Assemblée législative de l'Ontario

ORGANIZATION

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

CONTENTS

Wednesday 25 September 1991

Organization

Ministry of Industry, Trade and Technology

STANDING COMMITTEE ON ESTIMATES

Chair: Jackson, Cameron (Burlington South PC)

Vice-Chair: Marland, Margaret (Mississauga South PC)

Carr, Gary (Oakville South PC)

Daigeler, Hans (Nepean L)

Farnan, Mike (Cambridge NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

Lessard, Wayne (Windsor-Walkerville NDP)

McGuinty, Dalton (Ottawa South L)

McLeod, Lyn (Fort William L)

Perruzza, Anthony (Downsview NDP)

Wilson, Gary (Kingston and The Islands NDP)

Substitutions:

Kwinter, Monte (Wilson Heights L) for Mrs McLeod

Mills, Gordon (Durham East NDP) for Mr Johnson

Clerk: Carrozza, Franco

The committee met at 1531 in committee room 2.

ORGANIZATION

The Chair: We have perhaps five minutes of committee work to attend to as we await the minister. Before you is an agenda. We would like to deal with the subcommittee report and I have another household matter to deal with. The committee has a report in front of it. The subcommittee met at noon today and is reporting to the full committee "that the committee request from the three House leaders permission to continue to meet past the third Thursday of November (21) 1991, notwithstanding standing order 60(a)." Any comments or questions?

Mr G. Wilson: As you know, this committee has had to be restructured because of Karen Haslam becoming Minister of Culture and Communications; she is no longer on this committee. As I understand it, the person who was in the subcommittee meeting came to me after the subcommittee to report this. I do not think all the factors have been considered; they are not in here as such. It is just a bald statement. I was wondering whether we could have either some discussion of that now, or the reasons for it, or else a caucus before our own committee just so we will be clear on what the reasons are.

The Chair: For the record, I should indicate that the subcommittee representative for the governing party, Mr Johnson, was present. He is required in the House at this moment to present revenue bills. However, it has his support. Perhaps Mr Carr or Mr Daigeler, who are present, might wish to comment on the second part of your question, but thank you for clarifying. All parties were represented at the subcommittee meeting.

Mr Carr: The discussion was basically around how we are going to get to all the estimates in the time frame. The discussion centred around the fact that in the present climate, when we are looking at government spending more than ever before -- I guess the Premier has often said that he is looking to opposition parties and senior civil servants and everyone -- this committee should do everything in its power to get through as many ministries as we can in the time frame, notwithstanding the fact that a lot of it got pushed back because of the budget being pushed back and some of the books not being ready, and then not having an opportunity to catch up over the summer. It was our hope that we could do whatever it takes to get through as many ministries as possible through this process.

If you look on page 2, at one of the requests that had come through -- I guess we tabled about four suggestions that were made -- after some discussion, I think the consensus was that we need to show the public this process is important. As you know, the auditor's statements have been somewhat critical of this committee and its process, so we would attempt to do everything possible to get through as many of the ministries as possible. There was agreement on that. As a result, we came up with this position to attempt to persuade the House leaders to take a hard look at it. That was the general discussion, I think, Hans, if I am correct.

Mr Daigeler: That reflects what was going on at noon. I thought your colleagues spoke to you in the meantime.

Mr G. Wilson: Sorry, I did not hear your comment.

Mr Daigeler: I think Mr Carr accurately reflected what went on at noon. I would have assumed your representative would have reached you by now, but it is the normal practice that the subcommittee discusses these things and makes a recommendation. Obviously, the committee members can do whatever they want with their subcommittee report, but Mr Carr spoke accurately as to what went on at noon.

Mr O'Connor: I think we are putting a request to the House leaders to take a look at what we have before us. They will have to take a look at the schedules and they will have a better idea exactly what time can be allotted. I suppose they will have to take it to the Board of Internal Economy as well because it would probably reflect on the committee's budget for the whole year. I suppose it is something we can send to the House leaders and have them discuss it and take it through the appropriate channels. It does seem like a very reasonable request in this period of accountability, though.

The Chair: Just for the record, the standing orders define for us our practices. If we follow our standing orders without interruptions of committee time for being called to the House, the best look is that we will complete only seven of our 12 ministries and not even complete the seventh ministry. So, to complete the task or even come close to completion, we have to do something that will allow us to complete our sittings. We must therefore go to the House leaders to amend the standing orders. That is the procedure.

The committee looked at the option of meeting during the spring session in January and February and felt all of the expenditures will have been done and that really the process would be more political than accounting. The second suggestion was extending the reporting date line, which is the option being presented today. There will be no expense increase other than coffee for those meetings, is the extent of the expense for that, in all probability. The Monday evening meetings were suggested but they represent some difficulty; and meeting one extra day, either the Wednesday or Monday morning or even the Thursday morning while the House is sitting, was also considered.

If there is no other discussion we would like to proceed to a vote, if it would be moved by a member of the subcommittee. All those in favour? Opposed, if any? Carried.

The second item is housekeeping, as I indicated earlier. We are required to report the estimates, which were tabled Monday, September 23, containing the Legislative Assembly, the Office of the Ombudsman, the Provincial Auditor and the election office. In accordance with our standing orders, since we are not dealing with these, they would be routinely reported to the House. I would do that tomorrow if it is the committee's wish to approve it.

If there is no discussion, I entertain a motion to proceed in that fashion. Thank you, Mr O'Connor. All those in favour? Opposed, if any?

Motion agreed to.

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The Chair: If there is no other business, I would like to --

Mr Daigeler: I understand from the research office that you are requesting to put together a paper. You may have overlooked that. It might be useful to advise the committee on that as well.

The Chair: Yes. At the subcommittee level it was suggested that the legislative research department update the report, which is now 2 1/2 years old, with respect to analysing how Ontario is managing its estimates processes, to bring that up to date, and several other matters. That is only the information of the committee. I would entertain any questions privately after the estimates but I would like to proceed to invite the minister.

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

The Chair: There being no further business, I welcome the Minister of Industry, Trade and Technology to his first estimates, I believe.

Hon Mr Philip: My first as a minister, if that is what you mean. I have been in many estimates.

The Chair: I invite the minister to introduce those who are accompanying him for the purposes of Hansard and the committee's benefit. I also suggest that, in accordance with our procedures, we will be allotting up to 7 1/2 hours for this ministry. As is the custom, we invite the minister to use up to 30 minutes for his opening comments in any way he sees fit, then we will invite the official opposition for their 30-minute period and then the third party will be given that opportunity. The minister will be given time following that procedure to respond for up to 30 minutes. With that, I welcome the minister and allow him to proceed.

Hon Mr Philip: It is a pleasure to participate in this set of estimates. I would like to introduce Tim Armstrong, my new deputy minister of a few weeks, not new to the Ministry of Industry, Trade and Technology, but certainly new to me. Tim, maybe you can introduce some of the staff we have here.

Mr Armstrong: Let me introduce Brian Wood, the executive director of finance and administration; and Bill Corcoran, who is the assistant deputy minister, industry and technology division. We will be joined shortly by the assistant deputy minister of trade and international relations, Claudette MacKay-Lassonde; the assistant deputy minister of policy and development, Peter Sadlier-Brown; the assistant deputy minister, northern industry, Jim McClure; the president and chief executive officer of the Ontario Development Corp, David MacKinnon; the president and chief executive officer of the Ontario International Corp, Gordon Gow; and assorted public servants of well-known reputation and talent, all of whom are here to assist the committee and the minister and we are delighted to be here to assist you.

Hon Mr Philip: I particularly want to welcome Mr Carr. This is my second speech he has had to sit through today. We had breakfast together and I appreciate that he is either a bear for punishment or interested so much in this matter that he wanted to come back and hear the longer version of the speech. I welcome this opportunity to present to you the 1991-92 estimates of the new ministry I have just taken over, the Ministry of Industry, Trade and Technology.

I see in the room today many who have served in previous governments including the former Minister of Industry, Trade and Technology, and I want to acknowledge the expertise he has. I will be interested in any constructive suggestions he may have to offer me as the new minister. I may be new in the ministry, but as many of you have noticed and as the Chair has pointed out, I am not new to this process. I recall my days as Transportation critic, when Jim Snow had to put up with me for 27 hours of estimates. It was quite an experience for both of us, it certainly made for long-lasting friendships for some reason or other. I still get calls from Jim with advice on transportation. I have not had a call from him recently.

As some of you know, I have been serving in the Legislature since 1975. During my time in opposition I have served as Chairman of the standing committee on public accounts. Value-for-money auditing is a particular interest of mine and it is something I carry over into this business ministry. Coming to MITT in times like these has been a challenge. There are big changes happening in the world and in Ontario: structural changes as industry adapts to new technology and new competitors, cyclical change as we in the developed economies emerge from recession, and changes in the international marketplace and in the way business is done as the world undergoes the process of globalization.

As the ministry responsible for industry, trade and technology programs and policy development as well as for much of Ontario's economic development activity, MITT is involved in these changes in a very substantial way. For example, we have been working closely with Algoma Steel to help that company resolve its difficulties. We have entered into negotiations to become a partner with the European consortium attempting to buy de Havilland because we feel that investing in aerospace is an investment in the key industry in Ontario's future. We established the manufacturing recovery program to help small- and medium-size business firms recover from the recession. Through the program, companies such as Epton Industries and Panill Veneer have received government assistance.

Governments, however, must do more than react and help firms cope with recession, important as that is. Like business, governments must prepare for the future. Accordingly, my ministry, in consultation with other ministries and with the wider public, is in the midst of developing a detailed strategy to guide future options and actions in the industrial and economic policy sphere. I mention these few issues to demonstrate to you that government is taking action, that MITT is responding to the current environment of economic change both here and now and for the long-term future. In doing so, we are listening to the business community.

One of the key messages I want to convey to you in my remarks today is that this is a government that wants to hear business concerns. Through me and through MITT, there is a direct link between business and the cabinet and we believe in the principles of co-operation. This is an NDP government, the first in Ontario's history, and I am proud to say that means our notion of co-operation and consultation includes not just government and business but also the labour movement, working people, the disadvantaged and others with an interest and stake in Ontario's prosperity. Our economic strategy must be based on this kind of relationship.

In my comments today I would like to tell you about some of MITT's recent accomplishments as well as our plans for the future. I will tell you what we are doing and how we are responding to the fast-changing environment both here in Ontario and in the area of international trade. I will touch on the most important of our existing programs and our activities and I will describe a few important new ones.

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These are not easy economic times for any government. We took office in the middle of the worst recession in 50 years, a recession that will have lasted well over a year by the time it ends. The high interest rates, high-dollar policies of the federal government, coming as they have in the wake of the free trade agreement, have resulted in serious dislocation for many companies in this province. We have seen the impact in terms of jobs lost, falling exports and increasing shutdowns.

Real gross domestic product in Ontario declined by almost a percentage point last year. The GDP will have shrunk by 3.3% in 1991 and for the period January to March 1991 the GDP declined at a 6% annualized rate following a drop of a precipitous 8.4% in the last quarter of last year, and would have been even worse but for a rebound in business inventories. Job losses during the recession were higher than in any recession since the war. Altogether employment in Ontario declined by close to 250,000 jobs.

I am happy to tell you that the consensus among economists now is that the worst of the recession is behind us. The Canadian economy began to recover in the second quarter of this year, led by personal consumer spending and exports. The proof is in the increases in auto sales, employment, housing activity, retail sales and in manufacturing exports. Labour markets, too, began to strengthen in the second quarter. Employment in Canada grew by 1.2% at an annual rate between April and June, compared to a drop of 5.7% in the first quarter. Ontario's growth was 0.5% at an annualized rate in the second quarter.

Especially welcome for Ontario were the gains to manufacturing employment. Along with a large increase in manufacturing shipments and output, goods-producing industries had the largest employment increase in almost two years in April and May. Ontario's manufacturing industries had particularly strong employment growth from February to May.

