Assemblée législative de l'Ontario

MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING

CONTENTS

Monday 12 February 1996

Ministry of Municipal Affairs and Housing

Hon Al Leach, Minister

Daniel Burns, deputy minister

Dino Chiesa, assistant deputy minister (acting), housing operations division

Patti Redmond, manager, program administration, housing policy division

Anne Beaumont, assistant deputy minister, housing planning and policy division

Robert Glass, director, rent control programs, housing planning and policy division

STANDING COMMITTEE ON ESTIMATES

Chair / Président: Curling, Alvin (Scarborough North / -Nord L)

Vice-Chair / Vice-Président: Cordiano, Joseph (Lawrence L)

*Barrett, Toby (Norfolk PC)

*Bisson, Gilles (Cochrane South / -Sud ND)

Brown, Jim (Scarborough West / -Ouest PC)

*Brown, Michael A. (Algoma-Manitoulin L)

*Cleary, John C. (Cornwall L)

Clement, Tony (Brampton South / -Sud PC)

*Cordiano, Joseph (Lawrence L)

*Curling, Alvin (Scarborough North / -Nord L)

*Kells, Morley (Etobicoke-Lakeshore PC)

*Martin, Tony (Sault Ste Marie ND)

*Rollins, E.J. Douglas (Quinte PC)

*Ross, Lillian (Hamilton West / -Ouest PC)

*Sheehan, Frank (Lincoln PC)

Wettlaufer, Wayne (Kitchener PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Preston, Peter (Brant-Haldimand PC) for Mr Jim Brown

Also taking part / Autre participants et participantes:

Bradley, James J. (St Catharines L)

Clerk pro tem / Greffier par intérim: Decker, Todd

Staff / Personnel: Poelking, Steve, research officer, Legislative Research Service

The committee met at 0906 in committee room 1.

MINISTRY OF MUNICIPAL AFFAIRS AND HOUSING

The Vice-Chair (Mr Joseph Cordiano): Members of the estimates committee, we will resume with the Deputy Minister of Municipal Affairs and Housing. Mr Burns is here with us this morning and the minister will join us within an hour. I believe he is scheduled to come back. He's visiting our neighbours next door. So we'll continue. I believe the Conservatives have 20 minutes.

Mrs Lillian Ross (Hamilton West): Good morning. Can you please tell me, with the cancellation of the non-profit housing that went forward a couple of months ago, how many non-profit housing units are there now?

Mr Daniel Burns: I'd ask a couple of ministry officials to join us to help with the specific questions, Dino and maybe Patti as well.

Mr Dino Chiesa: I'm Dino Chiesa. The number of post-1986 committed units is 84,187 and the ones that were committed pre-1986 were 26,342, for a total of 110,529.

Mrs Ross: So that's how many units are currently existing now.

Ms Patti Redmond: That's right, under administration right now. We make the distinction between pre-1986 and post-1986 because that's the point by which the province assumed lead responsibility for housing. So although there are subsidies being provided in the pre-1986 units by the province, the federal government has the lead on those. So that's why we make that distinction.

Mr Alvin Curling (Scarborough North): It was 84,000 for pre-1986?

Ms Redmond: No, 84,000 for the post-1986, so that's the number of units that were developed under the federal-provincial program, the Project 3000, Homes Now, Project 10,000, those programs.

Mrs Ross: Excuse me; I'm a little confused about this. Is co-op housing included in that amount?

Mr Chiesa: Yes, the co-op housing is included in that amount. Co-op, not-for-profit and the municipal non-profit are all bulked together in that number.

Mrs Ross: I believe when we left last week we were told that the co-op housing, nothing was going to happen with those units because we sort of hold the mortgage for 30 years. Is that correct?

Mr Burns: As these projects are developed, when they open, they open typically with 35-year financing and a 35-year operating agreement between the sponsor and the ministry. That operating agreement covers the basic norms that we set out for program administration and the basic ingredients of the financial relationship. That's the factual part of your question.

On the second part -- "Does that mean that nothing can be done?" if I can use your words -- it is possible to redesign program parameters, it is possible to look at financing alternatives, but that must be done in the context of recognizing that this housing stock does have mortgage debt on it and the sponsor groups do have operating agreements with the ministry.

Mrs Ross: In the non-profit housing units, are most of those housing units rent-geared-to-income?

Mr Chiesa: It varies but, on average, about 70% of the units are rent-geared-to-income within those numbers. The rest of them are rented at market rents.

Mrs Ross: The ones that are rent-geared-to-income, is there a particular ratio that you look at? Is it 30%?

Mr Chiesa: The current percentage that's used is 28% of the income is what the tenant pays for rent.

Mrs Ross: Is that comparable to what other provinces would charge for non-profit housing?

Mr Chiesa: It varies. Some provinces charge more, up to 30%, and I think one or two charge 25%. They're looking at their funding.

I'm sorry, the one point I didn't make, when you asked a question on the percentage of RGI, the 70% applies to the ones that were done post-1986. The ones that were earlier than that, the percentage of rent-geared-to-income units is a little less than 70%.

Mrs Ross: Post-1985 is because previous to that it was federal?

Ms Redmond: Pre-1985 is federal lead and post-1985 is the provincial lead on the program. The pre-1985 programs had a minimum 25% geared to income and up to 50%. They have a much lower percentage, on average, of geared-to-income units in them than the ones under provincial administration, which are, on average, 70% geared to income.

Mrs Ross: I want to ask about the co-op housing again. From what I heard last week, is it true that anyone can apply to co-op housing; it doesn't matter what your income is? Is that correct?

Mr Chiesa: That's correct.

Mrs Ross: Say someone is making $60,000 a year and they apply for co-op housing. Are they subsidized in that unit?

Mr Chiesa: Well, yes and no. What the person would pay is the market rent. In other words, if that project were built and it were not co-op, or not not-for-profit, just a regular apartment rental building, and the rent for that unit might be $800, then that person would pay the $800. Where it gets a little bit complicated is that with the actual cost to put up a new unit and the actual cost associated with that -- the repayment of the debt and the operating cost -- the break-even rent is somewhat higher; on average, it's around $1,200. So there is, in that particular case, a $400 what we call bridge subsidy, to bridge the gap between the economic rent or break-even rent and the market rent. In effect, they are --

Mrs Ross: They're subsidized.

Mr Chiesa: There is a subsidy, but it's a different kind of subsidy. It's not a rent-income subsidy.

Mrs Ross: I also understood that co-op housing was built with standards that were higher than, say, other housing that was being built. Is that correct?

Ms Redmond: Yes, the technical standards that the ministry developed for the program have higher standards in areas like energy efficiency than the building code would require, looking at standards that would help to reduce the long-term operating costs. But yes, that's true.

Mr Ross: So they would have, say, high-efficiency furnaces as opposed to mid-efficiency, that sort of thing.

Ms Redmond: They have standards that exceed the requirements in the building code, and yes, they would have things like higher-efficiency furnaces. They also have different standards with respect to modifications for the physically disabled units as well.

Mrs Ross: I need to get all these facts straight, so I'm going to pass on further questions till I get them all sorted out in my mind. Peter, did you --

Mr Peter Preston (Brant-Haldimand): Preston, the sergeant of the Yukon.

Mr Gilles Bisson (Cochrane South): That's what I was about to say.

Mr Preston: Everybody does.

The bottom line is that we've got 110,000 units out there, roughly. How many of those are costing us 10 grand a year?

Ms Redmond: The $10,000 a unit is the approximate average for the post-1985 program.

Mr Chiesa: About 84,000.

Mr Preston: All right. Those are the ones that we are on the hook for the mortgage too.

Ms Redmond: Yes.

Mr Preston: What about the pre-1985? Are we on the hook for the mortgage for those?

Ms Redmond: It depends. There are some units that the province has more of a role in, and that's the municipal component of the post-1985. But no, they're the federally led programs.

Mr Preston: What are the post-1985s costing us?

Ms Redmond: Sorry, the pre-1985; I misspoke myself. I apologize.

The Vice-Chair: Let's not get the last 10 years confused. I want to make sure we make that very clear.

Mr Preston: What are the pre-1985s costing us?

Ms Redmond: I don't actually have the answer in front of me, but it's considerably less because those units are much older, so the mortgages have been paid down. The other aspect is that the federal government's contribution is part of it as well. But I can get that answer for you and provide it to you later.

Mr Preston: I don't need dollars and cents. Is it half?

Ms Redmond: It's probably a little less than half.

Mr Preston: Four grand, roughly?

Ms Redmond: We can look it up, but roughly.

Mr Chiesa: It would be less than half.

Mr Burns: The most important reason that it's less than half is the same reason that the Ontario Housing Corp's subsidies are less. They were built before the inflation of the 1970s and early 1980s, which reduced the proportion of the operating cost that goes to debt servicing.

Mr E.J. Douglas Rollins (Quinte): Of the units we have available, how many are equipped for disabled people?

Mr Chiesa: It depends on the project, but it's between 5% and 10%.

Mr Rollins: Only between 5% and 10%.

Ms Redmond: That are modified for the physically disabled -- wider hallways and modifications to the bathroom and things like that. There are some projects that are 100% modified, depending on the sponsor group and what tenants they were proposing to have, but it does average around 5% to 10%.

Mr Rollins: We have some that are 100% for disabled?

Ms Redmond: Yes.

Mr Rollins: I see. Most of those would be located in Metro or around this area, or are they in the outlying areas? I find it strange that in Quinte, I don't believe we have any that are capable of --

Ms Redmond: No, I think they're concentrated in Metro and larger urban areas, but there are some units that are all modified because the sponsor group that was sponsoring the project, that was the particular kind of tenant they were proposing, and in some cases they also have support service funding from another ministry.

Mr Rollins: Some of those units are equipped so that there are blind people in them too?

Ms Redmond: Yes, there are projects for the visually impaired.

Mr Rollins: So there are a number of those. Would the costs be quite a bit higher on those units than they would the others as far as costs are concerned?

Mr Chiesa: There's about a 15% allowance that we allow. Sometimes it gets that high, sometimes it's less, but the maximum that's allowed is 15%. They usually come in at less than that.

Mr Rollins: Just because of the added facilities that they have to have.

Mr Chiesa: Correct, all the way from architectural design to actual building in place.

Mr Rollins: A large number of these units are designed basically for seniors also, or is it just that they kind of grow into that system, they get into it when they're younger and they work in that way?

Ms Redmond: Most of the seniors' projects that are just for seniors don't really have any physical modification, although some of them have some additional requirements in terms of motion, if they hadn't moved in their unit and things like that. I don't think they are much more expensive. There's no additional capital required in those units. That's different if the project is actually targeted for the frail elderly, seniors who are in need of some level of support care. They may have additional requirements as well.

0920

Mr Chiesa: There are some architectural details to it where the plugs sometimes are a little bit higher and there are modifications to the washrooms with grab bars, just very basic, standard things they would have, kitchen cabinets a little lower, just different aspects to it that are more sensitive to seniors' needs.

Mr Rollins: So they are adjusted, in many cases, for that?

Mr Chiesa: Yes, they are.

Mr Rollins: I think that's one of the pluses for it, because we continually need to be reminded that we do have people who require different facilities and that we should keep building for them to some extent.

With older places, we're basically tied into that pre-1984 bill. We're tied into that for some time yet, I believe?

Mr Burns: Yes. The very first generation of projects funded by the federal government under the approach that used local sponsors, non-profits and cooperatives, the ones built in the late 1960s which had 25-year mortgages, have been burning their mortgages in the last few years. But the programs that we're involved in administering, nobody is about to reach the end of their mortgage operating agreement period in the next few years. They've got a while to go.

Mr Rollins: What percentage did we go into with that? The feds are into it, and I know we're into it to some extent. But what are we into, just the operating of it?

Mr Burns: The federal-provincial program, which is the largest component of all of this, is a 50-50 cost-shared program. But the province for some years has been funding non-profit and cooperative housing on what's called a unilateral basis, which essentially means using our own money entirely. For those programs and those projects we support 100% of the necessary costs.

Mr Rollins: So there's no federal support in those whatsoever?

Mr Burns: Not in what we call the unilateral ones, no.

Mr Rollins: I see. Are they representing a larger number or are they about the 26,000 of those that we're into?

Mr Burns: They're part of the 84,000. The federal government progressively reduced its funding through the 1980s and into the 1990s and stopped, I think entirely, in 1992 or 1993. The province began in 1987 to fund unilaterally, significantly, and from 1987 till last July funded a considerable volume of new construction each year.

Mr Rollins: I think that probably runs us awfully close to our time.

The Vice-Chair: You have about three minutes. You have till 9:28. From my vantage point it looks like 9:25.

Mrs Ross: Just one more question. I'm going back to co-op housing again. If, in the past, a community-based organization came to the province and said, "I want to develop 100 units," I'm a little confused about who's supplying the money for those 100 units. Can you help me with that?

Mr Burns: Let me just go through the steps. The first thing was to have the application evaluated. The evaluation system changed over time, but in more recent years it's been a competitive process. There were far more applicants than there was funding available. If you got past the evaluation process, you got a preliminary letter from the ministry saying, "You can start." The ministry would then arrange for some very preliminary financing to be made available to you from a bank. We operated a financing program competitively. We're trying to get good rates for the whole system.

You would then begin to work with an architect and a planner, lawyer, whoever you had to work with towards your project. The costs, as they arose during the project, would be run until the point when it opened, at which point they would be converted to a mortgage. It's identical, really, to the process used in private development.

That financing was made available from private sector financial institutions. What we did was arrange for competitive rates through a process we use to manage the financing in the program, but the actual money comes from a bank. At the end, the mortgages are all private sector mortgages, if I can put it that way. They're all held by banks or trust companies.

Mrs Ross: Then, with respect to upkeep and maintenance of co-op housing, that responsibility lies with whom?

Mr Burns: It lies with the sponsor. They own and operate the project. What they have with the ministry is an operating agreement that says something about how people who are going to get RGI assistance are to be chosen, their annual re-evaluation and other standards we require that the project meet. They have to make an annual submission on their operating budget. They have to give us their audited financial statements each year. The auditor is required to look at more than just adding the numbers up; he has to look at whether they're doing, for instance, the income calculations correctly.

That operating agreement establishes the financial relationship between the ministry and the operator, the operator looking at their budget, their expenses -- the biggest expense is debt service, followed usually by property taxes and utilities, and then finally what we call manageable costs, the ones they really make decisions about: the annual maintenance program and whatever staffing they have in place. That's their cost side. They have a revenue side made up of their rent revenue, and the gap between their rent revenue and their allowable expenses is met by the ministry.

The Vice-Chair: Your time has elapsed.

Mr Curling: Let me follow through on what we're talking about: public housing and the private housing concept. The Conservatives asked about market rent, how much subsidization goes on in non-profit housing and what kind of subsidization you would say in the private sector. The question was, are those paying market rent subsidized? A good question. Would persons paying market rent get the same value for the money that they paid in non-profit housing or in co-op housing as they go to the private sector?

Mr Burns: If the system is working properly, people in units within the non-profit cooperative sector who are paying rents based on market benchmarks should be paying what they would pay for a similar unit in a private sector building nearby.

Mr Curling: Then the motivation of a person who comes into a co-op or a non-profit home to be in there -- I don't want you to anticipate their feelings about coming into a co-op. They're not being offered anything more. Are there any studies showing why they would want to live in non-profit housing more than a privately run enterprise?

Mr Burns: I don't know of any studies that have looked at that particular issue, no.

Mr Curling: The reason I'm asking that is that many people feel that those who are paying market rent seem to be getting a big bargain and that they are being more subsidized than in the private sector. Correct me if I'm wrong, but I think the concept is not to have, if you want to call it a ghetto, of people who are RGIs only living in a place but to have some people at market rent to say this is a community that is a normal community outside. Many of the people who pay market rent most of the time are dumped upon, feeling that they're getting something more and they're being subsidized. That concept has to go, because there are two different types of concepts that are being run outside, and the quickness to dump on those people sometimes is very unfair. I hear that quite often. In other words, what we want to achieve in public or non-profit housing could not be achieved if we didn't have those market rent people living there, because they contribute their kind of day-to-day living also. It's a comment. I don't know if you want to comment too.

Mr Chiesa: You're commenting on integration and the concept of how that works within that context, and that's the program. It was based on that premise.

Mr Burns: Let me say one last thing about the financial arrangements. While it's true that rents paid by market tenants in this program are benchmarked against private sector rents, it's also true that those rents are less than what would be required to retire the cost of creating the particular unit or to manage it. That's what Dino said before about saying there are two points of view on this. My memory of what my economics professors used to say is that if a good or a service is offered at less than the cost of producing it, then there's a subsidy in that, if it's done by the public sector.

0930

Mr Curling: That's a good point, Deputy, because we're having two types of concepts of housing out there. One is that the government went into the public housing business in order to manage, if you want to call it lives, some people in transition and some people whose income was such that they could not access the private market, and somehow it needs even more. Therefore, the cost to run that kind of non-profit, that kind of concept of housing, will be much higher than the private sector. The private sector would not be concerned about counselling and all the other aspects of things that would be necessary in those non-profit housing, so therefore the cost would be higher.

My economics teacher would dissociate the social aspect of it and the social cost because she is, like someone said, comparing apples and oranges or maybe grapefruit and oranges, which look alike and almost taste alike but sometimes they are slightly different, and we get into that kind of concept and the cost is higher.

Therefore, would you agree that running non-profit housing, its entire cost, taking everything into consideration, is much higher than running a private concept of housing?

Mr Burns: Let's disentangle the costs a little bit. I ran through some major components of cost before. I'll just run through them again. The first one is debt service: For co-ops and non-profits built recently, the cost of servicing that debt is obviously a lot higher than debt service for projects built 15, 20 or 25 years ago, whether they're private or public housing or non-profits built a long time ago. Let's take that aside and look at the remainder.

The property tax and utilities bills should be roughly comparable, a lot of things being equal between the two sectors. So leave that aside.

That takes you to what I called before the manageable costs. There are parts of those costs where costs in the non-profit sector should be comparable to ones in the private sector, the ones for a lot of the maintenance activities, for administering the basic landlord-tenant relationship.

Then there are going to be some costs that will inevitably be higher in the non-profit sector because of the requirements we put on non-profit operators to do things that a private landlord wouldn't have to do, like administer a tenant selection system, administer an annual rent recalculation with an individual tenant; and in the case of providers who also have either wholly or a large portion of their tenant population households with special needs, they may have to provide extra levels of service.

But I think it's important to disentangle those parts of the cost structure where you can and should use private sector benchmarking from those where you can't because we're essentially asking them to do a bunch of things that wouldn't arise in a private sector context.

Mr Curling: I think you put it very well, Deputy. Therefore, we can contract out some of the jobs to be done in that housing to the private sector; if someone wants to come in and fix the doors, we'll privately contract it out and we can take care of that, so it must be comparatively speaking. In other words, if you replace 50 doors in the private market and replace 50 doors in a non-profit market, it's supposed to be the same. But somehow we find that the management of that really increases the costs, and then the burden comes that it costs more to run a non-profit, maybe because of bad management, bad contractual agreements, and then the tenants -- one of the things, and that is the political part, where the decisions are made politically, is to say, "We must get out of the business because were are just bad managers." Therefore, the concept of why we are in public housing goes out the door because of the other things: There are the other, human factors that are taken into consideration, that have a cost that is not in the private sector, that have got to be attached to the public housing sector, so the cost goes up.

The point I would like to make is that when you're making your presentation to the minister on all that, emphasize the human aspect of it all the time, the human cost for life and the human cost financially to have the counselling, that it costs to run a democratic process within the tenants' association. I think that when we get out of that market, we're going to lose people and how to assist them to manage their lives.

Let me go on a little bit. I'd asked the minister the last time about interministerial committees. Maybe I could ask you too, Deputy. The Ministry of Community and Social Services, the Ministry of Health and the Ministry of Housing: Do you, as deputies, meet in regard to housing challenges that you have and have to deal with? Do you meet on that regular basis?

Mr Burns: We have a similar structure to the one the minister described last week. There's a permanent committee of deputy ministers in the social policy ministries who meet to deal with the entire range of issues that arises among social policy ministries. In addition to that, on an issue basis or a project basis or a proposal bases, we will create a committee to work on a particular set of issues or problems for a period of time. It's identical in that it mirrors and is analogous to the political discussion you heard the minister describe last week.

Mr Curling: Let me take a specific case then. At the moment, is there no interministerial committee dealing with the homeless? Some of the costs of support for some of those people who are out there are assisted and supported by Community and Social Services, or some costs are supported by the Ministry of Health. Is there such a committee now dealing with that?

Mr Burns: We have and have had for a very long time an interministerial process for talking about all those situations where housing for people and services to people come together. People who are now homeless who might be trying to enter the permanent housing world as opposed to the hostel world often come across non-profits that specialize or make a particular point of trying to support and help those people. We have and have had for a very long time with Health and Comsoc dialogue about what is usually called supportive housing, of which this is one aspect. We continue to have that forum and that process and we've been charged recently with looking at the issues the minister mentioned to you the last time we met.

Mr Curling: So there is no permanent structure. It's just you meet from time to time, as you said, in regard to issues that may arise that have some impact on the ministers.

Mr Burns: The structure is effectively permanent. Whether we're meeting intensely or less intensely depends on what's on the agenda.

Mr Curling: I would have thought that the 20,000 homeless people out there would have been a situation that one would have been meeting regularly on to see how we can resolve most of the problems there. That was my concern.

Maybe you and your staff could help me about shelter allowances versus RGI. Are there any studies being done now about benefits that are more positive with shelter allowances than having the RGI? How much money -- I think someone had quoted -- now is being dispensed in RGI and how much money would one anticipate in the shelter allowance direction that the government is going to go?

0940

Mr Burns: As the minister indicated last week, and I actually participated in that discussion as well, we now provide support to households in the housing market through the RGI system, taking all programs together, in an amount that is roughly $700 million a year in value, plus the shelter component of income security programs administered by the Ministry of Community and Social Services amounts to about $2 billion a year in the current configuration of the program. Those are the base numbers.

As the minister indicated, we are looking at the introduction of a shelter allowance program, at the options for approaching the introduction of a shelter allowance program. We have not finished that work. The work is under way; we have not finished it.

As the minister indicated, an important ingredient in this consideration is what the federal government is doing in the same terrain. The Canada Mortgage and Housing Corp was the subject of a program review in the last year. Minister Martin announced in the last federal budget that the federal government would be doing program reviews of quite a large number of federal crowns and non-core programs of the federal government.

It's our understanding that the program review of Canada Mortgage and Housing is complete, but we don't know what the conclusion is. We're expecting to hear either in the federal budget or around the federal budget. That will be an important ingredient in thinking about what options the province might have for looking at the introduction of a shelter allowance approach within the social housing terrain.

Mr Curling: So the RGI program combined with Comsoc is about $2.7 billion.

Mr Burns: This year, yes.

Mr Curling: With the anticipated move to shelter allowance, there are two considerations: one, that more people would get assistance with access to affordable housing. Is that the concept? Is that the direction they want to move, that shelter allowance would give people more access to affordable housing?

Mr Burns: As the minister indicated last week, the situation we have at the moment among households who have the most limited means is this: If you happen to get your shelter supported through the Ministry of Community and Social Services programs, you get a pretty good level of support in a lot of housing markets in the province; if you get your support because you happen to be living in a unit which allows you to have a rent-geared-to-income arrangement, you get quite a lot of support; but if you're in neither of those situations but you have very limited means, you don't get any support. It's in that third part of the community of households with very limited means that you get households paying 50%, 60%, 70% of their income for rent.

As the minister indicated last week, that horizontal inequity, to use a policy term, is something he wants to address, and it is a key component, obviously, in the policy work we're doing on the question of shelter allowances.

Mr Curling: I understand the inequity or the cliché used all the time that we don't want to subsidize buildings, that we want to subsidize people, or something of that sort. With that configuration that he's going to change, do you feel we would serve more people -- that's the point I'm trying to get at -- in getting access to affordable housing and that there'd be no decrease in the support of what they give now?

In other words, if one individual is being subsidized for 80% of the rent, do you anticipate that when shelter allowance comes in, that 80% subsidy will be reduced? You're saying, "We want to give more." It's easier, like day care, where what they have done is put a limit on it and said, "We have this amount of money and more people will be served." Will those people who are getting a subsidy to some high level because of their inadequate income -- is it an anticipation that will be reduced, the cost of shelter allowance?

Mr Burns: I'm not anticipating any particular outcome because at this moment in time what we've been asked to do by the government, as the minister indicated last week, is to examine the terrain carefully, to present the cabinet with options, to cost those options, to look at the implementation issues, to consider the position of the federal government, and it would be leaping to conclusions for me to draw a conclusion at this point of what might happen when the cabinet has that policy discussion.

Mr Curling: One of the things that is going to control shelter allowance is the anticipated lifting of rent control, and the minister said he will be looking for an alternative to rent control. Do you feel -- there are more studies done in regard to rent control -- that change itself will have a negative impact or a positive impact with regard to shelter allowance? In other words, rent control --

Mr Burns: This is another terrain where the cabinet has asked for its options, and as the minister again indicated last week, that is what we're working on. While he was pretty clear on his views about the current system, he didn't indicate, and I can't indicate, that the system that will arise after rent control will look like A, B, C or D. The decision hasn't been made yet.

Mr Curling: Deputy, I can understand where you're coming from; I can't understand where the minister is coming from entirely, because most of the funds we have here are driven by political decisions, and I just want to know where they are going with all of that.

Last week I gave an indication that I wanted to talk a little bit about employment equity and the department you have within that ministry. What is the total amount of funds available to employment equity in your ministry?

Mr Burns: I should answer that question in two parts. First, in the estimates book you have before you the employment equity program, as it existed at the time this book was put together, would have cost the ministry, in rough terms, about $240,000 this year. However, I should indicate that the employment equity office doesn't exist as a separate entity any more. The new government, as you know, has moved away from the employment equity approach that the last government took, and as part of that, employment equity offices were wound up in their historic configuration. The responsibilities that remain are now part of the larger mandate of human resource branches in just about every ministry, including ours.

Mr Curling: Did you lose that money in the process, or was that money absorbed into human resources?

Mr Burns: In the first instance we simply reconfigured the organization so that the staff and budget responsibilities were merged in the way I indicated. Both in-year and for the next two years, we are looking at reducing the size and cost of our organization. That applies to all our functions.

Mr Curling: What negative impact did it have on the ministry when it was asked to cancel the employment equity division or department or section?

Mr Burns: I'm not quite sure what you might mean by a "negative impact." It had the impact I described. Whether that's positive or negative is, I guess, in the eye of the beholder.

Mr Curling: The negative impact -- I presume the positive impact, let me put it this way, is recognizing that there were barriers existing within the system that were not allowing people to be promoted or to be employed or to be trained, and what you've described is you've said most of that has moved over to the human resources area.

0950

Mr Burns: I think I now appreciate what you're asking. Our ministry, like all ministries, has an obligation to ensure that its human resource practices are of the highest possible standard, that its training programs are available to all of its employees, that its promotion competitions are operated in the most open and fair manner. Those obligations remain, irrespective of the organizational design we might use to reflect our part of a government's interest in these issues.

Mr Curling: Let me ask you this other question then, Deputy. In the past it was recognized that this was not being achieved and then the employment equity area came into being in order to address those challenges that were before us. Now it's gone, and you say that it was always the intention of the ministry to recognize these situations and deal with them as fair as possible. In the past, though, the problem was that, with all the great intentions, it wasn't being done. The government came in and said, "It's not being done, so here is an area we'll put in in order to recognize that." Then another government comes in and says, "We don't need that because we've always been fair." My question then was to say, what has changed? What positive or negative impact has this had? I'm not quite sure that it would have made any difference if it was there or not, because you said that all the time we were doing the things that were right. But people are saying no, it wasn't right, because people weren't being advanced through the system.

We being -- "we" the government, that is -- one of the largest employers, we're very much guilty, even more than the private sector, of some of the systemic discrimination that was happening. So you can assure me now, then, or reassure me, that employment equity, not in its clichéd term, is being done and that nothing has changed really, you are moving still towards having equity in the workplace, and that will be achieved even without the $240,000 division or section they had in the ministry?

Mr Burns: I think to fully appreciate your question I'd have to ask what you meant by some of the things that you indicated you thought were important goals or aspects of this, but I just repeat what I said before. Those base responsibilities remain. The new government has made it quite clear that policy framework for equal opportunity will include ongoing attention to the issues that I mentioned before.

