Assemblée législative de l'Ontario

PRE-BUDGET CONSULTATIONS
ONTARIO NURSES' ASSOCIATION

MUNICIPAL ELECTRIC ASSOCIATION

CANADIAN INSTITUTE OF PUBLIC REAL ESTATE COMPANIES

CANADIAN FEDERATION OF LABOUR

AFTERNOON SITTING

TREASURER OF ONTARIO

ASSOCIATION OF MUNICIPALITIES OF ONTARIO

CANADIAN MANUFACTURERS' ASSOCIATION, ONTARIO DIVISION

TORONTO BOARD OF EDUCATION

ONTARIO ARTS COUNCIL

MUNICIPAL FINANCE OFFICERS' ASSOCIATION OF ONTARIO

ONTARIO NON-PROFIT HOUSING ASSOCIATION

ONTARIO SCHOOL TRUSTEES' COUNCIL

CONTENTS

Thursday 31 January 1991

Pre-budget consultations

Ontario Nurses' Association

Municipal Electric Association

Canadian Institute of Public Real Estate Companies

Canadian Federation of Labour

Afternoon sitting

Treasurer of Ontario

Association of Municipalities of Ontario

Canadian Manufacturers' Association, Ontario Division

Toronto Board of Education

Ontario Arts Council

Municipal Finance Officers' Association of Ontario

Ontario Non-Profit Housing Association

Ontario School Trustees' Council

Adjournment

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair: Wiseman, Jim (Durham West NDP)

Vice-Chair: Hansen, Ron (Lincoln NDP)

Christopherson, David (Hamilton Centre NDP)

Jamison, Norm (Norfolk NDP)

Kwinter, Monte (Wilson Heights L)

Phillips, Gerry (Scarborough-Agincourt L)

Sterling, Norman W. (Carleton PC)

Stockwell, Chris (Etobicoke West PC)

Sullivan, Barbara (Halton Centre L)

Sutherland, Kimble (Oxford NDP)

Ward, Brad (Brantford NDP)

Ward, Margery (Don Mills NDP)

Substitution:

Curling, Alvin (Scarborough North L) for Mr Kwinter

Clerk: Decker, Todd

Clerk pro tem: Deller, Deborah

Staff:

Anderson, Anne, Research Officer, Legislative Research Service

Rampersad, David, Research Officer, Legislative Research Service

The committee met at 1000 in committee room 2.

PRE-BUDGET CONSULTATIONS
ONTARIO NURSES' ASSOCIATION

The Chair: It is 10 o'clock. I would like to see if we can stick very closely to the time frame this morning. We will begin. Half an hour per group.

This is the Ontario Nurses' Association: Eileen Davidson, president; Glenna Cole Slattery, chief executive officer, and Carol Helmstadter, research officer. Welcome. You may begin.

Ms Davidson: Good morning. My name is Eileen Davidson and I am the president of the Ontario Nurses' Association for 1991. With me on my immediate right is Glenna Cole Slattery, our chief executive officer, and to her right is Carol Helmstadter, our research officer, government relations. To my left is Mary Hodder, associate director of labour relations, and to her right is Seppo Nousiainen, research officer.

The Ontario Nurses' Association represents over 55,000 nurses working in Ontario hospitals, nursing homes, homes for the aged, public health units, the Victoria Order of Nurses and industry. We are pleased to appear before this committee to present our views concerning the 1991 Ontario budget. Our comments relate to expenditures on health care and in particular expenditures in hospitals.

One needs only to read the newspapers to realize that the nursing profession is in a crisis. There is a profound sense of dissatisfaction among nurses about their pay benefits and working conditions, all of which has been documented in report after report. The highly publicized shortage of nurses is the clearest indication of a crisis which we believe will not disappear. While some argue that the current nursing shortage is a short-term, cyclical phenomenon, we disagree. In our view, the current nursing shortage is the first manifestation of a permanent imbalance in the demand and supply of nurses.

On the demand side, three factors are fuelling the imbalance:

An aging population: Canada's population is aging as the baby-boom generation makes its way through the system. The proportion of those who are over 65 years of age will increase, creating a substantial demand for all health care services, including the services of nurses.

The expanded role of nurses: The role of nurses will expand significantly in future years as areas of expertise are created. There is overwhelming evidence that nurses are fully capable of assuming many of the functions currently performed by family physicians.

Technological change: The most pervasive factor influencing today's demand for nurses is technological change By expanding the bounds of medical knowledge, technology has increased the range of physical ailments which can be effectively treated, thereby allowing individuals to live longer. Patients are sicker, requiring a more intense and sophisticated level of nursing care. The physical demands, continuous pressure to keep pace with the rapidly changing base of nursing knowledge adds to the complexity that the nurse must deal with on a daily basis. The impact on the employer has been a rising requirement for technically competent nursing staff.

On the supply side, the problems are equally serious. Potential recruits do not choose nursing because it is not a desirable occupation due to low pay, poor career prospects, stressful working conditions, shift work and a lack of recognition.

Nursing must now compete in the marketplace for recruits with other occupations and professions newly opened to women. According to the Ministry of Skills Development, between 1986 and 1996 the supply of young people entering the labour force is projected to decline by 125,000. Not only must nursing deal with competition from other occupations and professions; it must also deal with a share of a shrinking pool of potential workers.

We are fully aware that the Ministry of Health is making an attempt to manage existing resources better. No one likes waste in a publicly funded system. Indeed, if wasteful practices are allowed to continue, then hospital workers can truly claim that their low wages subsidize an inefficient and ineffective system.

At this time I will ask Glenna to present some statistical data and numbers for the committee's consideration.

Ms Cole Slattery: I tried really hard to find something that would give the committee a comfort level.

The Chair: Just a minute.

Mr Hansen: I would appreciate if we could possibly have the clerk do a photocopy of what you have read out there, so we have it when we are going over it, because by the time we get Hansard we are not going to be having all these facts and figures.

Ms Cole Slattery: We can deliver you any materials that the committee would like between now and the end of the day.

Mr Hansen: Okay, that is fine.

Ms Cole Slattery: I was looking to give the committee a bit of a comfort level but it is hard to do. People who hold purse-strings -- some people say those purse-strings very often translate into nooses. So I found this and I want to start with this. I am going to give you hard numbers. I am going to give you dollars and cents, statistics and hard numbers.

There was a good article in Maclean's on 23 February 1976, entitled "The Revolt of the Middle-Class Worker: An Inquiry into the State of Canada's Unions." It specifically deals with the so-called white-collar worker. 1976 was not yesterday. It seems like yesterday to me, but it really was not yesterday. I think what you are seeing today with us here representing 55,000 white-collar workers is the truth of the Maclean's article. In the 15 June 1990 Toronto Star the banner is "Hospital Crisis Looms, Senators Say." That is true.

In October 1990 in the Star, "Engineers' Pay Topped Inflation for 12 Months, Study Shows," it talks about 57,000 professional engineers who got a median salary, which means half of those surveyed earned more and half earned less, of $55,000. I submit that these engineers, if there was a magic wand that made them 98% female, would not have got that median salary. Not that they are not worth that median salary -- I believe they are -- but my workers do not get that kind of a median salary because they are 90% women, so I want you to consider that all that I say has an undercurrent of sexist discrimination.

This banner here, which I am sure you all read with interest on 15 December 1990, "Nurses Asking for Pay Raise of 50 Per Cent," appeared in the Toronto Star, and that is not a true statement. We have not asked for 50%. Having said that, shortly after that, on the next day to be specific, "Premier Won't Promise 50% Raise for Nurses." I do not blame him. Why would he promise somebody something that he had not been asked for yet? My past president and my current president were not interviewed. Indeed, we were out of the country when that article was written. I bring it to your attention for the possibility of consideration of sensationalism in journalism, because this gets everybody all hot and bothered, and quite frankly it is over nothing.

Now let me get to something. This union is on record for the last five years that we do not believe that our industry is underfunded. We believe that one third of the public purse in any given industry -- if it is inadequate, there is something wrong, because after all, the citizen does need roads and bridges and fire and police and all those other fine things. So we are not saying that this industry should be funded in a larger dollar degree. This is nothing new. We have been saying this for months. We do not believe any new money is needed if the current fiscal resources are properly distributed. I am going to tell you right now that I suspect my testimony will be a bit at odds with the Ontario Hospital Association. Quelle surprise, right?

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I am going to leave with you with some really heavy questions. If I could have found the answers, I would have given you the answers as well, but I believe that the answers are only able to be accessed by government. You folks were elected to do for better. for worse, a lot like when you get married, only usually marriages -- well, not lately. I was going to say they last longer than a government term.

[Laughter]

Ms Cole Slattery: What are you laughing about?

It is the distribution of the wealth, and there is wealth other than financial wealth. Human resources are far scarcer for any country in the world than money. You can steal money; you cannot steal human resources.

The province of Ontario has been on record since 1953──in case there is a Progressive Conservative member in the room who would like to be reminded, it was his government that said it believed in equal wages for women. Now we are pushing 40 years later and all three of you have had a shot at this. Somebody better get it right, or I am going to start a feminist party and take the place over like they did in Iceland.

Back to the 50%: My workers got a 50% wage increase in 1974 when they threatened a province-wide strike and since then they have got diddly. In fact, twice they were under an AIB and once they had their wages rolled back. For the NDP people here who represent workers, if you consider a 10% a year increase a wonderful increase, then that is what they got from the Simmons award. They have had it, bottom line.

In the last three years, during boom times for this province, their wage was 4.4% per year for three years. What we are looking for in this contract round is 3% of the total health care budget. It would be a 30% raise over two years. Don't want to give it? No problem. They are going. They know they are essential services. They know they cannot strike. They are going, which is worse than if they strike. At least if they strike, they are standing around looking at you.

Beds are down. Staffing is down. First question: If admissions are not down, then the question is, has the quality disappeared? I suspect that it has. You should be aware that they are using second-year nursing students now and calling them staff in some hospitals in this province.

Now I am going to get down to the numbers and I suspect this is the reason why -- this is page 10, January 1991 from the publication Hospital News. It is editorial notes. I will give you this because I thought if they knew I was going to use this here they might not have put it in: "Here are some hospital facts and figures to dazzle friends with." Stay tuned. I am about to dazzle you.

The 1990 budget for health care, according to Ted Ball in a speech in October to the OHA seminar, was $15.7 billion. We had a hard time at our house wrapping our head around a billion dollars until somebody finally figured out a billion dollars is a thousand million, which made it a little bit more manageable in my mind. I am going to round this sucker off to $15 billion. Forget the $700 million that 0.7 means -- just $15 billion.

According to the OHA, and I have taken it from this tiny little piece of paper here, the amount of the health care budget that they get is 44%, and 44% of $15 billion comes down to $6.6 billion. We need to keep these in mind. They say that the amount that goes to doctors is 32%, which is $4.8 billion. They say that other health services, and I suspect that is community health and what have you, get 20%, which is $3 billion, and senior prescription drugs are 4%, which is $0.6 billion.

Let's go back to their 44%, their $6.6 billion. That is a lot of money and that is not their total budget. I am going to tell you their total budget. They also say in the article that there are 110,000 total RNs in the province, which is, I suspect, a true figure, because it is our figure from the college of nurses, but 25,000 of them do not work so just scratch that right down really quickly to 85,000. I suspect that 10,000 of those people are nursing administrators or such positions and 10,000 of them are educators, which leaves 65,000 workers, of which 55,000 are in our union. It is 90% organized, is what I am leading to.

The total number of doctors -- this is another important figure -- is 18,000. The OHA says that the total number of full-time employees is 130,000 and the total number of part-time employees is 60,000, giving a total number of people working in hospitals of 190,000. I have a question mark there and I will tell you why. Our statistics on our membership are very, very accurate because we bring in a heavy due and we give back to the member at the local level the local cost for education and travel. We keep salaries and the whole bit. So we need to keep very accurate statistics on where our members are, whether they are full time or part-time or what have you, for local dues allocations. We know that we have 55,000 and we know that we have 24,294 full-time equivalents in the hospital sector. We also have 24,622 part-time in the hospital sector.

For purposes of discussion, we chose to look at the part-timers as each of them working two and a half days, making up one full-time equivalent, so that leaves a total of 36,605 FTE registered nurse category employees in the hospital. We have been told that for every nurse there is another worker in whatever other category, so if our statistics are right and I know they are, then it is approximately 72,000 workers in all categories in the hospitals. My question is, where did they get 190,000? I bet you 50 cents that the rest of it is their administrative staff. That is a joke. You are supposed to laugh.

Mr Christopherson: It is not funny. It happens too often.

Ms Cole Slattery: I know. Here are some statistics from your own government, a new study out. The average age of a registered nurse in Ontario is 40. Nursing school enrolments have declined, we hear, about 25%. It is imperative for this government, for the loyal opposition and for the third party to understand that for the entire industry to survive the RNs who are in the system must not leave it. They must not leave it or you have some problem. I do not. I have lots of friends to take care of me if I get old, but you guys will get old just like I do and you do not have that many friends to take care of you.

ONA's statistics show that decline in membership begins at step 5. We have a nine-step grid. Really, it is 10, because the start is the first step. It ends up at the ninth step. Step 5 is where it goes down. I am going to pass this around when I am done. I did not give it to you now because you would look at it instead of listening to me.

This is the 1990 grid. It gives the existing wage. It shows you the existing span between years and it gives you the percentage of our membership at every level. You are not going to like it when you see those percentages. Steps 5 and 7 show the smallest number of workers in the nine-step grid. Step 9 shows almost 40% of our total workforce.

One would believe that these numbers at step 9 will remain until retirement is reached. I suspect that the people, the women, in step 9 are well over 40.

The future manpower planning is seriously affected by the apparent decline in the RNs willing to enter the profession and stay in the workforce long enough to move though our grid. Over the past four years, many studies show, including ONA's, that women are dissatisfied with wages and conditions, between 5% and 7%, and were making plans to leave in 1988. The span between the steps very clearly shows a built-in lack of incentive.

In 1980, 35 cents per hour was put in shift and weekend premiums. In 1984 this was raised by 10 cents and in 1991 it remains at 45 cents an hour. This is totally unacceptable in a workforce that is summarily assigned by the boss 24 hours a day every day of the year including weekends and holidays. Longevity is totally ignored by the boss, even after 15 years at work, and RNs are still forced to rotate all three shifts, work weekends and holidays at the whim and will of the employer's representatives. That ain't going to go on any longer.

In some areas of the United States an RN gets $5,000 a year for working the second shift and $10,000 a year for working the third shift and that is on top of a healthy base. Our workforce is assigned forced overtime on a regular basis, regardless of their family responsibilities and their own physical status. This is no longer acceptable to the workers. It is my belief that they will not strike or disrupt the system. They are beyond that. I believe, and I have been in their midst now for five years, that if the grid is not successful, if our wage demands are not met, the workers below step 9 will just quietly go on to other areas.

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If I cannot help them take control of their profession and find justice and remuneration within their -- and it is their -- industry then I will help them attain their life's goals in any way I can. They are bright, committed, energetic and decent. They deserve a job, somewhere in the world, that rewards those qualities. Becoming an RN does not mean you are an indentured servant. These men and women can retool and retrain and enter any workforce they want to. A hospital sells nursing care like a bank sells money or Beckers sells milk. If you take everyone but RNs out of the hospital, including the administration, you still have a hospital. If you leave everybody else in and take the RNs out, you have a very expensive hotel with bad food.

The costs for technology are staggering. What good to the taxpayer-patient are any of these machines if the RNs that interpret the generated data are not there? The machine does not run down the hall and say "Hey doc, this patient over here is going to die if you don't get here." The machine clicks along ad infinitum. It is no good to anybody unless there is a nurse there to interpret it. Why is there almost unlimited funds for machines and no funds for workers in this industry? Lots of funds for administration, lots of funds for technology and machines, no funds for workers.

Historically, politicians have been misled by hospital administrators on the so-called nursing service budget, which was always allowed to be interpreted as RNs' salaries. With all due respect, I would suggest that it would be interesting to see this budget if the so-called hotel charges were carved out and the actual dollar figure of RNs' staff salaries in aggregate was examined. No government in North America has been willing to do that, to the best of my knowledge, and I have been fielding this stuff now for almost 20 years.

Our demands at the bargaining table are generated by our membership through a "Have-A-Say" questionnaire that went out to 55,000 people. They have always done it this way. We structure our bargaining objectives from the members' responses. Membership sits on internal committees at every step of the process, up to and including the hospital central negotiating team which comes to the table with the staff. I am putting this in so you do not think it is just me. They have been doing it this way for 18 years. It is them. It is my belief that the wage demand we have on now -- and I might add, nobody has asked me from the hospital side how this could be implemented, the wonderful way it could be implemented. I am well aware that the problem is 1 April 1991. I am well aware that the implementation, from the management and government standpoint, is. in many instances, more important than the amount. Nobody has asked me yet how I would do it.

It is my belief that our grid is the only way to retain seasoned workers currently in the system, and also draw back those seasoned workers who have left the industry. You would bring them back into the taxpaying workforce and you would end the current nursing shortage. Futuristically, it would also eventually attract young women and men into schools of nursing and guarantee a continued labour pool. You cannot add your continued labour pool.

It is 3.3% of the health care budget I am looking for.

Here is your first question. How is it fair -- these are the Ontario Hospital Association's numbers -- that 18,000 MDs get 32% of the provincial budget, which translates out to $4.8 billion. How is that fair? If I got every wildest dream imaginable, if I got everything I asked for the registered nurses, our wages would be $2 billion. How can anyone expect twice as many RNs to continue to work in the system if half as many MDs get twice the government funding? This means that for every 50 cents an RN gets, a doc gets 2 bucks. How can the doctors conti they cannot, and they are right.

What would happen to care for citizens, even if, as it appears, no concern is given to quality of care and safety of patients? It ain't the machine that watches you, and it ain't the doc. It is us.

I told the OHA last week that if it had treated us fairly over the past 18 years, if it had brought us along in the same way it had guaranteed its own salary progressions, instead of stiff-arming and demeaning and disdaining us, then there would be labour-management harmony today rather than an angry and frustrated workforce that totally distrusts the goodwill of the boss. They have themselves an industry at the brink of collapse.

I am coming down to my last couple of questions, which really are the most interesting questions: The OHA generates 19% of its income itself. It says so in their little paper. If they get $6.6 billion from the government and they generate $2 billion, that is $8.6 billion. If I say, and I do say, that the wildest dreams of the nurses could be realized for $2 billion -- you are already paying them $1.5 billion -- and if the statement I have heard is true, that there is another worker for every nurse, and those workers are not at our wage level, but let's say they are: put another $2 billion, $4 billion for wages, in an industry that has $8.6 billion at its disposal. Where is the beef? Where is the other $4.6 billion? That is a question that only the seated majority can find out.

While some of you in this room are businessmen, many of you in this room are trade unionists and you know what it is to look at a wage grid. You know every boss's single largest item on his deficit is the wages, as well it should be. Who does the work? The people do the work. Here is an industry with $8.6 billion, and in the wildest possible stretch of anybody's imagination, I will say, okay, $4 billion for wages; where is the other $4.6 billion?

Thank you for your attention.

Mr Phillips: Thank you for that presentation. I have a few questions, because I can see over the next two months the possibility of a fair bit of conflict. I think all of us want to avoid that.

By the way, I will declare a bit of a conflict: My brother is a nurse.

Ms Cole Slattery: If I had known that when you were the Minister of Labour, I would have made you let me in. You never let me in to talk to you.

Mr Phillips: I was open. There was never anybody who wanted to see me who could not see me, ever, ever, ever.

Ms Cole Slattery: Oh, do not say that. That is not totally true. You may not have been aware I wanted to see you, but I was not successful in getting in.

Mr Phillips: I saw groups all day long, all the time. The question is this: When the OHA was in, they said, if my numbers are correct -- first, the grants will be announced to hospitals in the next couple of weeks. I will give you a series of questions. I would like your comment on what that grant level should be, because I could see that is going to be a major determinant in your negotiations.

Ms Cole Slattery: Why are you throwing good money after bad? Why would you give them more money when you cannot find out what the hell they did with the money you gave them last year? As far as the grants are concerned, they want a 13% increase here. They were funded under your government, sir, with -- I forget what the percentage of cost of living or whatever it was. That did not roll.

Mr Phillips: It was 9%.

Ms Cole Slattery: And your government brought down pay equity. They were told to lay aside 1% of whatever. Three years later, we have seen zip. And you know what? I expect we are going to see zip. They have never been fiscally accountable for what they knew were going to be -- I tell you, I have a staff and they know they are not going to work next year for what they worked for this year.

Good lord, everybody knows that. Is anybody in this room going to? You probably will, because you do not want the public flak for raising your salaries. This is ridiculous. You give more and more and more money to do what? Go and find that $4.5 billion. Anyway, if they got another $10 billion in grants, we would not see it.

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Mr Phillips: I am just trying to get my question out. The grants will be announced in the next couple of weeks. The OHA, when it was in here, said that 75% of its expenditures went to nurses and other staff, unionized staff. I think they said that roughly 36% or 37% was for nurses and the remainder for their other unionized staff. They suggested to us that, because of arbitration, the pattern had been set with their other organized staff at around the 8% level, so that was the basis on which they were looking for their 13% grant. I am just saying that I can see coming in the next couple of weeks the grants to the hospitals, and if the grants are not what the hospitals need they will say: "Well, we cannot possibly provide what I think" --

Ms Cole Slattery: Good, and you will be saving a lot of money because you will be able to padlock half of them. If you think my workers, having gotten zip for almost 15 years, are going to settle for 8% -- that is not going to be.

Mr Phillips: I am trying to support you here, Glenna. I am with you. I think you are suggesting that the range of request will be 30% over two years. That is what I think you said in your opening remarks.

Ms Cole Slattery: Yes.

Mr Phillips: I just want to be sure, now that we are in the role of the loyal opposition, that when the grants come out I have some idea of how the nurses, the ONA, will respond to them, because that will be the pattern set for negotiations. That is my first question.

My second one is in terms of pay equity, because I can see that that will also be, "Well, you'll get your just reward under the Pay Equity Commission." I would like your response to that. Is that what you would accept as an answer, or really is it going to take place at the negotiating table?

Ms Cole Slattery: First, we are at the table. We are at the table with the OHA, we have a bargaining session next week, and we go into mediation conciliation the week after that, and then we are off.

My membership is going to call this shot: 8% ain't going to do it. Pay equity is over here, wage negotiations are over here, and it is so stated in the legislation. I will only do one thing at a time. I tried to do pay equity for three years and I got stiff-armed and stopped everywhere, including by the Attorney General of Ontario under your administration, sir, after I had won that debate at the tribunal and at the Divisional Court. The government that passed the bill came in and opposed it in the appellate court. So I have a bit of a problem with what I am ever going to get out of pay equity.

So that is over there. That is a philosophy that this union can afford to pursue. Our wage demands are practical realities that the government ignores at their peril. These women are smart. They like what they do.

Mr Phillips: Some men.

Ms Cole Slattery: Some men. Two per cent, two out of a hundred. God love them, and they must be braver than lions to be there. The fact of the matter is, unfortunately, for the majority, you are facing an angry white-collar professional group whose anger has been 18 years being born. This has been a long gestation, but it is born. I think it is totally justified.

We never got any money in boom times. Dr Martin Barkin told a group I was part of at one time that the interesting thing about the health care industry is that it is recession-proof, because legs do break and babies do get born and stomachs do get holes in them and have to be taken out. So it is business as usual for health care.

And another thing: We do not feel guilty. What the OHA does with the rest of its workers is the OHA's business and the unions that represent those workers. But I am getting sick and tired of having people try and make our workforce feel guilty if we get 29 cents more than somebody else has managed to negotiate. I am telling you, without us you ain't got an industry.

One of the things I am going to give you -- and we will bring over before your session is over this afternoon the president's remarks. I brought the 1990 wage grid. Actually, the proposed grid was at the bottom of it, but I thought, well, after next week I can share that with more people than the OHA.

There are two things of interest here to trade unionists in the room and to any elected official, because I am showing you with numbers. The centre line is the existing wage grid that is in place today and has been in place since 1 April 1990. It is that which disappears 1 April 1991. The line above it is the span. I start out at start, and I am 21 years old, and I work until I am 30 or 40 or 50 or, God forbid, 60 -- although I will be 60 next summer so that may not be so bad. The ninth step is it. That is it, that is as good as it gets no matter how old you are.

You will see at the top line the span between the grids, in other words, what coaxes the Carol Helmstadters with three or four degrees. This woman used to be a neurological nurse over at Wellesley. What coaxes this women who works in the operating room up in Parry Sound or that fine young woman, well, that nice lady from Thunder Bay, who is an ex-OR nurse? She has a baccalaureate and used to teach. At one point in time she serviced every bargaining unit north of the 401 for our union. She was on board long before the union was even a union. Would this bottom line keep us? We are all quite smart. I am sure you can see that.

What is interesting to you is the percentage of our members at each step of this grid. You are not going to be happy campers.

Mr Phillips: You have already won the point on the increase. The Premier has promised that.

Ms Cole Slattery: No. The Premier of Ontario has promised my union nothing. His government, as well as when he was in opposition, has made very firm commitments to women's equality, women's empowerment and women's wages. I expect he is an honourable man and I expect I am better off with him at this particular stage in the life of my union than anybody else in the world, but he has not shook my hand and said, "You've got it, Glenna." Because I am not negotiating with him. I am telling the representatives of the seated government that I think you are all being jerked around by the OHA. I have got no quarrel with the Premier -- yet.

Mr Phillips: We are trying to figure out where the money should go. You are saying the money is already there in the hospitals, just reallocate it.

Ms Cole Slattery: That is what I am saying. Find out where the $4.8 billion is if the $4 billion is wages.

Mr Phillips: I think we should get that number if we can. The OHA said three quarters of its budget went to nurses remuneration and the rest of the unionized staff. You are saying that if it is 50% you would be surprised.

Ms Cole Slattery: I developed these statistics at the high upper end, but I can tell you exactly how much the existing payroll for RNs is today as we sit and speak: $1,545,780,000. This is based on 41,000 workers. I have already told you that I only have 36,000, but I threw in the other 5,000 for the nurses who work in this province who are not in my union at the staff nurse level.

The Chair: I am going to interject at this point. I am going to give you about two minutes and we will have to wrap this up, because we have other presentations this morning.

Mr Sutherland: You have said that there is enough money in the system. I want to talk to you specifically about the area of management of the health care system. I want you to give comments about where you feel there are some specific areas where changes can be made in terms of the money, the $4.8 billion. You are asking where it goes, but obviously your membership knows where some of those savings can be made. I want you to focus that in terms of nurses' roles in the decision-making process and what progress has been there and what more progress do you feel needs to be made?

Ms Cole Slattery: First, I think they spend an unconscionable amount of money on consultants. There is hardly a hospital that belches without the consultants' approval. I would take a hard look at that. The technology has turned into competitive warfare: "My hospital is better than your hospital." Excuse me? You are four blocks away for God's sake, and you both have a machine that costs $1.5 billion and there are only three of us in the province who need it? I mean, something has to be done. That is the most poor planning. I have said it for years. You turn the industry over to the staff members because we give the place the care for half the price. Very top-heavy administration. Carpet on the administrator's floor, another parking lot -- they need another parking lot. You know, this goes on. There is money for everything but the nurses.

Now, the last part of your question was --

Mr Sutherland: About nurses' roles in the decision-making process.

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Ms Cole Slattery: You are talking about the right. Mrs Caplan, God love her heart, gave us rights so that we could get duly elected as staff nurses to every committee in the hospitals. Forget that. I do not think 15% have complied. In fact, a couple of weeks ago, or a month now, we had a nurse up in Peterborough who was duly elected and went to a committee escorted out by the director of nursing service at the request of the physician chairing the committee. What was really funny was the press was allowed to stay.

So we have real sexist problems in this industry, but if we were involved more -- I suspect you would find that Carol Helmstadter and myself and Mary Hodder and Eileen Davidson are not unique. You are looking at it. You have thousands of them like us. We are not unique. These people are the people who are doing the work.

At the public hospital steering committee a week ago, I had a real problem. They are opening the Public Hospitals Act and the steering committee is going to give recommendations to government. They are going to take all the power away from the doctors. Good. They are going to give it to the hospital administrators. Not so good.

You know, this is a sexist system that is built on a male, white hierarchy, which I am looking at right now, absent this fine gentlewoman. Excuse me Mr. Curling, I did not see you down there. But you know, years ago I said the only thing the women's movement did was put the black man in the white woman's place and put the white woman one step below, because white men are more comfortable with black men than they are with white women.

The fact of the matter is that we are 98% female. It is a labour-intensive industry. The entire industry is 80% female and it is one third of the public purse. You got a problem.

The Chair: I would like to thank you for your very animated presentation this morning. I would like to thank you for coming.

Ms Cole Slattery: My pleasure. Thank you for letting us come. I appreciate that. We do not always get invited to dances. It does not necessarily mean we do not come. but it is nicer to come with an invitation.

The Chair: Thank you for responding to it.

MUNICIPAL ELECTRIC ASSOCIATION

The Chair: Our next presentation is by the Municipal Electric Association: Frank Hueston, chairman; John Wiersma, president; Tony Jennings, chief executive officer. We are awake now. We are focused.

Mr Hueston: Mr Chairman, I would comment that we have copies of my introductory remarks for each member of the committee and what I have to say will not be exactly what is in the written word. In an effort to leave some time for questions and answers I have shortened up the written text to some extent. I suspect that you are quite familiar with the gentleman on my right, Mr. Wiersma, not only the president of the Municipal Electric Association but the general manager of Pickering Hydro; myself as the chairman of the Municipal Electric Association and chairman of the hydro electric commission of the town of Port Hope; the chair people from the association coming from the political or elected side; the president. the vice-president coming from professional staff.

Mr Chairman. I am pleased that we have the opportunity to speak before this committee. The Municipal Electric Association represents 315 municipal electric utilities in the province of Ontario. Ontario's community-based electric utilities are publicly owned and supply electricity to villages, towns and cities on a full cost-recovery but not-for-profit basis. Together, they serve 2.7 million customers, delivering 70% of the power, representing $5.6 billion used in the province, to some 75% of the customers.

Throughout this century, Ontario has gained from the commitment of the principles of public power at cost. No other public service is financially self-supporting. Ontario Hydro and the municipal electric utilities have a unique wholesale-retail relationship which provides the citizens with the highest level of reliability and service while introducing no tax burden.

The Municipal Electric Association provides the means for the member utilities to take joint action. Much of this effort is focused on joint development of standards and practices to better serve the customer or to respond to the legislative and other changes in the working environment.

The Municipal Electric Association also represents the common concerns of the members.

The Municipal Electric Association has five recommendations it wishes to make to the Legislature and the government of Ontario.

1. The goods and services tax: Despite representation to committees of both the House of Commons and the Senate, the federal government has insisted that electricity be the subject of the goods and services tax. Other countries have introduced value added taxes that have provided special treatment for electricity. Notwithstanding that some have felt that similar special treatment had to be extended to other home-heating fuels, electricity's importance was recognized.

In Canada, exemptions or zero rating has been extended to other services. Is publicly supplied water any more critical than electricity to life in the 1990s? Food consumed in the home is not taxed. Is it consistent to tax refrigeration, the means of preserving such food? Medical services are not taxed, so why is electricity to run a home dialysis machine any different?

The federal government provides tax rebates to other services and yet this public service, which is the only one that is self-financing, is expected to bear the tax burden. It is treated on the same footing as profit-oriented, privately delivered energy forms. Why is electricity singled out? Correspondence from the federal government would suggest that this is largely because the books are separate and thus taxation is easy, as opposed to other public services where funding is mixed in the general tax revenue.

The goods and services tax was to be offset by the removal of pre-existing federal sales taxes of up to 13%, yet Statistics Canada data suggest that federal sales tax content in public utilities is no more than 1% and therefore the net effect to the individual ratepayer is a 6% increase.

