Assemblée législative de l'Ontario

PRE-BUDGET CONSULTATIONS
OLDER WOMEN'S NETWORK

BRAMPTON BOARD OF TRADE

ONTARIO MINING ASSOCIATION

ONTARIO SEPARATE SCHOOL TRUSTEES' ASSOCIATION

ONTARIO TAXPAYERS FEDERATION

JOHN KELLETT

INTERFAITH SOCIAL ASSISTANCE REFORM COALITION

ONTARIO COUNCIL OF AGENCIES SERVING IMMIGRANTS

ONTARIO ASSOCIATION OF RESIDENCES TREATING YOUTH

CANADIAN FILM AND TELEVISION PRODUCTION ASSOCIATION

ONTARIO PROVINCIAL POLICE ASSOCIATION

CONTENTS

Tuesday 13 February 1996

Pre-budget consultations

Older Women's Network

Etta Ginsberg-McEwan, member

Brampton Board of Trade

Bob Malcolmson, policy analyst

Ontario Hotel and Motel Association

Rod Seiling, president

Mary Lapaine, chair

Ontario Mining Association

Patrick Reid, president

Ontario Separate School Trustees' Association

Patrick Meany, president

Patrick Daly, vice-president

Patrick Slack, executive director

Ontario Taxpayers Federation

Paul Pagnuelo, executive director

John Kellett

Interfaith Social Assistance Reform Coalition

David Pfrimmer, Evangelical Lutheran Church in Canada

Doryne Kirby, Canadian Religious Conference of Ontario

Joy Kennedy, Anglican Church of Canada

Ontario Council of Agencies Serving Immigrants

Mulugeta Abai, member, board of directors

Maisie Lo, chair of policy committee

Sharmini Peries, executive director

Ontario Association of Residences Treating Youth

Gita Schwartz, executive director

Canadian Film and Television Production Association

Elizabeth McDonald, president

Stephen Ellis, member, board of directors

Steve Ord, member, Ontario producers' panel

Ontario Provincial Police Association

Brian Adkin, president

Rick Cazabon

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président: Chudleigh, Ted (Halton North / -Nord PC)

Vice-Chair / Vice-Président: Hudak, Tim (Niagara South / -Sud PC)

Arnott, Ted (Wellington PC)

*Brown, Jim (Scarborough West / -Ouest PC)

*Castrilli, Annamarie (Downsview L)

*Chudleigh, Ted (Halton North / -Nord PC)

*Ford, Douglas B. (Etobicoke-Humber PC)

*Hudak, Tim (Niagara South / -Sud PC)

*Kwinter, Monte (Wilson Heights L)

Lankin, Frances (Beaches-Woodbine ND)

Martiniuk, Gerry (Cambridge PC)

Phillips, Gerry (Scarborough-Agincourt L)

Sampson, Rob (Mississauga West / -Ouest PC)

*Silipo, Tony (Dovercourt ND)

*Spina, Joseph (Brampton North / -Nord PC)

*Wettlaufer, Wayne (Kitchener PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Bassett, Isabel (St Andrew-St Patrick PC) for Mr Arnott

Carr, Gary (Oakville South / -Sud PC) for Mr Sampson

Crozier, Bruce (Essex South / - Sud L) for Mr Phillips

Marland, Margaret (Mississauga South / -Sud PC) for Mr Martiniuk

Clerk / Greffier: Carrozza, Franco

Staff / Personnel:

Drummond, Alison, research officer, Legislative Research Service

The committee met at 0932 in room 151.

PRE-BUDGET CONSULTATIONS
OLDER WOMEN'S NETWORK

The Chair (Mr Ted Chudleigh): This morning we are going to take another chance at having the Older Women's Network present to us. I do apologize for the interruption we had the last time that your group was before us when we had to adjourn. Today we have Etta Ginsberg-McEwan representing the Older Women's Network. We have 30 minutes. Would you proceed, please.

Ms Etta Ginsberg-McEwan: I do represent the Older Women's Network, but I also want to tell you, for what will follow, that I have the credentials. I have been a professional social worker for over 40 years. My most recent position was the director of social work at Baycrest Centre for Geriatric Care. In the States, which you can tell by my New York accent, I was the associate director of one of their largest medical centres. So I want you to know that for what I have to say, I have credibility.

I'm sorry more of you are not here. What I would like to start off asking you to do or to try to imagine is to listen with your third ear, develop one this morning, and your third eye, because your regular eyes and ears seem to filter out the pain and despair and the things you don't want to hear, and I'd like you to able to hear me this morning. So therefore, listen with your third ear and look with your third eye.

I'm first going to quote from a book that I recommend strongly. It's paperback, it's inexpensive -- Small Expectations: Society's Betrayal of Older Women, by Leah Cohen:

"The elderly in our society are generally rejected, but we are particularly disdainful of older women. The discrimination begins in infancy and escalates as we become mature women, but it doubles as we grow older, for then are we not only women, but old women, perceived as unattractive, unneeded and parasitical. In our 40s, when we can expect another 40 years of life, the double rejection begins. Yet a man in his 40s is perceived to be at the height of his attractiveness and desirability. He can anticipate another 25 years of active, productive life.

"The majority of women over 65 live below the poverty line. Most live alone in poor housing, having outlived or been abandoned by their spouses. They are the victims of indifferent, fragmented medical care and have a great fear of rape, mugging, street harassment, robberies and swindles." And you've read about that; you read about it almost daily.

"Older women are often lumped together by social service agencies, charitable foundations and religious organizations, who generally make the condescending assumption that crafts, bingo and concerts are the only activities that older women enjoy and find satisfactory. They, as well as the rest of society, pay little attention to the fact that we become most individual and unique as we age." And I can tell you that as I've been aging, I've become most unique.

It is stressful to become an older woman. We can expect a loss of status and a sense of being useless. We are in danger of being pronounced senile. Fifteen per cent, and I think it's a little higher now, of women are termed senile, but that's because they have been overmedicated and understimulated and rejected.

I want to quote to you something because I am sick and tired of hearing about the baby boom. There was a woman who lived in a tiny room far from transportation on a subsistence income. Her only pleasure in life was attending adult education classes at a local community college. She told me that she was aggressively confronted by a male student of about 30 years old, "I don't want my tax dollars paying for your education," he said. "You're an older woman. Why are you taking a place away from a younger student who could take this education and do something productive with it?"

"I guess," she mused, "society wishes we would disappear, maybe drop dead at widowhood or retirement. If they could, they would line us up and shoot us," and that's a quote.

When I say I'm tired of hearing about the baby boom, too much has been blamed on older people, even the CPP, and yet another economist has come out saying that the CPP is in a fine state of affairs and that this is all either the media's fault for publicizing it wrongly or it's the government's fault.

All the poverty lines are somebody's subjective assessment of an income level below which people are defined as poor. But I don't think anybody asks people themselves what they think people need to live on. In a survey that was done some years ago by Health and Welfare Canada -- it did a postal survey of 16,950 old age security recipients and had a very high response rate of over 70% -- they were asked what they thought would be an adequate income at that time. Now it would be a little higher. The replies averaged out to $10,600 a year. They were also asked at what income they could live comfortably without worrying about money. The average replied $12,690. Then they were asked about their own incomes. For men, the average income was $10,535. That's almost at the adequacy level for that year. For women, the average income in the same survey was $6,785.

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I do not want to hear any further that we are a special- interest group. This has been the government's response to many organizations. It is divisive. You and I share the same interests. While I speak for the Older Women's Network, which is a voice for older Canadian women whose purpose is to overcome injustices and inequities at home, in the workplace, in communities and in society as a whole, we are deeply concerned and committed to the wellbeing of all people.

Getting back to special interests, let me tell you that you will grow old. No one escapes unless through an untimely death. You will suffer strokes, heart attacks, cancers, other chronic illnesses. Your children and grandchildren can easily become disabled through accidents or birth injuries. Every voter who goes to the polling booth has a special interest, so there are millions of special interests. Why else would they vote? So I ask you that you stop using this expression because you are polarizing people and groups.

Your budget tells us, tells the media every day to warn us of continuing devastating cuts. It is unrelenting, 24 hours a day. Despair and hopelessness and helplessness have become dark clouds that hover over us. It is hard to believe that Premier Harris and his cabinet were ever children raised by loving parents who must have instilled in them the need to respect and value every human being. Somewhere along the line they have lost their way, and I don't know how to get them back on track. You know, the track, Dorothy's yellow brick road in the Wizard of Oz, which spelled out hope? You don't speak to us well; you don't demonstrate sensitivity. There's some arrogance and condescension. Sometimes I feel that I want to offer my services because I'm one -- there are many -- one of the better social workers and advocates in Toronto.

Ernie Eves feels that his message is not getting across. That's not true. It is getting across. He spells "his" -- I don't think he spells it publicly with a capital H, but the government, whether it be Snobelen, whether it be Tsubouchi, whether it be Mushinski, whether it be Mr Wilson, seems to spell "His agenda" with a capital H. But a capital H only belongs to a Supreme Being, God.

I guess you think that the people crowned you last June, but they didn't. What the vote meant was that there was confidence in you being a messenger of the Supreme Being and that you were going to be a protector of all people and a guardian of our needs. However, you have committed some sins by casting us aside -- vulnerable children, vulnerable young adults, old men and women -- by your continuous attack.

For seniors, the Older Women's Network is especially interested in funding for health care, drug benefits, housing co-ops, non-profit housing projects and so forth. The government economic statement which was issued in the fall suggests that $1.3 billion will be saved by constraining transfers to hospitals: 4% in 1996-97, 5% in 1997-98 and 6% in 1998-99. That may have changed, but you're still going to take a lot away.

I have to tell you that much of my professional career has been in acute care hospitals. You probably do not experience this, but you need to know, and since there are many more women than men because, for whatever we do, we live longer -- I don't know why; we have so much aggravation with men. But I want to tell you that in the last few months it has been disgraceful what has been happening in hospitals and in emergency rooms, and maybe some of you have heard something from your constituents, that people have been discharged prematurely, some sent home in nightgowns and pyjamas in taxis, and they have been only readmitted, which has been more costly to the government. I'm not sure why that is happening, but there seems to be an atmosphere of uncaring.

The drug benefit plan: I'm really not such a sick old lady but I'm on a lot of medication. So I figured out that monthly the $2 could come to $18 a month, and the $6.11 for the whatever you call that charge. Anyway, I figured that I could be charged, on the average, about $850.88 a year. I'm using myself as an example; I'm quite sure I'll be able to manage that by cutting here and there. I do not possibly see how older women on welfare, on old age assistance with Gains -- now, they get Gains because they don't have enough to live on -- are going to manage. They're going to take it away from food, probably, or they will not take their medication.

Many senior women live in rental apartments. Some

of the best-maintained have been the co-ops and the non-profit housing projects, where the rent is geared to income and the residents serve on committees which oversee a standard of maintenance for the buildings. If these kinds of housing are not developed with government funds, how will older women manage to live?

There are also many transfer payments to municipalities that impinge on seniors' lives. Services provided to seniors play a very valuable role and prolong ability to remain active and contributing members to the community. That you find in the excellent seniors' centres in various neighbourhoods throughout Metro Toronto, where they have very good instructors, volunteers and so forth. When people feel that they're not valued, they hide in their apartments, they become sick, and end up in the hospital costing the government more money.

Another area that we're very concerned about: nursing homes and old-age homes. Forget that I worked at Baycrest; that is an outstanding place. But most nursing homes and homes for the aged give the minimum service. I warn you very seriously that if you allow Metro or any other municipality to privatize homes for the aged, we will be in serious trouble. We are in serious trouble with the privatization of nursing homes.

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Now the most recent thing -- do you see the pattern? -- is the transportation. I cannot believe what is happening with Wheel-Trans. I wonder where all this money comes from. I called yesterday so that I would be sure I had the right information for you. There are 25,000 people on the Wheel-Trans list. Granted that there are some abusers -- there are in every system; everybody abuses -- they are going to spend money on contacting all 25,000 of us, including myself -- I'm permanently in a motorized wheelchair -- to verify. Do you realize what that's going to cost and what that money could do?

It's the same thing as reading in the paper this morning that Jim Wilson wants to get a card where it will have a lot of information about us. Now the figure may be wrong in the paper -- I doubt it -- but it's $1 billion. Where is all that money coming from? So when I think about it, I seem to feel that there are bushels someplace that you really could be using more effectively, because if you're going to give us cards, you're going to have to deal with the privacy information.

The government policies of slashing public spending on transfers and services will do little to address the growing feelings of economic insecurity and mounting government deficits. The middle class is shrinking. There is less stable employment, more temporary and part-time work, more frequent and longer periods of unemployment, and a growing pool of unemployed young people. For those in temporary jobs, six of 10 workers would prefer permanent employment -- with good reason, for part-time and temporary workers have lower earnings, fewer benefits. You know all that.

The labour market is becoming increasingly polarized. People who have been de-engineered -- which is the new word -- out of their jobs at age 55, when they still have many more years of work, now find themselves competing with a lot of other people for work; and certainly the 55-year-old or the 60-year-old isn't going to get the job.

I think you heard last week from the Advocacy Resource Centre for the Handicapped that the demographics show that of people over 55 there's an increasing number who have become chronically ill, as opposed to those under 55. All of this illness -- not all of it but a good deal of the illness has to do with the stress that one faces.

Now, you know that more and more families are falling below the poverty line, despite that some of them are working. Poor families in Ontario fell $2.8 billion below the poverty line, and the poverty line figure is coming from the Fraser Institute. They fell below the line in 1993 -- those are the latest figures I could get -- but it's even more now.

Continually cutting supports to society's most vulnerable members and increasing the income inequities among its citizens -- you can't justify it on social and moral grounds. Most Ontarians -- I can't say all because I've come across a few who don't give a damn -- do not want to live in a society where a large portion of the population lives in poverty, even those who have considered themselves sheltered from the problems of poverty.

I suggest very seriously and sincerely that you give up this 30% tax cut. I have no idea, I cannot comprehend where the money is coming from, unless it's coming from the backs of all the programs that you cut. I don't think it's going to bring any jobs into the area. People are going to use it probably for another vacation in another country, which will get the benefits of our dollars.

But since you're offering a part of the population a 15% cut maybe in July and then the other 15% maybe next January, what are you offering the people whom you've cut? What are you offering them? Don't you think they should get a piece of the action? So I suggest that you not implement the cuts, because anybody with a conscience wouldn't want to have a tax reduction.

While I'm recommending and the Older Women's Network is recommending full funding back to the municipalities, continuation of drug benefits, getting Wheel-Trans and other TTC issues on track, restoring some moneys to the social assistance payments, we know you can't do it all. We understand there is a deficit, but what we ask is that you think a little bit about where you make the cuts.

You know what it feels like when I talk to people? It feels to people who are vulnerable that you want them to go away and to get out of your faces and you want them to exist on bread and water. Now, I don't mean bread and water in terms of food; I'm using bread and water metaphorically, bread and water in terms of all activities of daily living which you take for granted every morning you wake up.

The Older Women's Network represents your mothers, your grandmothers, your siblings in generations to come. I consider myself accountable and responsible for what I do with people, and you too are accountable and responsible and will be held so. I thank you for giving me this opportunity.

The Chair: Thank you very much, Mrs McEwan. We have about four minutes left, total. Could we start with a brief question from the opposition.

Mr Monte Kwinter (Wilson Heights): Mrs McEwan, I was just delighted to have you appear before us. I'm blessed to have you contributing, as you have done, to Baycrest, which is in my riding. I'm also blessed that I have an excellent senior centre in the Bernard Betel Centre. But that certainly isn't what is happening around the province. I'm sure you'll recognize that those are two unique institutions that are a model for others to follow, but again, if the funding isn't there, it's not going to happen.

I also want to agree with your definition of special interests. I feel very strongly that every citizen of Ontario has a special interest, and that is to do the best for themselves, for their children and for the province.

A lot of what you talked about was very general. If there is one sort of message, one item that you think is the most important that this government should address for older women, what would that be?

Ms Ginsberg-McEwan: Can I have two?

Mr Kwinter: Sure.

Ms Ginsberg-McEwan: I may need three. Two would be the drug plan, that you rescind that, and that you do something about raising the social assistance program. People's souls get corroded day after day after day. I'm not talking about homeless people or people dying on the streets. I'm talking about another kind of death, which is a death of the spirit, and when you don't have enough money. Those two go hand in hand, the social assistance and the drugs, and if you want people to pay for their drugs, the $2 fee plus the -- well, welfare people won't be paying the dispensing fee, but if you want them even to pay the $2 -- and I gave you an example of $18 a month -- then you have to do something about social assistance.

Mr Tony Silipo (Dovercourt): Thank you very much for your presentation, particularly I think for reminding us that there is really much more than just a human element to what is going on, that what is happening, if I've heard you correctly, is that we are not only threatening a number of basic services, but I would say we're threatening the very soul of the society we've developed over a number of years.

I thank you for reminding us in a very direct way about how those needs and concerns have to be kept very much in mind as the government, for understandable reasons, continues to do what it believes it needs to do in terms of the deficit.

I think, as you've said, we're not arguing about the need to tackle the problem of the deficit, but in doing that it's important we maintain the society we have developed, improve what we can improve, and not simply destroy piece after piece what we've built up over the years. We may have a balanced budget, if we do that, at the end of the day, but what we're going to have is a greater level of poverty. In fact, we saw some figures yesterday and on previous days that indicated, again very clearly, that the benefits of the tax cut will go largely to high-income Ontarians at the expense of middle- and low-income Ontarians.

The only question I have for you is that we are hearing more and more from people like yourself, and people representing a whole array of people, and themselves, who are bringing these things to mind. I have the sense that privately, members of the government are beginning to feel uncomfortable about what they are doing, but at the same time I see that publicly and to some extent even privately they still believe fervently that this pain is necessary. I just ask you again to add any comments you may have that might instil in them a sense of understanding that this is not the way to go, that this is in fact destroying the very fabric of the society we've built up over the years in Ontario.

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Ms Ginsberg-McEwan: Personally, I can tell you and you can use your imagination, I've been disabled most of my life, and every day to get up and go through the various routines is a drag and is a bitch. Now I wake up and I'm a little bit more apprehensive, a little bit nervous. I'm more anxious than I ever was, and I was trying to say: "Look, what are you so anxious about? You've been managing all these years."

I'm going to be 70 years old July 4, great American day. I worry that there won't be any help to get a motorized wheelchair, to get leg braces, to get the incredible amount of equipment that is necessary for me and other people to be able to stay in one's apartment. I worry about those things. We now hear, and it may just be a rumour, that the ADP, the assistive devices program, will be cutting back.

When you ask me, I'm telling you that I'm more anxious. Recently I had a checkup and the anxiety came through in my heart, with some problems, and I said, "Oh, boy, will I speak to Mike Harris about that." It's more anxiety, which I don't feel older people need. It's increasing worry, and the insurance isn't enough.

I think you would do yourselves a world of good if you just demonstrated by one thing, if you reviewed that social assistance -- I'm not sitting here pie-in-the-sky. You can't restore 22% or 21%, but do something. Show that you have faith in all people, not just the rich, because that's the reputation you're getting, and that's not what you wanted when you were elected; that's not what you want. You're decent people and you don't want that.

Mrs Margaret Marland (Mississauga South): Ms Ginsberg-McEwan, I want to thank you very much for being here. You are a particularly inspiring person and I just think you're wonderful. When you talk about older women and age, it's so immaterial, when we hear from someone like you, and I'm thinking about Mayor Hazel McCallion, who is 75 tomorrow. You're all women who inspire all of us, regardless of gender.

We hear very clearly what you are saying to us this morning, and I would like to tell you that the easiest thing for Premier Mike Harris and his cabinet and all of us as members of the caucus would be to have done nothing. We're not popular, we know that, but what we're doing isn't to be popular; it's to be responsible for the future.

I was very encouraged by what you said. You said: "We know you can't do it all. We understand there is a deficit." I know you do understand that, when you said that the Older Women's Network is concerned about generations to come, and that's sharing what our concerns are. Premier Harris and the cabinet do value and cherish every human being. If they didn't, or if we didn't, we would sit back and let the debt spiral continue, which means in the long run we wouldn't have any money for even bare survival programs.

The question I have for you is, in terms of one area that you're concerned about -- and shelter, after food, is the primary concern of everyone -- you mentioned a concern about what the future will be without assisted housing. Would you agree with me that in the long term, if we have a program of shelter allowances where we directly give the financial support to the person who is eligible for that help, they then through their shelter allowance choose where they want to live, that rather than subsidizing a whole building of bricks and mortar, giving money directly to the eligible people to take with them to live in a building that may be privately owned, but the shelter allowance will help them choose where they can live and make up the difference in what they can afford?

Ms Ginsberg-McEwan: I don't know whether you know -- the government did save the Older Women's Network's work on the co-op that's going to be built downtown, and that was one of the few that were saved.

I can't agree with that. I think really co-op housing is the way to go if it's at all possible. I think that if we're going to have rent controls done away with, shelter allowance will be in serious trouble. It won't be enough.

I hear what you're saying, that you do value. All I'm saying is that we live in a concrete world. People see things only concretely. So what I'm asking is that you come up with something that you can show those people who are not going to get a tax cut, something concrete. People scoff at what you say when you say, "We care." People don't find it, because they're worried and they don't have enough food and so forth. So while I respect those words, they don't help. You have to demonstrate something concrete.

The Chair: Ms Ginsberg-McEwan, thank you very much for your appearance today, and particularly for coming back after last Wednesday's experiences.

BRAMPTON BOARD OF TRADE

The Chair: Our next presenter is the Brampton Board of Trade, Mr Bob Malcolmson, policy adviser. Welcome to the committee. We have 30 minutes.

Mr Bob Malcolmson: Thank you for the opportunity to address the committee today. My name is Bob Malcolmson and I am the policy analyst for the Brampton Board of Trade. I'm here today representing the over 1,000 members of the Brampton Board of Trade, which employ some 60,000 people in Brampton and the region of Peel.

The purpose of the Brampton Board of Trade is to represent and actively promote the interests and profitability of Brampton business and its members. Three of the board's major goals are to build and maintain support for control of taxation and expenditures affecting the tax community of Brampton; to promote the most efficient methods, including privatization, of delivering government services; to create an economic environment which is positive and attractive to new and existing businesses.

Today we are here to share with you our business community's thoughts on your upcoming budget. We feel the government is on the right track to getting Ontario's fiscal house in order with the passing of Bill 26 and your deliberations on education and municipal restructuring.

The board of trade has adopted an overall position that any additional government spending at any level on programs must be funded from current budgets by reallocation of funds from existing programs. The board of trade has vocally opposed additional government spending through increases in taxes at any level.

In letters not only to the province of Ontario but to the Prime Minister, the Peel Board of Education, the city of Brampton and the region of Peel, we stated, "Governments at all levels must bring their financial house in order and adopt a philosophy of not spending more dollars than they bring in and that it is essential to look to tax reduction and reallocation of funds from existing programs to reduce the tax burden and/or fund new ventures."

It is interesting to note that when we speak of business in Ontario, the vast majority are small businesses. Eighty per cent of our board's membership is made up of small businesses employing 25 people or less. These business people are your neighbours who run the town pharmacy, the local convenience stores, the carpenters, the mechanics, the machine shops in the industrial malls, and the innkeepers in cottage country. Ask any one of these business people and they will give you the real perspective on the state of the Ontario economy and the barriers for growth in jobs.

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Where are we today? Quite frankly, we're in a mess. Ontarians are in a state of shock. They have finally realized what has happened to their province over the past decade. Many Ontarians have come to the harsh realization that we can't continue spending approximately 25% more than we take in, while others with special interests feel money grows on trees.

The federal government has realized there is no more money, and you have finally realized that you can't spend your way out of the mess and are now putting plans in motion to get Ontario back on track. It is now time to educate the school boards and municipal levels of government that there is no more money. Without putting away the credit card and having a plan of action, in some cases painful action, we will be bankrupt. Simply put, if a family who owned a three-bedroom bungalow continued to spend on credit and had the debt and deficit problems Ontario has, they would by now have lost their home, been put out on the street and declared bankruptcy.

The Brampton Board of Trade maintains the position that governments municipally, regionally and provincially must be committed to downsizing government, to cost reduction as a government policy, to accountability to the taxpayers, to less government and to the elimination of government duplication. Our message today is not only from the business community; I have over 160 letters with me today from employers and employees alike who took the time to fax me a letter, starting Friday, with one simple message. I'll just read the letter:

"Dear Mr Harris and Mr Eves

"Keep your promise. As a taxpayer, with all due respect, I must advise you I cannot accept any more tax increases. Mr Harris and Mr Eves, I support you and ask that you live up to your promises, despite the pressures from the special-interest groups, and cut government inefficiencies, balance the budget and lower taxes. However, I cannot support a personal income tax reduction if it results in an increase in the deficit."

There are over 160 letters here and I will leave these when I leave today.

Simple observations:

Although the economy is showing signs of recovery, we have far too much unemployment, especially among our young people. In many instances the youth of today are not looking to the future, for they can't see any light at the end of the tunnel.

We have hit the tax wall, and any thought of higher taxes will drive our economy farther underground, increase the exodus of businesses out of Ontario, increase tax avoidance and evasion, and stop our already fragile upturn.

Ontarians are being cautious, for they have gone through a most difficult recession and have either lost their jobs or seen their neighbours and family members lose their jobs. They are not prepared to take a chance and spend money, fearing they may end up in the same or a similar situation. In a nutshell, they are unable to see their future clearly.

The Ontario government has the difficult task, and that means each and every one of the MPPs, of not only cutting expenditures and getting our finances in order, but you must also face the human side of the equation and rebuild the confidence of our citizens in the Ontario economy. You must address this fear of the future and the fear of spending. If there ever was a time for a tax break, it is now.

Businesses today are extremely mobile and they will gravitate to jurisdictions which support a competitive environment and jurisdictions with a welcome mat out for business. People move to areas where there are jobs and an opportunity to raise their families in clean, safe and affordable communities. The attitude of today's government towards attracting business, helping business to start up and grow by cutting red tape and getting out of the way of business, is refreshing and should help business remain competitive in this global economy.

However, the Ontario government must eliminate the barriers that entrepreneurs face in creating jobs: the red tape. This will allow businesses to bring more taxpayers into the economy and more revenues to the government. Small business is the engine of the economy, and as we stated, over 80% of our members have 25 or fewer employees. By reducing payroll taxes and regulatory burdens and eliminating the red tape to business, you eliminate barriers to employment. The end result is growth and job creation, and ultimately more people working. This means more people paying taxes, resulting in more sales tax revenues to the government as well as lower expenditures on unemployment and welfare rolls.

We need businesses to want to come to Ontario and to stay and grow here. Jobs secure our futures, jobs build communities, and jobs create the tax dollars to support our health care, education and infrastructure services that make Ontario and our communities great places to live. These jobs will be created and sustained by the private sector. To borrow a line from a song, we ask the government to "Give us a place to stand and a place to grow."

It is important for you to continue to evaluate government programs to eliminate duplication and ensure that the appropriate level of government -- either federal, provincial or municipal -- is delivering the service. Although all possible government services must be open to private sector tenders, by redefining and restructuring the role of government we will end up with a smaller, more efficient government with less red tape.

The government has promised tax relief for all Ontarians. Ontario taxpayers have been hit with tax increases again and again over recent years. It is refreshing to see a government promising to give back money by cutting taxes. We all know that personal income taxes on medium-income families and retail taxes are dangerously out of line. Rather than providing significant revenue increases, tax increases have been met with tax avoidance, an increase in the underground economy and migration of businesses south of the border. The promised personal income tax cut is encouraging. However, we caution, it should be implemented only if it does not increase the deficit.

Ontarians also want this government to balance the budget. It is necessary and, although painful for some, it is of paramount importance for the government to get expenditures under control. The government needs to increase revenues by controlling expenditures. It is encouraging to see the government taking the approach that it cannot spend more than it takes in. To be successful, your challenge is to increase the vitality, revenue production and job creation within the private sector.

The private sector does not want handouts. What we need for Ontario today is the elimination of the barriers to doing business: better-designed and fewer regulations, less red tape and less bureaucracy, coupled with a pro-business mindset.

Business, both big and small, is the government's greatest ally in our economic recovery, but you will only understand business by being able to put yourself in the shoes of a small business person or entrepreneur, seeing the challenges they face and the opportunities they can collectively bring to this great province.

I was talking to a lady last night who's got a small business in a town outside Brampton. She told me she puts in three days a month filling out government forms, three days of unproductive time that's costing her money and, potentially, tax dollars for this province.

The special-interest groups are supporting the cuts so long as the government cuts somewhere else. This is more commonly know as the NIMBY approach, or not in my backyard. For the past two decades, business has ducked the cheap shots towards business and focused on the short-term adaptation and survival approach in dealing with regulations.

