RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
CONTENTS
Thursday 7 November 1991
Rent Control Act 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121
STANDING COMMITTEE ON GENERAL GOVERNMENT
Chair: Mancini, Remo (Essex South L)
Vice-Chair: Brown, Michael A. (Algoma-Manitoulin L)
Abel, Donald (Wentworth North NDP)
Bisson, Gilles (Cochrane South NDP)
Drainville, Dennis (Victoria-Haliburton NDP)
Harrington, Margaret H. (Niagara Falls NDP)
Mammoliti, George (Yorkview NDP)
Marchese, Rosario (Fort York NDP)
Murdoch, Bill (Grey PC)
O'Neill, Yvonne (Ottawa-Rideau L)
Scott, Ian G. (St George-St. David L)
Turnbull, David (York Mills PC)
Substitutions:
Coppen, Shirley (Niagara South NDP) for Mr Bisson
Fletcher, Derek (Guelph NDP) for Mr Drainville
Gigantes, Evelyn (Ottawa Centre NDP) for Ms Harrington
Mahoney, Steven W. (Mississauga West L) for Mrs Y. O'Neill
Marland, Margaret (Mississauga South PC) for Mr Turnbull
Murdock, Sharon (Sudbury NDP) for Mr Drainville
Poole, Dianne (Eglinton) for Mr Scott
Tilson, David (Dufferin-Peel) for Mr Turnbull
Clerk: Deller, Deborah
Staff:
Baldwin, Elizabeth, Legislative Counsel
Comeau, France, Legislative Counsel
The committee met at 1020 in room 151.
RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation.
Suite de l'étude du projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.
The Chair: The standing committee on general government is called to order. I would like to welcome all the members here this morning. We would also like to welcome the minister, the Honourable Evelyn Gigantes, who will be joining us for clause-by-clause hearings of Bill 121, An Act to revise the Law related to Residential Rent Regulation.
As all members will know, there are substantial amendments from the government, from the official opposition and from the third party. We will need everyone's co-operation to ensure that we can proceed in a somewhat orderly fashion.
I understand all the government amendments are already in the reprinted version of Bill 121. That is the bill we will be using. I further understand that the amendments from the opposition parties are in our black, substantially thick file folder. I ask all members to please leave their black file folders here over the lunch hour as other material has to be inserted. We can pick them up early this afternoon when we reconvene.
I would also like to ask the committee members for unanimous consent to stand down section 1 of the bill, which is the definition section, as amendments we will be dealing with may affect the definition section and I would like to come back to that later.
If I can get unanimous consent for that, I would like to proceed.
Mr Tilson: Before you proceed on that, I find the paperwork that has been presented to us the most overwhelming package I have ever seen in my short stay here at Queen's Park. I see amendments that appear to be put forward by the government that exceed the number of sections in the bill, which I find absolutely appalling. Obviously the bill has not been properly researched. I would therefore move, because of the extensive revision of the bill -- the bill appears to have been completely rewritten -- that this committee make a recommendation to the House that the bill be withdrawn and that the ministry prepare another bill for consideration.
The Chair: Mr Tilson has moved that the legislation before this committee be withdrawn and that the committee recommend that the minister prepare another bill.
Mr Tilson: If all the amendments pass, this will be a completely different bill than what went around the --
The Chair: You are asking that the bill be withdrawn and the government produce another piece of legislation.
Mr Tilson: Yes.
The Chair: Any discussion on Mr Tilson's motion?
Ms Poole: The Liberal caucus shares the concern of the Conservative caucus over this bill. We have some 90 amendments by the government, over 60 by the Liberal Party and I believe 26 by the Conservative Party. The bill itself has 130 clauses, only one less than the Residential Rent Regulation Act that was so roundly criticized for its complexity.
It is clear that the bill we are looking at right now, the one that has been reprinted with government amendments in it, is not the one we took to public hearings. Many of the amendments are technical, but certainly many of the substantive recommendations made by people around the province are ignored and are not in this reprinted edition. I really believe the government should go back to the drawing board and do what it said it was not going to do from day one: have a lengthy, meaningful consultation and take time to actually do some empirical studies which will back up some of the claims that have been made.
The building operating cost index formula is a perfect example where we had reliance on a Royal LePage study which was not formulated in the first place to take a look at the formula. That was not the purpose of the study. We had it updated with Royal LePage being given one week to do an updated study. It became obvious during the hearings that the evidence was meaningless and yet the government is relying on that to set the guideline formula.
It just does not make any sense. We need to have some accurate, empirical studies done so that when this legislation goes out it is good legislation. It is extremely difficult right now, it is a patchwork quilt. We will support the Conservative motion.
Hon Ms Gigantes: I will be very brief. To begin on the question of the guideline, it is, as every member of this committee is aware, under consultation right now with people interested in this matter around the province. That will be an extensive consultation. It will be reported back. I am sure you will have specific comments to make at that time.
If we leave that matter aside and move to the main matter of the motion, the contention is that the legislation is too long, that there are too many words in it, too many clauses, and that it is therefore not simple. The two things are not necessarily self-supporting or mutually supporting. The concepts in this bill are fairly straightforward. They are laid out in as clear language as possible. As the opposition has acknowledged, most of the amendments put forward by the government are technical in nature. If we are talking about substantial changes that will affect the interests of parties governed by the bill, we will be looking at a maximum of seven to 10. I have not done a specific headcount of the amendments that way, but I think the opposition will have to acknowledge that.
I think there is good reason to proceed. I urge that we do so.
Mr Mammoliti: Maybe I just do not understand the motion, but I would like you to rule on whether this motion is appropriate in terms of our last meeting when we agreed to print the bill and put the amendments in the bill. I could be wrong, but I understand the motion to read that we scrap it now. Frankly, we agreed to it at the last meeting. I am not sure whether the motion is in order.
The Chair: It is my view that the motion is in order. I have further checked with the table officers and my view that the motion is in order is supported.
Ms Poole: In reference to the minister's comments, I would like to make a couple of points. She has mentioned the consultation about the guideline. I point out to the minister that the formula for the guideline is set out in legislation; it is not set out in regulations. The number I am talking about, the one that started out as 50% in large buildings and 66 2/3% in small buildings, is now 55% in all buildings. That is in the legislation. The minister can do all the consultation she wants to, but if we pass that she would need a specific amendment to this act at a later date to change it. So it is consultation after they have embedded it in stone, which does not make any sense.
When she comments that the opposition is criticizing it for having too many words and too many clauses, she is missing the point we are making. The government made a commitment several years ago when it was an opposition party. It said, "We want legislation that is comprehensible and understandable by tenants, by small landlords, by anybody dealing with this legislation." What we have is not a comprehensible document. Many of the technical amendments will just have people scratching their heads and saying, "What is this all about?" We are saying, "Go back to the drawing-board," simply because it is a patchwork quilt. It has been pieced together, papering over the cracks. Quite frankly this is not the comprehensive legislation tenants and landlords in this province were led to expect we could have. It is not comprehensive, it is mainly a bunch of pieces of paper stuck together and I think it is just going to lead to chaos.
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Mr Tilson: I think the snip and paste position of Ms Poole is accurate. I must confess that as a new member it is discouraging when I see the process that has been going on, particularly in this committee in the last number of weeks, particularly during the registry office closing issue and the attitude of the government with respect to this committee. Moving into this piece of legislation, I understand that the government -- the previous minister and I am sure this minister -- and all of us are concerned about the state of housing in this province. I understand that. We are all united on that issue. I think it is the process that is one of our major disagreements, as well as the philosophy.
Normally when one is uncertain how one is to go about it, and the government has talked about this in the past, you have a discussion paper or a policy paper that could be sent to a committee, could be dealt with in committee of the whole House and distributed to interest groups. On this whole area, whether it is the Residential Rent Regulation Act, Bill 4 or this Bill 121, I see that a lot of the issues that need to be discussed and explained to us need to be explained by consultants, by specialists. Life has got so complicated that only consultants -- we have tenant groups and landlord groups. The average tenant and landlord has no idea what is going on. We send out a bill. We go around the province. It is a very expensive process. At the same time, within that process, we have a green paper distributed by the Minister of Housing.
The Chair: Order, please. I am allowing as much latitude as I possibly can and we are going around now for the second time. It is not my intention to try to curtail debate, but I am going to ask all members to try not to relive everything this committee has done over the past 14 or 15 months, but to try to speak specifically to the motion that Mr Tilson has made. With some of the discussion I am hearing this morning maybe the latitude is getting wider and wider. I ask for the co-operation of all members so we can function efficiently and appropriately.
Mr Tilson: Mr Chair, I appreciate your concern, although that is the very point I have, that we have gone out and done all these things. The public has the impression that this is the legislation one is going to deal with. When you have a complete change to a piece of legislation, when I have a mound of paper before me in a black binder and heavens knows what else is going to come to me, it gives me great concern. As a member, it gives me great concern when I and this committee have spent a great deal of time going around the province dealing with specific legislation and it is now before us in a completely different form. That is unfair to all the members of the public who appeared before us.
If the ministry has listened to the public, and I hope that is the position taken by the minister, that we have listened to the public, now we are putting forward change as opposed to saying: "Thank you very much, members of the public, we have reconsidered our position. We are going to withdraw the bill. We are going to make it clearer for you. We are going to introduce another piece of legislation." That is the intent of the motion, so that we do not mislead the public of Ontario.
Mr Marchese: I hope, Mr Chair, that I am not reliving the land registry meetings where for three meetings we discussed similar things.
The Chair: No, any debate on the land registry meetings will be ruled out of order immediately.
Mr Marchese: I understand that. I appreciate the comment. The motion that is before us is really not very helpful; that is obvious to me. It is too dismissive and in that way it is not very helpful. To say it is not comprehensive, to say it is too technical, does not really assist us in this discussion. It would seem to me that if the members opposite to me want to object to particular clauses, they can do so. I would be helped by a knowledge of what they feel is too technical, that we cannot understand, that we need to be assisted to understand, or if it is not comprehensive enough, by their making the appropriate suggestions to make it more comprehensive.
As a process, if we deal with the clauses and I hear the objections, I will have a better sense of what they are talking about, but the motion as it is does not help any of us to proceed in a way that is helpful to all of us here.
Mr Tilson: Because the bill has changed substantially -- and because we have gone around asking the public to respond to one particular piece of legislation -- it is fine for Mr Marchese to say we can make a response. Why did we go around to these cities all over the province getting representations on a completely different piece of legislation? That is the intent of the motion.
The Chair: I am going to ask the clerk to read the motion into the record before we call for a vote.
Clerk of the Committee: Mr Tilson moves that the committee recommend that because of the large number of amendments tabled here, the minister withdraw the bill and introduce new rent control legislation.
The Chair: All in favour of Mr Tilson's motion?
Mr Brown: Recorded vote.
The Chair: Mr Brown has asked for a recorded vote.
The committee divided on Mr Tilson's motion, which was negatived on the following vote:
Ayes -- 3
Brown, Poole, Tilson.
Nays -- 5
Abel, Coppen, Mammoliti, Marchese, Murdock, S.
Ms Poole: On a point of information, Mr Chair: The new package of Liberal amendments has just been distributed. We had to change a number of them because of the government amendments so that our package corresponded with numbering and other things. There are two substantive changes I would like to draw to your attention. First, I mentioned last week that we had an amendment regarding the standards board, to re-establish the standards board to strengthen it and give it more jurisdiction. That is in this new package distributed this morning.
On the other one, you will see that the first amendment refers to "board," meaning the Rent Review Appeals Board. This will replace an amendment which we tabled last week which says "board" means the Rent Hearings Board. Just briefly, when I was reconsidering my amendments, I realized that since we are asking for hearings to be reinstated as well as the appeals to be reinstated, to call it the hearings board, as the old appeals board was called, might be confusing. This just clarifies that when we are talking about the "board," we are referring to the appeals board.
The Chair: I need unanimous consent from the committee to stand down section 1. All in favour? I thank the committee for your support in that matter.
Agreed to.
Section/article 2:
The Chair: We are going to immediately move to section 2 of the bill. Any questions, comments or amendments to section 2?
Hon Ms Gigantes: If I am looking at the right section, this relates to matters that were raised, I believe, by the Federation of Ottawa-Carleton Tenants Associations during hearings in Ottawa. Am I correct on that? I have the wrong section.
The Chair: Subsection 2(1) reads, "This act applies to rental units in residential complexes, despite any other act and despite any agreement or waiver to the contrary."
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Ms Poole: I am trying to locate the amendment in question, if I could just have your forbearance.
Hon Ms Gigantes: There are no amendments on this one.
Ms Poole: So this is just the straight part of the bill as it was originally?
The Chair: Yes. Shall section 2 in its entirety carry?
Section 2 agreed to.
L'article 2 est adopté.
Section/article 3:
The Chair: Are there any comments, questions or amendments to subsection 3(1)? I am going to do every subsection individually so we do not get confused.
Ms Poole moves that clause 3(1)(a) of the bill be amended by striking out "bed and breakfast establishment" in the last two lines and substituting "bed and breakfast vacation establishment."
Ms Poole: There is a concern that if the wording is left in its present form, some rooming homes may be considered as bed and breakfast or certainly may try to interpret themselves as being bed and breakfast. Just to make it very clear that the government's intention in this regard related to vacation situations for bed and breakfast and not rooming house situations, we have suggested this amendment.
Motion agreed to.
Ms Poole: Under clause 3(1)(b), a "vacation home for a seasonal or temporary period" was to be "not exceeding four months." A number of people have commented that there are situations where a home might be used for a vacation period, particularly with our Canadian seasons, for a period of six months, yet it would not qualify. Is there any particular reason the four-month period was chosen?
Ms Parrish: I do not think there is any magic to the four months per se. I think it is just trying to get across the fact that this is intended to be accommodation of a temporary nature. I guess once you get past six months, it seems like the place is occupied for most of the year. Four months is what the current statute says as well, so there is some merit in simply carrying that forward, because that is what everybody has learned. If you make these minor changes, then people have to relearn another rule. I think all the four months is trying to do is to say there should be some reasonable period. For example, you should not have a situation where senior citizens go to Florida for one month and their accommodation for the remaining 11 months ends up not being covered by rent control. So it is really trying to have some period of temporariness. I think a period of more than six months would be problematic, but between four, five and six, it is really a question of --
Mr Tilson: I would also assume that the general intent of clause 3(1)(b) is to exclude some mobile home, trailer park -- I am still not clear what term I should be using, but the trailer park mobile home. I assume the intent of this section as well is to exclude those types of places.
Hon Ms Gigantes: No, that is not the intent in this section.
Mr Tilson: I think you have done it. I think you have excluded, which I congratulate you on. Since I am taking the position that it is for four months -- because it does in my belief support the mobile home vacation, four months is not long enough. I believe the whole mobile home topic should be out of the bill, and it is in the bill.
The Chair: I am not sure if you are in order at the present time, Mr Tilson.
Mr Tilson: With respect, I think I am, because I believe clause 3(1)(b) deals with mobile homes. The minister can say all she likes, but I will bet you she has created a legal problem.
The Chair: Thank you for your opinion, Mr Tilson.
Hon Ms Gigantes: It deals with all homes, all residences.
The Chair: Any further questions, comments or amendments to 3(1)(b)? All in favour? Opposed? Shall clause 3(1)(b) carry? Carried.
Clause 3(1)(c): Any questions, comments or amendments? Seeing none, shall 3(1)(c) carry? Carried.
Clause 3(1)(d): Any questions, comments or amendments? Seeing none, shall 3(1)(d) carry? All in favour? Opposed? Carried.
