SPECIAL REPORT, PROVINCIAL AUDITOR MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS

CONTENTS

Monday 26 February 2001

Special report, Provincial Auditor: Section 3.03, project to automate the land registration system (Polaris)

Hon Norman W. Sterling, Minister of Consumer and Business Services
Ms Sandra Lang, Deputy Minister of Consumer and Business Services
Mr David Roote, assistant deputy minister, registration division,
Ministry of Consumer and Business Services,
Ms Jennifer Smout, assistant city solicitor, city of London
Ms Sue Corke, assistant deputy minister, policy and consumer protection services
Ministry of Consumer and Business Services

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair / Président
Mr John Gerretsen (Kingston and the Islands / Kingston et les îles L)

Vice-Chair / Vice-Président
Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)

Mr John C. Cleary (Stormont-Dundas-Charlottenburgh L)
Mr John Gerretsen (Kingston and the Islands / Kingston et les îles L)
Mr John Hastings (Etobicoke North / -Nord PC)
Ms Shelley Martel (Nickel Belt ND)
Mr Bart Maves (Niagara Falls PC)
Mrs Julia Munro (York North / -Nord PC)
Ms Marilyn Mushinski (Scarborough Centre / -Centre PC)
Mr Richard Patten (Ottawa Centre / -Centre L)

Substitutions / Membres remplaçants
Mr Bert Johnson (Perth-Middlesex PC)
Mr George Smitherman (Toronto Centre-Rosedale / Toronto-Centre-Rosedale L)
Mr Joseph Spina (Brampton Centre / -Centre PC)

Also taking part / Autres participants et participantes
Mr Erik Peters, Provincial Auditor
Mr Andrew Cheung, director, justice and regulatory audit portfolio,
Office of the Provincial Auditor

Clerk / Greffière
Ms Tonia Grannum

Staff / Personnel
Mr Ray McLellan, research officer,
Research and Information Services

The committee met at 1033 in room 151.

SPECIAL REPORT, PROVINCIAL AUDITOR MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS

Consideration of section 3.03, project to automate the land registration system (Polaris).

The Chair (Mr John Gerretsen): I'd like to call this committee meeting to order. Welcome, everybody. Today we're dealing with section 3.03 of the 2000 special report of the Provincial Auditor, the project to automate the land registration system, Polaris. We'll start off with a statement by the minister. Welcome, Minister. That's twice in two days that you're here.

Hon Norman W. Sterling (Minister of Consumer and Business Services, Minister of Correctional Services): I hope they don't give me another ministry.

Mr Chairman, thank you very much for the opportunity to say a few words. I have some prepared remarks, but before I go into those I should say that perhaps a sketch background of the registry system as I saw it prior to the automation or the digitalization of the land registry system would be helpful.

Back in the old days, when I practised law, before becoming a member of the provincial Parliament, there were basically three types of land registry systems in the province. In fact, they still remain but are much more compact at the present time due to the whole Polaris project.

The first and the oldest type of system that we had in Ontario was the land registry system, which essentially was a system inherited in its form, its rules and its law from Britain. That system was developed over an 800-year period, so when we started to set up our land registry offices we adopted a lot of the rules, the rights of easements, the rights of licences, the rights of fee simple, the rights of fee in tail, all those kinds of names that were common in the land registry system from Britain.

The land registry system was basically a system of registration which allowed a great deal of flexibility with what you could do with land. That was sort of the beauty of the system, that you could use land and grant rights and partial rights, leasehold rights, easement rights, in a whole number of ways that therefore allowed a great deal of flexibility for the landowner to share his or her property rights with others.

In probably the 1960s or 1950s, we started to develop some land systems which gave greater surety of title to a person who was buying the land, because the government at that point in time started to see that the old system of land registry often required a lawyer or a title searcher to go back and check the history of the title for a very long period, where records were not that good, where there weren't a lot of land surveys surrounding what was described in the instruments. There was a decision to create essentially two other types of systems, called the certification of title system and the land title system.

The certification of title system was a system whereby if a person was uncertain of the title because of the registry documents that went back 40 or 50 years, there was a process by which you could go and essentially, at a time frozen, get a certification of the title as of 1960, as of 1972 or as of whatever time the application was made, that the title was good and the crown was saying the title was good at that time, subject perhaps to a certain number of conditions.

Then the land title system was developed. The land title system was a system of titles whereby not only would you freeze the guarantee of the title at a specific time, but you would continually guarantee that title into the future. The land title system I think is one which we should aspire to for every title, every piece of land in the province of Ontario, because what it does is limit or lower the cost to the consumer in terms of acquiring that property. If fact there is a guarantee that is kept up to date, so to speak, from year to year. Then when the next purchaser comes along for that property or the next mortgage goes on that property, you don't have to go back and there is certainty of what your rights are in that particular property.

What happened in around 1986 or 1987 was that the government of the day decided that it would try to take another step in the long history that I've outlined, and that would be to give even greater certainty of title and greater accessibility in terms of records. To try to move where we were going in the future, they started a project totally within government called Polaris. This was contained in the Ministry of Consumer and Commercial Relations, through which the land registry offices have always reported.

That project started, I believe, in and around Kitchener; it was in southwestern Ontario, as I understood it, at the time. They started to digitalize and tried to develop a system of putting paper onto a computer. As I understand it, they started to run into problems about two or three years later, deciding that the government itself couldn't put this project together. It was becoming evident that it was quite awesome. I think the number of properties at that point that were under the three registry systems that I outlined was something like 3.6 million or 3.7 million across all of Ontario. It was becoming more and more evident to the government of the day that they couldn't do it.

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In 1988-89, the government put out an RFP, or an RFQ-I'm not exactly sure how they went about it-to try to join in partnership with the private sector to carry this project of digitalizing all of the land registry records across Ontario and put that in a public-private partnership. I think actually the first partnership fell apart, but in 1991 a successful partnership did develop with a company called Teranet, which is still the company with which we are engaged in undertaking this project.

That company is owned 60% by the private sector and 40% by the government of Ontario. We still have 40% of the common shares. I believe we also have some preferred shares securing the investment we had already made as a government in the project. In other words, as I mentioned before, we started as a government alone trying to do this project and I think the government of the day spent around $30 million of government money in terms of the staff of the civil service that it had put in. The deal struck at the time was that we would put in $29 million, the private sector would put in $29 million and we would get credit for the $30 million which we had already sunk in, in the form of some kind of preferred shares, which I guess eventually will come out at the end of the project.

I have to tell you, though, that as we went through this process, having had the opportunity to do some work in this area, primarily in the 1970s when I practised law, I was somewhat skeptical that this project could be done, just because of the mammoth size of it. It was just huge. Having had the pleasure of going particularly into rural eastern Ontario and seeing the complexity of some of the titles, the uncertainty of some of those titles and the task that was there to try to clear up an individual title, I was somewhat skeptical that we would get to a final conclusion. But of course it wasn't within my realm of possibility to deal with that matter at that time, save and except as an opposition member of the Legislature, and the deal was struck with Teranet and it was set.

As you can imagine, when I outline the three kinds of titles that there are, the three kinds of registration systems that there are in Ontario-the land titles, the certification of titles and the registry office-the first two are much easier to deal with when you're trying to put them on a digital record and trying to confirm that this title is good, because in the first case-and the most important part of both certification of title and land titles is that you need a survey. If you have a survey on the ground which says in the description of the land that you are buying or selling or mortgaging, a particular parcel of land which is described in a survey which is in fact there on a piece of paper, then there is much less problem with conflicts surrounding that particular title. You have a picture of it, a land surveyor has gone out and put bars in the corners and therefore you know exactly what's happened. A lot of the problems with the registry system relate to sloppy descriptions, you know, "the east half of lot 7, concession 8," and in some cases the farmer who was adjacent to it put his fence over on the particular property and there were rights associated with possession and all those kinds of things.

At any rate, what happened over, as I understand it, the first four or five or six years of the project was that the digitalization-blame it on the computer-was primarily focused on those properties which were in land titles and in certification of titles. The real problem that Teranet ran into was when they started to get into the registry office titles. In eastern Ontario that is probably more prevalent, particularly outside the urbanized areas. It becomes more and more expensive to clean up these titles because you don't have the surveys, you have sloppy conveyancing that took place and those kinds of things. As we're getting closer to the end of the project in terms of putting all of these-now I think there are 4.2 million or 4.3 million titles, because the number of titles has gone from 3.6 million to 4.3 million-Teranet is facing more and more difficult problems in putting each new property on to the system because it's hazier as to exactly what the rights are and it's more difficult to clean up the old titles.

Presently we are in a situation where we have approximately 72% of all properties on the system. We still have some areas, I believe, in the north, like Sudbury, Thunder Bay and some of the northern communities, which basically have a land titles system, so that putting those particular projects on to the system will be still relatively easy. But to get the last 15% to 20% is going to be a difficult process. I think the bottom line is that we're going to have to sit down with Teranet and calculate out how this will eventually be done in a most efficient and economic way.

The bottom line of the whole thing, in my view, is that it was a mammoth project to start. It has required over the period of time for the government and the company Teranet to continue to negotiate, to continue to deal with changing technology, the changing nature of the project as you've gone from the easier properties to put on the system to the more difficult projects to put on the system. But as a result of what we have done, I believe that in the end we will provide, number one, a process which will be more economical to run and more economical for us to deliver in the future.

It does take less time for the people involved in the transactions to do their business and therefore should lead to consumer savings with regard to that. It will lead to greater certainty of title and therefore I believe that services like title insurance, often used in the United States, are virtually unnecessary for the average person in our province. You have the province standing behind the title, so why do you need somebody else ensuring that particular title? In fact, what has happened, if you compare costs of conveyancing in the province today, they are very similar to the costs for the services of a solicitor and for the services of a title searcher back in the 1970s. Those costs have not increased and that's partially due to the fact that we have continually improved our registration system.

I don't think you can look at this particular item and investment in this particular area as a public-only investment. I think you have to look at it from the point of view of the citizen and what is he or she getting in the end. I believe in the end they are getting better certainty of title and they are probably getting a much better cost in terms of the delivery of that service.

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We have in part of Ontario provided for electronic transfers at this present time, and hopefully that will spread to other parts of Ontario. That is a system where the client comes in, normally, to a lawyer's office and says, "I'm buying or selling a piece of property," and the lawyer can, without going to the registry office, search the title in his office. He can actually transact the business in his office via keyboard, through the use of identification numbers and can of course transact, in a lot of cases, the financial part of it as well. So it is moving from a very, very antiquated, old system into, really, the next generation, and we are leading many jurisdictions in the world in terms of what we are doing.

The company Teranet itself also has alternate businesses that it's been involved in, although the land registry system in Ontario and the digitalization of that system has been its principal business. They have done some business in the UK in terms of other kinds of software. They have software packages that they are selling, and it is our hope, as this project comes to an end, that that part of the company will be enhanced.

The Chair: Minister, we normally allow 20 minutes for opening statements.

Hon Mr Sterling: Have I gone on more than five?

The Chair: You've gone about 21½ minutes. But I'll let you finish up, and then there may be some questions.

Hon Mr Sterling: I know that you've all enjoyed it, though, very much.

The Chair: You've certainly given us a beautiful legal history of our landholding system in Ontario.

Hon Mr Sterling: I guess the net part of the whole thing is that to date this has cost the consumer-our net investment is about $115 million. We have saved about $75 million in government staff because government staff in registry offices have dropped from about 1,200 to under 500 as a result of how the business is done, and we are in fact ending up with a better system in the end.

We have not received dividends as shareholders of this company at this time in terms of cash. I believe we have received dividends in terms of those other things that I mentioned, in terms of lower-cost transactions for the average Ontarian. But we will continue to act diligently in representing Ontario's interests as a member of Teranet and also as the ultimate controller of the land registry system.

Teranet owns the system. The province will forever, as long as we are the government of course, own the data. Therefore we, in the end, control that. We control the registration fees, which are part of the investment strategy that is involved in this.

Thank you very much. I had a prepared speech which I didn't actually read, but hope that the people who wrote it are not too-

The Chair: I'm sure you can file it with us and we will read it for bedtime reading.

Hon Mr Sterling: I'm sure you will. Would anyone care to ask me a question about the beginning?

The Chair: As I mentioned before, last week when you appeared before our committee, it is rather unusual for a minister to appear before this committee, but we always welcome the opportunity. What I'm suggesting is that perhaps we'll allow 10 or 15 minutes for each caucus to ask questions, if I hear no objections, because there may have been a number of issues based on that. So I'll start with the Liberal caucus.

Mr George Smitherman (Toronto Centre-Rosedale): I'd like to ask maybe just a couple of framing questions to try and determine better the extent to which-

Ms Marilyn Mushinski (Scarborough Centre): Do you want to frame the minister?

