ONTARIO FEDERATION OF STUDENTS FÉDÉRATION DES ÉTUDIANTES ET DES ÉTUDIANTS DE L'ONTARIO
ONTARIO CONFEDERATION OF UNIVERSITY FACULTY ASSOCIATIONS
COUNCIL OF ONTARIO UNIVERSITIES
CONFEDERATION OF ONTARIO UNIVERSITY STAFF ASSOCIATIONS
ASSOCIATION OF
MUNICIPALITIES OF ONTARIO
MUNICIPAL FINANCE OFFICERS' ASSOCIATION OF ONTARIO
CONTENTS
Thursday 21 November 1991
Pre-budget consultations
Ontario Federation of Students / Fédération des étudiantes et des étudiants de l'ontario
Ontario Confederation of University Faculty Associations
Council of Ontario Universities
Confederation of Ontario University Staff Associations
Election of Chair
Association of Municipalities of Ontario; Municipal Finance Officers' Association of Ontario
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair: Akande, Zanana L. (St Andrew St Patrick NDP)
Vice-Chair: Sutherland, Kimble (Oxford 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)
Ward, Brad (Brantford NDP)
Ward, Margery (Don Mills NDP)
Wiseman, Jim (Durham West NDP)
Substitutions:
Conway, Sean G. (Renfrew North L) for Mr Kwinter
Sorbara, Gregory S. (York Centre L) for Mr Kwinter
Wessenger, Paul (Simcoe Centre NDP) for Mr Jamison
Clerk: Decker, Todd
Staff:
Anderson, Anne, Research Officer, Legislative Research Service
Campbell, Elaine, Research Officer, Legislative Research Service
The committee met at 1014 in room 151.
PRE-BUDGET CONSULTATIONS
The Vice-Chair: We are going to proceed with the item on the agenda, beginning the pre-budget consultation process.
Mr Phillips: Mr Chair, just before we begin, it was just two weeks ago that we had the Treasury people in here with what turned out to be numbers that have changed radically. In fact, in hindsight, the presentation was very strange because it was only about four or five days later that there was a $2-billion change in the numbers.
My comment is that I think we should have the Treasury people back again to give us the real numbers or today's numbers or the best numbers. The foundation on which we are trying to build now looks like it is about $2 billion out. A subset of this that I would like to discuss when they come here is the fiscal stabilization plan, just to have a better understanding of the basis on which they will be applying for that and the rationale for expecting it, which I think is about $585 million. Overall, I think we have to have the Treasury people back to do this.
The Vice-Chair: Before we recess for lunch, we will have a further discussion on that issue. Would that be acceptable? Then we can deal with it at that time.
Mr Sorbara: My understanding as well, given the demise of Mr Hansen as the previous Chair, was that we were first to elect a permanent Chair to the committee.
The Vice-Chair: I believe we are going to have that election this afternoon.
Mr Sorbara: Could we not proceed with it right now?
The Vice-Chair: Well, no. That is on the agenda for this afternoon.
Mr Phillips: You mean your votes are not here yet.
Mr Christopherson: Well, if you want to be frank about it.
The Vice-Chair: I would like to continue with the proceedings. This is a little different format than we have had in the past, in terms of having each individual group come forward and make its presentation. We thought we would have the groups come together to make presentations so that we can try to develop a bit of a consensus of opinion in terms of the different sectors. Please do not think this is meant to be a confrontational process; it is not. It is meant for us as the representatives, in preparing the report, to try to get a consensus on what the issues are.
We will give each group about 10 minutes to make its formal presentation and then we will divide up the time between the three parties for questioning. We will do that on an equal basis and I am sure we will have enough time for questions. Then we will proceed from there.
I guess the groups that are before us have decided the order in which they are going to go. For the purposes of Hansard, before you start your presentation I just ask each group to identify yourselves and the people who are here from your organization.
ONTARIO FEDERATION OF STUDENTS FÉDÉRATION DES ÉTUDIANTES ET DES ÉTUDIANTS DE L'ONTARIO
The Vice-Chair: Welcome to the presenters. We are going to begin with the Ontario Federation of Students.
M. Lacroix : Bonjour, tout le monde. Je vous invite à vous servir de votre appareil de traduction, si vous voulez ; je vais faire ma présentation, la majorité du moins, en français.
Il me fait plaisir d'être ici aujourd'hui pour pouvoir présenter pour ce comité certaines positions que nous jugeons particulièrement importantes au niveau des étudiantes et étudiants de l'Ontario. C'est particulièrement important selon nous, étant donné la période dans laquelle on se trouve actuellement. On a une période où tout le monde nous dit que la fiscalité ou ce qui s'appelle revenu pour le gouvernement, est très bas et qu'il y a des répercussions sur tout le système éducatif et sur tous les autres services qui sont fournis par le gouvernement.
En commençant, j'aimerais attirer votre attention sur le fait que, bien que les collèges et les universités aient une responsabilité envers la société en général, la société a aussi cette responsabilité réciproque envers les collèges et les universités. Au cours de la brève présentation que je vais faire ici, c'est un des points qu'on va certainement retoucher.
Un autre point qui est important pour moi, c'est le fait que lorsque le gouvernement NPD a été élu, il nous a fait la promesse que l'éducation serait une de ses priorités. Jusqu'à maintenant, on a vu différentes façons qui traduisaient la priorité du NPD mais qui ne sont pas nécessairement ce à quoi on s'attendait.
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En tout cas, du moins les étudiantes et les étudiants de l'Ontario -- je crois que les gens qui poussaient ce gouvernement-là s'attendaient à quelque chose d'autre. On s'attendait en fait à une réduction des cotisations étudiantes et, tel que proposé à l'intérieur du programme du parti, à une réduction ou à une abolition totale des frais d'éducation pour les étudiantes et étudiants de l'Ontario.
Ce n'est malheureusement pas le cas ; ce n'est pas ce qui s'est passé. On a vu, l'année dernière, une augmentation de 8% au niveau des frais pour les cotisations étudiantes, augmentation qui a touché directement la population étudiante. Moi, je viens particulièrement de l'Université d'Ottawa. On a vu plusieurs de nos confrères ou consoeurs de classe qui cette année étaient incapables de revenir à l'université à cause de ces augmentations-là. Ça a été le cas aussi à l'intérieur de certains collèges.
Ce qui vient aussi avec ça en particulier c'est la révision du programme de prêts et bourses de l'Ontario, OSAP, qui promettait d'avoir des changements au niveau de la façon dont l'éducation serait subventionnée, au niveau de l'accessibilité pour les étudiantes et étudiants de l'Ontario. Malheureusement, encore une fois, ça a été assez décevant parce qu'on n'a pas vu un moyen direct de faire en sorte que cette accessibilité soit plus présente pour tous les étudiants et étudiantes de l'Ontario.
On a dit aussi qu'il y aurait la possibilité que les bourses elles-mêmes soient délaissées, c'est-à-dire qu'on aille seulement sur une base de prêts aux étudiantes et étudiants. C'est particulièrement dangereux lorsqu'on prend en considération qu'environ 92% des étudiantes et étudiants de l'Ontario qui ont accès à OSAP on accès aussi à une bourse. Je vais juste, si vous voulez, vous donner un nombre approximatif d'étudiantes et étudiants qui seraient particulièrement touchés s'il fallait que les bourses soient coupées.
Il s'agit d'environ 63 000 étudiantes et étudiants, à la lumière de nos estimations, qui se trouveraient à être coupés au niveau de l'éducation. Ce serait une barrière supplémentaire, encore une fois, au niveau de gens qui sont a priori marginalisés dans la société, c'est-à-dire ceux qui ont moins de revenus pour étudier. Encore une fois, ce serait une barrière supplémentaire qui les empêcherait davantage d'avoir accès à une éducation postsecondaire.
Comme je le disais plus tôt, les universités et les collèges ont une responsabilité envers la société et la société a cette responsabilité envers ces gens-là pour assurer qu'on a une éducation accessible, pour faire en sorte que tous les gens de toutes les classes sociales de notre population aient accès à cette éducation-là. Il est notre ferme conviction que c'est crucial pour le développement d'une société que toutes les couches de la société puissent avoir accès à l'éducation postsecondaire, autant au niveau du collège que des universités.
On a aussi avancé une méthode qui pourrait en quelque sorte diminuer le fardeau rattaché aux prêts et bourses. On a particulièrement étudié ce que ça coûte au gouvernement et aux étudiantes et étudiants de la province pour payer les prêts et les intérêts qui tournent autour de ça. On a détaillé cette exemple-là à la page 8 du présent document.
À l'intérieur de ça, on se rend compte par exemple que, pour quelqu'un qui aurait 10 000 $ de prêts venant du gouvernement fédéral et 4 000 $ venant du gouvernement provincial, cette personne se retrouverait avec, en quelque sorte, des intérêts payés qui seraient au-delà de la totalité du prêt.
Par conséquent, ce que nous on dit face à ça c'est que le gouvernement devrait probablement revoir la raison pour laquelle ce système-là avait été introduit à l'intérieur des banques ; c'est-à-dire que le taux d'intérêt était très minime au début des années 70, je crois bien, lorsque ça a été introduit, mais ce n'est plus le cas actuellement.
Par conséquent, possiblement le gouvernement devrait regarder à reprendre l'administration de ces prêts-là de telle sorte que les dépenses d'intérêt qui sont présentement payées carrément aux banques soient repayées au gouvernement et, en retour, que cet argent-là puisse servir à financer d'autres étudiantes ou d'autres étudiants à l'intérieur de notre province pour, encore une fois, augmenter l'accessibilité à l'éducation.
On a comme mission, au niveau de la Fédération des étudiantes et des étudiants de l'Ontario, de promouvoir une haute qualité d'éducation ainsi qu'une haute accessibilité. Pour nous, c'est une des façons de faire en sorte que cette accessibilité demeure présente et accessible pour tous les étudiants et étudiantes de cette province.
Un autre des points qu'on a entendus dernièrement c'est que les paiements de transferts risquent d'être historiquement très bas. Ça nous laisse avec un certain nombre d'options, évidemment: ou pour le gouvernement de mettre une priorité sur l'éducation pour, à l'intérieur des paiements de transferts, canaliser une partie importante de ces paiements-là vers l'éducation, ou encore de se retourner vers les étudiantes et étudiants et augmenter les frais de scolarité de ces gens-là.
Encore une fois, ce que nous disons, en tant qu'étudiantes et étudiants, c'est que ce serait une autre barrière supplémentaire, une autre façon de diminuer l'accessibilité aux gens qui sont, en partant, déjà marginalisés dans la société, c'est-à-dire, les gens des classes sociales à moyen et faible revenus.
Si on se retourne et qu'on refile la majorité de ce financement-là aux étudiantes et aux étudiants, il va y avoir de moins en moins de gens qui vont pouvoir y avoir accès, et les gens qui vont continuer d'y avoir accès vont être les gens qui pouvaient au départ se le payer, c'est-à-dire les gens des classes sociales plus élevées qui, comme je le disais plus tôt, ne sont pas nécessairement les gens qu'on veut viser à l'intérieur du développement d'une société, parce que ces gens-là sont déjà favorisés. Il s'agit d'aller chercher d'autres gens pour vraiment avoir une répartition complète dans la société de l'éducation de nos personnes.
Il y a aussi d'autres processus qui ont été avancés par certaines recherches, dont le plan de remboursement proportionnel aux revenus. Encore une fois, la Fédération soutient que ce plan de remboursement proportionnel aux revenus est une forme de repaiement qui est dangereuse vis-à-vis d'une éducation accessible à tous. Ce qu'on risque de faire avec ça c'est de se retrouver à un moment où, si les taux d'intérêt augmentent, on va payer seulement la partie de l'intérêt sans toucher au capital, ce qui aurait comme conséquence d'amener les gens à avoir un repaiement de leurs études sur une période pouvant s'étendre jusqu'à 30 ans. Ça, encore une fois, c'est très dangereux. C'est une autre barrière. Ça fait plusieurs fois que je reviens sur le mot «barrière».
C'est peut-être parce que c'est une chose qu'on sent particulièrement actuellement dans les universités. Quand on s'en va aux endroits pour l'inscription et qu'on voit de plus en plus de gens qui se plaignent des frais de scolarité, du montant où c'est rendu -- comme ils le disent si bien : «Ceux qui sont là, c'est ceux qui ont la chance de revenir.» Comme je le mentionnais plus tôt, il y a plusieurs personnes qui n'ont pas eu la chance cette année de même revenir à l'université ou au collège en raison de l'augmentation, et ça c'est dangereux.
Donc, pour revenir au plan de remboursement proportionnel aux revenus, ce que nous proposons comme alternative au financement c'est non pas d'aller taxer les gens en fonction de ce qu'ils ont emprunté pendant leur scolarité, mais bien d'avoir un système d'imposition proportionnel aux revenus de telle sorte que, avec un système de taxe proportionnelle, les gens qui vont avoir gradué au niveau des collèges et universités et qui vont avoir un revenu supérieur pourront payer en fonction de leurs moyens et non pas en fonction de, hypothétiquement, ce qu'ils vont être capables de rembourser plus tard. Ce sont des points qui sont cruciaux pour les étudiantes et étudiants actuellement.