Mr Curling: The staff that were employed by the employment equity area, are they still there? Has anybody lost jobs? Has anybody been laid off?

Mr Burns: As I indicated before, the staffing that had been a part of the employment equity office in the Ministry of Housing before the change in government is now part of the base staffing of the human resource branch in our ministry.

The Vice-Chair: Thank you, Mr Curling. We turn to the New Democratic Party.

Mr Tony Martin (Sault Ste Marie): I just want to say at the outset how troubled I am with the direction that I anticipate this government is going re the question of public housing and getting out of the business of housing in that we live in a society today, particularly here in Ontario because it's closest to most of us in Toronto and environs, and in my own community of Sault Ste Marie where we still have a large number of people who are not properly housed, who do not have the kind of housing that speaks to a quality of life that I think the amount of money today floating around -- mind you, in fewer and fewer hands -- would indicate we could probably, as a community and as a society, afford.

Ontario got into the public housing business a few years ago for very definite and specific reasons, and many of us remember that because we either were ourselves in a situation where we needed to be housed more adequately or we knew of people who needed to be housed more adequately, and that housing either wasn't there or it couldn't be accessed in a way that was affordable. So the government got into the business of making sure that there was adequate and safe and warm housing available that had the space that was necessary to accommodate the needs of families with children and with people in those families who perhaps had specific needs that needed to be looked after because maybe they were challenged in one way or another. So the provincial government, out of a need to respond to a mandate that government over the years has always been called to respond to -- and that is, when somebody in the community is in crisis or in need of some assistance because of conditions or situations that are beyond their control they can't deal with themselves, then we gather as a community of people to make sure that those who are at risk most are indeed looked after.

In those times, the private sector was not building the kind of accommodation that these folks could access or could afford to access, and so the government got into that business. I would suggest to you that really not much has changed. As a matter of fact, things may have even got worse. The niche that public housing fills or the need that it responds to is still there and was not then being responded to or filled in any adequate way by the private sector, nor do I suspect will it be if the government of Ontario decides, as it looks like it is doing, to get out of that business now. There will be a lot of people who will be out of a place to live, and if not out of a place to live, out of a place that speaks to the quality of life that all of us expect we should be able to access in a civilized society.

Last week I picked up the newspaper and read that most of our major corporations are making historically record profits in a society where the people who work for those corporations, because they are making that kind of money, are doing quite well, particularly those at the top echelon. So the premise somehow that government cannot afford to be in the public housing business just, in my mind, does not hold any water, and the premise that the private sector is just revving its engines waiting to get into and to fill the void that's going to be left when government gets out does not hold any water either. So I have personally some real concern about the folks out there who are now receiving less, whether they're the working poor who are now being knocked off the rolls in record high numbers because they don't qualify any more under the new guidelines for any kind of top-up or assistance of any sort or whether they're in fact people on welfare who are now finding that they have less in their pocket than they did before October 1 and are now having to make decisions about some very basic necessities that will force a lot of them into downgrading the kind of accommodation that they've come to enjoy, however limited in some cases, and now will no longer be able to afford.

1000

This is bringing with it some tremendous stress on the public housing system, as well as on the private housing stock that's out there, where landlords who got into the business of renting, thinking that it might be a good way to make a few bucks, put something in place that will be there for them when they retire, are finding now that many of the tenants that they have can no longer afford to pay the rents that are presently in place, even with the rent control legislation that's there now, which we're anticipating will also disappear. They were able to at least keep their head above water, but they're finding more and more with the decisions that are being made by this government that they can no longer stay in the business.

So you have the private sector landlords who are in the business now under stress and making decisions about whether they will in fact stay in the business or not, at a time when the government is looking at getting out of the business of providing affordable, decent housing. You put that together with all of the other complications that decisions being made by this government are having and I have to say, I'm somewhat distressed and concerned as I look at it.

I guess what I want from this government, as I've asked in so many other areas, is some data, some information, something that will make me a little bit more confident that at the end of the day, when you move out of the business, at the end of the day, when you're finished your cutting and slashing of services to people, that there will be available to people housing that is, as I think we all expect it should be, safe and affordable and speaks to a dignity and a quality of life that reflects that we do in fact in Ontario live in a civilized society.

What studies have you done, what information do you have at hand that will give me that confidence and allow me to go back to my constituents in Sault Ste Marie, in northern Ontario, and, when given an opportunity, in the larger metropolitan areas, to say to them that they don't have to worry, that in fact there will be a stock of good, safe, affordable housing for them next year and the year after and 10 years from now?

Mr Burns: As the minister indicated last week, the work of assessing what alternatives there are to our current arrangements is under way at the moment, and while, in broad terms, the government has laid out the kind of objectives it would like to see met, the options it's got for meeting those goals have not been completely considered.

As you know, in the process used in cabinet, in government, the minister and the cabinet themselves have an opportunity to examine those options and to choose what is necessary or appropriate in terms of discussion or decision-making around those issues. Because these are all questions that are presently under consideration, as the minister indicated last week and as I confirmed a few minutes ago, I don't have a document to hand to you that sort of looks at the cost and structure and operation of any part of the system at the moment or what might happen under alternative A or B. That is the work that's going on presently.

Mr Martin: You don't think it would be appropriate or helpful to the whole process to somehow include those of us who have been elected by large numbers of people across this province in those discussions and to share with us that information if you want us on board in any significant way, if you want us to be helpful as you move in this very aggressive and dramatic way to change some of the very basics of what people expect will be there for them in a society such as the one that we have in Ontario today?

I just find it really difficult to believe that in fact you have done that kind of homework, that you have those numbers, that you do understand and can quantify the impact of these decisions and keep them somehow hidden, secret, under the veil of cabinet confidentiality and not share it with the rest of us. Because every week, when we go home to our constituency offices and as we walk through our communities and talk with the people we represent, we are presented with some very serious questions by people. I have to tell you, frankly, I don't know how to respond. I don't have any answers. What it does is it adds to the level of anxiety and tension that's out there and in my mind takes away from any confidence people might have that in fact life is going to get better in this province so that they might participate in some creative and constructive way in making sure that that is what happens.

I would ask you, I guess, when it is that we might expect to have presented to us some of the facts and figures and numbers that you suggest are being looked over at the moment by those who are involved in this very clandestine and secret cabinet process so that we all might get on board and support this new direction and not be as concerned as we are that what's going to happen in the end is you're going to have a whole lot more people in Ontario who will not be housed either because there isn't a supply of affordable, decent housing out there or they won't be able to afford it.

Mr Burns: Obviously, I can't give any specific commitment on timing. That's not in my hands, nor in fact is it in the minister's hands. But it would perhaps be appropriate at this point to repeat what the minister has said a number of times about this issue in public forums, and that is that people who live in public housing will have an opportunity to have a dialogue about this before things happen. That undertaking he's given any number of times, and I think it was contained in the remarks he made here last Thursday.

1010

Mr Martin: I did sit for a time last Thursday and listen to the minister and I listened to some of the questioning here this morning, in particular by my colleagues in the Liberal caucus. I can't help but think that this is just another example of this government moving ahead very rapidly, making decisions that are going to affect directly and in major ways the quality of life of ordinary citizens, of poor citizens, in many cases the most vulnerable of our citizens, and then after the fact telling us that we're going to be brought in on some discussion about how all this is going to unfold. It's like closing the gate after the horses are out.

In northern Ontario we've had over the last six months example after example of decisions being made by people in Metro about how we're going to maintain our roads, particularly in the wintertime. The new policy now, Morley, by your government in northern Ontario is that when we have a snowfall, there aren't enough plows, so we close the road down. Actually, it's great for the doughnut and coffee shop business because we're all sitting in doughnut shops. Every weekend you go up north on 69, that little Tim Horton's there just outside of Parry Sound is just loaded with people.

Mr Morley Kells (Etobicoke-Lakeshore): All your buddies are there.

Mr Martin: Yes. Everybody's spending money because the policy of this government, who really don't understand the challenges that real people are facing because they've now locked themselves up in the pink palace -- it's become a fortress. You can't even get in any more without breaking the windows --

Mr Kells: Come on, loosen up.

Mr Martin: -- to talk to ministers and to the decision-makers. Then we come to these forums where finally we get a chance to speak to the ministers and the officials responsible, and they tell us that it's all cloaked in secrecy. We can't have the information, we can't have the numbers; they're somehow part of the cabinet process. You know, we will be invited in, they will share that with us, but it'll be too late.

In northern Ontario they closed down the only airline, actually an airline that was put in place by your government. Morley, you may have been part of that government. I don't know how long you've been around here, but they tell me you've been here for a while. You put in place a corporation to respond to the very real transportation needs of northern Ontario -- and in northern Ontario, if you don't have transportation, you don't have anything -- and this government is just systematically, in a very short period of time, taking away all its money.

I don't know how we're going to get around up there. Gilles suggests maybe we all buy Ski-Doos; Al Palladini suggests we all buy cell phones. It's going to be pretty interesting, to say the least.

It's the same approach we're finding as this government and the Ministry of Northern Development and Mines makes decisions about how we will travel in the north that we find in the area of how we will house citizens who live in this province.

I can't help but get a little parochial here. We have some problems in Toronto and Metro, we really do, and when we were government I took the opportunity to go around with some people who work in the area of low-income and poverty groups and visit some of the private sector housing in particular that's out there. I have to tell you, I'm glad that I'm not having to settle for what some people are living in today. It's pretty frightening.

In northern Ontario, though, in places like Sault Ste Marie and, I guess even in a more critical way, smaller communities like Wawa, Chapleau, Hornepayne and the many very small communities important to our resource economy, there are people up there who live in public housing and who expect that through some partnership with government they will continue to be able to access and afford housing that's decent and, when you look at this winter in particular, that's warm and safe.

What are you going to do? What are you going to do in small communities when the private sector determines that it just can't afford to build housing in places like White River and Atikokan because under the new rules it just isn't a viable business proposition to get into building housing of that sort?

Mr Burns: I think it's worth mentioning three things in response to the many questions invented in your last remarks.

First, in the British constitutional tradition, all governments have the right and perhaps even the obligation to carefully consider their circumstances before publicly delivering legislation or white papers or green papers, and there's nothing different about the process being engaged in by this minister than processes engaged in by other governments to look at policy issues before they enter the public discussion phase.

Secondly, with respect to the situation in the private rental market, we had quite a long discussion about that on Thursday, and about the need to look at conditions in that marketplace and at the set of issues that would need addressing if one wanted to ensure that you had a marketplace in which people would be likely to invest in private sector rental housing. That agenda of issues is part of what we are looking at at the moment, and the minister I think indicated very clearly on Thursday that it was an important part of considering what happened next in the private rental market. It wasn't just a matter of thinking about what might succeed the present Rent Control Act. And that assessment applies as much to smaller communities in the province as it does to larger ones.

Mr Bisson: I would say that's a heck of an admission, because what I take it you're saying is that the dismantling of our rent control system is being looked at seriously by this government, which would result in putting three and a half million people in jeopardy with the cost of rental units for the favour of a few people who might profit in the development sector in the rental market. I just think that's quite an admission.

Just a series of quick questions, because I've only got about eight minutes, apparently, if I'm correct, Chair?

The Vice-Chair: Less.

Mr Bisson: A little bit less than that. Okay.

Is the government still committed to a universal shelter allowance to replace the non-profit and Ontario Housing that you would sell off? Is that still the direction you want to go in?

Mr Burns: I think the minister indicated on Thursday that a shelter allowance was a way, a good way, of dealing with the horizontal inequity, to use the policy term, that exists among --

Mr Bisson: So the answer is yes, you would go to a shelter allowance system, which is --

Mr Burns: The answer is not yes.

Mr Bisson: Oh.

Mr Burns: If you don't mind me answering your question, I will answer it. There is a horizontal inequity that involves a large number of households. Whether the answer to that is a universal portable shelter allowance that completely replaces all the present expenditure that supports households is not something that the minister described as a policy objective on Thursday, and he made it very clear that the options for introducing a shelter allowance support for households, and the options for transforming the social housing system, are things that are being worked on presently and that the cabinet's going to have a chance to look at in the coming months, not the past months.

Mr Bisson: You'll have to pardon me. If you're going to privatize a non-profit or Ontario Housing unit somewhere in the province of Ontario and those tenants no longer are within part of that non-profit, they've got to get the money somewhere to pay the landlord for the difference between the market rent and what they would normally pay under RGI. So how do you do that other than the shelter allowance? Are there other options that you're looking at, other than a shelter allowance?

1020

Mr Burns: Embedded in your remarks are a series of assumptions about what might happen in considering private alternatives to public housing. The characteristics of the model that you just advanced might lead to the situation you describe, but it's hardly the only way one could consider private options for what is now public housing.

Mr Bisson: Listen, it's pretty simple. It's pretty simple.

Mr Burns: Or it --

Mr Bisson: Excuse me. It's pretty simple. You sell off a 100-unit building somewhere that's now run by a non-profit, and it's taken over by a landlord. The landlord's got to pay a lot of money to buy it, and to recoup that investment, he or she has to charge rent. If you pay it strictly at what people are paying on the RGI limit in regard to rent geared to income, it would be economical for them to take it back. So you have to give a shelter allowance or something to the landlord to make up the difference.

Mr Burns: Once again, you're assuming your own conclusion.

Mr Bisson: You're going to fire-sale the buildings then.

Mr Burns: You're assuming your own conclusions.

Mr Bisson: Well, I'm assuming you're either going to fire-sale it or you're going to give the person a shelter allowance. You got to do one or the other.

The Vice-Chair: Order. We would like to get answers; you have to allow for the answer. I can monitor --

Interjections.

Mr Bisson: All kidding side aside, Chair, it's a serious issue. If you're going to sell off the non-profit, let's say, somewhere in the province of Ontario, presently the rent is being paid. The difference of the market and what is being charged to the tenant is paid through subsidies to the non-profit through various means. If you put it in the private sector, how are you going to make up that difference, that's the question, if you're not going to do it with a shelter allowance?

Mr Burns: As I indicated, the way you frame the question assumes the answer.

Mr Bisson: Well, the way you're framing your answer is also --

Mr Burns: To go to the question --

Interjections.

Mr Burns: -- looking at the public housing stock, there are parts of the public housing stock that are now owned by the Ontario Housing Corp that are managed in the private sector today, and they're managed in a way that still maintains the rent-geared-to-income system.

Mr Bisson: The landlord doesn't do that for free.

Mr Burns: No. In fact, he does it for -- at least the ones that operate in MTHA -- less money than it costs to directly operate the units. There are more ways to consider private sector involvement or privatization, if you want to use that phrase, within the public housing sector than sell to someone in the private sector with no conditions attached, for example, no condition that you maintain participation in the rent-geared-to-income system. That's the assumption you made, and of course if you make that assumption then you will reach your own conclusion. But there are lots of other ways to consider doing this.

Let's consider another: Ontario Housing Corp as you know, created in 1964, largely built or acquired its stock between 1966 and 1976, mostly by 1972. But beginning in the mid-1970s and running right through to last year, Ontario Housing Corp has been selling parts of its stock, close to 2,000 dwellings over that period of time, including a large number of the scattered units in northern Ontario, and just last year 80 units in Ear Falls.

In those circumstances, we actually had a fair number of tenant households who were able to purchase the units, given the market conditions that they were embedded in and had the characteristics of the household. So there are other parts of the stock where the circumstances of the tenants might lead you to another option.

If you look at the options followed by Alberta in considering public housing, what they essentially did was break up the monolithic provincial crown corporation-administrator approach and replace it with --

Mr Bisson: A monolithic private sector approach.

Mr Burns: No, they didn't. They replaced it with boards for parts of the province and then charged them with producing cost-effective administration. In many cases that has meant active private sector participation in the delivery of the service, but they didn't actually sell the asset nor did they abandon the program design that supported poor individuals.

Mr Bisson: Just for clarification, when you're saying they supported the services, you're talking such as cleaning, reparations of buildings -- that kind of stuff is where the private sector came in, as in the Alberta model?

Mr Burns: Property management, program administration, maintenance, all those kinds of activities. All I'm suggesting to you is, when you think of answering the question, how might you privatize or introduce much more private sector operation within the public housing framework, there are many ways to consider doing that beyond outright sale with no future obligation to participate in the program.

The Vice-Chair: Can we move to a 10-minute break, I was thinking? It's at the whim of the committee, but I would suggest a 10-minute break at this time.

Mr Curling: Do you think by that time, Mr Chair, that the minister may be here?

The Vice-Chair: I was thinking along those lines perhaps.

Mr Curling: Because every time he's away it cuts into the time we will have him for interview.

Mr Bisson: No, because it's the government members who have questions --

Mr Preston: No objections to a 10-minute break.

The Vice-Chair: A 10-minute break.

The committee recessed from 1026 to 1039.

The Vice-Chair: We will now resume our deliberations. I believe it's the Conservative Party that has the floor. You have 30 minutes and we will commence from this point on.

I'd like to note the presence of the minister. We missed you before.

Hon Al Leach (Minister of Municipal Affairs and Housing): I was with your colleagues next door.

Mrs Ross: Minister, nice to see you again. I'm sure the opposition is happy to see you this afternoon.

The Provincial Auditor's report pointed out several problems with respect to non-profit housing, in the administration and that sort of thing. One of the things that was mentioned was that project costs were going up despite large declines in land prices and construction costs; also the cost per unit to develop. What would you say was the effect of the province setting a maximum cost per unit that developers could charge?

Hon Mr Leach: What it did was take away any incentive for a developer of a co-op or a non-profit to be efficient. We said we would pay I think up to $108,000 a unit, so the goal, rather than to be efficient and look at costs, then was, "Let's see what I have to do to spend this $108,000." It became a disincentive rather than an incentive.

Mrs Ross: Would you say that, overall, $108,000 per unit was the amount that was paid out?

Hon Mr Leach: Sometimes more. Sometimes there would be overruns on projects that people would come back after the fact and try to get payments on. But rather than try and build any efficiencies into the construction of a co-op, it just became a matter of, "I've only spent $103,000; well then, I guess I'll put in gold-plated taps to get the price up to $108,000," particularly when you had consultants --

Mr Bisson: Where are all those gold-plated taps?

Hon Mr Leach: You've probably seen lots of them over in my riding, where you spent a lot of time.

Mrs Ross: Would there have been any units that would have been built at substantially less cost than $108,000 per unit?

Hon Mr Leach: There were; there isn't any doubt about it. But when you had consultants that were being paid on a percentage of the total cost of the project, obviously there was no incentive to keep costs down. The consultants that were involved, the developers that were involved, and understandably so, are in business to make a profit. One of the biggest misnomers I've ever heard is "non-profit housing." I don't know anybody who doesn't make substantial profit from non-profit housing.

Mrs Ross: I understand Mr Kells has some questions, so I'll pass over to him.

Mr Kells: Mr Minister, I enjoyed listening to your deputy because I recall well --

Hon Mr Leach: Does that mean you're not going to enjoy listening to me?

Mr Kells: I recall well when he arrived as the deputy. I went to a breakfast meeting in my role as president of the Urban Development Institute, and Mr Burns talked about housing and his ministry. He listed five major points that were going to be the thrust of the ministry, and ever after that I sort of referred to the ministry as the Ministry of Public Housing. I'm wondering, just in general terms, are we to expect that the thrust of the ministry is still one of public housing only or is there a more broad approach to providing housing or relating to the housing industry here in the province?

Hon Mr Leach: I know you're aware that it's our intent to try and divest ourselves of our housing portfolio over the fullness of time. I can say in defence of all of the staff at the Ministry of Municipal Affairs and Housing that, as an example, when we made the decision to stop subsidizing co-op housing back in July, that was a 180-degree turn from where government was going prior to the election. The staff, to their credit, took those policies, reversed them and implemented the new policy within a matter of weeks. Without a lot of dedication, hard work and long hours, that couldn't have happened, so I think they are supportive. I shouldn't say they're supportive of all government policies or any government's policies, for that matter, but as professional public servants they carry out the mandate of the government of the day, and they've done that well.

Mr Kells: It wasn't my intent to imply anything different. I'm just refreshing my memory and that of the deputy. I understand fully the role of the public servant. Actually, in my previous incarnation, as much as I represented my industry, which was in many cases a polarization from where the government stood, we always had great respect for the people in both your ministries; in those days they were separate. In both cases -- the bill next door that you're discussing -- I understand that your staff had to do a considerable amount of review. Although I'm not over on that committee, I feel as an ex-spokesman for the industry that that is a tremendous improvement, probably not all the industry wanted, but nevertheless a considerable look at another bill. Anyway, certainly not intending to tackle the work of the civil service in a critical way.

I just want to play with some numbers again. Five years ago we looked at these numbers with a very critical eye, and now we're the government and we've been reminded many times that we can't keep hiding in the past 10 or the past five years, that we must assume our responsibilities.

I looked at your opening remarks. I see that the unit average subsidy is $10,300 annually, and in my little figures here that's about $860 a month. If I recall, the last time we had those figures, maybe two years ago, the figure was up as high as $950. That is a bit of a drop. Is that because some of the units didn't get built? I wonder what happened. It's a drop in the right direction, but it's still considerable when you think that annual subsidy, averaging across the province, is $860 a month.

Mr Burns: The difference may be because the number that was included in the minister's opening remarks covers the whole universe of projects developed since the global agreement in 1986. If you were looking at ones that were opening in a particular year, particularly the ones that opened in 1992-93-94, you've got a higher number because they were built in a higher-cost environment and in a higher-interest-rate environment. It may simply be that the numbers you recall, because you were looking at a slice rather than at the larger thing -- and there are certainly components of that larger terrain that are higher costs than the number that's included in the minister's remarks, as the minister indicated a minute ago.

1050

Mr Kells: Thank you for that. To continue, we are still at the roughly -- what was it? -- 132,000 units. We still have an average of $860 a month, which I think even the proponents of non-profit or public housing would agree is a considerable subsidy. In the past, and I think it's still valid, we've used roughly $1 billion as the annual subsidy for the units involved. In most cases, the mortgage is over a 35-year period.

The defenders of non-profit particularly have always talked in terms of some mythical point in time where there is, as they call it, the crossover. Somehow in this commitment that we had as a government and a commitment of public dollars there's supposed to be some alleviation of these costs, and I don't know whether we're talking year 22 or year 23 of the mortgage. I have always challenged that. I've never had, in my estimation, a valid explanation of whether the public is ever to be relieved of this $1-billion annual charge. I was wondering if you could comment on that or give me the simple explanation, if possible.

Mr Burns: The simple explanation is that the numbers we're talking about at the moment are characteristic of the early years of projects. Most of our projects are relatively new. The view is that over time we will experience enough inflation in rents and that the portion of the operating costs that have to go to debt servicing will drop. That's forecasting a future that's a bit like the past because public housing built in the 1960s is carrying a very low debt load. If that happens, you eventually reach a point where the subsidies that are required to operate the project within the program are only the rent-geared-to-income subsidies.

Do we have projects that have reached that crossover? Yes. Do we think others will reach that crossover? Yes. Do we think all the projects in the program will reach that crossover within 35 years? No. We have modelled the financial performance of this whole system over the whole period of time, the 20 years, several times and whether the whole system reaches that crossover really does depend on the assumptions you make about inflation.

Mr Kells: As you know, maybe thanks to John Crow or not, inflation hasn't been a big factor. House appreciation certainly hasn't been a factor. I'd be interested to see your model. I'd be interested to know what percentage might eventually enjoy a crossover. I found that the arguments made by the non-profit people, who are operating on subsidies from the government to make these assumptions, somewhat deceiving and unprovable and, with all due respect, I still feel that's the situation.

But maybe let's look at it from a global point of view. Say you were looking at $1 billion a year and just round it off for the next 30 years. That adds up to $30 billion in 1996 dollars. Do you have any model that says that couldn't be true, that maybe with all these crossovers we might be looking at what figure? I don't suspect you'd have anything precise, but has anybody ever taken into consideration that the crossovers don't work?

The point I'm trying to make, Minister and Deputy, is that this is a huge commitment in dollars to the public that has yet to even get into the taxpaying brackets when you're talking 20 years, 30 years. There are people out there, young people trying to get educated, trying to work up into society, who are picking up a tab down the road for, if you will, the lucky 132,000 units that are in existence, the people living in those units. In my mind, a great number of the people in non-profit housing units have won a lottery. They've won the right to be subsidized over a long period of time.

I don't know, in the fullness of time, how fair that is to society across the board. I was just wondering if there are any comments on what our total commitment might be.

Hon Mr Leach: You're absolutely right. You're certainly not going to get any argument out of me. I'll give you a good example: the Flying Toad Co-op on the Toronto Islands.

Mr Kells: I was going to get to that. I like it as an example. Go ahead.

Hon Mr Leach: Eighty units, by lottery, to select individuals. If our subsidy average remained at what it is today, in excess of $10,000 a unit, the taxpayers would have subsidized that complex $28 million over the life of the mortgage. You're right. It has been described as a sweetheart deal and I can't find any other better word to describe it, and that applies to most of the co-op undertakings we've had in Ontario.

By the way, I've been very forceful in saying that I don't have anything against co-op construction. I think it's a great way to build; I just don't think it should be done on the backs of the taxpayers. Of the number of projects we have curtailed or withdrawn subsidy from, we're encouraging the sponsors of those units to find other ways and means of financing the projects. If they can finance it, then what I would prefer to do is to develop a shelter subsidy program that would subsidize the individual who needs help rather than subsidize the bricks and mortar for somebody who doesn't need help.

Mr Kells: Maybe let's go back to bricks and mortar. I have my concerns about this crossover and I have my concerns, and we'll talk a bit about the package inside, about who's in the co-op, but I never could see where maintenance or land values going the other way entered into the equation. We have this mortgage which the taxpayer is on the hook for, and there is no consideration that if for some reason in certain parts of Metro that I'm familiar with you might have a plunge in land values, and we certainly have seen this in the last five years for sure, that the buildings in question are even worth the mortgage on them, and 20 years down the road -- it's always been my understanding that 20 years is a pretty good lifespan for an apartment.

As a matter of fact, Sewell has a whole bunch of documentation that says all our apartments in Metro are going to fall apart and there is billions to be spent on fixing them up, but let's just get back to these non-profits. In this sort of mortgage, in case there are huge maintenance costs or a huge drop in values, where are we ever going to see crossovers or any appreciation?

Mr Burns: As I said, the long-term model assumes some degree of inflation. If the very substantial reduction in values in the real estate market we've experienced in the last few years is sustained, then that would have an implication for the timing or even the possibility of having the kind of crossover you and I were just discussing.

With respect to major investments in the building, up until three years ago, a component of the program funding was directed to a long-term maintenance reserve which was intended to capture significant capital needs in the 35-year period, and at the end of the 35 years, there's obviously an opportunity to do some refinancing if there's a need to invest a significant amount of money in a building at that point.

Between wherever the project might be in its life history and the 35 years, the question of how you'd finance a major capital need, should it arise, is one we have been discussing and continue to discuss, because it's not obvious exactly what method you would use. If there is significant equity in a building, you may be able to do it through financing. Even though we've got 35-year mortgages, most of them renew in three-, four- or five-year terms, so there are windows where some refinancing can take place. There is the base of money available in the reserve system. The problem of financing major capital investment during the 35 years is not fully resolved, and it's not going to be, I don't think, for some time.

1100

Mr Kells: What follows from that of course is, if it should take place across the board, then the 35 years and the billion annually could be raised substantially if very many buildings had come into that situation.

In the same vein, my understanding is that it was a mixture of subsidized, and there are market rents in there, and we know that in a number of buildings the market rents weren't taken up. So that would be certainly a shortfall, whether it be on a monthly basis or an annual basis. Who pays for the shortfall? When we made inquiries a couple of years ago, it was that the Ministry of Housing paid for the shortfall. Well, that again puts another cost on the taxpayer, I'm sure, particularly with the current rental situation out there, that exists today. So who is picking up the shortfalls on a building-by-building basis?

Mr Burns: Like all people who operate in this particular industry, there is some provision for vacancy loss in every operating budget, and that would be included in any approval that we gave. Should you experience a greater operating loss because of vacancy than contemplated by the outlook budget, historically that likely would have been covered by the ministry, but only after a discussion. Let's say it turned into an operating loss. You don't automatically get your operating loss covered. You may have to, in effect, repay it over a period of time after a discussion with the ministry. That's one side of it. On the other side, in a number of cases the ministry agreed to let a sponsor raise the number of units that were operated on a rent-geared-to-income basis.