Mr Smitherman: Glad to see you're awake.

The way the relationship works talked about public-private sector partners, as we hear that language a lot. You mentioned the 60-40 split. I'm anxious to know the extent to which on a day-to-day basis the government of Ontario seeks to play its role in determining the way the business is run.

Hon Mr Sterling: We don't. We have equal representation on the board of directors, even though we are "minority shareholders." The relationship is purposely set so that the company has control, so the CEO or the president has control of the day-to-day business. Our relationship is involved in really dealing with the agreement that we have with Teranet the company and through the board of directors in terms of general guidance to the company in terms of some of the major decisions which would, of course, include their financing arrangements.

Mr Smitherman: Would you agree that that sets up a situation whereby some taxpayer dollars-or in this case, you used words like "investments," talking about the system itself-are offered a higher level of scrutiny and accountability through the Provincial Auditor, as one example, than investments-a word that you used-into these public-private sector partnerships?

I'll use as an example that this morning I awoke to your smiling face on television talking about absentee rates in the public sector. As a partner in a public-private sector partnership, does the province of Ontario have a greater responsibility to the taxpayers to play a role in making sure that companies are operated with every available energy put toward the protection and enhancement of the taxpayers' investment?

Hon Mr Sterling: I think the scrutiny has to be a little bit different in terms of what we do because we are not making the individual daily decisions and therefore we have to hold a board of directors in the company responsible as a whole in terms of the profit and loss, the living up to the contract which we have made them, whereas when we are responsible for the actual delivery of the service, then we have to be more intrusive in terms of our scrutiny.

Mr Smitherman: Would you see it as an unhealthy precedent to begin, through these public-private sector partnerships-which presumably are going to become more rather than less common-to give greater access to the Provincial Auditor, as an example, through the agreements that are signed? Obviously, Teranet was looking for business from the province of Ontario. I'm not saying you were there when the original deals were done, but I'm asking for your view. You've been a minister now for your second go-round. The Teranet file is not a new one to you. Probably you got back there for your first afternoon of briefings and were reminded that this stuff was still going on and you wrung your hands-

Hon Mr Sterling: No, I expected it, actually.

Mr Smitherman: Do you think this is something that we ought to be trying to enhance, to provide a higher level of accountability for the taxpayer in those investments in private-public sector partnerships, as an example, to give the Provincial Auditor enhanced access to those things to protect the taxpayers?

Hon Mr Sterling: I think what you have to do is seek the protection within the framework that you set up. The whole idea of a private-public partnership is to say that the private-public partnership is going to operate in a freer and a more competitive nature than you can as a public sector. The public sector is often inhibited in terms of how it operates because it's not operating with a bottom line, it's not normally operating in competition with other sectors, and therefore I think you have to take that into account in terms of what you're doing. Therefore, I don't think that the intrusive nature that we allow for our auditor to go into our ministries should be the same in public-private sector relationships. I believe it should be done through the contractual nature and the overall view of it from the point of view of what we, the taxpayers, are paying for it and what the government stands to win or lose out of it.

Mr Smitherman: Wouldn't you say that it's a dangerous precedent to establish a situation where the public domain is narrowed through public assets being transferred, in a sense, to the private domain, where there is a-I would say diminished; I think you would at least say different-level of accountability. Isn't the danger that you as a minister, with some responsibility presumably, if I'm to read my press clippings, to try and find ways to save costs within the ministry that you're responsible for, are taking a very different view toward that piece of business that used to be a core ministry business but is now in a public-private sector partnership and operating in a different way? Isn't there a danger that the taxpayer is better represented in the sense that you're working harder to look at the line-by-line activities in your ministry than those things which have been pushed into another domain and protected, I would say, from a better look-see from some of the tools that citizens have found important, like the Provincial Auditor?

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Hon Mr Sterling: I think it's a trade-off. I think what you do when you're deciding whether you're going to go and have a particular service provided by the private sector rather than the public sector is that you're going to gain more efficiencies because they are better able to control their expenditures, better able to make decisions on a day-to-day basis in terms of the running of a business rather than as a public sector, because of the pushes and the pulls that they have in the private sector, and therefore you say we can afford not to have day-to-day scrutiny in this particular matter and we can then describe that in a contract with the company, and if they step outside of that particular contract, then we can go back in or we can take remedial measures. That's, I think, how the original contract was set up back in 1988, 1989 or 1991, or whenever it was, with Teranet. I think there's a balance there in terms of what you do.

Mr Smitherman: In your time as a minister with responsibility for the Teranet file, if you will, have you ever been in a position to ask the senior staff there or the board or your government appointees on the board to take costs on, to sponsor events or activities? Have you ever as a minister used any influence to ask Teranet, the private company, to sponsor activities that were of particular interest or concern to you?

Hon Mr Sterling: I'm not sure I understand the question. I have met with the chair of Teranet, I've met with some of the members of the board, whom we appoint as the government of Ontario, to talk to them about their concerns with regard the company. This is going back to when I was the minister before, 1995 to 1996. I have not had the opportunity in the last two weeks to meet with anybody from the board. I don't know how many times I met with members of the board to talk about the direction that Teranet was taking, whether we should renegotiate, not negotiate, what the debt load was, all those kinds of things. Yes, I did as a minister do that.

Mr Smitherman: I'll just restate my question. What about instances where you might have asked them to look favourably upon something that had come across your desk or domain and that you weren't in a position to deal with? This is a private company. Obviously they've got the capacity to do some things the government can't do. Have you ever as a minister been in a position to ask them to support activities that you might have favoured but weren't in a position to do as a minister?

Hon Mr Sterling: I can't imagine how that would happen; they're in a very defined area of business. So no, I've never done that.

Mr Smitherman: No sponsorships, no support for hiring of employees, that sort of thing?

Hon Mr Sterling: No.

Mr Smitherman: No advocacy on that part?

I guess I have a different tack of question. One of the things I worry about-obviously all of us are struck every day by the rate of technological evolution that's going on. I think about 1991. It doesn't seem like that long ago-well, maybe it does to some-except when you place it in the context of technology; obviously there's been a pretty dramatic rate of that. Is there any danger that because we continue to miss deadlines-I think you made a pretty good defence of the challenge, especially with the last 28% that still need to be digitized, but is there a danger that because we miss deadlines and the total time that it's taken will be much greater than was originally predicted, the end product that the taxpayers, the citizens of Ontario, will have will be at risk of being not redundant but out of date technologically?

Hon Mr Sterling: There is always that danger in terms of what you do, but hopefully the data and the technology now permits you to transfer or use all the work you had before to move it on to the future.

We may decide, too, that we shouldn't try to do this last stage, this last 18%, within a specific time frame of three to four years. We may decide that it's more efficient and better for us as taxpayers and as a government to do that over 30 years in order to get that last 18% done. It may be much better to try to do that as the properties actually transact into the future and make a deal, or try to contract that on an individual case with all the lawyers across Ontario to get that finally done. So we're entering into a very different stage of time in terms of where we're going to go in the future, but there is that danger.

Probably the ministry will be able to answer you more specifically on it, but as I understand it, Teranet is building the system so that it could be transferred on to a succeeding system if that became the way in the future.

Mr Smitherman: I want to make sure I heard that right. Were you suggesting that it might take 30 years to complete those final tough ones and that that might be, from your standpoint, an appropriate circumstance?

Hon Mr Sterling: I think that should be part of the discussion, as to whether we should do that or not.

Mr Smitherman: How do we engage in that discussion?

Hon Mr Sterling: I will engage in that discussion with Teranet to find out what is in the best interests of the taxpayers in terms of finishing off this last 18%.

Mr Smitherman: I might say that for my two cents' worth-and I will phrase this in the form of a question-I would ask you to ask them this. My concern would be that you have a situation whereby you decide to slow down the rate rather than finish that final piece, and obviously people in some parts-you've mentioned lawyers as one example. I was waiting for a response from my honourable friend the Chair to talk about his knowledge of this situation. But it would seem to me there would be some regional inequity in a circumstance that saw those more difficult ones put off with that project not being completed. I think that's a danger, on a regional basis.

I would be even more concerned that further enhancements to keep up with technology that you mentioned are there as a platform to build upon, that it would be very difficult to justify those enhancements to the piece that has already been done in the absence of having completed the overall project. How would you respond to that?

Hon Mr Sterling: I think you have to look at where these properties, the 18%, are. They're probably properties which are often within families, that may be traded or sold or conveyed or mortgaged once every 30, 40, 50 years. Therefore, in terms of equity, you're talking about properties generally of maybe lower value where it just doesn't pay to have it all surveyed; the survey costs three times as much as the value of the property. You run into problems like that. Therefore, it's not a question of equity in terms of one system versus the other, or the cost of doing business from one to the other, but the fact that a lot of these properties that we're taking about are the properties that are relatively inactive in Ontario.

What is the best way to deal with them? Is it better to spend $100 million-I'm picking that totally out of the air-when you could have this done over a longer period of time for, in present-day dollars, $10 million, and you're not really hurting anybody in terms of how they transact business because the business is transacted so rarely in those areas? I think that has to be taken into account.

I would imagine that the technology will always accept a new piece of property because the number of pieces of property is going to grow every day anyway. Every time you put up a new condominium, if you have 100 apartments in it, there are 100 new properties that go on to the system, so it's always going to have to be open-ended.

Mr Smitherman: That's 5,000 new properties in my riding alone in the last year or two.

Hon Mr Sterling: Thanks to the growth we have in Ontario.

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Ms Shelley Martel (Nickel Belt): Thank you, Minister, for appearing before the committee today. I'd like to begin where the auditor left off in his audit, in terms of the future fallout, because the auditor made it clear that at the time the audit was complete the ministry could not give the auditor a good indication of where it was heading. Specifically, "The Ministry also advised us that it was in the process of assessing its options for automating the land registration system." So, by your comments here today, should the committee assume that the ministry has completed its assessment of options and you are clearly determining that you will continue with Teranet?

Hon Mr Sterling: I can't answer that. I do know that we hired a consultant to evaluate the situation before the auditor began his report. I don't believe we have that evaluation back yet.

Ms Martel: This is the second evaluation after the outside consultant who reported in 1999?

Hon Mr Sterling: I'm going to have to defer to my deputy on that. This is a point of history that I wasn't involved in.

Ms Sandra Lang: The review that the minister referred to is very much an ongoing initiative between ourselves and SuperBuild, which is a part of the government's examination of its ownership interest in the company. We have yet to complete that evaluation. We have explored a number of options, we have a number of options that we're looking at, but we haven't completed the analysis yet of those options to determine whether there is a specific course of action that we then want to sit down and negotiate with the company.

Ms Martel: Let me back up because your options, as I just heard you, all include Teranet. When I read the auditor's report, it seemed to me that there were options outside of continuing with Teranet. Is the review specifically on how to continue the relationship with Teranet but to improve it so that they continue to be the company providing this service?

Ms Lang: I certainly think that is a very real option. It's not necessarily the only option. I think we want to ensure that the investment we've made to date with the company is continued if in fact that is a viable option and one that's fiscally prudent.

Ms Martel: Can you describe to the committee what other options you're looking at that might be outside of Teranet? Is the ministry seriously considering resuming ownership of this project?

Ms Lang: I think it's fair to say we've looked at that, but as I indicated earlier, we haven't completed the analysis of that. There also is potentially the option of looking at a different company, should we want to pursue a different course of action with another company. But all of those are, at this point in time, just options that are needing to be done. As good public servants, you know it's our job to look at all the options available to us and provide the best advice we can using principles of good customer service and fiscal prudence.

Ms Martel: I appreciate that, Deputy. I guess what worries me is the uncertainty, because as I listened to the minister, I certainly got the impression we were continuing on with Teranet. I apologize if I was mistaken in that. What worries me is that the auditor completed his report in, what, April 2000? We are now in February 2001 and you still can't give us a clear picture of whom you're going to continue with and how this project is going to unfold, almost a year later. Doesn't that worry you?

Ms Lang: I think it's fair to indicate that we have been, in the course of that year, doing a significant amount of work exploring options. But we've also engaged, as I indicated earlier, with SuperBuild in a process to do the appropriate kind of due diligence. We've engaged financial firms, technology firms and legal firms to do the best analysis they can and give us the best advice on what our going-forward strategy ought to be.

Ms Martel: Can you tell us, Deputy or Minister, whoever wants to respond, does the ministry have concerns about Teranet's financial stability? I'd refer back to the bond issue in September 1999, which clearly involved Teranet using its proceeds (a) to pay loans and (b) to finance the future costs for this system. Now, those future costs were not identified by the auditor, so if you know what they are and can share them with the committee, that would be helpful. But are you in any way concerned about their financial viability as a company and whether or not it's going it make good business sense to continue with them as a partner?

