Legislative Assembly of Ontario

PRE-BUDGET CONSULTATIONS

CONTENTS

Monday 9 March 1998

Pre-budget consultations

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président

Mr Garry J. Guzzo (Ottawa-Rideau PC)

Vice-Chair / Vice-Président

Mr Wayne Wettlaufer (Kitchener PC)

Mr Ted Arnott (Wellington PC)

Mr John R. Baird (Nepean PC)

Mr Jim Brown (Scarborough West / -Ouest PC)

Mr Garry J. Guzzo (Ottawa-Rideau PC)

Mr Monte Kwinter (Wilson Heights L)

Mr Gerry Phillips (Scarborough-Agincourt L)

Mr Gilles Pouliot (Lake Nipigon / Lac-Nipigon ND)

Mr E.J. Douglas Rollins (Quinte PC)

Mr Wayne Wettlaufer (Kitchener PC)

Substitutions / Membres remplaçants

Mr Tony Silipo (Dovercourt ND)

Clerk / Greffière

Ms Tonia Grannum

Staff / Personnel

Mr Ray McLellan and Ms Lorraine Luski,

research officers, Legislative Research Service

The committee met at 1004 in room 228.

PRE-BUDGET CONSULTATIONS

The Chair (Mr Garry Guzzo): This committee will come to order, please. We have a quorum. Before we deal with the report writing of the committee's hearings, are there any preliminary matters to be dealt with? Any preliminary comments?

Very well, with regard to procedure, what is your wish?

Mr John R. Baird (Nepean): I was not on the committee last year, Mr Phillips was, so I will just throw on the table that we go through the report page by page and if there are any stylistic or semi-substantive changes, we consider them as we go, and if there are none, we just go on to the next page.

The Chair: I'm in your hands.

Mr Ted Arnott (Wellington): Mr Chair, is it normal procedure during this committee when the committee is writing a report that it be written in camera, or was it normally in past years done on the record with Hansard?

The Chair: I asked that question earlier and I understand that it has been done both in camera and in open session in the past. That's precisely what I was thinking at the time I asked for any preliminary matters.

Mr Gerry Phillips (Scarborough-Agincourt): I assume this is an open session. I have personally zero interest in doing anything in private unless it's personal matters.

The Chair: Oh, personal matters. You mean in committee. We're obviously in open session unless someone feels differently and so votes against.

Mr Tony Silipo (Dovercourt): I was just going to say the same thing as Mr Phillips. I don't see the rationale for doing this in private session. I think the last time I was here we even did it downstairs in room 151, so it was even more public than being in this room. I'm assuming that what we need to do, first of all, is just be clear that the summary of the report as put together by the staff is accurate in reflecting what we collectively thought was said to us, and then obviously the more crucial issue will be the recommendations, and I'm assuming we'll get into debate on those. I have some recommendations, I'm assuming government members do and I'm assuming Mr Phillips does as well, and we'll deal with them. But I don't see why that needs to be in private. I mean, we're all here to be accountable for the things we say and do, so I think we should proceed in public session.

The Chair: We have no motion, so we're in open session. The suggestion, though, has been made that we go page by page. I think before doing that the first question we should address is, are there areas or issues which were dealt with in the submissions that are not reflected in any way in this document that we have before us, this draft, and, if so, what are they? Then once they're identified we will deal with those and whatever else we have here.

Mr Baird: I was going to bring this up as we went to the part of the report that dealt with sectors of the Ontario economy. We were interested in seeing if research could prepare a small summary with respect to high technology as a sector and, in addition, to small business as a sector. For example, in high-tech, we heard from the Canadian Advanced Technology Association and ITAC Ontario. Then in the small business sector we heard from the CFIB, Delta Engineering, Global Ryan's Pet Food Co, Craaytech Painted Plastics, the Rubbery Warehouse Store and the PLM Group Ltd. I thought there might be some concerns specific to small business and high technology that we might want to include under the sector categories and, if there was agreement, just to ask legislative research to prepare a similar addition of a paragraph or two on each of those areas.

The Chair: Are there any other areas?

Mr Phillips: I was quite disappointed in the two responses I got to questions on revenue from gambling and on the teachers' pension. They're essentially not what I expected. On the teachers' pension, you may recall that the committee was trying to find out the status -- do we have to make these payments? -- because there is an $800-million difference between what the government has said it spent on pensions and what is reported in the financial statements. I had expected an answer back that would say, "Here are the expectations over the next year, what you should expect in pension payments," and instead I got a non-answer. On the gambling revenues, we were told at committee by the deputy that the estimates would be in the hundreds of millions of dollars for video lottery terminal revenue -- that's what he said -- and again we got back a non-answer.

I'm not sure how the committee can deal with either of the two issues. What is the taxpayers' obligation on teachers' pension? Is it $500 million or is it $1 billion? We're talking at least a $500-million difference, and the answer was not at all helpful. And the deputy said that video lottery terminal revenues would be in the hundreds of millions of dollars in the upcoming year, and we've got nothing -- this answer is a non-answer. I don't know why, but that's a minimum of $1 billion that we don't have an answer on.

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The Chair: That's a very valid point and I recognize it, but I don't want to deal with it yet. When I asked for preliminary matters, I was more or less expecting that might be one of them, and I will come back to it, but at this point in time I want to know, for the benefit of the people who are assisting us, whether there are any issues and areas that are not covered in the draft that you feel should have been covered.

Mr Silipo: I don't have any additional areas. I just want to state that I don't have any problems with what Mr Baird is suggesting. I presume that what would happen is that the researcher -- there are some references made inside here already to some of those, so I'm assuming what Mr Baird is looking for is for those to be taken out and put in a separate section, plus any additional comments that are there that weren't put in. Is that it?

Mr Baird: Not entirely. There are a number of small business and high-technology areas already mentioned in the report, just as there would be, for example, for manufacturing throughout the document. I guess what I wanted is a special section under the sectors. There may be some duplication, as there is already, with various sectors, so I don't want anything taken out, rather two small sections added in.

Mr Silipo: That's fine.

The Chair: Is there anything you would like to say with regard to Mr Baird's comment?

Mr Ray McLellan: On your point, Mr Baird, we had started off with a high-tech section at the back, and then we were trying to integrate and incorporate as much of that material at the back into the report, into the text. In the final analysis, what happened is that was moved into the section dealing with colleges, universities and high technology, that HT. It was brought forward, but I can certainly take your comment and take something back and reconstitute that there.

Mr Baird: Terrific.

The Chair: You'll have some time and you know what we're looking for. It's not a question of what is said; it's a question of highlighting the submission and the fact that a sector of the economy was present, which is not obvious, shall we say, from reading the introduction or from the content.

Any other areas? I'll go back to your point, Mr Phillips. You've made the point. Is there anything further you want to say?

Mr Phillips: I don't know whether the committee is as frustrated as I am, but on the teachers' pension it literally is a $500-million or $600-million difference, and if on the gambling revenues the deputy is right that it's hundreds of millions of dollars, this is not some insignificant amount. We're talking a difference in the deficit of $1 billion.

I'm frustrated, Mr Chair. I don't know what more you can do to get what I thought was going to be the answer back. On the pensions, either there is an actuarial surplus in the pension and we don't need to make the payments, or there isn't. On the gambling revenues, the deputy has said it is hundreds of millions of dollars. I'd like to know where the hundreds of millions of dollars are. Frankly, all we got back was something that was announced six months ago.

Mr E.J. Douglas Rollins (Quinte): It will be out. He's just going on a series of --

Interjection: Twelve months.

Mr Phillips: I gather when he said they expect hundreds of millions of dollars of revenue, the deputy wasn't -- "It's certainly in the order of hundreds of millions of dollars."

Mr Rollins: There are no VLTs yet in place to generate that income, are there?

Mr Phillips: Surely in the budget they will be estimating what the revenue is. They've got a plan for it, they are moving forward on the plan, they've announced the plan and he says it's in the order of hundreds of millions of dollars. If we're trying to deal with recommendations on dealing with the deficit and we don't have anything more than just the word of the deputy about hundreds of millions of dollars, I'd like to know the plan. What is it?

The Chair: Well, you've asked the question and the deputy did hear you, there's no question about that.

Mr Monte Kwinter (Wilson Heights): On the same point, we have a situation where the letter of March 6 from the Ministry of Finance addressed to Mr Phillips, where he addresses the gaming revenues, suggests that charities will receive, as a result of charity gaming club and VL initiatives, up to $180 million a year. That $180 million a year represents 10% of the gross gaming revenues. On that basis, obviously the ministry thinks they're going to get $1.8 billion, if they're going to give them $180 million, and that doesn't include what they get from the casinos.

In the second paragraph of the letter they say that revenue projections are "$1,435 million from both the Ontario Lottery Corp and the Ontario Casino Corp." Somewhere along the line they've come up with a $180-million projection for the charities, which is 10%. So there's a huge amount of money they have already identified, but they won't put it down and say, "This is what it is." The figure that I have heard is that VLTs are supposedly going to generate at least $700 million a year. All we're trying to do is find out, what is that number and how does that fit into the budget? On the one hand they tell you what the proceeds are going to be for charities, but they won't tell you what the gross amount is or what their expectation is.

Mr Baird: I think we could get into a whole host of public policy debates and political debates and discussions on a good number of public policy issues. Perhaps I could suggest that if there are concerns, they could certainly be raised in terms of one of the recommendations. I think what we're here to do is not to undertake an examination of a whole host of public policy issues; we're here to listen, to make inquiries of the presenters we heard in these pre-budget consultations and then finally to make recommendations that the government may wish to consider with respect to the preparation of the 1998-99 budget. So I don't know what sort of path we could pursue in terms of these discussions beyond a discussion of them if they were contained in a recommendation that perhaps the official opposition would like to present for discussion.

Mr Phillips: I think you can appreciate that in the financial statements the taxpayer has laid out $1 million of taxpayer money to set up in the Ontario Trillium Foundation an agency which will distribute video-lottery-based funds up to $100 million, with the taxpayers paying $1 million to set up a video lottery special communications unit. The taxpayers are spending their hard-earned dollars: setting up this lottery special communications unit for $1 million; $1 million to the Trillium Foundation to hire staff to distribute all of this money. The government may not want to talk about gambling, but they owe the public an explanation of where we're going on this stuff, and they owe the committee that. I just find it extremely irritating that something as monumental as this -- it really is bafflegab. There's no other way to describe the answer we got.

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The Chair: I accept and respect your position. After I received a call from Mr Phillips in Ottawa on Tuesday or Wednesday of last week and further inquired of the ministry with regard to the questions that he had raised -- I'm not clear what you're talking about when you mention "and that doesn't include casinos." Are you talking casinos or are you talking charity --

Mr Phillips: I didn't say that.

The Chair: I'm sorry; it was Mr Kwinter.

Mr Kwinter: Mr Chairman, what I am saying is that --

The Chair: Seven hundred million dollars but that doesn't include casinos.

Mr Kwinter: That's just revenue from VLTs.

The Chair: What casinos are you speaking of, the two that --

Mr Kwinter: I'm talking about the three, or four, if you want to consider it four. You've got the one in Niagara, the one in Rama, the one in Windsor and the riverboat in Windsor.

The Chair: All right. Let me just say for clarification's sake that, as I see it, Mr Phillips's question would possibly be answered this way: Nothing has changed in the last 12 months. Whatever was contemplated in the last budget is contemplated again in this budget because nothing has happened in terms of projected revenues. Having been part of the committee that travelled the province and dealt with the legislation, certainly that was the government's position at the time, estimating up to $180 million in revenue for charities and up to $1.8 billion in terms of government revenues -- "up to."

Mr Phillips: But you see, Mr Chairman, I said to the deputy, "Can you give us the estimate of how much revenue we should expect in the upcoming fiscal year from video lottery terminals?" He said, "It's in the order of hundreds of millions of dollars."

The Chair: I remember your question, I remember the answer and I've read the reply, which came, I believe, after 3 o'clock on Friday.

Mr Phillips: Yes, it did. Thank you.

The Chair: Let that be noted.

Mr Kwinter: Mr Chairman, I understand your comments about "Nothing has happened as yet," but reports emanating out of the Ministry of Finance and the ministries responsible for economic development and trade and consumer and commercial relations are that notwithstanding that the introduction of VLTs has been delayed, they expect to have them up and running starting in April. When you consider that the fiscal period we're talking about starts April 1, they will certainly be a factor in next year's economic revenues. All we're saying to the government is, can you please tell us what you expect that number to be? Because it's going to impact on the budget. On the one hand they're saying, "We expect to get up to $180 million, which represents 10%, but we won't tell you what the number is." That's all.

The Chair: I understand what you are saying, but please understand what I am saying. I'm not trying to answer the question. I am simply saying that it's true that -- I didn't mean to say that nothing has happened. They are in exactly the same position in April 1998 as they were in April 1997, so the projections, I would assume, would be exactly the same. That's my answer.

Mr Kwinter: No, with all due respect, we are doing pre-budget hearings -- budget, not fiscal reality.

The Chair: I appreciate that.

Mr Kwinter: We're talking about budgeting and you're saying we are going to be in exactly the same position in April 1998 as we were in April 1997. I'm suggesting to you, with respect, that we are not in that position, because in April 1997 to April 1998 there are no VLTs. But we know -- the government has said -- they expect to have the startup on these VLTs in April 1998.

The Chair: And I'm saying to you that if you'd asked that question in February 1997, you would have got exactly the same answer. They expected to have them in April 1997 and they didn't. But because they did expect to have them in April 1997, whatever they were budgeting for revenue in April 1997 is probably very close to what they're budgeting today. That's my guess. I'm not talking from any authority. I waited till 3:20 to get the answer on Friday as well. The point is well made. Thank you.

Anything else? Are we prepared to proceed then on a page-by-page basis of the draft submission?

Mr Phillips: Yes.

The Chair: The table of contents is the first item, pages i, ii and iii. Other than the suggestion from Mr Baird, which apparently has been accepted, to have a heading with regard to the issue of high-tech isolated in itself and a few paragraphs drafted on that, are there any other issues?

Mr Baird: And on small business.

The Chair: And on small business, I'm sorry. With that amendment, we can then carry the contents section and move on to page 1. Any comments or questions with regard to page 1?

Mr Baird: I just had a few changes and I guess I'm in your hands as to how you think I can best make them. Would I be best to present the changes just for pages 1 and 2 under that category, "Economic Outlook and Fiscal Profile"? I have a number to present. Am I best to present them all or just one by one?

The Chair: If we're going to proceed page by page, I would suggest you let me have them with regard to page 1.

Mr Baird: The first bullet I would rewrite to say as follows, "This year's deficit outlook is $5,162 million." I would strike "Two years from now" and insert "Just over two years from now, in the fiscal year 2000-01, the deficit will be zero." That's just clarifying the minister's comments that he made on February 10 and it's in Hansard on page 1787.

The Chair: Do you understand the proposed amendment as submitted by Mr Baird? Any questions?

Mr Arnott: Would it not be more clear to say "$5.162 billion," instead of "$5,162 million"? That's more common usage.

The Chair: I would have thought it was billion, but --

Mr Arnott: The way it's written is technically correct; $5,000 million is $5 billion.

Mr Baird: I guess I'm in your hands, Mr Chair, as to how you want to conduct that. Do you want to take one change at a time or do you want to take 10 changes and then discuss all 10 at the same time?

The Chair: If it's going to deal with the first bullet I'm going to hear all the submissions with regard to the first bullet. So $5.162 billion as opposed to $5,162 million.

Mr Arnott: Do you understand what I mean?

The Chair: Yes, I understand what you mean. Quite frankly, I had missed that it was a comma. Does anybody have a preference?

Mr Baird: I agree.

The Chair: It might be more consistent, $5.162 billion.

The suggestion you've heard from Mr Baird, any comment?

Mr Kwinter: I have a problem with what Mr Baird is suggesting. There's no question that the government has projected a balanced budget in the 2000-01 fiscal period. However, several of the key economists who appeared before this committee had suggested that that will happen at least a year earlier, and that if it doesn't, there are some very serious problems with what the government is doing with its finances. There's every indication that will happen. I think this statement reflects that it's going to have, and I think the Premier has gone on record as saying that he expects to have, a balanced budget, not in this fiscal period but in the fiscal period following this one.

Mr Baird: This isn't a discussion. This is a summary of what the minister presented before the committee, not a summary of what others may have presented or on other public policy issues. I feel we have to clarify it and make it little bit more crisp.

The Chair: I think that's a fair comment. This is referring, as I read it, to what the minister said.

Mr Baird: I don't disagree with your comment, by the way.

Mr Kwinter: That's fine.

Mr Silipo: That was the point I was going to make. Maybe we should just be really clear about this, that in fact the bullets that are here reflect or are supposed to reflect statements that the minister has made. Perhaps what we could do is, before the three bullets, just be really clear about this by inserting a couple of words such as, "He stated that," and then bullets 1, 2, 3.

Mr Baird: Fair point.

Mr Silipo: Or words to that effect so that it's really clear.

The Chair: To clarify that this was the minister's position.

Mr Baird: It says right above there, and I think it's clear, but if you would be comfortable with a second clarification, that's fine.

Mr Silipo: One could go from that next to the bullets and still have some confusion, I think.

The Chair: Anything else?

Mr Baird: I would insert two more bullets.

The Chair: No, I want to deal with this.

Is that bullet carried then? After the word "billion" -- it now becomes "billion" -- "Just over two years from now to the year 2000-01" --

Mr Baird: In the fiscal year 2000-01?

The Chair: In the fiscal year -- "the deficit will be zero." Carried.

What's your next point?

Mr Baird: I would add two further bullets in terms of summarizing the minister's comments, and again --

The Chair: I'm sorry. Did you say to add two further bullets?

Mr Baird: Insert a fourth and fifth bullet.

The Chair: Yes?

Mr Baird: These are directly from his comments in Hansard on pages 1787 and 1788. The fourth bullet I would propose would read, "Ontario's economy is growing faster than the rest of Canada and faster than any of the G-7 countries." Then the fifth bullet, "Since June 1995, 311,000 new private sector jobs have been created."

The Chair: Once again, this is what the minister said?

Mr Baird: Yes.

The Chair: Any comments? Carried.