Turning to the future, Treasury economists are now forecasting that Ontario's output will grow by an average of 3.7% a year over the next three years. The Conference Board of Canada forecasts that Ontario will lead the Canadian economy out of the recession with a GDP growth rate of 3.8% in 1992. A key factor for Ontario will be the renewed demand for our manufactured goods, particularly from the United States. Again, according to the Conference Board of Canada, Canadian manufacturing, which is centred in Ontario and Quebec, will grow by 4.5% next year. So the Ontario economy is bouncing back and with strong growth.

An important point I want to make here is that despite the business downturn in the last year and despite the continuing pressures we face adapting in to structural change, Ontario continues to be a diverse, resilient, stable economy and a good place to live and do business. Here is proof: Over the past two decades Ontario's wealth has been growing at among the highest rates of any developed economy. It is more than a matter of GDP numbers. The United Nations has over the past two decades developed something it calls the human development index, or HDI, to measure the favourability of a country's overall human development conditions. By this measure, Canada ranked second in 1990, up from seventh place in 1970 when the index began.

This leads to what I think is a very important point often overlooked when we discuss economic policy as the link between our economic structure, our labour markets and our human resources. The most important resource to our industrial future, especially as we shift to value-added activities, is our labour force. A complex, diverse economic society such as ours allows for the development of broadly based and portable labour force skills and experience and so increases potential for the transfer of knowledge and technology between firms. These are the underlying and interrelated strengths on which Ontario will be built.

Let's turn to the bigger picture and look at some specific cases. When we look at the Ontario economy by industry we see, not surprisingly, that different sectors have been affected in different ways by the cyclical downturn and by the process of structural adjustment. For example, the slowdown in the housing market and in business spending on plants has seriously affected construction, engineering and architecture. The outlook for these sectors will improve as the recovery gathers momentum.

The electrical and electronics industry has been less affected by the recession than by structural change. More than any other sector, electrical and electronics firms are competing globally. Companies make decisions about where to locate plants and make new investments on a global basis. We will work to ensure that Ontario remains competitive in this high-value-added sector.

The food processing industry has been adversely affected by the Canada-US free trade agreement and will be a continuing source of concern to policymakers in the immediate future. The furniture sector, too, continues to adjust to the loss of tariff protection and increased competitive pressures from around the world.

Two of Ontario's most dynamic sectors are software and computer services and health care. For example, the software and computer service industry will grow by about 16% in 1991. In the computer software subsector, PC and scientific workstation manufacturers are booming. Many companies, Digital Equipment Corp, IBM, Hewlett-Packard and Apple are expanding either manufacturing or procurement in Ontario.

While Ontario's aviation and space industry remains one of the province's most important export industries, a number of major firms are facing difficulties. As a high-value-added, export-oriented sector, aerospace is important to Ontario's future and the priority of this ministry.

Our automotive sector has been in a cyclical downturn that has affected all suppliers to the industry worldwide. There are strong signs that the downturn in autos is now ending. Indeed, despite the downturn and global competition, major new investments are under way. Over the medium term, however, there remains cause for concern as the Canadian auto assemblers open their sourcing to parts makers from outside the country.

In terms of small business, many of you know that almost 98% of Ontario's 325,000 businesses have fewer than 100 employees and that between 1988 and 1989, 82% of the net new jobs in Ontario were created by these small businesses. It is a fact that new businesses are a critical component of job creation. General economic conditions have, however, resulted in close to a 20% decline in new business registrations in Ontario over the past year. In addition, my staff estimates some 25,000 existing businesses have closed in Ontario this year.

I am not going to review the performance of every sector in Ontario. The point I would like to make is that, as the recovery gains momentum, our higher-value-added, export-oriented sectors are well positioned for the future. What we must do as a government and as the Ministry of Industry, Trade and Technology is to help the private sector to realize that potential. I repeat that co-operation will be essential because the effects of this recession will be with us for some time and will have serious implications for Ontario, for the ministry and for industry.

Before I go into the ministry's activities and plans for the future, I want to tell you about what we have been doing over the last year to make our operations and the delivery of our existing services and programs more effective and efficient. First, we created a new industry and technology division with a responsibility for our domestic regional offices, small business and the ministry's technology programs. In other words, all our domestic industry programs are under one roof.

Second, and this is a major change from the past, the ministry has assumed responsibility for the international activities of the Ministry of Intergovernmental Affairs, comprising an international relations branch, the office of protocol and the international planning secretariat. In the new global economy, diplomatic and economic concerns are not easily separated from trade and investment. By combining MITT overseas branches with the Ministry of Intergovernmental Affairs offices under the ministry's new trade and international relations division, we have now linked trade and investment objectives with the broader economic and diplomatic objectives. Now Ontario speaks with one voice in foreign markets. A new policy and development division has been set up with responsibility for all policy -- industrial and technology, sectoral and trade policy. The division is also responsible for a cabinet liaison.

The northern industry division continues to co-ordinate MITT activities in the north and to promote trade investment and innovation in this region. To oversee and manage our expanded and reorganized range of activities, we have recently welcomed two new deputy ministers, Bill Corcoran for the industry and technology division and Claudette MacKay-Lassonde for trade and international relations. She was flying in from New York. I do not see her here yet, but I am sure she will arrive soon. Both come to MITT from senior positions in the private sector. They join Peter Sadlier-Brown, the assistant deputy minister of the expanded policy and development division, and Jim McClure, ADM of northern industry.

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In addition to the reorganization, we have taken other steps as part of MITT's continuing process of renewal. For example, the ministry's administrative manual has been reviewed and rewritten both to reflect current policies and procedures and to make it more usable.

Over the years, human resources decision-making has been pushed further down the line at MITT, part of the process of making operations less bureaucratic and less tightly controlled from the top. The new Human Resources Directives and Guidelines helps managers operate with this more accessible and flexible human resources management system.

Part of the new human resources system has been the introduction of PRAISE, a new performance appraisal system to help management and employees better set objectives and standards of performance. All managers have now received training in the new system. Our electronic data transmission network has been expanded and upgraded. We can now send electronic mail to MITT offices on the other side of the world. Our networks continue to be expanded and made available for the use of other ministries. The next big step in expanding our information of technology resources is the introduction of the opportunity management system, or OMS.

OMS will be, in effect, a ministry-wide filing system containing all information about our clients, our international context and our dealings with them. The data base is tailored to the needs of different users in the ministry and will be continually updated. OMS has been successfully implemented and tested with sites in head office, Willowdale and Chicago. The purpose of all these changes is one dear to my heart: to increase the value of what we are getting for taxpayers' money. In so doing we are also fulfilling our mandate to support new technologies.

As I have learned over the past few weeks, MITT is a complex ministry, with many programs and activities. I could not mention every one of these initiatives without keeping you here for longer than I want to speak or much longer than you want to listen; I will therefore pick just a few of the more important activities to deal with.

First, trade and international relations: In 1990, Ontario's exports of over $74 billion accounted for half of all Canadian exports. Trade is as important to the economic wellbeing of Ontario as it is to the major trading economies, including Germany and Japan. If we want to continue to have a high standard of living, we have to continue to export, and the competition is getting tougher all the time.

Increasing our exports means more than just marketing products and services. That may have been good in the past, but in an era of globalization, increasing exports also means telling the world that Ontario is a modern, developed economy, a place which is attractive to foreign investment because our factories and workers produce goods and services that are competitive with the best available on the international market.

The aim of the ministry's international activities, directed by the new trade and international relations division, is thus twofold: first, to attract new investment to Ontario, especially in higher-value-added, high-tech sectors with the potential for exports and import replacement; and, second, to increase exports of Ontario's goods and services.

In the past Ontario did not need to do a great deal in these areas. We had plenty of foreign investment; we had the largest market in the world right next door. But as I have already said, the world is changing fast and, like business, the Ministry of Industry, Trade and Technology must also be looking forward. That forward orientation is why we set up the trade and international relations division which I described to you a moment ago, and it is why we appointed the ministry's strategic planning task force, which is an initiative of the trade and international relations branch to identify one-, three- and five-year aims and sector priorities to our international investment and trade activities.

We have also increased the ministry's commitment to investment attraction and technology exchange initiatives. On the investment attraction front, we set up a new industrial properties listing system. Perhaps I can give you a better idea of the range of MITT's trade and investment activities by talking about our achievements around the world.

The Asia/Pacific branch operates four Ontario offices in a region which is home to some of the fastest-growing economies in the world and which accounts for about $3 billion of Ontario's exports. In the first quarter of the fiscal year 1991, the MITT Tokyo office helped to land sales of over $12 million to Japan alone in products ranging from software and laser equipment to medical instruments and log houses.

Our Europe, Middle East and South Asia branch helped over 1,100 companies sell more than $187-million worth of goods and services last year. On the investment side, the branch attracted $206 million, resulting in the establishment of 50 firms and the creation of over 800 jobs in Ontario.

The Americas branch focuses not only on the United States but also on Latin America and the Caribbean. Requests for information through Americas branch offices have shown a marked increased over the past year. In the first quarter of this year alone the branch helped with seven mergers and acquisitions, two joint venture licensing agreements and seven strategic alliances, resulting in investments worth $8.5 million to Ontario.

To give one example, our Atlanta office helped Corvita Corp of Miami decide to open a high-tech facility in Toronto to produce artificial blood veins. The project will create 15 higher-value-added jobs. On the trade side, the Americas offices helped generate sales worth more than $1.5 million in the first three months of the year. With the recession ending, the branch expects to surpass last year's sales figures of $476 million.

I think you will agree that these are excellent results, especially at a time of economic downturn, and we congratulate the staff and the branches and the overseas offices for doing a job very well.

In addition to the marketing efforts of our overseas offices, there is a range of complementary activities that can facilitate the success of our international business dealings. These include contact with foreign governments, visits by politicians and senior officials, cultural and educational activities and participation in international activities, environment, labour, health and other fields.

For example, MITT helps Ontario firms in foreign markets by entering into bilateral international agreements with foreign governments. We recently signed an agreement with the Russian federation. The agreement established a framework for identifying priority projects in Russia which will receive financial guarantees from the Russian government and which will be financed through the Export Development Corp line of credit.

Bilateral agreements with the Four Motors of Europe have been reaffirmed by the new government. Four Motors comprises some of the most technologically advanced jurisdictions in Europe: Baden-Württemberg in Germany, Rhône-Alpes in France, Catalonia in Spain and Lombardy in Italy. The objectives of the Four Motors' initiatives include strengthening Ontario's commercial ties with Europe, helping Ontario firms gain a foothold in the single European market that will exist after 1992, and providing access to European markets and expertise at the regional level. These are important objectives, given the growth of regionalism in Europe and the possibility of access becoming more difficult after 1992.

MITT also helps Ontario business people meet potential customers and exhibits their products overseas. The investment and trade support branch co-ordinated the participation of Ontario's businesses in nearly 100 trade shows and other international marketing initiatives last year. We also introduced Ontario firms to potential partners. In recognition of the growing importance of joint ventures, mergers, acquisitions and licensing arrangements in international trade and investment, a special strategic alliance section has been established. Since opening for business in March 1990, the section has brought to fruition nearly 40 investment opportunities, resulting in $15 million in investment and some 300 new jobs.

The investment and trade support branch also works with business immigrants who have reached the stage of investing and opening operations in Ontario. Investments totalled $29 million last year; 827 jobs were created or maintained.

Finally, I want to mention the Ontario International Corp, whose mandate is to help Ontario professional service firms and suppliers of capital equipment to bid on and win international contracts. This is an important area for Ontario. About 15% of billings for Ontario engineering firms are from outside North America. The kind of services and goods on which OIC focuses are precisely the kind of high-value-added activities that the government believes are the key to future prosperity. By helping market the engineering and other professional services such as architecture, management consulting and other specialty services, OIC not only helps increase service exports directly, it can also have an impact on capital goods manufacturing through associated equipment sales.