Je n'ai malheureusement pas fait attention au temps où j'ai commencé, mais je crois que ça fait déjà un bon cinq minutes que je parle. Pour terminer, je vous invite encore une fois à reprendre cette déclaration qui se trouve à la page 9, à l'intérieur de la section, Who pays the price, au deuxième paragraphe. Le gouvernement s'est engagé, avec une résolution au niveau des Nations Unies, à offrir le droit à l'éducation et à une éducation accessible à tous.
Vous avez une expression en anglais qui dit : «You have to put your money where your mouth is.» C'est probablement le temps de le faire. Si on croit à cette accessibilité à l'éducation, si on croit à une haute qualité d'éducation, il faut qu'on se prenne en main et qu'on fasse en sorte que ça en devienne une priorité. Ce n'est pas seulement le fardeau de quelques centaines de milliers d'étudiants qui est rattaché à ça ; c'est le fardeau d'une société complète. C'est le fardeau du développement d'une société qu'on veut meilleure dans les années à venir. Si on veut assurer que cette société-là devienne meilleure, ça passe nécessairement par une meilleure éducation et par une éducation qui est plus accessible. J'ai vu ce matin des gens qui portaient un chandail avec un message très éloquent où on dit : «Si vous croyez que l'éducation coûte cher, essayez l'ignorance.»
Ma crainte est que présentement c'est vers ça qu'on s'en va si on ne se reprend pas en main et si on n'assure pas que l'éducation va redevenir une priorité et que l'accessibilité de cette éducation-là va être donnée à toutes les couches de la société, peu importe la couleur de la personne, la race, la langue ou la religion, pour que tous les gens qui ont déjà à faire face à des barrières culturelles du moins n'aient pas en plus la barrière monétaire à vaincre. Merci.
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ONTARIO CONFEDERATION OF UNIVERSITY FACULTY ASSOCIATIONS
The Vice-Chair: We will move on to our next presentation, the Ontario Confederation of University Faculty Associations.
Dr Graham: I would like to thank the committee for inviting us here today and I would like to introduce the committee to people from OCUFA who are attending this meeting. With me is Marion Perrin, the executive director of OCUFA. Sitting in the audience are chief researcher Heather Webster and another one of our researchers, Veronica Horn.
OCUFA is pleased to have the opportunity to appear once again before the committee. This is our third presentation to this committee in under a year. It is a year which has seen no relief from the devastating recession which has plagued the economy and in which the government has seemingly turned aside from its plan to combat the recession by stimulating the economy and has become increasingly concerned with cost-cutting and deficit reduction.
In an attempt to hold the provincial deficit at what it believes to be acceptable levels, the government has cut funding already promised to the province's universities and is warning that operating grants will be held to "historically low" levels. It has been said that Ontario cannot afford to put more public money into higher education. It is just too costly.
The T-shirts the OCUFA people are wearing today read, "If you think education is expensive, try ignorance." We want to make this very evocative statement the focus of our remarks today. We want to stress one fundamental and very important point: We believe Ontario can afford to fund its universities adequately. What it cannot afford are the economic and social costs associated with an inadequately educated population. Universities must be adequately funded, not in spite of our desperate circumstances, but because of them.
What are the costs of the failure to invest in post-secondary education? Much has been said about global markets and international competitiveness and we will not dwell on the topic, except to state the obvious: Canada and Ontario are increasingly being drawn into world markets, and if we are to prosper in this environment, we must be competitive. One way of doing this is by lowering standards and attempting to undercut the competition, which is characteristic of the way things worked in the industrial age of the later 19th and early to mid-20th centuries. But it is not the way success is being achieved in post-industrial society, where competitiveness is dependent on high levels of productivity and innovation.
In our last appearance before this committee, we discussed the work of Harvard economist Robert B. Reich. Reich maintains it is the knowledge and skills of a nation's working people and the quality of its infrastructure which make it unique and uniquely attractive in the world economy. Nations which do not invest in education are doomed to a declining standard of living. They become trapped in a vicious cycle in which global investment can be lured only by low wages and low taxes. These enticements in turn make it more difficult to finance adequate education and infrastructure in the future.
On the other hand, "a workforce that is knowledgeable and skilled at doing complex things and which can easily transport the fruits of its labour into the global economy will entice money to it." As people's knowledge and skills increase and experience accumulates, "a nation's citizens add greater and greater value to the world economy, commanding ever higher compensation and improving their standard of living."
In its presentation to this committee last August the Ontario Secondary School Teachers' Federation made a similar argument. It quoted Jeff Faux, president of the Economic Policy Institute in Washington, DC, who reaches the same conclusion as Reich. Faux writes:
"The new global economy requires a new economics for North America, one in which nations compete against each other not on the basis of cheap labour but on the basis of expensive labour, ie, labour which produces innovative products and services. A high-wage strategy involves a transformation of the organization of work from traditional `top-down' management to management by teamwork. This in turn requires a new emphasis on a high-quality general education for all."
It has been said that education is the single most important determinant of economic growth in the developed world. The level of education and skills that will be required in the next century to achieve and to sustain economic prosperity is increasing steadily. It has been estimated that by the year 2000, 50% of all jobs will require at least 17 years of education and training. Furthermore, the knowledge and skills of the future will become outdated every five years, requiring continual education and retraining.
Ontario's universities cannot do the job they need to do in preparing the province's citizens for the global workplace in the absence of a sustained commitment to adequate funding. Failure to make such a commitment will result in declining prosperity for the province and for its citizens.
In addition to the economic cost associated with failure to provide adequate funding to the province's universities, there will also be undeniable social costs. Before this committee and in other forums, OCUFA has expressed profound agreement with the government's stated commitment to the achievement of equity in Ontario. We have observed that Ontario is rapidly becoming one of the most racially and ethnically diverse societies on earth. We have stressed that employment equity cannot be achieved without educational equity, that is, improved accessibility for those groups that have traditionally had low rates of participation in higher education.
In its November 1990 speech from the throne, the Ontario government spoke about a new vision for Ontario, one which provides for a decent quality of life for all of us, a society in which all Ontarians can achieve the best of which they are capable, have genuine access to education, culture, training and jobs and receive fair treatment from its institutions. The social implications of continued underfunding of higher education cannot be ignored and they cannot be tolerated. In the absence of adequate funding for the province's universities, accessibility will be severely compromised and the government's own equity goals seriously jeopardized.
OCUFA shares the vision of an Ontario where the gap between rich and poor grows smaller instead of larger, where people are no longer divided, rewarded or penalized on the basis of class, race or gender. Without a fairer distribution of the benefits which higher education confers, we cannot achieve these goals.
OCUFA believes that Ontario must maintain a strong system of public higher education for its own economic health and for the wellbeing of its citizens. We believe that the tax system is still the best vehicle for funding public expenditures. We recognize that the tax system is badly in need of reform and we urge both levels of government to co-operate in finding equitable solutions, including a greater contribution by corporations, which are the major beneficiaries of the education and training carried out at post-secondary institutions. We note that the corporate share of the overall tax burden has declined in Canada, while the shares derived from personal income tax and consumption taxes have increased.
OCUFA does not believe that students should bear a greater cost burden. We oppose higher tuition fees and the introduction of income-contingent loan repayment plans. We do not have the time today to detail our policies with respect to these issues, but we have provided in the package before you some additional material for your consideration. We thank the committee for this opportunity to be part of the consultation process and we look forward to your report.
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COUNCIL OF ONTARIO UNIVERSITIES
The Vice-Chair: We will now move on to our next group, the Council of Ontario Universities.
Dr George: It is a pleasure for the Council of Ontario Universities to appear before the standing committee on finance and economic affairs today. My name is Peter George. I am president of the council. Accompanying me today are: Brian Segal, chairman of the council and president of the University of Guelph; Pat Adams, director of communications and public affairs; and Edward DesRosiers, director of research for the council. Dr Segal and I are going to share the council's presentation. I will lead off.
Members of the committee, Ontario universities have been experiencing underfunding for more than a decade. The current difficult recession is a continuation of the crisis for higher education in Ontario. This time, however, a system which has been trying desperately for years to make do has reached the end of its ability to withstand more cuts. Jobs are being lost and more will be cut. Student places at university are at risk. Social initiatives will be at best stalled and at worst devastated.
The advances made by women and minorities in establishing themselves in tenure track and contractual positions will be halted. As universities cut back, the last into the system will of necessity be the first out. Support staff positions, which are largely held by women, will be cut, and re-employment will be very difficult. Study programs that are not part of the core programs of the university will be sacrificed. In the short term the effects will be dramatic. In the long term they will put our higher educational system and the economic and social progress of our province in real jeopardy.
Why, despite repeated warnings, have our pleas gone unheard? Our university system has suffered the effects of underfunding more than any other major funding agencies of the government of Ontario. You will see, in the last chart of the brief we have given you, indexes of expenditures per clients served. The ones which have gone up very significantly since the late 1970s are hospitals, schools and adult offenders. The ones which have declined significantly since the late 1970s are colleges and universities.
Yet unlike any other major transfer payment recipient, universities are part of the solution to what ails this province. Hospitals and agencies funded through the Ministry of Health and the Ministry of Community and Social Services treat symptoms of society's ills. Universities seek answers to the physical and social problems giving rise to these symptoms. Medical breakthroughs in cystic fibrosis, diabetes, AIDS, Alzheimer's disease and cancer research have been made recently at Ontario universities. Environmental research and the causes of aquatic pollution and the testing of salt-resistant durable road surfaces take place in Ontario universities. Social sciences research on such wide-ranging issues as demographic trends, cross-border shopping and community economic development among Ontario's first nations is studied at Ontario universities. Canada's most recent Nobel laureate is a faculty member at an Ontario university.
Consider too what universities mean to the provincial economy. Universities generate, both directly and indirectly, some $6.2 billion of expenditures in the provincial economy, and more than 138,000 jobs are associated with university operations.
The dividends the university system pays in this province are real in both human and economic terms. Our ability to continue generating these dividends is sorely constrained by current levels of funding and funding arrangements -- a long history of low provincial operating grants and strict regulation of tuition and other fees. Only through your action to resolve the underfunding of our universities can we contribute more fully to building a stronger, more competitive, more socially progressive Ontario.
I will now turn the microphone over to Dr Segal.
Dr Segal: Thank you. I want to correct the agenda spelling of my name for Hansard. There is an ongoing association between my university and birds and animals. We are proud of that.
If I could perhaps start with a human reality, the cohort of 18- to 24-year-old students has been shrinking demographically. Even with the new patterns of immigration, one of the things we know is that the age profile of immigrants coming to Ontario is identical to our own age profile, so the cohort is shrinking but the number of students applying to universities continues to increase.
One thing we as university administrators have learned is that if you ever want to understand the future, watch how high school kids behave. They have an uncanny ability to sense what is happening. We watched computer science enrolments drop and applications to computer science drop two years before jobs in the sector began to decrease. We saw the same thing with petroleum engineers and chemical engineers. Students sensed two to three years before the market actually collapsed in terms of employment opportunities that this was going to happen and found other locations and applications within universities.
If the students today are saying something to us, it is that they have determined that their future ability to be productive as Canadians and earn a decent wage is very much tied to their ability to get into and complete university education. I think all of us, particularly adults, should take real notice of that, because what we say rhetorically, they are really telling us with their feet and with their own aspirations and goals. To them, universities are a ticket to the future and an opportunity to have options. I think the message we are getting from the students is that somehow we have to figure out a way of continuing to accommodate them.
In the last 11 years, Ontario universities have accepted an additional 60,000 students. That is a university equal to the University of Toronto plus an additional 10,000. There is no other sector in society that has been more productive by any measure. Even if one looks at the OCUFA data, which show some increases in faculty numbers in 1989-90 over some previous years, buried in those numbers, Mr Sorbara will know, are 550 positions that are linked to retirements. Part of the faculty renewal program will disappear as the retirements take place. Over the next two or three years, that number will shrink by about 550 positions or more.
We understand the dilemma governments find themselves in. We do not live in a sheltered world and we do not look at different data than you and governments do. We understand that there are real constraints on the ability of the public purse to finance everybody's aspirations. From our perspective when we take a look at obligations, we know we not only have wage obligations. These are collective agreements that have been voluntarily agreed to by the parties, and of course many of our institutions have two-year agreements. We are already looking at the cost of the second year of two-year agreements right across the system into next year. Those two-year agreements were based upon inflation and other cost-of-living factors that occurred three years ago and are tied to this year's year-over-year cost of living. I wish they were tied to next year's projected inflation, but that is not the way it works.
Ultimately institutions, if we are going to finance the wage settlements, if we are going to finance pay equity, if we are going to finance UI increases -- just as an example, in-year UI increases from my university, taking the July 1 increase and the January 1 increase, is $1.2 million -- and if we add to that the claw-back the government put in place for this year for my institution and add back what is now likely to be, at most, half of what it promised us for pay equity, in-year we are looking at, for one institution, about $2.6 million of things that we did not have available to us at the time we set our budgets. That means we are going into next year in a very difficult economic situation. We have collective agreements and additional in-year claw-backs or costs that have to be dealt with. One of the things we really do not want to do is take the government's deficit and simply put it into our deficit. There is no magic about that. We just cannot keep shifting the sands from one place to another.