Except in adding unproductive work, the goods and services tax does not affect municipal utilities. They, like other businesses, must pass the cost along to the consumer. The ratepayer is the one who suffers.

Despite the general tax relief cited by the federal government, this approach strikes the rich and poor alike. How severe is this regressiveness? It is interesting to note that those who can afford to invest in energy-saving strategies can reduce the tax impact.

We should return to the principle of power at cost.

It is therefore recommended that the Legislature of Ontario and the government of Ontario in their dealings with the federal government should continue to oppose the taxation of electricity through the goods and services tax.

2. Ontario's retail sales tax: The new government has expressed its strong dissatisfaction with the goods and services tax strategy. In speaking about the increase in Ontario Hydro's rates for wholesale power, the Honourable Jenny Carter, our Minister of Energy, expressed specific concern over the impact of the GST on consumers of electricity.

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Precisely the same concerns that applied to the GST apply to any extension of the retail sales tax to electricity. The current economic situation gives the government of Ontario a challenge which will not be easy. The temptation to follow the lead and tax services may be difficult to resist.

Public electricity affects virtually every citizen and resident in the province, and it is therefore recommended that the provincial sales tax should not be extended to electricity.

3. Water rentals: Public power in Ontario was established in this province to secure for Ontarians the benefits of their indigenous sources of energy at the cost of supplying that energy. There were to be neither tax-based funding to assist in this regard nor profits or other extraneous charges. The basic principles of power at cost have been eroded by ever-increasing levels of water rentals. As ratepayers of this province, through our publicly held generating and transmission company, Ontario Hydro, we pay to briefly rent water moving through the generators and turbines. Our public, non-profit company pays rents to our government. Rent implies the landlord has associated costs. In this case, there are none. Is this power at cost?

The concept of taxation of an agency owned by the public for use of a publicly owned resource is fundamentally undefensible. The current government has called for increased attention to Ontario Hydro's proposals for new power generation. Such rents on the use of public waters affect the economic viability and competitiveness of water power.

The members of MEA have long sought to have water rentals eliminated, yet we recognize that this may not be the time to ask the government to forgo a long-standing source of income which its predecessors have enjoyed. It is therefore recommended that the level of water rentals charged to Ontario Hydro not be increased.

4. The debt guarantee charge on Ontario Hydro: The debt guarantee charge does not fall into the same category. Introduced in the 1989 budget, this charge does not represent even a temporary use of resources, nor does it recoup a cost incurred by the province on Ontario Hydro's behalf.

Ontario Hydro borrows with the approval of the government. The province normally guarantees Ontario Hydro's debt. This notional transaction has carried on for years. But suddenly in 1989, this service was to cost half a per cent of the outstanding debt. The introduction of the debt guarantee charge increased by over 2% the rate which Ontario citizens pay for electricity.

Is this a tax? It certainly does not reflect a provincial cost nor, given the assets of Ontario Hydro, does it reflect any actuarially sound prediction against the likelihood that the guarantee would be called into play. There is a notion that, without the guarantee, Ontario Hydro's cost of borrowing would go up by this amount. There is no evidence of such an increase. A half a per cent increase is highly unlikely, given Ontario Hydro's assets and its reputation in the market. The only valid test would be to let Ontario Hydro borrow without the guarantee. Let the marketplace put a value on the guarantee, if there is one. Particularly when the new government is expecting Ontario Hydro to undertake new expenses for critical energy management activities, the Legislature and the government should seize this opportunity. We should minimize such impacts on the province's electricity consumers and, at the same time, right a recent wrong.

It is therefore recommended that the debt guarantee charge on Ontario Hydro should be withdrawn.

5. The cost of public hearings: A growing cost of supplying electricity in Ontario is the cost of participation in public hearings on rate reviews or environmental matters under various Ontario statutes. In most municipalities in Ontario, a hydroelectric or public utility commission is elected by the voters to ensure that reliable, low-cost electricity is supplied to its community. Through the Municipal Electric Association, they take part in these hearings to ensure appropriate consideration of the concerns of the electrical consumers they represent.

Utility commissioners support due process and thorough review, yet they are rapidly coming to question the cost-effectiveness of some of the current processes. The Ontario Legislature and the Ontario government should also be concerned, particularly when the proponent appearing before the tribunal is itself from the public sector.

Ontario Hydro undergoes an annual rate review. Is this annual process necessary? Is the increasing amount of evidence and detail and the broadening scope of the Ontario Energy Board's interest appropriate?

After a year of preliminary steps, the environmental assessment hearing on Ontario Hydro's demand supply plan is about to commence, or at least it is likely to, some time in the spring. The hearing, by general consensus, will last at least two years. Some of our members look with great worry at the ongoing experience of the environmental assessment for timber management on crown lands in Ontario: conceived in 1986, initiated in 1987, under way in 1988 and now likely not to produce a report before 1992. In that case, the proponent is the Ministry of Natural Resources -- the government of Ontario itself. Millions of dollars are being spent on consultants and lawyers' fees, dollars that will come from the pockets of taxpayers and consumers.

The intervenor funding panel for the Environmental Assessment Board has recently released its report regarding Ontario Hydro's demand/supply hearing. Over $21 million worth of funding was awarded. Some cost awards may also follow. As the proponent, Ontario Hydro will have to bear these costs. They will be passed on through the cost of power to municipal utilities and ultimately to the consumer. Appropriate public input should improve the decisions. The question is, how much, and does the end justify the means?

This hearing is examining the need and rationale for certain projects which form the early parts of Ontario Hydro's demand/supply plan for the next 25 years. Subsequently, specific site hearings will be required.

The member utilities from the Municipal Electric Association do not want to skimp on any steps necessary to ensure an adequate, sustainable development strategy for Ontario's electrical supply. As locally elected men and women, they share with the members of the Legislature and the government concern for the environmentally and economically sound future of this great province. They do question the time and moneys involved in the current process. Do these expensive processes significantly improve the quality of the decisions that we are elected to make?

One thing is for sure: Decisions from this process will not be made quickly. One must remember that "no decision" is in fact a decision, possibly the worst one. Does it matter how quickly these decisions are made? That depends. It will depend on how long the current recession lasts, how quickly the economy will recover afterwards, how successful we are at economic energy conservation, how fast the population grows, how much our mix of businesses and energy uses change, how fast our current generating facilities deteriorate and, eventually, how long it takes to build appropriate, new -- environmentally and economically best -- generation.

Intervenor funding awards are spent largely for experts and lawyers. How much does this funding of competing lawyers and competing experts improve the result? Of equal importance, what does it do to the ability of the concerned individual to take part in the process? Surely, there must be a better way.

It is therefore recommended that the Legislature and the government of Ontario should monitor the cost-effectiveness of major public hearings more closely and should take steps to reduce the costs and time delays resulting from them.

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The issues that the Municipal Electric Association places before you are not new. While they may be politically different, and the current climate may raise financial problems, our recommendations are matters of principle. Ontario led the world in its strategy for delivering electricity. It was one of the few jurisdictions that recognized early the importance of reliability, public control and cost.

Ontario established the concepts of public power and power at cost. Please join the commissioners and staff of the municipal electric utilities throughout the province in supporting these valued principles.

Mrs Sullivan: I am quite interested in your brief. I have heard many of the points made by the MEA before. I think, as you know, that the Liberal government took stances on some of these areas. To some, the new government has yet to speak. The major speaking, really, into electricity so far has been done to the questions of nuclear from the new government, and I suppose we are all interested to see what it will have to say latterly.

On the first issue, I just want to suggest to you that you may or may not have noticed that the new government has been leading the revolt against the GST, we are told --

Mr Curling: Revolution.

Mrs Sullivan: A revolution.

Mr Stockwell: How is it going?

Mrs Sullivan: We have not heard how it is going, but we understand that it is doing it.

Interjection.

Mrs Sullivan: That is right.

The Chair: Move it along a little, please, so we can get to the question.

Mrs Sullivan: Well, you noticed there is a revolt, but that is only the first part of the question. I want to turn to the cost-effectiveness of public hearings and also, in doing that, talk about some of the other points you have made, including cost of water rentals and so on in which the environmental and social costs are factored into the discussions. These of course have been major parts of discussions in the past. Indeed, there is some view that environmental and social costs are not adequately factored into some of the pricings.

In terms of public hearings costs, I wonder if you are aware that in addition to the awards that have been made by the panel of $21 million for intervenor funding on the DSPS, Ontario Hydro itself has set aside $60 million for intervenor funding. In fact it is encouraging intervenors to come forward and is looking, for example, at some of the hydro projects in the north, waiting for decisions to come out of the Ministry of the Environment for those processes to go ahead so that the intervenors can be funded.

Mr Hueston: Well, $65 million was originally requested. The one-member panel recognized $21 million of that $65 million --

Mrs Sullivan: As part of the environmental assessment process.

Mr Hueston: Yes.

Mrs Sullivan: But within Ontario Hydro's budget for the EA process there is an additional $60 million which Hydro itself is making available for intervenors.

Mr Hueston: I should also point out that in addition to that $21 million, some intervenors, we being one, are putting up their own funds as well. We won intervenor funding, but it was on the basis that we cover a part of our costs with our own funding.

Mr Wiersma: There is a significant indirect cost involved on the part of Ontario Hydro for the commitment of its staff and so on, which is not funded in any way. That is perhaps what is being referred to in the $60 million of Ontario Hydro's cost, for its staff to participate in this process.

Mrs Sullivan: Hydro will be offering direct grants to groups as well. Certainly one of the things that the previous government had started to do and the new government is doing is reviewing the environmental assessment process to clean it up, make it faster, while still maintaining the integrity of that process. It is one of the things they have done that I concur with and speaks directly to your point.

The cost of intervenor funding is something that I think everyone in all parties sees as a very appropriate part of the public process leading to decisions. That is not really a question, but --

The Chair: A good throwaway.

Mrs Sullivan: I think every party thinks it is a valid and valuable part of the process in reaching decisions.

Mr Hueston: We are very concerned about the cost of power. I think most Ontarians think that power is cheap in Ontario. It is not getting to be cheap any more. I can give you an example that I picked up very recently. The average urban residential cost for power in Ontario is about seven cents a kilowatt-hour based on 1,000 kilowatt-hours per month per house. I recently was at a seminar and was told that the residential cost for power in Takoma Park, Washington is less than four cents. That is US money, but that is significantly less than Ontario. Of course, you get into the whole Tennessee Valley Authority in the United States and power is under five cents.

I think people up here tend to look at the New England Power Pool and New York City where power is 15 or 16 cents a kilowatt-hour and say Ontario is cheap. It is compared to that, but when we are competing for industry, you are not seeing industry going into New York City; you are seeing it going into Tennessee, Kentucky and places like that. Those are the places that Ontario has to compete with to get industry.

Mr Stockwell: Maybe mine is more of a comment as well. I think all parties would agree with the openness the public hearing brings. I think the length of time these processes take is absolutely insane. It is absolutely nuts, especially when it comes to the environmental assessment hearings for, let's talk about, the landfill sites. The last one took 11 years from start to finish.

Mrs Sullivan: My riding.

Mr Stockwell: There you go; 11 years. That is absolutely insane. Nobody can plan on an 11-year basis. I guess that is really what you are suggesting.

The question I am asking you is that the general consensus on your demand-supply plan suggests it is going to take two years. I think that is a laugh. It is going to take considerably more than two years, in my opinion.

Mr Jennings: If I may, it is at least two years. That is what everybody has decided to base budgets on because nobody knows how long it is going to take.

Mr Stockwell: They can base budgets on two years, but the fact of the matter is it is going to be more than two years and you are going to go over budget on all of them.

The Chair: If it is really quick, I will let Mr Sutherland have his question and then you can have yours, but we must move along.

Mr Sutherland: Mine was more a comment. I met with a local group last week. You talked about the long process and the costs in intervenor funding, and you talked about the other experts, but the reality of the situation is that many people out there in the public who are concerned about what is going on environmentally in these other things do not have the knowledge or background to totally comprehend everything that is being presented, particularly when they have a sense that it is only one-sided. I think the process is there to allow the public to have faith in the process, that both sides can be heard and that they can have a full comprehension of what is being proposed.

Mr Jennings: If I can respond to Mr Sutherland's comments from a personal standpoint which I think is shared by an awful lot of the elected commissioners in the Municipal Electric Association and the staff, it is only referred to in a very limited way in our brief but one of the issues is how those local people take part in a process that is focused largely on very expensive experts and very expensive lawyers.

I sit as an executive member of the Conservation Council of Ontario and I look at a number of our member organizations that are trying to appear there. Some of them have chosen not to ask for intervenor funding because they do not want to hire lawyers. They just want to come to make a case. But they are dealing in a very peculiar environment for that kind of input.

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Mr B. Ward: I have a follow-up, first of all, so I am clear that there was mention about the tax as well as everything else. Is your suggestion that we should be encouraged to continue our opposition to the GST, specific to the taxation of electricity through the GST? You are encouraging us to continue our opposition?

Mr Jennings: Yes.

Mr B. Ward: Could you speak to that?

Mr Jennings: Because the responsibility --

Mr B. Ward: My question, if I may, is following upon Mr Sutherland's comments on the public process. I think your concern is the cost of public process, the delays, the needed high-cost lawyers and experts who seem to get involved on both sides, and at times even government against government, so to speak. In your opinion, how did that system evolve from the concept of open and honest hearings where the general public is allowed to dialogue with the various departments? How did it evolve to get where we are today where it seems to be a necessity that a high-priced lawyer or a high-priced expert has to be there, otherwise things are not discussed? I was wondering if you could comment briefly on how we seemed to get in the mess we are in.

Mr Hueston: I got to thinking that it is kind of a competition. The previous people, the nurses, commented on the fact that you had to be bigger and better -- "My hospital's going to be better than yours" -- and I think we fell into the same sort of situation. I will let Mr Jennings comment.

Mr Jennings: Let me respond to that by saying that there is no way of knowing from the outside. I think there was an intent at goodwill in trying to make sure that everybody had an unfettered chance to have his say. You are dealing in this hearings just like the timber management one that was referred to, in fairly sophisticated technical areas, so you try to help the people by providing them with the funding to get experts. But inevitably, because it is a process that is removed from government, it is more -- allow me to express a personal opinion -- an American style checks and balances approach rather than the government accepting the responsibility for its decisions. I do not think it is any one government; that has been developing --

Mr B. Ward: Just a natural evolution, I guess.

Mr Jennings: -- over two dozen years that I have seen our society moving and wanting to have some kind of arm's-length, decision-making process removed from government. So you end up with a quasi-judicial type of approach. I think our members are seeing a lot of money spent and are wondering not that the issue should not be raised, but if there cannot be a better way that is less costly and less delay.

Mr B. Ward: Time to review the process.

Mr Hueston: I think the thing that concerns us -- if we look at the timber management situations, at least the trees continue to grow while this ongoing hearing carries forth, whereas what we are sitting on here in energy is that progress towards the development and design of new generation plants is at a standstill. That is a significant difference.

The Chair: On behalf of the committee I would like to thank you for your presentation this morning.

CANADIAN INSTITUTE OF PUBLIC REAL ESTATE COMPANIES

The Chair: Our next presentation is by the Canadian Institute of Public Real Estate Companies: executive director, Ronald Daniel, accompanied by Ross Cullingworth and Peter Goring. We are trying to keep a tight schedule today, so you have half an hour.

Mr Cullingworth: Thank you for giving us the opportunity to come before you. I am Ross Cullingworth, president of Coscan Development Corp and president of CIPREC. Ron Daniel is the executive director of CIPREC. Peter Goring is chief financial officer of Bramalea Ltd.

CIPREC is the Canadian Institute of Public Real Estate Companies, an organization that has approximately 40 members. They are the larger developers in the country, predominantly involved in commercial, retail and industrial activity. Some members -- it just so happens that we are probably the two -- Bramalea and Coscan, are also fairly involved in the residential side. As an organization we have significant property holdings. The companies in the association have significant holdings in Ontario.

For the period 1984 through to 1989, inclusive, our industry was one of the very significant contributors to the growth in the province, and our industry probably represented a very significant percentage of the new jobs that were being created, because construction activity was running into very high levels.

I would like to give you just a quick overview. We have submitted a short brief. I presume you have had that and I am trying not to concentrate on that at all, but to touch on a few other things and then give you the opportunity to ask us any questions you might have.

I would like to give you what we see as an overview of our industry, our business now. On the commercial, retail and industrial side, all are in a significant oversupply situation. With the current decline in jobs that we are experiencing and the difficulties that manufacturing is having, particularly the problems it is having on the export side, exports are being hurt by the high level of the Canadian dollar, but another very significant factor that is influencing the problems on export is the cost of doing business in Ontario.

There is no impetus with this decline of activity to stimulate any new construction. These sectors of the economy, we believe, will be a negative contributor to growth in 1991.

As projects are completed -- there are a number that are still going up -- there will be very little new ones started to pick up the employment. We can see the example of the recent capping occurring on the Bay-Adelaide Centre.

It is our view that jobs in Ontario will continue to be lost in 1991 in our industry.

On the residential side, it is also in an oversupply position. There are a significant number of units in inventory on the condominium side. On the low-rise side, there is not what you would call a lot of standing inventory. There is definitely some. However, the resale market has a very significant oversupply and so we think that the level of construction on the residential side will also be low and therefore have the same impact on the economy as the commercial, retail and industrial.

Over the past number of years the provinces have reduced financial support and transfers to municipalities. These actions have caused a surge of new taxes on business in general and real estate in particular.

A recent article in the Globe and Mail made the point that municipal real estate taxes in Canada increased by 7.8% a year during 1983-89. Between 1987 and 1989 property tax increases exceeded inflation by 73%. These increases are in the traditional real estate municipal assessment base and do not include some of the additional taxes that are now being extracted, the recent new taxes such as the Ontario commercial concentration tax, the development charges tax which is significantly increasing levies across the province, and the increased land transfer costs.

It should be understood that in office and retail space, the commercial leases provide for the landlord to pass new and/or increased taxes on as additional rent to tenants. Tenants, in turn, will assess the impact of their costs on their business and decide whether they can pass it on to their customers. The point there is just generally that it is not the organizations that pay the tax bill that bears the cost, but the end user. It is the consumer who ends up paying for these increases in taxes.

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There is a tremendous tendency for governments to like to look at the development industry, we have experienced it many times before, and say, "Let's tax that industry more." You are not going to tax the industry more to any great extent. It will get passed through to the consumer. It makes the cost of doing business that much higher and thus the increase is falling on the consumer and it is making it much more difficult for businesses to be able to operate, particularly with the impact of free trade.

In summary, we do not see really what sector will lead the economy out of the recession. Presumably it will be consumer spending. However, in our industry we still have sufficient inventory to absorb that. If the consumers do come back into the market a little stronger, even if housing starts to increase, this is not likely to translate itself into a lot of jobs.

It could be, therefore, a little more severe a recession than most people are predicting. We are having more people now suggesting that it might be a little longer recession. However, if we look at some of these things on a historical basis, we know that our industry has always been one that has helped, or tended to be one that helped to bring the economy out of a recession. We are saying this time we are not sure that that is factored into many of those forecasts correctly. The real estate industry is one of the larger employers in our economy and we respond to demand. We see very little demand for our products in 1991, particularly in light of the current oversupply.

Our recommendations to governments, and we do make these same points to the federal government -- in fact we obviously add a few more things because of its influence both on the cost of the dollar and interest rates -- but the government must deal with the structural problems that have been created in the economy.

The cost of doing business in Ontario is inordinately high from provincial deficits and, as I said, for that matter, deficits throughout the country, high interest rates, excessive taxation at all levels, artificial trade barriers within Canada, the cost of creating industrial facilities as compared to the cost across the border, all of which serve to inhibit productivity and job creation and obviate the benefits that we do expect to achieve over the long term with free trade.

The deficits: To deal with deficits, governments -- federal, provincial and municipal -- cannot increase taxation in this environment. In this environment, this will lead to a reduction in international competitiveness and probably a reduction of industrial activity and job creation. Fundamentally, our levels of taxation should be decreased to keep our industries competitive in the world market.

At the end of the day we in our industry have probably the same underlying objective that we think the government has, and that is a stable, productive economy and one that is probably providing a reasonable level of growth. Not an excessive level of growth, but something that is controlled and does not stimulate price increases.

The government must reduce spending in absolute terms and redirect spending to support economic activity, reduce spending in areas of business regulation and the bureaucracies involved, in duplication of services such as the collection of taxes. In social and cultural programs, make social programs more user-pay as a method of forcing the cost down and make social programs more targeted and less universal.

Those were just some of the general comments. If anyone has any questions at all, we would be more than happy to try to deal with them.

Mr Curling: We had a presentation yesterday from the Toronto Home Builders' Association and they are giving me the opposite message, or maybe I am hearing wrong. They are saying that we should stimulate the construction industry, that is what I am hearing from them; as a matter of fact, they are the ones who are building and you are selling. You are saying that the market itself is oversupplied, both the commercial and residential market now, so therefore there should be no more put on the market. Am I hearing you right?

Mr Cullingworth: That is correct. It is definitely oversupplied in commercial, retail and industrial. On the residential side it is oversupplied at the current market prices, but I would have to say that there is very little product. Because it cannot be produced at current land prices and current costs of production, there is very little product for the affordable level. Anything below $14 is very difficult to produce in Toronto.

Now, that does not apply in other communities. If you go outside of Toronto -- and I do not mean just outside of Toronto, because the Barries and the Oshawas are also influenced by the Toronto pricing -- if you go to Kitchener and London, you will find there is an oversupply of housing in most ranges and they do not have the same affordability issue. But quite definitely, there is a market and there is very little product because of the increases in pricing that have occurred in the last few years in affordable housing in the greater Toronto area.

Mr Curling: I would be presumptuous to even ask you to comment on their presentation, although you did not hear it, because you have worked very closely with them. The overinflated price of that product -- when I hear about available, I say it is overinflated, because the price of homes is going up so fast, and I am talking about residential, for instance -- that sometimes they could not even catch up with the price. What they have done is take some of the facilities, the accessories out of the house. You do not get lights, you do not get a fridge, you do not get a stove and all of a sudden the prices keep going up but you are getting less.

Now, the affordability can be addressed, would you not say? Basically, there is a price in there somewhere. I am talking about the builders and the real estate people who are saying, "A willing buyer and a willing seller," that kind of game; people were then confident of getting homes. Would you then say how far down you feel the prices will drop with this oversupply of unaffordable houses that will come down almost to affordable?

Mr Cullingworth: Peter and I might have different answers to that. Peter, do you want to try that?

Mr Goring: That is what democracy is all about. You can start.

Mr Cullingworth: The decline in prices, I believe, is probably much greater than reflected by the normal resale information that you see. We know in many cases builders have a tremendous tendency not to reduce their prices and that is why there is very little selling. They have a tremendous tendency not to reduce their prices for a number of very natural reasons. They might have a lot of people already in a community who have bought at a different price and they do not want to be the ones who significantly reduce the price to sell. However, there is no action occurring.

In the resale market there is some action occurring. We have seen many examples of prices today that sell for anywhere from 30% to 40% less than the price they sold for a year and a half or two years ago, and you have to go back close to two years to get to the peak.

On the land side, I have seen many examples of land prices, and I am talking now about the serviced lot. Because of the leverage involved, this would be a higher number than if you came to raw land. On the land side I have seen declines of similar amounts, 30% to 40%.

I think that is at the high end of the scale. As you come down the scale, so that your pricing is coming down into the lower price -- I am talking there about some of these single-family houses that were moving up into the $500,000 to $600,000 range -- there has been a very significant shift down in those and there is virtually no market for them. In the lower range, if you get down into the $200,000 product, we probably have seen something in the order of a 20% to 25% decline in values at this point in time.

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Mr Curling: You do not want to comment?

Mr Goring: No, I just concur with that. It is like trying to sell fridges at the North Pole. The era of consumer orgies is gone and nobody wants those big houses. You obviously have to bring them down a lot more, because people just do not want them. The houses that are more appropriate to today's taste, I think 20%, 25% is the right number.

Mr Cullingworth: But again, I think there is very little product at all in the GTA that falls in at a $140,000 price. If one converts that into the level of income a family must have to support buying, we have removed a very significant proportion of the people who did not have houses, we have removed them from the capability of coming into the housing market.

Mr Goring: And to some extent, the advent of those houses is going to be delayed because of the lags in the zoning process. If you have a piece of land that you were thinking of putting into 50- or 60-foot lots, and you woke up to where the market was and decided you had better start changing them in mid-process back to 28- and 32-foot lots to put more affordable housing on them, it is going to take 18 to 24 months to get that new product on the market. I think that is why we have seen a bit of a gap here. The product people want to buy cannot be delivered and will not be able to be delivered for another six to 12 months, except for stuff that just happened to be there.

Mr Phillips: Mr Curling asked part of my question. I think a lot of committee members, myself included, have been quite taken with the fact that the professional forecasters, the banks, the Conference Board of Canada, Informetrica -- I see today that the University of Toronto has completed a study -- all are predicting that we are only months away from coming out of the recession. Mid- to late 1991 I think is what virtually every forecaster has predicted for us.

You said today that you may see things slightly differently from your perspective. I wonder if I might ask on what you base that conclusion. I also think you may be closer than many of us are to measuring a kind of belief some people have that some industry is leaving Ontario. I wonder if you might just comment on the basis on which you have reached your conclusion that the recession may be a little bit longer than the professionals', not that you are not a professional forecaster -- the other forecasters'.

Mr Cullingworth: I am not a professional forecaster. I said it could be that it will be a little longer recession than a lot of the forecasters are predicting. It seems to me that very often the housing industry has been one of the industries that tended to be the leader of the economy out of a recession. The economy turns a little, house building moves up and that creates a lot of jobs. We are a very job-intensive industry. I think if what many of the forecasters are doing is looking at a lot of the historic numbers, then they might not be factoring in the full impact of what is going to happen in the housing industry.

However, having said that, I do know that most of the forecasters are forecasting lower housing starts in Ontario in 1991 than we had in 1990. So from that perspective, it should be in there. I guess we are in an industry right now, particularly cent red in Toronto, where there are an incredible number of negatives. So we might be a little more pessimistic than many people because we have both issues, declining business, declining activity, seeing that last for a period of time, and declining values wrung into the business at the same time. We do not have many up days when we go into the office and maybe that is influencing us.

Mr Phillips: I think that is the same thing we feel here. The forecasters, who seem to step back from it somehow or other and forecast the weather, say the storm is going to end and those of us who are in the middle of the storm cannot see the end of the clouds.

Mr Daniel: Maybe I could add that in our brief we indicated there may well be various sectors of the economy that will recover, but it is not in the cards for real estate to recover in 1991 and we do not see major recovery until 1993. There will be a continuing decline in Ontario of new investment in the commercial construction field through 1991 and again in 1992.

Mr Phillips: Where is that?

Mr Daniel: It is in our brief, but it is Data Com, which specializes in construction forecasts. That is the problem. In other recessions, as Ross Cullingworth has pointed out, the construction of commercial space and residential housing has led the various economies across the country out of the recession. We do not believe it is going to happen this time.

Mrs Sullivan: I am also interested in the predictions that you make, and particularly that oversupply at this time will mean that housing and other construction starts really will not be a trigger for reflation. I wonder if we are moving into a time when indeed there ought to be less emphasis placed on housing and other construction starts as a key economic indicator. So much of our gross domestic product in recent years has been based on a measure in terms of housing starts, and with demographic change I wonder if in fact we are not looking at a permanent restructuring in the real estate industry in all of the four sectors.

Mr Cullingworth: It has have been predicted, actually, for the last 10 years that demographics will reduce the activity in the industry and it has not occurred. One of the main reasons for it is that we are first of all a shifting population. The Toronto area is a very attractive area, has been an attractive area. We are concerned about its ongoing attractiveness to business and industry and we have a significant change in the level of immigration into the country, a high proportion of which moves into the Toronto area.

You go back five or six years and we were talking about immigration of 70,000 and 80,000 people a year. Now we are up to 200,000, moving to 250,000. If you factor that in, immigration is a direct demand for housing or accommodation. It does not matter whether it is rental or ownership, but it is housing. If you factor that in, I think you will find that as long as Ontario continues to grow and create jobs, it will attract those people into the community and the demand will probably stay very close to the 200,000 level for the next number of years in Canada.

Peter, did you want to touch on the --

Mr Goring: I want to make a comment on the industry. To me, there is one demographic change in here. As we went through a period of prosperity the average family size shrank dramatically, which increased the number of units. I do not know how many of your children are coming home.

Mrs Sullivan: They all are.

Mr Goring: We will see that change, I think, over the next four or five years, but I agree with Ross that it is the immigration that has been driving this market. I think we are having a serious problem with industry in this province. I do not know if that is news to anybody on this committee, because I think you are all aware of it.

As you know, our home base is Bramalea. About five years ago it looked like they were not going to get. I cannot even remember what it was, an American Motors plant, I think, originally. We actually said we would make the big sacrifice and, in quotation marks, "give away" some land in our industrial park so American Motors could build a plant.

But that will be okay because we are going to have all these suppliers who will want to be really close to the plant. We understand they are having this new just-in-time inventory and everyone will want to be on their doorstep so when they want a widget in five hours they can walk across the street with it.

When we went out and canvassed the industry we tried to bring those people here. This was as long as five years ago. We found (a) how far a truck could drive in 24 hours and (b) that even then the tax burden and the costs, as opposed to being somewhere in Kentucky. were just totally uncompetitive, even including driving time. Although we did not gain anything. we are now actually at the point where we are seeing plants move and those suppliers are going south of the border.

Also the other impact: Anyone who lives in the Niagara Peninsula feels the loss of shoppers and eventually jobs across the border. Hopefully. as the federal government moves to start collecting the GST, some of that will disappear, but for those of you who are in the Niagara Peninsula and other border points especially, I think it is a large problem which will affect seriously the retailing side of industry in Ontario.

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Mr Sterling: I have been concerned about the nonproductive part of the rise of costs of real estate in Ontario over the past five years. I guess I am concerned about our planning process and whether or not it is serving the function it was intended to serve. I think most politicians agree with the function, regardless of party. whatever, but it seems to have created a monopolistic system, which in my view has not led to extraordinary good planning overall. I am not sure the price our people have paid is worth the overall planning system. That might sound strange from somebody who drafted the Niagara Escarpment plan. but notwithstanding that. I am concerned about the overall impact of our planning system.

In a time of recession and when real estate properties have been devalued and prices are softer, I imagine the pressure on municipal governments for new development is much less. It probably is the best time to alter our planning system, because people have more time to think about what our overall goals are without the immediate pressures on us. Have you any comments on that end of it?

Mr Cullingworth: You would have no difficulty getting a few comments from us on the complication, the difficulty in the system. There are some things that the system does that people probably do not quite realize. It clearly provides everyone the opportunity to object and delay activity, but there are other side-effects.

The system is so complicated and so long, and the municipalities are put into the position of constraining themselves, only allowing a certain amount of land to be developed in a year. because of a number of elements.

It could be the fact that they knew they were only going to have two schools or were only going to process the land that accommodates two schools. They have all of their own departments to worry about. They have their engineering departments, their planning departments, their plumbing departments, their whole infrastructure, the garbage departments. They do not want to throw them all out of whack in terms of a normal process. They do not want to find that one year they processed 2,000 acres, to find out that the next year they really only are going to process 300 or 400 acres, because then they have all sorts of people on staff who they are not even in theory extracting, because they do take a lot of the costs for those out of levies.

What happens then is they have a tendency to have a relatively normal position in terms of what they process, but the market does not work that way. Whatever it is that they are moving through the system, it takes four to five years to move through the system. Automatically. if there is a spurt in demand. which we had starting in 1985, built much higher in 1986 and 1987, had a huge spurt in demand, maybe a lot of it motivated by speculation, that is definitely a possibility, but it pushed up the demand for land processing and it was not changed in terms of its pace.