In our practical way, when confronted with government initiatives damaging to our global competitive position, we've focused on making them less damaging and rarely attempted to address the pressures of the special interests which drove the initiative in the first place. Frankly, our approach was wrong.

While the public was aware that business supported changes to Bill 40, there was limited understanding of why it was necessary to make Ontario business more competitive and why it was costing jobs.

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Business also supported the restructuring of government Bill 26. Fearmongers said it was the onslaught of poll taxes and user fees. Actually, it is about accountability, about taxes, and the cost of government to individuals and business.

As a board of trade, we have been critical about education from both the cost and accountability standpoints. We feel the boards of education should be operated more cost-effectively and that the boards' bureaucracies must design programs to fit their budgets and more fully utilize their assets and not rely on tax increases. We also supported the combining or elimination of school boards, which would allow the sharing of schools, reduce trustees, decrease the bureaucracy and save tax dollars.

In 1994, there was a survey of school boards done by the province of Ontario that showed the average cost per student being $6,371 per student at the elementary level and $7,477 per student at the secondary school level. When you look at the individual school boards, the costs range -- and this is where the elimination of school boards would come in -- from $5,348 per student for a school board with 11,252 students to a high of $13,419 per student for a school board of 167 students. Where's the accountability to the taxpayers in this situation?

Our board undertook a study in 1995 of the Peel school board budget and the Halton school board budget and determined there was no set method of accounting in place for all school boards. While Halton's budget gave us a clear audit trail and ease of access to information, we were unable to extract the same information from the Peel budget. In order for the province to get a handle on the cost of education, we feel it important that each board have the same accounting and budgetary packages to enable the province to benchmark expenses and allocate grants equitably.

Each of you is involved in the political structure of this province. Like you, the local clerks or small business person or entrepreneur believe in Ontario and want to make our province a better place to live, work and raise our families. None of these objectives can be met without a healthy private sector growing jobs and making returns on investments.

The board of trade, as an organization, is apolitical. We are proponents of the free enterprise system as the only way for Ontario to regain its strong economic position and the only way to grow jobs in Ontario.

I've spent a lot of time not talking about the budget, at least not directly. I've spent some time on job creation and job growth and the fact that our tax burden in Canada is higher than any of our major partners. That's driving jobs and companies out of Canada and out of Ontario.

I have alluded to the need to reduce paperwork and eliminate red tape in government programs. When business is diverted from productive activities to file reports, it dilutes management attention to business fundamentals, weakening our competitive position.

I've spent some time discussing education and the fact taxpayers are demanding more value for their money and an excellent education for their children at an affordable price. The money must be spent in the classrooms for quality education so they and we can compete in the global marketplace.

I have discussed the need for government to restructure and implement cost-saving measures to provide the necessary services at the lowest possible cost and in the most cost-effective manner to the taxpayers.

In summary, as you, the government, come up to your first budget, we remind you that you were voted into office on one common theme: accountability to the taxpayers -- all the taxpayers, not just those with special interests. Overspending is no longer acceptable. You must cut costs and change the way government does business. It is now time to stay the course and be accountable. As the letter says, keep your promise, balance the budget and lower taxes.

We need to look at this Ontario budget as an opportunity to show the global business community, the global investment community and the citizens of Ontario that the government of Ontario is truly open for business and serious about changing the cost of governing. You need to show that job creation and the growth of businesses are the keys to financial stability for the people of Ontario and its government.

I thank you and committee members for your time, and I would be most happy to answer any questions.

Mr Silipo: Thank you very much, Mr Malcolmson. Let me say to you that I think you have been talking very much about the budget, because when you talk about job creation and job growth, that's got to be central to what I think we're all wanting to do. I appreciate very much your presentation.

I want to centre in on one of the themes I saw running very much through your presentation and which I think you summarized even at the end: balance the budget and lower taxes. You qualified throughout the presentation a couple of times, and from the letter or petition you read, that you were very much in favour of the tax cut but you wouldn't be able to support it or you had some reservations about it if it increased the deficit.

What I would like to put to you is that it seems clear to me -- and I'm not sure that even the government members would argue about this -- that giving the tax cut at this time will increase the debt and it will postpone the balancing of the deficit and it will add overall some $20 billion to the debt, as we look at the figures available to us now. Whether or not you agree with that, if that were the case, is that something that would give you pause with respect to doing the tax cut at this point?

Mr Malcolmson: To answer your question simply, I think that's the challenge before this government and to every MPP, to ensure that they can somehow do this and make the tax cut.

Mr Silipo: So you'd like the tax cut but you also have some hesitations about it if it's going to increase the deficit?

Mr Malcolmson: Just what the letter said.

Mr Silipo: That's really the crux. It can't be done, because the money is borrowed money. It can't be done unless the government saw fit to cut even more dramatically than it has, and that would mean much, much more. We're not talking about another few million dollars here; we're talking billions of dollars.

The other question is on the tax cut and the link between that and many of the other things you've talked about, which for the sake of time I'm not going to get into but simply say to you that I very much support the thrust of making it easier particularly for small business. I hope our own actions in government in beginning that process around registration -- what I see this government doing is moving to the next step of that, around reporting mechanisms, making that simpler for small business. I support that wholeheartedly.

But if there's going to be a tax cut, have you thought about the relative merits of that tax cut as it relates to building consumer confidence and increasing spending -- which is, after all, the objective of this, in terms of helping to create jobs -- of that tax cut being, rather than through the personal income tax cut, being on the sales tax? How would you and your association react to that?

Mr Malcolmson: First off, I'll answer your question about the tax cut and that it can't be done. I don't think any person in business today, from the single entrepreneur all the way up -- there's no such word as "can't." They'll always find a way of doing it. I think this tax cut has to be to the middle- and lower-income people to generate the money into the economy. The more money people have in their pockets, the more they're going to spend. I'll just use an example. If I had $10 extra in my pocket every week, and there were 100 people like that, they would maybe go into a fast-food restaurant and spend that $10, treat themselves. If 100 people did that, that's 1,000 extra dollars. If 100 people did that on a consistent basis, that small fast-food outlet may have to and probably would have to hire more people, full time or part time, which now creates more money in the economy and more taxpayers.

The tax cut drives the revenue. It's a revolving circle. It just keeps going around and around. The more money you have, the more people spend, the more money taxpayers would give back in taxes. It's a never-ending circle. If you cut part of the circle off and tighten it up, it's not going to work.

Frankly, you have to do something to build the confidence of people in Ontario. Right now, nobody wants to spend a cent, as I said in my presentation, because they're terrified of the future. They're terrified that this is not going to happen and the economy is going to sink right back to what it was two or three years ago and people are going to be losing more and more jobs. You've got to fix it.

Mr Wayne Wettlaufer (Kitchener): Thank you, Mr Malcolmson, for a very enlightened presentation. Like you, or certainly prior to being elected, I was a small businessman. I often realized that an increase in taxes meant a reduction in demand for my product and for the products of other business people around. You're aware, I believe, that the Red-Tape Review Commission has been struck, with a design to reduce the burden of Ontario's 45,000 regulations?

Mr Malcolmson: Yes, I am.

Mr Wettlaufer: How do you feel that will impact your members?

Mr Malcolmson: The amount of red tape that they go through to do anything, if they can get an extra two hours a day, some productive time to get their businesses back on track, anything will help. I don't say cut red tape; get rid of it. There's no excuse for having to go, as a small businessman, to about 12 or 15 different locations to do something; go to one place.

You may or may not be aware that in Ontario -- I was surprised to hear this -- in order to do anything, if you need a licence for it, there are over 700 licences required in this province to do something, from driving a car to fishing, and you don't get them all in the same location. That's ridiculous. That's red tape of the worst kind that you don't need. Put it in one location or get rid of it entirely.

Mr Wettlaufer: I have one other question. Reaganomics is often cited by the opposition and the third parties as an example of the failure of trickle-down economic theory to increase jobs and an improved economy as a result of a reduction in taxes. Of course, in the United States, at the same time that there was this reduction of taxes, they increased their spending by billions of dollars on defence. Of course, we don't have that in Ontario. Do you feel that our program of decreased spending, decreased taxes will have an effect on the economy, considering we don't have those expenditures?

Mr Malcolmson: As long as people, at the end of the day, have more money in their pocket to spend, it will work fine.

Mr Kwinter: Mr Malcolmson, I just want to ask you a simple question: Do you consider the Brampton Board of Trade a special-interest group?

Mr Malcolmson: No, sir, I do not.

Mr Kwinter: Why not?

Mr Malcolmson: Because it represents all the businesses in the community and all the employees in those businesses. The letters I gave you today, sir, were not from employers; they were from employees as well.

Mr Kwinter: Your statement says the common theme is "accountability to all the taxpayers, not just those with special interests." I say with respect that is the problem that we have. The government says, "If you disagree with us, you're a special interest; if you agree with us, you're not a special interest." How can you possibly say that a board of trade is not a special interest? I'm not saying that in a negative sense. I'm saying you have an interest to support the views of your members. That is a special interest. I'm not saying it in a negative way. I'm not saying that's a terrible thing. But I think one of the problems that we're having in all of these discussions is "we" and "they." You say: "I'm not a special interest. I only have the interests of my members at hand. They're businessmen. They do things." Well, they are not the total population. There are people out there who are not in business and who have as much right to government services as everyone else. I think that is the problem.

We heard it from the person who made a presentation just before you. I saw this on Bill 26. You talk about a NIMBY situation, not in my backyard, "We're not a special interest," but you are. Surely, if there is one special interest, that is the business lobby. Again, that's not negative. But you are a special interest. You want the interests of your members addressed. I think it would do a lot to this whole process if we stopped talking about "we" and "they." I'd like your comments on that.

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Mr Malcolmson: I disagree with you. We're not a special-interest group. You made the comment that there are people out there who are not in business. You're probably right, but most of them have jobs and work at a business or work for somebody, whether it's at the grocery store or whatever. The boards of trade and the chambers of commerce, Mr Kwinter, support not only the business people who are paying to be there but the employees. They're trying to look out for the best interests of each and every one of their employees.

I'll just use a prime example. You say we're a special-interest group. At times we have said -- it's in this document right here, Getting Ontario Working Again; it was up for election -- the business community and the people at this conference have said: "Don't raise the minimum wage. Freeze it or lower it or whatever."

Every time the minimum wage goes up 50 cents, you've got an owner in the small corner grocery store, for example, who says, "Okay, it's gone up 50 cents an hour." You work through the math on it and it ends up that it's going to cost him, because he has to give it through his entire operation, $200 more a week.

He had a choice to make: Raise his prices and be uncompetitive against major competitors in his community, or take a look at his staff and say: "All right. That's $200 a week. There's an individual. I can't afford them any more. They're not employed." Where do they go? They either go on unemployment or eventually on to welfare.

To say we are here representing business -- no, we're here representing the people of Ontario who work at jobs. Yes, we happen to be a business association, but we're not a special-interest group. We're looking out for everybody so people have jobs and they have a place to go and money to make to pay taxes, to make this province work.

The Chair: Thank you to the Brampton Board of Trade for their presentation this morning.

ONTARIO HOTEL AND MOTEL ASSOCIATION

The Chair: We now have the Ontario Hotel and Motel Association represented by Rod Seiling. We welcome you, Mr Seiling. We have 30 minutes.

Mr Rod Seiling: Thank you, Mr Chairman. I have with me Mary Lapaine, chair of the Ontario Hotel and Motel Association and an owner-operator from Goderich, Ontario.

Ms Mary Lapaine: Good morning.

Mr Seiling: Thank you for the opportunity to appear before you and your committee here today. My name is Rod Seiling and I'm president of the association. I also serve as executive director of the Hotel Association of Metropolitan Toronto, one of the area zones that comprise the OHMA. While our members are either in the accommodation or hospitality industries, they are really subsectors of the tourism industry.

Tourism is the world's largest and fastest-growing industry. The World Travel and Tourism Council estimates that tourism accounts for 10.1% of the world's gross domestic product and employs one worker in every nine. It also represents 10.7% of global capital investment and 10.9% of worldwide consumer spending.

It is predicted that by the year 2005, tourism is expected to more than double its current gross domestic output to $7.9 trillion, generate 90% more jobs, almost triple its capital investment to $41.7 trillion and attract more than double the current level of consumer spending to $4.67 trillion.

Canada's position in this market has fallen from sixth in 1986 to 10th in 1991. We are the only country of the top 10 tourism destinations to experience a decline in arrivals.

Ontario's share of international tourism receipts has also declined, from 1.25% in 1983 to 0.97% in 1991, even though our international receipts almost doubled to $2.88 billion during the same time period. Losing market share in a growth market is something that is very troubling to our industry and one which we hope this committee will agree to investigate. Tourism, as other countries and provinces have discovered, can be a means to the creation of new jobs and incremental sources of new tax revenues.

Ontario has simply not kept up during that time. Other destinations have been more successful in attracting this growing demand. One of the key elements in this equation is the lack of funding to market our product. We are simply not in the game when it comes to creating the awareness required to take advantage of opportunities.

Our industry recognizes the need for the government to get its fiscal house in order. We believe that in doing so, it must look at where to invest its scarce resources. Investing in the tourism industry has been proven in other jurisdictions as a means to maximize those returns.

The state of New Jersey was about to cancel its tourism marketing budget. Fortunately, the new governor, Christine Whitman, commissioned a cost-benefit study, a study, I might add, that was done by a firm here in Toronto. On learning that for every $1 the state invested in marketing tourism it received $14.40 in taxes, the governor made the decision not to cut the budget for tourism marketing but to increase it to 60%. Similarly, we are aware of work under way in Hawaii which shows that state receives about $8 of tax revenues for every $1 invested in tourism. On the other side of the coin, the state of Colorado cut its budget and suffered a 40% decrease.

Nationally, the federal government committed $50 million a year, starting last year, to market Canadian tourism. The funds are available on a matching basis for the respective provinces and the private sector.

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What has Ontario done? It has cut and continues to cut the budget for tourism. Those cuts now equate to 53% of the budget allotted for tourism. The funds available for marketing have now shrunk to around $8.5 million. One could reasonably conclude that any further cuts to this funding would take the level down to such a point where Ontario simply is not able to perform in the marketplace.

One also has to ask the question as to whether these cuts have been counterproductive to Ontario's economy and have been a major contributor to our underperformance in the tourism market. Tourism is an industry that responds directly to demand, and demand is related to the ability to create awareness. Awareness, as you all will know, is a function of marketing, and with all the cutbacks, we suggest, it is not surprising that our tourism industry has been underperforming.

We urge the government not to allow any more funding to be cut from tourism. We suggest the government seriously look at increasing the resources for tourism as a means of creating new jobs and earning new tax revenues. Most importantly for the government, the majority of the jobs that will be created will be what we refer to as entry positions.

Increases in the level of demand for our product result in immediate increases in jobs and goods and services purchased. There is no time lag; the response is immediate and the vast majority of the jobs are low-skilled and the first-time job seeker.

As you see by the chart in front of you, the tourism industry contributes a fair amount to the tax base, almost $6 billion federally, $2.5 billion provincially and another $500 million municipally, but the graph is symptomatic of a problem. To many in our industry, we simply are now viewed as tax collectors for the government. In fact, we're at a national conference right now, and some are looking at our income as a fraction of taxes rather than taxes being a fraction of income.

In a recent Price Waterhouse study, you might be pleased to know as well, that had been done here for the Toronto industry, only 11% of those in the industry were earning a return equal to or better than bank interest -- not really an incentive to invest.

Ontario's tourism industry. Ontario represents the largest tourism industry in Canada. We are the gateway for the country. In 1992, the province had 66% of all US visitors and 53% of overseas visitors. Ontario accounts for 36% of the national tourism revenue. Tourism is the province's fourth-largest export, behind motor vehicles and parts, industrial machinery and wood products. Tourism activities occur all across the province. While there are large companies involved, it is an industry primarily comprised of small business.

I draw your attention to the chart. Whether it be food and beverage, accommodation, 35%, 43% are in the 1 to 4; 200 or more are down to 0.4% or 1.7%. So we are basically small business personified.

Tourism is most about jobs. There are over 272,000 direct jobs in the industry's primary subsectors -- and you see it by the enclosed chart again -- the subsectors being accommodation; food and beverage; public transportation; auto; recreation; and retail. Also, you see there the direct expenditures in millions of dollars, with a total of $16,887,000, so again a very large industry.

Tourism also represents 6.6% of Ontario's total employment. As I said earlier, the industry contributes significantly to the province's tax base. Because of the spinoff effects for other businesses, investment in tourism generates up to two and one half times that amount in real dollars, according to the World Travel and Tourism Council.

Each incremental dollar the industry produces generates 45 cents in tax revenues for the various levels of government. The federal government receives 23 cents, the provincial government 16 cents and local government six cents.

The tourism industry was hit very hard by the recession. To many, that recession still continues. Contrary to public opinion, the good times have not returned. although for some, things are improving while for others the struggle for survival continues daily. In the accommodation sector we are selling our product today for about the same price as we charged in the late 1980s.

You see here -- I'm not going to walk through them -- the bankruptcy statistics for 1994-95. But one of the things that is pointed out here, and one of the major problems for it, is lack of access to capital. It's a major problem. There's no funding available. Any investment we're seeing is primarily coming from either the US or from offshore, and people are coming in and picking up our properties for less than construction value. What that is doing as well is putting added pressure on our good operators because they can come in at less than market cost and compete on a price basis and steal market share and put added pressure on, as I said earlier.

A majority of the industry, as noted earlier, is comprised of small owner-operated businesses. For them it is not a job, but a way of life. They are at direct financial risk as the industry has been and is being forced to restructure.

We would suggest that Ontario cannot afford to ignore any more longer the economic opportunities tourism presents. With our inherent resources, there's simply too much upside to continue to ignore the potential. To accomplish this, the government needs to review its fiscal, taxation and regulatory policies as they relate to the industry. This process would examine the barriers to investment and growth and propose solutions.

The tourism industry has not been a good advocate to government over the years. It has been a reactive voice more often than proactive. In doing so, the industry has failed for the most part to influence the development of good public policy as it relates specifically to our industry. The result has been the evolvement of regulatory and taxation policies which have negatively impacted on the competitiveness and profitability of the industry. For example, in 1994 the accommodation sector paid out 50% of its revenues in taxes, levies, tariffs etc to the various levels of government. Obviously, this situation is not conducive for owners to earn a return on their investments and acts as a disincentive for any reinvestment, let alone new investment.

Property taxes all across the province are disproportionately higher than in other provinces. For example, a national chain has recently documented the differential. In eastern Canada, property taxes average $1,087 per room; in western Canada, $800 per room; and in Ontario, $1,647 per room, which includes Metropolitan Toronto. This is driving capital investment into these other jurisdictions, to the detriment of our industry. This is leading to a situation where our infrastructure, both from a physical and a human resource perspective, is not competitive any longer.

I might add there is virtually no investment taking place. The companies are investing out of the country, out of province. There's nothing happening here at all.

In Metropolitan Toronto, the situation is even more dramatic, as hotels are being unfairly assessed at 100% more than other commercial properties. This inequity is threatening the economic viability of the industry and is costing the economy jobs and investment.

In the hospitality sector, under the Liquor Licence Act, licensed operators are subject to a number of unfair taxes. These include a wine or beer volume levy, a bottle levy, an environmental fee and federal and provincial sales taxes. They are also subjected to two gallonage taxes: (1) $2.64 per hectolitre on beer; and (2) an amount equal to 12% of the purchase price of wine and spirits.

The result of this unfair taxation policy is that consumers pay more for alcoholic beverages purchased in licensed establishments than they do at the LCBO. Ontario, you should be aware, is the only province to invoke a gallonage tax. Estimates put the final selling price by the licensee at some 50% higher as a result of these taxes and levies. The price distortion is inducing the public to stay at home and drink rather than go out. The result is less jobs, less goods and services purchased and, of course, lost revenues to government. This artificially high price is also conveying an image that Ontario, to our tourists, is a high-cost destination, and this is an impediment to attracting more tourists.

Ontario's withdrawal from the regulatory field as it relates to smoking is also creating major problems. Local municipalities seem to be in a race with one another as to who can be the first to be totally smoke-free. In their haste they sometimes use incomplete data to justify their actions and in the process ignore the unlevel playing field they are creating within their own municipality, let alone the sizeable economic impacts.

I might add that no one is bothering to look at alternatives. Sweden, for one, is one of the leading countries in the world looking at this problem and is looking, through mechanization, at air quality.

Unfortunately, customers do have options. They can go to a neighbouring jurisdiction or they can stay home. Again, these actions can and will have a dramatic impact on our abilities as a province to attract tourists and conventions. This is not just a smoking issue. We are a responsible industry; our actions aptly demonstrate this. It is an issue about fairness and a level playing field.

We urge the government to immediately conduct a comprehensive review of the tax and regulatory policies as they relate to our industry. The review should look at such issues as competitiveness and fairness as they relate to other industries and jurisdictions. The government should also move immediately as per the recommendations of its own Golden task force report to rectify the inequitable property tax situation that Metro Toronto hotels are subject to.

The imposition of the GST cost our industry, as other businesses. For example, in Toronto in 1990, the average daily room rate was $107.08, including PST. In 1991, with the GST in place, the actual room rate in the city was $101.57, including PST, a decline of 5.2% to the consumer. In actual fact the decline to the operator was 11.1%, as the room rate, excluding tax, was $90.69. It is impossible, we are told, to isolate the actual impact of the GST, although no one argues about the negative impact of it on the economy.

We urge the government not to proceed with any harmonization of the two taxes that will result in an increase in the tax load to the consumer -- and it is the consumer who pays the tax. It is our understanding that a harmonized tax, to be revenue-neutral, will have to be set at a rate of 15%. Our industry, as well as the provincial economy, we suggest, cannot and should not be burdened with the decreases in business such an initiative will cause.

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We congratulate the government on its actions to date in reducing and/or eliminating, where it has jurisdiction, the hidden costs to our members. I refer here to such things as the payroll health tax, WCB, CPP, UI, inapplicable employment equity and employment standards regulations, inappropriate workplace health and safety regulations and others. They are job killers.

Our members are good corporate citizens. They believe in and practise fair hiring, worker safety and protection etc. We already are, I would suggest, as the accompanying chart shows, socially responsible in our hiring practices and do not require additional burdens. What they need are regulations that are equitable, flexible, affordable and that enable our members to be competitive in the global marketplace. In that regard, we urge the government to work with us with a view to examining all the regulations that affect our industry and to eliminate and/or modify those that are outmoded.

I won't walk you through the chart. You can see on the hiring profile that we more than exceed the average across the province.

By the way the data for our industry have been stored, it is very difficult to do comparisons of the cost of some of these hidden charges. Needless to say, the increased costs over the past 20 years would undoubtedly total over 400%.

The government does have available to it a substantial new source of non-tax revenue. We estimate, based on data from other provinces, that video lottery terminals would net Ontario well over $500 million annually, more than likely closer to $750 million. For example, Manitoba is earning $220 million, Saskatchewan $100 million and Alberta -- while I've got here $315 million, I'm told as of yesterday's meeting with the folks from Alberta that it's over $400 million today.

The introduction of these machines would then pave the way for the elimination of the estimated 15,000 to 20,000 illegal machines all across the province. These illegal grey market machines are diverting untold millions of dollars into the underground, untaxed economy. Furthermore, they are forcing law-abiding operators to break the law by allowing the machines into their establishments or risk losing substantial amounts of business, with all the resulting negative impacts.

Some may argue Ontario should not introduce VLTs because of potential negative social problems. The hard reality is that they are already here in the province on a broad basis. Is it not preferable to bring this activity above ground and then to have the resources available to deal with the potential problems proactively?

VLTs have demonstrated, from our industry's perspective, that they have helped restore economic health and prosperity to the respective provinces' hospitality sectors. VLTs are a form of entertainment and as such attract customers. Owners benefit from the commission they earn.

This information is not supposition but fact, based on experience in other jurisdictions. We urge the government to closely examine the benefits that they convey in terms of the much-needed boost our hospitality sector desperately needs and as a source of revenue for the government.

In conclusion, other jurisdictions have recognized tourism for what it can be: an engine for economic growth and prosperity. This can and should happen here in Ontario. We have the product. What is lacking is a commitment from the government to provide the resources in terms of funding and public policy. The industry is able and willing and it is awaiting a signal that Ontario, as in those other jurisdictions, is ready to work with the industry for the betterment of all the stakeholders.

We urge you not to ignore tourism any longer. We've received lip-service in a broad sense from governments over the years. I think to the detriment of this province and to the people of the province, our industry has been sadly overlooked.

Ms Isabel Bassett (St Andrew-St Patrick): Thanks for your presentation, Mr Seiling. What I want to ask you is, on page 6 of your presentation, you talk about the discriminatory nature of property taxes between hotels in the region of Metro Toronto. Two questions for you: One, what would levelling the uneven tax field do to create jobs and promote investment here in Metro? Two, were we to make some changes, how soon would we see some beneficial effects?

Mr Seiling: The answer to the first question is yes, the hotels have been forced to cut services, delay investment. The answer to the second question is, almost immediately, because we know that it's a detriment to the service levels that we need to offer. It also would result in an immediate increase in jobs, because in just five hotels that I met with last week, there's some $60 million of deferred improvements waiting for some signal that --

Ms Bassett: Sixty million?

Mr Seiling: Some $60 million in five hotels alone, and I can even take that province-wide. The Metro Toronto problem is dramatic; it's 100%. But if you look at the property tax situation across the province, the same thing is just magnified and personified here in Metro Toronto.

Mr Jim Brown (Scarborough West): I can vouch for the fact that there are illegal video lottery terminals in my riding. They're all over the place. There's an implicit deal when you play it that the bartender's going to pay you if it comes up right. The police in my riding are too busy trying to track down murderers, let alone solve the problem with VLTs. So they do exist and there are a lot of them.

The question I have is -- and it's got nothing to do with VLTs, which I think are a great idea -- you mentioned on one hand the number of bankruptcies in your business and on the other hand you said it related to the sources of capital. I'm wondering, here in Ontario, are we extremely limited in the sources of capital and is that a detriment to job creation?

Mr Seiling: I think Mary would like to answer, being an owner-operator of a small business. There's no question that access to capital is a huge problem. In fact, there isn't any. There is none available today.

Mr Jim Brown: You mean the chartered banks don't lend you any money?

Ms Lapaine: No. You can walk into a bank and you can say, "I'm a small business and I'm here for a loan," and maybe they don't know who you are. The second you tell them what industry you're involved in, within about five minutes you know the door is going to be closed on you. It is absolutely impossible. We have owner after owner telling us in our office there's no capital money out there. I think, as an owner-operator, that is one of the biggest frustrations. What Mrs Bassett was asking about Toronto is across the province. We have no money for capital. Even if we could get it, we can't afford it now anyway because we're all in dire straits.

Mr Jim Brown: First of all, I'd like to say it's not limited to your industry. Any small or medium-sized business gets the same treatment. Do you think this is related to the tax structure that we have, or it's just the fact that we don't have enough sources, we overregulate the financial institutions, or there's just not enough competition for putting money out?

Mr Seiling: It's a combination, but clearly it's a function of the tax structure and the regulatory system. I can tell you that there are major companies in our industry that have sold all their assets in this province. They still manage the property on a contract basis. That money is being invested out of the country. There is no ROI until they're gone. They're saying, "Why would we put our money at risk here and earn nothing when we can take it out of the country and earn a satisfactory return?" They have shareholders to answer to, so that's where it's going. There is virtually no money.

The one chain that has money to expand, and it owns properties here in this province, is not investing here. They own the property and still it makes no sense to them to put any money in. That money is going out of the province.

Mr Jim Brown: And the jobs with it.

Mr Seiling: The jobs and everything go along with it. It's simply not here.

Mr Bruce Crozier (Essex South): Good morning. I wonder if you could inform us as to the competitive position that we're in in the province of Ontario vis-à-vis the other provinces. I'm speaking of the cost to travel, the cost of a vacation, maybe compared to the United States and even to other destinations where vacationers go from Canada, or where someone from other countries may look at Canada as either an expensive or less expensive place to travel.

Mr Seiling: First of all, we are the bargain. It used to be Europe on $5 a day. It's now Canada/Ontario on $5 a day, so in fact a problem we have is that we're so cheap to the international visitor they almost think there's something wrong here. On the product supply side, we are blessed. We're recognized as having world-class attractions.

Where we're starting to slip is, the infrastructure that was in place is starting to wear out, and because there's no return on the dollar, it's simply wearing out and we're going to end up losing simply because of the fact that the customer today is able to have and expects and demands a certain level. They want a $200 room for $100 a day and they want everything else. The customer has learned they can do that. It's the new product evolvement or psychology of the customer today.