Anything else on page 1?

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Mr Baird: Just a number of stylistic changes in the second to last paragraph, and these are non-substantial. I think they just do a little bit of clarifying. In the second line, "that revenues have increased $2.4 billion since the 1997 budget," eliminate the comma and insert "and" and then take out the parentheses before "primary" and after "realignment" in that paragraph, just for stylistic reasons.

Mr Kwinter: I have a problem with the sequence of what has just been suggested. I have no problem with adding those two bullet points, but if you add them in the same grouping as the three, then you're saying that the underlying reason for this economic performance, for example, the creation of the jobs, was attributable to the fact that revenues have increased. The fact that revenues have increased has nothing to do with creating jobs. What you're doing is you're talking about the deficit and what the fiscal performance is going to be, and the reason it's being accelerated is that revenues have increased. I have no problem with putting in a statement that the minister said so many net new jobs have been created when the budget is going to be changed, but I have a problem when it follows on that the underlying reason for this economic performance is the fact that revenues have increased when it comes to creating jobs, because it really has nothing to do with creating jobs.

Mr Baird: Again, this is a public policy discussion.

The Chair: Just a minute. Remember this, your point is accepted, but what we're saying now with the change is this is what the minister stated.

Mr Kwinter: I have no problem, but I don't think the minister stated that the reason he's got this number of net new jobs is because of the economic performance of an increase in revenues. The increase in revenues is a result of the economy growing, the jobs are a direct result of that, and as I say, I have no problem with its being in there, but not at that point. That's all I'm saying.

The Chair: I hear you. Thank you.

We're back to the bullets and adding the bullets without editorial comment between bullet 3 and bullet 4. The suggestion has been made that there is a causal connection, and I accept that; I think I have to accept that.

Mr Baird: I don't. I think these are reflected in the minister's statement, and I can reference the fourth bullet that I'd like to add, Hansard, pages 1787 and 1788.

The Chair: I accept that, and when I say I accept it, I think Mr Kwinter makes a valid point and I think the minister was making exactly that point. What I am saying -- and since we've already passed the bullets I hesitate to go back to them -- is my interpretation would be that the minister was making that point.

With regard to the changes in the second-last paragraph, any comment?

Mr Silipo: Yes, I would actually prefer if the information that's in the brackets that Mr Baird is suggesting we take out be left in, and if it's a question of just the sentences flowing, perhaps what's in that bracket could simply be turned into another sentence and then set out there.

The Chair: You've heard our comments. I'll allow you the edit. Anything else on page 1? Page 1 is then carried, as amended.

On page 2, amendments?

Mr Baird: Again, just a clarification, in the first half paragraph at the top, the first full sentence: "Efforts to reduce the deficit are important to slow the growth in the forecast debt" -- rather than "of the debt" -- "which stands at," just for purposes of clarification, "$106.7 billion at March 31, 1998," just to be explicitly clear, because the report will be coming out in a couple of weeks and I thought it would be good to have a specific number.

The Chair: So you want to insert the word "forecast" before the word "debt" and you want to change the number to "$106.7 billion at March 31, 1998." Accepted? Accepted.

Mr Baird: Just one more small change in the first full paragraph, the second full sentence: "While job growth for youth reached," I would insert "about 30,000 jobs over the past 11 months, the minister," and then continue. Again, it's just a clarification.

Mr McLellan: On the point of the debt, Mr Baird, in the past what we've tended to do is to stick rigorously to the information provided in the submissions by witnesses and documentation, and not to necessarily update it on subsequent information that comes to light. I don't have a problem; I just want to bring it to your attention that we've tended to stick with that process, rather than updating on subsequent information following the hearings. You either stick with the information in the hearings or you open it up and introduce new information during the report writing process. I just want to point to that departure. I don't have a problem with it.

Mr Baird: It's a fair point.

The Chair: I don't know how important it is on this particular statement, but it's going to be a very valid point on other matters, I think.

Mr Baird: I think it's a very fair point. On this number I just thought that was for the general public or the folks who read this report, just so we're absolutely crystal clear what the net debt is as of a particular date, just to eliminate any ambiguity.

The Chair: We've already carried it and it does become that much more precise, at least by picking a date as of when we're talking. If someone has any objections, we will go back. But I think Ray's point is well taken.

With regard to these proposed amendments, inserting the words "about 30,000 jobs in," is it "the first 11 months" or "the last 11 months"?

Mr Baird: "Over the past 11 months."

The Chair: With the greatest of respect, that does not clarify anything. What are you talking about, "the past 11 months," as of what date?

Mr Baird: As of the date the minister made the presentation.

Mr Silipo: I think you just need to put whatever the dates are.

Mr Baird: They are in the back.

The Chair: All right, "about 30,000 jobs in the 11 months ending February 1998"?

Mr Baird: Sure, that's a good idea.

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The Chair: I suppose January 31, 1998, would be more precise. He was delivering this in the first week of -- is that acceptable? Is it carried?

Mr Silipo: The point that's made in the first sentence of that first full paragraph is, of course, the same as we've inserted now under one of the bullets on the previous page. So it is repetitive. I don't know whether we need to have it there again. You could still take it out and just simply either start with the rest of it as it is or just say "Job growth for youth" etc.

Mr Baird: That's fine.

The Chair: So if we're putting it in in that bullet, we take it out here? Is that agreed?

Mr Baird: That's fine.

The Chair: Very well. So that first sentence comes out and then I presume we start the paragraph with "While job growth," as amended. Carried.

Anything else on page 2?

Mr Phillips: We can't change this because this is what he said, but I just want to express my frustration on the way we report jobs. I'd like some day to use a consistent measure. I've always used what the government uses. In their Economic Outlook they have employment, they have a number. We've discussed almost yearly with the financial officials what number should be used for recording jobs. Unless you start to use a consistent one, everybody picks the one that makes them look best, including probably the opposition: We'll say, "This is blah, blah, blah." The equivalent would be if we report revenue on the basis of, "In the last three months, this happened" or "In the last six months, this happened."

There is a number that has been used always in budgets. It's the StatsCan number; it's the number the Ministry of Finance publishes; it's the labour force statistics for Ontario; it's the number that's in all the budgets. As I say, if we're selective, ie, "Within the last seven months, this; in the last eight months, that," you never really talk apples to apples to apples.

I shouldn't say I don't care -- I do care -- but I understand why the minister would come and select the best possible set of numbers. It's just the way it works. But I would hope that we could all ultimately agree on how we should measure job growth. To me, I take it the way the government has always done it. If any of you look back through any of the Economic Outlooks, any of the budget numbers, it's always using the Stats Canada number. I just say that the Stats Canada number for 1997 shows job growth of 102,000 jobs. It doesn't change the number of jobs out there, but at least it's a way that we don't kid ourselves, and that's where the discussion has been around here: "Well, the economy grew at 4.4%, jobs grew at 1.9%" -- that's the number, by the way, the government uses: 1.9% -- "Is there something going on?"

We can play games with ourselves forever, I guess, by using different measurements to our own purposes. But to try to deal with consistency, I just say to the committee that I think we should set how we want to measure jobs, and if we want to change it, I suppose I don't have a problem with that. But I'd at least urge the committee members to look at the numbers themselves so at least we all agree with the numbers.

Now, you can't change that, because this is what the minister said. It's probably factually not incorrect. But we don't have a steady benchmark. The number I use is the number the government uses. You can see here, Economic Outlook, employment growth, and they use the number out of here, but we keep jumping it around.

There's nothing we can change here because this is what he said, and we can't change what he said. But at least for ourselves we should all at least look at the Ministry of Finance Stats Canada numbers on job growth and say, "In 1994, it grew 71,000; in 1995, 71,000; in 1996, 80,000; in 1997, 102,000." By the way, on youth employment, the 1997 youth employment is actually down 6,000.

Again, that's the number the government itself normally uses, unless it's not in their best interests.

The Chair: Your frustration is noted. I might tell you you're in good company. On Ottawa radio yesterday, the chairman of the Conference Board of Canada, Mr Nininger, made the same point. He didn't make it as forcefully or as eloquently, I might say, Mr Phillips, but you're in -- maybe I shouldn't say you're in good company.

Mr Phillips: We're in the same company.

The Chair: Some people think you're in good company. It is a valid point, and it obviously creates some benefits for people in our position and some confusion for people in the --

Mr Phillips: To be honest with you, Mr Chair, it makes the 1997 numbers look worse for "the government," but it would make the 1998 numbers look better for the government, in my opinion, if you used a consistent measurement. But I'll note it and I'll probably be sitting here again next year and say, "Well, gee, I see you've changed the way you report your numbers."

Mr Silipo: I think Mr Phillips, as you've noted, Chair, makes a very valid observation. I wonder if there isn't a way in which we could, without taking away anything that is attributed to the minister -- I would agree with him that what we're talking about so far is reflecting accurately what the minister on behalf of the government has said. But would there not be a way, perhaps towards the end of this particular first section on the economic outlook and fiscal profile, or somewhere else if it's more appropriate, to make that kind of notation in terms of reflecting the job numbers using, as Mr Phillips has said, the Stats Canada numbers? Those are the only ongoing common measurement that I think there is when you want to compare anything over the next -- looking into the next couple of years and in fact going back however many number of years.

I would just make that as a suggestion, because I think it's possible to do that without starting to quibble about numbers or seeming like we are trying to quibble about numbers, but just simply noting that there is a variety of ways in which these jobs numbers are looked at or are recorded or are reflected and that the only kind of common one, certainly that I've seen, are the Stats Canada numbers, and somewhere noting that in the report. I don't know where or how it would be best to do that, but I'd raise that as a possibility.

The Chair: It's a valid point.

Mr Baird: I would just indicate, Mr Chair, that if we were to go through the various presentations that folks were making and then made our own editor's comment or editor's note before and after each one, I think we'd be going into uncharted waters we would rather not go down.

The Chair: It's a valid point. There are some pitfalls.

Mr Baird: But if the minister chooses to use the job statistic way in his presentation, I don't think we should -- nor would it be appropriate for me at CUPE's presentation to note that the committee believed these numbers were wrong and should be used a different way.

Mr Silipo: I wasn't suggesting we do it in juxtaposition here to the minister's presentation. That's why I was suggesting that perhaps somewhere else, somewhere later on in the report --

Mr Baird: I think you said specifically at the end of the economic and fiscal outlook.

Mr Silipo: It's simply because again there, the next part of this talks about the Ministry of Finance officials' report to the committee and reflects a number of the statistics that they provided to us. As Mr Phillips pointed out, the numbers that are in the actual fiscal outlook are the Stats Canada numbers. It's not like we would be extrapolating and making up new numbers. We would be using information that was there, if not as part of the presentation then certainly as part of the documentation that was provided to the committee by the Ministry of Finance officials.

I'm not trying to create something that doesn't exist. I'm simply saying there is a very logical link we can make between the common denominator way of measuring, among other things, jobs growth, which are the Stats Canada numbers, and the fact that those are reflected, as Mr Phillips was saying, in the Ministry of Finance documents.

The Chair: With regard to page 2, are we ready? Carried as amended? Thank you.

Page 3.

Mr Baird: I have two issues, coincidentally, on the issue of employment labour market. One is stylistic and one is substantive.

Given Mr Phillips's comments, I'd put on the table and ask the committee: The number 26 in the committee is what Mr Dorey used in Hansard. It should rather read 16. I would ask if there would be the willingness to change that from 26 to 16 so that it's an accurate number.

The Chair: Agreed?

Mr Phillips: What's that, the Help Wanted Index there?

Mr Baird: Yes. It's supposed to be 16. I concede Hansard says 26, and I just wanted be up front. Hansard says 26. He should have said 16.

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The Chair: Are we agreed?

Anything else on page 3?

Mr Baird: Stylistically, just a quick change, and this is purely stylistic. I would change it to read, "For example, over the last 11 months the Help Wanted Index was up 16%," period, and omit the rest of that sentence. Then I'd omit "In the order of" in the next sentence so it would be "Two hundred and thirty-four thousand," not "In the order of 234,000." It's just "Two hundred and thirty-four thousand private sector jobs were created and the provincial unemployment rate decreased" -- just omit the word "has." Those are just two stylistic changes.

The Chair: Let me understand it now. The sentence would read, "For example, the Help Wanted Index was up 16%."

Mr Baird: No. "For example, over the last 11 months the Help Wanted Index was up 16%." Eliminate --

The Chair: -- "in 1997...."

Mr Baird: Yes, and then eliminate "In the order of 234,000" just to read "Two hundred and thirty-four thousand," and then eliminate the word "has" in that sentence. Those are purely stylistic.

The Chair: Are the stylistic changes accepted?

Anything else on page 3? Page 3 is carried? Carried, as amended.

Page 4: Any additions or deletions? Page 4 is carried? Carried.

Page 5: Any additions or deletions?

Mr Baird: In the second paragraph, eliminate the range where it says "$55-56 billion" just to say "$56 billion."

Then one sentence down, the sentence reads, "However, the reserve, referred to above, will not be required." I think we should just strike that sentence. The reserve fund is not spending and doesn't belong, I don't think, in the paragraph.

Further, "The PIT forecast is approximately $1.8 billion higher than the figures released in the 1997 budget," period, and eliminate "last year and higher 1996 assessments."

I apologize. There's one other, in the third line down. It says "and transitional expenses." Just for purposes of clarity it should be "and social services realignment transitional expenses." I just wanted to clarify those points.

The Chair: The suggestion is that in paragraph 2 we eliminate the reference to $55 billion and simply state $56 billion. In line 3, after "charges," we add "and social services realignment transitional expenses." We eliminate the sentence starting, "However, the reserve,..." Then in the last sentence it would read "$1.8 billion higher than the figures released in the 1997 budget," period, eliminating the last five or six words there.

Any objection? Carried?

Mr Phillips: Just a moment. What we're referring to there is that it is $1.8 billion higher than originally projected in the budget, right? It's not in last year's budget.

Mr Baird: Yes, you're right.

The Chair: Anything else on page 5?

Mr Baird: In the third paragraph, second line, I would simply strike "permitted" and put "helped." In reading Hansard, on page 1801 they said "is able to," and I think "helped" is probably a better word than "permitted."

The Chair: So take out the word "permitted" and replace it with "helped." Any objection? Carried.

Any other changes on page 5?

Mr Baird: Under "Revenue Changes," I'd change the second sentence to say, "This figure has been attributed to disaster relief funding and adjustments resulting from the impact of changes in the PIT to," and, for the purposes of clarity, strike "health and social entitlements," to read "PIT to the Canada health and social transfer."

The Chair: You've heard the proposed changes. Any objections?

Mr Phillips: Did the financial officials indicate -- I can't remember -- how that, changes in the PIT to health and social entitlements, affected Ontarians? I can't remember that in their presentation.

Mr Baird: Beyond saying that there was an increase of about $10 million with respect to some changes made in the PIT federally, which obviously would yield Ontario additional funds -- on the income tax there are some extremely small, modest changes that resulted in increased federal income tax, resulting in a $10-million increase in provincial.

Mr Phillips: It's of interest to me because I gather what happens is that, and I'm looking at the financial statement, the cash portion from the government went down by $280 million -- is that right? -- on the health and social transfers. Does that mean the tax portion went up by $290 million?

Are you following, Mr Baird? I'm on page 5, where you said that there was a $10-million difference. I'm on, I think it is, the government's financial statements. Is the $10 million net the difference between -- there's a $280-million decrease on the health and social transfers offset by a $290-million increase --

Mr Baird: I'd be happy to find out the answer to that question for you. I'm just going to note that question.

The Chair: Anything else on page 5?

Mr Baird: Under "Operating Expense Charges," the second bullet, just one thing I wanted to clarify, to add at the end to "stable funding," to insert "for the former Metropolitan Toronto School Board and the former Ottawa Board of Education."

The Chair: Accepted?

Any other changes on page 5?

Mr Baird: Just a final one. Under the last bullet on page 5, "An additional $900-million provision was put into...for 1997-98," and then strike "which was added in 1996-97," again just to clarify so it's crisp.

The Chair: So insert the word "provision" after the word "million" in the last bullet on page 5 and eliminate the last five or six words.

Mr Baird: And after "'restructuring and other charges'" insert "for 1997-98."

The Chair: Agreed?

Mr Silipo: I just want to be sure that we're not changing what's actually happened, because as I read this bullet I understood this was reflecting the fact that $900 million was put into restructuring and other charges from the 1996-97. This gets into the part of that whole discussion about moneys that were put into one year but not spent. I'm just a little concerned that in the way Mr Baird is suggesting we reword it, that reference to 1996-97 disappears. I think it maybe changes the context a little.

Mr Baird: Just the way we do accrual accounting, the way the Provincial Auditor has insisted that we operate on the accrual accounting system, if a particular decision is announced and is booked towards that year, I guess with the title "Operating Expense Changes," I think it clarifies the fifth bullet, that it is for 1997-98 while perhaps announced in 1996-97. Just under the category "Operating Expense Changes," I think it should be explicit and crisp.

The Chair: Any other questions? Does page 5 carry, as amended? Carried.

Page 6: Any additions and deletions?

Mr Baird: The top bullet, second sentence, stylistically, to delete "The addition to" and just read, "These transitional measures have added $559 million to the operating expense."

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The Chair: Accepted?

Anything else on page 6?

Mr Baird: Under "Capital Expense Changes" -- this is referenced to page 1798 of Hansard -- just for purposes of clarity when someone's reading the first bullet: "Disaster relief for public agencies and municipalities, as a result of the recent severe ice storms in eastern Ontario."

The Chair: Accepted?

Anything else?

Mr Baird: Second bullet, same reason: "Local services realignment, capital transitional assistance and funding to facilitate the transfer of developmental service clients out of large institutional settings." Again, it's just so when someone reads this they'll know what we're talking about.

The Chair: Accepted?

Anything else on page 6?

Mr Baird: Just to reword, under "Restructuring and Other Charges," with the same purpose in mind -- I'll just read it as it would read. That would be easy.

"The total provision for restructuring and other charges in 1997-98 is $1.5 billion, an increase of $900 million from the 1997 budget provision. These expenditures will support health care and municipal restructuring, for example, as well as other necessary investments that may arise from the government's efforts to ensure the efficient and effective delivery of public services."