The system-wide vacancy problem that arose in 1991-92, frankly, as a feature of the general recession, has largely receded as vacancy rates have tightened in most urban communities and employment levels have risen, at least west of Yonge Street. So our system is not experiencing as much vacancy loss as it did three years ago. In an extreme version, it might threaten the stability of a sponsor group, and then of course we're exposed to the risks that might arise from dealing with that or taking someone over, but that's how we manage them at the moment.

Mr Kells: But the point is, if it should happen again, whether there's a cyclical process, somehow the public is still the one on the hook. There's no doubt about that.

I want to be just specific for a bit. I don't like to talk about my own riding that often, but I have my share of non-profits. I have one in particular that has a number of management problems, and I must say that the ministry is doing a good job every time I call. It's a rhetorical question and I don't expect you to answer it, but it makes you wonder at what point they get their own house in order.

This has to do with artists. It's a co-op involving people who have proven that they have made their living, or not made their living, in a creative way, and their feeling, as they enunciate it, is that subsidized housing is something they deserve in relation to what they put into society. I don't really believe I should argue about that, but this one seems to have a flood of problems. The commercial part downstairs never gets rented, never gets finished, and it goes on and on. I, like other MPPs, wonder at what point some of these problems will go away. I don't expect you to answer that, but it is a continuing irritant.

Mr Burns: I should say that we do have an established procedure for problems that arise in operation. The regional office is supposed to follow a process. If in the first rounds a dialogue doesn't work, we can do what's called a compliance review, where we go in and assess the degree to which they're operating in conformity with the program rules. At the next level they can get a full audit assessment and they have to meet the terms of the audit. After that, or perhaps more quickly if the problems are really profound, we do have the capacity to introduce a receiver or, in extreme cases, to actually take the ownership of the project away from the sponsor group. Those aren't common, but we have done both of those things.

So as an individual member of the Legislature, if you find our ministry working on the problems but they've remained substantial, then what you should be seeing is an upgrade of our intervention from dialogue to compliance to audit to, in extreme cases, actually removing the sponsor.

Mr Kells: Actually, I find the ministry trying hard. I guess we'll just leave it at that.

Similarly, during the election -- just so I can understand here -- every time the argument was made by the non-profit community that there was a huge lineup of people wanting non-profit housing, in need of non-profit housing. In my riding there were three rundown buildings. They were taken over to be made into a non-profit co-op, and the people who lived in there were offered the opportunity to take up those units. I must say, most of them didn't understand and they still don't understand what that's about.

With two weeks to go in the election, it was moved through the Ministry of Housing, and with all due respect, I don't know how three units on floodplain that are rundown -- there was no demand, particularly, from within, and there was a great deal of opposition from within -- how this ever happened. There still is a huge amount of confusion there. I never understood how they could apply this huge waiting list of thousands to the few units that were left in a specific community in a specific place. In other words, who is lucky enough to have gained access to those units?

I did complain. I know you have cut many non-profits. I made my point that this one should be reviewed. But because one of the banks or one of the trust companies got out of there, thanks to the former policy -- they're happy to get out of there -- three old units that they absorbed by default, on floodplain land, now we again are in there for 35 years. It's almost like a lottery: Who's going to enjoy the benefits of that? I just find that kind of appalling, particularly the timing. The timing makes me extremely suspicious particularly, if I may be political for a bit, when during the election it was a major issue and when the election was over a number of publications indicated that was a victory for those people over the government of the day. I don't know if I expect an answer on that either.

Mr Curling: I'd like an answer.

Mr Kells: I can get by without your answer, Alvin.

The Vice-Chair: We need a three-minute answer.

Mr Burns: For 20 seconds: As I indicated on Thursday, through the election period we continued to work with any sponsor who had entered the program before then, and we did that right up until election day itself. So, in this particular case, they went along through the decision points that were required by the program.

The question of whether you should have, as a component to a non-profit program, what's called acquisition rehabilitation with existing tenants has been fiercely debated through the whole history of the program; sometimes people did, sometimes they didn't. It, no question, has the feature that you just described, which is that there aren't very many units available to people who are on waiting lists. As the minister indicated on Thursday, having shelter subsidies through a supply system is inevitably inequitable because people outside the system don't get any help, but if you're inside the system, you do.

The Vice-Chair: You have one minute.

Mr Kells: We're getting another chance then. Leading the Islands, I'm pleased that the ministry has made the moves it has. I would like to have presented here to the committee some breakdown on that $426,000 in legal and consulting fees that the Flying Toad Co-op spent. I want to know what the future of that trust is. I guess it's been wound up. I just don't understand how we, the public, end up picking this tab up. I know it was a bill that went through the Legislature. I know it wasn't debated. They tell me it went through late one evening. I'd like to know how that came to be. I'm getting calls already over those 20 lots. They're wondering how they apply to be one of the lucky 20 to get a lot.

The Vice-Chair: I don't think there's time for an answer, so I will move on to Mr Cleary.

1110

Mr John C. Cleary (Cornwall): Minister, I just wondered if you could help me out, help me to understand. I have a letter in front of me; the people involved have been trying desperately to get an answer for some time and there's nothing coming forward. I'll read the letter to you. It's addressed to myself, but you have had copies of similar letters in your office. It's concerning the Nativite project in Cornwall. It's addressed to myself:

"Further to our previous meetings and conversations, we would like to voice our continued displeasure with the government's decision to cancel the abovenoted projects and more recently with the lack of response from the Ministry of Housing.

"As you may not be aware, two progress invoices" from the project" for...work undertaken up to June 20, 1995, were forwarded to Logement Nativite on July 20, 1995. At this time, copies of these progress invoices were also forwarded to Mr. Mac MacDonald, of the Ministry of Housing.

"Given the continuing nature of this matter, the original progress costs, additional costs and accrued interest will soon total three quarters of a million dollars. We are sure that you can understand that this represents a substantial amount of money to our company.

"In addition to the outstanding costs, the property currently possesses additional problems. During the development of the plans, we entered into a number of agreements with the city of Cornwall and adjacent land holders based on the specific requirements of these projects. These agreements were, for the most part, for the betterment of the city and others, and based solely on our proposed development plans. Most of these agreements and amendments currently make site A very difficult to develop for alternative purposes.

"It is with some regret that we find ourselves looking to the courts for remedies. We would much prefer to negotiate a satisfactory settlement with the Ministry of Housing.

"We look forward to your prompt response to this letter. We remind the government that delays only serve to escalate the outstanding costs of these projects.

"Thank you for your assistance."

"Sincerely yours,

"Menard Bros. Limited

"Gaetan Menard."

They've been into our office many times and they're not getting any answers from you people.

Hon Mr Leach: As I mentioned last Thursday, one of the problems we're having with the windup of the co-op program is that our agreements are with the sponsor groups and not necessarily with the contractors or developers. I'm not sure whether the staff have the details on that specific project with us here; if not, I'll get it for you.

Our problem is, if the sponsor group, for whatever reasons -- whether they're part of the class action suit against the province on the withdrawal from the co-op program -- if they're not cooperating in some way, then it makes it extremely difficult for us to deal with the contractors that are involved. I agree with you 100% that there are certain contractors, architects or whatever that are being penalized through no fault of their own because we can't pay them. We have to put the payment through the sponsor group that we have a contract with and then the sponsor group reimburses the contractor for the costs they've incurred.

We're as anxious as the individuals involved here to get this cleaned up. I'll make a commitment to you to respond to this right away, if that's the circumstance. Do we have anything specific?

Mr Chiesa: We don't have a specific response but we'll get that. The one point we want to add as well is that we wrote all of those groups that did not submit on behalf of third parties and said, "If you don't submit within a certain date" -- I think that's expired -- "we'll deal directly with the developer-builder or other consultants now." That will facilitate those kinds of examples that were just raised here. But we will get the details of that project for you.

Mr Cleary: Just to add a little bit, the sponsor group has been into my office too, they've also met with members of your party, elected officials, and there's nothing happening.

Hon Mr Leach: They've met with ministry staff, are you indicating?

Mr Cleary: On that? I don't know.

Mr Chiesa: We'll get back to you with the information. On the latest sheets we had they had not even submitted the required information. But we will get back to you on that specific project.

Hon Mr Leach: We're as anxious as anyone to get this wrapped up. There's no advantage to anyone in having this proceed any longer than it absolutely has to, so we'll make a commitment to get back to you personally with the details of that particular project.

Mr Cleary: Just so that we understand each other, they met with cabinet ministers of your party.

Hon Mr Leach: Again, I am at a loss to understand why they would not have submitted the necessary information for us to proceed with rectifying that.

Mr Cleary: Does MacDonald not have that?

Hon Mr Leach: My understanding from staff is that the last indication that we have is that the information that was required from the sponsor group had not been submitted.

Mr Chiesa: We will get the details and report back.

Hon Mr Leach: We'll straighten it out with the sponsor group. If they have the necessary documentation, I can assure you that we're anxious to clean it up. I don't like, nor does anyone like, to see a contractor who carried out his work in good faith be penalized in any way. So we'll get back to you as quick as we can.

Mr Cleary: Thank you. I just want to touch on a few other items that are more specifically in our part of eastern Ontario. We have many in our community who have been hard hit and many who are not properly housed. We have long waiting lists and it's my understanding that the government will not get involved in any more housing units.

Hon Mr Leach: That's one of the problems that we face, is the long waiting list. The social housing program has become a luck-of-the-draw type of program. If you're one of the fortunate people who can get into a subsidized unit you're okay, but there are tens of thousands of people who have been on waiting lists for many, many years, which I think is a strong indication of how and why the system is not working. That's why we would prefer to develop a shelter allowance program so that we can provide assistance for those individuals who have been on waiting lists for years and years. Some of them are paying in excess of 50% of their income for shelter and are unable to get any support whatsoever, and I personally think that's unfair and the system should be changed.

Mr Cleary: In other words, it would be your plan to subsidize units in private --

Hon Mr Leach: No, our proposal is to provide a shelter subsidy to individuals who need support rather than to units. If you have an individual in Cornwall, for example, we would develop a shelter allowance policy, and if they wanted to move from Cornwall to Brockville, that shelter allowance would be portable so that they could change their location without having to go from a waiting list in Cornwall to a waiting list in Brockville or wherever.

Mr Cleary: I'll tell you another thing. There are lots of good units available that many all over Ontario will not rent to certain individuals. Did you ever have any consultation with the Minister of Community and Social Services? I was going to ask him last week about that, but everything that we asked him he was going to consult on, so I thought I'd wait for this opportunity. Did you have any intention, your government, of paying direct to the apartment or the property owner instead of giving it to the social assistance recipients?

Hon Mr Leach: We would far prefer to provide a subsidy to an individual and allow them to choose where they want to live. You know, in many instances it's absolutely no business of the landlord whatsoever whether you're getting assistance from the government. If I provide any individual with an allowance and they can go and select where they want to live, I think that's their business, not the landlord's.

Mr Cleary: I'm not very happy with that answer, because I think it could solve a lot of our problems to get people into units if the government or someone would pay the rent directly.

Hon Mr Leach: Do I understand correctly that you would recommend that we provide subsidies to landlords rather than to individuals?

Mr Cleary: I would say to units for individuals. I know it's the individual that's got to be done, but in many cases, in many parts of Ontario, the landlord doesn't get it and you've got the people rotating from one unit to another.

1120

Hon Mr Leach: That is done now, actually, to some degree, where there are payments made to landlords that pay the difference between rent geared to income and the market rent in many instances around Ontario.

Mr Cleary: I would think that in our part of Ontario, and I know others because I have letters from all over, if a landlord was sure that he was going to get the rent, he would be prepared to rent it at a lower rate, if he was sure he was going to get it, because right now a landlord can lose a month or two of rent, the way the system works.

Hon Mr Leach: Yes, I understand.

Mr Michael A. Brown (Algoma-Manitoulin): I'm interested also in this issue, the government's approach to subsidizing people rather than units. I think if we're going to get our heads around that, we're going to have to understand a little bit about what the government's intending here. The first thing I guess we need to know is, how many units, in the minister's view, need to be available for rental in the province of Ontario, versus how many do we have? In other words, what's your target? If you're telling me that there are thousands of people out there unable to get affordable housing, is the problem that we need more units, developed by the private sector or whomever? What exactly is the problem and what is your target if there is a difference in the number of units available and the number of units we as a province need to have available?

Hon Mr Leach: There is a shortage in units available, there isn't any doubt about that. In the city of Toronto the vacancy rate is almost zero. It's about 0.8% and falling rapidly. Because of legislation that we have in place, a number of pieces of legislation -- and I don't think any one piece can lay claim to, "This is the reason why new units aren't being built." It's a combination of many things: rent control, the Landlord and Tenant Act, and a whole number of issues -- property taxes. Because of all of these varying factors that inhibit the construction of new rentals, there hasn't been any built in decades -- 20 years.

Mr Michael Brown: I understand that. I understand that there are a lot of things wrong, in your view, and that therefore we need more units, that we've got an unacceptably low vacancy rate. I'm asking, how many more do we need and how many more will be produced by the government's economic policy?

Mr Burns: The broad state of the housing market's tracked by Canada Mortgage and Housing Corp and the Ontario housing market has underperformed demographic growth for several years. If you take that as a measure, a housing market that outperformed demographic growth for a few years some time in the future is a goal that the federal government and ourselves should have. But the underperformance is not just related to specific government policies about rental housing. It's obviously closely related to the state of the economy and to the preparedness of individual households to purchase -- that's on one side -- or form separate renter households, on the other side.

Mr Michael Brown: My question's pretty simple. I'm saying there is a difference between what we have now and what we need in order to house Ontarians the way we think or the government feels Ontarians should be housed. There must be a goal you're trying to achieve here. Aren't we trying to achieve, I think all of us in this room, seeing that Ontarians have the ability to rent or to own, or whatever, acceptable accommodation? Therefore, we need so many new units if we don't have enough. What is your goal? How many units will this government produce -- I don't mean build itself, but I mean have the economy produce -- by the end of its term? Don't you have any idea?

Mr Burns: Successive federal and provincial governments have not set goals, I think, in the language that you mean it, for private sector production in this country for a very long time. There have been forecasts of how much activity we might see in a marketplace and there have been measures of effectiveness of the marketplace, looking at prices and vacancy rates, and certainly we've put a lot of effort into looking at conditions in the marketplace, because the government has an objective of attracting investment to the rental housing sector. The minister spent some long time on Thursday talking about the key components of that. But that's not for the purpose of achieving 18,000 or 2,000 or 27,000, but rather for the purpose of ensuring you've got a well-functioning marketplace.

Mr Michael Brown: I would suggest to you a marketplace in Metro Toronto with a 0.8% vacancy rate is not a market-performing situation. Therefore, how many more do we need to produce to make it a well-performing market, if that's what we --

Mr Burns: There is no federal government goal in the sense that you meant it either.

Hon Mr Leach: The other point is that there's absolutely no incentive for anybody in the private sector to get into the apartment business, to provide any --

Mr Michael Brown: You're going to give it to them, Mr Leach. So if you're going to do all these things to give the private sector the opportunity to produce all these units, the question I'm asking is, how many more are they going to produce? I don't think it's all that tough. It makes it rather difficult for the opposition or anyone else in Ontario to judge the government's performance in the housing area when we don't even know what the government intends to do. What's the outcome? This government likes to talk about outcomes. Is the outcome in Toronto -- maybe we can't use precise numbers. Is it a vacancy rate of 4%, a vacancy rate of 3%, a vacancy rate of 5%? Where does the government want to get to on this? I just want to know, what outcome is your government intending to get from all your policy --

Hon Mr Leach: First of all, what we have to deal with in the short term is establishing ways and means of enticing people back into the business at all. All that's happened over the last number of years is that there have been programs and policies put in to inhibit anybody getting into the --

Interjection.

Hon Mr Leach: Do you want me to wait until the NDP give you your next question?

Mr Bisson: I'm giving him your answer.

Mr Michael Brown: Mr Bisson was informing me that you said 20,000 units was the number of units.

Hon Mr Leach: No, the number comes from the industry, which has indicated that there is the capability of putting 20,000 units in Metropolitan Toronto under construction in a short time if conditions were there to entice them to get into the building business.

Mr Michael Brown: I'm presuming you have your policy set forward, more or less, in terms of what you think needs to happen for the private sector to take up the slack and to build Ontario and all that kind of good stuff. What I'm saying over here is, that's well and good from your perspective. How am I supposed to know whether you're successful? I want some way of knowing. It's a good theory; these guys had a good theory too, and perhaps we had a wonderful theory also, but really, you are judged by what the outcome is of the policy.

Hon Mr Leach: But I'm sure you would agree that the first goal that has to be achieved is attracting the industry back into the business at all. You can have all of the lofty goals that you want. I mean, you can set goals and criteria and numbers and so forth, but if nobody is going to build it, then it's a futile exercise. I'm sure you would agree with that. So the first thing --

Mr Michael Brown: That's precisely what I'm trying to say.

Hon Mr Leach: You can establish a number that says, "We want to generate the construction of 50,000 units a year and we want a vacancy rate of 5% to give people lots of opportunities," but if there is absolutely no incentive whatsoever for anybody to go out and build a unit, then all it is is useless pipe dreams. The first thing that has to be addressed is get new stock back under construction.

Mr Michael Brown: No problem with that; we agree. But what if your particular program doesn't produce the incentives and there aren't units built, or not enough units built?

Hon Mr Leach: What we do know is that under the existing laws of the land there is no incentive and there will not be any built. We've been told time and time again by people in the development business, by people who provide private rental stock that they have no interest in building apartments under the current laws of the land. If they are not changed, you will not see any new buildings.

1130

Mr Michael Brown: It is obvious that what you say is true. For 15 years there has not been enough private sector rental --

Hon Mr Leach: I'm sure that you will agree that what we have out there is deteriorating over time. What's happened with the regulations that we have in place now, a landlord cannot get any reasonable type of return on his investment, so responsible landlords are bailing out of the business. They're being taken over by less scrupulous landlords who cut corners, cut down on maintenance and make the buildings to a point where they're just falling apart. That has to be addressed as well.

Mr Bisson: That's an overexaggeration.

Hon Mr Leach: I can show you some. Come with me, Gilles. We'll go over to Wellesley and Parliament and you'll see for yourself.

Mr Michael Brown: I've been around these housing debates for quite a while, so I understand that. Let's go talk about your shelter subsidy program. Who qualifies for that? Who will qualify? Will everyone whose income is at such a level that they are paying more than 30% of their income for rent qualify for that program?

Hon Mr Leach: It will be basically a rent-geared-to-income type of policy, but as was pointed out earlier this morning and as I pointed out on Thursday, the shelter allowance program is still under development at the staff level. When we get the preliminary numbers out on that, I would like to take it out for consultation.

Mr Michael Brown: Is the intention, though, that everyone below a certain level of income versus the amount of rent they have to pay qualify? In other words, it's an income-based, or geared-to-income, if you will --

Hon Mr Leach: It could be similar to the process that you have now on how you qualify for a rent-geared-to-income unit, except that rather than providing the subsidy to the unit or giving it to the landlord, we would give it to the individuals and let the individuals select where they want to live, so that you don't have to go over and live at the corner of Gerrard --

Mr Michael Brown: Does the ministry then know how many people would, in all probability, fit into that category?

Hon Mr Leach: There's probably a broad number available, because we know the number of people who are in subsidized units now, we know the number of people who are on waiting lists and who have been on waiting lists for years and years.

Mr Michael Brown: I would suggest the count is broader than that, Minister.

Hon Mr Leach: The combination of those two numbers is going to be your initial --

Mr Michael Brown: I think it would be significantly more.

Hon Mr Leach: It could be, but again, you have to agree that you've got those people, those poor individuals who have been out there for years and years paying 50% of their income for shelter and getting absolutely no help and who will never get any help under the existing policies that are there now.

Mr Michael Brown: I agree. This is supposed to be estimates, and I know that they're not for next year, but really we're in a situation where we're asking about next year. What would you anticipate the cost of a shelter subsidy program to be across Ontario in that event?

Hon Mr Leach: We haven't worked out that number yet. As I think we indicated earlier this morning, they're working on various options for shelter allowance programs. They're being developed now. I don't have a final number. I know we're spending $1 billion a year on what we're doing now.

Mr Michael Brown: Would it be the intention of the ministry to actually be administering this program, or would it then become a program of, say, Mr Tsubouchi in Comsoc? Because what we really have here, I would suggest to you, is just a straight income maintenance program.

Hon Mr Leach: Again, that's another one of the options that is being explored because, as you know, this government wants to go to as many one-window-shopping programs as we possibly can. If there are social assistance pools have to be made, then they should perhaps be under one ministry rather than under three or four. That's one of the aspects that we're looking at right now: Where should these programs reside? Should Health have a program, should Housing have a program, should Community and Social Services have a program, or should there be some attempt to try to rationalize all of them so that we can have the best benefit possible for the individuals who need help?

Mr Michael Brown: I'm just wondering if there's enough money in this province to support this kind of program at a level that would even compare to the non-profit subsidization we're at now. But I don't know, because I don't have any numbers, and you don't know because you don't.

Hon Mr Leach: As I indicated to you, we know what the initial blush of numbers is, the people who are in --

Mr Michael Brown: Could you share that with us then?

Hon Mr Leach: I think they're readily available, in a broad outlook, the number of people who are on waiting lists.

Mr Michael Brown: Could we have the ministry share those with us?

Hon Mr Leach: I don't know. Has anybody got those off the top of your --

Mr Michael Brown: It would be fine for them to file them with us.

Mr Burns: We could prepare a memorandum that gives a summary of the numbers the minister's referring to.

Ms Anne Beaumont: I don't have them with me. We can compile something and make it available to the caucuses.

Mr Curling: While you're at it, I just wonder if you can anticipate those who are out there who have not applied but may need some subsidy too.

Hon Mr Leach: One of the reasons that they haven't applied is because they know there is absolutely no hope under the current policies. Under the existing programs that exist today, there is absolutely no hope for them whatsoever. That has to change. I think we would all agree that there are individuals in society right now who are being penalized just because they haven't been fortunate enough to be able to grab the brass ring on the way by.

Mr Michael Brown: I'm sure somebody in government has -- well, your ministry has, in particular, the numbers, but it would not be difficult, I suspect, to get from StatsCan the number of Ontario families that are spending more than 30% -- I don't know that 30% is the right number -- of their income on affordable housing. Do we have those kinds of numbers?

Hon Mr Leach: They're basic demographic numbers that are available.

Mr Michael Brown: Yes, I understand that.

Hon Mr Leach: I think we'll be able to put something into memorandum form and distribute it to the members of the committee. Staff might want to add something.

Ms Beaumont: I could give you one answer on that right now, dealing just with renters, because I assume it's renters that you're talking about.

Mr Michael Brown: Not necessarily, but we could start with renters.

Ms Beaumont: I don't have the information at hand that deals with people in an ownership situation, and of course many of them would be paying more than 30% of their income on their housing costs, but some of that is paying off principal on the house. For renters, approximately one third of renters in the private sector in Ontario are receiving government subsidy of one form or another. Of the remaining two thirds of the population in private rental, in 1994, according to Stats Canada, 39.3% of them spent more than 30% of their income on rent.

Mr Michael Brown: So 40% of --

Ms Beaumont: It's 40% of the two thirds. One third is subsidized, in one form or another, by government. Of the remaining two thirds, approximately 40% spend more than 30% of their income on rent.

The Vice-Chair: Thank you, Mr Brown. I have to turn to Mr Bisson.

Mr Bisson: I wanted to ask you a number of questions around rent control, but I just want to follow up on the shelter subsidy issue. Just to put this in context, what I think you're saying is that as a government you're trying to figure out how to get out of non-profit housing, if possible, and that you would favour going to a system of shelter subsidy, where the tenant would be given the money and they would go shopping around for the best possible deal in an apartment in the private sector. What got my attention was that you were saying that you felt that the present system was unfair because those people who are now presently not getting a subsidy in a non-profit or a co-op housing project, or in the private sector through a subsidy, it's unfair for those people who are not getting that subsidy. That raises two questions. First of all, do you intend on expanding the shelter subsidy to cover those people who are presently not getting a subsidy from the government? Are you going to expand this?

Hon Mr Leach: A lot of individuals -- and a lot of seniors, for that matter -- in the numbers I've seen are paying, as I've mentioned, 50% of their income for shelter.

Mr Bisson: That's what the private sector is charging them, yes.

1140

Hon Mr Leach: Well, whoever is charging them, that's what they're paying. The existing programs and existing policies that have been in place do not provide any assistance for a senior female, for example, paying 50% of her fixed income for shelter. There's no way to help them out. I think that's unfair; I think it's unfair to those individuals.

Mr Bisson: Are you suggesting, though, that you would expand the shelter allowance program to cover those people who are presently not in any form of subsidized housing from the province of Ontario?

Hon Mr Leach: Yes, I think that you have to develop a program that takes it beyond those who are fortunate enough to happen to be able to qualify for a subsidized unit. I think we have to find ways and means of helping those individuals in society who need help and who haven't been able to get it as a result of the existing policies.

Mr Bisson: The next logical question is, where are you going to get the money for this? You're presently spending, as a Ministry of Housing, in subsidies to various projects across the province that are housing people on rent-geared-to-income and through others -- I think the total is about $3.5 billion altogether between what we give to the non-profits and the co-ops and what we give to private landlords. You'd have to blow the bank to get to that point.

Hon Mr Leach: Maybe I'm missing something here.

Mr Bisson: I think you are, yes.

Hon Mr Leach: Are you telling me that we shouldn't be trying to help those people who need help? Is that what you're saying?

Mr Bisson: No, I'm wondering where you're going to get the money for this.

Hon Mr Leach: We should just ignore them?

Mr Bisson: No, no, I'm asking you the question, where are you going to get the money to pay for this?

Hon Mr Leach: That's where we're looking at. We're looking at redefining the programs that are in place at the present time. As you said, as you pointed out, we're spending about $3 billion for a groups of individuals.

Mr Bisson: It's $3.5 billion. But if you expand it to cover people who are presently not covered, you're going to be spending more money because there'll be more people applicable. That might be fine, but I'm wondering, are you saying here today that the Ministry of Housing is going to get an increase to its base budget? That's news to me.

Hon Mr Leach: What I'm saying is that we intend to develop policies that are going to help those people who need help. I'm just absolutely amazed that you would take a position that we should ignore those who need help.

Mr Bisson: No, no, I think it's a laudable goal, but even when we were in government, when we were accused of spending money foolishly, we couldn't have developed that kind of program for the amount of money it would have cost. I'm asking you, are the Premier and cabinet telling you the Ministry of Housing is going to get more money?

Hon Mr Leach: What we're going to do is spend our money a little bit more wisely. We're going to get out of the co-op housing business where we're providing $10,000-a-year-per-unit subsidies to individuals, many of whom don't need subsidy whatsoever. If we could get out of programs --

Mr Bisson: But that's contrary to what you told me last week.

Hon Mr Leach: It's not.

Mr Bisson: You told me last week that you weren't getting out of the co-op housing business. Now you're getting out of the co-op business.

Hon Mr Leach: What are you talking about? Where have you been? We got out of the co-op business last July. Have you been asleep for the last six months?

Mr Bisson: No, no. You told me last Thursday --

Hon Mr Leach: We stopped 390 units.

Mr Bisson: Al, you told me last Thursday --

The Vice-Chair: This is rather amusing, but one at a time, please.

Mr Bisson: You told me last Thursday you had cancelled a bunch of co-op housing projects, but you were not going to privatize the existing co-op housing projects. You're now telling me today, on Monday, that you're going to get the money to pay for the subsidy by cancelling co-op housing projects that are presently being occupied.

Hon Mr Leach: No, what we're doing is, we're not getting into any more. We've stopped the boondoggle. No more $10,000-a-year-per-unit subsidy being built. We can take that money, the money that would have been spent on those programs, reinvest it into people who need help, people you seem prepared to ignore.

Mr Bisson: But that indicates that you would have to have an increase in your budget, because those units that were being built would have added to the base budget of the Ministry of Housing in the form of a subsidy. Logic tells me that means the Treasurer of Ontario would have to give your ministry more money. I thought the whole exercise of what this government was trying to do was to balance the budget and eliminate the deficit in five years. How are you going to do that by expanding the program?

