1997 ANNUAL REPORT, PROVINCIAL AUDITOR: MINISTRY OF THE ENVIRONMENT
TECHNOLOGICAL/MILLENIUM ISSUES
CONTENTS
Thursday 18 June 1998
1997 Annual Report, Provincial Auditor:
Section 3.07, conservation and prevention division
Ministry of the Environment
Mr John Fleming, Deputy Minister of the Environment
Mr Keith West, director, waste reduction branch
Mr Carl Griffith, acting assistant deputy minister, corporate management division
Technological/Millenium issues
Mr Erik Peters, Provincial Auditor
STANDING COMMITTEE ON PUBLIC ACCOUNTS
CHAIR / PRÉSIDENT
MR BERNARD GRANDMAÎTRE (OTTAWA EAST / -EST L)
VICE-CHAIR / VICE-PRÉSIDENT
MR RICHARD PATTEN (OTTAWA CENTRE / -CENTRE L)
MR MARCEL BEAUBIEN (LAMBTON PC)
MR BERNARD GRANDMAÎTRE (OTTAWA EAST / -EST L)
MR BILL GRIMMETT (MUSKOKA-GEORGIAN BAY /
MUSKOKA-BAIE-GEORGIENNE PC)
MR JEAN-MARC LALONDE (PRESCOTT AND RUSSELL / PRESCOTT ET RUSSELL L)
MS SHELLEY MARTEL (SUDBURY EAST / -EST ND)
MR RICHARD PATTEN (OTTAWA CENTRE / -CENTRE L)
MR PETER L. PRESTON (BRANT-HALDIMAND PC)
MR JOSEPH N. TASCONA (SIMCOE CENTRE / -CENTRE PC)
MR TERENCE H. YOUNG (HALTON CENTRE / -CENTRE PC)
SUBSTITUTIONS / MEMBRES REMPLAÇANTS
MR DOMINIC AGOSTINO (HAMILTON EAST / -EST L)
MR DOUG GALT (NORTHUMBERLAND PC)
MR MORLEY KELLS (ETOBICOKE-LAKESHORE PC)
MR TONY MARTIN (SAULT STE MARIE ND)
MR FRANK SHEEHAN (LINCOLN PC)
CLERK PRO TEM/ GREFFIER PAR INTÉRIM
MR TODD DECKER
STAFF / PERSONNEL
MS ELAINE CAMPBELL, RESEARCH OFFICER, LEGISLATIVE RESEARCH SERVICE
1997 ANNUAL REPORT, PROVINCIAL AUDITOR: MINISTRY OF THE ENVIRONMENT
Consideration of section 3.07, conservation and prevention division.
The Chair (Mr Bernard Grandmaître): Good morning. We have with us this morning John Fleming, deputy minister; Carl Griffith, assistant deputy minister, corporate management division; Ivy Wile, assistant deputy minister, environmental sciences and standards division; and Wilfred Ng, director, investigations and enforcement branch. Lady and gentlemen, we have an hour to deal with our issues -- we have to deal with item 3 and 4 on the agenda -- so we have an hour to spend with you. Will the deputy minister start, please.
Mr John Fleming: I'm pleased to assist the standing committee on public accounts in its review of chapter 3, section 3.07, of the Provincial Auditor's 1997 annual report. I have some comments I'd like to make in that respect and then we'd be delighted to entertain any questions the committee might have.
The auditor's review focuses on the conservation and prevention division of the Ministry of the Environment. The committee might be interested to know that the conservation and prevention division in the ministry has recently been reorganized and its responsibilities have been realigned with other divisions in the ministry.
We have a newly created integrated environmental planning division which has assumed the responsibilities for developing policy and programs to promote reduction of waste generation and conservation of energy and water. This division has also assumed the responsibility for developing environmentally sound policies for air, water, waste and land use.
Under the new organization, the responsibility for environmental assessment has been entrusted with the operations division of the ministry. The responsibility for developing criteria for approving provincial funding for water and sewage capital projects rests with the environmental sciences and standards division.
Before responding to specific points which the auditor raises in his report, I'd like to touch on some of our achievements to date and to highlight some new directions which will enhance environmental protection in the province.
In terms of waste management, Ontario's highly visible blue box program has been an unqualified success. This program, operated by the municipalities, with guidance and financial assistance from the ministry, is available to more than 85% of Ontario's households, and that participation is increasing. Through our waste reduction program, of which the blue box is an important component, Ontarians have reduced the waste landfilled or otherwise disposed of by 32% since 1987, and we are now among the leading provinces in waste reduction.
That's not to say that the blue box doesn't have some challenges at this stage in its evolution. We are certainly aware of those challenges, and I'll be speaking more about that in a moment.
We are totally committed to our goal of protecting the environment. We have made significant improvements in the environmental assessment process, and the newly created provincial water protection fund to finance construction of water and sewage plants bears testimony to that commitment.
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I would now like to address some specific points raised by the auditor in his 1997 report. The report addresses three distinct areas: waste reduction, the environmental assessment process, and funding for water and sewage projects.
The auditor's report has provided an excellent review of how the ministry needs to improve the work it's doing. All issues raised by the Provincial Auditor have been addressed and the ministry is taking action to respond to all recommendations. Let me turn first to waste reduction.
The auditor has questioned our ability to reach the 50% target for diverting non-hazardous solid wastes from landfill sites. We agree that that's an ambitious target; however, we have made significant progress. As I stated earlier, in 1996 Ontario achieved a 32% reduction rate, which will be publicly reported in the ministry's business plan. Also, the waste management policy branch will include this goal of reducing waste by 50% as one of the performance measures in their business plan.