Mr Crozier: Notwithstanding some of the concerns that you've pointed out in here, we can say that Ontario is a reasonable place to travel and that then part of our problem is what you addressed at the outset, that we just don't promote ourselves and perhaps don't have the funding to promote ourselves.

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Mr Seiling: We are simply not in the ball game. We're being outspent by other provinces, by other countries. The federal government's initiative was a large help with matching dollars, so Ontario has no dollars to really play in that market. We're not even there. The province of Quebec gives the city of Montreal $15 million just to market Montreal. BC's got $15 million. We're sitting at about $8.5 million for marketing. That's gone from well over the $20-million mark at one time.

We recognize government has scarce resources, but as we say, this needs to be looked at as investment, because this is an industry of small business. The dollars aren't there. If there's not an awareness level, you're certainly not going to get people. Yet these are jobs that are available, as I said earlier: You create demand, there's a job tomorrow. There's no six-month, nine-month, year delay. On average, if a hotel rents 14 or 15 more rooms in a day, you have to hire another person immediately.

Mr Crozier: Certainly, I want to explore the VLT question, but it's much broader than need be discussed here today, and as the opposition observer of the government, we'll be most interested to talk to you on the subject of VLTs at another time.

Mr Silipo: Thank you very much for the presentation. I for one believe very strongly that there is a lot more that we need to do, as you're suggesting, particularly in terms of marketing Ontario overseas, where because of the attractions we have and because of the potential links we have just by virtue of where the population of Ontario comes from, we have a natural tie.

What I want to focus in on and ask you to talk a little bit more about is the role of government. I know your industry was unhappy in the past and I gather was happier when, as part of the change in government, tourism was made part of the Ministry of Economic Development and Trade, attached to a major ministry. Yet I'm concerned that judging from what you said, the government, as it has been cutting budgets of various ministries, has also been cutting the budget for this ministry or this part of the ministry as it relates particularly to the marketing.

You have some interesting figures in your presentation about the American experience and what happens when governments, together with the industry, invest in marketing as opposed to when they cut those dollars away. Are you getting anywhere, do you feel, beyond the presentation you're making here today, with the minister or with the government in terms of having people understand that this is an area where it makes sense for the government to be investing? It has a return for all of us, for the industry first and obviously for all of us in terms of jobs and what that means for the benefit of everyone.

Mr Seiling: First of all, we have a dialogue with the minister and his staff. They've recently reorganized. We believe there's a great understanding there of the value of tourism. It would be too early for me to prejudge what's going on. We're concerned about the cuts and quite frankly we made these same solicitations a year ago when you were in power and the budget continued to get slashed. We're at the level now where if there are any more cuts, we simply aren't there. You can't meet any objectives if you try and meet the problems on the side.

We're encouraged by the initial move that tourism is economic development, that it's nothing else but, so we think we're in the right church, in the right pew, so to speak, and hopefully we'll be able to work with the government and find ways of partnering.

Our industry's not looking for a handout, but because of the high level of taxation and the composition of the industry -- it's small business -- if there isn't help there from the government in the broad sense, it just simply won't be there and the jobs won't be there, and these are jobs that will either be on government assistance -- they can use the jobs as a stepping stone to something better. Traditionally we have a high turnover and what happens is that jobs in our industry are usually a stepping stone to something better. We're the entry level for the first-time job seeker or for someone changing jobs, using it to move on, so we expect, and part of the business is, the high turnover. It's not that they're not good jobs but we know they're transitory and people use them for something better.

Mr Silipo: My understanding and my question was not to try to get at the government, but simply to solicit from you what was happening there, because certainly, as you said, there were cuts even in the previous government. I think the cuts now are more severe, but the point is simply understanding this scenario, that it's worthwhile investing in.

There were a number of discussions when we were the government that led to a strategy being developed with the involvement of the industry around the future of tourism. Is that, from your perspective, on track in terms of a number of the things that were looked at under that strategy, including marketing certainly being, as I recall, a key part of that?

Mr Seiling: Yes. There's activity taking place on that front and meetings have been held with the minister. They're going to use the consultation process and we expect, in the next month to six weeks, that something will be going forward to the minister on a proposal based on the studies that have been ongoing for the past year to 18 months.

Mr Silipo: Good.

The Chair: I'd like to thank the Ontario Hotel and Motel Association for appearing today.

ONTARIO MINING ASSOCIATION

The Chair: Our next group is the Ontario Mining Association and it's represented by Mr Patrick Reid. I understand Mr Reid is a former member from Rainy River. I'd like to welcome you to the committee.

Mr Patrick Reid: It's always a pleasure to be back in the Amethyst Room. Also, I would like to tell you, especially some of you first-time people, it's a pleasure to be on this side of the table after 17 years here. I have with me my colleague Peter McBride, who is the manager of communications and energy for the Ontario Mining Association.

As we came in the building this morning, we saw a school group in front of the map of the minerals of Ontario that I'm sure you all spend time looking at as you come in and out of the building. It was quite heartening to hear the guide explaining Ontario's mineral history to the school children, where some of the minerals were located and what they were used for. We try, through the Ontario Mining Association, to educate the public about what mining and minerals is about.

We have a mining week every year. I think this is our seventh. It will be held April 29 to May 5, and we usually put on a display in Toronto at the Royal Ontario Museum. They have a very good minerals display there.

We also have a meet-the-miners night in conjunction with Ontario Mining Week. The last few years, we've had this reception for members of the Legislature and senior civil servants at the Royal Ontario Museum. This year we're happy to tell you that we're going to be holding that reception here in the Legislature on Thursday, May 2, so you'll all have an opportunity to drop in and meet the people who produce a lot of the mineral wealth for the province of Ontario. So I'm issuing you an early invitation, and I hope, Mr Chairman, you'll bring along your clerk of this committee, who is an old friend of my colleague.

The mineral industry is a wealth-creating industry. Our revenues in the province are between $5 billion and $7 billion, depending on the price of metals and minerals. We provide some 72,000 to 75,000 jobs directly and indirectly, with revenues of about $1.1 billion going to the coffers of Ontario and helping to pay the salaries of some long-term members, such as Mr Bradley who I see has joined us.

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We are a leader, Canada is a world leader in high-technology mining and more than 85% of the mineral producing workforce uses advanced technology. This is something that isn't generally known. A lot of people have a view of the mining industry as sort of pick and shovel, but if we didn't have high technology, if we weren't using robotics, if we weren't using computers, we wouldn't be able to compete in the global mineral markets.

It is a commodity business and prices are set on world markets. They're not controlled by Canadian or Ontario producers, and therefore, we are price takers and we have to meet those prices and be productive or we don't stay in business.

It's also a high-risk business. To find a mine requires possibly staking thousands of claims. Doing diamond drilling on a thousand claims might produce one ore body that could be made into a mine. We estimate it costs about $100 million to bring a small gold mine into production and can cost anywhere from $250 million to $500 million to bring a base metal mine into production. This is a high-risk business and it has a long time frame. Usually from the time of finding something that looks like an ore body or a mine, it takes about seven years to bring it into production.

For your consideration this morning, I want to touch briefly on three subjects: resource allowances, RRSP-type mine reclamation funds and regulatory reform.

In the last federal budget the Finance minister, Mr Martin, said that there was going to be a review of the resource allowance. Probably two of the more esoteric pieces of legislation in Canada are mining acts and mining taxation, and resource allowance is one of those, and I don't pretend to be an expert.

Basically, the resource allowance was brought into Ontario and other provinces back in the 1970s to be an offset to the federal government taxing the income from mining companies, and it was a recognition that the provinces, in our case Ontario, owned the resources and that the people of Ontario and its government should receive some kind of benefit through royalties from the mineral resources in the ground.

The mineral resource allowance was a way of offsetting the cost of federal income taxes and royalty taxes from the province to try and keep a relative level, competitive playing field for the mining industry. This is now under review, because on the original law there was a court challenge by Gulf Canada in which they found something in the law that wound up costing the federal treasury some millions of dollars in money that they had to refund to Gulf Canada. The federal government was concerned that every mining and oil and gas company might follow this track, and hence we are having a look or having a review of this resource allowance.

The federal government recommended five options originally, or four options, and now we're up I believe to seven, and we, the OMA, have had discussions with the Ministry of Northern Development and Mines and Finance officials here in Ontario.

We believe that the resource allowance can be kept in place with legislation to close the hole, if you like, that Gulf Canada found, so that there won't be any further refunds necessary to the oil and gas or mining industry, but will keep the mining industry in Canada competitive.

Last year, when we appeared before this committee, we also talked about the possibility of the mining industry being allowed to have RRSP-type mine reclamation funds.

To open, develop, operate and close a mine in Ontario now, it is necessary to have a mine closure plan and a plan of financial assurance. The financial assurance is to ensure that funds will be available when the mine is closed or shut down so that the mine can be safely and environmentally soundly closed.

An RRSP type of fund would be a fund in which a company would put money in over the operation of the mine; interest would be paid on those funds within the fund, and when the mine closes, those funds would be withdrawn, those funds would be taxed, but the money would be used to pay for mine closure. We believe the analogy between a person's RRSP fund for retirement and the retirement of a mine are very similar, and we ask your consideration of this.

The last topic is regulatory reform, about which we spent a great deal of time talking to this committee last year. As you heard from the previous speaker, the burden of regulations and legislation in this province are quite high. Regulations cost money and they cost jobs, particularly if they are either unnecessary or overly burdensome, or if in fact they don't make any sense whatsoever.

In our submission there are figures that indicate how some of the regulatory burden has grown over the last few years. We're happy to see that the government is taking some steps in looking at regulatory reform, in harmonization between the federal and provincial governments, in some of the environmental fields particularly, and hopefully we will do away with some duplication.

All of these will lead to a better investment climate in Ontario and job creation that I think we're all looking at.

Mining is an industry which does and can continue to benefit everyone in Ontario. It should be viewed as a cooperative partner in Ontario's economic future and social development. It is an important sector of the economy this committee can support by taking steps to deal with the three specific concerns we've mentioned and by improving the investment climate in Ontario.

You can take actions which are fair and sensible to demonstrate that Ontario is a good place to invest, build, create jobs and prosper. You can take actions which encourage and foster the responsible and sustainable development of the province's mineral resources for the benefit of everyone in the province.

Ms Annamarie Castrilli (Downsview): Thank you for coming. My question deals with the regulatory reform you alluded to in the final part of your presentation. You mention that Bill 26 deals with some of the concerns you have about "excessive" regulations, by your standard, and you indicate there are many more ways in which your industry could be assisted.

In the absence of some of the regulations that are being eliminated, what does your industry propose to do? You say there were compliance costs. I wonder if you could elaborate on the kind of voluntary compliances you might put into place.

Mr Reid: First of all, what Bill 26 or the amendments to the Mining Act did was to make the mining industry more self-regulatory. It shifted the onus from inspections and government responsibility to the industry doing it itself and being quite vulnerable if it doesn't do it. So there's been a shift there, which we accept. We accept that responsibility and we accept the fact that if we don't the meet the standards that are set down, we feel the full brunt of the law.

One of our major concerns is the duplication of environmental assessments between the federal and provincial governments. We know this is being worked on, but we've got to eliminate the duplication, where we have to meet a set of standards for the federal government and a set of standards for the Ontario government, when we're all trying to arrive at basically the same reasonable set of standards.

Voluntary: We are doing voluntary things in terms of air and water, reducing emissions. There is the ARET program. It's a federal one, but most of our companies are participating in it. Ontario mining companies, by the way, are on the leading edge of environmental technology. We don't want to be polluting or being branded polluters, so we're working both with the federal Ministry of the Environment and the provincial Ministry of Environment and Energy, not only on the regulations but on voluntary things like ARET.

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I should say that Bill 26 did not reduce any standards and we're not looking for a reduction in any reasonable standard that's going to protect the environment and human health and safety. We're not after that per se. What we're looking at is one set, if you like. We've got six pages now of legislation and regulation at both the federal and provincial levels, and some of it is duplicative, some of it is contradictory, and some of it is out of date. We're looking for an approach that will make sense for everybody. We're not looking for the opportunity to get away with anything. We don't want that, because we know that the public and this government, in its collective, is not going to allow that to happen.

Ms Castrilli: The thrust of your position, though, is that there were compliance costs related to complying with government regulations and that you applaud Bill 26 because it makes you more self-regulating. My question is, aren't the costs going to be the same? If you are going to regulate yourself to do some of the same things, and if the only issue is the cost of compliance, how does that help? Your costs are not going to go down, are they?

Mr Reid: There are three ways that regulation costs. First of all, you've got the cost of compliance. You can comply in doing it the best way to arrive at the end that everybody wishes, or you can comply in the sense that you have a lot of civil servants telling you, "Thou shalt do it this way" or "Thou shalt do it that way." Sometimes those ways do not make sense or are not the most cost-effective. Second, we have built up in Ontario over the past number of years a whole monitoring, inspection, command and control type of operation that some people think is necessary, or thought necessary, and it costs money to have all these inspectors, all these monitors, and it costs the companies money.

I don't know if it's apocryphal, but we're told you can have a mine site -- and it's not restricted just to mining companies -- and you can have 12 inspectors from 12 different ministries, or sometimes two inspectors from the same ministry but inspecting something different, show up at a property. Somebody has to show them around. There are reports -- there are so many reports that have to be written in this country, it's ridiculous. It doesn't achieve the end of providing a safe and healthy environment, most of this stuff. Most of it's paperwork.

Ms Castrilli: I suppose time will tell what will happen when the industry regulates itself.

Mr Silipo: To follow up a little on that, the concern we heard from a number of sources around the self-regulating aspects of Bill 26 as they related to the mining industry was the concern that by moving to what we now have as the law of the province, while, as you say, the standards that have to be met haven't really changed substantially, there isn't as much of a check there, because it now is up to the industry through an independent source of some kind to say you've complied. That still leaves a lot of concerns out there from a number of groups. Time will tell whether this has been a wise move on the part of the government, but I certainly have understood your position on that, and you reiterated that today. There's probably not much point in arguing about it. It's now the law of the province, and we'll see what happens.

I want to pursue a bit more this question of the regulatory reform as it related to the question of the myriad regulations you have to meet, provincial and federal, whether in the discussions going on through the Red-Tape Review Commission or the Clearing the Path process those issues are being addressed. Are those areas of potential duplication being addressed? Do you have any sense that something can come out of those that might simplify the regulatory process the industry has to adhere to, at both the provincial and federal levels?

Mr Reid: The short answer is yes. We see a direction developing where things will be simplified, that parties will be focused in what their responsibilities are, that we'll get away from more of a direct command and control but the standards will be still met and they have to be set.

We're here to engage in a debate. I have to tell you, Mr Silipo, that I understand the politics of the omnibus bill and everything else that went on through it. In terms of what people, particularly Pollution Probe, told the other committee, they should be ashamed of what they said, because what they said was not accurate, it was not fair, it was not balanced, it was not reasonable. You heard a lot of scaremongering about the stuff that relates to the mining industry in that.

Mr Silipo: We'll see, and I hope, for the sake of the industry and for all of those who live around the province where mining is a way of life, that you're right.

One of the other areas you talked about that I just want to clarify to see if I understood you is on the RRSP reclamation funds. You're essentially saying there that the same rules that apply to RRSPs around deferring taxes to be paid ought to be applied, because you're making the argument that it's the same type of situation: The money's being put aside to be used at some point in the future and the tax should be paid on it then. The response you've had from the federal Minister of Finance so far is to say that he's against it because he views it as a tax avoidance scheme. Is that a fair summary?

Mr Reid: That's the official federal party line. What they're more afraid of is that they will lose revenue, will take a tax hit if they allow this in that if they allow it for mining, then pulp and paper, chemicals, oil and gas will also require the same thing.

I really think it's a matter of fairness and equity. If the governments and the people want to have certain things, then yes, we'll do it and we'll comply, but you provide a reasonable tax situation for that framework to exist. We can go on all day, but we've done some numbers that show it would not be that much of a tax loss to provide this RRSP type of thing. You can put caps on it.

Mr Jim Brown: As promised in the CSR, we said we were going to reduce red tape, freeze hydro, WCB reform, and freeze mining taxes. I have a bit of experience in the mining business, and I know that mining helped build Ontario. Mining is at the root of the economic development of Ontario. Even today, the Toronto public marketplace provides a lot of funding for ventures, prospecting, mines, usually outside the province. What do we do about this? I know you guys are from the big companies, but you rely on the prospectors running around northern and central Ontario taking chip samples and doing all those kinds of things. They'll come to you with ideas, potential ore bodies, and you'll joint-venture them and so on. What's happened to our mining business? What's happened to the prospecting business in Ontario? There doesn't seem to me to be that much prospecting. The money goes to Arizona, it goes to Mexico, even Cuba. Quebec has flow-through shares. What can we do to get the business back and going again?

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Mr Reid: Mr Brown, a few years ago the mining industry in Canada, including Ontario, got together and started something called Keep Mining in Canada for the very reasons that you're talking about. We came up with a 10-point program, five that industry would do and five that government could do, to keep mining in Canada and make it prosper and provide the high-tech and high-wage jobs that we do. We've revised our program, it's now a 12-point program and we should have it here for you or we'll send it to the clerk.

A lot of money has left Ontario and Canada to go to other places. There are three reasons: First is that a lot of countries have pretty favourable geology; second, a lot of countries have changed their mining and investment laws to attract investment and they realize, because they're not as far advanced industrially, that a good mining industry can be an underpinning of their economy; and third has been the sort of government attitude and overregulation and overtaxation of the last 15, 20 years, almost the benign neglect by governments of the mining industry and some act of aggression towards all the resource industries.

The Toronto Stock Exchange, by the way, is the largest raiser of risk capital for mining in the world; 20% of the activity on the TSE is related to the mining industry.

Mr Jim Brown: So we raise the money here and we take it to Arizona. In terms of self-regulation, the directors of all those companies are certainly aware of their personal liability when it comes to mining operations. I think the second thing is that in comparison to, say, Arizona and the environmental groups that are there, that are always on your doorstep, Canadian companies will go and invest in Arizona as opposed to Ontario. It seems to me that they're prudent people in Arizona; they're reasonable people; they're smart. They're going to make sure that their environment is protected. So is that the difference, that we're just so scared or what?

Mr Reid: What's the attraction? I must say the prospecting activity has picked up in northern Ontario. I'm not a geologist, but I am told by those who are that Ontario and Canada still have very favourable geology, as good as a lot of places in the world. I really think -- and this is my own opinion -- part of it's psychological. I think the mining industry has been hammered by various groups and bodies over the years. The regulatory burden does not make sense. We're overgoverned in this country; we all know that. We've got too many different levels of government with too many regulations, and the taxation is seen not to be competitive and/or as fair as it is in some other jurisdictions. So people who are making these decisions get fed up to here and say: "Tough. Let's go somewhere else."

Mr Jim Brown: What about the flow-through share --

The Chair: We're at the end of our time. I'd like to thank Mr Reid for attending and bringing the Ontario Mining Association's concerns to the committee, and thanks to Mr McBride as well.

ONTARIO SEPARATE SCHOOL TRUSTEES' ASSOCIATION

The Chair: The Ontario Separate School Trustees' Association is next presenter. Welcome, Mr Meany.

Mr Patrick Meany: Good morning, Mr Chair. Let me introduce us: Patrick Slack, executive director of our association; myself, and I am president of the association and a trustee of the Dufferin-Peel Roman Catholic Separate School Board; Patrick Daly, first vice-president of the association and chairman of the Hamilton-Wentworth Roman Catholic Separate School Board; and Earle McCabe, deputy executive director of the association.

The Ontario Separate School Trustees' Association, OSSTA, represents 53 Roman Catholic separate school boards from all regions of the province. These boards provide Catholic education programs and services to over 600,000 students.

OSSTA appreciates the opportunity to appear before the standing committee on finance and economic affairs to discuss funding issues that have an impact on the quality of educational opportunity available to all elementary and secondary pupils in Ontario.

There is an executive summary on page 2, but I would like to go straight to page 3 and take you quickly through the salient points of the brief so as to show the logical sequence.

OSSTA acknowledges that school boards will have to operate in 1996-97 with fewer resources than in previous years. The social contract provides for an annual reduction of $425 million; $1 billion annualized cost of a $400-million reduction announced by the Ontario Minister of Finance in November 1995.

Fairness and justice require that these reductions apply to all boards, with all boards accepting a fair share of the burden. We believe that to provide lesser resources for the education of some Ontario students means that their future contribution to the economic, social and cultural life of this province may thereby be adversely affected.

OSSTA believes that the announced reductions in transfer payments violate the rationale for equalization grants. Education grants from the consolidated revenue fund are not the same as grants to municipalities or hospitals. Rather, they are truly equalization payments meant to bring all boards to an equity level, or at least to the ceilings. The poorest boards, that is, those with the least assessment, receive larger equalization grants, while the richer-assessment boards have less of a gap to be met by provincial grants.

The net effect of reductions of $1 billion in provincial funding to school boards hurts the poorest boards and has little, if any, impact on the richer boards. Indeed, the reductions have no impact on those few boards in negative grant situations.

Boards that receive few, if any, equalization grants may well make cuts parallel to those made by other boards. This would result in savings to the board and lower local taxes, an achievement which would be a boon to their own ratepayers but which is unavailable to all other ratepayers in the province. For the sake of fairness, all boards should be required to share equally in funding cuts, with savings from boards which receive no equalization grants to accrue to the provincial funding model for the benefit of all.

Fairness demands that all students be treated equitably. This is possible only if all boards are treated equitably and that all boards accept their fair share of the burden. Therefore OSSTA recommends:

That any reduction of provincial grants to school boards be based on a formula which ensures a fair sharing of the burden by all school boards, with savings generated by boards in negative grant situations to accrue to the provincial funding model;

That legislation be introduced instructing municipal treasurers to remit to the province any surplus tax revenues that may occur as a result of applying the standard mill rate to local assessment, with such revenues to be used to narrow the gap between assessment-rich and assessment-poor boards.

We have four concerns regarding the 1996 general legislative grants which are scheduled to be announced next month.

First, equity as an objective. Equity and fairness have long been a key principle undergirding our system of education in Ontario. We urge that the following be added to the list of objectives in order to provide an equitable and fair system of education in Ontario.

Second, while we have equity to the ceilings through the use of equalization grants, everyone recognizes that the ceilings are too low and do not reflect the realistic costs of school boards. The proposed cut to the grant ceilings is of great concern, since any reduction to the ceilings further increases the serious inequities that already exist.

Third, sharing and cooperation for Catholic boards are guided by two important principles: (a) that the initiatives achieve real efficiencies and measurable savings for all boards; and (b) that the initiatives do not compromise the unique mission of Catholic education.

Fourth, transportation. The 53 Catholic school boards in Ontario, with 1,544 schools, serve the same geographic area as 106 public boards with 3,210 schools. These figures demonstrate why Catholic boards have proportionately larger transportation costs than public boards.

OSSTA therefore recommends that greater efforts be made to provide stability in provincial funding affecting school boards and that consideration be given to announcements of funding on a multi-year basis.

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Capital funding. Funding to maintain, repair and renovate is essential to protect Ontario's $20-billion investment in school facilities. In recent years, the pressure of enrolment growth has meant that only limited funding, about $34 million per year, has been available to boards to renovate and update. The facilities renewal program of $67.5 million annually for three years was an important step to address board needs and it is essential that it proceed as announced

OSSTA therefore recommends that the Ministry of Education and Training honour all capital allocation commitments made to boards in the capital expenditure forecast process as well as those made for the facilities renewal program of April 1995.

Payments in lieu of taxes. OSSTA supports a more equitable local sharing of payments in lieu of taxes. Few, if any, municipalities share with school boards, public or separate, the education portion of payments in lieu.

OSSTA recommends therefore that legislation be introduced to require municipalities to allocate to school boards all payments in lieu of taxes based on the education mill rate.

I would like to ask Mr Daly to carry on from there.

Mr Patrick Daly: My comments relate to the need for funding reform in the entire education funding model. New Directions, Volume Two: A Blueprint for Learning in Ontario, states: "Everyone involved in the educational system agrees that Ontario's complicated formula for funding education needs to be replaced." OSSTA endorses this assertion and urges the government to proceed with a new funding approach without delay.

Many studies have been conducted in recent years on how to improve the funding of elementary and secondary education. We go on in our brief to outline a number of those reports and commissions. A consistent theme of all these studies is a recognition that under the present system of funding education in Ontario, a school board's ability to offer its students a high quality of education is influenced by the wealth of its property tax or assessment base. In practical terms, this means that the Ontario education system offers clear advantages to some students simply because they live in assessment-rich areas.

We go on in detail to outline the basic problem in education finance. I'll highlight a couple of significant areas on page 9. We list the inequities above the approved ceiling; the way commercial and industrial revenues are determined and directed; the lack of access to commercial and industrial tax base by separate school boards and a number of assessment-poor public boards; as well as the default mechanism provision.

All studies since the Smith report in 1967 have focused on inequities arising from the disparity of commercial and industrial assessment among school boards. Most reports have recommended some form of provincial pooling of all non-residential assessment.

Our association supports the full provincial pooling of all non-residential assessment and its distribution on a per-pupil basis for a number of reasons. On page 10 and at the top of page 11 we detail at length those reasons. I'll just highlight them.

(1) The provincial pooling of all non-residential assessment is needed to stimulate economic development and thus create jobs in these difficult economic times.

(2) The present municipal boundaries create opportunities for differing tax regimes that distort normal business patterns. Only provincial pooling will bring about property tax neutrality for commercial and industrial taxpayers in the Ontario economy.

(3) It is the height of inequity to impose provincial standards of learning without providing adequate funding to allow all school boards equality of educational opportunity.

(4) For individual students and their parents, disparities of assessment wealth that generate disparities in education spending are accidents of history and geography. Access to educational opportunities should not depend on fortuity, nor should social policy perpetuate such disparities.

(5) The commercial and industrial assessment wealth of urban areas is in large measure attributable to the work of people who do not reside within their jurisdictions.

(6) The vitality of the urban areas is something to which all Ontarians contribute economically. The rest of the province should not be treated as a colony or hinterland for the urban areas to exploit, especially in respect of a social good and basic entitlement such as education.

(7) The alternatives of coterminous pooling and regional pooling of non-residential assessments, such as recommended by the Golden report, are not acceptable because they would perpetuate disparities of wealth between urban and rural areas of Ontario and do not eliminate the distortion to business location decisions.

Provincial pooling of all non-residential assessment is essential. Without action in this area, the other finance proposals lose their potency.

OSSTA therefore recommends that, for the sake of fairness and accountability, the government proceed with the provincial pooling of all non-residential assessment as a component of education finance reform.

We go on, on page 11 to the top of 12, to highlight the need for fairer use of residential assessment and we give a specific example in Stormont, Dundas and Glengarry, where the separate board educates nearly 50% of the students yet receives only 36.9% of the assessment.

Under the current system, all directable assessment is automatically assigned to the local public board unless a person having the legal right to do so takes specific steps to direct assessment to the support of the local separate board. This default mechanism system works unfairly in favour of public boards and also in favour of English boards where French-language school boards exist. As a consequence, school boards receive less proportionate residential assessment than they would obtain if the rules of choice were neutral.

In this regard, OSSTA recommends that all residential property owners be required to direct their taxes to the school system they are entitled to and wish to support and that undirected taxes be pooled and distributed on a per-pupil basis.

Regarding the determination of realistic costs, New Directions, Volume Two: A Blueprint for Learning in Ontario again emphasized that there must be a determination of realistic costs in education. We support the need to identify the components of recognized expenditures and their costs and the development of a rational means of updating components as recommended by both the Macdonald commission and the select committee on education.

We therefore recommend that a determination of realistic costs be included as a part of education finance reform and that a rational means for updating cost components be developed.

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I want to return to the issues which Mr Meany raised in his comments. We believe that these critical issues must be understood in light of the enormous cut in education funding. As he indicated, school boards are all well aware of the impending cuts in funding. However, not all school boards are the same. Those that are located in rural areas generally receive more of their funding from the province than boards that are located in urban areas where assessment wealth is much greater. Some school boards, particularly the public boards in Metro Toronto and in Ottawa, receive no provincial funding at all because of their enormous assessment wealth.

When it comes time to save money in the system, this difference becomes critical. When the government wants to save money, it reduces grants to school boards, but the school board that gets no grants experiences no such reduction unless that is provided for in legislation. A school board has no legal authority to pay money to the province. That is why the Social Contract Act gave authority to the province to require the public boards in Metro Toronto and in Ottawa to remit social contract payments to the government.