Hon Mr Sterling: Of course we are. We always will be concerned about debt. We, the taxpayers, own 40% of this company and that's why we have people on the board of directors: to be concerned about that. I would point out that that bond issue is issued by the company. It's not a liability of the taxpayer as such, save and except that it's a liability of the company of which we have part ownership. It's quite important to understand the distinction. Therefore, it limits our liability in some ways in terms of the government of Ontario.

Ms Martel: Except it would become a liability to you if one of the options the ministry chose to continue this process was to terminate its relationship with Teranet, because Teranet put up as security its licence with the province, the agreements, all the computer software and the equipment. So the issue of where you're heading is particularly important, because if where you're heading includes terminating your contract with Teranet, there are some serious obligations that the province would have to assume.

Hon Mr Sterling: I don't want to hold that out as our number one choice by any stretch of the imagination. I think we've had a long relationship with Teranet over the last 10 or 11 years, and the likelihood is that that will carry on and we'll continue to work with them to try to make this system work and to get the project done to the best degree we possibly can. My guess would be that it would be more difficult to untangle than to try to make this thing work, and we are working as partners with them to try to make it work.

Ms Martel: Do you know what their future costs are with respect to implementing the automation? This goes back to their issuing the bonds to have enough money to cover that. Do you know what their costs are?

Ms Lang: I think the costs are going to be determined partially by how we decide to proceed in going forward. If we continue on the same path that we're going at the moment, I think the estimate from the company was somewhere in the order of $700 million. But we have not made any of those determinations in terms of accepting that as our going-forward strategy.

Ms Martel: Is SuperBuild looking at this $700-million estimate? Can you give the committee a clearer picture of why that appears to be so high now? What does it involve?

Ms Lang: SuperBuild is looking at that number. They're looking at a variety of components of the company and its estimation of the costs. I think the costs are probably related, as the minister alluded earlier, to the nature of the records that have yet to be automated and the amount of time associated with trying to convert and automate those records in a very timely way.

Ms Martel: Just out of curiosity, has SuperBuild also looked at-perhaps they're not the ones-has the ministry sought some legal advice with respect to what its obligations might be if the relationship with Teranet was severed? I'm not suggesting that's where you're going, but certainly as a result of the bondholder issue, did the ministry seek legal advice at that time to clearly understand what its obligations might be?

Ms Lang: Yes, we did. It's our belief that we do not have any liability that relates to the bond. We were quite clear in getting legal and financial advice, and we consulted the financing authority for the province as well.

Ms Martel: So despite what has happened and despite what was put on the table as an asset, there are no repercussions for the province?

Ms Lang: We still have ownership of the data, and we also have in one of our agreements the expectation that we will continue to see the operation of the land registry system should there be a break in the relationship with Teranet.

Ms Martel: The ministry does that, and that's clearly in the agreement?

Ms Lang: Definitely in the agreement.

Ms Martel: In terms of the decreasing revenues that are coming back to the province, is SuperBuild examining why that is happening? For example, we know that in 1994-95 the revenues were about $38 million, and that declined to about $13 million in 1999-2000. Is the ministry examining why those revenues continue to decline when it appears there would be more transactions going on than ever before?

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Ms Lang: I think I would interpret your question to refer to the royalties. Is that the number you are referring to, the royalties coming back to the province?

Ms Martel: I would assume so, but I don't think the word "royalties" was used.

Ms Lang: I think the numbers you referred to are clearly the numbers associated with the royalties.

Ms Martel: And the decline is associated with what? The committee would have to assume that an increasing number of transactions would be occurring, so our royalties should be increasing, not declining.

Ms Lang: That's right. I'm going to ask David Roote. He's the ADM responsible for this division, so he can respond to that question.

Hon Mr Sterling: Mr Chairman, while I've offered myself, perhaps members of your committee would rather ask questions of my officials.

The Chair: In all fairness, we allowed the official opposition 15 minutes to question you, and we'll allow Ms Martel and your own government members the same time. Whether they use it to question you or the ministry is entirely up to them.

Hon Mr Sterling: I was trying to get out of here, that's all.

Ms Martel: Any of these that you'd like to answer would be fine with me, Minister.

Mr David Roote: If I could, then, the original model that was established assumed that as properties got automated, the statutory fees related to the registrations on those properties would be transferred to the company as an ongoing funding mechanism to pay for the project. What the Provincial Auditor looked at, and our assumption, was that as those revenues began to increase to the company, we were also experiencing savings. As the minister mentioned, we have saved about $75 million in staff costs and we also no longer have the operation of the system, since it's operated through the company. So on a net basis, the province is better off and, as the minister mentioned, our net cost is about $114 million. So it was always assumed that as the properties became automated, the fee revenues would be transferred to the company to pay for the ongoing cost of the project.

Ms Martel: But the revenues are dropping.

Mr Roote: The retained revenues for the province, because as more properties get automated, those revenues go to the company. We retain the revenues associated with the properties that are not automated.

Ms Martel: But isn't the split 50-50?

Mr Roote: That's on the basis of the profits from the company, not the diversion of revenues from registrations.

Hon Mr Sterling: I think it varies in terms of searches. If it's automated, Teranet gets 95% and the province gets 5%. On registrations, I think it's 75% in royalties to Teranet and 25% to the province. You have to remember too that as what we get back is dropping, so are our costs. Yes, we're getting less in terms of the revenue pot, but we're being pulled upon less and less each day as more and more of these properties go on to the automated system. It will be a net wash in the end and hopefully net positive for us.

Ms Martel: That was going to be my next question. So far we've seen a decline over the period 1994-95 through to 2000. I don't know if you have any estimates of your revenues for 2000-01 or if it's too soon to give the committee an idea about it. Are we going to end up in a situation where there actually isn't a net benefit, that we're seeing a loss in the outgoing years as this project is completed?

Mr Roote: No. We will continue to retain the revenue from registrations against properties that are not automated. Since the automation project has carried on longer than was originally anticipated, the retained revenue for the province is also more prolonged. Also, as a result of the properties being automated and fees being transferred to the company, our royalty payments rise, because, as the minister mentioned, 25% of the registration fees come back to the province as royalties. So our royalty payments are rising as the properties get automated.

Ms Martel: Do you have a schedule you could provide to the committee that would show both of those streams? I must confess that not all of this is very clear to me.

Mr Roote: I'm sure we could provide that. As the deputy has mentioned as well, it will be affected on the basis of the go-forward model we develop, once we finalize what the public policy approach is going to be in the future.

Ms Martel: Could you give us-and maybe the deputy or the ministry could answer-some of the things you're looking at with respect to trying to improve the accountability you have with Teranet? I gather there has been no contract signed with respect to the latest deadline, which in our documents appears to be 2010. I don't know if the ministry thinks that will be the actual deadline or whether that is something SuperBuild is also looking at. Can you give us some idea of what you're looking at in terms of how to improve the relationship so that there is better accountability and we more clearly understand the costs that are coming at us and the schedule as it appears to be going away from us?

Mr Roote: If I might, Deputy, the deputy talks and meets regularly with the chair of the board. Prior to board meetings, the deputy and I also speak with our provincial appointees on the board. I also sit as a non-voting member on the board. That was one of the recommendations made out of the consultant's report so that we have a greater direct presence at the board meetings from a provincial standpoint. We do have good oversight as to what's happening with the company, and we will be talking about the various models and what the completion date will be or how we determine when the completion of the project will be. That's part of the options we're reviewing now.

Ms Martel: Are you in a position to share with the committee any of those at this time?

Mr Roote: I think the deputy has mentioned a couple and the minister mentioned a couple with regard to looking at conveying or doing transactions of the properties that are conveyed into the future. There are a variety of different things, but we're still in the early stages of doing the analysis, and now with SuperBuild involved as well they are looking at the financial and ownership interests. So those things all have to be put together; they have to be done as a package deal.

Ms Martel: Do you have any idea when the review will be complete?

Mr Roote: SuperBuild is hoping to have some results of their analysis available in the spring, and we hope to be able to have our information with regard to the public policy options completed around the same time.

Ms Martel: In the meantime, you have not extended formally by way of contract the completion date, so the completion date that is still in effect would be the one that was signed in January 1998 for 2004.

Mr Roote: That's correct.

The Chair: We'll have to leave it at that for now, Ms Martel. Mrs Munro.

Mrs Julia Munro (York North): I wanted to go back to the little history lesson that the minister provided us with in relation to the fact that when you talked about the historical role the province has provided in this area, it is clearly providing the kind of service primarily to the legal profession in terms of being able to execute the research that's necessary for those lands to change hands. I just wondered whether, through you or the deputy, we have any notion in terms of the way in which this current process is working and whether we can look at the kinds of things that are happening today as a result of those changes that have been introduced through Teranet.

Hon Mr Sterling: I have to say that of course whenever you go into these kinds of things you have resistance in terms of people who are involved in it, but those people who are involved in it love the system. We have a lawyer who would speak to it, if that's the desire of the committee, in terms of transacting property and those kinds of things.

I must say that when I looked at it, as I said before, having been involved under the old system, I was somewhat skeptical about some of the things and particularly concerned about the security of transactions and those kings of things. I became convinced after I listened to the debate that in fact the new system, the electronic system, is in a lot of ways more secure than the paper system, because there was forgery; there were methods of fraud under the old system. The system will work and it will work well, and the legal community will speak very highly of it. I think you should also know that it will lead to lower transaction costs for the consumer because the system is more efficient in terms of everybody's time and it is more certain in terms of the titles that are being transferred.

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I suspect we'll have a debate here in the Legislature maybe five, 10 or 15 years from now-I'm not sure when that debate will take place-that maybe we'll have conveyancers in this province instead of lawyers doing this kind of business. It would of course require them to be well trained. This has happened in England in terms of the conveyancing profession. Mind you, those conveyancers are trained just about as long as the lawyers are in terms of what they're doing, but I suspect that will happen. But right now, as I mentioned before, the cost per transaction is about the same now as it was in the 1970s in terms of the solicitor's fees. Other costs have gone up-the costs of surveying, the costs of real estate fees, because property is worth more and it's a percentage of, and those kinds of things-but if you look at the cost per transaction, it's stayed the same, and that's because of some of the automation that has gone on.

Mrs Munro: I just have one other question then that sort of relates to that, looking at this in terms of what role this automated land registration system is going to play in the bigger world of e-commerce. There were questions raised a few moments ago about how flexible this system that is being designed today is going to be for the future. Obviously it would seem to me that this is also part of what should be in the mandate, if you like, of the organization.

Hon Mr Sterling: That's a good point. The whole idea of setting up Teranet was not just to run the land registry system and automate it. The whole idea of setting up Teranet as a public-private company was that they would in fact become innovative, they would use this as a jumping-off point in terms of other services. They have, as I understand it, already been involved in some other kinds of services. I had examples of them. Maybe you can give me a hand on exactly what other kinds of businesses they've been involved in.

Mr Roote: They are developing an electronic portal for the legal community called BAR-eX. That's their brand name. It allows the legal community to do a lot of different things. Even getting into the ordering of legal supplies, they can have linkages now. As the minister said, they want to get more innovative, they want to expand in the market for lawyers so that they have not only the real estate business but they get into the other business that lawyers are engaged in, in order to expand their markets in those areas. They have done quite well in that regard.

Ms Lang: I would also refer to the fact that they are engaged in work with the Ministry of the Attorney General as well. They've automated the writ system. The writ system is one of their products. As the minister alluded to, they have also been engaged in some initiative with the government in the UK in looking at the extent to which their products might be useful to some of the initiatives the UK is currently considering as they relate to their land registry system.

I do know that they've also had some discussions with the provinces west of here. Saskatchewan, for example, has been talking with them about the product they have and whether there's some value there in terms of Saskatchewan taking a look at our process.

Ms Mushinski: I'd like to follow up on Mrs Munro's line of questions, because it seems to me, when I look at some of the handouts you provided to us this morning, that there's significant experience on behalf of Teranet if you look, for example, at the awards they've received etc. Can you advise us if a cost-benefit analysis was conducted prior to entering into this contract in 1991?

Ms Lang: Yes. There were actually quite a few cost-benefit analyses conducted. My understanding, based on the information that I've been given to date, is that in the late 1980s there were some cost-benefit analyses that were looked at as the government of the day was contemplating the automation and seeking out a private sector arrangement. There were also when the contract was signed.

Ms Mushinski: Could you say that again? That was in 1988?

Ms Lang: It was 1987 or 1988, the latter part of the 1980s.

Ms Mushinski: During the Peterson government.

Ms Lang: I know the ministry also conducted some examination of what it would cost for the government if we were to carry out the automation process utilizing continued investment in public servants and the technology of Polaris. At that time, I think the estimates were well in the order of somewhere over $600 million, with a timeline of about 15 years to complete the automation. It's also fair to say that at that time we weren't contemplating electronic registration. It was simply automation of the records and conversion to title.

