Legislative Assembly of Ontario

PRE-BUDGET CONSULTATIONS

CONTENTS

Thursday 7 March 1996

Pre-budget consultations

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président: Chudleigh, Ted (Halton North / -Nord PC)

Vice-Chair / Vice-Président: Hudak, Tim (Niagara South / -Sud PC)

Arnott, Ted (Wellington PC)

*Brown, Jim (Scarborough West / -Ouest PC)

*Castrilli, Annamarie (Downsview L)

*Chudleigh, Ted (Halton North / -Nord PC)

Ford, Douglas B. (Etobicoke-Humber PC)

*Hudak, Tim (Niagara South / -Sud PC)

*Kwinter, Monte (Wilson Heights L)

*Lankin, Frances (Beaches-Woodbine ND)

*Martiniuk, Gerry (Cambridge PC)

*Phillips, Gerry (Scarborough-Agincourt L)

Sampson, Rob (Mississauga West / -Ouest PC)

*Silipo, Tony (Dovercourt ND)

*Spina, Joseph (Brampton North / -Nord PC)

*Wettlaufer, Wayne (Kitchener PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Bassett, Isabel (St Andrew-St Patrick PC) for Mr Arnott

Carr, Gary (Oakville South / -Sud PC) for Mr Sampson

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

Also taking part / Autres participants et participantes:

Stockwell, Chris (Etobicoke West / -Ouest PC)

Clerk / Greffier: Franco Carrozza

Staff / Personnel: Alison Drummond, research officer, Legislative Research Service

The committee met at 1003 in room 228.

PRE-BUDGET CONSULTATIONS

The Chair (Mr Ted Chudleigh): We will call the meeting to order. I'd like to welcome the committee back. The amendments to the report were circulated, I believe, yesterday afternoon to most members. The changes have been highlighted. I'm in the committee's hands. Should we go through them one by one?

Mrs Margaret Marland (Mississauga South): I would suggest, Mr Chairman, that we ask people if they have any changes or additions or comments on the revised report. I think that would be a faster way to deal with it, so we can go right to the page that they might want to address.

The Chair: If we could start at the lowest page number, who would have any amendments or changes or concerns within the first 10 pages, or within the first five pages?

Ms Isabel Bassett (St Andrew-St Patrick): We do have a change on page 2.

The Chair: Page 2. Are there any changes to page 1 then?

Ms Bassett: Ms Marland is going to do it, given my voice.

Mrs Marland: On page 2, the top of the page, obviously the highlighted area. Just to lead into that, if you go to the bottom of page 1, you'll see that the paragraph starts on the bottom of page 1 and reads, "Part of the minister's presentation," and then it says, "He noted..." etc. So when you get on to the top of page 2, it's still quoting the minister, and when you get to the last sentence of page 2, "Ontario's per capita provincial spending" -- I think, if I'm correct, that was your sentence, Ms Lankin. I would like to suggest that Ms Lankin's sentence go into another paragraph since it's not attributable to the minister, and then I do have an addition. Is it acceptable that we put that into another paragraph?

The Chair: Are there any concerns about placing that final sentence into another paragraph?

Ms Frances Lankin (Beaches-Woodbine): I guess it depends on where it gets placed.

Mrs Marland: No, no. Just right there.

The Chair: I understand it's right there.

Mrs Marland: Just to start another paragraph.

Ms Lankin: Sure. That's fine.

Mrs Marland: Okay. Now then, I would like to add, and if you want this in another paragraph or following Frances's sentence -- it probably should be another paragraph, I guess. If you have your Hansards, I'm referring to page 1115-2 of Hansard of the first day, still in the minister's comments.

Ms Lankin: What page number again, please?

Mrs Marland: Page 1115-2. It's the top of the page. I've only Xeroxed mine because I didn't bring the Hansard up. I'll read it to you. I was going to add, "However, combined" -- the "combined" is right out of Hansard -- and it says, "However, combined provincial-local program spending in Ontario was higher than average per person for all provinces in 1993-94 and in each of the three preceding years prior to 1993-94." Have you found it?

Mr Tony Silipo (Dovercourt): That's a minister's reference, is it?

Mrs Marland: Yes.

Mr Silipo: I would want it to be clear that it was, Mr Chair, because I don't think I agree with that.

Mrs Marland: You may not agree with it, but I'm just adding it because --

Mr Silipo: Oh, no. I'm not quibbling with the fact that the minister said that. I just want to be clear that if we're putting it in, it's under the context that the minister said that, because I think he's wrong.

Ms Lankin: I was going to actually object to the addition on the basis that all of the information which you've quoted from the minister that's already been incorporated into the draft report is with respect to Ontario. If in fact you want to start making combined comparisons, provincial and municipal, for example, with respect to debt loads, we know that there is a very different balance in other provinces where municipalities have taken on a greater proportion of debt than here in Ontario, where we have tended to maintain the debt at the provincial level. Quebec is a very good example of that, a very high level of indebtedness at the municipal levels, and in fact at the provincial level there as well.

We're either comparing provincial stats, or we're comparing combined stats, and that would mean going back and including a lot of other information. While I understand the political point that you're attempting to make, we added one sentence which gave a slightly different perspective on all of the above information that the minister had put forward on provincial debt, accumulated debt. We added one sentence which gives it a bit of a broader perspective. It says, "However, look, this is also a factor."

If you want to make a provincial-municipal comparison, then I think the appropriate way to do that is to go back and do that on issues of debt as well. So I would encourage you to drop that suggestion at this point in time. I don't think it contributes greatly to the public's understanding of the situation. I think it is a confusing comparison if you're not consistent all the way through in terms of combined municipal-provincial statistics.

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Mrs Marland: If I may respond, Frances, the sentence before yours says, "Ontario's public debt interest in 1995-96, at $8.9 billion or 18.8% of revenues, is the second highest among all provinces after Nova Scotia at 19.3%."

We already have talked in this paragraph about all provinces, and my addition simply says combined provincial-local program spending in Ontario was higher than average per person in all provinces.

Ms Lankin: I'm sorry. Maybe I wasn't clear.

Mrs Marland: No, I hear what you're saying about the combination, provincial and municipal.

Ms Lankin: Your response to me was that in the sentence before the per capita provincial spending comparison of provinces you were looking at public debt comparison of provinces. I agree with you; that the exact point I'm making. The addition that you want to make starts to look at per capita spending on a combined analysis of provincial and municipal. My point would be then, if you want to contrast that, you need to contrast it to a combined provincial-municipal debt comparison, which is not what this paragraph is all about. This is all about interprovincial comparisons, not combined municipal-provincial.

Ms Bassett: Ms Marland makes a point, but I think we should allow Ms Lankin's point and take out that last reference. But we are going to have this sentence made separately, if that's all right.

Ms Lankin: That's fine.

The Chair: Other changes?

Ms Bassett: On page 2.

The Chair: That's an additional change on page 2, Ms Bassett?

Ms Bassett: Yes, that's the only change on page 2, right.

Ms Lankin: So the only change on page 2 is to make that sentence a standalone paragraph.

Ms Bassett: That's right.

The Chair: Who would have the next change? Anything up to page 5?

Our writer would like to ask a question about page 3.

Ms Alison Drummond: At the bottom of page 3, just three lines up from the bottom, it talks about the Bank of Nova Scotia's presentation, about the bank's citing the study of OECD countries. I was just wondering if the committee wants that study discussed both on page 3 and on pages 10 and 11, because that is the same study that they were citing, just in terms of whether the committee wants that discussion basically repeated. Both summarize the study.

Ms Bassett: I think as long as you indicate that it will be discussed below on pages whatever -- and then if you refer, when you get to the second reference, "as discussed above."

The Chair: Anything before page 10?

Mr Gary Carr (Oakville South): Just a second, Mr Chair.

Ms Bassett: We'd like to just add --

The Chair: What page are we on?

Ms Bassett: We're on page 9. If we're going to add to the new section that was created called "Job Creation" which Alison did, we just wanted to add -- and I want to read it out. It comes from Hansard 15, page 5, I think F-336: "Now we're at the forefront in terms of profitability and their ability to generate income and output in this province, in this country."

That's just carrying on with the Bank of Nova Scotia's -- the expert witness. His quote is just carried on. Then we'd like to add, from the Canadian Chemical Producers, again from Hansard, Wednesday, February 7, page 1010-2. This is the quote:

"Eventually, the spending restraints and other positive government policies will help the private sector to grow and to offset the effects of government restraints. In the shorter term, the promised reduction in personal taxes will help cushion this blow."

Ms Lankin: Where are we?

Ms Bassett: I'm on the Canadian Chemical Producers' Association from Hansard, Wednesday, February 7.

Ms Lankin: To be added where? Sorry, Isabel.

Ms Bassett: To be added on page 9 to the job creation section that Alison was building.

The Chair: So it would be inserted just above the monetary policy?

Ms Bassett: That's right.

Mr Gerry Phillips (Scarborough-Agincourt): Just so I'm clear on where the job references are there in those comments. The first comments were the Bank of Nova Scotia saying they would see job creation as a result of that. I thought the chemical producers' comment you just read was around income as opposed to jobs.

Ms Bassett: I'd have to go back and look at the context.

Ms Lankin: Could you give us the reference again? I've got the Hansard here.

Ms Bassett: I'll get out the Hansard, February 7, 1010-2.

The Chair: That's Instant Hansard that she's referring to.

Ms Lankin: What's the lead-in to the paragraph?

Ms Bassett: The lead-in to the paragraph is, "Eventually, the spending restraints and other positive government policies."

Ms Lankin: Is this in their presentation or in response to a question?

Ms Bassett: It's in their presentation.

Ms Annamarie Castrilli (Downsview): Is that the beginning of the paragraph, "eventually"?

Ms Bassett: Yes, the part that we were inserting is in the beginning of the paragraph.

Ms Lankin: I can't see that in Hansard.

Ms Castrilli: There's no paragraph that starts with "eventually" in their presentation.

Ms Bassett: It's the fifth paragraph from the bottom. Oh, no, because they don't have Instant. There's no point looking at it. They've got the original.

The Chair: It's my understanding that the copy Ms Bassett's working from is the uncorrected copy, and the lead-in to the paragraph may very well change because of a correction.

Ms Castrilli: That's our problem.

Ms Bassett: We could go back to the part where you see, "A CCPA score card and text assessing the competitiveness."

Mr Phillips: We have it. It is not in the context of jobs that they're mentioning this, is my --

Ms Bassett: Okay. We won't push that, Mr Phillips. On second reading of the whole thing, I think you were right.

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The Chair: Okay, the chemical quote is withdrawn.

What about the continuation of the comment to the Bank of Nova Scotia? Does that stand?

Ms Castrilli: Could we have that again? We didn't really follow it. What's the Hansard citation?

Mr Phillips: This is a younger Mr Carr here.

Mrs Marland: That's what I said.

Mr Carr: Margaret has been bugging me for years to keep it short.

The Chair: Spring is here; we're shearing these days.

Mr Carr: She bugs me and Mike about our hair and I listened to her. The Premier, I don't think, did.

You wanted the quote? It's, "Now we're at the forefront in terms of profitability and their ability to generate income and output in this province, in this country."

Ms Castrilli: And that occurs where?

Mr Carr: February 15, page F-336.

Ms Castrilli: I don't think that's their presentation. That's in response to a question, is it? I think it is. It's not the text of their presentation.

Mr Carr: I'm not sure if it was in response to a question or not.

Ms Bassett: No, I don't think it was. I don't recall that it was. It was a continuation of the quote pretty well that was put forward to start with.

Ms Castrilli: Could you just give us that quote again? We're having some difficulty locating it exactly. It's in a response, yes?

Mr Carr: It is in a response.

Ms Castrilli: It's the paragraph that starts "obviously," is that the one?

Ms Lankin: No. "You have to remember, too, if I could add just one comment...." The first paragraph in Mr Gempel's response on F-336 and it's the last sentence in the first paragraph.

The Chair: Have we found the quote?

Ms Castrilli: Yes, we have, but I don't know that it helps.

Mr Phillips: My only challenge, Mr Chair, is that I don't see any reference to jobs in there. I realize it's something you may want to put in the report somewhere under corporate profitability, but I can't find the word "jobs" in there, nor was he necessarily correlating profitability to jobs, that I can see there. It just seems out of place under "Job Creation."

Mr Joseph Spina (Brampton North): I concur. It doesn't have any real -- other than there are impediments. Those elements ought to be referred, I think, in a different area that can be addressed in a whole lot of other ways.

Ms Bassett: It probably doesn't matter, but since Alison already brought up the subject, at that point we were just continuing on to get the thrust of the whole discussion; that's why we put it there.

Mr Monte Kwinter (Wilson Heights): The concern I have with that particular quote is that if you read it in its context, he talks about going through this terrible recession and now that that's behind us, we're at the forefront of things changing; not that it has changed, but we're at the forefront. It could change and it could not change. I just think if we're using it, we have to make sure that it isn't someone saying things are going to be much better. He's saying that we've just gone through this terrible recession, we've downsized, we've got sort of the basis where we should be able to go forward. It's a little bit different than saying that we are going forward.

Mr Phillips: Not to be provocative at all, I hope, but I think actually what the Bank of Nova Scotia was telling us was that the manufacturing sector in Ontario for the last probably 10 to 15 years has been investing heavily in capital, and even though output has been going up, employment has been going down as manufacturing picks up the benefits of capital investment. I think what the Bank of Nova Scotia was alerting us to is that the service sector is on the edge of that as well. So I think they were actually alerting us to a problem in job creation rather than almost the opposite of saying that we're on the verge, certainly in the financial service sector, of significant job creation. So I guess that's just another reason why I think it may be contradictory almost to use the Bank of Nova Scotia's comments on the fiscal side to support job creation when the witness I think was suggesting that we should anticipate potentially fewer jobs in the financial service sector at least.

Ms Lankin: I don't know if it helps at all, Isabel, but in reading that actual quote, it doesn't really follow on from what Alison had recapped; in fact, it precedes it. Alison's reference to the Bank of Nova Scotia actually is from the paragraph that follows the sentence you were going to insert, where they go on to talk about the rationalization in the manufacturing sector, now starting to see "companies able to generate better earnings performance and maintain high levels of output." But we know there haven't been jobs as a result of that. It then goes on to say the service industry is going through it right now and then makes the case that in fact governments should do it too; it's now time for governments. So it's really not about job creation or anything.

Ms Bassett: Let's take it out.

The Chair: Withdraw it? Further changes? I note a sentence removed on page 10. Page 11. We move through a section without many changes. Does the government have any other changes they wish to propose?

Ms Bassett: No. Those are all our changes.

The Chair: Are there any changes from the opposition that they wish to comment on or propose? Any changes from the third party that they wish to propose?

Mr Silipo: We consider ourselves to be the opposition.

Mr Phillips: Let's not get into a scrap here.

Mr Silipo: The Chair was being picky; I thought I'd just respond.

The Chair: The Chair is reminded of his position as Chair and makes no comment, but it's probably the most difficult thing I've done.

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Ms Lankin: Mr Chair, I'd tell you you were doing a good job too, but the last time I did that to Jack Carroll he got heck from his committee members for weeks afterwards, so I won't say that to you.

The Chair: Thank you, I appreciate that.

There being no further amendments, are we prepared to move the report?

Mrs Marland: No, we're into recommendations.

The Chair: Oh, we want to make some recommendations. The parties were asked to bring recommendations with them. I assume we have some of those. Perhaps now would be a time to distribute them.

Ms Bassett: We have our recommendations, but we didn't expect to be through so quickly. A new typed-up copy is coming over. Can we start and I will read out the recommendations one by one, that I just do one and we can discuss it? Whatever you want, Mr Chair. Do you want me to read them all?

The Chair: If we have a copy of them, we can have them copied very quickly. I think it's difficult to discuss something after it's been read as opposed to --

Mrs Marland: It's much easier to have it in front of you. That's why I was looking forward to having theirs in front of us. We have a copy of ours, but we have some changes and that's why it's being retyped.

Ms Bassett: We have the recommendations. We're just going to get them copied. Could we have a five-minute break just to keep you from waiting for five minutes?

The Chair: A five-minute break? If you'd like to give your recommendations to the clerk, we can have them all copied.

Mr Phillips: Well, we're ready to go. Do you want to go?

The Chair: Okay, we'll start with the Liberals' recommendations.

Mr Wayne Wettlaufer (Kitchener): Mr Chair, it might help to have a five-minute recess anyway. We might want to avail ourselves of the facilities.

The Chair: You're on your own.

Mr Phillips: Do you want me to begin, Mr Chair?

The Chair: Please, Mr Phillips.

Mr Phillips: What we've tried to do here is to put forward recommendations that we hope can get all-party agreement, so we've kept it quite simple. With one exception, I think they're plans the government plans to implement anyway, so I don't think the government members will have difficulty with them. Rather than having a government report and two minority reports, I think it's best if we can find a way to get one report. We've got four recommendations here. If you want me to read them into the record, I'd be happy to do that.

Mrs Marland: Just before you start, Gerry, I wanted to ask you if you'd given that first sentence to Mr Martin yesterday.

Mr Phillips: Actually, I got elected here, so I focus almost all my attention here. I'm full-time at this job.

"(1) Job creation should be the most important criteria against which the budget is measured. The new government has committed itself to seeing 725,000 net new jobs created between January 1, 1996, and December 31, 2000. This budget must indicate the plan to achieve this.

"(2) The people of Ontario were assured of three clear program commitments. They are as follows: `the plan guarantees full funding for health care, law enforcement and education spending in the classroom.' We expect to see the budget honour these commitments.

"(3) The government should cancel its planned $5-billion tax cut in order to focus on dealing with the deficit. The people of Ontario are prepared to join together to fight the important battle of the deficit, but they are not going to join together if a majority of the expenditure cuts are used to fund the tax cut, especially when a majority portion of the $5-billion tax cut goes to families making over $90,000.