Clause 3(1)(e): Any questions, comments or amendments? Seeing none, shall clause 3(1(e) carry? Carried.
Clause 3(1)(f): Any questions, comments or amendments? Seeing none, shall 3(1)(f) carry? Carried.
Clause 3(1)(g): Any questions, comments or amendments?
Mr Tilson: We had originally tabled an amendment which may now be changed as a result of the numbering system changing. I understand the numbering system has changed.
The Chair: If you have an amendment, I would go forward with making the amendment, Mr Tilson.
Mr Tilson: It is substantially different than the existing 3(1)(g).
The Chair: Maybe legislative counsel can help us.
Mr Tilson: Has the numbering system changed?
Ms Baldwin: The numbering system of this has not changed. Looking at it, my assumption is that what you are proposing here is an extra clause, in addition to the one that is in clause 3(1)(g) in the bill, so if we were to number your amendment 3(1)(g.1), we would be home free and it could be considered right after (g).
Mr Tilson: Thank you very much.
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Mr Mammoliti: I am sorry; I guess I am assuming that Mr Tilson has an amendment to this. I just cannot find it; that is all. It is not in the book.
Mr Tilson: I do not wonder, George, there is so much paper here.
Mr Mammoliti: Most if it is your amendments. Do not complain about paper when most of them are yours.
The Chair: As I said earlier, we have quite a few pieces of paper. We will go through this meticulously to make sure that we are all at the same point. Seeing no questions, comments or amendments to clause 3(1)(g), shall clause 3(1)(g) carry?
Mr Tilson: On a point of order, Mr Chair: To the solicitor, I just ask your assistance. I think you have seen my amendment and the intent of my amendment. Are you saying my amendment is separate from clause 3(1)(g)? I believe it is.
Ms Baldwin: That is correct.
The Chair: Shall clause 3(1)(g) carry? Carried.
I believe Mr Tilson has a new clause.
Mr Tilson: I hope all members have it. If members do not have the amendment I wish to make, I am sure we could make copies available.
The Chair: Mr Tilson moves that subsection 3(1) of the bill be amended by adding the following clause:
"(g.1) living accommodation in a new residential complex if the building permit for the residential complex was issued on or after the 6th day of June, 1991."
Mr Tilson: The intent, of course, that the legislation has proposed -- at least from the original Bill 121, and I assume that in the massive amendments it is still the same -- is that buildings should be exempt for the first five years. That is what has been put forward. Our party's position is that all new buildings should be completely exempt from rent control indefinitely, and that is the intent of it.
Specifically, if this clause is not passed, then presumably the government has not responded to the submissions that have been made throughout the public hearings in a request that the five years is too short. In many cases, a building permit is issued, and because of regulations, because of problems, it takes considerable time to put up residential complexes. Even with non-profit housing, one sees how long it takes to put up non-profit housing -- any type of building. That is the first submission I would make.
The second submission would be that there is no logical reason to have rent controls on new buildings, particularly if the government is honestly trying to encourage developers, investors, whoever, to construct new buildings, because now we are saying, "If you're going to put up new apartment buildings, we'll give you five years and then we're going to put on rent controls."
Why would anyone do that? I submit that is one of the reasons why there are no new apartment buildings of any substance being constructed in the province. There is lots of non-profit housing. I have developer after developer coming into my office. They want a piece of the action. It is a gold mine for them. They realize that it is financially silly to go out and raise money to build new apartment buildings, but it is not financially silly for them to get into non-profit housing. Hence, when you see the massive regulations that are being put forward with rent control in Ontario, there are no new buildings being constructed.
Of course the members on the government side of the committee will be sure to pounce on me and say, "There's a recession going on," and they will probably give their free trade argument, and God knows what else they will say. That is all fine and good. That is a standard pat argument they use on everything.
However, I am sure even they have had individuals come to their constituency offices, people who are interested in constructing residential accommodation in their particular ridings, aside from the submissions that have been made throughout these hearings, that there must be some strong encouragement to get the housing market back on track again. Non-profit housing is not the answer. The government cannot afford to simply take over the housing industry. That is what the plan appears to be, from reputed statements from the Premier at least.
Therefore, that is the general intent of my submission: First, there is no logical reason to have rent controls after five years, and second, there needs to be some very strong encouragement to the business community to start constructing residential accommodation again.
Ms Poole: I think I have solved the problem of why this was confusing. Apparently this Conservative motion was not in the package they tabled last week but has been included as a new motion today. If anybody is looking, it is in package 172 on your desk. That was a facetious comment. Please do not look for 172.
Mr Tilson: That is all right. I have not read yours as yet either.
Ms Poole: I have read yours, Mr Tilson, this just was not included in your package last week.
Mr Tilson: I am sorry. All right.
Ms Poole: The other thing that puzzled me somewhat was why it would be included here in the clause that deals with "short-term living accommodation provided as emergency shelter," particularly since we have two sections later on -- I think they are subsections 3(5) and 3(7) -- dealing specifically with exemptions. The Liberal Party has proposed an amendment that relates to this issue in the sections later on, and our position is that it should be a 10-year instead of a five-year exemption, simply because the five-year exemption does not allow the landlord to get to a break-even point, so it would not be an incentive to build.
The problem with Mr Tilson's amendment is that he is saying all buildings should be exempt for ever. It would seem to me much more logical to have a trial period where we see how it goes, where we see whether there has been any incentive to build by putting in this exemption. While we appreciate the spirit of it, Mr Tilson, we will not be supporting this amendment.
Mr Mammoliti: Mr Chair, I would perhaps like you to rule on this. I am not too sure whether this amendment is legitimate or not. I understand that amendments are to amend either the clause or the subsections, not to take it over completely. It seems to me this wipes it right out. Perhaps you can rule on that. I do not know.
The Chair: Thank you, George. How did I know you were going to do that? The motion is in order.
Seeing no further discussion, all in favour of Mr Tilson's new clause 3(1)(g.1)? Opposed?
Motion negatived.
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The Chair: Moving along to clause 3(1)(h), questions, comments or amendments? Shall clause 3(1)(h) carry? Carried.
Clause 3(1)(i), questions, comments or amendments? Seeing none, shall clause 3(1)(i) carry? Carried.
Clause 3(1)(j). Shall 3(1)(j) carry? Carried.
Clause 3(1)(k). Shall 3(1)(k) carry? Carried.
Moving to subsection 3(2), can we look at 3(2) in its entirety, paragraphs 1 to 4? I will give members a moment to look at that.
Ms Poole: Might we have a moment? I am trying to deal with the act as we knew it up until this morning, plus the new revised act, plus my amendment on this section, plus the government's amendment on this section, at the same time.
The Chair: That is why we are going to go through this subsection by subsection. Since this section has been amended by the government, you might want --
Hon Ms Gigantes: Do you want to have the whole thing read?
The Chair: Maybe a brief explanation.
Mr Tilson: Mr Chair, I need your help on the process.
The Chair: Absolutely.
Mr Tilson: I walked in this morning with what I thought was Bill 121. I now have a new Bill 121. Are some sections in here the government amendments -- as I understand it; I was not at the last meeting -- in the new Bill 121?
The Chair: All the government amendments are in the new Bill 121.
Mr Tilson: All right. Have they been identified as such?
The Chair: Do you want to have them all flagged as we go through? Is that what you are requesting?
Mr Tilson: Yes.
Hon Ms Gigantes: They are flagged, Mr Tilson. If you take a look at the top of page 11 in the printed bill, you will notice that there is an arrow indicating amendment. It notes at the top of page 11 the beginning of the amendment and at the top of page 13 the end of the amendment.
Mr Tilson: Just so that I understand it, the entire subsection has been amended. Is that correct?
The Chair: It appears that way, Mr Tilson.
Hon Ms Gigantes: It has.
Mr Tilson: I hope the minister will explain what she is doing.
The Chair: We will give the minister a chance to do that.
Hon Ms Gigantes: Essentially what this amendment does is to make sure that in those rental units which are part of the Ontario Housing Corp or run as non-profit or co-op housing units in the province, the tenants will not be subject to more than one rent increase during a year. That had not been provided for in the original bill.
Mr Tilson: I wonder if I could ask why. What is the rationale for that amendment?
Hon Ms Gigantes: There was a good deal of comment during the public hearings during the summer that in fact rent control should apply to all rented premises in the province. The government feels there is good justification for not having the act apply in full, because rental units which are part of that stock of units, either operated by the OHC as rent geared to income or operated in our non-profit and co-op housing stock as rent geared to income -- here we are talking simply about the market units. But one whole section of that stock operates on rent geared to income, which I think we all understand, so there is no application of the Rent Control Act to that section.
Mr Tilson: Mr Chair, if I could just --
Hon Ms Gigantes: No, if you would let me finish first.
Mr Tilson: I am sorry.
Hon Ms Gigantes: We are providing here for those units which pay market rent within our non-profit and co-op housing stock, so that they will have no more than one increase a year. Because those units still are a different kind of housing stock from the private rental stock, we have not sought to apply the rent control legislation to them, but we are making the provision that they shall have only one increase per year.
Mr Tilson: I understand the minister's intent, but as I understand non-profit housing, there is rent geared to income and then there are the others. By not having rent controls -- I understand you are saying the intent of this section is that this legislation would not apply to the rent-geared-to-income units.
Hon Ms Gigantes: The legislation in toto; that is right.
Mr Tilson: That is right. The difficulty is, of course, that the entire building is indirectly subsidized.
Hon Ms Gigantes: That is why we have not sought to apply the legislation.
Mr Tilson: I appreciate that, but in fact you are indirectly affecting those tenants who are not subject to the rent-geared-to-income units.
Hon Ms Gigantes: We have sought to provide them with the benefit of having only one rent increase a year. As matters stand now, they are subject to more than one increase a year from time to time.
Mr Tilson: I understand that, but by doing that you are indirectly assisting the other tenants as well because of the overall building having two classes of tenants.
Hon Ms Gigantes: This amendment applies only to those tenants who are in the market rental units.
Mr Tilson: I understand that. Just to be brief, are you really not creating a class system of tenants, that some tenants are more equal than others?
Hon Ms Gigantes: Yes, that is true.
Mr Tilson: Is that fair?
Hon Ms Gigantes: Some tenants are paying rent totally based on their incomes, and that is a benefit they have that people who pay market rents do not have within that sector. However, we feel that the people who are paying market rents should at least have the benefit of protection in that they should only have one increase per year.
Mr Tilson: But that continued assistance will continue no matter what you have.
Hon Ms Gigantes: What continued assistance?
Mr Tilson: The continued assistance to those types of tenants.
Hon Ms Gigantes: Which types?
Mr Tilson: The individuals who require assistance.
Hon Ms Gigantes: Do you mean people who are paying rent geared to income?
Mr Tilson: Yes.
Hon Ms Gigantes: That will continue; you are right.
Mr Tilson: That is right. So it really does not matter. That type of assistance will continue and presumably that assistance will continue from --
Hon Ms Gigantes: We intend to continue rent-geared-to-income assistance, yes.
Mr Tilson: That is right, but are you not thereby, with this amendment, shifting the burden to the other tenants?
Hon Ms Gigantes: No, we are shifting no burdens. We are providing that for the operation of such developments which combine both rent-geared-to-income and market units, there may be a slower kind of changing of the rent schedules in the market unit stock, which may make the administration a little less smooth; but overall it does not inhibit the operation of those units.
Mr Tilson: I believe what you are doing is that you are shifting the burden to those tenants who are not receiving assistance because the government --
Hon Ms Gigantes: We are providing them with additional protection.
Mr Tilson: If I could finish, naturally, because of that position, because of the burden being shifted, that the government will not be required -- it is almost like a type of downloading, which all governments have been accused of including the Conservative governments, to municipalities, that favourite argument. This is a form of downloading to those other types of tenants.
Hon Ms Gigantes: No.
Mr Tilson: The government will therefore not be required to produce as much assistance as normally would be required.
Hon Ms Gigantes: No, that is not the case. I think Mr Tilson misunderstands what this amendment does. This amendment does one thing and one thing only. It says that tenants who are paying market rents within those kinds of developments shall be subject to only one rent increase a year. It says nothing about the extent of the rent increase. It does not provide the rest of the benefits of this legislation to them. It does not affect the other tenants, nor does it shift any cost between groups of tenants. It simply says that the administration of those developments can only ask for one rent increase a year from the people who pay market rent.
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Mr Tilson: I understand the change. As usual, in much of this bill it simply boils down to a disagreement in philosophy between myself and the minister as to where she is going with this legislation.
Hon Ms Gigantes: No, I think there is a misunderstanding.
Mr Tilson: No, I understand perfectly well what you are trying to do. You are shifting it on to the other tenants.
Hon Ms Gigantes: Which other tenants?
The Chair: Thank you. Ms Poole.
Ms Poole: When I look at this amendment I find myself in an unusual situation, because I am accusing this government of not going far enough. Usually they have gone too far for my taste, but on this particular amendment we will not be supporting them. The Liberal caucus has put forward an amendment on this same section. I may as well speak to it at this time because it is very intricately linked to what the government has just proposed.
The Chair: Order, please. We are never going to get through this bill if we do not do one thing at a time.
Ms Poole: I am just saying I would not be speaking to our own motion because I am combining the two and saving time. We have an amendment on this same section, and the philosophy I am going to espouse is --
The Chair: Because there is so much paper around and because it is absolutely necessary for every member, including myself, to be able to follow what is going on and not have us go back to certain sections, which I have seen happen before in committees because certain members did not believe that certain subsections had been carried, why can we not carry and vote whether we are either in favour or not in favour, and then go to your amendment at the appropriate subsection?
Ms Poole: The two amendments are on the identical section. They just have a different direction in which they are going. The government amendment has provided for its market renters a provision that there be a 90-day notice period of rent increases and that there be only one increase every 12 months, and that is as far as it goes. The government has refused to include non-profit housing under rent control in the full scope and this has been roundly criticized by tenants, because those renters believe they should have the same protections.
Ironically, the landlord community also feels that non-profit housing should be under rent control. They feel it should be a level playing field, that the non-profit sector should be playing by the same rules of the game as the private sector. For two quite different philosophical reasons, both tenants and landlords have supported that non-profit housing should come under the full umbrella of rent control.
What this does is touch the tip of the iceberg. It does not really deal with the issue. We will not be supporting this. Our amendment will follow immediately, which I no longer need to talk to at the same length because I have just given you our rationale. We cannot support the government amendment.
The Chair: Any further questions, comments or amendments to subsection 3(2)? Do you have an amendment?
Ms Poole: I move an amendment to subsection 3(2), that subsection 3(2) of the bill be amended by striking out clauses -- now let me get my new, improved act.
Mr Tilson: On a point of order, Mr Chair.
The Chair: I am not surprised.
Mr Tilson: You will have to bear with me. I am having a great deal of trouble with all this.
The Chair: I am trying to do this in the most simple and orderly way possible. I need everybody's help to do that.
Mr Tilson: As I understand it, the government has an amendment to amend subsection (2) and now the Liberals are trying to amend that amendment. It seems to me we should first of all vote --
Ms Poole: We vote on the amendment to the amendment first, strange as it may seem.
Mr Mammoliti: Do you need help, David?
Mr Tilson: I do, but not from you, George.
Ms Poole: I think this is so convoluted that we all need a little help.
The Chair: I think the difficulty is that there is a lot of paper floating around and it may not co-ordinate with everyone's thoughts. We are going to take our time and we are going get this done as best we can. Ms Poole has an amendment to the amendment.