In the early 1990s, when the contract was about to be signed, due diligence was taken at that time. I understand that consultants were brought in to take a look at the arrangement and the contracts, and the assessment was completed before the contract was signed in the early 1990s. So there has been a series of examinations, both from a cost-benefit perspective and also to ensure the contracts were tight and in the public interest.

Ms Mushinski: I'm trying to get a handle on this change from 3.4 million properties to 4.3 million, which I believe, Minister, you said represents about 17% that haven't been registered yet, or converted, I guess?

Hon Mr Sterling: Let me clarify that. As we were saying, each time a condominium is registered-let's say it would have 100 units in it-that increases the number of parcels there are in Ontario. Because we've had such significant growth in that kind of development over the last five or six years, it raises the total number of parcels of land-calling your space in the air a parcel-from, I think, 3.5 million to 4.3 million or whatever. So the number-

Ms Mushinski: So that's growth?

Hon Mr Sterling: Yes, that's growth. But of the 4.3 million in total, we still don't have 28% automated at this point in time. It's easy to automate the new ones that are coming on, but it's more difficult-

Ms Mushinski: I take it that the new ones-I'm looking at growth of close to 4,000 units coming on stream in my own area in the next little while, very close to the growth in Mr Smitherman's riding, thanks to our government, of course, but he never said that. I take it the growth is automatically registered under the new system.

Hon Mr Sterling: It depends where it's occurring, but generally speaking, yes. If it occurred in Sudbury, it wouldn't, because it hasn't happened in Sudbury at the present time.

Ms Mushinski: So does that 28%, which is what I'm trying to get a handle on, have to do with the complexity of the transaction, does it have to do with the location? Why has that 28% not yet been undertaken?

Hon Mr Sterling: The answer is partially both of those-the way you put the question. Part is the location. They have gone, in terms of automation, to one geographic area. I think they started in Kitchener and then went to London.

Interjection: Woodstock.

Hon Mr Sterling: Woodstock. They've sort of moved from registry area to registry area. If you were looking at it, there are probably 8% to 10% that are still somewhat easily done. Those would be in suburban areas like Thunder Bay and Sudbury, where they are under a land title system. Automating those records will be fairly easy. Once we get to 80% or 82% or 83%, the other 18% will be difficult to do because they are in the land registry. They are out in the rural communities, and the titles aren't quite as good in those areas.

Ms Mushinski: My last question has to do with other jurisdictions. Are there other jurisdictions within Canada that have automated their land registry process?

Mr Roote: Yes, there are. BC OnLine is one of them. But to compare Ontario with the other jurisdictions in Canada, Ontario certainly has the most properties and, as the minister has said, in some of the other jurisdictions, particularly in the west, all the properties were in land titles to begin with, so the conversion process wasn't necessary.

In the eastern provinces, New Brunswick and Nova Scotia are also going to convert their properties. They're in registry and will be converted following the Ontario lead, because they do see the benefits we are incurring in Ontario and are pursuing automation like us. We are certainly front-runners with regard to the ability to have electronic land registration. We're the only jurisdiction in Canada that has that, and it's a decided advantage for the consumer and for the legal community to be able to register electronically.

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Hon Mr Sterling: Chair, maybe we didn't explain that there are sort of two pieces to it. One piece is the land titles records that are automated. They are there. When you go to search the title, you can punch it up and can find it, or you can find it on your screen in your office. The other part is transacting the business, conveying the piece of land from A to B.

As we've pointed out, the project has changed. It was originally just an automated record that you could punch up and then search your title. Now it has become not only that but the ability to transact business on your computer.

The Chair: Just for clarification, you talked about the growth taking place in condominiums, but the same thing would apply to any new subdivision that is registered or any severance that takes place that creates more units.

Hon Mr Sterling: Absolutely. Yes, that's right.

Ms Mushinski: I understood that. Just one quick question: have you had an opportunity to view the Provincial Auditor's recommendations with respect to the ministry independently reviewing Teranet's procedures? These were all alluded to in the auditor's report on page 71, which are now sort of contained within recommendations that Teranet should reassess its estimation procedures for project costs and timetables, that you should independently review Teranet's procedures and cost estimates, and that Teranet's accountability processes be improved to ensure that relevant operational and financial matters be brought to the attention of key ministry officials on a timely basis.

I wondered if-

The Chair: Just to be clear on that, those recommendations were not contained in his report; they were a handout this morning.

Ms Mushinski: I realize that, but they were certainly alluded to in the auditor's report.

The Chair: They were alluded to, yes.

Mr Erik Peters: They are on page 71.

Ms Mushinski: I wonder if you had any comment.

Hon Mr Sterling: It's an ongoing process. We have to continue to be diligent in demanding of Teranet and the company what its estimates are, what its projected costs are, and are the dates realistic in terms of the job to be done? The ministry, as I understood it, prior to the report of the auditor last year, had already started and engaged in evaluating where we were and where we're going. We have to do that. I think it's absolutely essential with a project of this size that we continue to do that and continue to meet with our members on the board to ensure that our interests-the taxpayers' interests-are being properly represented.

Mr Bart Maves (Niagara Falls): Thank you, Minister, for appearing today. You've got a good grasp of this system and this process. You were probably a minister of the crown way back-half the time of the history you talked about in land registry.

Part of the history of this process itself-I may be wrong, but correct me if I am-is that all the cost-benefit analyses and the decision to go with a private-public sector partnership started in the 1980s with the Peterson government, and then in the early 1990s the NDP government agreed that was the right way to do this project. In 1991, did they have a full and open tender process in order to find Teranet as a company to go into this business with?

Mr Roote: At the time the election took place, there was another due diligence review. The deputy mentioned that there have been several of these done over time. So prior to the deal being agreed to or being completed, there was another due diligence review that was undertaken by the government of the day at that time, and the deal was then signed in 1991.

Mr Maves: Was there a tender process to pick Teranet?

Mr Roote: No, the process by which Teranet was formed started prior to that time. There were expressions of interest primarily from the surveying community. There was then a consortium arrangement developed which led to the formation of Teranet. So that was not reviewed. What was done was the due diligence review as the founding assumptions around this, and the government then signed the deal in 1991.

Mr Maves: When they signed the deal in 1991, the business arrangement that the minister talked about, with their revenue, the diversion of certain revenues, the royalty, the dividend streams and all that, that was set up in 1991 also?

Mr Roote: That's correct.

Mr Maves: Has that been adjusted at all since?

Mr Roote: No, we're still operating with the same basic agreement that was struck in 1991.

Mr Maves: In part of the auditor's report he talks, and we talked this morning, about this $44-million debt that the company has right now. Where has that debt accumulated from? What has caused that to accumulate?

Mr Roote: That's their overall financial statements if you looked at the company, their accumulated debt with regard to the carrying costs from the bond debenture and all other lines of business that they have investments in. So if you looked at the bottom-line position on a cumulative basis, there's a $44-million debt.

Mr Maves: By looking at that, is it possible to determine what parts of that pertain to our dealings with them and what might pertain to other dealings the company might have?

Mr Roote: I don't have those figures available, but we certainly will be looking at, from the standpoint of what makes good sense from the taxpayer's value, the Polaris project and its financial dynamics going into the future. I don't have a breakdown of those numbers.

Mr Maves: Both the deputy and the minister have said, and I quote the deputy, "Originally, we were not contemplating electronic registration when the process started." In 1991, there was this $275-million estimate to complete the process. Both timelines and costs have changed. How much of that change in the cost and timelines of the project was the result of the change of the scope of the project?

Mr Roote: First of all, the $275-million figure was not an all-in figure. When we look the documents that were signed when the deal was entered into in 1991, the total costs estimated at that time were just over $400 million. In today's dollars, that's about $500 million. The major cost considerations that have occurred since the deal was originally signed were the debt financing through the bond and renegotiation of the agreement with the company's subcontractor, which added some additional cost to the projected completion of the project. Those were the two major cost considerations.

Mr Maves: Can you explain why the company left its original subcontractor?

Mr Roote: At that point, the cost to retain the subcontractor was greater than the returns they were getting on the transfers of revenues from the province. So they were paying more than they were getting in return for the business they were conducting. So they've reduced their cost by terminating the contract with the supplier. Now they do it all in-house.

The Chair: Just one question for clarification, using the Chair's prerogative, just to get some clarification with respect to a statement that you made, Minister: you said that the ultimate aim is for the system to be less costly to the consumer. I wonder how that relates to the tremendous increase in the land transfer tax over the last 10 years. Also, you made a statement to the effect that in the long run it will not, in the new system, be necessary for people to get title insurance, and yet title insurance is something that's really only come into vogue in Ontario over the last 10 years. Would you just like to clarify those?

Hon Mr Sterling: Yes. Number one, land transfer tax has nothing to do with the registry system. It's a method of taxation that we pay, and those rates are determined the same way your rates of income tax would be struck, and all that money just goes to the Ministry of Finance. I believe there have been decreases since 1995 in land transfer tax, after substantial increases in land transfer tax prior to 1995, and I'd be pleased to provide those to you.

The other question was-

The Chair: Title insurance.

Hon Mr Sterling: Yes, title insurance. Title insurance is available very widely in some states in the United States, and there has been some talk of title insurance companies coming and doing business in Ontario. But when you have a land title property, when you look on the screen when it's automated, what you see is probably one or two or three documents: you would see the subdivision agreement, if you lived in a subdivision; you would see a mortgage on the property, which would be put there either by the builder or the predecessor you had; and you would see a deed on that particular title.

When the property is transferred to you, you essentially get a deed or a transfer-it used to be deeds; they're now transfers-that says, "You are the owner of this property, subject to this mortgage and subject to the subdivision agreement." That's your title. That's what a title insurance company would do for you in the state of Illinois: they would provide you with title insurance, for which you would pay, as I understand it, somewhere around $200 or $300. They have a private insurance company over here which does that. We don't have that need here in Ontario, nor do we have the need for the lawyer to go back 40 years and search the title, because all he has to do is look at the most recent instruments and say, "The title is good. The province stands behind it," which is actually, in some ways, a heck of a lot better than an insurance company, because the province is forever going to be here.

The Chair: I'm sure we'll have further discussion on that.

Thank you very much, Minister. It's five to 12. We can either adjourn now and come back at 1:30 or-was the ministry going to make a presentation as well or did the minister give the ministry's presentation?

Ms Lang: The minister did a fine job.

Hon Mr Sterling: She'll tell you something after lunch.

The Chair: Then I would suggest that we recess at this time and come back at 1:30.

The committee recessed from 1153 to 1334.

The Vice-Chair (Mr John C. Cleary): I call the afternoon session of public accounts to order. It's my understanding that we're going to carry on with the rotation this afternoon from where we left off, but the auditor has a statement he wants to make on some questions that were answered this morning.

Mr Peters: Thanks, Chair. Ms Martel raised a question about royalties and the net income going down. Over lunchtime we secured some numbers on this and I wonder, Mr Roote, if you would be in a position to verify the numbers we had for the revenue. As we said, for March 31, 1995, the net revenue to the ministry was $38 million; for March 31, 2000, it was $13 million. The royalty component of that in that period-maybe I should give you all the components, remembering that where fees are charged for records that are not transferred to Polaris, the ministry can retain 100%.

In 1995, $71 million was earned in revenues not on Polaris, and $2 million was earned in terms of royalties from Teranet by the ministry. We have to deduct from this the branch expenditures of $35 million, which gives you then $38 million for 1995.

The comparable numbers for March 31, 2000, were that $29 million was earned from records not on Polaris-in other words, that's 100% the ministry's-royalties were now $12 million, so they have increased as we assumed they would over this period of time, for a total of $41 million, less branch expenditures of $28 million, giving a net revenue of $13 million.

You may want to comment, but that's the best we could provide in terms of bringing the background to bear.

Mr Roote: If I might, just to repeat what I mentioned this morning, the intention of the project, the way it was intended to be funded, was that the fees would be transferred to Teranet at the time the property was automated and registrations were made against that property. It was assumed that as more properties got automated, there would be a larger revenue transfer to the company that continued to fund the project. So the fact that the retained fees of the ministry have declined is not inconsistent; it's quite consistent with the way the funding model worked for the project.

Mr Peters: I agree with that. That really means that the decline is there because, as more records are transferred to Polaris, the proportion of 100% revenue, in other words, pertaining to non-records, would decline and the royalties would go up.

Mr Roote: That's correct.

Mr Peters: That's the working relationship.

The Vice-Chair: Is everyone happy with that at the present time? If so, we'll move on to rotation now. It's the official opposition's turn.