Hon Mr Leach: The policy of this government is to get out of the boondoggle-type programs that have been in place for about the last decade and get back to helping people who need help. I mean, you have to agree that somebody who is paying 50% of their income --

Mr Bisson: No, listen, I'm all with you on that.

Hon Mr Leach: -- needs some help and we should try and do that.

Mr Bisson: Al, I'm your ally.

Hon Mr Leach: I somehow missed that.

Mr Bisson: If we can figure out a way to make it more affordable for lower-income people, I'm all for that too. But the problem is that I'm trying to figure out your logic here. You're saying you're going to expand the coverage of the new shelter allowance system to include those people who are presently not covered by some form of subsidy from the province of Ontario. It is only logical to assume that's going to cost more money. So you've got to do one of two things: You've either got to increase the budget of the Ministry of Housing -- and I'm asking you, is that the approach that the government is prepared to take in order to expand that program?

Hon Mr Leach: Or you spend the money that you have more wisely.

Mr Bisson: Okay. Let's take it from the other side. I don't know if that's the answer but let's say, for the sake of argument, you don't get new money from Ernie Eves. Then it means you've got to get the money somewhere else. Does that imply that for people who are now covered under some form of subsidy, either in the private sector or in a non-profit, that subsidy will be reduced and shared among a greater base of people? Is that what you're going to do?

Hon Mr Leach: That's one of the options that is being looked at obviously. We indicated this morning and we indicated last Thursday that there were a number of options that this government is exploring to try and develop a shelter allowance program that will provide assistance to those who need it beyond those who get it at the present time.

Mr Bisson: That means that you would have to change the formula by which at this point 28% of income of a person who qualifies for a rent-geared-to-income goes towards the rent. If you're going to share it among a greater base by including more people in your new shelter subsidy program, it means you're going to have to allow those people to pay more rent than they're paying now under the rent-geared-to-income system.

Hon Mr Leach: It was your government that passed the legislation that increased their rent by 25%.

Mr Bisson: No, no. It went from 25% to 30% over a period of five years. I agree we did that.

Hon Mr Leach: That's pretty close to a 25% rent increase.

Mr Bisson: Minister, you're the guy in the seat making the decision for your ministry, along with your cabinet colleagues. You're going to be making a recommendation that they're going to have to support, and if you're going to expand your shelter subsidy program -- I was just intrigued when you said that because I think, like you, that there are some people out there who need help who are presently not covered by the system. But I've got to ask a real simple question: Where are you going to get the money to pay for it?

If the Minister of Finance is not going to give you the money to add new people into the system, that means you've got to take what's there and you've got to spread it over a larger base. If you do that, you know what that means? That means that Granny Smith's rent is going up, and she is on a fixed income, in order to subsidize somebody who is on an upper-income scale and who might be able to afford to pay more.

Hon Mr Leach: What we might do is take some of the 25% rent increase that you put on those people and use it for shelter allowance. Is that an option we could consider, do you think?

Mr Bisson: But you're at 28% now and our increase would bring it to 30% over a five-year period.

Hon Mr Leach: That's about a 10% rent increase.

Mr Bisson: I hear what you're saying, but that in itself ain't going to cut it, Minister.

Hon Mr Leach: Is it one of the avenues that we could look at? Does it provide some?

Mr Bisson: That's what you're telling me you're going to do. That's what I take it you're telling me you're going to do.

Hon Mr Leach: That's part of it. That could be part of it.

Mr Bisson: It's going to be a heck of a lot more than a jump from 25% to 30% of your total income if you're going to spread the base to people who are presently not covered in some sort of shelter subsidy.

Mr Curling: Rent control will be gone.

Mr Bisson: Like my friend Mr Curling, the Housing critic from the official opposition, says, if you take rent control off to boot, my God, do you know what's going to happen? They're going to drive you to the poorhouse. Your subsidy is going to go from $3.5 billion to what?

Hon Mr Leach: I'm a bit disappointed with my colleague from the Liberal Party. Last Thursday he agreed with me that rent control wasn't working.

Mr Curling: I didn't agree --

Hon Mr Leach: Yes, you did. You check Hansard. I keep hearing the sound of flip-flops here.

Mr Bisson: There are two positions within the Liberal caucus on this issue. It depends who you're talking to.

Hon Mr Leach: It's either a yes or a no, one of those two options that they take.

The Vice-Chair: Order. All these true confessions are heart-warming, but we must get back to the real business here.

Mr Bisson: I know. Just to wrap that up, I'm going to be looking forward to what you do there with extreme interest because there are only two ways that you're going to be able to expand your program. You know it as well as I do, Al.

One, you're going to have to get Ernie Eves to give you more money, and I think that's a non-starter; I don't think that's going to happen. If you do, you'll be the first minister of this government to actually succeed in doing that, and for that we'll give you whatever award we give ministers who do that kind of thing. It's probably called the Boot Out of Cabinet. Or you're going to have to do the other, which is, if you're going to broaden the base, you're going to have to take it from those people who can least afford to pay, which is those people who are in the lower-income scale.

I think the goal is laudable. I don't have an argument with trying to expand it, but in this time of budgetary restraint you're going to have an extremely difficult time getting the new money. It only means that you're going to have to stick it to those people of the lower-income scale even more than what's happening now.

You're further complicated by, and now we're getting into rent control, if you take the rent controls off, the big loser in this is not only going to be the tenant, I think it's going to be the person who pays a lot of rent in this province, which is you. You pay rents in this province to the tune of about $3.5 billion a year, both in non-profits and co-ops and in the private sector through shelter subsidies in one form or another, and if you allow the rent control to come off, it only means that your budget's going to have to balloon.

1150

Why would you, as the person who signs the biggest rental cheque in this province, allow yourself to be in a position where you're going to have to blow more money because you're going to allow landlords in those markets where they're able to get away with increased rents? Why would you do that?

Hon Mr Leach: There's no rent control on non-profits now.

Mr Bisson: No, what I'm saying is, you're paying a greater number --

Hon Mr Leach: That's the biggest part of our --

Mr Bisson: But, Minister, whoa, whoa. You pay more money to the private sector through shelter subsidies than you do to the non-profits. What's the actual figure? Can I get the number here? It's $2.5 billion to the private sector versus $1 billion to the public sector? Is that the correct number? I get a nod of yes or no?

Ms Beaumont: Comsoc's budget for shelter allowances is something under $2 billion at this point.

Mr Bisson: Yes. But the point is, a lot of that money goes to the private sector landlords, and if you turn around and you say, "I'm the Minister of Housing and I sign the cheque for a lot of rents in this province along with my colleague who pays it out in FBA benefits or GWA benefits for their shelter allowance. I'm going to take rent controls off," it means that the province of Ontario is going to be paying a heck of a lot more money to landlords in this province in the form of increased rents, doesn't it?

Hon Mr Leach: You're assuming that rents leap up. But one of the programs that we set --

Mr Bisson: How are you guaranteeing that they're not going to leap up?

Interjection.

Mr Bisson: I'll let you answer, Al. Sorry. I've got to be nice to you. You're really my friend, you know. I just want you to know.

Hon Mr Leach: What's that old statement? With friends like this, who needs enemies?

Mr Bisson: Al, I'm the only friend you've got at the moment.

Hon Mr Leach: Well, you are my friend. We have, by the way, had many philosophical discussions along this line and sometimes I think we're even getting a smidge closer.

Mr Bisson: You're about to sign an NDP card, I believe.

The Vice-Chair: Memories of 1975 notwithstanding.

Hon Mr Leach: Every time we get a little bit closer, he veers off to the left again and we lose him.

That's not beyond the realm of possibility. That's probably a good possibility. But again, if we don't take that type of action we're not going to get any new private sector apartment stock being constructed.

Mr Curling: They won't build --

Hon Mr Leach: Under the current regulations they won't. They've already told us that. I'm glad you agree with that. They won't build under the existing rules. We have to change the rules. What we have doesn't work.

Mr Bisson: But here's the logic of what you're doing, Al, and this is the problem I've got. You're saying on an ideological principle, you want to help those people in the development sector who want to build new apartment buildings by giving them the ability to take off rent controls altogether. They're already protected, because there's no rent control on new rents for five years. But anyway, let's not get into that debate right now. But you're going to do that in order to help a few developers build a couple of apartment buildings. First of all, I don't think --

Hon Mr Leach: Who are they building them for? Are they going to live in them themselves or are they going to rent them out?

Mr Bisson: Listen. Al, the point is -- and that's not going to get it for you. You know the problem is development charges, it's taxes, it's all that other stuff.

Hon Mr Leach: It is, yes.

Mr Bisson: That's the problem. It's not rent control.

Hon Mr Leach: Rent control is one part.

Mr Bisson: Rent control, I would bet you, if you were to sit down and look at it, is less than 2% of the problem and probably even less. So the point I'm getting at, for a government that comes to power saying, "We're the commonsense government that is going to do things that make sense," what you're doing makes absolutely no sense at all. You're the guy who's going to cut the rental cheque, and if you take rent controls off, you as the provincial government are going to allow your budgets to mushroom to points that you're not going to be able to sustain. It is in your vested interest, as a province, as the people who pay a lot of rents in this province, to make sure that we have an absolute cap on rent control, not only to protect those people out there who are not getting a subsidy at this point, but also to protect your own behind. You have to pay those rents. So why do it? What's the logic here?

Hon Mr Leach: But I think you have to agree, and I know you do agree, that we have to get new rental stock on the market. You have to agree with that.

Mr Bisson: Fine, I agree with you, but you're not going to do it through rent control.

Hon Mr Leach: So then what we have to do is we have to provide an atmosphere to entice people back into the building business.

Mr Bisson: Al --

Hon Mr Leach: This is question and answer. You question and I'll answer. We went through this before.

Mr Bisson: No, no, this is an opposition forum, all right? I've been over there before.

Hon Mr Leach: If you start to hear the sound of a commonsense answer, you interject. Is that the way this works?

Mr Bisson: But the point is, Al, you know as well as I do, and my friend Mr Curling and everybody else in this room who knows anything about building and development, what's stopping people from building apartment buildings today is that it's not economical. That's the problem.

Hon Mr Leach: I agree.

Mr Bisson: It's not because of the rent controls.

Hon Mr Leach: Yes, that's part of it.

Mr Bisson: Every developer I've dealt with over the past number of years says to me, "I'm paying 280% more tax on an apartment building than I would on a private building. I'm paying development charges and other things in the forms of fees and permits that are fairly high," depending on what city you happen to find yourself in. The cost of materials has gone through the roof literally to where it's very expensive to build and it's become uneconomical to build that sector of the market which provides lower-income rent buildings that we find around this province. They can still --

Hon Mr Leach: So you would agree that those things should be changed. Would you agree that those things should be changed?

Mr Bisson: Hey, listen. I'm going to be going on the other committee and I'm going to support you on some of that stuff.

Hon Mr Leach: We proposed to change them. You didn't. You just left them sitting out there.

Mr Bisson: Listen. I'm going to go on the other committee and support you on some of that stuff because where you move as a government that makes some sense, I think it's incumbent upon us in opposition to work with you to make that happen easier. But this is a give-and-take here. Don't go over there and say, "We're going to do this," and then after that you're going to go on the next committee and stick it to tenants. That's all you're going to achieve by getting rid of rent control.

Mr Curling: Beat up tenants all the time.

Hon Mr Leach: One thing I'm sure you've heard me say over and over, and I'll repeat it once more, is that we're not doing anything with rent controls until we're satisfied that we have a program in place that provides protection for tenants.

Mr Bisson: Will that new system have an absolute cap on rents?

Hon Mr Leach: I said that we are going to provide a system that provides protection to tenants. We're not making any changes until we do that, but I do know that changes are necessary because this system doesn't work.

Mr Curling: You're selling off the non-profits, though.

Hon Mr Leach: It doesn't work.

Mr Bisson: Oh Al, you can't say the system doesn't work.

Hon Mr Leach: Alvin, you sat there last Thursday and I asked you the question, do you think this system works, and you said no.

Mr Bisson: That's okay. He's allowed. But, Al, listen. You can't come to this committee and say rent controls don't work. Where is the lineup of thousands of tenants in this province that you would expect to see if the rent control system didn't work, and where is the lineup of tens of thousands of landlords who say it doesn't work?

In all my dealing with both landlords and tenants, the issue has not been rent control. There are some landlords out there that would like to be able to raise the rent, and given the opportunity of no rent control they would do it, but the majority of the people are well served in the system. You can't say that and get away with it.

Hon Mr Leach: Did I hear the gong?

The Vice-Chair: At 12 noon.

Mr Bisson: We'll carry this on later.

Hon Mr Leach: Yes.

The Vice-Chair: You have 12 minutes remaining in that round, so we can either continue with that or break for lunch, as we normally do.

Mr Bisson: Do I get the 12 minutes? Do I start when I come back?

The Vice-Chair: You carry that forward when we come back.

Mr Bisson: As long as I start when I come back.

Hon Mr Leach: I'm sorry, Joe. I thought I heard the gavel go.

Mr Bisson: That's fine.

The Vice-Chair: We'll adjourn for lunch then.

The committee recessed from 1157 to 1329.

The Vice-Chair: Members of the estimates committee, we will now resume our afternoon sitting. I believe we left off with the NDP having 12 minutes remaining on their round. Mr Martin, I'm going to turn over the floor to you.

Mr Martin: I just want to follow up a little bit on the line of questioning that my colleague Mr Bisson was chasing before we broke. I don't pretend to have the same in-depth understanding of the whole issue of your ministry, because I'm not your critic, but I certainly have some concerns that come not just from me and the limited ability I have to read, study and try to understand the impact of what you're proposing, at least by some of the indicators that we see re the whole question of rent control.

What I hear when I talk particularly to my constituents at home and some of the renters in my community -- I guess coming from my own watching and experience of the 1980s, where rents went right out of orbit and we had the flipping of properties and a whole lot of very unseemly activity in that area. You're on the record as saying that you want to remove rent control. The first question I would have is, are you looking at any kind of a cap at all? What will you do if this whole thing begins to spin again over the deep end so that people just can't afford a place to live any more, particularly the ones at the bottom end?

Hon Mr Leach: We're looking at a couple of models that are used in other provinces. The two that are quoted most often are Quebec and BC.

BC has a tenant protection program where the tenant can object to a rent increase on a one-off basis. Their first position is to negotiate with the landlord, and if they can't resolve or come to an understanding with each other, then they have an opportunity to take that to arbitration and the arbitrator would make a decision on whether the proposed increase was fair or not, and his position is final. That seems to be working relatively well from what I'm advised; certainly well enough that I believe that we in Ontario should investigate it and see if there is an application for that type of program here.

As you know, as we've discussed this morning and last Thursday, my only concern is that we're not getting any new apartments, particularly in the large urban areas where you have almost no vacancy rate whatsoever and every year there are thousands more people looking for rental accommodation and nothing coming on stream. So we have to find some ways and means of enticing the builders back into the market.

There are many ways and many options to look at. I agree 100% that rent control is only one of the issues that inhibit more building but it is one that is brought up in every instance, in talking to people involved in the business, that is stopping them from doing it.

To answer your question, I think we will always have a program with legislation that ensures that tenants are protected. That's paramount and I've been quite vocal in indicating that we will not do anything with the existing rent control program until such time as we're convinced that we have a program that provides adequate protection to tenants.

Mr Martin: My colleague suggested to you this morning that the end result of what we're all trying to do here is to provide affordable housing to people and do it in a way that isn't going to bankrupt anybody, including the government, but to make sure that it's there, and if it is the private sector, to make sure they can in fact do it.

I think you referenced this morning that you believe that because of rent control, some landlords have not been able to generate the revenue they need to renovate their facilities. I've seen some of the facilities. I went on a little tour about two years ago in downtown Toronto. Actually, a year or so after I came down here, because I wanted to see for myself what was out there, what people were dealing with, what they were living in. You're right; some of it's pretty horrid. I was trying to get a handle on why that was the case. I was motivated out of that to do or to support whatever our government could do to make sure there was a goodly number of decent, affordable homes for people to move into.

The concern I have, though, is that when we lift the rent control, the landlords who already have facilities -- let's talk about them for a minute. By the time they are able to generate the kind of money they need to do the renovation that's required, which you've said is substantial, and then you look at the landlord who's going to build new, the cost of building and trying to get the return on investment that people expect today when they put money into something, don't you have any fear at all that that in itself will drive the cost of rental units beyond the reach of a whole whack of people?

Hon Mr Leach: I would hope not. By the way, if you went out and took that tour again today, it hasn't gotten any better; it's gotten worse if it's done anything. You've touched on I think one of the major problems that we're facing. Good landlords who want to ensure that their tenants have the best possible accommodation available, who keep maintenance right up to scratch, can't get even a reasonable return on their investment. It costs them money, so they just take a look at it and say, "I could stick my money in a savings account and do better than this."

What happens then is, they sell the building to someone who says: "I can make a dollar on this. The way I'm going to do that is I'm going to cut every corner that it's possible to cut. I'll shave maintenance to the bone. I'll only replace lighting when somebody complains about it. I'll only clear the snow away when it becomes an absolute health hazard and things like that." What happens is that they do make a dollar, but they make it on the backs of the tenants, and that's unfair. We have to do something to correct that situation.

Mr Martin: Having heard the argument that putting the kind of renovation in that is required to live up to all the standards and do the right thing would be very, very expensive, I guess I'm afraid that if you lift the cap that's there with the rent control, the tenants are going to get it no matter which way you go. They're going to get it the way that you've just described with rent control, if that's in fact what happens, but they're going to get it in another, I think even worse way, if you lift the control, because the cost then becomes so prohibitive that they won't be able to afford even the hovel they're living in now.

It seems to me that anybody who's investing is going to want to invest -- I think experience has shown this -- in the high end as opposed to the low end. What are you going to put in place to ensure that there are people out there who are willing to either renovate or build and put enough units on the market to fill the need on the low end as opposed to the top end?

Hon Mr Leach: One of the things we have to do -- I know it's one of the few things your colleague and I agree on -- is to get the costs of renovating and building new accommodation down. As I mentioned earlier, rent control is only one of the issues that affects enticing people back in. You may say that it doesn't have an effect on it, but even if it's a perceived effect, if a builder or pension funds or people who are going to provide capital into building new accommodation perceive that rent control is a problem, then perception is reality. But I will totally agree with you that it's only one of many issues that have to be dealt with. The main one is, we have to get the cost of building new rental accommodation down, and there are various ways to do that.

1340

Mr Bisson: Perception, in our view, is almost like saying, "I perceive the Tories are bad so I won't vote for them."

Hon Mr Leach: Is Tony finished?

Mr Martin: Yes. I'm going to pass it on to my more aggressive friend here.

Mr Bisson: Listen, I've got three minutes left. We have three minutes, two minutes left?

The Vice-Chair: One.

Mr Bisson: One minute left -- a really simple question: On your new system of rent control that you're looking at, are you going to be putting in place an absolute cap? I doubt that you are, the way you're talking. If you're not going to put an absolute cap on the amount of rent they're allowed to go up under this decontrolled system, how are you going to prevent that from happening?

Hon Mr Leach: Let's assume -- this is an assumption because no decisions have been made yet -- that we put in something like the BC model of tenant protection. If a tenant objects to the rent increase, it goes to an arbitrator. An arbitrator deals with both parties and evaluates whether that proposed rent increase is fair or not fair.

Mr Bisson: Sounds like a not very democratic system to me. We're going to be spending all of our time in arbitration.

Hon Mr Leach: Not necessarily. It seems to work well out there.

The Vice-Chair: Mr Barrett.

Mr Toby Barrett (Norfolk): Minister, I wish to discuss the Ontario Building Code. This morning Mr Kells made reference to the former Ministry of Housing as the ministry of public housing, with the suggestion that private-sector-created housing and private-sector-maintained housing as being neglected under the system that's been set up.

It's my view as well that government rules, regulations and red tape are inhibiting not only builders but landlords from providing the kind of housing we need. We've been operating under close to 20 years of rent control. Over the past 20 years the Ontario Building Code has been broadened extensively, especially since about 1986, into areas beyond just ensuring the health and safety of the occupants of the buildings or ensuring that construction is up to specifications. Private landlords are competing with government-subsidized, non-profit housing. I'm a former landlord, and after 12 years I got out of the business. I just could not compete. Operating a small rental property in rural Ontario, I felt I was subjected to regulations that maybe had relevance for high-rises in the city of Toronto as opposed to regulations that have relevance for a riding that's made up of primarily small, privately owned, single-family dwellings.

To go back to the building code issue, I want to determine its effect on housing construction. I recognize in the early 1980s very high interest rates pretty well killed the housing industry. They certainly did in my area. A tremendous pent-up demand in the mid-1980s and the late 1980s and increasing consumer confidence resulted in again a tremendous building boom. That ended about 1989-90 and we just haven't seen much since. I can visualize almost every new house under construction in my riding when I drive around. There aren't very many of them.

Builders I talk with and used to work with before I got this job have been grumbling about the building code. There's what I hope is some misinterpretation about it. We hear of issues like fire protection and sprinklers in residential homes; there are some scary stories out there. Again, the builders know the impact of interest rates on the economy and consumer confidence but they're very concerned about the building code, and there's a very high expectation that we are going to do something about the regulations that have been added to the building code that goes far beyond just health and safety and the security of occupants. Could you comment on that?

Hon Mr Leach: Yes. I had an opportunity to speak to the building code officials in North Bay at their annual conference earlier this year, or I guess late last year. We plan to totally review the building code. As you're probably aware, it's updated every couple of years. The next update is due in 1997. What I'm recommending we do is get back to basics with the building code. As you indicated, it was initially put in place to ensure basic health and safety issues across the province applied to all building. It has been expanded to a point where it's gone far beyond its original intent. Many of the issues that are in the building code I don't quarrel with as standards; I just don't believe they should necessarily be in the building code.

The example I often use is the requirement to have floor-to-ceiling insulation in a building. That's probably not a bad idea. It's costly. If a builder wants to put up a building and have that standard included in his project, then he should market it that way and say: "Here's an extra level of standard. It provides more warmth in your basement and does a whole lot of other things. It's going to cost you an extra $1,000 on the price of this house, but it's well worth it, so buy my house." I don't think that's an issue that should be built into the building code, saying everybody has to apply this standard.

Mr Barrett: Just to comment on that, I had the opportunity to build my own house and I did install floor-to-ceiling insulation in my basement. I also used two-by-sixes instead of two-by-fours and an extra inch and a half of SM insulation on the exterior. Because I built my own house, I was willing to top it up or to do the extras, because I do not plan on selling the house.

I really question why some of those options that I would vote for, and that many people who maybe want to put a lot more money into their home than other things would opt for, would be regulated for all and sundry and why it's a requirement for people who are building homes in the marketplace. There just doesn't seem to be any flexibility. I'm wondering if we can achieve this flexibility. By achieving the flexibility, I'm convinced it will decrease the costs for builders, to enable more people to purchase homes. But can we increase this flexibility? Can we come up with some alternatives? Can we perhaps look to self-regulation in the industry rather than marrying almost every nail that gets pounded in to some rule and regulation?

Hon Mr Leach: I agree. In this review of the building code that's taking place right now we're looking at getting back to basics, as I mentioned, getting back to the basic health and safety issues that the code was originally intended for, and issues like insulation and fire sprinklers etc should be marketed as a plus, upscale, in the construction of a house but not necessarily mandated to every house in Ontario.

I agree with you that the changes that have been made in the building code in the last decade have driven the price of houses up considerably. Between that and development charges, we're looking at between $20,000 and $30,000 on the cost of a house. Mortgage that at 8%, 9% or 10% over 35 years and you're into a pile of money that has made housing affordability for many of our citizens just unattainable.

1350

Mr Barrett: I understand as well that through the industry -- and I did not take advantage of this, I guess, because I built my own home -- there's a warranty program, through the Ontario New Home Warranty Program. What little I know about this program strikes me as being a system that's been set up for home builders to not only take responsibility for their product, but to be held accountable. It sounds like an insurance program that they all contribute to and are held accountable probably by their own association. Can more responsibility be put on a group like this to provide some regulation in the industry, as you say, to ensure the basics without going above and beyond to every bell and whistle that some individual may want?

Hon Mr Leach: My understanding of the home warranty program is that it is funded by the building industry and it's to protect us for that type of occurrence, where you get a cracked basement or some issue. It's worked very well when you have isolated problems where a builder has a warranty on his home and he'll come in and make the repairs to the cracked basement or the broken tile or whatever it is. There have been other occasions, and the only one that comes to mind is the plastic vents. What was that program where we were replacing the vents?

Mr Barrett: Gas furnaces.

Hon Mr Leach: The gas furnace issue. It was a huge expense. If all the builders had had to cover the cost of that under their warranty program, it could have put a lot of them into bankruptcy. Then it became a real hassle about whose problem is this. Is it the builder who bought the unit in good faith? Is it the manufacturer who maintains that you knew what it was you were buying? Is it the government that said this was not an acceptable product? That's been going around and around in circles. I think we reached some satisfactory -- was it a cost-sharing?

Mr Burns: I think the Ministry of Consumer and Commercial Relations, which was responsible for the Ontario New Home Warranty Program, (1) worked out a new financing arrangement, but (2) has also given its stamp of approval to a couple of replacement products which can be used in relation to that particular problem.

Mr Preston: That program is over now though, isn't it, the replacement program?

Hon Mr Leach: I'm not sure whether it is or not.

Mr Preston: I think it ran out.

Hon Mr Leach: I know they reached some conclusion late last fall. There was a time frame involved where you could respond, but whether it's all over now I'm not sure.

The home warranty program has a lot of merit and I think most responsible builders subscribe to it.

Mr Barrett: Just in closing, given the nature of most structures that are erected in my rural riding and most rural ridings, oftentimes it's the owner himself, whether it's a residence or a farm building or a place for small business. In many cases, when it is contracted out, it's usually a chap and his brother-in-law and his nephew who put this stuff together. These people get the work because they have the reputation and they have the contacts and they know who to call in for the concrete and other jobs like that. It seems to work very well.

What I'm finding, in chatting with people over the years, is that the rules and regulations in part take the fun out of it. It takes the spirit out of this and it almost encourages a bit of cheating on the rules. They're trying to get away with the barest minimum, as opposed to providing respect to some of these builders, respect for their craft and their reputation, because their business rests on their reputation, especially in small towns and rural regulations. You can beat the horse to death with too many additional additions to this building code.

Hon Mr Leach: I see our colleague Mr Sheehan is here in the room. If anybody's going to take care of red tape and regulations, we've got the right man listening to this debate.

Mr Frank Sheehan (Lincoln): I have a question for you. On pages 41, 64 and 68 --

The Acting Chair (Michael A. Brown): Are you finished, Mr Barrett?

Mr Sheehan: Are you through, Mr Barrett? Oh, I'm sorry. I thought Toby was through.

The Acting Chair: I lost control. It's all right.

Mr Barrett: We changed chairmen in midstream there.

Mr Sheehan: A couple of numbers come up, all dealing with non-profit housing. There's $860 million, $274 million -- these are all in hundreds of millions --

Hon Mr Leach: I'm sorry, Frank, what page?

Mr Sheehan: Pages 41, 64 and 68. I don't think you have to look them up. Maybe the minister or the deputy might. They talk about non-profit housing. I get confused with all the numbers and some of them seem to say the same thing, but I'm not sure they're saying the same thing. Maybe you'd explain those to us.

Then maybe you could explain to us the problem that you're facing as you confront this problem. It's all well and good to say that money should not take precedence over the people involved in this thing, the people served, but if we continue spending the way we're spending, there won't be any money to take care of anybody. I will use the family analogy, that the parents must manage the resources, and that's what I ask you to do.

Maybe you could explain to the committee the problems you have, some of the dollar numbers you have and the management problems you have. Maybe you could explain to us the red tape that's involved in administering this thing vis-à-vis a private sector organization. I'm trying to get a handle on what you're doing here. It's just mind-numbing. I read through the book twice and I sat there and I thought Gone With the Wind was a hell of a lot more exciting book, but almost as long. Can you help us out there a bit?

At one of the briefings we had you were throwing around numbers like the subsidy numbers and the cost of it and the administration costs and the condition of the buildings and the dollar costs to bring them up to speed. That's one end of it.

Then the other side of it becomes, when you're administering this thing, how much of the red tape do you have that confronts you that could be identified and cut out and would that make the thing more effective? How do the costs vary compared to the private sector?