Ms Poole moves that subsection 3(2) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out paragraphs 1 and 2.
Ms Poole: I think I have fairly well laid out the case of the Liberal Party. We feel that non-profit units, with the exception of those co-op units, since there is already a democratic element there where they decide what the rent increases are going to be among themselves, should be included under the umbrella of rent control. Ironically, the ministry has said, "It's too difficult and it's rent geared to income so we can't do that and we can't do this." When I was talking to the president of one of the major umbrella tenant groups in Ontario, he said: "That's nonsense. Give me three hours and I could give the government a way to do it." Tenants do not buy it. Landlords do not buy it. The Liberal caucus is not going to buy it.
The committee divided on Ms Poole's amendment to the amendment, which was negatived on the following vote:
Ayes -- 4
Brown, Mahoney, Poole, Tilson.
Nays -- 6
Abel, Coppen, Gigantes, Mammoliti, Marchese, Murdock, S.
The Chair: All in favour of subsection 3(2), as reprinted? Opposed? Carried.
Moving on to subsection 3(3), questions, comments or amendments? Explanation by the minister.
Hon Ms Gigantes: The explanation is the same. What we are talking about here is notice for the once-a-year increase in non-profit housing.
The Chair: All in favour of subsection 3(3)? Carried.
Clauses 3(4)(a), (b) and (c), questions, comments or amendments?
Ms Poole: Perhaps we could hold off just one moment, Mr Chair.
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The Chair: Sure, no problem.
Ms Poole: Legislative counsel has recommended that we have an amendment for subsection 3(4). I have it in the new package from today. It was not in our old package because I think it comes because of the government amendment.
The Chair: Ms Poole moves that subsection 3(4) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out clauses (a) and (b).
Ms Poole: This is terribly confusing, but under the bill as originally printed there were clauses (a), (b), (c), (d), (e) and (f). Since the government reprinted it, it broke it up into two sections. Our first amendment only dealt with clauses (a), (b), (c) and (d). This particular one deals with clauses (e) and (f). That has everybody totally confused. What it means is that we are dealing with the second part of our motion, which I imagine the government will still defeat because it did not like our first motion.
The Chair: Shall Ms Poole's amendment to the amendment carry? All in favour? Opposed?
Motion negatived.
The Chair: Shall clauses 3(4)(a), (b) and (c) carry as amended? Carried.
Questions, comments or amendments on subsection 3(5)?
Mr Tilson: This is the five-year section, I believe.
Hon Ms Gigantes: No.
Mr Tilson: Yes, it is.
The Chair: Subsection 3(5) reads, "This act applies in respect of a rent increase for rental units described in clause (4)(a) if there is" --
Mr Tilson: I have two bills here before me. I understand. I was looking at the old Bill 121.
The Chair: No problem. Like I said early on, there is a lot of paperwork floating around.
Mr Tilson: Mr Chair, I think it is fair that you are going to have to go slowly on this because of the tremendous number of changes.
The Chair: Mr Tilson, I am going through it paragraph by paragraph.
Mr Tilson: I just want to make sure I am voting on the right subsections.
The Chair: I am not pushing the committee. The committee will proceed at its own pace.
Questions, comments or amendments on subsection 3(5)? Shall that subsection carry? Carried.
Ms Poole: We originally had an amendment to that, but I think with the government's reprinting we do not have an amendment to subsection 3(5) any more, right, legislative counsel?
Ms Baldwin: Yes, that is right.
Ms Poole: Forget it, Mr Chair.
The Chair: That is a new one, that is a first.
Mr Tilson, you can stop the committee at any time in its proceedings for questions.
Mr Tilson: I am not being critical.
The Chair: I want to tell you that usually the Chair carries whole sections at a time and I have refused to do that because of the complicated nature of this bill.
Mr Tilson: You misunderstand me, Mr Chair. I am not being critical of you. I am being critical of the process which seems to be foisted upon us. I think the whole process is going to be doubled in time, simply so that members of the committee can figure out which section we are voting on.
The Chair: Subsection 3(6), questions, comments or amendments?
Ms Poole: Mr Chair, I did have a motion in this regard, but since the government has defeated our amendment relating to bringing non-profit housing under the umbrella of rent control, our amendment is no longer in order.
The Chair: You are not going to pursue your amendment. Shall subsection 3(6) carry? Carried.
The Chair: Subsection 3(7), clauses (a) and (b).
Ms Poole: Mr Chair, the Liberal caucus has an amendment. Not only that, we understand what it is. I will say to the whip of the government caucus that it is incredibly confusing because of using a reprinted bill and having to revise all our amendments to comply.
The Chair: Ms Poole moves that subsection 3(7) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out "8, 95.1" wherever it appears and substituting "8, 12.1, 95.1."
Ms Poole: Mr Chair, if you would like a brief explanation of the purpose of this --
The Chair: Absolutely. I think it would help.
Ms Poole: It probably would. Section 12.1 of the Liberal amendments creates a separate capital account for new complexes, which relates to moneys that would be put into a separate account for the purposes of doing capital repairs. Therefore, when subsection 3(7), going back to the reprinted act, says that only certain sections of the act will apply to a new residential complex, we will have an additional one. We could do one of two things. We could stand down this amendment until such time as the government makes a decision whether it would be willing to accept our later amendment establishing separate capital accounts for new complexes, or we could deal with it now.
The Chair: Are you asking me my opinion or are you asking the minister a question?
Ms Poole: I am happy to do either, whichever.
The Chair: My preference is not to stand these sections down because it will make it more complicated for us in the future, and that is not, I believe, a good enough reason to stand it down. We might want to hear from the minister and maybe other members or staff.
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Hon Ms Gigantes: I think the most reasonable way of proceeding would be to deal with the principle of the Liberal amendments, which will be addressed by various amendments of this nature. They would like to extend the period during which the Rent Control Act will not apply to new buildings. They would like to extend it from five years to 10 years.
Ms Poole: Just as a clarification, this amendment has nothing to do with that particular point. Our section 12.1, which we want to incorporate here, has to do with a separate capital account, a reserve account for new complexes only. It has nothing to do with extending the exemption for new buildings from five years to 10.
Hon Ms Gigantes: My point was that we are dealing with the principle of changing an exemption from five to 10 years. This is an amendment which relates to that in that it sets up a system of developing accounting during that period. As we will not be supporting the main principle of the amendment, which is the exemption extension from five to 10 years, we will not be dealing with this amendment with favour.
Ms Poole: With due respect to the minister, I think she has completely missed the point. Our amendment to section 12.1 simply establishes a reserve account for capital expenditures in new buildings. This could be if buildings are exempted for five years or for 10 years. It makes no reference in section 12.1 to five or 10 years. Even if the government was opposed to the principle of extending the exemption from five years to 10, it could still vote on the principle of establishing the capital reserve fund. The two are totally separate and apart. It is just camouflage to pretend you are voting against the capital reserve fund because it is tied to a 10-year exemption. It is tied in no way, shape or form. The government could very easily vote for section 12.1 and establish that reserve fund and do as it chose on the other matter.
Hon Ms Gigantes: What we are dealing with is an amendment that would affect a building during the period of exemption. We feel there is no way during the period of an exemption to put this kind of process in operation.
Ms Poole: I fail to see why the process of the capital reserve fund could not be put in place for new buildings during the period of exemption. The minister has certainly put other rules and regulations in for the period of exemption, such as the fact that tenants must receive notice, and if a landlord does not give due notice, that unit will come into the rent control system -- I should not say the rent review system -- because that is truly what it is.
Quite frankly, the minister's stand on this does not make any sense. She is basically saying, first of all, that because we are recommending that it be a more realistic exemption period -- if you are going to encourage new construction, five years is not going to do it. With 10 years, at least there is some hope, maybe not much, that there will be some new construction.
That is totally separate and apart from what we are saying in section 12.1, which is simply to establish a reserve account. If the minister does not like the way we have set up the capital reserve fund, if she would like to stand down the amendment until next week so they can discuss the mechanism by which to bring it in, I have no problem with that, but it is just muddying the waters to talk about the exemption period as being relevant to this particular amendment.
Mr Tilson: I have a question for the minister and the Liberal critic on the figures of five and 10 and the rationale. Perhaps we will start off with the minister as to how your ministry arrived at the figure of five.
Hon Ms Gigantes: Mr Tilson, as you understand, the base for the rent control system, and indeed the rent review systems we have had in the past, is a notion of a maximum legal rent, and increases which are allowed on top of a maximum legal rent.
We feel that within a five-year period the operators of a new building will be able to go through enough market experience to establish a maximum legal rent which will allow in the future, given the mechanisms provided within the bill, for the profitable and secure operation of rental buildings. We think five years allows the market enough chance for fluctuation so that this can be established and that it is essentially all an operator will need to be able to operate into the future past the five-year mark.
Mr Tilson: I understand what you said, that this is why you are doing it, but again, why not six? Why not 10? Why that particular number? In other words, your answer could apply to any number. Ms Poole probably will give the same answer you just gave.
Ms Poole: I have a different answer.
Mr Tilson: That is good.
Hon Ms Gigantes: I can elaborate.
Mr Tilson: I should hope so.
Hon Ms Gigantes: The object of this legislation is to provide protection for tenants against excessive rent increases. It is not our object to prolong the period when any tenant will not have protection. We think that, on the other hand, the landlord has a fair chance to establish a maximum legal rent in a five-year business cycle which will support the safe operation and the profitable operation of a rental building in a five-year period and proceed forward from that. At the same time, we think it is a reasonable length of time to provide that a tenant or tenants will be without protection in order to give that benefit to new developers.
Mr Tilson: That is some elaboration on your answer. I guess my question really is, have you talked to any one who actually puts up buildings?
Hon Ms Gigantes: Yes.
Mr Tilson: I know you have had consultations with most of the major groups -- at least, your predecessor did or members of your staff did -- but I am thinking specifically of the Toronto Construction Association and the major landlord groups that actually invest to put up these things. In other words, it obviously takes a period of time. We are talking after a building permit, I think.
Hon Ms Gigantes: No, we have an amendment dealing with that item, Mr Tilson. We are suggesting occupancy now.
Mr Tilson: After occupancy?
Hon Ms Gigantes: Yes.
Mr Tilson: I have had some experience with these buildings and there are obviously problems that occur even after occupancy takes place. In fact, I do not know how many of you have ever moved into a building. I have moved in as a tenant. I can recall moving into a building that was not even completed.
Hon Ms Gigantes: I have just done it myself.
Mr Tilson: Then you know first hand. I am getting back to the question of five years. You know the problems. I can well remember moving into a building where my individual unit was completed, but the overall construction of the building had not been completed -- the landscaping, the paving, the hallways. You walk up cement hallways. Much work has to be completed.
I guess problems that need to be ironed out with new buildings, aside from the overall issue your predecessor has spoken of -- it is encouraging that this is the argument. Your government's comment has been, "We'd like to encourage investment in new buildings." I believe Mr Cooke has made statements similar to that.
Have you asked that specific question of the Toronto Construction Association, the Fair Rental Policy Organization of Ontario, any of these other major groups, large groups of landlords or construction people, and what has been their answer as to whether or not five years -- I am talking about your consultations, because as you know, you did not attend the hearings, but I did. I attended every last one of them, and all of those groups came to us and said, "Five years is not enough."
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Ms Gigantes: All those groups did, but there were many other groups that came and said we should have rent control from the first day.
Mr Tilson: Who? What construction group said that? What landlord group said that?
Hon Ms Gigantes: There were other groups besides construction groups and landlords who came before the committee hearings.
Mr Tilson: I appreciate that. I am dealing with the groups of people you are trying to encourage to put up housing in this province. Those are the groups you are trying to encourage. That is the intent of this section. Would you name the groups that have said five years is enough?
Hon Ms Gigantes: I am not going to engage in a long discussion on this point, because we could have several hours of discussion on it. I give you my word that I have had discussions with these groups. One has to come to a decision about what is reasonable, given the different interests involved and given a kind of commonsense assessment, combined with the best kind of technical information we can gather through the Ministry of Housing. It is my judgement and it is the judgement of the government that five years provides an incentive as an exemption period and that five years is a reasonable period of time to allow tenants in new buildings to go unprotected, which is something I do not like to see.
Mr Tilson: You are repeating what you said before. Again, my question deals specifically with why the figure five. Why not 10? I understand your rationale.
Mr Mammoliti: On a point of order, Mr Chair: I am sorry. I have been listening. I thought we were on the amendment to the amendment at this point.
Ms Poole: No, we are just on the amendment.
Mr Mammoliti: We are not on your amendment?
Ms Gigantes: No, we are on your amendment to our amendment.
The Vice-Chair: Mr Mammoliti is correct. We are on the amendment to the amendment.
Mr Mammoliti: I think we are just straying off a little bit here. Maybe we could get back on board.
The Vice-Chair: Obviously people have seen this conversation as pertinent to this issue -- the minister and the critic for the Conservative Party have -- but I would remind members that it is useful if we restrict our comments as much as possible to the particular amendment. Before you get too excited, Mr Tilson, I realize these are all issues that have ramifications on each other, so it is difficult for the Chair to be too careful in its restrictions.
Mr Tilson: I would like to continue with my questions to the minister, because I think it is most relevant, specifically with the overwhelming evidence this committee has heard that five years is simply inadequate. I am not saying this in support of the Liberal motion, because I will be voting against it too.
People who know much more, with due respect, than you or I with respect to the issue of putting up buildings and with respect to encouraging investment for constructing buildings have come to us and said: "We're not going to do it. Why would we?" Having heard that testimony -- I do not want you to repeat your rationale that you are trying to do this and you are trying to do that -- why the figure five?
The type of answer I am looking for is that presumably someone who puts up these buildings says, "It takes so long to get into" -- to use your words -- "the market issue of rents to understand what is required to keep these buildings running."
Many of the issues raised in the overall problem of housing, most of the problems of housing, as you know, have occurred because 75% of the housing in this province is out of date. It is 20 years or more and they are falling apart. That is why the existing legislation, Bill 4 and its predecessor, came into being. That is why you put this into place. So this section is most important and I do feel it is incumbent upon you to put forward a rational position as to why you have chosen five years. Why not 10?
Hon Ms Gigantes: Very briefly, we did put out an options paper originally around this legislation. It suggested an exemption period of three. We heard a lot of discussion of that proposal. We moved to five, and I am told that the experience under the existing legislation, Bill 51, the RRRA, is essentially that it takes about five years for rents to be established in new buildings that really reflect what is happening in the market in a way that allows landlords to be able to use that as a base and move on.
We really do believe, which Mr Tilson clearly does not, that the provisions for rent increases in this legislation are quite adequate for landlords to be able to maintain and operate buildings at a profit. He and I disagree there. I have attempted to address the question of the number of years, and really, because I have got engaged in this discussion with him, I think we have moved off the subamendment, which we should be dealing with.
Mr Tilson: On a point of order, Mr Chair.
Ms Poole: Mr Chair, I have been waiting quite patiently.
Mr Mammoliti: So have I.
The Chair: Is this a point of order?
Mr Tilson: It certainly is.
The Chair: And the point of order is?
Mr Tilson: My point of order, Mr Chair, is that it has been admitted by all that this is all tied in together. The reserve fund and this section, this amendment, are all tied into one. That has been the --
The Chair: Is that your point of order?
Mr Tilson: That is my point of order, and it is perfectly fair for me to ask this question at this time, or any question dealing with this.
The Chair: I think we have allowed you full rein to discuss your views on this.
Mr Tilson: Then, since we seem to be dealing with both of them at the same time, I now turn to Mrs Poole and ask her rationale for 10 years.