There became an absolute scarcity of land currently available for building. In fact we all know that many builders were selling product on land that they did not even have approved. They were selling houses, saying, "We are going to deliver it in a year and a half out ahead of ourselves." That was really dealing with next year's land in any event. That put a force into the system that drove prices up.

I know there are a lot of people who would like to take a different position. but I am a very strong believer that the house-pricing increases in Toronto were motivated 100% by a scarcity of land being available for the market to deal with. Therefore the system does have its rigid and negative impacts on the buyer.

Mr Sterling: I would just like a short answer because we have to move on. Can you tell me if there have been any studies done by your group on comparing -- I think it is very important that we compare -- systems in New York or Michigan, because they are becoming more and more our competitors as we move towards a global economy in this matter. Have there been any studies done on comparison of delivering costs of developed and undeveloped land in both those. comparing their jurisdiction to our jurisdiction and their timing process to our timing process and their safeguards, etc.

Mr Cullingworth: We have not undertaken any specific studies of that nature. I am not sure whether there have been any.

CANADIAN FEDERATION OF LABOUR

The Chair: Our next presentation is by the Canadian Federation of Labour: Jim McCambly. president: Ron Begg, president of Working Ventures Canadian Fund: Reg Conrad, secretary-treasurer of the Ontario Provincial Council of Labour.

While we are waiting for them to set up. some of these questions have started to range over a wide variety of topics that do not seem to deal directly with pre-budgetary recommendations. We have a very tight timetable for today. We are sitting practically the entire day, and if we could restrict our questions solely to that area of expertise and one question per person very quickly, we will be able to get through today's agenda. But we do have a very full agenda with the Treasurer coming in the next 45 minutes or so.

Mr McCambly: It looks like we have pretty much got the mechanism in order, so I would try to make haste in order to utilize your time to the best advantage. I welcome the opportunity for the chance to make this presentation. I want to try to go through, relatively quickly, a presentation and open the opportunity for some questions and answers, but maybe with some presentation, I might discipline myself.

Ron Begg, on my left, is the president of Working Ventures Canadian Fund, and Reg Conrad. on my right, is the secretary-treasurer of the Canadian Federation of Labour's council for the province of Ontario.

The Working Ventures Canadian Fund is sponsored by the Canadian Federation of Labour, and I guess it is the first national venture capital fund sponsored by labour. It is national in scope for economies of scale, but it is committed to reinvestment in each province.

Working Ventures was established under federal legislation. It is up and running. We are selling shares. We are ready and seeking investment opportunities. We have a federal 20% tax credit for any investor up to $3,500 anywhere in Canada. We have a $ 15-million grant that is payable to the fund over a seven-year period. We are just at the end of the second year of that now and we have about five years to go. It is RRSP eligible, but I do not want to exaggerate that. What that essentially means is that some people who are now committing their RRSP money to guaranteed investment, if they have a pension fund, if they have a sound RRSP plan, may take part of that and put it into equity capital that does not currently exist.

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Of course, what we are here for today is to request your support to have Ontario consider participating with a matching tax credit. Just at a glance you can see here that the structure of the fund is very much like a mutual fund. We are looking to create the opportunity for thousands of individual people. particularly working class people, to participate in the fund. to pool their activity. energies and money to be managed professionally into promising growth businesses.

In order to emphasize that we are gearing this whole thing to average people, average Canadians, and not millionaires or corporate investors such as has previously been the case, our objectives are to make the economy grow, to have people working to make the economy grow, to create jobs and strengthen the economy by people participating in the risks and rewards, and really pride, I think, is also an important issue, the average person participating in his national and provincial economy.

A bit of an introduction of the management team that we have hired, and these people have been selected on a national scope from the best we could find in Canada: On my left is President Begg, who has lengthy experience as an entrepreneur and a manager of business and is a very energetic, dedicated leader of the fund.

Jim Hall, the VP of investment, has just been cleared by Ontario and every other securities commission in Canada to enable us as an investment advisor to be able to make investments in small and medium business. He has tremendous credentials, has managed up to $400 million of funds in his track record.

Peter Pressey, a chartered accountant, is VP of administration and a computer expert and a person who we hired from a very large Toronto business and are fortunate to have.

Julie Makepeace was a marketing manager for one of the chartered banks and is particularly familiar with things such as RRSPs and different instruments that were similar to our fund.

We have a board of directors which is worth mentioning; many you would recognize. In addition to President Begg, Geoff Styles is a recently retired vice-chairman of a national chattered bank. Pierre Lortie was with Bombardier Financial and was previously chairman of the Montreal Stock Exchange. George Fells is sometimes called the dean of venture capital. Wendy Dobson, of course of the University of Toronto and a local person most of you would know. Lloyd Barber is from the University of Regina. There are directors who are appointed from the unions, but it is only a majority of one. You can see that the power and influence of these people is very welcome and very important to the direction of our fund.

The operating principles are really important for you to understand. We want to operate this fund on sound management principles. We have identified that it is professionally managed. It is not managed by the unions; it is managed by the best professionals we can find. We operate with strict fiduciary responsibility to shareholders, and of course one of our main objectives is job creation. One of the ways we would look to do that is by going out and backing potentially successful enterprises, enterprises that have the potential for growth, have the potential for exports, have commitment to excellent quality in competitive Canadian products, both for the domestic market and for international markets, whether it be manufactured products or whether it be services.

The matter of productivity is something that is very important, I think, a contribution that we can make in trying to develop greater positive labour-management co-operation. The fund and others see us as a more patient long-term investor than other types of capital funds that are looking for private investments to go public very quickly, forcing them into difficult situations. We see it basically as a very big, giant step in the free enterprise system for labour getting involved and working with and helping businesses to succeed.

The diversification of the fund is important. It is across all provincial boundaries, although we will get into the individual investment in the province. It is across all industrial sectors. It is able to invest in any stage or type of investment, whether it be expansion of existing businesses, turnaround, startup, restructuring. Of course we want to help workers or businesses in employee share ownerships. Where that occurs, we can assist them, advising and getting involved in that way.

We are more interested in incremental tech instead of just high tech. Naturally that is a more risky type of investment. We are not so keen at the moment, at least, on getting into high risks. We are more prepared to take lower rewards and a little lower risk. looking for higher labour content. and certainly to be able to put value added to both the investees and the products that are created rather than exploiting resources.

The commitment to participating provinces is really crucial. We have circulated material to you that includes the prospectus. I have taken an excerpt from the material that was given to the Premier and ministers which reflects the commitment we give to any participating provinces. This is something you can cut your wrist and sign in blood if you need to. because it is our commitment to our membership. to everyone, that when a province gets involved, we want to see things happen in the province so that people can have a share in and participate in. It is not just the 80%. It could be 100% or 120%, because the province also has access to any other uncommitted money in the fund for investment in the province.

First, our prime objective is to invest in businesses, as we talked about before. and until such investments are available we would put them in government paper. It might be Ontario Hydro. It might be other types of paper that would be approved in the province of Ontario. The national office is in Ontario, right here in Toronto. We can give quarterly -- or monthly, if necessary -- detailed financial reporting to the province. We want to go with strategic sector advice that the government is interested in, and to try to tie to that also in terms of the areas. Ontario is a lot more than Toronto or Hamilton. We are also very interested in the Sudburys, Saute Ste Maries. Samias or whatever, and Renfrew or other parts of the province where potential investment exists.

The impact -- for your benefit very important -- is that for every 20 cents of provincial support, we will have $1 to invest in small and medium business. Carrying that forwards for every $2 million of provincial tax credit, we will have $10 million to invest.

If you extrapolate that, with a $10-million investment, here are just some examples. The material we have on this really comes from Working Ventures here in Toronto, which is the Canadian expert, if you like, on this type of investment. I just took a couple of examples. That kind of investment in three years, they estimate conservatively, would create or promote or support 1.500 jobs. By year five. it would be 2,000. Important for your as a finance committees is the recommendation or decision on behalf of the taxpayers and that is the return in revenue, and this is only taking personal revenue, not from a business or corporate return. By year threes the year should produce $1.6 million in tax revenue, and by year fives $3.1 million. So the compounding effect of the incentive is huge for the benefit of the province and the taxpayer base.

There are details in our submission on exports and research and developments which are all available to you if you wish. Again it is the matching credit and the involvement of the province that we are really looking for, and your supports your recommendation and considerations which I hope are some of the more important issues that you will be dealing with your committee. You get thousands of Ontario people involved in looking to the future and supporting the investment and a bright future in Ontario, I guess the indication is now there is no better time to have some equity money available to support some businesses, some of which are very desperate for equity capital at the moment.

To close, it essentially is a matter of government leadership that will enable us to promote what we see as a dynamic co-operation between business and labour to really make some things happen and help average people to make things happen so that they do not just have to wait for large investors to make decisions within the economy.

I would be happy to try to respond to any questions, Mr Chairman, that you and the committee might have, or the president of Working Ventures, or Mr Conrad. Thank you.

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Mr Hansen: Maybe I missed the slide, but if this is proposed and comes in, would the small business be applying to your outfit or would it be applying to the government and wind up working through your funds?

Mr McCambly: All applications for any sort of capital go through the machinery of the fund. Due diligence needs to be done. searching of whether they have the managements whether they have a markets whether they have a product. All that is done by President Begg and the vice president of investments Jim Hall. He is responsible for that. Only after they are satisfied that there is a potential for investment would they come back to a committee of the board or the board itself to says ` We are recommending investment in this enterprise." So it is run as an investment business in that respect.

If the province or the government has a desire to support certain industries or certain areas or something we would ask you to take a look in those areas to see what might be done that would coincide with the objectives of the government of the days but it would definitely be that the initial responsibility is with the directors, with the company, to make sure those investments are prudent.

Mr Phillips: I am intrigued by the idea. I will make a prediction that, in some form or others something like this will be considered in the very near term. My own judgement is Quebec kind of figured out a lot of stuff and this is one of theme that we are going to be looking at creative ways to foster new forms of partnerships. That will be kind of the jargon of the futures and what you are seeing in Algoma right now, in some form or another, will drive its I suspect.

The Chair: Are you going to patent the phrase?

Mr Phillips: What is that?

The Chair: "Fostering partnership."

Mr Phillips: That is a cliché already, and it will be a cornerstone of the future that is another jargon -- all of which leads me to say that this group has been working on this for some time. I think the OFL has had some difficulty with it, and I think it is split on it. I predict that in some form or another that will change, because if we want to look at the future, we will need some repartnership. So I guess I just say to the government that I would hope it would kind of look at this as a -- if it is not the perfect model, it is something very close to this, and as I said, the Algoma thing may drive at least the thinking around new partnership. President Begg, I think, was the entrepreneur of the year one year in Canada, developing a world product out of nothing, which sells now around the world. I think you do have a good staff on hand there that has kind of bowed the way a little bit.

I am repeating myself. I do not know whether this is the perfect model, but I would urge the new government to take a look at this and see if we cannot drive it forward in some form to help with that.

Mr Sterling: I just want to ask a couple of specific questions. Does the federal government presently give a grant for this kind of thing? If you got the provincial government to agree, you would be getting 41)%, or the investor would be getting 40%.

Mr McCambly: Yes.

Mr Sterling: Who gets the 40%, the investor?

Mr McCambly: The investor.

Mr Sterling: So he gets 40% kickback.

Mr McCambly: Yes, 40% tax credit. It is exactly the same as what is provided now for the solidarity fund in Quebec and it is exactly the same as the province of British Columbia is offering -- although it has no takers for what it is proposing in British Columbia, and it is no wonder, but I will not get into that -- and it is exactly the same as what we currently have in the province of Saskatchewan. I might say it is going great. I tell you, things are happening there and we are very pleased with the response. Mind you, they acted and created retroactive legislation.

Mr Sterling: We had in this province, brought in two governments ago, the small business development corporations, which I believe provided a 30% kickback for the shareholders. But there were limitations on the type of investment.

Mr McCambly: Yes.

Mr Sterling: How does this differ from that?

Mr McCambly: The big difference with this fund and most other types of proposals is that there is a limit to the amount of tax credit you can get. The maximum investment is $3,500 a year or less. But the average is more like $500 to $800. We are talking about average people here. Of all the people who invest in anything, only 17% or 18% invest in any kind of equity. So what we are starting from is, the first thing that anybody who is going to invest says, "What's the guarantee?" If you are going to invest in this kind of thing, there is not a guarantee. What we are talking about is getting people involved in making the economy work, having a piece of the action, seeing something happen.

I used to rent a cottage and then I bought it. When I rented it, I only cut the grass. Now I never quit working. I work on it continually. I sympathize and I am not in any way critical of some unions which have the notion that this is a bit of a conflict of interest. We have soul-searched on this. We do not think so. We think it is time for labour to move in a new direction, to be a new player in the economy, not to control the economy, but to really help to make things happen.

Mr Sterling: Could I ask a few more questions on specific details? I am always interested in having people invest. This would be open to anybody in the public?

Mr McCambly: Everybody.

Mr Sterling: Everybody in the public?

Mr McCambly: Yes.

Mr Sterling: What would control the administration costs of the plan? I am always concerned. I think that with SBDCs we had a number of people who set the SBDCs up, but basically the 30% became an administration cost, which was extremely high for what they were really doing. What guarantees are there to the government that you are really not creating -- excuse me for being a bit probing, but I would be concerned if that 40% all went down to pay highly paid executives' salaries.

Mr McCambly: I can tell you, we are just as concerned as you are. I will let President Begg respond to that because he is the person who has to answer to the board of directors to keep those costs in line on behalf of the shareholders.

Mr Begg: I think the model that Working Ventures is pursuing is that we are very much like an equity mutual fund and the cost of administering that fund will be similar. Unlike the SBDC, which involved a relatively small number of relatively high-network individuals with larger investments, this is directed like an equity mutual fund to a rather large number of discrete investors, particularly average wage earners.

We have gone to market, unlike the SBDCs, under the full prospectus route. We have received our final receipt on our prospectus from the Ontario Securities Commission and securities commissions across the country, and one of the elements discussed in the prospectus, of course, is the administration costs of the fund. In the prospectus, there is the commitment that administration expenses will not exceed 5% of the fund. As a practical matter, our operating expenses are substantially lower than that to date and forecast for the next year. One of the reasons, of course, that this is possible during the startup phase is that we are enjoying the federal grant which underwrites the startup costs, so the individual average wage earner who is investing in the fund is not going to see heavy administration expenses.

1210

Mr Sterling: One last question. Would investment be based on the fact that it was a union-run shop?

Mr McCambly: No. I think that deserves an answer from me because it is a question that is always asked and is a good question. We are not limiting or directing this to unionized firms. We are sure going to look at requests from unionized firms and we do not want to invest in firms that are anti-union or that are not interested in good relationships. We are talking about starting up businesses and so on that have never heard of a union and a lot of times that is not necessarily unionized.

The Chair: I am going to interject here at this point. We have the Treasurer coming in approximately 20 minutes, during which time we have to have lunch. Now I have three more people who would like to ask questions.

Mr Stockwell: I am fine, I will not ask a question.

Mr Hansen: I have a question. If we are talking Algoma, that is $800 million. That is the top, but we are getting down to, what level would you be investing in a business?

Mr McCambly: A quick answer.

Mr Hansen: If a person needed $10,000 to get a business going, or $50,000, or $100,000, as we know here in Canada now that at least 95% of the people are employed in small business, is this the area that you are looking at, small business, or are you looking at large business?

Mr McCambly: We have sort of indicated, at least for the start, although we have not started that investment mode, but about $100,000 initial would be about -- you would not go lower than that, for sure. But our limits are set under the regulations that we established federally and those are, 500 employees or less, $10 million net or less, $35 million gross or less, so that gives us a pretty large size.

Let me tell you that one of the business directors said: "One of the first things we've got to do is raise that limit. We've got to be able to back bigger enterprises." That is now the rule. I just tell you that.

Mr Hansen: Okay, good.

Mr Curling: I am going to make a comment more than a question. I know that you are trying to attract ordinary people to invest in their own province and all that and I am going to just make a comment. Maybe at the first blush I would see the aspect of employment equity. I would like to see some visible minorities and see a woman. At a glance at your board I saw one Wendy there. That is some effort to be made because people, when they invest, want to feel a part of it, that they see people reflecting the kind of society that they are in. That is just a comment. Maybe you have attended to that, but I think it is a very serious matter that should be addressed.

Mr Begg: To comment on that, I spend half my life these days dealing with the investment community and the other half out dealing in the union halls with, you know, average wage earners. The kind of dialogue that this is stimulating and the kind of participation that we are getting by people right across the country is really exciting.

The investment community is coming to understand that unions are interested in increasing productivity and building stronger businesses and working people out in the union halls are taking a look at the effects of investment in productive businesses and the need to participate in this to increase their stake in the free enterprise system. It is a very exciting thing, quite apart from the merits of the project in terms of employment creation and building strong companies.

Mr Stockwell: Sounds real exciting. I am looking for some cheap money.

Mr Begg: Thank you. Here is my card.

Mr McCambly: I will just try to wrap it, to say thank you. There are a number of other provinces that are now looking actively at something similar to what you are and similar to what Saskatchewan is doing. Of course, I live in Ontario, but Ontario is a leader and I think your government has an opportunity to do something here that is really going to have a major, lasting effect. We are talking about Canadians who are not going to leave Canada. The money is not leaving Canada; the money is not leaving this province. We would really encourage and request your support in this endeavour that we think is big for the future.

The Chair: Thank you for your presentation.

At this point I would ask the clerk to bring in our lunch. I will recess the meeting until the minister gets here. He will be about 10 minutes late, so it will be about 12:40.

The committee recessed at 1214.

AFTERNOON SITTING

The committee resumed at 1234.

TREASURER OF ONTARIO

The Chair: I would like to reconvene the hearings for this afternoon. We have before us again the Treasurer of Ontario, the Honourable Floyd Laughren. I would like to turn it over to the Treasurer.

Hon Mr Laughren: Thank you, Mr Chairman and members of the committee. I am pleased to be here, I think, so far. As you know, Ontario Finances came out yesterday and I do not think there were too many surprises for people who are observers of the fiscal scene in Ontario. As the Finances will show -- and I think all members have copies of it -- we still think we are going to be able, despite slipping revenues and increasing expenditures, to maintain our deficit level at about $2.5 billion for this fiscal year.

It is not magic; it is a case of having some revenues that we did not really think we were going to get because of the settlement of Ontario taxes collected by the federal government basically for 1989 that are now coming in. We are substantially higher, almost $1 billion higher, than we thought, so that has allowed us to stay within the deficit number of $2.5 billion. We are pleased that the numbers have shaken down that way.

At the same time, we are not kidding ourselves that we had much to do with that. But at the same time we are concerned about the year coming up, about what level revenues will be at. Of course that is not, I do not think, the discussion for today, so I really should not get into it, I suppose. But in terms of the third-quarter finances, you can see the numbers that are quite clearly outlined. In revenues, the big numbers that have affected us are, the retail sales tax came down $672 million from the budget plan back in the spring; the corporation tax being down $775 million; gasoline tax $102 million, and land transfer tax $240 million. Compensating for that was the increased personal income tax. which I talked about, which is up $937 million. That still means that our revenues are down $883 million from what was budgeted in the budget plan.

On expenditures, you can see it is not complicated there either: the Ministry of Community and Social Services up $554 million. That is quite simply the dramatic increase in welfare case loads. The other is the Ministry of Health, the open-ended programs in Health such as access to the health care system and the Ontario drug benefit plan being up $136 million. The contingency fund was $389 million, which was used to transfer to various ministries, and then of course the UTDC guarantee, $400 million. When you take into consideration all of those changes, you end up with the $2.5-billion deficit for 1990-91.

We are now in, of course, the final quarter, January, February and March, and we are expecting the recession to continue this quarter. Most people still seem to think that the recession will turn around in the latter part of calendar 1991 but that when we come out of the recession it will not be a big rebound, it will be a flatter rebound than it was in 1982-83. So that it is going to be perhaps at a plateau that will not be as high as the plateau from which we found ourselves after 1982-83. We are somewhat concerned about that, but at the same time we are doing what we can.

I think that, looking back a couple of months, I am really pleased now that we went ahead with the capital works project, the $700-million program, because I think at least it was some kind of response to the recession and I think it was the right kind of response. It did not build in expensive programs that have annualized costs for many years. It was a case of doing some rebuilding of our infrastructure that needed to be done anyway. At some point those dollars would have to be spent and it is probably cheaper to do them now than later, also, of course, the creation of about 14,000 person-year jobs. It will be more than 14,000, because a lot of the jobs will not last a year.

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There was a story in the press this morning, along with a great picture, which indicated that the capital works program was tied up in red tape. I have never complained about media coverage, because I have been blessed that way, but it really was not a proper reflection of what I was at least trying to say. What I was trying to say was that when we announced the $700-million program we said that, of the $700 million, we were going to put it in place as quickly as we could because we were into the recession already but that it takes time to consult with our partners out there at the local level, whether it is municipalities or school boards or even line ministries across the province and that as soon as we could get the jobs going, they would be going and they would be paid for.

Once you even assign a job, and you have heard of some of them already being announced, as soon as that is announced, then you have to go through the process of getting people on the job and then there is the process of paying for them and so forth, so there is always a lag when you are launching a program like this. To my knowledge, it is not bogged down in any kind of red tape. It is just a normal process of getting jobs started, and then as the bills come in, you pay them. I think it is not a case that it is bogged down. There is absolutely no attempt to slow down the process of those jobs. We want them out there as quickly as we can and we want most of the jobs to be completed by the end of 1991, because we believe we are coming out of the recession and that this was supposed to be a capital works project that would help us cope with the recession basically in 1991. So far, I think we are doing all right with it.

We have invited the federal government to come on board and participate, but so far it has refused to do it. We had a meeting this Monday past with the other finance ministers across Canada and with Mr Wilson. Mr Wilson still is preoccupied with high interest rates and inflation. I tried to impress upon him the fact that in December, the last month I saw the figures, Ontario had a consumer price increase of 4.4%. I hardly think that is worthy of a singleminded monetary policy based on anti-inflation and that it is time, since he is in a war mood anyway, to swivel his guns on the problem of the recession and away from inflation. But he is determined to continue to keep interest rates up there at what I think is an unreasonably high level and talk about the problems with inflation in the economy rather than the problems of the recession. That is not helping us in our struggle in Ontario, but I do not know what else we can do to convince Mr Wilson that we have a problem. It is moving into the other provinces as well, although Ontario's numbers are more serious than those of the other provinces.

I know you did not come to hear me speak for an hour, Mr Chair. If I could leave with those few introductory remarks, I have to leave at 1:30, but I would be pleased to try to answer any questions you have, and there are people here from Treasury who will help me.

Mr Phillips: I appreciate the Treasurer's being here and I would not mind at some stage just if we could look at next year too, but maybe it is impossible. I guess two or three things. One is, I am quite curious about the $ I-billion windfall. You may recall a little exchange you and I had in the House where you said I was too partisan by suggesting that there may be something coming.

Hon Mr Laughren: I do not remember that.

Mr Phillips: It is what it says here. I said, "I will say that a little side bet might be the previous Treasurer's estimate of revenue for the fiscal year may be closer than the current Treasurer's." You said, "Oh, you're so partisan."

Hon Mr Laughren: Okay. Now I remember.

Mr Phillips: It does have some impact in terms of thinking ahead, because I know that when you made your statement in early October about the deficit, at the same time I think the federal government was recording, I think, about a 24% increase in personal income tax revenues. I am curious about when we, the provincial government, would have found out about the coming windfall, because I gather we had a similar windfall the previous year.

Hon Mr Laughren: Surprisingly similar numbers too, I believe.

Mr Phillips: It just seems unusual that the federal government was reporting this for the period April to September, and the lines of communication were not, I gather, as swift as they might be, and that is the base on which I was saying to you in the House that I thought the revenues were going to be higher.

Another part of the question is, we now have the third quarter in and I would not mind some feeling from you about the fourth quarter. Are we likely to see these numbers stay the same? I am thinking about revenue and expenses. I know how tough that is, but if revenues come in higher, would we expect therefore the deficit to be lower or the spending to go up to keep to the $2.5 billion?

The last one is, I know that you were remarking that the Treasurer last year used the windfall to prepay some expenses. The good thing about next year is that we will have $600 million or $700 million worth of expenses -- UTDC and whatever you put in for SkyDome. I know you do not want to say what it is, but whatever is in there are kind of one-time expenses this year that we will not incur next year.

Again, if you are looking to this committee to give you some advice on the budget, I just want to make sure of all those things. One is when we found out about the billion-dollar windfall; as I say, when the feds were reporting it earlier. The second one is, I guess the answer is this is your best cut of what we will get for the fourth quarter, but last year it seemed to me it was another little bit of windfall that came even later than this point in time. The last one is just, have we prepaid -- you do not have to give the exact number -- somewhere around $500 or $600 million of expenses in this year's budget that will be of a non-recurring nature?

Hon Mr Laughren: You mentioned the UTDC. That is the only one I am aware of.

Mr Phillips: The SkyDome -- I am sorry. I know you do not want to give that number, but in your previous one you said you provided in the contingency plan.

Hon Mr Laughren: That is correct. That has not been paid yet.

Mr Phillips: But there is money somewhere.

Hon Mr Laughren: It is built in there. The second point I would caution you on is when it comes to preflows. The preflows that come into this fiscal year, 1991, gave what I would call -- this probably is not a technically correct way of saying it, but almost a false $1-billion revenue base, which means that next year we are starting off $1 billion less in natural revenue base than we would otherwise, because 1991 was inflated by $1 billion. I do not say this in a critical way, just that putting that $1 billion into 1991 meant that there was a higher base in 1991, so in 1991-92, we do not have that billion, almost a billion, that was there from the preflow in personal income tax revenues from the federal government. This year, if we had kept this billion dollars -- $922 million, is it?

Mr Phillips: Thirty-seven.

Hon Mr Laughren: If we had kept the $937 million and did not build it into this year's numbers, I suppose you could argue we could have a deficit of $3.5 million and preflow it into next year, but I do not think that makes much sense. Not only that, the auditor already is a little bit testy with Treasury for doing it last year, so I would keep that in mind when you are thinking of the base of revenue this year compared to the base of revenue next year.

Mr Phillips: I was wondering when we found out about the billion dollars.

Hon Mr Laughren: Yes, I was going to get to that. I am going to ask Tony Salerno to help me with that because I quite honestly do not know. You had better take a seat so that the mike will pick you up. This is Tony Salerno.

Mr Salerno: The federal government started giving us indication that the transfers to the province would be revised in November, as an early indication. The revision is a composition of prior-year assessments and revision of this current year's collections.

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Hon Mr Laughren: I think you ended too abruptly for Gerry to cope with.

The Chair: That is the shortest answer we have received in this committee hearing in two weeks.

Mr Phillips: In terms of the final quarter, I am just trying to -- because I think last year there was kind of a series of windfalls. Are the windfalls over now?

Mr Salerno: What we have done in our estimation that you see in the third-quarter Ontario Finances is try to anticipate any further revisions. We will not know the actual number to the dollar until March, frankly. What we have done is try to anticipate what that final number will be, and we feel that is the best number. We do not anticipate any significant change from that number that we are reporting in the third quarter.

Hon Mr Laughren: Or in expenditures, to answer your question. But even if there was a windfall in the fourth quarter --

The Chair: Would you just speak a little closer to the microphone? We want to record all of this.

Hon Mr Laughren: Sorry. Even if there was an increase in some kind of windfall in the fourth quarter, we would not be looking for ways to spend that.

Mr Phillips: Okay, good. On the other one, I know you do not want to give the SkyDome number because that is a matter of negotiations, but there is $400 million.

Hon Mr Laughren: There are also negotiations going on with the doctors as well, so if we started putting down individual numbers --

Mr Phillips: But those would be ongoing expenses.

Hon Mr Laughren: No, no. I am talking about negotiations with the doctors who have not settled. The province has not settled with them since 1988,1 believe.

Mr Phillips: But the $400 million is a one-time expense that will not be incurred next year. The SkyDome would be a one-time expense that will not be incurred. I am just looking for offsetting ones. I know you are concerned about the prepayment the previous Treasurer had for the three areas. I am just looking for other prepayments that you will not incur next year, one-time expenses, this 400 and whatever is in there for SkyDome.

Mr Salerno: There is a certain amount as well for the settlement of doctors that is in fact retroactive to 1989.

Hon Mr Laughren: Then it becomes annual.

Mr Phillips: That is my point. I am just looking for things that will not be incurred next year, you can just take them right out of the budget.

Hon Mr Laughren: Okay, but if there is a retroactive aspect to it, that part is what --

Mr Phillips: I understand that; you would have to fund that. But it is $400 million plus SkyDome, the nonrecurring expenses.

Hon Mr Laughren: You persist in saying that, but you are not quite right. It is $400 million for UTDC, plus the SkyDome, plus part of the doctors' settlement, assuming we arrive at a settlement. The retroactive aspect of it which is not an annualized cost is a one-time shot.

Mr Phillips: I understand, but I am just --

Hon Mr Laughren: Okay, I think you understand.

Mrs Sullivan: My questions follow through from the third-quarter financial report leading into budget planning for the next year. It seems to me that as you are starting budget planning for the next year, you can really start, as the Treasurer, with a clean slate with all sorts of options. They may be a balanced budget, they may be a deficit, they may be revenue moves, they may be expenditure moves.

Many of the changes that you have already made, particularly on the expenditure side, will affect the 1991 budget. As you look at, with no revenue moves, about $120 million a day coming in in revenue and an operating surplus that you talk about in the third-quarter report of $669 million, you do have room to move this fiscal year and you have done so and some of the moves that you have made will in fact carry over to next year. I am thinking of things like $500 million, no retail sales tax on top of the GST; capital projects, $665 million left for next year, social assistance rate changes, $365 million for next year; nurses -- who knows? -- but there has clearly been a promise made; this morning an announcement of $52 million on child care. So you have some room to move and in fact you have already made some decisions affecting the budget next year.

One of the things that you have not done which has affected the municipalities is to announce the transfers and get your reflation fund, if you like, the $700-million fund, of which $34 million is coming out of this fiscal year and depends on municipal participation. I wonder where the municipalities' share will come from and when those transfer payments will be made.

The other thing I am wondering about in terms of reflation is, why has the water and sewage corporation not been taken up and acted upon. That agency was deliberately structured so that it could lever additional capital into the economy to deal with necessary environmental projects.

School capital has been placed over a period of three or four years in terms of announcement. Some of those could perhaps have come on stream earlier.

On the revenue side, we have talked about some of the expenses you have newly brought in to the 1991 budget. I wonder, as you are planning that budget, if there are revenue moves that you are deliberately leaving out of your calculation, including additional new payroll taxes.

Hon Mr Laughren: Perhaps I could start at the top of your list. I think your first basic question had to do with transfer payments. Correct me if I miss one here.

Transfer payments: We have been doing some fine-tuning, partly because of the numbers changing and so forth, on transfer payments and we are basically ready to go now. We are trying to get it ready for the next -- I keep saying dates and having to backtrack from them, but certainly within two weeks we hope to have the transfer payments. I thought they would be out before now, quite frankly. I was a little disappointed in that.

Mrs Sullivan: Are you holding back because of the date of the federal budget?

Hon Mr Laughren: No, absolutely not. Mr Wilson did not give us a date for the federal budget the other day when we met, but I got the impression he is not going to delay it very long. The last date I saw flown around, not a specific date, was some time in February. I would not hold him to a particular week or anything like that.

My impression was he still hoped to do it around the end of February, but he did not give a date. He did not make that commitment, I hasten to add. It is more a case of making sure we had all the right numbers and consulted with the various ministers who were involved with the transfer agencies. We are quite anxious to get that out as quickly as we can.