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I said earlier that we believe in co-operation, that business has a voice at MITT. At OIC, staff work closely with more than 900 companies that have registered their capabilities with the corporation. In spite of the recession, OIC clients last year signed 29 overseas contracts, worth $57 million, and 1991-92 looks to be an excellent year for OIC. Already, clients have signed contracts which have a value of $100 million in Ontario expenditures. For the future, Ontario International is shifting towards the pursuit of large capital projects rather than the smaller consulting projects of the past. To this end, OIC is putting more emphasis on creating strategic alliances and partnerships.

Those are some of the highlights of the trade area. Now let me turn to industry and technology. MITT's approach to industrial and technological policy reflects the philosophy set out by the government in the provincial budget. Our goal is to facilitate structural change to "actively promote the development of high-value-added, high-wage jobs through strategic partnerships." Over the past year, however, as well as preparing for the future, we have also had more immediate concerns -- helping Ontario firms weather the recession.

The manufacturing recovery program, first announced in last April's budget, helps medium-sized and smaller firms both recover from the recession and prepare for the new competitive environment that they will face over the longer term. With funding of close to $60 million, the MRP will provide advice, expertise, staffing and financial assistance to about 200 companies over the next three years. The program has three components: recovery plan assistance, a management and marketing personnel program, and an adjustment plan to help firms prepare for the long-term future. In operation since May, 64 companies have been approved and 102 applications are currently under review.

One of the important new directions which I am supporting at MITT is the forging of links with other than the traditional clients -- with small business, with entrepreneurs, with ethnic businesses and businesses operated by women. It may surprise some of you to learn that about a quarter of all new businesses in Ontario are started by women. For the most part, however, at least in the past, these business have tended to remain small. For this reason, MITT's small business offices worked together with the Federal Business Development Bank to set up a program called Step Up which helps women entrepreneurs expand their operations.

Other new programs include the border community assistance fund to help communities adversely affected by cross-border shopping, and an enriched Partners program for networking with other organizations interested in entrepreneurship and co-sponsoring services. One example is our flagship book, Starting Up a Small Business in Ontario, which we co-publish with IBM Canada. For business people who are new immigrants, the ministry, together with ethnic associations, has recently created a series of audio tapes in seven languages outlining our business assistance services. This is an example of the kind of links with non-traditional business clients that I spoke about earlier.

The youth venture start-up capital program helped 966 summer students and almost 700 year-round youth-owned businesses last year, while Visions, an optional entrepreneurship educational program for grades 7 and 8 is increasingly being adopted by major school boards across the province.

Integral to many of MITT's industry and technology activities is the idea of talking to and helping business directly rather than from Queen's Park. Our small business branch now has 26 locally based self-help offices up and running across the province. Operated jointly with municipal governments, the offices help people interested in starting a new business. More than 200,000 potential or small business owners attended seminars, used the toll-free hotline and bought Small Business Ontario publications through the year. Last year we directly helped almost 10,000 new and established business owners.

We also provide services to existing firms. Throughout Ontario, ministry consultants at our regional offices advise and help business people. For example, last year the central east branch undertook over 2,700 consultations, influencing $19 million in investment and 540 jobs.

Here in Toronto another unit of the industry and technology division and the domestic industry support branch completed studies on the competitive challenge facing our furniture and electronics industries, sponsored technology transfer seminars, and helped set up a network database linking hospital procurement offices with Ontario suppliers. Another program linking Ontario buyers and suppliers, the sourcing centre hotline, received over 4,000 calls last year.

I am informed that there are only four minutes left, so I guess I can use the rest of the speech on some other occasion, and maybe Mr Carr will be with me at that time as well.

I would like to talk about the future, then, briefly. I hope from everything I said, you can see that the Ministry of Industry, Trade and Technology is future oriented. I have told you something of the activities and plans of each of our major areas of activities. I have mentioned the ministry's strategic planning task force, which is looking at the aims and sector priorities.

Ultimately, all of our activities and plans must be shaped and guided by an overall vision, a strategy for the future. That is why the ministry's policy and development division, in consultation with other ministries and interested groups, is developing a framework for economic renewal which will guide all of the Ontario government's economic development activities, not just those of the Ministry of Industry, Trade and Technology. The framework is being developed among many of the themes that I have stressed this afternoon, themes that are already evident in MITT: shift toward higher-value-added activities both within firms and across the economy; more attention to research and development innovation; advanced skills; firms with a strong presence here in Ontario; a more direct and activist approach to economic development policy.

Our vision of Ontario is of rising living standards, but equally important is the protection of our environment, our quality of life, high levels of employment and an economic and social future that we can, ourselves, shape.

In conclusion, another element of our vision for the future is the concept of bridge-building. By that I mean co-operation and meaningful dialogue between business, labour and government. I have outlined to you, and indeed in many speeches around the province, some of the elements that I believe are necessary to build that. I have outlined some of the processes to business groups, and indeed to labour, that happened to attend some of my speeches.

I want to tell you that I am anxious to work with all members of the House, to go into your ridings to meet with your business people, to work with each and every one of you to create a stronger economy in Ontario and in your particular region. I look forward to receiving your advice in this first set of estimates that I have ever had the pleasure of sitting in this chair to deliver, and not, as I usually have been, sitting in Mr Jackson's chair. Thank you.

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The Chair: Thank you, Minister. I would like to recognize Mr Kwinter.

Mr Kwinter: How much time do I have?

The Chair: Thirty minutes.

Mr Kwinter: Thirty minutes?

The Chair: Up to 30 minutes.

Mr Kwinter: There is so much to talk about and so little time.

The Chair: Well, there are about 15 more pages here if you would like to read them.

Mr Kwinter: Mr Chairman, I would like to start off by congratulating the minister again -- I did it in the House yesterday -- on his assumption of a portfolio that I certainly enjoyed, and I wish him well. I genuinely wish him well. I want to say to those members of MITT who are here, I served in three different portfolios, and I can say, without in any way slighting other bureaucrats and other ministries, that the three years I spent at MITT were the most fruitful, the most enjoyable and the most fulfilling that I had. It was because of the people who were there. There is no question that they are a professional staff. They have the interest of this province at heart, and I want to publicly acknowledge that.

There are some concerns that I have, serious concerns for this province and, by reflection, for this country. I just want to relate to you some of the things that have happened in the year since the government changed. I am going to be as non-partisan and as objective as I can.

Almost immediately after the government assumed power, an ad appeared in the Wall Street Journal that said, "If you are thinking of investing in Ontario, think again." I thought the ad was irresponsible. I thought the people who put it in made a dreadful mistake, but notwithstanding that, over a million decision-makers in the United States -- this ad appeared in the eastern seaboard edition of the Wall Street Journal -- had an opportunity to see a message that said, "If you are thinking of investing in Ontario, think again."

Some time after that an editorial appeared, and those of you who have had any experience in public relations will know that editorial material is far more effective than paid advertising. When you have a paid ad, someone has paid for it; they have a point of view they are trying to put across. When you have an editorial, you still may have a point of view that the particular publication is trying to put across, but it has a lot more power and a lot more validity because people tend to believe what they read in publications.

The headline in Barron's, which is the official organ of Dow Jones, again read by over a million decision-makers in the United States, said, "Ugly socialist hydra rears its head in Ontario" and goes on to talk about all of the terrible things that they perceive to be happening to the business climate in Ontario. Again, this by a publication that is read by key decision-makers in the United States.

So you have a climate in our largest markets -- I am sure the minister knows that about 90% of all our trade is with the United States. That is our greatest concentration, I am sure you know. We have offices in Boston, New York, Chicago, Atlanta, Dallas and Los Angeles, and those people are out there trying to sell Ontario as a jurisdiction in which to invest. You have a climate created by those publications. You have adverse articles in the New York Times, again, critical of the government, critical of the climate that has been set up to invest in Ontario.

Put that aside. I am our caucus whip on the standing committee on finance and economic affairs. We have just spent a month travelling around Ontario listening to people make representations on the budget. Almost to a man, the labour representatives that have come forward -- and I have now found out that the government retained a public relations firm to counsel them and to give them the material they could present at our committee -- but to a man, these people came forward and bashed business. They bashed multinationals. They bashed corporate welfare bums. They bashed business, saying that what we have to do is turn all of these enterprises over to the workers because that is the only way we are going to get any kind of protection.

Yesterday, the minister will know, I stood in the House and I showed him a fund-raising letter that was sent out by the secretary of his party. In it, it says, "One year later, big business is out to get us." When you read the article, it claims that big business is thwarting the efforts of this government to do the things that it thinks are important, and that the only way that we can stop them is to provide funding so that we in fact can go out and counter what big business is doing.

I say that to you because we are in a situation that is very competitive. There is no one who has to come to Ontario. The minister should know or will want to know that in most cases when we are trying to attract investment we are in a competitive situation. My concern is this:

Almost a year ago today, or maybe a little earlier, we were negotiating with the Ford Motor Co to establish a facility at Oakville. We got part of it. I do not even know whether we got the rest of it. Did we get the van plant?

Hon Mr Philip: The big plant is going in.

Mr Kwinter: The big plant is in. I know that. I do not know whether we got the van plant. But the point I am trying to make is this --

Hon Mr Philip: It is $500 million.

Mr Kwinter: Fine. You do not have to tell me. I was the one who negotiated that. Let me tell you what happened. When we were negotiating, we were competing with St Louis, Missouri, and the problem you have is that the decision is not made in Ontario and it is not made in St Louis. It is made in Michigan.

My concern is not just the Ford Motor Co. It is every single company that is coming to invest. They have an alternative where they have different divisions bidding for the same product mandate. Suddenly someone says at the board table: "Take a look at this stuff. Look at what Barron's is saying. These are Ontarians advertising in the Wall Street Journal. This is the government's own party. Look what they are saying." Why in the world would you possibly put one nickel into that jurisdiction? Why would you do it?

That is my concern that it is going to have a very serious impact on our ability to maintain the kind of industrial-commercial activity that we have come to enjoy. I can tell you, when you take a look at some of these coalitions that are taking place -- and I have not even talked about the labour legislation. You want to talk about people going apoplectic, all you have to do is talk to people in the major industries once they have had a chance to see that labour legislation. Why would they ever come to Ontario?

Instead of trying to make it a conducive place to do business, an attractive place to do business, a place where they can come and thrive and prosper and create jobs and create economic activity, we are sending out a signal that says: "We don't want you. If you come here, you are going to be at a disadvantage because we are going to tilt the scale against you." In fact, we are saying, "Don't bother, because you're big business and we don't want you." You may say, "Well, that isn't the signal that is being sent out." I can tell you that is the perception.

One of the strangest things that has happened to me since my change in status as of September 6 is that I have not lost any of my client group. I have a steady stream of people calling me up and saying, "Can I come and see you?" They are saying, "My God, what are we going to do with these guys?" And they keep listing all their concerns.

The minister may have the best of intentions, he may be the most honourable man going and the most dedicated proponent of co-operating with business, but when he gets to that table he is only one voice out of 30, and my concern is that those other 29 voices are going to drown him out. That is the problem I have. That is the concern I have with the atmosphere that is being created.

Having said that, I want to talk about a couple of specific things that he mentioned. Number one is de Havilland. Again, I was very involved in the de Havilland situation. I had the opportunity of visiting Seattle, meeting with the president of de Havilland. It is a very simple situation. Boeing does not need anyone to show them how to build aeroplanes. Boeing is the most successful aircraft company in the world. Boeing does not need any money. When I was with them -- and I do not know what their situation is now, but it is probably no different -- they had $4 billion cash in the bank.