Hon Mr Leach: You've touched on a number of areas there. We're talking about the administrative costs to administer the programs. I can say on the rent control program, for example, that the administrative costs to look after that within the ministry are $22.5 million just to ensure that you have a process in place that rent control can function.

Mr Sheehan: On a cost per unit, how does that compare to the public -- say a private sector?

Mr Burns: The minister was working through the ministry programs as defined here, starting with rent control, which isn't really an administration of housing program. There is no private sector analogue for that one.

As you go through the rest of them, the non-profit housing line and the Ontario Housing Corp line, then there are costs in the administration of those programs for which there are direct private sector comparables and there are costs for which there aren't. The ones for which there aren't are those where we require operators to do things that a private sector landlord wouldn't have to do, like maintain a waiting list and evaluate people who might be seeking housing, or evaluating their income again each year.

In the non-profit program, we have done some assessment of how operators in the non-profit program, and there are about a thousand of them, are doing in the main components of their operating costs that they can exercise some control over, so I'm excluding mortgage interest and I'm excluding taxes and utilities.

Looking at the remainder, maintenance costs, costs to maintain the basic property management service -- and in the non-profit program we have a wide range of actual performances in relation to each other and in relation to the private sector -- somewhere between 15% and 20% of non-profit operators have manageable costs, where they're comparable, that are quite similar to private sector cost experiences. The remaining 80% are higher and some of them quite a lot higher. As to the ones that are higher to the largest degree, there are two groups: one, those who offer a service in addition to housing. They're typically running very small projects. They might be housing people with physical disabilities or who had been in psychiatric institutions before. Now, they, for perhaps obvious reasons, have rather high operating costs. That's one group.

The other group are the larger non-profits, usually owned and operated by municipalities, and they have a more expensive operating cost structure in part because they've got, typically, a unionized workforce. They're often using work rules and arrangements that are the same as the municipality itself.

1400

So the actual performance of that system, that thousand providers, is quite diverse. What we have been doing in the last while, what we're going to focus on during the next year or two, is trying to tackle our cost constraint needs by distributing those constraints based on how people do on a cost-effectiveness measure. In other words, the more you depart from cost benchmarks, the larger a constraint you'll get, as opposed to across-the-board constraints of the sort we saw in the past, so that over time we expect more and more the non-profit system, in the manageable-cost area, to show cost performance which is similar to private sector performance. That's in the non-profits and cooperatives.

In public housing, the Ontario Housing Corp, we also have a fair range of manageable-cost performance, and as we work through, as the minister indicated earlier, what we might do in the longer term with that stock, to move it away from ownership and operation by the province -- even in the short term, we are moving to restructure the operations of that crown corporation so that it itself becomes more cost-effective and we are using private sector cost benchmarking to help in the exercise of choosing where to make changes in the way we do work and the business practices and move that operation closer to private sector performance as well.

Mr Sheehan: You intend a couple of things then. You intend to reward the better performers in that area where you're getting these direct comparisons? It's one thing to have a stick on the other guys, but where's the carrot? Do you have it contemplated?

Mr Burns: The first carrot is if you're meeting --

Mr Sheehan: Keep your job, I know that, but above that.

Mr Burns: You don't get cut.

The second part of it is a problem that actually bedevils program administration in the whole public sector, and that is, can you find a way to design an operating funding relationship that's got incentives in it to be cost-effective, to let people retain some of the benefit of being cost-effective year over year?

We have been working towards that sort of system and we now have with the non-profits an incentive structure that allows them to retain a portion of an operating saving if they achieve it and we have a little bit of that in the design of our capital cost control system too for the few projects that are finishing construction.

In the Ontario Housing Corp at the moment we don't have any incentives of the sort you're describing in the operating budget, but it is something the corporation is looking at as it looks at restructuring its internal operations.

Mr Sheehan: I assume you're getting stuck with a large part of the bill of the municipally operated houses. I haven't put my head around not-for-profit when all these other terms are used, but when you talk about the municipally operated plants, are they just presenting you with a bill and you pay it and they run it?

Mr Burns: No, they have operating agreements with us that require them to adhere to the norms that we have in the program, and we have an established process for changing, for example, the budget norms. What we would be doing with respect to them this year is they're going to get a bigger reduction target than the smaller, more cost-effective operators. Over the course of probably two or three years we hope to bring them much closer to the benchmarks that we've got.

Hon Mr Leach: I think what my colleague might be referring to is the co-op housing program, where we're subsidizing each unit in excess of $10,000 and how that's determined. Part of it is based on the rent geared to income of the individuals who are in it and we subsidize that. The balance is the difference between the market rent that's charged for people in a co-op and the operating cost.

I'll give you some round numbers on this, they're round, gee-whiz-type numbers. The average rent generated in a co-op is between $350 and $400. The average market rent that's charged is about $750 to $800. The operating costs range anywhere from $1,150 to $1,400. So the average rent that we get, let's say, is $400 and the average operating cost is $1,200. The $800 subsidy is what -- I think your question was, are we writing a cheque for that, and the answer is yes.

Mr Sheehan: So my question becomes, then, what are you doing -- like, in the nursing home business, you've got private operators who are running full-service nursing homes at -- one fellow I know says $79 a day and he's making money. That's a not-for-profit, but he's making money, he's covering all his capital costs, allowance costs, and he's able to reinvest in his plant. If he's doing that at $79, but the average cost to municipalities is over $100 a day, it just seems to me we say, "Well, that's the way it is." If we're going to maintain and continue to offer these services, I don't think we can continue to say that's the way it is, just because that's the way it is.

Are you guys going to address, as a ministry, the problems with the union labour rates, with the union work-to-rule routine? There's something wrong with this process. We're either going to continue the safety nets the way we've got them or we're all going to go down in the ship together.

Hon Mr Leach: I think, as the deputy pointed out, we are doing something about it. We're dealing with the entire non-profit co-op program and looking at their operating costs and how we can bring them back in line with what the private sector does, for example. Some are more efficient than others. Some compare quite favourably with the private sector at the present time and some of them are quite a piece out of line. We're trying to develop a program, and I'm confident that we will develop a program, that rewards those who are operating efficiently so that reductions in government programs won't affect them, which is the carrot approach.

We have to develop a process that ensures that those who are operating inefficiently are brought into line, and there are ways and means of doing that by reducing the subsidies that are available to them. But I also think you have to develop a process that shows them, as much as we can, where they're being inefficient in administration, in hiring practices, in not filling vacancies, for example. If you have someone who is not aggressive in ensuring that their unit has 100% occupancy, for example, or very close to it, that's all revenue that's not coming into the co-op, and in the long term ends up as part of the operating costs, because you're still paying the bills and so forth whether that unit is full or not. That ends up being the cost that we assume. So we have to, I guess -- I was going to use "training program" -- provide some management knowledge and tools to the people who run co-ops now to make sure they can make the right decisions and work as effectively as possible.

Mr Sheehan: Can you tell me how far along you are in your revision of the Landlord and Tenant Act?

Hon Mr Leach: How far along we are in the --

Mr Sheehan: In the process.

Hon Mr Leach: That's actually not my act. It belongs to the Attorney General, for some reason, which we'll find out at some point in time. But right at the present time, he's welcome to it.

1410

Mr Sheehan: Okay. The next question's probably going to get the same answer, because we just had market value assessment laid on us. Is this in your ministry or is that Ministry of Labour or something?

Hon Mr Leach: The point is well taken, and this is another thing that we are doing within government to ensure -- again, it relates back to the responsibilities that you've been given -- that programs of like nature fall in the right ministries.

Right now in our program -- we talk about shelter subsidies, for example. The Ministry of Health has programs, we have programs, Comsoc have programs, Culture and Rec have programs; everybody and their brother has a little piece of the action. I think that if we could find ways and means of putting all of those programs into the appropriate ministry, you'd probably save one hell of a pile of money just on the administration, and stopping people from going over and getting a few bucks here and a few bucks there, and another couple of bucks over there. When you look at the balance sheets of some of these organizations, their total source of revenue comes from various government departments. Half the time I don't think one government department knows what the other one is giving.

Mr Sheehan: Is the assessment process in your ministry?

Hon Mr Leach: Assessment? No, that's the Treasurer.

Mr Burns: Ministry of Finance.

Hon Mr Leach: Finance, because assessment really wouldn't have anything to do with housing.

Mr Burns: Or local government.

Hon Mr Leach: That's another good case in point where we have to start paying some attention to who's doing what in government agencies.

Mrs Ross: How much time do we have left?

The Acting Chair: You have about one minute.

Mrs Ross: Well, with one minute left --

The Acting Chair: There will be at least one more round this afternoon.

Mrs Ross: I guess I wanted to ask, under rent control legislation there's a maximum allowable amount that a landlord can raise his rent, is that correct?

Hon Mr Leach: That's evaluated each year. Every year there's a formula in place where the rent increase is determined. This year it's 2.9% or 2.8%, which I guess is the lowest. People talk about rents running out of control. That's the lowest increase that's been allowed in many years, or ever, and yet rents are still below what landlords are eligible to charge. So the marketplace is actually driving rents right at the present time.

Mr Curling: And yet there are rents that are offered and landlords are still offering at less.

Hon Mr Leach: That's right. That's what I'm saying. The marketplace is really determining what rents should be.

Mr Curling: Because of rent control that was brought in.

Hon Mr Leach: No, it's not, it's totally opposite. Right now you can walk out under rent control and the rent control will allow you to charge $1,000 a month, where landlords are actually renting those for $750 or $800.

Mr Curling: So that proves the point itself, that all this rush to cancel rent control is what? However, I won't get on this rent control game again. Let me --

Mr Bisson: What's the point? Rent control's a game --

Mr Curling: What was described by the deputy --

Hon Mr Leach: We have an alliance of the NDP and the Tories.

Mr Bisson: Well, I'll tell you, we're probably more --

The Acting Chair: Mr Curling, I think, has the floor. It would work a little better if one member spoke at a time.

Hon Mr Leach: My apologies, Mr Chairman.

Mr Curling: What you say, Mr Minister, and the deputy himself has described that, there's a vast difference in how government runs the housing business and how the private sector runs the housing business. Would you say so? Because I heard --

Hon Mr Leach: Yes. In many instances it's necessary that non-profits, for example, have a responsibility to administer waiting lists, to look after a number of administrative functions that are not part of the private sector.

Mr Curling: If you do compare them, it's kind of unfair because there are certain things that the government will do because how it runs its housing business, if you want to call it that, is much different than the private sector.

Hon Mr Leach: Well, I wouldn't say it's unfair because we know what those administrative costs are. If we peel those off, there is still an imbalance between the private sector and the public sector.

Mr Curling: And when you peel those balances off it's because of incompetence and inefficiency in how the government, not tenants at all, ran these things.

Hon Mr Leach: Not necessarily. I'm sure there are some inefficiencies, there's probably some incompetence, but it's a combination of a number of things: wages, contracts, labour contracts; any number of --

Mr Curling: Contracts are private.

Hon Mr Leach: Any number of issues that can --

Mr Curling: But the contracts you're talking about, these are private people that the government itself contracted to do the job.

Hon Mr Leach: No, I'm talking about labour contracts more than anything else.

Mr Curling: If you give a greater amount of money when you are soliciting contracts and it drives the price up, it is because it was not managed properly, because I can't see why someone building public housing or non-profit housing and one building a private --

Hon Mr Leach: Let me give you a good example then. In a government operation when you're going out for a product to run your housing, whatever it is, whether it's lawn maintenance or painting or whatever, governments are obligated to go to public tender. There is a cost of administration of going to public tender. Prices are not necessarily cheaper by public tender. If you're in the private sector, you go out and negotiate that price. What often happens, and I think that anybody who's been involved in the building business, you more often than not go out and negotiate a price and then you take that low bidder in and you negotiate some more and probably drive your cost down. So there's more ability on behalf of the private sector to get the cheapest price than you do, obviously, in the public sector where you call a tender and you take the lowest price that comes in -- not necessarily the lowest price but generally the lowest price -- and then have to look after all the costs of administering that as well.

Mr Curling: Let me just move on to something else, Mr Minister. One of the main reasons of government in the housing business is to offer affordable housing to those most in need. Most of the people who are in need are those people who are on welfare and people who earn low incomes who cannot access the rental market easily, or even buying a home. Why would your government then slash a 21.6% reduction in the income of those on welfare who are the ones who want to access housing? Would you feel that that itself would have an adverse, a negative effect on what you're trying to do for those people to access affordable housing?

Hon Mr Leach: The rents in OHC, if I recall correctly, did not increase as a result of the 21% reduction.

Mr Curling: Sure, they did not increase, but the income of people decreased.

Hon Mr Leach: Yes. What's your point?

Mr Curling: They would then have less money -- I'm not talking about OHC itself. I'm talking that you are helping people to access affordable housing, generally, in the private or wherever it is, because you want to bring the price down so people can access affordable housing. Now, people outside there who are getting welfare or any kind of subsidy are getting 21.6% less now in income to access those homes. They have less money now to do it.

Hon Mr Leach: Yes.

Mr Curling: Don't you think it is working in reverse to what you want to happen?

Hon Mr Leach: I'm sorry, I've kind of lost the point here.

Mr Curling: You lost the point? If I have less money I can't access --

The Acting Chair: Mr Curling, through the Chair.

Mr Curling: If I'm given $100 a month --

Hon Mr Leach: Yes, I agree.

Mr Curling: You get that point?

Hon Mr Leach: They have less money, yes.

Mr Curling: Yes, yes. Wouldn't it be more difficult to access the rent that is out there, which is making it difficult for them anyhow to pay for their rent?

Hon Mr Leach: Yes, I wouldn't argue with you. I think that any time you have someone who's on social assistance and somebody who has almost nothing to start with and you take 20% of that away, it's very difficult. And it is difficult, and nobody is going to deny that it isn't difficult.

Mr Curling: Sometimes these things are not difficult at all to understand. I understand that. If I get 21% less in my income and I have to access the same place for that money, it would be more difficult.

Hon Mr Leach: Yes. You're going to have to adjust your living habits and your spending habits, as anyone would have to do who has had a reduction in income. Believe me, there are hundreds of thousands of people who aren't associated with --

Mr Bisson: Don't suggest tuna, whatever you do.

Hon Mr Leach: -- who are not on welfare who have had wage reductions and cutbacks, and in fact every civil servant, I believe, took a 5% cut.

Mr Curling: I understand all that, Minister, but I'm just saying that most --

Hon Mr Leach: So a lot of people have to adjust their spending habits.

1420

Mr Curling: Those on welfare are the most vulnerable in our society, as we know.

Mr Preston: No, the guys who are working for minimum wage --

The Acting Chair: Order, one at a time. Mr Curling has the floor.

Mr Curling: Those on welfare, some of those are the most vulnerable in our society --

Hon Mr Leach: I agree.

Mr Curling: -- to survive. It's a fact. Of course, there are the working poor, yes, also. I agree with you, but I was just dealing with that group, where the government is trying to assist and support and help those people through those transitional times. Is that causing a problem in your ministry, setting up policies for people to access affordable housing now, now that they are 21.6% more away from that?

Hon Mr Leach: No, it probably would in the long term but in the short term there's such a shortage of supply, there's so many thousands of people on waiting lists that their opportunity to access affordable housing is pretty slim to start with, to find a subsidized unit. That, again, is why we go back to where we were the other day and trying to get away from subsidizing bricks and mortar and getting into shelter programs.

While we're talking about the reduction of 21.5%, which is difficult, and there's no doubt about it. If anyone of us in this room took a 21.5% cut in your income, it would take you some time to adjust. Having said that, I also just to get on the record that the province of Ontario still has one of the finest social assistance programs in North America.

Mr Curling: I'll tell you something --

Hon Mr Leach: I don't think that you can deny that, Mr Curling.

Mr Curling: One, I wasn't arguing that. I'm talking about the individuals themselves, you see, who have now lost 21.6% of their income and were having difficult anyhow at that time --

Hon Mr Leach: Yes.

Mr Curling: -- and I'm just saying that. I'm saying to you --

Hon Mr Leach: And I'm agreeing with you.

Mr Curling: -- in your planning, it must have made it more difficult for you because they then have to take a larger step in which to access affordable housing later on down the road, but if they have lost nearly 22% of that income, it is more difficult.

Hon Mr Leach: It is more difficult. They're going to have to adjust their spending habits to accommodate that reduction in the amount of money they have available. I agree 100% with you.

Mr Curling: Let me also go down to the building code, which I said to you in my response to your opening remarks, that it's a hell of a challenge that you have before you. But you said something beyond that. You said that you want to go back -- I think to the 1970 standard, or something like that. I hope I heard you properly. You want to go back to basic --

Hon Mr Leach: No, I think what I said is that there will be an amendment to the building code coming out in 1997, and in that review I would like to go back to basics of the building code to ensure that it does what it was originally intended to do, and that's to provide health and safety standards for building across the province.

There's been many things that have crept into the building code over the last several decades that have been put in as standards that have driven the costs of housing up. As I mentioned to my colleague, when you look at the standards on an individual basis, you can't disagree that it's a good standard. But where the problem comes is should they all be in the building code or should they be standards that are provided to builders and say, "If you want to market your house with these standards in it, feel free to do so," but they won't be mandatory for every building across Ontario.

Mr Curling: One of the biggest things I find, the largest hurdle that the home buyer or owner, whatever you would want to name them, the problem they have is of warranties. They're making the largest purchase ever in their lifetime. They have the least warranty of all products that they buy. People are so elusive -- and I commend your government for dealing with that same furnace problem that they had. It was very complex. It involved a lot, I take it it should be an eye-opener to other things to come, who can you nail on what product.

The concern though, Mr Minister, is that if the building code is reduced -- or the standards will be reduced, as you said, taking away, as you call it, some of the unnecessary things, going back to what it was really intended for, and it may be reduced in a way that may not protect the owner. There are concerns over there who are expressing that concern. What assurance would you give us that they can rest assured that this will not be the case, that the product they'll buy will be warrantied and they will be protected and the government is their friend on this basis and they wouldn't have to take on the big developers, or the developers or subcontractors that are in there, because, as you know, it's very complex. If one goes in to talk about that the tile or the marble broke, you may hear it's not -- you know what I mean, the different steps of contractors they reach till they exhaust their funds and time. Is there any reassurance you could give us that this would not be the case and government will be there to protect the consumer in this respect?

Hon Mr Leach: I think you've touched on two topics. One is the building code issue and the other is the home warranty issue. The home warranty issue is a program that has been established by the building industry itself. It's self-funding. They insure it themselves. Most reputable builders belong to that. They pay premiums every year into this insurance program so that they can ensure that people they sell their houses to have recourse for -- I don't want to say poor workmanship, but problems that arise during construction, so they can do it.

The second issue was the building code issue. What we want to do with the building code is to ensure that there are strong health and safety standards established that cover all buildings right across the province that everybody must comply with. What's happened over the last decade, and some of the issues that we talked about earlier, is there are standards that have crept into the building code which should really be optional construction standards rather than building code issues. I'm talking about the insulation program, for example, and some of the other energy-efficient type programs that have found themselves in the building code which should really be construction options. So when you're going out to purchase your home, or I'm going out to purchase my home, I could take a look at the standards of various levels of construction, and say I am prepared to pay $200,000 for this house because it has X, Y and Z better construction methods in it than the house that's for sale for $180,000, for example. But the one for $180,000 would have to have the health and safety features that every home that's constructed in the province would have to have.

Mr Curling: I just want to make sure that regardless of what price you buy it it has the basic standards, and the basic standards are such that can be followed by the builders, enforced by the government and feel that they are protected, because too often that's the problem. As you know, and I don't want to jump all over the place, even when we had standards for the landlords to maintain their building, what the governments of the day didn't do was to give the money to the municipalities so that those enforcements can be done. So although some people complain about their buildings and the maintenance of their building, everybody just ignored it because the municipality had no money to enforce it. The fact is, too, that we may have laws that come into place and the government does not follow it up, and people have the largest amount of investment that they have put forward in their homes and the individual has a difficult time getting justice done.

Hon Mr Leach: I think what we're striving for is that we can reach and establish some policies, some procedures, a building code that would encourage builders of whatever type of accommodation we're talking about, whether it's apartments or condos or houses, to build a good product because they want to build a good product, not because there are government regulations that force them into doing something that they deem to be unnecessary for the establishment of a reasonable product. So they end up cutting corners and doing all kinds of things and then the government turns around and builds an administration that has to run around checking and searching and keeping track of things, which again drives up the cost even more. If you had basic standards where people could say, "I can understand this standard. I think this is an acceptable standard. I can build a product that people will want to live in, and it will be safe and it will be healthy" -- that's what we're striving for.

1430

Mr Curling: I'm going to ask you one more question, in regard again to the building code, and my colleague Mr Cleary will want to ask you some others. I presume you have been consulting, as you say, with the Ontario Home Builders' Association. Who else have you been talking to in that respect or consulting with?

Hon Mr Leach: Building code officials, the individuals who are given the responsibility to go out and inspect houses, to know where they're coming from. We've talked to homeowners' associations as well.

Mr Burns: There has been a short paper prepared, and I think it's been circulated to between 40 and 50 industry groups, professional associations and others involved in this field of the sort that the minister just characterized.

Ms Beaumont: In addition to those, the Ontario branch of the consumers' association and environmental groups etc. So it's a wide range of people with an interest in housing and in building generally.

Mr Curling: That is of reassurance on my part.

Mr Cleary: Having been a municipal politician for 15 years, 11 years at the head of a council, and I guess the minister knows, we've had a lot of housing projects come under us. As you know, many of those municipalities are not going to be around shortly, I guess. Many of them have 20 or more municipalities in them. They have a lot of concerns about their housing projects and they're really concerned about the lack of information they're getting from this government. There's no direction. They've had people down to speak to them on a number of occasions who didn't give them any guidance at all, and that's just a question that I'm asking you: When can they expect to be brought up to speed on the restructuring plans that may affect the local councils?

Hon Mr Leach: Immediately. I spoke to ROMA just last week.

Mr Cleary: I was there too and I know what they're asking.

Hon Mr Leach: We spoke to ROMA and indicated that our staff are available at all of our regional offices to go out and meet with them, provide whatever information they may require, answer any questions they have. We've got more than sufficient information available for them, and anybody who has any interest in restructuring, all they have to do is pick up the phone and call the regional and we'll be there in no time at all. Because we are anxious to get busy on the restructuring program to ensure that, again, municipalities and taxpayers are fairly represented and costs are kept at a minimum.

Mr Cleary: The municipalities are very concerned about their property taxes and the results of their transfer funds. I know in our area the transfers went between 20.4 and 28.5. Can you tell me how the municipality restructuring plan will help local councils avoid increasing property taxes to pay for these services?

Hon Mr Leach: They're going to have to operate more efficiently and we have indicated that to them. I think we started this process about last August when we had the first AMO conference. We indicated to them at that time that they were going to have to reduce their costs by 40%-plus over the next two years. Most of them heeded that advice, have either started to look at restructuring plans or have looked at ways that they can reduce their costs by combining services with other municipalities, by having joint tenders, by doing a number of things that increase the efficiency of operating their municipality. I'm extremely pleased to hear from the last conference the number of municipalities that are going to be able to absorb the reduction in transfer payments and not have to have property tax increases.

Mr Cleary: I would have another question then. You say they're going to save money and all this, but with the cutbacks that municipalities are being asked to accept, is your government planning on at least moving up the date of municipal transfers? The municipalities that I represent were always concerned about when the transfer money came through to them; in many cases it was the end of June. With all this restructuring and cutbacks, will you commit to moving the date of the transfer up to at least April?

Hon Mr Leach: The date for transfers was April 15 in previous years. It was a decision of the Treasurer to change that transfer date to June. That's a decision that has been made by the Treasurer; I don't think there is any consideration being given at this time to changing it.

Mr Cleary: You're not going change it, being you're cutting them back. It's still going to be June.

Hon Mr Leach: That's the decision that has been made by the Treasurer. The number of payments has changed. I think it's gone to one -- is it monthly now, starting in June? There was another formula, anyway, that started on April 15. But that decision has been made by the Treasurer and I don't anticipate that he intends to reverse that.

Mr Cleary: So they'll still be borrowing the money till June.

I know there's a lot of concern among elected officials and those who might stand for elected posts in the future about the personal liability section under Bill 26 in the event of losses. Can you explain to me how Bill 26 makes elected municipal officials personally more liable under Bill 26 than they were before?

Hon Mr Leach: Actually, they're not. The original Bill 26 had a clause in it that, on a restructuring by a municipality, if a local council took actions to dispose of assets or give extremely high wage increases or take any other actions that might not be in the best interests of a restructured municipality, the councillors could be held personally responsible for that. During the deliberations on Bill 26 there was an amendment put forward that took that clause out, so there is nothing in Bill 26 that added any increase to the liabilities that municipal councillors have.

Mr Cleary: Was that a government amendment?

Hon Mr Leach: Yes.

Mr Cleary: Okay. We didn't get a copy of the bill till just recently. so I haven't read it all yet.

Hon Mr Leach: It was made near the end of the public hearing process, but it was taken out of the legislation.

Mr Cleary: Will amalgamation mean that those financially sound municipalities, those with good reserves and assets, will be lumped together with those municipalities that are not as financially viable?

Hon Mr Leach: Restructuring is going to be a local option. There are a number of townships, in various counties, for example, in many areas, that are looking at restructuring. Bill 26 has indicated that this government prefers them to work their restructuring proposals out among themselves. It would depend on what decisions they arrived at. If, for example, you had four townships that were looking at amalgamation and three of them agreed that amalgamation should take place, and the upper tier or the county also agreed that restructuring should take place, that it would be in the best interests of the majority of the municipalities and in the best interests of the majority of the taxpayers in that county, then that restructuring would take place whether the fourth one liked it or not.

To reverse that, if there were four municipalities and three of them felt that there was no benefit in restructuring and the fourth one did, the fourth one has the ability to request that the government undertake a review, to appoint a commission that would investigate very much along the way a municipal board review would take place. They would investigate the pros and cons of amalgamating the municipalities. If there was a strong business case put forward that says this would be in the best interests of the taxpayers of all of the municipalities, then it could take place. If it was determined not to be in the best interests of the taxpayers, then it would not take place.

1440

Mr Cleary: For example, if there were three municipalities, A, B and C, and A had good reserves and assets while B and C did not, will there be any protection under the amalgamation scheme that will ensure that A's reserves and assets will be directed to benefit the ratepayers in the municipality or will those benefits be spread over A, B and C?

Hon Mr Leach: That's part of the negotiating process between all of the municipalities involved. It also has to involve the upper tier as well. But that's what would be part of the negotiating process.

Mr Cleary: How much more time do I have?

The Vice-Chair: That's it. Thank you, Mr Cleary. Mr Bisson.

Hon Mr Leach: Are we back again?

Mr Bisson: How's it going, Al?

Hon Mr Leach: I know what we've go to do. We have to get together and arrange to get some fresh air in this building.

Mr Bisson: I'll tell you, we can arrange that just by opening the window behind you. We can arrange a demo to go by and just take care of that window. That's not funny actually; I shouldn't josh about that.

Listen, I want to make a deal with you, all right, on this rent control stuff?

Hon Mr Leach: All right. Let me see your hands first.

Mr Bisson: I'm keeping one under and one over.

The Vice-Chair: The last time we heard that was, you know, about 20 years ago, a deal between your parties.

Mr Bisson: Oh, I won't touch that one with a 10-foot pole. Listen, you've stated in this committee and you've stated also in private to me in discussions that we've had -- and we've been to-ing and fro-ing on this whole question of rent control. I think quite frankly that the government's going to have a problem trying to -- obviously no problem, trying to pass it through the House because you've got a majority, but I think you'll have a certain amount of difficulty trying to convince a lot of people of the logic of what you're talking about.

If we agree that in rent control -- the whole premise I understand you saying, and correct me if I'm wrong, is that the changes that you want to make to rent controls are predicated on the fact that you feel that construction is being hampered by the limits that are imposed by rent control. That's the biggest thing.

Hon Mr Leach: That and maintenance, yes; between the two of them.

Mr Bisson: If that's the case, I would argue strongly that changing rent control -- and I think you've said this on this committee as well -- ain't going to do it. If you were to go out there and just change rent control and do absolutely nothing else, do you think there would be one stick of new apartment buildings put up in the province of Ontario, if you just did the rent control?

Hon Mr Leach: No, I agree that rent control is only one of the issues that has to be reviewed; there are a number of others that we have talked about. I agree that rent control alone would not be the catalyst to generate new construction. However, it's the building industry that comes back to us, time and time again, saying that rent control is one of the important ingredients.