"(4) The government should incorporate in the budget the budget recommendations of the government-appointed Ontario Financial Review Commission."

The Chair: Comments?

Mr Spina: I don't know whether Mr Phillips wanted to comment on each of them and then we respond in turn. How do you want to proceed with this?

The Chair: Certainly. Would you like to have a few minutes to speak to them, Mr Phillips?

Ms Lankin: Mr Chair, a procedural recommendation. It strikes me that while we eventually will have to deal with the recommendations individually, it might be helpful to have all parties' recommendations read into the record. By the time we conclude doing that, the government might have their recommendations here. Then we all have a sense of the nature of the tone of all the recommendations that will be before us. There may be some that are quite similar from all three parties, or two of the three parties, that we might want to combine and/or support. I think that might be a helpful way to proceed.

The Chair: Would you agree, Mr Phillips?

Mr Phillips: I don't have a problem with that, as long as I have the chance to speak first on these things.

The Chair: I'll see to it.

Mr Phillips: I appreciate that.

The Chair: Ms Lankin, would you like to read yours?

Ms Lankin: Thank you very much. I would like to read the report into the record. We do have some background rationale, which I'll read through fairly quickly, but I would like it to form part of Hansard.

"The government's economic direction, combining drastic cuts to public jobs and services with a reckless tax cut, is dangerous for Ontario. It risks depressing an already fragile economy, as the committee heard from expert witnesses.

"In his Common Sense Revolution, Mike Harris promised a job creation plan to `generate economic growth and investment and create more than 725,000 jobs.' With the government's approach, there is no hope of achieving this promise of 725,000 new jobs. In fact, these economic policies could push Ontario into recession and produce layoff notices for many thousands more Ontarians.

"The proposed Tory tax cut, while putting money in the pockets of the richest Ontarians, would cost $28 billion over the next five years, based on the plan spelled out in the Common Sense Revolution. Just the extra interest on money borrowed to fund the tax cut will cost the people of Ontario $4 million per day.

"Meanwhile, the government is already slashing jobs and public services far more than is necessary, all to pay for this tax cut. The Common Sense Revolution's guarantees of full funding for health care and classroom education have given way to the first wave of layoff notices in Ontario schools and hospitals.

"Unfortunately, the government's lack of openness has made it extremely difficult for this committee to do its job. The Finance minister has provided no medium-term data, no growth projections and -- worst of all -- no information about the costs of the impending tax cut.

"But even with the sketchy information available to the public, the committee must urge the government to abandon its job-killing policies, invest in economic development, consider the impact on the most vulnerable and adopt a balanced course of deficit reduction.

"Each of the expert witnesses before this committee pointed to the current fragility of the Ontario economy. Each of the experts -- including the government's own witness from Canada Trust -- said the Mike Harris spending cuts are having a negative impact on retail sales and jobs, dragging down the overall economy. `Ontario is attempting to downsize government's share of the GDP in the province at a time of relatively weak economic activity,' said the Canada Trust witness. `I think that this does run the risk of tipping the province into a period of sustained sluggish growth.'

"According to the expert witnesses, Ontario is experiencing at best a soft recovery marked by low job growth and weak consumer performance.

"The experts disagreed on the probable stimulative impact of a cut in income taxes, but they all agreed that the tax cuts will not be entirely translated into consumer spending. The eventual impact is subject to the overall strength of consumer confidence, which in turn is affected by the overall employment picture, yet jobs are being killed by the spending cuts required to pay for the tax cut.

"`The lack of specifics regarding the composition and timing of the tax cut makes analysis of its net impact difficult,' said the government's expert witness from the Bank of Nova Scotia. `There is no guarantee that Ontarians would fully spend their tax saving.'

"Only one expert witness provided a detailed econometric analysis of the combined impact of the government's agenda, demonstrating that it could translate into potential loss of 125,000 jobs. In addition, four of the five expert witnesses said the risk that a tax cut would prevent achieving a balanced budget was serious enough to warrant reconsideration of the Tory pledge to cut income taxes by 30%.

"After balancing all the presentations, the conclusion is clear. The plans outlined by Finance minister Ernie Eves in his opening presentation would not help achieve the government's promises of 725,000 new jobs and a balanced budget in four years. The government's plans would take Ontario in the wrong direction. Therefore we make the following recommendations:

"Recommendation 1: The Ontario economy is in real danger of slipping into recession. The government should take note of high unemployment and a depressed consumer outlook. Deep spending cuts will make the situation worse by killing jobs and destroying vital public services.

"Therefore, the government should embark upon a course of balanced deficit reduction to strengthen, rather than weaken, the province's economy.

"Recommendation 2: The government's promised 30% income tax reduction will not have the hoped-for stimulative impact on the fragile economy. The benefits of the tax cut will go primarily to the most wealthy, and there will be $28 billion of lost revenue to the province. This is the real explanation for the deep cuts the government is imposing in jobs and services.

"Therefore, the government should abandon its plan to introduce a cut in personal income tax and instead maintain a balanced deficit reduction plan.

"Recommendation 3: The economy requires some stimulative activity, as pointed out by all expert witnesses. The proposed tax cut would offer some stimulation, but this would be offset by the slashing of jobs and services needed to pay for its implementation, leading to a general decrease in economic activity.

"Therefore, the government should consider other stimulative tools, such as capital spending and investments in economic development to support growth in jobs and the economy.

"Recommendation 4: Consumer confidence, political stability and the overall level of training and health of the population are important considerations for increasing business investment.

"Therefore, the government should keep its campaign promises to protect vital public services, such as health care and classroom education, and restore the damaging cuts that are already causing thousands of layoff notices in schools and hospitals.

"Recommendation 5: The expenditure cuts announced to date have had the worst impact on the most vulnerable. Women, children, seniors, the poor, sick and the disabled have been hit the hardest. At the same time, the government's proposed 30% tax cut would benefit disproportionately the most wealthy in Ontario.

Therefore, the government should take into account its responsibility to all Ontarians in shaping a more balanced program of spending reductions."

The Chair: Thank you. Do we have --

Ms Bassett: No, we do not. We'll have them in five minutes, we promise, if we could recess.

The Chair: Could I suggest a five-minute break? Thank you.

The committee recessed from 1043 to 1053.

The Chair: Can we reconvene the meeting. I'm glad next week is March break. I think the committee needs a holiday, or at least a rest.

We now have a copy of the government's recommendations. Would someone like to read those into the record?

Mrs Marland: Yes, I'll read them.

"Recommendation 1: The government should honour its commitment to reduce the deficit and balance the budget by the fiscal year 2000-2001.

"Recommendation 2: The government should find the necessary savings needed to balance the budget.

"Recommendation 3: The government should reduce personal income taxes to stimulate job creation, investment and consumer confidence.

"Recommendation 4: The government should continue to eliminate red tape and unnecessary regulation and reduce the barriers to investment.

"Recommendation 5: The government should proceed with its plan to reduce the employer health tax burden on small and medium-sized businesses, Ontario's largest job creators.

"Recommendation 6: the government should consider creative initiatives such as providing tax support through crown foundations to assist various sectors in the necessary restructuring.

"Recommendation 7: The government should work with the federal government to end regulatory overlap by ensuring that only that level of government best suited to regulate a particular activity does so.

"Recommendation 8: The government should continue discussions with the federal government with a view to harmonizing Ontario's retail sales tax with the federal goods and services tax provided that any harmonization of the two taxes does not increase the tax burden on Ontarians.

"Recommendation 9: The government should honour its commitment to eliminate the gold-plated pensions of MPPs.

"Recommendation 10: The government should address the inequities and associated problems of the property tax system in Ontario.

"Recommendation 11: The government should define its core business, restructure to meet the needs identified and focus its resources on them.

"Recommendation 12: The government should review the regulations of provincially regulated financial institutions to ensure that such regulations do not constitute a barrier to accessing capital by small and medium-sized financial institutions. The government should also work with the federal government to ensure that federally chartered banks do not restrict access to capital for small and medium-sized businesses.

"Recommendation 13: The government should request that the federal government reduce federal programs to the same degree that the federal government is reducing transfer payments to provinces."

That's the end of the government recommendations to this report, and I so move.

The Chair: If each of the parties would like to make a brief comment, we will start with Mr Phillips.

Mr Phillips: I'm not sure whether you want to take each of our recommendations one at a time or want to try and cover all four recommendations. It may be a problem trying to cover all four with one comment, so I suggest we take them one recommendation at a time.

Our first recommendation, as I think the members recall, was around the jobs situation. I think all three parties accept -- I think we do -- that this is probably the number one issue in Ontario; certainly our party does. I think the number of 725,000 net new jobs over the five years is one the government has often used in the Legislature. I think it's the cornerstone of the platform, so I would think it's in all our best interests to make sure the government spells out in this budget its plans for how it's going to see that happen. This may be one recommendation that all of us can support; I think it's worded in a fairly non-partisan way.

The Chair: Would you like discussion on this and then we'll vote on them individually?

Mr Phillips: I suspect that may be the best way, because otherwise we're --

The Chair: Shall we proceed, then? Are there comments from the government or the third party?

Mr Silipo: We of course would support this particular recommendation. I find it really interesting when I look at the government's recommendations, and I know we're going to talk about those more specifically in a bit. While they reiterate a number of the promises made in the Common Sense Revolution, I would have thought one about recommitting themselves to the 725,000 jobs would have been first, or maybe second, right after the tax cut, but it's not there at all. There are 13 recommendations, and it's not there at all, and I think that's strange.

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We did hear through the presentations, particularly through the presentation the Finance minister made -- and we make this point in our recommendations and in our conclusion so far. We don't think the plans the Minister of Finance outlined will get this province to the 725,000 jobs, and that may be why we don't see that reflected in the recommendations from the government members. If we're wrong, and the minister and the government still believe in the 725,000 new jobs, we think there ought to be no problem on the government members' side in saying, as this motion says, that the budget should at the very least indicate how the government is going to achieve the 725,000 jobs and that job creation should be, as we believe needs to be the case, the most important criterion against which the budget is measured.

We didn't see that yesterday in the federal budget. I would have thought that would have been the time for Mr Martin to finally indicate what he was doing. I haven't seen a coherent plan yet on the part of this government, and I would expect, if there's going to be any kind of plan, that this budget coming up would be the time at which Mr Eves would choose to do that. A recommendation that simply says: "You said in the Common Sense Revolution, Mr Harris, that job creation is the most important objective, specifically 725,000 jobs. This motion commits you to it, recommits you to it, and the budget is the time for all of us to hear how you're going to achieve that" -- I would certainly urge people to support this recommendation and would find it strange if this was not unanimously agreed to.

Mrs Marland: I don't suppose, Mr Phillips, you would accept any change to your motion? We agree that job creation is an important criterion to be considered when the budget is being prepared, but we don't agree that it's the most important criterion. You probably wouldn't accept an amendment to that, would you?

Mr Phillips: Just give me some words. I think what we're trying to do is to get a series of recommendations that all three parties can support, so what would you like to say?

Mr Kwinter: May I be of some help? I haven't talked to my colleagues, but what about, "Job creation is an important criterion against which the budget is measured"? Do you have any problem with that, Gerry?

Mr Phillips: No. I think everybody understands that our caucus would say "the most important," but if that's what required to get support --

Ms Lankin: I just indicate that we would support that kind of change. We think it's important, if there's an opportunity, to have recommendations supported by all three parties, so wording that said job creation is an important criterion as opposed to the objection Mrs Marland had to the words "the most important criterion" -- I would indicate on behalf of our caucus that we agree with the original wording, but if that's what it takes to get the government caucus to support it, we would be fine in supporting that amendment.

Mr Phillips: We're all set.

Mrs Marland: I'm suggesting that it would be exactly what Mr Kwinter said, that job creation is an important criterion, but we have to take out "against which the budget is measured." We agree with the statement that job creation is an important criterion and, "The new government has committed itself to seeing 725,000 net new jobs created between January 1, 1996, and December 31, 2000." We have to take out "This budget must indicate the plan to achieve this." The difficulty for us is that this is saying "this budget" and we're looking at a five-year period. Also, you will see in our recommendations a recommendation to deal with job creation as well.

Ms Lankin: Is that number 3?

Mrs Marland: That's one of them.

Mr Phillips: Just so I'm clear, you would say, "Job creation is an important criterion against which the budget is measured"?

Mrs Marland: No.

Mr Phillips: So it's just an important criterion. Okay. Then, "The new government has committed itself to seeing 725,000 net new jobs created between January 1, 1996, and" -- that's okay.

Mrs Marland: I'm sorry. I'm misleading you. I can't even read my own writing. I didn't take out "against which the budget is measured." I'm sorry.

Mr Phillips: Okay. Good.

Mrs Marland: "Job creation is an important criterion against which the budget is measured." Just a minute. I have to go back to what I said originally: "Job creation is an important criterion." Then, instead of saying "The new government has committed itself," because we know it has, we think it is important to say, "The new government should be committed," because in our CSR we committed, so this is reinforcing. Anyway, I don't think you're probably going to want our --

Mr Silipo: What about amending that to "The government should honour its commitment" taken from your own recommendation?

Mr Kwinter: Again trying to be of some help --

Ms Lankin: Sorry, Mr Chair. Just before Mr Kwinter proceeds, I would like Ms Marland to finish the sentence. I'd like to know what you're prepared to accept in this recommendation and not. You were dealing with the second sentence.

Mrs Marland: In the second sentence we're saying, "The new government should be committed to seeing 725,000 net new jobs created between January 1, 1996, and December 31, 2000."

Ms Lankin: And the last sentence?

Mrs Marland: We can't leave in, "This budget must indicate the plan to achieve this." As I said, the reason we can't do that is because we can't confine this budget. When we're looking at a five-year span, we can't confine this budget to achieve that.

Mr Kwinter: If I could address Mrs Marland's comments, I think to say, "Job creation is an important criterion," period, really doesn't say anything. In what context are we talking about? It would seem to me that if you accept that job creation is an important criterion in formulating a budget, whether you want to measure it against it -- that was a criticism of the federal budget yesterday by a lot of parties, saying they didn't address job creation. To just say, "Job creation is an important criterion" to me doesn't say anything. That's a nothing sentence.

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Mrs Marland: I agree.

Mr Kwinter: I haven't finished yet. I just want to help a little further along. You say, "We've already said we're committed to it," so why would you want to fudge those words? What you might want to do that might help you is in the last sentence. Rather than saying, "This budget must indicate the plan," maybe you could say, "This budget should indicate the plan to achieve this," which isn't as onerous. In one it's "must," and this one is "should."

Ms Lankin: I'm seeing some heads nod over there. If there's agreement, I'd like to know what the government members are agreeing to before I start to --

Mrs Marland: I can understand why.

The Chair: Mr Silipo?

Mr Silipo: Maybe, Mr Chair, to sort of bolster more nodding of heads on the other side, could I help the government members along by reading to them some words that will give them some comfort.

"Creating 725,000 jobs is what the Common Sense Revolution is all about." That's on page 3 of the Common Sense Revolution below a chart that shows what they want to do. It starts out: "A Harris government will immediately implement a five-point job creation plan. This plan will generate economic growth and investment in Ontario and create more than 725,000 new jobs."

The commitment is pretty clear. What this motion does is ask people to live up to that commitment and ensure that the budget is measured against that very key commitment. The five-point plan was all aimed at getting the 725,000 new jobs according to the government's promises during the election, not the other way around.

I find it odd even that the government members have difficulty saying, "Job creation is the most important criterion," because their Common Sense Revolution document says exactly that. It says that's really the objective and all the other things are ways to get there. As others have indicated, if the government members are now hesitant to talk about job creation as the most important criterion and can only accept this as "an important criterion," I find it a bit odd, and I want my position very clearly on the record.

I very much prefer the original wording in this motion because I think it does reflect more directly what the government and the Premier have been saying throughout the election and since the election, that creating the 725,000 jobs is what the Common Sense Revolution is all about. If that's what the Common Sense Revolution is all about, in their own words, that should be clearly reflected in the budget, which is going to be their first budget, as they put it. I'm not sure we should even be deviating from that, but if we're going to deviate from that, we shouldn't soften up the expectations any more than that.

Mrs Marland: I don't have my CSR in front of me, but I think we also talk in other parts of the CSR about eliminating the deficit and reducing the debt. I don't know that we said it's the most important criterion, did we? I know it's equal with our deficit reduction and reducing the debt.

Ms Lankin: If it's helpful, Ms Marland, balancing the budget is one part of the five-point plan the CSR sets out to accomplish 725,000 new jobs. The first is to "cut provincial income taxes," which you have set out in your recommendations. The second is to "cut non-priority government spending," which you have set out in your recommendations. The third is to "cut government barriers to job creation, investment and economic growth," which you have set out in your recommendations. The fourth is to "cut the size of government," which you have set out in your recommendations, and the fifth is to "balance the budget," which you have set out in your recommendations.

The only thing you haven't set out in your recommendations is the recommitment or a statement that the Finance minister and the government should be honouring your commitment to the creation of 725,000 jobs. As my colleague Mr Silipo has said, right at the beginning, the first full chapter of the Common Sense Revolution, the first chart, it says, "Creating 725,000 jobs is what the Common Sense Revolution is all about."

It is passing strange that now we have hesitancy on the part of the government members to commit to a recommendation to their government to honour that commitment, to say it is the most important criterion, which in fact in the Common Sense Revolution is set out as the most important goal, and all the other things contained in your recommendations are in the Common Sense Revolution in support of achieving that goal. Quite frankly, if you don't set out a plan, you're not going to get there by the year 2000. That's not to say, Ms Marland, that in your second budget or your third budget or your fourth budget you won't have refinements to the plan, you won't build on the plan, but clearly your first budget has to set out what the plan will be to accomplish that through the years 1996 to 2000 or you will not have any opportunity of achieving those numbers.