I am providing you with some facts and figures to illustrate the rate of progress we have achieved in this area. A fact sheet, "Municipal 3Rs in Ontario: 1996" -- and we have copies of that available for members of the committee -- was produced in partnership with the Association of Municipal Recycling Coordinators, Corporations Supporting Recycling Inc, the Recycling Council of Ontario and the Ministry of the Environment. Over 1,000 copies of the fact sheet have been distributed to municipal, industry and non-government organization stakeholders since its release in the fall of 1997. The 3Rs fact sheet highlights waste reduction achievements between 1994 and 1996 including (1) a 16% increase in municipal waste diversion tonnage; (2) a 41% increase in centralized composting tonnage; (3) a 12% increase in residential recycling; (4) a 20% increase in municipally collected industrial, commercial and institutional recyclables.
The ministry and its partners are expected to release a second fact sheet on 1997 achievements in the fall of this year.
Some questions have been raised about the sustainability of the blue box program. The ministry is reviewing its options including those presented in the Recycling Council of Ontario's Roles and Responsibilities report. Currently, the ministry is working with the municipalities to promote cost-efficient collection and processing procedures to promote effective facility operation and to increase material capture rates. The ministry is proposing to work with Corporations Supporting Recycling Inc to examine where efficiencies can be achieved in the waste reduction infrastructure in Ontario. The ministry has plans to encourage more use of pilot demonstration projects to generate more ideas and options for waste reduction.
The ministry has also, in conjunction with the Environment and Plastics Industry Council, developed a full-cost accounting model, which has been distributed to municipalities, and we continue to work with municipalities that want to use this model to determine the full cost of their waste systems.
I am certain that all these steps will not only help to sustain the recycling program, but also to significantly enhance the rate of diversion of solid wastes from landfill sites and other disposal means.
Let me turn now to environmental assessment. On January 1, 1997, Bill 76 was implemented to increase the effectiveness of the environmental assessment program. That was just over 18 months ago. During this time, the environmental assessment branch in the ministry has made several significant steps forward in improving the effectiveness and efficiency of the environmental assessment program. To provide overall guidance and direction in doing this, the branch, through its continuous improvement section, has recently completed its 1998 to 2000 environmental assessment branch business plan. The plan identifies specific strategies and deliverables in addressing the issues of time and cost in the environmental assessment process, while always ensuring protection of the environment.
To improve efficiency, the regulation setting out the specific time frames for decisions in the environmental assessment review process is expected to be in place by fall of this year. However, the branch has been using the deadlines proposed in the regulation to guide the review of all new environmental assessment submissions.
During the 1997-98 fiscal year, the branch has been successful in reducing the average time required to review an environmental assessment from the historical 26 months identified by the Provincial Auditor to approximately 12 months, a significant improvement. A performance indicator is identified in the ministry's business plan, to measure the effectiveness of the branch's efforts to reduce this time requirement. This achievement has been reported at various meetings and conferences.
I turn to the last issue, that being funding for water and sewage projects. In an effort to ensure due regard for economy, the ministry has changed its terms for funding municipal water and sewage projects. Under the new provincial water protection fund, the ministry has implemented steps to ensure that municipalities select the most cost-effective solution. The ministry has made administrative changes in the applications for funding, as well as changes to the terms of reference for studies funded under the provincial water protection fund. Municipalities applying for funding are required to examine various options, including water efficiency, system optimization, area joint servicing arrangements and private system upgrades to ensure that the most cost-effective solution is selected and to defer or eliminate capital expansion.
The study component also requires that the municipality commit to report to the ministry on the implementation of the results of optimization and efficiency studies.
To facilitate administrative matters and to evaluate critical information, the municipalities have been provided with documentation outlining program criteria and eligibility. Funding is only committed when complete documentation, including an environmental study report in keeping with the Environmental Assessment Act, are provided. The procedures for the flow of funds have been streamlined to ensure that ministry funds are available commensurate with the needs of the projects. The municipalities are now required to provide cash-flow projections in writing on a quarterly basis.
Overall, the auditor's report has provided an excellent review of how the ministry needs to improve the work it is doing. As you've heard me say, action is under way on all of the recommendations made by the auditor.
Thank you for your attention, Mr Chairman and members of the committee. We'd be happy to respond to questions.
The Chair: Thank you. We will start with the opposition.
Mr Dominic Agostino (Hamilton East): Thank you for the presentation. I want to focus a little bit on the future of the blue box program and the role of the province in trying to sustain that program. Just briefly, it was the auditor's recommendation that the ministry should work with municipalities to reduce the costs of collecting materials, and so on. In view of the fact that the funding for municipalities from the province for the blue box program is basically non-existent, do you see a danger in the future viability of the blue box program; in view of the trends and changes in materials being recycled and collected and what the value of that material is, whether the municipalities can continue to afford to carry out blue box programs and recycling programs and such? Do you see a danger that municipalities may not be able to continue to afford to carry out the blue box program in view of the impact it's going to have on their taxpayers?
Mr Fleming: I'd like to start by saying that I think the blue box program is at a decision point in its evolution. As I mentioned in my opening comments, we're looking at a wide range of options in terms of how best to sustain and in fact improve the performance and the efficiency of the blue box. We've engaged in extensive consultation and have been assisted significantly by the Recycling Council of Ontario, that put together a consultation for us and brought us a number of options. Those options include a number of proposals for how to deal with the financial challenge that municipalities are facing. We're well aware of those challenges, as I said earlier, and we're actively reviewing those options now, looking for means of both sustaining municipal blue box efforts where they are now, increasing and improving diversion rates from disposal and assisting municipalities with that whole process.