Mr John Gerretsen (Kingston and the Islands): Just so I'm clear, all the fees at the registry offices, other than land transfer tax, are set by your ministry. Is that correct?

Ms Lang: All the statutory fees are set by us. Yes.

Mr Gerretsen: Those fees have increased substantially, let's say, in the last 10 years. A registration fee 10 years ago was about $20 and now it's $60 per document.

Mr Roote: I think the fees, when they were changed in 1993, at that time were $27.50 and they went to $50.

Mr Gerretsen: Right, in 1993, and they've just recently gone to $60, I believe, as of-

Mr Roote: December 5.

Mr Gerretsen: -December 5 of this past year. The search fees have gone up as well, from $5 to $8 just recently.

Mr Roote: That's correct.

Mr Gerretsen: Those are fees that have been totally initiated by your ministry.

Mr Roote: That's correct.

Mr Gerretsen: So when the minister said this morning that in effect the system is getting cheaper from a consumer's viewpoint, that's not quite correct. In actual fact, the fees have gone up quite drastically just within the last two to three months.

Ms Lang: That's accurate. The fees have gone up, but I think what the minister was alluding to was that the cost to the consumer should go down, particularly with automated properties, because we don't have to spend a fair amount of time and energy doing all the searches that were associated with the manual system. The consumer should be benefiting by not having to pay the legal community quite as much as they did and by not having to have as many folks trekking down to the registry office and charging to the consumer the costs associated with doing those kinds of transactions.

Mr Gerretsen: He also said, though-and I think I'm quoting him correctly-that in fact the legal fees that customarily have been charged for the lawyers' involvement in transactions are at about the mid-1970s level, that that really hasn't gone up all that dramatically. So I'm not quite sure how what you just said jibes with what he said this morning.

Ms Lang: I'd be quite happy to bring one of our witnesses up, Mr Gerretsen, if you think that would be useful. We do have a lawyer with us today who practises out there, and she might be quite happy to respond to your query.

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Mr Gerretsen: Maybe we can wait for that until a little later on.

Ms Lang: OK.

Mr Maves: While we're on the subject-

Mr Gerretsen: OK, let's hear from the lawyer.

Ms Lang: Maybe Jennifer Smout could come up. Jennifer is counsel for the city of London.

Mr Gerretsen: The question I have of you, Ms Smout, is, are the legal fees that lawyers are charging in real estate transactions-I'm talking about their fee component. The minister said this morning that they have remained relatively stable since the 1970s. A lot of the other costs relating to real estate transactions have gone up-I think he was talking about real estate commissions and things like that-but the legal fees that are charged on a standard transaction have remained relatively stable over the last 25 years. I believe that's what he said, and if he didn't say that, I'd like somebody to correct me. Do you agree with that statement?

Ms Jennifer Smout: I was here this morning, and I did hear the minister's statement. To the best of my recollection, the statement was that the fees have, for the most part, stayed the same since-I believe he said-the 1970s. What the minister did say, though-and I did hear quite clearly-is that the other costs associated with real estate transactions have in fact increased. That's what we in my profession would call the out-of-pocket or disbursement costs. It's well known across the province that fee searches-charges by conveyancers and title searchers-and also registry fees are all tacked on to a bill in addition to the lawyer's fees. It's fair to say the lawyer's fee has probably stayed the same, but the cost for the conveyancer or a title searcher to do the search has not, and you've seen those go up.

One of the beauties of an automated land registry system is that there is an enormous public benefit we haven't really spoken about this morning. It's imperative for everyone to understand that an automated land registry system reduces the number of documents that have to be reviewed in order for someone to offer an opinion on the title, so that a purchaser can buy, a vendor can sell or a bank can put a mortgage on the property. In some instances in the registry system, you might have to look at hundreds of documents in order to give that opinion. In an automated system you don't. The fewer the number of documents your conveyancer is required to pull and copy and review, and that the solicitor is required to review, the less time that's involved and the less time that's charged.

Mr Gerretsen: That's the whole purpose of going into the new system. But let me ask you this-and it relates to title insurance. I should tell you that I'm a lawyer as well and have practised in this area over the last 30 years or so. Until 10 or 15 years ago, title insurance was an unknown commodity in most parts of Ontario. He made the statement this morning that as we go into this system, basically you don't need title insurance. Ironically, it's just within the last five or 10 years that title insurance has become more and more in vogue, costing the consumer more money than used to be the case when they simply relied on the opinion of a lawyer in most real estate purchases. Do you have any comments on that?

Ms Smout: My experience with title insurance, I will admit to the committee, is somewhat limited, but I am well aware of it. I've studied it since it's been implemented. In fact, in our jurisdiction in Middlesex we had the first fully automated land registry office in the province, so we're really on the cutting edge. We were also the first to have electronic registration. When the title insurance issue came to our community, many of us thought, "We won't use it" or "We won't need it." But there are instances where title insurance is a very useful product.

I know many people in the non-automated or the old registry system see a huge benefit to title insurance, because it can actually help bring the cost of a transaction down. But the big benefit of title insurance is that in many instances a purchaser does not require a survey of the property. Title insurance can cover situations where a survey isn't available. The cost of the survey will vary from one jurisdiction to another. They might be a few hundred up to $1,000 or more, depending on how complex the property is. So there are benefits to title insurance, and mostly in that particular situation.

Mr Gerretsen: Thank you, because that leads me to my next question, which deals with surveys, and this is addressed to the deputy. It's correct to say, is it not, that what's happening in going into this new system-do you set the rules and regulations with respect to the registration requirements, or are those set by another ministry? Do you set those rules and regulations?

Ms Lang: I believe we set those rules and regulations.

Mr Gerretsen: It's a well-known fact that if the description is somewhat different from a previous description, or in a land severance situation or certainly in the cases of subdivisions and condominiums, you need a survey nowadays. It's almost impossible to make those kinds of transactions without a reference plan or a survey. You've set most of or all those regulations, have you not?

Mr Roote: I'll have to get a word from my counsel here.

Mr Gerretsen: You're not under oath.

Mr Roote: No, but I'd like to provide an accurate response.

Mr Gerretsen: OK.

Mr Roote: It does depend on the situation. If the property is in title, I think there is already a map. A survey would be more important in a registry property than it would be-

Mr Gerretsen: I guess what I'm getting at is that from the viewpoint of the average lawyer who works in this area and of the consumer who is involved in property transactions, going into this new system it almost looks as if we're making the consumers who are buying and selling land pay for the resurveying of Ontario. From a practical viewpoint, the survey requirements you set out in your rules and regulations are much more stringent now than they were five, 10, 20 or 25 years ago. They're becoming more and more pronounced etc. Would it be correct to say that consumers are paying to resurvey the properties of Ontario so that we can go into this new landholding system?

Ms Lang: I think Jennifer is prepared to answer that question.

Ms Smout: I'm not prepared to speak in great detail about the ministry's regulations, but the automation of the land registration records does not require a survey to be done. In fact, when the records are automated and put into the new electronic system, I think it makes the whole system more accessible to the public and actually makes the cost easier for the public to bear than a system that does not.

For instance, I brought a search of title with me today. This was a registry division property. It has 41 documents that had to be pulled, reviewed and copied. The purchase price of the property itself was only about $90,000, and the search alone was over $300-just the search. If this property had been automated and in the automated system, you could have very easily determined the owner based on the ministry's certification right on the top of the sheet you pull off the electronic system. It's very easy to do. You don't have to be a lawyer to do it. The public can do that. As well, you probably would have had to look at about eight documents, from my reading of the search,.

Mr Gerretsen: Right.

Ms Smout: But the survey requirements, in terms of what you're talking about, for registered plans of subdivisions and registered plans of condominiums-the bulk of transactions that would still be done on the system would not require a survey or reference plan.

Mr Gerretsen: You put your finger right it on it when you said that the ministry in effect certifies that title once it's in the system. The question I have of you, Deputy, is, is that what you're paying Teranet for, to in effect certify those titles once they go into the system? Obviously in order for somebody to certify it to you, they would have to pull those 41 documents so that you know the conditions, exceptions and parameters of that certification to you.

Ms Lang: I'm going to ask Mr Roote to respond to that.

Mr Roote: It is true that quality control reviews are done, both by Teranet and by the ministry. One of the things we are looking at in the future is that one of the models could contemplate relying upon the certified statements of the lawyer at the time the property is conveyed. There are some practices now that we want to review to see whether they should be continued in the future. But right now we do a quality assurance to verify the accuracy of the information before it's put into the automated system.

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Mr Gerretsen: That leads me to the next set of questions. The auditor makes a statement on page 69 in his review of this contract-and by the way, thank you very much for the summaries of the individual agreements you provided us. Would you be prepared to table the actual agreements, such as the master agreement, the shareholders' agreement, the implementation and operation agreement and licence agreement, with the committee?

Mr Roote: If you so desire.

Mr Gerretsen: I'd request that be done, Mr Chair. He makes the statement, "We did not rely on the work of the ministry's internal audit services because they had not conducted any recent work that was relevant to our review." Do you not have an internal auditing process in place whereby your agreement with Teranet, which has escalated from a cost of $235 million to over $1 billion over the last eight, nine years-an internal audit review system, so that you know what you're being charged for and all the auditing that's required to make sure that happens?

Ms Lang: We have an internal audit branch inside the ministry. But before I comment on it, I want to correct the record. We have not spent $1 billion. We do not intend to spend $1 billion. I think it's important to understand that the government costs to date have been somewhere in the order of $235 million. It's really important that the committee understand that the number that was alluded to of $1 billion is a highly speculative number and one we do not agree with.

Mr Gerretsen: But it's a number the auditor says it's going to cost if you run this program to the conclusion.

Ms Lang: I think it's one the auditor replayed as a result of a review we had conducted by a consulting firm that gave a worst-case scenario. If all of the processes that were in place at the moment were to continue on the same path and in the same time frame, it may cost up to $1 billion, but we were well ahead of that happening. We initiated the review way back, a year and a bit ago, because we wanted to ensure the going-forward strategy was in fact going to be one where we could fiscally defend the expenditure of money to complete the initiative. There has been no commitment or agreement to proceed with any initiative that would cost $1 billion.

Mr Gerretsen: I'm just trying to get a better handle on that. You've got this contract with Teranet that was tendered for, I take it, back in 1991, according to your own handout. I get the impression that we're so far into the system now that you can't really withdraw from it without the system, the way we envision it whereby every property is in this system, being completed. Have we gone so far into it that we've reached a point of no return and have to go along with Teranet whether we like it or not, or else we will have wasted the $235 million or we won't get the whole province into that system? Have we reached that point?

Ms Lang: If you look at the contracts, you'll discover the province does have some options should we decide to terminate our relationship with Teranet. But as I said earlier this morning, we've had a very good relationship with that company and we're quite pleased with the success they've achieved to date. It's been a very innovative initiative and I think something that was started way back in the mid-1980s, with a genuine foresight for trying to do something to benefit consumers. I'm not sure at this point in time that we would be able to justify to the public pulling out of the relationship with that company unless there were some serious problems we have yet to uncover.

Mr Gerretsen: Yet a few years ago, in 1999, Teranet provided the ministry with an estimate of over $700 million to complete the project. That's Teranet's number, which is totally different from the $235 million they quoted you six, seven years ago. A billion may be speculative, but $700 million is Teranet's number. That's not speculative. They were saying that's what it's going to cost, as far as they were concerned, in April of last year. I realize you're not willing to pull the plug. On the other hand, the costs have gone at least triple or almost triple, according to their own numbers. We're stuck with them whether we like it or not. What I would like to know is, what assurances are there in the contracts or within the ministry that these escalating costs, whatever the number is, whether it's $700 million or $1 billion, aren't going to go sky-high again? What kinds of mechanisms have you put in place to not allow that to happen?

Ms Lang: I'm going to ask David to take that question.

Mr Roote: Perhaps just to put things in context again, the $275 million was a figure identified by Teranet that the auditor picked up in his report. The $275 million was not an all-in number. As I mentioned this morning, the all-in number, with all of the additional features, was closer to $400 million, which would put it, in the context of today's dollars, at about half a billion dollars. Even based on the government's original estimates if it had done the project itself, the cost would have been about $600 million, which in today's estimate and today's present value of dollars would be over $700 million. I'm trying to keep things in a context to say that this project has not overrun with regard to its cost. These costs that we've incurred to date are in keeping with what was originally contemplated at the beginning of the project.

It is true we are looking at the go-forward position. We are very interested in maintaining best value for taxpayers and finding innovative solutions to continue the project and complete it. We have worked up some models with the company. The company's estimates were based on figures as they knew them at the time. The costs in Toronto are somewhat lower than they had originally contemplated, so the numbers have changed, but the context for the numbers is not $275 million. It wasn't that at the beginning. The $1-billion figure is a scenario we're not pursuing and the other costs are more along the line of what we've actually experienced to date.