I really worry about the backsliding we're seeing on the part of the government members here in terms of committing themselves to what was the key promise in the Common Sense Revolution, which clearly is the thing that most Ontarians are concerned about: the economy and jobs. Clearly, if we want to see the economy turn around, we heard from all the witnesses that consumer confidence is critical. Consumer confidence is only going to buoyed when there is a sense of security about employment. We would argue, and we will in our recommendations, that some of the elements of the Finance minister's plan tend to undermine that confidence, tend to risk sliding us back into a recession, and that would be harmful to achieving the goals you've set out yourself. I hope that on sober second thought the government members will take a look at the recommendation as it is worded and find that in their heart of hearts it's what they knocked on doors and said and there's no reason they can't support it today.

Ms Castrilli: I wonder if I could be helpful and back up a little. We've started to argue the substance of a revision and we're still not clear what the revision is. I wonder if maybe we could have Mrs Marland read the kind of wording they want and then we could proceed to debate.

Mrs Marland: Thank you, Ms Castrilli. That's very helpful. The opposition is very convincing, so here is the new amendment. We have listened. The recommendation would read as follows:

"Job creation is an important criterion against which the budget is measured. The government should work to see 725,000 new jobs created between July 1, 1995, and December 31, 2000, according to the five-point plan in the Common Sense Revolution."

Ms Castrilli: That's "The government should"?

Mrs Marland: "The government should work" -- well, we said "to see" because you had said "committed itself to seeing." I think we should probably say, "The government should work to create 725,000 new jobs between July 1, 1995, and December 31, 2000, according to the five-point plan in the Common Sense Revolution."

Ms Castrilli: You mean 725,000 net new jobs or --

Mrs Marland: Not net.

Ms Castrilli: You're taking out "net"?

Mrs Marland: It doesn't say "net" in the CSR. It says 725,000 new jobs in the CSR.

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Mr Phillips: This one is around jobs, so I just want to make sure the last sentence says, "This budget should indicate how the government plans to achieve this." Or is that what the last sentence is?

Mr Carr: Yes, "according to the five-point plan in the Common Sense Revolution."

Mr Phillips: That prejudges how they're going to do it. The purpose of this one is to focus on the jobs, so I would think we should just leave the wording as it is in my little thing. If you don't like the word "must," just say "should indicate."

Mrs Marland: No. Gerry, my wording is focusing on the jobs. It says, "The government should work to create 725,000 new jobs between July 1" --

Mr Phillips: I see that, yes. It's just the last sentence, which --

Mrs Marland: -- "according to the five-point plan in the CSR," which you just confirmed was --

Mr Phillips: Yes, but I think we're going to deal with those later. I think it should simply end by saying, "This budget...." as I've got it here. I don't know what the problem with that is.

Ms Lankin: If we are attempting to find language that all three parties can support, the recommendation on jobs should be a standalone recommendation. Many of the other recommendations of your own that you've put forward indicate the parts of the Common Sense Revolution that are part of that five-point plan. I will not vote for something that recommends the five-point plan, because I don't support your 30% income tax cut, so I think that's problematic for you if you want to see all-party agreement for the recommendation.

Ms Bassett: We were putting it in to make you happy, so let's take it out to make you happy. It doesn't matter to us.

Mr Phillips: That doesn't make me happier, but it's fine.

Ms Lankin: If I may come back in understanding how this will read, "Job creation is an important criterion against which the budget will be measured." Rather than "The new government should create," I would pick up on the wording you have in all your other recommendations, which would be, "The new government should honour its commitment to the creation of 725,000 net new jobs between July 1 and December 31," and then, in terms of what the recommendation is, there should be some plan in the budget to begin to achieve this, or something. I don't know exactly what you were posing in the last sentence there.

The Chair: Are we ready for the question?

Ms Castrilli: I'm not sure what the question is, Mr Chair.

Mrs Marland: Shall I try again?

The Chair: We're going to have another reading.

Mrs Marland: Now, watch this:

"Job creation is an important criterion against which the budget is measured. The government should honour its commitment to create 725,000 new jobs between July 1, 1995, and December 31, 2000."

Ms Lankin: You're uncomfortable with anything in the recommendation that suggests "The budget should reflect this" or should speak to this or should start to set out the plan? I'm not sure what your objection was to the last sentence, or can it remain intact?

Mrs Marland: No. The last sentence is difficult for us, because we don't believe it will only be this budget that will be involved. This is a budget for 1996; it's not a budget for the next five years.

Mr Phillips: In the interest of trying to get something we can all agree on, because we are commenting on recommendations for the budget, I think it's implied that the budget should reflect these recommendations. We would prefer to have that line in, but if this is as far as we can get, I could live without that last line. It is a series of recommendations impacting on the budget, and it is, I think, implied that we will evaluate the budget on the basis of how it's doing against the 725,000.

The Chair: Thank you very much. Are we ready to vote on the amendment to the original recommendation?

Mr Carr: Mr Chairman, on a point of order: We may not get through all of these and we'll only end up with potentially one recommendation. Can we try to move forward and get agreement on 3, 4, 5 and 7 before we vote on them, say, "This one's agreed to" and move on? What I could see happening is that we'd only end up with one recommendation, that one or whatever. Why don't we do it that way? We'll agree on that when it's all set to go. We'll keep moving forward and see how many we can get.

The Chair: Is the committee in agreement with that process?

Mr Phillips: The only challenge you might have, Mr Chair, is that I think we all know we're in agreement, but we've never actually agreed to it.

Mr Carr: No. What I'm saying is that we wait and vote on all of them together, the four or five recommendations that we can get a consensus on. The reason I'm saying that is that we obviously want to add our recommendations that are going to get to the jobs. I personally -- I haven't talked to them -- am uncomfortable talking about creating the jobs if we don't get the recommendations. Where we're going to run into problems is that our recommendations to create the jobs, in the whole job creation of the government, the five points, the biggest is the tax cut. We're going to be recommending to the government to create 725,000 jobs, but you won't let us do the tax cut which will create it.

What I'm saying is that we can still maybe agree without the tax cut in there and agree on some other things, but I just am uncomfortable. What you're asking me to do, and I don't know what the other members feel, is agree to create 725,000 jobs, but then you won't agree on how we should do it. That's why that last line, "according to the Common Sense Revolution" -- I understand why you don't want that in, but I just don't think we should be agreeing to it unless we can lay out what our plans are to create those jobs, and we may not get the recommendations of all three parties on it.

The Chair: Further comments?

Ms Lankin: Defer the vote.

The Chair: Defer the vote?

Mrs Marland: The reason I support what Gary is saying is that we have a five-point plan and --

Ms Lankin: We've agreed to defer the vote. Can we just get on to the recommendations, or we'll never get through them.

Mrs Marland: I just wanted to respond that obviously our job creation is tied to some other parts of the CSR, that's all, so if we don't get the other parts -- okay.

The Chair: The second recommendation.

Mr Phillips: Can I request a favour, that I could go to 4 and then back to 2? I'm trying to get recommendations that I think may get a consensus.

The Chair: Mr Phillips, they're your recommendations. You can do them in any order you want.

Mr Phillips: I really appreciate that. Recommendation 4: I think most members recall that the government appointed the Ontario Financial Review Commission. The Liberal caucus felt it had several important recommendations for the budget preparation. I believe at the time the Minister of Finance indicated general support for it, so recommendation 4 is worded "should incorporate in the budget the budget recommendations." There are other recommendations in this report that go beyond just the budget, I thought very worthwhile recommendations around things like: that the government provide, in its annual budget, deficit targets for the upcoming and the following two years; that the government provide in its budget a longer-term view of debt reduction targets; that the fiscal forecast be biased towards the cautious end. There were several, I thought, extremely important recommendations, and if they don't get out on the table now with some support from the Legislature, the minister may in the rush of things not incorporate them. That's the purpose of that, and the reason I move to it is because I have a feeling that recommendations 2 and 3 will engender some more debate, but on this one I think we may be able to get all-party agreement.

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Mr Wettlaufer: Gerry, generally we agree with you but, as you know, in any report there may be some segments of that report that you might not want to incorporate. So could we propose an amendment that the government "should consider incorporating," rather than the words "should incorporate"?

Mr Phillips: I don't have a problem with that, in that I can appreciate there may be detail that one in the cold, hard light of dawn one has looked at, but what I take from that is that the general thrust of the committee's report the government members would support, not necessarily our recommendations. So I think that may be useful. I was going to suggest something, "should incorporate the thrust of it," but if you're saying --

Mr Wettlaufer: "Should consider incorporating," instead of "should incorporate."

Mr Phillips: Yes. I have no trouble with that.

The Chair: There's agreement to recommendation number 4, to the amendment of it? Other comments?

Mr Kwinter: Can I just make a suggestion? Again, I haven't had a chance to talk to my colleague about this. I'm a little concerned about the term "consider" because the term "consider" is a very passive kind of a word. You look at it and you say: "Consider it. Well, we considered it. We're not going to do it." I would be a little happier if the government "should attempt to incorporate." It isn't mandatory, but at least it gives them a direction to say, "Here, here's the report; do your best to do this," whereas if you just say, "Would you please consider it," it would just seem to me that it just gives a little bit more direction without binding the government.

Mr Spina: With reference to Monte's point, I'm just wondering, as a rookie, what is the traditional situation? The committee really does put forward some recommendations, but historically it's my understanding that the Finance minister takes all of the recommendations into consideration and will attempt to normally, as a matter of course, implement the recommendations but the Finance minister always has the final say as to what they incorporate or do not incorporate. Is that the case?

Mr Phillips: That is true. In the final analysis, this is advice to the minister and the minister and the government essentially end up doing what they believe. But I think Monte's point is a good one, which is to say the committee is saying to the government, "You should attempt to implement these recommendations," as opposed to, "You should simply consider them as part of the background." So from our side it is I think the intent of the committee that many of these recommendations -- the committee says, "Yes, that's the direction we'd like to head." So if you could accept that, I like Monte's wording a lot better. In the final analysis, if they don't do it we would say, "Why didn't you do it?" and there would be a reason why they didn't do it, and that's the way the game works.

Mr Spina: So you're suggesting the minister could say, "Look, we attempted it but we didn't feel it was viable" for whatever reason.

Mr Kwinter: Yes, exactly.

Ms Lankin: I would say, in response to Mr Spina, in fact your arguments tend to support the original wording that Mr Phillips put forward, because all of our recommendations will be considered by the Finance minister and he will determine one way or another how to deal with them. I point out to you that you're not nearly so cautious in your recommendations where you say the government "should find" the necessary savings, the government "should reduce" personal income tax, the government "should continue to eliminate" red tape, the government "should proceed with its plan to" -- your recommendations are all fairly strongly, actively worded, and you know that the minister will consider those recommendations and may or may not adopt those recommendations as part of this budget plan.

Our recommendation says the government should incorporate the recommendations of the Ontario Financial Review Commission. Given that it is your government's commission and report, he will look at it, he will determine one way or the other whether or not he is going to support that. I tend to support the original wording. If you want to go along with Mr Kwinter's recommendation that the government should "attempt to incorporate," I can support that too. But remember, none of us get to write the budget. It's done in another office someplace and these are only recommendations.

Mrs Marland: Does the Minister of Finance write the budget, Frances?

Ms Lankin: Not usually, no.

The Chair: Mr Martiniuk. Gerry. And welcome to the committee, Gerry.

Mr Gerry Martiniuk (Cambridge): Thank you, Mr Chair. I don't want to waste your time because I was not here for your deliberations, unfortunately. I would have preferred to be here, in many ways. My difficulty is that I assume, by using the word "attempt," that this committee has in fact agreed, as a committee, there's a consensus to every recommendation in that report.

Ms Lankin: Dealing with the budget. Those are the only ones that are referred to.

Mr Martiniuk: Because I wasn't here so I assume there was general consensus that every recommendation -- and that's why the word "attempt" implies that. Otherwise, you'd have to fall back to "consideration" if you do not have unanimity, I would suggest.

Mrs Marland: We don't have any difficulty with "should attempt to incorporate." Let's just get on with it.

The Chair: Does the mover of the recommendation agree to the amendment?

Mr Phillips: Yes, I do.

The Chair: Shall we move on?

Mrs Marland: So it would read: "The government should attempt to incorporate in the budget recommendations of the government-appointed Ontario Financial Review Commission." Fine.

Ms Bassett: Could I just have it, before we move on -- we are in agreement -- but let's just read it out to make sure and then --

Mr Carr: Mr Chairman, if I might suggest something: Why don't we have these given to the clerk so that when we're done, as we go through this, including the one we agreed on, have him do them up so we've got in front of us the hard copy? That way we will have it in front of us and can read it rather than going back and forth.

The Chair: When we reconvene this afternoon, you're talking about?

Mr Carr: Yes, if we can get them.

Mr Phillips: What I believe what we have, not voted on, but kind of tentatively agreed, is, "The government should attempt to incorporate in the budget the budget recommendations of the government-appointed Ontario Financial Review Commission." So it's specifically the recommendations around the budget from the --

Mr Spina: The commission is us, though.

Mr Phillips: It was this, the Ontario Financial Review Commission.

Mr Spina: Okay. That's a different story.

Mr Phillips: Do you want me to move on to the next recommendation, Mr Chair?

The Chair: I believe that's the process we're following, I think.

Mr Phillips: Okay, we're back up to number 2 now, which I guess we'll call number 3. I realize the government made many commitments and I think the government recommendations that we've been given use the words "should honour its commitment" several times here. I see three times now where "the government should honour its commitment," "should honour its commitment," "should honour its commitment." To me, during the campaign and since the campaign, probably the commitment that has caused the most debate in the community has been around the commitment on -- and these are the words straight out of the government's document -- "The plan guarantees full funding for health care, law enforcement and education spending in the classroom."

I've coincidentally used the same language as the government does, "honour these commitments." So it's just doing what the government members have done in several other ones here, in putting in our recommendations the direction to the government to honour its commitments.

Mr Wettlaufer: I think what we'd like to do here is to achieve a consensus. We believe as a government that we must find the savings before we can make the spending. So what we would like to see is an amendment to the wording: "We encourage the government to fulfil its commitment over the term of its mandate to guarantee full funding for health care, law enforcement and education spending in the classroom."

Mr Phillips: The challenge I guess would be whether we are properly reflecting what the commitment was. I wouldn't want to be endorsing a recommendation that's different than what you promised. So that's the concern we have, because the language tended to be quite specific: total non-priority spending will be reduced by 20% without touching a penny of health care funding; other priorities of law enforcement and classroom funding will also be exempt. So the problem is -- I'm not sure I understand your wording -- that your recommendation may put us in the position of not following through on the language that you used.

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Mr Wettlaufer: Gerry, what we believe is that our difficulty is not going to be in cutting down the amount of money spent on health care; we believe our major concern is holding the line to $17.4 billion. We are committed to spending the money, but it's a matter of making sure that in certain areas we can achieve some savings so that we can spend it in other areas. We just feel that we have to achieve the savings first before we make the commitment to spend in other areas.

Mr Phillips: I'm just trying to get an idea. Are you saying you are going to cut classroom spending until you find the savings and then you'll put it back in the classroom?

Mr Wettlaufer: Right now, I was addressing it specifically to the health care issue. To the classroom, we are committed that we are not going to affect classroom spending.

Mr Phillips: We're agreed on that one then.

Mr Wettlaufer: Over the term of the mandate.

Mr Phillips: So you're not going to touch classroom spending, but would it be true on law enforcement?

Mr Wettlaufer: It's fulfilling it over the term of the mandate.

Ms Lankin: Just dealing with classroom education, Mr Wettlaufer, for example: "over the term of the government"? This is very different. I'm reading the Common Sense Revolution, "Classroom funding for education will be guaranteed." It doesn't say anything in there about over the term of the government. It doesn't say anything in there about cutting and then reinvesting in classroom education. It says, "That does not mean that savings cannot be found elsewhere in the education system." So there is nothing in the Common Sense Revolution that proposes a finding of savings in classroom education to reinvest in classroom education over the term of the government. That's not the commitment. I would find it very hard to support what I think is a rewriting of your commitments, a repositioning, some kind of revisionism that's taking place. We want to see that commitment lived up to, along with health care and law enforcement -- and, by the way, even though you didn't write it into the Common Sense Revolution, agriculture. Your Premier went out and said it directly to the farmers.

Mr Carr: In keeping with that, I don't have any problem with number 2, but let's expand it and go directly out of the Common Sense Revolution. For those who have it, page 7. We can work this in under health care.

Mr Phillips: Which edition? I've got all the editions.

Mr Carr: The fourth, final printing, with the big picture of Mikey on the front. What it does say, and we can expand it, "As government, we will be aggressive about rooting out waste, abuse, health card fraud, mismanagement and duplication." Page 7, directly out of the CSR, expands on it, because the health care was expanded. The next paragraph, and you don't want to get it too long, "Every dollar we save by cutting overhead or by bringing in the best new management techniques and thinking, will be reinvested in health care to improve services to patients." And under education, if we can expand that somehow: "Too much money is now being spent on consultants, bureaucrats and administration. Not enough is being invested in students directly." That is word for word directly out of the CSR. So I could agree to your number 2 if we expand it to include the wording exactly out of the CSR of what was meant when we talked about protecting health care and education. It would be unfair to do it in isolation unless you continue on, because then you get a full flavour of exactly what we said we would do.

The law enforcement one, I'm just quickly going to try and grab how we could expand on that. I don't know how we can do that right off the top.

Mr Phillips: I --

The Chair: Excuse me, Mr Phillips. I have Miss Castrilli.