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Mr Agostino: Just to follow up, though, do you believe the provincial government has a responsibility to assist the municipalities in a financial manner to sustain and carry out the blue box programs if the future of the program could be in jeopardy?
Mr Fleming: We see our challenge as being one of identifying the options available, considering all of the quite divergent stakeholder views on how to deal with this, and finding solutions that involve the stakeholders in making sure the blue box program is sustainable and efficient.
Mr Agostino: I appreciate that you're limited in what you can answer, given your role as a senior bureaucrat in the ministry. Would it be fair to say that the decision on whether or not there is funding for the blue box program -- and I understand it's a political decision, not a decision you make, but as an expert in the field and as the top environmental bureaucrat in this province, do you believe there should be a role for government in financing and helping the municipal level? Knowing that the decision is strictly political, to be made by the cabinet or by the government, not by you, do you believe, from the point of view of patterns or trends you've seen elsewhere, that there needs to be a role for the upper levels of government to financially assist these programs if they are to continue to exist?
Mr Fleming: I believe there's a role for the provincial government in finding financial solutions to make the blue box sustainable. That's not the same as saying there's a role for the provincial government in funding the blue box.
Mr Jean-Marc Lalonde (Prescott and Russell): My question is in the same vein: the blue box program. At present, with the fact that some of the municipalities are going to user fees on the blue box now, do you feel there will be a reduction in the participation of the consumer in the blue box program, which has been a success? We've seen that just lately the municipalities are talking of having a user fee for the blue box.
Mr Fleming: We're aware of a number of municipalities -- I believe that number is in excess of 100 now -- that have implemented user charges for garbage, but not for blue box. Our assessment is that those municipalities that have imposed a user-pay charge for the removal of their garbage have really encouraged people to use the blue box more. If you have to pay to have your garbage removed, most homeowners would take whatever steps they could to reduce the cost of that, and one very easy means for them to reduce the cost of their garbage is to increase the amount that goes into the blue box. To my knowledge, there are no municipalities charging individual homeowners for blue box collection.
Mr Lalonde: I've definitely seen that in the paper. In the rural areas they're talking of having a user fee or a user charge for blue boxes. They've also gone to a user fee for the garbage; they're allowed so many bags a week. Especially those seniors who don't need the full two bags they're limited to are going to put all those recycling materials in the garbage bags so they won't have to pay the fee for the blue box. That is definitely coming.
It's a good thing amalgamation might prevent some of that, because the larger municipalities already had the blue box program, which has been a success. Some of the smaller municipalities have not gone to the blue box program and are talking about going to blue box, but there will be a user fee.
Mr Fleming: I might turn that question to the director of waste reduction and ask whether there are any municipalities they're aware of that are considering blue box charges and what the stage of that is.
Mr Keith West: Any municipality with a population of 5,000 or greater is required to have a curbside recycling program in place, a blue box program. I'm not aware of any municipality in Ontario, and there are over 100 now that have a user-pay system in place, that have that user-pay on the recycling side. I am aware that the majority of those are related to the garbage side and that the garbage user pay is paying for the blue box program in those municipalities.
Mr Lalonde: Well, at the present time it's under study.
Mr Tony Martin (Sault Ste Marie): In the same vein, if municipalities are already experiencing difficulty in funding the blue box program, and I would suggest that most municipalities gave it their best shot, and we now have the government not participating any more in the funding of those programs, how realistic is it to expect that this program will continue and achieve some of the targets that we've all set and hope to achieve through this method of waste reduction and cost reduction at landfills?
Mr Fleming: I'd like to say first to the member that I think the sustainability of the blue box program is extremely important to all of us who have any involvement in it. It has become virtually an icon for people's attention to environmental issues. It's going to be important for us to maintain that program because of the profile the blue box has. Our challenge is to try to find means of sustainable funding for the blue box, wherever that might come from. The RCO recommendations have offered us a number of options to consider.
The second challenge is to try to push harder on the efficiency of the overall blue box system. The blue box obviously is only the most visible part of the waste diversion system to the homeowner. There is a very large infrastructure that lies behind that for taking the materials, processing them, sorting them and finding markets for them. I think there's general consensus among all stakeholders that there are still significant efficiencies that can be found in the overall system.
So we have a dual challenge of finding a sustainable financing approach and reducing the cost of the program. I think that's doable.
Mr Martin: That's a huge challenge. It's going to be a challenge for municipalities as well as the provincial government. I'm not sure how many municipalities are going to be able to rise to that, given the lack of different kinds of resources that many of them are experiencing at the moment as they try to take over some of what was previously looked after by another level of government.
Are there other alternatives if, for example, two or three or five years down the road we find that the blue box just isn't the most financially feasible way of going about this? For example, earlier this morning Mr Young mentioned, and others have too, the possibility of other types of recycling initiatives, refillable bottles. We had the example presented of Brewers Retail, that program and the fact that they capture over 90%. Have you done any studies to indicate how effective that approach might be, as opposed to continuing down this road with the blue box program, which up to now is continuing to present as rather challenging in terms of who pays for it?
Mr Fleming: Certainly there are a number of other options available for diversion of waste. I'll call on Mr West in a moment for any comments he might make. No one would argue with the success of the Brewers Retail deposit return system. What we have in Ontario is a quite successful blue box program that has very high public credibility. One of our concerns is the creation of duplicate systems for dealing with other parts of the waste stream and the costs that go with creating what would be, in the beginning at least, parallel systems. I might ask Mr West if he has anything further to add to that.