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Once institutions go down the deficit financing route, it is very difficult to get back. I look at Concordia or McGill. These are institutions that started with small deficits. McGill's is about $81 million and Concordia's is somewhere around $46 million. You wake up in the morning and you are spending $9 million a year in interest charges. Those are of concern to us, and obviously to our governors, and begin to put some real constraints on our ability to operate effectively.
Any comparison of how we are funded, whether we are compared on a per-student basis against other provinces -- we are ninth -- or whether we are compared against public institutions in the US, the difference between us and those in border states across the country is about 55% lower funding per student in Ontario public institutions. If you take the California system, which is now reeling under its own pressures, it currently is getting 100% more dollars per student than the universities in Ontario.
We do not advocate this, but there has been an attempt to get equity within the university system in terms of wages and compensation between our various employee groups and various institutions. We are in the process of talking to our employee groups about two-year agreements and whether they would be willing to sit down and relook at those agreements, obviously voluntarily. There may be some sympathy, there may not. Ultimately, if the government really wants to get a handle on the wage bill, it is going to have to take a look -- I do not say this with any sense of joy -- at some legislated period of wage restraint which will allow all of us to operate on a level playing field.
From our perspective, if I can just reflect on the number, if we look at all the cuts that have been put in place, if we look at the collective agreements that have been agreed to, if we look at the pay equity costs and the continuing costs of employee health insurance and other things, we are looking at an increase of about 7% to stay where we were two years ago. From our perspective, if we cannot achieve 7%, then, in the document handed out to you, you begin to see some of the possible actions universities would have to take. The chart before you, "Implications of Alternative Funding Scenarios," indicates that there likely will have to be reductions in enrolment, faculty and staff in order to accommodate the commitments we already have.
Let me turn to the matter of tuition fees and start by saying that my colleagues around the table all share, I think, a common view: If we could find a way of avoiding tuition fee increases, we should do that. We share the common view that public funding of universities, as a matter of public policy, should come out of tax revenues and should not necessarily be borne simply by the users of that system. We have other universal systems where users do not bear anywhere near the cost of those systems, or any of the cost of those systems. That, from our perspective, is an ideal approach to the problem, but we are not living in an ideal world. Because we are not living in an ideal world, I think we have to contemplate an issue we have had difficulty contemplating in the past, and that is looking at the whole question of progressivity in tuition fees.
All of us in Canada believe in a social equity agenda, and one of the reasons we support a progressive tax system is that it is based on the notion that those who earn more pay more. It is not a new concept. We want a progressive tax system in this country. When it comes to tuition fees, we have a fairly regressive system. Whether you come from a family with an income of $500,000 or an income of $50,000, you pay the same tax to go to university.
Our view is that if we look at a substantially more progressive system with a massive redistribution mechanism attached to it, we can ensure that no one will be denied access to university education because of lack of income. Those who can afford to pay more will pay more. Those who can afford to send their children to private schools and look forward to a university education so they can reduce the amount of money they are spending on their kids' education can afford to pay more.
While it may be somewhat painful to look at it, from our point of view we have to be realistic. There are people who have substantially higher incomes and they can afford to pay more to send their children to university. Why do we not ask them to pay more? Why do we not take a good chunk of the extra they pay and redistribute that into a student aid system that really ensures without stigmatism and without the kind of negative aspects of selectivity that students who cannot afford to go to university are able to do so?
My last point is that I sincerely hope you can have some significant impact on the government discussions around financing. We recognize the difficulties this government and governments generally are in. We have asked the new government of Ontario since it came in for a multi-year plan. We know you have some problems today. We are here for the long haul. We want to sit down with the government. We want to take a look at a realistic approach to operating and capital funding over a three- to five-year period. If we know there is some light at the end of the tunnel we may be able to make decisions today that can ease the burden on all of us.
The Vice-Chair: You should not feel you have to apologize for a school that is associated with birds and animals.
Dr Segal: I am not apologizing, let me tell you.
The Vice-Chair: Particularly being from the dairy capital, there is nothing wrong with being associated with cows as well.
CONFEDERATION OF ONTARIO UNIVERSITY STAFF ASSOCIATIONS
The Vice-Chair: We will move on to our next presentation, the Confederation of Ontario University Staff Associations.
Mrs Johns: I want to thank you very much for including us in these discussions. This process is quite new to me. I do not have a written brief; I was not aware I should have one. My comments will not be terribly long today. I do want to support what my colleagues at the table have been saying. Our university system is in a lot of trouble these days because of the consistent underfunding we have been undergoing.
The situation at the moment is such that if there is not some assistance soon we could be seeing losses of up to one third of our university support staff. The impacts on staff have been incredible. Some of the universities have already gone through consultation reports and have started laying off staff members. Others are trying to work through a process of consultation and task forces internally to try to decide where they could reasonably make some changes. These are very hard on staff.
Entire families in some instances are going to be unemployed. Library acquisitions keep declining. The students need the books in the library. The service is declining because there are just not enough people to help with all the procedures that need to be done. There is outdated equipment in the labs and it keeps breaking down. People are expected to try to fix this themselves because we cannot purchase new equipment. The secretarial and office staff are working for quite large numbers of faculty. Some of the universities have been considering early retirement and career change incentives, but this also presents a problem. As was mentioned earlier, re-employment is going to be very difficult, especially in these economic times, and there is no money for training and skills development. I keep wondering how low these cuts can continue to go.
The cutbacks that take place usually occur in a larger number at the staff level in universities. It is also curious that there has been some mention of the pay equity that is presenting a lot of problems to us, and now we have some new employment equity legislation possibly coming forward. Most of the jobs being reduced are jobs held by women. Therefore, I do not know how universities are going to be able to comply with some of this. It is going to be difficult. You cannot employ people when there are no jobs.
In closing, I would like to say how really concerned I am about the university's future here in Ontario.
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The Vice-Chair: I want to thank all of you for your presentations.
We will now move on to questions. I believe we have about 45 to 50 minutes altogether, so we will divide that up between the three parties. I remind members of the committee who are asking questions to please keep their questions brief. If you want to ask just one group or if you want to ask for comments from all groups, that is fine, but realizing that, keep your questions brief and preambles very short. I would ask those responding to questions to try to keep their responses as brief as possible. We will start with the official opposition.
M. Sorbara : Je vais commencer mes questions avec juste un mot de félicitation à tous les membres qui ont présenté quelque chose devant nous aujourd'hui, surtout à M. Lacroix, trésorier de la Fédération des étudiantes et des étudiants de l'Ontario. Il continue à présenter avec une force typique des étudiants, dont je me souviens très bien depuis l'année 1985, quand j'étais ministre, la force des étudiants sur les grandes questions de financement de nos institutions et aussi la responsabilité que les étudiants prennent vis-à-vis les grandes questions de l'avenir de nos institutions.
I have a couple of questions for President Segal, whom I knew as President Segal but of a different institution, at that time Ontario's only polytechnic institution, Ryerson Polytechnical here in Toronto.
First of all, Dr Segal, I want to get the political question out of the way. When we inherited government in 1985, there was the issue of underfunding, which was the first thing that appeared on my desk as Minister of Colleges and Universities. I do not want to go back to what we call the bad old Tory days, but we had, for five and a half years, responsibility for setting public policy in the area of post-secondary education, as in all other areas. A new government was sworn in on October 1, 1990. Have you seen, during the first 15 months of this government, any major policy shifts, dramatic new initiatives in public policy from this government, as compared to the last? I am really not asking you to evaluate the two or to say one was better than the other, but from the perspective of the president of an institution and from the perspective of that institution, have we seen any major new policy thrusts thus far?
Dr Segal: I think you will recall that when you became minister there were some significant improvements associated with funding and new initiatives to the university system -- whether it was the faculty renewal program, whether it was the multi-year financing of capital, whether it was to cease the war on whether we are underfunded or not -- a kind of recognition by you and your government that we were underfunded and that the problem needed to be addressed. During the first number of years of your government's mandate we did see some rather refreshing views of the university system and some real action.
That initial burst of enthusiasm slowed down. Again, I am not trying to evaluate governments, because it is not my business to do that, but it did slow down and your successors were not as able, if you will, for whatever reasons, to continue with those initiatives.
When the new government came in, again, it picked up where you had left off in the sense of saying, "We know you have a serious underfunding problem." The minister indicated he accepted the notion of a $400-million problem, so I think we were pleased we did not have to go back over the fight we had fought for many years in the early 1980s. In fact, the government's announcement for funding for this year, if one took everything it promised, was a positive message sent to the universities. There was no question about that. Disappointment has set in quite significantly since that time. In my 12 years as a university president I have never experienced an in-year cut where we were promised one thing and then it was taken away from us. We have had very significant in-year cuts and I do not know if it is over yet. I do not know the full ramifications and implications of the Treasurer's statement the other day in the House.
I think the sense of interest in the universities is there. The ability to deliver goes through these cyclical patterns. The intention of this government, I thought, was very clearly stated in the funding announcement for this year. Most of us, while always wishing additional funds to solve other problems, recognize it was a very strong statement on the part of the government. Since that time we have seen a clear shift. That is likely a response to the economic crisis the government finds itself in, but I am not here to defend any governments.
The final point I would make on the public policy side is that what appears to have started with your government, a process of broad-ranging consultation, also continued with the new government when it came in. However, there have been a range of decisions made within this year that were not part of a consultative process. It appears to us that at least they want to consult on matters that are not terribly important to us and may become important to them, but they do not have a lot of interest at this stage in consulting on matters that are terribly important to us. I do not know if that puts things in perspective.
Mr Sorbara: I have one other question before we go to Mr Phillips. There are three areas I am particularly interested in at least for the university sector; we are not dealing with community colleges today.
First is the internationalization of our institutions. I believe the internationalization of the institutions represents our ability to be on the frontier of knowledge all around the word. Second is the interlinkages of our institutions within Ontario, that is; new models that make your faculty of engineering a component of engineering capacity in Ontario. Third is of course financing. This is going to be very much a probing question. It arises from what the treasurer of the Ontario Federation of Students said in his brief, and that is a question as to whether universities themselves -- given their student application system, which I think is run out of Guelph, and the technologies available to them in computing -- might have the capacity to actually take over the whole business of funding and banking and managing the student loan system in Ontario rather than having it shared between the government and the banks, not to the profit of the institutions themselves.
So the three areas are interlinkages, internationalization and funding a model that would have universities running basically a student bank.
Dr Segal: Let me try to address each of those quickly. There has been a dramatic transformation in international programming, in the internationalization of curriculum in many institutions. One of the problems universities constantly face is that people have a view of the university which stopped the day they left. There is a sense that nothing has changed. "I left 12 years ago," or 15 years ago or 20 years ago, "and that's what it was and that's what it is." There have been significant transformations.
My own university, as an example, has the internationalization of curriculum and the teaching of global issues as a part of the mission of the university. You know of the examples at York University and the University of Toronto. There are examples right through the province, not just of exchange programs and students studying abroad, but of an attempt to go into the curriculum and change it so that graduates get a much better understanding of what is happening internationally. There has been a dramatic increase in language programs, because that is another component of internationalization.
On the second question, two weeks ago the University of Guelph and the University of Waterloo opened two on-line, real-time electronic classrooms. If you are teaching at the University of Guelph, you will see on a big screen your class at the University of Waterloo and the students at the University of Waterloo can ask questions in real time. They put their hands up, they ask a question, you see them. You write on the blackboard at Guelph, it comes out on the blackboard at Waterloo and vice versa.
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That was established because we have the Guelph-Waterloo graduate programs in physics and chemistry. They are joint programs. We have taken four strong departments in physics and chemistry and made them powerful. The Guelph joint PhD program in philosophy with McMaster is another example. I am using only those that are close to me and that I am aware of. The Carleton-Ottawa collaborative programs in engineering and in other areas, I think, are other examples of that happening.
There are many more discussions going on today among universities around collaborative programs. Another example is that six universities met at the Six Nations reserve this week with the elders to talk about how a consortium of universities in southwestern Ontario can, with the aboriginal peoples on the Six Nations reserve, offer clear transition and access programs to the university. Indeed, they can bring university programs there and do it on a collaborative basis. There is an awful lot more of that happening today than, for example, three or four or five years ago. Could you refresh my memory about the final question?
Mr Sorbara: The third point was the possibility of a university/student bank to take over the whole area of funding of students, from government, from OSAP and from the banks, which now profit very significantly from it.
Dr Segal: I think that is a very exciting thought, and it is not one we have thought about.
Mr Sorbara: Can I invite you to do it, then?
Dr Segal: Absolutely. I think it is a very interesting thought.
The Vice-Chair: I thought we had a request to rotate between the three parties, so I am willing to do that if it is still the preference.
Mr Phillips: How much time do we have left?
The Vice-Chair: You have about five minutes left for your caucus.
Mr Sorbara: Had I known you were going to rotate, sir, I would have let Mr Phillips go first.
The Vice-Chair: That is all right. Mr Sterling.
Mr Sterling: I am quite willing to let Mr Phillips go ahead.
The Vice-Chair: Okay.
Mr Phillips: A very quick question to Dr Graham. Next week, the government will announce its Ontario Training and Adjustment Board. Much of your brief is on retraining. I think a lot of the funds will head over there, though not necessarily out of the university. Has your organization been involved in that, and do you have a comment on it?