The Dash-8 does not have a problem, other than one I am going to talk about, in that it is probably the most successful short takeoff and landing aircraft in the market. Their order book is two years in duration. They had orders that took them into two years, which was a problem because some of their competitors, like Embrier, Fokker and some of the others, were delivering in shorter time frames.

De Havilland is building five aircraft a month and it would like to have built six. The problem is that for every aeroplane they build they lose money. They did a cost analysis and found that if they built six a month, they would lose more than $1 million, so the more aeroplanes they build, the more money they lose. To counter that, if they built that aeroplane in Seattle, they could build three a month and make money.

I am going to tell you something that I have not told anyone before, but when I came back -- and I said to them: "How could that be? We've got good workers up at de Havilland. They're right in my riding. They're super people." "Of course they're super people, but they won't allow us to make those aeroplanes efficiently. They will not allow us to put in productivity measures. Unless we can do that, we're pulling out." They told me that nearly two years ago.

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I came back and I met with Bob White confidentially, privately, and said: "Bob, let me tell you what's happening. I just came back from Boeing. They tell me they're going to bail out of de Havilland because they cannot make any money." He said to me, "They're just putting you on. You know how much money they've got? Do you know how many orders they've got? They're just trying to get something from you." I said, "They didn't ask me for anything, so I only have to take them at their word." He said, "They're just handing you a line; don't believe it."

What have we got now? We have Boeing obviously making the decision that they are not going to continue any longer. They made more money building one 747 than they did building as many Dash-8s as they do in a year. So they have decided they want out. They have poured a pile of money into that operation; the federal government has poured a pile of money into that operation. Why would anyone come along and buy it?

Obviously the consortium from Europe -- and I met with them at great length and often -- said: "Yes, we can see we have a role in that company, but only if we do certain things. We've got to cut the labour force. We have to outsource whatever we can. It's absurd that de Havilland is building seats for aeroplanes when they're 20 guys out there who will bid on them and supply them cheaper. Some of them may not be union workers, but they'll be workers." They are saying, "Here is what we are prepared to do and that's why we're going to buy it."

You have a situation where they have gone to Investment Canada. Investment Canada has said, "We want you to have a Canadian partner." Lo and behold, we have the Ontario government emerging as the white champion. For whatever reason, I have no idea. There is nobody there, with all due respect to my former colleagues at the Ministry of Industry, Trade and Technology, who knows how to run an aircraft business, I can tell you that, and I do not think I am insulting anybody by saying that. Money is not the problem.

What is the role? The role as stated by the Premier and the minister is to save jobs. I say to you with respect, the problem is not to save jobs; the problem is to save the company. Just saving the jobs is not going to do anything for you, because the company is not going to be around and the whole thing is going to go down. You become very selective in the jobs you save. You want to save some jobs at de Havilland, but you just write off the jobs in Barrie at General Tire. The Premier says: "Oh, what if we send 1,200 people to Saskatchewan for Crown Life? They're not union jobs, they're not manufacturing jobs. Who cares?" So you become very selective in the jobs you are trying to save.

I am suggesting to you that the only role the province has -- I do not see it as having a role at all, but if it is going to have a role, the only role the consortium sees is that Investment Canada has stated it wants a Canadian investor. So they are saying, fine, they have made a deal with the province to put some money in it. I can tell you, unless the company changes, that money will be down the tubes in the same way that the money from the federal government was down the tubes, the same way that Boeing's money went down the tubes. There is no possible reason that the addition of the Ontario government into the equation is going to make it a great company, because all it can bring to the equation is the government clout to make sure they do not get rid of those jobs, and to bring in some money. If money was the problem, I would agree. If someone said, "I've got this fabulous idea. We can do all these things but we need money," that is fine, but money is not the problem.

Let's talk a minute about Algoma. Algoma is exactly the same thing. If there is anybody in this country that can make steel, it is Dofasco. They are an efficient operation. They are a good operation. They thought they could have a fit with Algoma and they bought it. They have now come to the resolution that it made no sense and they have written it off completely. There is nobody in the bureaucracy who knows how to run a steel company. Again, I am not insulting them. So what possible role does the government have in investing in a steel company, other than saying, "We want to save some jobs"? Well, jobs are not the problem. The problem is saving the company. It is counterproductive to save the jobs, because if you save the jobs, you doom the company. The more jobs they have, the less productive and efficient they are and the less competitive they are.

We have a situation where the government has become very selective. It decided: "We cannot afford Consumers' Gas. Let it go to British Gas. We have to let Varity go. We have to do other things but, for some reason or other, let's go to Algoma and try to keep it afloat, for whatever reason. Let's try to keep de Havilland going, for whatever reason." There are valid reasons for keeping those companies going, but the direction that is being taken is not going to do it. I predict it. You may keep them going for two or three years, but I am prepared to put my name on the line and say that those companies are going to go. I defy you and anyone who takes an objective analysis that unless you restructure them -- and that means there is no role for the government if you are going to restructure them. The only role our government has is to keep them from being restructured, to make them stay the way they are, which means they are inefficient, non-productive and non-competitive. That is a problem.

Let's take a look at Kapuskasing, exactly the same problem. You have two partners, Kimberly-Clark and the New York Times, both of them knowledgeable in that industry, both of them with no shortage of money. They have decided it makes no sense to keep those plants going, so they have said, "I'll tell you what, give us some money for the power plant and we'll give you the plant." Hard-nosed businessmen are never going to give you anything if they think there is an economic value. They are giving you the plant because it has no value. It is a liability. "Please, take it off my hands. There may be environmental problems that I don't want to have to deal with. There may be a whole host of things. Take it, it's yours. Just bail me out of the power plant and give me the money, and that's it." So the government comes along and says, "We're going to get the workers to buy it out." Who in their right mind would imagine that the workers can do something that the professional managers cannot do?

I am not trying to speak against worker buyouts. Sometimes it works. I will give you an example. It is not a real example, but a hypothetical example. You may have a Black and Decker in Brockville. They are making a product they are good at, they have the technology and they have the skills. For whatever reason, head office decides, "We're getting out of that market," so they close it down. There is no valid reason. The company was good. They have just decided they do not want to be in that market any more.

There is a role for government to participate, to allow the workers to buy it out so they can keep it going, maybe not with that product, but with similar technology and similar application of skills. They can go out and carve a niche. No problem with that at all. But when you have Abitibi-Price and some of the other major pulp and paper companies really hurting and shutting down plants, you have a turkey -- and I say that will all due respect -- up in Kapuskasing, an operation that is no longer efficient, no longer competitive. You are going to prop it up by pouring money into it and sucking the workers in saying, "You get in there and we can make this thing work." It makes no sense, because money is not the problem and workers are not the problem. It is marketing, it is technology and it is a competitive world out there. Why this is happening, I have no idea.

Mr Perruzza: You mean a little worker --

The Chair: I am delighted you are here, Mr Peruzza, but you will speak in order.

Mr Perruzza: Thank you for recognizing me.

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Mr Kwinter: I can be a passenger on an aeroplane; that does not mean I can fly it. Just because you are a worker in a plant does not mean you can run it. What I am saying to you is that there is more to it than just turning out the product. If it were just a matter of turning out the product, things would be very simple. There is hardly a day goes by that large, sophisticated companies do not go bust.

You have to ask yourself why they are going broke. There are many reasons. One is that there is competition from somewhere else; it has cheap labour; it has a quicker growing cycle on trees. There is a whole range of reasons why you are no longer competitive, even with your best efforts, even with everybody doing whatever they are doing. Everybody looks at Mexico. You have to look at Mexico. Look at Thailand, Taiwan, Singapore, Hong Kong; look at Russia; look at Poland; look at Brazil. Go to India -- lots of people, low wages and smart, let me tell you, smart. Do not be deluded that these people are sitting on their haunches making sandals and weaving carpets.

If you speak to the president of General Motors, George Peapples, he will tell you they have four engine plants in North America. They have one in St Catharines, two in the United States and one in Monterrey, Mexico. Their plant in Monterrey, Mexico is the most efficient plant they have as far as productivity and cost go. That is a very serious issue.

I want to talk about that just for a minute. I had the honour of chairing a session of the world economic forum in Davos, Switzerland last January on the North American free trade agreement. On the panel with me was the chief of staff of the President of Mexico, Mr Cordoba, and the undersecretary of commerce of the United States, Mr McCormick. The reason I was there was quite bizarre in that I normally would not be on a panel with these people, but because of the Gulf war, the federal deputy had been grounded and they were told they could not go to Davos because of the war threat. I was there, and they said, "Would you fill in, because we know of your involvement in the free trade discussions?"

If you know anything about the automotive business in Ontario and in Canada, the bulk of it is here, about 90%

Mr Perruzza: You mean you participated in the free trade agreement?

The Chair: Mr Perruzza, please.

Hon Mr Philip: I am listening.

Mr Kwinter: Okay. At the present time, about a million cars a year are produced in Canada, most of them in Ontario. With the exception of a plant in Nova Scotia and in Beaumont, Quebec, most of the cars are produced here. Of those cars, 80% of them are shipped to the United States. In Mexico at the present time it is about the same number, but at that conference the chief of staff of the President of Mexico stated that their intended plan was to build 4.5 million cars by the year 2000. I had to do a doubletake to understand what he had said. I could not believe that he was going to increase their production four and a half times. When you consider there are only 9 million cars a year built in the United States, that is a huge number. That market is going to have to come from somewhere.

I thought this was just rhetoric. When I came back to Toronto, I spoke to Frank Stronach, who is currently putting a Volkswagen bumper plant into Monterrey, Mexico. I said to him, "Would you believe they claim that by the year 2000 they are going to build 4.5 million cars in Mexico?" He said, "They're wrong; I think they will do it by 1997." That is a fact of life. That is going to happen, which leads me -- how much time do I have?

The Chair: You have six minutes.

Hon Mr Philip: Give him an extra four minutes. I have an extra four minutes.

Mr Kwinter: Which leads me to another area where I have some great concerns. The government has stated that it is unequivocally opposed to a North American free trade agreement. They are opposed to anything to do with Mexico. What they are going to do about it, I do not know; probably as much as they did about the free trade agreement. They are saying they are opposed to it and for the life of me, I cannot understand their rationale.

We have a situation now where, because of the economy, because of the political climate in Ontario, we are at a very serious disadvantage. We are trying to attract investment from around the world, and we already have free trade, whether we like it or not. You know that we opposed the free trade agreement, but it is a fait accompli, it is a fact. We have a free trade agreement between Canada and the United States. There is a good chance there will be a free trade agreement between the United States and Mexico. If that were to happen and Canada was not a participant, why would anybody want to invest in Canada when all he would have to do is invest in the United States and he would have access to both agreements? We have the United States acting as a hub and it will continue to make its next arrangement with Central America, Brazil and wherever.

What we have to do is make sure we do not say that we are not going to be a part of it, but to make sure that we are a part of it, and also make sure that the present agreement is not diluted as a result of the negotiations. But for this government to state that it is opposed to the North American free trade agreement is the height of folly. It is like committing suicide because if you go to talk to the Japanese and say, "Please, sir, come and put your facility in my jurisdiction," they will say: "What for? Why would I possibly come to Canada when, if I go to the United States, I have the benefit of dealing with you and dealing with the Mexicans?"

You have to understand that Mexico has in excess of 80 million people. A lot of them have no economic power, but a lot of them do, and with this free trade agreement, more and more of them are going to get that economic power, so there is a huge internal market which will be of benefit to Canadians.

The other problem no one seems to understand: We had exactly the same argument with the free trade agreement. I think one of the problems with free trade -- and I am not opposed to free trade; I want you to know that. I am opposed to this deal that we have, I thought it was a lousy deal, we gave away the store -- the problem we had is that the Prime Minister oversold it. The impression was that here was this incredible market of 270 million people and with free trade we would have access to it. What people did not understand is that we already had access to it: 80% of all trade in goods and services between Canada and the United States was duty free before the free trade agreement. The major concern was not that we would get access; the concern was that we would not get access, that the protectionists in the United States would clamp down; that was the problem.