Mr Gerretsen: But do you agree it is $700 million as of April 1999?

Mr Roote: That's Teranet's estimate. That would be based on continuing to do things the way we are doing them now. We want to look at other ways in which those costs could be reduced and still provide best value for the taxpayer and still get the benefits out of the original project that we've undertaken with them.

The Vice-Chair: Excuse me. Would the auditor's staff want to make a comment?

Mr Andrew Cheung: The comment I have is, we're not sure of the source of the $400 million or the $625 million that you refer to. The number we get, the $275 million, is obtained directly from the Management Board submission in 1991. As far as we know, we don't see another number beyond the $275 million in that submission, and it's anticipated over an eight-year period, the $275 million.

Mr Roote: I'm sorry, Andrew; I didn't catch that.

Mr Cheung: The $275 million is the only number we have seen so far in the Management Board submission of 1991.

Mr Roote: We've gone back and looked at the original closing documents that were part of the deal. The figures in there were about $404 million, of which the $275 million was a piece. We've also looked at original documents that estimated that had the government undertaken this project itself, that would have been in the order of about $620 million.

Mr Cheung: But what is the number approved by Management Board?

Mr Roote: Those were numbers taken from the Management Board submission.

Mr Cheung: But the only number we see, as I said, in the submission is $275 million.

Mr Roote: Which submission?

Mr Cheung: The Management Board submission.

Mr Roote: The Management Board submission, in original documents that we have, has information that uses those other numbers as well.

Mr Peters: Mr Roote, I find it a little bit difficult to understand this line of argument at the moment because our report was sent to your ministry for factual clearance. Therefore, the $275 million was factually cleared by your ministry. I find it a little bit difficult to comprehend why in an open hearing now this number is challenged when you had plenty of opportunity to challenge it when we wrote our report.

Mr Roote: The number was factually correct according to the numbers that were provided by Teranet. What we've done is gone back and looked at all the original documents that were developed at the time the deal was being prepared, and that's where these numbers come from.

Mr Peters: Sorry. Why did you not pay us the courtesy, as an office, to advise of these numbers when we cleared the report with you?

Mr Roote: We didn't have access to those numbers at that time. We've gone back and found the original documents that were part of this arrangement, and that's where those numbers are found.

Mr Peters: OK.

Mr Gerretsen: I find it rather curious that, according to the president of Teranet Land Information Services-this is a direct quote from him-"It has been known for many years that this would be much more expensive than we thought, only because the work has been much harder." Do you agree with that assessment?

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Mr Roote: The reasons for the change in the project from its original inception-you have to remember that in 1991, when the deal was signed, there was an assumption about the amount of money that would be transferred to the company as a result of the real estate market at that time. As you also recall, in the early 1990s there was a very significant economic downturn which changed that assumption. The registration volumes declined from about 1.9 million to about 1.1 million. That reduced the funding available to Teranet to continue on the project, so they borrowed money. They had a credit line. Money was borrowed through a credit facility and now they have the bond debenture. That has increased the costs as a result of the changing economic times and the changing times of the project and how fast it was being completed.

Mr Gerretsen: Just a couple of other questions. How much time do I have?

The Vice-Chair: You've got eight minutes.

Mr Gerretsen: I understand that only 17 of the 55 registry offices we have in Ontario are presently on-line. Can you give us any projected timeline when the remainder will be on-line or how many will go on-line, let's say, within the next two years, five years?

Mr Roote: When you say "on-line," do you mean with electronic registration?

Mr Gerretsen: Yes.

Mr Roote: We have a couple more coming out this year. The schedule calls us to be in a couple of other jurisdictions this fall. We are continuing to automate in Toronto. That's where most of the work is being done right now, in Toronto and Simcoe county. So there is ongoing work being done in those areas. There are a number of smaller offices which don't have automation at this point. We have about 70% of the properties automated in Ontario now and about 64% of the properties converted to titles from registry.

Mr Gerretsen: Just following up on something the minister said this morning, these are basically in parts of the province where, let's say, we have had subdivisions since the Second World War, and condominiums. The real problems are with the unsurveyed properties in many of the rural areas, particularly in eastern Ontario, in which a land holding system goes back, I suppose, almost a couple of hundred years. Do you agree with that?

Mr Roote: That's correct.

Mr Gerretsen: Would you agree it may take as long as 30 years to get every property in the province on-line?

Mr Roote: It depends on what approach we use to complete the conversion. Right now, the way the project works is that they go into an area and they do it according to the blocks of properties in that area. What the minister was mentioning this morning with regard to that time frame would be on the basis that if you automated and converted the property to titles at the time it was being conveyed on a transaction basis, and because of the turnover rate of the properties being different in different parts of the province, that's what that time related to.

Mr Gerretsen: When we're saying that the properties are on-line, are we talking about the fact that they have PINs, property identification numbers, or are we talking about something other than that?

Mr Roote: All the properties that are in land titles would have property identification numbers.

Mr Gerretsen: Right, and there are many in the registry system as well now.

Mr Roote: That are automated; that's correct.

Mr Gerretsen: When we're talking about the fact that-what is it?-32% are not as yet automated, would that mean that 32% of the properties in Ontario do not have a PIN number?

Mr Roote: If they're in registry, they wouldn't have a PIN number.

Mr Gerretsen: And if they're in land titles, they would because of the land titles process.

Mr Roote: It identifies a specific parcel.

Mr Gerretsen: I wonder if you could just explain to me what processes you have in place currently, then, or what you will put in place to ensure that whatever the cost overrun, it will not escalate to the same extent it has over the last six or seven years. What internal processes have you put in place to in effect make Teranet more accountable?

Ms Lang: I'm going to ask Sue Corke, who is our ADM for policy, to take that question.

Ms Sue Corke: We have two relationships with Teranet in the ministry-one is the shareholder relationship and one is the client relationship-with regard to automation and conversion. In the past, we have actually managed those two relationships in the same way, if you like. Just in the last six months we've undergone a reorganization in the ministry. We've set in place a new sector liaison branch, and the purpose of that branch will be to put in place some embedded and systematic approaches toward governance, performance management and accountability. The financial accountability will become part of that.

We're just currently staffing up for that at the moment. I think we're probably in a really good position to do that because, over the last 10 years in the ministry, we've had a lot of experience with working in a sort of performance management and governance fashion with other organizations. I am on four other boards of directors. I have had a lot of experience now with governance in this sort of arrangement. I feel fairly certain we can put in place a series of structures and a series of regular liaison meetings-meetings with the board of directors of Teranet, the provincial board members, regular annual strategic planning sessions with the provincial members, those kinds of things-so that we can get a much better grip. We'll have a full-time financial analyst on the staff of the new branch, and I think we will be able to manage that in a very good, systematic way.

Mr Gerretsen: Those are all the questions.

The Vice-Chair: No more questions? OK. We'll move on to the NDP's half-hour.

Ms Martel: I wanted to return to the worst-case scenario of the $1-billion estimate which came from the consultant. Deputy, you said you disagreed with that estimate because it really emphasized the worst-case scenario. I was wondering if you could outline to the committee what that worst-case scenario was.

Ms Lang: David may have to help me here, but my understanding of that scenario would be that we would continue to process the conversion of the properties, particularly the ones in registry that are quite problematic, in the time frame, and it would require significantly more staffing to come in and be able to do that in a way that could achieve the milestone of 2003 and 2004. Because we've had the experience to date and have discovered the difficulty of doing the work in the registry part of the government system, we recognize that may not be a cost-effective way of doing business. I think the estimate was based on, if you were to take all of the remaining properties with all of the complications and all of the problems associated with the automation and conversion and do it at lightning speed over the next two or three years, it could potentially cost up to $1 billion.

Ms Martel: Because you have to hire so many more staff in order to do that. Teranet has about 800 staff of its own directly employed by Teranet. How many staff does the ministry have to support this project?

Mr Roote: We have a very small unit right now and that's, in Ms Corke's remarks, to add some additional strength to the ministry from a government and oversight capacity. We only have a few staff. In my office I have a couple of staff who are involved in doing the strategic liaison review with the company and maintaining relations with the company, but we're now looking to strengthen that capacity inside the ministry.

Ms Martel: So the people involved directly in the conversion are Teranet staff; they are not ministry staff?

Mr Roote: That's correct.

Ms Martel: Were they ministry staff at the time the conversion took place and were transferred to Teranet?

Mr Roote: Yes. A number of them were. A number of them did go to the company.

Ms Lang: A significant portion of them, a high percentage.

Ms Martel: The second question has to do with Teranet's estimate of $700 million as a project cost. I'm assuming that's total cost, not an additional cost over and above the $300 million they've estimated they've already spent.

Mr Roote: That's correct.

Ms Martel: You said in reply to earlier questions that that was probably a fair assessment in terms of costs.

Mr Roote: I would think in today's environment probably not, because when those cost estimates were made they weren't very far into Toronto as a jurisdiction to do. To date, they've done a fair amount in Toronto, and the estimates to complete Toronto are substantially lower than they had originally thought when they started out. I would suggest that those costs probably would be modified somewhat.

Ms Martel: Do you have any idea what the modification would be, since these were costs that came out in September 1999, I believe?

Mr Roote: I don't have them with me, but certainly we could review that.

Ms Martel: Just so I'm clear, what was Teranet basing those costs on? Can you give us all of the components?

Mr Roote: Looking at what they call the "cost per PIN" or "minutes per PIN" in order to do that. Where their estimation varied was from one jurisdiction to another; the minutes per PIN could vary quite substantially. They had what they were looking at with the remaining properties in the province times the average minute per PIN or range of minutes per PIN, and they then would add in their carrying costs for their debt financing through the bonds, and any other capital depreciation would be part of the project itself.

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Ms Martel: Does the ministry feel confident that all the remaining properties have been identified? That was one of the arguments that Mr Kaplanis made, that 25% of the properties were unknown at the time the project started.

Mr Roote: The way in which properties are known is, in the registry system we don't identify individual parcels, and when it comes into land titles, we do. But in the registry system we have pieces of land. We also work with the Ontario Property Assessment Corp, which determines the number of assessable units for property tax purposes to get a good approximation of the number of properties, but we don't have a precise number. Of course, the properties are growing each year too because of subdivisions and condos.

Ms Martel: So right now you're working with about 4.7 million?

Mr Roote: About 4.3 million to 4.5 million is what we estimate.

Ms Martel: At the same time that Teranet gave the estimate of the $700-million project cost, they also projected a completion date of 2010. I'm going to assume that was based on no new staff being hired and continuing the work with their current staff. Was there anything else that they factored in to arrive at that completion date?

Mr Roote: Looking at continued streamlining, where we could have the streamlining the ministry has with the company over the years for the procedures to do the implementation, by and large it was go forward based on where we are today.

Ms Martel: I'm not sure I understand what you mean by "continued streamlining," Mr Roote.

Mr Roote: We looked at ways in which we could modify the procedures to try and make them more streamlined than they are today, and we've had various initiatives with the company to look at ways we could do that. But our bottom line from the ministry standpoint is to ensure that we have quality of records, we have integrity of the system and we have public confidence in the system. We've worked with them, but those are the principles that we continue to operate with. But we're always looking at more efficient ways of do it, if they're possible.

Ms Martel: The 2010 completion date was Teranet's. Does the ministry agree with that, disagree with that? You disagree with the $1-billion cost and you've explained that. What's your position on that completion date and why?

Mr Roote: The completion date will be a product of what we decide to do on a go-forward basis. Those are the models we're looking at now. So the 2010 figure is not something the ministry agrees with. We are looking for the most cost-effective way and best value for taxpayers to complete the project.

Ms Martel: How does the cancellation of the subcontractor affect that completion date? As I understood you in response to an earlier question, the work is being done in-house now. But as a result of that occurring, there was quite a dramatic drop in the number of properties that could be registered per month. Can you tell the committee how many properties are now being registered per month, and is it Teranet's position to just continue to do the work in-house, and what does that do to the completion date?

Mr Roote: As we understand it now, they are going forward on their staff complement. I think they're automating-I'll just have to check-about 15,000 properties a month.

Ms Martel: And they were doing about 23,000 before, with the subcontractor?

Mr Roote: That sounds about right.

Ms Martel: Because this happened after they gave you an estimate of their completion date, which was 2010, have they changed their completion date now based on doing this work in-house and knowing that they are not registering as many properties per month as they used to be?

Mr Roote: No. The 2010 figure is based on their current workforce.

Ms Martel: Did they revise it a second time? As I understood the timeline, they originally told you in September 1999 that it would take up to 2010, and then the subcontractor was lost in December 1999.

Mr Roote: But I think the decision had been reached at the company level that they would be continuing on without the subcontractor. So those numbers assume their absence.

