mr Assaly represents a group I think we should give him the courtesy of that amount of time.

The Chair: I am just following directions of the subcommittee.

Mr Sterling: I do not want to cut him off, it is the end of the day as well.

Mr Kwinter: Mr Assaly, I was taken by your comment about the 14,000 retail jobs. There seems to be a perception by the government that retail jobs do not really count.

Mr B. Ward: Is that true? It is not true though.

Mr Kwinter: I am just saying that is what he was saying, that if they were 14,000 jobs in the steel industry or the automotive industry there would be panic in the streets; but they are 14,000 retail jobs so there is not the same kind of situation. That attitude permeates the whole issue of Sunday shopping.

We have a situation in Ontario where people do shift work. In factories they work seven days a week, no one comments about that. People who work in restaurants, in the hospitality and service industry, work seven days a week, nobody comments on it. For some reason or other they have singled out retailers as the ones who have to be protected because they are being exploited and they are asked to work, whereas 40% of the workforce in Ontario works Sundays. Why do you feel this is happening? Why do you feel there is such an insensitivity to the retail business?

Mr Assaly: Because, except for organizations such as ours -- and we are probably one of the stronger ones because we have that many members -- there are too many of us who are just independent. They are individuals. There is no union. I would give my right arm -- but frankly I would probably get shot when they hear this around the country -- for them to unionize our employees, then they could stand up to the government for some things or other. John is laughing at me --

Mr Cleary: Oh, no.

Mr Assaly: Really, we are individuals, we are all independent. That is why we had to have things like business improvement areas to try and get us to work together. We are all individuals. By the way, getting back to the Sunday shopping, our survey has shown that the Sunday shopping issue is not that big a trigger in sending people across to the States.

Mr Sterling: Our party and our dissenting report on the cross-border shopping issue, which this committee considered prior to this matter, recommended that the provincial sales tax and the GST be melded into one tax so it could be collected at the border and that the increased revenues the government would get from that would allow a decrease in tax of about 5 cents a litre. Those are basically the two recommendations we made. I was interested in your survey and in knowing who are the greatest cross-border shoppers in this area by profession?

Mr Assaly: We find, and this is shocking to us, that the majority of cross-border shoppers are not the people who are at the bottom level of the economic ladder. They are the ones who are educated and are a little higher. I have just had a meeting by telephone with one of the people who spoke here earlier. We are finding that probably the most prolific group of cross-border shoppers in Ontario are schoolteachers.

Mr Jamison: Thank you for coming today and making your presentation. It certainly addresses a problem of grave concern to all of us here regardless of party. It is an issue that I know the ministry I am attached to, the Ministry of Industry, Trade and Technology, is concerned about. When the minister spoke about the problems in and around cross-border shopping -- some issues are greater than others, but in the in-depth look this committee took at the cross-border shopping situation, time and time again we were reminded that the atmosphere was created over the last few years to really place in people's minds the assets to going across the border. I know you have zeroed in on gasoline which is an important issue.

Manufacturers that wish to export are talking about the Canadian dollar. It is a relevant factor in cross-border shopping also, but beyond that, what we heard from a number of presenters to this committee was in fact that the free trade agenda placed in people's mind an ability to go freely across the border. Beyond that, when the GST was put in place, there seemed to be an almost immediate increase in the magnitude of cross-border shopping. I do not say that all the problems rest with the federal government.

The Chair: Can you get to the question?

Mr Jamison: I certainly do not intend that to be the case, but what I am saying is basically that gasoline may be an issue that is probably more identifiable than most, but the issues are broad ranging when dealing with cross-border shopping. Do you feel that way?

Mr Assaly: The free trade thing came along which gave everybody the idea that this federal government had said: "We're going to open the borders. Everybody can go and shop. We're going to lower the tariffs." That was not the intent. It was meant for commercial business but they have not kept it like that, because the federal government seems to consider cross-border shopping strictly a traffic problem. That is all they are concerned with, getting people over the border faster. It is a traffic problem with Mr Jelinek's department; it has nothing to do with taxes or collecting duties or anything else, it is a traffic problem. We cannot get anywhere with them so we are coming to you and saying that the gasoline is where you can attack it right now.

We know there has been a social commitment made that we want to tax people for alcohol and cigarettes; that has been a social choice. We made that choice for reasons of health and everything else. Fine, we accept that. But the retailers in this province, whether in shoes, clothing or in any field, can compete, in spite of what the Globe and Mail and some of them have said in their columns. I attacked one of their columnists last night, I had a tough time not to attack him physically because they write about our service.

We can compete with the Americans on service. We can compete on quality. We can compete on everything. We are interested in the people buying here -- not, Mr Sterling, collecting the duties at the border because they have shopped there. We want a reason for them to stay here and the reason for them to stay here is not to tax the hell out of them with the gasoline. We do not want them to go over there and shop at all. They have a choice. But if the choice is on service and on quality and all those other things like price -- we can compete on price, believe me, and we are doing it now if you will see the ads that Bata and Radio Shack and I run myself on Samsonite luggage and everything -- we can compete.

1610

But you have to do something to keep those people in Canada and the only way you are going to keep them here is by lowering the gasoline tax. The bridge right out here at 6:30 in the morning is lined up with everybody who has a pickup truck, tandem truck, car or anything on the way to the States. And if you talk to the Petro Canada dealer on the corner there, he has this big place, he tells me in the morning they are lined up at his pumps to take fifty cents or $1 worth of gas to get across to fill up in the States and get back. He cannot operate like that.

You people, the government, have to do something about gasoline taxes. We cannot wait for all the very complicated problems about our distribution system and all these other things as to whether we are going to have a new way of distributing merchandise and new wholesale and manufacturing systems. We cannot wait and you cannot wait, because you are not going to have any dollars to keep up all the policies you want and all the social benefits we deserve. You are not going to have the dollars to do it if you do not keep those people buying here.

You are the only ones who can do it and I am here talking in spite of the fact that my confrères said, "You're wasting your breath, George," and I said, "No, these are our leaders, they're the people we've elected, they're supposed to be smarter than me and smarter than you, so they should damn well know what has to be done." You are the government. The opposition better get on their high horse too and raise a little hell about it because between all of you, you have to do something because it is now a crisis situation for the whole province, not just the border towns.

The Chair: I would like to thank you for your presentation. Maybe if you stayed around a few minutes some of the members would like to talk to you.

Mr Assaly: I would be glad to talk to any of them.

Mr Villeneuve: Have you your union rep with you?

Mr Assaly: You know better than that.

The committee adjourned at 1612.