On the water and sewage corporation, I think there has already been an announcement on the assignment of a deputy minister to help provide some muscle to that, Mr Pitura. It should be an indication that we are not trying to stall on that. We are taking that quite seriously, but there is still some review of what that whole role should be.

On the revenue side, I was not very clear. I did not understand your question about payroll taxes. Was there some reason why you selected payroll taxes for the question, or were you just using that as an example?

Mrs Sullivan: I think that at a time of deflation in the economy, a recession, it is in the interest of the business community to know whether it ought to be anticipating new payroll taxes in the next budget.

Hon Mr Laughren: I see. I think you know the budgetary process around this place as well as I do. I will be very honest with you, though. I am not trying to be vague or to obfuscate. There has been no decision on tax moves at this point. The consultations with the interest groups all across the province have really just started -- that is where I just came from now as a matter of fact -- with this committee. I am quite serious about looking forward to hearing from the committee because you are hearing from lots of groups and we are too.

It is a new experience, but it really is quite edifying.

Mrs Sullivan: But would you rule out payroll taxes?

Hon Mr Laughren: I would not rule out anything. I do not think it would be fair to start going through a checklist and ruling out certain ones, but I hope you appreciate the fact that that means it would not automatically rule them in either.

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Mrs Sullivan: The other question was, where will the municipal share on the reflation projects come from?

Hon Mr Laughren: A project is one in which the municipality normally has a share. They would continue to have that share and would be up to them whether or not they picked up that particular project and went along with it. If they decided no because they did not want to assign their resources to that particular project, that is fine. But that would be the normal process of sharing.

That is why we said when we made the announcement that it was $700 million of provincial money and that if all of the projects that we thought were out there would be accepted by the municipalities and school boards, because they were their projects, the total input into the economy would be about $1 billion if they pick up the local share, add the local share into the provincial share.

So there was that built-in assumption right from the beginning. But I think you would have to commend us for not saying that it was $1 billion of money. It was really $700 million of a provincial commitment that only becomes $1 billion if the local government picks up its share, the municipalities and school boards.

Mrs Sullivan: But you have cut back already in your estimate of what you would be flowing this fiscal year.

Hon Mr Laughren: Wait a minute now. It was not cut back. I think we started out with around $40 million, $41 million or something and it is back to $34 million.

Mrs Sullivan: Yes, $41 million to $34 million.

Hon Mr Laughren: But that is not because we cut it back. As those projects can be taken up and approved -- I mean a lot more than that have gone through the operations committee that is dealing with this. It is just a case of that is how much we think will actually be able to be spent in 1991, before the end of March, not because we are cutting back on it at all. We would spend $50 million, $60 million, $70 million. The ceiling is there of $700 million and so there is no attempt whatsoever to reduce that number in this fiscal year -- none. It does not make any difference to us whether $30 million, $40 million or $50 million go this year versus 1991-92.

Mrs Sullivan: That will make a difference to your 1991 fiscal year. We are talking $700 million in static and you have dropped already from $41 million to $34 million, and possibly by year-end, if you cannot churn these projects in, it could be $25 million.

Hon Mr Laughren: I suppose.

Mrs Sullivan: The impact on the next fiscal year is also going to be significant.

Hon Mr Laughren: But on a $45-billion or whatever billion-dollar budget, it is not going to alter our fiscal position very much in 1991-92.

Mrs Sullivan: But it may alter the impact of the reflationary funding, the impact of the projects themselves in terms of economic turnaround, given that all of the economists, including from Treasury, are suggesting that the need for the reflationary impact is before the third quarter of the next fiscal year.

Hon Mr Laughren: That is a good point. That is why we are doing what we can to push them out there. The faster they get out there, the happier we are.

Mr Stockwell: I am concentrating on three specific areas today.

First, preliminary revenue projections for next fiscal year: I am certain you have some. Last year, the then Liberal government provided those preliminary revenue projections to this committee. We cannot seem to get them. How come? If so, when will you give them to us?

Second, on the deficit, you have suggested a couple of times that your next fiscal year's deficit is going to be higher. You have said numbers do not fuss you; they do not I think "scare" was the word you used. You have taken a long hard look at that, I assume, and you know it is going to be higher and you have accepted the fact it is going to be higher. Have you looked at the other side of the equation, maybe wage and price freezes, some hold-the-line areas in the government where you could generate some revenue to offset some of the tax increases or increasing the deficit?

Third, when your Fair Tax Commission was announced, it was going to come back to you with some real important recommendations, preliminary recommendations in fact. It was not going to be a long-term, ongoing, for-ever-and-a-day commission. It was going to come back and give some serious recommendations reasonably quickly. Well, in a very short period of time, it appears to have taken on a life of its own. Originally, it was 12 months. Now we are talking 36 months as to when you will get a recommendation back.

Is the Fair Tax Commission your first plank for re-election come 1995? It does not seem to me, if you are going to get this report back in three or four years, you are going to have any opportunity to implement any of these concepts and ideas, and An Agenda for People will be put on hold because every time anyone asks you about that, you just refer them to your Fair Tax Commission.

Those three areas really interest me, particularly the deficit, and how soon your Fair Tax Commission is going to talk to you.

Mr Laughren: Thank you, Mr Stockwell. First of all, I do not know where you get the year 1995 from. We are considering a very early election.

Mr Stockwell: Consult with Mr Peterson.

Mr Laughren: Never mind, never mind.

I know you probably will not like this answer on the revenue projections, but I have no intentions of providing revenue projections until I have thought about what kind of tax changes, if any, we are going to put in place for 1991-92. I would be simply second-guessing myself if I did that. We are aware, however, that tax revenues are going to be relatively flat -- I do not mean flat-line so much as relatively flat in 1991-92. Other than that, I cannot give you a number on revenue projections.

On the deficit, once again, it is basically the same answer. Until we have done our revenue projections and taken a hard look at the kind of expenditure controls we want to put in place, it would be pretty hard to give you a very precise number on the deficit. You asked a question about wage and price controls. I assume you meant across the entire economy.

Mr Stockwell: Within the province at least.

Hon Mr Laughren: Yes, but private and public sector?

Mr Stockwell: I was specifically speaking about the government.

Hon Mr Laughren: Oh, you are talking public sector.

Mr Stockwell: Yes.

Hon Mr Laughren: Why am I not surprised?

Mr Stockwell: Why do I feel like I know your answer?

Hon Mr Laughren: No, but you raise an interesting question. At the federal provincial meeting which is still fresh in my mind from Monday, the federal government is expressing concerns about settlements in the public sector all across Canada, not just in Ontario and in the federal public sector as well. I certainly do not see that as the cause of our problems. If we have problems in Ontario with revenues and expenditures and subsequently deficit, they are caused by the recession. You would be pretty hard pressed to point a finger at anything other than a recession which is not simply an Ontario recession. You could say it is a made-in-Canada recession. I would be inclined to agree with you if you said that, Mr Stockwell.

Mr Stockwell: I did not say that.

Hon Mr Laughren: But I think that the answer is to get the economy moving again, and Mr Wilson could have a major say in getting the economy moving again. For those reasons, no, I have not even thought about your suggestion.

On the Fair Tax Commission, we are tidying up, if you will, the final selection of all of the commissioners. We hope to make a formal announcement in the next two or three weeks. You will recall that we are going to ask the standing committee on agencies, boards and commissions if it wishes to review that selection of commissioners. That was raised in the Legislature at one point by Mr Harris. We want to make sure that there is an opportunity for that to take place.

We have been slower getting this thing started. I am not blaming the standing committee for this. The potential for the standing committee to slow the process down is there too, for up to about 60 days or 65 days, I think, while they have an opportunity to review the names that are submitted to them. We will make the announcement of names the same day that they are referred to the standing committee. That means that if the standing committee was to, say, deal with it that day or that week, then that is one thing. They may very well decide that they have got other priorities and will not deal with it. They have to deal with it within I think -- I do not know why I keep saying 65 days but something like that anyway. If that is the case, then they would not really be able to become commissioners until their names have been vetted through that process. That will slow it down a little bit but we do not know how much since a part of that is up to the committee.

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Mr Stockwell: Just one quick supplementary. It is very difficult when you are dealing with questions to yourself, but the fact of the matter is every time you get a difficult question, you pass it off to the Fair Tax Commission.

Hon Mr Laughren: No, that is not true. Ask me a tough question.

Mr Stockwell: What I would like to know is when I will learn more about the Fair Tax Commission. When are we going to hear back from the Fair Tax Commission?

You are telling me it has slowed down. Originally, when you announced this, it was 12 months.

Hon Mr Laughren: No, I am sorry. I did not address that part of your question.

Mr Stockwell: So when are we going to hear back from it? There was a tough question. Sometimes you do not even answer them.

Hon Mr Laughren: We want information from the tax commission to be on an ongoing basis back to us. We are not going to be paralysed on matters of taxation, because we have appointed the Fair Tax Commission. We want to get advice from them as they carry on and we reserve the right to take action as well. The Fair Tax Commission is a commission that is going to advise us on making the tax system in Ontario fairer than I think most people feel it is now. I do not want to, on the other hand, pre-empt their role by moving on a wide array of taxes as we appoint them to do their job, so there is a line we walk with getting advice from them and not being paralysed and not taking any action on tax measures.

Mr Stockwell: Is the original date still in place, 12 to 18 months?

Hon Mr Laughren: No, I do not think you ever heard the 12-month figure from me.

Mr Stockwell: No, 12 to 18 months.

Hon Mr Laughren: If they completed their work in 12 to 18 months, I would be happy but I would be surprised if they can. I do not want to tell them their schedule.

Mr Sterling: I would like to follow up on Mr Stockwell's question. In terms of your concern with the federal interest rate policies and that kind of thing, we have had evidence in front of this committee that the inflationary pressures on the private sector are coming from the high wage settlements in the public sector. You say to the federal government, "What can we do as the government of Ontario to influence you to bring down interest rates?" You know interest rates are intimately tied to the inflation rate and that, if the inflation rate drops, then Mr Crow has more room to drop the interest rate. I understand that public sector wage settlements are 1.5 to 2 points above the rate of inflation in Ontario at this time. Does it not make sense to you to consider wage controls in the public sector in order to bring that down so that Mr Crow would have some room to drop the interest rates?

Hon Mr Laughren: First of all, I do not think that is correct. I stand to be corrected by Mr Salerno, but I thought that the public sector wages in the last quarter or two in Ontario were actually running below the private sector. I stand to be corrected on those statistics.

Dr Christie: The private sector settlements have been varying with respect to the public sector counterpart. In late 1989 they tended to be higher. This year it has moved around from quarter to quarter; there has not been a clear trend, although on average public sector settlements have been higher. Settlements have been declining and inflation has been declining, although one of the things that has been noted has been the role of anticipation with respect to the GST in terms of making settlements arrived at now for next year somewhat different than the ongoing rate of inflation now, because people are anticipating an impact of the GST.

Hon Mr Laughren: I might add to what Mr Christie said. By the way, I have a correction on what I said about the Fair Tax Commission. The legislative committee has 35 days to notify us, when we send in the names, if they want to review the appointments and then another 30 days to do so, to review them. That information will make it clear.

Mr Wilson brings in the GST, which we think adds at least a point, I think more, to the rate of inflation. I do not think many people would say it was below one. People might say it was not 1.5, which we had built into our numbers. But I can tell you that it is a bit strange to bring in a tax that increases the rate of inflation by a point and then complain about us causing inflation. I mean, he cannot have it both ways. Also, I have never heard Mr Wilson nor Mr Crow -- by the way, did you convince Mr Crow to come before the committee yet?

Mr Stockwell: Yes, he said the day you give us your revenue projections.

Hon Mr Laughren: I see. In other words, no.

Mr Stockwell: That is what we got about your revenue projections.

Hon Mr Laughren: He has never told anybody I can think of that anything the province would do, that he would then make a commitment to lower the rate of inflation and subsequently the value of the Canadian dollar, which Mr Sterling points out.

Mr Sterling: But there was a significant difference in the GST driving the rate of inflation up and a wage settlement which is in excess of the rate of inflation, because it is compounding every year. It was pointed out by several of the economists who appeared in front of this committee that while the GST drove the rate of inflation up by 1%, that is 1% for ever and it does not feed upon itself. You are not willing, then, to consider doing anything to assist Mr Wilson in dropping the interest rate?

Hon Mr Laughren: Absolutely. We will co-operate with Mr Wilson in most ways.

Mr Sterling: What ways?

Hon Mr Laughren: We engage in bargaining with the public sector. That is one of the ways in which we try to control the expenditures of the province. Do not forget as well that there are such things as arbitration awards which can go beyond the settlements as well, so you have to keep that in mind.

Mr Jamison: Last week reference was made to your concern about the federal transfer payments to the province and the possibility of further decline from the federal government in payments to the province. Could you expand on that and what effect you would see there?

Hon Mr Laughren: Mr Wilson has indicated that he is going through the same process we are with trying to plan his budget, only he is closer to the date than we are. But he is not about to tell us any of his budgetary decisions at this point. He certainly did not tell us at our meeting. It is possible to get signals and vibes and I certainly am very unhappy with what the federal government has done to us on transfer payments, not just now, for the last several years.

Just next year we think that what they call the cap on the Canada assistance plan, which is being challenged in the courts, is going to cost us over $500 million and the freeze on the expenditures on the established program financing over $500 million as well, so that our revenues from the federal government will be down over $1 billion, I believe, $1.3 billion to be precise. So that hurts in our ability to absorb expenditures as well and in particular when we are going through a fairly difficult time. I did try to make that point to Mr Wilson at the meeting, as you might expect, because that is my job, but he was not overly sympathetic.

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Mrs Sullivan: Can we just have clarification on that? Is it $1.3 billion that you are anticipating in the cutback in transfers for 1991? Is that on top of existing cutbacks?

Hon Mr Laughren: No.

Mrs Sullivan: That would be the accumulated total.

Hon Mr Laughren: Yes.

Mrs Sullivan: Okay. Thank you.

Hon Mr Laughren: But actually if you go back to 1982-83, the reduction, correct me if I am wrong here, but if the same level of transfer payments from the federal government were in place today as back in 1982-83. we are not talking a billion, we are talking probably $6 billion or $7 billion lower than they would otherwise have been.

Mr Salerno: If I may add, the $1.3 billion is only the impact of the 1990 federal budget modes.

Mr Christie: Federal budget modes, right.

Mrs Sullivan: So in February there was an additional one. We could be seeing an impact to the 1991 budget of well over $2 billion depending on what might be --

Mr Salerno: Depending on what they may do; who knows?

Mrs Sullivan: In that particular fiscal year.

Hon Mr Laughren: Our feeling is that it is going to be a smaller pie overall from which to distribute to all the provinces and that we will be as one of the so-called "have" provinces -- I do not like that term -- but so called because of equalization payments. You can imagine we are a fair target. Sorry, Mr Jamison.

Mr Curling: Minister, I am going to follow up on the transfer payments. Immigrant groups have come before us here and are extremely concerned, and as we have the Ontario-Canada agreement and transfer payments coming across they feel that while two parents are quibbling around the money, they will be shortfalled on the amount of money they will get for programs like ESL training and a number of things while we have the increased immigrants here. Could you assure us, whether it is a shortfall coming from the feds or so, that I could say to these immigrant groups as they are coming in that the Treasurer came in and said: "Don't worry about that. That fight is between the feds and us. Your money will be coming so your programs will be in place," and they do not have to close down their organizations and can continue the kinds of services they have done so well over the past years?

Hon Mr Laughren: Okay, but could you help with a clarification of your question? Built into you question. are you arguing for a higher deficit or more taxes? I am little confused.

Mr Curling: The clarification I am having is that if you do not get the money from the feds for that ESL program, if you will say to them, "I'd love to give it to you but that bad Mr Wilson or that bad federal government hasn't given me the money so I can't give it to you," they are saying, "I want you to reassure me that you'll tell them that yes, that fight is between us but your money will be found someplace else."

Hon Mr Laughren: Stop repeating the part of the question I understand. It is the part I do not understand that I want you to enlarge on. What are you building into your question, a higher deficit or more taxes?

Mr Curling: No. That is your problem about a higher deficit.

Hon Mr Laughren: But you would agree that one of those two is built into your question.

Mr Curling: Well, listen. I will go along, Minister, and say that you are not concerned about a greater deficit as long as the services of those people are looked after, because you see, as again the saying goes, these are the people who are last to hire, first to fire and also that any services that are coming to them they have got to wait a little longer and the burdens will be greater on the system.

Hon Mr Laughren: Mr Curling, I am not trying to trivialize your question, believe me. We are very much aware of that. I do not know what kind of line we will end up walking on that, but you are quite right. It is a very tough decision when you have cutbacks coming at the federal level, as we think there are, when we have revenues that are pretty flat and some expenditures that are very high. That is a decision that has to be made and that is part of the budget process which has not been completed: To what extent do we allow the go up and how high, and to what extent in the middle of a recession can you impose new taxes on individuals and the private sector? I mean, you put the dilemma in your question. It is built in, the difficulty of the process, and I know you are quite right, that is our problem.

Mr Curling: The dilemma is not in my question either. The dilemma is in their finding that they will not have programs.

Hon Mr Laughren: No, no. I understand that and we will try.

Mr Phillips: A couple of real themes have emerged in our hearings so far. Almost every professional forecaster -- the banks, the Conference Board, I think Informetrica -- I think it is fair to say, and I think your Treasury people as well have said, that we should see mid to late this calendar year the end of the recession or the coming out of the recession.

The second big thing we have seen here are people coming to cash in the Agenda for People with a kind of list of promises. I realized when you prepared this you said, "Ontario is now in a recession," and my question really is this. You believed we were in a recession when you wrote this, and the Treasury and the forecasters predict it is going to be a short recession. What kind of advice should we -- you, I guess, in the end -- be giving to the groups that come now in terms of saying: "These are the commitments we got. There was a prediction of a recession then, there's a prediction of a short recession now." Should they anticipate the same timetable that you had in here or a slightly slower timetable?

Hon Mr Laughren: My first advice would be to be patient and understanding and anticipate a slower timetable. There is no question -- and I think most people understand that -- that we cannot do things as quickly as we thought we could when we ran on that campaign of Agenda for People, and I do not think people want us to, quite frankly. Every single-interest group wants us to deal with its particular issue and I understand that. It is their job to do that. But at the same time, when you talk to them, looking at the big picture, they say: "On the other hand, take it easy. All eyes are on you to try and manage the Ontario economy in the middle of a recession. Don't let it get out of control." People do not want us to try to deliver on Agenda for People. You say we knew the recession was on when we wrote it. I do not think anybody knew that we were in for this kind of recession.

Mr Phillips: Well, I just want to get the difference in the recession, if it is going to be a short one.

Mr Curling: One that is spelled with an "R."

Hon Mr Laughren: Yes. I would remind you that when that agenda was written and published, also published at the same time was a provincial surplus of $23 million.

Mrs Sullivan: But you had anticipated a recession. It was included in your discussion.

Hon Mr Laughren: Yes, but you tell me how anybody could have anticipated that the recession would hit us as hard as it has in terms of the big revenues that I talked about that have dropped so dramatically and the welfare case loads --

Mr Phillips: But they are coming back fairly quickly, are they not?

Hon Mr Laughren: No.

Mr Phillips: I thought you predicted a day in October, a $1-billion shortfall in revenue and now it is $670 million. Those are the numbers.

Hon Mr Laughren: I think you are not taking into consideration the income tax. Correct me if I am wrong on that. Where are you? You are talking expenditures, Mr Phillips?

Mr Phillips: I am saying that you thought there was a $1-billion shortfall in revenues in October. It is now down to a $670-million shortfall. It looks like it is coming back.

Mrs Sullivan: The total revenue shortfall.

Mr Salerno: If I may -- the ongoing revenues are actually down quite significantly. The revenues that reflect what is currently happening in the economy, the retail sales tax, land transfer tax, corporate taxes, are down quite significantly from the second quarter. What has buoyed those revenues -- you are quite right that overall they are slightly higher than they were in the second quarter -- were really payments in respect of prior years from the federal government for personal income tax that was owed the province essentially back in 1989.

Mr Phillips: Yes.

Mr Salerno: That is what is reflected in that $937 million. By and large, it is personal income tax that was owed the province in previous years.

Mr Stockwell: So what? Is it different money?

Mr Salerno: No. I am not saying that it is different money. What I am saying is that in terms of reflecting what is happening, the situation has deteriorated since the second quarter because the current revenues in corporate taxes and sales taxes, the major revenue sources, land transfer taxes, are down quite significantly since the second quarter.

Hon Mr Laughren: The point that Mr Salerno is making is that if you are talking about Ontario's revenues based on this year, they are down very, very much. The only thing that saved us in terms of revenues is the federal payments from back in 1989 -- not this year.

Mr Phillips: All I am saying is, we ran on the platform saying, "We can't do everything because there are financial realities," and someone else ran on the platform saying, "We'll do these things," and now it is difficult to say, "Well, now, we can't do everything that's in our platform." That is all I am saying.

Hon Mr Laughren: Yes, we cannot do them as fast as we thought we could either, there is no question about that.

Mr Stockwell: Oh, so you still think you are going to get 60% funding in education?

Hon Mr Laughren: That would be great.

Mr Stockwell: That is a dream and you know it.

Mr Curling: That was their promise.

The Chair: Thank you for coming and giving us this information this afternoon.

Hon Mr Laughren: Thank you, Mr Chairman. We would appreciate any of the information you are getting from your groups being forwarded to us because it is the right time to be giving us that information.

The Chair: We will forward you a package of submissions, then.

Hon Mr Laughren: Yes.

The Chair: We will have a five-minute recess.

The committee recessed at 1331.

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ASSOCIATION OF MUNICIPALITIES OF ONTARIO

The Chair: Before us we have the Association of Municipalities of Ontario: John Harrison, president; Grant Hopcroft, past president: Ken Brooks, co-chair, fiscal policy committee: Bob Richards, co-chair, fiscal policy committee. Thank you for coming. We would like to try to tie ourselves pretty tightly to the half-hour presentation limits. I would ask the presenters and the members of the committee to bear that in mind.

Mr Harrison: My name is John Harrison. I am a member of council down in the township of Delhi in Haldimand-Norfolk region. One of your committee members, Mr Jamison, represents the riding that I come from.

The Association of Municipalities of Ontario has a membership of more than 700 of the just over 800 municipalities in the province of Ontario. The residents of our municipalities represent in excess of 95% of the population of the province.

Our fiscal expert, due to his involvement over the past few years in a number of projects, both internal in our association and in terms of his work on advisory committees, particularly most recently the Advisory Committee to the Minister of Municipal Affairs on the Provincial-Municipal Financial Relationship. is our past president, Grant Hopcroft. I am going to let Grant quarterback our presentation to you this afternoon. Hopefully, we will have some time at the end for some questions, if the committee has any questions. I will pass the microphone then to Grant.

Mr Hopcroft: Thank you very much, John. On behalf of AMO, Mr Chairman, I would like to again thank the government for continuing the process of pre-budget consultations. We think that it is a very important part of opening up the process of budget and government action for the new year. Of course, since we do not as of yet have any idea what the transfer payments are going to be for next year. we are obviously looking forward to some feedback from the committee today. We will hope to leave some time for some questions.

As John has alluded to, there have been a number of reviews ongoing over the last couple of years in the provincial-municipal context, the advisory committee being one. Hopefully that report will be released around I March. There is of course the Provincial-Municipal Social Services Review, and AMO has done a number of internal reviews, culminating in what has been called the New Dimensions report, which was released last spring and which calls for a complete restructuring of the provincial-municipal relationship, both in terms of roles and responsibilities and in terms of how governments, particularly our two levels of governments. finance these services and the programs they are providing to the public.

With that in mind, and recognizing that it is a little late to implement substantive change for 1991 because of the consultation that obviously needs to take place, we would hope that the government would view 1991 as a transitional year. It would be with a view to working towards a more substantive restructuring for the 1997 municipal budget year.

Accordingly, one of our key recommendations is that there be more or less a holding pattern that would see municipalities at least hold the line in terms of some of the downloading that has occurred over the past few years and the flat-lining of some of our unconditional transfer payments. The key recommendation then is that the province support a minimum, across-the-board increase in the unconditional transfer payments to all municipalities at least equal to the rate of inflation which, depending on who you talk to, is projected at somewhere between 5% and 6% for 1991.

We feel that this is tremendously important because of, as I mentioned, some of the new responsibilities that municipalities have had to take on over the last few years without the commensurate financing to see that those services are properly delivered. As a result, we have seen local priorities and local municipal programs suffer.

The other recommendations that are set out on the précis are going to be covered to some extent by Mr Brooks and Mr Richards. I would like to emphasize a couple more before I turn to Ken, that being the third one on the précis sheet, which is that no new cost-shared programs which would further entangle the relationships between the two governments be initiated in 1991.

We are concerned that it would make the process of disentanglement that we are putting forward in both the New Dimensions report and in some of the other reports that much more difficult. Of course, it would have a substantive impact on municipal budgets in terms of matching municipal dollars which are required in many cases and which in many cases have been very difficult to come by. Mr Brooks will be touching on that in some detail.

That is not to suggest that the province should abdicate the responsibilities in terms of adequately funding some of the existing conditional transfer payments, roads of course being one of the most obvious ones at the present time, where adequate funding levels are going to be required from the province to hold up its share of the partnership.

I would like to turn now to Mr Brooks, co-chair of our fiscal policy committee, to touch on a couple of the issues.

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Mr Brooks: Besides my involvement with fiscal policy, I will just mention that my involvement with AMO comes from my position as a councillor with the town of Wallaceburg, which is in Kent county. In part of my presentation I will touch upon how it has affected our own situation in Kent county so you can better appreciate that we feel the impact. There are two things I want to touch upon, one being the new policy initiatives and the other the impact upon social services.

With regard to the new policy initiatives, we would like to encourage the government as part of its cabinet submissions to require the completion of municipal impact statements for all new pro rams which have implications for municipal resources. We have highlighted such in the past and because of the importance we would like to emphasize it again.

There have been a variety of occasions where in the past the province has transferred funding responsibilities to the municipal sector. There are a number of examples where the province has felt that it wants to retreat from an activity or that a municipality would be the better vehicle to carry out these activities and, therefore, it has been transferred. An example of that would be court security, which was a hot potato last year. We saw how that was transferred to municipalities without proper and full consideration of the impact upon the municipal budget.

This has a fiscal impact upon municipalities and the municipal sector cannot readily absorb these increased costs. We therefore ask that the impact for municipalities be properly considered when making changes or implementing new programs. It is our submission that responsible government should consider all corollary impacts, and this of course means that in provincial actions the municipal impact should be considered. This appears to have the support of some members of cabinet and, therefore, we would ask that this be considered and perhaps carried out by the government in the budget process.

The second thing I want to touch upon is our position with regard to the funding of social services. It is our position that the property tax revenues are obviously an inadequate and inappropriate tax base for social assistance. Social assistance is a program for redistribution of income and an equitable base for such comes from tax sources other than property taxes. We have seen reforms in social assistance and these were long overdue and welcome, but to an extent these are being conducted upon the back of the municipalities.

As a result of some programs, the case loads have increased within municipalities by about 50% across the province. For many municipalities these payments have greatly exceeded their budgets as the impact could not be properly foreseen. Our brief outlines statistics printed by the Ontario Municipal Social Services Association earlier in 1990.

I will just mention again our experience in Kent county as an example to show that county case loads have almost doubled and our expenditures were about $2 million over budget. In Kent county that meant that even if the county froze all expenditures in 1991, it would still require a 12% increase in county levy to meet that deficit which resulted from the social assistance changes. The case loads are still increasing and, as unemployment rises in areas such as Kent county and throughout this province, we will see more recipients of these programs and this will be a municipal expense on taxpayers who can ill afford the expense required to meet these costs.

There have been a number of reports done in the past dealing with the issue, the latest being the Provincial-Municipal Social Services Review. Our brief echoes what municipalities across the province are saying, that this is a provincial jurisdiction with the need for provincial resources to back up these programs and municipalities should not be a funder of these programs.

Now the government has indicated its commitment to reform of the system, and this reform should include the funding of the system. Other aspects of these programs are suffering as a result of the maintained municipal involvement. For example, special assistance budgets within municipal general welfare assistance budgets are suffering. Municipalities are reducing special assistance budgets because they can no longer afford it. This is at the expense of the recipients of social assistance.

The Treasurer had a recent announcement involving assistance in funding to deal with the latest increase and this was a welcome step in this direction. I would urge you to continue the process in the 1991 budget to show the government's commitment to reform of the social assistance system. At this point I will turn it over to Mr Richards.

Mr Richards: Good afternoon. I speak to you as co-chair of AMO's fiscal policy committee and as treasurer and commissioner of finance of the region of Peel and as treasurer of the Peel Non-Profit Housing Corp.

AMO would like to see the province's 1991 budget acknowledge the need for an examination at least of alternative sources of revenue for municipalities. You will recall a prior provincial budget which imposed a $5-per-tire tax for the disposal of tires which went into the provincial coffers while leaving the disposal of tires a municipal responsibility. We would like to see similar ingenuity directed to the municipal revenue stream.

The second point I would like to make is that AMO as well fully supports the reintroduction of Bill 229, a bill that will take municipal investment and borrowing in Ontario out of what have to be called the Dark Ages. It is, for example, illegal for me as a treasurer to use a computer to record certain debt transactions. Clearly, there is an immediate need for reform of municipal investment and borrowing in this province. Back to you.

Mr Hopcroft: We all acknowledge that this coming budget will be a difficult one for a number of reasons, the economy and the transition being two of probably the most prominent features. Municipalities have been rightly concerned about the direction of the province in the past in terms of what was expected of them other than continually looking to increased responsibilities without the means to finance those responsibilities.

The first budget and the impending transfer payments, I think, will be a key indication to municipalities as to the philosophy that the new government will have towards the municipal sector. We would hope that whatever action the government takes, it reflects the recognition of the importance of the role of municipal government and also respects the autonomy of municipalities as indeed a legitimate form of government with legitimate roles and responsibilities.

We would like to see those roles and responsibilities restructured. We would like to see some clear indication in the coming budget of the province's commitment towards that re-evaluation of the existing relationship and the movement towards one that I think would recognize the significant areas of influence and interest and also the revenue sources available to the two levels of government.

As long as municipalities continue to have some of the responsibilities that they do, there is a clear need for revenue-sharing between the province and municipalities in terms of funding some of the very substantive social programs that municipalities have been funding over the last few years, welfare obviously being a significant one.

As our president indicated we would leave, we hope, a significant period of time for questions, we welcome questions from the committee at this point.

Mr Jamison: I know that in our own area there is a significant burden right now on the welfare and social assistance programs and this is reflected. as I see, right across the province. What kind of impact do you see in the next fiscal year there?

Mr Harrison: The answer to that question is always sort of episodic. We can say that it is going to be bad across the board. but we all have our own horror story. Haldimand-Norfolk region, which delivers GWA at that level in our area. budgeted in 1990 for a 25% increase in our costs for GWA over 1989. We are in fact coming in at about a 65% increase, which is 40% over what we had budgeted for. Luckily, we did at least provide for a 25% increase, and our commissioner is indicating to us that we should be looking for a further 65% increase in our budget in 1991.

The problem that we have with social assistance is simply this: It is clearly a provincial government program. All of the decisions in regard to welfare are made here in this building on this hill. None of them are made substantially at the local level. But every time the province decides that there is going to be an increase in GWA, we carry 20% of the can. Every extra dollar that goes out in GWA is 30 cents yours, 50 cents the feds' and 20% ours. So you people are making decisions that are costing us a tremendous amount of money. That is our basic problem with GWA.

We do not object to enhancements to the program. We do not for a moment question the idea that there has to be a net for people to fall into when they get outside the normal income stream, but we think that if we are not going to have the authority to make any of the decisions and all those decisions are going to be made at the provincial level, that has to become a provincial program 100% provincially funded.