Dr Graham: We have not been directly involved in OTAB; not at all. We are seeking to have a voice in the Teacher Education Council of Ontario consultations. At the present time, as you know, TECO does not have faculty representation on it. We would like to ensure that the board does have faculty representation. We also have had no voice in OTAB.
Mr Phillips: Well, in the end, I will be interested in your comments.
The Vice-Chair: Dr Graham, excuse my ignorance. What is the TECO program?
Dr Graham: It is the Teacher Education Council of Ontario, which is an arm's-length council that gives advice to the government on teacher education.
The Vice-Chair: Thank you.
Mr Phillips: In the end, I would like your comment on OTAB at some stage. I think it will be announced next week. As you know, it moves much of the training, retraining, workplace training, all those things, into kind of a crown corporation of some sort, with a budget of probably -- I do not know -- up to $1 billion perhaps.
My other question is to Dr Segal. You mention in your brief that the 7% is a kind of absolute minimum. I have listened carefully and I have read the brief. Could you just give us some indication of how you arrive at that 7%? I know you are anticipating a CPI of 3.73%, but how do you arrive at that, and equally important, if that 7% does not happen, what happens?
Dr Segal: The basis for the 7% is in the note below, linking it to the CPI, pay equity costs and the flow-through costs of higher enrolment. Even though this year and the first year we took only 1% more students, there are still substantially more students in the system because of the flow-through of those numbers. There was a program put in place a number of years ago called the accessibility envelope, and there are flow-through dollars associated with that to cope with the additional enrolment, so that is part of the 7%.
I think the issue facing us is, if we do not get 7%, if there are no restraints on already agreed-upon salary agreements -- salary costs are about 80% of the operating costs in universities, many of us have cut to the bone on utilities and energy and library books, and the deferred maintenance problem is incredibly serious -- you are really down to two things. You are down to students and people: (1) constrain the number of students you take so that you can constrain the number of sessionals you hire and therefore lower your budget costs that way, and (2) look at other staffing costs and how you can reduce those costs. That ultimately means that in one way or another, individuals will be laid off. Each institution will have to look at how it goes about solving that particular problem.
Mr Phillips: If the increase is to be 5%, is there any indication of what the real impact of that might be?
Dr George: The scenario we present here is with a 5% increase. A 2% shortfall on basic need would be a linear combination of about 5,000 reductions in full-time equivalent enrolment, about 300 faculty positions lost and close to 400 staff positions lost. Individual institutions might trade off between the composition of those kinds of cuts, but this is an attempt to give you a scenario on a system-wide basis. These are factors that would be left in the end to individual institutions.
Mr Sterling: Perhaps I will pick up at the point where Mr Phillips left off, with regard to 80% of your costs being in the wage area. Inflation is probably going to be 2% to 3% this year, and maybe this coming year it will be in that area. You ask for 7%. Where are the other costs coming in? Are you practising any kind of wage restraint within the university area?
Dr Segal: Our problem is that there are 40 or 45 collective agreements within the university system. Many, though not all, of those agreements are two-year agreements. My view is that those coming up for negotiation next year will come a lot closer to what the CPI will be next year. Agreements that are in the second year of a two-year agreement usually bear some relationship to this year's year-over-year CPI, which is still running at well over 5%. So institutions are caught going back.
What we are trying to do is go back to our employees and say: "Look, the environment has changed dramatically. Yes, we have a two-year legal commitment. Can we sit down and reopen the discussions?" Each employee group will have to take its own cue as to what it decides to do, but ultimately if they say no, we do not have any leverage to use. That is why in my comments I said it may well be that the only way of actually dealing with that matter would be for wage restraint legislation to be brought in, and then it would affect everybody. I personally would be quite supportive of wage restraint legislation that would affect everybody for a period of time, to get all of us through this very difficult period.
I do not think the faculty or staff of our universities are insensitive to what is happening to pulp workers or to other workers who do not have jobs. On the other hand, if the parties sat down and voluntarily agreed to an agreement -- it is not easy to change it; legally you cannot change it unless both parties voluntarily agree to do it. That is the bind we find ourselves in.
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Mr Sterling: If you took a graph -- I do not know whether you would take it on the average salary of people working in the universities over the last six years -- and you drew on the graph what the rate of inflation was versus the rate of increase in salary, where would you be now?
Dr Segal: We would probably be right there.
Mr Sterling: So you would not be much above the rate of inflation.
Dr Segal: No. As a matter of fact, the Council of Ontario Universities did a study two years ago, or had an independent study done by Hay Management, comparing faculty salaries to other salaries in the public sector and the private sector, because there has always been this view that we pay our faculty too much. The study was done independently; we did not control it, we simply paid for it. The study made the comparisons and Hay Management came out and said that in certain cases we are paid about right and in other cases we are below our counterparts, in particular below our counterparts in government.
Mr Sterling: I would like to switch the topic to tuition fees and talk a little bit about that. I noticed in section 4 of your council's brief that you showed the effect of the operating grant being increased by anywhere from zero to 7% and how you would have to make up for that in tuition fees required from students if, in fact, you are allowed to increase tuition fees above the rate of grant increase. Is the position of the universities that this should be an overall policy, or a policy of the individual universities?
Dr Segal: There is no position of the universities on that matter. I believe the Council of Ontario Universities is of the view that, failing other sources of income, namely grant income, tuition fees should rise and there should be a formulaic way of allowing those tuition fees to rise. That may include providing discretion within floors and ceilings to individual institutions to make their own decisions about that.
There is also a group that believes in the total deregulation of tuition fees, allowing institutions to charge what they wish. I am not of that group. I believe if you decouple tuition fees from government policy, then you clearly open the door to the kinds of serious problems that my colleague from the Ontario Federation of Students spoke about this morning, and you take government off the hook, frankly. Then the only way you can survive is by bumping up tuition fees.
We did make a proposal on tuition fees to the current government that would essentially grandparent, if you will, all of the students in the system. It would increase the tuition for entering students, guarantee the entering students that they would stick with that tuition for four years, then treat the group behind them the same way, so that there was a sense of predictability. I think there are some avenues through which that can take place. The income-contingent repayment plan process, which is some distance away, is another way of deferring payment and then requesting that payment back on the basis of the level of income earned at the time.
If I can just summarize the position, (a) if we cannot get the amount of money we need from the government to operate, (b) we should be allowed to increase tuition fees, (c) there should be a ceiling on those tuition fees, and (d) there could be some discretions in the ceiling within individual institutions. Right now, by the way, the policy is that this is the maximum you can charge. You do not have to charge the maximum as an institution. You have that flexibility now.
Mr Sterling: In your brief, in addressing the tuition fee issue, you put down seven points which basically buttress the argument that perhaps there is room to increase tuition fees. But you also put in a very important proviso: as long as there is a safety net to catch those who are unable to sustain an increase or meet an increase in tuition fees.
I understand the government has been undertaking a review of OSAP and the whole tuition fee area. Where is the government on this issue? Is it now going through this consultation with all you people or is there any hope of a resolution to this? You cannot really deal with the tuition fee question in isolation from the other.
Dr Segal: My colleagues may have more up-to-date information on that. I think the reform of OSAP is a terribly important policy objective, but I do think you can top up OSAP with university funds. For example, a program in which 25 cents or 30 cents of every additional dollar raised by tuition fees, within the limits prescribed, would legally have to be redistributed into a student aid fund within each institution, run jointly by the administration and the students that could never be used for any other purpose, that would roll over from year to year if it was not all spent and stay in that trust fund, is another way of ensuring that students are not denied access because of lack of funds.
There is a clear sentiment on our part that you cannot simply increase tuition fees and not have a significant proportion of redistribution for student aid. You can do that within the universities, though, and you can mandate that within the universities. You do not only have to do that through OSAP.
The Vice-Chair: Mr Sterling, did you want a comment from the other groups as to whether they have any more information?
Mr Sterling: Yes. I do not know if anybody else has any kind of information on the OSAP review study.
Dr Graham: Perhaps I could comment on that. I sit on the OSAP review committee, on the general body of that review. We have run into a particular problem this year with regard to the upcoming year's OSAP situation, the situation for 1992-93, simply because there is no money. It appears there will be some tinkering, I should say, with the OSAP system and we will be going on to a more thorough review of the OSAP system for the following years.
Certainly the Ontario Confederation of University Faculty Associations and the faculties of our universities believe that student assistance programs have to be improved, because at the present time students are asked to live on rates that are well below the rate of welfare. The levels of OSAP funding are well below where they should be for people to live in any sort of decent manner, and there has not been any change in the levels of funding since the program was begun. At the beginning of the program there was an attempt to make the funding of student assistance bear some relation to need: the prices students were paying for housing, food, transportation and so forth. Since then it has simply been a gross amount, and in the meantime costs for students have risen dramatically.
On the question of tuition fees, OCUFA does not share the views of the Council of Ontario Universities. We are here today of course not to quarrel at the table, because we are well aware of each other's position on this particular situation. We think there is probably some game at work so that if you raise tuition fees you are going to lower government grants.
OCUFA shares the policy statement by the New Democratic Party -- not to be equated necessarily with the government -- that there should be no tuition fees for students. In principle and philosophically we believe there is no sound, rational argument in favour of the existence of tuition fees, and other constituencies across the world have recognized that. Canada and the province of Ontario recognized that in signing the International Covenant on Economic, Social and Cultural Rights in 1976, which guarantees that Canada and its provinces will work towards the progressive introduction of free education at the post-secondary level. We think this is an absolute necessity to keep in mind as a principle. We realize it is not possible and not practical at present or in the immediate future to dramatically reduce tuition fees, because of the economic situation in our country and across the world. We are, however, asking that tuition fees not be increased, because that will work against the very need of our society to educate people on a broad level, especially people who come from the less wealthy sectors.
Universities have traditionally educated people primarily from the upper-middle class and the wealthier classes in society. That is long gone. Our need for the future is to educate people on a much broader basis, to bring people in who were traditionally said to be working-class people. We have to end those kinds of class distinctions, to bring people in who have been disadvantaged and underadvantaged and who come from economically disadvantaged as well as culturally and educationally disadvantaged portions of our population. In order to do that, we have to make accessibility financial as well as social.
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The Vice-Chair: Dr Graham, I do not mean to cut you off, but I just wonder if Mr Lacroix would like to make a comment as well before we move on to the next question.
M. Lacroix : Oui, je reprenais certaines statistiques qu'on a sorties ici que je trouvais particulièrement importantes pour un sujet comme le financement des étudiants.
Si on recule aux années 1977 et 1978 environ on réalise que, à ce moment-là, il y avait environ 15% du budget d'opération qui provenait aux universités qui était financé par les étudiantes et les étudiants. Si on regarde ce qu'on a actuellement, c'est environ 20% du budget opérationnel, et si on fait une comparaison ou si on essaie d'établir un pourcentage d'augmentation pour une étudiante ou un étudiant, ça représente environ 150% d'augmentation par personne dans cet espace de temps.
Donc, si on continue à augmenter la part des étudiantes ou des étudiants pour financer nos universités, je pense qu'on ne prend pas la bonne voie. Il y a une voie, selon nous, qui est la bonne : celle de faire de l'éducation une priorité. Je regarde un graphique à la page 4 de notre document, où on voit que pour l'argent qui a été traditionnellement versé pour l'éducation dans les dernières années, comparativement au reste des dépenses gouvernementales, l'écart s'agrandit d'année en année. Il faut renverser ça.
Encore une fois, c'est une question de priorité. Vous demandez ce que les étudiants peuvent faire. Qu'est-ce que tout le monde peut faire ? Nous autres, on peut vous dire ce qu'on pense que vous devriez faire, mais c'est à vous que revient la responsabilité de faire en sorte que l'éducation soit une priorité qu'on renverse la vapeur à ce niveau-là et qu'on arrête de taxer les gens qui sont des étudiantes et des étudiants qui vont être le support pour l'évolution de cette société demain.
Mr Sterling: Mrs Cunningham, who is our critic, had to go to a House leaders' meeting and she apologizes for having to leave early. She is our critic in this area.
Ms Akande: I am interested in your references to equity employment and to subjects related to that in relation to the cuts or restrictions in funding. Certainly new initiatives do cost; there has to be a basic level of staff. Not everyone must go, not everyone can go. There has to be some natural attrition, some retirement, some transfer which has to be replaced. These are normal and natural occurrences in every college and every university.
I wonder, because you relate it to funding, and I do too, what moves are in place to ensure that those positions will be replaced from among the target groups in that equity employment and how, if that replacement seems difficult, it is made more difficult by lack of funding.
Dr Segal: Thank you for that question; it is a very important question to us. I guess the thrust of our brief simply is, and I can use my institution as an example, in the last three years we have replaced 110 faculty positions. We have done that with an employment equity policy in place. We have made some significant gains on the gender side, modest gains on the visible minority side and even more modest and, from our perspective, not terribly acceptable gains on the disabled side on those faculty rehirings.
We have done better on some of the staff rehirings in terms of all the designated groups. Each institution has in place an employment equity office, which is more than simply an office. In our case, there is a hiring and recruitment policy. There has been very clear attention to our targeted groups in order to improve the demographic basis of our own population, and we share those objectives with the people of the province and with the government.