We do not know what arrangement has been made between the Ministry of Education and Training and the public boards in Toronto and Ottawa for the payment of their share of the reduction of funding for education in the province of Ontario. The point is simple and critical: You need legislation in place in order to return the savings to the provincial purse out of Ottawa and Toronto.

The second point is even more important from a political perspective: If the province does not succeed in getting the money out of Metro Toronto and Ottawa, the differences in funding across Ontario will only increase the inequities. That is because the other boards in the province will have their funding reduced by the province, but the public boards in Toronto and Ottawa will be able to carry on business as usual. They already spend far more than other boards, and the discrepancy would only increase. As one example, in 1995 the Metro Toronto public board spent $7,566 per pupil, while the Metropolitan Separate School Board spent $5,777 per pupil, a difference of $1,789. The equalized assessment for Metro public is $1,027,000 per pupil, and for Metropolitan separate it is $543,000. The inequities are as obvious in comparing assessment-rich public boards with assessment-poor public boards. The Bruce County Board of Education spending is $5,474 per pupil, again over $2,000 per pupil difference than Metropolitan Toronto public.

There is a third point to be made which follows from the first two: It is that all assessment-wealthy boards will find it easier to accommodate spending reductions than low-assessment boards. It is much easier, for example, for the boards of education in Metropolitan Toronto to reduce costs. If you tried to do that, however, in the rural areas of Ontario or in Red Lake, for example, the cuts are far more difficult to deal with. How do you achieve a cut when you only have a single supervisory officer or a very small school? For small and assessment-poor boards, the cuts will go far past administration and will impact on programs and students' learning. That is why we say that the fair way to distribute the burden of funding cuts is the same way in which the province distributes the legislative grants: The wealthy boards should absorb a larger proportion of the cut. The viability and success of education in our province depends on this important point.

We were very pleased and encouraged to hear the Honourable Jim Wilson, Minister of Health, indicate yesterday that hospitals which are operating efficiently and have streamlined in recent years will not be subject to the same level of funding cuts as perhaps other hospitals. We are encouraged by the statement and strongly encourage the government to employ the same principles of fairness and justice for education.

Mr Meany: Our conclusion is briefly summarized in the last two paragraphs on page 13, which say that OSSTA, representing as we do 53 separate school boards across Ontario, extends its hand to work with the province, with school boards and with other agencies at the local level in support of steps to provide that educational excellence to all students in our province without discrimination.

That completes our presentation. There is a summary of our recommendations on page 14. We will try to answer any questions.

Mr Silipo: Thank you very much for the presentation. I have to say that I find an aspect of your presentation a little troubling, because I think that the only one you're making happy by what you're suggesting or what you're doing is really the Minister of Education and the government, because I think he's succeeded in doing one important thing, which is to start to pit school boards against school boards. I say that with all due respect and having heard you make a number of these same arguments in the past. But I worry about the amount of stress that you're placing on the question of the negative grants. My understanding is that in fact we're likely to see in Metropolitan Toronto, I guess partly, as I understand it, because of a reduction in the assessment base that is really hitting the Metro school boards hard this year, probably those boards even being in a positive grant situation, to a small extent; I don't think to a large extent, but it may be there.

I guess I worry because I think part of the assumption that's in your presentation is that those boards that are spending at the higher level are overspending, as opposed to maybe they're spending what we should all be spending on education, and therefore what we need to do is to rectify those inequities by allowing increases where there has been underspending.

Mr Meany: If I may comment on your first point, Mr Silipo, perhaps we're more pitted than we used to be, but we have always tried to point out that the system is rigged against us; it always has been, and governments and administrations have been acknowledging that.

It's just that it's been difficult to do it, and I think we've been reasonable in working with others. It's possibly exaggerating a bit to say we're pitted against each other. We do have to say that if you were to reduce the spending by those who have more to the level that we operate with, a great deal of money would be saved. If it's okay for us to operate at so many thousand dollars per student across the province and provide, I think, good education, it should be for others.

Mr Silipo: I think when we get into that kind of approach we're right from the bat saying we're prepared to sacrifice a lot in the quality. Even, for example, when you talk about the funding formula, certainly I know, from the discussions that we were involved in when I was at Education -- and I don't know what's happened since in terms of how the analysis has come out -- when we were looking at the relative costs, one of the things that was becoming clear to me was that probably the fairest result would not necessarily be one spending ceiling or one spending formula that would be the same across the province, because there are differences. What there was and what I presume there should be is an attempt to try to understand, if you want to do it on a per-pupil basis, what you need to be able to properly educate a young person in Toronto versus any other part of the province.

I understand all of the points that you're making about the equity. I agree, I think, with the general thrust, with that caveat that I put on at the beginning. But overall the government has taken the position that you can take this kind of money out of the school system without affecting the classroom. What I have heard consistently from public boards, Catholic boards, teachers, everybody else is that there is no way you can take that kind of money, $400 million or $800 million, out of the system without affecting the classroom. I'd like to ask you to comment on that because I think that is important.

Mr Meany: We have to agree; it's impossible.

Mr Gary Carr (Oakville South): I agree the formula is the most important thing. Having said that, I think it should be done on a per-pupil basis. I don't know if we're going to get agreement among yourselves, the public and the teachers on what a per-student cost is. Recognizing that there are two classes of students, elementary and secondary -- and if you can be specific as to whether it's $5,700 or $6,700, whatever it is -- what do you need to educate children adequately in the province on a per-student basis? What would you recommend to the government?

Mr Meany: We think that needs to be established.

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Mr Carr: But you don't have any idea now. What I'm getting at is that that's the difficulty. Everybody says it needs to be established. What needs to happen is that you come forward and say, "We believe it's 67 or 57," whatever it may be, but what you're doing is throwing it on to the government. Do you believe you can even come up with a figure you can recommend to the government?

Mr Meany: We believe we're providing good education at our present level. We know that times are hard, and we would accept that.

Mr Daly: The other key point is that we're obviously very interested in working with the government on the education finance reform work group, and that group is not far from establishing the figure. It's not a matter for us to just throw out a number. Obviously, we could do that, but that wouldn't be fair. That work group will be establishing that number and that number should be the base level of education for all in the province.

Mr Carr: Do you think we will be able to get a number?

Mr Daly: Yes, absolutely.

Mr Carr: Okay. The $400 million is coming out, as you know, but the government has said, "Tell us the tools you need to reduce the $400 million." We've done that in the other areas, with the hospital restructuring and so on. Given that the $400 million is coming out -- you can argue that you don't want it to, but it's coming out -- knowing that, what are the tools you need to be able to get that money out?

Mr Meany: We would start with principles, and our principles would be starting off with fairness and starting off with not interfering with the programs that the kids -- Patrick?

Mr Daly: The important issue we raise in our brief, that the high-spending boards get cut proportionally more than the lower-spending boards, would obviously be the first and most important point. Also, we suggest a process by which the government, the school boards and the teachers' federations sit down and cooperatively come up with a means to reduce by that number. Obviously, we're all going to be impacted by the cut. We all need to be part, and willing to agree to be part, of the solution. Clearly, things will not operate the way they have, and it's better for all of us to sit down and be part of that solution.

Mr Carr: I have a million and one questions, but if there's any time left I'll pass to my colleague.

Mrs Marland: I would like to congratulate you on this brief this morning. It's a very constructive brief, and we appreciate the obvious work that has gone into preparing it. Of course, it's always a pleasure to see Patrick Meany. He and I started our political careers together in 1974 when we were very, very young.

I notice that you were also at the resource development committee yesterday, so you're obviously having your bed and breakfast down here these days trying to help the government. We appreciate that help, and we really want you to know that.

I'm encouraged, Patrick, to hear you say, "We know that times are hard." You can't have the responsibility you have as an elected person and not know that. We know you are struggling with your budgets. What I need to know is whether you agree with the position of the government in terms of trying to protect programs in the long term by making tough decisions now that have to be made, and also, that we feel the educational opportunity for a child living in Elliot Lake or Kapuskasing must be the same as for a child living in Mississauga or Scarborough. You and I have fought together for funding for renovations to old schools in existing large boards, like St James, for example. Do you agree with us having as our goal the equity of educational opportunity in this province for every child, regardless of board and regardless of geographic location?

Mr Meany: Yes, that is our point. I would add, in acknowledgment of Mr Silipo's point, that there needs to be a weighting formula so that if there's something extra in Red Lake or something extra down here -- it may not be the same number of dollars, but there can be a weighting formula. I understand that's part of our policy. As to your original question, whether I agree on saving programs in the long term, "in the long term" made me wonder. You did not mean to say there could be some damage in the near term? We wouldn't agree that programs should be interfered with, even in the short term.

Mrs Marland: The question arises from the fact that the cost of borrowing money this year is $9 billion in Ontario. The cost of servicing our debt is $9 billion. That is more money than this province spent on education last year on everything: elementary, secondary and post-secondary institutions, universities and colleges. If that's the situation this year, it stands to reason that if we don't stop the spending, in another five years the cost of borrowing the money to provide any programs will have doubled.

As we now know, even with the major cuts this government is reluctantly making in all areas, our accumulated debt is still going to go from $100 billion to $120 billion in another five years. My question to you is, do you support the concern we have about where we are now, trying to provide the programs, knowing how much money we've borrowed and how much it's costing us to service that debt?

Mr Meany: Yes indeed, and we have given a great deal of thought to all of that, and I have personally looked at it. Let's go back to my original principles. I mentioned doing it all with justice and fairness, hurting as few people as possible, and that includes the programs. If something has to be done, it has to be done, but we find fault with doing things too quickly without more phasing, too much suddenness, too much shock to the system and, I'm afraid, to people and the programs, the students.

Mr Crozier: Good morning, gentlemen. It's interesting to note that when Ms Marland said the debt was going to go from $100 billion to $120 billion over the next four or five years, that happens to be the same amount as the tax cut. We've had a lot of discussion on that over the last few days, and there'll probably be more in the future. While we're talking about tax and fair tax, in Essex South, the area I come from, the separate school board and the public school board share almost equally, it's so close to 50-50 in terms of the number of students and supporters with each board. So we have a coterminous board where that's balanced, but the funding is not. The separate board certainly receives less funding, and I don't think that's fair.

There's also been a lot of discussion about how schools should be funded. You've dwelled on the inequities in property tax and assessment. Has it been discussed at all, or do you have an opinion, about whether schools should be funded by another means of taxation?

Mr Daly: If you're referring to some form of funding through income tax or some other, obviously our association was very interested in the Fair Tax Commission a couple of years ago and supported the recommendations coming out of that report in relation to provincial pooling and distribution on a per-pupil basis through income taxes. We don't see that as a reality in the current climate, so we're not recommending that. We still believe a fair funding model is achievable in the current situation and that the means to do that is to provincially pool all non-residential assessment. That could happen quickly and would alleviate the inequities that currently exist.

Mr Crozier: I have a further question or two, but my colleague also has a question.

Mr Kwinter: I'd like to pursue the idea of the constant funding per student regardless of where you are in the province. You've acknowledged that you don't object to a weighted allocation, but I'm sure you would recognize that, for example, in Metropolitan Toronto, it costs teachers more to live in Toronto than it does, say, in North Bay. I would suggest that the population mix, given the huge number of immigrants in Metro Toronto, puts a burden on teaching, which costs money. My concern is that when you start to weigh what the allocations are per pupil, you may be exactly where you are now. How do you deal with that?

Mr Meany: We have given a great deal of thought and consideration to that. By the way, having lived in the north for some years, I can tell you that a lot of things up there are more expensive. For instance, transportation is a whole different thing. But we have taken all that into consideration, and according to our calculations, the amount of difference that weighting makes is insignificant compared to the amount of inequity.

Mr Patrick Slack: If I could add just a word to that, if you take a look at all the figures, you will see that the expenditure on education relates very closely to the money that's available to spend on it. If there were more equity in the ability, there might be a more equitable distribution of the spending on each child in this province. Be very careful to see that factor. I do understand, and we acknowledge, that the differences are there, but they're not as great as they would be had there been less of that money there to do that. You have to look at the resources and how they're distributed.

The Chair: Thank you very much, gentlemen, for coming in and presenting to us today. We appreciate your participation and your brief.

That brings to a conclusion our morning session. I would like to read one thing into the record. The week of February 25, we will be travelling. On the evening of the 25th we will travel to Thunder Bay for hearings there on the 26th. We will travel to Sault Ste Marie for hearings on the 27th. We will then travel to Ottawa, through Toronto, for hearings on the 28th, and then on to London for hearings on the 29th.

We will recess for lunch.

The committee recessed from 1211 to 1332.

ONTARIO TAXPAYERS FEDERATION

The Chair: This afternoon we have the Ontario Taxpayers Federation, Mr Pagnuelo, joining us. Mr Pagnuelo, thank you very much for joining us today.

Mr Paul Pagnuelo: Good afternoon, Mr Chairman and committee members. I'm Paul Pagnuelo, executive director of the Ontario Taxpayers Federation. I wish to open my remarks today by saying this is the first time, in appearing before this committee during pre-budget consultations, that we find ourselves in the position of not having to plead with the government to deal with the deficit crisis, and to do so not by tax increases but by spending reductions.

During last year's June election campaign, all three main parties publicly stated their commitment to balance the budget. Both the Liberal and NDP parties promised to balance the budget within four years. The PC Party pledged to balance it in five.

The Liberal and PC parties promised to balance the budget through spending cuts and not by tax increases. Both promised balanced-budget legislation and lower taxes.

The Liberal red book noted that the NDP implemented more than $4 billion in tax increases in its first three years in office. Lyn McLeod pledged that over five years they would put $1.7 billion back in the pockets of Ontario individuals and businesses.

The PC Party pledged to give taxpayers twice the break the Liberals said they would. Mike Harris promised to reduce provincial income tax rates by 30% in three years and to abolish the employer health tax on small businesses. To offset the $400 million lost by eliminating the payroll tax, Harris stated a progressive fair share health levy would be instituted for individuals earning more than $50,000 a year.

In our opinion, the commitments made to voters by the Liberal and PC parties were absolutely crystal clear. The budget would be balanced within their term of office, spending would be cut and taxes would be lowered.

On June 8, 1995, the court of public opinion decided in favour of the Harris election plan by electing a majority PC government. However, since that date, those who lost the election -- the opposition parties, certain media and a mixed bag of spending coalitions which consider it their right to access the provincial treasury -- continue to act as if the election had never happened.

Our primary message to the government in respect to the upcoming budget is to maintain your resolve in doing the things you said you would. Despite the howls of protest from those who are not prepared to accept that their funding has been cut, and despite the rhetoric from the opposition parties, whose job after all is to oppose for their own political gain, our federation commends the Premier for acting swiftly and with determination in delivering on his promises.

But the challenge facing not only this government but all Ontarians in the next several years is a daunting one. Intense restraint is necessary in order to reverse years of fiscal folly, which have culminated in $10-billion annual deficits, an accumulated debt of $100 billion and a staggering tax burden. Of equal importance is getting Ontario's economy going again, and that means creating an environment where business is willing to invest once again in this province, consumer spending will move out of the slow lane, new jobs will lead to higher tax revenues and lower social spending costs, and Ontarians who have fled to the underground economy in protest of high taxes and government misspending will once again be willing to pay their fair share.

Managing change in difficult times is not a pleasant task. No government, regardless of political stripe, can do the job alone. And unlike past years, we can no longer put the problem off until some time into the future. As the old Elvis Presley song goes, "It's now or never." In order to achieve the Ontario we all strive for, each and every one of us must play an active role in charting the future of this province and rebuilding our economy.

It is within this overall context that we address our recommendations in respect to the upcoming budget.

Back on May 30, 1995, Mike Harris, leader of the Progressive Conservative Party, pledged, if elected, to support immediate passage of taxpayer protection legislation. The legislation would make any increase in existing tax rates or any new taxes subject to approval by the voters of Ontario in a binding referendum. It would require the elimination of Ontario's operating capital deficits within at least five years, along with interim deficit reduction targets for each of the years. Finally, it would contain pay-for-performance ministerial salary penalties for both the Premier and cabinet ministers if interim deficit reduction targets were not met.

While we had hoped that this legislation would by now be in place, we trust that the Premier and the Finance minister will honour the pledge which they and their fellow caucus members made by introducing the legislation as part of their budget package.

Ontario's spending, tax, debt and deficit levels have become so outrageous that a public consensus has emerged, and that is that taxpayers must act to control government. In going through the pain over the next several years of government restructuring, we must insist that the effort not be lost to future and by future governments. Once we pull ourselves out of this fiscal mess, there must be a mechanism in place to ensure that never again in the history of this province will we allow ourselves to indebt future generations.

The purpose of taxpayer protection legislation is to place limits on the behaviour of governments with respect to fiscal policy. Governments may be restricted in a number of different ways. Some taxpayer protection laws force governments to balance their budgets on a year-to-year or cyclical basis. Others require a self-imposed spending and/or tax limit. A number of jurisdictions with taxpayer protection legislation employ debt limits in order to curtail the negative effects of government overspending.

In each and every case, however, taxpayer protection legislation provides a fiscal line that the government in question may not cross. It sets out a definitive, objective and precise guideline delimiting the resources available to the state to be derived from its citizens. Its citizens likewise are provided with the confidence that the state will not act in a arbitrary or erratic manner in the appropriation of revenues and how it spends those resources. Under taxpayer protection legislation, the expectations of both parties in the raising and spending of public funds are pre-defined.

Thus, taxpayers are protected from what can widely be regarded as ill-conceived and damaging fiscal policy: excess debt financing, successive deficits, growth in spending disproportionate to growth and production, and a seemingly limitless series of tax increases or the imposition of new taxes. Legislated limits protect the citizen's right to the wealth he or she has produced while protecting the economy, the environment from which that wealth is derived.

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In May 1994, we proposed a taxpayers protection act for Ontario. Since that time, in conjunction with our parent organization, the Canadian Taxpayers Federation, and our other provincial affiliates, we have continued to improve the model.

As part of our submission, we have appended a copy of the taxpayer protection amendment which the Canadian Taxpayers Federation recently proposed for the federal government. This is the model which we would like the Ontario government to adopt.

The taxpayer protection amendment sets out constitutional, rather than statutory, fiscal limits. The effect of this provision is that the legislation would be far more difficult to override or change in the future.

Our national TPA could be taken almost word for word and applied to the province of Ontario in the form of a constitutional amendment. Section 43, found in part V of the Constitution Act, 1982, provides for the provincial Legislature plus Parliament to amend the Constitution with respect to changes that only apply to the said province. This section has been used before for single-province amendments, including changes to language laws in New Brunswick and amendments pertaining to denominational schools in Newfoundland.

Highlights of the taxpayer protection amendment include:

The Ontario government would be forced to balance the budget by the end of fiscal 1999-2000. After that, deficits could only be run in case of war or natural disaster, and then only after a vote of two thirds of the Legislature.

Provincial government spending would be restricted to the growth rate of population plus inflation.

The government would be forced to put any proposed new tax or any increase in existing taxes which are not revenue-neutral to a binding referendum, requiring the majority of those voting to approve of the tax change before it could be passed.

Also, financial penalties would be applied to any and all members of the Legislature who vote to increase spending or taxes which would cause a violation of the amendment.

The provincial government would be prevented from offloading its expenditures on to municipal governments or school boards without an equivalent transfer of revenues.

An emergency reserves account or "rainy day fund" would be created in case of war or natural disaster; 1% of program spending would be set aside every year specifically for this purpose.

Any budget surpluses would go to either the emergency reserves account or to the debt servicing and reduction account.

The contract offer made to OPSEU by the Ontario government is one that would be the envy of many private sector workers, both unionized and non-unionized. Indexed pension benefits, current-schedule dental benefits, merit increases of up to 3% and topped-up parental leave benefits are enjoyed by relatively few private sector workers in Ontario today.

The layoff, severance and notice provisions are so generous they would have caused many private sector workers to choke on their cornflakes when reading about them in their morning paper the last several days.

Severance is usually given in lieu of notice, but what the government is offering is a lot more. OPSEU-represented employees will get both a generous notice of six months as well as severance pay, and not just regular severance but double severance pay. A 20-year employee will receive six months' notice and 40 weeks of severance. That's 66 weeks, or a year and a quarter's pay.

If that is the price of labour peace, it is a very expensive price indeed. It clearly sets public sector workers apart as a privileged sector of society. For many taxpayers who never in their lives will ever work under such generous conditions, it means holding their noses, but if it means reducing a bloated civil service and that civil service salaries and benefits will begin to moderate and fall into line with the private sector, then it's a price which taxpayers reluctantly are willing to pay.

There are those who argue that lowering taxes is mean-spirited and that they would only benefit the rich. There are others, including ourselves, who argue that lowering tax rates would actually increase tax revenues because it would cause economic activity to boom.

It's obvious, in light of current negotiations between the government and the union, that spending cuts are going to take longer than originally anticipated to kick in. Because of this we would like to recommend that the government phase its promised 30% tax rate reduction in over six-month intervals beginning this July.

This would mean that the first-year cut of 15% would be achieved by a 7.5% reduction in July and another 7.5% in January 1997. The remaining cuts of 7.5% in each of the next two budget years would be implemented in six-month periods at the rate of 3.75%.

It's the perfect win-win situation because it allows the government to fully honour its election pledge, it'll result in faster deficit reduction and it'll be a continual booster shot in the arm for consumers and the economy.

The Golden task force has proposed that property taxes be determined using actual value assessment, a system used in BC, which reassesses market values annually. But we question why a government that is trying to cut costs would even consider bringing in a new property tax assessment system that will be significantly more expensive to administer. Using the BC costs as an indicator, the per capita cost in Ontario for assessments under actual value assessment would skyrocket by 67%, from $9.60 to over $16. With annual assessment reviews, the related costs won't go down, but up.

If the Harris government wants to save big dollars and at the same time bring in a new system which is easy to understand, easy to administer, fairly distributed, transparent and more closely related to the cost of services used by each property and class, the province should be adopting the unit assessment system.

The system is based on the square footage of the building and land. Different mill rates would be applied to both, with further distinctions for usage. With unit assessment, taxation policy would be tied solely to the mill rate and not the assessed value.

Identical properties would have identical assessments regardless of where in Ontario they are located. Property owners could simply call up a municipality and ask for the applicable mill rates to determine the tax competitiveness of their local town, region or school board.

With square footage and usage being the sole criteria for determining assessments, the province could save as much as $130 million a year in administrative and equipment costs, and there would be virtually no need for appeals. The small army of provincial assessors searching for new plumbing and skylights and peering into windows to determine market value using complex formulae and subjective judgement would vanish. And by removing the disincentives of a market value assessment system, which penalizes property owners for improvements to their buildings and land, not only would the government save money, but tax revenues and the economy would improve as a result of increased activity in the construction industry.

While user fees for certain municipal services make sense, we remain concerned that there exists no provision to protect taxpayers from municipalities looking for an easy way out of dealing with reduced provincial transfer payments. If a certain service that is now funded through general revenues is converted either partially or in full to a user-pay basis, the amount of funding from general revenues that went to pay for the service must, and I stress must, be returned to taxpayers. If municipal governments simply opt for user fees or higher municipal taxes to offset lower transfer payments, the benefits of the 30% provincial tax rate reduction will be lost and the objective of forcing municipal governments to restructure the delivery of their services will simply not be achieved.

We again urge the provincial government to enact either legislative or regulatory changes which will prohibit lower-tier governments from implementing user fees as an indirect tax grab.

We wish to remind the government of its promise to introduce legislation last fall that would have scrapped the gold-plated pension plan for Ontario MPPs. The promise and the November 27 report of the Ontario MPP Compensation Commission seem to have vanished into thin air. We question why the promised reform has not yet occurred and if the delay was intended to benefit retiring party leaders Bob Rae and Lyn McLeod.

We remain of the view that Ontario's MPP pension plan is immoral. The Premier's comments late last summer, that the government doesn't believe it has the legal or moral right to take it away from MPPs already in the plan and that it must grandfather veteran MPPs with more than the five years' minimum service requirement, fail to provide an example of making sacrifices at the top.

Fair and proper reform of the pension plan should entail a transfer of contributions by MPPs, together with dollar-for-dollar matching contributions by taxpayers and accrued interest, to an RRSP. We again urge the government to implement the necessary reforms, to do so on a retroactive basis because you missed that earlier deadline of November, and to do it without further delay.

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Finally, I want to comment on something we raised last September with the Education minister, and that's the matter of retirement gratuities in Ontario's education system. Put bluntly, they're bleeding taxpayers dry, and the provincial government must legislate an end to this diamond-studded perk. In a study which we released to the Education minister last September, we noted that of the $978-million total liability, reserves were in place for only 8.75%, or $85 million. Because there are no province-wide standards for calculating the liability, the potential cash payout may be severely understated.

In 1993, taxpayers forked out more than $90 million in cash bonuses to retiring school board employees just for showing up to work. This amounts to paying employees twice -- once for working and once for just getting up in the morning. Directors of education, who can earn as much as $140,000 a year, stand to collect a $70,000 lump sum payment the day they retire. All this is in addition to their fully indexed pensions.

With school boards cutting back on discretionary spending in areas like classroom supplies and computers, it simply does not make sense to be running up a $1-billion IOU for a perk which amounts to a subtle form of extortion for not being sick. Individual school boards are in too weak a position to negotiate an end to the perk, and we again urge the government to legislate its termination. Thank you.

Mr Carr: Thank you very much for your presentation. You talked about the property tax, which will probably be most pressing, as a result of the Golden report, over the next little while. You didn't comment on anything else in the Golden report in terms of the governance issues and so on. Have you had a chance to look at that and make any recommendations?

Mr Pagnuelo: I'll tell you, having been involved in this organization for the last five years in Ontario, particularly with the Ontario Taxpayers Federation, being involved with a number of municipal groups, consulting on an ongoing basis with municipal taxpayer groups across this province, there's an overwhelming consensus that we have one too many layers of municipal government. The consensus is that we don't need bigger government; we don't need superregional governments. What I am hearing consistently throughout this province from every corner is to eliminate, abolish, get rid of the upper-tier level of government all together. Regional and county governments should simply go and their responsibilities should be repatriated to local municipal councils and/or the province, whichever best fits the particular responsibility.

Mr Carr: One last question. If the growth figures aren't there and the revenue starts to drop, the government's going to have a tough decision to make, whether to go ahead with the tax cuts or cut more than they already have, because everybody has said don't string out getting rid of the deficit past five years. If doing the tax cut meant more cuts, I take it you'd be in favour of doing the cuts?

Mr Pagnuelo: There are two important things: one is delivering on the promise, but more important is also making sure that we balance the budget within the five-year period. If revenue projections were worse than anticipated and if it's slower than necessary to achieve the spending cuts, I think most taxpayers would be prepared to see the tax rate reduction spread out over a five-year period. But the bottom line is that 30% has to be delivered by the end of your mandate. That's what you promised; that's what you were elected on.

Mr Carr: Thank you very much. Good luck.

Mrs Marland: Thank you for this excellent brief. We will certainly pay attention to all the aspects of it, and I'm glad you touched on as many subject areas as you did. The one I perhaps see as being the most significant in your brief and the one that maybe you can give us some more help with is the idea of having this taxpayer protection legislation, essentially to save government from itself in the future. Sitting here finally a member of government after 11 years in the wilderness, I know for a fact that it would be much easier for us to continue the kind of laissez-faire that has been evident in terms of responsible fiscal planning of the last 10 years. It would be easier, we would be more popular, and certainly five years from now when we go to seek re-election we wouldn't be at the wrath of all these groups and individuals who think everything we're doing right now is too tough, too soon, too fast and wrong.

While I see us being in this position of risking that because of what we're doing now, what would worry me the most is not not being re-elected, because I would rather not be re-elected than serve this five years in government not being willing to support making the tough decisions just to save my seat. I would rather lose than be re-elected because I wasn't strong enough to make the right decisions and to support those decisions. What would bother me the most is for us to do all this and exactly, as you point out on page 4 of your brief, have another government come in and it would be all for naught.

How do you perceive this taxpayer protection legislation being developed and being really held accountable? Right now, we have regulations that prohibit school boards from deficit financing, yet we have school boards that have deficit budgets.

Mr Pagnuelo: The key, in terms of ensuring that it's ironclad, that it can't easily be changed -- although the legislation we propose would require a majority vote by the citizens of Ontario to amend the amendment, we're still saying entrench it as a constitutional amendment. For any government to try and undo that at a future date, whether it's your government or a government of another party, there would be a terrible political price to pay.

More importantly, I speak to all of you as a parent, and as a parent of two children ages 7 and 11. I am having a difficult time facing reality that what I've left my children is a terrible legacy where they're going to end up paying that debt down, not myself and not you, and they're going to have a lot less in the way of government services as a consequence. I think that is basically unfair. It's unfair of this generation, my generation. I think we've been absolutely selfish. We wanted everything we could get out of government, but we weren't prepared to pay the price in the form of higher taxes. It's a lot easier to pass the bill along to future generations. I think we all have a moral obligation to make sure, once this mess is cleaned up, that it never ever happens again in this country, in this province.