We have exactly the same thing in Mexico; 80% of the trade between Canada and Mexico is duty free. There is no prohibition of anybody in Canada going to Mexico and setting up an operation. There are Canadian companies that did it. Flett Industries in London moved their operation out of London and took it down to Mexico. Anybody who wants to do that can do it now, and the free trade agreement is not going to enhance it. All it is going to do is, over a period of time, whatever is negotiated -- the US-Canada free trade agreement had 10 years to eliminate tariffs, and whatever they decide to do with the Mexico-Canada, if it is a Canada-US agreement, it will be the same.

We have to be in a position where, instead of putting up barriers, instead of putting up reasons for people not to invest here, we have to create situations that will encourage people to invest here, because quite frankly, without that investment we are not going to be able to sustain or expand our economy. For every dollar that Ontarians have in our pockets, 30 cents is there because of trade. An American has only got 10 cents of every dollar because of trade. We are one of the most trade-dependent jurisdictions in the world. We depend on foreign investment to provide a lot of the value-added that we enjoy.

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I am terribly sympathetic to those nationalists who feel there are certain things that must remain in Canadian hands, but you cannot have it both ways. You cannot condemn foreigners for coming in here and providing the jobs you want, for providing the technology, and then decry the fact that you do not have any jobs, that people are moving out and that plants are closing down. The message I have been trying to convey to the minister is that the world economy is quite fragile. It is a difficult time. I keep hearing remarks about the made-in-Canada recession. I can tell you it is not a made-in-Canada recession. It is a recession that is being felt by not all, but most of the industrialized countries in the world and there is going to be a shaking out.

The European Community is getting its act together. The Pacific Rim is getting its act together. Without question, countries like Mexico and Brazil are sleeping giants -- that is the expression -- sleeping giants who are starting to flex. Unless we create an environment that is going to allow us to compete, to attract the kind of investment that will give us the value-added, which means we have got to forget about the low-end jobs -- if a company like Flett, that is wiring harnesses, needs women sitting there doing finger work and they want to get $12 an hour and they can do it for $2 an hour in Mexico, you have to let it go. It has got to go because you cannot compete. But that does not mean you go home, pull the blanket over your head and say, "That's it, we're finished." What you have to do is direct your energies and your resources to creating the ability to provide these value-added jobs, these high-tech jobs, that will sustain the kind of standard of living that Ontarians have had and want their children to have.

It is a sad commentary. In my generation -- and I do not know whether you saw the poll -- if you asked my parents, did they think I was going to have a better life than they did, virtually every person said, "Absolutely." You ask the generation today if they think their children are going to have a better life than they did and they are not so sure. Many of them are convinced they are not. That means we have to do something about it, which means there has got to be some realization by the government that you just cannot keep bashing business, you cannot keep setting up barriers to make investment unfavourable, you cannot keep bringing in regulations that will force people to go somewhere else and that, unless you do something about it, you are going to have some problems.

I want to close by putting out a challenge. When I was the minister, I had someone come in from one of the states that opened up an office here, and there are three or four of them that have. He handed me a brochure and that brochure had a list of chief executive officers of major companies in the state -- whether it was Kentucky or Tennessee, I cannot remember -- saying, "Come to Kentucky," or "Come to Tennessee, because -- " and they listed all of the fabulous attributes of that particular state. The challenge I have for you is that I would like to see you get a booklet out from chief executive officers in Ontario saying the same thing. If you do it, boy, I take off my hat to you.

The Chair: Thank you, Mr Kwinter. It is interesting you referenced your parents. I guess we can add optimism to one of those things that occurred with 40 years of Conservative rule in this province. I appreciate that. It will allow us to slide right into Mr Carr, with that comment.

Mr Carr: Fine Conservative that I am, I want to thank the minister for coming as well.

Hon Mr Philip: Behave yourself. I know your mother very well.

Mr Carr: Yes, I was going to say I grew up in the minister's riding. As a matter of fact, this morning when they said that he was first elected in 1975, I racked my brain and I was thinking I was in high school during that period of time. My mother still lives in that riding, so we know Mr Philip very well. Those signs went up in 1975 and they keep --

Hon Mr Philip: She is such a wonderful woman. I do not know where she went wrong.

The Chair: I think the good news is that you were removed from the classroom before Mr Carr got there.

Mr Carr: Thank you very much. I want to congratulate the minister on getting such an important portfolio, because it is. All the programs that the New Democrats care so passionately about really do not depend, as many of us realize, on the compassion of government. They depend on the healthy and prosperous economy that is needed to support them. The minister is almost like the salesperson at a company. The jobs all depend on generating the revenue that is needed to employ the people, so he has a very, very difficult task and we look forward to working with him.

We had a good breakfast this morning, where we met some of the people in the Oakville business community. He will know that Mr Harrigan was there, the chief executive officer at the Ford Motor Co, and some of the comments he had were interesting, notwithstanding some of the talk about consultation with this government. The fact of the matter is that in the last budget that put the tax on his cars, as he said, the ones that they put the so-called gas guzzler tax on were the Grand Marquis and the Cougar, which were his two most profitable lines. The St Thomas plant was operating all three shifts. The Cougar engine plant was doing very well. It was the most profitable and they were generating a tremendous volume. Then what happened was, all of a sudden, a tax was thrown on it. As he says, they were not consulted at all about it. Hopefully what will happen is that the minister will be able to go to the cabinet table after his deliberations with the business people and ensure these things do not happen.

Some of the difficulties are still there. As the minister will know, Mr Harrigan talked today about the blockade by the truckers. As a result, the parts going back and forth were not able to get between the plants in the US, and we saw layoffs as a direct result of something that had absolutely nothing to do with the auto industry; we have layoffs because of the spinoff effect.

So, minister, you have a very difficult task. But in the consultation process that has been going on over the last little while, notwithstanding the fine staff who are involved in the ministry, really all you need to do is listen to the various groups out there and what they have been saying over the last little while. Since assuming my new responsibilities as critic for Industry, Trade and Technology, I have spent some time going around and meeting the business community, including labour leaders and almost anybody else who is prepared to see me. I was reflecting on some of the things that have been said by people like the Canadian Federation of Independent Business, which, in its brief last year, said that when it looked at the major problems facing this province, taxation and regulations were the two biggest factors. They point out in one of their briefs, unfortunately a study showing that the tax structures in Ontario and Quebec are the most unfair to small businesses. So we do not need to look too far for some of the solutions that are out there.

Another company in my riding, Procor, makes railway cars. Some of the things they said were interesting, and I will quote, "Ontario provincial taxation policies...have made Ontario a relatively undesirable place to continue our business, as compared to the USA, Alberta or Quebec." To my good friend Mr Kwinter, who was responsible during that period of time, this is dated September 24 of last year -- I was barely elected at that time -- the problems that we were seeing were the result of a few years of high taxation policies.

They go on to say, "Given that...Ontario income tax is one of the most non-competitive in Canada and that Ontario tax is applied on the largest portion of Procor income because of the location of so many of our employees here associated with the manufacturing plant, Procor is under extreme pressure from competition outside Ontario."

They say it is not just the US, that some of the tax structures -- and I will circulate this to the minister -- they also talk about some of the federal problems they see. They list the federal ones too and then they relate provincial policies which discourage locating business in Ontario as a manufacturer. A lot of the things we are talking about are not new; they have been said for a long, long time. What we need now -- and I do not say this particularly to any individual, any minister -- is leadership on implementing some of these proposals.

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It was interesting that we talked about some of the companies that are expanding. The minister laid out some statistics. I was leafing through the Globe and Mail Report on Business where a study shows that about 37% of Ontario's largest companies are not planning capital investment in this province over the next five years. They list the top five reasons: the wage protection policies, the provincial government's deficit, the levels of Canadian and Ontario productivity, Ontario's planned employment equity legislation and corporate income tax.

Here we are going around saying we want international investment and we have got our own companies saying in studies like this, "We don't want to invest here." I suspect the big challenge we have got is to get our own companies saying, "Yes, this is a pretty good place to invest." As a result, I think eventually we will have some of the investment coming from the international scene.

I had a chance last year to meet with the president of Tridon, which, as you know, actually bordered on the Chair's riding as well. They have a plant in my facility. We lost 500 jobs. Of course when it came out, all the politicians, both federal and provincial, were blaming each other with free trade and so on. I sat down with the president and he said the final nail in the coffin to that particular plant was the employee health payroll tax. Again to Mr Kwinter, I am sure he was fighting hard when that discussion was going around the cabinet table, but the fact of the matter is, that was the final blow that cost 500 jobs.

Cam Jackson, the member for Burlington South, and I met with the union and the president. The relations were good. The union said: "We could, if we had any productivity improvements -- we worked well with the company. They listened to us." The company said: "We had fine employees. They were unionized under the Canadian Auto Workers. We worked very well together, but the fact of the matter is the biggest impediment was the government itself."

As we sit back and talk about labour-management co-operation, and all governments try to facilitate that, what we need to look at is governments themselves and how their policies affect the jobs. When I said to Mr Davidson, "Why don't you come out and say that is the reason you left, because of the payroll tax? You have a duty and a responsibility to help some of the other businesses that are staying here," he looked me in the eye and said: "I would be prepared to do that. We're still going to sell back into this market, and for good corporate relations we don't like to attack governments, but we would be prepared to do that if you can sit here across from me today and say that you honestly believe it would do any good with this government."

I could not tell him that. I thought it was a sad state that we would have a president of a company that was leaving who felt that stating the reasons and outlining them to the government of the day would not do any good.

I was pulling out some newspaper clippings about some of the people moving to Buffalo. If you read through it, there is a lot of criticism of the federal government as well as some of the provincial initiatives. Really what they are saying, if anybody read it -- and I think the minister probably did; if he did not, he will get a chance to see it -- again, is that one of the biggest reasons is the tax situation in this province versus the United States, in particular New York state.

All the answers we have got -- we do not need to deal with a lot of the officials in the ministry; some of them have been hearing this probably for years. As I sat back and reflected on some of the things we need to do, I pulled out some recommendations from the Ontario Chamber of Commerce. They have put together a brief that I think all members got. It is not a lot of rhetoric. There are policy positions that have gone back for three years -- 1989, 1990 and 1991.

When you look through it, you see that the Ontario Chamber of Commerce has been around since 1911, represents a true cross-section of the opinions of the provincial business community and has a membership in excess of 65,000 people. There are concrete recommendations and actions that, if implemented, would go a long way towards helping the economy and industry in this province. Before we try to reinvent the wheel on a lot of these programs and initiatives, I say very clearly that I am a big believer in listening to the people on the front lines, the people who are out there every day and see exactly what is happening.

I encourage the minister and some of the other officials to take a look at some of the recommendations there. They are concrete. They are action-oriented. They are not a lot of rhetoric. I think we would do well to listen to some of the information that has been generated by responsible people who truly care about what is happening in this province.

We do not need to look any further than some of the reports that have been commissioned. Our friends at Coopers and Lybrand put together a report on reshaping Canada, how to compete and what government needs to do to assist industry in this province and indeed this country. Again, they are fairly critical of the federal government in a lot of areas as well as some of the provincial initiatives, but on pages 5 and 6 they list some of the key elements they see -- the cost structures, scales of production efficiency, labour skills -- and what they see that needs to be done. I firmly believe the standard of living of the next generation, which we all care so much about, will be in direct proportion to the skill levels we give them today.

It is very easy to read and a fairly concise report. They go on to talk about the tax structure, cost and availability of funds, regulations and technology. I brought a couple of extra copies. The minister may have had a chance to read it, but I will pass that along to him as well. Again, they make some recommendations in the back. So before we go ahead and start to spend a great deal of time consulting again, I encourage you to take a look at some of the information that has been generated. By the way, I think the accounting firm, if you need more for caucus members, will be prepared to send it out.