Ms Martel: They had already projected that in because they knew they were going to get rid of them?

Mr Roote: Yes.

Ms Martel: All right. The consultant also said in his report that the cost to convert the remaining-he used the figure 1.8 million-properties using the existing workflows would exceed the revenues. Do you know what the cost is that will exceed the revenues, what the consultant projected that to be?

Mr Roote: The consultant didn't project figures. The consultant took figures provided by the company and put them in the report. If you look at the costs incurred to date by the company of roughly $300 million, then the balance would be associated with the remaining properties; the balance of their projection would be associated with the properties still to be done. Why that was considered to be uneconomic was that the turnover rate in those rural areas is not as frequent as it is in the urban areas. As a result, because they would only get fees when the property is conveyed, the amount of revenue would be much lower than in an urban environment, where they turn over more rapidly.

Ms Martel: The cost was never identified by the auditor in terms of whatever the consultant had said. Is that a public figure?

Mr Roote: The auditor's cost estimates were based on information provided by the company.

Ms Martel: I'm sorry if I'm not making myself clear. Of the bullet points that were highlighted by the auditor, in terms of what the consultant said, the one I'm interested in talked about, "The cost to convert the remaining 1.8 million ... exceeds the anticipated revenues from conversion." But the auditor didn't outline a cost there, as I see it. So is that a public figure?

Mr Roote: I would say that if you took the costs to date that the company has incurred to do the properties it has done-

Ms Martel: Which is $300 million.

Mr Roote: -and then subtracted that from the various cost estimates, that would be the cost to do the remaining properties.

Ms Martel: So it could be $1 billion minus $300 million or it could be $700 million minus $300 million? Is that what you're saying?

Mr Roote: The most recent one would be $700 million.

Ms Martel: So about a $400-million shortfall?

Mr Roote: A $400-million cost based on that analysis.

Ms Martel: In that respect, Teranet issued about $280 million worth of bonds, and this was for two things: one, to pay down debt, and another, I assume, to put aside money for future costs. Do you have a breakdown of how much was set aside to pay debts and how much of that $280 million was for future costs?

Mr Roote: Because Teranet is a private company, I really can't provide you with the figures on that breakdown basis.

Ms Martel: Let me tell you what I'm concerned about and maybe you can give me some confidence that this is all right. Depending on what that breakdown was, Teranet may or may not have recovered enough of that $400 million for their future costs. Perhaps they are going to obtain that money in a different way to make up that difference. So what I am wondering about is, where is that $400 million going to come from if their costs work out to be about $700 million? Is it an ongoing stream that is part of the contract? Is it a portion of that plus a portion of what they got from the bonds?

Mr Roote: Yes. The bond money would provide money, in addition to the monies transferred from the ministry, for registrations against automated properties. So there would continue to be revenue provided to the company through the registration process for fees.

Ms Martel: Can you tell us what that revenue stream is on an annual basis? I understand that it fluctuates, depending on properties, but is there an average?

Mr Roote: I'll give it to you in a second.

Ms Lang: While David is getting that number for you, Ms Martel, I'd like to clarify that the $400-million cost assumes that we would continue doing what we're doing the way we're doing it. I think that's subject to our thinking about whether there are other options. I don't want to leave the committee with the impression that we've committed ourselves to spend another $400 million, because we haven't done that yet.

Ms Martel: I appreciate that, Deputy. A little bit further in the questions I want to ask you some more questions about the review, because it wasn't clear to me where all of that is heading.

Mr Roote: We're still checking.

Mr Peters: Just in between, you can probably provide Ms Martel with that number because what the $280 million was raised for must come from the offering document that Teranet put out in the open market. That's an open document and that should contain the information as to how much money they needed to pay off existing debt and how much money that provided for the future of the project.

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Mr Roote: The bond was a private placement.

Mr Peters: Why does it have a Standard and Poor's rating? They must have gotten at this information somehow.

Mr Roote: The Standard and Poor's rating doesn't disclose all of the material-

Mr Peters: I realize it doesn't, but with the bond now being rated and being publicly traded, does that mean the offering document is confidential?

Mr Roote: Because it was a private placement with institutional investors, it wasn't offered for public acceptance or public involvement the way it would have been for other types of instruments.

Mr Peters: OK.

Mr Roote: For the year 1999-2000 the revenue transfer would have been $47 million, and we would have then recovered royalties against that.

Ms Martel: What were the royalties recovered against that?

Mr Roote: I think they were in the order of about $12 million.

Ms Martel: So would you say that you feel confident that between the revenue that comes in on an ongoing basis as the project proceeds, plus whatever money was set aside through the bond offering, Teranet would not have a problem coming up with another $400 million if at the end of the day that was the rest of the money that was necessary to complete this project?

Mr Roote: I think that's a reasonable statement. I think the early indications we have from the financial advisors retained by SuperBuild suggest that their financial position is solid in that area.

Ms Martel: Can I ask then about the review? Deputy, you mentioned it earlier and it actually caught us by surprise because we had nothing in our briefing documents to indicate that there was a second review going on. So I wonder if you can give us a bit of information about it, ie, when it began, what was the nature of the reference to SuperBuild and also terms of reference, if you can outline them to us, if they exist.

Ms Lang: Let me start back to early 1999, when we retained Andersen to do the first review and that was concluded. As a result of that review, we started an exercise with SuperBuild in the spring of last year to begin to take a look at what are the legal financial risks and issues associated with the current contractual relationships with the company. Over the course of the summer and into the autumn, the terms of reference were narrowed down and there was an offering that went out on an RFP to retain the consultants. Those consultants have been brought on board this autumn, some prior to Christmas, some just post the holiday season. They are in the company now doing the necessary financial technical and legal review.

At the same time, ministry staff were working very much with the company on looking at operational options that might be worth looking to the future for in terms of different ways of completing the conversion and are there some models that are worthy of pursuit that aren't going to cost the kinds of dollars that the company's estimates are currently reflecting?

So we've had the benefit of some thinking with the company. We've had the opportunity to investigate ways in which things are being done in other provinces. The minister alluded this morning, I think, to the notion that there are other jurisdictions that are looking at transaction-based approaches to complete their conversion and their automation. We've explored those and we are using those kinds of options with the SuperBuild advisors to help us determine what might be the most practical, convenient and prudent way to proceed, ensuring that we maintain the integrity of the land registration system, but we also do it in a way that's fiscally responsible.

My hope would be that the conclusion to those kinds of reviews and analyses will happen this spring and then we will be making some determinations and moving forward with the government's support in a plan of action.

Ms Martel: So the outside consultants are looking both at Teranet's structure now-legal, financial etc-and how valid some of the options would be in terms of being workable, being economical and getting the project done on time, high quality-both sets of things.

Ms Lang: In a way that makes the most sense, yes. I think it's the most practical solution to getting the project completed in a way that's going to be responsible.

Ms Martel: You said earlier, when you were questioned about the $1 billion and did you agree with it, that the ministry-I thought you said-had implemented some changes to avoid exactly that scenario. Can you describe what you meant by that?

Ms Lang: No, I indicated the ministry hasn't accepted that scenario and hasn't accepted that costing. That's based on the earlier assumptions that I referred to, that the company would have to staff up significantly to complete the detail work of particularly the registry properties.

Ms Martel: So the changes that have been made, in looking at the $1 billion and the completion date of when to work with SuperBuild to get the outside expertise to look at Teranet and to work with Teranet-and also Ms Corke talked about the sector liaison branch we well, which I assume is to have some increased monitoring.

Ms Corke: It's basically to systematize, if you like, the relationship that we have with Teranet. We had an excellent working relationship over the years, but I think what we'd like to do now is put a little more into it. We have some experience, as I said before. The sector liaison branch will have some other responsibilities besides creating that oversight relationship with Teranet, so it's not entirely devoted to that. But it will give us some opportunity to know more on a regular basis about these kinds of things and to participate at the appropriate moments in the right decisions.

Ms Martel: Are the terms of reference for that committee public?

Ms Corke: What I was talking about was the sector liaison branch. It's a staff activity. We do have to do some, I wouldn't say terms of reference, but perhaps a business plan. That's very new. We've only been underway about-actually I've been six days on that particular job, although we restructured a little earlier.

So yes, we do have to do that in a formal way. We also have to, of course, talk to Teranet about how we can have some regular weekly relationships with them or regular monthly liaison meetings with them and the kind of financial discussions that we should be having when the SuperBuild report is done.

Ms Martel: What was the nature of the relationship previously? There was a board of directors. Mr Roote, I gather that's a new position for you because there was not a non-voting government member attached to the board before.

Mr Roote: That's correct. The suggestion was that we have our four provincial appointees at the board, but to give greater presence to the ministry and to the provincial interest directly it was suggested that we have an ex officio or non-voting member at the board, and I've served in that capacity now for the last six months or so.

Ms Martel: Does the board meet once every month?

Mr Roote: No. It does meet once a month now as they get ready for their budget year, but the board generally meets about six or seven times a year.

Ms Martel: Deputy, is it possible for the committee to have the terms of reference that were used for the selection of the consultants working with SuperBuild? Is that a public document?

Mr Roote: It was a public tender to acquire both the legal and financial advisors that SuperBuild acquired, so yes, it's a public document.

Ms Martel: That would be great. Thank you.

Mrs Munro: I wanted to first of all thank Ms Smout for coming and talking about your perspective because I raised it earlier today. I think that given that we're looking at the change to providing a service, to be able to hear something of your experiences gives us a sense of exactly what the changes are and how they should affect the service that we want at the end of the day.

I just wondered if in your experience, because of the fact that you were in a jurisdiction where this was a pilot, you brought with you some documentation to give us some example, and I wondered if you could give us further example or demonstration of the kind of experience you've had in being able to compare between an automated and a non-automated system and the kind of thing that means for both you in a professional sense but also for the people who want to see these transactions take place, that is, the citizens of the province.

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Ms Smout: The one thing I would like to add before I start is that I began my career in 1986 in London, and at that time the registry office had not been converted; it was entirely registry. So I have grown up through two different systems, from the paper registration to the conversion to now electronic registration, and I'm still here, so that's good. I never thought at this stage in my career I'd start to feel old, but I guess that just goes with the turf.

I have also worked very closely on this system because our office tested the products for the ministry as they came out, and that was everything from electronic searching on your desktop right up to electronic registration. So I've seen this program in many different shapes and forms as it is today.

There are four benefits to this system that I think are almost immeasurable. The first is that it reduces the complexity. I talked before about the volumes of work that may need to be done in registry. When you reduce complexity, you reduce error. When you reduce error, everyone wins-the lawyers win, the public wins, the municipality wins-because if you can get that information fast and accurately, that's a good thing for everyone. It makes the system more accessible because, with the automated system, non-lawyers can actually look at the material and often determine what they need to know. In the registry system that may not always be the case. We have a number of people in our corporation who are non-lawyers who are able to get title information on their own without having to come through the legal department. That is an advantage.

The other benefit is that the costs do go down because as the volume of material you need to do to look at a search is reduced, that brings the cost down. If you have to look at and pull and copy and review 40 documents as opposed to six, seven or eight, of course the costs will be different. Or, if you are retaining an agent to do that for you, then the costs would be different. You don't have to do as many different types of searches in the automated system as well, and that reduces the costs significantly in some cases; on the executions, for instance.

The other thing is that the system is accurate and it also has the certification, and you can put in your PIN, address and name of the owner and get this information right back. That, of course, goes back to reducing the error.

The last thing is that it's really accessible, and that's been greatly enhanced with the electronic system, because you can have it on your desktop if you want or use the system at the registry office. It isn't as cumbersome as the paper system, so you can go in there as a member of the public, put the information you need into the computer as a layperson and get that information back in a format that you can understand, which is a nice benefit for everyone. It also provides more options for the way you use this information. In the registry system you need a lot and a plan in order to get your information. In this automated system you can search by the name of the owner, by the municipal address, in some instances, you can search by lot and plan, of course, if you want, or with that PIN number that we talked about, or you can even look at a map, point to your property and pull the information up. That makes the system more versatile and provides more uses for the public at large than the current paper system does.

When you go back from this system, when you're dealing with a paper system-and recently I had to do that: move from this system and go back to the registry system. We were working on the transfer of the pipeline from Lake Huron down to London. When you have to go back to that system-you have to start sifting through these volumes of documents, looking through these big abstract pages that are all written out by hand in some instances, depending on how far back you're going-it's very cumbersome. When you can't be doing that work right off your desktop, you really notice the difference. In an environment where we're doing everything at home, from on-line banking to shopping and whatever else we use your computer for, this type of system has immeasurable benefits for how we're going to interact in the business world today, and it's very good for the public in that respect.