Mr Kwinter: Thank you very much for your presentation. There's much in it that I can endorse. I do have some questions, though. One is your call for a balanced budget in the year 1999-2000. We have a situation where the Minister of Finance appeared before us, showed us a chart saying that this government, in a best-case scenario, if everything goes the way they hope it'll go, will not be balancing their budget until the year 2000-01, which in fact is going to be after their mandate. How do you deal with that?

Mr Pagnuelo: Mr Harris signed, and I have it right here, our taxpayer protection pledge back on May 30. He said, if elected I will "support immediate passage of taxpayer protection legislation that will...require the elimination of Ontario's operating and capital deficits within at least five years, along with interim deficit reduction targets for each of the years." If we go five years from when they were elected, they should have it balanced by the end of their mandate.

Mr Kwinter: Right, but I'm saying to you that the Minister of Finance appeared before us last week, presented us with this document -- it's his document, not ours -- saying that the balanced budget will be in 2000-01, which will be past their mandate.

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Mr Pagnuelo: Then I say he's got a problem, because it conflicts with this.

Mr Kwinter: I agree. I'd like also to get your reaction to the idea where you state, "Would lower personal taxes cause you to spend more or do you and your loved ones already have pretty much everything you need? How about most people?"

We have figures that show that of the tax cut, 51% is going to go to the 18% of the population earning over $75,000, and 7% of that tax cut is going to go to 42% of the population. When the deputy Finance minister appeared before us and I asked him, ""Have you done any studies about how much of that money is going to come back into the economy?" He said they really didn't have that information, although as a rule of thumb, the people at the very low end of the economic scale are the ones who will have the greatest incentive to spend the money right away because they need things, and when they get that money, they're going to go out and buy things that they normally don't have.

We've heard that Ontarians have the greatest debt in their history and the lowest savings, not in our history but certainly in the last, say, 20 years. My concern is that this money is going to go back to other than those at the very low end of the scale, who everybody agrees will go out and spend it, but the money that's going to be spent is not going to give the government the kind of kick in the economy it wants, because too much of the money is going to people in the economy who have the ability to arbitrarily spend their money as opposed to needing to spend their money.

Mr Pagnuelo: What level of income do you suggest that happens at? Basically, the message I'm hearing is that certain people don't need it. At what level are you suggesting that occurs at?

Mr Kwinter: I'm suggesting that anyone who earns $75,000 a year, if they get that money and more, will in all likelihood, given the fact that we're at the highest debt and the lowest savings, either use it to pay down debt or top up savings or take a vacation. I don't think a lot of that money is going to find itself back into the economy. I think even $35,000 is kind of high, but under the statistics and under the breakdown, 7% of the tax cut is going to go to people with $35,000 a year income or less. I'm suggesting that your best hope of getting that money back into the economy has to come from that group, but only 7% of the tax cut is going to be in the hands of that group.

Mr Pagnuelo: If you target the tax cuts to one specific group, particularly those in the lower-income brackets, you're really going to limit the ability to grow the economy in terms of retail trade and manufacturing, because there'd be a limited number of products those consumers would buy. As you expand the ability for more people to share in that tax relief, you're going to have a greater economic boom because there'll be more products available that people will buy.

It's also important to consider a couple of things. First, under the Harris plan, my recollection with the tax cut was that there would be a fair share health levy that would kick in starting at $50,000.

Mr Kwinter: That's all factored into this.

Mr Pagnuelo: I think that needs to be looked at, and it's very progressive. The higher up you get, the more progressive it becomes.

Mr Kwinter: I very much support what you're saying about user fees. The concern I have is that when you bring in this balanced-budget legislation and it only applies to Ontario, it doesn't really compel lower levels of government to adhere to that. Today, if you saw in the paper, Mel Lastman is talking about $5 a bag for garbage, and to me, that's a tax.

Mr Pagnuelo: There is absolutely no municipality anywhere in this province that has to either increase taxes or bring in new user fees, or cut or eliminate services. What all municipal politicians are overlooking is option C, and option C is what we call the Yellow Pages test. It's something you and I do as consumers. We shop around for the best quality and the best price on the services or goods we want to buy. Municipalities don't do that. They attempt to deliver all the services directly themselves, so whether they're getting best value for money, they don't know, and there's no way they will ever know until they actually go out and put those services out to competitive tender.

If you take a look in the United States and other jurisdictions around the world where they've adopted competitive tendering as the model for the delivery of services, the actual results have been cost savings of anywhere between 20% to 40% on average and no deterioration in the quality of service -- in fact, in many cases, an improvement.

What we're seeing some of these municipalities do in terms of bringing in user fees -- user fees in certain instances make sense as long as they're revenue-neutral and as long as, if a certain service is provided today out of general revenues and it's moved to a user-fee basis, those revenues that were taken out of general revenues have to be returned to taxpayers. Politicians at the municipal level can't have it both ways. They can't get to keep those revenues and at the same time implement user fees.

We're saying there's got to be some protection. There's no protection today to stop the tax grab at the municipal level.

Mr Silipo: Thank you very much for the presentation. I want to take issue a little with one of the points you make, that the opposition and others continue to act as if the election had never happened. I want to pursue that, not to get into an argument with you on it but to suggest that, aside from the fact that we disagree with what the government is doing, I for one would acknowledge that the promise of the tax cut was quite clear, as I read the Common Sense Revolution, as I heard it, but there were also some other equally strong promises made.

Just to highlight two that we've been talking about during this process, one was to maintain health care spending at the current level and the other was to make cuts in education but to protect classroom spending. What we are seeing is that both of those promises are not being maintained. So in questioning the tax cut, we're not questioning it just for the sake of saying, "That's a bad promise" or whatever, which we are saying, but because it has to be looked at in conjunction with other promises that were made. If the government is persisting in saying, "We have to do the tax cut," and doing the tax cut puts in jeopardy other important services and other important promises that were made, we think there's a legitimate point that needs to be raised, and that we as opposition need to raise, to say to people: "This is the balance. This is the tradeoff you're making."

If the government of the day thinks that tradeoff is worthwhile making, fine, they have the majority, they can pass that, and they will deal with the electorate in terms of a judgement that will be made at the next election. I just wanted to sort of put that point to you.

The other thing is a real question to you. I heard you very clearly here and at other times in terms of your reminding the government about their promise on the tax cut. As I listened to you today, I take it that it goes beyond just the fact that the promise and the commitment was made, but because you think it does help to stimulate the economy and thus get the jobs back, which is also the other basic reason the government is saying they're doing it. What would the position of your federation be if it could be shown that if the government is determined to do the tax cut, a way to generate more spending and to therefore help create that momentum and that consumer confidence and those jobs would be not by doing the tax cut on the income tax, but by looking at it, for example, as against the sales tax? Has your federation looked at that as an option?

Mr Pagnuelo: Looked at dropping the sale tax?

Mr Silipo: Yes. Looking at the numbers the government has put out in its own document, the value of the tax cut is about $4 billion to $5 billion. That's roughly a drop of 4% to 5% in the sales tax.

Mr Pagnuelo: We did a survey in respect to the GST when the federal government started looking at reforming the GST. We did a survey of our members. Our national organization was founded back in 1989 because of massive opposition to the GST that was going to be rammed down everybody's throats by Brian Mulroney. That's how the whole organization started, particularly out west.

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About 92% of our members who responded in a survey said they were vehemently opposed to the imposition of the GST at the time Mulroney brought it in. They were opposed not because it was a consumption tax; they were opposed mainly because of the way it was being brought in. They saw it as a massive tax grab without any attempt by government to try to control spending. They also saw it as a potential cash cow where they could very easily raise the rate.

When about a year and a half ago we asked people what their preference was -- would they rather pay taxes on what they earn or would they rather pay taxes on what they consume -- we were absolutely astounded. We figured, because of the opposition to the GST back in 1989-90, that the majority of our members would say they would prefer to pay taxes on what they earn versus on what they consume. But about 74% said they would prefer in principle to pay taxes on what they consume, so there's not massive opposition -- in fact, the exact opposite -- to consumption taxes, but it was particularly the GST and the way it was brought in.

Which reminds me of one other thing I didn't address today, and that's the issue of harmonizing GST and PST. We're pleading with this government, don't even consider it, because it'll end up in a massive tax shift of about $3 billion from businesses to consumers. The last thing consumers and the last thing businesses need is to take more money away from consumers, that we don't have already.

The Chair: Thank you very much for your presentation, Paul. We appreciate your coming before the committee today for the Ontario Taxpayers Federation.

JOHN KELLETT

The Chair: The next presenter is Mr John Kellett, who is a financial consultant. Welcome.

Mr John Kellett: Thank you very much. By way of introducing myself, I've just hurried up from Bay Street where my day job is managing mutual funds and pension funds for tens of thousands of our fellow citizens. I therefore feel I have a vested interest on their behalf in good public policy, and I would add that at least two of the funds I manage are 100% invested in Canada in stocks and bonds, so there is certainly that commitment.

Good afternoon, ladies and gentlemen. I would like to thank you for permitting me time on your agenda to express my viewpoint. I am here as an individual, a lobby of one, if you will, to give the committee such help and insight as I can from the important perspective of Canada's capital markets. I have not been asked to represent any industry association or my employer, and I would appreciate it if you would accept my remarks on that premise. I might add that this is my first-ever appearance at a public policy forum, so I would ask you to overlook presentational defects. I'm often told that members of the investment industry are too reticent about getting personally involved in public policy issues -- most recently by a deputy minister of the federal government -- so I'm here to present what I believe to be a valid viewpoint of what will be required to restore Ontario's economic wellbeing over the long term.

Over the decades, there has been a general acceptance in Western democracies that a mixed-economy model works best for most segments of their societies. What is in argument is the appropriate level of government intervention and regulation, and this is the delicate balance that you as politicians have to strike.

I acknowledge at the outset that I am a fiscal conservative, largely on the basis of practical observation after 27 years in the investment business. This is a profession that requires a pragmatic rather than ideological approach, as the stakes are too important to be distracted by external biases. Thus, I do believe there would be many more advocates of government intervention on Bay Street if that approach was seen to be successful in generating economic wellbeing and confidence. Unfortunately, it is now even difficult to use Bay Street as a scapegoat -- no longer do domestic interest rates have a made-in-Canada flavour. Partly this is due to a worldwide trend towards interdependence of nations' economies and capital markets. We no longer have the luxury of operating in an insular vacuum where policies can be pursued without considering their external impact. However, this natural and accelerating trend of globalization has been worsened for Canada and Ontario by our rapidly increasing dependence on international lenders to finance our domestic level of overconsumption.

As is well known, Canada is one of the world's most indebted external borrowers. Because of our need to attract foreign investment, we have been burdened with among the developed world's highest real interest rates, designed to retain notoriously fickle offshore capital. Foreigners are naturally much less interested than Canadians in the social policy and domestic economic realities that have led to the present impasse, and they will leave -- having many alternative locations in which to invest -- at the slightest cause of concern, political or economic. This reality puts both our monetary and fiscal policies in a straitjacket because, as the world's largest export-dependent economy, our currency is very sensitive to external pressures.

A large part of the problem is the significant lack of consumer and business confidence in this province and country. Our savings levels are at multidecade lows and are among the lowest in the developed world, our cost of capital is far too high relative to domestic conditions, and the cheapest form of capital, which is equity, is far too expensive relative to other competing countries. The situation wasn't created overnight, and it will not be quickly solved. Restoring confidence, domestic and international, is an important requirement and the process is already well begun.

In this regard, Canada's inflation record over the past six years has been excellent, especially compared to our trading partners, but it takes time for outsiders to recognize and reward this as a durable trend. Ontario still has a lower debt-to-GDP ratio than all but four provinces, but on a comparative basis Ontario's situation has steadily worsened since the mid-1980s. Today that ratio is 34%; 10 years ago it was less than 20%.

Unfortunately, the relative situation continues to worsen rapidly. Currently no province has a worse budgetary deficit as a percentage of GDP than Ontario -- currently at 2.8% -- and the province is running an absolute deficit that would horrify even the largest US state. This is due to a downloading of federal government deficits that disproportionately affected Ontario, lower inflation and its impact on government revenues, and far too rapid spending increases in Ontario in the late 1980s and early 1990s. Only by determined action now can these adverse trends be arrested. Already the average Ontarian owes nearly $27,000 in public debt, of which $9,500 is provincially denominated.

Unfortunately, when one becomes debt-dependent, there are far more adverse consequences than beneficial, especially over the longer term. The well-intentioned efforts to drive economic growth through government spending has had the presumably unintended consequence of transferring wealth from the poor, who borrow, to the rich, whether nations or individuals, who lend. Increasing government spending in the absence of sustainable private sector growth drives up borrowing costs and increases real interest rates.

In the 1960s the real interest rate on Canada's long-term bonds averaged just over 3% per annum. In the 1990s, after three decades of escalating government spending, rising taxes and borrowing, the real rate has so far averaged 6.3%. It is no coincidence that Canada has currently the highest real interest rate among the G-7 nations at the same time as having the second-highest, to Italy, total government deficit and government debt-to-GDP ratios, and sadly, nothing kills jobs and job creation quicker than high real interest rates.

If ever-higher proportions of GNP in the government sector was the answer, Canada's growth rate would have picked up over the decades instead of declining, as it has, and Ontario and Canada would have had much faster growth than, say, the United States. In recent years this has clearly not been the case. It has been calculated that if Canada had the same employment-to-population ratio as the United States -- in other words, if it had the same unemployment rate and the same participation rate in the labour force -- there would be 530,000 more Canadians today enjoying the dignity of a job and not burdening the welfare system.

Unlike Canada as a whole, as a legacy of past provincial prosperity, Ontario's employment-to-population ratio is only marginally below the US, but for us this ratio has fallen dramatically over the past eight years. In 1988, approximately 52% of Ontario's population was in the labour force compared to 46% in the US. Today both figures are close to 47%, with the US ratio being slightly higher. In essence, there has been no recovery in Ontario's labour market despite copious government spending.

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Realistically, this comes as no surprise. If you analyse statistics published by the Organisation for Economic Co-operation and Development for 16 of the world's largest economies, there is a strong correlation between high general government total outlays as a percentage of nominal GDP and high unemployment. Thus Japan and the US have economies in which approximately one third of spending is done by governments, whereas in Italy, France and Belgium the equivalent proportion is between 52% and 55%. However, the jobless rate in the latter three countries is considerably higher than it is in Japan and the US.

Unfortunately, because of past spending excesses, an increasing proportion of Ontario's spending is now consumed simply in servicing the accumulated debt, and this problem is rapidly becoming structural and imbedded. Thus in 1995-96 approximately 15.7% of total Ontario spending will be on debt servicing, a higher ratio than for all but two provinces, those being Saskatchewan and Nova Scotia, and both those provinces are now running budget surpluses and therefore not adding to their debt burden, unlike Ontario.

Since it has been calculated that approximately 46% of Ontario debt is held by non-residents, it is evident that a very large proportion of our tax dollars is being exported to foreign investors who demand very high real interest rates. Ontario's difficult fiscal situation is indicated by the fact that, using current criteria, debt-rating agencies could within two or three years carry New Brunswick and Manitoba debt at a higher credit quality rating than Ontario's.

Obviously, then, a determined effort must be made to eliminate the provincial budget deficit. The tax hike route adopted by the federal government and numerous provincial jurisdictions through the 1980s clearly proved counterproductive, as a heavier and heavier tax burden, allied with more and more burdensome regulation, squeezed the life out of Canadians' expectations and the economy. Even in the early 1960s, President Kennedy, not exactly a conservative ideologue, recognize that higher tax rates and burdens resulted in lower government revenues. Since then, governments on all parts of the political spectrum have recognized that integrity of government finances was crucial to economic prosperity.

Famously, it was a socialist government in New Zealand that set that country on the growth path it is now enjoying, though at the cost of several years of difficult transition. The Kiwis have now had average annual growth in industrial production of more than 5% per annum since 1992, persistently low inflation rates -- in fact the central bank governor can be fired if the core inflation rate exceeds 2% -- and an unemployment rate, despite massive government downsizing through the 1980s, that is presently under 7%. And they don't have the advantage of the huge adjacent economy into which to send vast net exports that we have in Canada and Ontario.

In Canada an NDP premier in Saskatchewan, Tory premiers in Alberta and Manitoba and Liberal premiers throughout the Maritimes have been making the tough spending decisions. One of the most effective has been Premier McKenna, who Richard Gwyn describes as having the most economically successful province in Canada. This is despite or, more likely, because that province has among the lowest welfare payments in Canada, but offset by generous programs to move welfare recipients into the workforce. A cornerstone of Mr McKenna's success was the early recognition in 1987 that New Brunswick's deficit was far too high and had to be eliminated. Because of his early start, Mr McKenna had the advantage of being able to do his spending cuts in a steady, incremental fashion rather than in more dramatic ways after years of excess. Even in Ontario, the NDP government in its later years recognized that something had to be done to rectify the fiscal situation, which is why it introduced the social contract and Rae days.

In the US a Democratic president, Bill Clinton, has cut the federal budget deficit by more than half in dollar terms, and more so as a proportion of the economy. Today total government deficits in the US account for 2% of nominal GDP, compared to over 7% in Canada. There are numerous examples at the state level of the benefits of fiscal prudence. New Hampshire, with a long history of aversion to taxes, is the most prosperous New England state without any natural competitive advantages.

In the late 1980s Michigan was a hard-hit "rust belt" state with a $2-billion budget deficit -- Michigan has a slightly larger population than Ontario, and yet its worst deficit was dramatically lower than ours is today -- and it had a 9.5% state unemployment. Governor Engler cut 20 boards and commissions, eliminated the department of licensing and regulation and reduced the state payroll by more than 7%. Despite cutting government jobs, Michigan today has an unemployment rate of 4.4%, the lowest in at least 25 years, and a budget surplus despite cutting taxes 21 times.

Part of his program was to reform welfare, cutting general assistance to able-bodied people with no children and improving incentives to work. As a result, nearly one third of Michigan's welfare recipients have a job, the highest proportion of any state, and the state welfare rolls have declined for 21 consecutive months. This latter trend has saved taxpayers over $100 million annually and has now enabled the state government to announce an ambitious pilot project to provide generous social services so poor people can go to work without economic disadvantages.

As domestic and international investors see that governments are serious about restraining their role in the economy and cutting spending, their confidence rises. This has two beneficial impacts. First, they lower the cost at which they are prepared to lend money, as they see the supply of new government debt issues diminishing. As interest rates drop, other forms of investment become more attractive and they are more beneficial to the economy longer term. It is a little-known fact -- as that character on Cheers likes to say -- that over the past 30 years Canadian equity investors have received only 1% per annum extra return over the return generated by a totally risk-free 91-day treasury bill. No wonder no one is willing to take great risks in this country; it simply hasn't paid. However, the higher stock prices are, the cheaper it is for corporations to finance at low cost for the very long term. When corporations can secure lower cost financing, whether debt or equity, they can increase highly beneficial capital spending which creates jobs and enlarges capacity, which in turn restrains inflation.

I personally do not like the prospect of short-term dislocations from cutting entitlement and program spending, but the taxpayer is not a bottomless pocket and the sooner his and her confidence can be restored the sooner long-term economic recovery can begin. The good news is that we have seen many examples of the overall success of this approach. Indeed, Mr Klein in Alberta and Mr Savage in Nova Scotia can now ponder ways to reduce their fiscal austerity. Of the former, one observer recently wrote, "In less time than he, or any of the prognosticators, dared forecast Alberta has achieved the twin goals of eliminating the deficit and putting in place a realistic plan to eliminate the provincial debt as well."

As to the appropriateness of an income tax cut, I think its main benefit is psychological and would be taken by most taxpayers as directional rather than meaningful in a short-term sense. If the provincial and federal governments are able to maintain the trend to lower interest rates, the combined benefit of lower taxes and interest payments would be positive for lower- and middle-income taxpayers and borrowers. To get the maximum impact from the use of scarce government resources, I would focus all the benefits of a tax cut on lower- and middle-income taxpayers; presumably wealthier taxpayers, as well as all others, would benefit from a more dynamic economy. Furthermore, those who would thus benefit from this tax cut would be more likely to spend their new discretionary income on Main Street rather than Bay Street, thus beginning to restore the balance between the real economy and the financial economy to the benefit of both.

I would conclude by saying that I am aware that there's no one right answer to restoring our economic health. For 27 years I have been making decisions about investments for which at any moment in time there are equally good arguments for buying and selling those securities. The judgement lies in giving the appropriate weight to the positive and negative aspects of the investment and then living with the decision. Often mistakes are made, but at the end of the day a career is maintained by being more often right. It is my judgement, based on long observation, that a tilting of the pendulum away from government intervention would now benefit the greatest number of Ontarians.

Thank you very much, ladies and gentlemen, for listening so patiently to this rather dry presentation. As I am not an economist, I do sympathize with you for having to endure two weeks of this contradictory testimony. It's no wonder they call it the dismal science.

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The Chair: Thank you very much, Mr Kellett. Your presentation was without error as far as the technique is concerned, as you apologized at the first, and I for one certainly was not bored. If we could start with questioning, perhaps we could have two minutes each, and we would start with the opposition.

Ms Castrilli: Thank you, Mr Chair. Two minutes is not nearly enough. I have a million questions. I will focus on one. There's a great deal that's said about New Zealand and its policies and the effects on its economy. Let me just read you a study conducted by the Canadian Council on Policy Alternatives, published in December 1994, January 1995, so within the last year. I'll tell you what it says.

It says that the unemployment rate in New Zealand was 4% in 1984, and now it's at over 16%. It says that over half the country's manufacturing jobs have disappeared. It says that New Zealand now leads the world in the incidence of violent crime and youth suicides. It concludes that a 25% cut in welfare rates drove poverty rates up to 40% overnight, with one in four children in New Zealand now living in poverty. It says that public hospitals are forced to compete with private ones for funding. It says that New Zealand, because of the shortfall that it has endured in taxes, has had to impose a 12.5% sales tax. And after all that, New Zealand's net public debt, which was supposed to be assisted by all these measures, has risen from $11 billion in 1984 to $38 billion, up 300%

I guess I'm a little interested in your opinion, because your paper says something quite different. How do you reconcile that?

Mr Kellett: Well, it was a socialist government that did it, so perhaps it didn't do it as effectively as it could have done. I would say that you have to put that in the context of what's happened in other economies and the escalation that's occurred in a lot of other economies. Where would New Zealand have been without the introduction of these measures? They do have, as I say, an unemployment rate under 7%, which is substantially lower than ours. They did have to move --

Ms Castrilli: With respect, the study says it's 16%.

Mr Kellett: I know, and I'm disagreeing with the study, with respect. Basically, they were in a very difficult situation of being a tiny island with no large market next door to bring them on side, as we have the benefit of. We are a large net exporter of manufactured goods, so it's a big benefit to us.

Certainly, as I've said in my piece here, there are no absolutely right answers, but there are directions, and I've given several other examples in my piece. Just look over the border at Michigan. I think they're very satisfied.

Ms Castrilli: I regret we don't have to explore those, but the fact is that their deficit tripled.

Mr Silipo: Just in that exchange, it became again eminently clear, as you pointed out yourself, sir, how much contradiction there is in even the figures, in the statistics, if we're arguing about whether New Zealand now has a 7% unemployment rate or a 16% unemployment rate. There's a big difference.

I just wanted in the short time to focus in on one aspect of your comments, and that was around the income tax cut. I was struck by your comments that you see the impact as being more psychological, initially at least -- I'm assuming; again, correct me if I'm wrong -- as opposed to having a real impact initially to create jobs.

I was also interested in your comments that you would suggest that the benefits of the tax cut should be focused on lower- and middle-income Ontarians. Now, we don't know what the government is going to do, but I guess, just judging from what's in the Common Sense Revolution, that would dictate that it would in fact apply it on a percentage basis right across.

There's been some discussion also about whether in fact if you looked at making the tax cut not on the income tax but on the sales tax instead, because presumably you could take that same equivalent amount of money and lower the sales tax four to five percentage points, that wouldn't in fact generate a greater level of spending, given that that would clearly put more money into the hands of middle- and lower-income Ontarians on a relative scale. Do you have any reaction to that?

Mr Kellett: I would say that the money originally belongs to the taxpayer. It then goes to the government, which then gives it back in different fashion, at its choice. My preference would be to do it through the income tax rather than the sales tax, because then the individual receiving that benefit can make the choice between spending, saving or whatever else it is that they wish to do with the money. So it's a question of how they use that benefit.

There is the other long-term, I think, positive of declining interest rates and how much it frees up in terms of spending for the individual, particularly those who borrow, which tend to be lower- and middle-income taxpayers. A lot of people are refinancing debt right now just to take advantage of that, and that, allied to an income tax cut, would allow people, for the first time in many years, to see a little expansion of what they can spend. I think that would be good psychologically.

Mr Wettlaufer: Thank you, Mr Kellett, for your presentation. You heard the previous presenter saying how he wanted a commitment that we were going to proceed with our taxpayer protection legislation. I want to assert that we are committed to it, we are planning on introducing it, but that we believe the best taxpayer protection legislation is a balanced budget.

We have moved very quickly, I think, to reduce our spending towards that eventual target. Last week, in talking with a Ministry of Finance official, we heard him say that had we not moved as quickly as we had, it would have cut back on our availability of market where we could borrow money, perhaps, and that it could have meant as much as a quarter or a half point greater interest rate for the province to borrow that money. To the province, that means $250 million to $500 million additional borrowing costs, but that also has an effect on the average citizen. Would you care to comment on what it might do to the average citizen in terms of his mortgage costs, his soft consumer goods or his other interest, ie, a car or something like that?

Mr Kellett: Clearly, it's very beneficial, and as I indicated to Mr Silipo, it's a double impact. You're getting it through the interest rates and you're going to get it through a tax cut subsequently, which can only really be considered appropriately if there are spending cuts to allow for the tax cut. The spending cuts are absolutely mandatory to get to that position.

So I commend the government. They have moved. It is never easy to cut spending, but it is highly necessary. Just this morning, the province of Ontario announced a very, very large re-funding in global markets, and I think we'll see the benefit of much lower interest rates on that $1.5 billion just this morning.

Mr Wettlaufer: And that impacts on the consumer.

Mr Kellett: Indeed.

The Chair: Thank you, Mr Kellett. This being your first presentation, I'd encourage you to keep it up.

INTERFAITH SOCIAL ASSISTANCE REFORM COALITION

The Chair: We'll move on now to the Interfaith Social Assistance Reform Coalition for Ontario. We welcome you to the committee.

Rev David Pfrimmer: I want to thank all the members for allowing this time to be with you and to share some of our views and ideas. My name is David Pfrimmer. I work with the Lutheran office for public policy. I'm with the Evangelical Lutheran Church in Canada. On my left is Ms Joy Kennedy, who is with the Anglican Church of Canada, and on my right Sister Doryne Kirby, who's with the Canadian Religious Conference of Ontario. There are some other members who would have been present -- we are an interfaith coalition -- and unfortunately couldn't be here today due to other commitments, so our apologies that they couldn't be here, including Brother Michael Maher, who I think had originally arranged the time with the clerk.

The Interfaith Social Assistance Reform Coalition is a coalition of religious communities that has sought over the years to address the continuing reality of hunger, poverty and homelessness. It was formed in 1986. ISARC has participated in numerous efforts to reform social programs both in Ontario and in Canada. It has also been active in educational efforts to raise awareness among members of religious communities about the challenges facing our communities and the ways we as neighbours can respond to our neighbours in need.

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Sister Doryne Kirby: The Interfaith Social Assistance Reform Coalition, ISARC, includes representatives from the Ontario Conference of Catholic Bishops, the United Church of Canada, the Jewish community, the Evangelical Lutheran Church in Canada, the Anglican Church of Canada, the Disciples of Christ, Citizens for Public Justice, the Buddhist community, the Canadian Religious Conference -- Ontario and the Presbyterian Church in Canada, working in partnership with other concerned groups.

The moral cornerstones for public policy: In a public letter of April 1988, "God Demands Justice -- Justice Demands Action," religious leaders in Ontario outlined the ethical consensus of what religious traditions believed were the moral cornerstones for public policy. They wrote:

"This vision of a just society is not of our own making. God challenges us to do justice, show mercy, and walk humbly with our Creator. This invitation compels us to develop a society built upon a solid foundation that is measured by how we treat the most vulnerable."

ISARC has maintained that the following general principles should govern our approach to public policy, including taxation. The cornerstones of public policy must be: human dignity, mutual responsibility, social justice, economic equity, fiscal fairness and ecological sustainability.