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Mr Sutherland: I can certainly understand the concern over the welfare issues. I just wonder if we can get a little more specific about some of the other programs, because we have had several groups here who have come and requested funding but they also talked about community standards and reflecting the needs of specific communities. I get a sense that it is very difficult to have all strictly provincially run programs and then be able to meet those community standards. I was wondering if you could comment on that process in relation to some of the things Mr Hopcroft was saying about disentanglement.

Mr Harrison: Let me say maybe to begin with, it is not the position of our association. and I do not think it is the position of the municipal sector generally, that the province should take over all these funding responsibilities and somehow give us a windfall. Whenever we have spoken to the government, we have always acknowledged the fact that if the province is going to take over a funding responsibility, for example like GWA, we have to find a way to have a mirror transfer back to the municipal sector of a funding responsibility.

The first time I spoke to the Premier and the first time I spoke to the Treasurer, the first thing I said to them was, "We are not here for a cheque; we are here to find a way to disentangle our relationship so that you pay for your programs and we pay for our programs and the net effect is a zero-sum balance."

Let's look at some local programs, for example. Local roads is an issue that might well be transferred back to the local level; policing, to a certain extent; provision of sewer and water facilities; perhaps local public health. There are all sorts of them.

Mr Hopcroft is better at this than I. Grant, give me a couple more that we might be willing to take on further responsibility for.

Mr Hopcroft: I think looking at perhaps a broad policy framework. generally our position has been that if it is an income support program that has as its goal redistribution of income to the less advantaged in our society, that should be a provincial responsibility in terms of funding from the provincial, and to a lesser extent from the federal, income tax under the Canada assistance plan.

We would like to see more responsibility, and of course it goes with it that we would be prepared to pay in those areas where there is not an overriding provincial interest to ensure consistency across the province. It really should not be a matter for the province to dictate to municipalities the standard for a local street that may have 8 or 10 houses on it. We certainly understand that there is a provincial interest in ensuring that provincial highways and major roads between municipalities and between areas of municipalities are maintained to a certain standard that the public can come to expect and rely on with some degree of assurance. I do not think we want to pin down at this point any firm positions, other than trying to come to something within those broad policy guidelines.

Mr Sutherland: Is there a set percentage figure increase that you think the majority of your members are looking for or feel would be comfortable to kind of start turning the tide this year?

Mr Hopcroft: I think in terms of the unconditional transfers we are looking for at least a minimum equal to the rate of inflation. As I had indicated, we are expecting an inflation rate of somewhere between 5% and 6%. I think municipalities, on the unconditional side, are looking at that type of transfer. On the conditional side, obviously the costs of various programs have gone up more than others. We are obviously pleased to see the movement that has been indicated already in terms of the province picking up the additional cost to the welfare rate increase over the 5%. That is certainly a welcome sign. It obviously still does not go anywhere close to the 100% provincial funding that we would be looking at.

We really feel that the province should recognize, as has been referred to already. the fact that many municipal budgets have been severely impacted by increases well above the rate of inflation, and in fact well above the astronomical increases that many of us budgeted for last year. When our welfare and social services people came to us a year ago and said, "We're budgeting 35%, 45% increases in this program area," we figured, "Gee, we hope it does not go this high," and in fact in some cases it has almost been double that. It has been a real strain and municipalities have had to cut a lot of local programs to meet those kind of expenditures.

Mr Harrison: One thing that I guess we should say in regard to that as well is that the committee has to keep in mind that we statutorily cannot deficit finance. We cannot deficit finance our operating, so when we run a deficit in a program area like GWA, we either have to cut that money out in that year from some other program that we decided to do, or alternatively we are faced in the next budget year with, "The first thing we have to do is cover that deficit." So we have municipalities where the first thing they are going to have to do in 1991, before they even consider maintaining the same level of service, is pick up a deficit that was generated in 1990 by the overruns in GWA.

The province. of course, is not in that position. If your Treasurer unfortunately has a deficit, it just gets capitalized and you do not have to automatically pick up that amount of money in the next fiscal year.

Mr Hopcroft: We are certainly not recommending that municipalities be given that option.

Mr Harrison: No. We are just pointing out that it is really a double whammy when something like this does happen.

Mr Phillips: You answered part of my question, which is, as we look at just the short-term -- in the next few weeks I guess you will be getting your grant announcements -- and the way we should think about them, is inflation on the unconditional and something that reflects your cost increase on the others? My question for the longer term is, I would not mind from AMO something you have not touched on, and that is just how municipalities are seeing the economy, just to give us any advice in terms of another perspective on the economy.

Interjection.

Mr Phillips: Let me just finish. You were here earlier. I think you heard that we have heard from the professional forecasters that things look relatively good over the short term.

The second one is just a comment. I think the debate that the province will have with municipalities will be interesting just in terms of devolution and not unlike the debate, in a different way, that is going to occur nationally, which is responsibilities and those sorts of things in a different sense, but it will be a very worthwhile debate that has begun now and that we will simply look forward to over the next few years. I got my answer on the grants, but can you give us any advice on how municipalities are seeing things?

Mr Richards: I think you should know up front that municipalities do not have the macroeconomic economists that --

Mr Phillips: You have had enough of them.

Mr Richards: We just see what we see. We see housing starts down. We see literally riots at some of Peel's welfare assistance offices. We have had police there now most days just to keep order. We see revenues from building starts down. I am talking from the perspective of a municipality that most of you would think is rich, being the region of Peel. We know we are in a recession. We are on the front lines. My staff know we are in a recession. I have two staff in charge of shutting off people's water for lack of payment and they are working around the clock.

Mr Phillips: That is amazing to me.

Mr Richards: In terms of what is down the road, I know of what I read, and I deal daily with all the Bay Street firms. We are in a recession and it is going to get a little bit worse before it gets better. We are hoping for a pullout of this thing by the end of 1991, but we are really battening down the hatches. The sad point is, as has been discussed, we are trying to deliver a budget that is going to come in at 4%, 5% for our taxpayers. We are starting at 4% because of welfare, so it is well nigh impossible for us to give the taxpayers what they want because of factors we cannot control. In one of the richer municipalities in this province, we have a 4% tax rate, before we start, just for welfare.

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Mr Phillips: That is the increase in the mill rate, not expenditures.

Mr Richards: That is the increase in the mill rate. That is the little thing you get in the mail. You open it up and you say, "Holy cow, the region of Peel did it," and we cannot put a videotape in there saying, "We didn't do it; look somewhere else."

Mr Phillips: You put all the words in there; you just do not put the video in.

Mr Richards: People do not read it. They pick all the words, put it in the garbage. and they see the name and they start to yell. Municipal politicians are going to lose their jobs for things they cannot control.

Mrs Sullivan: I was interested in some of the list that you indicated could be turned over to municipalities completely. You included water and sewer in that list, which I kind of found surprising, and left the whole waste management area, which perhaps has been taken over by the Minister of the Environment, or perhaps has not. But in many ways you are talking about longer-term funding matters. I was interested in your questions or proposals that there be changes in the ability of municipalities in the investing and borrowing area. I wonder if you could tell us, first of all, in more detail where you see some of those changes and second, what level of borrowing are municipalities at now? Are they at pretty close to the 20% that they are allowed under the Ontario Municipal Board?

Mr Richards: It varies. If you read budget paper E a couple of years ago, we could buy small countries out with our debt capacity. If you look at individual municipalities, episodics, there are some that are right up against it and should not be borrowing any more. There are some very large ones that are doing very well debtwise; however, there is a tradeoff. You may have very low debt but very high taxes because you choose to charge taxes as opposed to borrowing, and I have heard some provincial staff try to use debt capacity or the level of reserves as ammunition for downloading or for not helping, but you have to look at the entire picture plus what is coming down the road.

To use an example close to home, the region of Peel has about $100 million in its reserve just for waste. We also know we have hundreds of millions of dollars coming down the road, so are we well off or not? You have to do it on a case-by-case basis. If you do all the aggregates, we will probably be better off than the province of Ontario in terms of debt capacity. Our tax rates, though, are outstripping yours annually, so it depends on where you look and whose ox is being gored.

Mrs Sullivan: You have not mentioned in your paper who pays in terms of waste management and the very serious problems that are coming forward in terms of recycling programs and the other two Rs. Where do you see that moving?

Mr Harrison: As an association, and as I talk to my friends in the municipal sector, I think that there is a commitment in the municipal sector -- and some of these people may disagree with me -- to be the lead agency in terms of waste management. We do not have a problem with the concept that waste management is a municipal responsibility and should be funded municipally. We are going to have to change, as municipalities, some of the ways we fund it. We are going to have to have some help, certainly in the short term, in terms of our recycling programs. We have made representations in regard to ongoing provincial subsidization of the recycling programs, but fundamentally we are satisfied that waste management is a municipal responsibility.

Mr Hopcroft: Residential, and we do not want to get into hazardous wastes. We recognize that is something that needs to be co-ordinated on a provincial basis. I guess if I can add one thing it is that if we are to have that responsibility, there really needs to be some substantive change to the way that waste management is handled and there is an overriding need for the province to be involved in terms of regulations regarding things as simple as packaging to ensure that in fact we do not have excessive waste going into municipal waste management systems.

We also would, I think, state very strongly, for those areas that we do have an interest in, that we not be left out of the negotiations as we have so many times in the past between the province and the industrial sector. The recycling cost-sharing formula which is in place right now we feel is a perfect example where a deal was made that was not to the benefit, long term or short term, of municipalities and really did not have polluters paying the costs that they should.

Mrs Sullivan: So for this fiscal year, you have not included it in here, but in fact you will be seeking funding to assist in the implementation of existing and future recycling programs.

Mr Harrison: The existing system is that for start-up recycling programs the capital costs are borne one third by the municipality and one third by the private sector and one third by the province. The operating costs in the first year are 50% provincial, 50% municipal, and decreasing over five years to being entirely municipal. Our position is that we should have a new regime whereby any net operating loss in a recycling program should be borne one third provincially, one third private sector and one third municipal.

Mr Christopherson: I have no questions really. Having spent five years on city and regional council and being a former colleague of the presenters, I am clear on the issues. I am clear on the position of AMO. Just a statement, though, if I could to acknowledge how focused and clear the report is. I think in particular the members on this side of the committee room, if you will, are impressed with the fact that it is not just a question of laying out a whole host of demand items with a price tag on it. Certainly there are many groups that are doing just that, and justified in their own right, but I think there is more that needs to be done between municipalities and the provincial government and I think they may have gotten lost in that kind of firestorm, if I can use that term.

In addition to the new economic relationship which a lot of us made as part of our election campaign and are hoping to see instituted as part of the new government, is also a commitment to the relationship itself. I was at that first-ever emergency meeting as a delegate on behalf of Hamilton to talk about what was going on provincially and municipally at the time of the transfer of the police out of the courtrooms, all the taxes that were suddenly being dumped on. I think that is when we kind of reached the limit.

I think that you have offered up a document that helps set the stage. I know that your private discussions with ministers and members of the cabinet are going very well and they are being very well received. I think you are feeling that too in their response to you.

As one member of this committee and as the assistant to the Treasurer, as well as a former colleague, I suggest to you that I think you have made an excellent first formal step today in your presentation. You have outlined the issues and I hope that by the end of our term in office you feel that we have been able to effect the kind of changes that you are looking for, which I quite frankly think are necessary if we are going to have a proper positive future, especially in light of some of the other relationship problems that we have within Canada right now. Thank you very much for your presentation, for your brief.

The Chair: On behalf of the committee, I would like to thank you for your presentation.

Mr Harrison: Thank you.

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CANADIAN MANUFACTURERS' ASSOCIATION, ONTARIO DIVISION

The Chair: Our next presentation is from the Canadian Manufacturers' Association, Ontario division, Eric G. Owen, director of taxation; John Marczynski, director of taxation, Stelco; John Carlos, director of taxation, Du Pont. Thank you for coming this afternoon. We are trying to stick to our time limit today, half an hour for presentation and questions, if you would begin, please.

Mr Owen: It is a pleasure to appear before this committee to outline CMA Ontario's pre-budget submission to the Treasurer of Ontario, and copies have been provided. With me today are John Marczynski, who is with Stelco. He is the taxation chairman of CMA Ontario. He is on my left. John Carlos is the director of taxation, Du Pont Canada.

To start, I would like to point out that CMA Ontario represents approximately two thirds of the total national CMA membership and our members account for about 75% of the total manufacturing output in this province of Ontario.

The importance of the manufacturing sector in Ontario is reflected in the fact that manufacturers provide approximately 35% of direct and indirect jobs in Ontario. The manufacturing spectrum which we represent includes, among others, transportation equipment, food, chemical, electrical and electronic products, primary metals, paper products, machinery and equipment, printing and a variety of consumer goods. Manufacturing, as I am trying to offer to you, is big business in Ontario.

I would like to turn the microphone over to Mr Marczynski, who can outline for you what is in the CMA's pre-budget submission.

Mr Marczynski: I would like to make a statement. Ontario manufacturers are facing the 1990s with the recognition that this decade will bring the toughest competition they have ever faced. We mean that. The globalization of world trade and manufacturing, the harmonization of the European trading system, combined with rapid technological change and product/process innovation will challenge manufacturers to adapt to changing markets. How Ontario manufacturers perform over this coming decade will significantly determine the province's future employment prospects and standard of living.

While the manufacturing sector has shown great strength over the latter half of the 1980s, Ontario's relative competitiveness has declined over this period, and in particular since 1986. There have been many articles, papers and studies performed in this area by more capable and knowledgeable professionals than us who have overwhelmingly concluded the same. This fact is based on Ontario's rapidly increasing tax burden, increasing government intervention in all areas of business affairs, and the punitively high cost of capital that is determined both by high interest rates and the worsening tax treatment of capital investments in Canada and in Ontario.

For example, since the mid-1980s the deduction for new capital investment in Ontario manufacturing has moved from a significant competitive advantage to a small disadvantage when compared with an equivalent US manufacturer. Let me just point something out: Years ago manufacturers, prior to stage I of federal tax reform, could write their equipment off in two or three years. That has been moved to roughly 12 years, so you do not need a computer to figure out the big edge we have lost.

It is recognized that the policy initiative of the Ontario government by itself has not created this situation, nor will it correct it alone. However, reversing these damaging trends and reviving Ontario's relative competitiveness is essential to maintaining a strong manufacturing base. While the free trade agreement has opened new markets in which we can effectively compete, the removal of trade barriers and tariffs has resulted in investment strategies focusing more attention on the costs imposed by the relative tax systems on the manufacturing sector and the impact it has on the return on investment capital.

Ontario manufacturers have demonstrated in the past that they can compete and capture effectively both domestic and export customers. However, the ability to continue to be successful is in question since the proportion of taxes from the manufacturing sector has increased at a greater pace since 1980 than increases in their profits. This has resulted in a significant drag on Ontario manufacturing ability to fund new technology, plants and business systems in order to even hold on to existing customers.

Ontario manufacturers challenge the government to adopt the goal of and be a leader in making Ontario one of the most competitive and attractive investment destinations in North America. Pursuing this objective requires placing a much higher priority on the competitive impacts of all current and future legislation. Ontario manufacturers will take the leading role in creating a more aggressive export-oriented manufacturing sector. However, government policies must show a stronger commitment to the goal of competitiveness if a favourable climate for manufacturing investment and production is to exist through the 1990s.

We believe that the following recommendations, which we have made to the Treasurer of Ontario on Ontario taxation policy, will help build a stronger and more competitive manufacturing sector and will help promote sustained economic and employment growth in the 1990s. We made six major recommendations to the Treasurer and I would just like to read them into the record.

The first one was to delete the Ontario current cost adjustment sunset clause. It was a major piece of tax legislation that offset the damaging effects of federal tax reforms and that is set to expire at the end of 1991. We would like that sunset clause removed, so that we can continue investing in new capital with the support of the province and the taxpayers of this province. It is an investment in our manufacturing facilities. It is an investment in jobs. It should not be looked upon as an expenditure.

Mr Christopherson: That is 30%?

Mr Marczynski: Yes.

Mr Christopherson: It was 15% and went to 30%?

Mr Marczynski: Yes, that is right.

The second recommendation: The Ontario and federal governments should co-operate to ensure that they do not tax each others incentives.

Three, no introduction of new taxes or tax increases. There have been a lot of rumours about energy taxes, green taxes, carbon taxes, training taxes. We think there are other alternatives the government should be looking at rather than putting additional burdens on a sector that is bleeding right at this point in time.

The others are, ensure that the Fair Tax Commission has balanced representation, harmonize federal and provincial consumption taxes, and perform a competitive impact analysis on all legislation.

These are detailed in our submission. I would like to open it up now for your questions.

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Mr Phillips: Thank you for the presentation. I will give you a personal opinion. I think this is going to be the issue of the 1990s, but I will give you another personal opinion: I do not think people realize it yet, so it is going to be very difficult for you to achieve your objectives, in my opinion, until the problem is clear. I think personally that the problem is just on the horizon, and for the country we are going to have to come to grips with it a very fundamental issue here. With all due respect to you, there are other groups that are able to make their case right now a lot better, but I am with you on it. I really think you are going to see this as a significant issue, but it is going to be challenging to move on it in the short-term, I suspect.

My questions really are these: One is that I have a perception that the economists do not share, that we may be seeing manufacturing leaving the province and the country at a significant rate. By the way, on the numbers you show of 70,000, I think if you look at the numbers at the end of December in manufacturing, it is 110,000. That is 11%, I think, of the manufacturing jobs gone over a 12-month period. The economists tell us: "That's just sort of natural attrition and what not. When the economy gets rolling, just tramp the accelerator and away it will go." I wonder if you can be of any help on whether the economists are right that this is the case or whether we are seeing significant manufacturing jobs leaving the province and the country.

My second one is, again the economists have told us that they think the end of the recession is not far off, a matter of months, some time in calendar 1991. I think all of us believe that, the Treasury and what not. What does the CMA or the CMA Ontario branch feel about that? I would appreciate your comments on it.

Mr Owen: I think it is a very interesting proposition that you have said about the misunderstanding of the importance of manufacturing in Canada and in Ontario in particular. We in Ontario look at manufacturing as the engine of growth. We look at manufacturing as the creation of wealth in Canada.

Mr Phillips: I agree with that.

Mr Owen: If, for example, you were solely to rely on services, it just will not happen, from the point of view that we will find there will be bleeding of our wealth into other areas and that we are not creating any further wealth in Canada.

This leads to the point, and it is one of the points John Marczynski did make about the competitive edge for manufacturers, that I would like it on the record at this time that we are not asking to be equal with anybody else; we want to be better than everybody else. What I mean by that is that we want to have a better competitive edge. Just making us equal is not good enough, because money flows where it is easiest, and if there is just one little edge, if the tax environment is equal and there is one little edge, you will find money will go where that little edge is. So we have to give Ontario manufacturers a better than even chance to actually respond to that.

Looking at manufacturers leaving, indeed you are quite right when you say that we have said the employment fell 70,000 in the 12 months ending in November 1990. We put this pre-budget submission to bed in time to get it to the Treasury -- you must understand that -- and we have recognized that there has been further attrition since that time.

Regarding manufacturing leaving the province, yes, I would say manufacturing is leaving the province. It is not solely, however, because of free trade. A lot of people like to point and say, "It's free trade."

Mr Phillips: I did not say that.

Mr Owen: I know you did not, but the thing is that you have to look at it very closely and see where the best rate of return can be expected, and that is the where money goes. I am not suggesting that we will find manufacturers will just up and leave the province. They have already a great investment in Ontario and as such it is fallacious to think that they will walk away from this. That will not happen. However, what we are looking at here is new investment, and this is the key to the whole equation.

Regarding the length of the recession, we do say here in the document 1991, but then from the point of view, you have to realize that manufacturers have been screaming the R word. According to Mr Wilson you do not say the R word, but the thing is that we have been screaming the R word for longer than it has been acknowledged by the federal government. We have been screaming the problems of manufacturers for more than two years.

Do any of my colleagues wish to make any comments?

Mr Marczynski: The R word: We may be starting to play with the D word in certain sectors of the manufacturing community. You see what has happened in the Sault and --

Mr Phillips: What sectors?

Mr Marczynski: Steel: There are really serious problems in that industry. We are not just talking about jobs moving south of the border; we are talking about companies going bankrupt, where nothing is going anywhere. That is what we are dealing with. And the recession for the manufacturing sector started much sooner than for the rest of the economy.

Mr Sutherland: My question is kind of picking up on Mr Phillips and talking about the significant changes that are going to be occurring in the next decade in manufacturing. I want to focus specifically on skills development. I know the CMA had some representation on the Premier's Council on skills development. I was wondering if you could give some comment as to where you think the specific focus should be going on that. It would seem to me that if we are going to have manufacturing rebounding, then the strong emphasis is going to have to go in that way.

I would appreciate maybe some short-term advice, whether you think there are any budget implications that way for this year and then over the longer term.

Mr Owen: Again, I recognize the importance of the question. I do not believe this group is oriented to industrial relations. Indeed, we do have a group that is looking at skills development. We in the manufacturing sector have been very very concerned over the years about the actual fall-off of skilled tradesmen in the manufacturing community. We do not wish to just have jobs where people go and press a button hour after hour. We are looking for enrichment. We are looking for the betterment of the standard of living for the manufacturing community. We do recognize that we are downscaling or downsizing in terms of job creation in manufacturing. However, this in large part relies upon technology advances and this type of thing.

What we want to do and what we are at this time doing, with the development of the Premier's Council, is that we have made comments on that. We also are looking at working with the federal government to create skills training programs. This is something that the Canadian Manufacturers' Association is well into and we hope to have this on the road at least by the middle of this year. We hope that this will certainly encourage people in the schools, who will come out and recognize manufacturing as a viable career. This is one of the things we do believe it to be. I think that is the best I can say at this time.

Mr Christopherson: A couple of questions, if I can: One, the OCCA that was referred to, John, that you talked about -- since you made your presentation and I got on the speakers' list, I have had a chance to read what is here. Maybe you could just expand on the reason here why you would like to see it extended, in the context that the initial reports I am hearing are that there was not quite the pickup on this that we had thought might happen. I realize you are suggesting that it might have been the time frame, that it is just not long enough for those kinds of decisions to kick in. I would like to hear that also for the record, because that is an area of discussion in the Treasury.

Mr Carlos: Maybe I could answer that for you. We are talking, number one, about new capital investment and this is where the Ontario current cost adjustment has its greatest impact. The capital expenditure would be of a duration, depending on the size, of three to four years, from the time a decision would be made to invest to the time we have our first piece of production.

Therefore, recognizing that time frame, if for example today I was going to make a decision to build a new fibres plant or if Stelco was going to build a new steel rolling mill, the investment would take quite some time. The impact of the OCCA, being sunsetted by the end of this year, would really have very little consequence on the investment decision. So if I had the opportunity to invest either in Hamilton or in Kingston versus, let's say, in Oklahoma or the state of New Jersey, I would therefore be competing with a similar kind of investment decision with other strategists, and they would be looking at their ability to depreciate or write off their investment and we would be looking at ours, and they would have that small advantage that John mentioned earlier, where at one time we had a significant advantage.

What I am saying is, the sunset will have virtually no impact on major new investment if the Ontario current cost adjustment is sunsetted by the end of 1991.

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Mr Marczynski: It is very important. The big projects that companies get involved in do take that long. One of the problems we have here is that some business decisions have been made on the basis that the OCCA would be at 30% for the future. There are some corporations that are very concerned right now that they have been sort of shortchanged, because they have worked out the economics for their project on that assumption and we have changed the rules again midstream.

You have to go back to why it was put in the first place, and that was basically to offset the removal of the fast write-offs at the federal level. That gave Canadian manufacturers a significant advantage over the US. Right now the US can write its equipment off in seven years. It probably takes us I 0 to 12 under the new rules.

It was playing a very important role. You also have to realize we are going into a recession right now. I think one of the strategies with sunsetting it at the end of 1991 was to see if we can get businesses to dig into their pockets and spend in a hurry.

There is just no cash there right now. You pick up the paper every day and there is someone saying he is slashing his capital spending by 50% or eliminating it totally.

With due respect to the Treasurer of Ontario, I would suggest that strategy will not work right now. We need this in place during that period of recovery. That is going to take a number of years.

Mr Owen: If I could add one comment to that, I did note that you referred to it during the overview, that you asked the question, was it the 15% that went to 30%? Yes, that was indeed the OCCA that we are referring to.

However, you have to realize that it was only enacted into law this month under Bill 10. As such, a lot of corporations, especially the big, shall we say, mother corporations of the United States -- because of the regime under which they work in the United States, and perhaps some of the Canadian companies -- would be a little more aggressive, but the American companies would not move at all until that was actually in law.

What you have actually seen now is that we have not a sunset clause on something that has been in place for three years; we have a sunset clause on something that was put in place as of January of this year and it is going out as of December this year. In other words, what we are talking about is a 12-month span. That perhaps is one of the reasons why the Treasurer did not see the impact of aggressive tax planning. The planning was going on, but the actual investment was not going on because until it is in place -- we are very sceptical from the point of view; we do not have a lot of money -- we have to direct it in those areas we think are the best areas. We can look along those lines.

Mr Marczynski: One thing I would also point out the problems in Quebec. They are really getting behind the manufacturing sector. They have a 100% write-off now on manufacturing equipment. When you get into manpower training. They are not talking about slapping taxes on employers. They are encouraging them to run training programs and have developed a refundable tax credit system there. They are also reviewing the provincial capital tax with a view of possibly eliminating it for manufacturers.

We have found former governments to be very supportive of manufacturers. When Allan MacEachen and others were hurting certain sectors of the manufacturing community, the former provincial treasurers were down there in Ottawa telling them they were going the wrong way. The OCCA was a message to the business community in Ontario that, "We support you. the federal government may not." It is important to realize what is going on in the world outside of Ontario and also to look at what manufacturers are doing in Japan and Europe. In some sectors they are spending at twice the rate that we are here. If that pace keeps up, we are going to be sliding in that you will not have a manufacturing sector, a strong one anyhow.

Mr Christopherson: Thank you. With your indulgence. Mr Chair, a quick question on the economy. Everybody is telling us they expect the dollar to be going down somewhat, and who knows how much, the same with interest rates. if that happens, nominally to the best-case scenario, but it does happen. However, if there is still a sense that there is a weak economy -- perhaps the war is still under way; the American economy has not bottomed out as some feel it has -- do you think that would still be enough of a catalyst for the manufacturers to be pulling some projects or beginning to invest some of the money they are currently hanging on to?

Mr Owen: If they are currently hanging on, it is by their actual fingertips because what we are seeing, and we have reflected this in the submission. is that interest costs are really hurting badly. We find we had a 1981-82 recession and we were looking at leverage as being one of the big problems. People were going bankrupt all the time because of the high interest costs which were due and it was not dividends versus interest. We did see a great amount of restructuring since that time. However, it still is not as, shall we say. healthy as it was. There is still a lot of leverage out there. It is nigh impossible to get equity funds these days. People still have to go out and look for leverage funds.

Looking at the interest costs, according to our calculations, the costs now amount to 2.8% of total manufacturers operating expenses, compared to 1.8% in the fourth quarter of 1987. That is very considerable. Also, looking at this from the point of view that this has reduced our profits and cash-flow and our ability to invest, we are hanging on by our fingertips along those lines.

The Canadian dollar, we again have reflected and referred to this in here, we do believe is now worth, in US dollars, about, 77 cents in terms of its true economic purchasing power. We look at this and we say if that is the case and it is only 77 cents, this is the equivalent of a 12% export tax or indeed for imports coming into the country, a 12% discount on imports coming into the country. I do not know any Canadian who manufactures imports coming into Canada. We have to look very, very closely at the jobs that are in Canada. We have to make sure our ability to compete with the exports in the global economy is there. We have to look at it very, very closely.

Mr Marczynski mentioned Quebec as being one of our major competitors. This is something we do not look at. Perhaps something that is not apparent right now is that Quebec has been the first Canadian province to harmonize its consumption taxes with the federal government. Where we in Ontario will be able to take back from a GST, for the point of manufacturing, seven percentage points, in 1982 Quebec will have a 15-point edge whereas we only have seven. This is a further eight-percentage-point widening. We cannot afford that; if we want the jobs to go to Quebec, that is fine, just stay where we are, but from the point of view of wanting to keep the jobs, which we do believe we want to keep the jobs in Ontario. We have a very good province of Ontario. Over the years we have had a very good life here. Let's keep this.

We challenge, in our paper here, the Ontario government to be a partner with us because this is something we do believe in. We believe what we are looking for is to align our resources, to look at manufacturing as the engine of growth -- spend on offence. We as Canadians see this all the time. We see Canadians saying: "We are not very aggressive. Let's start being aggressive." These are some of the things that we are starting to do. Let's make governments competitive. These are the things we are looking at. We are looking at an environment in which interest rates are low, savings rates are high, government expenditures are in balance and the tax system makes industrial restructuring feasible and attractive. This is what we want. This is what we hope the new government of Ontario will really take to heart and that it will look at the jobs that can be created, the standard of living that not only can be maintained but also increased and take into consideration those people who are feeling the burden of the recession right now. It is bad out there. You do not have to tell us it is bad. We know it.

This is what we want to offset as well.

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Ms M. Ward: I appreciate your comments about the interest rates and the exchange rate. That may be part of your answer to the question I am going to ask.

I was struck by two comments made a little time apart that sort of took me down memory lane to about 1987 or so. You were talking about manufacturing leaving the province and saying it is not all due to free trade. I appreciate it is not all due to free trade.

Then you mentioned that we might actually be in a depression in some areas; you mentioned steel. What I was remembering then was that the big selling feature of the free trade agreement when it first started to be talked about was the steel industry, that we had to have the free trade agreement to save the steel industry.

I am wondering if you can answer, what went wrong? What is the cause of the problem in the steel industry today?

Mr Marczynski: There are a number of problems that have nothing to do with the free trade agreement.

Ms M. Ward: It was supposed to save it. That is why I am asking the question.

Mr Marczynski: The US market is very important to our industry. Right now, because of the exchange rate, it is hard to access that market. You lose your edge right there.

The Americans have supported their industry quite well there. They have laundered them through the chapter 11 bankruptcy proceedings. They have the concessions they need from their state and local governments, from their employees and they are very competitive right now. Unless the dollars drops in value, it is very difficult for our industry to access that market.

But just worldwide, globally, there is an excess supply of steel out there. The steel industry cannot get the price increases. Our costs keep going up. It is just a continual squeeze. That is the fundamental problem.

There is a glut of steel out there. There are a lot of Third World countries that have come on the scene building steel mills, not worrying about the economics of supply, demand, price and competition. They just subsidize them. They wanted a steel industry and they dumped all this steel into North America. That is the problem.

The free trade was going to help us maybe to access that market in the States that was very important to us.

Ms M. Ward: It was planned to be sort of a saviour, the dollar.

Mr Marczynski: Yes, the dollar is the big thing right now.

Mr Carlos: If I could add something from a personal perspective, this would be from a Dupont perspective. We made certain investment decisions anticipating the free trade agreement or something like it would come some day, and we were very successful in competing with other investment decisions around the world and put some investments in place. Now we are bearing the fruits of them. If you look at the numbers that are coming out the pot right now, even though many of our markets are very weak right now our strongest segment is in fact in exports. We have tremendous increases in our exports primarily to the US. That was because of investment decisions we made a number of years ago.

Now we want to be able to compete for the next series of investments. That is where the problem arises. As you look at the global pie for investment, we have to compete with everyone else out there. As the barriers to trade fall down and tariffs fall down and other things fall down, the strategists' focus goes right to the tax system and it becomes a very important, strategic aspect of the decision-making process.

The steel folk and the chemical folk have done very well competing with the best in the world in developing technology, converting technology into good-quality products, servicing our customers very well, but if a tax system keeps increasing and the bite of the fruits of our labour are not piled back into plants, machinery, equipment and new technology we might as well just join the caravan going south.