The problem as we see it is -- and again, because of what has happened, we use my university as an example -- we have 35 vacant faculty positions. They are now frozen. They will not be replaced. We have a full-time-staff hiring freeze in place. It has now been in place for a year. It will continue. There will be no replacements. That is where it begins to hurt. That is where it slows the momentum in terms of employment equity.
One of the things that has been so important to us is not just establishing the policy but really getting people to buy into the policy and to feel a sense of ownership. Many people will understand -- and again, I can only use my institution as an example -- that when we first put the policy in, we got everything. We got, "Now you are prepared to undervalue quality; you are prepared to make tradeoffs," all those issues. The experience over the last two years has been such that so many of the people in opposition have come to realize that when you cast a wider net, you get a lot more quality. There are now converts seeing that you can in fact make some real gains on the equity side and not only equal, but in many cases enhance, quality. I am worried that, as we cannot replace these positions at this stage, the rebalancing of our employee populations will be a lot more difficult to do and will be a lot slower. I guess that is the message here.
That should not necessarily have an impact on our student recruitment, because the same kinds of issues we are looking at for faculty and staff, we are looking at for students. We want to make sure our student populations reflect the demographic reality of our province. Again, one of the things that has been very clear to us in my own institution is that as we raise our admission standards, we do not decrease the people coming from our target groups; we actually increase the numbers coming from our target groups.
Ms Akande: That does not surprise me.
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Dr Segal: No, but I am saying that we never thought we would decrease it. Obviously, one of our target groups is women. As the University of Guelph admission cutoffs have gone way up, over 66% of students entering the University of Guelph this past year are women. Within that category, although we do not collect data yet -- we are going to start collecting it on a voluntary basis -- the number of visible minority students has clearly increased significantly.
Those are issues that are important to us. We are not going to hide behind the petticoat of underfunding to remove our obligation to do something. In some areas, we are just going to have to do it a lot more slowly because we cannot replace people.
Dr Graham: Just briefly, three things; I am inviting the government here to look at this problem in a holistic manner. One of the things we have to do is to make sure we have an educational equity program in place in order to be able to provide people with the kinds of backgrounds that will enable them to come into our sector and take employment as university faculty. That means of course starting out with very early grade school and eliminating the barriers, breaking down the streaming, which automatically ensures that certain people from certain backgrounds are not going to be able to get to the stage where they might take up positions as university faculty members.
Second, we have asked the government repeatedly for a faculty growth fund because of the problem Dr Segal has outlined, that we have positions opening up across the province but that most of them are being frozen because of a lack of funding ability to fill them. We have also invited the government, and invite it now, to use a faculty growth fund in order to try to stimulate the positions for targeted groups.
Mr Christopherson: First of all, on behalf of the government members, I want to thank all the presenters today for taking the time to come. We really appreciate the effort you have obviously put into your presentations. All of it contributes to decision-making.
I have a couple of questions, the first one to Mr Lacroix. The presentation by the Council of Ontario Universities, on what I have counted out as page 5, suggests that under certain conditions, and I recognize that context, the council believes tuition fees should be looked at. They state a number of reasons for that.
I will just briefly touch on a couple. They have put forward that fee rates are lower now than they have been for 40 years, that the tuition fee revenue per full-time student at public universities in the United States was 76% greater than in Ontario and, over the page, in item 7 they talk about the fact that university graduates exceed the average industrial wage by 63% by virtue of the fact they have taken the time and effort to go through university.
I would just ask you, from your perspective on behalf of the students, how you would respond to some of those suggestions.
M. Lacroix : Je croyais ici que vous vous reportiez au rapport de la fédération ontarienne. Je vous demanderais juste de repréciser certaines des statistiques, s'il vous plaît. J'essayais d'écouter la traduction. Parfois, si vous parlez trop vite, la traduction ne va prendre qu'une certaine partie de votre discours. Donc, si vous pouvez modérer un petit peu, s'il vous plaît, juste pour reprendre les grandes lignes des questions, parce que je regardais un autre graphique.
Mr Christopherson: That is fine. I understand. I am having the same problems with some reception in mine too. I was referring to the Council of Ontario Universities' presentation. Do you have a copy in front of you?
Mr Lacroix: Yes.
Mr Christopherson: Good. I counted out page 5 with the chart in the middle. I was just referring to some of the items they list at the bottom of the page. I was referencing items 1, 3 and 7 just for examples of some of the stats the council was putting forward. I was just asking how you would respond to those notes from the perspective of the students.
M. Lacroix : Je dois vous dire que je viens d'avoir le document, donc je n'ai pas eu le temps de repasser chacune de ces données-là. Si je reprends la première chose au niveau des frais d'étudiant, qui n'ont pas été gardés au même niveau que les frais d'inflation, comme je le disais tantôt, en rapport avec les statistiques que nous avons eues, ça s'avérerait être possiblement l'inverse puisque le taux que les étudiants ont payé en termes de cotisations étudiantes a augmenté au niveau de, ou à un niveau supérieur à, l'inflation.
Donc, par conséquent, comme je vous le dis encore une fois, je ne sais pas exactement d'où viennent toutes ces informations-là. Je m'en excuse si je ne réponds peut-être pas de la bonne façon à votre question.
Le troisième point : je crois qu'on se rapporte ici au taux américain par rapport au taux ontarien, au niveau des cotisations que les étudiants paient. Au niveau de l'Ontario, on paie plus cher qu'aux États-Unis ; c'est bien ça ?
Ms Bhat: Perhaps I could just interject here. We all realize that in the United States students are paying proportionately larger tuition fees than they are in Ontario. However, we must also recognize that accessibility is a great issue in the United States in terms of these institutions that are charging phenomenal tuition fees. This is why the federation has always come down very strongly against an increase in tuition fees.
We are paying relatively low fees compared to the United States, but we would like to think that in Ontario the post-secondary institutions are striving towards a better quality of education that is accessible to all students regardless of their socioeconomic backgrounds. These kinds of tuition fee increases are a direct barrier to students in the system. They exclude those people who are traditionally marginalized in society. Education is supposed to be opening the doors to these people and giving them the ability to go forward in their career development. That will not happen unless they have access to post-secondary education.
Tuition fees have been increasing since the 1970s. Perhaps they are not at par with the level we were paying in the 1970s in terms of the proportion we are paying of the costs of running the system. Right now we are paying about 19% of the costs. I know that different sectors have been asking that students assume a greater proportion of the burden.
If we went with Dr Smith's recommendation to increase it to 25% of the costs of running the institutions, this would mean about a 40% to 50% increase in tuition fees for students. A student would come out with just an undergraduate degree, which we all know does not get you too far these days, and with a debt load of about $50,000. That is a serious debt load to carry for the rest of your life and it will affect everything you do from them on.
If you are married and you come out as a couple finishing undergraduate degrees, you are looking at a $100,000 debt load for yourselves. You still have to start thinking about your children and their education. You have to start thinking about your own future, getting some sort of mortgage on your home. That would be a serious impediment to doing these kinds of things. If you wanted to do any sort of graduate studies, your debt load would skyrocket from there. Then you have to start thinking how you are going to repay that.
Income contingency has come up during this conversation. I realize that people think income contingency is a great way to go about repaying this kind of debt load, but what happens is that as interest rates inflate, students stop paying the principal of their loan and just keep up with interest rates time after time. As they pay their 3%, they never touch the principal. They just keep paying the interest premium on the loan. It is not really a viable option, so the federation has always come down against an increase in tuition.
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The Vice-Chair: Mr Christopherson, unfortunately, we are out of time to ask any more questions.
Dr Segal: May I make one correction?
The Vice-Chair: No, I am sorry. All the time has been used up.
Mrs Sullivan: Since we did not have an opportunity to do so, I wanted on behalf of our caucus to thank all the representatives of the groups that have appeared and put forward extensive discussions of current and future issues facing us in the university community.
Mr Sorbara: Do we not go until noon?
The Vice-Chair: No, actually, because there is the one other item Mr Phillips brought up earlier that we have to have some discussion on. I would like to thank each of the groups for --
Mr Sterling: Mr Chairman, one of the participants wanted to make a correction. I think you should afford him that opportunity.
The Vice-Chair: Okay, sorry. Dr Segal?
Dr Segal: Thank you, Mr Sterling. This is not the forum to debate tuition fees. If the committee would like the data behind our numbers, we will send it to the members. We will also send the US participation rates in public institutions, which are about 25% higher than in Canada.
The Vice-Chair: That will be fine, and if any groups have additional information that would support any of the data they have presented and want to submit it, they are more than welcome to do that. Again, thank you for coming forward. It has been a very informative morning for all of us to have you all here together. We thank you for participating in this process.
Mr Phillips, you brought up a point earlier that you wanted the committee to discuss.
Mr Phillips: Yes, the Treasury people were in here two weeks ago and laid out the fiscal scene for us. It has changed dramatically. I think we need an update on that because it is the foundation on which we are building our thinking.
The Vice-Chair: I just need a clarification, because they gave us a preview of the upcoming years and I believe the things that have changed are with respect to this year. Could you clarify what you are really asking for?
Mr Phillips: I think they actually reviewed the fiscal environment and the overview of major transfers. They went through the 1991-92 fiscal environment, highlighted and reviewed it, and then the fiscal outlook. Both of those things have changed, I gather, by a couple of billion dollars. I think we need an update. A subpart of that is that a big part of the package is the fiscal stabilization plan. I would like an opportunity to get an idea on what basis that is being applied for, because that is going to be a big part of the fiscal plan as well.
The Vice-Chair: Just one other question then: If the committee thought there would be merit in going ahead with your suggestion, when would you be looking for that to occur?
Mr Phillips: I would think two to three weeks, because it was regarded as the foundation we were going to build our thinking on.
The Vice-Chair: Mr Christopherson, you had comments to make?
Mr Christopherson: First of all, I do not have any problem if at any point we need to bring in the Treasury staff to give us the information we must have to do the work at hand. However, I am a little unclear at this point as to how things have changed in terms of what the Treasury staff came in for last time. As I participated, it was not a budget report. They were talking more about the economy and how that affected the planning for the upcoming budget. I think it is important that this committee, right now anyway, stay focused on the budget that is coming. That is what our work is, but I am certainly open to listening to other comments on this.
As I enunciated early on and I do so again, time is of the essence. I suggest respectfully that we do not want to take away from the time we can have groups coming in consulting with us so that we can get a report together and give it to the Treasurer in time for it to be meaningful. I would not want to see anything take us away from that objective, because, as I understand it, that is what we are trying to do.
Mr Sterling: I do not disagree that there is a time problem here. My concern is the confusion over how much the last two announcements by the Treasurer are going to have on the planning for next year's budget.
I am unclear, quite frankly, as to the arguments about how much has been postponed or actually cut. That is my concern about it. They may not be able to clarify it any further, but it seems to me that for us to be able to try to make some kind of recommendations, we should have a clear view from them what their story is with regard to what has been transferred and what has not.
We have two groups coming in this afternoon. We are giving, what, a half hour to each?
The Vice-Chair: I expect we would probably spend a maximum of an hour in total with both groups: a 10-minute presentation and time for questioning.
Mr Sterling: If Mr Davies or some of his staff could be here this afternoon we would be quite willing to see them because that is the concern of Mr Phillips and me, if they were available for 4:30 or 5 o'clock.
The Vice-Chair: I doubt we are going to be able to get someone in here. I thought Mr Phillips said that maybe we would be able to get someone here in a couple of weeks. That is what he was originally looking for. Now that the idea is on the table and we have heard some arguments, both pro and con, maybe we should take the lunch-hour to think about it and we can make a decision this afternoon.
Mr Sterling: Why do you not phone the Deputy Treasurer and ask him if he can come?
Mr Christopherson: Mr Chairman, I will undertake to see if Mr Davies is available on such short notice and, if not, when might we be able to schedule this, and I will get back to the opposition members this afternoon.
The Vice-Chair: Okay, and we will make a decision this afternoon.
Mr Christopherson: Is that fair?
Mr Sorbara: His office is close by, it is just across the road.
Mr Christopherson: Yes, I am familiar with where the office is, Mr Sorbara.
The Vice-Chair: We will make a decision, then, this afternoon. On that note we will recess the committee until 3:30 this afternoon.
The committee recessed at 1157.
AFTERNOON SITTING
The committee resumed at 1540.
ELECTION OF CHAIR
The Vice-Chair: Before we have our presenters come forward, we just have one piece of business to take care of, and that is the election of the Chair of the committee. I would like to have nominations.
Mr B. Ward moves Ms Akande as Chair.
Do we have a seconder for that? Mr Christopherson. Do we have any other nominations for Chair?
Mr Phillips: What about Ron Hansen?
The Vice-Chair: He is not here today so I do not believe he can be nominated. Do we have any other nominations?
Mr Stockwell: You cannot nominate off the committee, that seems to be the interpretation. Could we nominate to find out if the member would like to stand? Could we do it that way?
The Vice-Chair: Mr Stockwell, Mr Hansen has resigned as Chair of the committee.
Mr Stockwell: I know, but I guess what I am trying to do is --
Mr Christopherson: Play games.