The Chair: I think it is Mrs Poole's turn to speak to the amendment.
Ms Poole: At long last. Mr Mammoliti earlier made the point that the issue of the five- to 10-year exemption is separate and apart from this subamendment, and he is quite right, but the minister was the one who brought this discussion into place, so I feel we should clear it up.
First of all, as to why we chose 10 years, we had landlord after landlord and construction association after construction association that came before us and said a five-year exemption would encourage nobody to build, that a more realistic period would be 10 years, so that landlords could come much closer to the break-even point prior to going under the rent control system.
Because we had heard various versions of this, one of the reasons we asked the Canadian Bankers Association to come to our committee was to give us an answer, and the Canadian Bankers Association said 10 years. They said it might be possible to reach this point in eight years, but 10 years was much more likely, and they substantiated that. That is the type of testimony we are talking about.
The whole point is totally irrelevant, because if the minister knows what it costs in carrying costs and everything else to put up a new unit today, you are talking of $2,000 to $2,200 per unit per month to carry that unit. If she is talking about protecting tenants, then she is looking at the wrong income level. Anybody who is going to be able to afford one of those new units is going to be relatively well-off. I will tell you one thing, the market is much broader at a $2,000-a-month rent than it is at a $500-a-month rent, so to me this is all a red herring, if you want to call it that.
The point we are trying to make has nothing to do with the five- or 10-year exemption. The point we are trying to make with this amendment is that later on, in section 12.1 of the Liberal amendments, we are putting forward a proposal for a capital reserve fund for new buildings.
We understand the minister's rationale for not bringing it in for existing buildings. It is very difficult with a building that is 30 years old and has capital repairs that need to be done, and done now. It is not to wait until a capital reserve fund is built up. It is perhaps understandable why they did not put in capital reserve funds for old buildings, but to me it is incomprehensible why they would not establish it for new buildings so that by the time we get to that 10-year period, or whenever it is, there is a reserve fund built up so that the tenants can be assured the landlord can go into that reserve fund, make capital repairs to the building, and not have to have an above-guideline rent increase because of it.
I just cannot comprehend that an NDP government, a socialist government, which purports to represent tenants, would not want this kind of thing. Certainly it would be a valid experiment to find out whether the reserve fund could work.If you have any belief at all in the reserve fund concept, surely it makes sense to try it with new buildings when we are starting with a whole new playing field.
Getting back to our subamendment of the minister's amendment of the original provision, which we are all totally confused about by now, all we are saying in this amendment is that later on we have something establishing the capital reserve fund. When the minister talks about parts of the act that apply in subsection 3(7), we want to make sure our concept of capital reserve fund is included. That is all we are saying. We have got off on quite a tangent about it, but it is very enlightening to see what the socialists are coming up with as far as rent legislation is concerned.
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Mr Mammoliti: In order to expedite things, I will pass my time.
Ms Poole: I was looking forward to your comments, George.
Mr Mammoliti: We have already touched on them.
Mr Turnbull: Surely the objective of all the parties is to have some extra rental accommodation built. It is quite obvious from the discussion with the various building groups that they are not prepared to build rental accommodation with a five-year window. You can play political games and say: "We've compromised. We said three years in the discussion paper and the banks said seven years and the builders said 10 years." It is irrelevant. If the developers are saying they are not going to build with a five-year window, are you going to achieve your objective?
The Chair: Order. It is my intention to allow considerable latitude in all the debate that this committee is going to partake in, but by the same token we have to speak to the subject matter that is before us and we have to deal with Ms Poole's amendment to the amendment.
Mr Turnbull: First, nobody else did, and second, I am coming to the very point of the reserve funds. If you have no buildings --
The Chair: Order, please. Mr Turnbull, I am not grateful for your comments. I warned all committee members, including your colleague when he started to stray off topic, that they should come back on topic. That is what I did for you, on behalf of the committee. You are either going to speak to the amendment or be ruled out of order and we will proceed with the other business of the committee.
Mr Turnbull: I am speaking to that. Since construction and reserve funds for new buildings are so interrelated, I think it is impossible not to interrelate the discussion of them. If you are not getting any construction of buildings, then it is irrelevant whether you have reserve funds. Ultimately you have to ask, who is going to fund the reserve funds? Is it going to be the tenants? That all depends on whether the buildings are built, and once they are built, how you control the amount of money flowing into these reserve funds. Are you going to say that the landlord has to pay a certain portion of the income of the building? If the income of the building is uncontrolled at the beginning, are you going to have a notional amount fully rented and the landlord will pay in the deficiency, in which case it further exacerbates the question of when the building will become profitable, if at all? I ask you, Minister, how you propose to get buildings built, because it is absolutely vital to Ms Poole's amendment.
Hon Ms Gigantes: I think we could get into a philosophical discussion and pretend this kind of business expertise and that kind of understanding of the motives of developers and landlords and the economy and so on for a long time. I think the opposition members understand the position we have taken. We believe it is a reasonable position and I think to try to get into further discussion on this question related to the specific item before us right now is probably not helpful.
Mr Turnbull: I have asked the minister, what do we need reserve funds for if there are no buildings being built? That is a pretty simple question.
Hon Ms Gigantes: We are not proposing reserve funds.
Mr Turnbull: To the suggestion of pretending expertise, I have to tell the minister that is extremely insulting, because I have a lot more expertise than you do in the construction industry.
Hon Ms Gigantes: We are not proposing reserve funds. That is the amendment to the amendment.
Ms Poole: On a point of order, Mr Chair: Originally I had proposed that we could either stand this down or proceed with it. I think it is obvious that until we deal with section 12.1 we cannot deal with our amendment to subsection 3(5). Just for clarification, we have two amendments to 3(7), which used to be 3(5) in our old bill, but is now 3(7) in the new bill.
The Chair: I am assuming we need unanimous consent to stand certain sections down. I noted earlier, with a lot of heads nodding in certain directions, that we did not have the unanimous consent and I note again that we probably do not have unanimous consent. We are at the stage now where I believe we have had debate. Mrs Poole, you have not had your fair share of the time. It is your amendment. If you need some more time to explain your amendment, I am certainly going to allow that.
Ms Poole: I think we should go ahead and vote on this, but I request that if section 12.1 passes, we revisit and reopen this amendment.
The Chair: It appears we have unanimous consent for that.
Ms Poole: If I have that request, I will call the question.
The Chair: Shall Ms Poole's amendment to the amendment carry? All in favour? Contrary?
Motion negatived.
The Chair: Shall subsection 3(7), including clauses (a) and (b) carry?
Ms Poole: Mr Chair, I have another amendment on 3(7). Because we are very close to 12 o'clock and we will have to go and vote soon in private members' hour, I propose that we adjourn and discuss my second amendment on 3(7) when we meet at 3:30.
The Chair: Just to remind the committee, we have stood down section 1, carried section 2 and carried section 3 inclusive up to subsection (6). When we reconvene this afternoon at 3:30 we will be dealing with Ms Poole's amendment to the amendment, subsection 3(7).
The committee recessed at 1159.
AFTERNOON SITTING
The committee resumed at 1546.
The Acting Chair (Mr Abel): The standing committee on general government is called to order.
Mr Brown moves that subsection 3(7) of the bill, as reprinted to show the amendments proposed by the minister, be amended by striking out "five" in the fourth line and substituting "ten."
Mr Brown: In this amendment and we had some discussion upon it this morning is that we are suggesting we have a period of 10 years before these new buildings come under rent control. The reason for that is quite simple. The people who are expert at this -- and we are using the Canadian Bankers Association as our experts -- are telling us that you cannot possibly be in a position to have the building to a point where it is paying inside of five years. We are afraid if we do not extend that time to 10 years, there will be no new buildings built. If there are no new buildings built in Ontario, then of course we have a great problem in our housing industry.
Obviously the government introduced this five years in the bill, recognizing that fact. We are saying it is just not an appropriate time frame, and I would again ask the minister how we arrived at five. Who suggested five would be an appropriate amount of time to properly encourage building in Ontario?
Hon Ms Gigantes: I will very briefly respond to that. In the original discussion paper, as you will recollect from this morning's discussion, we had suggested an appropriate option might be to have exemption for new buildings for the period of three years. When the Canadian Bankers Association was consulted, I understand it suggested five years, and it is five years we have brought forward.
It seems to us to be a reasonable period of time for the reasons I explained this morning. We are not looking to see a new building brought to a break-even point in the period of exemption. What we are looking at is a reasonable period of time to establish a maximum legal rent which, given the procedures of the rent control legislation, Bill 121, will permit a landlord to make both a profit and able to look to necessary maintenance and repairs. We feel five years represents precisely that.
Mr Brown: I guess there is a different view among the experts on what will, in effect, encourage construction in this province, and I suppose it comes down to a complete difference of opinion about the number. The witnesses we have heard and the Canadian Bankers Association have suggested 10 years is the number that really would more correctly represent the point at which a building would break even.
I say to the minister -- at this point I guess this is a hypothetical conversation -- that we will soon know if five years is an appropriate period of time. If it encourages construction, and that is the intent, I suspect, of this clause in the government's bill, then it will work. I think we will know shortly, within the next two or three years if there are no buildings being built, that the five years is not appropriate and that 10 years is a more appropriate number. I have serious reservations about staying with the five and would encourage the committee to do what I think the experts have told us and set the appropriate rents with the longer time frame involved.
As an aside, I would like to talk a little bit about the reserve fund we were hoping to have. As the minister knows, many forms of housing, or at least some forms of housing, have a reserve fund in new buildings; condominiums, for example, do. We are concerned that with the shorter time frame and no reserve fund we are going to get the worst of both worlds. Buildings are not going to be built and what few happen to be built are not going to get the repairs that are needed.
I urge the committee to support our resolution. I understand that it is again picking a number out of a hat, but I think we are doing it with more expert testimony that in our view will help the construction industry and the development industry provide the kind of housing we need. I am asking the government to consider that number more carefully, and I think that is what the problem is.
Mrs Marland: Mr Chairman --
The Acting Chair: A point of order?
Mrs Marland: No, it is not a point of order; it is just a request. I am a substitute on this committee for the regular member, David Turnbull, and I understand from the clerk that my substitution slip should have been presented to the committee this morning, although I was not taking part in this morning's session and Mr Turnbull was here this morning. I am only a substitution for today. I am only substituting this afternoon because Mr Turnbull was here this morning, so my request is for unanimous consent of the committee to accept my substitution slip for this afternoon.
The Acting Chair: You are correct, Mrs Marland, that the substitution slip should be in 30 minutes after the meeting has been called to order.
Mrs Marland: At the latest.
The Acting Chair: And it would take unanimous consent of the committee. Agreed?
Mr Mammoliti: Mr Chairman, I have to say this. I remember distinctly when we first started this committee approximately a year ago. It happened that one of our individuals was late and that side did not let us do it. In terms of unanimous agreement, I will not stoop as low, and I will agree.
The Acting Chair: Thank you, Mr Mammoliti. Do we have unanimous consent? Agreed.
Mrs Marland: Thank you for the unanimous consent. I hope the record will show, Mr Chairman, that I am not late for this committee. I suggest to Mr Mammoliti that I am here this afternoon in place of my colleague Mr Turnbull, who was here this morning.
The Acting Chair: Thank you, Mrs Marland, perhaps we can get on.
Mr Brown: Good to have you on the committee, Margaret.
Mr Mammoliti: Even if you are late.
Mrs Marland: You are so stupid.
The Acting Chair: Is there any more discussion on the amendment to subsection 3(7)?
Mr Tilson: Our party does not support either the government's position or the Liberal position, although obviously I think the Liberal position is better than the government position. I guess this is really a question to the minister. We are in a recession. It could be argued that buildings are not being put up because of your regressive and draconian laws, and you would probably respond, "There is a recession going on," and you would probably be correct to a certain degree.
Mr Marchese: Mr Chairman, I do not want to interrupt the speaker, but we were calling for a vote.
Mr Tilson: Mr Chair, I had my hand up to speak at the same time Mrs Marland did.
The Acting Chair: Mr Tilson is correct. I failed to recognize him. We got into the unanimous consent thing and I inadvertently bypassed Mr Tilson.
Mr Tilson: As I indicated, I assume you would take that position and you would be correct. There is a recession and it is a serious recession. People are out of work, companies are going out of business, for whatever reason, and we will not get into all that either your side or my position. But the fact is that there is a recession and it appears it is not going to be out of place for some time.
I suppose this question could be directed to both Mr Brown and the minister, and I hope both of you will respond. When you are considering your five-year or 10-year period, are you taking into account the issue of the recession and the date your five- or 10-year period is starting from?
Hon Ms Gigantes: The period of occupation.
Mr Tilson: The date of the act?
Hon Ms Gigantes: Of the occupation.
Mr Tilson: If the purpose of your bill is to encourage construction now and occupancy this year, which is unlikely, but within the next couple of months, then the recession is on and people are reluctant to proceed with the construction. Should you not take into consideration the seriousness of this terrible recession we are all feeling and extend the five-year and 10-year period? My question is to both the minister and Mr Brown.
Hon Ms Gigantes: What I have had to say before on the proposal in the legislation explains the position we have come to. I believe the five years, from point of occupancy, will be enough of an assurance to anybody who is contemplating investing in a rental building development. If that person is making a decision today or six months from now, the government proposal will allow a period without rent control provision application for a full five years.
We are not, as Mr Brown suggested, looking to provide a developer of a new building with an opportunity to reach a break-even point, however that might be defined. What we are looking to do is to provide a long enough period -- and I believe five years provides that -- to allow the establishment of a maximum legal rent in the market which will be stable enough within whatever period of up and down we see in the economy over the next five years -- or indeed five years from two years from now -- to establish a maximum legal rent which will, given the provisions of Bill 121 when it becomes actionable to such a development, provide a landlord with enough room for profit, maintenance and repairs to ensure that somebody contemplating an investment decision will be doing so in an atmosphere which is understood and predictable and where the establishment of a maximum legal rent can be done over a long enough period of time that fair rent in terms of return will be available for the landlord.
Mr Tilson: I regret your taking that position, because I think what housing needs is something to jump-start the economy. Housing has come to a dead stop. There is no construction taking place at all with the exception of some non-profit housing, and even that is going to dry up unless the deficit is going to climb even higher.
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It is still a serious problem and this is your golden opportunity to encourage new development. The bankers did make a similar statement to that, Mr Brown, but they did not necessarily support that position. They basically are opposed to rent controls. They are opposed to the philosophy of rent controls. They did make the statement, Mr Brown is correct, but they did it with the qualification that they are opposed to the principle of it. It was almost a reluctant form of statement. This amendment of Mr Brown's to your subsection 3(7) is the golden opportunity for you to put something in that is going to jump-start the housing industry, and you are not doing it.
Mr Brown: I would suggest one of the difficulties we have is lies the history of rent control. Members will recall that I believe in the 1976 incarnation of rent control, buildings built after that date were not subject to rent control, period.
We found that, over time, as other governments come to office, those views are changed. What we are trying to do with this amendment is put a specific time frame on, with a hope that any government in the future will have a look at the reasons why an investor might make a decision and take into account that the investor would have been assured by the government of the day that he had a fixed period of time.
We all recognize the realities of government. That is, no government in this province can last more than five years. There is an election and the government is either re-elected with a change in policy or a different party with a different view takes power. Then, as we know, rent control legislation or rent review legislation can change dramatically.