Ms M. Ward: So you think we do not really have a completely free access, there are some barriers.

Mr Marczynski: The whole problem there with Canadian steel producers trying to ship their products south -- we had modernized our plants, we were very efficient, etc. The US steel industry was really bleeding in the 1980s. The fallout there was much more dramatic than what we experienced in the 1981-82 recession. There were massive plant shutdowns only because they did not stay world class like the Canadian steel industry. The Canadian steel industry did much better than the US in getting out of the recession, so the Americans got very protectionist and they wanted to put voluntary restraint agreements on the Canadian steel industry. We lobbied against those effectively. Washington agreed to exempt Canada from the voluntary restraint agreements but we needed the free trade agreement to help sort of settle some of the trade disputes to leave the door open for us to continue shipping into the States. What has taken over now are broader economic forces that are not necessarily determined here in Canada and Japan, but all over the world. Why do we have the dollar where it is? Why are interest rates so high here? It is a very complex thing we are dealing with.

The Chair: We are really running behind time. If we could sort of wrap this up.

Mr Owen: May I make one comment, please, Mr Chairman. We are distressed about what is happening in Algoma, for example, no doubt at all about that. We do not want a live example of the efficacy or the primacy of manufacturing within the framework of a community. What we are saying is, and I have said this to Mr Christopherson, we are going to see downsizing within the manufacturing community. I did make that comment there.

However, what I have to say is that the service spinoff from the manufacturing more than offsets some of the job losses within the framework of the manufacturing, and this is what we have to look at as the wealth creator and as the service organizations which are clinging together with the manufacturing community. It is an interdependence; it is not a dependence, it is an interdependence. I think Algoma, sad as this may seem, is going to show that the interdependence is there and not only will we lose the 7,000 jobs if Algoma does go, but you will find all of the other peripheral jobs for the service industry, the small retail stores and all this, go belly up as well and that is a sad state of affairs. This, I do believe, shows the primacy and the wants of future wealth development within the manufacturing community.

The Chair: Okay, I think we should wrap up with that and any further questions maybe you could address later. Thank you for your presentation this afternoon.

1500

TORONTO BOARD OF EDUCATION

The Chair: I would like to call on the Toronto Board of Education; Beare Weatherup, chair, Tam Goossen, vice-chair; Ann Vanstone, chair of the education finance committee, and Ron Trbovich, comptroller of finance.

Thank you for coming. Again, we would like to try to stick as close to the half-hour presentation time as we can. I know the onus of responsibility for that is on the committee members as it is on you to give expedited answers. All set?

Mr Weatherup: We do appreciate the opportunity to present our views to the standing committee here in respect of the forthcoming budget of the Ontario government. It is safe to say that our board and our ratepayers are very optimistic because during the provincial election campaign we know very well the New Democrats were saying --

Interjections.

Mr Weatherup: Well, we still like it. They said:

"New Democrats propose raising the provincial share of education costs to 60% over five years, providing a solid base for a better education system and lifting some of the load off property taxes. The cost of this initiative over the next two years would be $1.5 billion."

Premier Bob Rae in his 30 August 1990 response to the chair of the Metropolitan Toronto School Board, in response to a questionnaire we sent him, said, "New Democrats would seek to restore Metro's funding to at least the 1981 level of 21%." He added that: "An NDP government would increase the per-pupil grants. Given that 90% of the public school boards spent more than the ceilings set by the provincial government, New Democrats believe that it is time to establish more realistic ceilings."

During the election campaign, Premier Bob spoke about a number of other issues, the most important of which was the question of integrity. We feel that the Toronto Board of Education and its ratepayers expect the Premier and his government to keep that promise and allow time for a full consultation with the educational community.

In taking this position, we acknowledge that the provincial government is faced with an unforeseen deficit, a deepening recession and the resulting increased public expenditures such as welfare and falling provincial revenues because of increased unemployment. Given this reality, we expect the Treasurer to set a budget that is fiscally responsible while at the same time addressing the needs of those most directly affected by the recession.

As school trustees, we will also be prudent in setting our budget, being mindful that many of our property taxpayers are also facing harsh economic circumstances. In fact, I was at a meeting this morning where a young Portuguese student, who is 15, was requesting permission to leave school. Her father was unemployed. they face a combined mortgage bill and tax bill of $3,000 a month. There was nothing I could do. We wanted to keep her in school but she felt her duty towards the family was to go out and work.

I think that when you have to go through that on a regular basis, you realize the pressure the property tax puts on people, and it does not measure their ability to pay. We do have a concern and we are sure you are concerned when you look at the budget.

Ms Vanstone: In November 1989 the then Treasurer of Ontario announced an 8.7% increase or $363 million more in operating grants to school boards for 1991. That announcement was very short on specifics and for good reason. The Treasurer knew that the transfer payment was inadequate and the school boards across the province would be expected to increase their mill rates on average by 12%, and school boards did so in response to the limited or no funding for inflation, enrolment growth, the employer health care tax, pay equity and other costly provincially mandated initiatives. You have heard school boards complaining about this for the last little while.

The Ontario Public School Boards' Association has stated that Ontario school boards need at least an 11% increase in operating grants from the provincial government, or $500 million more in 1991. Anything less will surely result in a third straight year of double-digit mill rate increases across Ontario.

Education cost escalation factors are well known. Province-wide enrolment will increase by 1.9%, necessitating the hiring of more teachers. Average teacher contract settlements are approximately 6.3%. Inflation is in the order of 4.5%. The federal goods and services tax will increase school boards' expenditures by 1.2%. Increased immigration will increase English-language instruction costs, which will likely rise to more than $55 million. Pay equity calls for a rise substantially over the next two years, including the appropriate funding of internal equity issues. All of these factors and more will apply in the trustees' consideration of the Toronto Board of Education's budget.

For example, each year Metropolitan Toronto receives nearly 25% of all immigrants who choose Canada as their new home. Many of these families and their children become part of our school communities in the city of Toronto. The cost in teachers' salaries alone to deliver English-as-a-second-language programs is in excess of $20 million a year. As immigration accelerates in response to federal initiatives, these costs will continue to rise dramatically. Without federal and provincial support, Toronto property taxpayers will continue to fund these extraordinary costs.

When the 1991-92 transfer payment announcement is finally made, we expect the Treasurer of Ontario and the Minister of Education to fully disclose the impact of the increase in operating grants on school board mill rates. In the interests of public accountability and integrity, it is the least we can expect from the provincial government.

In the past two years, the province has contributed less than three fifths of 1% to the Metropolitan Toronto School Board's budget. Metro's budget in 1990 amounted to approximately $1.9 billion. The Toronto board's share of that budget was $516 million. Last year, the Toronto board held its mill rate increase to 10.8% -- the provincial average was 12% -- but only after significantly cutting its operating and capital budgets. It is likely for 1991 that Metropolitan Toronto public school boards will again receive no financial operating grants or capital grants. In other words, the entire cost of public education in Metropolitan Toronto will continue to be borne by the property taxpayers of its eight public school boards.

It is the position of the Toronto Board of Education that the province has forced it to rely upon the property tax as the sole source of revenue to fund its educational programs and services. This provincial action discriminates against the public school taxpayers of Toronto. It is unfair. We agree with the new government that the general legislative grant formula is broken. It was never intended that the cost of education should be solely borne by property taxpayers. The funding of education requires a major overhaul.

Toronto taxpayers have contributed hundreds of millions of dollars to the province's consolidated revenue fund in the form of consumption and income taxes. The province has a duty to return some of these taxes to Toronto's public education system in the form of operating and capital grants, and through a mechanism that provides direct relief to property taxpayers.

It is recognized that meaningful reform of the education finance system will take time, effort, consultation and support. The Toronto Board of Education is fully committed to this effort and wishes to participate fully with the province by contributing its ideas and expertise. In the interim, the Toronto Board of Education must deal with its property tax system, which is undergoing a number of developments and which is beset with serious problems.

Ms Goossen: The Metropolitan Toronto School Board has the largest tax base of any school board in Ontario. Relatively speaking, we are commercial-assessment rich. To a limited extent, this allows the MTSB to have the highest per-pupil expenditure in all of Ontario. So it should surprise no one that the Toronto public education system is considered one of the very best urban education systems in all of North America.

Toronto's public education system has many achievements. For example: pioneered the benchmarks program that documents a student's progress to parents; a leader in curriculum development in respect of race relations, drug and AIDS education and other program areas; initiated junior kindergarten and full-day senior kindergarten programs; pilot project on destreaming; started heritage language and ESL programs; initiated day cares in schools; developed a successful special education program; introduced inner-city programs; maintains high standards for schools that are safe, clean, healthy learning environments; developed alternative schools and programs throughout the system to meet the individual needs of our students.

We are very proud of the achievements of our students and teachers, but it should be made very clear that a quality education system comes at a price. In this regard, every expenditure of the Toronto board is geared to achieving excellence in the classroom to graduate students who are critical thinkers, lifelong learners and major contributors to the social, economic and political fabric of this province.

In order to sustain our programs and achieve these results, we must be assured of an appropriate level of funding. We have grave concerns about our property tax base, our only source of funding. Toronto's property tax base has not grown at the same rate as the provincial average of 3% to 4% for the past few years. To illustrate that, between the years 1986 and 1990 the growth varies from a low of 1.1% to a high of 2.8%, and in 1990-91 the growth was only 1.2%.

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While new assessment dollars have been added to the tax rolls, these increases have been eroded through losses in commercial and industrial assessment appeals. Residential property taxpayers in Toronto have had to bear increased taxes that otherwise would have been borne by corporate ratepayers who successfully appealed their tax assessments. In any event, real growth in Toronto's property tax base has been less than the provincial average, and our residential ratepayers have been hard hit as a result. It is interesting to note that, with coterminous pooling, the Metropolitan Roman Catholic Separate School Board's assessment base grew by 6% in 1989-90 and 9.8% in 199091.

Beyond this, our property tax system is riddled with inequities. For example, property taxes on rental apartments range from three times to six times the average tax burden on single-family homes. Commercial and industrial properties are assessed at a lower rate of market value than apartments. The bottom line is that property taxes on apartments are passed directly through to tenants as part of their rents. It is a hidden and unfair form of taxation.

Metropolitan Toronto council's market-value-based reassessment scheme is scheduled for implementation in 1993. In the Toronto Board of Education's view, this scheme is badly flawed and will further exacerbate inequities within and between property classes. The Toronto Board requests that the Ontario government take no steps to implement Metropolitan Toronto council's reassessment scheme, but instead that it be referred to the Fair Tax Commission for study, along with other proposals to reform property taxation in Metropolitan Toronto.

This recommendation is premised on the legitimate assumption that public education will have a representative on the commission. It should be noted that the Toronto Board of Education has the largest stake in the property tax base, whereby education costs account for more than 50% of the property tax bill levied in the city of Toronto. We resent the fact that our board has not been consulted by Metropolitan Toronto council nor the province in the review of our property tax system. We expect that to change.

The Toronto Board of Education is very concerned about the number of successful appeals of the property assessments of large corporations. These corporations can afford to hire expert consultants and lawyers to reduce their property tax contributions. These successful appeals over the last dozen years have had the effect of reducing the overall tax burden of the commercial property tax class and shifting the taxes forgone through successful appeals to all other ratepayers.

This trend must be stopped, indeed reversed. For the first time, the Toronto Board of Education has appealed the property assessments of ten large commercial enterprises in the city of Toronto as being assessed too low. We intend to prosecute these appeals to restore their assessments to levels where these corporate property owners are paying their fair share. The SkyDome, the Toronto Star building, the Eaton Centre, the Toronto-Dominion Bank towers, First Canadian Place and the Dufferin Mall are some of the properties whose assessments we have appealed.

As well, the Toronto Board of Education views with concern the property tax burden on low- and moderate-income families, seniors and other people on fixed incomes.

The province provides two measures to help offset the burden of property taxes on these groups: the Ontario tax credits claimable as part of the federal income tax return and Ontario's property tax grant for seniors. Since the previous government took office, the Treasurer had not adjusted the Ontario tax credit provision to reflect the increasing magnitude of the property tax in personal budget terms. While the Ontario property tax grant for seniors was increased in 1985 from $500 to $600, today this amount is woefully inadequate.

The Toronto Board of Education strongly recommends that this Treasurer increase to realistic levels, without delay, the Ontario tax credits and grants for seniors and low- and moderate-income families.

Mr Weatherup: In an article in the Globe and Mail, 29 January 1991, the Minister of Education indicated "that the government wants to find a way of controlling discretionary spending by local school boards as part of its move to 60%" funding. "The government must be sure that we have some control over our costs. We can't be saying that we'll go ahead and increase up to any amount that they decide to spend."

The Toronto Board of Education is concerned that in moving the province's rate of support for the cost of education from its current level of 41.7% to 60%, the government may attempt to introduce two measures that will significantly undermine a local board's autonomy. One such measure is the imposition of province-wide expenditure controls. A second one is likely some form of province-wide pooling of corporate assessment.

Expenditure controls were imposed in the early 1970s and did not work. They were crude instruments, insensitive to local conditions and needs. Similarly, pooling corporate assessment and redistributing it among the assessment-poor boards in the name of achieving 60% provincial rate of support is a sham similar to that now imposed by Premier Vander Zalm in British Columbia. Corporate property taxes are local taxes and should remain with local municipalities and school boards. By reducing a school board's access to its local tax base, local autonomy and accountability are severely compromised. Beyond this, the quality of education programs in Toronto and its ability to be innovative will be seriously eroded.

In pursuing a fair education finance system, we should be seeking new solutions. There is sufficient evidence that the old ideas of draconian proportions, such as expenditure controls and pooling? do not work. We must first agree on the fundamental principles and objectives of an ideal education funding system before attaching ourselves to those outdated ideas.

Ms Vanstone: The next section is on capital needs of our school board. You will note at the top of page 8 a list of projects that will be coming up in the next few years. It is usually considered that the city of Toronto is a fully developed city. In the last several years, most capital programs have gone to Scarborough, which has been a growth board, and most of Metro's capital dollars have gone that way.

You will note under "A" a list of new developments in the downtown Toronto core. I would point out, although it is not pointed out here, to give you some idea of the scope, we are creating in downtown Toronto a community the size of Barrie. Barrie has 14 elementary schools and several secondary schools. Those are just new developments.

The board has also defined substantial accommodation requirements in various schools across the system which at a minimum will require 117 rooms by 1994. These are critical needs. Average annual requirement over the next four years, $5 million.

All-day kindergarten: That was an announcement by the province a couple of years ago. We knew we did not have room. However, we have done an assessment of it now and you will see we have identified a requirement for 133 classrooms. If we do not do the all-day kindergartens until 1994, the number of classrooms would increase to 200. In a three-year phase-in period, $33 million.

Child care: A 1989-90 evaluation of the child care facilities has identified 16 elementary and 19 secondary schools which do not provide child care. Bill 30, which may receive royal assent in 1991, would permit boards to provide child care facilities, presumably out of property taxes as well. For an initial phase, it is proposed that schools without child care facilities introduce this program over a two-year period at an annual cost of approximately $9 million. In addition, there are 80 child care facilities presently located in substandard spaces -- for example, basements, play spaces and storage areas -- which should be relocated. If this was addressed over a five-year period, the annual cost would be $8 million.

School sites: In order to address the number of spaces required, it is estimated that approximately 50 acres will be required. This is estimated at $325 million, and if a 10-year program of land acquisition was contemplated, this would require $32.5 million a year.

Our buildings are very old in the city of Toronto. That is becoming the case in all of Metropolitan Toronto. A modest renovation/replacement program would include a complete replacement every 100 years, together with major renovations every 35 years and minor renovations every 20 years, at a cost of $19.5 million, $12.3 million and $3.9 million. Therefore, the total annual requirement for this item would be $35.7 million. This would not address the current backlog, estimated at $240 million. To address this backlog, a yearly requirement is estimated at $6.8 million.

If both of the above programs were introduced, the requirement identified to the board in 1988 for additional funding for maintenance needs would be addressed, that is, $6 million annually. It will also address the funding currently identified in the Metropolitan Toronto School Board capital building program of roof restructuring and thermal upgrade under the category "advanced renovations."

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Building codes and safety standards: For the past few years, projects such as fire safety improvements and barrier-free access have been identified on the Metropolitan Toronto School Board capital program with a requirement of approximately $3.5 million. It is proposed to continue these initiatives, with an average yearly requirement of $3.5 million.

The annual capital requirement for the next two years is $180.1 million, declining slightly thereafter for the next eight years. The total capital program for required pupil places is $968 million, together with an ongoing need of $46 million annually for renovation, replacement and building code and safety standards.

Mr Weatherup: In conclusion, the public education system of this province is the only system charged with providing universally accessible educational opportunities for all learners, regardless of their ethnic, racial or cultural backgrounds, social or economic status, age, individual exceptionality or religious preference. This mandate is crucial in a democratic society. This mandate requires special recognition for public education within the province's education funding scheme. The government must understand that it cannot separate the question of financing education from the issue of quality programs without destroying the very fabric of our public education system.

Since 1975, we have seen an annual decline in the province's rate of financial support for public education in Metropolitan Toronto. For too long, the local boards, the local property taxpayers and parents have quietly worried about this trend. The Toronto Board of Education will work with the province in developing a new funding model for education. In this challenge, we will be openminded and responsive to new ideas. We will participate in the consultative process and press for positive changes. We will always keep foremost the ultimate purpose of this exercise: to meet the individual needs of all our learners.

The Chair: Thank you. I have a question from Mr Phillips.

Mr Phillips: I appreciate the brief. It is carefully crafted. As I have said to other education groups, I am very familiar with this because I was hounded during the campaign. These promises were made and I think they resulted in the election of several provincial members and therefore the defeat of others. I see Mr Silipo, who is probably very anxiously awaiting the announcement of the general legislative grants and what not, particularly given the year that it is, with the election coming up and things like that.

My question really, I guess, is two- or three-fold. Yesterday there was a group here and there was a Metro trustee here actually, speaking --

Ms Vanstone: It must have been the Ontario Public School Boards' Association.

Mr Phillips: Yes. I will ask all my questions, because the Chairman normally only allows one question. I will try to get all my questions -- a multifaceted question. One is the 21% to the Metro public board. I am interested that you do not, in your brief, expect a lot of progress to be made this year in that. I am just wondering what the expectation of the Toronto board is of the timetable for getting to the 21% for the Metro board.

The second thing is that the minister was here the other day announcing that the 60% funding that they are going to move to will include capital and teachers' pensions. She announced that that is the platform she ran on in the election. That was a totally different definition than the debates I have had with my colleagues, or my opposition. I am just wondering what the Toronto board's interpretation has been, because as I say, that will come as quite a surprise to the teachers and the taxpayers, who were expecting some significant changes.

I guess the last question is just, I appreciate your comment here on ceilings, because that was the third kind of surprise to me, that it would be 60% of something the minister determined as opposed to 60% of what the school board would say.

Just in closing, in case I do not get a chance to say it, I have said this many times publicly. The city of Toronto school board has really made a major contribution educationally in Canada. There is no question of that, in my opinion. I think I have said that perhaps to certain of you. If you look at the accomplishments of the Toronto school board, it is an innovative board, it has some courage, and it has had for at least 20 years that I am familiar with. So I wanted to compliment the board again when I have a chance to do so publicly, because I think it has historically and continues to do a first-class job. But maybe you can return to those questions, Mr Chairman.

Mr Weatherup: Okay, I will try to answer the first part. I guess the 21% and the 60% are linked because, to some extent, we have used those numbers to get to what we want, more of a process we want to get to, and that is, until you decide what the fundamental principles and objectives of the school system are and what you want to do, it is very difficult to set. We argue around programs, so what I would say, you have to set -- and in our brief, I think it is on page 9, we talk about what the fundamental principles and objectives of the education system are. After you do that, then you can set grant ceilings that vary from jurisdiction to jurisdiction.

Clearly in Toronto, where you have a big inner-city population and an ESL population, you might have a different ceiling than you would have in another jurisdiction where they might not have those needs, or have different needs. So there is a sort of a process.

Then you go into the grant ceilings and after that you can get into the percentages question. But I think the goal, and this is certainly the direction we are asking the province to go in, is to look at those things, because we are not interested in the British Columbia solution where Premier Vander Zalm said: "Yes, we'll give you 60%. We'll simply take away all your commercial assessment and we're going to give it back to you." We are not particularly interested in getting back what we already have, when in fact our arguments are that the province should be looking at the entire system of education funding when it looks at that and then get to setting realistic grant ceilings that actually meet the actual local need, and that is where the input from local boards is very important.

The question of whether it should be 21% of 60% or 59% or 62% is very difficult to comment on, as long as those sorts of principles that I have talked about are taken into account.

Ms Vanstone: Yes. Picking up on that, I would agree. Whenever you say 60%, it begs the question, "Sixty per cent of what?" Twenty-one percent begs the question, "Twenty-one per cent of what?" Every group that has lost funding of education -- and you certainly know, Gerry -- for the last many years has said there has to be a realistic appraisal of the ceilings or indeed what should be included in the costs of education in the province of Ontario. Certainly, as Beare says, the costs are very different. In Red Lake, the school boards need to have teacherages and that happens throughout the north. We do not need that in the city of Toronto, but with a large multicultural population we have to operate heritage language programs.

So the needs differ and the kind of ceilings that are envisaged have to be site-specific, if you like. I was surprised as well to see the minister's comment about 60% including capital and teachers' pensions. At least with the former government it was only future pensions that were suddenly lumped in with the operating costs. Now we have capital in there as well.

When the government did reach a high of funding that I believe was 61%, not 60%, and it was before I was in this business except as a parent, it was operating. It did not include capital and it did not include teachers' pensions. It was 60% of operating, so if one is going to go back to the 6040 or even think about it, he has to be comparing apples with apples, not apples with oranges. We started changing the apple into something else a year ago and now it seems to be changing even further into a completely different fruit.

Mr Phillips: I want to just comment on the answer.

The Chair: Excuse me. We have four more presentations and they are all half an hour.

Mr Phillips: I do not think there is any way that you will get away with it and I think in one sense you have to spell it out very clearly. It was extremely clear within your documents. You have the 41.7%, which did not include pensions, did not include capital, so it is going to be very tough, I think, if I can be completely honest with you, for the new government to argue anything different.

Mr B. Ward: But you are willing to work with us?

Mr Phillips: No. I am sensitive because the Premier was called a liar in the campaign.

The Chair: Excuse me. I am going to rule this out of order because this is not the time or place for politics. We have a lot of presentations to go and I would like to thank the presenters for coming and making this presentation.

Mr Weatherup: I would like to thank you for having us and we look forward to working with you.

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ONTARIO ARTS COUNCIL

The Chair: Our next presentation is the Ontario Arts Council, Nalini Stewart, chair.

Ms Stewart: Thank you, Mr Chairman. I would like to first introduce the people I brought with me. I will start with Daryl Novak, director of administration; Norman Walford, executive director of the Ontario Arts Council, and my board member, Michael Rayner, a partner with Deloitte and Touche who is also a former Comptroller General of Canada. I mention that so that if you give us more money you can feel quite safe that it is in good hands.

Thank you very much for inviting us to do this. I do not think we have ever done this before -- I certainly have not -- so we are very pleased to be here. I have no formal brief, but we did give a short handout that I believe was given to all of you this morning. What I would like to do is just talk about the general arts environment and then leave lots of time for questions. I would also, before I start, like to thank all of you for the mention of the Ontario Arts Council in the throne speech, which was like a message of hope through the whole arts community, and I would also like to say how pleased we are with the NDP policy paper, Work of Art, which is a bit old. It was written in 1984, however we still agree with all the sentiments and I hope that you people will continue with that.

I talk about the arts environment today in 1991. The Ontario Arts Council is 27 years old. In 27 years, Ontario today has more than 50% of English-speaking artists right here in this 100-mile area around Toronto.

Our writers are on international best-seller lists all over the world. Our dancers are also considered the best all over the world. Seven, eight years ago, even five years ago, nobody saw our films, and starting about four years ago our films started winning awards in Berlin and at Cannes and we started being noticed. The National Film Board's shorts were always noticed, but our feature films have become also in the top league.

Our theatre is in the top league. I go to a lot of theatre and I saw one recently, King Lear, that had come from a top company in England. I had been to Stratford just the week before and seen Macbeth and I came back and I thought our company was really just as good. Mr Phillips has heard me say a lot of these things before, but I continue with this message because I believe in it so strongly. Because the best English-speaking artists are in Ontario, we can feel proud of what they are doing. The money that has been put by governments, in the past 27 years by the Ontario Arts Council and 30 years with the Canada Council, not one cent of that money has been wasted, because we have seen the results.

They have added value to our lives in so many other ways. They have certainly helped the economy because every time people go to an arts event, they go to a restaurant before, they take taxis and they hire baby-sitters or they pay parking, so it helps the economy.

Our artists are better educated. We have in our package here it is not in that handout but it is a package here that we will give you -- some figures that they are better educated than the average person in Ontario but they earn less than the average person in Ontario. In terms of what is happening in the world today with identity and free trade, our artists have defined who we are in terms of Canadians thinking up an identity for ourselves. Our artists tell us who we are and they tell us who we are in a really eloquent way.

In terms of the artistic community, any time artists move into an area, the value of that area goes up. Now, which other group in society do we have where every time they move somewhere, whether it is Yorkville or Queen Street or whatever, because they create original products, they improve the area they are in?

Having done all this for us, today the artistic community is suffering really badly. In 1988 we presented a report to the government saying that we needed more money, and maybe we asked for too much money at that time, but everything that we predicted is coming true now. One by one the theatre companies are closing, our dance companies are cutting back on their number of weeks, our artists are leaving Toronto. Many of you will say: "That's fine. That's okay if they leave Toronto. Let them go to Flesherton," which they are, or Hamilton. That is okay, but many artists are also leaving the profession and that is not okay, because if they are no longer artists because they feel they just cannot support themselves, then I think that we really lose quite a lot.

So what I am trying to do is talk to members of Parliament, trying to talk to people one-on-one as much as I can and say to them that we at the Ontario Arts Council are very aware of the economy. We follow it all very carefully and very closely. We know all the problems with the government, but what we are saying is, the amount of money that the arts need compared to other sectors is really not very much.

We are asking for an increase of $11 million in our base for this year. I will take you through in a second. I know it sounds like a lot and I know that the deficit is large, but when you look at the value added and when you look at the national identity and when you look at how important it is and how it helps the spirit and how you need bread -- this is a cliché -- but you need bread, you need roses. But we do need all these things and more so than ever now in Ontario and in Canada. I think we need to know who we are, and it is not wasted money, because for every dollar that goes into the arts, there is $10 of volunteer effort that goes into the arts.

The artists themselves subsidize half of what we do and they give back so much. I am not trying to put any other sector of society down, but at the moment we do not have any artists on the welfare rolls and we do not find them in mental hospitals and we do not find them in prisons. You do not find them in places where they are not helping society. I really strongly believe that artists give so much to our society that the little we do for them, we gain so much back.

Maybe before I go through this I would like to turn over to Michael Rayner and maybe he can say a few things.

Mr Rayner: Perhaps just to supplement some of the comments Nalini has made and speak from the perspective of a board member who has been with the arts council for just under a year, I thought it would be helpful for members of the committee to understand a little bit about the way in which the arts council operates in taking public funds and disseminating them over 1,000 organizations, over 1,600 individual artists and, frankly, touching the lives of many Ontarians, not just because of the work of those organizations and individual artists but through programs in the schools that are widespread, etc.

The council exists and plays an arm's-length role. Essentially, we have created in our body politic an institution which can take public funds and ensure that they are distributed fairly and equitably without political influence. The function of the board of the arts council, indeed of the staff, is to ensure, in fact, that the public money that is entrusted to us is distributed in a fair and equitable way across the arts community, particularly the professional arts community.

I would like to say, having observed this system now for a little over nine months, that I think it is an extremely well designed system. Governments that provide money to the arts council can do so with confidence, knowing that the process that has been established over the years in the council is an extremely good process, that we use a process of juries, of peer appraisal, within the arts community to ensure that excellence is rewarded and awarded grants by the arts council, and that the sorts of biases one might worry about in the disbursement of public funds over large numbers of organizations, I think, are effectively eliminated. The combination of a vigilant board and a very highly competent staff ensures that this process works smoothly.

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Nalini has alluded to the tremendous needs of the arts community at the present time. One of the things I have been most surprised by, I suppose, and impressed by in this short period of time that I have been associated with the council is just how much suffering, in effect, is going on in this community. Every board meeting I attend we are briefed on the number of arts organizations that are either closing or about to close, the number of individual artists who are leaving the artistic community and moving into jobs where they are unable to pursue their art.

Many people in Ontario in this recessionary time are facing crisis, and a new crisis for them. The artists and the arts organizations in the community in effect are facing a considerably deepened crisis, but they have really lived in crisis for the last 10 or 15 years. If one examines the funding pattern, the distribution of funds by the governments through the arts council, you will see that there has been no matching, if you will, of funding by government with the cost of living and inflationary pressures in our society.

So we have come to the government with what appears to be an unusual request for much more money than we had in the past as part of our base. But essentially the argument we put is that we are trying very hard to redress what one could in fact characterize as the wrongs of the past.

We urge members of all parties to consider carefully the plight of this artistic community, which we believe to be in a true state of crisis. We urge you all to think of the multiplier effect that Nalini alluded to that comes from the work of the artists in our community -- the number of ancillary industries, related service businesses and organizations that are linked with arts organizations and individual artists -- the way in which money spent through the arts multiplies and provides for employment and wellbeing for all Ontarians.

Ms Stewart: On 23 January there was an article in the Toronto Star that talked about the crisis in the arts, and in this article the writer said that the cultural safety net is crumbling really quickly at the moment. Again, I have said we have predicted this in two of our reports. One was the theatre task force study that we did called Places Please a year and a half ago in which we named the theatres that would be in deep trouble, and they are at the moment.

If we do not help these organizations now, these organizations will fail and those people will go on the welfare roll. So in a way each is equally bad. It is really important for the Ontario Arts Council to be able to look after our key organizations. I never said that every organization deserves to be kept alive for ever and our board has never said that either, because some should just be allowed not to be there. For our best organizations, we really have to make sure that during these tough times we help them and do everything we can to keep them going, because we just cannot afford to go back.

Most of the arts organizations did not participate in or get the riches from the boom here that Toronto went through in the 1980s. Some people made a lot of money, but nobody in the arts made a lot of money during the 1980s and we have a lot of catching up to do.

Mr Rayner: If I could just supplement that, I think another element of the possible failure of some major arts organizations relates to the tremendous loss of investment that occurs if you allow something that has been built over 10 or 15 years to suddenly disperse. The time to rebuild the talent and bring people together and create the synergy and be able to offer again what was lost is just incredible. The investment that is being made in major and even minor arts organizations in simply assembling the talent and providing the space is incredible. If we lose that, if any one of them goes and the people involved are dispersed, we lose a great deal. We lose many years in terms of the ability to replace that activity.

Ms Stewart: This is in our brief. We fund 1,000 organizations across Ontario. We give money to 1,600 individual artists. We do everything in two languages. We are very aware of the whole multicultural complex of Ontario. I talked to Mr Phillips a lot for years when he was in that job. We have some of the best programs. We did them very slowly and very carefully. Now those programs are being looked at not just in Canada, but we have inquiries about those programs even from countries in Europe. We have done the artists in the workplace program. We are now looking at new ways to reach the people of the first nations, because they are very keen that they be part of the system in every way possible. We are looking at programs in the black community.

We have a very open organization and our board and our staff always try to be one step ahead so that we anticipate things that are happening. Right now, for example, we know that there are certain communities that have become very strong in terms of wanting to make sure that they have equal access. We already anticipate that. We welcome them in and we talk to them and say, `-Okay, how do we do it?" So as an organization. we have tried to reach everybody in this province. We do not just sit in one place and feel satisfied that we have all the answers.