Ms Joy Kennedy: Budgets reflect our collective values: Budgets reflect our priorities, but more importantly, they are public expressions of our collective values. The fundamental purpose of the economic enterprise, of which governments play a central and important role, is to enhance the wellbeing of people, families and communities. While governments may, and should, respect the law, this does not always mean they comply with the moral responsibilities necessary to build and sustain communities.

Building a community, be it local, provincial, national or international, requires that special and particular attention be given to those who are at risk of being excluded: the poor, the young, the elderly, the unemployed or underemployed, women, newcomers to Canada and others. Our political institutions must pay particular attention to ensuring these people have a fuller place in society.

It is in difficult times that these values are put to the test. Rather than abandon principle, we must use it to guide us in our moral responsibility to each other and for each other.

ISARC therefore recommends that this committee call upon the government to make the elimination of hunger, homelessness and poverty, as well as the furthering of social wellbeing, the priority for the budget of Ontario.

Recently, some elected leaders have expressed regret for the unintended consequences of the drastic cuts to social programs. Ignorance of the consequences does not make the consequences any less severe or devastating, nor governments less responsible. Governments need to anticipate the outcomes of their economic policies. This is true not just for the fiscal consequences, but even more so for the social consequences. Just as the government books are audited for fiscal accountability, so too governments need to be audited by measurable criteria for the exercise of their social responsibilities.

Many social and voluntary organizations play an important role in helping develop effective strategies and providing valuable research and information. Far from being special-interest groups, as they've often been named, they deserve our support in assisting in assessing and evaluating the social effectiveness of public policy.

We of ISARC recommend that this committee call for the establishment of a social forecast, concurrent with their fiscal forecasts, to be tabled in the Legislature, and a social audit, undertaken regularly, to evaluate the performance of public policies.

ISARC has advocated strongly for a reformed social assistance system that was founded on collective values and effective principles that are integrated into the actual legislation. These values and principles must be present to safeguard citizens from capricious and arbitrary actions of their governments. More recently, the drive of fiscal expediency has resulted in governments failing to honour their social obligations.

It is important to point out that Canada has participated in the development of various international agreements to establish minimum standards for a wide range of human rights. These have included both basic human rights as well as social, political, economic and cultural rights. Many of these international obligations are honoured by programs implemented through the provinces. Therefore, Ontario should ensure that the legislation acknowledges our international obligations under such instruments as the Universal Declaration of Human Rights, the Convention on the Rights of the Child and other internationally agreed to conventions and protocols. It is through fiscal agreements between various levels of government that these collective social obligations are ensured.

ISARC recommends that this committee recommend that the provincial government, in its negotiations with the federal government, ensure that there are standards, at a minimum those within the Canada assistance plan, that apply to Canada's social programs and ensure a fair share of the necessary financial resources for the people of Ontario.

Sister Kirby: Taxes -- fulfilling our responsibilities to each other: There are various ways by which we exercise our responsibility for each other. Taxes are one essential way that governments ensure the wellbeing of citizens. There are a number of assumptions that are being made which ISARC questions.

First, it is not always the case that decreased taxes will stimulate economic growth, and there is an increasing body of evidence to support the opposite assertion, that responsible increase in taxes will stimulate economic activity.

Second, even increased growth does not mean increased prosperity. The Canadian economy has experienced growth, but it has not resulted in increased job opportunities and has resulted in declining median incomes for families.

Third, whether or not Ontarians, or Canadians, are overtaxed depends on your point of reference. Neil Brooks of Osgoode Hall Law School has pointed out that when you consider the quality of education and universal access to our public health care system, Canadians pay less for those services as a total than people living in the United States. What then is the difference between a private sector tax or a public sector premium? People need and want these services and will inevitably pay for them. The real question is, who benefits, people, or special private sector group interests?

This leads ISARC to conclude that the current proposal for a 30% cut in provincial taxes will not lead to the predicted outcomes the government projects. Furthermore, the dramatic cuts necessary to make it possible have increased unemployment, heightened insecurity among the workforce, and may result in exacerbation of the deficit, due to the fallen tax revenues. Clearly the early warning signs are there in recent reports that consumer confidence is at an alarmingly low level. ISARC believes that the proposed tax cut reflects more wishful thinking than good economic policy.

From a moral point of view, the benefits of this tax cut also seem dubious. As the above chart indicates, those with higher incomes receive a disproportionate share to those with middle and low incomes. Why should those who are well off benefit at the expense of those with middle and low incomes? One third of the benefits of this tax cut will go to only 10% of households with incomes of over $95,000. ISARC believes that as a good moral minimum, the benefits should be reversed. After all, people with incomes of less than $30,000 spend 95% of their after-tax income mostly in the domestic economy, while those with incomes of over $80,000 spend only 60% of after-tax income, largely on imported goods and services. This approach would at least reflect sound economics and be more socially responsible.

ISARC recommends that this committee call for a moratorium on provincial income tax cuts; that this committee call for the reinstatement of the 21.6% cut to recipients on social assistance; that failing this approach, this committee call upon the government to reverse the benefit of the tax cut, with increased amounts for low-income people and decreasing levels of benefits as income levels increase.

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Ms Kennedy: There are many who are now advocating user fees for those who are consumers of government services. ISARC is concerned that people are first and foremost citizens with civic responsibilities and rights. Canadians have created a country where government and community institutions have served to safeguard the wellbeing of all citizens. This is an enviable tradition of civic responsibility. It is well worth encouraging and cultivating.

Canadians and Ontarians understood that they are citizens first, not simply consumers of public services. While there may be some limited usefulness for user fees such as dog licences etc, the widespread reliance on user fees undermines the nature of citizenship. At their worst, user fees can be a less obvious way of shifting unfairly the tax burden to lower-income people. What is required is some informed discussion on the question, what are the core government services that citizens need and support?

ISARC recommends that increased reliance on user fees be delayed until there can be a broad public discussion of what are the core government services that should be exempted from reliance on user fees.

ISARC recommends, further, that this committee support the establishment of a provincial council mandated with the task of addressing the question of integrating social and economic policy.

ISARC recommends that this committee call for continued support for social and community organizations developing new approaches to addressing these issues.

Mr Pfrimmer: Social divisiveness and polarization: The perception among many people in our communities is that some people and corporations are not bearing their share of the burden of the fiscal challenges we face. ISARC realizes that collectively Ontario must address the serious problem of the provincial deficit, but clearly low- and middle-income people are being asked to bear a greater responsibility for a deficit they were not primarily responsible for creating. The result has been increased polarization in the community, a profound sense of insecurity among individuals and families, a loss of confidence in the political process and politicians, and anger and resentment among our neighbours and our friends.

Rather than building a collective response to our problem, ISARC regrettably believes that the government has exacerbated this divisiveness and polarization by its unwillingness to seriously consult the community and social organizations, by labelling those same groups as "special interests," by a confrontational style in addressing various sectors such as students, workers and teachers, as well as by ignoring low-income people and the real human face of suffering.

Governments are given a mandate in elections but such mandates are not blind nor unconditional mandates. ISARC believes that what is urgently required is the rebuilding of trust. Many community organizations, including religious communities, have worked and continue to contribute to their communities. There are those who suggest that the religious community, the churches in particular, should have nothing to say about government's policies or that the churches are not doing or paying enough. Such suggestions do not contribute to building trust but betray a more self-serving agenda.

There should be no doubt that leaders of local faith communities across the province are not supportive of the direction that is being put forward. It is also increasingly clear that there are ever-larger numbers of faith group members of all political inclinations who are disturbed by this government's direction.

It is true that there are a range of views within the religious community, just as there are within any organization, but there is an emerging moral consensus that is concerned that the current direction of economic policy in this province is unfairly increasing the suffering of the poor, heightening the insecurity of workers, dashing the hopes of young people, eroding the sense of wellbeing among families and eroding the feeling of belonging in our communities, thus leading us down a dangerous road.

ISARC encourages you to call for a new set of priorities that takes seriously the financial challenges, but primarily focuses on the needs of people. ISARC encourages you, as a committee, to put forward recommendations that focus on people, that will help rebuild and renew our sense of community and a spirit of civic responsibility, and will offer a greater sense of security and hope for people. In short, ISARC encourages you to make recommendations that offer not an economics of despair, but an economics of hope.

Please, as our elected members, be assured that in our various faith traditions we pray that God will guide and direct you and give you wisdom in the decisions you need to make.

The Acting Chair (Mr Gary Carr): Thank you for the presentation. We have about three minutes each and we'll start with the New Democratic Party.

Mr Silipo: I'm certainly more than familiar with the work you have done and the positions you've taken on these important issues in the past. I want to thank you for making the comments and addressing, I think in a straightforward fashion, also the point towards the end of your presentation about the role of the faith community, because that's certainly something that's been challenged by some members of the government in past discussions.

I certainly agree very much with the position you've taken on a number of fronts and particularly on the role and the worry that exists out there among people in the faith community that there is a responsibility to speak up, that this is not a partisan issue, that this is something that should in fact concern all of us.

The point we inevitably hear from the government side, and I'd be interested to see what questions or comments they have on your presentation today, is that we basically have no choice, that we really have such a fiscal problem that we just have to cut, we have to do all of these things, we have to balance the budget. They would argue that they have to do the income tax cut to stimulate job growth, even though we are seeing even their own figures from the Ministry of Finance indicating that they're not anticipating big job growth as a result of the tax cuts, at least initially in the first couple of years, and down the line we don't know.

My question to you really is, is there the kind of understanding that you describe here in your presentation out there in a way that is spreading among people, that what this government is doing, perhaps with all good intentions, is really taking us down a path we will regret in the sense that we will maybe balance the budget, although in a longer time frame add to the debt, but what we will have left as a society is going to be a much meaner world in which the survival of the fittest will be the basic principle, it seems, that will guide us? Are people out there, more and more people you are dealing with, seeing, understanding that is what is happening?

Mr Pfrimmer: I think it's a good point. We hear a lot about economic restructuring: The world is changing, we have no choice. If you take that logic to its ultimate conclusion, I think maybe all of you need to resign, because what we need is a CEO and a board of directors, not a political process. In some respects there's a certain fatalism about that which I think should be alarming especially to people in public office.

Secondly, I'd just say that there are dramatic changes. People I meet are aware of those. Your friends and neighbours are aware of those as well. They're aware that the economy is changing, but they're also increasingly aware that the rules we thought governed economic life and activity no longer apply in the same way. They're full of contradictions.

I think it was in a Massey lecture that John Ralston Saul said if economists were doctors, they'd all be sued for malpractice. There's a certain sense in which what's also going on right now is that we're rewriting the rules of economic life, and at that discussion we need to look at rallying our citizens around how it is that we're going to have a collective discussion about that, not a polarized discussion, not a polemical discussion or partisan discussion, but what kind of community you want to build.

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Interestingly enough, even all the futurists and prognosticators who write many books say that where the important emphasis of the society has to go in this current moment is on the social sector. That's where jobs are going to be created, that's where the new kind of wealth and wellbeing are going to be addressed, and we're not doing anything about that. We're following, and I think a lot of people are aware of that, old economic prescriptions that are as out of date as a manufacturing industrialized world is and we have to make those kinds of changes as well.

If you want to talk about a changing world, let's look at how it's changing in the broader sense and not in the narrow sense. I think people are on to that because they're not happy when they see their schools cuts, when they see their hospitals closing, when they see their neighbours and their friends and their children who aren't going to be able to get jobs. When they see those realities, they realize there's more to it than merely just economic restructuring.

Mrs Marland: Mr Pfrimmer, Sister Kirby and Ms Kennedy, we thank you very much for this presentation, particularly the depth and the thought that you've put into it. At the end, where you said that you hold us in your prayers, that is a very significant comment because these are very difficult times for this government and they are very difficult decisions that we're making.

I hear you, Mr Pfrimmer, when you said a few moments ago that we have to decide what kind of community we want to build. I think what we are saying is that we need to have money in the future in order to protect our communities. The kind of community we want to build is one where the people who live in Ontario are not totally dependent on government, where government simply can't be all things to all people. You know, there's this amazing idea that government is someone else, somewhere else, that there's a money tree down at Queen's Park, but in fact government is simply you and I and everyone else who lives in this province.

When our colleagues talk about the 30% decrease in the income tax rate and how the rich will benefit, you never hear them saying also that in our proposal the people who will get the greatest reduction in their income tax rate -- in a scale in your own brief you go up to $3,700. Nobody ever talks about the fact that those people at that end of the scale are going to be paying over $3,000 in a health care levy. So it is an equal sharing, and that's what we're attempting to do.

I notice very clearly that you also state that -- I don't want to use the acronym, because it's difficult for people -- the Interfaith Social Assistance Reform Coalition realizes that collectively Ontario must address the serious problem of the provincial deficit. I'm encouraged by that statement on your behalf.

Mr Pfrimmer: I want to say we recognize that, but do you know there's a priority? If you're talking about families and households, and governments really aren't like families and households -- you have a lot more options than the average family and household has in terms of the power of taxation, spending and all those kinds of things. But I think it's important to bear in mind, when we're talking about addressing the deficit, that there's a humane way of doing it and there's an inhumane way of doing it; there's a just way of doing it and there's an unjust way of doing it. I guess what we're seeing, not just in this jurisdiction, I might add, is that governments tend to favour old economic thinking when they try to say who's responsible for the deficit.

What we're saying is that everybody's responsible. That's true, but that has to be reflected not just in theory but also in the practice on the ground. I think consistently over the last number of years, middle-income and lower-income people have borne a greater share of that responsibility. We need, I think, to be honest and say we all bear a responsibility and everybody should pay as they are able, as they have been given. The things we have, the wealth we have entrusted for our use is not ours alone. It was given to us for a purpose, and we need to bear that in mind.

I hope that the government takes it into consideration, because I quite frankly think that the current direction is a direction that's putting you on morally thin ice.

Mrs Marland: My colleague has a question, so I'm yielding the floor to him.

The Chair: Is it a short question?

Mr Douglas B. Ford (Etobicoke-Humber): Yes, I'd like to make a comment.

One of the people before you came in from the Ontario Taxpayers Federation and said, "Tax the rich." I don't know in my own mind how you continually tax the rich. This has been tried in other parts of the world; their wealth has been taken away and I didn't see a better generation come out of that situation.

Here we have 285,000 Canadians who earn over $100,000 a year ending up paying almost one third of their earnings in income tax. "This group represents 1.43% of all taxpayers," and then the top 11% of taxes earning 35% of all income, those earning over $50,000 a year, pay 52% of all taxes." So if you have that situation, a very small percentage -- we had another group in here the day before that said so many people don't pay any tax. We get lies and more lies, and I'm just trying to get to the bottom of it to satisfy this panel as to how --

The Chair: Do you have a question, Mr Ford?

Mr Ford: -- you see the tax system. How should we tax all these people? We're getting certain innuendos that the rich don't pay any and it's inequitable, but I would like to say this: If you tax these rich people out of the country, then who are you going to get the revenue from?

Mr Pfrimmer: This is a broad and a long debate.

Mr Ford: I realize that.

Mr Pfrimmer: I don't know if we said, "Tax the rich." We said that not everybody is in fact paying their fair share.

Interjection.

Mr Pfrimmer: It's a different kind of assumption behind that. I think there are a number of alternatives. For example, in this province and this country we've flattened the number of categories, reduced the progressivity of the tax system. We've relied on consumer taxes, consumption taxes, which are regressive taxes. We're also caught in a global situation where there is a race to the bottom. You can never get taxes low enough, because some jurisdiction's going to yank the rug out from under you as soon as you get to that level. We need to be able to reassert some tax sovereignty here that says there's a way of garnering some of these resources for social purposes.

We have to think in a lot of new ways about the tax system. For example, those people who benefit from the use of the international commons beyond any national jurisdiction pay nothing for that privilege now, and yet it has dramatic and adverse consequences on our environment and our societies. There should be some way in which we are able to collect money from those resources.

The other thing is, we need to begin to look at how to frustrate what we would call speculation, or speculative capitalism, which creates nothing but just takes, and the tax system doesn't look at ways of penalizing that and rewarding those who create genuine wealth that improves the life of our communities. So we have a really perverse tax system.

It's not quite as simple as saying, "Tax the rich." We need to have all jurisdictional levels of government as well as the community say: "People have a responsibility to contribute, and they have a responsibility to contribute based on what they've been given. Let's look at how we put that together in a way that generates resources."

Mr Crozier: There are still one or two of us to go. The comment was made that we on this side never mention the Fair Share health care levy. The reason we don't is because in their own Common Sense Revolution it says, it's important to note, that the tax savings in the chart on the previous page include the health care tax levy. So they're really getting back more in tax than what it says, but they are having to pay some on the other side. I just wanted Ms Marland to know that we don't mention it because their own document says it's included.

You mention that you would like the 21% cut in social assistance replaced, and I think you very realistically realize it won't be and therefore have gone into the tax area. The tax cut was made across the board. Half of those on social assistance are children. Some of those who received the 21.6% tax cut need that money; others don't. Could you comment on the fact that it's just an across-the-board reduction as opposed to one that's targeted towards those who need it less?

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Mr Pfrimmer: Number one, I want to be clear that we're not in favour of the tax cut. Quite frankly, the real threat is not necessarily taxes; it's a question the security that people have about their own jobs.

It may be, as some have suggested, that if you cut taxes, it'll restore consumer confidence or whatever people spend, but I think that's a very dubious economic proposition at this point, especially in the current climate that we all feel out there. But we're not in favour of targeting programs generally. If there has to be a tax cut, though, we have to recognize that there's been an increased tax, in a sense, on social assistance recipients by 21.6%.

The point should be that as much money as possible should be restored to those people at the bottom who need it the most. I think what mechanism that would be if the government's going to proceed with the tax cut needs to be considered a little more seriously.

I'm not sure if I've addressed exactly what you wanted. We want to see those funds returned to the people who need it most.

Mr Crozier: Frankly, I was talking about the 21% cut to social assistance and how that was across the board, but I don't want to take up any more time. The remarks you gave, though, are appropriate to the tax --

The Chair: Okay. The Chair appreciates that. Ms Castrilli.

Ms Castrilli: I am very impressed with your paper, particularly with the principles of public policy that you set out that ought to be taken into account by governments of whatever stripe in trying to fashion legislation and budgets.

You may have been in the room earlier when I asked a question of the previous gentleman with respect to New Zealand and its rather disastrous attempts to do much of what the current government seeks to apply here in this jurisdiction. I pointed out to him that despite all of the measures, New Zealand has managed to triple its deficit.

Although what we're dealing with are some measures presumably to get the debt and deficit spending under control, would it surprise you to know that their own figures indicate that our own deficit will rise some 25% -- we're now at $97.2 billion, or at least we were when the government took over -- and that by the year 2001 we will be at $120 billion in debt?

Mr Pfrimmer: We're not surprised at all. In fact, I was intrigued by your comments about New Zealand because we have talked with our church and ecumenical partners, not so much the multifaith community but church partners in that part of the world, and they paint a very different picture about New Zealand. Far from being a success story, there have been tremendously adverse consequences on that community.

It's not a question of whether New Zealand ran into the so-called infamous debt wall but whether in fact there weren't suggestions -- this is what we were hearing from them -- that there were runs on their currency and those kinds of things. When you have a trillion dollars a day sloshing around in international currency speculation, $80 billion of which is lost -- if somebody's a good hacker on a computer, they may be able to find that money; it might be a big help -- it's no wonder that there was actually an assault in New Zealand by currency transactions that has created some very damaging consequences.

The interesting thing that we also heard about New Zealand, that's often forgotten, is that it was in a transitional period of government and that the political leadership and commitment to stand up to those international economic forces was not present. There was an abdication of political responsibility and political leadership, moral leadership, so many of those programs were whisked out by people who were advising transitional folks and who basically were trained in the United States in the customary economic theology of the time.

The Chair: Thank you very much for your presentation today, and thank you to the Interfaith Social Assistance Reform Coalition for bringing a very important message to the committee. Thank you very much.

ONTARIO COUNCIL OF AGENCIES SERVING IMMIGRANTS

The Chair: The next group is the Ontario Council of Agencies Serving Immigrants. We welcome you to the standing committee on finance and economic affairs.

Mr Mulugeta Abai: Good afternoon, honourable Chair and honourable committee members. My name is Mulugeta Abai. I am a member of the board of directors of the Ontario Council of Agencies Serving Immigrants. To my right is Maisie Lo, a volunteer and chair of the policy committee. To my left is Sharmini Peries, executive director of OCASI.

The Ontario Council of Agencies Serving Immigrants welcomes this opportunity to provide our comments to the standing committee on finance and economic affairs. Your committee has the difficult task of providing advice to the Minister of Finance on taxation, expenditures and budgetary policy. Many of these areas are beyond the mandate of OCASI. However, in our presentation today we will limit our comments to the following issues: the role played by community-based immigrant services; the important contributions of the immigrants and refugees to the economy; and the provincial government's role in facilitating the effective participation of immigrants and refugees in Ontario's economy.

We would like to begin our presentation by providing some background on the work of OCASI agencies. OCASI is an association of 140 community-based agencies across Ontario. OCASI agencies provide essential programs to assist immigrants and refugees in the settlement and integration process. This includes English-language and citizenship classes, career counselling, job training, family counselling and individual counselling, interpretation, information and referral, legal assistance and health services. A particular achievement by OCASI agencies is the development of programs for unemployed workers and social assistance recipients which integrate language and skills training, employment preparation, personal skills and job placement.

OCASI agencies are cost-effective, innovative and responsive to changing needs. They have developed skills in a wide range of program areas and involved tremendous voluntary commitment. Last year, one million volunteer-hours were worked at our member agencies.

The work of OCASI and our membership is fundamentally about breaking down the barriers which often prevent immigrants from reaching their full potential as participants and contributors to Ontario's prosperity and vitality. Our goal is a harmonious and thriving Ontario.

Immigrants -- that is, those Canadian citizens and residents born outside of the country -- constitute a large and enduring segment of the country's population. According to the 1991 census, immigrants represent 16% of Canada's population and 23.5% of Ontario's population. Immigrants are vital to our economy, and all categories of newcomers to Canada contribute to the economic growth, development and wellbeing of Canada. In an increasingly global economy, it's important to utilize the international knowledge, familiarity and expertise of Canadians who originate from the very countries with which Canada must trade and compete. Immigrants bring very great potential to Canada, but often this potential is blocked by barriers of racism, language, lack of training and lack of recognition of professional credentials earned abroad.

Yet immigrants do contribute. Statistics Canada data shows that immigrants to Canada begin to have more employment earnings than native-born Canadians within five to 10 years of arriving in Canada. Research indicates that immigrant households in Canada contribute to raising the standard of living of non-immigrant households by paying more taxes than the value of public services which they use. It's important to note that immigrants use fewer welfare services than native-born Canadians. Immigrants also play an important role in ensuring Ontario's economic and demographic future.

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The provincial government has made it clear that Ontario is open for business. To move forward with productivity and prosperity, we must use the language and business skills of all Ontarians. Immigrants bring to Ontario linkages with other countries, knowledge of new markets, new ideas about production and innovative ways of doing things. We urge the provincial government to ensure that in developing policies and strategies to improve Ontario's economic position, the needs and interests of immigrants and refugees are clearly considered.

OCASI recommends that the government of Ontario develop polices and strategies to improve Ontario's economic position by realizing the full economic potential of immigrants.

Ms Maisie Lo: I would like to briefly summarize the key issues and recommendations which are contained in our submission to the standing committee.

Community-based agencies such as the OCASI member agencies are a cost-effective method of delivering services. Our agencies have deep community roots and rely on the work of thousands of volunteers. Our work focuses on increased self-reliance for individuals, families and communities.

The support of the Ministry of Citizenship, Culture and Recreation through the Ontario settlement and integration program is essential for the continued ability of the immigrant services sector to meet the needs of Ontario's diverse community.

OCASI recommends that current funding levels for the Ontario settlement and integration program be maintained.

Premier Harris has stated his commitment to the development of a federal-provincial immigration agreement which includes a new funding arrangement proportionate to the numbers of immigrants received. The federal government has indicated that it wants to devolve responsibility for immigrant settlement to the provinces or to local partners. Premier Harris has stated, "The provision of government-funded settlement services, language classes and skills training is essential for newcomers' full participation in the life of Ontario."

OCASI supports the provincial government's efforts to secure a fair agreement respecting immigrant settlement with the federal government. Ontario receives the majority of immigrants to Canada and is a major destination for secondary migration. Yet in 1993-94, federal support for settlement services for a new immigrant in Ontario was $760, whereas it was $1,510 in the rest of Canada. OCASI has offered its assistance to the provincial government in the negotiation process.

OCASI recommends that the provincial government continue in its efforts to secure a fair and equitable agreement with the federal government with respect to immigration and immigrant settlement.

Learning one of Canada's official languages, particularly English in the province of Ontario, is a fundamental aspect of social and economic integration. Yet English-language classes for adults are disappearing right across Ontario. A recent study by York University illustrates that throughout 1993 and 1994 educational institutions in Ontario made substantial cuts to all aspects of ESL programming and delivery. Teaching Ontarians to read, write, speak and listen in the English language must be considered an educational priority. Without access to official-language training, immigrants and refugees cannot participate in the economic growth of Ontario society.

OCASI recommends that the provincial government identify English-language acquisition as an educational priority and ensure that programs continue to exist in communities throughout Ontario.

Premier Harris has stated his commitment to delivering action on access to trades and professions for Ontarians trained abroad. Premier Harris has stated a commitment to work to incorporate access principles into the policies of licensing and certification bodies.

OCASI supports the recent provincial announcement of the creation of a credential assessment service by the Ministry of Education and Training. This is an important first step in establish equity of access to professions and trades. OCASI supports the development of additional measures, including demonstration projects and joint initiatives with community organizations and regulatory bodies.

OCASI recommends that the provincial government develop a range of measures as part of its equal opportunity plan to ensure equitable access to professions and trades for individuals who have acquired their education and training outside of Canada.

OCASI acknowledges the provincial government's decisions regarding employment equity. The task ahead is the development of new strategies to ensure equal access. We believe that one strategy is the revitalization of the Ontario Human Rights Commission.

OCASI recommends that the Ministry of Citizenship, Culture and Recreation take immediate steps to improve the effectiveness of the Ontario Human Rights Commission and to ensure that the commission has a strong focus on systemic discrimination.

A second strategy to promote equal opportunity and employment should relate to public education. In this regard, OCASI supports the Premier's stated commitment to "work with volunteer groups, schools, employers and workers in education programs against discrimination, and take full advantage of our hate crime laws."

OCASI recommends that the provincial government play a leadership role in developing a province-wide education program against discrimination.

Skills training is an essential component of equal employment opportunity. For immigrant and refugee clients, it is our clear view that training does work. Especially for social assistance recipients, training can enhance opportunities in the labour market.

Community-based training draws on available resources and expertise to provide sensitive, high-quality training which is culturally appropriate, learner-centred and cost-effective. A study sponsored by Human Resources Development Canada found that programs often report completion rates of 87% to 90%, with a rate of placement in employment or further training of 75% to 80%.

It is our view that many of the programs launched by the Ontario Training and Adjustment Board have been successful. The multipartite composition of OTAB, which includes representatives from business, labour, education and community groups, has led to an enriched understanding of the labour market and to improvements in labour force development policy.

OCASI recommends that the provincial government maintain a multipartite governing body for the Ontario Training and Adjustment Board, including representation from business, labour, service providers and equity-seeking groups.

The concept of workfare is one which is currently the subject of much discussion. We are concerned that there seems to be an assumption that welfare recipients do not wish to better their situations. This is not the experience of OCASI agencies. OCASI agencies are overwhelmed with inquiries from immigrants and refugees receiving social assistance who are seeking ways to upgrade their skills and to re-enter the workforce. Long waiting lists exist for the skills training programs offered by our agencies. Providers of official language programs cannot meet learner demand for classes. Agencies which provide job placement services are overwhelmed with requests for assistance in finding work. In addition, many agencies are expressing difficulties in providing orientation and training to the increasing number of unemployed people who are requesting volunteer opportunities.

OCASI recommends that the provincial government ensure that a range of volunteer training and learner opportunities is available for social assistance recipients who desire to enhance their labour market participation.

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Ms Sharmini Peries: The current government and Premier Mike Harris have taken great pride in their ability to deliver on commitments that they have made. Therefore, we are also heartened by Premier Harris's commitment to promote access to trades and professions, to develop a comprehensive immigration strategy and to boost education programs against discrimination. We believe that there is a great deal of common ground between your government's agenda and the interests of our membership. Therefore, on behalf of the 140 organizations that OCASI represents, we would like to thank the standing committee on finance and economic affairs for providing us this opportunity to express our comments, and we would welcome any questions you may have.