Other organizations as well: The Canadian Manufacturers' Association, in its pre-budget submission to the Honourable Floyd Laughren, Treasurer of Ontario, outlined very clearly what it would like to see done. Some of the recommendations in there are well worth looking at. They have an executive overview. I will quote from it:

"Ontario's relative competitiveness has declined over this period" of the 1980s. "This fact is based on Ontario's rapidly increasing tax burden; increasing government intervention in all areas of business affairs....

"Ontario manufacturers challenge the government" -- this is the provincial government -- "to adopt the goal of making Ontario one of the most competitive and attractive investment destinations."

On page 2 of that, they outline the summary recommendations: deleting some of the Ontario current cost adjustment sunset clauses, some of the initiatives for co-operation, no introduction of new taxes or tax increases, harmonizing some of the federal and provincial consumption taxes and performing a competitive impact analysis on all legislation.

Again, some of the presentations that were made were laid out very clearly and were, as Floyd says, piled as high as he was during that period. Before we do a lot of consulting again in the next go-round with the new minister, there is a tremendous amount of information already out there. I suspect the ministry officials know that.

Today, after the minister left, I think one of the questions asked by the business community and some of the business leaders and workers who were there was --

Hon Mr Philip: I was there later than you were. What are you talking about?

Mr Carr: When I was there, one of the things they spoke to me about were the labour relations amendments. Some of the groups have said, in my consultation when I have gone around to people in the chambers, that this will be the single biggest event to drive business out of the province. They even say it is bigger than the deficits and what has gone on in the past. In fact, when the question was asked today, a couple of them came over afterwards and asked what was going to happen. I would encourage the minister, as one who is at the cabinet table and really has a voice, to take some of those concerns forward.

We will be interested, when we get into the question and answer, in some of the concerns out there about where some of the funding for the ministry goes. I do not think anybody could not be touched by some of the tragedies of people losing their jobs at Algoma and de Havilland. I think what a lot of people have concern about is that the money that is pumped in is being used wisely. The federal government under Trudeau, and correct me if I am wrong on this, initially put money into it and bought it. A corporation took it over. We have put upwards of $700 million into it, and what the taxpayers and the people of this province are asking is, what is the long-term viability of propping up some of these companies? Because as Mr Kwinter said, the big fear that a lot of people have is that the money going in will be like sand down a gopher hole, never ending, and that ultimately in the end the company will not survive.

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I encourage the minister to keep the lines of communications open. I know in negotiations it is very difficult. I had a chance to speak to Mr Gerard one night when he was here for some of the meetings that went on over the Algoma situation. I think it is very important that we open the lines of communications between all these groups. One of the things I had hoped would have happened under this government is that there would have been a lot better harmony between labour and management. As I said early in the mandate, if nothing else happens, if we can foster a better atmosphere between labour and management under this government, if they did nothing else, that would be a very worthwhile goal.

I am not going to attempt to blame either labour or business, but the fact of the matter is that one year later labour-management relations are more polarized than they have ever been in the history of this province. Again, whether the fault lies with the government or whether it falls on big business or whether it falls on labour, the fact of the matter is we are worse off now under this government than we were a year ago.

I want to share some of the concerns we have as we head forward. Hopefully, we will get a chance to discuss it a little bit further. The minister is going to have a very difficult job over the next period of time. At the end of the day, hopefully we will be able to say that we worked together, that our discussions were constructive and that we attempted to bridge the gap between all groups. Let's attempt to do that. Let's try to end this mindless finger-pointing that has gone on.

As I said to some of my friends on the committee, I have been on both sides of it. I worked with Inter-City Truck Lines as a teamster; I loaded the trucks there. I also worked in management. I have seen both sides of it. I was there when Alltrans Express, TNT, closed the door, and I can tell you the reason was because of the labour-management relationships. Again, I will not blame either side. I used to sit while discussions were going on between branch managers and union officials where literally the air was blue. We would always be wondering, when they came out and all of a sudden had to talk to a customer, why the company's customer relations went down the tube. Ultimately, of course, all the jobs were lost.

At the end of the day the co-operation that needs to be there has to be constructive, but I would encourage us to lay off a lot of the rhetoric as we go forward. Let's take some of the recommendations and implementations that are listed here and start carrying these things forward.

Leadership is about action, not rhetoric. I say to the minister, just in closing, even if you are on the right track, you are still going to get run over if you just sit there. I will be very constructive in my criticism of your actions, when warranted, but I will look forward to working with all members in a constructive manner.

The Chair: As I indicated earlier, perhaps the minister would like to respond. Or if he wishes to call on any of his staff to respond directly to any questions or comments, they can proceed to the other microphone, if it is convenient, and identify themselves for purposes of Hansard. I now afford you the opportunity for your response comments.

Hon Mr Philip: Thank you, Mr Chairman, for this opportunity. I want to thank my two opposition critics for their remarks, which I enjoyed, some of which, particularly in the case of Mr Carr, I even agreed with. I used to often agree with Ted Arnott's criticisms of the government, and he and I as the Minister of Transportation got along quite well. So maybe there is a possibility for some kind of co-operation there as well.

Let me start with Mr Kwinter's comments. First of all, I find it unfortunate that he has depicted the presentations before the budget committee or the committee dealing with the budget as being anti-business. In fact, the members on the committee, and particularly my colleague who is one of my two parliamentary assistants, Mr Brad Ward, informs me that a majority of the presentations before that committee were supportive of the budget, be they presentations from business people or from trade unions; that the trade unions were not particularly critical of big business. To characterize them as such is quite insulting to those people who came forward with some constructive ideas which they did not consider to be anti-business.

It is true that a majority of people who came before that committee, much to the surprise perhaps of some of the opposition parties who, I understand, had staff calling around trying to encourage people to come before that committee, were in favour of the budget. Indeed, as I go around the province, and I have met with numerous business groups, a number of them have actually said that it was a good budget. I have met with people, for example, in the Indo-Canadian business community who said: "We have looked at the budget. We felt that it was courageous and indeed important that in this budget you fought the recession and in fact that the moneys, the extra moneys that you put in, helped create jobs but also helped to keep a number of businesses from going bankrupt."

A number of the people whom I have met around the province as transportation minister, particularly the municipalities, lauded the budget. They were able to get projects done at a time when there was a lot of competition for those projects. Those projects came in at substantial savings to the taxpayers. Many of them, in fact, averaged about 20% less than similar projects of the previous years, and they were able to create jobs in companies that would have otherwise lost their equipment and, indeed, may have lost their business had there not been an anti-recession program to build the valuable infrastructure that helps us to compete.

So I make no apologies for the budget. I support the budget and I think a number of people in the business community do support the budget, particularly those who come from countries where social democratic parties have shown some leadership instead of simply rolling over the way that the Liberals would have done letting history or the marketplace take its course.

Mr Kwinter talks about the concerns, he says, of ads in the US papers, that somehow big business is so unsophisticated that they are going to believe an ad in the New York Times by a group of people whom even Conrad Black would find it uncomfortable to be with. Well, maybe Conrad would not, but most other business people whom I know would.

Indeed, when I met with a number of the bankers and a number of the international business community, they said: "You know, we don't care what the particular political party in power is called. We don't care if it's social democratic. We don't care if it's Labour. We don't care if it's NDP. What we care about is the policies, and if you think that we are scared by a bunch of front-page headlines and scare tactics by either people who buy ads or by people who write editorials in the Toronto Sun, then I think that people are just underestimating us. We are really fairly sophisticated, and we are prepared to invest in this province because we know that this is a good place to invest. It is a good place, for one thing, from an international point of view; it is easy to get executives to come to Toronto and other parts of Ontario. It is a good society to build a business in because we can attract the best executives, the best talent from all over the world. Ontario is a good place to live. It is cosmopolitan, it is cultural. It has a high standard of living compared to many other countries, higher environmental standards, and therefore it is a good place to live."

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Indeed, I sat with the chairman of the fourth largest company on the Hong Kong stock exchange and he said, "You know, all those headlines, they were interesting and I wanted to meet you; and after I've met with you and with members of the government, I realize that headlines don't really make for any substance, I just find that this seems to be a good place for me to invest the money in my company. I'm going back to Hong Kong and I'm going to tell them that and I'm certainly going to consider investing here."

I had a call, interestingly enough, and I returned the call just last night. I tried to reach the caller a couple of times, from Guelph, a person I have the highest respect for, somebody who acted as a mentor to me in a very non-partisan way when I got elected in 1975. The caller said: "I'm getting so tired of the negative naysayers in the Legislature and in the press about Ontario and about this government, and what you did seemed to be reasonable." He said, "Ed, if there's anything I can do to help you or to help you with the local business community, just give me a call." And that was a long-time member of the Legislature, Harry Worton.

Harry is one of the finest people I have ever met in politics. When I first got elected in 1975 Harry was a Liberal and he said: "Look, if you're young, you're going to see a whole bunch of prima donnas around here who are going to try a whole bunch of things and they're going to last about three years, four years. But," he said, "I'm going to teach you how to be here for 20 years." He said: "There's a great advantage to being here for 20 years. There's no outside shovelling and everything is pensionable and it's not really a bad job even though you put in a lot of hard hours. But you get a lot of satisfaction out of this."

Harry taught me how to get elected and re-elected and re-elected, so I have a lot of respect for him, because I owe my job to Harry, as well as to Fred Young and a couple of other people who taught me the ropes around here. But, you know, that is a non-partisan comment. That is a long-time Liberal member of the Legislature who said, "Give me a break." He can see through it, but also the international business community can see through it.

The vice-president of the Ontario Chamber of Commerce said to me: "Ed, look, I'll go with you to the States. I'll talk to any of the companies that are investing in Ontario. I'll tell them that this is a good place to invest." Sure, it is not perfect. There are a number of things that are wrong in this province and I want to tell you about some of them and they are not of our making, but they are certainly things that we are going to work on.

I can tell you that if it takes three years for a plastic company to work through the environmental process, they are not going to invest in Ontario, and that is wrong. But that is not my government that has done that. We are going to deal with that problem and the Minister of the Environment is going to deal with that problem. We are concerned about that problem and I want to talk at some length about that, because I know that Mr Carr is interested and he and I share a common interest in this regard.

Mr Kwinter talked about the Labour Relations Act. I guess I have to ask Mr Kwinter, if this is so bad, then why is it that his Liberal government in Quebec has similar types of legislation? Indeed, we do not have a final Labour Relations Act. What we have had is a position paper, a discussion paper that has changed.

Mr Kwinter: A cabinet document.

Hon Mr Philip: Well, I mean, you are sophisticated enough, you have been in the cabinet, to understand that there are documents and there are reworked documents and there are reworked documents --

Mr O'Connor: Many times over.

Hon Mr Philip: -- many, many times over. I have been around here for a long time. I have received all kinds of Liberal cabinet documents and when the final product came out the legislation was not similar.

One of my favourite people in politics -- because I used to sit here in your chair, Mr Chairman, and Roy McMurtry would sit here. Now Roy McMurtry had a back-brace, so he was not as comfortable as I am, but he would sit here for hours and hours of committee hearings. I always respected him because he always came in to the committee hearings and listened to what people had to say. If you looked at some of the things that Roy McMurtry did, he had one position paper after another and eventually he developed a consensus. I do not think that is wrong for a government to do, quite frankly. I think it is a good idea for a government to turn out a position paper, for a ministry to turn out a position paper, for other ministers to scream and jump up and down and say, "No, the people that I'm talking to want some changes," and to get some changes in.

If you look at the way in which Mr Mackenzie looked at what he was doing, he said, "Hey, there are a whole bunch of people out there who want to be directors of corporations, who want to be directors of non-profit corporations as well, and maybe the original position that was brought forward with ideas by various people, maybe what they're saying is wrong, and maybe we can change." There is nothing wrong with that.