What we are attempting to do here is come to a reasonable number of years. I am not sure 10 is perfect. Maybe seven is right; maybe 12 is better. I do not know. But what I am saying is that five is not sufficient; 10 might be and 10 is more likely to be. It would give an investor in a building a more reasonable assurance that he can reach a stage in the development when he can pay the bills and, most important, keep the building in the kind of shape you need to so that tenants in this province have good, well-maintained homes.
I would argue that while you may be right that no restriction on the number of years is best, if I were a developer I would maybe be a little bit more comfortable with a fixed time frame that was prescribed in legislation and, therefore, hopefully, less likely to be tampered with by a succeeding government.
I would really urge the committee to have a look at this and support our amendment because, in time, when the province is struggling to provide rental accommodation that is good for tenants, we will need to have new buildings built and I do not think the five years is enough incentive to create the kind of marketplace we need to do that.
The Acting Chair: Those in favour of Mr Brown's amendment? Opposed?
Motion negatived.
The Acting Chair: Shall subsection 3(7), as reprinted, carry? Carried.
Mr Tilson: No.
The Acting Chair: Did I hear a no?
Clerk of the Committee: You did, but it was after. You had already carried it.
The Acting Chair: It was after. Okay. Questions, comments or amendments to subsection 3(8)?
Interjections.
Mr Brown: I thought he said no.
The Acting Chair: It was already carried, then somebody said no after.
Hon Ms Gigantes: Mr Chairman, I believe the Liberals wish to move an amendment to subsection 3(8).
Clerk of the Committee: No.
Hon Ms Gigantes: No? Has that been withdrawn?
Mr Brown: What has happened is that, some previous clauses we are withdrawing were relevant to subsection 3(8).
The Acting Chair: Shall subsection 3(8) carry?
Mr Tilson: I have a question to either the minister or her staff. We have just passed subsection 3(7), which exempts new buildings for five years. I guess it is similar to the old subsection 3(6). My question is -- and this came out during the hearings -- what effect would this have on new buildings? I am thinking of year 4 or year 5. If we are exempt and they have not done it, then nothing happens; we just carry on. But new buildings do not do that because they are exempt. New buildings do not do section 96. Do you know what I am talking about?
Ms Parrish: I am afraid I confess to being a little lost. These sections say a new building can lose its exemptions under certain circumstances. One is if they have not told the tenants, "You're living in an exempt building." You can lose your exemption if you do not tell the tenants that they do not have the protection of rent control. Second, you have to tell the registry that you are an exempt building and the date from which you become exempt so that we know when the five years end.
Mr Tilson: We are talking about subsection 3(8) here.
Ms Parrish: Yes. It says that if a landlord fails to give that notice, he or she can lose the exemption.
Mr Tilson: The owner of the new building does not have to do that; but if he does not do it, he is out of luck. I am thinking towards the end of the five-year period.
Hon Ms Gigantes: No. This applies precisely to the person who is managing -- the landlord, you might call this person -- the new building. In order to get the exemption, that landlord has to follow certain provisions.
Mr Tilson: But if he does not do this, he is out of luck, even if it is a new building. Is that what you are saying?
Hon Ms Gigantes: If he or she does not follow this requirement, which is a way of saying, "You will be exempt from the provision of the Rent Control Act for a period of five years and we will provide the whole process through which you are exempt," then the building is not exempt.
Mr Tilson: Why would the landlord need to file the statement of rent information if the building is exempt?
Hon Ms Gigantes: We have to know when the five years end and we have to know the rent that is established. Further, if I am moving into a building as a prospective tenant, I want to know whether that building is going to be subject to the rent control legislation. If it is not, I may be subject to rent increases I will not be able to afford, so I need to know that.
Mr Tilson: So new buildings may not necessarily be exempt unless you know --
Hon Ms Gigantes: They are not exempt unless the landlord follows the provisions to gain the exemption. That is what subsection 3(8) is about.
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Mr Tilson: It is a difficult position. It shows where our bureaucracy is taking us. If landlords do not know any better -- they are told that they are exempt for the first five years from the date of occupancy, presumably of each unit.
Hon Ms Gigantes: Whom would they be told by?
Mr Tilson: They would have to know this act for starters. They would have to know about subsection 3(8) or they are in big trouble.
Hon Ms Gigantes: If they looked at subsection 3(7), they would see as landlords that there is an exemption available, and subsection 3(8) tells landlords how to gain that exemption.
Mr Brown: I have some difficulties. Maybe what I need is just some help here in understanding the process. My concern is that as buildings finish their five years, there could be a situation where in a depressed real estate market the rents are very low one year and the next year -- we have booms around here occasionally -- the rent would be quite a bit higher for a similar building that happened to have been built just one year later.
For example, if the building were occupied today, five years from now perhaps rents would be depressed. A similar building could be built two years from now and the rents would be very high. So a tenant would face conceivably, when he entered the rent control system, in one building -- they could be side by side -- the rents could be quite different. I do not know whether I am making myself clear here.
Hon Ms Gigantes: Yes.
Mr Brown: A tenant could be conceivably paying $300 or $400 more for exactly the same thing. Is there anything in this that would prevent that from happening?
Hon Ms Gigantes: Two points: First, when we discuss the question of the five-year exemption, what we are trying to do is provide a long enough period of time so that you are bridging a business cycle. That means that within that business cycle we would expect that a landlord would be able to establish a legal rent which would fairly reflect the value in the market in a continuing way. That is step 1.
Step 2: There is nothing in either the rent review legislation we have had in the past or the rent control legislation we are proposing here which purports to provide equivalence within the market. That is not what is provided by this kind of mechanism legally at all. So what you have is that within a range the market plays and there is competition. Some landlords may be induced to lower rents and some landlords may be quite happy to push forward with the maximum amount available under the guideline increase each year. Some landlords in the past have not used their maximum increase available. It depends on the market. There is market play around a system which is based on the maximum legal rent.
Mr Brown: Yes. I understand that. What I am trying to think through here are the ramifications of what you have just said, what a landlord may tend to do under those circumstances. What he may tend to do may not be particularly good for the tenants who are in the building. For example, if I were a landlord in the fourth year, one year before my exemption is over, I might say, "Look, I'm going to double my rents this year." You might throw a lot of tenants out on the street, but the landlord's objective is just to come into the rent control system at the highest maximum rent possible.
Hon Ms Gigantes: Right. Yes.
Mr Brown: I am a little concerned about what that might do to --
Hon Ms Gigantes: The market plays around that, Mr Brown. That landlord, in trying to double rents, I do not think would have any tenants. He has to have tenants to establish the rent. So there we are.
Mr Brown: Does that mean, if one particular unit is vacant at the time, that the last rent that was charged and actually paid applies?
Hon Ms Gigantes: That is correct.
Mr Brown: So if no one is ever actually paid the rent that he claims he is about to charge --
Hon Ms Gigantes: Then it is not the maximum legal rent.
Mr Brown: Even if the rest of the building -- okay, now I understand.
The Chair: Further comments to subsection 3(8)? Shall subsection 3(8) carry? All in favour? Opposed? Carried.
Questions, comments and amendments on subsection 3(9)?
Mr Brown: We had suggested an amendment to subsection 3(9). We are withdrawing that.
The Chair: Shall subsection 3(9) carry? All in favour? Opposed? Carried.
Subsection 3(10), questions, comments or amendments? All in favour? Opposed? Carried.
Subsection 3(11), questions, comments or amendments? All in favour? Opposed? Carried.
Shall section 3 in its entirety, as amended, carry?
Section 3, as amended, agreed to.
L'article 3, modifié, est adopté.
Sections 4 to 6, inclusive, agreed to.
Les articles 4 à 6, inclusivement, sont adoptés.
Section/article 7:
The Chair: Moving on to subsection 7(1), questions, comments or amendments?
Mr Tilson: Is there a provision here as to how you serve the tenant? Is there a reference to the Landlord and Tenant Act, the process of serving a tenant? Am I on the right subsection?
The Chair: Yes, you are.
Hon Ms Gigantes: It relates to subsection 7(2), the process.
Mr Tilson: Is the person served in person, by mail, by posting on a door, the types of notices similar to those in the Landlord and Tenant Act? Is that in here somewhere? It is still subsection (2), is it?
Hon Ms Gigantes: We are just looking up the reference here.
Ms Parrish: I believe there is a later section in the procedural section, section 48, that tells you all the methods of giving notice in the statute. So you can hand it to the person; if you are a tenant, you can hand it to an adult person in the rental unit; you can leave it in the mail if there is an ordinary mailbox, etc. My recollection is that it is very similar to the Landlord and Tenant Act.
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Mr Tilson: I have a further question with respect to this process. During the hearings, both the Liberal Party and our party asked several times whether the draft regulations with respect to the entire bill, and certainly anything involving this section, would be submitted to the committee for consideration. Minister, either to you or your staff, have regulations been prepared and, whether it is yes or no, will you be presenting us with those regulations for our consideration prior to the committee making its report to the House?
Hon Ms Gigantes: As I mentioned this morning, we are doing consultations on the components of the rental guideline. We are also consulting around the amortization tables. I think each member of this committee has been alerted to those consultations and provided the background materials. Certainly we will be pleased to report back to you on those.
Mr Tilson: Any other regulations that you have prepared, or are you waiting until after you have passed the bill?
Hon Ms Gigantes: Some we would not be able to prepare until after the bill has been dealt with.
Mr Tilson: Why?
Hon Ms Gigantes: Because some of them will depend on what is in the bill. I am just reading a note here --
Ms Poole: Do you not know what is in the bill?
Mr Tilson: I see a bill here. You know what is in the bill. Can you not prepare regulations based on the amended bill that you are presenting to this committee? I want to know what you are doing, Minister.
Ms Parrish: I guess we intend to have a consultation on the regulations. What we did was to write to the major tenant and landlord groups and ask them to give us their priorities for regulation development so we could work on those regulations they thought were the most critical to them first.
Mr Tilson: Would it be useful for us to adjourn these proceedings until you have had an opportunity to prepare regulations for this committee to study?
Hon Ms Gigantes: No.
Mr Tilson: The reason I say that is that I ask innocent questions like this, and you quite rightly pointed out to me that I should read section 48, which is very kind of you, but there are other areas here that no doubt will be dependent upon what the regulations say. Now you are telling us -- well, amortization things, and that is fine, but I am talking about the overall regulations you intend to put forward. Every ministry has a big picture; at least if you have not, you are in trouble. I would like this committee to see the big picture before we send this report back to the House.
Hon Ms Gigantes: I think the big picture is in front of us in terms of rent control legislation. I consider the regulations that we are going to attach to this legislation to be the fine lines around the big picture. The two key elements are now being consulted upon. I am quite happy to report back the results of that consultation. Some of the matters that will be associated with the act, I personally need to give more thought to. I would not like to see us stop this work while I do more background study of some of the items which will come under administrative or regulatory provisions.
Mr Tilson: I express my concern now and I will continue to express my concern. The motion I made at the outset this morning was not done in any flippant manner. I want to see everything and I think this committee wants to see everything that you have in mind for housing legislation. To say that the big picture is here -- I thought we had the big picture when we were going around the province, but we do not have the big picture.
The big picture is going to include the regulations, which could include items under section 7, for example, or many other sections, the definitions section. There are going to be all kinds of definitions put forward in the regulations, definitions that will involve sections in the entire legislation, and we do not know what they are. You could rewrite the act with those regulations.
Hon Ms Gigantes: I do not intend to do any such thing.
Mr Tilson: I hope you do not, but I fear you do.
Hon Ms Gigantes: Mr Chair, Mr Tilson asked a question about section 7 and was referred to a very explicit description of process in section 48. Any further information that he seeks on any particular section, we will do our best to address as we go along.
Mr Tilson: I just hope that we are not going to see, as soon as this bill is passed, a section such as section 7 being rewritten by the bureaucrats. We do not know. We have no idea what the big picture is. We have a brief skeleton --
Hon Ms Gigantes: If you take a look at section 48, I think it might clear up your concerns on that one.
Mr Tilson: Excuse me -- we have a brief skeleton that seems to change from week to week. Goodness knows what it is going to be next week, and yet you are going to think about what your regulations are going to be. You are going to think about it.
The Chair: This all relates to subsection 7(1)?
Mr Tilson: It certainly does, Mr Chair.
The Chair: I just wanted to make sure.
Mr Tilson: I have asked a question. It appears that the regulations have not been prepared and, if they have, this committee will never see them, which is shocking.
The Chair: I think your question was fine. You have asked to see regulations as they relate to section 7. I believe the answer was that they are not ready.
Mr Tilson: The answer was that she is thinking about it.
The Chair: Section 48 covers your question on section 7 and, rightly so, you asked if there were any other regulations available. I think the answer was that a lot of them are being formulated --
Mr Tilson: She is thinking about it.
The Chair: I know that might not be an answer to your satisfaction, but I think we have gone over this ground three or four times now. We are running a list. Ms Poole and Mrs Marland.
Ms Poole: On this specific point, it is an appropriate time to discuss it, because what triggered this in Mr Tilson's mind was the word "prescribed" in subsection 7(2). In rent review legislation, probably more so than in many other types of legislation, the regulations are incredibly powerful. They can actually change the direction of what is intended in the act, and there is a lot of power in the particular regulations attached to it. So we are very uncomfortable with the fact that we are looking at this legislation and have no assurance of what changes are going to be made in regulation which will affect the interpretation of this act.
Perhaps the minister could take under advisement that it might be appropriate for her to suggest that the standing committee on general government take a look at the regulations during the intersessional period, January, February, March, because there are changes. We have already seen a few draft copies of regulations which the minister's office had sent to the opposition critics on request. What I see concerns me because I see changes being made without the appropriate studies and reviews and with numbers pulled out of the air. I think if we are going to make this legislation work, we have to make sure the regulations are proper. The minister may want to comment now, or she may want to get back to this committee on the possibility of this committee studying regulations in the intersession.
Hon Ms Gigantes: On the question of subsection 7(2), what we are discussing here is the piece of paper, the form which will give the tenant notice. There has been a consultation related to Bill 4 about the appropriateness of form, but I will say to committee members I am still thinking about matters relating to that. I certainly am not at this stage ready to indicate what I think the form should be like, but there has been a good deal of public discussion around it with the interest groups involved.
On the broader question of the regulations, I will keep that question in mind and try to assess what it would mean both in terms of the priorities of the work we are doing in the ministry and in terms of the priority of work that the government intends to bring to this committee.
Mr Tilson: I would suggest we stand this section down until the minister has had an opportunity to think about what the piece of paper is going to look like, where section 7 is dealing with a notice that would be given to a tenant. We have no idea what that notice is going to look like or how regimented it is going to be. It could say absolutely anything. I for one am not prepared to assign that right to the bureaucrats. I think the committee is out of order in voting on section 7 when we do not know what that notice is going to look like.
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Mrs Marland: I cannot believe what I am hearing. I think today is an example of the reason we want to accelerate the delivery of Hansards to committees. Unfortunately we will probably not receive what the minister said today for another three or four weeks, because at the moment that is how quickly we get the printout of Hansard. If we meet next Thursday morning -- actually it is two weeks today because we are not sitting next week -- and read over what the minister has said, it will be unbelievable reading.
I cannot believe we are here discussing a bill which we already know has tremendous impact on the future of tenants in this province and certainly tremendous impact on the future of landlords and the investment they have already made in real estate in this province, and we have a minister sitting here saying: "I'm still thinking about these matters. Some of these matters I'm still thinking about." I cannot wait to read in Hansard what her words actually are.
This government has the gall to bring forward legislation and ask this committee to place amendments and process this legislation while the minister says she is still thinking about it. What kind of game are we playing here? Either we have a piece of legislation because this is the government's position and this is the direction the government wants to go, or we do not.