Mr Stockwell: Well, some would suggest I am playing games, like those across the room, but what I am trying to do is create the democratic process. Considering what I have read in the paper and the fact that Mr Hansen has said he has been forced off the committee and told to resign, maybe it would be the democratic thing if all members here, considering he did not want to resign, could show how worthy we think he was as a Chairman and offer that post back to him and show our confidence in him as Chairman. I think he was one of the best chairmen this committee has had and I would like to see him back in that job.
The Vice-Chair: Mr Stockwell, Mr Hansen has resigned as Chair and he has been substituted off the committee through a motion in the House which has already carried. We have one nomination forward. If you have any other nominations to make, please do so. Do I hear any other nominations? Seeing none, I declare nominations closed. I present to you your new Chair.
Motion agreed to.
ASSOCIATION OF MUNICIPALITIES OF ONTARIO
MUNICIPAL FINANCE OFFICERS' ASSOCIATION OF ONTARIO
The Chair: If the group will come to order, please, we have the third in the pre-budget consultations this afternoon and we are going to hear presentations from the Association of Municipalities of Ontario and the Municipal Finance Officers' Association of Ontario. Welcome. Thank you very much for coming. Each group will have about 20 to 25 minutes to make its presentation. After that there will be a question period and we will rotate the questions so that everyone has an opportunity. Please give us your names and explain exactly who you are.
Ms Cooper: Good afternoon. My name is Helen Cooper. I am currently the president of the Association of Municipalities of Ontario. I serve in that capacity because I am the mayor of the city of Kingston, hence actively involved in municipal politics in the province. I would like to thank the committee very much for allowing us the opportunity to make this presentation this afternoon. We will certainly respect time limitations. I will give a very brief overview of our document, taking me perhaps only 5 to 10 minutes, then I would welcome questions which I and my colleagues will attempt as best we can to answer.
First of all, we are certainly well aware, not just from various media reports but a variety of other indicators, that the provincial government is facing the most serious financial difficulties of many years. We would suggest, however, that it is equally important that the province recognize the economic difficulties currently being experienced by municipal governments as well, another level of government in this province.
As we know, it is very difficult for the province to cope with financial situations that are brought about by changes in federal government funding and federal government policies. It is at least as difficult for us at the municipal level to react to what may seem to us very frequently to be arbitrary decisions that have seriously affected our abilities locally to administer our own budgets and offer reasonable levels of increase in taxation to our citizens.
We at the municipal level, of course, have just gone through the experience of municipal elections across the province. Like many of my colleagues, I spent at least the last month and a half actively campaigning. I can say very clearly that our main source of revenue, which is property tax, is a tax that is totally indiscriminatory in recognizing people's ability to pay. That is becoming very obvious from its effect on many of our citizens. I think my municipality, being no exception, is looking at very significant budget increases in 1992. We estimate at this point about 25%, for instance, in Kingston. It definitely means we will be looking at certain staff reductions and so on to be able to offer a reasonable increase to our citizens.
We do want to be fiscally responsible. I would point out that having gone through the rigours of elections across the province, I think everybody elected in a municipal government is intending to keep the promises he or she has made. Certainly those promises revolve around what we would do about taxation. Therefore, what we are saying at this point is that if the province, in dealing with its financial problems, is going to continue to impose burdensome responsibilities on municipalities, we would ask that commensurate compensation go with those new responsibilities, which unfortunately has not been the case in many instances in the past few years.
To use some examples, the most obvious -- and I am sure I am not telling this committee anything it does not already know very clearly -- is that the effects of social assistance reform and the effects of the recession on the statistics are absolutely staggering in terms of the changes in general welfare assistance expenditures. We are now looking in 1991 at GWA expenditures accounting for as much as 32.6% of a municipality's net revenues.
Again, I would point out that this is based on income raised through property tax. I do not think property tax was ever intended as a source of revenue for funding of social assistance programs. I would argue it does not make any sense. Very frequently, it is in essence taxing the poor to subsidize those who require income subsidy.
Another example is waste management and the nature of change of regulation, which has been at a breakneck pace, particularly in the last 18 months. The municipalities' financial ability to respond is increasingly more complicated and difficult. Many municipalities had accrued reserve funds, but considering the kinds of costs we are looking at now -- the establishment of a new landfill or waste diversion program in the order of $30 million, for instance, for a typical medium-sized municipality -- there has never been any contemplation of establishing funds that would cover those kinds of costs.
Therefore, we are saying at this point that if there are to be regulatory changes, particularly in the area of waste management, they will have to be done in consideration of the fact that municipalities will have established their budgets early in 1992 and will not be able to respond appropriately without incurring serious operating deficits, which of course will then have to be made up in 1993.
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A further example we would like to point to is that of police services. Of course this is something that municipalities have argued for many years, and I am sure those of you who served in municipal government prior to being in the provincial legislature can well remember the frustrating arguments arising from the fact that the municipality has virtually no control over a police services board budget, and it can be independently arbitrated. It is extremely frustrating when a municipality is trying to determine, at this stage, in extremely difficult circumstances the priorities for service in the municipality.
The ability to include policing services among everything else is simply not possible under the current circumstances. We would therefore suggest that the province consider amending legislation which will at least allow municipalities control over police services budgets, which has never been the case previously.
We point out from our own survey results that the combined costs of welfare assistance and police services, both of which ultimately fall within provincial and not municipal control as the legislation is currently written, generally consumed in 1991 from one quarter to two thirds of the tax revenue raised by municipalities. That of course varies, depending particularly on which level of municipal government we are referring to. Much of the remaining portion of municipal budgets is devoted to staff salaries and benefits. The province, through the implementation of pay equity and an arbitration system, is also controlling at least some of those staff salaries and benefits as well. We would point too to an arbitration system that has consistently made awards in excess of inflation. I have been in municipal government since 1980, and it has been consistently the case since then. Therefore, at this point, it makes it very difficult for us to be able to control costs.
We would like to suggest a number of recommendations. I will go through them very quickly, recognizing that I am almost at the end of my time.
1. We made our presentation to the provincial cabinet in September, and at that point we had proposed a formal provincial-municipal agreement on revenue-sharing to provide more predictability in terms of the kinds of long-term planning exercises that we all think are appropriate for very large municipal corporations to be undertaking. We would suggest that until such an agreement is in place, given the financial impact provincial policies have had and continue to have on our ability to control our own expenditures, we receive an across-the-board unconditional transfer payment at the rate of inflation, which we understand currently stands at 3.3%.
We also suggest it may be appropriate to unconditionally make other grants which have traditionally been conditional transfer payments to allow municipalities more room for breathing, because we must make a lot of very tough decisions in the coming financial year.
2. We suggest that funding levels of conditional grant transfer payments from the province to the municipalities should be adequate to allow municipalities to fulfil the stated objective of a given program, as very frequently the regulations attached to those programs are imposed solely by the provincial government.
3. We suggest that the Police Services Act be amended to give municipalities the authority to approve police service budgets. I will not go into that again.
4. We suggest that the province work with AMO to resolve the issue of cost-sharing for general welfare assistance as soon as possible. We are extremely appreciative of the opportunity to partake in the disentanglement process, which we think is the most important provincial-municipal initiative for many years. We would suggest, because of what we see on the immediate horizon, that the first phase in the disentanglement exercise is an examination of our relationships with respect to social assistance reform and the overall scheme of provincial-municipal financial reform.
5. In recognition that it may be some time before the full results of the disentanglement process are implemented, AMO recommends that all decisions which have an impact on municipalities or on our cost-sharing relationship be linked to the disentanglement process, and that cabinet submissions affecting municipalities include a statement of municipal financial impact.
That is a consistent request we have made for at least two or three years now. What has occurred in the past -- and I am sure it was not ill intended, but it has occurred in any case -- is that a ministry of the provincial government has made a legislative decision or recommendation not realizing that there may have been serious financial consequences for municipalities that may not have been immediately obvious. The immediate example that comes to mind is court security.
6. Where new legislation, regulations or programs result in an increased financial burden for municipalities, the province should increase transfers sufficiently to meet those new costs.
7. The association requests that the province support the exploration of alternative sources of revenue and the establishment of a revenue-sharing act. My point bears repetition, that property tax is becoming more and more inappropriate to be funding the variety of activities we are expected to respond to. It is a very severe source of inequity to the people of this province.
8. When we are faced with the challenge of budgeting in the absence of knowledge of what the province is going to require, we ask that we be allowed to know our fate as quickly as possible, because most municipalities now fully recognize that the good old days are gone for ever and we cannot sit on a municipal budget for a third to a quarter of the way through the financial year. The budget has to be done as close to January 1 as possible to be absolutely reasonable and give appropriate direction to the administration of our municipalities.
That concludes my presentation.
The Chair: Thank you very much, Ms Cooper. We are going to ask that the Municipal Finance Officers' Association of Ontario make its presentation and after that we will have both groups come to the table and ask them some questions.
Mr Rinaldo: Thank you, Madam Chair. I want to express appreciation on behalf of the Municipal Finance Officers' Association of Ontario for giving us the opportunity to appear before you once again before you finalize your 1992 budget. I will be referring to the presentation that has been handed out to you. Our goal here is threefold: to provide you with an insight into municipal budgets and the financial pressures that we are in, as well as supporting the mayor's position in terms of this recommendation and addressing a couple of what we call the technical, clean-up issues such as debt legislation. And we would like to pursue new legislation and talk a bit about municipal pensions, if we may.
The Chair: Excuse me. May I ask your name, please?
Mr Rinaldo: I am sorry. I am Joe Rinaldo, chair of the Municipal Finance Officers' Association of Ontario. With me is Mike Trojan, and he is the vice-chair as well as the treasurer for the region of Niagara.
Perhaps I could start briefly on the pressures we are facing here. We all know the economic realities of the 1990s and that there are limited resources, not only for the municipalities but also for the province. We know you are struggling with your $9.7-billion deficit and certainly we cannot expect major windfalls in terms of grants. But given this environment, what we feel has to happen is that we have to work in a partnership with the province to meet the demands and expectations of the public.
It would certainly be irresponsible to simply look at you to solve our problems, but I think the real problem is the cost of government services at all levels. To simply shift the burden from one level to another does not solve that particular problem. It is our opinion that shifting the burden to the property tax base is really shifting it to a more regressive and inferior method of taxation. All of us should be responsible for our own taxing decisions, and that is the way responsible government should work.
Once again, we recognize that we have to work together to look at programs and service deliveries that have to be reviewed -- they have to be rationalized -- and perhaps even to look at ways to reduce the already onerous tax burden on Ontario residents.
I believe the Ontario economy and the taxpayers can no longer sustain the current level of public sector spending; therefore, the only way to resolve this is for us to work together.
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Just to pick up on the mayor's position, I wanted to highlight to what extent we have control of our own budgets. If you turn to page 2 of my submission, you will see there is a sample of a composition of property taxes for the region of Halton. I have used this simply for illustrative purposes. You will notice that two thirds of our expenditures are virtually controlled by someone else. Some 52% is for police services, and a number of the others are for boards and agencies such as the conservation authorities, the children's aid society, health services and general welfare assistance, which is controlled by the province.
The municipal councils really have direct control over one third of the expenditures, with the result that in many cases the property tax increase is well beyond the control of local councils. If you turn to page 3, I have given you an analysis of the municipal property taxes in Halton in 1991. You will notice that we had a 6.94% tax increase: 3.4% was for police services, 2.7% was for general welfare, and 0.8% was for services that council in fact had control over. So more than 90% of that particular budget, in fact, was controlled by someone else. That is the problem many of the municipalities in Ontario are facing.
We welcome the work towards disentanglement and we are certainly looking forward to working with you on that. We think that will achieve and promote sound, efficient government in delivery of services and improved accountability to the electorate.
Once again, the areas of immediate concern to municipalities are the areas of social services and police services board. We understand there has been a recent announcement in terms of conservation authorities and the reduction of their grants. One of the things we are concerned about is that conservation authorities will have the legislative authority to simply pass on that reduction in grant to local municipalities, which are constrained very significantly.
If I can go to page 4 and talk about transfer payments very briefly, I just want to remind the committee that municipalities cannot budget for any deficits. In fact, if we do have a deficit we must tax for that as a first item of taxation in the following year. Therefore, our flexibility is extremely limited.
I did a brief analysis in that little table on page 4 which shows you what will happen to most municipalities if unconditional grants are at certain levels. For example, if there is no increase in unconditional grants, most municipalities will expect a tax increase of 3% before they even start looking at their 1992 budget. That is the first thing that will happen. If you provide us an unconditional grant increase of 3%, we would be looking in the area of 1% before we start looking at our budget. Only if you match our municipal expenditures will you actually have no impact whatsoever.
Again, because our general welfare assistance program, as well as our police services board, is increasing at a faster rate than inflation, we can expect that we will have some tax impact as a result of whatever announcement you make in terms of unconditional grants. We are having to face that at a time when the taxpayers are telling us that inflation, or something less than inflation, is the property tax increase they are looking for.
Therefore, MFOAO is urging you to take that into consideration in your final decision-making process in determining the level of funding that you will provide to local municipalities. Again, we are urging you to make the announcement to us as early as possible, since our municipal fiscal year is January 1 and most of us have already started our planning process for the 1992 budget.