Ms Castrilli: I guess I'm a little concerned with that. It wasn't what I was going to address myself to in the first place, but, you know, I'm looking at the same edition of the CSR that you are and I'm looking at --

Mr Carr: Word for word.

Ms Castrilli: And I'm looking at the letter that is signed by Mike Harris. It's part of the introduction, May 3, 1994, and it says: "This plan guarantees full funding for health care, law enforcement and education spending in the classroom." That's what we've done, that's what we've said. We said, "You should honour that commitment." You're now looking to --

Mr Carr: Expand it to exactly what we said in the CSR, word for word.

Mr Castrilli: You're editorializing. Let me speak to what I was going to respond in the first place, to Mr Wettlaufer. I'm not sure that it's the mandate of this committee to advise the government on all of its mandate. Our job here is to give advice on the budget. That's what we've been doing here. We've been having pre-budget consultation, listening to witnesses, gathering the information and giving our best advice. So I certainly would support us giving advice on the budget. I'm not at all sure that we should be giving advice on the next three or four years of the government's mandate. So on that basis, I would support the wording that is currently there.

Mr Spina: I just wanted to draw the attention to the Sweeney report, which was commissioned by the last government, where Mr Sweeney's commission identified that 47% of education funding was non-classroom-oriented. That is where we feel that any reductions in education would really come, and that is where the changes have to take place in the educational system, not the classroom. If we bring into account what is happening in current days, the problem really lies with the school boards themselves in right now covering their legal liability by giving the notices that they've been giving.

I would suggest -- I would, in fact, state that the pupil/teacher ratio is something that is bound by the collective agreement already, so any teacher layoffs cannot impact on that element of the contractual agreement. So that's where the education spending in the classroom is going to have to remain as a commitment because they are not going to be able to back down on that particular legal element.

I would suggest furthermore that a lot of the teachers who have received their notices in the past week are probably going to be hired back once they get the final funding commitment. So I don't think that our commitment to keep classroom funding is going to be impacted, because the cuts can be generated again at the bureaucratic level where 47% of the figures are outside of the classroom at this point.

Mr Silipo: I suggest to Mr Spina that he take a good look at where that 53% is being spent because he will find that a good chunk of that, in fact, is classroom spending. I have a lot of trouble with Mr Sweeney as well as Mr Snobelen in the suggestion that so much money is spent outside of the classroom. You can't run a school without a principal and a vice-principal, for example, and those are two elements not included in Mr Sweeney's calculations, interestingly enough -- and many others.

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But that veers from the point I wanted to make, which is that if the point here is to see if there are some recommendations we can agree with, I have a lot of trouble with simply rewriting every conceivable version of how people want to get these things in the Common Sense Revolution back into recommendations.

What we're trying to get here with respect to health care, law enforcement and classroom spending is the basic commitment the government made, reiterating that. The basic commitment, certainly as I read it here, was that under health care, "We will not cut health care spending." Under law enforcement it was, "Funding for law enforcement and justice will be guaranteed." Under education it was, "Classroom funding for education will be guaranteed." In each of those three I'm quoting directly from the Common Sense Revolution.

It's very true that in each of those areas there is language in the Common Sense Revolution that talks about reinvesting dollars. I don't think any of us are trying to pretend that isn't said; that is said. But I would not agree to something that says we're now going to now spell out all the different points that are under that, because some of those are things I'd completely disagree with.

There has got to be a way, if the government members agree, maybe just lifting those words, if that's what they want to do. We'd say that in the area of health care, "The government reiterates its position in this budget that there would be no cuts to health care spending, that funding for law enforcement and justice will be guaranteed, that classroom funding for education will be guaranteed, with the understanding that in each of those areas that would be in part done through savings found within those existing budgets." But the bottom line we're saying is that we want to reiterate through these recommendations the commitment the government made in the Common Sense Revolution, which was to guarantee funding for each of those areas.

Mr Carr: When you talked about the recommendations, yes, I think we should give the recommendations to the minister, but we also should be giving the recommendations I suggested in there about being aggressive in rooting out the waste, abuse, health card fraud, mismanagement and duplication. That last is the big part, because the savings as a result of hospitals being reduced in the Toronto area will be funding the high-growth areas -- we have 25 million in the GTA -- so the money is coming back.

I don't know how anybody can argue not recommending to the Minister of Finance that we be aggressive about rooting out waste -- I don't think anybody could disagree with that -- abuse, health card fraud, mismanagement and duplication. When we make our recommendation about protecting funding for health care, I think we should make a recommendation that is word for word from page 7 of the Common Sense Revolution and include that. I cannot agree to number 2 unless we expand on what we mean about some of the changes, because there will be a shift, funds shifted out of hospitals in the Toronto area, as they close, into long-term care. If you are just saying, "No, don't close any hospitals in Toronto," I can't agree to it. The way the motion reads now, that's what it seems to be saying.

I cannot see how anybody, of any political party, can disagree with the words and the provisions about telling the government to root out -- and I'll repeat them again -- waste, abuse, health card fraud, mismanagement and duplication. Then we are getting in the entire context of what was said in the Common Sense Revolution: We would protect it but we would do those things. For the life of me, I can't see how any member of any political stripe could be opposed to that.

When it comes to education, the wording we could use -- and it could be tightened up a little, however you want. But if you're going to quote from the Common Sense Revolution, quote the parts that are in there as well in talking about what we're going to do. With education, my recommendation would be to say that too much money is being spent on consultants, bureaucrats and administration and not enough is being invested directly in students, because that's why the cuts can be made. We're very clear, if you go through the Common Sense Revolution, on the $400 million we are taking out in the other sections of it. We said we would take $400 million out. We said we're going to leave junior kindergarten to the option of trustees. That's the Common Sense Revolution. We said we were going to get rid of the fifth year of high school. We said that in other parts. That's where the money is coming out. We even quote in there the $350 million of saving that's going to come as a result of that.

When you're going to be quoting from the Common Sense Revolution -- and this was given to 2.5 million people. If we're going to do it, I'm saying we should expand it and say exactly what the Common Sense Revolution said. Talking in isolation, I get the feeling that what you're saying -- and I may be wrong -- is that you're opposed to any type of restructuring, any type of closing of hospitals in Toronto and any of the shifting of the amounts.

That's what will happen and that's will be done and that's what most members on this side will be supporting. I will tell you very clearly that unless we shift money from some of the Toronto hospitals, which on a per capita basis -- I'll give you some of the figures out there right now. Toronto, in terms of funding, gets more funding than the greater Toronto area on a per capita basis.

If we're going to talk about what's going to happen in health care, let's quote from the Common Sense Revolution. If we put those words in there, which I can't see how any member could disagree with, then I could support number 2. If not, I can't. I don't know about the other members.

Mr Phillips: I realize you're fairly emotional about this. Maybe the easy way to do it is to take your own recommendations and say -- if I carry your logic to its logical conclusion, your recommendation 1 should then say: "We will do it through reducing waste etc, etc," and you would repeat the Common Sense Revolution after it. What we're all trying to do is to have a series of recommendations, that we don't end up with four or five pages of telling them how to do it. We're essentially saying, "Here's the thrust."

Frankly, Gary, I think I can understand why you're so emotional about it. But each of these recommendations are not designed to be the business plan for how to implement them. If they were, we would never be able to get through any recommendations, because you would say, "We want to eliminate the deficit and we'll do it by this and this and this and this," and we'd be debating the technique of it and the tactics.

I'm just doing what you did. I'm trying to get a series of understandable recommendations isolated. I took one of your own commitments out of the Common Sense Revolution. It was all clearly isolated in one place; I just took that language. I think we're going to get ourselves into difficulty if we try and put about eight paragraphs after each recommendation.

Let's just do what you've done: keep it nice and simple, not say how we're going to do it, but, "Here are the recommendations." Anyway, I guess I'm beating a bit of an unusual horse here, but I am having difficulty with the logic, actually.

Ms Lankin: I think Mr Carr's comments are interesting. I don't know how he can sit there and suggest that a recommendation which simply lifts a quote from Premier Harris's own letter -- somehow he extrapolates from that that the opposition is promoting the status quo in terms of public sector services or, particularly in the case of health care, is opposed to health care restructuring. Well, excuse me, Mr Carr. Remember who you're talking to across the table here with respect to very significant work done on the beginning of health care restructuring that needs to take place in this province, and a person who is very committed to seeing a shift in spending from the institutional sector to the community sector, from the illness treatment sector to the illness prevention and health promotion sector. I reject the little lecture you always seem prone to give when we get into these discussions.

Mr Carr: It wasn't meant that way, Frances.

Ms Lankin: Well, you say it wasn't meant that way. I appreciate that and I repeat that so it's on the record, because anyone who goes back and reads your comments, I would think, would interpret it the same way I did.

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I personally don't have a problem looking at wording for a separate recommendation that urges, in the health care sector, for duplication to be ended, waste to be rooted out, health care fraud to be rooted out. I don't have a problem with that. I think that's a standalone recommendation. I think you've actually touched on some of those elements in broader language in your recommendations, not specific to health care but in general in government, and on most of those you'll find that there will be agreement from our caucus.

The real issue that's going on here is that there is a political debate as to whether the government has lived up to its commitments, and the debate centres on whether finding efficiencies and reinvesting them is the same thing as maintaining funding over the term of the government or whether it is a sealed envelope; that in the course of any given year, the health budget reads $17.3 billion or $17.4 billion, and as efficiencies are located or found, they're earmarked for reinvestment in other areas. That's the political debate to be had. Surely that is a debate that will continue no matter what the Finance minister says with respect to how you are living up to your commitments. It will be a debate as to whether you are.

The recommendation here simply takes that and makes it clear that there will be guarantees for full funding for health care, law enforcement and education spending in the classroom. I can't imagine your Finance minister not making that commitment in your own political terms, ie, he will say "over the term of our government," because we've heard him say that in answer to questions in the Legislature. We don't believe that was the commitment that was made to the people of Ontario. That's the political point, and we're never going to reach consensus on that in this room, so to start to try and pad it, to start to try and define it, to start to try and put terms to it is absolutely guaranteeing that there will not be a joint recommendation on this point, because we differ about what that commitment meant and how people understood it and what you said when you went to the door.

I've said this many times. I don't believe any of you knocked on the door and said: "We're going to protect health care funding. We're going to seal that envelope over the course of the term of our government, over the course of five years." That's not what I believe you thought the commitment meant, let alone along what you conveyed to the public, and it's certainly not what the public thought. That's the point of political disagreement.

The recommendation itself, to say that the budget should spell out its commitment to the maintaining of funding in these three areas, is surely something we can agree to. We would like to see that spelled out. We will probably find ourselves saying, in the way in which the minister spells it out, that he's not living up to the commitment, that that's not what was promised in the election. But that's the political dispute. Let's not get into trying to solve that political dispute in the context of this recommendation, because we can't. We have a very different perspective of what that is. So the recommendation is partisan- neutral in that sense. If we all agree that those commitments should be lived up to, we all have a different definition of what the commitment is, and that is the political debate to be had after the minister spells out how he intends to live up to those commitments.

Mr Kwinter: I just wanted to expand on what Ms Lankin had to say. I don't think it's our role to micromanage the economy and to put recommendations to the Minister of Finance as to exactly how he should do it. But this is going to be the first budget of this government. There are commitments that have been made and commitments that are expected by people, and I think we have an obligation to make sure we bring to the attention of the minister that these things should be taken into consideration. I think it's quite benign. We haven't invented language. We've said: "Your plan guarantees full funding for health care, law enforcement and education spending in the classroom. You tell us how you're going to do it." If you're going to redefine that, good luck to you. You take the political chance of doing that.

But if we are trying to give advice on a budget and that budget is going to reflect all the realities of what is happening in Ontario and the commitments that have made and situations that have been found, I think we have an obligation to at least highlight these things for the minister. He has the option, as I'm sure you know -- and the question was asked, "What is the experience?" He will totally ignore this recommendation, which is usually the case. I say that cynically, but that is absolutely the case. If you think this document is going to have any impact, you're living in a dream world. It will be interesting and it will get filed away, as it always does, but the Minister of Finance is doing his thing, and he has every right to do his thing. But we also have a right and we have an obligation to at least put into the record that if you're going to be preparing a budget, let's have a budget that reflects the situation and the commitments that were made. If you choose not to do that, you do that and you have to deal with it. We saw that yesterday. The government has made lots of commitments, particularly, let's say, on GST. They chose to literally ignore it yesterday, and they do that at their political risk. People will say, "Whatever happened to this thing?"

I'm saying I don't think we should be micromanaging the economy and telling the minister how he should do it, but we certainly have an obligation, as the economic and finance committee of the Legislature, to make sure that those elements that could impact on the budget are brought to the attention of the minister, whether it be by deputants who come forward and tell us what they want or by what we bring forward.

These are our recommendations; the government side has theirs; the third party has theirs. We will either come to agreement or not. This particular issue is going to appear, whether it appears in the document as consensus or whether it appears as a minority report. What we're trying to do is get as much consensus as we can to do it in such a way that it's as uncontroversial as we can. But as I say in my last point, which I've said three times already, we should not be micromanaging the economy in this committee.

The Chair: Thank you very much. The committee stands in recess until 2 o'clock this afternoon.

The committee recessed from 1206 to 1401.

The Chair: As we broke, I believe we had agreed to the wording on --

Ms Bassett: Mr Chair, I'd like to move that since the two Liberal recommendations that are remaining -- the one that we broke on, that we were discussing, we have discussed it, we are not going to reach any consensus on that. So I would move that we vote on them and move to the PC recommendations. But in any case, let's move forward on the two Liberals. We're not going to discuss them any more. We won't reach any consensus.

The Chair: Okay. I would like to have a representative from the third party before we have an actual vote. Could we move on and discuss perhaps some of the recommendations of the government? Would you agree?

Ms Castrilli: That would be fine with us. We have no problem with that.

Ms Bassett: It's in the interests of consensus which all members said they wanted to get. It gives us a chance to get to recommendations that we might have a chance to have some agreement on, and we feel we won't on the other recommendations either.

Ms Castrilli: Just for clarification, Mr Chair: Does that mean that we have agreed to recommendations 1 and 4 that we put forward?

The Chair: We have not yet voted on those recommendations.

Ms Castrilli: That's what I'm trying to clarify, that we've agreed to 1 and 4.

Ms Bassett: We have agreed, Ms Castrilli, as amended, to those two recommendations that you put forth, yes.

Ms Castrilli: There is no possibility of consensus on number 2. Is that what you're saying?

Ms Bassett: No, there is not.

Mr Kwinter: Or number 3.

Ms Bassett: Or number 3.

The Chair: Did you wish to vote on 1 and 4 then?

Ms Bassett: Yes.

The Chair: If we could agree then to conduct a vote, can we conduct it as one or do you want two votes on this?

Ms Bassett: I think we can do two votes.

The Chair: Recommendation 1, all those in favour? Agreed.

Recommendation 4, as amended, all those in favour? Agreed.

Mr Phillips: Has Margaret been muzzled?

Mr Chris Stockwell (Etobicoke West): It's a hell of a muzzle if she is.

Ms Lankin: You're actually here. You came because you want to be part of debating number 9, "The government should honour its commitment to eliminate the gold-plated pensions of MPPs." Mr Stockwell, I knew you would come for that debate.

Mr Stockwell: Bingo.

The Chair: I don't think the Chair has recognized you, Ms Lankin.

Ms Lankin: Mr Chair, would you like to recognize me now?

Interjection: It sounds like Ms Lankin.

The Chair: Ms Bassett.

Ms Bassett: I would like to move ahead with our recommendations, and since they've already been read into the record, we will start with recommendation 1 and I shall read it if you want, "The government should honour its commitment to reduce the deficit and balance the budget by the fiscal year 2000-2001."

The Chair: Discussion? Are you ready for the question? Those in favour? Carried.

Ms Bassett: Second recommendation, "The government should find the necessary savings needed to balance the budget."

Mr Kwinter: I have no problem with the thrust of what is going on, but I do have a problem with the implication that there's only one side to the ledger and that the only way you can balance the budget is with savings. If you have increased revenues and if you had the windfalls that Alberta had, you wouldn't have to have any savings. All you would do is balance the budget on those revenues.

I would support this if it was amended to say that the government use its best efforts to stimulate the economy, to grow the economy and, as well, to find savings needed to balance the budget. I just don't think it's a one-sided equation. I think both sides have got to be addressed.

Ms Lankin: I agree with Mr Kwinter's recommendation. Primarily, may I remind government members that there is a great disagreement from our caucus with your proposal to proceed with the 30% income tax cut at this point in time.

I think all of us know and understand that anyone would appreciate getting a tax break -- there's nothing wrong with the idea in sort of the abstract -- but at this point in time, when it means lower than expected growth in the economy, with lower than expected revenues coming into government, that you're going to have to cut faster and deeper than you had even projected in your Common Sense Revolution, to proceed with a tax cut when we've heard from all the experts who came forward that the stimulative value of that is, at best, questionable, and to continue to hold on to that as the main element of your industrial strategy and your job creation program to achieve your own target of 725,000 jobs when in fact the exact opposite is occurring, when the increase in the amount of cuts you have to accomplish to achieve a balanced budget means that you are going to be laying off thousands more workers than you had even anticipated in the CSR, and that leads inevitably to a continued lack of confidence on the part of consumers -- when people aren't at all comfortable about their employment security, they don't go out and buy.

Let me tell you that right now the people who are walking the picket lines as members of OPSEU are not spending. Thousands of young teachers who fear they will be the next to be given a layoff notice are not spending. Students who are graduating from university who should be going out and buying their first car and investing in the economy are worried that all of the training and education they have been pursuing will be for naught, that there won't be a job for them.

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In fact, the pursuit of cuts at the rate at which you are and the depth at which you are pursuing them is really putting us on the edge of slipping back into a recession. We heard that warning clearly from many of the presenters who came before the committee, that there is a real, delicate balance, and this budget is going to have to find that delicate balance.