It is not fair for the minister to answer, when she is asked about a very relevant section by both my colleagues, "I'm still thinking about these matters." I am sorry, but this is just not on. How flippant, how casual and how offhand can this government be if that is its attitude in dealing with processing a piece of legislation which is significant and unsatisfactory.
We already know what Bill 121 is. We know how many sections there were to the bill to start with. We know the government had 99 amendments to its own bill -- we went all through that last week -- which is inexcusable. Either you are willing to defend and answer the questions relevant to this bill or you come back with a bill you have thought about and are prepared to answer questions on. Who is going to be making these decisions? Are you going to make them or is the deputy going to make them or are you going to be thinking about them for another few months?
Hon Ms Gigantes: I might.
Mrs Marland: At what point will you have the answers you should have today when we are here to deal with this bill -- not by choice, because we are not happy with this bill. We are here to deal with it and to be able to ask the minister questions. When the minister says, "I'm still thinking about these matters," it is just not good enough.
Hon Ms Gigantes: Perhaps I could make myself a little clearer. It appears that at least some members of the committee do not understand what we are discussing in this section. We are discussing the form on which the landlord will provide information and notice to the tenant.
What has apparently launched this great diatribe is that the exact design of this form is not available at this moment to the members of the opposition, and further, that I have said as minister that I want to consider the exact nature of that form. The information that will be on that form is covered by this legislation. What I would like to be sure of is that we are providing within the operation of this regime of rent control a form which can be easily filled out by landlords, in other words, which landlords understand and which is clearly understandable by the recipient, the tenant. In the past there has been some grief around this form. That is the reason there has been consultation under the section of Bill 4 that calls for a form for the design of a new form.
I have looked at the old forms that have been used in rent review and rent control in this province and I have examined the new form. I am not satisfied that we have the most clear design possible. I am sure each member of this committee would want to make sure that the design of the form provided, in language that was as clear and understandable as possible both to the person filling it in and to the recipient, the information necessary for this legislation to operate effectively to the mutual benefit of both interests.
Mr Brown: Perhaps the Chairman could help me. It seems to me, if my recollection is correct, that we had a discussion around this during the Bill 4 hearings. During the Bill 4 hearings the proposed forms were actually brought to this committee. We had a look at them and I believe all would agree that there were some helpful suggestions made. I am just wondering if the minister could undertake the same process as we go through this bill, because I think everyone would agree there were some improvements made to those forms as a result of the suggestions of my colleague the member for Eglinton and others. It does not seem to me that would be an unreasonable request.
Hon Ms Gigantes: I do not think so either. I would just like to make sure the outline we bring you is the best we can bring forward, and I am not sure we are there yet.
Mr Brown: Is that an undertaking from you to bring those forms when you are prepared?
Hon Ms Gigantes: Yes, I would be pleased to do that.
Ms Poole: As a point of clarification for the minister, she seemed to think our concern was only about the prescribed forms in subsection 7(2). Because this is the first time the word "prescribed" has been used in the act, our concern is much broader. We would really like to take a look at the regulations that are going to be affecting how this act is implemented.
The Chair: Mr Tilson made that clear. He was using this section specifically as an example but he was also using this section to express his concerns for some future debate that may take place.
Ms Poole: That is right. I believe the first time I spoke I also made a similar point, but the minister seemed to dwell on what was in subsection 7(2).
Hon Ms Gigantes: That is where we are.
Ms Poole: That is where we are, but it is also the first opportunity we have had to talk about what is prescribed and what is not. It is very important. I can understand that perhaps not all the regulations are in their final form or in an appropriate draft form at this stage, but I would like an answer from the minister by the time we meet again as a committee as to when the regulations for certain sections will be ready and whether she is prepared to share them with this committee, either during the course of the clause-by-clause or in the intersession if certain regulations are not ready by that time.
The Chair: Shall subsections 7(1) and 7(2) carry? All in favour? Opposed? Carried.
Mrs Marland: I have a question on a point of procedure. In my six years, I have not sat on a committee where votes have been taken and the minister has voted.
The Chair: The minister has the right to substitute and she is substituting for a member.
Mrs Marland: If the explanation is that the minister is substituting for a member of the committee, I accept that.
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The Chair: That is the explanation. She is substituting for Ms Harrington.
As you will see from the notation at the bottom of page 19, we are dealing now with clauses 7(2.1)(a) and 7(2.1)(b), which have been amended.
Mr Tilson: My question is similar to the series of questions we have been asking, which makes it difficult to proceed without seeing the regulations. First of all, we have a proposed amendment to paragraph 12(1)1 which talks about a number of things that need to be included that go beyond what the government proposes. Those sorts of things should be here, I believe.
I look at the words "The notice shall include information setting out the total cost," and it talks about taxes, heat, hydro, water, etc. I would assume the regulations could dictate other things that would be included. Is that correct?
Hon Ms Gigantes: No.
Mr Tilson: What do the words "shall include" mean? What else can a notice have?
Mr Brown: On a point of order, Mr Chair: Usually we would have a reason for this amendment and the explanation before we enter into the discussion.
The Chair: Yes, you are correct.
Mr Tilson: I will withdraw until later.
Hon Ms Gigantes: I certainly do not mind having Mr Tilson raise the questions first on this particular amendment.
Ms Poole: I do have an objection. I think we should all be clear as to the purpose.
The Chair: You are correct. I should have asked the minister and staff to explain the reason for the amendment. I apologize to Mr Tilson, but we will get right back to him as soon as we get the explanation.
Hon Ms Gigantes: Members of the committee are aware that there are provisions under the proposed legislation that relate to increases or decreases in the rent that can be charged as a result of extraordinary changes in operating costs. These in turn relate to changes in municipal taxes, heat, hydro and water charges. What this amendment does is specify that the prescribed form mentioned in subsection 7(2) shall include --
Mr Tilson: The prescribed form which does not exist.
Hon Ms Gigantes: That is correct. You can see why it does not exist yet. We do not even know if you are going to pass this amendment.
Ms Poole: You do not? Is there a schism in the NDP caucus? I am shocked.
Mr Tilson: I am amazed at the shock.
Hon Ms Gigantes: I live in faith.
Mr Tilson: I disagree with you, with due respect. I think the form goes hand in hand with this. When you are talking about the prescribed form that does not exist, the whole process is ludicrous. How can we vote on a prescribed form that does not exist?
Hon Ms Gigantes: We are telling you what will be in the prescribed form. That might help you.
Mr Tilson: I anxiously await that.
Hon Ms Gigantes: That is what subsection 7(2.1) indicates. It indicates that we would have in that prescribed form, as well as those items which need to be prescribed under this legislation, the cost for extraordinary charges that can affect the rent over the previous two years. Colleen reminds me this is only the case if the landlord has received an order to increase the rent.
Ms Poole: I find this amendment a little confusing, together with the reason for the amendment, because it states it only applies where a prior order under this act has provided for an above-guideline increase based on extraordinary operating costs. Is ther a prior order dating back to 1975?
Hon Ms Gigantes: There were no such provisions then.
Ms Poole: Okay, then 1985?
Hon Ms Gigantes: Only under this act.
Ms Poole: And no predecessor acts?
Hon Ms Gigantes: No.
Ms Poole: So would the effect of this be, for instance, if a landlord had an extraordinary operating increase next year, once this legislation is in place, and received an order granting him or her an additional rent increase because of it, if five years from now the landlord once again went for an extraordinary operating increase, because he or she had done it one time before, a non-specified time, he or she would have to provide all this extra information, but if he or she had not in a prior order, then he or she would not have to provide it?
Ms Parrish: What this section says is that if you have received an above-guideline increase by order under the Rent Control Act, in future your notice of a rent increase to your tenants must set out this information. Suppose I am a landlord and in 1995 I get an above-guideline increase. In subsequent years I must provide this additional information. This is to cover, for example, circumstances where landlords have had the benefit of increases and the tenants cannot get the benefit of any decreases that occur because they do not have the same information as the landlord. So this is essentially creating a more even playing field between landlords and tenants about information, if the landlord has obtained an order under the statute.
Ms Poole: Would the order have to be relating to an extraordinary operating increase or decrease?
Ms Parrish: The section says --
Ms Poole: Or anything, if it was capital?
Ms Parrish: Respecting capital or extraordinary operating cost increases. That is what clause 7(2.1)(b) says. The findings for the order include an allowance for an increase for capital expenditure or EOC.
Ms Poole: Could you elaborate on the type of information? It says here on "the total cost for the residential complex for each of municipal taxes, heat, hydro," and so forth. You will be prescribing a form which will just ask for totals. Or are there additional things that the landlord -- is it a percentage? What exactly is it you will be requiring?
Hon Ms Gigantes: Total. It says "the total cost for the residential complex."
Ms Poole: So you are saying that the landlord has to say, "Last year I spent $84,000 on municipal taxes"?
Hon Ms Gigantes: That is correct.
Ms Poole: So it is just a bottom-line figure?
Hon Ms Gigantes: It is for the last two years.
Ms Poole: For the previous two years. So it is a bottom-line figure. It does not have to tell the tenants that there has been an extraordinary operating increase previously or that there has been a capital expenditure increase previously.
Hon Ms Gigantes: If they had been there, they would have known that.
Ms Poole: I am trying to relate why you have capital in here.
Ms Parrish: During the course of the hearings a number of people commented that they thought it was unfair that, for example, the landlord might come in and have certain repairs made to the building which would decrease the water bill or the heating bill or whatever, and the tenants would pay for that in the capital increase. If there was a significant saving, they would never have an opportunity to apply for any decrease that was there because they would never be able to find out that the decrease had ever occurred. The sense was that although the act theoretically allowed for that decrease, it never could happen in the real world because the tenants would not have the information.
A number of landlords said, "Oh, if the tenants only knew that even though I've done all this, my bills are still going up because everything is increasing," so we thought this information might help both landlords and tenants. If the landlord is right and the costs are still rising, then the tenants know that and they do not feel as upset. If the tenants have a legitimate right to apply for a decrease, then why should they not get that information? Otherwise, later provisions in the statute are not that useful because they have a theoretical right which they cannot really exercise.
We did, however, decide to confine this information to those people who had come through the system on quid pro quo ground: that if you are a landlord who never asks for an above-guideline increase and you never come into the system, perhaps you should have a simpler life, I guess, or a simpler form.
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Ms Poole: One thing I can say that is probably a good idea about putting it on the form is that many tenants do not appreciate that quite often 25% to 30% of their rents go to paying property taxes. So perhaps there will be that realization there that they have a stake in whether the property taxes are higher or lower in their particular community and that they should be more aware and more proactive in making sure market value assessment does not come in for instance, in Metropolitan Toronto.
Hon Ms Gigantes: They might also like to compare their property taxes to those of their cousins who own houses, which might also be educative. I think it will provide a lot of useful information to tenants.
Ms Poole: And perhaps the Minister of Housing will be approaching the Minister of Revenue to discuss the fact that --
The Chair: Order.
Ms Poole: Is the former Minister of Revenue calling me to order on this point?
The Chair: That is right. I knew exactly what you were going to say.
Ms Poole: I bet you did.
Mr Tilson: Somehow I lost my position here, but here I am back.
I had three areas in this subsection 7(2.1) which I started on -- what the words "shall include" mean. What else?
Hon Ms Gigantes: The form will set out the basic information on which the determination of rent will be addressed.
Mr Tilson: What will that be?
Hon Ms Gigantes: It will be the existing rent, the maximum legal rent, the guideline, any application.
Mr Tilson: Why do we not put that in and take out the words "shall include"? Why should we pass this, enabling -- I believe this --
Hon Ms Gigantes: The form will also include some other information which will describe to the landlords, I hope, as they fill in the form, and to tenants the meaning of the information.
Mr Tilson: Now we are getting to the issue. What does everything mean? I am quite serious about this.
Hon Ms Gigantes: Yes, I am too.
Mr Tilson: I need to know what you are doing. I do not know what you are going to put in this notice. It is going to be a legal notice which, if not complied with properly, is going to have serious ramifications on the whole system.
Hon Ms Gigantes: Yes.
Mr Tilson: At this particular point in time we on this committee have no idea what is going to be in that notice. We know it is going to include taxes, heat, hydro and water. We also know that it is going to include some other unknown things.
Hon Ms Gigantes: Not in all cases, as has been pointed out. It will include those items only if the landlord has applied for an above-guideline amount for that unit.
Mr Tilson: Is this not putting rather onerous restrictions on all parties and this committee? I repeat, we do not know what is going to be in this notice. Even if you had the notice here, even if you knew what your notice is going to be, which you do not --
Hon Ms Gigantes: That is correct.
Mr Tilson: -- this section, "shall include," I believe gives you absolute discretion -- not you, but the government, whoever that may be -- complete jurisdiction to put all kinds of things in the notice.
Hon Ms Gigantes: No, that is not correct. Anything that goes in this notice is governed by regulation and it is prescribed and has to relate to the elements of this legislation. Otherwise it is not an acceptable regulation; it is open to challenge.
Mr Tilson: What is acceptable? I do not know what the regulations are, nor do you. I am going to ask you on every section as we go through here -- you might as well be prepared for it -- I want to know what this act means, and I do not know what it means. I do not even know what "extraordinary operating cost" means. I do not know what "capital expenditure" means. You have not defined them anywhere. What do those words mean?
Hon Ms Gigantes: They have been defined and, as we progress through the bill, we will deal with those definitions as they relate to the operation of this legislation.
Mr Tilson: What do they mean as far as subsection 7(2.1) is concerned?
Hon Ms Gigantes: They have a precise meaning which is described in clause 7(2.1)(b), which relates those items to an above-guideline increase.
Mr Tilson: I think you are saved by the bell.
Mr Fletcher: They are going to stack the vote.
Mr Tilson: Madam Minister, you tell me to look at clause (b). I am looking at clause 7(2.1)(b); that is the very clause I am looking at. I do not know what "capital expenditure" means. I know what "capital expenditure" means in my mind; I am not too sure I know what it means in your mind. Will you tell us?
Hon Ms Gigantes: It is not a question of what it means in my mind; it is a question of what it means in this legislation.
Mr Tilson: Yes, it is.
Hon Ms Gigantes: If you read through the legislation, you will see what it means in this legislation.
Mr Tilson: Would you tell me where it is, in so far as it relates to subsection 7(2.1)?
Hon Ms Gigantes: As far as it relates to clause 7(2.1)(b), it relates to an order given under this legislation for a capital expenditure or an extraordinary operating cost that is above guideline.
Mr Tilson: Where are those phrases defined in the act?
Hon Ms Gigantes: They are referred to in sections 14 and 15, I am told. I must say I am not flip enough yet --
Mr Tilson: Flip?
Hon Ms Gigantes: -- to be able to give you -- yes, the flip-over number -- sections 14 and 15. If you will look at the sidebar on page 18 of the bill reprinted, you will see "Extraordinary operating cost." On the top of page 19, "Where increase is extraordinary." Those may help you. Also on page 19 --
Mr Tilson: Let's deal with subsection 14(1) --
Hon Ms Gigantes: -- I am still just answering the question, if I may. Under section 15 you will see a sidebar that can lead you to an understanding of eligible capital expenditure, and further, subsection 15(2), "When capital expenditure is eligible." Those are the relevant sections.
Mr Tilson: Mr Chair, I am going to jump ahead to these sections. May I do that?
The Chair: I believe what we are trying to find out at the moment is --
Mr Tilson: The definition of "extraordinary operating cost."