Again, just for clarity, one thing I found --

The Chair: Just a minute. Is it accepted as read?

Anything else on page 6? Is page 6 approved as amended? Thank you.

Page 7.

Mr Baird: I have just one comment. I was wondering if on the expert witnesses page, page 7, just to split it up appropriately, the economists could appear in order of caucus selection one round at a time, meaning government, opposition, third party, government, opposition, third party, rather than the order that they're in.

Mr Phillips: I don't even remember who we put on our list. I really don't.

Mr Baird: I do.

Mr Phillips: Enemies of the state.

The Chair: A lot of us have difficulty believing some of them were our picks.

Mr Baird: We had a few surprises. The Royal Bank was not our selection, I'll put for Hansard.

The Chair: This is alphabetical, not as they appeared. You want them --

Mr Baird: What I wanted was that they appear on a rotation basis, so that it breaks up the report both in terms of --

The Chair: Help us out here. How would they then list, by name?

Mr Baird: Government, official opposition, third party, then repeat.

The Chair: No, by name. Who were the government ones first?

Mr Baird: For example, Sherry Cooper was government, Hugh Mackenzie was third party, I believe John McCallum was the official opposition, Informetrica I believe was the third party, Catherine Swift was the government, Scotiabank --

The Chair: If you don't know, we'll pick it out of the records here, if it's passed. Mr Phillips has a comment.

Mr Phillips: Let me just strongly object to this. Our caucus just tries to get who we regard as knowledgeable on the economy. I think we put down the names of four bank economists. But if they are going to be identified as Liberal witnesses, I won't do it in the future.

Mr Baird: I wouldn't want to identify them in the reports, just in order.

Mr Phillips: But the Hansard will say, "Put them in order." If this is the way you want to work, where you are friends or enemies of the state --

Mr Baird: That was not my intention.

Mr Phillips: Well, for God's sake, why would you put down -- I really literally will not in the future submit names, because I don't want the Royal Bank feeling they are now regarded as the mouthpiece of the Liberal caucus and the enemy of the government.

Mr Baird: People can check out some of the members of our caucus on Hansard and not know this on the issue of friendship.

Mr Phillips: But if it were that they were here representing the Liberal caucus, I would not put their names down.

Mr Baird: My only purpose in doing that was to split them up so we get a variety of opinion presented in the report. That's a fair point. I didn't take it from that angle. That's a fair point, and I can withdraw that suggestion.

Mr Phillips: Neither of those would ever regard themselves nor any of the bank economists as supporting one of the other parties. They would not come if they thought that was how they would be identified.

The Chair: I think you're absolutely correct.

Mr Baird: That was not my intention, but it's a fair point.

The Chair: It might be appropriate to indicate then that they appear alphabetically.

Mr Phillips: If in the future we say, "Bring forward as spokespeople," then --

Mr Baird: I withdraw it.

Mr Phillips: I agree, if we just put them alphabetically.

The Chair: All right, but that's the way he has done it.

Mr Phillips: That's fine.

The Chair: But I would like to indicate here that they appear alphabetically as opposed to order of importance or order of preference of the positions they made, that the submissions indicate that's the way we're doing it.

Mr Kwinter: The only problem I have with that is that you then have to decide if they are appearing by virtue of their personal names or the organizations they represent. I think when we invite them, we invite them as their organizations and not as individuals. It would seem to me that you start to get into some very serious problems.

The Chair: So you want to list them alphabetically as per their employers.

Mr Baird: But that's not the case. For example, Hugh Mackenzie appeared, and he was very clear that his comments were his own feelings and not necessarily those of the Steelworkers, while the Steelworkers may agree with just about everything he had to say.

The Chair: I withdraw the suggestion, since you haven't voted on it, that we put them alphabetically.

No changes to page 7. Agreed as read? Carried.

Page 8.

Mr Baird: I just have a few stylistic changes. Under "Catherine Swift," last sentence, second-last line, just the term "surplus jobs;" I prefer the term "unfilled jobs." I don't think she said "surplus." I just don't like the word "surplus" when talking about jobs.

The Chair: Let's go back to her submission and see how she described it. If she used the word "surplus," the word "surplus" remains; if she didn't, we'll change it to "unfilled."

Mr Baird: Terrific, and the last line, just after "high technology," rather than "resulting in a structural problem," I think "indicating a structural problem" would give greater clarity on her presentation.

The Chair: "Indicating" replacing "resulting." Accepted? Page 8 carries.

Mr Baird: I have just two more. Under "Scotiabank," just a clarification. From what I read, I think "A debt ratio of no more than 17% in 10 years should be the policy target" more accurately represents his comments in Hansard. There's no policy change, just to make it clear.

The Chair: Accepted?

Anything else?

Mr Baird: Just one other one, under "Fiscal Commentary" -- no, it was fine.

The Chair: Nothing else? Thank you.

Page 8, as amended, carried? Carried.

Page 9: Any additions or deletions? Carried as read?

Page 10: Any additions or deletions?

Mr Baird: Just two very quick insertions. Under "Personal Income Taxes," going down, when they list, right after the Ontario Real Estate Association, there were a few that were missed. I would insert the Ontario Chamber of Commerce, the Canadian Taxpayers Federation and the Ontario Natural Gas Association. Then just in the next sentence, "support for this initiative" not "initiatives." Just remove the "s." That's it.

The Chair: Anything else?

Mr Phillips: The federation had several recommendations. Are we dealing with all of them?

The Chair: I seem to recall --

Mr Silipo: They should be added later on.

Mr Phillips: They come elsewhere?

Mr Silipo: They come elsewhere.

Mr Phillips: Okay.

The Chair: Page 10, as amended, carries? Carried.

Page 11: Any additions or deletions?

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Mr Baird: Just a quick question. I wonder if I could ask research just to go back and confirm. The Ontario Trucking Association, I just would ask you to doublecheck that statement. Perhaps you're right, I didn't have the opportunity to check it before this morning. I would just ask you to doublecheck.

The Chair: Your question is with regard to what?

Mr Baird: Under "Harmonization," I'm concerned that conclusion may not reflect what the Ontario Trucking Association said, and I would ask that they confirm.

The Chair: All right. We'll confirm it.

Does page 11 carry? Carried.

Page 12, any additions or deletions? Is page 12 carried as read? Carried.

Page 13, any additions or deletions? Is page 13 carried as read? Carried.

Page 14, any additions or deletions? Carried as read? Carried.

Page 15, carried as read? Carried.

Page 16, carried as --

Mr Baird: No. Again, this is just stylistic. Under "Student Assistance/Accessibility," just for clarity, "The ability of students to complete their education with the increases" rather than "continue in the system." It just sounds a little bit awkward.

The Chair: Anything else?

Mr Phillips: I'm sorry. I had one on 15, Mr Chair.

The Chair: We'll deal with 16 and go back to 15 if it's the wish.

Anything on 16? Carried as read? Carried.

Mr Phillips wishes to go back to 15.

Mr Phillips: At the top, that the Minister of Finance indicated the way to resolve the tax rate inequity was a uniform commercial-industrial tax rate across the province, did he say that in his remarks? Do you have a reference to Hansard?

Ms Lorraine Luski: I can check.

Mr Phillips: That's fine. We'll look later.

The Chair: Page 15 is carried, with that question.

We have carried 16, as amended. Page 17.

Mr Baird: Just one small change in the second-last paragraph, "the Council of Ontario Universities," not just "the Council of Universities."

Mr Phillips: You've been a busy fellow over the weekend.

Mr Baird: I do my homework.

The Chair: No substitute for a good staff.

Mr Baird: You can imagine how my staff feel when I do correspondence. I look over to my staff and he's not looking up.

Mr Phillips: I picked up all these things myself. I didn't want to be nitpicking here.

The Chair: Page 17, as amended? Carried.

Page 18, additions and deletions?

Mr Baird: With the same spirit in mind as the last one, under "Knowledge-Based Firms," the second paragraph, last line, "14,000 graduates and there will be an estimated demand for," just for clarity.

The Chair: Accepted?

Anything else? Page 18, carried, as amended? Carried.

Page 19, carried as read? Carried.

Page 20, carried as read? Carried.

Page 21, carried as read? Carried.

Page 22, carried as read? Carried.

Page 23 --

Mr Baird: It was a long night, so gradually, as I went on, I got more --

The Chair: -- carried as read? Carried.

Page 24, carried as read? Carried.

Page 25.

Mr Baird: I did get a second wind late at the office though. Under "Child Welfare," just a number of stylistic changes and for clarity. The fourth line, "It showed that 74% of children are" -- I would strike "turning out fine" and put "developing well," "but 26%" -- I would strike "are in trouble" and insert "have one or more academic and/or emotional and/or behavioural and/or social problems." Just stylistic.

The Chair: Anything else?

Mr Baird: In the second paragraph, the second line, "to social programs that support child development," and then instead of "Programs which assist," "Programs which support child development" again, and then in the second-last line, it would say, "society pays later through a lower quality of community life and a less productive workforce." Again, the same message, but just more crisp.

The Chair: Page 25, as --

Mr Baird: Sorry, I have one more. In the second-last paragraph, the third-last line: "...that the Minister of Community and Social Services be prepared to act on the upcoming recommendations." Again, it's just stylistic.

There is one more. In the last line just omit "matters of" so it's "would address income security."

The Chair: Page 25, as amended? Carried.

Page 26.

Mr Baird: Under "Child Care and Early Childhood Education," when you read their submission in Hansard, February 13, page 1917, I just want to clarify -- and I think it accurately reflects what they had to say on that page of Hansard -- by adding a first sentence: "The Ontario Coalition for Better Child Care believes that it isn't how much money is spent, it's how it's spent." And then, "However, cuts to." The reference there is to page 1917, if people want to --

The Chair: Agreed? Page 26 as amended? Carried.

Page 27.

Mr Baird: My comments on the sectors of small business and high technology have already been made. Just two small changes under "Agriculture": "The Ontario Federation of Agriculture identified several matters of concern. They felt the government could extend provincial compensation." Strike "the need for."

At line 4 there's a semicolon, then just omit "and to."

The Chair: Agreed? Page 27 as amended? Carried.

Page 28.

Mr Baird: In the top paragraph, again with respect to agriculture, in the second line: "expand funding to Ontario's safety net programs; provide adequate resources to municipalities." We should strike out "should be available" just to be crisp.

The Chair: Anything else on 28?

Mr Baird: Under "Construction and Transportation" -- again just to put my cards on the table, Hansard of February 16, page 1978 -- I would add a sentence ahead of that, under "Infrastructure" and just before "The construction industry" to read: "The Council of Ontario Construction Associations said things are starting to turn around for their industry and paid gratitude to the government. They did, however, say they are concerned about the ability of the construction industry" blah, blah, blah. And then, just for clarity under that same paragraph, strike "provincial highways." I think it's more appropriately "municipal roads and bridges." We don't give provincial subsidies for provincial highways because they are obviously the property of the government; it was the municipal roads and bridges.

The Chair: Agreed? Agreed. Anything else on 28? Does page 28, as amended, carry? Carried.

Page 29.

Mr Baird: At the top, the first line, for stylistic reasons I would strike, "In order to provide long-term planning for the provincial highways system." I would strike that and just put: "The Ontario Road Builders' Association recommended" and finally, at the end of that paragraph, "which would permit the industry to plan accordingly."

The Chair: Anything else on 29? Does page 29 as amended carry? Carried.

Page 30.

Mr Baird: I've got a number of changes on this, generally clarifying and stylistic. In the first paragraph, the last sentence, I would strike the last two words, "tax policy," and insert "government interventions such as tax incentives."

With respect to the credit unions, in the fifth line of the second paragraph, instead of "cost to banks," I think just to be crisper it's "the rate for banks" of the deposit insurance.

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The Chair: Anything else on page 30?

Mr Baird: Under "Access to Capital," I have a number of stylistic changes. In the first sentence, I would strike "in securing the necessary business financing." That could be taken out.

In the third line: "must go public to raise financing, an expensive proposition, with risks involved."

At the first bullet, "The role of a renewed Ontario Development Corporation," and then farther down in that bullet, "To ensure that there are adequate controls on such a corporation, the banks should participate by offering."

At the third bullet, "The federal government has provided assistance through the Small Business Loans Act which is administered mainly by the banks."

Then I have some substantive changes under "Forestry." Maybe I should just read it.

The Chair: Just one second. With regard to that, you said the third bullet?

Mr Baird: Yes. I would just put, "which is administered mainly by the banks."

The Chair: And then with regard to "Forestry" on page 30?

Mr Baird: I would strike a substantive part of that, so maybe I could just read what it would say.

"The forest industry, represented by the Ontario Forest Industries Association, suggested that the province continue to reduce red tape, review regulations for their relevance, maintain a market-based stumpage system and design policies and taxes to encourage sustainable economic development." I would strike the second line from "it" to "sustainable" and replace it with what I gave, again just to be crisper.

Mr Silipo: Sorry, but the industry did also say what is in those first couple of lines, that it needs assistance following the reduction of government services in single industry towns. You're not suggesting we take that out, or are you?

Mr Baird: I did, but that's a fair point.

Mr Silipo: That reflects what they said. If you want to reposition it, that's fine --

Mr Baird: I did, but that's a fair point, so if that point could be taken into account.

The Chair: We want to retain the nub of the first sentence, that "it will need assistance following the reduction of government services in single industry towns." That's accepted, and then redraft as --

Mr Baird: Yes, leave that sentence in. I did say to delete it, but it's a fair point.

The Chair: Page 30, as amended: Carried? Carried.

Page 31.

Mr Baird: Again on the forestry side, I would strike that half of the sentence, "economic development through capital investment," which is from the previous page, and then change the rest to read as follows: "The industry is concerned about its cost competitiveness, the Lands for Life land use planning process, Ministry of Environment cost recovery proposals and Who Does What restructuring cost implications for northern municipalities." Again, that's just to be crisper.

Mr Kwinter: I haven't checked the Hansard, but are you suggesting that when they say they are concerned about their capacity to contribute to social programs, you want that out?

Mr Baird: Let me just take a moment and I'll check that. That's a fair point.

Mr Kwinter: Mr Baird, my point is that if they said it, I think it should be in.

Mr Baird: Agreed. Why don't we just have the research service check it, and if it is, fair point.

Mr Silipo: I have the same concern with respect to that last point in the section, about their concern that the future of northern communities depends on the sector.

The Chair: We'll leave it with the researcher, that if it was said, it belongs there. Anything else on 31?

Mr Baird: Yes, under "Housing and Real Estate," in the first paragraph, the second-last line. One is for clarity and then there's something to add. First, "which is partly attributable to move-up buyers, stable interest rates and rising consumer confidence." Then I'd add a further insertion in that paragraph: "When questioned, the association replied that job creation is the single most important determinant affecting the housing market."

The Chair: Anything else on 31?

Mr Baird: Under "Mining," the second-last line, and these are purely to clarify: "The association is concerned with the status of financial self-assurance for mine closures and cleanups." That just seeks to clarify exactly what they said.

The Chair: Accepted. Is 31 carried, as amended? Carried.

Page 32.

Mr Baird: In the second paragraph, I have a clarification and an addition so that instead of what it says it would read:

"Mining is a knowledge-based high-technology industry. About 5% of the workforce is employed in engineering, scientific research and development positions, but mining is also a cyclical industry largely dependent on the global economy. Recently it has experienced low prices in gold, nickel and copper, but its longer-term outlook remains promising as exploration expenditures have increased in recent years."

Again, the latter part came from their presentation.

The Chair: Anything else on 32?

Mr Baird: In the last line I would strike out "student" and insert "classroom": "A prescribed percentage of classroom funding," rather than "student funding."

The Chair: Is 32 carried, as amended? Carried.

Page 33.

Mr Baird: Just two or three stylistic changes. At the fourth bullet under the Ontario Restaurant Association, just to clarify, it should read, "The PST threshold for restaurant meals should be raised from $4 to $6." Then under "Wineries," in the second paragraph I'd take out the word "by" and insert "of," and in the second line omit "which is."

The Chair: Agreed? Agreed. Anything else on 33? Page 33 is carried, as amended.

Page 34: Carried as read? Carried.

Page 35.

Mr Baird: The third paragraph sounds a bit awkward. Perhaps "CUPE suggested that renewed public sector investment in health care, education and social programs" -- and then it doesn't say what. I think it would be fair, and the others can correct me if I'm wrong, to say, "CUPE suggested that renewed public sector investment in health care, education and social programs will generate decent-paying jobs and provide stability for Ontario's economy." I think that's a fair reading of what they said.

The Chair: Anything else on 35? Does page 35, as amended, carry? Carried.

Page 36: Carried as read? Carried.

With regard to the special witnesses, appendix A, any additions or deletions?

Mr Baird: On page iii, under "McCallum, John," "Forecasts for 1998-99," at the first bullet, the second line, "the second highest rate in Canada, 0.3% above the national average" I think more accurately represents what he said.

The Chair: Does everybody understand what is suggested? Agreed? Carried.

Mr Baird: On page v, just two stylistic things. Under "Swift, Catherine," in the second line I would say, "medium-sized businesses," and then put a comma after "spending" in the last line.

The Chair: Anything else?

Mr Baird: Page vii: Again, this is just a concern of mine with "surplus." At the top of page vii, "surplus jobs," I think the word "unfilled" is better.

The Chair: Yes. If it's changed back on page 8, it'll be changed here. Anything else?

Mr Baird: No.

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The Chair: I know we said we'd go page by page, but I foolishly assumed that there would be no changes. Is appendix A carried, as amended? Carried.

Any additions you want to make to the witness list?

Mr Baird: Can we be retroactive?

The Chair: Carried as the rest? Thank you.

Mr Silipo: If I could, Chair, there was actually one very minor change back on page 9, which I think is just the computer being too eager. At the bottom of the page, the third-last line --

The Chair: We're now under "Balanced Budget -- Surplus"?

Mr Silipo: No, page 9 of the actual report, not the appendix. I had this written down somewhere else, so I didn't pick it up before when we went through it. The word "public" just appears twice. I think what it's supposed to say is "the government should engage in a public dialogue," so just take out the first "public."

The Chair: Agreed?