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Mr West: The only thing I would add to that, and I certainly agree with it, is that we have had two municipalities, Guelph and Northumberland, put in a wet-dry system that is somewhat different than the blue box program and is seeing some success. So that's anther option that municipalities are clearly looking at in terms of their future projections and getting to the waste diversion targets that they have set for themselves as individual municipalities.
Mr Martin: If the goal is waste diversion and doing that in an intelligent and environmentally sensitive way, is there a point at which, for example, the blue box program just presents as unworkable given the new circumstance of who pays and the added cost? Is there a point at which you'd be willing to say, "This isn't working and hasn't worked"? I recognize that up to this point it is the icon and we're all into it. I put out my blue box every Monday morning. We participate in it in our community in a major way. But if that becomes financially unfeasible for communities under the new regime we have in place, is there something that indicates to you that maybe other approaches or a combination of approaches might be more financially feasible than the one we're doing now?
Mr West: I can only say that at this point in time the basket of goods in the blue box is comprehensive and covers a fair number of materials. At this point I think it's something we need to take a good, hard look at. As the RCO report has indicated, there are a number of options to look at, including refillables, including different payment programs in terms of how you fund the blue box.
At this point in time, I would say that we have a successful program and we need to make sure we build and enhance that program to the degree that we can. That is certainly something that is going on right now with the RCO report. The number of stakeholders that were involved in that was very comprehensive, and it was comprehensive across the province in terms of the meetings they held. They presented some very good options.
But by and large, I think the consensus is that at this point in time the blue box is still a very workable system and we need to introduce efficiencies into that system. We will be working hard to do that, and we need to come up with a mechanism for funding to ensure its sustainability.
Mr Martin: The clean water and sewage piece: I understand the push to make sure that all the projects considered all the different ways they could deal with their challenges besides new capital expenditures. At the end of the day, though, basins are filling up with sewage because the system is not able to handle the load and sewage is going into rivers.
Again, communities just don't have the resources under the new load that they handle by way of cost of the things they are now expected to pay for. If they are not able to do all of the studies that are required, that are suggested, and that you say are now the order of the day, how do you get to, "Okay let's do this because it has to be done," if that's what's obviously required?
Mr Fleming: I think it might help you to know that over the past two or three months the ministry has allocated in excess of $120 million to over 50 different projects for water and sewer capital. What we are describing are the criteria that we are using for determining where funding goes. The objective behind that is to ensure that the funding goes to projects that are dealing with health or environmental risk areas. The additional criterion is to make sure the municipalities are finding the most cost-effective solutions. The bottom line is that the ministry has allocated over $120 million in the last two months for projects of the nature that the member describes.
Mr Martin: We're being told that there isn't any money left in that pot. The niggling feeling of some of us is that some of these new requirements are actually being put in place to make sure that projects don't get to the point where they get funded and done.
Mr Fleming: In addition to my first comment, I would say that the fund that was created by the government was a $200-million fund, and we still have something in the order of $80 million of funding left over the three-year lifetime of the program.
Mr Martin: So there's $80 million left in that fund?
Mr Fleming: Approximately that amount.
Mr Peter L. Preston (Brant-Haldimand): Tony's comment that the blue box system is the icon: You know that's not true any more; I know that's not true any more. We have systems that divert 80% of domestic waste now.
Your ministry spent substantial amounts on the Markham study that showed the wet-day system to be far superior. There's Guelph with its diversion rate right now of roughly 60%, Tillsonburg and Aylmer with a diversion rate of 80%. Yet we're saying 3% of the municipalities are breaking even. That means 97% of municipalities are losing money on a blue box system when they could be making money on a wet-dry system. That means the blue box is not the icon. It was an excellent idea, but so was the Model A. Its time has passed.
Why are we not endorsing the blue bag system and working with something that's 100% environmentally friendly or, if you want to argue with that, let's say 99% or 98% environmentally friendly, and 80% diversion is achieved?
Mr West: Guelph, to my mind, is a success story; that's correct. In fact, we have moved in our regulatory review exercise as a ministry to recognize the two-stream process, as it is commonly referred to, as a legitimate recycling operation. If there are other municipalities that are going to go in that fashion, the ministry will be supportive of that and is changing the regulations to allow that to occur on an ongoing basis. That's a very viable option. It is at the start very capital-intensive in terms of putting the facility together, and the municipalities have to judge that versus the cost of running a blue box program.
There are a lot of municipalities that are assessing that system. Whether it's going to be the most cost-effective system, we only have two, and we only really have one -- that's the Guelph system -- that's working to any great degree at this point in time in terms of both the wet and the dry side. So the ministry is very much responding to that in terms of recognizing those facilities.
Mr Preston: Sir, Tillsonburg and Aylmer are working at almost double the diversion rate of Guelph. Guelph cost $38 million. I think your ministry came in for $18 million of that.
Mr West: That's correct.
Mr Preston: Aylmer cost $5.2 million. The people who operate Aylmer will put one of their things on a municipal site now for nothing. Tell me where the expense is incurred: 80% diversion, make money on the stuff you divert, and it costs you nothing. I would like to know where this great expense comes from.
Mr West: I was just referring to the Guelph system, that it was capital-intensive to start off with.
Mr Preston: There's no question about that clearly if it has to be completely redesigned to make it come up to the 80% that the smaller but more efficient facility is.
Mr West: I guess my comment would be the same. It is up to the municipality, and Aylmer is a good case in point. They have also designed a system that is just as effective and has some cost efficiencies in it as well. As a ministry, we are recognizing that, and if that works for that municipality, we're not going to prevent them from doing that.