Mr Bisson: Let's explore that a little bit further. I think you've answered yes to my question, but I'm going to try it again. If you, as the minister responsible for housing issues in this province, were to say, "Our government's policy in order to spur the construction of new apartment buildings in the province of Ontario shall be the elimination of rent control," do you think that would result in the construction of a whole bunch of brand-new buildings?

Hon Mr Leach: It would if we --

Mr Bisson: No, no, I'm just saying on its own.

Hon Mr Leach: If we took other issues into consideration as well.

Hon Mr Leach: I think I said that --

Mr Bisson: Let me try this again, because I think you and I agree. I'm being very serious here.

Hon Mr Leach: You're not getting an argument out of me. I believe that we've agreed to this, that rent controls are one of the issues. It's not the only issue, but we want to look at all of the issues in a package. I don't think that you can cherry-pick; you know, "We'll pick this one out and we'll leave that one in and we won't touch this one and we'll touch that one and we'll whack this one harder." I think you have to look at all of the conditions that are having an effect on rental housing stock as a package.

Mr Bisson: But I would argue you're cherry-picking in the opposite direction here. If I was the Minister of Housing, and I'm just trying to imagine this --

Hon Mr Leach: You've really got to stretch your imagination for that one.

Mr Bisson: It's not all that far off. Jeez, the way I figure it, all we need is about an extra 40-odd seats or 50-odd seats, and that could very well happen. Who knows? We've been there before, you know.

I'm just saying, if I was Minister of Housing and you were in the opposition and I was to go to you with your knowledge of the rental business and your knowledge of the construction business and I said to you, "Al, I'm going to give you a deal that's going to spur all kinds of construction in this province. I'm eliminating rent control," I think you'd be the first ones up on my doorstep saying: "Hey, Gilles, this is not just about rent control. If you do this in isolation, it ain't going to result in dick."

Hon Mr Leach: Agreed.

Mr Bisson: All right. So then why do it?

Hon Mr Leach: Because you have to look at the whole package. There are about four or five issues that are going to provide the stimulus to create additional building. Rent control is one of them. But you can't take the four and say, "Okay, it's not rent control alone, so we won't do that; it's not Landlord and Tenant Act alone, so we won't touch that; it's not the rental protection act; we won't touch that; it's not the apartment tax, so we won't touch that," because if you look at them in isolation, I doubt that there's one single issue that's going to be the catalyst to get construction going. It's got to be a package.

Mr Bisson: What I'm prepared to do with you is to go back to my caucus, and I think I can get agreement that if you want to work on the question of trying to get new apartment buildings built in this province because you favour a private sector approach -- and I understand that and I respect it; you have the right as a majority government to decide the policy of this province. I haven't got a difficulty with that. I respect the will of the people through democracy. But I have a bit of a problem the way you're going about it.

I'm saying if you want to go to private sector construction and increase that so that the private sector plays a more predominant role than it presently does in building those rental units at the lower scale, I'm prepared to go back to my caucus and say, "Listen, in exchange for not playing around with rent control and putting people in jeopardy" -- because that's all this is going to get you -- "we will work on all those other issues with you." We will work on the issue of the municipal tax, we will work on the GST issues, we will work with you on the questions of regulation, on the question of permits and fees. I'm more than prepared to go back and work on that, and I think it can be done.

This is where I'm going with this: If you did that at the Ministry of Housing, I think you would certainly have the support of my party. I can't speak for the Liberals, but I would imagine they're a pro-development party and I would take it that they would have no objection to that, and everybody would come out the winner. You would come out the winner as the government. The construction industry would come out the winner, because in the approach of your government, you want to see the private sector play a larger role. I think there's still a role to be played for the non-profit sector, but if you want for the next four years to give the private sector a larger role, let's work in that direction. And tenants would win because they would not have their rent go in jeopardy.

Are you prepared to enter into those kinds of discussions? Because I think it can be done.

Hon Mr Leach: All of those things are vital, but there are even some more that you didn't mention, like the Landlord and Tenant Act, for example, and the residents' right act and the --

Mr Bisson: Can you speak up?

Hon Mr Leach: What's the issue that doesn't allow for the conversion of --

Mr Bisson: That's the housing protection act.

Hon Mr Leach: The Rental Housing Protection Act. You have to look at all of those as a package. All of the issues that you've just raised are valid and they're issues that are going to have to be addressed, in my opinion, if we're going to entice the private sector back. But so are all of the other issues that I've mentioned, and I don't think you can undertake a review of an issue that's as important as this one by putting some in and taking some out. I think all of those issues have to be on the table for review.

Mr Bisson: The problem I'm having is that the approach you're taking is a little bit like saying, "The patient's got to go in because he's got a problem with his appendix, but we're going to rip out his entire intestinal tract in order to get there." I really believe that you're coming at this from the premise that you want to involve the private sector. I can support you on that. I think the private sector --

Hon Mr Leach: I would take just the opposite tack. I think it's like going into the hospital and seeing that the guy's got a broken leg but he's in there to have his appendix out, so you take the appendix out and leave the leg broken.

Mr Bisson: No, I really disagree. I think where you're at here, the problem that you're getting into is that you're trying to deal with one problem that is legitimate, but in doing so you're going to put a whole bunch of people at risk by moving away from the present system of rent control in order to deal with the other issue.

We can sit here and we can have this debate for the rest of the week, but the point is that I don't think you can argue with me that tenants will be put at risk of having their rents go up as a result of trying to deal with appeasing one sector of our society, which is developers and landlords. I don't think that's fair.

1450

Hon Mr Leach: No. I mean, we're not in this to -- landlords and developers are there to build buildings to rent to people. They're not there to build buildings that are going to be sitting there empty.

Again, I think that I have to keep repeating, and I wish that this would catch hold someplace, that we have indicated time and time and time again that we don't intend to do anything with the current rent control system until we're satisfied that we have a tenants' protection act in place. What I would implore your party to do would be to work with us to ensure that we develop a package that does provide tenant protection, because the existing system that we have in place right now has too many flaws.

Mr Bisson: Listen, I haven't --

Hon Mr Leach: Even my good friend Mr Curling here agrees with that.

Mr Bisson: We'll move into that issue in a couple of minutes. I have no difficulty working with the government if your aim is to try to figure out a way to bring the private sector into constructing more units. I think that's doable, but I ain't going to work with you if as a result of that we're going to put up three and a half million tenants in this province as pawns in that game. I think that's really dangerous.

Hon Mr Leach: They're not being pawns in a game. Look, I don't know how many tenants you have in your riding, but 80% of mine are tenants, and no, I'm not going to be taking any actions that are going to be detrimental to 80% of the people in my riding. Let's be real here. But I do know that the current system that's there doesn't work. It's not good for tenants; it's not good for landlords. It has to be replaced.

You come with me after this and we'll go over to the corner of Parliament and Wellesley. I'll show you a prime example of what I mean, where this current rent control system has caused good landlords to get out of the business and have them taken over by less than good landlords, for the sake of liability, where they're cutting corners now. They're making a buck on those buildings but they're doing it to the detriment of the tenants that you want to protect. Those people every day are putting up with stuff that nobody should have to put up with because we've got a system in here that forces landlords to cut corners, do things that create all kinds of problems for tenants, and we've just got to do something to fix it.

Mr Bisson: Your approach is like trying to fix this with a sledgehammer. Listen, I've been in your riding on a number of occasions because I've been invited, as you well know, as the critic for Housing issues --

Hon Mr Leach: Where is your riding, by the way?

Mr Bisson: My riding's up in a place called Cochrane South: Timmins. But I've been invited to your riding a number of times to tenants' organizations in your riding: St James Place, Regent Park.

Hon Mr Leach: St James Town.

Mr Bisson: St James Town; pardon me. I do come from Timmins. In all of these various meetings that I've had with your tenants, nobody has said to me in your riding that rent control is broken. What they're concerned about is their member, the MPP for that riding, who is the Minister of Housing, doing away with rent control. That's one of their big issues.

The other issue they're concerned about, depending on where they live, is the government's policy on the abandonment or the privatization of non-profit housing. That's the other concern. At no time have I had --

Hon Mr Leach: Well --

Mr Bisson: Just one second. At no time have I had anybody in your riding or anybody else in a riding in this province come to me as the critic and say: "I think the present system of rent control doesn't work. I am a tenant and I can tell you why." I've had nobody from the construction industry come in and say, "If you just do rent control on its own and you dismantle it, it will fix all of the problems in the system." That's never been the case.

Hon Mr Leach: Let me --

Mr Bisson: You'll get a chance, sir. The only thing I want to say is that you're saying that the system is broken. You're talking about how you want to get into some sort of a consultation and review process. What consists of the review process that you're going through now in regard to rent control? What kind of mechanism do you have in place in order to take a look at all of this? If that's your householder, I've already got it.

Hon Mr Leach: No, this is your householder. I wonder why tenants become concerned about rent control. I'll tell you why they become concerned. It's because people like you get over there and start fearmongering, saying, "Do you want rent increases of 20%, 30%, 40% or more?"

Mr Bisson: That's right.

Hon Mr Leach: You should be ashamed of yourself for passing around information like that.

Mr Bisson: Not at all. You should be ashamed, as the Minister of Housing --

Hon Mr Leach: By the way, that's a good picture. That's a very concerned tenant. It's a good picture of your executive assistant.

Interjection: The truth hurts, don't it?

Mr Bisson: But Al, seriously, listen. I know one thing, being in government before. When you're smarted, you normally react in that way. We are, as critics in this party and as critics in the opposition, out there talking about issues because there are people who are concerned and are opposed to the action that your government is taking.

Hon Mr Leach: And you have sat with me and we have talked and I have repeated time and time again in the Legislature and in this committee room and in the press and in the media that we're not doing anything with rent controls until such time as we have a system that provides protection for tenants. And then you walk out and start going over to people who are very vulnerable, who have concerns. You get over there and you start fearmongering with this garbage that absolutely creates --

Mr Bisson: Oh, Al.

Hon Mr Leach: I mean, you're doing a disservice to them. You really get them upset and it's really shameful that you've got to take that type of action just for political points, believe me.

Mr Bisson: Very good. Now that you've had your say, I can tell you wholeheartedly, because I've been on both sides of the House, first of all in government, the Conservative Party was very good at going out there and raising issues that they thought were important for their caucus and they thought that people in Ontario were in sync with and went out and did the exact kind of thing. It's called going out and informing the public about what a government is doing. You can't sit here as the Minister of Housing --

Hon Mr Leach: Not when you're planting fears in our most vulnerable part of society.

Mr Bisson: You cannot sit here and try to give me assurance, and if you can do it, I would very much like to see you --

Hon Mr Leach: How many times do I have to repeat it, that I said that we would not do anything that was detrimental to tenants?

Mr Bisson: -- guarantee people that their rents are not going to go up because of your actions. Will the rents go up because of your actions? Is that a possibility?

Hon Mr Leach: Did I tell you time and time again that we were going to have a program that will ensure tenants are protected?

Mr Bisson: The question is, can you sit here and guarantee to the tenants of this province that as a result of your actions of moving out of rent control, their rents will not go up? Yes or no?

Hon Mr Leach: Can you tell me that under your rent control program, rents didn't go up? Rents went up every year you were in power, every year.

Mr Bisson: According to a cap. The rents went up according to a cap.

Hon Mr Leach: In fact, the smallest increase that tenants had was this year when we came into power.

Mr Bisson: There was an absolute cap. Can you provide assurance to the tenants of this province that you will have an absolute cap on the amount that rents are able to go up?

Hon Mr Leach: I can absolutely assure them that we're not going around saying that rents are going up 40% or more.

Mr Bisson: Can you guarantee me that won't happen? Are you willing to guarantee that won't happen?

Hon Mr Leach: The only instance where I can give you an example of where rents jumped up by 40%, it happened to a woman in my riding who came in to see me in tears, didn't know what to do. She had rented an apartment at $600 a month. She walked in. After three months, the landlord walked in and said, "Your rent's $900." She was devastated. She didn't know what to do. You know why? Because the Rent Control Act ceiling was $900. They sucked them in by saying: "Here's a low-ball rent." Get 'em in the door, get 'em moved, have them undertake all those expenses. Get 'em in a position and say, "Gotcha." That's what's wrong with this system.

Mr Bisson: There's a cap on the current rent control system. You know that as well as I do.

Hon Mr Leach: It is not.

Mr Bisson: You're the minister responsible for --

Hon Mr Leach: The $900 was the amount of rent that was eligible under the Rent Control Act. You could charge any amount underneath that.

Mr Bisson: Al, let's try it this way. Let's come at it from the other way. Over the last couple of years in regard to rental increases that have occurred in this province under the current system of rent control, what would be the percentage of people who had their rent go up more than above the guidelines that were set out in the legislation? What's the percentage?

Hon Mr Leach: Let me turn it around the other way. I know that there are 40% of them who are paying less than the maximum rent.

Mr Bisson: Under our guidelines, yes, but how many of them have gone over the guidelines?

Hon Mr Leach: That's what's called letting the marketplace determine what will take place.

Mr Bisson: Minister, I'm asking you a very simple question. Can somebody from your ministry provide me with the percentage of rents that were increased above the accepted guidelines over the last two years? You're telling me about horror stories out there. Let's talk fact. What is it?

Hon Mr Leach: I'm talking about fearmongering.

Mr Bisson: What's the percentage: 50%, 60%? Or is it 80%?

Mr Bob Glass: Minister, we can provide information on the number of applications we've received for above-guideline increases.

Mr Bisson: And how many of them resulted in --

Hon Mr Leach: Do you want to introduce yourself, please.

Mr Glass: Bob Glass, director of rent control. Since we've started in the program, we've received about 1,500 applications involving 84,000 units from landlords requesting increases above the guideline. The average increase as a result of those orders to date has been 6.39%. That's over the last three years, approximately.

Mr Bisson: And of the total rents that were charged in the province of Ontario within the entire rental housing stock, what is the percentage of rents that were increased above the accepted guidelines?

1500

Ms Beaumont: Can I just add one thing to what Bob had initially said? The numbers Bob gave you were the increases applied for to the system. What we can't give you is the information on what kinds of increases took place to raise rents from what was an actual rent up through that gap between actual and maximum, and that allows you bigger increases.

Mr Bisson: But where this is leading, Minister, is that you cannot sit here today and tell me and the tenants of this province -- you're trying to make the case that there's a big crisis in the rental housing industry and all kinds of exorbitant rents are being charged under the present system of rent control, but your people from the ministry can't provide me with the figure, of the 3.5 million people in the rent control system today, whatever number of units that is, how many of those units under the current rent control system have had rent increases above the guidelines as prescribed under the act. Quite frankly, the system works. That's why they can't provide the number. There are far fewer examples of that happening than you're trying to make us believe. That's what it comes down to.

Ms Beaumont: One of the things we can tell you is something about the number of instances where there is a significant gap between the actual rent charged and the maximum rent allowable. If you look at those units where the maximum rent is $1,200 a month, about 90% of the rents charged in those units are at least $100 less than the maximum rent.

Mr Bisson: Can I ask the clerk of the committee, Mr Chair, if we can have that information tabled to the committee, all the information they're referring to. But I want to get back to the minister with a simple question.

The Vice-Chair: Just a moment, Mr Bisson. Let me ask if that would be possible.

Mr Bisson: It's public information. We used to get reports every year in government, so I imagine they're still available.

The Vice-Chair: That's fine. I just wanted to make sure there were no comments.

Mr Bisson: I want to go back to the minister and ask this simple question: Can you guarantee under your new system that you will not allow rents to go above a certain cap? Are you going to take the cap out of the system?

Hon Mr Leach: Yes, I can guarantee they wouldn't go above a certain cap.

Mr Bisson: So you're going to keep the cap in the system. That's going to be the basis of a new rent control.

Hon Mr Leach: I thought I answered your question. You said, could I guarantee that they wouldn't go above a certain cap? Yes, I can guarantee they won't go above a certain cap.

Mr Bisson: Do you have any idea what your cap would look like?

Hon Mr Leach: Not at this time.

Mr Bisson: What's the level? We have a cap now that's set within the rent control legislation. Would that amount be higher?

Hon Mr Leach: Any cap we did impose, if we had to impose a cap, and I certainly hope we wouldn't have to, would ensure that tenants were protected, which is what we have been saying all along.

Mr Bisson: Are you trying to tell me that rents would not go any higher than they are allowed to go under the present system?

Hon Mr Leach: I thought your question was, would I guarantee that --

Mr Bisson: You're skating a bit. I understand your job as a minister -- you have to sell the bill of goods -- but I'm asking a simple question. You have a rent control system today that says there is a specific cap on how much rents can go up in Ontario. My question simply is, are tenants going to be worse off or better off when it comes to the amount of rent they pay under your system?

Hon Mr Leach: If I had asked you that same question five years ago, "Do you have any intention of raising the rents in Regent Park by 25%?" do you think you would have answered it?

Mr Bisson: Yes, I would have.

Hon Mr Leach: You would have said, "Yes, we're going to go out and raise the rents of the poorest tenants in our entire society by 25%"

Mr Bisson: Yes, and I faced the tenants in my riding who lived in non-profits, all of them, and went to their tenants' meeting and told them so. All I'm asking you to do is come clean and tell me, will tenants be worse off or are they going to be better off under the new system? Will they pay more rent or will they pay less? It's as simple as that. Will my rent go up under your system more than it would under the present system?

Hon Mr Leach: Tenants will be far better off.

Mr Bisson: How?

Hon Mr Leach: Tenants will be better off because they'll have greater choice of accommodation, they'll have better- maintained buildings --

Mr Bisson: They get choice of accommodation now. What does that have to do with rent control?

Hon Mr Leach: Rent control is creating a situation where the maintenance of buildings is deteriorating. There's absolutely no choice of accommodation anywhere in the province.

Mr Bisson: No, no. Listen, you're skating on this. I'm trying to get a simple answer to a question.

Hon Mr Leach: What you're saying is, "Are you still beating your wife?" I know.

Mr Bisson: You have now a system of rent control that has an absolute limit on how much your rent is able to go up. Are you able to guarantee that under your system, tenants will be no worse off when it comes to the amount rent will be allowed to be raised -- in other words, that you're not going to change the cap system?

Hon Mr Leach: By the way, are you still beating your wife?

Mr Bisson: Eh?

Hon Mr Leach: I just wanted a simple yes or no: Are you still beating your wife?

Mr Bisson: Never did. It's a simple answer.

Hon Mr Leach: Well it's that kind of --

Mr Bisson: No, it isn't.

The Vice-Chair: Order. Far be it from me to get in the middle of a slanging match, but --

Mr Bisson: That's your job as Chair. That's what we pay you for.

The Vice-Chair: It's the only time I'm relevant around here, I know, and I wake myself up every once in a while. But let me just settle this down a bit. I don't think we should get personal at all.

Mr Bisson: I didn't take his question personally.

The Vice-Chair: That's fine. I just wanted to warn you not to descend to that level of personal diatribe. Let's try to not do that.

Hon Mr Leach: The intent, Mr Chairman, was to indicate that the question that was being asked can't be answered.

Mr Bisson: What do you mean you can't answer? You're the Minister of Housing. It's very simple. You are telling the people in the province right now that you plan on reviewing the system of rent control and replacing it with another system. True or false?

Hon Mr Leach: That's true.

Mr Bisson: All right, and that begs one question. Under this new system, whenever we get to it, are you going to guarantee that tenants are going to be no worse off than they would be with the absolute limit imposed by the cap now?

Hon Mr Leach: I am saying that tenants will be better off. They'll be better off because they're going to have more choice of accommodation.

Mr Bisson: Are they going to pay 5% more, 10% more, 20% more than now?

Hon Mr Leach: The question you have to ask is, would a tenant be prepared to pay 5% more, or whatever the number is, to have better accommodation, better maintenance, all that? You're telling me that people would rather live in something that is run-down, poorly maintained, lights out, all that type of stuff, rather than have a system that provides them with appropriate accommodation. I don't think so.

Mr Bisson: That's not what's being said. How much time on the clock left, Chair?

The Vice-Chair: You have very limited time. Four minutes.

Mr James J. Bradley (St Catharines): Ask him more rent control questions. I want to send this Hansard back to the renters in St Catharines.

Mr Bisson: To come back at it, you're the Minister of Housing. The buck stops here. That's what Harry Truman said, right? You're the minister, you're the guy going out and making the changes to the rent control system. I've been asking you the same question over and over again for the last 20 minutes. It seems to me it's a fairly simply answer. If a tenant today is paying a certain amount for rent, and you don't change the rent control system, five years from now there's a limit to the increases that tenant will pay for that unit, based on the present system of rent control. If you change the system to what you envision, will that tenant end up paying more rent or less rent or the same?

Hon Mr Leach: I don't know yet. As I said, we're still working on the procedures that say we're going to have a package that provides protection to tenants. That program is still under review. I know what the existing one does, and I know its limitations. In my opinion, it doesn't work, and I'll continue to say that it doesn't work. If you take a look around at the rental accommodation in my riding, you would see why it doesn't work.

Mr Bisson: A lot of people wouldn't agree with you on that point. Listen, I'll make the offer one more time, and I'm very genuine about this. I'm sure we can get an agreement in the House. If you want to deal with the question of how we build new units in this province, we can come to terms with that, and I think everybody can come out the winner, including you as minister. But if part of the deal is putting all these tenants at risk by doing away with the present system of rent control that puts in place an absolute cap, there's a real problem.

Hon Mr Leach: What you're telling me is that the rent control system we have in place at present is absolutely perfect. I don't think it is.

Mr Bisson: Nothing is absolutely perfect, but it's a heck of a lot better than what you're trying to sell people now.

Hon Mr Leach: So if it's not perfect, you wouldn't agree with me that perhaps we should take a look at it to see if it can be improved? Do you think it could be improved?

Mr Bisson: It can always be improved, but the difference is simply this --

Hon Mr Leach: If it can be improved, do you not think it's worthwhile that we should take a look at it?

Mr Bisson: Listen, the difference here is this: When the Conservative government --

The Vice-Chair: Hansard is having a hard time keeping up.

Mr Bisson: I'm done here. It's because he and I feel passionately about this issue, don't we, Al?

Hon Mr Leach: Yes.

Mr Bisson: When the Conservative government introduced legislation to bring in rental control in this province, every government since then has worked to make the legislation better. All right?

Hon Mr Leach: Yes, that's what we want.

Mr Bisson: The problem we're having with you is that you, in your own words before this committee and in questions before the media -- and I would like to go back and look at Hansards in the House; you might have said the same thing -- are talking about returning rent controls back, not to where we had it when we came to power, not back to what the Liberals inherited when they came to power, but pulling it all the way back to before what Bill Davis brought in.

If that's the game, the renters in this province aren't interested. That's why we're concerned. That's why, as the critic responsible for housing issues for my party, I will go out and tell people what you're up to. I will tell them to contact all your backbenchers to make sure they understand that this is a game people don't want to play. I make absolutely no apologies for that because that, my friend, is my job.

1510

But if you want to work with us to fix the question of new units in this province, I say it can be done without delving into rent control the way you want to go. If you're prepared to do that, we will work with you and tenants in this province will work with you and I think we will all come out ahead in the end. But don't put the tenants of this province as the sacrificial lambs in this exercise to satisfy a few people in the development industry and a few people who happen to be the landlords who will benefit out of this.

Hon Mr Leach: I absolutely agree with you that you should be out there doing your job and making sure that people have the right information. But to go out there and spread information that you know is not correct is just uncalled for.

Mr Bisson: But you're telling me right here in this committee --

Hon Mr Leach: Look, you get A for talking. Try listening for a bit. You might hear a little. You're going out there and you have absolutely nothing whatsoever to substantiate that information -- nothing whatsoever. You've gone out to the most vulnerable people in our society and have scared them to death.

Mr Bisson: You're doing a pretty good job of that on your own. Can you deny what's in that pamphlet?

Hon Mr Leach: You have gone out there and the people who --

Mr Bisson: Can you deny that what's in that pamphlet cannot happen under your system?

Hon Mr Leach: -- are paying 30% and 40% and 50% of their incomes in rent --

Mr Bisson: Are you guaranteeing --

Hon Mr Leach: Try listening. How many times do we have to do this?

Mr Bisson: I'm listening.

Hon Mr Leach: It's question and answer. You've asked a question.

The Vice-Chair: I think we've listened long enough. Next. The Tories.

Mr Kells: I've enjoyed the dialogue. I don't know if the minister's enjoyed it as much as I have. My first subject was going to be rent control, Minister, but I think I'll give that a rest for a bit.

But I might say a couple of things about rent control, historically. I happened to work here when it was first introduced in 1975, I was a member when it was improved because of the flip situation, and in my exile as a non-MPP, the Liberals appointed me to the Rent Review Hearings Board, so I have a bit of a feel for this game of rent review and rent control. I might tell you that it's two different subjects, and with all due respect to the honourable member, we should not mix them up.

At the time that the rent review hearings act was passed, it was a collaboration between the Liberals and the NDP, part of their agreement. They put together the rent review hearings act, which was the most complicated, unworkable act ever devised in the history of this place. Even with the agreement between the NDP and the Liberals, on the night of passing that act 54 amendments were put in overnight.

Mr Bisson: It sounds like Bill 26.

Mr Kells: No, with all due respect to the honourable member, it was a doublecross of the Liberals on the NDP. It ended up being, unfortunately, an act that was very beneficial to the landlord. I do know, because I represented that industry after. I said to that industry, "You were much too clever and it cost you dearly," because, lo and behold, when the NDP won in 1990, they went to a harsh Rent Control Act. They went right back and by and large revoked most of the rent review hearings act. Those 33% and 40% increases came out of the rent review hearings act.

I know. I had to listen to those people, and we had to apply those huge increases based on the terms of those acts and a bunch of regulations that were so complicated, nobody could figure them out. In some cases, it was 67%, and we arbitrarily just took them and reduced them so they wouldn't be so ridiculous. That was the rent review hearings act, and that came out of a combination arrangement between the Liberals and the NDP, doublecrossed by the Liberals at the last minute.

Okay, we can live with that, but we should not mix that up with rent control. Rent control, as the NDP changed it, was very precise. There still was a rent review hearings act with certain limitations and certain things you could do, certain things left over from the past. But by and large, rent control with prescribed increases is something the public understands, politicians understand, and it works to a certain degree.

Now, let me tell you, as somebody who represented the development industry and the rent management industry, right now there isn't anybody in that industry who isn't happy with rent control. You've got guaranteed increases. We have a market that was terrible for the first quarter of the 1990s and now might be a little better, but by and large, the landlord was not the guy wanting to change rent control. Somebody who wants to take rent control off now is an investor. The problem with what you're asking, Gilles, is that no investor wants to build in this province if he doesn't have some guarantee that over a prescribed period of time he's going to at least have an opportunity of getting a return on his investment.

If your question to the minister is, can we get together as a group -- the opposition parties, the government, the industry -- talk about offshore investments, talk about anybody, then I think the answer probably is yes. I do believe the minister understands that most of us dealt with this subject at election time. I know he has a great number of renters in his riding, mine are 50%, so it is not a subject that many of us treat lightly. It seems to me that I hear the minister clearly. He says, in anything I've ever read or understood him to say in person, that the system's broke. I agree with that. Nobody's going to build private housing. We can't afford to build it for the public, so somebody has to build it. We have to come up with a new system. All I've ever heard the minister say is that we will, as a government, tackle the problem of how to get rental accommodation built. At the same time as we're attacking that problem, we have to guarantee that nobody is going to be arbitrarily, because of rent increases, shoved out of their homes.

I remember way back 15 years ago, when we debated the same subject, the problem was, are we going to put somebody out on the street? That is still a problem today, and I think it's within our ability to solve that. In all due respect, you can have those one-on-ones with the minister all you want --

Mr Curling: You should explain where the Liberals betrayed the NDP.

Mr Kells: Well, you did.

Mr Curling: What are you talking about, Morley?

Mr Kells: You did. You were the minister at the time.

Mr Curling: Do you know what you're talking about?

Mr Kells: Oh yes, I know exactly what I'm talking about. Could you explain the rent review hearings act? You were the minister and you didn't understand it.

On my time, I'd like to move on to a couple of other subjects.

Mr Curling: You got a job out of it, though.

Mr Kells: Listen, history has all the facts. You can't change it.