Mr Baird: I can't believe I missed that.

The Chair: There'll be a change in the staff in that office, I'll tell you.

That amendment to page 9 is carried.

Just give me one moment here with our staff. I should go on record as telling you that a tremendous volume of information was put forward before the committee, some excellent submissions, and I commend the staff for the draft that they presented to us today. I think, from the type of amendment and the type of comment that has been made, the accuracy is underlined in the work that was done on a very limited timetable. We thank you for your efforts and for your extended effort in meeting the deadline.

My question is with regard to the changes.

Mr McLellan: As far as the timetable is concerned, first of all, I'd like to say there were a couple of points raised this morning that we'll have to get back to, if we can just have the lunch period to do that and respond when we come back at 2 o'clock.

With respect to these changes, I think that tomorrow morning would be an appropriate time to bring a revised document back. I think we meet at 10 o'clock tomorrow. Is that appropriate?

The Chair: Let me ask you this: Why would we come back this afternoon? Why wouldn't we do everything at 10 tomorrow morning?

Mr McLellan: That's up to you.

The Chair: It's really up to us, but I want to know what's easiest for you. Are you afraid that some of the changes may require a second change? Is that why you want to come back this afternoon with it?

Mr McLellan: I'm in your hands. It's just a matter of going back and being able to respond to some of the questions this morning and to look back through the submissions, first of all. Second, to get the changes as passed may take a few hours. In other words, I'll need some time to do that. If the committee decides to come back tomorrow morning, that's certainly appropriate and would fit within my timetable.

Mr Baird: Could I just make a comment? I echo your comments, Mr Chair. I had never sat on a committee that did a report-writing phase and I met with a number of folks to find out how that was done, and it's extremely professional. I think the fact that there are no significant discussions on just about any issues says a great deal in terms of the professionalism that the report was written with.

You've got to go away and come back with another draft. We've discussed at the subcommittee the potential that when a final draft is ready we could just have the sign-off of the three caucuses, and if there was agreement to do that, that's fine with me. There don't seem to be any really contentious issues. You've jumped through hoops to get us this far, and I don't have any objection if you want to take a couple of days and then just have sign-off from the three caucuses after the fact, obviously with the recommendations being amended. I wouldn't have any objection to that.

The Chair: Suggested by Mr Baird that it be a simple matter of signing off, and I assume his suggestion there is that we do not have to come back tomorrow morning.

Mr Baird: That would depend on how quickly we were able to deal with the recommendations.

The Chair: I mean for this. We're just talking about what we're dealing with as far as the time is concerned.

Mr Baird: Because if they were to come back with recommendations tomorrow morning, we'd probably have to recess for two hours to read the 30-page document to see whether we were comfortable with it, and I think that's unfair and unlikely.

The Chair: With regard to this section that we've dealt with.

Mr Silipo: If it helps, Mr Baird's suggestion about how to deal with the content of the reports to date is, as far as I'm concerned, an appropriate way to go. We don't need as a committee to come back, unless members want to, and actually go through the whole thing again. We agreed as the changes were being proposed, so it's only a question of having a chance to look at them and make sure they are there. I trust very much the process so far, so on that score I would be comfortable with the suggestion to simply have them vetted through the subcommittee.

The Chair: Very well then. It's moved by Mr Baird that as far as the written report is concerned, we provide this staff with additional time to resubmit and as agreed to by the subcommittee, that allowing for this procedure -- I believe we did discuss it -- that we would then have each caucus sign off without having the committee reattend.

Mr Baird: And that would presume that we could sign off unanimously. If any of the parties had a concern they wanted to bring back to the full committee, that wouldn't be a problem. I doubt very much that would ever happen.

The Chair: Let's deal with this motion. Are we agreed? All in favour?

Mr Kwinter: Just on a point of order, Mr Chairman: May I suggest that the research staff, when they prepare the amended report, highlight where the changes were made so you don't have to read through the whole thing all over again to see where they are. Just spot where the changes were made so you can compare with the original to see how the changes were made.

The Chair: That will be done. With regard to Mr Baird's motion, all in favour? Contrary, if any? Carried.

Having done that, if we're not coming back, it is suggested to me that we will require a motion that the subcommittee be allowed to adopt the report, translate the report and have it printed and that the Chair be authorized to present the report to the House.

Mr Phillips: The second part of the report we haven't dealt with, which is the recommendations. I don't know whether we want to wait till we've dealt with the recommendations before we move that motion.

The Chair: This will just deal with the part we've dealt with.

Clerk of the Committee (Ms Tonia Grannum): This would be just giving authority to the subcommittee, because if we don't come back to the full committee --

Mr Phillips: The full committee will meet this afternoon.

Clerk of the Committee: We're coming back this afternoon?

The Chair: We have to deal with the --

Mr Phillips: -- recommendations.

Clerk of the Committee: Okay.

Mr Baird: I think Tony has a caucus meeting to go to.

The Chair: Yes, we can. Very well.

Mr Phillips: The next step was for each of us to present our recommendations, if I'm not mistaken. Ours are in the final drafting stage now, but will be ready for 2 o'clock this afternoon, if we want to deal with them this afternoon.

Mr Silipo: I have them here now. We can deal with them now or this afternoon.

Mr Baird: I have mine here now too.

The Chair: What's your wish? Wait till 2 o'clock or do you want to --

Mr Baird: Just to ask the expectation of how long the phase of the recommendations would take. Would we be better off to start now with one of the parties or would we be better off to start at 2 with all of them? Is there a chance we could get them done in the afternoon, or is there a necessity for us to come back tomorrow? I just wouldn't want to see us lose --

Mr Silipo: Can you do yours in 20 minutes? Could you present yours and then I get the remaining time between now and noon?

Mr Baird: I could certainly present them.

The Chair: Let's do that.

Mr Silipo: Why don't we do that and we can pick up with ours in the afternoon.

The Chair: Is that your wish? We'll proceed with the government recommendations? Very well.

Mr Baird: In tabling the government recommendations, I assume we can get copies of the opposition parties' as well.

The Chair: Mr Phillips, did I hear you say you don't have yours here?

Mr Phillips: No. They'll be ready at 2. That's right, Mr Chair.

The Chair: They won't be ready till 2?

Mr Phillips: They will be ready at 2.

Mr Baird: Oh, you don't have them now. If we could get the third party's, then presumably we could do the third party's first, before the official opposition's, just so we'd have some time to review the recommendations, if there's no --

Mr Silipo: I don't care.

The Chair: It's suggested that, because Mr Silipo has his here now, after dealing with the government recommendations we would then deal with the third party's recommendations, allowing some time to review the opposition's. Is that it?

Mr Kwinter: The concern I have is that my experience in the past has been that if the government has a recommendation and the other two parties have recommendations and some of them are at variance, sometimes you can make an accommodation by amending one or the other; you come up with one recommendation that everybody agrees to that encompasses what people are suggesting. As long as we're missing ours, because we didn't anticipate that we'd be doing that, we may have to go through it again. It seems to me -- we're at 15 minutes to 12 -- that we'd be better off starting at 2 and having all the recommendations, so if there are some adjustments that can be made we should do it.

Mr Baird: Is there a potential to get the official opposition's recommendations for 1:30, just so we can have an opportunity to review them before we start?

Mr Phillips: I'll try, sure.

Mr Baird: If that could be tried, that would be appreciated.

The Chair: I think Mr Kwinter makes a valid point.

Mr Baird: Sure, if that's how you feel. That's not unreasonable.

The Chair: Can we reassess our situation and recess now until 2 o'clock and hope to have the Liberals' recommendations as soon as possible?

Mr Baird: Sure.

The Chair: I have a motion to recess until 2. All in favour? Carried.

The committee recessed from 1142 to 1406.

The Chair: Order. We have a quorum to deal with the recommendations, and I think it was agreed we'd start with the government positions first.

Mr Baird: The government has presented 20 recommendations, considerably more than the other parties. I don't mean that with any intent. In terms of process, do I move each one individually? Some are self-evident and require perhaps demonstrably less discussion than others. Is that how it would operate?

The Chair: It's open to whatever the committee feels.

Mr Baird: Can I move them all in one?

The Chair: I would expect that we deal with them one at a time. I would suggest that's the way we proceed, unless we have an agreement to the contrary.

Mr Baird: Recommendation 1: "The government should honour its commitment to deficit reduction and balance the budget by the fiscal year 2000-01."

The Chair: All those in favour? Contrary, if any? Carried.

Mr Baird: Recommendation 2: "The government should fulfil its commitment to reducing personal income taxes to stimulate job creation, investment and consumer confidence."

Mr Phillips: We have some substantial difficulty with this. I looked at the national personal income tax revenue versus the provincial personal income tax revenue over the last couple of years. I think nationally the personal income tax revenue is up about 11%. Here in Ontario it's flat, is the way I look at the numbers: $16.3 billion in 1995-96 and $16.3 billion this year. Had we had the same rate of growth in Ontario as the national numbers, the deficit would have been $2.5 billion lower.

I also actually took a look at the GDP numbers nationally and here in Ontario over the last two years, and while 1997 was a good year in Ontario, 1996 was quite a weak year -- surprisingly weak, actually. On the two counts, one is that it appears it has cost Ontario roughly $2.5 billion worth of revenue in 1997-98 from the income tax cut, and there's not a lot of evidence on the GDP numbers that it has meant a substantially larger growth in Ontario than nationally -- 1997 was better and 1996 worse.

The third thing of course is that if the deficit is such a huge problem -- and I think all of us agree the deficit is a problem -- I wonder how we can afford to be giving people who are making roughly a quarter of a million dollars a year a tax break that is worth roughly $500 million.

All of us now face general problems in our hospital emergency wards, significant problems in our municipalities with the downloading and significant problems in education funding things like junior kindergarten, but at the same time we can fund a tax break that will give people making more than a quarter of a million dollars a $500-million tax break.

As I say, there's no doubt -- you look at the revenue numbers provincially and federally, with federal income tax revenue up over two years roughly 11.5% and provincial income tax revenue flat -- that if we had the same growth as the federal government did in income tax revenue, the deficit would be $2.5 billion lower, and presumably, without any question of a doubt, the budget would be balanced. This budget that the government will announce in roughly a month and a half would be balanced without the tax cut. There's no question of that. For all those reasons, our caucus has substantial difficulty with recommendation 2.

Mr Silipo: This is a recommendation that we in the New Democratic Party strongly disagree with. I think it's no surprise. We find that even if you were to take the government's argument that the deficit needs to be tackled, as we would agree and in fact supported the first recommendation, there is ample evidence to indicate on the one hand that the tax cut has not generated the job growth, the investment and the consumer confidence this motion suggests it does, and second, it isn't necessary to do the income tax cut to achieve the balanced budget.

There's enough evidence that would show to this committee in this round of pre-budget hearings, and I know in the past, that in fact the government could be reducing the deficit. The government also would not be adding to the debt, as it is doing by proceeding with the tax cut, and still would have been able to achieve the deficit reduction targets.

For those reasons alone, we would be against this particular motion. But when we add to that the cost of the tax cut both in terms of what it has meant in terms of the unequal sharing of the benefits -- 18% of the tax cut benefits go to the top 3% of taxpayers, those who make six-figure salaries, against the very, very small amount of money that goes to the average income taxpayer and the average family in the province -- and then put that up against the costs in terms of the loss of services in our health care system and in our school system that we have seen and will continue unfortunately to see, there is no way in which we either can buy the logic or see the sense, common or otherwise, of the government proceeding.

Although I certainly don't purport to claim any ability to convince the government to do otherwise, I think that more and more government members and supporters must be realizing that the costs of the tax cut far outweigh any minute benefits we might be seeing from this policy. I had hoped that there might have been some room for the government to actually have some room left for not proceeding with the balance of the tax cut, because, as I say, I wouldn't expect they would be prepared to undo the decisions they've made so far, but I take this motion from Mr Baird as being an indication that the government is going to continue to railroad ahead and ram ahead with the next instalment of the tax cut, and that will mean we will continue to see the impacts in terms of further cuts to our education, school and health care systems at the very least.

Mr Baird: I'll be very brief. Cutting taxes would simply not make sense if one's only objective was to balance the budget. That's an important objective, one that we would all place great priority on, but job creation is the top objective. To simply say to the unemployed young person, "Please wait until we balance the budget," or to the young family that's struggling to be able to provide and raise their family, who is feeling the pinch of high taxes, "Listen, I'm sorry, please wait until your government balances the budget," I think would be wrong.

With respect to tax revenue, while the personal income tax revenues have not been increasing at perhaps the substantial rate that other jurisdictions have, just from the third quarter reports, you see retail sales tax revenue up, corporation tax revenue up, gasoline and fuel tax revenues up, tobacco tax, land transfer tax and mining profits tax revenue up. At the same time, the federal government this year will cut almost $1 billion; we'll get almost $1 billion less on the Canada health and social transfer than we got last year, which is substantial. That causes us concern.

I look to one of the expert witnesses we had from Nesbitt Burns. There are a lot of very talented young people working at Nesbitt Burns. Sherry Cooper said, "The personal income tax cuts...have gone a long way towards reviving consumer confidence and spending." The tax cuts are working and job creation is their goal.

The Chair: Any further comments? Ready for the vote? All those in favour?

Mr Wayne Wettlaufer (Kitchener): Recorded vote, please.

Ayes

Arnott, Baird, Jim Brown, Rollins, Wettlaufer.

Nays

Kwinter, Phillips, Silipo.

The Chair: Carried.

Mr Baird: Number 3, "The government should continue its commitment to reducing job-killing payroll taxes, particularly for small business."

Mr Silipo: I have mixed feelings on this. I heartily agree with anything that can be done to reduce payroll taxes because I'm convinced it is one of the criteria that small businesses use to determine the extent to which they can hire new people. But I also have problems in a couple of major areas where the government has acted, where I see what that also means when that's put together with other changes. The one that comes to mind is what the government has done in the area of workers' compensation, where the reduction in premiums has gone side by side with the reduction in benefits to injured workers.

If that's the kind of thing the government intends and means by killing or reducing payroll taxes, then I don't think it creates the kind of climate that balances the very important issues that need to be balanced -- on the one hand, making it more attractive for small business particularly to invest and to create new jobs, but at the same time, where that is done by simply taking rights and benefits away from working people, particularly using the example of injured workers, then I find that offensive and I find that wrong and I can't support that.

I don't think I'm going to support the recommendation, but I wanted to be clear in placing my comments on the record that it's because of the way in which I've seen the government proceed to take actions in this kind of area and not because I am against, or we as a party are against, the idea of reducing payroll taxes, because we do think there is merit.

When we were the government we took some steps to reduce some payroll taxes, particularly as we tied them to the creation of new jobs and provided employers, particularly small business employers, with incentives to do that. I think that's the kind of approach that makes sense, particularly where you make that direct link between reduction in payroll taxes and job creation. Where it doesn't work and where it's wrong is the kind of thing the government has done in the area of workers' compensation, where you equate on the one hand reducing payroll taxes or premiums for employers in that case with the reduction of benefits for injured workers. That's not the kind of thing we should be doing.

Mr Phillips: The idea here that it's helping small business: I'd just remind us that more than offsetting any of this will be the changes in property taxes. With the elimination of the business occupancy tax, there is no doubt -- it was actually a year ago, almost exactly, in this committee that we raised it with the Minister of Finance, saying, "Tell us again how this is good for small business property taxes, to take roughly $5 million per bank tower off property taxes and put it on to small business."

The reason I raise that is the implication here that there's a real concern about small business, but what's happening on the business occupancy tax is that small businesses -- whatever savings may have been available from the employer health tax is going to be offset probably three to four times with the restructuring of the business occupancy tax, where small businesses are looking now at a 10% property tax increase and the banks, as I say, are looking at a 15% to 17% decrease in their property taxes. It's always a bit difficult -- and opposition continues its commitment to small business -- when we see that those things are happening with the government on property taxes. As I say, that will eat up probably four or five times the savings on the employer health tax issue.

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The Chair: Further discussion? Ready for the vote? All those in favour?

Mr Wettlaufer: Recorded vote.

Ayes

Arnott, Baird, Jim Brown, Kwinter, Phillips, Rollins, Wettlaufer.

Nays

Silipo.

The Chair: Number 4?

Mr Baird: "The government should continue to eliminate barriers to doing business through the work of the Red Tape Commission and other initiatives."

Mr Silipo: This might seem like kind of a motherhood recommendation; maybe it was meant that way. I would actually like to be able to support it, but I can't support it as it's written now, and I'll tell you why. I wonder if Mr Baird would be amenable to a small amendment. It's the reference to the Red Tape Commission, which I know he and his government take great pride in, in terms of a number of the things they have done. I would be able to look at that Red Tape Commission and find a number of things that I would agree with, but there are also some things in terms of the work that group has done that I strongly oppose -- some of the moves towards privatization, some of the other changes.

I would be willing and happy to support a motion that simply said, "The government should continue to eliminate barriers to doing business through", if you want to add things like facilitating, whatever. I guess I'm asking Mr Baird if he's prepared to remove the reference to the Red Tape Commission. Then I'd be willing to support it; otherwise I have trouble with it.

Mr Baird: I appreciate the spirit in which you make the request. I think I can speak for my colleagues. We view the work of the Red Tape Commission, both in the past and in the future, as an important part of that effort and see that as a substantial part of the motion, so I'd want to keep it as is. I appreciate your intent.

The Chair: All those in favour? Contrary, if any? Okay.

Mr Baird: Number 6. "The government should introduce legislation mandating a balanced budget."

The Chair: No, we go from 4 to 5.

Mr Baird: I apologize. I'm sorry.

"The government should consider a strategy to address the debt once the provincial deficit has been eliminated."

Mr Kwinter: I have no problem with the intent. I have some problems with the way this is worded. Mr Baird, if you read it one way, it says "consider a strategy to address the debt" and then it says "once the provincial deficit has been eliminated." I understand what you're trying to say: Once the deficit is gone, a strategy to reduce the debt. But when you read it, it might say, "Let's not worry about that until the deficit is reduced." It would seem to me that you should be working on that strategy now, in anticipation of the deficit being reduced. Do you understand what I'm saying?