The same thing happened with auto insurance. We went and we looked at the auto insurance and we said: "Look, here is something in which there is a need for restructuring. There is a need to give some of the victims an opportunity which they are denied under Liberal legislation, and there is a need, also, for lowering the price." Through a set of negotiations and through a set of economic studies, we realized that at this point in time public auto insurance did not make sense for this province that happens to be the centre of insurance in Canada. It was a difficult decision, but at least it shows the flexibility of a government that is willing to listen.

My Liberal critic says the government is not listening, while at the same time his friends in the House get up and say, "They've done a flip-flop," every time we listen and we reform and we change what was originally proposed. You cannot have it both ways. If you are listening and you want changes, then you have got to at least give us the benefit of the doubt, or give us the benefit that we are listening and we are making some changes.

Thanks to our actions, the auto insurance companies said: "Maybe there are cheaper ways of doing things. Maybe there are ways in which we can restructure. Maybe there are ways in which we can deliver a cheaper product." It may not be as cheap as public insurance would be, but we can lower premiums by an average of $40 to $60, and maybe we can also have some form of modified tort.

He talks about Bob White and productivity. Let me tell you, as I go around this province and talk to industries, I find that the labour movement for the first time -- well, not the first time, but certainly now more than ever -- is very interested in developing co-operation with business. I meet with the president of GE Canada and I see the new plant which was put in in Pickering for $20 million. He tells me: "Look, come on up on stage. This is the president of our union," and he is sitting right next to the president of the company and the chairman and the architect. He says, "We built this because labour and management co-operated and we were able to work out a deal."

When I talked to Bob White he said, "Look, we've got to have a system in which labour and government and communities and management have co-operation." If you look at the countries that are the most successful, if you look at the countries that have that kind of co-operation, where you do not have the kind of postal strikes that we have once a year, you find that they are led by social democratic parties, such as this one that has been elected, and they have developed the kind of structure and infrastructure that allows that to happen.

He talks about de Havilland and he talks about various other companies. Let me go through a few of them. Let me leave de Havilland for a minute, because it is something I am really interested in and I would like to talk about it a little bit later.

First of all, my Liberal critic mentions Crown Life. He does not say whether his government would have bought it or not. Crown Life was situated in Ontario, but in fact most of its business was in the United States. Anybody doing a realistic assessment would say that perhaps its business investments were not the best kind.

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I know from personal experience, I have made a lot of money with good business investments. I was called the millionaire socialist by Premier Peterson and I consider that a compliment. I made it honestly with good business investments. Far be it from me to criticize Crown Life, but anybody who looks at Crown Life says they did not make good investments, any more than Re-Mor and Astra Trust did, if you remember them, I chaired those hearings. But what authority do I have as a minister to tell a private corporation that it cannot move to another province? I am not Joe Stalin in Stalinist Russia who says, "I'm going to seize your assets." For one thing, they do not have very many assets. Sure, I may not like the fact that they are moving, but what right do I have to say, "You're not going to move to Saskatchewan or Alberta or wherever else"?

As for Algoma, when we look at Algoma what do we see? First of all, we see a town that has a major problem. What happens if this company disappears entirely? Mr Kwinter does not say what he would do in that case. He does not say he has a plan to provide jobs, to provide new industries in that town. He just criticizes us for going in there, for working with the workers and the company to restructure that company. When we see the final proposal, which has to be accepted by the banks, when on October 31 we have the final decision, you are going to see an effective company that can compete. That is part of the restructuring process. Part of the leadership of a government is not to sit back and say, "Let a town go down, we can't do anything about it. That's private enterprise for you. Tough luck, Charlie"; it is to say, "Here's a town that is in deep trouble if this industry disappears. How can we build a consensus between the workers, the companies and the government to save the town, to save the industry and make that industry as economically viable as possible?"

He criticizes the fact that we did not purchase Consumers' Gas. I consider it a compliment. It says that this government is pragmatic and that we look at every case, and in the case of Consumers' Gas a very strong argument was made that if it were sold we would benefit in the way that we as a government see is important: increased research and development that could not have taken place except at tremendous cost to the taxpayers, at tremendous cost unless we found another investor. So here is a foreign investor, from a sister country, who comes in and says: "We can produce new technology. It's going to be here in Ontario. We can produce new research jobs. We can produce new, higher-value-added products." I say that the Premier showed leadership, showed flexibility. He said, "I'm going to judge each case as it comes along."

To say there that this government has some kind of ideological position, when at the same time we can look at Consumers' Gas and say: "Look, here's a company that's offering us a really good deal. It means all kinds of new things, not just for the company itself, but spinoff jobs, spinoff companies" -- I say that says we are pretty pragmatic and we are operating in the same way that social democratic governments have operated with business around the world and done a pretty good job in building the most affluent economies anywhere in the world.

We talked about Kimberly-Clark. Kimberly-Clark was an interesting deal also because it put together a series of different parts. If you look at Kimberly-Clark, then what you see is a win for everybody. I think that is not a bad thing. If you look at numerous other cases, you have a series where the government showing some leadership can put together different factions and try to make them work together.

Let me talk about de Havilland. De Havilland is painted by Mr Kwinter as somehow something that we should not have done. Of course, his federal colleagues in Ottawa are saying to the federal government, "For heaven's sakes, you've got to save de Havilland." I am sure I could produce with very little effort speeches from some of the federal colleagues, the member for -- what is his name, Kaplan -- saying: "Look, you can't have a major industry like this go down. This has been one of the centres of aerospace. Are you, Mr Conservative Prime Minister, going to leave the Diefenbaker legacy of the Arrow by letting de Havilland go down?" My critic then from the Conservative Party somehow condemns me for de Havilland and says, "Are you really protecting the taxpayers' money?" It is not just my taxpayers' money and your taxpayers' money in Ontario, it is the federal taxpayers' money that is matching us. Indeed, it was Mr Wilson and Investment Canada that said, "Look at the first offer, it's not a good enough offer, and we've got to have another offer."

As a result of the co-operation between Mr Wilson and Premier Rae and our government, we were able to produce yet an even better offer, and that offer from A&A is a good offer; it is the basis certainly of a good offer. We are in the process of negotiating. We are not buying this as a bail-out. Anybody who knows anything about this industry knows there are certain sectors in which businesses specialize and when you start getting out of your specialty you often get into trouble. Boeing is a great company. It is making a lot of money, or at least until recently it has been making a lot of money. We have problems in the aircraft industry generally. It is not making as much as it once was. But it specializes and makes very well very wide-bodied superjets. You and I have all flown in them, I am sure, and enjoyed the comfort of flying in first-class aircraft. But commuter aircraft was not its bag, it was not its --

Mr Lessard: We do not fly first class; we fly economy.

Hon Mr Philip: I tell you, I fly Air Canada and Canadian Airlines and I get first class in economy. I think they do a great job, whatever class you are in. I do not get to fly first class, at least at taxpayers' expense. Forgive me if I like a little luxury occasionally when I am paying out of my own pocket.

The next question is, "Well, why didn't Bombardier buy in?" Bombardier, if you look at it, a highly successful company again, has expanded very rapidly, but this is not its particular product line, either.

The issue facing us, then, was: "Is there a need for an Ontario presence? Is there a need for a Canadian presence?" Of course, Investment Canada felt there was. So we said, "Where do we get that Ontario or Canadian investment?" Because it is in the interest of the workers, it is in the interest of all of the spinoff industries that are so dependent on this, to ensure that not just the manufacturing but the research and development on new products stay in Canada. What better way than for the Ontario government to own part of it and to negotiate part of being at that board table and being part of that decision-making. So we are negotiating a deal that I think you will find very difficult to criticize once the full deal is made. I know some of the particulars of where we are now and I have some idea of where we are going to be. Indeed, it is going to be very hard for the provincial Conservatives to criticize it because of course it is certainly a deal which we will be jointly in with Mr Wilson and the federal government.

Let me talk about the straw man, which I call it, that somehow Ontario is against foreign investment. Nothing could be further from the truth. My goodness, my deputy and my research assistant, Una O'Reilly, sitting behind me, will tell you the number of hours that I have spent meeting with potential investors who are not only foreign investors wishing to invest here in Ontario, but also trying to put together the start of some joint ventures where we can work in joint venture transfer-of-technology types of situations between companies here and companies in India or around the world.

If we are against foreign investment, then I am spending 10, 12, 15, 20 hours of my time every week, in addition to my regular 60, 70 hours on other things, spending time talking to people, trying to encourage investment, then I am wasting my time, because that is nonsense.

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Certainly the Treasurer has gone to New York and to various other places and has met with investors. I have spent an awful lot of time meeting with investors and indeed putting investors together with other people who can make deals. That is the role of this government. It is not to go, and I will not mention names of previous ministers, around the world throwing glorified cocktail parties. That does not get business. What gets business is that you have to know what you are doing, you have to have a structure, you have to know why you are going in there, you have to know who you are bringing and you have to have a follow-up. If there was ever a fault both in the federal government -- and my federal colleagues agree with this when I talk to them -- and of the provincial governments over the years, it is that they did not have a strategy. I can tell you, I have a lot of respect for the Minister of State (Small Business and Tourism) in Ottawa and he and I go around making the same speeches, so I guess I have to agree with him and vice versa.

The Chair: You have been going to the same cocktail receptions.

Hon Mr Philip: No, we are not going to cocktail receptions, interestingly enough, we are going to, both of us --

Mr Perruzza: Mr Chair, that is really inappropriate and out of order.

The Chair: Some day when you are the Chair, Mr Perruzza, you can say what you want to.

Interjection: I would apologize.

Hon Mr Philip: I do not mind if Cam tweaks me occasionally as long as I am allowed to shoot back without him calling me out of order.

The Chair: It was borderline unparliamentary, but I let it pass. That was all.

Mr Lessard: At least you know he is listening.

Hon Mr Philip: What, you are ruling against yourself or you are not ruling against yourself?

The Chair: No, I almost recognized Mr Kwinter's restraint.

Hon Mr Philip: You know, it is getting in there and meeting with the investors and encouraging them and seeing how you can put deals together. I think that is the role of government.

Mr Kwinter says this party is opposed to the North American free trade agreement, but you know, so is Jean Chrétien, if I read his speeches correctly. He was opposed to free trade, but now he is in favour of free trade, or it depends on which speech you get Jean Chrétien on. All that we have said is that we want to be at the bargaining table, that we have a right to protect Ontario, that we want to be informed, that we want -- if we are not at the bargaining table, and I know that the previous government asked for that -- at least to be informed and we want input. That is the position I have taken with Mr Wilson. Indeed, let me just read into the record what I have written recently to Mr Wilson.

"I greatly enjoyed the opportunity to meet with you informally recently to discuss the range of industry and trade issues and I look forward to a working relationship. I might add that I have also had a very constructive exchange with your colleague Tom Hockin, Minister of State (Small Business and Tourism), and I look forward to having a more comprehensive meeting with him in the next few weeks.

"I am concerned about the need for a meeting of federal and provincial ministers responsible for international trade to discuss the North American free trade negotiations. I have been pleased by the efforts of Canada's chief negotiator John Weekes in providing regular briefings on progress in negotiations to provincial officials. These meetings are greatly appreciated. However, negotiations have progressed substantially since the last federal-provincial trade meeting in July and your continuing objective to conclude the negotiations by early 1992 means the key political decisions must be made by this autumn."

Then I conclude by asking that we hold a ministers' conference, "to at least be briefed by the federal government so that we can have input. I would be happy when we discuss that item to discuss what some of my concerns are."

But you know, we are not saying anything any different than perhaps the Business Council on National Issues. It said: "We would prefer that NAFTA talks were not happening now. Why? Because there is a whole shakedown which we're still trying to cope with from the original rounds of free trade agreements. Until that time we'd at least like them to be postponed." What we are saying is, "We want to be there to protect Ontario's interests."