I'd like to talk just a bit about Ataratiri. It's another one. I don't want to embarrass my Liberal friends, but it did come up the pike from the current mayor of Toronto at the time, who was very obvious about his Liberal leanings and has gone on to greater fame. It was an arrangement made with the current Liberal government of the day. As you know, there was $350 million-plus spent on Ataratiri. The deputy minister knows this subject probably better than I, or at least as well as I. There we have $350 million of money spent, jobs lost, forcing industries to leave that area at the same time that the same government's Ministry of the Environment was bringing on -- Mr Bradley used to be here; he was the minister of the day -- bringing on reasons why that land couldn't be used for housing.

As I recall, and I have my papers on it, I came down to see Ross McClellan, when the NDP had taken over the government, who was the man behind the scenes of the NDP, and I showed him the industry figures that we had presented to city hall. I said: "Mr McClellan, speaking for the industry, there's no doubt where I'm coming from. We, the industry, look at this as a position that is just not commercially viable. Besides the $350 million, you're looking at a potential of $1 billion in loss." To the credit of Mr McClellan, who eventually passed the information on to the cabinet of the day, Ataratiri was put on hold.

The only reason I mention it is because it's still carried, in the government's books, as a huge loss. Not only do you have $350 million-plus, maybe heading on to $400 million, already spent; you might have somewhat lessening environmental demands on the land, but there is no future direction for the land -- except if you read Crombie's report for the city of Toronto, which simply says that other uses could be visualized and they could work their way around the flooding potential and the environmental hazards.

1520

It's in your estimates, but I mention it as a warning to our own government of the extremes that can be reached as we search for solutions to housing. It's supposed to be a solution to a housing problem in the heart of Toronto, and because it was misdirected because the economics were not known, because even the most greedy developer never got his hands on Ataratiri, we've taken the public down the street one more time.

I'd just like to make one more comparison before I leave Ataratiri. We spent -- the Liberal government of the day and the mayor of Toronto -- $350 million in collaboration and it turned out to be the province that took the huge brunt. At the same time, the Ontario Jockey Club tried to sell similar-size land, better located, better potential, and sold that same land -- they actually never got the money because that deal was thwarted because of environmental concerns -- for $35 million. So you're looking at government intervention into the private marketplace -- $350 million. It took manufacturing jobs out. You have the Greenwood Raceway, $35 million, and now I understand on the second go-round they sold it for considerably less; we're down to maybe $20, $25 million.

It is hard to comprehend an economic situation where governments can so overly spend, get involved in the marketplace, even confuse the fact that one ministry says, "You can't do it," while at the same time we're spending huge wads of government money. Gilles does not want our government to duck the issues of the day, but I just want it on the record one more time how this current issue that's sitting with the Ministry of Housing came about. It came about from a huge, misdirected desire to provide public housing in the city of Toronto.

I also want to talk about Cornell. We've been at Cornell for quite a while. I think it wouldn't be a bad thing if it was put on the record how much has been spent on Cornell to date. I know you brought in design experts from around North America. I know that the private industry is keenly interested in Cornell. I guess the question is, when might we ever see any action on Cornell? Then I'd like to ask you about Seaton, if I may.

Mr Burns: Cornell was acquired in 1972 as part of the land assembly made by the province at that time in anticipation of an international airport. I don't know what part to assign to Cornell. The total acquisition cost was in the order of $350 million. It was written off some time in the late 1970s. So the acquisition's carried on the books of the province at nil.

Over the past five years, as you said in your remarks, the province has worked with the town of Markham and with other people, principally with the town of Markham, to get the planning approvals in place. There's now a general amendment to the Markham plan that provides for urban expansion as a secondary plan for that district, and the first subdivision is somewhere in the approval process. That five-year effort -- just the last three years of it have been carried and will be retired when the revenue from the sale comes in. Have you got the actual number, Dino? It's in the order of $2.5 million.

Mr Chiesa: I'll get it in a second.

Mr Burns: We'll get the exact number in a second. The cabinet looked at a number of provincial land holdings last fall and Minister Johnson announced, I think in late November, that we would move quickly to the point of being able to sell Cornell in its current state of approvals. Realty Corp and the Ministry of Housing are in effect kind of partners in this operation in a work team. The request for proposals for a consultant to work with us on the disposal process was put out, the reviews have been done and that firm is on board. The next stages of seeking and evaluating private proposals will be under way in the next couple of months. I expect that we will be looking at options for proceeding in May, June, maybe July, somewhere in that period of time, to dispose in some way or another of the Cornell land assembly.

Mr Kells: I think the operative word or description is 1972. You also recall that there were more acres involved in those days.

Mr Burns: Yes, 20,000. This is 1,000 arpents.

Mr Kells: The other piece of that was called North Pickering under the Liberal regime and it's now called Seaton. I guess my point again is that when governments start to get involved in large land assemblies, then we start to wander into territory which is a bit difficult and a bit risky for us.

I don't have to tell you that the real estate industry is less than 50% of what it used to be. A lot of proud corporations are gone. The difference is that governments aren't gone; they change, but the costs are absorbed by the taxpayers. I suspect that if we added up the cost of Markham and the cost of Norfolk-Haldimand, which the Conservative government has to take all the blame for -- and even the assembly of the acres around the projected airport, we, the old Conservative government, have to take the blame for.

Then in 1985, and particularly at the beginning of 1987, when times were good, there was a very good, sound organizational structure put in place called the North Pickering whatever and they pulled in industry. A chap by the name of Tom Zizys, who worked for the Liberal government, had a very good plan, and the idea was to get on with it.

I don't know whether it's just market pressures or whatever, but the frustrating part is that the industry did sit down. There was good municipal participation; the province had a plan. That was around 1990, and here we are in 1996. I wouldn't know how many bucks have been spent on that North Pickering situation. It was cut cold by the NDP when they came in. But again, nothing's happened there.

At the same time, that has had a very strong impact on what else has taken place in the region of Durham and in the region of York. There's the big pipe and there's everybody having demands on the pipe. So I guess it reinforces my concern of when government gets into the marketplace. I believe in a society, surprisingly enough, that doesn't remove government from everything. Surprisingly enough, as I said, I used to be a right-winger in the Davis government. I'm a moderate now. It seems to me that government has a role.

The Vice-Chair: Perspectives change.

Mr Kells: Yes. Well, times change. I guess all I want to have on the record is that here we are now, we now have all this experience behind us. We've written off the $350 million down here at Ataratiri and we might be able to get some of that back; we've written off the $350 million involved in Cornell. I don't know what the figure is and what we've got in leases for the land farther out. But if we're going to come into all the problems involved in Golden and governance and taxation, we're still dealing with all this raw land that's in the hands of the government.

Somehow it seems to me -- it's only my concerns that I can pass on -- that yes, rent control is one thing, but it's all impacted by the industry. The industry will always try to make a profit, but government's got to be there to balance industry desires and the common good of the public at large. I'm not too sure, as we sit here in 1996, that even with all the well-intentioned policies of the three different governments, the three different parties, the public has been well served. I guess my concern, in bringing it up, is that I simply hope we have the opportunity now, with the interest rates the way they are, the marketplace the way it is, to not panic, to approach rent control, to approach these huge assemblies of land, to approach bringing in the private side, bringing in our friends in the opposition. Maybe we could get a housing construction industry that works out to the benefit of all. That's my point. Thanks for the opportunity of saying it.

Hon Mr Leach: Cornell I think is going to start shortly, this spring. You'll see shovels in the ground and at long last we'll start to recoup some of the taxpayers' money that has gone into that project. There have been arrangements made to get a secondary plan on Seaton, and again I think in the not-too-distant future you'll see some of the taxpayers' dollars that have been invested in that project starting to be recouped.

1530

On Ataratiri, we took a bath for $350 million. I haven't given up hope that we will eventually develop that property into something that will benefit the community. I certainly hope so. It's in my riding and I know that it cost hundreds, if not thousands of jobs for the people who live in those non-profit housing complexes that we talk about, and those were actions that were taken -- I'm not saying this to throw blame -- that really hurt a community. It took people where there were some out-of-work -- most of the industry that was down there was light industry, blue-collar work, and it took thousands of jobs and just put them all on to the street and most of them on to social assistance.

I guess the point of the exercise, and I concur with my colleague, is that government should stay the hell out of the land business. You've indicated three or four that have been absolute disasters. I was trying to think of one that has been successful and while you were speaking I couldn't come up with any. What we're really saying is that we should let the private sector do what the private sector does best, and that's in the housing and building and land development business.

Mr Kells: I appreciate your comments, Minister. I wouldn't like to mix up apples and oranges, but just next door we have another bill. It's almost like the difference between an orange and a grapefruit. Here we are talking about rent controls, land assembly, non-profit housing, public housing, and all those things that are vital to society today. At the same time, the industry I used to represent had two major problems and they're both encapsulated in Bill 20. Those problems surround two things.

In the old days, when the world was bursting and commercially viable and everybody was making money without seeming to have too much effort except just bank-backing, we had a big worry about getting approvals through. Land approvals and the delay were the big problems holding back this huge demand, so we almost seemed to overrun the system.

Again, I'm not picking on the Liberal government of the day. It just happened in their time. It would have happened to any government. The municipalities couldn't handle demands. When the NDP changed that, the whole thing just stopped. Problem one that the industry always faced to try and meet all these problems we're talking about was getting their approvals through without driving up the cost of housing greater than it had to be.

The second problem was that municipalities have to pay for all these things, and the opponents of all this will tell you what a huge advantage homeowners get because you have to put in roads, you have to put in sewers, you have to put in schools etc. So we came to the era of development charges and indeed educational levies, whether legal or not.

As we talk about the things we're talking about here today, they have to be resolved at the same time as you're looking at development charges, soft and hard, education levies, if they're legal, or some way of paying for education, some way to pay for growth. On top of all that, you have to worry about the economic welfare, jobs etc.

I can maybe describe the problem to you; the mystery is to come up with the answer. As we're talking about our estimates today here, it's difficult to talk in terms of rent control if you don't look at the big picture. I think the best thing we can do as elected people is to try once and for all, even though we'll have disputes all the way through, to look at this big picture in light of who pays, why, who receives the benefit and should they, and how everybody's paid so that everybody in society at least gets an equal chance.

I understand privileges and I understand rights. Our government in the old days said that housing's a right. If housing is the biggest issue in here, then taking all those other elements into consideration, providing that housing is something that I think is the big challenge for our government. If Gilles is really serious, and I think down deep he probably is, this within reason could be debated in the Legislature and we could resolve it. I think it's well within our means, but we don't need more history on this. All the history you could ever want is out there. There isn't a country in the world, there isn't a so-called successful or unsuccessful real estate company that hasn't learned the lesson of financing land speculation. It's with us forever.

In our little world of 10 million people, and bring it on down to the -- I hate to use the word "GTA" because it's unpopular, but bring it down to a focus in the GTA, I think we have the expertise, I think we have the practical knowledge, I think we have the experience, and I think it can be done. I do think that over there in Bill 20 and over here it's within our ability to get this whole thing resolved.

You'd agree with that, wouldn't you, Gilles? You agree with, don't you?

Mr Bisson: As long as you don't put up tenements that --

Mr Kells: Throughout, you asked the minister to give you some kind of guarantee. I can't speak for the minister, but I think it's possibly within our ability to come up with some system that doesn't work in a detrimental way to any tenant, by and large.

The Vice-Chair: You have about five minutes left. Why don't you take that and then we'll take a 10-minute break.

Mrs Ross: Sure. I certainly don't have the expertise that my friend Morley Kells has in housing, so I'd like to ask --

Interjections.

Mr Bisson: Don't sell yourself short.

Mrs Ross: I'd like to ask a question. Public housing and non-profit housing: I'm a little confused about that. Can you please explain to me the difference between the two?

Mr Burns: Do you want me to do that?

Hon Mr Leach: Yes, a five-minute answer.

Interjections.

Hon Mr Leach: That's because he's got a 20-minute answer.

Mr Burns: Yes, that's right. I'll pause, because I was about to give the 20-minute one.

In 1964, National Housing Act amendments, the federal government offered to finance provinces that wanted to build social housing on a particular model. The model was 100% rent geared to income and there was quite a large amount of cash. The federal government had quite a lot of cash in the 1960s and was funding significant new programs as part of a process of completing the social welfare program it had run on in the early 1960s. The government of Ontario moved very quickly. In fact, in the first three or four years Ontario took 80% or 85% of the money, it was so well organized.

What was built -- or bought -- are the fairly large projects you see in most urban communities, and then quite a lot of mainly seniors' housing in smaller towns.

Because the projects were large, they concentrated a large number of people of very limited means and, in the family projects, with large numbers of kids, in very small pieces of geography. A lot of them were large-scale apartment complexes, and within a few years they elicited a very strong public negative response, not just in Ontario but across Canada, but especially in Ontario.

In 1972, the federal government stopped and said: "We were too simple-minded about this. It doesn't work too well, so let's look at another way of doing it." From 1972 to 1974 they rethought it. They had some national task forces. In 1974 they amended the National Housing Act and from 1974 till recently, social housing has been delivered this way, not by big crown corporations or public agencies but by community sponsors of various sorts: municipalities, church groups, social service agencies, cooperatives. They are much smaller in scale than the ones from before and they are largely on what's called the mixed-income model; that is, not everybody in the project is there because they have the absolute lowest possible income. In fact, in most non-profits there's a banding, so many have market rents, so many have shallow subsidies and so many are very poor, so you have smaller projects, mixed format.

The Ontario Housing Corp has continued to exist. It still selects its tenants, or did until very recently, on a point ranking system that really meant that the less you had and the more desperate your situation, the more likely it was you would get in, continuing to gather in these geographic locations the people with the biggest problems and the least income.

That's the distinction between the two approaches. If this hasn't been enough to give you a sense of which one is which in your own community, we would be happy to tell you which ones are funded under the first model and which ones are funded under the second.

The Vice-Chair: I think that about does it.

Mr Burns: I'll save the 20-minute version for another time.

The Vice-Chair: We'll take a 10-minute break.

The committee recessed from 1541 to 1558.

The Vice-Chair: Mr Cleary has a few questions, Minister.

Mr Cleary: Getting back to when I was cut off the last time --

The Vice-Chair: Order, please.

Mr Bisson: On a point of order, Mr Chair: I just was having a discussion with the Liberal Housing person, and I take it he's okay with this -- he's nodding affirmatively -- that the Liberals would do a half-hour in their rotation, we would do a half-hour in our rotation and we would deem the estimates to have been done for today as if we would have gone till 6 and we'd come back tomorrow to finish.

The Vice-Chair: That's fine. Thank you very much.

Mr Bisson: I'd ask for unanimous consent to do that.

The Vice-Chair: Unanimous consent? Agreed. We shall deem it to be 6 of the clock at 5 o'clock.

Mr Bisson: At 5 o'clock. It's called Queen's Park standard time.

The Vice-Chair: Only politicians could do that.

Mr Cleary: Say a municipality is concerned about whether there will be any support programs for a period of transition to amalgamated municipalities. Are there going to be any support programs?

Hon Mr Leach: We have indicated to municipalities that if there are circumstances that present themselves where they would like to bring a proposal forward, we would be pleased to discuss it with them.

1600

Mr Michael Brown: I'm trying to understand where the ministry is going and perhaps the minister can help us a little bit. We're talking about $1 billion being spent in the non-profit co-op, all those supported sectors, and you're talking about some kind of income supplement system to replace that. I'm trying to understand your exit strategy for leaving the support of the non-profit co-op sector. Is there a plan and what is your strategy?

Hon Mr Leach: They're two unrelated issues, the co-op housing program, and you're right, this year it cost us I think $856 million and it would have been over $1 billion next year had we not taken the actions to curtail the subsidy to the projects that were going to be under way. That's one issue and that's a totally different issue than the -- because those costs are with us. They're contractual arrangements that have been made.

Mr Michael Brown: Which costs are with us?

Hon Mr Leach: The $800-and-some-odd million that we pay for co-op housing subsidies now are subsidies that are going to be with us for a substantial period of time because governments have entered into contractual arrangements with co-ops to provide that subsidy over the term of the agreement that we have with them over 35 years.

Mr Michael Brown: So there can be no exit from that situation then?

Hon Mr Leach: We can reduce costs somewhat by streamlining the administration and operation of the co-ops, but they're minor amounts relative to the hundreds of millions that are involved in the subsidy program.

Mr Michael Brown: How much then is the government considering with non-profits, the other side of the issue? Are you looking at an exit from that side?

Hon Mr Leach: There are some 84,000 units involved in non-profits, and we indicated in our campaign that we would like to divest ourselves of the bricks and mortar of that program. It's a long-term program, and obviously I think that anybody who is aware of the general makeup of the program knows it involves CMHC, for example, and the federal government, ourselves, and in many instances municipal involvement as well. Any program that's going to be undertaken to divest ourselves of involvement in non-profit or social housing is going to have to involve all of those players. So you can appreciate that it will be a long-term strategy rather than a short-term strategy for the bulk of the portfolio.

There are some -- and it's a minor amount, roughly 10% -- where you have single or semi-detached houses that are in the OHC portfolio which we're looking at to see whether we could put some of those, if not all, on the market. That's not a new strategy. It's a strategy that was undertaken by previous governments. The NDP sold a few off, the Liberals sold a few off. We're looking at divesting ourselves from that part of the program.

Mr Michael Brown: If I can understand you then, you wouldn't expect over the next few years to substantially reduce the amount of money that is presently in the non-profit sector in terms of provincial government support in the non-profit sector?

Hon Mr Leach: It's going to be reducing rather than growing, and I want to develop long-term strategies that would enable us to get out of the program in the fullness of time.

Mr Michael Brown: One wouldn't expect then that over the next even three or four or five years there will be huge savings to the government as they divest themselves slowly according to some strategy yet to be determined in these sectors?

Hon Mr Leach: There will be savings. The amount, you're right, is yet to be determined.

Mr Michael Brown: Then if we're moving to this income supplement situation, one wouldn't expect that there will be a lot of dollars in your budget being freed up to move into that sector. Is that a correct assumption?

Hon Mr Leach: Yes. As I said, the amounts haven't been determined yet, but any funding that can be freed up from that sector or other sectors -- and I see where you're coming from now. Where are we going to get the money to pay for the shelter allowance program? Is that what you mean?

Mr Michael Brown: That was one of them. I'm just trying to get my head around what's going on here.

Hon Mr Leach: We're going to be reducing costs wherever we can in every other field. Funds that we can free up we plan to put into a shelter allowance program.

Mr Michael Brown: But from the statistics we've just heard from your ministry, there would almost need to be a doubling -- there would be a doubling -- of the number of people that your ministry has told us would qualify under the 30% rule. There are not going to be significant new dollars in your own ministry. Perhaps it comes from somewhere else -- I don't know -- but within your own ministry there are not likely to be significant dollars.

Hon Mr Leach: What you can do and what we're doing is looking at the various options to do that. You can tailor entry into a shelter allowance program to fit the funds available, to create a new program. Obviously, the more money you have available, the broader the program you can introduce.

Mr Michael Brown: But then aren't we into the same situation we're trying to fix, in that some people can grab the gold ring and other people can't? Isn't that what we were talking about when they can't get into the non-profits or into the co-ops or wherever?

Hon Mr Leach: But you want that number to be diminishing at all times. The more people you can serve with a shelter allowance program or any program that provides some assistance to them, the better off you are. All we're saying is right now under the 84,000-unit OHC portfolio, there's a limited number of people that you can serve and there are tens of thousands, over 100,000, people on the waiting list. Any program that you can introduce that diminishes that number -- hopefully, over time you'll be able to develop a program that would suit all of those. I don't think you're going to be able to do it on day one and I don't think anybody would expect that entire waiting list of 100,000 would be eliminated in one fell swoop.

Mr Michael Brown: In a related question to that, the demographics of our society are changing. We all know that. As a society we're getting older. In my constituency --

Hon Mr Leach: It beats the hell out of the alternative, I'm told.

Mr Michael Brown: Yes, it sure does. In a constituency like mine, though, usually you would expect it to put pressure on providing those non-profit buildings that house seniors in particular. I'm trying to understand that there will not be increased pressure. In my world, in the world of Algoma-Manitoulin, the hope of the private sector filling that gap is fantasy, quite frankly. It isn't going to happen. It didn't happen before there were non-profits and it won't happen now.

If the government is not going to move in areas like ours, where realistically there is no possibility that the private sector is going to enter that market, how are we going to look after those seniors?

Hon Mr Leach: There are a number of ways, and I'll get the deputy to speak to this in a moment. One of the ways, for example, and as I've mentioned throughout the discussions that we've been having, co-op and non-profit housing, in my view, is the way to go. What I've said is that we have to find ways and means of constructing it without substantial taxpayer subsidies. I think most of us would agree that $10,000 a unit in subsidy per year for a co-op is extremely high. We can't afford it.

What we're doing now is working with sponsor groups to try and find ways and means of getting those buildings constructed at a cheaper cost by changing various pieces of legislation that reduce the cost. Get the building up and then provide subsidies to the individual, primarily seniors -- as a matter of fact, seniors is the first part we're looking at in coming up with the shelter subsidy allowance; provide the shelter allowance directly to the senior to be paid into the co-op. It gets the government out of the co-op subsidy business. It provides the sponsor group to get it built. We provide the subsidy to the individual who's in need. That's the premise we're working on and I think that's doing it, but there are other ways as well.

1610

Mr Burns: I just want to add a brief comment on the question of whether the demographics of Ontario are going to produce over the next 10, 20 years a huge waiting list for social housing programs. There's no question they're going to produce major demands on the health and social service needs, but over time the households that are entering the post-65 world have more and more assets and income compared to the ones in the past.

On the other side, historically in this province we've tilted a major part of the social housing program to seniors larger than they represent as a portion of households who have limited means. So in many, many communities right now we have quite modest waiting lists for seniors' RGI. I think there's no question that as a whole government we have to be very alert to what's going on and the demographic change in the province. But in the housing world we're not predicting that an increasingly aged population is going to produce a mammoth demand problem for social housing per se.

Just to go on, to reinforce the minister's comment, the households that do get access to rent-geared-to-income housing who are elderly are almost entirely those who have only the pension and the income supplement; they have very modest means. But as time goes by and they begin to derive some income from the Canada pension plan and from other sources, they are going to be farther away from that base situation and it would take less of a bridge to sustain their housing costs in another format.

Now, I think, just to go back, the big challenge is connecting appropriate services to that aging population and to the places they live. That is also a big challenge in the social housing world, particularly those places where there are a lot of seniors in the tenant population, and in the Ontario Housing Corp and lots of community organizations people are trying to make partnerships with the service providers in that world to try and address that.

Mr Curling: Mr Minister, first to correct the record, a little bit more understanding of what Mr Kells was talking about. When rent review came in, it was done by landlords and tenants getting together and bringing about that policy. It may be a rather complex thing for Mr Kells and his colleagues. I hope so, because a lot of consultation brought that policy about. I mean, it was a keen understanding: Landlords and tenants brought that process to the Legislature after long consultation.

Yes, it was a bit complex, but I think it was aiming towards fairness. All the NDP caucus voted fully in favour of that, and so did the Liberals. Just to get that clear with Mr Kells as he goes criticizing the rent review process. Tedious -- as a matter of fact, we had almost five weeks of hearings and I think I attended every single one of those hearings around the province, unlike Bill 26 of course: We couldn't find the minister at all to even appear to defend.

Hon Mr Leach: Be nice, now.

Mr Curling: No, I know that was kind of complex for him and it was difficult. But again we did that and that was the process. I hear you talk about consultation and I believe you've had a lot of consultation. There are quite a few legislations you want to bring forward, I can see, as you mention there. They're going to be very challenging ones, and I know that you would be going around the province, especially that rent review, rent control legislation that you want to introduce, or the alternative to it, as you say. That would be very interesting

Minister, I empathize with you, with the 100,000 that you said are on the waiting lists that need access to RGIs. Do you think that when your policy comes in, you'll be able to offer subsidy to all those with your shelter allowance, what you have now and the 100,000 that are there?

Hon Mr Leach: No. As I pointed out to your colleague, obviously it's not going to be possible to develop a program where you could walk in on day one and say the waiting list is eliminated. I don't think anybody expects that or anticipates that, including those that are on the waiting list. What I'm saying is that we want to develop programs that will help us eliminate that list as quickly as we possibly can, dealing with those that are most in need first and working our way through.

Mr Curling: So you'd have more on subsidy than at present. The amount of people who are being subsidized now, in numbers -- there would be more people on subsidy.

Hon Mr Leach: Yes, because there are 100,000 people --

Mr Curling: Waiting.

Hon Mr Leach: -- waiting for help. We want to try and help as many of those 100,000 as we possibly can, dealing with the most needy first, which are very-low-income families and seniors, primarily.

Mr Curling: It's been a long day for you so you can always give me the answer another day. Will any of those subsidies given to anyone now be reduced? Will they be given less? Even those who are getting subsidy now, will that be reduced?

Hon Mr Leach: We know that those who are getting subsidy now, their rents are going to be increased. That's being increased as a result of an arrangement that was made by the previous government to take the rent -- geared-to-income rates from 25% up to 30%.

Mr Curling: So the rents will be increased.

Hon Mr Leach: Yes.

Mr Curling: Will their subsidy be increased?

Hon Mr Leach: Not necessarily. Those decisions haven't been made yet. As we've mentioned on a number of occasions, we're still looking at the various options that are available to us to establish a shelter subsidy program. We're also looking at various programs that exist at the present time. I think my colleagues from the NDP indicated a couple of days ago that when they were reviewing the program they could see a need, and I'm not quarrelling with the need to increase the percentage from 25% to 30%. As a matter of fact, I think Ontario has the lowest rate of any of the provinces right at the present time.

There might be a need at some future point to revisit that again, so there's no guarantee that you can say, "Yes, it's going to 30%; it'll never go any higher."

Mr Curling: Would their subsidy decrease then, whatever the government gives them?

Hon Mr Leach: It means that they would have to pay more of their income for shelter.

Mr Curling: Therefore, their subsidy will not increase, but they may have to pay more for their rent. In other words, if they are getting $500 a month now and their rent goes up, of course they'll have to dig in and pay more. Would that $500 also be reduced?

Hon Mr Leach: They're not all on social assistance, you have to understand.

Mr Curling: I know. I'm just talking about those who are subsidized.

Hon Mr Leach: You're talking about people who are on social assistance, whether their social assistance is going to go up or down?

Mr Curling: No, no. Those who are subsidized into these --

Hon Mr Leach: In housing.

Mr Curling: In housing, on RGIs.

Hon Mr Leach: Where they pay a certain percentage of their income into rent.

Mr Curling: Yes.

Hon Mr Leach: Okay, the percentage that they have to pay for rent is increasing and has been increasing over the last several years from 25% up to 30%, so they are paying more of their income. Whatever source of income they have, whether they're working or whatever, they're paying more of their income for rent. Is there a possibility that that could increase? There's always that possibility. Just as conditions existed five years ago, those conditions may exist again in another five years.

Mr Curling: You're going in the wrong direction. You're maybe not understanding me fully. There are subsidies given to people on RGI, rent-geared-to-income, and I know that their rents will go up. Of course, they'd have to dig more into whatever subsidy they get to pay for that rent, but there's a certain amount of subsidy they do get. Will you also reduce that?

1620

Mr Burns: The subsidies in RGI do not go to the household, they go to the landlord. So if it costs $1,000 a month to operate a unit, counting debt servicing and all the rest of it, and the household that you've been talking about, which is now paying 30% of their income is now paying 400 bucks a month, that 600 bucks never passes through the accounts of the tenant. It goes straight to the landlord.

Mr Curling: But, Deputy, you had said, and the minister had said, that we're going to change that concept and give it to the individual so they can go out and do their shopping.

Hon Mr Leach: That's a shelter concept.

Mr Curling: Yes. On the shelter allowance, will they be getting less because at the outside there now they will be in an open market looking and you will be giving of course a certain amount of money according to their income. Will that percentage that you give -- well, given to the landlord, that they've gotten, and they're going into the private market -- be less, or you don't know now?

Hon Mr Leach: We don't know as of yet.

Mr Curling: Is it possible it will be?

Hon Mr Leach: What we're saying is that we're still evaluating the shelter allowance program to see what we can do, and at the same time we're looking at the RGI programs as well. There haven't been any decisions made as of yet.