I'm very concerned about your proposal, which is your next recommendation, to proceed with the reduction in personal income tax as you promised in the Common Sense Revolution. I'm concerned about your recommendation to proceed with that at this time; it ties very much into your second recommendation, that you achieve the necessary savings to balance the budget.

If, for example, you decided to forego the tax cut at this point in time, the savings that you would need to achieve to balance the budget would be dramatically reduced, by about $28 billion over the course of the term of your government. That's an amazing amount of money that could be there to invest in, certainly, the restoration of some sense of employment security and consumer confidence, as well as maintaining needed social infrastructure.

I'm not arguing for increased expenditures, I'm not arguing for any course, other than to continue to approach the deficit as a significant problem, to reduce the deficit and to achieve your balanced budget. I support those goals. It's the methods by which you get there and it's the balance that you strike in the economy.

The effects of the government's fiscal plan, as we've seen them set out by the Minister of Finance before this committee, as commented on by many of the expert witnesses, really lead me to worry about the fact that your fiscal plan is going to have the exact opposite impact from what you have projected and what you hope for.

The way in which this recommendation is currently stated, which only talks about savings in order to achieve that deficit reduction, and doesn't understand the importance of growth in the economy, of job creation, of that other side to the whole equation and how that affects revenue growth and revenues coming in to the government, is wrong-headed. It gives the wrong emphasis and it doesn't show the balanced approach that I think many of the people who came before this committee argued for.

I wouldn't support the recommendation as it is, only because it's not clear enough and it's not full enough in its intention, and I would support a recommendation that's amended as Mr Kwinter has suggested.

Ms Bassett: We're going to move ahead with the recommendation as is. We're ready for the vote. I'd ask for a recorded vote in this case.

The Chair: A recorded vote for recommendation 2.

Ayes

Bassett, Jim Brown, Carr, Hudak, Martiniuk, Spina, Wettlaufer.

Nays

Castrilli, Kwinter, Lankin, Phillips, Silipo.

The Chair: The motion carries.

Mr Phillips: On a point of order, Mr Chair: I gather we're now into recorded votes and I think we have to go back to the two recommendations of ours that were just sort of dismissed by the government. I don't know whether the NDP would also want to deal with its recommendations or not. The rules I think have changed in terms of procedure here and I wonder if we shouldn't be going back to that.

The Chair: Mr Phillips has proposed that we go back to the Liberal recommendations and vote on 2 and 3 as well.

Ms Bassett: As a recorded vote?

Mr Phillips: Yes.

Ms Bassett: I've no problem with that if you want it on the record.

Mr Phillips: I gather it was unanimous, 1 and 4.

The Chair: Numbers 1 and 4 passed unanimously.

Mr Phillips: Yes.

The Chair: Then all those in favour of the Liberal recommendation 2?

Ayes

Castrilli, Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina, Wettlaufer.

The Chair: The motion is defeated.

Recommendation 3 from the Liberal list.

Mr Phillips: Recorded vote again, Mr Chair, please.

Ayes

Castrilli, Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina, Wettlaufer.

The Chair: The motion is defeated.

Ms Bassett: Recommendation 3: "The government should reduce personal income taxes to stimulate job creation, investment and consumer confidence."

The Chair: Discussion? A short statement?

Ms Bassett: No.

Mr Kwinter: On a point of order, Mr Chairman: In the interests of saving time, if there are items on your recommendation list that you're not prepared to accept a change to, I think it would help us, rather than get into a huge discussion, to say, "We're going to call the question and that's it." If you think that there's an area where there is room for discussion, then we can discuss it. But to spend our time discussing and you saying, "We're not prepared to change it, so let's call the vote" -- I think we'd save ourselves a lot of time. Does that seem like a reasonable suggestion?

Ms Bassett: The only thing, Mr Kwinter, is that we don't really know until we hear what you're going to say.

Mr Kwinter: All right.

Ms Bassett: That's why. If you have something that --

Ms Lankin: I will participate in discussion on this then, but Ms Bassett, for example, on the last point, Mr Kwinter and I both made comments and your response was simply, "We're going to proceed with it as it is." It would be helpful also then, if this is the spirit of cooperation and attempting to arrive at consensus, for you to explain your objection to the points that have been raised or why you are going to continue to proceed. I think that's why Mr Kwinter would have made that suggestion, because on the last example it didn't sound very much like there was a --

Ms Bassett: I stand corrected totally. In defence of myself, I was just trying to get through them because I wanted to get as much input in the areas where we could have discussion. That was the only reason, but I'm happy to discuss more, if you want.

Ms Lankin: I just raised that point because I have no idea why on the last recommendation the government caucus members felt that it was inappropriate to make reference to economic growth and job creation and their impact on government revenues as part of the balanced approach to eliminating the deficit and balancing the budget.

But in any event, we are on recommendation 3, which is, "The government should reduce personal income taxes to stimulate job creation, investment and consumer confidence." Actually, I find the wording interesting here. I note that on this one you're not saying the government should honour its commitment. I'd like to query whether this is an indication that the government caucus is on the Finance minister's side of things, which is to soften the commitment about the 30% tax cut -- 15% in year one, 7.5%, 7.5%, applied to all Ontarians equally -- or whether you're in fact on the Premier's office staff side of it, which is, "No matter what damage it does to the economy, no matter what the harm is, we've got to be out there because we committed to this and we're going to do it." That would be interesting to know. I'm not sure I'll get a clear answer to that kind of query here today.

But let me say first of all that I believe the very premise which underlines this recommendation is faulty, but it is beyond me to understand how the government caucus could interpret the information that was presented before this committee by countless witnesses, even at this moment. Let's just talk about the expert witnesses, including your own expert witnesses. How could you interpret their comments to this committee as supporting statements that the reduction in personal income tax would "stimulate job creation, investment and consumer confidence"? In fact, if you read through the expert witnesses, other than perhaps Ms Croft's statements that she thinks that you need to proceed with it and that it may well have some stimulative effect, by and large the witnesses were very much at odds with the very basic premise behind your recommendation.

We heard much from the expert witnesses that at this point in time the economy is much more fragile than the government's earlier predictions had been or than anyone -- not just the government -- had predicted; that we're in a -- to quote Ms Croft -- period of sluggish economic activity; that there is a significant problem with consumer confidence at this point in time; that that's only exacerbated by the number of potential jobs that will be eliminated through the government's cost-cutting initiatives; and that it will be some time before we see a return to consumer confidence.

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We also heard from those witnesses that the tax cut in and of itself wouldn't be a large contributor to increasing consumer confidence. Some pointed to the fact that at the lower end of the income scale, where there may be more of an inclination for the money that is received or saved in terms of the taxpayer by this tax break -- that that might be used as disposable income and might end up in the economy quicker. Many believe that that's going to be used up by the cost of increased user fees in many areas that municipal governments and others impose.

At the higher-income end, we heard very clearly that there's a tremendous amount of leakage from this money that will now be out there in the economy; that many would use it to reduce indebtedness; others would put it into savings, investments, many of them not being in the local economy, many of them being in offshore economies. There is absolutely one point of consensus, which is that that tax break, that government revenue that you're giving up, will not come back into the economy dollar for dollar and will not have a dollar-for-dollar stimulative effect.

So I think that there's a real problem with the basic assumptions behind this recommendation. I would point out to you that there were a number of witnesses -- again, expert witnesses -- who said two things: Make sure you don't jeopardize deficit reduction as a result of proceeding with this tax cut, that if there has to be a priority, the priority is deficit reduction, not the tax cut, at this point in time. That was very clearly stated by witnesses.

The other point of consensus is that all did point to the fact that we do run the risk of slipping into another recession and that you need to think about that carefully as you proceed with the development of recommendations to the Finance minister for this particular budget. If the economy is not strong enough now to withstand the additional cuts to government spending that you will have to take in order to pay for the tax cut and balance the budget at the same time, then you, by your actions, may well be forcing the economy to slide into another recession, which is not going to be good for anybody and is certainly not going to accomplish your plans of a job creation program of 725,000 jobs, which, as we know, is the stated intent of the tax cut.

I urge you to think this one through. There are many other formulations that you might even be able to support. My recommendation would be that the minister should not proceed with a tax cut at this point in time. But you even heard from witnesses who came forward and who argued that you should at least put a contingency approach in the budget which says that if your other fiscal and economic indicators are not achieved, you not proceed with the tax cut. I don't even see that in your recommendations, although many of you seemed to be quite interested in it at the time that we were going through the hearings and you questioned people about it. I thought that might be an idea that had some salience on the other side of the table here.

I would urge you not to proceed with this recommendation. At the very least -- I suspect that you will not support our recommendation, which is not to proceed with the tax cut -- perhaps we should remain silent on this, because this is an issue that really speaks to the heart of striking the balance between economic development, sound fiscal management and economic management.

I believe profoundly that if you review the record, even the legislative researcher's record of the presenters, you will see that it was a very, very mixed bag of opinion that came forward, but that it falls very clearly on the side of a cautious approach. To recommend to the minister at this point in time to proceed holus-bolus with a 30% income tax cut as was promised, in spite of all of the other variables and all of the other changes in economic conditions, consumer confidence, external to the province even, economic performance in other jurisdictions, which we depend on so much in terms of their inputs to our economy -- I urge you at least to drop this recommendation. It is not prudent at this point in time. It is not common sense to recommend that the minister proceed, no matter what, with that particular promise.

The Chair: Ms Bassett?

Ms Bassett: I'm going to defer to Mr Spina at this moment; he wants to speak.

Mr Spina: One of the elements of this particular campaign issue, and one which we feel is so important that it be integrated as part of our overall economic plan, is this: It has been shown that a reduction in taxes has increased tax revenues. The four expert witnesses brought forward, as a matter of fact, by the NDP and the unions -- well, the three and the independent economist who came forward -- wanted us to look historically. If we look historically, in the 1980s -- we have been compared by the opposition to Reaganomics in the 1980s -- the reality was that the marginal tax reduction rate implemented by the Reagan government resulted in $1.1 trillion in additional tax revenue. Now, that tax cut trickled down to produce a 76% jump in new business investment, in real dollars adjusted for inflation in the 1980s, and it tripled the rate of productivity growth. That's historically the fact of what happened in the United States.

Ms Lankin: What happened to the deficit?

Mr Spina: With respect to the deficit, what you had was a Democrat-controlled Congress that stalled all of the expenditure cuts that Reagan wanted to implement, and as a result of not being able to implement the expenditure cuts, they were not able to realize the full benefit of that tax reduction. But the US government realized historic tax revenues. Now, we aren't going to fall into that trap because we have already begun to implement the expenditure cuts, so you can't help but realize the positive impact of a tax reduction.

But I want to take it to the other side of it, and that is that the opposition continually zeros in on one element, and the one element is isolating the tax reduction. The tax reduction is not a single element. It is part of a three-part circle that was clearly outlined in the CSR, and that is, reducing the EHT, the employer health tax, to stimulate jobs in small business; replacing that revenue by implementing a health care levy to the higher-income earner, which is really a reduction of their tax rate. So the higher-income earners are not going to be realizing the full 30%; they never did. It's the lower-wage earners, $50,000 and under, who will realize the full benefit of the tax reduction. The opposition themselves have admitted to the fact that it's the lower-income people who, if they did get a tax reduction, would spend it. It would only be the higher-income people who would probably save some and probably spend the other. I'd rather have people who would probably save some and probably spend the other, but they make the decision, not us.

We've taken 11 personal income tax hikes in this province over the past 10 years and it's time we put something back in the taxpayer's pocket. So I move that we adopt this particular recommendation.

Mr Phillips: It's a fundamental debate. Firstly, I have yet to see a study that proves that you reduce taxes and tax revenue goes up. I challenge Mr Spina to table the study that he is purporting to quote, because I have not seen such a study. If that was a study, I will be interested to read it and I will be asking for it later.

But let's recognize what the promise is. You are going to cut $5 billion of revenue. Well, you see, the problem is -- Hansard can't pick up what the members are saying -- I'm using your numbers. It is $5 billion. That is after all three of your tax measures, and if you don't know that, you should know that, because you ran on this platform. So if any of you are going around saying it's $4 billion, you are misinformed. Your own information shows it's $5 billion. So if the decision that you're making, Mr Spina, is on the basis that it's $4 billion, you're wrong -- you're simply wrong. And it's not me saying it, it is your own numbers. So if you're saying you're making the decision on the fact that it's a $4-billion cut, you're wrong. It is after the health tax, it is after removing the employer health provision, it's after the fair share levy -- it is your 30% tax cut.

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The second point I'd make to all of you is, every penny of that you are going to have to go and borrow. If you people really believe that it is the deficit, if that's what you really believe, does it make any sense -- and you can see here, it's your own numbers -- direct fiscal impact of the Common Sense Revolution. I'm doing a Mr Carr here, I'm speaking slowly and pointing to it, but the direct fiscal impact --

Mr Carr: This is for my own reference.

Mr Phillips: Okay, for mine and yours, so you and I understand. And here it is, revenue loss because of the tax cut, $5 billion.

I say to you, you are not going to balance the budget until the year 2001. I know you all were told that the Conservatives manage the finances really well. I carry around the last time a Conservative government balanced the budget: 1969. I challenge the Premier and the Minister of Finance, because they are not the great money managers you may think. There's the last time a Conservative government balanced the budget. You people will not be around -- well, there'll be an election and maybe you'll be around -- but this elected government in this term will not be around. You'll never balance the budget. You won't be around for a balanced budget. You may table a balanced budget, but it will be March 31, 2001, before even you people say it will be balanced.

So I just say to the fiscal conservatives among you, and there probably are several, if this were your business --

Mr Stockwell: Only several of us here?

Mr Phillips: We've had this conversation many times, but think about it: Would you declare a $5-billion annual dividend if the company is in such tough fiscal straits? You may say, and one of you has often talked about it, "The greatest job creation project in the history of this province is going to be this tax cut." I think you would find economists who would say, "If that's what you want to do, if you want to cut taxes as a job creation exercise, this is probably the least productive tax cut," if that's what it's all about, if that's what you're all about.

We on this side, certainly we in our caucus and, I suspect, the other caucus are just saying to you, if the deficit is such a problem and if you want to get the population of this province, those members of OPSEU who are on strike, the teachers, the hospital workers, the people whom you've already hit on social assistance, all of those people, putting their shoulder to the wheel, I think you lose them, legitimately lose them, when over half of all the cuts that you impose on them go to a tax break. And I think you clearly lose them when over half of that tax break goes to families making more than $90,000. You truly lose them.

Interjection.

Mr Phillips: Mr Wettlaufer, these are your own numbers, and this is after the fair share health levy.

So I think you're making a fundamental mistake in proceeding with it. I think the money markets will recognize it for what it is, which is a dividend of a company that has no money to dividend. You'll borrow $20 billion to do this. The taxpayers of this province will pay $5 billion of interest on that alone. I was interested -- the NDP had in its report how much an hour that was, or certainly how much a day it was.

Ms Lankin: Four million dollars a day.

Mr Phillips: Four million dollars a day, the interest on the money you have to borrow for the tax cut. So if you want to live with that, if that is the legacy, if that is the basis on which you want to defend the expenditure cuts, so be it.

I didn't have a chance earlier, Mr Chair, to speak on our motion on the tax cut because it was, I guess, decided it wasn't going to pass, but you can gather from our comments that we feel the focus should be clearly, single-mindedly in the fiscal area on dealing with the deficit and not on taking over half of the money you save and paying it out in the form of a tax cut.

The Chair: Mr Silipo.

Mr Silipo: I think the government members can hide all they want behind the notion that the health levy is going to somehow redress a balance in the tax structure, but the reality is that when they look at the 30% tax cut, they can't escape from the sheer, stark reality that it will, unless they make a substantial change from the promise that was made in the Common Sense Revolution, that the way in which that tax cut will be applied, as we heard from deputant after deputant, is in a way that will benefit greatly the wealthiest citizens in this province. The numbers are just clearly there. We can argue about small percentages but, on balance, it's quite clear that the top 15% of income earners in this province are going to reap somewhere between 40% and 50% of the benefits of that tax cut. That's not equity as far as I'm concerned.

But, coming more particularly to the point that's raised in this particular recommendation, we also know that the income tax cut is not going to stimulate the economy and create the jobs. That's not just my position or my assertion, that's also what the Minister of Finance indicated to us. He didn't come here and say confidently, "Let's do the tax cut and we will start to see the effects of that." When pressed, he was quite clear in saying that in fact he didn't expect much of an impetus in terms of job creation, certainly for the first year after the cuts, and maybe not even much in the second year after the cuts. You're getting then very close to the last year of the mandate of the government and I think it's fair to ask then, where are the 725,000 jobs going to come from if the tax cut was supposed to be the main factor in getting those jobs created?

So I think it's quite appropriate for us to be flagging that one more time for the government members here, if they want to insist on this position of reducing personal incomes taxes. I understand how much of Mr Harris's own personal credibility rests on this point. It seems to me that he probably would forgo just about every one of his other promises except for this one. That's my own assessment. So I think we will see a 30% tax cut. They might fiddle around with the times, they might even fiddle around with the model of it, although I doubt that, but I think we will likely see it. But what we won't see are the jobs, and that's something that this government is going to have to answer for.

So they can pass the resolutions here. We can see the income tax cut laid out in the budget a couple of months from now but it's not going to generate the jobs, not because I say so but because your Minister of Finance says so.

The Chair: Are you ready for the question?

Ms Bassett: Yes, we are.

Clerk of the Committee (Mr Franco Carrozza): Is it a recorded vote?

Ms Lankin: Recorded.

The Chair: Recorded vote.

Ayes

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina, Wettlaufer.

Nays

Kwinter, Lankin, Phillips, Silipo.