Norman, do you want to take the people through the priorities?

Mr Walford: Just very briefly. the last page in the package you have outlines the priorities over a three-year period for the Ontario Arts Council. They deal specifically with some of the areas that have been mentioned by Nalini and Michael, and that is the stabilization of the whole community, starting with increases in the amounts of individual grants and the success rate of granting to the artistic community.

The stabilization of funding to key arts organizations: Nalini has mentioned that we have quite a number of arts organizations and prices at the moment, so it is an effort to increase the percentage of contribution that the Ontario Arts Council makes, recognizing of course that the funding of the arts in this province and in Canada has always been a partnership between many different elements. It involves community support. It involves support from private individuals and from the corporate community. We would be looking to have our money become a levering effect; in other words, if we put it in first, then quite often it is much easier for the companies to lever money from other sources.

We have many organizations across the province now which would, except for the lack of money, be eligible for operating support on a continuing basis. This is a problem which runs throughout every discipline, so that we would require funds in order to be able to give them ongoing operating support.

One thing we feel is very important in terms of creating a whole person through the educational system is the question of how often and what quality of experience a child has in the educational system. Right now, it is extremely low. They may have one experience with a major cultural institution from the time they enter school until they leave high school. We would like to devote more of our resources to ensuring that children of school age have the experience of artists and arts organizations within their school setting.

The last part -- it is by no means least -- is the whole question of the expansion or accessibility by different sections of our population to artists. That will be found in different types of audience-building techniques; also, reaching out to communities that may not be familiar with the kind of work we do and the kind of support that is available so that all sectors of our society can have access.

I just want to conclude by emphasizing that we work right across the province. Nalini mentioned the concentration in Toronto. That is true. But we do support community arts councils, symphony orchestras, theatre companies and other activities right across the province. In every single community you could find something that the Ontario Arts Council has supported at one time or another.

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I also want to say that recognizing that to some degree -- the old axiom that God helps those who help themselves -- we are engaged in a lot of activities that are designed to help arts organizations become better managers of their own destinies. That certainly involves things like help with planning, professional development for their managers. We have also set up a very small research function in order to provide them with materials with which they can make better arguments with their own municipalities or with the corporate community.

The final thing I would like to say is that one of the reasons we present for increased government support of the arts is always that the strength of the artistic community will have a profound effect on the creative and innovative capacity of the entire society. I do not think people really understand the connections. Quite often they see artists and arts organizations as off to one side, providing a certain kind of value to society.

If you look at it very closely, the inspiration for our industrial designers, people who are in various kinds of businesses, quite often are very seriously affected by what is going on in the artistic community, because it is basically the role of the artist to be fundamentally innovative and creative; that is, to think of new ways to do things and to ask questions that are crucial to the creative development of our society.

I think it is like the R and D of the whole creative spectrum in society in that its weakness will also weaken other aspects of that and some of the things that we realize from other sectors.

Ms Stewart: We would be pleased to answer any questions.

Mrs Sullivan: I am quite interested in your presentation today, having gone through the five-year plan earlier to some extent and having also been to school with at least, I think, a couple of you and having chaired a performing arts centre myself. I am quite aware not only of the role of arts groups in defining and expressing our community, but also of the economic impact that flows back into the community.

One of the things that I am wondering if you covered here or could speak to is that very frequently we think about arts organizations as appealing to large population groups. I do not think you have spoken particularly to the smaller interest groups that are a very significant and important part of maintaining an artistic commitment, if you like. Where do you fit that into your budget plan in terms of maintaining the smaller organizations, as well as the larger ones? I think you have spoken to a certain extent about the community outreach, but you might want to --

Ms Stewart: Of the 1000 organizations we fund, only about 20 could be considered large organizations. The other 980 would be in the category that you speak of. Certainly in communities across Ontario, for example, in Thunder Bay -- am I answering your question right? -- there is a symphony orchestra --

Mrs Sullivan: Just helping the argument along.

Ms Stewart: -- and there is a Magnus Theatre and we fund it, and the same in Sudbury and the same in Sault Ste Marie and the same in London, Windsor, all the places I have been to. When people think of the large organizations, they are the big five, as we say: the symphony, ballet, opera, Stratford and Shaw. But that is only five, and then there may be another 20 like Tafelmusik music and maybe Tarragon of Canadian stage. But then the rest across Ontario are community arts councils, community orchestras, community theatres, summer theatres. We have about 10 summer theatres. How many summer theatres? Eighteen, something like that? Every community has an art gallery.

That is what our base is in all those little organizations -- the big ones get the profile -- plus there are all the volunteers in each group or organization. We really reach everywhere in the province.

Mrs Sullivan: You might also want to underline your current base budget and the increment that you are asking for in specific dollar terms.

Ms Stewart: The current base is $34.6 million, even though on this page here, it says $38.6 million, but out of that --

Mr Walford: It is all here. It is at the bottom of the page.

Ms Stewart: We have a base of $34.6 million. We had $1 million added in multicultural money, but that ends in March this year. We would like to have $11 million added, mainly to keep our organizations alive.

Mrs Sullivan: You are really talking about $45 million as a commitment of the Ontario community to the arts in the province.

Ms Stewart: Yes. This has come down a great deal since 1988, because when we did our original five-year plan, which was based on a needs argument, we went across Ontario asking people what was needed in the arts. In view of the recession and the economy, we have cut back substantially.

Mr Walford: I wonder if I could add also, in terms of the incredible increase in interest and the number of organizations that have been formed over, say, the last 10 or 15 years, that we find ourselves in a very difficult position because our funding has not kept up with both the demand and the number of organizations, just the general population increase.

We have a lot of inequities between when an organization actually developed and the availability of funds in any given time period. One of the things this plan is designed to do is to try to correct some of those inequities. In other words, some of the organizations that have developed in communities during the leaner years we would now like to bring along to an appropriate level. That is one of the problems that underlie the thinking of this.

Mr B. Ward: I know we are getting behind schedule so I will be very brief. I met the chairman there it seems like a long time ago. Life moves ahead at Queen's Park. I do not pretend to be an artist. as I stated in our conversation. However, I do have a lot of respect for the arts. My wife is the artist of the family. I try to draw or -- I will tell you, you do not want to see the stuff.

The question I have is that our government is very big on consultation, co-operation, partnerships, etc, so that we have as a government. and I am sure all parties can assist in that -- would you be willing to work with us in partnership and co-operation so that we as a government have a full understanding of what the arts community's needs are, and that when funds are allocated we know they are going to the best possible programs so that we do not waste any of the tax dollars? Would you be willing to work with us in that sense, forming a partnership and co-operation?

Ms Stewart: Sure. I have already started that. I have already met Mr Christopherson, Margery Ward, you. I am just thinking. Three of the people in this room.

Mr B. Ward: You already know Gerry.

Ms Stewart: I have requested an appointment with you too.

Mr Phillips: You are spending your time in the right place.

Ms Stewart: You just have not responded yet.

Mr B. Ward: But you would be willing to work with us in a co-operative manner.

Ms Stewart: Of course. Our board feels that we are trustees of public money. The cheque that we get is -- we are trustees. Our processes are totally open, although we are an arm's-length agency. We are doing the same work as an arm's-length agency. We bend over backwards.

Mr B. Ward: Myself, I will be relying on your recommendations since obviously I am not an expert in the artistic field. I will be relying on your expertise and recommendations. I look forward to working with you.

Mr Christopherson: I was going to acknowledge how impressed I was that you managed to get to my office so quickly after the election. I am overwhelmed at how quickly you move. I find that you have been around all over the room here. That says a lot about your determination, your own personal commitment and also your lobbying skills, I might add.

As I mentioned to you in our discussions, I was fairly involved at the local level, being on our city's arts advisory committee recommending to city council ways in which we could do exactly the things that you are encouraging us to do at this level. To take it to a provincial level, I wanted to ask how successful you have been in having municipalities adopt arts policies. I ask that mainly in recognition of the fact that my sense, having served a number of years on that subcommittee, was that there really had to be a commitment at the local level, a hands-on commitment, not so much the dollars, although that is part of it, but the commitment.

I am wondering how successful you feel you have been across the municipalities in Ontario and how that might, if you will, underscore your points with us.

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Ms Stewart: We have not gone to everybody, but we have had Thunder Bay pass a resolution supporting the Ontario Arts Council's bid for more funding. It is easy for municipalities to pass a resolution if they do not have to put up money themselves. They got everybody together and they passed this resolution. It was great and it was a good PR gesture. But then, are they going to step in to save the Thunder Bay Symphony Orchestra or Magnus Theatre North-West?

Mr Christopherson: I really meant an arts policy as opposed to just a resolution.

Ms Stewart: Okay, policy. Windsor has had an arts policy and Hamilton has had reports and talked about it. London has talked about it. We talked to the mayor of London. Ottawa, because it is also the national capital, has things happening in different directions. Do you want to add something?

Mr Walford: Perhaps it would just help to say that one of the organizations that we have been supporting the formation of is -- the community arts councils of Ontario have formed an association. One of their absolutely principal issues and priorities is to go back to the membership, ie, the 45 or 50 arts councils from around the province, with exactly what you are saying. They realize that the only way they are going to be more successful is to have a stated policy within their community, within their municipality. Again, it is the levering effect of that, that if they do it means their community is committed; it means therefore that the local businesses may become more committed and it has a snowball effect.

Indeed, there has been some of the success. There are quite a number of communities that now have policies, and where they do not, it is certainly one of the objectives of this organization to ensure that they do.

Ms Stewart: I remember talking to the mayor of Windsor and the mayor of London about this. What they would like to do, and of course nobody even has the money to do it, is to have economic impact studies, because they are both convinced that the arts do help their cities. I wish that we had the money. I wish I could hire Allan Gregg or Martin Goldfarb to do a survey of how the arts help different cities.

Mr Sutherland: Sounds like a great project for the MBA schools in both those cities to take on.

Ms Stewart: That is an excellent idea, because we have facts and figures but they are really not up to date. I am embarrassed. I would not use statistics unless I felt that they were absolutely viable, but I think that it would help us if we had that.

The Chair: I am going to move along to Mr Phillips and I am going to ask him to do it in one minute.

Mr Phillips: Question and answer?

The Chair: Question and answer.

Mr Phillips: I think I may already have my answer, and that was that I am familiar with the million-dollar multicultural fund and how effective that is and how that is I think working to ensure that everybody has access to the council. I now know it expires in another month and a half or two months.

Ms Stewart: Yes.

Mr Walford: That is part of this request.

Mr Phillips: Yes, I see that. I could not quite figure it out until you explained.

Ms Stewart: But we would use more than $1 million in that community; we would use $2 million.

The Chair: Thank you for coming and thank you for your presentation.

MUNICIPAL FINANCE OFFICERS' ASSOCIATION OF ONTARIO

The Chair: We would like to move along now to the municipal finance officers. We start to recognize people as they recur. I am being forced to play the heavy. I am going to restrict your time to the allotted amount of time and I will try to get the members of the committee to have their questions reflect the time allocation. If you would begin, please.

Mr Rinaldo: Let me introduce myself first. I am Joe Rinaldo. I am the chairman of the Municipal Finance Officers' Association of Ontario as well as the regional treasurer and commissioner of finance for the region of Halton. With me, as you met earlier today, is Bob Richards, who is the vice-chairman of the association, as well as the treasurer of the region of Peel. With us also is Heather Bell, our executive director of the association.

I would like to express our appreciation for giving us the opportunity to give you a different perspective on municipal finance officers and municipal finance issues prior to your establishing the budget. Bob Richards has co-ordinated our submission to you and will be presenting it to you. With that, I would like to turn it over to him.

Mr Richards: I would like to just echo Joe's sentiments. Thank you to the standing committee for the opportunity to contribute to the development of fiscal and economic policy in this province. The budget that you are deliberating is perhaps the province's most important policy instrument, and public consultation on both the process and content of the budget is an important feature of the parliamentary system of government.

At this point in my remarks, it is probably a good idea to provide a brief overview of our mandate and membership of the organization I am representing. The Municipal Finance Officers' Association of Ontario or MFOA is the professional association of Ontario's municipal treasurers and senior financial officers. MFOA features 400 individual members from more than 200 municipalities across the province and is considered to be the authoritative source of opinion on municipal finance issues. MFOA has appeared before past incarnations of this committee and has worked closely with the Ministry of Municipal Affairs on a variety of municipal finance issues.

Enough about us. Let's get on with the issues.

As we stated earlier, the Canadian economy is in a recession, particularly acute in the province of Ontario. People and businesses are indeed hurting. During such recessions, all levels of government, we feel, are morally obliged to help restore economic growth and provide a safety net for those individuals who require assistance. All levels of government are also obliged, as a result of the disciplines imposed by the market -- and, you see, we are treasurers -- to operate within a fiscally responsible framework.

Fiscally responsible governments realize that large, persistent government-sector budget deficits encourage inflation, invite restrictive monetary policy from the Bank of Canada and reduce fiscal flexibility in meeting emerging new policy needs. Governments that are truly committed to the welfare of the public understand the importance of sound fiscal management.

In drafting its position on the 1991 budget, MFOA has tried to balance the twin obligations faced by all levels of government, the obligation to deliver economic and social assistance to the public and the obligation to operate within a responsible fiscal framework. Meeting one of the twin obligations at the expense of the other simply does not do justice to notions of good government.

MFOA therefore requests that no new cost-shared programs be introduced in the 1991 budget until provincial and municipal governments are satisfied that existing costshared programs are being adequately funded.

Having drawn attention to this overriding need for balance, we would like to put forward a few ideas aside from that one.

The first one deals with the word "disentanglement." The current provincial-municipal financial relationship is characterized by a confusing array of unconditional grants, conditional grants, cost-shared programs and special-purpose bodies armed with unaccountable taxing powers. For instance, the standing committee should be aware that the province's unconditional grant program has been roundly criticized in recent years by both the municipalities and your own Provincial Auditor. The conditional grant program now features over 100 individual grants to municipalities, each with its own complex formula. Special-purpose bodies armed with no electoral accountability are now responsible for more than 50% of the property tax levied by most municipalities; by many, at least. This entangled reality serves neither the province nor municipalities.

It is important to put the preceding statement and my rather strong wording in context. The current provincial government and the current Minister of Municipal Affairs inherited this situation. To its credit, the current provincial government has served notice on the need for financial reforms based on a reallocation of roles and responsibilities between the two levels of government, a concept referred to as disentanglement.

A process for disentangling the provincial-municipal financial partnership is currently being developed around the long-awaited Ballinger-Hopcroft report, as it is referred to, half of whom is still alive and well. This report is expected to be released this spring and it is still the single most important governmental issue on the agenda of many municipal decision-makers.

MFOA views disentanglement as the guiding principle that should govern the province in any contemplated budget initiatives that directly impact on municipal government. It is worth noting that disentanglement need not result in financial windfalls for one level of government at the expense of the other. Disentanglement can be revenue neutral in its attempts to match funding responsibilities with the same level of government that makes the key policy decisions for a given program area. In short, it is all about political accountability.

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Let's talk about timing for one moment. In order for us to budget effectively at our level, it is imperative that governments be provided with early announcements on transfer payments and unconditional grants. We understand that a new provincial government requires a certain amount of time to decide on the appropriate allocation of the billions of dollars transferred each year. In this sense, the expected mid-February announcement by the Treasurer is not terribly surprising. It is also, however, not terribly helpful. In future years, MFOA is hopeful that transfer payment announcements by the Treasurer will manage to precede the fiscal year for which they are being announced. Mid-November to us seems reasonable. Our fiscal year, by the way, is a calendar year, unlike your own.

The Minister of Community and Social Services has received and endorsed the broad findings of PMSSR, the Provincial-Municipal Social Services Review. This review of all social service responsibilities shared by the two levels of government seeks to simplify the financing and administration of the various programs. In the eyes of our association, the key recommendation of PMSSR is the recognition that general welfare assistance benefits should be removed from the property tax base and funded entirely from provincial revenue sources.

I will not repeat myself from this morning. I think it is on the record that GWA is not a popular item with the municipal sector.

During the legislative session before the 1990 election was called, Bill 229 was introduced for first reading. This bill would have extended and modernized municipal borrowing powers. The bill was the result of a three-year consultative process involving officials from the Ministry of Municipal Affairs, the Treasury. municipal officials and private sector investment dealers. It actually goes beyond that. I started working on this in 1980. The reforms have been long overdue.

Bill 229 was the first major rewrite of municipal borrowing and investing legislation since the 1960s. Passage of Bill 229 would have brought Ontario municipalities into the mainstream of modern money market practices while preserving the regulatory integrity of the Ontario Municipal Board in monitoring the accumulation of municipal debt.

We fully support the provisions of Bill 229 and request that it be reintroduced in the upcoming session of the Legislature.

We are interested in working with the province to develop new sources of revenue to relieve the growing financial burden placed on property taxpayers. To this end, our association has recently released a report on the imposition of a gross receipts tax on cable and other utilities making use of municipal rights of way. We require the support and participation of the province in its search for innovative approaches to funding municipal services in Ontario. We would ask the standing committee to consider the notion of a 1991 budget discussion paper to deal with the topic of new municipal revenue sources. If the standing committee thinks such a discussion paper could be useful, perhaps a recommendation to the Treasurer to commission such a paper would be appropriate.

I hope it is not lost on the members of the standing committee that nowhere in this brief did MFOA merely step forward and ask the province for more money. We feel this type of intergovernmental relations is simply not realistic given current economic realities. Instead, MFOA urges the standing committee to view municipalities as real partners with the province, partners who can stand on their own two feet in many situations. Municipalities balance their operating budgets every single year. In recent memory, the province has done so once. The challenge for the province is to listen carefully, act when help is needed and stand back when intervention is not justified. MFOA hope that the province's 1991 budget takes this advice to heart.

Mr Rinaldo: We would be more than happy to answer any questions.

Mrs Sullivan: As I said in a previous presentation, I am again surprised that the question of waste management was not raised, particularly with Mr Rinaldo at the table. Why are you not calling for $25 million for a landfill?

Mr Rinaldo: Halton has gone through a lot in waste management. We stared in I believe 1974 when the region was established, went through a first process and did not get anywhere. We have gone through a second process where our tipping fee went from about $12 a ton to $156 and really should have been higher than that.

I swore that in my next position I will go into a municipality that does not have a waste management problem. I have gone through two of them, one in Hamilton-Wentworth and one here, and I can assure you that I hope this is my last one. I still feel that municipalities should be able to fund the waste management and should have responsibility for it. Just to make it clear, what Halton was asking for was to take advantage of the program that you have initially put forward that the province has in place today in terms of assisting in the construction of the new facility.

Mrs Sullivan: You mentioned one appropriate type of municipal revenue source that may be new and I am interested that you bring it forward now, given the kind of feeling that is on the ground that maybe property taxes are awfully high and a budget paper at this point in time may be something that the Treasurer might be reluctant to look at. But what other sorts of revenue sources would you be looking at?

Mr Richards: There is a wide range and there are many that we do not even know about yet. For example, we, for one, have thought about municipal lotteries, something which we are excluded from, and hotel taxes. The tire tax to me seems like a revenue that should be a municipal revenue. As I said earlier, we have tire disposal left at the municipal level and it is being collected at the provincial level for I am not sure what.

The corporate concentration tax was an idea hatched from municipalities, taken by Treasury and used for provincial purposes. It is a clear incursion into provincial revenue-raising. Surely if anyone is responsible for the servicing of high-rise corporate concentrations of buildings -- it is a municipal road that is getting there, it is a municipal sewer, it is municipal water, and the funding is going to the province of Ontario by the corporate concentration tax.

We are looking for that kind of energy and ingenuity either to be unleashed for us or to be allowed to unleash it ourselves. We have the ideas; we just do not have the legislative framework to allow us to use them.

Mr Rinaldo: In the past we have offered to assist the Ministry of Treasury and Economics to write your budget. They have declined so far. We would be more than happy, if you wish, as one of your suggestions, to put that to work with them on that area.

Mr Richards: On the waste issue too, I think that municipalities are not looking for handouts on this issue. The best thing for the province of Ontario to do in this case is to get out of the way.

Mrs Sullivan: I suppose the reason that I asked the question is that Halton is eligible for $25 million in grants and they have not been forthcoming. I just wondered why it was not on the table.

Mr Rinaldo: Obviously that is a local issue and we were talking about the broader issues. If you have a program in place, we would want to take advantage of it, but if you make it clear that that is our responsibility and say income maintenance is your responsibility, we would obviously plan accordingly. That is what we want to do. We want to have the ability to plan our community when we know what the ground rules are. In the past few years, the ground rules have changed so dramatically that it is hard for us to plan responsibly for what is coming, what we have to provide for.

Mr Sutherland: Mrs Sullivan asked the question I was going to ask.

Mr B. Ward: I will pass.

The Chair: Very good. Thank you for your presentation.

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ONTARIO NON-PROFIT HOUSING ASSOCIATION

The Chair: The next group for presentation is the Ontario Non-Profit Housing Association: Debbie Kraus, executive director, and Cassie Doyle, president. You may begin.

Ms Kraus: I am Debbie Kraus and I am the executive director of the Ontario Non-Profit Housing Association. I would like to start by just giving a brief introduction about

our association. The Ontario Non-Profit Housing Association was established in 1988 by municipal and private nonprofit housing corporations in Ontario. We believe that access to decent, appropriate and affordable housing is a basic human right.

The goal of ONPHA is to build a strong non-profit housing sector and to promote the production and management of high-quality, affordable housing across the province. We now have 375 members and these members own more than 48,000 units, representing 55% of all municipal and private non-profit housing under management across the province. Our members come from urban and rural areas, small and large communities from right across Ontario. I would like to turn it over now to Cassie Doyle, our president.

Ms Doyle: I am from the city of Ottawa, in case you have not seen anybody from outside of Toronto today.

The Chair: We are particularly happy to have you, because we have only had one or two other presentations from outside of Toronto and I think we need that perspective.

Ms Doyle: Good. I wanted to say how much we appreciate your giving us this forum to present today. I am sure you have had quite a mishmash of presentations, so I would just ask you to focus on non-profit housing for the next 28 minutes.

The starting point of our recommendations you have before you is the very serious shortage of affordable housing in the province of Ontario. What is critical to our association is housing for low- and moderate-income families and individuals.

There is, I guess, a traditional view that non-profit housing or socially assisted housing is targeted to those who have the highest need, those on GWA, FBA or senior citizens' pensions. But what we recognize is that there are a growing number of working people in Ontario who require assisted housing, whose needs cannot be met in the home ownership market or the private rental market. In fact, in many parts of the province you could have two minimum wage earners who still would require assistance if they need family housing. That is really the starting point of our recommendations.

What we wanted to emphasize to you today is the importance of timing to us, particularly in your consideration of the 1991-92 budget. We wanted to put forward in the strongest way the need for the inclusion of funding for non-profit housing development in this budget that you are considering now, in the first instance, because of the needs in the province.

From the indications from your own Ontario Housing Corp, there are 45,000 people on the waiting lists that are administered by the public housing authorities. The nonprofit sector is the only new housing that is housing people off those lists. Other indications show that over one in three renter households in the province are paying an inordinate amount of their incomes on housing and that is pushing them into a poverty situation. We want it in relation to the need and particularly considering the current economic circumstances. Housing is one of the first things that hits people when one income earner or the sole income earner loses his or her job, so we would like you to keep that in mind.

The second thing is that non-profit housing is an excellent source of job creation or maintaining jobs in the construction industry particularly. Our research shows as does that of our sister organization, the Co-Operative Housing Association of Ontario -- together we have found that for every housing unit that the province funds in the non-profit sector, it produces at a minimum two full years in the building trades. That maintains employment in the building trades. As you are aware, the building trades are really in a serious slump right now and non-profit housing in many parts of the province is the only thing that is going to be built over the next 18 months, so job creation potential is an important thing to keep in mind for this budget.

The third is the efficiencies around producing nonprofit housing in this period. We have an infrastructure coming out of the Homes Now program which was incredibly successful. We have an infrastructure of developers and non-profit organizations across the province that are ready to build. We know that because of the economic downturn, we can pick up land or projects at a price which we could not do two years ago. Our tender prices on new construction are coming in in some parts of the province 20% less than they were 18 months ago, so I think it is something to keep in mind that now is the most efficient time for the province to build something that in the long term is going to continue to serve the needs of low- and moderate-income households.

Essentially, I guess the key point in today's presentation is to ask that you include funding for the development of non-profit housing in this budget year. This will signal the start of the province committing itself to stable and predictable funding for non-profit housing development. That is what the resource groups in non-profit, community-based organizations across the province want from the province now as an indication that there will be funding in this budget and that there will be a continued commitment so that we do not have these kind of runoff programs that everyone gears up for and then we run out of units.

There is the potential out there now to build. The time is right, the need is high, so we would ask that you keep that in mind in this budget year. In the long run, we will be calling on the province and looking to the province to honour its commitment that was indicated in An Agenda for People of building 20,000 units a year. What we basically want to see in this budget is an indication that that commitment will start.

That is the first part. I would like to turn you over now to our vice-president, Colin Gage, who is from Victoria Park Community Homes in Hamilton.

Mr Gage: I would like to address that any new program or any new initiative by the government must be very receptive to the diversities between both urban and rural differences. All too often, we see a lot of internal differences between ministries when there has got to be a co-operation of ministries, specifically the Ministry of the Environment versus the Ministry of Housing. When we get into rural areas and also into urban areas, we find that all too often this bogs down the process and we cannot respond quickly enough because it is caught up in myriad red tape with the two ministries.

Another issue is that any new development or any new program must be receptive to innovation as far as design goes. We are very fully cognizant of the cost implications of building and what we are striving to do is to build a very high quality product, but also to maintain our focus on making sure that it is architecturally attractive, that it fits into the community, that it is received well in the community and also managed well in the community. All too often in the past we have seen non-profit housing tarnished by what I would say is mismanagement and misdesign.

The new programs should also be very cognizant of the acquisition and rehabilitation of existing buildings. Right now we are seeing that the older rental housing stock is deteriorating at a very quick rate. We do not find the private sector responding very quickly to rehabilitate these housing units to a level that we would find acceptable so we are finding that the people who occupy these units are within our, if you would, catchment and they are not being addressed properly. We find that they are living in squalid conditions and because of the current economic times the landlord cannot respond effectively to rehabilitate the housing units. Once again, I must emphasize that the acquisition of existing housing stock will allow us to develop on a product that is already there and has proved itself over time.

The next area I would like to focus on is the province's Housing First policy and the provincially owned lands. We fully endorse the province's position that 35% of all provincial land under the Housing First policy will be dedicated to affordable housing. We would like to take that a little bit further and suggest to you that any small infill or smaller lots be designated totally or solely for non-profit housing and that when any larger tracts of land are being subdivided, the non-profit housing sector be very much involved with the planning process of those lands with the Ministry of Housing in order to ensure the inclusion of these lands for non-profit housing.

The rationale behind this is that we see this as a continuing, ongoing supply of affordable housing, if you will, and it will continue in that fashion, rather than holding a price at a set level for five years, selling it initially or building it initially for a set price and then in five years releasing it to the open market where inflation and the market forces will take over. We see that if we are allowed to move in with non-profit housing, it will retain that tenure for 35 years. I leave that for your consideration.

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Ms Frenette: My name is Sybil Frenette and I am from the city of Kitchener. I work for their non-profit housing corporation and I am also treasurer of this organization, so I have something in common with yourselves in that I watch the money of my organization like you watch the money of the government.

I wanted to talk to you about two things. One is the provincial policy statement on housing and the other is financial vehicles that our organization feels can be put in place to make non-profit housing more cost-effective.

First, in the area of the provincial policy statement, we endorsed strongly the recommendations of the provincial policy statement on land use planning for housing that was approved last year. Our problem with that policy statement, though, is that it does not have the teeth that it needs to be implemented. We see it as an opportunity; it is full of very good ideas. However, we do not have the mechanisms of accessing the recommendations contained in that policy statement.

For example, one area that is of particular interest to us is a statement that 25% of all lands under development should be set aside for affordable housing. One problem with that statement is the definition of "affordable." It differs very dramatically from the core-need thresholds that are established under the non-profit co-op and OHC programs, so there is not a matching between what is considered affordable under that policy statement and what is true affordable housing. We would like to see that area worked on and amended and expanded.

The other area of the affordable policy statement is that 25% of the land be set aside in some manner. It cannot be simply a policy statement in an official plan document that is a wish list. There has to be a means of obtaining that 25% affordable land. We have some suggestions that we would like to present to the government and work with your staff on creating those vehicles for allowing that land to be set aside.

One example is that school boards in Ontario are allowed to reserve land for school construction. We would like to be able to reserve land for non-profit construction in new plans and subdivisions. That way people moving into a new subdivision would know that the land is there, is going to be developed for non-profit housing, and hopefully we would not get the kind of community resistance we have been getting to development and it would be more acceptable in that the land would be noted as being for non-profit housing.

We would also like to see mechanisms such as cash in lieu for land that is set aside for non-profit housing. I can give you another example: for park land dedication, municipalities are allowed to have cash in lieu when they want land reserved for park use. A similar mechanism could be set in place for cash in lieu to be donated to a bank of funds that could be then used to buy land for non-profit housing or the land itself could be set aside through subdivision agreements for non-profit housing. Our organization has many ideas such as this, and we would appreciate the opportunity to work with your staff on these ideas.

In the area of financing, similarly to land use initiatives, we can also propose some financing initiatives to make the non-profit housing program more cost-effective. One area is index-linked mortgages. This is a program that is currently operative with the co-operative sector. We worked last year on a think tank with the co-operative sector on a capitalization subcommittee and we had, as I say, a think tank and a number of ongoing meetings with the co-op sector to propose financing means to bring the non-profit program into a manner that is more cost-effective. As I mentioned, the index-linked mortgage is one idea; land banking is another. We have received some funding to pursue these initiatives and, again, we will be meeting with your ministry staff to propose our recommendations.

In summary, what we want and what we are here today for is to ask you to keep non-profit housing as a priority of this government and to ensure that funds are set aside in this year's budget for non-profit housing.

Mrs Sullivan: I think this is a very useful brief because you have brought some new ideas to the table as well. I want to ask if you have discussed at all a recent court decision relating to the Burlington situation and how you see that as having an impact on the provincial statement on land use.

Ms Frenette: I have looked at the Ontario Municipal Board decision and I think Burlington went a little bit too far. Again, it was a matter of trying to find the mechanism. They were struggling to see, "This is the provincial policy. How do we then access those lands" -- in that case it was condominium units -- "for affordable housing?"

There has been very little direction from the province on how to implement that policy statement. Burlington gave it a try and went too far. They overstepped the bounds of normal planning and they got their knuckles rapped by the OMB for doing it. But it is only through those test cases that we are going to learn how to access affordable land.

Mrs Sullivan: But you feel that in your own communities you can still proceed under the guidelines now, until there is more specific legislation or whatever, even given that ruling?

Ms Frenette: No, I do not actually. I think that is the problem for us, that nobody knows exactly how we can get at those lands. They are all trying their own mechanisms. I suppose, to answer your question, we will continue to try until we are told we cannot.

Ms Doyle: I was just going to add that in the city of Ottawa we have been quite successful for a number of years in requiring land to be set aside for non-profit housing at subdivisions, at the point of approval of subdivision, and this was much further along a site plan. There are some technical considerations around that Burlington decision that --

Mrs Sullivan: Certainly that is where most of our communities have been most successful.

Ms Doyle: Yes, at subdivision.

Mrs Sullivan: It is getting them right on the ground.

Mr Christopherson: It is a pleasure to see my former colleague and good friend Colin Gage here today along with one of his colleagues. I agree with the previous speaker. It is an excellent presentation.