The Chair: -- definitions to a number of words that you do not believe are defined as related to this particular section we are dealing with. As long as we are going to other sections for that specific purpose only, yes, you are in order.
Mr Tilson: Yes. Mr Chair, I am looking at the first section that the minister referred to, subsection 14(1). That does not define extraordinary operating costs. Let's read it:
"The landlord may base an application on an extraordinary increase in operating costs for municipal taxes, hydro, water or heating for the whole residential complex."
If you are telling me that extraordinary operating costs are those items, then let's put it in the definition section. That is not a definition of extraordinary operating costs. You know that.
Hon Ms Gigantes: Read on, read on. Read all of section 14.
Mr Tilson: Why can you not define what extraordinary operating costs are? That is not a definition at all.
Hon Ms Gigantes: It is an operative term; it is not a philosophic term. It is defined in operation. If you continue reading section 14, I believe that subsection 14(2) will help you understand the way this term operates within this legislation.
Mr Tilson: Section 14 has to do with basing an application on an extraordinary operating cost. Those are the first words. It is not a definition of extraordinary operating costs at all. It has to do with basing an application on an extraordinary increase in operating costs. That is not what I asked. I asked what "extraordinary operating cost" means.
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Hon Ms Gigantes: In terms of this bill, if you read section 14, you will find that defined in operational terms.
Mr Tilson: Where? It does not say that at all. We are talking about an application.
Hon Ms Gigantes: Continue reading in faith, Mr Tilson.
Mr Tilson: I am faithful. I am reading it and I do not see it.
Hon Ms Gigantes: You will be led to subsection 14(2).
Mr Mammoliti: On a point of order, Mr Chair: We have gone over and over this a number of times already.
Mrs Marland: Maybe you could explain it.
Mr Mammoliti: Why do you not just be quiet for a minute? Can you do that?
The Chair: What is your point of order, Mr Mammoliti?
Mr Mammoliti: My point of order is that perhaps there should be an amendment. If you are so concerned about the definition, put an amendment in the appropriate place. Let's not waste time here. We are dealing with subsection (2.1). Let's deal with it. If he is concerned about the definition, maybe he should put an amendment in.
The Chair: That is not a point of order.
Mr Tilson: I am asking again what these words mean, Mr Chair. You have indicated that the definitions section, section 1, is being deferred till some date in the future. Let me try this question to you, Minister: You are not prepared to put forward the regulations. I believe that you could define capital expenditure or extraordinary operating cost by regulation. I believe you can do that and I do not think you should have that jurisdiction. Therefore, would you be prepared to define in the definitions section, section 1, capital expenditure or extraordinary operating cost? Because I do not agree with what you are saying. If you are saying that is your definitions section, then it is in the wrong place.
Hon Ms Gigantes: Mr Chair, if when we return to the definitions section Mr Tilson is still in confusion about how an extraordinary operating cost will be defined operationally under section 14, all three subsections, then I would not be adverse to having that inserted into the definitions section. But we are not defining an entity. We are defining an operational process built into the legislation, and it is that operational process, you will note, Mr Tilson, under clause (2.1)(b), which speaks not of an extraordinary operating cost but of the findings for an order including an allowance for an increase respecting a capital expenditure or an extraordinary operating cost. I certainly do not mind duplicating that, but we are not describing an entity or a thing. We are describing a process defined in the bill, in section 14.
Mr Tilson: Mr Chair, we are defining a thing in subsection (2.1), and throughout this bill the words "extraordinary operating cost" and "capital expenditure" are used. They are not just in section 14 and other sections; they are throughout the entire bill. That is the point I have been making throughout these entire hearings. I do not know what a lot of these words mean. I can define capital expenditure. I can define extraordinary operating costs. You will probably disagree with me. What troubles me is that you will define something later by regulation, after you have passed this bill. Since you are not going to give us the regulations, I want to know what these words mean.
Hon Ms Gigantes: Mr Chair, I suggest that Mr Tilson spend a little more time reading the legislation.
Mr Tilson: I have been reading it for months.
Hon Ms Gigantes: If he still has difficulty, it seems to me we are at an impasse and simply have to deal with the process as laid out here. There is nothing that can be laid out in regulation in contradiction to the process described in the bill by which an extraordinary operating cost is determined or by which a capital expenditure becomes eligible for consideration for an increase. That increase having been ordered, under clause 7(2.1)(b) he should not have trouble understanding what will be included on the form.
Mr Tilson: We all know that at a later date you can come along and make those definitions by regulation. Subsection 7(2.1) does not refer to sections 14 or 15. They have nothing to do with subsection 7(2.1). There are other sections that I am sure your staff would draw to your attention where these words are used throughout the bill. I can tell you because I know about it. I happened to be at the hearings; you were not.
The Chair: There definitely is a difference of opinion.
Mr Tilson: There appears to be, Mr Chair.
The Chair: There appears to be a difference of opinion.
Mr Tilson: Mr Chair, if we have come to the end of the debate on that subject, I would like to raise another issue.
The Chair: I think we may have exhausted the time.
Mr Tilson: Turn to the Progressive Conservative amendment to subsection 12(1), where I talk about a number of things that go beyond the items that are referred to in subsection 7(2.1), beyond "municipal taxes, heat, hydro and water," in which we get into "garbage tippage fees, water and sewage fees, insurance, cablevision, superintendent's salary and rent, maintenance, and those provincial and federal taxes the landlord must pay in order to maintain a residential complex."
I get back to my very first question: Would those words be included in the words "shall include," or could they be?
Hon Ms Gigantes: They certainly could be if they were passed.
Ms Poole: On a point of order, Mr Chair: If I could suggest a way out of this, just to speed things up, would the government be amenable to an amendment to its amendment which would state "for each of municipal taxes, heat, hydro, water and any other prescribed costs"? This would obviously leave it up to the government to determine what those prescribed costs were. Then if Mr Tilson's amendment does by some miracle pass --
The Chair: Order, please. That is not really a point of order. It is a good point of information.
Ms Poole: That is right. It is a very valuable point of information, Mr Chair. I am trying to be helpful.
The Chair: Mr Mammoliti is always providing us with good points of information. As this is something that falls into the same category, I have to give the floor back to Mr Tilson.
Ms Poole: I tried, David.
Mr Tilson: Minister, since you say they could be in there, would you be prepared to put them in now? Would you be prepared to put the additional words that I have in the amendment I just read to you after the words "municipal taxes, heat, hydro and water"?
Hon Ms Gigantes: There is more than one amendment proposed to section 12. When we get to section 12, if there are matters that the committee decides should then cause us to revert to clauses 7(2.1)(a) and 7(2.1)(b), I would be quite happy to consider them then.
Mr Tilson: If the committee is prepared to enable us to return to subsection 7(2.1), Mr Chair --
The Chair: We would need unanimous consent to do that.
Mr Tilson: Yes.
The Chair: I cannot promise you that will happen.
Mr Tilson: I am quite aware of that. I know who can make the promises in here. I guess I am waiting for the government members to indicate --
Hon Ms Gigantes: We have indicated we are quite prepared to consider that, yes.
Mr Tilson: There appears to be unanimous consent, Mr Chair.
The Chair: We will see if there is unanimous consent when we get to that section, Mr Tilson.
Mr Tilson: Are we not on subsection 7(2.1)?
Ms Gigantes: That is what we have been discussing.
Mr Tilson: If the amendments to section 12 pass, I understand the minister is saying that she will be prepared to return to subsection 7(2.1).
Hon Ms Gigantes: To consider at that time whether it would be appropriate to revert to that section, right.
Mr Tilson: My understanding is that you would be prepared to return to subsection 7(2.1) if the amendments passed.
Hon Ms Gigantes: I am prepared to consider it at that time.
Mr Tilson: What does that mean?
Hon Ms Gigantes: It means that if an amendment were to pass in section 12 -- I cannot predict what will pass in section 12 -- that I considered inappropriate to place in subsection 7(2.1), then I would not be prepared to revert. The likelihood is that this will not happen, but we will see.
Ms Poole: I think the question itself is straightforward. In the unlikely event that Mr Tilson's amendment subsection 12(1) does pass, would the minister agree that we should reopen this matter at that stage?
Hon Ms Gigantes: I would consider it at that point.
Mr Mammoliti: She has answered the question, Mr Chair.
Ms Poole: It is not that hard a question. Yes or no?
Mr Mammoliti: She has answered the question. Let's get on.
Mr Tilson: I think she said maybe.
Mr Mammoliti: She said she would consider it. Let's get on with what we are talking about instead of stalling, David.
Mr Tilson: Mr Chair, I resent that. I am not stalling at all. I am asking a question.
The Chair: We have been making good progress today, and I think we have made good progress because we have been respecting the views of all the members of the committee in a forthright manner. I think we will try to consider to work in that vein.
Any further questions or comments in regard to clauses 7(2.1)(a) and 7(2.1)(b)?
Shall clauses 7(2.1)(a) and 7(2.1)(b) carry? All in favour? Opposed? Carried.
Mr Brown: Mr Chairman, some of the members are required in the House for five minutes.
The Chair: Right now?
Mr Brown: Very shortly. I was just wondering if the committee could agree to a 5- to 10-minute recess while we go up to the House. There is to be a voice vote.
The Chair: When do you think the vote will take place?
Mr Brown: At 5:15.
Hon Ms Gigantes: Mr Chair, I am not sure of the exact regulation about this kind of thing, but I think if there is a voting bell, then the committee is not sitting during that period. Is that correct?
The Chair: I understand that if the bell rings, yes, the committee can adjourn and go up and vote. I think that is correct.
Ms Poole: Mr Chair, perhaps we could explain for the minister that the alternative is that when we go to vote on this particular section, we will ask for a 20-minute adjournment so that we can caucus our third member and get him down for the vote. Perhaps then she would understand we are trying to save the committee time by asking for only five minutes.
The Chair: You are asking for a five-minute recess?
Ms Poole: A five-minute recess.
The Chair: Starting when?
Ms Poole: Starting in approximately one minute.
The Chair: Starting at 5:15?
Ms Poole: Starting at 5:15.
The Chair: Why do we not have a six-minute recess starting now? The committee is adjourned for six or seven minutes.
The committee recessed at 1713.
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The Chair: Before we adjourned, we had carried clauses 7(2.1)(a) and (b) and we were moving on to subsection 7(3). Any questions, comments or amendments to subsection 7(3)?
Ms Poole: I believe we have an amendment to that, if you could give me just one moment to go through my voluminous binder here.
The Chair: Ms Poole moves that subsection 7(3) of the bill be amended by striking out "void" in the first line and substituting "voidable."
Ms Poole: This may seem like a fairly small change, but in effect what it will do is ensure that there will not be times when an order is nullified unfairly for a very minor point. I will give you a couple of examples of what might happen.
This spring, under Bill 4, the government changed the prescribed forms. The process of advising various parties that the forms were changed was less than complete, so there were landlords who were actually submitting applications on their old forms. Under this section, using the word "void," that landlord would have no recourse, no opportunity to refile on an appropriate form.
There are other instances. For instance, many landlords have now computerized their records, so they actually have the prescribed form on a computer. If the word "void" is used instead of "voidable," it could be interpreted that if a comma was missing, or some fairly insignificant thing that did not change the tenant's understanding of the form at all, it would be automatically void.
All "voidable" does is give the rent officer the option, in cases where it obviously does not affect the tenant's understanding or the tenant's rights, of providing an opportunity for that landlord to correct the mistake without going through the whole process again. I do feel that it is not an unreasonable request, and I think it is quite common in law to use the term "voidable" instead of "void" for that very reason.
Mr Tilson: The Conservative caucus will be supporting that amendment. I guess it gets back to the question I asked the minister on an earlier section. What happens if the landlords just do not know about something? What happens if they do not know to file a notice or they forget and they can honestly provide a legitimate excuse as to why that was not done, or, in the example given by Ms Poole, an old form was used? I am not going to dwell on the issue of this prescribed form that does not even exist yet, but again, we see how easily it could change. It can change by regulation. Unless you are a very astute landlord or unless you have a consultant on retainer, you will not know.
One of the difficulties that was expressed to us during the public hearings, Mr Chair, as I am sure you will recall, is that we had legal clinics whose sole purpose was to explain to tenants what in the world all this legislation was about or we had tenants' associations -- wealthy tenants' associations, many of them sponsored by the government -- which would be in a position to explain to tenants what sections mean. Similarly, landlords have consultants and landlords have landlord associations that explain to them. But if you are a tenant or a landlord and you are just an average person who is not able to participate in any of these groups, you are out of luck.
The example Ms Poole gave is a very legitimate one, as well as other areas, so I think it is a reasonable request. To simply say that if you have not dotted the i's or crossed the t's it is void is unfair, and I wholly support her amendment.
Hon Ms Gigantes: We are referring here to the notice of rent increase, and we are saying in subsection 7(3) that an increase in rent is void, and that is an absolute, if the landlord has not given the notice required by section 7, and I think that is appropriate. We want to make sure that this process is followed as specified in the legislation.
If I could refer members to page 55 of the printed bill, section 92, "Substantial compliance with this act respecting the contents of forms, notices or documents is sufficient unless a rent officer or other employee of the ministry with whom it is filed is of the opinion that it would result in unfairness to any person." I would submit that in the kinds of situations described by members of the opposition parties, section 92 would provide the breathing room, as it were, to make sure that substantial compliance would be deemed in those cases unless it were going to create an unfairness.
Ms Poole: I thank the minister for pointing out section 92, and I was aware of it. The concern I have is that if you go back to subsection 7(2), it is very specific. It says, "The notice shall be in the prescribed form." The landlord cannot make up his or her own form. They cannot alter the form in any way, shape or form. It has to be in the prescribed form. Then when you go to subsection 7(3), it says, "An increase in rent is void if the landlord has not given the notice required by this section." To me, those two subsections, 7(2) and 7(3), contradict what is in section 92.
Hon Ms Gigantes: No. I would suggest that in fact section 92 modifies or has the potential for modifying the very exacting nature of section 7.
Section 7 is key; it is at the heart of the legislation. I think we have to be very clear. Were we to say in subsection 7(3), "An increase in rent is voidable," we would be creating uncertainty. What we are suggesting in subsection 7(3) is certainty, which can be modified where it is understood that substantial compliance has been achieved.
Ms Poole: While I am pleased to have that assurance from the minister, whenever I have two sections of an act that appear not to be quite simpatico, it does make me a little nervous that in fact the one section could be applied quite rigidly.
Hon Ms Gigantes: Let us make no mistake, it is the intent of section 7 to be as well defined as possible. I think that the kinds of situations you are talking about, which are everyday life situations, will be situations which can be covered by section 92 to your satisfaction.
Mr Tilson: I think the point raised by Ms Poole is most relevant and I would like the solicitor to make comment. I believe that if you leave it as is, the word "void" does not give the "rent officer or other employee of the ministry with whom it is filed" the discretion to reverse an error or an old form -- a typographical error, the crossing of the t or the dotting of the i error, or the example given by Ms Poole where an old form is used. I believe that the word "void" is exactly what it says. That is the end of it and no ministry official has the right to change that. The word "voidable" does give the official the right.
I hear the bells. Does this mean we are adjourned?
The Chair: No.
Mr Fletcher: We are being called for a vote.
Ms Gigantes: Do we know when it will occur?
Mr Abel: We might as well find out.
Hon Ms Gigantes: In fact, we are just calling here now to find out.
The Chair: Please proceed, Mr Tilson.
Mr Tilson: I would like the solicitor to comment on whether the word "void" means that is it, or does the ministry official, as referred to in section 92, still have the discretion to reverse the errors I have suggested or Ms Poole has suggested?