Mr Preston: The question is, in the report you're continuing to say, "We will help the municipalities with the blue box system," and there is no mention of the wet-dry system in the report at all, when it's much more efficient and about double the participation by householders, because there's no dirty old box to clean out. You put it in this bag or that bag, and it goes out on one truck. Everybody participates. Even if they cheat, they participate anyway, because when it gets to the line it gets taken out. Yet in here this is all directed at helping municipalities cope with the cost of the blue box system. I don't understand it. I may be a little rabid on the point, but I was taken to Aylmer and was shown this, and it blew my mind that this thing is sitting there so quietly and nobody knows anything about it, when it's the system for helping our environment.
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Mr Doug Galt (Northumberland): Could I get some clarification of the difference between what's going on in Aylmer and, say, Northumberland? Is it essentially just the dry side of the blue bag?
Mr West: Yes, Northumberland is just doing the dry side at this point in time.
Mr Galt: What's Aylmer doing?
Mr West: As I understand it, they have both components working, both the wet and the dry. I don't know all the specifics of Aylmer, frankly.
Mr Preston: Ask him; he'll tell you.
Mr Galt: I was just trying to get a comparison.
Mr Morley Kells (Etobicoke-Lakeshore): If I may, I'd like to get back to the auditor's report and the reasons you're appearing before us. It seems to me that the ministry is probably a victim of over-ambitious wording when we started out with the whole blue box program. I don't think there's any doubt that the blue box program is sustainable, but I don't think it will ever be self-sustainable, so if we can start getting the language put together properly then you're not going to have the auditor coming down on you.
It would seem to me, if I understand correctly -- I don't know where the question is here, but I have some ramblings because I've just listened to you.
I think we have to accept the fact that the blue box is here to stay. It's an environmentally sensitive, acceptable process. I think we just have to eventually get our municipalities to try to bring the cost down on the other end, once we get the collection, and what they do with it. But the public itself will accept or has already accepted that a cost goes with this. We have to by and large say to the public: "There is a cost to this. It's maybe not the perfect system, and maybe we're not getting as much out of it from the other end as we should, but it's still the way to handle garbage."
My sort of redundant question to you is, do you not agree that we have to get the language straightened out so that the municipalities aren't expected to try to make this thing balance? It's not going to ever balance.
Mr Fleming: The member makes a really good point around the whole question of sustainability versus self-sustaining. It calls to mind the whole notion of product stewardship and all the various industries and producers who package goods that end up -- the packaging, that is -- in the blue box, and what's the role of municipal government and what's the role of the various consumer industries that package products in looking at financing systems. Those are certainly all addressed in the options that the RCO has put before us and that we're looking at.
As it stands right now, the revenues from materials recovered from the blue box system certainly don't pay the full cost of the program. I agree.
The Chair: One quick question, Mr Preston.
Mr Preston: We have a problem with returnable liquor bottles, we have a problem with plastic pop bottles, all of which we're looking at the consumer to pay a little extra and take them back. The blue bag system, the wet-dry, takes care of that problem. You don't have to look for further legislation, you don't have to look at consumers paying more money for their product, because the system takes care of it.
I made the statement this morning that any time there's a problem with waste disposal, I've got the answer. It's the same answer every time: the wet-dry system. It cures virtually every waste disposal problem we have today. You've got hazardous waste, but other than that, household waste, no problem.
The Chair: Any comments?
Mr Fleming: I don't think I have anything to add, Mr Chairman.
The Chair: We'll have another round, Mr Kells. I'm sorry I cut you off. I would like to ask a question -- and I'll get back to you, Mr Kells, I promise.
I need your assistance. In the 1997 auditor's report, you mention that the municipal assistance plan, MAP, now that you've extended -- $300 million in funding had been distributed to municipalities. What is the difference between this program and the provincial water protection fund of 1997, where there's $200 million? What is the difference between these two programs? Are they the same announcement or what?
Mr Fleming: I'll ask Mr Griffith to respond.
Mr Carl Griffith: The difference is that for the new provincial water protection fund, the criteria have changed, with a greater emphasis on environmental protection and health, looking at encouraging municipalities to find more cost-effective ways of addressing the environmental problems or the health problems. The MAP program was different in terms of its funding mechanisms. We think we've made considerable improvements to stretch the dollars as far as we can to address health problems and environmental problems. It is a totally different program. It is a brand-new program.
The Chair: So the $200 million that you're referring to are new dollars?
Mr Griffith: That's correct, sir.
The Chair: We're talking about a half a million dollars between the two programs: MAP and this new announcement of August 1997, the provincial water protection fund?
Mr Griffith: I don't have the total figures with me of the expenditures associated with the MAP program but that program has been discontinued and the moneys that continually flow are simply carry-overs from projects that started perhaps a couple of years ago. The provincial water protection fund was just recently announced and, as the deputy indicated earlier, we have just announced over $100 million of new projects related to the new program.
The Chair: What I'm trying to get at is that this new program, this new $200 million that you announced in August 1997, those are new dollars?
Mr Griffith: That's correct.
The Chair: And you can't tell me how many dollars were spent in 1997 under the MAP program?
Mr Griffith: There was originally $400 million allocated to the MAP program.
The Chair: I must have made a mistake here. Sorry, you're right and I'm wrong. Maybe I shouldn't be asking questions. After all, I'm the Chair.
Mr Lalonde: I had the same question.
The Chair: I'll pass on to M. Lalonde. One question from each caucus.