The Chair: The motion carries. Ms Bassett.

Ms Bassett: The next, recommendation number 4: "The government should continue to eliminate red tape and unnecessary regulation and reduce the barriers to investment."

The Chair: Will the member make a short statement? Ready for the question? Shall the motion carry? Those in favour?

The Chair: Carried unanimously. Ms Bassett.

Ms Bassett: I think we want recorded votes on everything, Mr Chair, if that's all right.

Mr Kwinter: If it's unanimous there's no --

Ms Bassett: Oh, you don't? Okay. Sorry. My inexperience.

Mrs Marland: It isn't recorded.

The Chair: Those opposed? There's none opposed.

Mrs Marland: You have to know who's present in the room.

The Chair: I'm sorry, we know that.

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Ms Bassett: Is there a political reason for -- we're all in here. There's no one leaving.

Mr Silipo: We'll actually admit that we voted in favour of it.

Ms Bassett: There's no one leaving in order to avoid voting on it. It's unanimous, right?

The Chair: It's unanimous.

Mrs Marland: It could be unanimous with eight people here. That's why we need a recorded vote, and I would ask that it be a recorded vote, Mr Chairman.

Mr Kwinter: May I make a suggestion in the interest of time? The clerk is sitting here, and if it's unanimous, all he has to do is record all the people who are sitting in this room.

Ms Bassett: That's right.

Mrs Marland: That's fine.

The Chair: Thank you, Mr Kwinter.

Ms Bassett: Moving right along -- is that all right, Mr Chair?

The Chair: Please, Ms Bassett.

Ms Bassett: Recommendation 5: "The government should proceed with its plan to reduce the employer health tax burden on small and medium-sized businesses, Ontario's largest job creators."

The Chair: Discussion? Shall the motion carry? Those in favour? Those opposed? None being opposed.

Ms Bassett: Number 6: "The government should consider creative initiatives such as providing tax support through crown foundations to assist various sectors in the necessary restructuring."

Mr Phillips: Just a question, I guess. What sort of costs are associated with this?

Ms Bassett: Establishing the crown foundations?

Mr Phillips: Yes.

Ms Bassett: Right now we're in the process, because of yesterday's budget where they brought in many tax initiatives to help charities etc -- we're trying to get an exact figure, I don't have it right in front -- but not considerable, given the goods that you get in terms of helping out universities and charitable --

Mr Phillips: I'm very supportive of it. I just want to know, because we're quite careful about expenditures, just how much you're asking us to approve in expenditures, just in terms of lost tax revenue, that's all. We have a responsibility --

Ms Bassett: A crown foundation, you will get 100% tax deduction on a major gift.

Mr Phillips: I understand that; the government therefore gets less revenue.

Ms Bassett: Of course.

Mr Phillips: I just want to know how much less revenue the provincial government will get as a result of this. Just to try to be fiscally responsible here before we agree to it, just how much lost revenue does the provincial government anticipate, or do you anticipate the provincial government losing as a result of the recommendation? That's all.

Ms Bassett: We don't have an exact figure because we don't know exactly what the number of gifts is going to be. Universities, they have not very up-to-date figures on what they've been getting in. We've all been reading in the paper since the crown foundations were established in 1992 that some people have given some major gifts. It has loosened up moneys that previously had not been forthcoming. I'm happy to meet with you later; not today because we're in the process of working it out. But if you take, say, a gift of $250,000, if that was a major gift, that could be written off.

Mr Phillips: I'm very much in favour of the thrust. It's just --

Ms Bassett: You want the total.

Mr Phillips: We're all in a bit of a dilemma here now because we're going to have to put our hands up in about five minutes to vote for or against this. It would be helpful for us to know, does this mean $50 million less revenue to the province; $5 million, or $100,000?

Ms Bassett: I don't know, but I would hope it would be considerable.

Mr Phillips: Considerably less revenue?

Ms Bassett: Considerable gifts, because these are going to hospitals and agencies that are being reduced from the public purse. We're trying to get the private sector to take them over. In effect, it's really money out of one person's pocket into another, out of the government's pocket, being supplied by the private sector. They will get a tax write-off, there's no question, but it's money that normally is not given. I've got studies that I can produce for you about what's happened in the States, that has released a lot of money that people didn't give when this wasn't there. We don't know what's going to happen in the Canadian sector; neither did the federal government when they brought in the cuts yesterday.

Ms Lankin: Obviously, given our support for the establishment of the crown foundations in the first place, we support the thrust of your proposal, but it does feel to me to be a little irresponsible for us to vote on something in which we're not giving any recommendations as to the parameters of this.

There needs to be some balance between incentives you put in place -- tax expenditures, essentially, as incentives -- in order to encourage donations versus what happens with the revenue base for government for carrying out a number of other large program areas, for example, maintaining health care expenditures at $17.4 billion, as you promised to do. You need tax revenues to do that.

I think the recommendation should have some limits on it from this committee in terms of the approach, even if they're not dollar limits; in terms of the cautions. We have not had any real discussion about this and we've not had any information presented to us from your caucus with respect to the background, the detail and the intent behind this.

It's not solely to help various constituent groups deal with restructuring, as you put forward. You're looking for a way to have them supplement their income because government is cutting back what they're funding. That's not necessarily assistance with restructuring.

While I support the intent of what you're proposing -- but I don't really agree with the words you've suggested here -- I would like to see some background information. Perhaps the government caucus could rethink the recommendation, to put some kind of parameters or context to this. I think it's irresponsible of us not to do that and to recommend this in a full way, which could very significantly undermine government revenues in support of very necessary and important programs that you've committed to maintain budgets for.

Mrs Marland: I must say, I don't understand Mr Phillips's question. You're asking us to give you an estimate on the amount of lost revenue to our government. Correct?

Mr Phillips: Yes.

Mrs Marland: Well, this recommendation isn't talking about lost revenue to the government. It's talking about increased revenue through donations which we wouldn't otherwise have. Because we're doing it through a tax break, it means we're encouraging more money to help support programs which otherwise wouldn't be supported. I don't think you quite heard Ms Bassett's response to you, because that's what she's explaining.

When the former government established crown agencies, it was simply for the purpose of getting a different set of books for a service like the water agency or whichever ones you want to refer to that still carried on the business of the government. We're talking here about getting money, which we wouldn't have had donated otherwise; therefore, it isn't lost revenue. It's actually an advantage to the government.

Ms Lankin: How can you say it's not lost revenue?

Mrs Marland: How do you see it as lost revenue?

Ms Lankin: Presumably, the donations people will provide will be because they will be able to write it off against their incomes and therefore pay less income tax, and therefore it is lost revenue to the Ontario government.

The point we make is that while there is merit in pursuing this, we should have some parameters, we suggest to the government, with respect to this. At a certain point in time you can find that your necessary revenue base to support programs outside those areas to which people might feel compelled or interested in making charitable donations, like the arts, the hospital foundations and universities -- but there are other necessary programs, like your commitment to maintain classroom funding in secondary and elementary schools in this province, for which there won't be foundations people will be making charitable donations to, and your ability to do that could potentially be undermined by significant lost revenues. At least you should admit there will be lost revenues, and at least we should be thinking about the context in which this recommendation is going forward and the balance you want to strike. I think that's a reasonable expectation of background to this kind of recommendation.

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Mr Phillips: It may be worth just a couple of minutes more. Governments of all political stripes often find it politically more expedient to offer tax expenditures than expenditure expenditures, and I'll give you an example. The previous federal Conservative government and the previous provincial NDP government wanted to encourage venture capital funds in small, provincially-based businesses, so they set up something called the labour-sponsored venture capital corporations. It was Mulroney's idea, and the NDP embraced it, but it is a tax expenditure program designed to get funds into small businesses.

That does represent lost revenue to the province of Ontario. All we're saying, certainly on our side, is that in this particular case we're very supportive of it, that it's a good idea and what not, but I do think any government, and certainly we would have expected this government, would have said, "Here's our best cut at the revenue loss as a result of it." There will be a revenue loss to the province. That's the whole idea, that you encourage people to give by offering a tax incentive. By offering a tax incentive, people are giving and saving some tax money -- not all the money, obviously, but saving some tax money. There's zero doubt that this recommendation costs the province money. The only question is how much.

Unfortunately, we don't have it; we're going to vote on it. I would just ask the government to perhaps try to do that for us and in the future when we have a recommendation like this, because a tax expenditure represents a hit on the deficit every bit as much as an expenditure expenditure.

Ms Bassett: I hear what you're saying, but I don't see it as a loss to the province, because the money that one pot is maybe giving up is going into another pot. The university foundations, which the NDP government brought in in 1992 -- the people gave money, so it might not have gone in taxes but it went to fund universities. It's the same kind of thing we are advocating now. In terms of how much it's going to be, that is going to depend on the generosity of Canadians, but there are many great figures coming out of the States, so maybe we will see the shifting of moneys from the private sector to fund hospitals and universities etc, whatever.

The Chair: Are we ready for the question? Shall the motion carry? Those in favour? Those opposed? None being opposed, the motion carries.

Ms Bassett: Next, number 7: "The government should work with the federal government to end regulatory overlap by ensuring that only that level of government best suited to regulate a particular activity does so."

The Chair: Discussion? Are you ready for the question? Shall the motion carry? Those in favour? None being opposed, the motion carries.

Ms Bassett: Number 8: "The government should continue discussions with the federal government with a view to harmonizing Ontario's retail sales tax with the federal goods and services tax, provided that any harmonization of the two taxes does not increase the tax burden on Ontarians."

Ms Lankin: I have a bit of a problem with this recommendation. First of all, we are clearly awaiting the federal government's actions to live up to its commitment in the last election to scrap the GST, so I'm not sure why we would be recommending that the Finance minister of Ontario pursue harmonization with a tax that is going to be eliminated when the federal government lives up to the promise it made. I think we would want, in Ontario, to continue to keep the pressure on the federal government to live up to that commitment. I'm with John Nunziata when it comes to that.

There are very complex issues which your Finance minister has recognized even in pursuing your recommendation as it's currently set out. Presumably, you recognize that harmonization doesn't mean just on the base of the current PST; it means expanding the current PST to include goods currently not taxed provincially to bring them under the rubric of a harmonized GST-PST. You would be introducing new taxes on goods currently not taxed.

I recognize that you put the proviso in that it doesn't increase the tax burden on Ontarians. Good luck. Your current Finance minister has been unable to get any kind of movement from the federal government on a proposal that would end up with no net increase on taxes. There's a real risk of you pursuing a massive tax grab here. I understand the words you put around it, but I think this is quite a dangerous one.

I remind you that you also have a commitment that you all signed in terms of the taxpayers' pledge that you would not be party to the introduction of any new taxes in Ontario, or you're all going to resign or something like that. I don't know what the guarantee was on it.

Harmonization means the introduction of a new provincial sales tax on goods currently not taxed, and I don't know how you can revise history to make that in accordance with your taxpayers' pledge that you will not introduce any new taxes in the province, other than your fair share health levy you committed yourself to. I think you've got a real problem with this. I really recommend that you rethink it. I can indicate to you that we'll certainly be voting against this recommendation.

Mr Silipo: I certainly echo what Ms Lankin has just said and would just add a couple of comments. I find this recommendation a little odd, not the words, but the fact that it's even here. With all my criticism of Mr Eves, this is one issue, so far, where his public pronouncements at least have been clear, which is that he's not interested in harmonizing with the GST, as I've understood his position, exactly because of the dangers set out in this motion, because it does increase the tax burden on Ontarians. I find it a little odd that members of the government side would now want to recommend to the minister that he continue discussions on harmonization, for all the reasons Ms Lankin has outlined.

This is a problem that the federal Liberals took upon themselves to resolve. Let's wait and see what their resolution is. I want to be quite clear. I want nothing to do with any discussions around potential harmonization. There's a promise by the federal government to eliminate the GST. Let them deliver on that promise.

Ms Bassett: We agree with you. We'll withdraw it. The reason it's there, though, is because many people did recommend it and we are working towards that end -- if we could get something that didn't add a huge burden on the taxpayers of Ontario, which has not been forthcoming, as you know.

Ms Lankin: Mr Chair, just procedurally, I believe these motions were all moved this morning, so it's properly on the floor and I think it would take unanimous consent for it to be withdrawn. I don't provide unanimous consent. I think you'll need to proceed to a vote so we can have a recorded vote on this.

The Chair: My understanding is that it does not require unanimous consent to remove a motion.

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Ms Lankin: That's interesting. I'd like to see the rules, and maybe the clerk can inform me later. In most proceedings, once a motion has been moved and is on the floor it is the property of the meeting and needs to be disposed of by a vote or otherwise. It can't be withdrawn just individually. I would think there must be some threshold. If it's not unanimous --

The Chair: Excuse me. That's different from what you initially said. It does not need unanimous consent.

Ms Lankin: Okay. What does it need?

The Chair: I understand it can be removed by the party. It does not require a vote.

Ms Bassett: I was just told that the mover of the motion can withdraw it; since I read it, I can withdraw it.

The Chair: Would the meeting like to hear from the clerk on the subject?

Ms Lankin: It would be helpful. Thanks.

Mrs Marland: If we want to be technical, I read it this morning and I moved it. I'm now withdrawing it.

Clerk of the Committee: If I could explain, once the motion is moved, the same person can withdraw it. What you're concerned about is that if the motion were adopted, it would require unanimous consent because it would become the committee's.

Ms Lankin: Actually, no. I understand that. I'll stand corrected, and I appreciate your clarification. I was of the opinion, from other proceedings and rules of order, that once a motion is placed on the floor it becomes the property of the floor, and you can often agree or whatever to have it withdrawn.

I'm not sure why the government members wouldn't like to proceed with the vote. I would like to see a recorded vote in which we unanimously rejected this recommendation, but if they don't want to be that far on the record, I understand their desire to keep open the political room for the future.

Mr Spina: We are listening, Frances.

Ms Bassett: I'm learning from watching Frances Lankin.

The Chair: The mover of the motion has withdrawn the motion. Do I understand that correctly?

Mrs Marland: Yes, I have withdrawn it.

The Chair: Thank you very much. Ms Bassett?

Ms Bassett: Number 9, do you call it, or is it the new number 8? "The government should honour its commitment to eliminate the gold-plated pensions of MPPs."

Mr Kwinter: I have no problem with the thrust of the motion. I have a problem with what I consider to be some of the language in it. I suggest something that might be a little more statesmanlike -- let me put it that way -- that "the government should honour its commitment to address the issue of pensions of MPPs." To suggest it's gold-plated is subjective and pejorative. To say you should eliminate it could imply that there should be no pension provisions for MPPs. I suggest that if we say the government made a commitment that it would take a look at pensions and would do something about it -- what that is, we don't know. There was a committee struck; the government has obviously decided it's not going to honour that recommendation. But it should honour their commitment to address the issue of pensions of MPPs in any way they see fit, and I think that would be a reasonable amendment.

Mrs Marland: Mr Chairman, I moved the motion this morning. I think Mr Kwinter's wording is far superior to the wording in the motion. Having moved the motion this morning, I'm now going to change the wording to read: "The government should honour its commitment to address the issue of pensions for MPPs." Thank you for your suggestion, Mr Kwinter.

Mr Kwinter: You're welcome.

Mr Silipo: I can certainly support that. I was going to make much the same point, that I was prepared to speak strongly against the wording that had been placed originally. We ought not as parliamentarians fall into it just because it's popularly useful to say MPPs should not have any rights to pensions. If there are issues with respect to the pensions that need to be addressed -- I think there are changes that need to be made; I've said that publicly and privately in the past. But I don't think that should prevent there being pensions for MPPs just like there are pension plans for lots of other people who work in the public sector in one way or another. The appropriateness of the pension really is what needs to be dealt with, not whether they should exist.

If there are other ways to address that, that's fine, but I'm not going to apologize for the fact that as an elected official I'm entitled to a pension plan. If that pension plan is deemed to be too rich, let's deal with that issue. I hope this is one that, over the course of time, people are able to address in a way that doesn't get at some of the basic things that I think can drag this down to almost like -- well, I'm not sure how to best describe it, but it's the kind of issue that I've seen bring out the worst in politicians, and it bothers me, as somebody who's spent a number of years in public life.

The Chair: Further debate? The question? Shall the amended motion carry? Those in favour? Those opposed? None being opposed, the motion carries.

Ms Bassett: Moving on: "The government should address the inequities and associated problems of the property tax system in Ontario."

Mr Silipo: I did a bit of a rah-rah this morning when Ms Marland presented this motion. I just want to be clear that in fact this is intended to do what, among other things, I hope it should do. I'm going to suggest an amendment to this which I hope will meet with approval on the government side, which is to add to the present wording, "including the need to phase out the use of the property tax for education and social services."

While there are clearly inequities in the way the present system is set up, both on the personal side -- the residential side -- and the business side, I would be very leery of any attempt to address those problems without addressing the broader issue of the use of the property tax.

I think we heard, even during these presentations, from some of the groups. I remember specifically a reference by the CFIB, the independent business group, to the need to address those issues around the property tax and the use of the property tax for such things as education and social services. It seems to me that's an issue, a big issue that, I think we can admit, no government to date has managed to address properly. We made some efforts, and I personally wish we had been able to go further than we did. I know there were some attempts when the Liberals were in office. Maybe they can be addressed through this government. If they can, they'll get lots of support.

The Chair: Debate on the amendment?

Mr Kwinter: I would like to suggest amendments to the main recommendation as opposed to addressing the proposed amendment.

The Chair: As an amendment is on the floor, do we not have to deal with it before we deal with further amendments?

Mr Silipo: Unless you are amending mine.

The Chair: Unless you are amending the amendment, which really gets confusing.

Mr Kwinter: I could amend the amendment.

The Chair: Okay.