Ms Bassett: Thank you for your submission. I'm the parliamentary assistant to the Minister of Finance, and he's looking to this committee to get recommendations for his budget. So thank you for the many recommendations and suggestions that you had. We certainly will look at them.

I have a question for you because I know from being involved with your association and many immigrants to this country that all the reports show -- that I read, anyway -- that immigrants are better educated, use welfare less often and contribute enormously to Canada. So I thank you for that, and we welcome working with your association as much as we can.

I understand you met last week, I guess, or 10 days ago with the minister and came up with suggestions, or one of your own members suggested, on how perhaps you could be cutting costs within your own organization. I wondered, since you have a lot of ideas that are on the cutting edge anyway, perhaps you have ideas of how you could cut your own organization and perhaps ideas that we could use ourselves in cutting social agencies back. Did you get any suggestions out of that recommendation that somebody made?

Ms Peries: It's an interesting comment. OCASI, in representing its 140 member organizations that are faced with tremendous government cutbacks at this time, has had no choice but to introduce a number of steps in order to deal with it, and a number of restructuring recommendations have been forwarded to our membership. As well, we are in consultation with the minister right now and are forming a committee to deal with the number of cutbacks that community-based organizations have faced and finding ways to cope with the situation, because in addition to the provincial government, we are also faced with a number of cuts through transfer payments and so on from the federal government as well. So the issue of trying to manage the situation for community-based organizations is tremendously difficult.

Our focus has been coping strategies and hoping to convince the government that it is cutting back in the wrong areas at this time. The committee that was struck up, with the approval of the Minister of Citizenship, Culture and Recreation, Marilyn Mushinski, is really to deal with it and how to face the restructuring that is going on I guess at every level, with the federal government, provincial government and with communities themselves.

Mr Kwinter: Thank you very much for your presentation. I can tell you that I think that all governments are making a mistake in not utilizing the incredible resource of our immigrant population. I know that in my riding I have a huge number of immigrants from Russia, most of whom have post-graduate degrees in many disciplines that we could really use, but there are many barriers for them to enter the professions of their choice.

I have a question. I don't know if it's a typo or not. I just find it very difficult in one of your statistics, where you state that in 1951 immigrants comprised 15% of the country's population, and in 1991 they comprised 16%. When you consider the influx after the war, surely the immigrant population has increased by more than 1% in 40 years. That's on page 2. You'll see it in the first paragraph at the top of the page.

Ms Peries: This is actually to I guess dispel the myth that there is an increased burden on the Canadian taxpayer due to immigrants. We are trying to demonstrate there's really no increased amount of immigration, meaning foreign-born, in Canada. That is exactly the message we are trying to get, that you're not actually coping with more immigration, and the statistics do remain true to that.

Mr Kwinter: That is an accurate number?

Ms Peries: Yes, that is an accurate number, and the citation is there for you if you want to check it.

Mr Kwinter: As I say, there certainly is a myth out there because it would seem to me that, since the war, there has been a much larger influx of immigrants from all over the world. That's certainly the perception I had and I think that most people have.

Ms Peries: In this case, the perception is a myth.

Mr Kwinter: When you tell me it only has grown 1% in 40 years, I find that interesting.

Ms Peries: Your perception is obviously, according to our research and statistics, false. I think that kind of perception lends itself to the backlash that immigrants have been experiencing that somehow the Canadian taxpayer, which obviously doesn't include immigrants as taxpayers, is carrying somehow an undue burden more recently than it has in the past. That is incorrect and that's what we are trying to demonstrate.

Mr Kwinter: I'm delighted that you have because I think that's a very interesting statistic.

Mr Silipo: I think it was Susanna Moodie who wrote a number of years ago that we are all immigrants to this place, the difference being that some of us came a little earlier than others. I think that's something for us to remind each other of from time to time.

I appreciated very much the presentation. I do hope -- I say this sincerely -- that the government takes the constructive way in which you've come before us today, because I've heard you argue before governments before in different tones. I just wanted to say, for the benefit of the new members on the government side, that you're seeing here some very constructive advice and I hope that the government members and the government heed it. You are pointing out to us -- as Mr Kwinter said; I would agree -- that we have, I think governments of all stripes, not done enough to take advantage of the wealth of knowledge that exists among our more recent immigrant populations. With all of the work that we've done, we still are not at the point where we are able to accredit people who come from other countries with various professional backgrounds in what I think should be a faster way than we do today and take advantage of those skills that people have.

I continue to be flabbergasted at how our school system -- rather than nurturing the fact that many children come to school with some ability in other languages and developing that, we tend to still resist that. That, I think, is to the detriment of all of us, not just as a society but indeed in terms of the economic strength that can generate. As I say, I hope that the government takes from your constructive suggestions some directions to follow and to act upon.

I just really wanted to get your sense of, as things are happening, as government is cutting -- I think you made a bit of a comment earlier in response to one question -- do you have a sense that the government is perhaps going about this in a way that's less than fair in terms of where cuts are being made? I take from your presentation that you're here trying to remind us that here are some areas where it's worthwhile to actually stop and think and make some investments, not even necessarily with a lot of money, but ways that in fact can help us. I just wanted to put that out and get your further comments on that.

Ms Peries: Absolutely. What we are seeing is this government encouraging volunteerism, for example. We have to tell you that OCASI and its member agencies, as we say in our brief, have generated one million hours of volunteer service at our agencies. In essence, if you are going to cut back in this area, I can tell you the first staff person to go would be the volunteer coordinator, because it seems that when you are in crisis situations you are often cutting back the fluff in order to protect direct services to the clients. In these cases, you are going to actually in the long run not benefit from the potential dollars that volunteerism adds to the public treasury.

The Chair: Thank you very much. We appreciate your presentation to the committee today. Your thoughts will be taken into consideration, I can assure you.

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ONTARIO ASSOCIATION OF RESIDENCES TREATING YOUTH

The Chair: Our next group is the Ontario Association of Residences Treating Youth. Welcome to the standing committee on finance and economic affairs.

Ms Gita Schwartz: Thank you. My name is Gita Schwartz and I'm the executive director of the Ontario Association of Residences Treating Youth, and my colleague is Diane Doucette, who is one of our board members. I apologize; I don't have a written part of the presentation. I just found out at the last minute and I appreciate being able to be here at all, so thank you for hearing from us. I do have some information, but rather than overwhelm you with more than you could possibly take in in a few minutes, I'm going to tell you a bit about our association and how we're looking to cope with current financial and social situations that we all find ourselves in.

The Ontario Association of Residences Treating Youth is a group of 40 agencies that provide residential care for children. We're legislated under the Child and Family Services Act and we do strictly residential care. The one thing that makes our sector unique from others like us is that we are the private operators in children's services. The services that we run are run on a fee-for-service basis. We're paid on a per diem basis.

Our referrals: We're what we call second access because parents, although they call us, very few can actually afford to pay for their children to come into care. We provide care primarily for children's aid societies, for the young offender system and other community organizations, but those too are primary referral sources.

We also work with a number of different types of children. One of them we call troubled youth, although it's not a great title. They are mostly the children who come to us from child welfare where there are serious family problems and protection is an issue. They come into our system through the children's aid societies.

We also work with developmentally handicapped children. These are the special needs children who today still are coming through the children's aid society. These are very often children who have multiple problems. It's not just a developmental handicap problem; they will also have some physical complication or emotional and behavioural problems as well. We work with the hardest-to-serve children in our system.

The third major client group that we handle is children who are medically fragile. These are children who are very, very ill, whose families cannot handle looking after them, and who need the kind of support that our group homes can provide for them. One of the important things to know is these medically fragile children are children who are very likely not going to live a full life the way the rest of us are. Many of them will be dying in our care.

Often what we find in our system, and we work very closely with the Ministry of Community and Social Services, which is where we belong and fit and have made representations on many issues -- and Mr Silipo will remember us from years past. One of the most recent things we have told the ministry is, in the area of medically fragile children we see many, many children who live out their lives in hospitals, and it's very, very costly. We're looking at $1,000 and $1,200 a day, whereas we provide group homes where we're looking at maybe $180, $200 or $220 a day, just to give you a ballpark figure in the kind of savings that can be made. Not only that, there are savings, but also, really importantly, is the quality of life that a child can have in a group home which has six or seven children with significant staff, both medical and otherwise.

Those kids have a much better life. You can take them out into the community. You can do stuff with them that -- you can imagine in a hospital, who can? There are no workers there to work with those children, tutor them or make sure they have some recreational programs.

We feel we have a lot to offer in terms of restructuring the system. That's just one small piece that I mentioned to you, because I think we can all visualize that really clearly and concretely. One of the things I was trying to figure out what to say here is that our system is quite complex. The whole social service area and working in child welfare is so complicated, and we're legislated here and we're controlled there. I don't want to overwhelm you with information, but I did want to give you a sense of who we are.

Over the last several years, just like everyone else in our system, we have taken significant cuts and what we have found is that we've been doubly hit with cuts, because not only did we take the cuts that came down as part of the social contract and the expenditure control plan, we were also hit in that our referral sources tried very hard not to use our beds, because they had to pay for them. It didn't matter that our beds, for the system at large, were cheaper and more cost-effective for the same quality of service. The reality is there are many transfer of payments organizations providing residential care, so a children's aid society will go, "Well, it's not going to cost me anything to go to a transfer payment agency, get the residential placement there." So that's what they do, and they call them free beds. We all know, and it's just one of those awful things, free beds -- there are no free beds, because it costs the taxpayers no matter which way you look at it.

We're on an educating mission to let you know that there are significant discrepancies in the funding basis that we work out of. When you have a transfer payment organization receiving funding parallel a per diem agency where a referral source has to pay, the referral source will automatically go to what they consider the free bed. It's not their fault, and we don't fault them for that at all. It's the way our system is designed. There isn't a level playing field.

What we've done most recently, just at the end of last year, is we made a submission to the Ministry of Community and Social Services, to Minister Tsubouchi, suggesting that residential care in our sector be funded on a per diem basis as opposed to a transfer payment basis. We also developed a model for that happening, which included a lot of the principles of very recent policy work which we've all been involved in. It's called the policy framework for services under the Child and Family Services Act. All of our sector has worked hard over the last several years to come up with principles that we all believe in and are important for us to move towards, like coordinated access to service, which would be one. Equitable funding would be another; integration of services so they make sense to our customers and not just to us. One of the real problems in our system is that parents get lost. They don't know where to go because it is quite complex and there are so many levels.

We've incorporated those basic principles that we all have come to understand as important in our sector and developed a model which includes local planning, where local communities take responsibility for the children in their areas who need placement. I should also mention we're very aware that residential services are expensive, and that's one of the things people talk about a lot and one of the areas where it's been hoped to cut back, and indeed over the years it certainly has cut back. As agencies have been constrained more and more, they look for other services, and they have developed some good ones: wraparound services where workers are sent into a home when a family is starting to collapse and look like they may have to take the children away. So there are lots of services that have developed, and they're fine services.

What we know to be also true is that there is always a need for residential care because that comes along with the whole mandated services that children's aid societies have. When children are in need of protection and they need somewhere to go, they come to us, so there will always be a need for residential care. We feel strongly that there needs to be a level playing field to make residential care available and accessible to the people and the children who need it. We would find, and we believe, that doing that on a fee-for-service, per diem basis would be the way to go.

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Let's see, I guess that would be the most important thing that I want to tell you about. I have copies for you of the actual proposal. I didn't want to get into the lengthy details of it. What backs up the proposal, I think, and what's important to know is there have been some studies done -- and unfortunately we don't have a lot of studies in our sector about how things break down and the costs and the quality and how do you assess the quality of care. It's all very grey area and we all have passionate feelings about it, but there's not a whole lot of research done.

But some of the preliminary research, and it's a part of this document I'm going to give you, shows that the per diem sector provides residential service at a significantly lower cost than other sectors do. If you look at these documents, you will see differences of between $50, $100 and upwards to $300 a day, depending on the service and what you're looking at. So we feel that there's easily $25 million to $30 million that could be saved in residential care if we were to move the system over to a fee-for-service-funded mechanism. That's a significant alteration for our partners in care and would require a fair bit of work, but we feel excited and interested and are talking about how one would implement that kind of thing were it to happen.

The other piece is that we've been talking with our partners, the people we work with regularly, and actually there's been a fair bit of support, both in our sector and at the ministry level, for moving things to a per diem funded mechanism. The details of how that might happen remain to be seen and people are trying to verify some of the funding pieces we have talked about.

I'll stop there and ask you if you have any questions that you'd like to ask us about in our sector.

Mr Crozier: Thank you and hello. Could you, for my information -- and I don't know whether I'm the only one who doesn't realize this -- did you say the children's aid society is a transfer payment agency?

Ms Schwartz: By transfer payments, I mean the government gives a lump sum on a monthly, quarterly, annual basis for the operation of an organization. So yes, a children's aid society is a transfer of payment, as are other residential care providers.

Mr Crozier: What's their alternative? You said they don't use you because you're on a per diem. What is their alternative if they choose not to use you?

Ms Schwartz: Which they do often. Their alternatives are transfer payment organizations that are funded by the Ministry of Community and Social Services to provide residential care, of which there are many, you see. We've become the resource of last recourse, so to speak, and because of that we get the hardest-to-serve children.

Mr Crozier: And your responsibility is legislated?

Ms Schwartz: Absolutely, and we're licensed by the ministry.

Mr Crozier: So notwithstanding the fact that your funding may be reduced, you, under law, have to provide the service.

Ms Schwartz: Yes, as long as we're functioning, there are levels that we have to adhere to.

Mr Crozier: Does not that put you in a rather awkward position?

Ms Schwartz: Yes, absolutely.

Mr Crozier: Could you tell me how awkward a position it is? How difficult does this become, if you have to conform to certain standards and legislation on one side, but the government says on the other hand, "You can't have the money for it," or, "You have less money for it"?

Ms Schwartz: It's been very difficult. The last few years, people have trimmed away everything they possibly can, so administration goes out the window and many people today are very concerned that they might not be able to keep their businesses going. They are, in the end, private operators who have to make sure they can meet their payrolls and not lose money while they're doing this.

When private operators first started, you saw a lot of individuals setting up small group homes where they would have one group home with six or seven children in it and then, as the system became more sophisticated, you have people who will run three and four group homes and also provide specialized foster care. People have grown.

What I've seen happen over the last few years is those small operators, they're losing, they're going out of business. There are still a few of them around and I don't think they're going to last much longer. Larger organizations have more of a chance to even out how they operate and carry on.

Ms Castrilli: Could I ask you to repeat the figures for me? You said the cost of caring for a child in a residence represented by your association is in the nature of $180 and $200 a day. Is that right?

Ms Schwartz: It depends on what kind of child you're talking about. When I was referring to that, I was talking about medically fragile children who you will often also find in a hospital, that can cost five times as much as we cost, and the child would get more quality of care in a smaller place, where their needs could be attended to. So if we're looking at like the $200 range, we're talking about children who are the medically fragile children who require medical attention.

Ms Castrilli: Is your range $180 to $100, or is it somewhat less than that $200?

Ms Schwartz: If you look at the whole range, it goes anywhere from $80 to about $220, depending on how intensive the service is.

Ms Castrilli: With regard to institutions, what do those cost?

Ms Schwartz: Again, I'd have to say that varies also quite a bit, but you'd be looking at anywhere from $50 to $300 difference, and I kid you not on this. I should hand these out, because it's a part of this package.

Ms Castrilli: It's $50 to $300 more than $80 to $220?

Ms Schwartz: Yes. That's very broad, but --

Ms Castrilli: No, I understand, but what accounts for the difference?

Ms Schwartz: What accounts for the difference? Several things. When you get a budget and you've negotiated with the government for what your annual charge can be, there's been a lot of flexibility. If you're a good negotiator, you have a very healthy budget to work with. Private operators, on the other hand, only get paid when they're working, when they have children in their homes, so they have to keep their costs down, they have to make themselves look attractive and still provide a quality service.

Ms Castrilli: The per diem would help in that.

Ms Schwartz: Yes, and if I might add something too, in the 1980s, there was lots of money around so you had agencies that really did do extremely well and were able to provide sophisticated programs and lived healthy lives, and that's still reflected to some extent, even though everyone has taken constraints.

Mr Silipo: Thank you. Hello again. Could you talk a little bit more about one of the things that you touched upon towards the end of the presentation, which is that through the fee-for-service system that you are advocating we could save, I think you said, about $30 million. How would that work?

Ms Schwartz: One of the things we did, and you'll see this in our documentation if you have a look at it, is we went through information and there's a feasibility study here done by a consultant named Bob Fulton. What we did is gathered up all of the dollars that are spent on residential care in Ontario -- to the best of our ability, because those figures are not easily come by too, and I'm talking about in our sector, under CFSA; it's not broader than that -- and we came up with approximately $337 million as that figure for residential care. That has never been pooled anywhere so far.

With our understanding and our information around per diems -- and what you should know is our average per diem in our sector is about $130 a day -- what we did is we figured if there is an average per diem in the system, and we base it at $200 a day, which we think is very doable and in fact would be a raise for private operators -- now, it would be a coming down for others in the system as well, although not for everyone. If you did that calculation based on the number of days of care, the number of beds there are in the province, we came up with approximately $20 million.

In our proposal, there is a provincial coordinated piece where there is a database that carries the information of where there are beds available, what kind of beds they are and who they might service, and what that does is take away the need for children's aid societies, every single worker, calling every place they know of to find a bed. You see, right now you might have 500 workers across the province looking for placements for children, calling around. All they'd have to do is call one place and we would have the stats available and let them know, "These three agencies are possibilities for your kid."

We assume there would be another $10 million in savings just in placement costs, all the effort and human work that goes into placing children. Right now, it's very disorganized. There's no centralized access.

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Mr Silipo: I appreciate that you deal with predominantly one particular group of young people in need of help, but can you, from your perspective, give us some insight into what is happening in the whole children's services area as a result of the fiscal constraints that agencies are having to deal with? I know this is obviously not something that is new. Agencies have been dealing with this -- I think, it's even useful to remind people that the social contract savings that were achieved in this sector were done differently than they were in the rest of the system, through agreement more than anything else. But what is happening out there?

Ms Schwartz: One of the things that has become obvious, and it has been happening over the last several years, is that the children coming into care are getting to be more and more and more difficult children. We don't see normal kids any more. It just doesn't happen. They go into the foster care system, which is a much cheaper system.

The children we see have tremendous difficulties by the time they come into care, because children's aid societies are being forced for fiscal reasons to intervene later and later in a child's life. They're coming to us older, they're coming to us with way more problems and, as we're having to adjust and make our own economic adjustments, we worry for the safety of the children and the staff.

We're really concerned, because one of the things we also see happening, and I think this is just true, is, as we're not helping children through the social service system, which has been happening now slowly over the years, we're going to be pushing them into the criminal system. If we can't help youngsters when they first come and present us with problems, then we'll be dealing with it at the back end, when they come into the criminal system and, frankly, it's a much more expensive system.

Ms Bassett: Thanks so much for your presentation. As you know, the Minister of Finance is very interested in getting input on innovative ideas that he can use in looking at his budget, certainly in the delivery of services more cost-efficiently.

I was interested in your presentation, where you mentioned that you saw that the placement system was sort of disorganized. Then you came up with, secondly, another idea of the per diem, that you could save so much money. Do you see other room for reorganization that might make things work better, but certainly would be more cost-efficient?

Ms Schwartz: Our proposal, as I said, does exactly that, and we are experts in residential care, so it's very hard for me to comment on other pieces. I think when it comes to residential care, we're prepared to work really hard to see that happen. As I said --

Ms Bassett: And "our proposal" you will give us after?

Ms Schwartz: Yes. Actually, I can pass that to you now.

Ms Bassett: Okay, and then we could get back to you when we look at it if we want.

Ms Schwartz: Please, yes. We also feel, quite honestly, if this were done and it were done starting tomorrow, if someone were given the task of implementing this, it could be done quickly, for one thing. Although it will be complex and there will be many details to sort out, it can be done quickly. I think six months to a year is a possibility to have a new system in place.

Ms Bassett: Without sacrificing the overall good of the individual.

Ms Schwartz: Absolutely. In fact we think the system would be improved. We really do, because you'd have coordinated access and people would be able to get information that they need. Absolutely.

Ms Bassett: My colleague, I think, has a question.

Mrs Marland: I was interested when you referred to the agencies in the 1980s, when there was lots of money around. I think, having been involved personally in those years, when many agencies were established and consequently many matching facilities were established and probably some of those are in the membership of your association -- I know we've gone through very difficult times even to this point, because there were years there when previous governments were not able, by their own decisions and priorities, to give sufficient funding to support even foster parents and foster homes, which is another alternative referral point for young people in distress or in crisis.

I remember when we were asking to increase the rate for foster parents -- because our children's aid societies across this province were absolutely desperate because they had nowhere, even on an emergency basis, to refer those children and young people because people couldn't afford to be foster parents and provide foster homes at the rate they were being paid. For a while I think that improved a little but there is still a great shortage in that area alone, and you're here representing sort of the commercial end and the private sector in another way of providing this kind of service.

What I would like you to comment on is the eternal debate about institutional care for young people with special needs, and although yours is youth, I think it's just as relevant to younger children, the debate about institutional care versus other types of care. Because where we may be coming from is the fact that institutional care is an extremely expensive way to deliver the personalized care that these special-needs young people have. Yet there are children for whom returning to their homes will never be an alternative because there's absolutely no way that their families can cope. I've dealt with families in that kind of crisis, whether we're talking about children with severe developmental disabilities or children with behavioural problems.

I'm wondering if you can comment on how, and again it may be in this report that you have that we haven't seen, but on how you see the government best making those decisions versus keeping some of our institutions going at a tremendous cost, and even your comparison of per diems to hospital care. But in the step out of hospital care into strictly institutional care, how do you see other types of service being provided that, in the long run, are not going to cost the people of Ontario more money than necessary and yet deliver us, as being a compassionate modern society in this -- I was going to say in this century, but in the 1990s and into the next century -- as being a responsible society, to help and give the care that is needed by these particular clients.

Ms Schwartz: It's a huge question that you ask and it's hard to know where to begin, but I can tell you one concrete thing that comes to mind immediately is that in our sector there are several directly operated agencies -- and what I mean by directly operated is they are directly operated by the government. There's Thistletown, there's Syl Apps, there's CPRI and there are a few dotted across the province. There aren't many of them. They're very costly. Our recommendation would be to collapse them and give that money back to the community so it can decide what resources it needs, because I do believe that they can do that more cost-effectively than huge organizations such as those. That's just one small piece.

I think systemically we've been moving away from institutionalization anyway, and I do believe it is cost-effective and better for children too, to feel closer and closer to a home environment.

Mrs Marland: Do you agree with giving the funding directly to the client?

Ms Schwartz: Oh, that's a whole other one.

The Chair: Thank you very much. We have run out of time and we do appreciate your presentation to the committee on a very sensitive area of our society. Thank you very much for your time.

Ms Schwartz: Thank you. Where shall I leave this?

The Chair: If you could leave it with the clerk, he will ensure that it's distributed to the committee.

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CANADIAN FILM AND TELEVISION PRODUCTION ASSOCIATION

The Chair: Our next group is the Canadian Film and Television Production Association. Welcome to the standing committee on finance and economic affairs.

Ms Elizabeth McDonald: Mr Chairman, members of the committee, my name is Elizabeth McDonald and I'm the president of the Canadian Film and Television Production Association. Today I'm joined by Stephen Ellis of Ellis Enterprises. Mr Ellis is a member of the executive and board of directors of the CFTPA. I'm also joined by Steve Ord, who is vice-president and general manager of Atlantis Films Ltd and a very active member of the Ontario producers' panel of the CFTPA.

Our association is the national trade association that represents the interests of over 300 independent producers that operate in every region of Canada; however, from your perspective, you might be interested to learn that about 65% of all industry activity takes place in this province and that more than one third of CFTPA members reside in Ontario.

Mr Stephen Ellis: As all Ontarians know, the budget that you are now preparing will be very critical for the people of this province. From the government's viewpoint, you are clearly trying to balance the commitments made to the electorate as part of the Common Sense Revolution while at the same time ensuring that Ontario businesses can continue to thrive, create economic activity and jobs.

According to Ernst and Young, the film and television business is a $2.7-billion industry for Ontario. Statistics Canada data tell us that the independent production sector annually generates $500 million in direct spending and more than $1 billion in indirect spending for the province. This is fairly remarkable when you consider that was only a $134-million industry in 1985.

A recent study undertaken by the association tells us that the industry is indeed export-focused. In terms of the overall national economy, the export value of the independent film and television business in 1994-95 was about $1.2 billion. Again, because the industry is so concentrated in this province, Ontario is the major beneficiary of the industry's activities in the global marketplace.

Beyond attracting investment to Ontario, the independent production sector creates jobs -- 35,000 in the past year alone. These are great jobs, jobs you would want your children to have. They're value added, they're available at the entry level. We provide training too that complements what our young people learn in the post-secondary system.

In other words, Mr Chairman, members of the committee, independent production is good business for Ontario.

Mr Steve Ord: The independent production sector is a high-risk, project-based, extremely mobile industry with low profit margins. Because of this, the industry has had to rely on government incentives to create the industrial infrastructure that allows companies like Atlantis to create jobs, stimulate innovation and economic activity in Ontario.

Governments throughout North America support the film and television sector through a variety of incentive programs. In Canada the most active provinces are Quebec, Alberta, Manitoba, British Columbia, Nova Scotia and, of course, Ontario.

In this province we have been very lucky to have the Ontario Film Development Corp's OFIP program, which is the Ontario film investment program. It has proven to be an efficient and cost-effective means to deliver support to the industry. In the 1993-94 period, OFIP support of $30.4 million triggered production spending of $175 million. It created an incremental gross domestic product increase of $210 million.

While CFTPA Ontario members believe that programs like OFIP are a critical ingredient that attracts them to do business in Ontario, we also understand that the present fiscal environment of the province calls for new approaches and creative thinking. Programs that have been in place need to be reassessed. This is why we are appearing before you today.

OFIP has clearly worked for us in the province, but it may not be appropriate in today's environment. This is not the first time that this association has met with a government to discuss change. About a year and a half ago we met with your federal counterparts to discuss a federal program called the capital cost allowance program for film and television production. The federal Department of Finance officials, in partnership with Canadian Heritage and ourselves, agreed that the CCA program was too expensive, with much of the moneys not going to the benefit of the production of high-quality Canadian programming. Collectively, we came to the conclusion that the better approach would be the introduction of a transparent refundable investment tax credit program.

The RITC, as it is now referred to, was finally launched by the federal ministers of Finance and Canadian Heritage on December 12, 1995. Even though the program only become operational in December, producers were made aware of it at this time last year. This permitted a phasing out of the CCA program so that the industry continued to have support during a transitional period. The industry therefore was not destabilized and producers could adjust their financial plans as required.

As you see, we are an industry willing to work with government to solve problems and keep investment and jobs in Ontario. We know you have some difficult decisions to make. We also know that the introduction of the refundable tax credit on the federal level has opened a new door for Ontario.

With the windup of the capital cost allowance tax shelter program, at least $25 million will be returned to the provincial treasury. That, coupled with benefits the independent film and television industry brings to Ontario, creates a unique opportunity for a new partnership between the government of Ontario and our industry to develop a new program that will stimulate economic activity within the confines of Ontario's fiscal reality.

I'll pass it back over to Stephen.

Mr Ellis: Mr Chairman, members of the committee, the Ontario members of the CFTPA are committed to working with you to find new ways to provide incentives to the business that will work within the fiscal framework. The one concern we have is that to keep the sector active and vital within the province, we will need to make sure that we create a bridging mechanism that allows a smooth transition between a program like OFIP to one that may make more sense today, such as a tax credit system. This will guarantee that the independent film and television sector will continue to provide a net benefit to this province in terms of both investment and jobs.

Thank you for your attention. We'd be pleased to answer any questions.

Mr Silipo: Sorry, I was out of the room at the beginning. I was trying to get caught up, but I think I have very much the sense of what you're saying, looking back at some of the notes from your presentation.

Could I just understand the level of the cut that you're having to deal with, first of all, in OFIP?

Ms McDonald: I think at this point the OFIP funding is frozen, and we don't know what is going to happen.

Mr Silipo: But your fear is that it will be eliminated?

Ms McDonald: Eliminated without anything to replace it.

Mr Silipo: Without any transition.

Ms McDonald: And without any transition. We've been very actively try to develop a response that will continue to encourage the economic activity within the province but that at the same time fits better within the industry's plans.

Mr Ord: As I understand it, in the last few years the budget of the OFDC, the Ontario Film Development Corp, was in and around $25 million a year. With the freeze that came into place in the middle of last summer, the level was reduced to roughly about $15 million.