Mr Lalonde: It is on the water and sewage allocation project. I thought the ministry, when they said they want a municipality to be more cost-effective or to have more cost-effectiveness, would have come up with some criteria that they would have to meet. At the present time, I don't see any change from what was done in the past, less the percentage of grant or money that is made available from the government.
In my area alone -- I met the OCWA people way back in 1995. The proposal was there were nine different filtration plants to be built. We said we should have one to cut down the cost and to be more effective. The government hasn't done anything towards that. We allowed some projects to go ahead just lately but there's no restriction.
I remember when former minister Grier said the 3Rs. We Canadians and Ontarians are the biggest water consumers in the world. We are still going ahead with grants for water filtration plants, but we don't have any restrictions. When I say restrictions, we should force every municipality to have a water metre.
I'm just going to give you a good example. When I was the mayor of the town of Rockland way back in 1977, 2,600 people were reaching the amount of one million gallons a day at that time. In 1991, the population was a little over 8,000 and rarely do we reach one million gallons a day because we put in a water metre. I was against it at the time. But now that we know there is a problem, especially in the area where the water aquifer is a problem, we're not asking the municipality to put in the metres.
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You just approved a water filtration plant in one of the municipalities which is going to be on the aquifer. It will affect the municipality of Cumberland, which is in deep danger from a system that was just installed a couple of years ago. You people didn't come down with restrictions when you awarded the grant, and the centralization or the regional water filtration plant -- you completely forgot to look at this possibility. There would be a great savings to the province, great savings to all the taxpayers, locally and province-wide, but you people haven't done anything about it.
Are you planning in the future, since you only have $70 million left in that special grant that you have for environment, to have some restriction on the others?
Mr Griffith: The program does. I will emphasize, we strongly encourage, when we are working with the municipalities and their applications for grant money, that they investigate systems optimization, economic efficiencies, joint area schemes, the whole menu of opportunities that will be cost-effective in terms of addressing their needs and addressing any problems.
Mr Martin: Under environmental assessment and Bill 76, have you had time to assess the initial impact of Bill 76 on the assessment process?
Mr Fleming: I think I'd have to say we're still into the early days, but the indications are that the length of time for our processing is significantly reduced. The provisions under the new legislation provide for what's called scoping, which is to try and narrow and define through the whole environmental assessment process what the real issues are.
We do that in two stages. First of all, we require the proponent for a project to put forward terms of reference for the project so we get a clear idea at the beginning as to what the issues are. Then there is provision now in the legislation for the minister, when he sends an application to a hearing, to actually scope -- again using the word "scope" -- the hearing, to say, "These are the issues that are in contention and those are the issues that are to be determined by the hearing board," rather than throwing the whole matter with issues that don't appear to be in contention before the board and taking a great deal more time to deal with.
Mr Kells: Mr Deputy, I don't expect you to announce policy here but I'm wondering if you could possibly comment on when, to help satisfy the auditor's concerns, you might be able to come to grips with the soft drink industry and disappearing refillable bottles. We know that there are stakeholders, as they're referred to, who certainly have a financial stake in these decisions. If we're ever going to get to some kind of solution, they have to be partners in the game. I'm just wondering where we stand from the timetable point of view.
Mr Fleming: The member is quite correct; it's not my place to announce policy. What I'm happy to say to the members of the committee, in the best of bureaucratese, is that this is an extremely active file. We are aware of the current challenges facing the blue box. We are extremely aware of the concerns that have been expressed, shall we say, by some of the municipalities, including the one that we are now sitting in, as to the need for solutions here.
I mentioned earlier, and I will say again, we're assisted very much by the work that the recycling council has done for us in identifying options, and they're actively being reviewed.
Mr Kells: Percentage-wise right now, between bottles and cans, what is the percentage? Do you have any --
Mr West: Bottles and cans?
Mr Kells: Yes.
Mr West: The refillable system at this point in time is just over 1%, maybe 1.7%.
Mr Kells: So regardless of the combination of bottles or cans, some 98% of it --
Mr West: -- is either cans or plastic; the PET bottles.
Mr Kells: I've lost track of the representation, but are you dealing with what to do in the refillable area or the lack-of-refillable area? Are you dealing with the can people and the bottle people at the same time or do we have two different groups there, as there used to be?
Mr West: If I understand your question correctly --
Mr Kells: Give me the answer and I'll tell you whether the answer is correct.
Mr West: The soft drink industry is a stakeholder whose position, to the ministry, is always very clear. We do deal with them on a regular basis in terms of making sure that we understand what their position is. They are very much a stakeholder that we address and deal with on an ongoing basis around this issue.
Mr Kells: I was trying to get a newer grip or an up-to-date grip on the economic arguments between the can people and the glass people. I think, if you answered it the way I understood it, they are separate interest groups at this time. When you come to grips with whatever is going to be the ultimate policy, you're going to have to deal with those groups, are you not?
Mr West: That's correct.
Mr Fleming: I think it's the same as in any issue. Where there are complexities to an issue, there are some parts of some issues where people hold the same views against a common competitor and then there are other subsets within stakeholders where the views part company a little. I'd just like to say that we certainly have no shortage of stakeholder input on this issue.
The Chair: The floor is open for very short questions.
Mr Lalonde: Just a quickie. I see that in eight other provinces we have some form of compensation if you return cans or other bottling material. Do we intend to try to get this going? Being right at the Quebec border, we see those people from Quebec coming in and they pick up all the cans, to the point that one municipality had to put in a bylaw that anybody who was caught picking up cans or recycling material would be fined. But they have to move them to Quebec, especially the aluminum cans. Do we have the intention of coming up with a similar program?