The Chair: In other words, what he's suggesting is that you say, "immediately consider a strategy to be implemented once the deficit has been eliminated." Do you have trouble with that?

Mr Baird: I'm just trying to think for a moment. I accept your idea; I'm just trying to figure out a way of how we could phrase it.

The Chair: Let me suggest, "The government should immediately consider a strategy to address the debt, to be implemented when the provincial deficit has been eliminated."

Mr Baird: No. How about, "The government should consider a strategy to address the debt for the period after the provincial deficit has been eliminated"?

Mr Kwinter: I kind of like what the Chairman had to say.

The Chair: He's more Conservative than -- what did Bill Davis say about you? I'm starting to get back in Davis's good books.

Anyway, what is your proposal?

Mr Baird: "The government should consider a strategy to address the debt for the period after the provincial deficit has been eliminated."

Mr Silipo: I could actually live with either of the two wordings on that part of it, but I do think that there is another piece that needs to be added to this. I don't know whether Mr Baird is amenable to this -- I hope he is -- which is simply to add a couple of important words which would indicate the need for the balance to be maintained between -- sorry, maybe simply doing it by just tagging words at the end of this of the nature of "keeping in mind the need to provide adequate funding for important services like health care and education." It's just a shorthand way of getting at the need for --

Mr Baird: I think they are two separate issues. I accept the importance of maintaining a first-class health care system and a first-class education system. I think they are two separate issues and there are issues in the other recommendations that deal with those topics. I think it goes beyond the scope of the recommendation. For example, what about post-secondary education, social services? There's a whole host of other public policy issues.

The Chair: The amendment, then, is as proposed by Mr Baird. Do you want it read? Understand it? Ready for the question? All those in favour? Contrary, if any?

Number 6.

Mr Baird: "The government should introduce legislation mandating a balanced budget."

Mr Silipo: I just put on the record our opposition to this. We expect that probably in the new session we're going to see actions taken by the government to bring in provisions that would require referenda before taxes could be increased. We've gone through that and we'll go through that again in terms of how inconsistent we believe that position to be with what the government has done so far and continues to do in terms of shifting taxes on to the property tax base and other bases of taxation, in effect. There's that inconsistency.

The issue of legislation mandating a balanced budget is for us similar and very much a part of that kind of thinking, which is that you should legislate these kinds of things. We believe that it's in fact at the heart of the system of government that we have for each party, particularly a party in government, to simply have its fiscal agenda up front as part of its responsibility and not to try and go around about it by having legislation in place that says you've got to do it this way or you've got to do it that other way. We would see this kind of recommendation as a direct affront to the basic nature of the parliamentary system of government that we have in place in Ontario and can't support it for those reasons.

Mr Phillips: For us it will depend on the specifics of the legislation. We've not had a philosophical problem with balanced budget legislation, so we don't have a difficulty with this recommendation. We may have difficulty with a specific proposal.

Mr Baird: The word there is "introduce," though, so it's not a --

The Chair: Any further comment? Number 6. Ready for the question? All those in favour? Contrary, if any? Thank you.

Number 7.

Mr Baird: I have one word I will insert and you can see when I do it. "The best social program for those living in poverty is a job. The provincial government should continue to create a climate conducive to solid economic growth and strong private sector job creation."

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Mr Phillips: My problem is with the first sentence. I know it may be politically popular to say that. I actually think that while for many people in poverty a job would be very important, it may in fact not be the most important thing forsome. For others it might be. My problem in supporting almost the preamble is that it presupposes that the solution to all those who are in poverty is simply job creation, when in reality for some it's quite different than that. It may be counselling programs. It may be special services for themselves or their children. This is kind of a slogan solution that is too broad for me.

Mr Kwinter: Just to add on to my colleague's comments, what this does is presuppose that everybody who is in poverty is not working. There is a whole class of people known as the working poor. These are people who are working but are being paid minimally and are effectively under the poverty line. I have a problem with that.

Mr Baird: My intent was just as Mr Phillips suggested at the outset, but both Mr Phillips's and Mr Kwinter's comments are fair, and to be accommodating, we could strike the first sentence of recommendation 7, if that would meet with your approval.

The Chair: Then the suggested amendment is to eliminate the first sentence and start number 7 with, "The provincial government should continue to create a climate...."

Mr Silipo: It's those couple of words that have been added in that create the problem for me, and I'm assuming that they haven't been put in by accident. I don't agree that the provincial government has been creating "a climate conducive to solid economic growth and strong private sector job creation," and so to suggest that the government should continue to do what it has been doing as the way to create jobs is something I couldn't support. I don't presume Mr Baird would be amenable to having the recommendation read as it was printed without the words "continue to" --

Mr Baird: You're right.

Mr Silipo: -- so I unfortunately will not be able to support it. But I want to be very clear on the record. I obviously believe that the government needs to create a climate that will be conducive to economic growth. I just don't think the way this government is going about doing it is the right way, and certainly I don't want to in any way concur with a recommendation that suggests it just needs to continue to do what it's been doing in order to do that.

Mr Wettlaufer: We could do it like you did, Tony, and chase businesses south of the border.

Mr Silipo: You and Mr Mulroney both, yes.

The Chair: We have the proposed amendment eliminating the first sentence with the words "continue to create." Ready for the question? All those in favour? Contrary, if any? Thank you.

Number 8, please.

Mr Baird: "The government should continue to work towards uniform, province-wide commercial and industrial education property tax rates."

Mr Silipo: I have a bit of a question actually on this one. I don't mind the wording as much here, the "continue to." I guess I need to be convinced that the government is actually doing this, because I haven't seen it. If the intent here is to support a direction, I wonder whether we should replace the words "continue to" with, "The government should move as quickly as possible towards uniform, province-wide commercial and industrial education property tax rates." That would make it clear that this is the recommendation we're making, and I'd like to move that by way of amendment. If the members of the committee on the government side are saying that they want to see the government move towards that, I support that. That's what we need to be saying.

Mr Baird: Is there an accommodation we could reach? I think this is something we obviously see as very doable over the long term, and the ministry certainly had discussions with the mayor of the largest municipality affected. Could we say, "The government should work towards" and take the "continue to" out if that causes you some concern? I'm trying to find some accommodation.

Mr Silipo: It's better. Sure, Chair, why not?

The Chair: So read it then as it --

Mr Baird: "The government should work towards a uniform, province-wide commercial and industrial education property tax rate," period, without the "s."

The Chair: Do you understand the amendment? Ready for the question? All those in favour? Unanimous.

The next item.

Mr Jim Brown (Scarborough West): I'd like to move number 9: "The government should continue to support policies to assist small and medium-sized enterprises in obtaining necessary capital."

Mr Kwinter: Mr Chairman, I have a problem; it has already been identified and we're going to see it all the way through. There is some question, certainly by people who appeared before our committee, of whether there was enough effort being exerted to obtain necessary capital for small businesses. I have a problem where we keep saying "continue to" do some of the things, because when the people appeared before us they were saying they want something different from what is being done. I would like to see "the government should support policies to assist small and medium-sized enterprises in obtaining necessary capital."

When you keep putting in the word "continue" it implies the status quo and I think there are a few of these things where we want to make some recommendations to change the status quo. That's not in any way detracting from your recommendation, but just not to build into it the acceptance of the status quo, "Continue to do what you're doing because it's great," because the feeling is that it's not great, not doing the job it should be doing.

Mr Jim Brown: I agree. We need more competition and we need more sources of capital. That's right.

Mr Baird: I would be amenable to that change. Just remove the "continue to"?

The Chair: Then number 9 would read, "The government should support policies to assist small and medium-sized enterprises." Agreed? Ready for the question? All in favour? Unanimous.

Number 10, please.

Mr Baird: Number 10: "The government should call on the federal government to immediately eliminate the employment insurance premium for youth and their employers."

The purpose for this is that this is an issue that the minister and a number of my caucus colleagues pushed for very strongly leading up to last month's federal budget. Unfortunately, the federal budget measure said "effective 1999." We think particularly small businesses which are creating many jobs for young people need assistance now, not later. While I recognize that the federal government has taken some action on this, we certainly are keen that they step it up and not ask young people to wait a year for assistance.

The Chair: Any further discussion? Ready for the question. Number 10: All those in favour? Unanimous.

Number 11.

Mr Baird: "The government should work with other levels of government and the private sector, including small business, to encourage youth employment."

The Chair: Any discussion?

Mr Silipo: Chair, we have a motion that deals with this area as well. It probably came up in one other place. Should I move ours by way of amendment, in addition to this? What ours does that this doesn't is suggest the notion of setting targets to deal with unemployment. Would that be an appropriate amendment here or should I just deal with that as a separate piece later on? How do you wish to do that?

The Chair: What number is yours?

Mr Silipo: Number 6, which says "The government should set and meet realistic targets for the unemployment rate, with a separate target and specific programs for youth unemployment," which I would see as a complement to what's suggested in number 11 and obviously something that would give it a bit more teeth than just the broad statement that's here.

Mr Baird: It's a fair point. Perhaps we could consider them separately, though, and have a separate discussion on yours when you present it.

The Chair: Yes, I think one complements the other. We could deal with them in order.

Mr Silipo: However you wish, Chair.

The Chair: I propose, then, to deal with this one and we'll deal with yours when we come to it.

Mr Silipo: Okay.

The Chair: Number 11: Ready for the question? All those in favour? Unanimous.

Number 12.

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Mr Baird: "The government should continue to support programs and initiatives that ensure our children grow up in a healthy, safe and nourishing environment."

Mr Kwinter: This is the one that really bothers me, because we heard from people like Dr Steinhauer and others that these programs are not in place. I have no problem with, "The government should support programs and initiatives that ensure children grow up in a healthy, safe and nourishing environment," but I think there were some very serious questions raised by several deputants as to whether the existing programs the government has are effective. I would like to see the removal of the word "continue."

Mr Silipo: A number of initiatives have existed for some time that were started by previous governments, whether ours or the Liberal government or even back to previous Conservative governments, that are worthwhile continuing, but there are also other initiatives that we would question. If the words "continue to" were removed, I think we could all support this recommendation.

Mr Baird: I said "continue to" because I was referring very specifically to the fact that in last year's budget there were a number of initiatives. The Healthy Babies, Healthy Children program was one, and I know my colleague Mr Arnott has worked for increased funding for that program. There have been a number of measures that I think have been welcome.

What we wanted to do was say to the government that those types of initiatives and other initiatives introduced in the past by other governments are ones that bear consideration for support in the upcoming budget. By "continue to" I was referring very specifically to the initiatives contained in last year's budget, the most exciting one being Healthy Babies, Healthy Children, and the breakfast program for children which was introduced previously.

There have been a number of initiatives by this government and, I will certainly concede, by other governments, undoubtedly when Mr Silipo was a minister. I think very strongly that it should include "continue to" because this is not an issue which would be a point of departure for us.

The Chair: Any further discussion? Ready for the question as submitted? All those in favour? Carried unanimously.

Number 13.

Mr Baird: "The government should continue to work towards an integrated approach to post-secondary student assistance with the federal government."

Mr Silipo: I have an amendment that we add to the end of that words to the effect of, "with particular attention being paid to the need to reduce debt load for students," which I think is an important factor.

The Chair: Could you repeat that?

Mr Silipo: "With particular attention to the need to reduce debt load for students." I agree very much with the need to continue to work towards an integrated approach with the federal government, but I continue to believe strongly that the main element of this has to be to figure out a way to reduce the debt load that would otherwise be there through a straight income-contingency system.

Mr Baird: On that one I'm open if there's an accommodation we can find. I think there are two issues. There's government overlap and duplication on one side of the coin, and second, there's student debt. We're all concerned when we see a student come out of school with a $50,000 debt. I'm demonstrably less concerned about $50,000 in student debt if it's the young fellow in my constituency office last week who got a job at Northern Telecom making $63,000 in his first year out of university. A $50,000 debt is not as significant an issue for someone who's going into employment in a high-paying profession. I don't know if there's a way to accommodate that. I'm more concerned about students who are unemployed for a number of years after their graduation with high debt.

Mr Silipo: I was looking for something that was also fairly broad, Chair. That's why I'd just left it with no --

The Chair: I thought you moved a specific amendment.

Mr Silipo: I did, yes, but I'm amenable to the words of that amendment being changed if they would find favour across the way. I wasn't trying to say how it should be done but simply to note that the question of student debt load needs to be addressed as part of this equation.

Mr Baird: How about "with particular attention to the impact of debt on young people"?

Mr Silipo: Sure, that would be fine.

The Chair: So it's proposed that number 13 be amended by adding "with particular attention to the impact of debt on young people." Is that what is agreed? Any further discussion?

Mr Kwinter: I have a little problem. I have no problem with the intent. I have a problem with identifying them as young people. There are people in post-secondary education who are not young. They have the same problem and in many cases the problem is accelerated. I think it should be generic to the point where we're talking about students and not young people.

Mr Baird: Replace "young people" with "students." I think that's a fair point.

The Chair: "Young people" would then change to "students" in the proposed amendment. Are you ready for the question now? All those in favour? Unanimous, as amended.

Mr Baird: Number 14: "The government should continue to ensure that the elementary, secondary and post-secondary education systems equip students with the scientific and communications skills to compete for high-tech jobs and meet future skills shortages identified by industry."

The Chair: Any comment?

Mr Silipo: It's one of those recommendations where you can read it at first blush and say, "What a good idea." On the other hand, you can also read it and ask, "Is this suggesting a focusing in of what elementary, secondary and post-secondary should do in terms of training for specific jobs?" I don't know if that's the intent, but it could be read that way. I'm a little troubled with just the tone of it, although I certainly don't disagree with, as I say, the positive way of looking at this.

Mr Baird: I was particularly impressed with the presentations by ITAC and the Canadian Advanced Technology Association. They spoke, obviously, of the growing skill shortages in the high-tech industry. With this recommendation, I was hoping for the government to encourage initiatives to get more kids, young people, students, returning students, into these areas.

Many of the problems exist in terms of the secondary level, where people aren't encouraged to consider pursuing these types of careers. People are encouraged to drop mathematics or science and aren't in a position where they can apply. There's a whole host of other initiatives, whether they be cooperative education or graduate transition, tax credits. As I said, there's a whole host of measures. If there's anything you've got which would --

Mr Silipo: One suggestion I had was if we removed the last three words, "identified by industry," then it would leave it as more generic.

Mr Baird: Yes. I think we accomplish what we wanted to accomplish.

The Chair: Anything else, Mr Silipo?

Mr Silipo: That's all, thanks.

Mr Wettlaufer: Chair, I'm not so sure that I agree with that. I've had a number of discussions with high-tech industries in my area in the last couple of months, and one of the things coming out loud and clear is that universities and high schools should not be encouraging learning for the sake of learning, that universities -- while it is a very noble idea to have the idea of learning for learning's sake and that it be a centre for higher learning, it is no longer just a centre for higher learning. Universities in general should be encouraged to establish a partnership with industry to ensure that students are going into areas of study which will ensure that they will have a reasonable opportunity for a job upon graduation.

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Mr Silipo: I don't disagree with what Mr Wettlaufer has said. The only point of potential disagreement is that I don't want to support something that gives the impression that we are suggesting industry should be telling the school system, elementary or secondary or post-secondary, what the parameters of that learning should be. I think there is a value and a merit to learning for the sake of learning, but I also don't think that has to be divorced from learning skills which then can be applied in a variety of jobs, not just in a particular job.

I guess I read, in the way this was, the notion that we were maybe saying industry was going to identify what the skills shortages were and we were going to reroute or fix or change our system of education to cater to that, as opposed to simply taking that into consideration along with everything else we need to do. That's why I thought that if we leave it out, you're still dealing with the need to meet future skill shortages, the need to have skills that will allow young people to compete for high-tech jobs. Those are the kinds of things industry would be looking for, we all would be looking for, but it leaves it broader than just simply saying that it's those things that are identified by industry that should be catered to.

Mr Baird: Is there maybe a middle ground where we could say, "and meet future skill shortages in partnership with industry," "in consultation with industry," "with consideration given to the local labour markets"? I'm fishing here to find something.

Mr Silipo: Again, I don't have any trouble with words that say "in consultation with" or the last phrase, "take into account the needs of the labour markets." That's fine. I think it's already in there, but if you want to say it in that way, then that's fine.

Mr Baird: "In consultation with industry"?

Mr Silipo: Sure.

The Chair: Any further discussion?

Mr Phillips: Just to record my disagreement with what Mr Wettlaufer said and to hope that while I think our education system clearly has to prepare young people for the workplace and all those things, that's not the only purpose of our post-secondary education system. If it's merely a job preparation environment, I don't think it meets the needs of a well-rounded society. It's probably not for a budget debate around a pre-budget consultation, but I didn't want silence to go recorded as agreement. That's not meant to say we don't have to put a lot of weight into job skills and all those sorts of things, but I dare say that if our education system had had that as its only criterion over the last few centuries, we'd be a much less caring, compassionate, well-rounded society. I'm not sure there's anything in what we're doing here anyway that precludes my point of view in any event, but as I say, I wouldn't want it to go unrecorded.

The Chair: Any further discussion? Ready for the question? All those in favour? Unanimous. So much for free choice.

Number 15.

Mr Baird: "The government should continue to search for ways to ensure more of the education budget is channelled to the classroom."

Mr Silipo: Again there is a basic problem here, which is that this sounds nice, it sounds okay, but you've also got to look at it within the context of what's happening to the overall education budget. I think that while channelling more funds to the classroom is a laudable goal, it becomes impossible to do that if what you're doing is continuing to cut dramatically the amount of money that's spent or that's made available to school boards to spend.

I think if we had words in this recommendation that said "while maintaining education budgets at least at their current levels," then the recommendation would make sense. So I would move that as an amendment, to add to the recommendation the words "while maintaining the overall education budget at least at the current levels."

The Chair: This is a formal amendment by Mr Silipo to add to the end of number 15 "while maintaining the overall education budget at least at the current levels."

Mr Baird: Could we have a separate vote on the two?

The Chair: We'll vote on the amendment first.

Mr Baird: Yes, that's right, a vote on the amendment.

Interjection: A recorded vote on the amendment, please.

Ayes

Kwinter, Phillips, Silipo.

Nays

Arnott, Baird, Jim Brown, Rollins, Wettlaufer.