Mrs Munro: One other question that I think is better directed to the deputy, since we're coming to winding down in terms of this particular opportunity: it seems to me appropriate to really zero in on, as we look at this problem as a committee, the kinds of dynamics that have changed from the original inception, say, in 1991, to what we're able to provide today. I just wondered if you could choose a couple of key things that you see, because I think that's why we find ourselves in the situation that we're looking at today, where the landscape, if you like, has changed and yet we're looking at numbers that started out in 1991 but now we're looking at quite a different landscape. I just wondered if you could provide us with a couple of key ideas that you think demonstrate how that landscape has changed.

Ms Lang: First of all, we've learned a lot. I think the important part of the experience for us, and certainly for us to pass on to others who succeed us, is that there have been a lot of lessons learned. We've learned a lot about working with the private sector and have seen the way technology can change the nature of business and how business gets done, particularly as it relates to providing service to the public.

As the minister alluded to much earlier today, historically the system was set up in a very legalistic, paper-based world. When I visit the land registry offices I'm always amazed at the amount of paper and the incredible history that exists in those offices, and that you do in fact have to employ lawyers in order to help you complete your transactions. We've learned over the course of this initiative and other initiatives that technology can make an incredible difference in how business gets done, how we support the public, how we can provide services to the public and how we can streamline the way the role the government plays in trying to be guardians of registration of land or property, or whatever our particular responsibilities are, can give us a whole lot more confidence, a whole lot more assurance and a whole lot more comfort that the work we're carrying on is going to be done accurately, with appropriate kinds of checks and balances in place.

The other thing we've learned is that there is probably no end to the future potential of this system, as we've seen the value of technology, the mapping expertise. I don't really think we know yet the degree to which the kinds of data and the ability to manipulate the data and use geographic information systems and other kinds of technology are going to benefit the public, how that might benefit the company and how it will benefit the government. I don't think we have any real appreciation yet. I think the world is wide open to us in that respect, which then speaks to the potential benefit for this kind of system to be marketed in other jurisdictions. One of the original objectives for setting up this relationship with the private company was to try to find ways in which we could develop value-added businesses, that in addition to doing the kind of conversion and title we could also then explore, in collaboration with the company as a shareholder, other ways in which their expertise and their technology could be marketed, and the return on the investment would then begin to come back to the shareholders.

I think I've articulated more than two, but I think there is a real story here that is worth sharing with others. We've had some need to take stock every once in a while along the road, but I think it's worth travelling down that road some more, because I do think it's going to take us to a place where we can feel very confident that the kinds of services that are being provided to our public, consumers, are in fact the kinds of services they deserve.

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Mr Maves: Earlier the minister had mentioned the number $75 million, some savings that had been generated through the ministry. Over what time period were those savings generated?

Ms Lang: That's been over the life of the initiative, as I understand it, from the time it was signed in 1991 till current in terms of staff reductions.

Mr Maves: If it did take until 2010, would it be safe to say we'd save another $75 million over that period?

Ms Lang: It would probably depend on how we move forward, but part of our thinking is that there may be additional savings. With electronic registration it obviously, as Jennifer alluded to earlier, cuts down on time and cuts down on manual checking and that sort of thing. So there may be further reductions we'll see over the next several years.

Mr Maves: Then, once the system is fully in place, some of those savings become perpetual, I guess.

Ms Lang: I suspect we then would be into a mode of continuous improvement and using whatever technology may be out there that's changing our world daily.

Ms Mushinski: Just one question, and it stems back to what Mr Gerretsen was asking earlier. It's something that really has concerned me. It seems that any time we move toward new technologies and new communication systems, we're always given the promise of savings for the customer, and I guess we make all these government decisions, clearly, to save money for the customer. The minister made a statement this morning that in terms of this particular service, the cost has at least remained stable since the early 1970s, and this particular system actually saves the customer money. My question really is, has it saved in other ways? It seems to me that when I was on a municipal council, a lot of administrative costs were spent on applying for a building permit, for example, and part of applying for the building permit of course was to ensure that the land was properly owned etc. Does this particular system save money in terms of other functions like building permit applications, and has any study been done on how those savings are passed on to the consumer?

Ms Lang: Sue, perhaps you could comment on that, and then we'll turn it over to Jennifer, because I think she would like to make some comments as well.

Ms Corke: Mine is probably less of a direct comment on that, but just to say, getting to part of your point, that Teranet actually is part of a consortium that won a recent contract to do some work on a construction permit initiative, just to talk to that particular issue. I'm not able to answer the question about whether there are savings there; it's too soon for me to say in that particular thing. But I thought it was interesting that you mentioned that as they are actually involved in that kind of work.

Ms Smout: I have a short answer and a long answer, so I'll give you the in-between. How about that?

Ms Mushinski: It was a fairly long question.

Ms Smout: I have looked at some of our statistics and I think you have to appreciate that the volume of work I do in my practice depends on what is actually being done that year by my council, as my client. This year we're anticipating a much higher volume because we are purchasing lands and expropriating properties for a large road project, so that will be a higher project. After annexation, and I know as a result of restructuring, in many municipalities they have to do a recataloguing and renaming of their streets to avoid two streets with the same name and those types of things. On our annexation, there were I think over 150 names that we had to change. All that had to be registered. The volumes fluctuate from year to year, so you have to be very careful in how you look at those figures.

Last year, on what I call one-party documents, documents that were initiated at my end by my council, us alone, that didn't involve another party, I did over 124 of those and I did all but three of them personally. That was from March 7, which was the mandatory date in Middlesex, up until about the middle of last week, so that's not quite a full year. Of those, I have two options to do those in the paper system. One option is to give that to a conveyancer to register those, in which case I would have to physically have someone walk it down to the registry office, or courier it and pay a courier charge; I would have to have someone physically walk down there or have it re-couriered back to me in the paper document system; and I would pay them a fee to register that. That might be anywhere from $20 to $40, depending on what services they would be doing for me. Then the registration fee is on top of that.

These documents I can now do in my office, on my desktop, within minutes. It's very simple for me to do them. They're very quick. I was anticipating a large increase in my workload, but I haven't seen that as of yet with this volume that I experienced last year. So if you look at 124 at anywhere from $20 to $40 a pop, that's significant.

There's also what I would call a softer cost, which people don't have good figures on, and we're in the process of exploring what those savings are. If you are physically taking someone out of their office, putting them in a vehicle, sending them to the registry office, paying their mileage, for instance-because in some areas the registry office isn't down the street or next door. We're lucky in London; it's maybe a 15-minute walk or so. But in other areas it's further, so you have to send them down there, pay for their parking if they have to park there, if that's applicable, plus the time that they're there and out of the office. But you can do some of those functions right off your desktop within seconds. So many of the people, for instance, in our building division have enjoyed having that service on their desktop, because they're able to get that information more quickly and they believe there is a savings. We're undertaking looking at that and we'd be happy to share that.

I should probably punctuate as well that the system is fairly new in London, even though it has been running for a year. When you have new technology, new systems and new regulations, it takes everybody a little while to make sure they're entirely comfortable with it. I'm changing a lot of my internal office procedures now to streamline things because I'm more comfortable with the system. Again, I think you're going to see that evolve as well.

Mr Gerretsen: I just have one series of questions, and that basically deals with this: I take it the properties that have been transferred are the easiest to transfer, that are either in land titles or in subdivisions that have been built after the Second World War. These are also the properties over which usually there's the least dispute and probably where title insurance is not required. If you stop the process now or go into a different system now, wouldn't you in effect leave aside that percentage of properties that probably need this new system more than the properties that are already in land titles and in subdivisions? Do you understand what I'm saying? They've obviously started by transferring the easiest properties, but also the properties, with all due respect for Ms Smout, where you didn't have to pull more than four or five documents to find a clear route of title. The kinds of examples that she gave, where you have to pull 40 or 60 documents, are probably the properties that are not now included in the system. They're the 1.8 million properties that are outside the system. Why weren't instructions given to take the most difficult properties first? Because the properties that are already in land titles or in subdivisions since the Second World War probably needed the new system the least.

Ms Lang: The answer to that question is that was the original business model. The original business model was designed on the basis of moving as quickly as you could on the easiest properties so the revenue would be generated, so the company would have sufficient cash to continue proceeding with the conversion of other properties. So it was very much part of the original business model to do it that way. The experience, unfortunately, during the early 1990s was that we had a slowdown in the economy, as you're aware, and that created some difficulties in terms of the anticipated cash that was to go to the company, because I don't think we put that in the estimate. We didn't anticipate the same kind of economic slowdown as we experienced. But quite honestly it was the original business model to do it that way, and the company has adhered to the original business model.

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Mr Gerretsen: It seems to me that precisely the kind of titles that Ms Smout was referring to are probably the kind of titles that will remain in the old system for up to 30 years, if we take what the minister said here this morning, because those are the ones that are going to take a long time to convert and many searches and checks have to be done. So it almost seems to me that we're setting up a new system at quite an expense to the taxpayer in one way or another, or the consumer in one way or another, for properties that need the new system the least. I'm just wondering whether the taxpayer is well served by that.

Ms Lang: I hope so. I hope, in terms of our going-forward action plan, that will be very much part of the criteria for whatever approach we decide to take. If we moved into an approach where the minister made reference to the transaction-based model, then presumably you would want to ensure that as those transactions were occurring and we were converting, you were building in that kind of assurance and that kind of certainty for the consumer so that you wouldn't have this sort of situation that I think you were referring to occur as we move forward in trying to complete the initiative.

Ms Smout: Mr Chair, I think it's also fair to say that my understanding of the ministry's process is that you're converting on a county-by-county basis and working through the system. I think that what you get from one county to another will vary, and you'll have just as many-as we would refer to in our profession-dog's breakfast titles in London as you will in Chatham, as you will in Sarnia, as you will in Windsor. So I don't think it's fair to say that what's being done are the easy ones. There are many that are just as bad.

Sometimes rural properties don't have as many documents as urban, or vice versa. So it's very difficult to make that general assumption on that basis. Even with subdivisions that may have been done after the Second World War, many of those were not in the land title system, they were in registry and required searching behind the subdivision plan, which again is often rather complex.

To be fair, when you're looking at each particular county you'll get some areas in that county or city that look good but just as many that look very bad.

Mr Peters: I just wanted to quickly, for the follow-up and just to help our researcher write the report a little bit better, follow up on the line of questioning that pertained to the year 2010 as a potential completion date. If I understand the answer correctly, the indication is that that is also a date you do not accept at this point? Would that be correct?

Ms Lang: That's correct.

Mr Peters: In relation to the numbers we were just given, if the 1.8 million records to be converted is the correct number, and if the current rate of conversion that you indicated is running at about 15,000 a month, that would put it at 120 months, which would put it into 2010-2011. Is it then the anticipation that in some of the scenarios you are developing there will be a more rapid rate of conversion, or is the 1.8 million in question? How do we deal with this?

Mr Roote: Based on the current count, Mr Peters, if we've done 3.1 million properties we have about 1.2 million left to go. It depends on what approach we might use. Mr Gerretsen's right: in a number of parts of the province, particularly in the east, all the properties are in registry, but also in the north there are a number of properties that currently in titles. They're not automated yet, but they're in land titles. There are different ways you could automate those than from the current process we're using with the company, but we'll be looking at a variety of those different things in order to make the best value decision for the taxpayer, but also to complete the project with its original objectives as much as we can too.

Mr Peters: In our report we talked about 2.5 million records at that time, and we dealt with a definition that was used in the implementation under the agreement, which was not only automated but also in the land registry system. I think in the business plan you used the three-million-record number, which I presume refers to the number of records automated but leaves 500,000 still to be put into the registry.

Mr Roote: The number of properties automated? Yes, that's correct.

Mr Peters: So when we talk about the number of 15,000 records a month, is that the number of records being automated or the number of records being automated and transferred to the land registry? I'm just wondering.

Mr Roote: The number of properties being automated.

Mr Peters: I see, so it's just the automation. And the outstanding then to the year 2010-so we would have to divide the 15,000 into 1.2 million, as one potential scenario.

Mr Roote: We would certainly be glad to work with you, because there are a number of variables in the way we'd have to calculate what the end point would be, based on how many properties are being automated. Some of those are being converted. It would vary according to where we are in the province.

Mr Peters: I just gave you one calculation that came from the information here, but just to help the committee write the report, do you have any idea at this stage, other than 2010, how much earlier you could see this project being completed? In 2007, 2009?

Ms Lang: We're not in a position at the moment, Erik, to make that conclusive a statement.

Mr Peters: OK. Thank you.

The Vice-Chair: First of all, I'd like to thank the ministry staff, the witnesses, the committee staff and the auditor for making their views known. Hopefully some of the questions were answered. I guess there'll be more as things progress. Anyway, I guess we're ready to adjourn the meeting. Thank you.

The committee adjourned at 1457.