Ms Baldwin: I think the minister's explanation of that is accurate in terms of how the legal effect of the statute would work.
Mr Tilson: Would you tell us what "void" and "voidable" mean?
Ms Baldwin: "Void" means it is --
Mr Tilson: It is over.
Ms Baldwin: Yes. There is the provision in section 92 that would make that not happen if there were substantial compliance with the form.
Mr Tilson: You believe section 92 enables a ministry official to reverse a section that says something is void?
Ms Baldwin: It is not a question of reversing it, it is a question of, on receipt, it is seen to be in substantial compliance and therefore the issue of void does not come up.
Mr Tilson: With respect, Mr Chairman, I believe that the moment that error has been detected, it is over, that the ministry official does not even have the discretion to review that position, because it is void. "Voidable" means that the official does have the right to review it, that it could be changed. That is the whole intent of "void" and "voidable". That is the whole intent of this amendment.
Again, is the item dead, with the word "void," before it reaches the people referred to in section 92?
Ms Baldwin: I gave my answer to that, Mr Tilson.
Mr Marchese: But section 92 would have the effect to act as if it were an overriding clause. He is quite correct in saying this is void, but section 92 then says that under certain circumstances subsection 7(3) is overridden by that clause. That is what it does.
Mr Tilson: No, it does not.
Mr Marchese: "Void" does not eliminate section 92, and section 92 cannot have --
Mr Tilson: What does "voidable" do?
Mr Marchese: There are two different things. "Voidable" creates another problem that I agree with the minister about. I think section 92 does address, to some extent, some of the problems some of you are talking about.
Ms Gigantes: Could I just say, as an old English major, that if we take the noun and the verb in section 92, what we have is, "Substantial compliance...is sufficient." Here we are dealing with the contents of forms, notices or documents, which relates very precisely to subsection 7(3).
Mr Tilson: I have no quarrel with section 92. I understand section 92. What I do not understand is why you will not concur with the issue of "voidable," because "void" means just that; it is finished, it is dead. "Voidable" means that under certain circumstances an error could be detected. Ms Poole is quite correct. Again I repeat that I respectfully disagree with the solicitor, that you do not reach section 92, you cannot reach it, because it is finished at that point. The moment the error is made, it is void, it is dead.
Interjection.
The Chair: Order, please. We are running a list. Anyone who wishes to speak can get on the list.
Mr Tilson: The moment you reach subsection (3), the error detected in subsection (3) or the error I have been referring to, if that fact has occurred, it is dead. The increase in rent is finished. The ministry officials -- who else was there? "a rent officer or other employee of the ministry" -- do not have the discretion, do not have the jurisdiction to make that decision. The only way they have that discretion is if the word "voidable" is used. That is what the word "voidable" means.
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The Chair: Thank you. Colleen, are you going to respond to Mr Tilson?
Ms Parrish: I will do my best.
What subsection 7(3) says is that if you do not give the notice, it is void, it is over. Section 92 gets into the discussion of, what the heck is notice anyway? Is this a good enough notice? Is that a good enough notice? What section 92 says is that you really should be giving the notice in the prescribed form, but if you give the notice and you use the old form or scribble something on it, and it is substantial compliance with the notice requirements, then it is an okay notice. However, if you have given no notice at all, it is void.
Mr Marchese: That is clear.
Ms Parrish: Because we do not say "voidable," nobody else can look into that. So if there has been no notice at all -- not a defective notice, but no notice at all -- it is void. There is no discretion for anybody to say, "Well, you didn't give notice, but you had a good reason for not giving notice." All section 92 does is to look at the actual notice and say whether or not that constituted a notice which substantially complied with the prescribed form. The amendment that the member for Eglinton has proposed would allow you to say, "Well, you didn't give notice at all, but we are still going to let you have this rent increase because of some other reason," which may or may not have anything to do with the substance of the notice.
Mr Tilson: But not giving notice in the right form is not giving notice. That is not giving notice. That is her point.
Ms Parrish: No, not giving notice in the right form, if there is substantial compliance, is notice, and that is what section 92 says.
Mr Tilson: You have to give notice in the prescribed form, but, as she stated, if you have changed the form by regulation, you are not giving notice. That is the whole point.
Ms Poole: With respect, I think Ms Parrish did not read the whole of subsection 7(3). It says: "An increase in rent is void if the landlord has not given the notice" -- and these words are quite important -- "required by this section." And subsection 7(2) very clearly says that, "The notice shall be" -- not "may" but "shall be" -- "in the prescribed form."
So subsection 7(3) is not saying you must give notice or it is void; it is saying you must give notice as required by this section. You must give notice in the prescribed form or it is void. To me, as Mr Tilson has pointed out on several occasions, that voids the application, period. The story is over.
Ms Parrish: No, because section 92 says that on all matters respecting the contents of forms, notices or documents, and this certainly is one such matter, "substantial compliance" is sufficient.
Ms Poole: They are two very contradictory sections, because of the word "shall" and because of the words "required by this section."
Mr Chairman, I do not see the point in going on. The government obviously is not accepting the arguments by the opposition.
The Chair: Thank you. Mr Mammoliti.
Mr Mammoliti: I just think this is critical. It is a question I would like to ask perhaps the minister or even counsel. In a particular case when there is a discrepancy or a conflict in two different articles or clauses in an act, which one would supersede which: the latter one or the one at the front of the book?
The Chair: That is a good question.
Mr Mammoliti: I have reason to believe that the latter one supersedes the one at the front of the book.
The Chair: Who wishes to answer that question? Does counsel wish to answer that question?
Hon Ms Gigantes: I would not touch that with a 10-foot pole.
Ms Baldwin: There are a number of different rules of statutory interpretation. It is never based on where the placement is in the text. I think, for the purposes of this discussion here, it is probably not necessary to go into all of the rules that determine that.
Mr Mammoliti: So there is no point in me carrying on with that? I will leave it alone.
Ms Baldwin: I will add, with regard to the particular issue that is raised here, that it is quite common in a number of Ontario statutes to have provisions like this substantial compliance provision. Generally speaking, the purpose of the provision is that when there are, for example, the requirements for prescribed forms, if there is a little deviation from them, that should not be grounds for someone who is supposed to use them to be knocked out. That is the purpose of the provision and, generally speaking, provisions are interpreted to give them meaning.
Mr Fletcher: Just a hypothetical case for whoever wants to answer. I am a landlord. I have the old form. I fill it out and hand it to the tenant. The tenant tries to invoke subsection 7(3), and I can go to section 92. Is that correct?
Ms Parrish: Yes.
Mr Marchese: Just for my own clarity, because what the opposition members have said is quite clear. Subsection 7(3) says that it is void, and that is clear to me. Subsection 7(2) makes reference to those forms. That is again clear. I felt, looking at section 92, that under certain circumstances, subsections 7(3) and 7(2) could be overridden by other circumstances. Theoretically, I understand that. As I read section 92, I do not understand it, though, because it is not clear to me what it is we could override. What is it that section 92 overrides? That is the clarity that I do not have. Perhaps staff might speak to an example, again, that would give us this kind of clarity, for me at least.
The Chair: Anyone want to try that?
Hon Ms Gigantes: I think it was Ms Parrish who was asked.
Ms Parrish: The usual cases are where people use old forms and write things in. There has to be a substantial compliance, so, for example, if you go back to our section, the section says that you must say you want to take a rent increase, you must say that it is at this percentage, and so on. You would have to have that information there. But if you just sort of misspell the name of your street or some other thing, that would not knock you out. You have to provide the basic information that the statute says you have to provide, but just striking out with your pencil "1990" on the form number and writing in "1991" is not going to mean your notice of rent increase is void. It is really to deal with that kind of case. But the basic information does have to be there.
Mr Tilson: I have a question to the minister on the issue of the words "void" and "voidable." What would it mean to you if we said an increase in rent is "voidable" if the landlord has not given the notice required by this section?
Hon Ms Gigantes: It would mean to me that whoever dealt with a question around whether the landlord had provided proper notice would have to determine it in each and every case. What the current wording suggests to me is that in most cases it would be an easy, certain determination and that the landlord would understand it, the tenant would understand it, and there would be no question in the minds of staff. However, there are circumstances in life --
Mr Tilson: Circumstances in what?
Hon Ms Gigantes: In life.
Mr Tilson: In life. Yes, there are.
Hon Ms Gigantes: -- where, with the best intent in the world, the exact compliance is not achieved. We all know that, for example, from voting in ballot boxes and the kinds of allowances that get made in practice, which are reasonable allowances around the very specific way in which people are supposed to vote. We can have matters determined about whether substantial compliance has been met or not. Here, we are saying that substantial compliance is sufficient. So if there is some small foulup in the delivery of the form that is prescribed in section 7, there will be leeway given, unless an unfairness is created.
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Mr Tilson: I believe what the minister has done has been to give a definition for both "void" and "voidable," and that is what concerns Ms Poole.
Hon Ms Gigantes: No.
Mr Tilson: If I could finish, you started off defining what "voidable" meant and then you switched to the word "void." That is not what I asked you. Again, someone decides. I think we all agree, if there has been an oversight of some sort, the wrong form, and the general intent is there, crossing the t's and dotting the i's, I think it is reasonable that is where section 92 would come into place. But the way you have described it, you have interchanged the words "void" and "voidable" -- they both go. What Ms Poole and I are both saying is that with the word "void," it is dead, it comes to an end. To enable section 92 to come into play you must use the word "voidable," and that is the intent of her amendment, which I support. So I ask you to reconsider your position because it is going to make it very difficult. Someone will end up challenging this in court and I can promise you a court will say: "Sorry, the word `void' means exactly that. It's dead." So please consider it.
Hon Ms Gigantes: We have a conflicting legal opinion here and I am taking the opinion of legal counsel for the committee.
The Chair: Thank you. Shall subsection 7(3) carry?
Hon Ms Gigantes: You mean the amendment.
The Chair: Yes, my apologies to Ms Poole. We are supposed to vote on your amendment first.
Ms Poole: That is why I voted against the section carrying it, because I thought maybe we should do my amendment first.
The Chair: My apologies, Ms Poole. Shall the amendment to subsection 7(3) carry?
Ms Poole: Recorded vote.
The committee divided on Ms Poole's amendment, which was negatived on the following vote:
Ayes -- 3
Brown, Poole, Tilson.
Nays -- 5
Able, Fletcher, Gigantes, Mammoliti, Marchese.
The Chair: Shall subsection 7(3) carry? All in favour? Opposed? Carried.
Any questions, comments or amendments on subsection 7(4)?
Ms Poole: Mr Chair, because we are getting close to the end of the day, I just wanted to give one piece of information to committee members. Last week we tabled an explanation of the Liberal amendments with committee members. Because we had to change our numbering to match the government's new amendments, these do not necessarily match with what is in your book today. Next week we will be tabling a new explanation, so you will have the correct information in case you find they do not match.
The Chair: Thank you, Ms Poole. The minister has some information for us too.
Hon Ms Gigantes: Because she is so wise, Colleen Parrish did not raise this piece of information in the previous discussion, but it might be reassuring to members of the opposition to know that the wording "void," for example, in this case in subsection 7(3), along with wording "substantially in compliance with section 92," exists in the RRRA and has never been challenged in court.
Ms Poole: Mr Chair, on that point of information.
The Chair: I think we have debated that section and the matter has been passed.
Ms Poole: I will be very brief, Mr Chair. I just wanted to respond to the minister's comment, 30 seconds.
The Chair: I am not sure if the minister's comments were in order. I allowed the minister's comments to go forward because I did not see it prolonging the debate. Now it has prolonged the debate.
Hon Ms Gigantes: I am sorry, Mr Chair.
The Chair: I rule the minister's comments, while valuable, out of order and we are going to move right along to subsection 7(4). Questions, comments or amendments to subsection 7(4). Ms Poole.
Ms Poole: I was going to put a motion to replace the Chair with somebody more fair who will give a colleague equal time.
The Chair: Questions, comments or amendments to subsection 7(4).
Mr Tilson: Mr Chair, I believe this is a new section. I would like the government's clarification.
The Chair: Clarification? I do not think it is a new section. It is not denoted.
Hon Ms Gigantes: No, this is in the original bill.
The Chair: Would you like clarification just the same, Mr Tilson?
Ms Poole: Subsection 7(4) is a new amendment.
The Chair: It is not denoted on my page 14.
Mr Tilson: They have probably missed the denotation. I have a section in my book here that says "government motion."
Hon Ms Gigantes: I see, yes. Here we are, Mr Chair. Subsection (2.1) has been added.
The Chair: Do you want to give us an explanation?
Ms Baldwin: Just a little bit. This may not be necessary now, but just for the committee's future reference there are two ways in this reprinted bill, as with bills that are reprinted after committees finish them, that you can tell where things have changed. One is by the arrows that were referred to before and the other is when there is a change of just a few words or a word within a section. That which is changed is underlined. You can see that in this subsection.
The Chair: Thank you. Any questions or comments on subsection 7(4)? Shall subsection 7(4) carry? Carried.
Subsection 7(5), questions, comments or amendments? Shall subsection 7(5) carry? Carried.
Shall section 7 in its entirety, as amended, carry?
Section 7, as amended, agreed to.
L'article 7, modifié, est adopté.
The Chair: Does the committee want to move on to a new section or adjourn at this point?
Hon Ms Gigantes: Why do we not try section 8?
The Chair: Does the committee want to try section 8?
Mr Mammoliti: Let's tackle section 8.
Section/article 8:
The Chair: Questions, comments or amendments on section 8 of the bill?
Mr Tilson: Is the same rationale given for section 8 as for subsection 7(3)? Are tenants and landlords being treated the same? In other words, if notice has not been given, what happens?
Hon Ms Gigantes: This could be taken as a balancing section, which would provide the landlord with the right to have the rent increase where the tenant had not taken his or her right under the act, having received notice.
Mr Tilson: The same rationale applies. I guess we are looking at fairness for both landlords and tenants. I do not think that either landlords or tenants are being treated fairly by that. In other words, I am looking at the issue Ms Poole raised on the issue of error or oversight: The tenant for some reason does not know or uses the wrong form or does not keep up with the forms. The same argument goes with the tenants. It is the issue of fairness.
The Chair: I think Colleen would like to speak to that.
Ms Parrish: I think this reference to the proper notice of termination is the period of time you have to give termination. There is no form. You do not have to use a prescribed form; you simply have to give notice in the proper way. For example, you have to give notice to the landlord. It is not like subsection (7) which says you have to fill in this prescribed form. It simply says you have to do it in the way it says in the Landlord and Tenant Act, with proper notice to the landlord and so on.
Mr Tilson: So there is not going to be a proper notice for tenants. There will be a proper notice for landlords but not for tenants, is that what you are saying?
Ms Parrish: There is not a prescribed form; there is a proper notice for both landlords and tenants.
Mr Tilson: What is a proper notice?
Hon Ms Gigantes: That is governed by the Landlord and Tenant Act.
Mr Tilson: Where is that?
The Chair: I can see we are not going to finish the discussion on section 8 today. It is already 6 o'clock. Do you have further questions on section 8, Mr Tilson?
Mr Tilson: No.
The Chair: Ms Poole, any further questions on section 8?
Ms Poole: No.
The Chair: Then we may finish it. Shall section 8 carry?
Section 8 agreed to.
L'article 8 est adopté.
The Chair: When the committee reconvenes we will commence clause-by-clause discussion on subsection 9(1). The committee is adjourned.
The committee adjourned at 1800.