The Chair: That's 3 to 5. The amendment is defeated.

Are you ready for number 15, the main one? All those in favour? Contrary, if any? That's 5 to 3. Carried.

Number 16.

Mr Rollins: "In order to give more employment opportunities to young people, the government should continue to support cooperative education."

The Chair: Any discussion? Ready for the question? All those in favour? Contrary, if any? Unanimous.

Number 17.

Mr Wettlaufer: I move the following recommendation: "The government should maintain its commitment to health care funding and continue to move towards a restructured, integrated health care system reinvesting administrative savings in priority services."

Mr Phillips: I think for many of us there's a growing major concern about the health of our health care system. Frankly, I'm not sure whether maintaining the health care funding is the right solution or not. What I do know is that health spending in 1992 was about $17.5 billion; when I say health spending, the amount of money that the taxpayers funded for health spending. Health spending probably is $28 billion in Ontario I would suspect right now, or $29 billion. The major funder is the big insurance company called the Ontario taxpayer. I gather the government said, "We're going to spend roughly $18.2 billion and then $18.3 billion."

I really think we do ourselves an injustice, a disservice by just saying, "That's the solution, to maintain it." I have a feeling that the thing is starting to fall apart on us and I'm not sure that $18.2 billion is the right number. It seems to me we should be talking about the quality of care rather than the funding and trying to determine what is the appropriate level of funding by, as I keep saying, the big insurance company called the Ontario taxpayer. Have we got an adequate level of funding in total in health care and by the Ontario taxpayer? I'm not sure that the committee knows enough to say that maintaining our commitment to funding is the right solution to our health system.

I repeat myself: Wherever I now go, I'm finding the system is starting to unravel slightly. That's not a partisan comment; it's just reality. I have difficulty with 17, because it's more about funding than it is about maintenance of a quality health care system.

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Mr Wettlaufer: It's interesting that we hear these comments from Mr Phillips. He talks about quality. Even David MacKinnon of the Ontario Hospital Association acknowledged that for 15 years we had improper planning. Quality we believe does take into account restructured, integrated health care for all age groups, for all people, whether they have mental disabilities or not.

You talk about commitment to health care funding. It was the Liberals' own red book which indicated that they would spend $17 billion a year on health care. This year we will spend $17.8 on operations spending alone, program spending. In total, it will be in the area of $18.5 billion, including capital and restructuring. I do believe we are taking the right steps. We're not going to turn it around in the snap of a thumb and finger when we've had improper planning for 15 years, but we do believe we're going to maintain our commitment.

Mr Silipo: I actually support the recommendation as it's written; I just wish the government was actually doing what this recommendation says. We can sort out the games that have been played with funding, but anything that calls on the government to maintain its commitment to health care funding I think we should support, and continue to move towards a restructured -- it isn't doing it in that way. As I'm reading it, it's the "continue to" that's creating a problem here. But this is what the government needs to do; it needs "to move towards a restructured, integrated health care system reinvesting administrative savings in priority services," yes, continue to provide that.

My problem, quite frankly, comes down to the problem we identified in a couple of other places before, which is the "continue to," because I don't think the government has been doing that; I think the government has been cutting in some areas without doing the integration of services appropriately, and that's what is causing the problems out there. Again, I would ask Mr Baird whether taking out the words "continue to" is in the cards on this one, because if those words were out I could support this recommendation, otherwise I can't.

The Chair: Just to be correct, in 17 the word used is "maintain."

Mr Silipo: Right, but then the words "continue to" are later on. Yes, "maintain" is okay.

Mr Wettlaufer: Chair, we're not taking the words out.

Mr Phillips: I appreciate the tone.

Mr Baird: Good cop, bad cop.

Mr Phillips: Just so I'm clear, what is the cause of the stress and the strain on the system right now? I suspect all of us have some real horror stories, if you will. I don't think the public really want us to say: "It was your fault," "It was Bill Davis's fault," "It was blah, blah, blah's fault." What is the solution here?

I just look at what has happened since 1992. I'm repeating myself: $17.5 billion. I think the population is up a million people since then, the number of people over 65 has increased dramatically and the cost of living has gone up. If the government is saying there's quite enough money in the system and it's just that it's being badly handled, badly managed, then that's what I think number 17 says. It isn't a question of more funding by the provincial government; it's that the system is badly managed.

I frankly don't know whether that's the case or not. I know the system can be improved, but I'm not sure there are sufficient funds in the system right now. I honestly don't know that. I have a suspicion that the government itself is going to come to the conclusion that there isn't enough money in the system. I think that will be an inevitable conclusion.

I'm having difficulty supporting 17, because essentially I read that as: "We've committed enough money. It's now just managing it properly." I don't have enough evidence to suggest that is correct.

The Chair: You're breaking with your federal leader, but that's okay.

Mr Phillips: I decided to run provincially so that's where I put my focus. Instead of going to Ottawa, I went to Toronto. Instead of going to Ottawa, you came to Toronto.

The Chair: Any further comments?

Mr Baird: I would concur with some of what you've said. We made a commitment that we would not let health care spending fall below $17.4 billion. In fact, we've come to the conclusion in recent years that we've got to spend more money. Not only do we have to spend the money we are spending now better and more wisely, but we've had to spend more money. One of our biggest challenges we face as a province -- not our particular government but as a province -- over the next five, 10 and 25 years is containing the growth in health care spending.

Mr Wettlaufer: I sure am glad to hear Mr Phillips say what he said. I thought he was pretty hard-nosed, but I realize now that he had no input in the design of the red book in its limit of $17 billion on health care.

Interjection.

Mr Baird: I think that had a lot to do with the red book. I'll remind you of that in the House when I have the chance.

Mr Wettlaufer: I would like to re-emphasize that for 15 years, even though there was some research being done by the bureaucrats, it wasn't being accepted by their leaders, the ministers of health. I believe we are continuing in the move to restructuring. I think that's progressive and is what the previous governments should have done.

The Chair: Any further discussion? Ready for the question on 17 as presented? All those in favour?

Ayes

Arnott, Baird, Jim Brown, Rollins, Wettlaufer.

Nays

Kwinter, Phillips, Silipo.

The Chair: Carried.

Mr Wettlaufer: I move number 18: "The government should continue to encourage the federal government to restore the $2.1 billion it cut from health care and post-secondary transfers to Ontario since 1994."

In the past 20 years, successive federal governments have reduced the amounts they have been paying towards health care and post-secondary transfers from 50% to 15%. Contrary to what the federal finance minister said two weeks ago, that they were increasing funding to Ontario by $1.5 billion, there has actually been no increase of $1.5 billion. All they have done is eliminate the proposed further cut of $1.5 billion.

Mr Phillips: The only problem I have with this is that I remember Mike Harris in the Common Sense Revolution, when the federal budget was announced, saying, "Common sense tells us the Martin budget will have significant impact on Ontario's economic outlook. The Dominion Bond Rating Service has estimated the cost reduction in federal transfers to Ontario at $2.3 billion. In the wake of that budget, the spending cut component of which we publicly endorsed, it obviously became necessary to revise our CSR projections." I know what Mike Harris wanted, and that was the cuts; in fact, he said he publicly endorsed them. That's one of the challenges the report presents now, that Mike has been on record as saying he likes the cuts and publicly endorsed them, so it makes our job a little more difficult when he has been as public on supporting the cuts.

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Second, I'm not sure, is the government saying that if it is restored they will increase spending on health care? This gets back to the point I was trying to make on 17. Is the issue that if we could only get more money from the federal government, we would spend more money on health care? Is that the issue? Or is it that if we can get the money, we will implement the tax cut? It would be helpful for me to know what the government's position is on 18. Is it, "We would like to spend more money on health care, and in spite of the fact that we publicly supported the cuts, if the cuts weren't there, we would increase our spending on health care"? Is that what the government is saying?

Mr Baird: I guess the issue is that every time the federal government cuts health care transfers -- and for that matter post-secondary education transfers as well, but in particular for health care, though, in this case -- when they cut $2.1 billion in health care, we've got to find that $2.1 billion elsewhere to maintain our commitment for health care, which puts a tremendous strain on the budget. I think the taxation matters are separate. I can tell you one thing: If we had $2.1 billion more money, we would be in a position to have such an argument and such a discussion. That would be an enviable position to have. The position of the government has been that the folks who have paid the toughest price in achieving the federal balanced budget were not internal government administration, they were health care, and they should be the first in line for that dividend, instead of a whole host of other new spending initiatives. They clearly did not see that as a priority and that's something which caused us concern.

Mr Phillips: I still didn't actually get an answer. It would be helpful for me if the government were to say: "Listen, if we could get more money, we'd spend more money on health care. That's the problem." If that were clear, then it makes it easier.

Mr Baird: If the federal government were to go back retroactive to 1994 and give us the $2.1 billion they've taken every year, I can assure you we would increase health care spending.

Mr Phillips: Well, there we got it. That's all I need to know.

The Chair: Take that to the bank. Mr Silipo.

Mr Silipo: I'm going to support this recommendation. I remember the days not too long ago when Mike Harris would say -- we would say this. You know, I would say this, members of the NDP government would say this, and Mike Harris would stand up and say, "Stop whining." I'm glad they have finally come around to realizing that we weren't whining, that what we were doing was in fact calling upon the federal government to do its job properly, not to deal with its problems by simply transferring them over to Ontario through the cuts of this $2.1 billion. I can only support the commonsense approach that government members are taking on this in finally realizing that there is a problem out there and that it has been caused in part by the federal Liberal government.

Mr Baird: You're the best, Tony.

The Chair: Ready for the question? Number 18, as presented, all in favour? Unanimous.

Number 19.

Mr Phillips: Mike had gone on record here as supporting all these cuts.

Mr Wettlaufer: He only had 20 members then.

The Chair: A lot of people have gone down on record. Number 19.

Mr Wettlaufer: I move, "The government should call on the federal government to provide a more equitable funding formula for health care and post-secondary education transfers." My comments are the same on this as they were on the last one.

The Chair: Further discussion? Ready for the question? All those in favour? Contrary, if any? Unanimous. Carried.

Number 20.

Mr Arnott: "The government should continue to urge the federal government to follow the recommendations of the provincial finance ministers and reduce EI premiums to $2.20 per $100 earned."

Mr Silipo: One of the concerns I have with this is, what does this mean to the other side of the equation, which is the benefits paid to workers who are unemployed? I would move the following words be added to this, "and to restore the cuts to employment insurance benefits," so as to be clear that what we're talking about is a combination of reduction in premiums with restoration of the level of benefits that was there before, and given that in fact there is a big surplus in the EI system, it's not something that couldn't be done if the political will was there to do it, so I would move that by way of amendment.

The Chair: An amendment by Mr Silipo to add "and to restore the cuts to the EI benefits."

Mr Arnott: I want to add a couple of comments to my recommendation that this be adopted. It's my understanding that at present levels, we now are charged $2.70 per $100 of payroll to go into the employment insurance fund, that as of the end of December 1997 there was a surplus in the EI fund that Mr Silipo alluded to of approximately $12.7 billion, and it's projected that by the end of 1998 it will go up to $19 billion, so clearly there is room for a reduction in employment insurance premiums, and our party believes very strongly -- and I think it's something that has been unanimously put forward by the provincial ministers of finance -- that a reduction in EI premiums would be a direct and immediate incentive for employers to create the new jobs we need.

Mr Silipo has raised another issue that he might want to raise in the context of his party's recommendations, but I think that recommendation 20 as has been proposed by our side should stand alone.

Mr Phillips: My problem here is that frankly this is not an area our committee spent a lot of time studying. I don't know enough about whether $2.20 is sufficient to properly fund the system or not. I do know that one of the problems in the past was they got into an economic downturn and the federal government ended up taking the premiums up, so it was counterproductive. The tougher the times, the more the rates went up. What I gather they are attempting to do here is to salt the money away in good times so that in bad times they don't have to take the rates up.

I honestly have not looked at the numbers to know whether $2.20 per $100 is reasonable or not. I would maybe ask the mover, what sort of demands would you see being met at $2.20 and can you table a report that says $2.20 is sufficient? I simply don't know.

Mr Baird: I just want to make a comment with respect to Mr Silipo's amendment. I don't take issue with his sincerity and his concern with the changes brought about in the new EI, which was the UI system. I don't recall hearing during the hearings process anything about the changes brought about to employment insurance to put that as part of our recommendations.

I was very impressed with the importance to small business. There was a chart that provincial policy director Judith Andrew gave us, and the concern small business expressed, that one of the highest concerns they had was payroll taxes, this being the obvious candidate, beyond the employer health tax, for such a significant reduction, to help job creation; that was the motivation to put it. Given there's such a surplus and given that provincial finance ministers representing New Democratic governments, Liberal governments and Conservative governments have called on that, that was the motive, so there is nothing sinister. I don't know enough about the reductions to employment insurance to be able to make any statement.

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Mr Arnott: I appreciate the comments by my colleague Mr Phillips and would certainly take note of them. I don't have any studies to table, unfortunately, but I still believe that looking at the tremendous growth that is anticipated in the EI account, a $12.7-billion surplus at the end of December of this year and an anticipated surplus of $19 billion by next year, certainly there is tremendous growth there that we can look at.

I guess the question is, how much do you believe that a reduction in payroll taxes would create jobs immediately? I believe that in fact the reduction in payroll taxes would create jobs immediately. It is my understanding that Liberal governments in New Brunswick and Nova Scotia also support this reduction and would probably concur with the recommendation.

The Chair: Further discussion? Ready for the question?

On the amendment as proposed by Mr Silipo: All those in favour of number 20, as amended?

Mr Baird: Do the amendment first.

The Chair: Right. On the amendment: All those in favour? Contrary? Defeated.

On number 20, as presented, ready for the question? All in favour? Contrary? Carried.

That completes the government recommendations. I think we had agreed before we broke this morning that we would move to the NDP recommendations next. Is that correct?

Mr Silipo: I'm easy. If you want to move to the Liberals, that's fine.

The Chair: What is your wish?

Mr Phillips: It doesn't matter to me.

Mr Baird: Given that Mr Silipo's was the next party to submit theirs, we could go to them, if there's no objection.

Mr Silipo: I'll move them as they are here.

Number 1: "Instead of continuing with implementation of the income tax cut, the government should immediately redirect this money to urgent needs, especially in health care and education."

The Chair: Any discussion? Ready for the question?

Recommendation number 1 of the NDP caucus: All those in favour? Contrary? Defeated.

Mr Silipo: Number 2: "The government should use funding made available from cancellation of the tax cut to ensure full access for Ontarians to universal health care as enshrined in the Canada Health Act."

Mr Baird: Just a comment in terms of this recommendation. Obviously it's couched with the terms of the tax cut, which by virtue of a previous recommendation, you will appreciate, is a concern on this one.

Certainly the government will continue to follow the Canada Health Act and the provisions enshrined therein in terms of the universality provisions. There has never been a discussion otherwise. I just wanted to put that on the record.

Mr Silipo: I'll just say briefly, because we have had some discussion on these issues already when we dealt with the government recommendations, obviously there is a very clear difference of opinion between those of us in the NDP and the government side on the question of the tax cut. But certainly one of the implications and one of the impacts that we are seeing is that in education and in health care, as this particular recommendation deals with specifically, we are seeing, we believe, a threat to full access for Ontarians to universal health care.

While we may still be at the point where legally the government of Ontario is saying they can abide by and are still abiding by the provisions of the Canada Health Act, we believe that we are getting very close and that if the direction continues, we will cross over that line, to the point where full access will no longer be something that we will all enjoy. That's a fundamental right that, as Ontarians and Canadians, we've enjoyed for some time and we want to make sure that the government corrects its course. Hence we've brought forward this recommendation and the previous one, dealing with the importance of health care and education, as two areas that require primary attention for ongoing funding and support by the government as opposed to the tax cut.

The Chair: Are we ready for the question on number 2? All those in favour? Contrary? Lost.

Mr Silipo: Number 3: "The government should halt the trend towards privatized, two-tier medicine, especially as seen in the destructive competitive model that has been introduced in home care."

I think the recommendation speaks for itself, but essentially one of the pieces we have seen the government begin to implement as they are moving towards a new model of health care, particularly in home care, is this kind of simply moving it to the lowest bidder. That means that we won't have necessarily the best care available to people out there in the communities. It's something we think needs to be corrected because the end result of that system, if the government continues along this line, will be to see a two-tier health care system, one for those who can afford to pay a higher premium and a higher amount and one for the rest of us. That's exactly the kind of situation that the universal health care system in this country and in this province was set up to move us away from. We are seeing the first steps taken by the Harris government to get us back to the way it was, and the way it was in the area of health care is not where we should be going.

The Chair: Ready for the question on number 3? All those in favour? Contrary, if any? Defeated.

Number 4.

Mr Silipo: "The government should use funding made available from cancellation of the tax cut to ensure province-wide access to junior kindergarten and adequate stable funding for the entire public education system."

The motion, I hope, is clear enough. It speaks for itself. I noted with some interest during the presentations the concern that was expressed around junior kindergarten, in particular from a variety of groups that we would have expected to hear from, a number of the teacher and child care communities, but also from groups that we might not have expected to hear that from, such as the Ontario Chamber of Commerce. There is clearly an understanding out there that what the government has done, particularly in this area of policy as it relates to young children, is wrong and needs to be fixed.

We obviously tie that very much to the government's steps with respect to the tax cut and point out, as we do in the recommendation, that cancellation of the next stage of the tax cut would more than provide adequate funding and adequate money for this initiative, among others, to be able to be properly funded.

The Chair: Number 4. All those in favour? Contrary? Defeated.

Number 5.

Mr Silipo: "The government should immediately freeze post-secondary tuition and take action needed to reduce crushing student debts."

I offer this as a complementary recommendation to one dealt with earlier dealing with post-secondary. We think the kind of shift that's been taking place towards asking students to pay more and more and more and then allowing universities and colleges to set even further increases beyond those established by the government -- those directions, we believe, are wrong because they will simply add to the debt that the government has put on to the backs of students, and that's something that shouldn't happen.