Mr Kwinter: I think the original recommendation is subjective and in some cases could be pejorative, depending on where you are and what taxes you pay. I would like to amend the amendment to say, "The government should bring equity and rationality to the property tax system in Ontario," which doesn't in any way imply what it is but gives the government a signal that it should deal with the problem because there is inequity and there has to be some rationality so that people feel everybody is being fairly treated.

The Chair: A discussion on the amendment to the amendment?

Mrs Marland: It's not really amending Mr Silipo's.

Mr Silipo: It's amending the first part of it. I'm assuming my part would still be able to follow from that.

The Chair: Including the need to phase out --

Mr Silipo: Yes.

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Mrs Marland: I don't think Mr Kwinter's is an amendment to the amendment. However, we would accept Mr Kwinter's new wording for recommendation 9.

We were going to say to your amendment, Tony, "The government should address the inequities and associated problems of the property tax system in Ontario, including the need to use property tax to fund education," which means we would address all those aspects, and it may be that in addressing them we would do exactly what Monte is saying. Maybe we'll eliminate funding other things through property taxes as well. We have to have the option open. I think we would prefer just to accept Mr Kwinter's motion.

The Chair: Are we ready to vote? We have rather a confusing situation on the floor, which I think I understand. I'll stand corrected if the committee disagrees with me. Could I ask if we could vote on Mr Silipo's amendment first, whether it stands?

Mr Spina: Could you read it or tell us --

The Chair: It dealt with the need to phase out the educational component of the property tax element.

Mr Silipo: "Including the need to phase out the use of the property tax for education and social services."

Mrs Marland: I didn't hear the social services. I'm sorry, I didn't hear that part.

The Chair: Shall the amendment stand? Those in favour of the amendment? Opposed? The amendment is defeated.

Mr Kwinter, would you read your amendment, please.

Mr Kwinter: "The government should bring equity and rationality to the property tax system in Ontario."

The Chair: Those in favour of the amendment? There being none opposed, the motion carries. Shall the motion, as amended, carry?

Ms Bassett: We just voted on it.

Mrs Marland: No, it was actually replaced.

The Chair: I'm sorry, Mrs Marland, we voted on an amendment to it.

Mrs Marland: I know we did. Okay. Then that is now the recommendation. If it helps, I will withdraw the original wording, "The government should address the inequities and associated problems of the property tax system in Ontario." I will withdraw that.

The Chair: It's my opinion that we have not yet voted on the motion; we have only voted on the amendment. We will need another vote on the motion. Shall the amended motion carry? Those in favour? Opposed? Whew.

Ms Bassett: Number 11: "The government should define its core business, restructure to meet the needs identified and focus its resources on them."

The Chair: Discussion?

Mr Kwinter: Quite frankly, I don't understand exactly how you define the "core business" of the province. I have no problem with the government being focussed and make sure it restructures the economy to focus on what it wants to do, but it would seem to me at the very least the province would have "core businesses." There are all kinds of things that go on in the province that government has responsibility for. I just don't know quite what you mean by the core business of the province.

Ms Bassett: I think that's a good point. We're talking about "businesses," I would think. I think that's a typo. It's a typo and it escaped me, I'm sure, because many people don't understand what the government's businesses are at this particular moment, so we have to bring definition to it. That's what we're talking about. I will check that out.

Ms Lankin: Ms Bassett, I don't have a recommendation yet on language. We can work through this, but I do have a significant problem with how this is formulated, not with the intent that government should set priorities and it should accomplish its restructuring in view of those priorities and it should focus its resources on those priorities, but you've taken language straight out of one sector of the economy and imposed it on government, which is that government should define its core businesses.

Now, we often use that kind of lingo when we talk about government when we're talking shorthand, but let's remember that government's role is much broader than business's. Government's role in our society is multifaceted. It's involved in redistribution of collective resources and the wealth produced from those collective resources, it's involved in protection of individuals and families and groups within society, it's involved in setting up regulatory structures to ensure a civil society, like our justice system. Those are not all easily described as businesses. It is in shorthand, in short lingo, but there are many things that have to do with providing a quality of life in the civil society and meeting the needs of the most vulnerable in our society, which business, quite frankly, is not directly involved in when they consider the bottom line of profit. I worry about an imposition, particularly by your government, of that kind of language, because I think it might mean something different to many of the people in your government than it would as just shorthand language.

I would like to suggest that we should be talking about the government defining the priorities of government in this province, and its restructuring should reflect those priorities and it should focus resources on those priorities. That would make me a lot more comfortable. I think there's lots of room for debate about what those priorities should be, but that language is much more acceptable to me personally than talking about core businesses, which evokes the bottom line profit image.

Ms Bassett: That's fine, Mr Chair. I think that's probably better, Ms Lankin. Let's go with that. That's fine.

The Chair: Could you get me the amended wording, please.

Ms Lankin: Yes. What I have suggested is that the government should define its priorities, restructure --

Ms Bassett: Core priorities, isn't it?

Ms Lankin: Sorry. Core -- well --

Interjection.

Ms Lankin: Okay. I'm not sure what the import of that word is in there. It's almost redundant. I mean, priorities are core.

Mrs Marland: It is redundant.

Ms Bassett: It's not redundant, as I see it, because we're focusing in.

Ms Lankin: Priority is the core interest.

Ms Bassett: Oh, I see what you mean.

Ms Lankin: The two words mean the same thing.

Mrs Marland: Yes.

Ms Lankin: What I was suggesting -- if you want to let me get it all out and then you can see whether it meets the needs -- the government should define its priorities, restructure in light of those priorities and focus its resources on those priorities.

Mrs Marland: Are you going to use the word "business" so you're defining the priorities, though?

Ms Lankin: I was replacing the word "business" with "priorities," because I think my explanation earlier was that talking about core businesses is a shorthand lingo that we often use internally here, but it's not really what government is all about and that I prefer using the word "priorities" than "core business".

Mrs Marland: But the way it stands now, Frances, it could be our priorities in anything. It could be our priorities in social services, our priorities in education.

Ms Lankin: Right.

Mrs Marland: But we're wanting this to refer to business.

Mr Silipo: No, that's not what it says.

Mrs Marland: You don't think so?

Mr Silipo: That's not what it says.

Ms Lankin: That's the problem, you see. I was worried about how this would be interpreted. You're the government and you've got the majority. Your government will decide what its priorities are, presumably in accordance with the commitment on health care, classroom education, law enforcement, eliminating red tape, whatever, but that's your priority as a government. You will set them out. I just prefer that wording than talking about core businesses.

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Mr Wettlaufer: I personally have a little bit of difficulty with --

Interjection: Speaking.

Mr Wettlaufer: Speaking.

Mr Silipo: Is it contagious, Ms Bassett?

Ms Bassett: Yes, it is.

Interjections.

Ms Lankin: That's why there's an empty chair on either side of the pair of them.

Mr Wettlaufer: I have a little bit of difficulty with the word "priorities," because "priority" is such a general word. It takes in every facet of everything. I think what we're doing here is talking about a reinvention of government. Governments all around the world are reinventing themselves as to what roles they should actively be involved in. I personally would be much more comfortable with a word such as "activity" or "role," as opposed to "priorities."

Ms Lankin: What about "priority role"? I understand what you're trying to get at and I don't disagree that governments should do it and your priority roles that you identify would be different than ours, perhaps, I just am objecting to the lingo picked out of --

Interjection: The corporateness.

Ms Lankin: The corporateness, thank you, of the lingo.

The Chair: Are we clear on the wording of the motion?

Ms Bassett: Could you read it again?

The Chair: The wording of the motion that I have: "The government should define its priority roles, restructure in light of those priorities and focus its resources on those priorities."

Ms Lankin: Or "on them," whatever.

The Chair: Are we ready for the question?

Mrs Marland: Yes.

The Chair: Shall the motion carry?

Those in favour? Opposed? None being opposed, the motion, as amended, carries.

Ms Bassett: Number 12: "The government should review the regulations of provincially regulated financial institutions to ensure that such regulations do not constitute a barrier to accessing capital by small and medium-sized financial institutions. The government should also work with the federal government to ensure that federally chartered banks do not restrict access to capital for small and medium-sized businesses."

Ms Lankin: Just a question, Mr Chair: The first part of this recommendation deals with provincial regulations and provincially regulated institutions to ensure that there aren't barriers to accessing capital by small and medium-sized financial institutions. I'm wondering if you meant small and medium-sized businesses, because then you go on to say we should, "work with the federal government to ensure that federally chartered banks do not restrict access to capital for small and medium-sized businesses." If in fact that's what you're talking about --

Ms Bassett: Businesses.

Ms Lankin: It is businesses? Okay.

Ms Bassett: Yes, you picked it right up.

Ms Lankin: Okay. I personally agree with this. There's much work that had been done with the establishment of community investment share corporations and community loan funds and farm plus programs under our government working with credit unions, revisions to the loans and trust and credit unions to make sure that they were able and in a position to be able to provide readier access to capital. I think that's useful.

We also tried to do some work with the federal government and directly with the Canadian Bankers Association around promoting a better understanding of the needs of new industries, particularly knowledge-based industries, the importance of banks starting to understand the demands and how you can't just loan against the old bricks and mortar and capital equipment because that's not what new industry is all about. So a lot of work was being undertaken and I think that should continue.

In particular, there was an initiative in the Ministry of Economic Development and Trade called the wisdom exchange which brought together CEOs from small, innovative growth firms and there were a number of linkages that were being built there between them and the banking communities, which I think should be continued, and although you have thrown out the window the sector partnership program, I would think that some of the work cross-sectoral of bringing groups together with financial institutions should continue.

I don't think Mr Silipo would have any problem with this either. We would support this recommendation.

The Chair: I take the motion as amended. Shall the motion, as amended, carry? Those in favour? Opposed? None being opposed, the motion carries unanimously.

Ms Bassett: Recommendation 13: "The government should request the federal government reduce federal programs to the same degree that the federal government is reducing transfer payments to provinces."

There's a typo in the middle. Take out "to" on the first line.

The Chair: This morning, we also added "that" before the second "the."

Ms Bassett: Okay, that's right. Is that why she put it?

Mrs Marland: Yes, I put in "that" --

Mr Kwinter: Mr Chairman, I don't understand this recommendation. It would seem to me that what you would want to have happen is just the reverse, that if the federal government was going to reduce transfer payments to the province, you'd want to encourage them not to reduce the programs that are federal programs.

To say to them you want them to reduce federal programs to the same degree that the federal government is reducing transfer payments to the province, then you're saying to the government, "Not only do we want you to reduce the payments to us, but cut your programs as well," so they get a sort of a double hit. I don't understand that.

Mr Martiniuk: I think the intent is clear, Mr Chair, that the federal government has in the past reduced transfer payments to individuals and other governments and yet had retained the same bureaucracy and the same level of waste in Ottawa that they have in the past. If they reduce, for instance, transfer payments to provincial governments by 20%, they should be reducing their bureaucracy by 20%. I think that's the intent of the motion.

Mrs Marland: Then maybe we should say that, instead of "programs."

Mr Phillips: What are the numbers, just so we know what we're voting on? The ones I've actually seen out of the federal government suggest that they've actually cut their own spending far more than they have cut transfer payments. I want to make sure that you've obviously got the numbers there. What are the numbers?

Mr Martiniuk: I do not have them with me.

Mr Phillips: Well, where are they? Are they at your office? The numbers I have show that they've actually reduced their own spending more than transfers.

Mr Martiniuk: Are you including transfers to individuals, or just to institutions?

Mr Phillips: Yes, and to the provinces, but you must have a different set of numbers. What I want to avoid is the embarrassment of us passing this motion, and then them saying, "Well, you obviously didn't even look at our budget, because we've already cut our own" -- because I can remember very clearly the words they used, "We are leading, we've cut our own spending more." I think you might recall last night, the budget was -- they cut defence another $400 million or something like that. I don't want us to look foolish on this, and obviously you've got the numbers.

Ms Bassett: I think in light of the fact that we're waiting for the numbers to come in, we should drop it, Mr Phillips. I thank you for pointing that out. We are getting the numbers, but I'd just as soon drop it for now.

Mr Phillips: Okay.

Ms Bassett: Thank you.

The Chair: It was withdrawn? Yes?

Ms Bassett: Yes.

Ms Lankin: I was just wondering, given that the numbers are on their way in, could you share those with us when they do arrive?

Ms Bassett: Yes, Ms Lankin.

Ms Lankin: Okay, thank you.

Mrs Marland: Just to do this technically, I will withdraw the motion that I placed this morning.

The Chair: Thank you, Mrs Marland.

Ms Bassett: That completes it.

The Chair: Shall we move to the recommendations proposed by the third party?

Ms Lankin: Recommendation 1: "The Ontario economy is in danger of slipping into recession. The government should take note of high unemployment and a depressed consumer outlook. Deep spending cuts will make the situation worse by killing jobs and destroying vital public services. Therefore, the government should embark upon a course of balanced deficit reduction to strengthen rather than weaken the province's economy."

Mr Silipo may want to add some comments to this, but I think in general I've set out over the course of the day, in response to a number of other recommendations, our concern that we heard very clearly from a number of the presenters of the weakness of the economy, of the danger of sliding into a recession and of the need for a very delicate balance in both fiscal and economic management to be reflected in this year's budget. That's the intent of our recommendation.

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The Chair: Mr Silipo?

Mr Silipo: No, I think that's fine.

The Chair: Further comment?

Ms Bassett: I understand what Ms Lankin is saying. It's just a different philosophical approach and there's no way we could vote for this recommendation.

The Chair: Further debate? Shall the motion carry?

Clerk of the Committee: Is it a recorded vote?

Mr Silipo: A recorded vote, yes.

Ayes

Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Hudak, Marland, Martiniuk, Spina, Wettlaufer.

The Chair: The motion is defeated.

Ms Lankin: The second recommendation we'll have to ask you to rule on. It reads as follows:

"The government's promised 30% income tax reduction will not have the hoped for stimulative impact on a fragile economy. The benefits of the tax cut will go primarily to the most wealthy, and there will be a $28 billion loss of revenue to the province. This is the real explanation for the deep cuts the government is imposing in jobs and services.

"Therefore, the government should abandon its plan to introduce a cut in personal income tax and instead maintain a balanced deficit reduction plan."

In light of recommendation 3 of the government caucus, which was passed earlier, although opposed certainly by our caucus, is this recommendation in order or is it contrary to one that has already been passed?

The Chair: It would be my impression that it would be in order. The previous motion has already passed. Therefore, this motion would be appropriate to be moved at this time.

Ms Lankin: Okay, that's fine. I was trying to observe orders from other proceedings where a motion that was passed --

Mrs Marland: May I speak?

Ms Lankin: You guys interrupt a lot.

The Chair: This is on a point of order, I think.

Mrs Marland: Yes, because you asked a question whether your motion was in order because of a previous motion passed by this committee. I'd like to ask the clerk why he is ruling that it's in order when it's a complete contradiction of the previous motion on the same matter?

The Chair: The clerk didn't rule; I did -- technical, perhaps.

In the same manner that a government can make a motion and there can be another motion moved at any time after that motion has been accepted, which completely contradicts it, so too can this committee.

Ms Lankin: This is not a bill.

The Chair: Mr Spina has a comment.

Mr Spina: If this is of any assistance, Mr Chair, there is another motion that was defeated that was tabled. That was the one by the Liberals, and it would seem to me that where you have essentially the same motion or the same thrust of motion and it's been defeated, then it becomes a duplication. I understand your ruling based on the fact that we passed one, but based on one that was defeated that's similar, then I think that's where I would say it's out of order.

The Chair: You're arguing that the motion can be introduced?

Mr Spina: Cannot, because it was already defeated when it was introduced by the Liberals.

The Chair: I can't quote the standing order, but I believe there is a rule such as that in the standing orders. However, there has been business intervening, and given that there's been intervening business, I believe it's appropriate.

Ms Lankin: Thank you very much, Mr Chair. I just wanted to make sure before I launched into a vigorous argument on this recommendation, because with all of the rational and sane and commonsensical arguments I have put forward today, I'm positive I will have convinced the government members to change their minds, unlike earlier when they voted against a similar Liberal motion, and that they will support this motion.

Actually, I don't want to take a lot of time because I believe we know what the end result will be. Let me just quickly, on the record, indicate that this one point of the government's fiscal plan causes us the most serious concern.

We believe that we are currently facing a very fragile economy, that consumer confidence is at a very low point. All of the reports day after day from school boards about thousands of employees receiving their notices; public servants in community after community after community walking the picket line attempting to save their jobs and save public services; young grads who are not able to find work in such times of high unemployment; all of that news feeds into a psychology of low consumer confidence, and that we will not see a turnaround in that over the short term for sure.

There is no evidence the income tax cut is going to aid in a turnaround in consumer confidence. There is no evidence that it will be an aid in attracting investment -- quite the contrary. If you have to do the cuts you are proposing to do to pay for the income tax break that you're going to be giving away, you will see a further erosion of community standards and delivery of public services, social services, health services, all of which are key indicators that help encourage investment to come to our province.

They don't just look at matters such as wage rates and taxes; they look at the health care system, at the stability and security of our neighbourhoods, at the trained workforce. All of those are important factors in attracting investment as well. It will not provide the kind of economic stimulus you are hoping for in terms of the 725,000 jobs, and we heard from expert witness after expert witness.

Our real concern is that to continue down this road you will have to make such huge cuts to the delivery of essential services that really will start to cut at the core and the fabric of our communities in such a way as to continue to undermine the confidence in the economy, the confidence in our communities and move us back into a recession. Surely, I know and you will agree, that is not what your intent is, but all the witnesses who came forward said there's a very real risk of that. This is the central driver to your proceeding down that path. It also puts at risk your ability to meet your fiscal targets with respect to deficit reduction and a balanced budget. It's wrongheaded to proceed at this point in time.