In the area of pay equity and employment equity, MFOAO urges you to maintain a commitment so that the burden of introducing pay equity within cost-shared programs, such as social services and health, is shared equally and responsibly, especially since the legislation came from the province to begin with.
The area we would like to pursue in new legislation is borrowing and investments. As you know, municipalities have the authority to borrow, subject to the approval of the Ontario Municipal Board, and in fact do invest in some of the reserve funds. That legislation has not been updated since the 1960s and we would welcome an opportunity to have it updated. We have worked for three years on a committee with staff of the ministries of Municipal Affairs and Treasury and Economics, and with municipal officials, as well as the public sector, and we urge you to introduce that legislation as soon as possible.
The final issue I want to raise is the area of municipal pensions, the public sector pensions. As you know, most are controlled through the Ontario municipal employees retirement system and we feel it must retain the flexibility to invest in marketable securities at the discretion of professional pension fund managers in order to ensure the actuarial integrity of future pension benefits. If not, what in effect will happen is that actuarial liabilities will accrue over a period of time, which future residents of Ontario will ultimately have to pay. Let's keep our books clean, and if we want to subsidize any kinds of programs, we should do it up front and not pass the liability on to future ratepayers.
In conclusion, we welcome working with you on any review of any of our new programs. We want to re-emphasize that shifting the burden on to the property tax is really considered a more regressive form of taxation. It is certainly an inferior form. We want to thank you for giving us the opportunity to make our presentation today and we welcome working with you in the future on any issues that affect municipal finance.
Mr Stockwell: How much do you want in transfer payments?
Ms Cooper: We have suggested in our brief that it be unconditional transfer payments across the board at the rate of inflation.
Mr Stockwell: So you are looking for the rate at 3.3.
Ms Cooper: What we are saying is that we recognize you have a financial problem. We certainly have a financial problem. Recognizing the rate of inflation I think is sharing the burden equally.
Mr Stockwell: So if you get 3.3 unconditional, you are reasonably happy?
Ms Cooper: We would not be as unhappy as if we got less. Let's put it that way.
Mr Stockwell: Okay. Any of these recommendations you are requesting hinge on your transfer payments, so are you looking at 3.3 subject to a few of these recommendations being adopted? I was on council for eight years. This is the same stuff we talked about for those eight years. We have been talking about it for ever.
Ms Cooper: Those problems have never gone away. It is just that the provincial government, no matter which government it has been, has never addressed them.
Mr Stockwell: I think they have addressed them; they just do not agree with you.
If you are looking at 3.3 and you get less than 3.3, where would you look to your city, Kingston, to see reductions taking place in your municipal budget?
Ms Cooper: It is difficult for me. I am not a dictator in my own municipality. Two thirds of the council is brand new, so it would be kind of interesting to hear what they have to say about it. But I think probably the first things to go are municipal support of external agencies, which I think is a serious problem. I am talking about mostly social service agencies. I think reductions in certain kinds of programs are a requirement; to make certain programs self-sufficient that have not been self-sufficient before. Things like recreation programs will be far less accessible, particularly to those of very low income, than has previously been the case.
I think we would really be pushing things like fire services and police services. I do not want to sound alarmist, but part of the reason is that they are certainly the most expensive, and that relates back to my comments about arbitration settlements. We will be making decisions that councils would have shied away from a few years ago. I will presumably cut the grass less frequently. Some environmental groups might argue that is a good thing. Perhaps some changes that are effected are not necessarily bad changes. It certainly forces municipalities into thinking differently about the variety of services they offer.
At the risk of sounding like a heretic, one of the first recommendations I would make is to get rid of the blue box program. I have made my reasons for that very clear. I think the blue box program is totally unfair to municipalities. Municipalities are subsidizing primarily the soft drink industry by operating blue box and I think we should get out of it.
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Mr Stockwell: Those points are really well taken. In fact, I made some of those arguments a couple of years ago at Metro council. It is kind of ironic, is it not, considering that we have a socialist government, that if you cannot get the 3.3% increase, you would be looking at social service grants, I assume, the universality of your recreation programs, fire, police and environmental programs like the blue box? I think that is rather ironic.
Mr Rinaldo: I can add one more service that our council seriously considered reducing last year but did not, the area of children's services. Council seriously considered reducing the number of subsidized child care spaces last year because of the pressures that were being encountered in last year's budget. We will be facing the same level of difficulty this year again. We are looking beyond double-digit tax increases.
Mr Stockwell: I have two very quick questions. What were the wage settlements for your employees this year?
Ms Cooper: They are 5% per cent in our case; 5% in 1992 and 5% in 1993.
Mr Stockwell: Did you get direction from the province about where you should be settling?
Ms Cooper: No.
Mr Stockwell: You did not? Have you read Agenda for People? You do not know that document?
Ms Cooper: No.
Mr Stockwell: I will send it to you.
Mr Phillips: Both your groups have a very good feel for how things are out there right now. Because I do not think either of these things is in your brief -- I cannot pick them out -- can you give us a sense of how the economy is going in terms of how it is impacting on your property tax revenues one way or another? Let me start with that one.
Mr Trojan: I will attempt to answer that one. The region of Niagara had the distinct honour of having the largest tax increase of all regions in Ontario last year and it was primarily due, as in many other regions, to economic conditions. Our increase was 12%; 6% of that was due to police spending and another 5% was due to the increase in welfare costs. Economic conditions are not the greatest and we are going to be faced with a similar situation in 1992.
In response to the situation we were faced with in 1991, our council chose to attempt to reduce our workforce by 5%, with a corresponding reduction in expenditures. We have just about achieved that, through a fair bit of blood and sweat. We have implemented an early retirement incentive program and we have eliminated any positions that were left vacant. We are trying to do it, to the greatest extent, through attrition rather than having to lay anybody off.
Having gone through all that and having nearly achieved it for 1991, we are faced with a budget in 1992, even when we take that into consideration, that is going to result in another double-digit tax increase because of a $2-million deficit attributed to our share of the increase in welfare costs. Our welfare case load has increased by 100% over the last two years and that is adding to it. As far as the tax revenues are concerned, we have compared tax collection success in our area municipalities. There has been roughly a 25% increase in the amount of arrears outstanding.
Mr Rinaldo: One other area where we are seeing the impact of the economy is in water consumption, particularly in the commercial and industrial sector. In Halton a significant drop in consumption created a $2-million shortfall in our water and sewer revenues, which are recovered completely from our water and sewer rights. We are feeling the effect of the economy, I can assure you of that.
Mr Phillips: Maybe I can add my second question, because they are related. Just in terms of social assistance payments, what is your anticipation for next year? I gather that is a significant part of it. I am trying to get a sense of the issues you are facing, whether the economic downturn has a significant impact on your revenues.
You know, unless you go bankrupt, you have to pay the property tax anyway. It is not like income tax, where if your income drops, you pay less. I am just wondering whether that has any effect on your revenue. Second, the costs across Ontario in terms of social assistance payments: Is there anticipation that we have now gone through the worst and the economy is starting to turn around?
Ms Cooper: I think it varies across the province. Our social services administrators expect another 50% increase in 1992.
Mr Phillips: Did you say 15%?
Ms Cooper: No, 50%. There are a whole bunch of people on UI now whom we have not seen yet.
Mr Phillips: I am sorry, did you say you expect a 50% increase next year in your expenditures?
Ms Cooper: In our total general welfare assistance bill.
Mr Rinaldo: I just want to emphasize that this is only our share. This is not your share; it is simply our share.
Mr Phillips: Is your share more than their share?
Mr Rinaldo: It is still 20%, but it is still a 50% increase on the tax levy that we have to tax for that additional amount, because we cannot budget for a deficit. For some municipalities, what happens is that they have a deficit because of GWA in 1991, they have to carry that deficit forward into 1992, and in addition to that, they have to increase their 1992 budget to offset the impact. That is why some municipalities are facing tax increases well above the double digit areas.
Mr Phillips: Is that typical of the AMO in terms of how it is anticipating the demand on social assistance in 1992?
Ms Cooper: I cannot answer that for sure, but I saw the statistics across the province. In our case, the city of Kingston, we were right in the middle for the last two years. I expect we are still probably somewhere in the middle; there will be some that are lower and some that are higher. But that is not atypical.
Mr Rinaldo: A sample of regional municipalities shows that it is in the area of 25% to 50%, all the regions, which is the majority of the population in Ontario.
Mr Phillips: You are anticipating, 1992 over 1991, a cost increase of 25% to 50%.
Mr Rinaldo: Absolutely, yes.
The Chair: We will move on to Mr Ward.
Mrs Sullivan: Could we ask that if the AMO has documentation on those projections from municipalities across Ontario, they could make it available to us? That has a significant impact on provincial figures as well.
Mr B. Ward: I would like to thank you for your respective presentations and the recommendations that are enclosed. I notice the AMO is suggesting that the transfer payments should be increased by the inflation rate, 3.3%. I think we all recognize that these are extremely tough times. Money is very tight for all levels of government.
It is my opinion that tax levels are about as high as they can go, so I really do not think we should be raising taxes more than they are right now. If you cannot raise taxes, and you are suggesting that transfer payments should be increased by 3.3%, are you suggesting to the Treasurer that he should allow the deficit to float higher than his objective of $8.9 billion in order to achieve your 3.3% increase? Would that be what you are recommending?
Ms Cooper: The comment you make that we cannot raise taxes is an interesting one. If the provincial government determines that it cannot raise taxes and that it has to control the deficit at the $9.7 billion level -- and I fully recognize the reasons for that --
Mr B. Ward: That is $8.9 billion for next year.
Ms Cooper: You have to recognize that if you give municipalities nowhere to go, taxes will go up. They will not be income taxes; they will be property taxes and user fees.
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Mr B. Ward: Your recommendation to the Treasurer would be -- and this is AMO's position, I guess, because you are here representing AMO as well the finance officers' association -- to allow that deficit to go higher?
Ms Cooper: That is the provincial government's decision, not mine. What I am trying to say to you, though, is that you cannot just unilaterally say taxes will not go up, because what you are compressing in one place is bursting somewhere else.
Mr B. Ward: The money has to come from someone.
Ms Cooper: If I may be so bold as to tell you what to do --
Mr B. Ward: You are here to give your point of view.
Ms Cooper: You have to decide which forms of taxation are appropriate to increase and which forms of taxation are not appropriate to increase.
Mr B. Ward: Are you suggesting that some taxes should be raised?
Ms Cooper: What I am suggesting is that if you give us nowhere to go, property taxes and user fees are going to have to go up. What I am further telling you is that those are extremely regressive forms of taxation that affect low income groups very severely.
Mrs Sullivan: On a point of order, Madam Chairman: The member is attempting to force a recommendation from the municipalities when their recommendation is for an increase in unconditional grants of 3.3%. The Association of Municipalities of Ontario has not made a formal recommendation, and clearly does not want to make a formal recommendation, about what the Treasurer of Ontario's decision should be.
Mr B. Ward: Where it comes from --
Mrs Sullivan: The AMO has presented a recommendation based on its requirements.
The Chair: I appreciate your comments, Mrs Sullivan. I had interpreted the member's remarks as seeking clarification. However, I might add that the member asked a question and perhaps has the response. Is there any further clarification?
Ms Cooper: I will let the financial experts take over.
Mr Rinaldo: It feels like being in council meetings. Basically what you are trying to say to us is that you want to shift the burden from one level of government to another. The issue is, do we raise taxes or do we raise the deficit. That is the question you asked us. What we are saying is that it is time for us to review the level of services.
The people are telling us they do not want a tax increase, regardless of where it is coming from. This is what I hear all the time when I deal with the public. What we have to start doing is deciding who is responsible for determining the level of service that is provided in municipal services, and what we are trying to tell you is that you make that decision for us. You control the police budget. You control the general welfare assistance and the level of funding that you are going to dictate for us. If you want to make those decisions for us, you must absorb responsibility for taxation. If you want to give us the opportunity to make those decisions, then we will accept the responsibility for taxation. That is perhaps the way I can clearly say it.
Mr Stockwell: Hear, hear.
Mr Sutherland: I apologize for having to pop out and miss your question. First of all, congratulations, Mayor Cooper, on your re-election. I sat back and observed the municipal elections and tried to get as much analysis as I could on what occurred across the province in the elections. I was rather shocked on election night in some respects as to how many incumbents got back in. I guess the reason I was surprised was that I had been listening to all the reports beforehand, which indicated that there was a real shift out there among the electorate, that they wanted to have a real change in representation, particularly some groups such as property taxpayer coalitions.
My sense, other than a few what I would call exceptions down in my area in southern Ontario, is that in the vast majority of the cases incumbents were returned. I know that in certain parts of the province that was not the case. In the north, some of the mayors of the larger areas were not returned. In the few areas in my region where they were not, my sense was, though, that it was not the property tax issue that got those people turfed out.
I wonder whether you would care to comment on that. What message did the electorate really send in the municipal election relating to taxation, either at the local or the provincial level?
Ms Cooper: First of all, I would be extremely careful in the interpretation of election results. The obvious response I can give you is that the general calibre of incumbent politician in the municipal government is extremely high, and that was recognized.
Interjections.