Mr Fleming: There are a whole range of options and the kind of options the member describes are certainly identified in the list of options that we're now reviewing.
Mr Preston: I could get rid of a whole bag of plastic bottles and save water. If you just want to fill them with water and put them in the back of the old toilet, it's going to save a ton of water over the years.
The Chair: Very good. On that note, we'll flush on to something else. Thank you very much for appearing before us this morning.
Mr Fleming: Our pleasure, Mr Chairman. I hope we've been helpful.
The Chair: Can we take a break, please?
The committee recessed from 1129 to 1132.
TECHNOLOGICAL/MILLENIUM ISSUES
The Chair: Can we get on with our agenda? Our third item on the agenda this morning is an update by the Provincial Auditor on the millennium bug, or the bogue. In French it's "bogue." That's a new word to me. It sounds better when you say "bug." I'll ask the Provincial Auditor to update us on the latest on the millennium bug.
Mr Erik Peters: As you know, when we met in the subcommittee, there was some concern expressed by some members as to what we're doing about the millennium bug. At that time, the only thing I could tell you, because we were still in mid-audit, was that we were debating whether to have a special report or to include it in our annual report in the fall. In the meantime, we have made the decision that it had to be a special report. There was some concern expressed before we went to the tabling that in fact it was a special report because we were going to be very hard on the government. That was neither the intention nor the purpose of going to a special report.
The reason we went to a special report -- the first time, actually, in the history of my office that we have a report other than the annual report -- was simply the time issue involved. If we had waited until November, we would have another five months to go before these issues were provided to the legislators to look at. Also, the report, quite frankly, has helped the Management Board Secretariat to deal with the issue, because the Management Board Secretariat is in charge, if you will, government-wide of ensuring that the issue is being dealt with, but the mechanisms that are in place to ensure that the ministries are actually doing things are less forceful. There are committees, and there is a steering committee and a deputy minister structure, so it is all in that area, but what happens in individual ministries is quite -- I don't want to say really all over the map, but it is quite different. As you can tell from the statistics in our report, some systems, our mission-critical systems, are certainly on target, but there are others that need acceleration and there are others that need really significant acceleration. In all cases that is really a measure of the initiatives we're taking within ministries to take action.
So it was also in the interest of Management Board that we go forward with the report right now, to bring it to attention and put some oomph, if you will, behind the issue.
Mr Preston: The oomph and the bogue.
Mr Peters: The oomph and the bogue.
That's why we did what we have done. Essentially there are seven recommendations in the report itself. They deal with various issues that I want to briefly outline, if I can find my little crib sheet which summarizes it very neatly. I have it here. The issues dealt with in the seven recommendations were essentially as follows:
In the first recommendation we talk about acceleration of the process, addressing it and having a realistic contingency plan just in case we don't get there.
The second recommendation deals with focusing resources. As you can appreciate -- even the ministry that was before us this morning -- there are all sorts of priorities before them as to what to do on program issues, policy issues and new legislation that is going on, and because of the critical nature of this issue, we are really exhorting the ministries to give it a proper ranking in those priorities, particularly with regard to information technology staff, who are scarce, expensive and need therefore to be deployed in a very focused way, whether in implementing legislation or dealing with the millennium bug. There are some tradeoffs and decisions to be made at the ministry level, and we are encouraging them to give the millennium bug the priority it really should have at this particularly late stage, as we are 18 months away from that date.
The third area is to plan in sufficient detail. One of the problems we have identified, from private sector experience -- we have gone out to private sector organizations and other government -- is that as much as 20% of the problems are identified only at the testing stage, which is much later in the game. Then you have very little time to cope with these problems. So we are encouraging good planning to identify many of the problems up front so that they are dealt with in good time rather than waiting until the last and potentially having a problem with systems failure.
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The fourth recommendation, and a very important one, is to start, as soon as possible, phase 2 of dealing with the millennium bug problem, and that is to plan for two very specific and important areas. One is the so-called less critical systems such as telecommunication systems, other support systems, PCs, things that are around in that regard. The other is to have very active communication with suppliers or other parties with whom the government deals on an electronic basis where it's changing data that goes in. For example, one that comes to mind is that corporations in Ontario can file their tax information in the corporations tax system. We would have a problem as the tax collector if their systems crash all of a sudden and we have to go, obviously, to a manual way, or find another way of dealing with that particular issue.
The fifth recommendation was to ensure that critical staff resources are actually in place because the millennium bug is pretty well pervasive. The private sector is coping with it; other governments are coping with it; the Americans and other countries are coping with it; the Europeans are making a great call on resources because they, combined with the millennium bug, are also trying to solve the problem of changing their currency to the euro, where they also have a deadline, which is a big information technology problem.
Information technology resources are much in demand and can pretty well dictate virtually their own price at which they want to be paid. The government, of course, has far less flexibility of dealing with these issues than the private sector, because they can pay bonuses, premiums and all sorts of other things which are not provided for in either our collective agreement or in the way we have structured remuneration in the government sector.
We have made recommendations to take steps. One way, of course, they're overcoming it is by engaging outside consultants to a great extent and to deal with that on the value-for-money basis. We haven't given up on the value-for-money concept, although this is an urgent matter.
The sixth recommendation is to establish an independent quality assurance program so that the ministry knows whether they are getting quality and can gauge the quality with which the problem is being addressed by either their own staff or the outside consultants who are getting in.