I'm quite aware that our own record when we were in government unfortunately also included increases in post-secondary tuition. I don't think it was anywhere near the kind of range that we're seeing now, but be that as it may, we believe the time has come to say that students can't be asked to bear more and more of the cost, that there's got to be a limit, that the limit certainly has been reached and that the government should therefore freeze post-secondary tuition at the same time.

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Mr Baird: I have a tremendous regard for the member for Dovercourt. I think he's, generally speaking, a very principled fellow, but on this issue -- I mean, you were the Minister of Education. I was a student when you were minister and I recall very vividly during the election campaign that you weren't going to freeze tuition, you were going to get rid of tuition.

Mr Silipo: It wasn't my recommendation.

Mr Baird: It was going to be gone. That was the party policy: It was going to be gone, zero tuition. I was so excited, because I was going into third and fourth year, and I had already had huge tuition increases under our friends the Liberals. Two of the ministers still sit in the House today. I was looking forward to it because it was going to be free and I was going to have all this extra money because I wouldn't have to pay tuition any more.

Mr Silipo: Just for the record, the only minister who was there at the time isn't in the House any more, who was responsible for this bill.

Mr Baird: I did check. You were minister from October 15, 1991, to February 3, 1993.

Mr Silipo: Unfortunately, I didn't have responsibility for post-secondary.

Mr Baird: But it did fall under your ministry none the less. This is the type of thing that in opposition is a very easy thing to say: "We'll freeze tuition; we'll get rid of tuition." But the reality is that there is a system to fund, where we want students and young people and people going back to school to get a good-quality education, and the fact of life is that you have to pay for it. I think we'd all like zero tuition. In a perfect world, that would be an admirable characteristic. I think it is somewhat unrealistic. Even under the previous government, of which my colleague was a member, I know Dave Cooke sponsored a number of seminars and symposiums on an income-contingent loan repayment plan, which goes substantially against the spirit of this motion. While I appreciate the spirit in which he presents it, it's an easy resolution for an opposition member to make and perhaps not realistic in terms of the disciplines of having to deal with the reality of a very, very large deficit. For that reason, those are the concerns I would express.

Mr Arnott: I hope it's not the NDP's position any more that they're going to get rid of tuition entirely for university students, because I think, as my colleague has pointed out, it's a fairly impractical thing and it isn't going to happen in the short term by any means.

I would like to add, and I think it's important to point out, that in the Treasurer's financial statement in December of last year when he indicated the government was going to allow additional increases in tuition, the allowance was made with the provision that a certain percentage of the increase in tuition rates, an additional portion, had to be set aside for student assistance. That's worthy of note in the context of this discussion.

As my colleague Mr Baird has pointed out, clearly the students who go to university realize tangible benefits to them as individuals. Also, we can't overlook the fact that the state still massively subsidizes tuition in Ontario today. Most students are not yet paying half of the total cost of their education through their tuition, so there's still a massive state subsidy for assistance for students in university.

Mr Silipo: To be fair, I think some of the criticism lodged at me and at my party from across the way is fair, and I take that. In this recommendation I'm not saying that at this point in time we should be undoing the various increases; we are saying that there should be a freeze on further increases. That's what the recommendation proposes, based on the argument that there have been substantive increases over the years by, unfortunately, all governments, all three parties being in government; and that we should not resolve the funding problems in post-secondary education by further tuition fee increases. That's the import behind this recommendation in saying, "Freeze the tuition fees, given what has happened, don't increase them further and then begin to take steps that we need to reduce the kind of incredible debts that we are beginning to saddle upon the students."

The Chair: Are we ready for the question on recommendation 5? All those in favour? Contrary? Lost.

Number 6.

Mr Phillips: There's a pattern emerging here.

Mr Silipo: Yes, there's a slight pattern emerging, as my colleague Mr Phillips says. But actually with this next one maybe we will see.

Mr Baird: The cancellation of the tax cut --

Mr Silipo: This next one isn't tied to any cancellation of anything. This actually is quite complementary to a recommendation we passed earlier.

Number 6: "The government should set and meet realistic targets for the unemployment rate, with a separate target and specific programs for youth unemployment."

If I could speak to it briefly, I'm trying to look at which recommendation it was that we dealt with earlier: number 11, I believe, where we said, "The government should work with other levels of government and the private sector, including small business, to encourage youth employment."

It was suggested at the time that this would be a very good complementary motion to that, because it suggests that the government should set targets for the reduction of unemployment, that it's not enough to say, as I think we all would want to say, "Yes, we should reduce the unemployment rate overall and particularly for young people," but that the only way to do that is for the government to actually set some targets and work towards those targets in the same way that government has chosen, this government and other governments, including ours in the past, to set targets for the reduction of the deficit.

Certainly the human deficit is the most important of all, and we think it's time that governments at all levels, and certainly this one, should be prepared to say, "Let's set realistic targets to drop the unemployment rate overall, and particularly the overarching rate for youth unemployment." There is no way in which we should be accepting the kind of situation that exists now. We can argue about the causes and the best way to deal with it, but what this recommendation says in a very broad way is, let's have government take on the understanding and the responsibility, that unless you begin to set real targets, this is a problem that we'll all just continue to talk about and not see much improvement on in the years to come.

Mr Baird: Just two brief comments. Obviously, from my comments earlier, job creation is more important than deficit reduction. I certainly have always believed and do now believe that. Indeed, there is an important target with respect to job creation.

I would express one concern about one word in the second line: "programs" for youth unemployment.

There's been a good series in the Toronto Star over the last three or four months on youth unemployment. On the first day of that series in the Saturday Star, there was a front-page analysis story, an introduction to the series, by John Honderich, the publisher of the Star. He said that what young people do not want is more platitudes from politicians or simply yet another government program.

I share that, and I think some of the answers to youth unemployment rest with creating the climate for job creation and then policies and initiatives rather than simply a make-work program which, while noble, is a short-term fix to an otherwise significant problem. That's why the recommendations already adopted that have I believe the support of all three parties are with respect to issues like cooperative education, which isn't a program -- more a policy or an initiative -- with respect to the tax system, with respect to high-tech skills and equipping our young people with the skills they need. So those are two concerns that I'd suggest.

Mr Arnott: I want to compliment Mr Silipo for bringing this forward. I think it's an idea that has some merit, actually, and would indicate support for the principle that he's trying to raise here. Certainly the government, with its stated commitment to create 725,000 jobs over a five-year period, recognizes that job creation should be given a great deal of priority consideration in terms of government policy.

I would ask the member what target rate he thinks it should be, what the rate of unemployment should be in Ontario. I think certainly we want to encourage a policy of full employment, but economists sometimes differ over what that means. There are always a certain number of people who are voluntarily unemployed, who have quit their job hoping to look for another one or are out of the workforce for some personal reason. They've made that decision themselves. So there's always a built-in percentage in the unemployment rate generally that are voluntarily unemployed -- a small percentage, I would think, probably less than 5%. But if he could provide additional clarification, it would be more helpful for me in terms of wanting to support it.

The Chair: I think Mr Phillips was next.

Mr Phillips: I come from a business background, and we sort of like to set targets in the real world. As someone once said, if you don't set yourself some goals, you'll never know when you've scored.

To me, this is a bit of a no-brainer. It's going to be quite unusual to explain why the government wouldn't want to do this. You'll see in our recommendations that we recommend that the government establish a series of goals. I might add, by the way, the Alberta government does a very good job at it. That was something we took out of one of the presentations here. So to me it's a bit of a no-brainer.

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I would repeat: On youth unemployment, the government's own statistics show that the unemployment rate among young people -- this is the 15 to 24 age group -- in 1995 was 15.4%; in 1996, 15.6%; and in 1997, 16.7%. The employment went from 781,000 to 778,000 to 772,000. It's acknowledged by all of us there's a problem. I thought Mr Silipo was probably good in saying "realistic" targets. It's a bit of a no-brainer. I'm not sure why we're even debating this.

Mr Silipo: The reason the wording is set out as it is is because I don't purport to have the answers as to what a realistic target should be. What we're trying to push through this recommendation is the fact that as parliamentarians, and certainly the government has a primary responsibility, all of us have a responsibility to begin to pay some direct, concise attention to this.

For example, I think it would be to everyone's advantage if we as a committee were to spend some time just focusing on this: in the same way that we've done the pre-budget process of hearing from people about the whole fiscal situation, to actually invite even some of those same people to come back and talk to us specifically about this and what we should be doing.

There's lots of evidence outside of our own borders around what initiatives governments have taken. Look at the situation in France: a lower percentage of youth unemployment there, and the government has taken the action to create, not on its own but working with the broader public sector as well as the private sector -- they've got a target of 700,000 jobs aimed particularly at young people. I don't think they presume that's going to resolve the problem, but it's going to make a major dent in the problem.

I think we'd have to look at the situation in terms of: What is the situation here in Ontario? What could we establish? What kinds of steps could we take? Yes, that would involve, Mr Baird, looking at some programs, not in terms of simply pretending that the government could create those jobs or that the government should create those jobs, but that there are opportunities, there are bridging mechanisms that the government could do, that government-funded programs would in fact provide an avenue for that to happen, but understanding that the real objective is to help create jobs in the private sector.

What we are saying here is, let's make it a priority. Let's make it an area in which we focus some attention not just in terms of the overall fiscal situation of the province, which we might agree or disagree is conducive -- obviously the better the economy functions, the more conducive it is overall to jobs being created. But what we're saying is that in addition to that, there are some things that government should be doing. In the same way that we preoccupy ourselves, and obviously this government perhaps more than others, with reducing the deficit, we ought to preoccupy ourselves in a very focused way with the issue of unemployment, particularly as it pertains to young people, and we ought to sit down in an ongoing way and talk about what remedies are there beyond what already is happening. That's what the intent behind this is.

As Mr Phillips says, in a way it is a bit of a no-brainer, it is a bit of motherhood, but it is also saying, "Let's take this on as a bit of a task in a different way than we've done so far." It's offering this as a way to go.

Mr Arnott: I shouldn't really speak to this again because I've already talked about it, but I want to pick up on what's been said here. I think we all support the principle behind what you're suggesting, Mr Silipo. There must be some reason why your government didn't set these targets and try to meet them. There must be some reason why the provincial government under the Liberal Party, to the best of my recollection, didn't do it.

I can think of one practical problem. This recommendation almost presupposes that the provincial government has control of all the levers that impact on economic growth or on economic downturns. Certainly if the provincial government in Ontario were doing everything it possibly could to encourage a low, steadily declining unemployment rate, and if there were a federal government in Ottawa that was raising taxes all the time and raising spending all the time and having huge deficits, that kind of thing, it would impact on the provincial government's ability to deliver on these targets. So that's a proviso that I would add in terms of my previous comments.

But again, I think your idea has some considerable merit and I would support it in principle.

Mr Baird: I'm not unsympathetic to the issue. I accept everything Mr Arnott said and agree with it wholeheartedly. The provincial government just doesn't have the levers to say, "Listen, we're going to create X number of jobs this year." I think it can create a climate and it can set goals and objectives that it's striving for and that it seeks to undertake, so I'm not unsympathetic to the spirit behind part of your recommendation.

If you're willing, I would have a significant change that does address the issue and bring the issue forward. I acknowledge that it's significant, but you may want to reflect on it, something of the nature of, "The government should honour its commitment to create 725,000 new jobs over five years, with special consideration to the challenge of youth unemployment."

Mr Silipo: I don't have any problem with that, but I don't know that it takes away from this or is a replacement for this. If Mr Baird wants to move that, I will actually support it, because I agree with everything he has said in that, but I don't see that it obliterates the need for this kind of motion, which goes beyond the targets that the government has already set.

The Chair: Are we ready for the question? Number 6, as moved: All those in favour? Contrary? Mr Brown, I haven't seen a vote. Are you voting negative? Defeated.

Recommendation 7.

Mr Silipo: "The government should halt its destruction of quality public sector jobs and direct savings from the cancellation of the tax cut into a practical commitment to job creation."

I'll leave it at that.

The Chair: Any discussion? Are we ready for the question? Number 7: All in favour? Contrary? Defeated.

Number 8.

Mr Silipo: "The government should declare a one-year moratorium in its overhaul of property tax assessments to allow enough time to sort out the chaos caused by the new system."

Again, this is obviously aimed at a big piece of the puzzle that we are seeing unfold now as the government begins to try to put in place the new tax assessment system, and we are seeing particularly on the business side the kind of chaos that's caused by the new system. Albeit there will be room for the municipalities to make some changes and to ameliorate the impact, the reality is that I don't believe municipalities have the kind of room they will require --

Failure of sound system.

Mr Silipo: -- particularly here in Toronto, but I know to a lesser extent perhaps in other parts of the province, that the new system is just causing a level of havoc that I don't think any one of us wants to see, whether or not we agree with the new tax assessment system.

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What this recommendation suggests is a one-year moratorium so that in that time the problems can be fixed. One of the things that I hope will get fixed in that is the recommendation we adopted earlier, unanimously, I believe, as a committee, which is that the government would work towards a uniform province-wide commercial and industrial education property tax rate. Given that the government has decided to move in this direction, it should now recognize that it can't be done in the kind of time frame it has chosen. Good government and good process would say, "You can still move in the direction you want to, but not in the kind of haste you are doing and not with the kind of process where you are setting up one sector of the business community against another," particularly laying small business out there in the way they have been, with the real threat of many of them going under as a result of the new system.

Mr Baird: Just a few comments. Obviously, some of the changes to our property tax system are not insignificant. Whenever you're doing reassessments, it's never going to be 100% perfect, and change is never easy. I think it would be demonstrably worse, though, if there were to be a U-turn in the middle of this process. Some of these changes have been contemplated for many, many years and for a whole host of reasons have been put off by successive Conservative, Liberal and NDP governments. I think changing gears now would only make matters worse.

To be fair, you did mention two points, particularly the issue with respect to small business. The minister last week was very clear that there was no way he was going to allow the type of huge tax increases some have suggested, particularly for small business. I think he has a real knowledge of the importance that small business plays in the economy. In addition, there are a good number of tools the provincial government has given the municipalities to make sure that assessment-related tax changes on small business are both fair and manageable. We can't lose sight of those points among the larger issue.

Mr Phillips: This property tax thing is a mess and it doesn't come as any surprise. Do you remember that the clerks and treasurers were in to see us? This committee has dealt with three bills on this, Bill 106, Bill 149 and Bill 164, and each time the clerks and treasurers, who are the senior municipal bureaucrats, said we're just asking for trouble with the way this thing is being done.

I wrote down some comments they made, that this new system is immensely complicated, with 84 classes and subclasses, 156 tax rates. They said: "Implementation on January 1, 1998, is a high-risk strategy for the financial health of the municipal sector." They said it's going to create serious problems. "This is a recipe for administrative chaos," and "This is downloading the government's confusion and indecision to the municipalities." It isn't as if the government wasn't warned or we weren't warned, because they sat right there -- I don't know whether it was in this room, but a room like this -- and warned us of all this chaos.

The suggestion of a one-year delay is intriguing, but the thing is in such chaos now, I don't know whether a one-year delay adds to the chaos or helps. I feel a little bit like a spectator watching something going very wrong and not knowing how we can help. I'm a bit perplexed about whether a one-year delay would help to sort it out or whether this thing -- as I said to someone, this train left the station when it never should have. It was never ready to run, and it's running now. It's got no brakes on it, and I'm not sure whether pulling a switch right now is going to stop the crash.

I really am perplexed. You can see in our recommendations we also point out the problems with it. I don't know what other members are getting. Mr Wettlaufer said he's not getting any problems. My office is deluged by small business. I gather there's no problem in Kitchener, but --

Mr Rollins: What's their address, though?

Mr Phillips: Well, I'm getting businesses that say, "Tell me again why my business is in Brockville and I've got to pay $15,000 in taxes and my pals over in Parry Sound are paying $5,000 in taxes" for identical businesses.

Mr Rollins: Location, Gerry, location.

Mr Phillips: Yes, location: If you're in Brockville you pay $15,000. But that's the rate set by the province; that's the provincial property tax rate. Mike Harris has said, "If you happen to be in Brockville you're going to pay $15,000; if you're in Parry Sound you'll pay $5,000" -- identical businesses valued at $500,000, nothing different other than, as you say, location.

I'm not being overly helpful. I'm just perplexed about whether a one-year delay would be helpful in this thing or whether we're simply going to have to try and demand that the government put the necessary resources into trying to muddle through this thing in 1998.

The Chair: Any further discussion? Not having heard an amendment for a 10-year delay, we'll deal with the item. It's recommendation 8. All in favour? Contrary? Defeated.

Mr Silipo: The day will come when you'll think the section is a good idea.

The Chair: We'll move now to the Liberal recommendations.

Mr Phillips: I'll begin. The first recommendation is, "The government should halt the further implementation of the planned income tax cut and redirect spending to other priority areas such as children at risk, reinstating junior kindergarten and health." It's not unlike one of the NDP recommendations.

The Chair: Any discussion? Ready for the question? Liberal recommendation 1: All those in favour? Contrary? Lost.

Number 2.

Mr Phillips: "The government should abandon its plans for further cuts to hospital and other key health services, and instead address the growing problems in timely access to emergency and core hospital services, and protect and enhance other health services to meet the province's growing needs."

It gets back to discussion we've had earlier. I'm growingly concerned about whether we have enough resources. The government, I know, has said it's not going to proceed with its last cut on hospitals "at this time," I think is the language they used. By the way, the Ontario Hospital Association in previous presentations had been relatively supportive of government direction, and this year they sounded an alarm for us, saying, "Listen, it has now gone too far."

Mr Wettlaufer: This reminds me a little bit of the question, "When did you stop beating your wife?" This is suggesting that we are planning further cuts to hospitals without any improvements to the health services, and that's quite contrary to what is going on. As a result, I am not going to be able to support it.

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The Chair: Further discussion? Ready for the question on number 2? All those in favour? Contrary? I declare number 2 defeated.

Number 3.

Mr Phillips: "The government should establish benchmarks to ensure that any provincial savings that occur as a result of its education changes and school board reorganizations are reinvested in educating our children."

We have been anxiously awaiting the announcement on the funding for school boards. The province now manages the total system. There's lots of evidence that we need additional resources in the classroom, and our concern is that whatever savings might come about as a result of reorganization aren't simply eaten up by trying to fund the tax cut.