As Colin will know, I was the chair of the regional task force on affordable housing up to the time that I was elected to Queen's Park, so I am aware of a lot of the issues that you are dealing with at first hand and the difficulty with finding mechanisms for the 25%. When I last checked with the region, they were still on the task force, Colin, grappling with the official plan amendments and how to actually incorporate some of the desires in the plan so that it would have some meaningful impact down the road when these things are tested. I know the kinds of problems that are there and we have inherited those problems. I can assure you that we appreciate the willingness to work with us in partnership to try to find solutions for them. None of them are easy, and I do not think any party suggested they were easy. We have been given the responsibility of finding those answers and we look forward to working with you on them.

I was particularly interested, Colin, to hear you refer to the overlap where the Ministry of the Environment was less than supportive at a critical time. I gather you might be referring to the project that we had in Hamilton on Sanford North, right near a major factory, where some help from the Ministry of the Environment may have made the difference. I am not sure if it was at the OMB or not. Was it?

Mr Gage: I think it is verging on the OMB now.

Mr Christopherson: Verging, okay. Regardless of how that turns out. there is no question that the case would have been strengthened if the Ministry of the Environment had felt a little more comfortable in setting its priorities. It was not that they did not, that they backed away from the housing being the higher priority, but the fact that they just backed away completely from making any recommendation, which left the fight to go on. It is wasting a lot of time in one way that really is not profitable for anyone. So I would hope that there will be more emphasis on that.

You are the first group that I am aware of that raised that issue and, of course, having seen it in my own community, I am aware of that example. There may be others, involving other ministries. I think that is an issue that we should be looking at with you to ensure that there is good co-ordination with other ministries and that there is support, where possible, and that we are articulating clearly the priorities, so that we do not get into those kinds of situations.

I would just close by again thanking you for your excellent presentation. I appreciate it.

The Chair: I have one quick question of my own. I have been very much interested in what the average cost is per square foot of building the units that you build, land included, if you can. I know it is probably not the same throughout the province, but can you give a ballpark number?

Mr Gage: Land included? It is difficult when you include land. Land is a large variable.

The Chair: All right. Let's try land excluded first.

Ms Doyle: In Ottawa now we had been up as high as about $72 per square foot for residential construction. Our recent tenders have been coming in at about the mid-60s. Those are mostly concrete high-rise buildings.

Mr Hansen: It think it was somewhere in the neighbourhood of between $40,000 and $65,000 per unit. I am guessing now.

The Chair: What is the average square footage?

Mr Gage: About 900 to 1,000 square feet, depending on where it is.

Ms Doyle: There is quite a range in terms of the price depending on the land, I think. It is a big variable.

Mr B. Ward: Locality and lots of variables.

The Chair: That is very useful. Thanks for your presentation.

Mr B. Ward: Well done.

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ONTARIO SCHOOL TRUSTEES' COUNCIL

The Chair: We have our last presentation of the day, the Ontario School Trustees' Council. We have Chuck Yates, president, and Lorraine Gandolfo, president of l'Association française des conseils scolaires de l'Ontario -- my French is not that great; I am glad my French teacher is not here; and Betty Moseley-Williams, president of the Ontario Separate School Trustees' Association.

Mr Yates: Thank you, Mr Chairman. We are outside the Toronto area too. Betty is from North Bay, Lorraine is from Brampton and I am from Cambridge.

We were aware of the fact that you have not had the opportunity to look at our submission and yet we are also aware of the fact that you have had a long day, so I would like to suggest that we will highlight our submission and then, if you do have any leisure time, I would hope you would look at our submission in its entirety.

The Chair: We have to review all of the submissions before we can make our recommendations.

Mr Yates: We are pleased to have this opportunity to appear before the standing committee on finance and economic affairs to offer Ontario School Trustees' Council advice to the Legislature in preparation for the 1991 budget. The council's recommendations for the 1991 budget were more difficult to develop than in previous years, given the timing of the government's announcement of the increase in transfer payments to public sector partners, including schools, hospitals, municipalities, colleges and universities.

The pre-budget consultation process represents an important and necessary opportunity for the Ontario government and MPPs from all sides of the Legislature to discuss with the education community, in an open and accountable way, education costs and the level to which education should and deserves to be funded by the people of Ontario.

We take this opportunity not to point fingers and make accusations, but to genuinely work with the provincial government to embark on fiscal policies and social priorities that will ensure fairness for Ontario taxpayers and equality of opportunity for all Ontario school children in both English and French schools.

In 1990 the provincial government increased school board operating grants by 8.7% over 1989, bringing total 1990 provincial operating grants to $4.5 billion. In 1990, provincial grants represented approximately 40% of school board expenditures, excluding capital expenditures. The remaining and much larger 60% was funded by school boards through taxes on local residential, farm, commercial and industrial properties.

In recent years, a number of new, almost hidden costs have crept into all school board budgets. These costs have little to do with educating students. They include the employer health levy, pay equity, GST, the CPP and unemployment insurance increases, occupational health and safety requirements and obligations and increasing costs of ensuring environmentally safe and secure schools. Council is saying that the provincial government must provide sufficient resources to enable school boards to be as committed to meeting broader social and public policy priorities as boards must be to providing the best educational programs and services.

The Ontario Public School Boards' Association has estimated that in 1991, on a system-wide basis, the costs of pay equity, occupational health and safety requirements, environmental protection, the health tax and the GST will consume 4% of the increase in grants over 1990. This means that the first $200 million of the increase over 1990 will just cover these costs. Education-related costs, such as programs and services and teachers' salaries, will increase by an estimated 9%. Consequently, a 13% increase in operating grants in 1991 will be required to allow boards to meet the dual obligations of providing quality education and meeting their obligations as employers.

We hope the committee will agree that high standards of health and safety for school staff, environmentally healthy classrooms and playgrounds for our children and pay equity in the public sector cannot and should not be traded off against the need for high-quality educational programs and services. Whatever the added burden of costs in English schools, it is that much greater in French schools because of the unavailability of materials, thus resulting in added costs.

The Ontario School Trustees' Council strongly urges this committee to recommend to the Ontario government that through the Ontario budget or by other special grant programs, provincial financial support for schools be increased to reflect not only new and ongoing educational programs and services, but also the additional non-educational costs. Council further urges that the financing of education be equitable for all students. We urge the committee to recommend to the Ontario government that pay equity costs of school boards be funded from the consolidated revenues of the Ontario government or from the public sector pay equity fund announced by the Ministry of Labour.

The province recently announced an income protection program for those who find themselves victims of layoffs and plant closings as a result of the recession. We applaud the government not only for its willingness to show compassion, but also for allowing victims of the recession to maintain their dignity. In many cases families of modest means become distracted and disjointed as they scramble to make ends meet. Children and young adults are not immune to these problems and often the problems at home emerge in the school system in one way or another. The mandate for our schools has grown and may continue to grow as governments look at new ways in which schools can address social and adolescent problems earlier on and in a more preventive manner. As the new government at Queen's Park contemplates new challenges and goals for schools, particularly in light of the social consequences of recessionary times, the council must urge caution for at least three main reasons.

First, expanding the school system's mandate will probably involve a renewed financial commitment on the part of the provincial government. It is not enough to develop new programs or services. They must be implemented. Staff must be trained or retrained, facilities must be adequate and goods and services must be purchased.

Second, at what point does the continued expansion of the mandate of the school system leave less time to adequately deal with the basics of learning -- reading, writing and math? While the role and goals of our schools broaden, the length of the school day does not. There must be proper planning and we must resist ad hoc stopgap solutions which produce substandard results and consequently waste taxpayers' money. French schools for the most part are still in a catch-up situation even with regard to the basic elements of education.

Third, the council shares the new minister's stated concerns regarding the need to examine the entire range of social, community, provincial and local services currently in operation in the name of serving children. We ask that this committee recommend that no new mandates be placed on the school system without full review of the impact on the current goals of schools, the financial resources necessary to fund new mandates and the degree to which new mandates and services coincide with existing services directed to children and adults.

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The $700-million capital works program announced in the speech from the throne demonstrates that Ontario is willing to invest in itself, in its citizens and its labour force to help turn the tide of the recession.

One of Ontario's most significant capital requirements continues to be its schools. Of Ontario's 4,600 schools, 20% were built 50 years ago or more. To meet curriculum and program enhancements, requirements of technological education, energy conservation, environmental and occupational health and safety standards, many of these schools require an immediate renovation, repairs and modernization.

School boards' five-year forecast of capital requirements amounts to almost $6 billion. In response, the province allocated $1.5 billion over five years or $300 million per year. While the province's capital allocations have increased steadily, there is still a significant shortfall and the backlog of new schools and badly needed renovations and repairs to existing schools continues to grow. Council is pleased, however, that the government has moved towards a multi-year capital grant commitment. This approach has enabled school boards and the province to undertake capital projects with considerably more planning.

For growing communities, it is unfair to taxpayers and children that their children must spend their entire school experience in portable classrooms without easy access to school libraries, modern labs, vocational facilities and adequate indoor lunch and physical fitness facilities.

The OSTC urges the committee to recommend to the Treasurer of Ontario that school boards receive a sizeable allocation of the special $700-million capital works program announced in the throne speech.

Council urges the committee to recommend to the Treasurer of Ontario that the government continue to honour its five-year, $300-million-per-year commitment for school board capital grants.

We also urge the committee to recommend to the Treasurer of Ontario that annual capital grants to school boards continue to be announced on a multi-year basis so that school boards can both budget and plan their capital construction programs.

In the coming months there will be much said about the financing of education, particularly as the Ministry of Education, along with the education community, begins the task of examining how best to improve our current system of distributing education grants to some 174 public, separate and French-language school boards throughout Ontario.

In addition, the government's Fair Tax Commission will undoubtedly be examining, among other things, the role of property taxes in education finance. In 1991, 60% of education operating expenditures, almost $6 billion, was financed by local property taxpayers out of their disposable incomes.

Families on low or modest incomes have been hit hard by a policy that ignores their ability to pay higher and higher local taxes for education. Families and individuals on fixed incomes and our elderly have been shouldering the cost of education, which continue to eat into their savings. Ontario's farm communities continue to shoulder an ever-increasing burden for education costs, regardless of changing economic conditions which affect their livelihood.

Trustees' council is proud of its long and consistent record of bringing to the attention of successive government the issue of provincial responsibility in education finance. The basic premise continues to be that by having the provincial government pay the greater share of education costs, be it operating or total costs, all taxpayers pay a share based on their ability to pay.

Council is pleased that the new government is very aware of the difficulties faced by local taxpayers. An Agenda for People stated:

"New Democrats propose raising the provincial share of education costs to 60% over five years, providing a solid base for a better education system and lifting some of the burden off property taxpayers. The cost of this initiative over the next two years would be $1.5 billion in property tax relief for Ontarians. We want to reverse the punishing increases in property taxes which hit seniors and low-income people especially hard."

How and when the spirit of this promise is met will be the subject of considerable consultation among the Ministry of Education and education stakeholders in the months ahead. It will also depend on the recommendations of the FTC. In the end, however, the provincial government must guarantee that the spirit of the promise which it made to the people of Ontario will be met.

To conclude this presentation, the council would like to reiterate its emphasis on forging a new partnership between provincial and local levels of government. We must develop a partnership of accountability to ensure the effective and efficient delivery of educational services. The achievements of desired results of education programs and services had a better than average level of support from our taxpayers. A partnership of accountability includes, among other things, co-operation, consultation and participation.

First, to be effective in the delivery of educational services for our young people, school boards and the provincial government must place a priority on co-operation. It is difficult to promote co-operation, understanding and partnerships among those who work in and those who are served by the school system, if those who are accountable do not demonstrate leadership and co-operation.

Second, changes in provincial education policies and practices require enormous consultation with and among the educational community. No matter how well intentioned, change that is not understood by those affected is less likely to be successful.

Finally, we must encourage participation of all the stakeholders. School boards form the centre of implementation for education in communities throughout Ontario. Within the boards, schools become the next line of implementation right down to where implementation matters the most, the classroom. The process of forming legislation or developing fiscal and policy priorities such as we are engaged in doing today cannot be done in isolation from those who are accountable for the delivery of services or from those who receive and pay for those services.

I thank you for the privilege of being able to present this paper to you today. We will try to answer any questions.

The Chair: Thank you for your presentation. Our first question is from Mr Ward.

Mr B. Ward: A quick comment. If the provincial government moves in a direction to increase the transfer payments over a period of time so that the burden of the property taxes is relieved a degree from the education standpoint, what safeguards do you see would be in place so that school boards would not simply use that as new money, so to speak, and so that the economic burden would remain, but in fact the money would be used to shift, obviously, the funding percentage. Would you comment on that?

Mr Yates: I would have to give a personal comment on that, if I may. I would hope in the consultation that goes on between the provincial government, the Ministry of Education and the boards which would hopefully result in increased payments by the province, some kinds of ceilings would be put on what boards can spend per student. That is a dangerous thing for me to say, but I firmly believe that.

Mr B. Ward: That is your personal opinion?

Mr Yates: That is a personal opinion. That in itself would contribute towards equity of opportunity for all students in the province, because at the present time some boards have more access to assessment bases than other boards. I am going to get shot when I walk out of the room. but unless the provincial government does something to govern school boards or to correct regulations, then that will not happen, unfortunately.

Mr Hansen: Yes, it is sort of along the same lines as Mr Ward's 60% funding by the province. I have had some teachers, I have had some trustees and they have some concerns on construction costs. In other words, for each school we build we hire an architect, we spend time; we wind up by building them all different, but the end result is that we mainly teach, in a lot of the schools, if they are not technical schools, the same subjects. They have the same desks, they have the same lab equipment, whatever the case may be.

I come from a rural area and they cannot understand the architectural fees going into some of these schools. Why does not the province come out with a blueprint and say if it is a technical school, let's say it was 20 classes, that is 20 classes; if it is 30, the plan just expands for 10 more classes. Do you think you could comment on that one, because on the 60% funding it is still going to be taxpayers' dollars in the end.

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Mrs Gandolfo: I can only speak for the board that I am associated with, which is in Brampton, so close proximity to Toronto, so construction costs are very, very high. I agree with what you are saying. I think the subject, is the subject, is the subject, no matter where or no matter what the building looks like on the outside.

On the other hand, unfortunately, we live in a society that has become very comfortable with the way its houses look and the appearance. I only say that because in the board I am associated with, we have had several delegations from parent groups who are very concerned about what the school will look like, what it will do to the neighbourhood and to the aesthetics, what the neighbourhood will look like. They do not want the high priced houses to depreciate.

I can also say that more and more boards now are going to repeat designs and are cutting that high cost for architects. I know that for the French schools we are building, because we are not building that many yet, that is what we are doing. We are going to repeat designs. If the school is there and it meets the function, it suits the purpose, those costs are circumvented by way of using the same design. I agree with that principle.

Mr Hansen: I did get one comment from one of my constituents. They said at least one thing they did a blueprint on was the portables. I will close with that.

Mrs Gandolfo: Those are repeat designs, no doubt.

Mrs Moseley-Williams: I am from Nipissing -- North Bay -- and I think people are very aware of the architectural costs, but the plans have gone to southern Ontario. It has only happened to two schools, but other boards have approached the architect and the plans have gone there for schools. So I think it should happen and it could happen, but there has to be a lot of work on it.

Mr Hansen: Another comment I would like to make is that my son actually goes to school in Welland, which is a French-designated area. What has happened in Welland -- and I see what you are saying in this particular thing. It is a French school, and they have received the older schools and they are very slow at actually upgrading them to what the other schools are like. The one was built, I guess, about 1910 and that one was upgraded, one of the main French schools in Welland. So they inherited an old problem.

Mr Yates: I can respond to the same thing on the local board level. My board is in a Waterloo suburb. In the past three or four schools we have built, we have used architects. We have built a centre core which the cities of Kitchener, Cambridge and Waterloo have contributed towards, which is used as a community centre also. Then we have put the remountable classrooms around, which can be moved as the school population 20 years from now goes down. They are not portables. They look like permanent structures, but they can be picked up and moved to a new location 20 years down the road when you need another school. Then the centre core is left there as a community centre.

Mr Hansen: One more comment on the design. I have had quite a few conversations in this particular area. On construction of a school, a lot of people in my area -- and it is a rural area -- look at the fact that the school is used from 9 until 3:30, and some of these schools could be actually used as a recreational facility after hours and some of the design going into the school prohibits that.

These are just some comments. You know, you are a trustee. If you are going back out there and you are at one of these meetings, it would make it easier for the government if you come up with some solutions to some of these problems possibly.

Mr Yates: The schools that we design also, we make one area that we can seal off from, say, the classroom area, where the gymnasium, library and that type of area is open to the public. All our schools, even the older schools, are open to the public through the entire year. But the new ones are designed as a community centre in the core area and then remountable classrooms built around it.

Mr Phillips: I would be happy to talk with you some day on that. I have had a lot of experience in that thing and I have a personal view on it. We are off the subject, I know, but I was chairman of the Metro school board, as you probably know, and we had a program called study of educational facilities, which was kind of cookie-cutter stuff, schools made in factories essentially, no architects. I think we put schools in neighbourhoods that really are going to be there for 50 years and did not look right. We might have saved a maximum of 1% on the construction costs but probably lost it on some other things. So it has two sides.

That is why when we were looking at the northern relocation plans for ministries -- the Ministry of Correctional Services, I think, has gone to North Bay -- I was one who supported very much the buildings because they are going to be there for 100 years and enhance the community, even if it meant a little bit more money over the short term. I think that North Bay one looks good, personally.

Mrs Moseley-Williams: Oh, it is a beautiful building.

The Chair: This is all very nice, but can we focus a question then.

Mr Phillips: I am sorry. You have a recommendation, I think, on 13%. I am just thinking of the short term now. You have got very good recommendations over the long term that will be very useful, but just in terms of looking at the short term, the recommendation on the grants lineup this year of 13%, I think. My recollection was another trustee group came in recommending 11%, but maybe my memory is going.

The Chair: It was 11%.

Mr Phillips: It is all a blur now. I was wondering on what basis the two groups might have reached a different conclusion.

The second thing is, you have mentioned your personal opinion on the ceiling, but I think we had another. We had a school board in here earlier today that took the opposite view in a fairly strong way.

Mr Yates: I figured they would.

Mr Phillips: You may or may not have been here at the time.

Mr Yates: No, I was not. I knew I was living dangerously.

Mr Phillips: I am just on the 13% versus the 11%.

Mr Yates: The 13% we were going on, we were using Ontario Public School Boards' Association figures. They were talking about the $200-million -- at least the 4% for the non-educational costs and an estimated 9% for educational services increases this year, and that is where we came up with the 13%.

Mr Phillips: So that reconciles the difference between the 11% and the 13%. Thank you.

The Chair: Was there another question?

Mr Sutherland: Actually, I just want to pursue this thing about the portable schools and leaving them in this community, because I was told there was one professor around at one of the universities who said that we have got a real problem right now if we are going through this growth phase in enrolment but that later on we are going to have to close these down. I believe his suggestion was that you build schools that you can turn into nursing homes because we have got an aging population, or senior citizens' homes. I do not know if there has been much development.

I guess the other thing I just want to comment on is, I am not familiar enough with what the Ministry of Education guidelines are. Are there certain size requirements or maximum size requirements for elementary schools?

Mr Yates: Oh, yes. Everything depends on the enrolment, because you have to produce figures that students are coming in before you get any approval.

Mr Sutherland: Right, okay. But in the small towns there are a lot of small elementary schools where new subdivisions popped up. In that way, what are the requirements?

Mr Yates: If you are going to build a new subdivision, I know it is the same anywhere in the province. You have to produce the number of students who will be in that school.

Mr Sutherland: Okay, but are there regulations on how far you can bus kids at the elementary level, or is that set by a board? In a town of 10,000 people, there are schools from grades I to 6, and I think there are five different ones, small schools.

Mr Yates: I do not think there are any written-down regulations on how far you can bus a child, but there are considerations certainly from the parents' viewpoint for the time they are spending on the buses and that type of thing.

Mr Sutherland: Right.

Mr Yates: People today are not the way they were when I went to school. People today wish to have a school in their neighbourhood.

Mr Sutherland: Right.

Mr Yates: Very much so.

Mr Sutherland: I walked a quarter of a mile every morning to get the school bus.

Mrs Gandolfo: Just to add to that, in the case for example of French schools, in some areas our schools are becoming more and more regional schools. So the transportation time or distance varies, and I guess each local board wants to retain a certain autonomy in deciding how far it wants to go with the busing. But it is pretty much at the local level.

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Mr Yates: There are two corrections I might make to you. On page 3, at the bottom, it says 1991. It should be, on the fifth line from the bottom, 1990. It was a misprint. The same thing happened on page 5 in the middle of the last paragraph. The first $200 million had increased over 1990, not over 1991, just so there is no confusion.

The Chair: You could have just brought it back next year. Do we have any other questions for this presentation? Seeing none, thank you for coming this distance. It was very good to of you to take the time.

Mr Yates: Thank you very much for hearing us.

Mr Christopherson: I believe that does end our planned hearings.

The Chair: It ends it for this week. We do have some planned for Monday morning.

Mr Christopherson: Yes, and I just want to address and place a motion regarding giving some direction to the research staff as to some of the general thrusts and themes of what at least the first-cut draft report might look like, as well as perhaps spelling out a time frame for having that report available. We are now being circulated with the summary of recommendations, which I understand is a straight listing of all the recommendations that we have received to date. Is that correct?

The Chair: Till noon today.

Mr Christopherson: Till noon today, right. And all of this preparation of draft documents, as I understand it, is of preliminary drafts in light of the fact that there are still some presentations to be heard Monday, but we do have time frames that have to be realistically addressed in which to finalize an actual report that the majority of this committee can support and send on to the House. Therefore what I would like to do, Mr Chair, is to move that the -- and if I am in any way offending by virtue of how I am wording the motion, I apologize ahead of time, and perhaps I can be corrected now or after the meeting, but I would move that we direct the research staff to produce a preliminary draft report incorporating the following themes and categories. One, under the the heading of the economy, the impact of the recession.

The Chair: Go very slowly.

Ms Anderson: Unless you have it written down.

Mr Christopherson: No. I was again thinking of Hansard, but that is okay. None of this is firm; it is meant to be just a general direction. But under that general heading, things like the deficit, job losses, the economic restructuring and a comparison with the previous recession. That is under the impact of the recession.

And under cause of the recession and the contributors of the recession, such as high interest rates, high Canadian dollar, the war in the Persian Gulf, free trade and globalization and the international recession.

Also under the general heading of the economy, a summary of the forecasts that we have received.

Next, an important theme is the concept of what I will call, for lack of better words right now. answers in partnership. That would be described in terms of the public input that we all would like to see more of.

Also, the consultative approach -- more consultation in government as we develop these partnerships, and in partnerships developing and finding the answers to the problems that we face, and then talk specifically about some of those partnerships and how they may work. For example -- this is not meant to be totally all-inclusive -- I would also the offer the suggestion that it may not be possible to actually describe which partnership per se, if it looks like we are going to end up leaving anybody out. It just becomes such a long list that it loses its impact; that is open for discussion and debate.

We would be looking at partnerships, for example, with the arts community. communities themselves, business, labour and other governments.

The Chair: Education: Did you have a special category for that?

Mr Christopherson: It could be.

The Chair: I am just throwing this out because it was a major part of our presentations today, the teacher recommendations, the board recommendations and the colleges and so on.

Mr Christopherson: I guess I saw that as being part of the other governments, part of the board of education and that whole relationship, and maybe under the last heading, which comes under social issues. If you give me a chance to finish it, then if I have left any gaps, by all means.

Ms Anderson: So this is still just called partnerships?

Mr Christopherson: Which, I am sorry?

The Chair: Still part of the partnerships.

Mr Christopherson: Yes, the other governments, full stop.

Ms Anderson: I have got lost now; I am sorry. You went through labour. education, other governments.

Mr Christopherson: Then stop. No, social issues will be --

Ms Anderson: That is a major heading.

Mr Christopherson: No, the one after the next. The next major one was agriculture, a suggestion that we look at agriculture as a separate issue. Then social issues and under social issues, last on the list but by no means least, then talk about all the social issues and the specific concerns that were addressed.

That is merely to offer up strictly a general, loose frame by which staff would have some sense, if this motions carries, of what the majority is comfortable with, and of course as I understand this process, leaves it wide open for debate and discussion following the finalization of our public hearings next Monday.

The Chair: Seconder? Mr Jamison. Are there comments or questions?

Ms Anderson: I have a question. Perhaps you could elaborate a bit on the partnerships section, particularly the specifics. You want us to talk about what you have heard from education and from labour in that section. I am not entirely clear what it is you would like us to put in that particular section when we are looking specifically at partnerships that are in the answers and partnerships section.

Mr Christopherson: The first thing I mentioned was to define it, if you will. What does it mean? The theme through that concept is the idea of the public input. Consultation is a big part of that.

The partnerships themselves, then, and I couched it by saying that if we end up with so many individual groups to do a paragraph on partnerships with, you run the risk of leaving out a major group. Again, all we are offering is a framework. I do not suggest this has been fully --

Ms Anderson: This is to bring forward themes that have been presented to you in the course of the hearings as opposed to drawing from anything else.

Mr Christopherson: Yes, at this point. For your basic work, yes, because it seemed to be that there was an awful lot of discussion from many of the presenters about their desire. In fact today many of them were saying: "We are not even here to bring forward dollar requests. We want to talk to you about working with us. We want to be plugged into the system." The motion suggests that this is a common thread that ran through the overwhelming majority of the submissions and that this section would reflect that, and the importance of that partnership concept to the majority of this committee.

Mr Phillips: It sounds fine. I think it would be realistic. I felt there was a lot of consensus by the kind of professional forecasters about where they see the economy going, so I guess that will be one of the things that emerges. I think the partnership thing will emerge. I think the challenge for us will be that so close to having gone through an election, with each of us having laid out our vision, it is going to be very difficult for us. The Conservatives have probably already written their --

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The Chair: Yes, we saw it in the paper today.

Mr Phillips: I would dare say that is about it. I think that will be where there will be some differences of opinion. They have said what they are going to say and I suspect we will graft on that from where we may descend to a slightly different view about how realistic it is to contemplate. But I think we ought to get going on it. My mind has gone to mush right now. I cannot think any more. No, do not put that in Hansard. I can think now. It is all clear.

Mr B. Ward: We got that in the record.

The Chair: The oxygen is now there. You are snapping now.

Interjections.

Mr Phillips: I am fine now.

Mr B. Ward: Who was the guy who said that?

Mr Phillips: Thank you very much, Mr Stockwell. It is Mr Phillips speaking now.

Mr Christopherson: Just to clarify the third point under the general heading of the economy was indeed forecasts and I think it is important that we get the reflection of what was said. I think that might cover some of the concerns Mr Phillips raised.

The Chair: Do we need a time frame in terms of when we would like this to be available to us?

Mr Christopherson: If you can get an acceptance of that motion, I have a follow-up in terms of the timing on the draft.

Mr B. Ward: Tomorrow morning?

Mr Christopherson: Oh, you have extended it?

The Chair: Do we have a consensus? Do we need to have a show of hands on a vote? Everybody is happy with that? Very good. When would we like this?

Mr Christopherson: I would like to suggest or move that if it is humanly possibly -- I understand it may be tight, but it would be humanly possible -- if that could be ready by Sunday evening around 6? If that is possible, that would allow the three parties an opportunity to acquire drafts as they desired them on Sunday evening, so that Monday afternoon after the draft is walked through by the staff, if time permits we can actually begin some debate. I think there is a concern on the part of the staff, and it is certainly shared by our caucus, over the limited time that we have to discuss this, and it is an important document.

The Chair: Could I interject with a question at this point? The Treasurer has not given us any firm date by which he would like to have our recommendations. Are you aware of any date or target time frame within which we are working?

Mr Christopherson: As I understand it -- as a neophyte I always stand to be corrected -- this whole operation after Thursday does not have any standing or any money to operate, and we have to be finished and have the report adopted by Thursday and that is our built-in time frame. Since you are being very successful at getting consensus -- I did not want to load too much in at one time -- the second part of this was to build in that the dissents, if there are any, and I suppose at a stretch one could imagine there might be --

Mr Phillips: You should allow for that possibility.

Mr Christopherson: Yes, that is what we will do. We will just prepare for the eventuality that happens. I would ask -- if I can push the process, Mr Chair, through you -- if five days following our work on Thursday is acceptable to -- at least Mr Phillips is here and the staff -- if that suits the time frame they would have for the dissents to be received by the staff. They could then be incorporated into the final report and delivered to the Treasurer within a week of our wrapup.

The Chair: So that is the 14th and 15th?

Mr Christopherson: I have to say that I have not yet talked to the Treasurer about that deadline. If that does not work, I will get back to this committee, but my assumption is that would indeed give him time to consider it.

Mr Jamison: A question to the committee: As far as meals are concerned, we are allowed to claim up to $27 without a voucher. The lunch, one meal a day, was provided. Should we make an adjustment in our allowance?

The Chair: The clerk has informed me that the adjustment will be done on a basis that they will take the cost and distribute it over the number of members of the committee and deduct it and there will be a sort of prorated --

Mr Phillips: I just had two sandwiches.

Mr Jamison: I just had one.

Ms M. Ward: I could do with two more right now. Who took it away?

The Chair: The press guy.

Interjections.

Ms Anderson: It is a question of getting some more copies at the same time.

Mr Christopherson: On that point, I was going to suggest that if the reports could be made available, and this I think will require the support of the offices of these other parties, the opposition parties, if the report could be available somewhere in the Legislature that is accessible and acceptable to everyone, then it would be up to each caucus to distribute them to their members should they desire them. The best would be if the committee, under your direction, were to receive them through the committee mechanism, but if that is not possible I think that second approach would leave it up to the caucuses to get it in the hands of their people themselves.

Ms Anderson: Can I ask another question?

Mr Christopherson: Sure. I am going to run out of answers eventually.

Ms Anderson: The reports are generally considered confidential, so they are normally signed for and signed in and out of people's hands. Part of that would depend on whether you go in camera or not when you are writing your report.

The Chair: I think this is the way we should handle this. I just throw it out as a solution, that the question is, if you want it available Sunday night, who in this building is available to get it on Sunday night?

Mr Christopherson: I can get them for our caucus. I can pick them up. I am not sure how I will distribute them, but I can pick them up.

Mr Hansen: But who do you sign with? Who do you get to sign?

The Chair: Is it possible that if they were available Monday morning --

Mr Christopherson: That does not work as well. The whole purpose of Sunday evening is that they can be read Sunday evening and discussions would be ready to go.

Ms Anderson: I shall be sleeping here.

Mr Christopherson: Could I not suggest this, Mr Chair? If indeed the research staff can provide the documents in that time frame, then can arrangements not be made for some type of courier service to ensure that they are mailed out, and it is up to each caucus and maybe the clerk could contact the -- I do not know if there are caucus whips on these committees, but one person from each caucus who will find out where these things should be sent to on Sunday night and send them out by courier, received with a signature.

The Chair: Who is going to sign for it?

Mr B. Ward: Whoever receives them.

Mr Christopherson: Yes. A lot of members are in town Sunday night.

Mr Hansen: You have Norm Sterling. He is going to be flying in from Ottawa-Carleton. Who do you have, Murray Elston filling in for Monte Kwinter?

Mr Phillips: We do not need them Sunday night. Realistically, I do not think we will have any of our members who will be poring over it Sunday night. I believe first thing Monday morning is fine for us, but you guys can do what you like.

Mr B. Ward: We will make arrangements together on Sunday night.

Mr Hansen: I think they should be available to each of the caucus offices.

Mr Christopherson: The question is, do we ask the clerk's office to ensure that they are provided or do we do it as we think we need it?

The Chair: I do not think we need all this on Hansard. I will adjourn the meeting.

The committee adjourned at 1729.