I am told that my time has run out. There were some, I think, really constructive things that my Conservative critic presented and I just wanted to comment on them. May I have another minute to at least do that, if I can find my notes correctly?

The Chair: If I might suggest, Minister, with the 15 minutes completed I am going to need a few moments to get the consensus of the committee as to how it wishes to proceed. In past custom --

Hon Mr Philip: I was going to compliment him and agree with him, so that is --

The Chair: You will have ample opportunity in a moment.

Hon Mr Philip: Okay.

The Chair: I am in the hands of the committee, but it has been the custom to move in rotation, first with the official opposition, I would recommend at this point 15-minute segments so that we can complete at 6. Then when we reconvene on Tuesday, October 1, we would start with Mr Carr. But I am in your hands. If you wish to order up our agenda --

Hon Mr Philip: I can do it in about three minutes.

The Chair: I am getting my guidance from the committee at this point.

Mr Carr: I want to hear him compliment me.

Mr Perruzza: I do not think any of us on this side would have a problem hearing the minister for another three minutes.

The Chair: I did not ask that question. I asked how we wanted to proceed with ordering up our time.

Mr Carr: Do we want 15-15 or 5-5 now?

The Chair: No difficulty? Then we will proceed on that basis. If you can wrap up in one minute, Minister, then I will recognize Mr Kwinter.

Hon Mr Philip: First of all, Mr Carr has pointed out what I think are two really serious problems of small business. The Canadian Federation of Independent Business and I had a very frank and constructive dialogue in our meeting. First is taxation. I think what we badly need to do is to look at the taxation on small business as well as on all business and find out what the impacts are. That is why our government has had a Fair Tax Commission and we are hoping to look at it. Indeed, my staff are putting together some other tax matters.

Regulation is a major problem. I agree with you 100%. It is a major problem to small business; it is a major problem to medium-sized business. That is why I found it very interesting that while Mr Kwinter talked about regulations or overregulation as being a major problem to attracting business, he failed to point out that his own party had a committee on regulations, chaired by the former member for High Park-Swansea. They presented a number of recommendations which were not implemented by the Liberal Party. I can assure you that we are going to deregulate or re-regulate a number of the regulations. I would like to explain in some detail our proposal of how we are going to go about doing that and I hope you will be part of the team that will help us with it. It is a major problem and we have got to get around to it.

Mr Kwinter: I would like to respond to some of the comments that the minister made. He said, "You can't have it both ways," and I think he is trying to do exactly that. He is trying to have it both ways. He makes the comment on Consumers' Gas, and if there is something that galls me about the government, it is that when it was in opposition, the leader, now Premier, got up and spoke constantly as if he had a halo around his head and that he was speaking from the mount and whatever he said was gospel. He stood on his feet in March 1990 and criticized the government because there was a rumour that British Gas was going to buy Consumers' Gas, and said they would never, ever, ever sell Consumers' Gas and that a public utility should be in public hands. When he makes the decision, suddenly it is pragmatic: "We are able to take a look at these things and change our minds."

Hon Mr Philip: We got information.

Mr Kwinter: The point I am making is that you ran two elections on government car insurance. There were commissions, there were filibusters, there were rooms full of material that was available for anyone who wanted to look at it. Notwithstanding that, it was a matter of faith of this government. The 1987 campaign was waged on government car insurance. You had all the information from Manitoba, you had the information from British Columbia; you had all this information and you made a decision. My concern is that your decisions waver with the wind and the problem is that they are not consistent. I am not being critical of some of things you are doing, what I am critical of is the process.

When Consumers' Gas was sold, it sent a signal that "here's a government that will allow foreign ownership." When another company comes along, Aerospatiale and Alena, and they want to buy a company: "We can't have foreign ownership. We have to have some Canadian presence." Then you have a situation and all the advantages you think you are going to get by being an owner, you can get in the deal. We went through that experience when we allowed Connaught Laboratories to be bought by Institut Mérieux. You want to talk about an icon in Canadian technology, you talk about Connaught.

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My preference obviously would have been, let's have a Canadian company buy it. At worst, let's have a joint venture. But if that is not possible, rather than salute the flag as Connaught sinks into the ocean and disappears flying the Canadian flag, let's get a viable operator. Let's get someone who has the technology and the ability to keep that company in Ontario, to keep it in Canada. In order to make sure the research would be done, that the investment would be done, we made that a condition. And I am saying to you that when you talk about de Havilland, I am not in any way saying, "Let her go." I am saying, "Let's keep her," but there is no reason why, just because you want to keep it in Ontario, you have to put any money into it.

I can tell you, and I am sure you are privy to this, when they first approached us, they were anxious to buy it. They were not looking for any money. They were just going to do it. Where the money came on the table was when there was pressure put on them to develop a new aeroplane. They said, "There isn't an aeroplane company in the world that can do that without some sort of government support, whether it's through military contracts in the United States or actual subsidies in their particular home countries. If you want us to do the kinds of things that you want us to do, that are not the business of de Havilland at the moment, then you're going to have to put some money on the table." That is why they suddenly went to the federal government and said: "Put up some money and we will agree to do what you want us to do, but if we just buy the company, we have an idea what we want to do with it. We are going to have to right-size it," and I say that in comparison to downsizing it. "We are going to do those things and we are prepared to do it."

The government's role, if it is just to make sure that the research is done and the investment is done, they can make that a condition of Investment Canada's approval. You have a perfect model. The model is Connaught Laboratories.

You talk about Algoma. I am very sympathetic to the people in Sault Ste Marie. I would love to see that plant flourish and keep going. But, as I said earlier, there is a contradiction in effort. I say to you with all due respect, the thing that drives most of the decisions of this government is to protect the jobs, and it is a laudable exercise, but sometimes it may be impossible. If that is the main thrust, then you are making the decision based on the wrong premise because you will save the jobs -- and I will tell you, I lived through it.

I lived through it with Milne Lumber up in Temagami. You keep saying your government did this, that and the other thing, and I say to you now that I am no longer in the cabinet, my government did a lot of things that I was not terribly supportive of, but the government did it. But when Milne Lumber came along and they wanted money to go into it, I opposed it. I opposed it at the cabinet table, and they said, "Hold your nose and pay it because we've got to support that company." I say, "Pay me now or pay me later. You want to do it. It is money down the drain." As it turned out, the money went down the drain. The company went down. The successor company went down. You cannot take a sick company and prop it up unless you restructure it.

And I have every sympathy with trying to restructure a company, but that does not mean that you do it in such a way that it is done for the wrong motivation. Again, I do not want to give you the impression that I am against workers, but if that is the problem, if the plant is not productive, if the plant is not competitive, and if that is part of the problem because they have too many people in there turning out too few products, then you have to make those tough decisions.

My concern is that decisions are being made for crass political reasons. As I say, how in the world are we going to be able to face shutting down Kapuskasing or Algoma or Elliot Lake? You want to talk about an issue? Elliot Lake is a community that has no reason for being where it is, other than at the time that it was built there, it was perceived to be the location of the uranium. Now it is no longer competitive. Our government would have done the same thing. That community is in the wrong location. It is not even on a major thoroughfare. What is happening is people are pouring hundreds of millions of dollars into it to keep it alive. Politically, I can understand that perfectly, and that may be the ultimate decision because of the politics, but the economics of it do not make any sense.

What you have to do when you are making these decisions is to take a look at it, and you may have to decide that even though it makes no sense economically, politically we cannot do anything about it and we have to support it. It is one thing to support a community, which I do not think anybody can object to. It is another thing to try to support a business that is not competitive, because all you are doing is prolonging the agony. You will keep them going for one year, two years, three years.

Listen, there is a perfect model. My suggestion to every minister and every member of the government is to put in their office "Sysco Steel." If you want to see what a sinkhole is, there is a company that has had hundreds and hundreds of millions of dollars poured into it by the federal government. In any analysis of it, any person who knows anything about the steel business will tell you, "There is a company that has no economic reason for being, other than the politics of it." That is why it is there. We need that anchor in Nova Scotia, in that particular area. That is one thing. It is another thing to kid yourself that it is a good business decision. It is a good political decision, but do not kid yourself into thinking it is a good business decision.

Hon Mr Philip: How do you know they are not good business decisions when you have not seen the restructuring program? Are you psychic or something?

Mr Kwinter: No, what I am suggesting to you is that any restructuring program that you can come up with that makes sense -- what makes you think all the wisdom rests in one side and not in the other?

Let's take a look at it this way, let's take a look at Algoma. Here is a company that was bought by Dofasco for somewhere between $700 million and $800 million two years ago. This is their business. This is not a sideline. They are in the steel business. They did not buy it 50 years ago and find that it is obsolete; they bought it just two years ago. They took a look at the company after it ran, and they found that their markets changed, their efficiency changed and that the company, from their point of view, was no longer viable. What did they do? They wrote down the total investment. If you take a look at their balance sheet, that was an incredible whack for them to do.

Hon Mr Philip: How can you say, though, that the proposal is foolish when you have not seen the restructuring program?

Mr Kwinter: I am not saying it is foolish. I am saying to you that here is a company that has $800 million already there. They have a vested interest in trying to salvage that $800 million. If they felt they could restructure it to a point where they could recoup some of that $800 million or at least keep that $800 million as a viable asset, why would they not do it?

Hon Mr Philip: They do.

Mr Kwinter: Why would they do it?

Hon Mr Philip: They do now. That is why they are working with the union on restructuring. The latest proposal has been supported, the first stage of it, by both the union and the company. And eventually, the banks will support it.

Mr Kwinter: Well, I can tell you the analysts in the industry have said that as far as Dofasco is concerned, it has written that off. The analysts in the industry are saying the thing is doomed. I wish you luck. I wish you well. You may make some political mileage, but again, I predict that it is a matter of time and you will be back at the table dealing with it in exactly the same way as Sysco, which has been festering out there for lo, these 20 years.

I am not against helping, but I do not see the role of the government. This is my concern. I see the role of putting people together. I see the role of being a facilitator, but if all you are bringing to the table is money, that is a buzzword for subsidization. If it is a viable operation, there is lots of money out there. There is lots of money from Boeing if you can make de Havilland work. There is lots of money from Dofasco. They had 800 million bucks that they have written down. If all you are bringing to the table is money, it makes no sense, because money is the least of their problems.

What you are talking is subsidization. Then of course you open up the whole Pandora's box because of GATT, because of free trade and everything else. That is my concern. My concern is that there are decisions being taken that make no business sense. If you are going to do it and say it makes no business sense, just political sense, I have no quarrel with that, no problem at all. I just have a problem when you are kidding the troops and saying: "We're going to go in and we're going to turn this thing around. We're going to make it a model of efficiency and it's going to be a world-beater," when it is not. Because if it could be a world-beater, there is a guy out there who would make it a world-beater. That is my concern.

Are you giving me the eye trying to indicate that somehow or other I have extended my time?

The Chair: No. I think you have concluded your remarks quite well. It is almost 6 o'clock. We have five hours and five minutes yet to complete estimates for this ministry. When we return on October 1 we will begin with Mr Carr.

I just wanted to refer to one quick matter from yesterday. I understand Mr Saunders from the Ministry of Labour indicated that some of the questions had been sent to my office from yesterday's estimates. I want to inform the committee that Mr Saunders sent them to my constituency office on Monday, and since I was not to come to Toronto on Tuesday, I presumed that he had sent them. But in the presence of the staff from the Ministry of Industry, Trade and Technology, all requests made during the course of the balance of these estimates, information that cannot be brought forward at the time it is requested, would be sent to the clerk. The clerk will then be responsible for distributing it to all committee members. That is the protocol, and I will certainly be advising Mr Saunders.

Hon Mr Philip: I have to go to a ball game at the SkyDome. I believe some government invested a lot of money in that.

The committee adjourned at 1803.