Ms Cooper: I will not pursue that any further. I cannot comment on the mood of the electorate in a variety of places. I can comment on the fact that tax revolt groups as such tend to be those who are able to voice their concerns because they have a certain amount of power to be able to do so. I would suggest to you that certain taxation changes that are occurring at the local level are affecting most strongly those who are most severely disfranchised to begin with, and that they are not the ones who are likely to be leading some highly developed and well-publicized tax revolt.
I can say from my own personal experience that there is plenty of evidence of hardship. I can tell you that in the part of our city where there was a lot of recent development for first-time home buyers, there are more for-sale signs on one street than there are houses not for sale, and most of those are defaulted mortgages. I therefore suggest to you that there is a taxation problem.
I found an electorate that was I think quite sympathetic to incumbents, recognizing that a number of problems we have had to deal with in the last while have been the results of certain changes we could perhaps not have forecast very well and have tried to respond to as best we could. But I do not think we should diminish the seriousness of the problem of the inability of certain people in our society to continue to pay.
The other point I would like to make too is that we mentioned waste management particularly. I think the shock value to the economy in the way the province is dealing with municipalities on waste management is extremely deleterious to our economies. I would suggest it is also creating a number of much-unwanted side effects, including allowing certain private sector corporations virtual monopolies in control over municipal destiny in these areas, and I would suggest that these things should be looked at very carefully. I recognize that there is a great need for change in environmental regulation, but I think it should be dealt with much more sensitively than has been the case in the last few months.
Mr Sutherland: You mentioned that if transfers did not meet the need, then there was the issue of user fees. You talked about those people who were disfranchised who were already feeling the impacts. If you see user fees coming in on certain things, are you referring to some of the -- while still important -- more optional types of things, such as recreational facilities? Is that where you are seeing it, or are you seeing it in more main core resources?
Ms Cooper: Those will be the first things to go. Obviously we will look at those services which are not life-threatening before we look at the ones that are. Therefore, the original intent of municipalities to provide certain kinds of services that people could not afford in terms of provision by the private sector, that is, a municipal pool as opposed to a private health club pool, those kinds of things will probably have to become much more self-sufficient, which defeats the purpose of having them in the first place. But that is definitely the first kind of thing that is going to go.
Mr Wiseman: I would like to pursue these questions. I know that in my municipality the province gives grants for transportation that are outside the regular transfer grants. I assume that is probably the same for just about everybody. Do you have any idea what percentage that is and what the impact would be of these outside grants? You talk about 3.3%, but if you get your 3.3% and you do not get anything else, do you have an idea of the impact?
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Mr Rinaldo: For programs like health and social services they would have a dramatic effect because those programs are primarily funded from the province. In other words, public health services are 75% funded by the province and 25% by the municipal sector. Most social services are funded in the area of 70% to 80% by the province and 20% to 25% by the municipality, so if you start cutting those back, our ability to provide those services would be completely hampered.
In terms of our road program, it depends on the size of the municipality. It is very diverse. It does in fact dictate the level of road improvements that will happen over the next year or two for various municipalities. They have not been keeping pace with inflation, and most municipalities have been cutting back the road programs.
Mr Wiseman: The disentanglement process: If you are talking about general welfare, we know where AMO stands on that. Outside of that, where would you say the most cost-efficient steps for disentanglement could take place?
Ms Cooper: Outside of welfare? We have listed what we think are the three most pressing areas, certainly the highest-cost areas -- waste management and police services -- and there is a high degree of entanglement in both those cases.
In terms of waste management, the Minister of the Environment is certainly in control of the process now, and I think many of us who are engaged in waste management master plans would argue that we are seeing huge amounts of money being spent unnecessarily at the moment. AMO has some extremely well-prepared briefs on those issues which we would be happy to send along to you.
Mr Wiseman: How many municipalities are currently looking for landfill sites?
Ms Cooper: Every municipality in the province, because the time it takes to get a new landfill exceeds the lifetime of any landfill site in the province now, I would guess, bar a few exceptions.
Mr Wiseman: Have you examined the Interim Waste Authority's document on site selection, the search for landfill sites that the Interim Waste Authority for the GTA has put together?
Ms Cooper: I personally have not. I would have to defer to the policy analysts at AMO.
Mr Wiseman: Because if that --
The Chair: Excuse me. I think time is running short and I am going to ask that you place your questions concisely. We will let you round that up and then we will move on to Mrs Sullivan.
Mr Wiseman: What is the average tipping fee that is being paid throughout the area outside the GTA?
Ms Cooper: Ours is $140. Peterborough is $150 now. I think those are probably fairly typical rates.
Mrs Sullivan: I have two questions, one of them relating to environmental issues. I know that Mayor Cooper has been very active in these areas over the past lengthy period of time and clearly has some concerns with respect to the regulations which will be introduced during the course of this year. Has there been an impact figure put on the cost to municipalities in Ontario relating to the leaf and yard composting and the source separation?
Ms Cooper: I cannot answer that question. Do we -- we do not.
Mr Rinaldo: Not in Ontario. We do know that as municipalities are going in there, it is a very large component of our waste management budget in Halton, I do know that, and it is growing at a much faster rate than even our cost of landfilling. In Halton we are currently exporting all of our wastes in our recycling -- our waste reduction program actually costs us more, despite the fact that we are hauling it all the way down to Niagara and in some cases to the United States, so that is the level of expenditure.
Mrs Sullivan: That is typical of many communities. By the way, if AMO does that kind of survey of the impact of those regulations on municipal costs, I think that would also be useful.
I wanted to ask Mr Rinaldo particularly about the interest of the finance officers' association in municipal pensions. The recommendation suggests that, "MFOAO urges the government to resist using public pension funds and that any government borrowing be made at prevailing interest rates," and so on. Are you suggesting that the province ought not to adopt a kind of Caisse de dépôt approach to investment for public sector pension funds? Is that what you mean by that statement?
Mr Rinaldo: Absolutely. I feel that in fact pension funds are funds of the employees and they should be managed in the most professional manner and get the highest rate of return so that we do not have problems similar to what we had in the 1970s. I recall when we managed pension funds in the 1970s. At that time I was with the region of Hamilton-Wentworth and we had a private pension plan. In fact there were major deficits which were accrued over that time in the city and the town, and the city and the region had to put additional moneys in there.
What you are doing simply is deferring the liability to future ratepayers, the future residents of Ontario, if in fact you create the shortfalls, because the benefits will ultimately be paid. If you are going to give a benefit today, the existing employees should pay for it today and not pass it on to future ratepayers. For goodness' sake, we are passing on huge deficits both at the federal and provincial levels in terms of passing on future liabilities to our future residents. Do we want to add one more to the list? That is the bottom line.
The Chair: I have Mr Phillips, and I have, tentatively, Mr Wessenger; I am not sure whether you were indicating that you wished to speak. But after that I am cutting the questions off.
Mr Phillips: Just a comment. That is an interesting discussion that took place, and it will take place some time down the road.
Mr Rinaldo: It sure will.
Mr Phillips: I gather the Treasurer even today was saying he is going to be coming forward with some form of a pool of capital for investment, and I am pleased to have your preliminary comments on it. The comment I would make is that the Treasurer I think is committed to the grant announcement for municipalities by the end of this calendar year. I think he said you will know by Christmas the bulk of your concerns, and then the budget of course may have some additional things in it that will be of interest.
Your recommendation for the grants, recommendation 1, is the 3.3% on the unconditional grants. On the conditional grants, I gather it is status quo, and if anything new comes in, adequate funding.
On the Police Services Act, that may be something that cannot happen right away, but I think we all understand your recommendation there.
On recommendation 4, again, I think social assistance, substantial review and disentanglement are going to take a little bit of time, but for this budget, are you satisfied with the cost-sharing arrangements between the provincial government and municipalities?
Ms Cooper: I do not think "satisfied" is the word I would use. Certainly it has been AMO policy for a number of years that social assistance funding should not be related to the municipal tax base at all, and I think for very logical reasons, but I think we are realists.
Mr Phillips: That is a essentially an 80-20 --
Ms Cooper: It is an 80-20 split. There are only two provinces in Canada that have municipal cost-sharing, by the way.
Mr Rinaldo: There is one area we would like to get an improvement or a clarification, and that is where we have had to implement pay equity. As you know, employment in health and social services programs is predominantly female-oriented in our municipalities, and that is where the biggest cost of pay equity has in fact affected us. We are having difficulty getting the fair cost-sharing ratio, based on the province's formulas, in terms of you picking up your fair share of pay equity cost. We would urge the province to help us in that area. We are not asking you to pick up our share; we are simply asking you to pick up your fair share of it.
Mr Phillips: That was in the social assistance area?
Mr Rinaldo: Yes.
Mr Phillips: Okay. Recommendation 5 is something that is important. Recommendation 6, I understand that; and recommendation 7. As I say, I think with the announcement on recommendation 8 there is a commitment to bring it out this year by the end of the calendar year. At least I think I understand completely your recommendations. I, for one, appreciate very much the clarity of them.
Ms Cooper: If I could just add another bit about pay equity, which is a very important point, in homes for the aged as well municipal budgets have gone up very dramatically in the last few years. We had to cover 100% of the retroactive costs of pay equity, whereas homes for the aged are usually roughly an 80-20 split as well. So municipalities in the whole pay equity scheme have had to pay 100% of the catch-up costs, whereas those salaries and wages are an 80-20 split otherwise. I do not think it makes sense.
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Mr Wessenger: This may have been asked before as I was late, but I would like to clarify it for myself. You are asking for grants of 3.3%. If grants at that level are made, does that translate to a municipal tax increase at about the same rate of 3.3% or 4.3%? Are there any predictions in that area?
Mr Rinaldo: I would be more than happy to predict. Even if you give us 3.3%, given the pressures we have in our social services program and some of the boards and agencies such as police services, we will expect that will lever up our tax increase by 1% or 2% even before we start our 1992 budget.
Mr Wessenger: That would work out overall to about what?
Mr Rinaldo: We are going to be well above inflation in that area.
Mr Wessenger: Even with a 3.3% tax hike in transfer payments you are still looking at tax increases in the 5% to 6% range?
Mr Rinaldo: No, 5% to 15% is probably more like it.
The Chair: I want to thank both the Association of Municipalities of Ontario and the Municipal Finance Officers' Association of Ontario for your presentations, for responding to the questions and for the clarity with which you have done that. I appreciate your coming.
Mr Rinaldo: Thank you for the opportunity to be here.
The Chair: There is a second item on the agenda which in fact has been carried over from this morning. I would ask David Christopherson to report on that.
Mr Christopherson: I had some discussion with the Treasurer's staff over the lunch period. There is certainly no problem with coming in if that is what this committee would like, but we are recommending we follow Mr Phillips's suggestion that indeed a couple of weeks would ensure we have used our time most effectively here in doing the consultations. If we would like to set a date now for two or three meetings down the road I will relay that back to the Treasurer's staff and we will have the right officials here to present the information. I would also like to get a sense of exactly what it is the committee would like so that whatever limited time we have is focused on the issues the committee would like.
The Chair: We have the afternoon of December 5 available. Would it be helpful to use that time then or would you perhaps want another day?
Mr Phillips: I am free that month.
The Chair: Maybe December 12 would be better.
Mr Christopherson: The only thing I worry about is something I have said before and the Treasurer has now said publicly: he is anxious to get these announcements made as quickly as possible. I again emphasize the importance of concluding our work so that we can get the report in his hands and it will have a meaningful impact.
Mr Sutherland: Is that December 5?
The Chair: The afternoon of December 5.
Mr Christopherson: Are we scheduled to conclude then?
The Chair: Yes.
Mr Christopherson: That would make sense. At what time specifically in the afternoon? Mr Wiseman: At 3:30?
Mr Christopherson: We will work that out with the clerk. We are finished the consultation by the morning of December 5, Mr Decker?
Clerk of the Committee: Yes.
Mr Christopherson: Fine. I will arrange with the Treasurer's office for the afternoon of December 5 at 3:30. Could I hear the focus, please?
Mr Phillips: For me it would be not unlike what they did two weeks ago with whatever numbers were current then. I think they reviewed where they thought we were going to come out this fiscal year and they again reviewed their projection. What we are trying to do is get a sense of what fiscal environment we are going to be working in. I do not think any of the economic environment is likely to change. A huge part of our makeup is the $585 million on the fiscal stabilization plan. I would like to know the basis on which that will be secured from the federal government.
The Chair: My understanding -- you can correct me, Mr Phillips -- is that you want an update of the figures and you want a review of the areas from which the focus of the budget, the budget reductions or the cuts will be coming.
Mr Phillips: I personally am most interested in an update of the fiscal outlook, and a subset of that is the fiscal stabilization plan, the basis on which we will be securing that money from the federal government.
Mrs Sullivan: I would also like, having heard the AMO presentation today, to see some projections from Treasury relating to the effect of increases in the general welfare transfers to the municipalities. In terms of those transfers $3 billion is now spent. If the municipalities are predicting increases of 25% to 50% in their case load and the province pays 80% of that, what kind of figures are we looking at in terms of that impact?
Mr Christopherson: Is that the impact on us or the impact on our partners?
Mrs Sullivan: The provincial impact.
Mr Christopherson: That is fine. I will do everything I can to make sure the presentations are focused in those areas.
The Chair: That being completed, I think we have completed our business.
The committee adjourned at 1646.