Mr Curling: We'll come back to that later on when you introduce that. Maybe I won't push it any more. My suspicion is that there will be less out there that people will be getting. Then you may be giving more people money, but they may be getting less in the kind of percentage in the RGI, which will go to the private sector anyhow.

Block funding, Minister -- how much time do we have?

The Vice-Chair: Five minutes.

Mr Curling: I just have a quick one. Block funding: Do you think, coming from the feds now, is that a positive move in what I am hearing, that the block funding comes without any strings attached as a transfer of the federal government, and say, "Here is your money"? That will make it more creative for you to do what you want to do.

Hon Mr Leach: If the federal government decided to move to a block funding formula and maintain the level of funding that it presently provides to us, yes, that would be very positive.

Mr Curling: Maybe next time I'll bring it up again and ask you what can we do to make sure that some of that money is not reduced coming across to the province.

Hon Mr Leach: Call all your cousins up there in Ottawa and just say, "Keep that money coming."

Mr Curling: You see, I gave you one good one just to leave there --

Hon Mr Leach: I appreciate that.

Mr Michael Brown: I'm interested, coming to the rent control issue again -- and that's because I happen to have been, unfortunately, the Chair of the last two committees that dealt with rent control and learned far more about rent control than anybody should have to know. Quite frankly, in my constituency we get one or two calls a year about it, so it's not a terribly big issue from a personal standpoint.

Hon Mr Leach: I get a few more than that.

Mr Michael Brown: I look at the last permutation of rent control with some wonder. It actually provided for the largest increases above inflation, if you talk about real dollars, of any rent control system ever in place in the province of Ontario. The fact is, it didn't happen. Most landlords couldn't get the type of increase, and the reason is because we're talking about real estate. We're talking about the economy. We're talking about markets. If it's not there, you can't get it. That's the way markets work.

The other thing is, the experience in real estate over the last five or six years -- if you were unfortunate enough to own some commercial real estate you know exactly what happened. It was greatly overbuilt and there were a lot of problems in the industry. But with residential real estate, there is a need to protect people from being thrown out of their houses. So right now rent control is probably not one of the bigger issues on anybody's agenda. I'm hoping you'll have some real problems with rent control because the real problem with rent control happens when the economy picks up, when people have jobs. When people want to move in the economy, things happen. Then you're going to get the pressures.

Your government sought various permutations during the times that rent control was in. Certainly, the Liberal government saw it in the 1985-86 area where the economy was picking up, and there was tremendous pressure in the economy to create jobs and to build houses and to have new accommodation etc. We all know. Is it your ministry's view that we're going to be into that kind of situation in the near future? If the economy starts to boom, you're going to have some trouble with rent control. If it doesn't, it's almost a non-issue.

Hon Mr Leach: I guess your point is that if we run into inflationary times, is that going to create a lot of problems for us?

Mr Michael Brown: I wouldn't say inflationary, I'd say growth times.

Hon Mr Leach: Growth issues. It's difficult to say. Let's assume that the existing rent control system stayed on, then those growth issues are taken care of in the rent control program. One of the options we're looking at, which is a tenants' protection program similar to what they have in BC, would again take that into consideration, because the rents are negotiated directly between the tenant and the landlord. Any dispute between what you feel is a fair rent and what I feel I need as a landlord is dealt with through arbitration, so that again, what's a --

Mr Michael Brown: But that system probably will work just fine as long as there isn't a tremendous pressure on the system. I guess we'll see as we go through.

I agree with you, there are some real problems with the present legislation. There are a lot of bureaucratic problems. There's still the problem which I myself always found totally amazing, that Mr Leach could be renting the apartment below me and paying twice as much as I am in the same building because that's when the Davis government's rent control hit. For no other reason, I could be paying considerably more or considerably less for exactly the same unit.

Hon Mr Leach: Yes, there's no doubt there's inequity in the system.

Mr Michael Brown: So there are a lot of problems. Those are all the questions I have.

The Vice-Chair: Thank you, Mr Brown. Before I turn to Mr Bisson, Mr Poelking, our research officer, has given me a piece of research that was done and I think it will give everyone a little bit of background on residential rent regulation in Canada past and present. I think we should circulate this perhaps tomorrow, when we make copies available.

Mr Bisson: Could we get a copy?

The Vice-Chair: Would everyone like a copy? I think that would be useful.

Mr Bisson: Who did it?

Mr Steve Poelking: Jerry Richmond and Carolyn Stobo.

The Vice-Chair: From my own legislative research service.

Mr Bisson: Good, excellent.

The Vice-Chair: Mr Bisson, you have the remaining half-hour.

Mr Bisson: Just a couple of things I want to delve into here, a couple of comments that you made earlier, and I'd just like to flesh them out a little bit.

One of them is that when you talked in exchange with the Housing critic for the Liberal Party, you were talking about the question of how come there's a difference in price in overall budgets for operating non-profit versus the private, if you remember the exchange that you had. One of the comments you made, and it was a bit of an interesting one, you used as one of the examples that one of the reasons it costs more for a non-profit to be operated -- I'm not talking construction; we're talking operational cost -- compared to a private was the public tendering process and I just --

Hon Mr Leach: I think I was referring to OHC at that time, where governments are required to go to public tendering. Private sector can negotiate a price and often they're able to negotiate better prices through face-to-face negotiations and tradeoffs than you are through the public tendering process.

Mr Bisson: Do you have anything that would point to that, because I've been involved in both tendering in the public sector through government experiences and also tendering in the private sector for services and the process is somewhat similar. You put a tender out, a package out there, you say what you're looking for either in services or materials, and people come back with prices based on their ability to do business with you at the best possible price, and from that you make a selection. On what basis do you make that comparison? That's the first time I've heard that one.

Hon Mr Leach: It's certainly not the first time I've heard it.

Mr Bisson: You might be right. I'd just like to know where you get that from.

Hon Mr Leach: Often when a tender goes out, people tender on it and you get the price. Very often, when the private sector -- and they would more aptly call it calling for proposals rather than a tender. They'll get proposals back from a number of interested individuals. They will then go to that individual or they might even go to the second-lowest guy and say: "Look, Joe has offered to do this for me for $1,000. Can you beat that price?" And he'll say, "Yes, I'll do it for $990 if I can get the job," and they negotiate back and forth. The ethics of tendering in the public service say that once you call that tender and the tender is received and the price is there, if it's $1,000, it's $1,000.

1630

Mr Bisson: Do you have any kind of data to show in your dealings with Ontario Housing that that is the case?

Hon Mr Leach: We tender.

Mr Bisson: I very well recognize that you tender, but are there any kind of data you can show that would actually demonstrate that there is a difference?

Hon Mr Leach: I don't know what kind of hard data they would have, but I know that in conversations with people who run the Metropolitan Toronto housing company, for example, people who were managers there in the past have indicated to me that they have negotiated contracts rather than tender and got a better price.

Mr Bisson: So there are no hard data then. Is that something you're looking at doing though, to change?

Hon Mr Leach: There are security contracts, for example. There are all kinds of different contracts where services are provided to the private sector on the one hand and to the public sector on the other hand. The public sector will pay more because very often the public sector has more requirements, more safeguards built in. You have to have deposits, you have to have a whole number of things that put the price up somewhat.

Mr Bisson: But you have no data. Is that something you plan on changing within the ministry, the tendering process for Ontario Housing to go to a different system? Are you proposing that?

Hon Mr Leach: No, there isn't any proposal to do that at this point in time.

Mr Bisson: Is that something you're interested in looking into? Is that something you would like to change?

Hon Mr Leach: No. I think from a public government standpoint, the tendering process is probably as efficient a system as you can get, taking into consideration that you're dealing with taxpayers' money and you have to be able to show to the taxpayers that you did this and you did it in a businesslike manner. In the private sector, for example, anybody here I think who has done any housing renovations, you'll shop around. The ability the private sector has over the public sector is they have the ability to shop prices around, where the public sector is basically tied to a tendering procedure.

Mr Bisson: I would take it, though, that in the overall cost of operating non-profits, if there's money to be saved that way, it's not large enough for the government to go after. It's not a big-ticket item that you can --

Hon Mr Leach: I think, as you mentioned when you started your comments, that that was one of the issues that was mentioned. It's not the total issue.

Mr Bisson: The other thing that you talked about in the cost of running public housing -- and my ears perked up on this one -- was the question of labour prices. I don't want to put words in your mouth, but you were alluding to one of the differences being that there are collective agreements in place and we tend to pay people better money in collective agreements than we do when they don't have collective agreements. Is that still your view?

Hon Mr Leach: Yes. I think in many instances that collective agreements that have been negotiated over time probably cause higher labour prices in the public sector. I never said that was bad; I'm just saying that's a fact of life.

Mr Bisson: That's what I want to clarify here. I'm glad you said that. Is it your view, as minister, that the collective agreements that are currently in place in the non-profits and/or under the Ontario Housing Corp should be renegotiated to push the wages down?

Hon Mr Leach: Could you say that again? I'm sorry, I missed -- what are you saying? Are we proposing to reopen the labour agreements that are there?

Mr Bisson: Are you proposing that you should reduce the wage levels within the collective agreements? When you did your exchange with the Liberal critic, you sort of alluded in your comments -- and I'd have to go back and look at the Hansard exactly -- that that was one of the big costs and you needed to find another way of doing things. So is it your view that you should go back and renegotiate those collective agreements to lower the wages?

Hon Mr Leach: No, but I think the collective agreements come up for renewal from time to time, usually on a one-, two- or three-year basis, and any time a collective agreement comes up for renegotiation, everything is on the table. Wages are on the table. They sometimes go up, they sometimes go down. Sometimes benefits change, and all of that would be on the table any time a contract is open.

Mr Bisson: I understand that and all's fair, but what I'm asking is, when those contracts do come open, is it the position of the government or yourself as Minister of Housing that the people responsible for negotiating contracts with people who service non-profits or Ontario Housing, that those items be put on the table in order to reduce the cost of the collective agreement?

Hon Mr Leach: What we want to do is ensure that we negotiate a contract that's in the best interest of the taxpayer, plus ensuring that our employees are well looked after.

Mr Bisson: All right.

Mr Burns: There are more issues in collective agreements than the face value of salaries or benefit structures. Job classifications and work rules are part of them and they all bear on cost-effectiveness. The Metro Toronto Housing Authority here in Toronto has just been reorganizing the blue-collar field staff to work in a very different format, and out of that came a discussion about a much simpler, more universal job description with a set of work rules attached. It's going to improve the cost-effectiveness of that staff group a lot, but it came from the things that are tied up in collective agreements.

Mr Bisson: With all due respect, the question I'm asking the minister -- and I see his name there, his name is Al Leach MPP, Minister -- is, is it your intent to reduce through negotiations, when the collective agreements come open, the overall cost of the package in the collective agreement? Because I think that's what you're alluding to, but I might have been wrong and it's a chance to clarify it for the record.

Hon Mr Leach: If there's an opportunity to negotiate different types of work rules that increase productivity, that lower costs, that's what we would be looking for.

Mr Bisson: So the answer's yes. Okay. In regard to the further of where that goes is the whole --

Hon Mr Leach: I don't think I said yes. I think I said --

Mr Bisson: No, no. What you're saying is that you're prepared to negotiate when they come open. I'm not trying to put words in your mouth.

Hon Mr Leach: I think what I'm hearing is that we shouldn't try and negotiate an agreement that's in the best interest of the taxpayers. Is that what you're saying?

Mr Bisson: I have negotiated on both sides of collective agreements and you always try to get the best possible deal for the people you're negotiating for. I understand that, but the question I was asking you is, the entire package in a collective agreement costs money.

Hon Mr Leach: Yes.

Mr Bisson: Wages, benefits, working conditions, all of that has an effect. What I'm saying is that the direction of the government is to reduce items in the collective agreement so as to reduce the overall cost of that collective agreement. That's all I was asking.

Hon Mr Leach: Yes, but what you might do is negotiate a package that allows you to do more for the same cost.

Mr Bisson: All right. Anyway, we'll see in time. As you say, in the fullness of time we'll get the answer on that one.

The other thing is -- and let me just ask you the question because I really don't know the answer -- is it the intention of the --

Hon Mr Leach: This will be the first one.

Mr Bisson: Yes. Believe me, there's more coming. Is it the intention of the Minister of Housing, or the government for that fact, where possible, to privatize those services with -- in the running of non-profits or in Ontario Housing units, most of that is done by people who are covered by collective agreements. Is it the intention of your ministry and your government, where possible, to put that over into the private sector; in other words, replace the workers who are now under collective agreements with private sector people who have been brought in by tender or contract?

Hon Mr Leach: What we want to do is provide services to those people who reside in OHC in the most effective way possible. People don't care who carries out the service. All they care about is the service itself. If there are more effective, cost-efficient ways of doing that, certainly I think that we would be obligated as a government to review those.

Mr Bisson: Is that a maybe?

Hon Mr Leach: It says that we're going to be as efficient and effective as we possibly can, taking into consideration that we're dealing with taxpayers' dollars.

Mr Bisson: If I was an alarmist, I would take that answer to be yes and, to be fair, I think it's a maybe.

Hon Mr Leach: If I was a taxpayer, I'd be clapping my hands.

Mr Bisson: You'd be clapping your hands at privatization as a better way of doing it.

Hon Mr Leach: No. I'd be clapping my hands that somebody is finally going to start to operate effectively and efficiently.

Mr Bisson: All right. Again, I don't want to put words in your mouth, but one of the things that you're looking at is, when Ontario Housing units who are presently being serviced by people who are under contract with collective agreements, if possible you will move to private sector people to do that?

Hon Mr Leach: No, I didn't say that at all. What I said is that we would be review all of the options that are available to us and we will examine what is the most effective, efficient way to provide services. Obviously if the public service unions that operate in OHC can provide services efficiently, effectively, then there's absolutely no reason for them to be concerned.

1640

I am continually advised that the public service -- and I was in the public service for many years; I know how effective and how efficient they can be -- can compete with the private sector. I don't see any reason why they shouldn't, so if that is the case, then there probably won't be any changes in contracting out. If they can work as effectively and as efficiently as others, then they don't have anything to worry about.

Mr Bisson: Okay, so in the fullness of time, we will find out if there's privatization in that sector. That's fine; I understand that.

The other thing is that you made a couple of other comments around two other pieces of legislation, and this, in order to just clarify for the record: There was discussion about the Rental Housing Protection Act that presently does not allow you, or a private sector landlord, to just throw people out of the house without making sure there is some provision for something else to replace it. Is it your view to make changes in the Rental Housing Protection Act?

Hon Mr Leach: It's an act that we want to review, yes. What changes would be proposed are yet to be determined because we haven't even started the review of that particular act.

Mr Bisson: Would the purpose of that be to deal with something like the Glengarry public housing project in Windsor, in order to allow that development to be sold off, which is a non-profit?

Hon Mr Leach: I don't think any decision has been made along that line. I think OHC said that that community has been put in some jeopardy because of actions that were taken by some previous government in allowing the construction of a casino right across the street.

Mr Bisson: That was called the NDP government.

Hon Mr Leach: Was it? I knew it was one of the other two.

Mr Bisson: Just for the record, we want that to be clear.

Hon Mr Leach: There's now other infrastructure that has to be put in place in Windsor, as I understand it -- and I'm only getting this second and third hand --

Mr Bisson: I understand that.

Hon Mr Leach: -- that dictates that that project, as it exists now, should be reviewed. OHC I think are doing the most appropriate thing by saying, "Let's look at what our options are," and they're including, by the way, representatives from that community on the review process.

Mr Bisson: It wouldn't be the first time that a non-profit housing project has been sold; that's not the issue. I recognize that. However, tenants in this province are protected under the Rental Housing Protection Act for certain evictions that happen when there are changes, and all I'm asking is, is it the view of the government to make changes to the Rental Housing Protection Act to allow that kind of activity to happen a little bit easier, in favour of the developer or the landlord?

Hon Mr Leach: As I said, we haven't started the review of the act as of yet. For all I know at this particular time, there may be no changes, there may be substantial changes. I'd like to have an opportunity to review it. I haven't done it yet.

Mr Bisson: Landlord and Tenant Act, there was also some mention about making changes there.

Hon Mr Leach: Yes. We've had this discussion going on for a number of hours now. I think what we have to do is make sure that we're in a position to entice the private sector back into the building business. We know that to do that we're going to have to review all of the acts that you have mentioned at this present time.

Mr Bisson: That's fair.

Hon Mr Leach: What the changes are are yet to be determined, but I do think that it's fair and appropriate that all of the bits and pieces that are in that package be looked at. I'm sure that you would think that was fair that they should be reviewed. Perhaps they can be even improved.

Mr Bisson: One further question on the Landlord and Tenant Act: Is it the view of the government to make changes to the Landlord and Tenant Act that would take away certain protections that tenants presently have in the act?

Hon Mr Leach: I don't know. As I said, we're going to review all those pieces of legislation, and until such time as we've had an opportunity to review them, to have public consultation, to get the views of both tenants and landlords, we haven't made any decisions. But I'm sure that you will agree that it would be appropriate to review it.

Mr Bisson: Part of the problem, however, I'm having with the reviews that you're talking about is that any government when they undertake a review, normally it's because they have an idea of where they want to go. You want to make it either better for landlords or worse for landlords or you want to make it better for tenants or worse for tenants. You have an idea of what you're up to. Part of the problem I'm having with your answers is that you're telling me you're going to do these reviews -- that's all fine and good -- but I don't know a government yet that's undertaken review of any piece of legislation unless they know where they want to go with it.

Hon Mr Leach: Well, I think I've repeatedly told you where we want to go with it. What we want to do is develop a system that provides a better process for tenants, because I don't think the system in place at the present time is beneficial to tenants. It doesn't give them any options of accommodation. There hasn't been anything built in years and years. We want to provide a system that provides the ability for someone who invests money in the rental business to make a fair return on their investment while providing good service to tenants. What we're saying is that rather than favour one side of the option over the other, we would like to look at both and ensure that tenants are well served and landlords are well served.

Mr Bisson: Have you ever been a landlord?

Hon Mr Leach: Yes.

Mr Bisson: Are you still a landlord? Do you still own buildings?

Hon Mr Leach: No.

Mr Bisson: How many buildings have you owned, just to get an idea?

Hon Mr Leach: It was very minor; one unit.

Mr Bisson: So the only experience you have directly as a landlord is one unit that you've owned.

Hon Mr Leach: Yes, although I don't think you have to be a chicken to recognize an egg, either.

Mr Bisson: You don't own that unit any more?

Hon Mr Leach: No.

Mr Bisson: When was that sold?

Hon Mr Leach: I don't know, 10 years ago.

Mr Bisson: Are you involved in any kind of business that has anything to do with any kind of rental property, where there is rental of units where you would be part of a company or any kind of a corporate entity that has that?

Hon Mr Leach: No. Why? Am I making money I don't know about?

Mr Bisson: No, I'm just asking. I'm trying to figure out where you're coming from and this is part of the question. Is your family involved directly -- your wife, let's say -- in owning apartment buildings?

Hon Mr Leach: No.

Mr Bisson: Your wife doesn't own any rental units at all within the province of Ontario?

Hon Mr Leach: Not that she's told me about.

Mr Bisson: Children, your own kids -- would you have taken buildings at one time and put them in the trust of your children?

Hon Mr Leach: No.

Mr Bisson: Okay, that's fair.

Hon Mr Leach: Are you working for the privacy commissioner now?

Mr Bisson: Yes, I am. I've got a job on the side.

Hon Mr Leach: I answered all these questions for him as well.

Mr Bisson: Those are fair questions. Listen, we come to public life --

Hon Mr Leach: That's why I don't have any problem in answering them.

Mr Bisson: That's right. That's good.

Onward and forward: On the Glengarry public housing project, you were making some comments before, I guess about a week or so ago, that you were going to make sure that those tenants in the end were protected and were not just left out in the cold. I respect that; I understand that.

Hon Mr Leach: On the Glengarry project?

Mr Bisson: Yes, the Glengarry project in Windsor.

Hon Mr Leach: The only comment I made on Glengarry was that I wasn't aware of the details of the project when I was asked by the media. The only thing I know about Glengarry at this point in time is that OHC is concerned about the future of the development and has undertaken a review of options that are available to it, including consultation with the existing tenants.

Mr Bisson: In the case of the Glengarry public housing project, people are now presently covered under the housing protection act, as we were talking about a little while ago.

Hon Mr Leach: No, they're not.

Mr Bisson: Oh, that's right too. They're non-profit

Hon Mr Leach: OHC is not covered by that.

Mr Burns: Non-profits and cooperatives and public housing are not covered by the RHPA.

Mr Bisson: I stand protected -- I stand corrected; protected as well.

Hon Mr Leach: And they stand protected, by the way.

Mr Bisson: How can you protect them, though? Just basically as the minister you're giving them your assurance that you're going to make sure that when this development does happen, they're not going to be left out in the cold.

Hon Mr Leach: I think that they've been given assurances by the local housing authority and by OHC that there's a need to review the project and that the tenants who are involved in that particular housing complex agree with that, and they're working with the local housing authority and OHC to review all of the options that are available to them.

Mr Bisson: Getting on to the 22% cut that people on FBA and GWA received as a result of expenditure restraints that your government is undertaking, those people who are renting from private landlords -- we're not talking non-profits now, we're talking about private landlords -- just by way of clarification, how was that dealt with? Part of my GWA cheque or FBA cheque is directly for my subsistence and the other part of it is for shelter. When the 22% cut was given, does that basically mean to say that it came out of the groceries and the rental thing was not adjusted in any way?

Mr Burns: Anne, do you happen to know exactly how Comsoc administered the cut? We're speculating up here so --

Ms Beaumont: I understand that when the cuts -- you may have some more recent information, Dino -- were made to those programs, there were cuts across the program.

Mr Chiesa: But the shelter component did not go down, and my understanding is the shelter component will stay the same.

1650

Mr Burns: For people in the private sector?

Ms Beaumont: No, not for people in the private sector; for people in public housing.

Mr Burns: The question is, what happened to the shelter allowance component of one's entitlement? The obvious thing is you caught the wrong ministry here, but I --

Mr Bisson: I'm just trying to figure out how people have to deal with that, but the question -- go ahead.

Ms Beaumont: The allowance would have gone down and there was much discussion, I understand, that took place between the various officers of Comsoc and people who had been in contact with them who are renting in the private sector, also between those tenants and the welfare officers and landlords. What I hear, and this is only hearsay in the content of some letters and phone calls that we've had, is that a number of landlords in some communities made rent reductions --

Mr Bisson: Yes, I'm aware of that.

Ms Beaumont: -- because they wanted to retain tenants they had that were good tenants but others wouldn't have done.

Mr Bisson: When they reduced my GWA or FBA cheque under the cuts from your colleague Mr Tsubouchi, it was reduced by 22%, not of the shelter allowance but the actual portion that goes to buying the groceries and buying the clothes etc. There was no adjustment made upwards on the shelter subsidy to try to make up the difference?

Ms Beaumont: No.

Mr Chiesa: On the private side, my understanding of what happened was that the shelter component -- the only thing that changed in the shelter component was the cap. For example, if the rent was $800, if that cap was $800, that cap went down by 21%. If you were paying $600 or $700, whatever the number was, then that didn't go down proportionately. In other words, if you were paying $600 or $650 for rent, the shelter component stayed the same. What went down was the cap that was allowed under that program for shelter allowance.

Mr Bisson: Let me just try it this way, just because I need to understand this a little bit better: I'm paying $800 a month for my rent. I get what's maximum allowable under the shelter allowance -- I never get that term right -- and I'm getting, let's say, for the other part of the GWA or FBA $700 a month. Is it only the $700 that was deducted by 22%?

Mr Chiesa: The $700 would have gone down; the cap would have gone down as well. Now, I don't know what the cap would have been for that unit or that unit type, or that particular family. So if the cap had been $800, then that would have gone down. If the cap was higher, which many times is the case, then it wouldn't have been affected.

Mr Burns: We can ask the Ministry of Community and Social Services to write you with the details if you'd like.

Mr Bisson: Yes, because somebody's asked me that and to tell you the truth, I'm not a hundred per cent sure how that was dealt with. I'd appreciate that.

I just have a few minutes left and I'm going to take it up by saying that I understand, quite frankly, your willingness and your need and your desire to move forward on certain issues when it comes to construction of new apartment buildings in the province. I want to repeat once again, as the critic for my party, that I can tell you that we're prepared to work with you on that, in all sincerity. I think there are some things we can do, short of changing the rent control system in the way it's being proposed, by dealing with all those other issues around development etc.

I put the offer back out to you again and say, listen, you took exception a little while ago to the pamphlet that was put out by myself as critic, to people out there I'll be meeting with over the next while, to bring the message, because the very problem is you're being very unspecific about what it is you want to do. Even in this committee, I walk away from here after two days of sitting here and asking very direct questions around rent control and other questions, I think -- speaking for the Liberal Party as well; I don't speak for the Liberals, I'll let them speak for themselves -- really left with still a lot of questions that are unanswered.

Mr Michael Brown: Okay, we agree.

Mr Bisson: The Liberals would agree with me. What happens is that when we ask you specific questions around the question of, "Will people pay a higher rent as a result of the changing of the legislation as it now exists to the legislation that you're thinking about?" you're unable to give us a clear answer of, "Yes, we know that rents will go up in the future." Rents are allowed to go up under the present system.

Hon Mr Leach: And you think that's justification to go out and tell people that their rents are going up 40%? Do you think that's justification to do that --

Mr Bisson: Listen, you were unable to --

Hon Mr Leach: -- to scaremonger like that?

Mr Bisson: Minister, you're the one who's scaremongering here, because you're unable to clarify the record for us. If you can guarantee that the rents will not be adversely affected, no worse than what it would be under the system that we have now --

Hon Mr Leach: If you can show me one iota of evidence that there's any proposal to increase rents by 40% --

Mr Bisson: Mr Chair, the minister's out of order.

The Acting Chair (Mr Peter Preston): Let him finish his speech.

Mr Bisson: Yes, he'll get the chance. What I'm saying to you is this: If you're not able to guarantee tenants in this province that once you've made your changes and you've moved away from the present rent control system and you go to a tenant protection system, whatever you want to call it, if you're unable to guarantee them that they will be no worse off than they are now under a system that has a cap, the answer's got to be that you're looking at doing away with the cap or severely modifying it to the point that rents will go up.

I don't see that as being something that most tenants in this province would be in favour of, and if I'm out there as a critic for my party along with others saying, "Hey, there's a problem here and people had better realize what the government is up to and we want them to go talk to their members of the Tory Party, both the backbench and the ministers," I'm sorry if you take exception to that. That's what the job is.

Hon Mr Leach: Well, I do, and I have absolutely no problem with you whatsoever --

Mr Bisson: I still have the floor. I would further just say to you, I sat in government for five years when both the Liberal and the Conservative parties were in opposition and that's exactly what they did and I never took exception to that, because I recognize that the opposition had and still has today a role to play in Ontario when it comes to both informing people about government policy and what's happening and then at times just giving a critical view and critical response to what the government is proposing if we feel we are opposed to it.

I fundamentally say here I'm opposed to the change, the moving away from the present system of rent control. If you're prepared to sit down with me and our party, and I imagine the Liberals as well, and figure out a way of dealing with development issues, I'm more than prepared to do that with you, but not at the expense of tenants.

Hon Mr Leach: I think that as an opposition member you have every right to do that and you should do that, but you also as an opposition member have a mandate to be responsible. Fearmongering and telling people that their rents may go up by 40% is not a responsible action and I find it somewhat offensive, to tell you the truth. Having said that, I'm more than prepared, and you and I have had this conversation before, to sit down with you, our party, your party and the Liberal Party, and work out a policy that provides protection to tenants, a good program to make sure they're looked after, and also ways and means of getting building stock back out there.

If the goal is to ensure that all three parties get together and develop a policy that benefits everybody, I'm more than prepared to do that. I do think, though, that all the issues have to be on the table, not just some of them.

Mr Bisson: In the last 30 seconds; there's still a minute left --

Hon Mr Leach: I would have kept talking.

Interjections.

Mr Bisson: I was watching.

The Acting Chair: We get a different view of things.

Mr Bisson: In the last 30 seconds, I will only say to the minister that normally when a government undertakes any review they know what the goal is and they know where they're going. The fear that I have right now is, you know where you're going but you're not able to share it with us because you realize it will leave tenants at risk.

The Acting Chair: Reluctantly, we are quitting at 5 o'clock tonight. Done, until tomorrow morning.

The committee adjourned at 1658.