The Chair: Further discussion? Ready for the question on number 3? All those in favour? Contrary? I declare number 3 lost.

Number 4.

Mr Phillips: "In spite of a 4.4% economic growth rate in 1997, the government is over 110,000 jobs short of its jobs goal. The budget must address the reality that the tax cut is not creating sufficient jobs and that other solutions are needed, such as ensuring that short-term and long-term educational programs are in place to meet the province's skills gap for high-tech jobs."

Again, I use the government's numbers, and after two and a half years there are 252,000 jobs; that's from June 1995 to the end of December 1997. Half of the 725,000 job target is 362,000 jobs or thereabouts, so the government is running about 110,000 jobs short of its 725,000 job target. Furthermore, as we've talked about in this committee before, there is an opportunity, we think, for focusing on our technology area and our information area to see more jobs created.

Mr Baird: Just a few comments on it. I guess there are four or five issues alluded to in the one recommendation. Certainly on the job front I don't think anyone would expect -- it certainly took a while. I use the analogy that it's like turning a cruise ship around. You can't turn on a dime in terms of the full effect of the implementation of a group of policies the government would present to obtain a desired climate for job creation. That's why there was a five-year target, not a month-by-month target. That's the first thing I would say.

The other implication in the recommendation is that the tax cut is the sole job creation policy in the government's economic policy. We know from the testimony of the expert from Nesbitt Burns that the personal income tax cuts have gone a long way towards reviving consumer confidence and spending. The tax cuts are working. Employment conditions have improved considerably, with Ontario generating more than 170,000 net new jobs in 1997, double the 1996 gain. That's from Sherry Cooper of Nesbitt Burns in a presentation she made before the committee.

The tax cut is only one of a number of policies, whether it's repealing job-killing labour legislation, whether it's that we work with the Red Tape Commission, whether it's cutting the employer health tax for small business, whether it's creating the regulatory environment, whether it's better marketing of the province abroad. There's a whole host of government policies and initiatives designed to create that climate that is conducive to job creation. Certainly on the high-tech front that's an area where we are sympathetic, and I think the committee has already unanimously approved one recommendation with respect to high-tech skills.

The Chair: Further discussion? Ready for the question? Number 4: All those in favour? Contrary? Number 4 is lost.

Number 5.

Mr Phillips: "The provincial government must review its plan to burden over $570 million dollars in new costs on to local property taxpayers across the province through its municipal downloading plans. Moving social services to municipalities and failing to address business education property tax inequity are two of the symptoms resulting from the bungled 'Who Does What' process. The implementation has failed on every account to meet the stated goal of simplifying and improving the delivery of any affected service."

I remember very clearly that a year and two months ago Dave Crombie, on behalf of the Who Does What group, sent a letter to the government saying, "We are strongly opposed to your plans to put social housing and social assistance on property tax and we unanimously" -- by the way, this was 14 people who were handpicked by Mike Harris to study this. They unanimously said, "Don't do it." It's been a series of problems ever since. This was supposed to be revenue-neutral and we find out that it's $570 million of added costs to municipalities.

The province said that one of the reasons it was taking over complete responsibility for funding education was to provide fairness, and then we find, as I said earlier, that now the province is setting the tax rates on businesses. We've got, in Orillia, a business paying $15,000 and an identical business in Huntsville paying $5,000 for the provincial education tax; one in Brockville's paying $15,000 and one in Parry Sound's paying $5,000. It's part of this bungled -- I hope you don't take offence at that -- Who Does What process. By the way, it will be this year, but next year as well when the municipalities are trying to set their property tax rates that they will be indicating where the problem originated.

Mr Baird: Obviously the realignment of responsibilities is a major exercise in public policy, there will be no denying that, but there are a number of things I would want to get on the record. The municipal support grant is being eliminated. The municipalities have known that for a number of years now. The president of the Association of Municipalities of Ontario acknowledged that a number of years ago. With modest savings for that plus the education tax room, there's a total of $645 million in funding being provided in each of the next two years, in addition to the permanent $570 million for the community reinvestment fund, the other CRF. There are savings from OMERS in the neighbourhood of $75 million.

In our own backyard, as an Ontario government, we have found 33% savings on our own overhead. When you put these realistic savings targets into perspective, the Quebec government this year is asking its municipalities to find 6% efficiencies.

There is only one taxpayer and we're certainly interested in working with the municipalities to ensure we get the best results for that one taxpayer, but we are asking them to find in the big picture in many cases modest savings, through the special circumstances fund of $77 million.

The second issue with respect to the inequity of the current tax system: I have a tremendous amount of respect for the member for Scarborough-Agincourt. This is not a tax increase. This is maintaining the inequity that was already there. I think we passed a motion saying that we would like to move to get rid of that. While I have tremendous respect for him, this is not the first inequitable tax system that we've had in Ontario. There was something called the commercial concentration tax, a tax that he voted for, that he actively supported as a Toronto member of the Liberal Peterson government that brought it in. It was a tax that was so bad even the NDP government got rid of it. I've got to remind you of that. It is somewhat ironic you'd make such a big issue of an inequitable tax that we didn't create, when in fact your government was the first government to create such an inequitable tax in the first place.

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Despite the significant tax increases and the significant revenue problem the New Democratic Party experienced, at the height of one of the worst recessions since the Depression, even they acknowledged the tremendously devastating and bad effect that tax had on the greater Toronto area. I do think it's important to put on the record that this inequity has existed for some time. The municipalities got themselves into this mess and we certainly want to work with them. I think there's been a significant indication from both the Premier and the Minister of Finance to work with them to resolve that inequity.

It's not going to happen overnight. It'll happen, I'll bet you, demonstrably quicker than the inequity developed. I think those are some important thoughts to put on the record with respect to this recommendation.

The Chair: Further discussion? Ready for the question? Number 5: All those in favour? Contrary? I declare it lost.

Number 6.

Mr Phillips: "The provincial government must act to address the confusion and chaos that will result from its hasty implementation of the largest property tax changes in decades. It is becoming increasingly impossible for the government to address all the problems it will have created by the 'make it up as you go along' property tax reform process it has developed behind closed doors over the past year. The implementation deadlines were unrealistic and were only achieved by neglecting to provide any impact assessments to the public in advance of implementation. The government has a responsibility to respond to both policy and implementation problems in the months to come in order to ameliorate the difficulties that will face businesses, residential property owners, charities, tenants and others."

We talked about this under the NDP proposal, but confusion and chaos are the only way to describe it. It truly is, everywhere but Kitchener, a significant problem.

Mr Wettlaufer: I wonder if it has anything to do with the fact that I look after my constituents.

Mr Phillips: Good for you, Wayne. I think it's a bit unfair to say Al Leach doesn't look after his constituents. I think that's a bit of a low blow. I know he's getting a lot of complaints, but I think it's unfair to say he doesn't care about his constituents.

As I say, whether it be on businesses that the province has responsibility -- I might add that we now have a uniform mill rate on education for residences. You know how that was done. It was by using provincial funds to balance it off, they said. That was the starting point on the announcement in the middle of December: "We'll have a uniform mill rate residentially." Those who were paying too much on their residences were fixed. For those whose rates were too high, where they'd been asked to pay too large a burden for education in residential, that was fixed through $600 million of provincial money.

But the government, in my opinion, just made a mistake. I think in December, and I said this, it should have dealt with the downloading, it should have dealt with the uniform mill rate residentially, it should have dealt with the property taxes on businesses and it should have dealt with the $600-million funds. It dealt with three of them, but not the fourth. Now we're left with, frankly, a heck of a mess.

I find it's going to be really challenging once all of our taxpayers get their bills and then start comparing them and phone their friends in another business a few miles away and say: "How much is your business evaluated at?" "Well, mine's evaluated at $%500,000." "So is mine?" "What are you paying for provincial education taxes?" "I'm paying $15,000." "Oh, I'm paying $5,000." "Wait a minute, I thought this was all fair and equitable."

I'm just saying that the government chose, where people were paying too much on their residences, to bring it down. How was it brought down? Provincial money. But if you're paying too much on your businesses, the province frankly ignored it, or forgot it or something happened.

We talked a lot about the employer health tax and we talked a lot about actually reducing the rate on EI, employment insurance. Both of those things are important but pale in comparison to the property tax increases, because if you talk to small businesses, they'll say, "My biggest single expense is property taxes." Taking the business occupancy tax off -- repeating what we said earlier today -- and putting it on to the realty taxes is driving property taxes up by about 10%.

Mr Kwinter: I just want to add one comment. My colleague and I met with some people in the printing industry a little while ago, and I found it quite startling to hear testimonials to the fact that some of these businesses now, as a result of this government's initiative, are paying more in realty educational property taxes than they are paying rent. When you hear that, you say, "Something has gone amiss," where that happens. These are non-partisan people. They're just businessmen who are saying, "Something has to be addressed here." The Minister of Finance has acknowledged there's a problem, and all we're saying is, "Let's address it and let's get it done."

The Chair: Further discussion? Are we ready for the question in number 6? All those in favour? Contrary? I declare 6 lost.

Number 7.

Mr Phillips: "The provincial government, as part of its annual budget, should establish quality-of-life indicators to measure the physical and social health of people living in Ontario. The results of this survey process should be then used to define and publicize realistic targets for reductions in our province's human deficit, including areas affecting children's health and care, education, our overall health care system and other performance goals regarding the care and opportunities we want to ensure all Ontarians deserve."

I was struck by one of our presenters who said that Alberta had some good standards, and our research officer, Mr McLellan, got those quality-of-life indicators from Alberta. I thought they were actually quite helpful. I think we should be incorporating them. I'll just read a bunch of them, because they've been doing it since 1996, and they report on it annually, obviously.

Literacy and numeracy skills for young Albertans, family income distribution, the number of Alberta families with incomes less than $20,000, job creation, days lost to disputes, violent crime rates, air quality -- no days of poor air quality reported in 1996; that was their measurement standard -- land quality, downstream water quality, serious youth crime, waiting times for cardiac surgery, length of stay in emergency, public perceptions on ease of access. I think they've got 23 core performance measurements that are related to 18 government goals. I just think it's a good idea.

Mr Arnott said earlier, "Why hasn't it taken place in the past?" I frankly don't know why it hasn't taken place in the past, but just because it hasn't taken place in the past doesn't mean it's not a good idea. I dare say governments of every political stripe want to avoid hard measurements of their performance, but certainly the Alberta government has shown it can be done, and it can be done on a broad cross-section of measurements. If we "believe government should be held accountable," and things like that, these things are clearly worth pursuing.

Mr Baird: This is certainly an interesting suggestion. I recall the one gentleman who raised it. I question whether the budget is the annual place to put it as an economic document. I know one of the principal exercises in terms of the administration of the government has been the business planning process that the various ministries and agencies go through on an annual basis now to adopt the appropriate accountability and performance measures. A good number of these performance measures are very specific and have quantitative indicators. If you look at the performance measures contained in the business plans which are released annually -- we're going through our third exercise this year -- they're getting better every year, would be the way I would put it. We would hope to see them develop into a mature part of the political process.

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I think as a government you want to encourage many evaluations of its success. The Provincial Auditor has done a lot of that, judging the provincial government's program results and evaluations. I don't have the benefit of having read the information you obtained from Alberta, but many such indicators in some of the areas you raised are actually in our business plan and performance measures. For example, the recidivism rate for parolees while they are on parole in Ontario is down to 2.3% or 2.1% where 5% is considered a good benchmark. It's down considerably in the last two, two and a half years.

There is a whole host of other performance measures with respect to education, now that we're measuring student achievement, to be able to quantitatively set goals for ourselves. We've brought in grade 3 testing and there's a new K-to-grade-8 curriculum. We'd like to be able to measure the effectiveness of that in the system, the grade 3 testing. In three years' time we should be able to get the full benefit of seeing how helpful the curriculum has been in that part of the process.

I have a concern. I don't have the benefit of the outside research you've done with respect to the situation in Alberta. However, the provincial budget is perhaps not the best place for that but rather the annual business plans that are tabled annually with the estimates, I believe. With those business plans are very exact performance measures that do, as I mentioned, have specific quantitative indicators and a good number of them.

Mr Phillips: Just on the point of where they should be, I actually went back and read some of the old pre-budget consultations. Of course, this was when you just had 20 members, but it was the recommendation of the then opposition Conservatives that it should be part of the budget. You may want to go back, but of course that was when you only had 20 members. If you read the pre-budget 1993 or 1994 Conservative recommendation, it was that measurements like this should be in the budget. That's where I got the idea.

Mr Baird: The ideas have good sense, I guess. We're not always narrowly set in a particular path. We're certainly open to work within our commitment. We don't say, "It's going to be this way and only this way." We're open to find the best way of doing things.

Mr Phillips: Well, you've got a lot more members now.

Mr Baird: More members, more ideas. The better route in our judgement has been through the business planning process and to put the performance measures, which I think are appropriate, for the public to make an evaluation.

Looking at the safety of our roads, in last year's business plan the Ministry of Transportation had some excellent indicators with radar performance. As one area, hopefully we'll be able to get a good sense over the next five or 10 years of the effectiveness of the drunk driving changes that were introduced in the Legislature last July.

The Chair: Any further discussion? Ready for the question on number 7? All those in favour? Contrary? Lost.

Mr Phillips: "Defeated" is better than just "lost."

The Chair: That completes the recommendations.

Mr Baird: Given the discussion that we had between all three parties just before we broke for lunch, I'd like to move the following motion:

I move that the final report signed off by all three caucuses be adopted, translated and printed, and that the Chair be authorized to present the report to the House.

I further move that a confidential advance copy of the report be presented to the Minister of Finance.

The explanation of the first part would be that if the three parties, which I have every belief we'll have no trouble doing, can authorize the changes that legislative research can conduct, the Chair be authorized to undertake the necessary arrangements to have the report printed.

The second part I didn't appreciate the importance of before, but obviously the input and information contained in the report would be of significant use to the minister. I would like him to get a copy sooner rather than to wait until some time in April. If he could get it sooner than that, obviously it would be of greater input as he considers measures for the next budget.

The Chair: Comments?

Mr Phillips: We're disappointed that our recommendations weren't adopted so we may be --

Interjection: Morally outraged.

Interjection: You guys are doing a minority report, right, Gerry?

Mr Phillips: You read my mind. I just want to get the timing down. For us, probably roughly two weeks from now I think we could have our report in, at 5 o'clock on that Monday, which is March 23.

Mr Baird: Do I have a chance to edit the minority report?

Mr Silipo: We'll give you another chance to take up any recommendations on further reflection.

The Chair: Two weeks from today at 5 o'clock. Is that satisfactory? Agreed.

Mr Silipo: I presume that wouldn't preclude the Minister of Finance still receiving an advance copy of this, if Mr Baird thinks he should get it before then.

Mr Baird: I didn't have a full appreciation and I was informed. I don't want him just to get a copy, I want him as well to be seen to get a copy, and I would hate for someone to tune into the legislative channel 10 days or two weeks before the presentation of a budget, if it happened to go that late, that he was only then getting the recommendations when likely some of the key decisions would have already been made. I know we want him to receive the information but as well to be seen to receive the information.

Mr Phillips: They may still be preparing it, even without our report.

Mr Silipo: They may not wait for our report.

Mr Baird: I can assure you --

The Chair: Then again, they might be doing it the night before.

Mr Baird's motion has two aspects to it. Are we ready for the question? All in favour? Carried.

We have agreed to two weeks to file the minority reports, if any.

Clerk of the Committee: Dissenting.

The Chair: Dissenting, not minority. My apologies. Any other business before the committee?

Mr Baird: Just to clarify the discussions we had just before the break, we had discussed with the clerk and research the potential of getting the report later this week and then having until a set time when the three caucuses could look at it and then try to sign off on it. I don't know whether they wanted to raise that now or get back to us when they've got the report ready.

Mr McLellan: We had a discussion about an appropriate time and I suggested an appropriate Wednesday, but if we get it to you by late Wednesday or early Thursday, is that all right? If there are specific concerns or deadlines you're working against, I should know that.

Mr Silipo: If research folks need a little longer, given that we're giving ourselves a couple of weeks to do the dissenting opinions, I would think that even if by this time next week, it should still give us enough time. It's a question of us just vetting the changes that have been made. I don't think it'll be a problem.

The Chair: Let's point to this week and give us the weekend to digest it.

Mr Baird: I'm in the hands of research. You've worked very hard to get this to us now and you've done a fantastic and excellent job. I thank everyone for all their efforts. I don't want to put an unnecessary deadline on you if you feel it's going to cause any strain.

The Chair: I don't think you need the time restraint anyway. If we can have it Wednesday, we'll get it Wednesday. If it takes till Thursday, we'll take it Thursday.

Mr McLellan: I'll undertake to have the recommendations inserted into the document in the appropriate spot at the end. Over the years the committee has undertaken to indicate after the recommendations whether or not they have been unanimous. Whether you would want to do that in 1998 or not, I don't know.

Mr Phillips: I don't think we did it in 1997.

Mr McLellan: I think it might have been back in 1996 when Elaine Campbell was on it. I just raise it because it's something that's happened before and if I didn't raise it, you'd say, "Why didn't you raise it?" If the committee wants to indicate that or not --

Mr Phillips: I'd do it the way we did it last year.

Mr Baird: I have no objection to that.

Mr McLellan: I had a couple of other points.

Just so I know when I'm preparing these final changes, there was discussion about harmonization under retail sales tax and there was a question about whether or not the Ontario Trucking Association had addressed this issue; in fact, they had. We checked that at noon, just so you know that. We'll leave it as it is.

The other point Mr Phillips had raised was with respect to Mr Eves's comments on the uniform business tax rate. On February 10 he addressed that subject. I think essentially what we've said on the top of page 15 still holds. We may clarify it by making specific reference, put in the word "business," because we had "commercial/industrial" tax rates. I think we should add the word "business" in there. If that's appropriate, I'll do that.

If anybody wants to see the direct quote on the 10th we're talking about, I can show that to you; or if you want me to read it, I can.

The Chair: No need.

Mr McLellan: Okay, we'll clarify that.

The Chair: Any other business?

We're adjourned, then, to the call of the Chair.

The committee adjourned at 1631.