I expect you will vote against this motion, but I wanted to put clearly on the record that our caucus cannot support this direction at this point in time, given the fragility of the economy and given the thousands of people who are going to be laid off and the important services the public of Ontario will lose as a result of this.

Mrs Marland: I wish to be very brief, but actually both recommendations 1 and 2 from the third party could have gone together, because unfortunately, what they are saying is that the third party is opposed to deep spending cuts and opposed to the income tax reduction. So they're actually opposed to everything our government is doing, and that's their privilege. I don't want to get into political rhetoric, but the fact that they were the previous government, obviously, and are not the government now, speaks to the fact that they have a different philosophy, that they have a different approach to managing the province, and they had five years when they had that opportunity.

We are now the government and we feel very strongly that the program that the program this government is on is the program for the solution of the problem.

In recommendation 2, which is what we have on the floor now, when Ms Lankin speaks to the fact that the benefits of the tax cut will go primarily to the most wealthy, I don't know how she knows that because we don't yet know how the tax cuts are going to be done. Then her further statement that there will be a $28-billion loss of revenue to the province: I don't know how she knows that figure either. We just have to accept that there is an absolute difference in how we want to resolve the problems of the province and increase jobs and services and reduce the deficit.

Obviously, we cannot support their approach. Their approach already has been proven to fail in the last five years.

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Mr Martiniuk: I'll make my little speech that I was going to make against the Liberal motion. Business has learned to compete in the world economy and I believe government has to. By lowering the taxes by the amount in the CSR, we are lowering it to the lowest in Canada and I believe that will attract attention.

We cannot follow the siren cry of what I call the economic isolationists who believe we can build walls around a country and therefore survive. We have such strange bedfellows as the extremists, Mr Buchanan of the United States and Mr Robert White here, who believe they can build a wall around this country. We can't do it. We can't hide from the realities and one of our attractions will be a lower tax rate. I believe that'll create investment and jobs and that's what government's all about.

Mr Silipo: I wasn't going to speak, but I think when Ms Marland, as an experienced parliamentarian, says, "How do we know the benefit of the tax cut is going to go to the richest citizens in the province?" I have to ask myself what it is that she ran on that was different than the rest of the Tory caucus, because it's laid out very clearly in the Common Sense Revolution, which I know Tory members, from time to time, like to quote from, and it's very clearly laid out there.

There are two or three different examples of what it means to you, depending on your income and it's all set out. You're going to get a 30% tax cut and that's where we're taking our information from, and beyond that what the Minister of Finance has been saying and what the Premier has been saying.

Ms Lankin has made some very solid arguments and we've tried throughout these hearings to make some solid arguments about why the 30% tax cut doesn't make sense economically, fiscally, socially, but I don't expect we're going to carry more weight than Mike Harris in these discussions and he's made it abundantly clear that there's going to be a 30% tax cut, no matter what. We just simply wanted to make our position clear again. Ms Marland is right on one thing: We disagree wholeheartedly with the direction this government is taking.

Mr Phillips: Just to comment on the same point, actually the commitment on the tax cut could not have been clearer. It was down to the last dollar. It was like this is not anything that's -- it isn't just $1,700, it's $1,767, it's $1,351, it's $2,540. Our colleague here just said it, it is 46.07% marginal tax rate.

To say that the promise was kind of a generic thing is simply not true. I hate to break the news to you all, but this stuff is out there and there are a lot of people at home working on their old tax returns with this around them. It isn't just going to be, "Well, it was sort of a generic promise." This is down to the dollar. So, Ms Marland, when you say to Ms Lankin, "How can you possibly say that when you don't know what it's going to be?" we've just simply taken at face value what you said in the Common Sense Revolution.

Not prolong the debate, it is a fairly fundamental point. We talked earlier today about the fact that it's $5 billion a year in revenue. Every single penny of it's borrowed. If we want to be an internationally competitive environment, I would have thought you'd say: "Let's get our fiscal house in order first." Let's not run up another $20 billion worth of debt over the next four years. Let's not head into the next election with that added debt on your backs, with $4 million more a day in interest payments as a result of the money you're borrowing.

We had somewhat the same debate, but the extra point I wanted to make is just that this is not sort of a broad-stroke promise you've made. It's down to the penny or the dollar.

The Chair: Further debate? Are you ready for the question?

Ayes

Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina, Wettlaufer.

The Chair: The motion is defeated.

Mr Silipo: I'll move the next recommendation: "The economy requires some stimulative activity as pointed out by all expert witnesses. The proposed tax cut would offer some stimulation, but this would be offset by the slashing of jobs and services needed to pay for its implementation, leading to a general decrease in economic activity.

"Therefore, the government should consider other stimulative tools, such as capital spending and investments in economic development to support growth in jobs and the economy."

This is actually one that I hope could meet with approval on the government side, because if you look at the operative words in the "therefore," what we're talking about is other stimulative tools, such as capital spending and investment in economic development.

We heard from at least a couple that I recall, and I'm sure more presenters, around the need for the government to continue capital spending, whether it's in the area of tourism, whether it's in the area of roads infrastructure, just to cite two examples, as being something that's necessary and it's something that I hope the government members would find would meet with their approval.

Secondly, investments in economic development: We know when you look throughout the world at jurisdiction after jurisdiction, regardless of political stripe, that governments that have been successful in helping to create a climate where jobs are growing are those governments that also take an active role in investing strategically in economic development of a variety of kinds, whether it's in local community initiatives or broader industry-wide initiatives, and there is a direct role for government to play in both attracting and starting businesses and supporting some expansion of businesses through that type of approach.

We're suggesting these as two other tools in addition to what the government clearly believes, the proposed tax cut, is one tool to help create jobs in this province.

Mr Kwinter: I'd like to speak in support of the thrust of the recommendation, but I'd like to offer an amendment. I think there is a major problem this government is going to confront. I was dismayed and shocked when the Minister of Economic Development, Trade and Tourism announced in the House that economic growth cannot be created with government assistance. I sent a letter to the deputy minister saying, "If that is true, why don't you send everybody home, turn out the lights and save the taxpayers of Ontario one pile of money?"

We have a whole ministry over there that is dedicated to creating economic development. Many of the programs are cancelled and I don't necessarily object to that, but I think there's a role for the government to play. There is a whole range of situations that have happened historically in this province where without government intervention we wouldn't have had them. I can tell you that the Ford Motor Co expansion in Oakville, the Honda plant up in Alliston, the CAMI plant in Ingersoll, the Toyota plant in Cambridge, the salvation of Algoma, the salvation of de Havilland, all of these had a role to play and the government had a major role to play in them.

I understand and, believe me, I'm aware of the problems, that there is only so much money and that there is certainly a philosophy throughout the land that if it can't stand on its own two feet, it should go. But I think that to totally reject that and just act as a cheerleader, to say, "Ontario's open for business and you should come here because look at all the great things that we're doing fiscally, and that's going to make this a great place to invest," I can tell you that businesses are businesses, and when they compete they look for the best deal they can get, and it isn't just the feel-good feeling. They want to know dollars and cents, what does this mean to them, and, "Does it make any economic sense for us to go here when we can go somewhere else?" I think there's a role to play.

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So I would suggest that the recommendation be amended to say, in the second paragraph, "Therefore, the government should consider fiscally responsible tools, such as capital spending and investments in economic development to support growth in jobs and the economy." As long as you can afford to do it and as long as you can see the payback and you can see where the spinoffs are going to create jobs for our citizens and economic development for suppliers of various goods and services, then I think the government absolutely has a role. I would encourage the government to support that kind of approach.

Mr Silipo: Mr Chair, I accept that as a friendly amendment.

The Chair: Are there comments?

Ms Bassett: No, we're not going to support this. I hear what you're saying and --

Ms Lankin: Sorry, I didn't hear the rest of your --

Ms Bassett: There's nothing else to say.

Ms Lankin: Could you just enlighten us as to what the objection is? This is not proposing higher expenditures. It's within the context of your budget and all the recommendations you passed that these are things that you should consider.

The Chair: Is there further comment?

Mr Phillips: I wish the government would respond, because I absolutely guarantee, as close as you can, that we all collectively face a huge problem with unemployment. I think we all would acknowledge that, particularly young people. If we don't put our creative juices to work on trying to find solutions to it, if we just say, "We have one thing only," we've got a problem. What this is suggesting, and my colleague added an amendment that I thought would help you, is, let's get the Ministry of Finance people and the rest of us thinking creatively and aggressively about creative solutions to this, because I assure you -- assure us -- that the problem is not going away. I frankly think it would be in your own best interests to have this in our report and to be putting the minister's feet to the fire to be looking at some things, some creative things. You may disagree with what was in the federal budget, but at least they had several things where they were trying to tackle youth unemployment and what not. It may not have been much, and may not finally be fully effective, but I would think you would want to be forcing your minister to put the same considerations in.

Mr Spina: As the PA for Economic Development and with due respect to the two previous Economic Development ministers across the floor, I would suggest that a comment you made, Mr Phillips, is a good one, that we should be looking at creative tools to create a positive business investment environment. But I would also suggest to you that, historically, one of the reasons why we put out cash dollars and actual loan guarantees to specific businesses was because we created an environment of taxation and barriers and regulations so that we, in a sense, had to bribe these businesses to come here as a result of those rules, regulations and tax levels. That's the reason why we don't feel we can support this. We would rather go after more creative tools to create that investment environment, as opposed to actually putting out the actual capital spending dollars. We've received within the ministry many comments, both written and verbal, from industry, saying: "Yes, we know that you've cut out corporate welfare," as it's been phrased in terms of grants and subsidies and so forth. "We understand what the government is trying to do. Give us the economic environment in which it's an incentive for us to invest and we'll be there." That's the fundamental message that has been recurring to the minister, and I just wanted to bring that forward.

Ms Lankin: Just briefly, there's nothing in this recommendation that says you should reinstate loan programs. That could be one thing you could do, but that's not what the recommendation says. The recommendation, as it's now written, would suggest that you look at "fiscally responsible tools, such as capital spending and investments in economic development to support growth in jobs and the economy." With respect to capital spending, let me make it very clear to you that you are not going to have an efficient infrastructure in this province that attracts any investment if people can't move their goods to market. If you can't rely on good highways for just-in-time delivery of inventory, you're not going to attract investment; I don't care what your tax rates are. There are certain things that are basic fundamentals. You can define that in any way you want. Like, Highway 407 is going to be important in terms of companies being able to bypass the congested 401 series. Let's take a look at that. That's an important contribution to the competitive atmosphere that you want to create in this province.

With respect to the term "investments in economic development," let me suggest to you that bringing companies together on a sector-wide basis to have them discuss what they face in the economic market that they're involved in, like aerospace -- how do you turn around the trend where there has been a decreasing world market and Canada's been having a decreasing share of a decreasing world market? That concept of bringing people together is an investment in economic development, in determining where you're going to go.

The kind of wisdom exchange I talked about, the kind of liaison in bringing together companies with banks to discuss what we need to have in terms of changes to the credit policies of banks, to understand new knowledge-intensive industries, all of those things are creative tools that you can implement in a fiscally responsible way. All it's saying is, don't rely only on your tax cut. You have to look at some of these other tools and include them, not in any way that adds expenditure to your budget; it's in the context of all the recommendations you've already passed. I think to reject this is for you to take a very naïve view of the market and what the market will produce in this province in terms of employment opportunities for people. It really is to say that you will not have any opportunity of coming close to the job targets that you've set and that you don't care.

The Chair: Are we ready for the question? Shall this amended recommendation carry?

Mr Silipo: Recorded vote.

Ayes

Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina.

The Chair: The motion is defeated.

Mr Silipo: Mr Chair, with your agreement, I'll just read both of the next recommendations, given the time.

Recommendation 4:

"Consumer confidence, political stability and the overall level of training and health of the population are important considerations for increasing business investment.

"Therefore, the government should keep its campaign promises to protect vital public services, such as health care and classroom education, and restore the damaging the cuts that are already causing thousands of layoff notices in schools and hospitals."

Recommendation 5:

"The expenditure cuts announced to date have had the worst impact on the most vulnerable. Women, children, seniors, the poor, sick and disabled have been hit hardest. At the same time, the government's proposed 30% tax cut would benefit disproportionately the most wealthy in Ontario.

"Therefore, the government should take into account its responsibility to all Ontarians in shaping a more balanced program of spending reductions."

Because of the time, I won't elaborate on those. We can proceed to the vote if you wish.

The Chair: Shall we call the question? Shall the motion carry?

Ms Lankin: Recorded vote.

Ayes

Kwinter, Lankin, Phillips, Silipo.

Nays

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina.

The Chair: Recommendations 4 and 5 are defeated. It being 4 o'clock, we have a motion to move.

1600

Ms Bassett: I move that upon final approval by the subcommittee, the report be sent for translation and printing;

That a copy be forwarded to the Minister of Finance at the same time as the report is sent for translation; and

That the Chair table the report when the final printed document is received with the Clerk of the House if the Legislature has not resumed, or in the Legislature if it is sitting when the document is received.

Ms Lankin: I have two procedural questions. First of all, we have voted on a number of recommendations individually and amendments to recommendations and amendments to the report. At some point, there needs to be a motion on the whole report, which I think is a bit different than a motion to report back, so I think we've missed one motion.

Secondly, I would like to inquired as to the procedure with respect to dissenting reports, if you could explain that to me.

The Chair: We should also talk about the form of the report. If we could talk about the form first, perhaps it's more of a procedural thing. In the past, recommendations have appeared in two different forms. The first is that they have been incorporated into the report at the appropriate spot, and the second way it has been done in the past is that the recommendations be listed at the back of the report. Does the committee have any strong feelings as to which way our report should read?

Ms Lankin: Personally, I would like to see the recommendations incorporated in the report as opposed to listed at the end. There can always be a --

The Chair: They would also be listed at the end, under those conditions.

Ms Lankin: Yes, but I'd like to see them in the report.

The Chair: Further comments? Okay. The committee has general agreement on that. I don't think we need a vote.

On the dissenting report, 130(c):

"Every member shall be permitted to indicate in a report that he or she dissents from a particular recommendation or comment within the report. The committee shall permit a member to express the reasons for such dissent within its report."

Mr Kwinter: I don't think anyone was wondering whether we could do it. I think the question was: What is the time frame? How do you want to present it? What is the deadline so that it can get into the report?

Ms Lankin: That's helpful; that was the thrust of my question. I do want to indicate that we will be dissenting from some of those recommendations and would like to provide our reasons for that in the body of the report as that proceeds. I would just like a sense of the time frame and how we can facilitate communicating with you and the Clerk's office about that.

The Chair: I'm sorry.

Mr Silipo: Time lines. How do we do it?

The Chair: Next Wednesday? Is that reasonable, to have your report in to the Clerk's office?

Ms Lankin: It depends on when we will have a revised version of this report with the recommendations built into the body of it. We'll start working on it -- I mean, we won't wait until then -- but I'll need to have that in order to be able to provide our dissenting opinion on those recommendations in the right context.

The Chair: Ms Drummond needs Hansard before she can give you that revised copy, and Hansard apparently is running a titch late.

Ms Lankin: What about the end of next week, then? If you can get us the report by the beginning of the week --

The Chair: Alison will speak to it.

Ms Drummond: I can distribute the report probably the day after I see Hansard, but I just need to see Hansard on one of the particular motions.

Ms Lankin: What does that likely mean, Alison?

Ms Drummond: It should be early next week.

Ms Lankin: Early next week? When? Monday or Tuesday?

Ms Drummond: Yes.

Ms Lankin: In that case, I think we could provide our dissenting opinions on the recommendations that we are opposed to by Friday.

The Chair: By Friday, March 15?

Mr Phillips: We kind of expected that our recommendations would be adopted, so we didn't think there would be a need for a dissenting report.

The Chair: Mr Phillips never disappoints.

Mr Phillips: But next Friday is fine.

The Chair: Now we should have a motion to adopt the report as it will be amended.

Ms Bassett: Sorry about this, but upon final approval by the subcommittee, when do we give that?

Interjection.

Ms Bassett: Once we get something back? All right.

The Chair: I understand that the report that we agreed to this morning, as amended, and the recommendations that we have agreed to this morning and this afternoon -- we would like a motion to adopt that report and those recommendations.

Mr Kwinter: Just as long as it's understood that we are going to be voting on that part of the report that we've all agreed to and those recommendations that -- well, we can't agree on all the recommendations that were passed, only those that were unanimous.

The Chair: The recommendations that we all agree to.

Mr Kwinter: Otherwise there would be no reason for us to put in a dissenting report, if we are on the record as approving the report.

The Chair: My understanding is that this vote is on all of the motions that carried. You may wish to vote accordingly.

Mr Kwinter: Trust me.

The Chair: I didn't have to point that out, did I? Was that motion moved?

Ms Bassett: I can move that. That's fine.

The Chair: Shall the motion carry?

Ayes

Bassett, Jim Brown, Carr, Hudak, Marland, Martiniuk, Spina.

Nays

Kwinter, Lankin, Phillips, Silipo.

The Chair: Carried.

Mr Phillips: We need your motion to report this now?

Ms Bassett: Yes. It's already been read in.

The Chair: Yes, we need a motion to report to the House.

Mr Phillips: Is that date all right still? I forget the date that you said.

Mr Bassett: Friday the 15th is when you said you'd have your thing ready.

Mr Phillips: Yes. Then when you were reporting them, was there a date?

Ms Bassett: There was no date.

The Chair: It's covered if the House is open, and if it's not open, that's covered in the motion. Shall the motion carry? Those in favour? Opposed? None being opposed, the motion carries.

Ladies and gentlemen, that concludes our business. Let me say what a pleasure it has been to be your loyal servant. I have enjoyed it probably more than I should have. Thank you very much for your cooperation.

The committee adjourned at 1608