The seventh, very short, is to now get into the phase where a very good testing plan is developed. The government is setting aside a dedicated computer facility only for testing. That has to be scheduled, who can do what, when, because although the number is low, or looks low, of 63 critical systems, each one of those systems is really a whole suite of systems that interact with one another. The 63 are, if you will, sort of the tip of the iceberg; that is, the suite of systems directly affects Ontarians in the way we deliver service, it directly affects the way we collect revenue and it directly impacts on critical payments that the government has to make.
When I say directly influences, it can affect health services, public safety, environmental protection, very important areas where we can't really have a failure without people being affected by it. That is, I hope, a short enough summary.
The Chair: Any short questions?
Mr Galt: Yes. I fluctuate from, "Good grief, this can't be much of a problem; we're just talking about a couple of zeros and a two," to "I don't know if I want to get on an airplane on January 1, 2000."
How big a problem is this? I just can't get my arms around a gut feeling about it. Is it a tempest in a teapot? I guess you're telling me it's pretty serious.
Mr Peters: The answer is really it can be both. That's why we're saying carry out an analysis up front. You can have a system where it really doesn't make a hill of beans of difference whether you have the right date in the machine or not, and yet there are other systems that may be very -- for example, I met last night with some people from the technology area. They are saying you may have such a thing, for example, where there's a little clock inside the computer and it says, "This particular program needs servicing every 30 days." so the year 2000 rolls around and all of a sudden the computer says, "I'd better shut down because I'd need service for 100 years." All of a sudden, out of the blue, for no apparent reason, the whole system just shuts down and it's just a little thing like that. So it requires careful analysis.
One other technical problem is that it requires almost line-by-line reading of certain programs. Many of these programs were written in languages that are no longer in use. The people who can deal with those languages all of a sudden have to come out of retirement and literally say, "How do I deal with COBOL or Fortran?" or some of the old computer languages. It really is all over the map.
There are certainly a number of pieces of equipment where you don't have a problem. It's as little as this: If you have Windows 95 on your computer right now, in your PC, you have a problem. If you have updated it to Windows 97, you don't have a problem.
Mr Galt: So somewhere around 1995, 1996, software companies started to acknowledge that the year 2000 was coming?
Mr Peters: That's right. When you have software, you really should very often look for a little note on the package that says, "This is year 2000 compliant," and then you'll be okay, but you may have bought it as late as 1995 and not even worried about it and therefore have that problem.
The Chair: Can I ask a question? What about the additional responsibilities to our municipalities? Right now the provincial government is, if I can use the word, downloading some of their responsibilities.
Mr Preston: They've transferred responsibility.
The Chair: Transfers, then. What about these municipalities? We're talking about our provincial setup, but what about these 600 municipalities that will have to deliver new programs? Do we know if they're up to date?
Mr Peters: If I can help out to the extent that we can, this phase 2, where we're talking about the less critical systems and others, also draws in what is called the BPS, the broader public sector. They were starting to look at that, as to how the government programs themselves interface with municipalities and other organizations.
As far as crown corporations are concerned, as you know my office audited 70 of them. Some were fairly large, like the liquor control board, the lottery corporation etc. What we did from my office a few months ago -- I forget exactly when; about April or so -- was we sent out to the chair of the board of directors of each of them what we call an awareness questionnaire. We have developed a questionnaire in which the board and CEO can indicate how the organization is dealing with the problem. We are assessing that in every audit as to where they stand. In fact, currently we are under negotiation in one organization where the board felt it was dealing with it in a reasonably timely manner, and when we did the examination we found it was not so. So we are dealing with the board directly on that and going in and making sure they are addressing the issue.
If I may add a very quick footnote on that, and it strays a little bit from your question, our questionnaire piqued the interest of the Europeans. The questionnaire that was developed by my office has been provided to the Fédération des Experts Comptables Européens, which is the new roof organization for accountants in Europe under the unification, to be used to create awareness in dealing with Europe's problems, because the problems are so parallel.
The Chair: One short question, because we still have an item on the agenda to deal with.
Mr Lalonde: Do you know, Mr Peters, if there will be some financial assistance programs for municipalities to cope with this change? I have received letters from municipalities asking if the government is going to have any programs to assist them in buying the new software.
Mr Peters: I don't know the answer to that question.
The Chair: If I may, I was told yesterday it's going to be part of the transition dollars. This is what the minister told me yesterday, that it would be part of the transition dollars. That's all.
Mr Lalonde: So those could be additional transition dollars.
The Chair: I really don't know.
Thank you for your report.
Can we deal with item 4?
Mr Preston: Mr Chairman, I believe item 4 is a matter to be dealt with by the House leaders. I don't think it's our purview to deal with that.
Mr Galt: Absolutely.
The Chair: We're being polite. We're asking.
Mr Preston: You can leave it to the House leaders as far as I'm concerned. Let them make the decision.
The Chair: If I'm not mistaken, and maybe the clerk can assist me on this, I was told the first two weeks in August and two weeks in September. Am I right?
Clerk Pro Tem (Mr Todd Decker): For committee activity? It's my understanding that there will be very little committee activity in July and that it will take place in August and September. What the House leaders and whips are asking for is an indication from all of the committees whether or not the committees want to have meeting time given to them in the summer.
Mr Preston: No.
Clerk pro tem: For this committee to be authorized to meet in the summer, we would have to ask for the meeting time and get on the schedule.
Mr Preston: No.
The Chair: Well, maybe I should take a vote on it. The answer is you're not interested in meeting all summer.
Interjections.
The Chair: I guess we'll leave it up to the House leaders to decide, as you've mentioned, Mr Preston.
Mr Preston: Move to adjourn.
The Chair: This meeting is adjourned
The committee adjourned at 1153