Mr Silipo: As you point out in here, there's certainly a good argument that can be made in terms of the cost-benefit of that investment being made in terms of the private dollars that it generates. But again, even if we put that aside, you're saying even if that fund is going to be eliminated, what you need to know is that there is some way of getting from where we are now to that position, rather than trying to do it overnight and creating some chaos in the industry or the loss of other additional investment that would otherwise be there.

Ms McDonald: Yes.

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Mr Silipo: All I can say is, certainly from our end, that seems to be eminently sensible. One of the problems we are seeing in a number of activities by the government is that because they believe so strongly in being out of the realm of these types of investments, whether it's in the film industry or in any of the other sectors, while they seem to understand, they don't seem to buy very much the argument that says spending of public dollars in a strategic way does generate additional private dollars. Only by having business people like yourselves come before us and show what this means in real dollars and in terms of the addition of jobs and investment is there any chance that in fact government members might start to think about this again, and we hope that they will.

Mr Wettlaufer: I'd like to assure you that the OFIP is being reviewed. That'll give you some reassurance; albeit how much, I don't know.

Would a reduced tax burden on your industry stimulate and attract film and TV production, development and investment in the province?

Mr Ord: Our sector is basically driven by project financing. When OFIP or the federal government invests in a film production or a television production, they don't invest in the company, they invest in the project. Each project, in effect, competes for those dollars with every other producer who has a project. Because of that, the industry revolves around the productions themselves, not so much the companies.

At the federal level, the new refundable investment tax credit is a way of, in effect, having the federal government match some dollars with the money that's raised privately by the producers as a way of encouraging them to invest and to produce in Canada -- Canadian productions. That is an incentive that clearly works. In terms of corporate tax incentives, I suspect they may be less helpful.

Mr Wettlaufer: When you say you compete with other projects, do you mean you're competing with other projects from outside the province?

Mr Ord: Yes, absolutely. The company that I work for, Atlantis Films, is one of the largest producers of television programming in Canada. There are only so many spots on television networks for television shows, and those broadcasters either buy Canadian shows or buy American shows. Within the area of Canadian programming, we would compete with other producers to convince those broadcasters that our shows are the best shows and will attract the best audience and are the best quality. That is really the competitive nature. That spills into the funding area because this is a business that is very market-driven, and usually whatever government assistance exists follows the initiative that the private buyers have taken in terms of selecting which shows are made and which shows are not made.

Mr Wettlaufer: Do you have a projection as to how many additional jobs you may be able to produce in Ontario this year if there is a reduced tax burden?

Ms McDonald: Excuse me, do you mean a reduced tax burden --

Mr Wettlaufer: To improve your investment in the province.

Ms McDonald: In the companies? One of the issues we have is that we have very few large companies and many, many smaller companies, so that the tax burden issue varies so much according to the size of the company and many of them would get relief from the tax system in different ways. That is, while we looked at it, we felt it would not be appropriate to stimulate the industry and keep the production up to the level. We have companies that are one and two people, and so they are in a completely different kind of corporate tax and are not burdened in the same way that some of the larger companies are.

Mr Ellis: If I can just add to that, at the same time, a one- or two-person company during a given year might have a project it's been developing come to fruition that would involve shooting a $2-million film. So for a short period of time, maybe six to eight weeks over the summer, it'll suddenly go from employing the two people on the payroll for the rest of the year to employing a significant number of people, 50 to 60 people, for the duration of the summer. The result is that it's a very elastic industry. It doesn't have a huge investment in bricks and mortar; or in payrolls, which are flat throughout the year. It's very seasonal.

I guess another of the concerns that we have is that with other jurisdictions offering incentives, it's also a very mobile industry. We've already determined to some extent that there have been some projects go to other provinces since the freeze last summer. It's obviously a trend that one doesn't like to see, given any instability that's introduced. So at this point I guess as an organization we're facing the music. The change is inevitable, but the question is can we stabilize things or not see a situation where the industry goes on hold in terms of an incentive that's been working. Elizabeth, you're familiar with the Quebec situation.

Ms McDonald: Yes. We've looked at a variety of programs. I guess because of the different nature of the industry, it's hard to make it as homogenous, to respond to your question as we would like. There has been a series of investment programs across the country. Quebec faced a similar situation to the Ontario government and it went to a tax credit program because it felt it was more efficient, it was aimed at labour. In other words, it encouraged, as does the refundable tax credit, the film and television industry to hire people. It went to the heart of what was important to the province. However, when that province introduced its tax credit program, it went through a period without any transition and there was just nothing. The industry almost collapsed in Quebec, and it's taken it three years -- it's starting to come back. I would believe people within the department and within your government may want to check with Sodeq and with our francophone counterparts in that province.

But the nature of the industry is that it's so project-driven that something that removes the support for a period of time can destabilize it. On the other hand, if it can be continued in some way -- and that's part of the reason we're telling you that there is money coming from the federal coffers that will be returned to Ontario, there's kind of a helpful solution there -- if we can continue to have supports and go through a transition and move to something that works better, and perhaps has less of a burden administratively as well, then that activity can grow and flourish in this province.

People like to do work here in Ontario; in the Toronto area, but throughout Ontario. It provides a good workforce educated in Ontario institutions. It works well on a lot of bases. It creates jobs not only within the sector but without it as well -- in the hotel business and all of those things that of course you who live in Toronto particularly see but we see in other parts of the province as well.

Mr Kwinter: Thank you for your presentation. I, for one, having been the minister responsible for your industry, certainly appreciate the fact that next to Hollywood and New York, this is the largest film development centre in North America. I think it's important that members of the committee understand that it isn't just what you see on the streets every day. It's the pre-production, the post-production and that critical mass that is developed that makes Toronto an attractive place in which to produce film and television.

The problem I think the industry has, and the problem I have particularly, is that the minister has made a statement -- this is the Minister of Economic Development, Trade and Tourism -- that economic development cannot be created by government assistance. So the question is, if you guys are so good and your product is so good, why don't you do it on your own? What do you need the government for? I'd like you to respond to that.

Mr Ellis: I think all of our members operate in a highly competitive environment, one in which the competition is international in fact, because of course Canadian and Ontario viewers when they sit down and watch television or go to the move theatre, they aren't really thinking through the process of whether they want to see a Canadian versus an American film. They just want to see a good film or a good television show.

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The difficulty is that the Canadian market generally, and a lot of the national broadcasters of course are based in Ontario, simply doesn't pay the freight. To attract viewers, whether it's at the box office or in front of TV screens, you have to make a product that looks as good as Hollywood, but the Canadian market simply won't support it. The producer here typically recovers about a third of their production cost from the domestic market. As a result of that, historically, a number of measures have been developed to try and even the playing field a bit for the Canadian producer.

The way a program such as OFIP has worked and works so successfully is not so much that by investing a dollar in a particular project it's simply adding a dollar to a project that might have happened anyway; it's that it provides a form of leverage for the producer. Very often a producer is having to line up their sale to the Canadian market, a sale to a foreign broadcaster perhaps, and may still be missing a third of their financing or, in the case of OFIP, as much as 20% sometimes is invested. The result of that is the project may go away.

Whereas it might be budgeted at $1 million and therefore generate $1 million-plus in terms of investment in the province, if it simply goes away because there's a missing 20%, then OFIP will make the difference between that $1 million being spent in the province and zero being spent in the province. It's not quite the same. As Steve was saying, because it's very project-oriented, a rather small investment on the part of the province is the difference between a project simply being made here or not being made in the province or not being made at all. It's a form of magnetism, if you like, to attract projects that are otherwise going to be made elsewhere or simply not made at all. So we look at it from a different point of view.

Mr Kwinter: I think one of the most dramatic ways of seeing how competitive is the situation is that if you ever watch a movie, invariably at the end of the credits they will give credit to some jurisdiction for its cooperation and assistance in producing that film. It is a very competitive market and it will go where they can actually get it produced. If they can't get it produced in a jurisdiction, there are lots of other jurisdictions that are quite prepared to let them do it. Is that a fair comment?

Ms McDonald: Yes, absolutely, and I'm sure Steve Ord would like to respond to that. I just came back from British Columbia and certainly it's looking with some interest at what this province is doing. They've got a great infrastructure there. They'd be happy to welcome the business there. Nova Scotia's also very active as well. When that stimulant isn't there, you're quite right: It moves.

One of the misconceptions of this industry is perhaps because of our proximity to the US border, where everybody compares the industry in Canada to the American industry. I believe that even within certain jurisdictions of the United States, to have production take place and stimulate activity, there are many states that have OFIP-like or tax-credit-like programs. All through Europe there's activity between the various members of the European common market to try to get the projects going there, to keep people busy and to create product there. Even within the American jurisdictions, you're absolutely right, funding exists and it's exactly to make sure that the activity takes place in that state. We see it in Europe as well.

Mr Ord: An interesting example is the state of California. It used to have tax incentives if you produced in the state of California. When they had those incentives, roughly 95% of all television movies that showed up on American networks were produced in California. After they eliminated those incentives and other states chased that business, that share dropped to 25% almost overnight, and California's trying very hard to bring the business back.

It's important to really understand that in this business it's a very narrow margin business, so if you get a very small incentive it's enough, whether project (a) happens, or (b), where it is produced. OFIP's leverage is around seven to one. Every dollar that it spent is bringing about $7 to the province in rough numbers. I think it's important to understand that argument.

The other thing that it is also very important to understand is the market we're in. The Canadian market is a small market. We're producing for 20 million English-speaking people, speaking for Ontario producers, in Canada. Our counterparts in the United States are producing for 260 million English-speaking people. Therefore, what a buyer -- a broadcaster or a distributor -- is going to pay to a producer in Canada is a fraction of what it costs to make that film. If you were CTV or Global, you'd choose between buying a Canadian show like, for example, a show my company I work for produces called Traders, or buy an American show. They can buy the American show for, say, $50,000 an hour to licence that show. A show like Traders costs $800,000 an hour. That's the fundamental economic difference that exists in Canada and why incentives have helped to really build the industry.

The Chair: Thank you for your time and coming in and presenting to us. We appreciate it very much.

ONTARIO PROVINCIAL POLICE ASSOCIATION

The Chair: The final group today is the Ontario Provincial Police Association. Welcome to the standing committee on finance and economic affairs.

Mr Brian Adkin: Thanks very much. We appreciate your seeing us, Mr Chair.

My name is Brian Adkin and I'm the president of the Ontario Provincial Police Association. With me today is Rick Cazabon, chief executive officer of our association.

We are here today to speak about the OPP budget and to ask all of you to ensure that the budget will not be reduced. We are not here to talk about raises or bargaining. We are here to talk about public safety and police service delivery. These are critical issues to all the citizens of Ontario and especially the residents of rural Ontario and our own members.

Two weeks ago, a document was released which revealed extreme OPP police service reductions if the OPP budget were cut by 20%. We are gravely concerned about this type of projection and the impact it would have on police service delivery for citizens of Ontario as well as the message it would send to the criminals of Ontario.

We are aware of the tough choices this government will have to make. The people of Ontario also expect you to make those choices, but they need to be protected, have assurances about health care and be educated. Beyond that, we can all do more with less. We can all pay user fees for any service beyond the norm.

The Ontario Provincial Police was formed in 1909. It is the law enforcement service for the province of Ontario and derives its mandate and authority from the Police Services Act.

Subsection 19(1) of the Police Services Act states:

"The Ontario Provincial Police have the following responsibilities:

"1. Providing police services in respect of the parts of Ontario that do not have municipal police forces other than bylaw enforcement officers.

"2. Providing police services in respect of all navigable bodies and courses of water in Ontario, except those that lie within municipalities designated by the Solicitor General.

"3. Maintaining a traffic patrol on the King's highway, except the parts designated by the Solicitor General.

"4. Maintaining a traffic patrol on the connecting links within the meaning of section 21 of the Public Transportation and Highway Improvement Act that are designated by the Solicitor General.

"5. Maintaining investigative services to assist municipal police forces on the Solicitor General's direction or at the crown attorney's request."

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The OPP is comprised of 5,811 personnel, consisting of 4,627 uniformed officers and 1,184 civilians. The organization is divided into six regions with regional headquarters situated throughout the province and general headquarters in Orillia. The OPP operates 180 detachments throughout the province.

It is estimated that the OPP provides its policing services directly to about 39% of the residents with an extension to about 45% to 55% when the transient population is considered.

Our 180 detachments are located throughout Ontario and at these locations we provide full policing services to the residents of rural and municipal Ontario. This includes patrol, investigations and support service requirements. This policing function is critical for public safety and wellbeing.

Our client base live on concessions and township lines where response time is measured in hours and fractions of hours depending on the victim's location. These types of locations make response times and adequate personnel even more critical. The OPP is responsible for the lost hunters, hikers and tourists who so often underestimate the majesty and the elements of Ontario. The OPP also operates summer detachments to deal with increased tourist activity in resort areas.

The OPP maintains specialized investigative services to enhance front-line policing functions and assist municipal police services that cannot afford this scope of service. Investigative support bureaus provide expertise in criminal investigations, commercial crime, auto and heavy equipment theft, criminal intelligence and narcotics investigations. Our members from these bureaus have been recognized as experts in their fields and not only provide leadership, but also assist in training other smaller departments to perform these tasks.

OPP traffic responsibilities include the policing of all 400-series highways, the Queen Elizabeth Way and King's highways in Ontario, as well as the traffic function within our detachments. In support of this function, the OPP also has officers trained in unsafe vehicle enforcement, commercial vehicle enforcement and dangerous goods handling enforcement. This specialized traffic function is extremely complex and requires a high degree of expertise. The OPP also has a specialized provincial traffic and waterways safety bureau which provides front-line support for these officers.

The OPP marine policing responsibilities are extensive, and to accomplish this task we have a large fleet of launches and skiffs. Our underwater search and recovery units complement this function.

The OPP is involved in providing support and assistance to all the police services in Ontario in the areas of tactics and rescue units, forensic identification and emergency response teams.

The OPP is frequently called upon by crown attorneys to provide investigative assistance to police services on all types of investigations. Assistance and investigative support is also provided to the chief coroner's office.

The OPP participates in several joint forces units for extremely serious incidents. These types of units are critical as they target specific organized criminal groups that derive large profits from their criminal activities.

The OPP also conducts intensive criminal investigations involving force personnel from our own detachments. The subject matter of these cases is often homicide, drugs, theft, break and enters and commercial crimes.

The OPP can also be described as the only rapid deployment force in Ontario. When a large problem, special detail, disaster or criminal occurrence takes place, the OPP is required to respond. Past events such as the Hagersville tire fire, native occupation of Ipperwash, unrest at Akwesasne, the Barrie tornado and large labour strikes and demonstrations are but a few examples of when the OPP is required to mobilize large numbers of members to act immediately to ensure the safety of the Ontario public.

However, this responsibility imposes a higher threshold on our force than any other police service in Ontario. That responsibility is maintaining the service delivery to our residents and businesses in our detachment areas while we supply officers to police these contingencies. For example, there were approximately 250 officers at the Ipperwash situation. These special situations also take on identities of their own. They require specialized communications, supplies, staffing, command and personnel support. Time is not usually on our side, nor is it on the victim's side, who look to the OPP for support, immediate response and help.

There have been many discussions about the term "front-line policing" in the last year. I can assure you that our organization is totally dedicated to supporting our front-line officers. If we should have our budget reduced, it will definitely have an effect on our ability to provide specialized investigative services to our clients.

OPP field service delivery is vital and cannot be reduced to the people of rural areas which we serve. The people of Ontario also deserve the highest quality of policing available. That means that officers responding to occurrences can request and receive specialized investigative support from the bureaus, which have the knowledge, skills and abilities to help them. It makes no sense to have a complex investigation completed and then have it fail before the courts because the proper expertise was not available when required. The people of Ontario have the right to expect that their calls will be answered promptly by detachments which are properly staffed and which have the proper complement for the area and time.

In 1993, the government of Ontario came to the OPP and the OPP association and said that our budget was going to be cut by $17 million. The force immediately began a comprehensive organizational review to determine areas where we could restructure and save money. The OPP association also participated in this process, both as members actively working on the review as project workers and negotiating with the government as part of the social contract. The OPP Association and our police association colleagues in the Police Association of Ontario, who incidently are here seated behind me, negotiated to help the government through this difficulty. The police sector is the only area where this type of negotiation occurred.

The OPP completed the organizational review, which has resulted in savings of approximately $15 million. The entire structure has been redesigned to provide an efficient service delivery. OPP commissioned officers have been reduced from 130 to 100. OPP civilian staff will be reduced by approximately 300 people. Many of our detachments were clustered or right-sized to deliver an efficient service. The terms "right-sizing" or "clustering" mean amalgamating detachments and reducing or eliminating administrative functions which can reasonably be accomplished by one location.

Technology is being used and implemented wherever possible. The OPP has reduced administration to the minimum while remaining cognizant of the need for proper supervision and support for our members. The OPP staffing level is based on a 92% response model. The government cannot expect the OPP to further reduce staff. The OPP cannot go any further to reduce staff.

The government must also recognize how complex policing has become. Micro scrutiny by the courts of all aspects during the course of investigations places demands on police services as never before. Ontario is the leader in Canada for jurisprudence, which has resulted in strict procedural guidelines for the police. The cost for all investigations, including specialized services, has risen as well, and this is not a privilege that only residents of large cities should enjoy. The people of Ontario have the right to expect the highest quality of service wherever they live.

The OPP has reduced from 16 district headquarters to 6 regional command offices as a result of the organizational review. These savings and decisions were made from within and are now being implemented. This redesign removed the inefficiencies in the system and will enable us to complete this decade and prepare us to enter the next millennium in a streamlined manner. We do not have any remaining areas to cut.

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We could, however, do some fine-tuning. We need financial control of our destiny. Cumbersome purchasing procedures continually frustrate our desire to do business in a more economical way. We need to be more like private industry and streamline the way we acquire our equipment and supplies, for example. The bureaucracy for purchases of any kind is very complicated. The inability to single-source during tendering processes for equipment purchases such as hats, boots and patrol jackets complicates obtaining these items.

The OPP has also been dependent on the information resource division of the Ministry of the Solicitor General and Correctional Services for technology capabilities. The ministry outlook is to support all divisions equally. Our position is that the OPP has special needs to be able to respond to emergencies and increase efficiency in operations. We are dependent on technology and require focused development for our needs.

The OPP also needs to access the revenue it generates. We provide services to the public on a cost-recovery basis at detachments, such as providing reports, photocopies etc. Money generated by this type of service needs to be credited to OPP operational budgets rather than the consolidated revenue fund. Service fees for visas, reports, letters and firearms permits etc must reflect the real cost of performing these functions.

Police oversight is another area where savings could be realized. In addition to the OPP professional standards bureau, mandates of the special investigations unit, or the SIU, the public complaints commission, or the PCC, the Office of the Ombudsman and the Human Rights Commission overlap each other, which results in duplicating costs. These areas need to have their functions reviewed, parameters narrowed and operating costs examined. We believe the people of Ontario are not aware of the complex, expensive and repetitive nature of police oversight investigations. The OPP Association is supportive of oversight agencies. However, we believe savings realized from a restructuring in these areas could be utilized for the general policing function of the OPP to benefit the citizens of Ontario.

The mandate of this government is to encourage business to relocate in Ontario, creating jobs and stimulating the economy. This is an excellent plan. However, businesses must feel comfortable in the area they are located; tourists in Ontario must feel comfortable when travelling throughout this province. If police funding is not maintained, there will be a negative effect on the OPP's ability to provide a safe and effective service to the citizens of Ontario.

As we prepared this presentation, I reviewed a letter dated May 4, 1995, written by Mike Harris to me and no doubt to several other association presidents. The letter states: "Every person in Ontario is entitled to the security of their person, property and family. We should be able to feel safe in our homes or anywhere else." The letter goes on to say: "That is why law enforcement is one of the three priority areas identified in the Common Sense Revolution, our comprehensive plan for governing Ontario. As a priority area, funding for law enforcement is guaranteed at current levels." For the record, the word "guaranteed" is typed in upper case letters to emphasize its importance.

The OPP Association asks not only the members of the Harris government but also all of you here, as representatives of your party, to maintain funding at current levels for all areas of law enforcement, especially the OPP. We do not want any of the residents of Ontario, especially the residents of rural Ontario, to be deprived of their right to excellent policing.

Mr Carr: It's a pleasure to see you again. I'm familiar, being parliamentary assistant to the Solicitor General, with some of the restructuring that has already taken place, but maybe you could expand on it a little. What you seem to be saying is that you have, as a result of past changes, already done a lot of the restructuring that is happening in other areas and that you've reached the point where you can't do any more. Could you elaborate on the restructuring that has taken place, just outline for members of the committee the tough decisions that have already had to be made with regard to restructuring.

Mr Rick Cazabon: Probably the best example I can give that is probably familiar to most people is the detachment structure out in the field. First of all, the districts were reduced to six regions from 16 districts, and within those districts and now regions, many detachments, mostly two to three detachments, have had their administrative centres amalgamated, therefore eliminating at least two admin centres and providing the administrative function from one location, at the same time bringing together commonalities between those detachments to provide the service on an effective level in that location. That seems to be the most visible change in that regard.

Certainly within headquarters there has been amalgamation of several areas with similar operations. For example, in the investigative field they've brought in the various areas under the command of one bureau, rather than, as in the past, maybe two or three or four bureaus, as the case may be.

Mr Carr: As you know, the minister's announced that they will be taking a look at the whole issue of policing. Do you have any preliminary thoughts? I know there'll probably be some further meetings as we go, but as we take a look at the changes, do you have any other suggestions for the government as we move forward into the next year about the changes you'd like to see in the whole area of policing in the province?

Mr Adkin: The most important thing is just to examine the police function and become efficient for the citizens. That's the important thing. We get back to the public safety aspect. There are areas of service being duplicated by all police agencies, and I think it's important to get beyond that, to look at it and say, "Does every agency need to provide a specific service?" It gets back to getting the bang for the dollar. The other thing that's a concern to us as well is some of the budget draws. For instance, we mention in here oversight court, those types of things. Back in the days when there were all kinds of tax dollars, you could afford these types of luxuries and they were there, but now your government and the entire Legislature are facing some incredible questions and some incredible decisions, and I think we have to take all those things into account. When times are affluent, you can have those luxuries. When they're not, get the money out of those areas and get them back into providing policing for the residents of Ontario, because that's what the people of Ontario expect.

Ms Castrilli: Thank you both for appearing here today on a very serious subject which we're all very worried about. Prior to being elected to the Legislature, I used to have the luxury of time, and I used to spend part of that time in rural Ontario where I and my fellow residents enjoy the benefits of the OPP services, since we don't have a police force of our own. I can attest to the work you do firsthand. I want to be very clear on what you've said here, particularly with respect to rural Ontario. It's your position that further cutbacks would seriously jeopardize the services you could provide to those rural communities. Is that right?

Mr Adkin: That's correct.

Ms Castrilli: That's what you're saying. I read what the Premier wrote to you, and it sounded to me very much like the Charter of Rights and Freedoms and its guarantees of life and security of persons, which you are committed to upholding. But I look at page 8 of the Common Sense Revolution, which states, "Funding for law enforcement and justice will be guaranteed," and the reason is that "the people of Ontario are rightly concerned about community safety in our province, particularly increased incidence of violent crime." What did you think that meant before the election?

Mr Adkin: Exactly what it said. We all looked at it and we were all analysing it and thinking that law enforcement would be guaranteed and the funding for law enforcement would be guaranteed, and that's what we were counting on.

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Ms Castrilli: But the situation is now different?

Mr Adkin: It would appear that it's moving to that direction, yes. We've seen it with funding cuts to the municipalities, without any type of envelope funding or directed funding. Our municipal counterparts and also ourselves were very concerned about where these budgets are going and what's going to be happening. We're concerned as well about providing protection to the public.

Ms Castrilli: So are we all.

Mr Kwinter: Can you tell me what proportion of your budget is used for uniformed personnel?

Mr Cazabon: In terms of salary and benefits or equipment or --

Mr Kwinter: I guess equipment relates to the number of people you have; if you have fewer people you'd have fewer -- just what is your personnel allotment of the budget, on a percentage basis?

Mr Cazabon: On a percentage basis, probably 80% of the budget is to salary and benefits. The remainder would of course fund the equipment used and the offices and so forth.

Mr Kwinter: So it's fair to say that any cuts would really have to relate to cuts in personnel -- at this stage, given the fact that you've already restructured?

Mr Cazabon: That's correct, sir.

Mr Kwinter: It's interesting. I was looking at the figures in 1984, 12 years ago, and was uniformed OPP personnel was 4,266, and according to your figure it's now 4,627. The personnel has grown by 361 over those 12 years, and I'm sure the population and the area of service has grown in far greater proportion than the 361 growth in the complement. Would that be a fair statement?

Mr Adkin: That's correct, yes.

Mr Kwinter: So any cutback in personnel is going to severely impact on the delivery of service. It's not going to be found in administration. You've already gone that route.

Mr Cazabon: Yes, sir, you're quite correct. The evidence is that police officers today, within our force, are responding to calls for service and really don't have an opportunity to do any proactive policing; it's all reactive, from one call to another to another, and it continues. In the statement we've made, the OPP is based on a 92% response model, which means certain procedures are put in place so the officers respond to 92% of calls within a certain amount of time. That can vary, depending on where you live and your access to policing services. The pressures are there. They're already working to that level of reactive policing rather than proactive policing. We'd certainly at least like to keep it at the reactive level, if not improve on that down the road.

The Chair: Thank you --

Mr Kwinter: Mr Chair, I have to get this in. You've done yourself a disservice. When you list your responsibilities, you've neglected to talk about the services you provide to this precinct, which are very important, considering what we've been going through in the last little while. I want to thank you for that.

The Chair: I'm glad you got that in.

Mr Silipo: Thank you very much for the presentation. One of the things that is going to be really revealing to watch in the next little while on this whole area is to see how the government deals with its commitment to you and to other police associations that it would not cut funding for law enforcement. One of the lines of argument we've heard, and I'm sure you've heard, with respect to municipal policing is that the government doesn't make that decision, that it's really the municipalities at the end of the day who determine the budget. I would argue strongly with that, because as you pointed out, if they're cutting funds to municipalities they really are putting the pressure on them to, among other things, look at cutting police budgets. But on the provincial level there really will be no escaping it. It will be clear. They will either hold their promise or they won't.

What I worry a little about is whether the kind of rumours we've been hearing recently about potential cuts -- either they will show that the government is not going to keep its promise, or I fear that maybe what they're doing is trying to position for some other changes. You talked in the brief about a number of the police oversight functions. I don't think it's a secret that the government of the day isn't particularly that enamoured with a number of those police oversight functions, and I wonder if this isn't just a setup to get people focused on that issue. You've made some points in here about some concerns you have and some ways in which you think that process could be improved, but even if some of those things were done, are we talking about finding big dollars there?

Mr Adkin: I guess that's an issue you have to look at each budget, but there are other ramifications there -- the types of complaints they investigate, how long they investigate them, the support services they require -- and I think when you get in there, there are significant savings. It's like so many things. You have a pendulum, and the pendulum swings to one side, and there's a time when you have to say: "It's been over there. Now we have to bring it back on line." In this day and age, with dollars so tight, any saving is important, and from that I think there would be significant savings.

Mr Silipo: I'm not arguing with the need to look at those; let me be clear on that. What I'm sort of warning is that maybe what is going on here is not so much an issue about cuts in OPP budgets. I hope that's not what's going to happen, and I know you hope that won't happen either. But I worry that what the government is doing is playing a bit of a game here and trying to do a setup towards fulfilling another part of its agenda. I just say that. I may be wrong, and time will tell. I certainly hope, as you do, that the government, whatever else it does, maintains its commitment to you and to the people of the province to continue funding the OPP at its current level. You said that's clearly your understanding, and I think that's everyone's understanding, from the election. We'll see what happens.

The Chair: Thank you, gentlemen, very much for coming in and making this presentation this evening. We appreciate the OPP's presence again in this building.

That brings to a conclusion our --

Mr Kwinter: On a point of order, Mr Chairman, if I could beg the indulgence of this committee. Since we have been hearing presentations, we've been getting some conflicting versions of what happened in New Zealand. I personally have no idea and have an interest in knowing which side is the right one. We had a witness today say that the figures given by an association were wrong and his were right. Could we ask the Legislative research person to look into the figures so we know what they are, so that when they're used as a reference, as they've been done by several witnesses, we at least have an impartial view of which figures are the right ones.

Mrs Marland: Have you seen the film that was made by 60 Minutes or The 5th Estate or somebody on the New Zealand example? You might like to see that.

Mr Kwinter: I would like some hard copy. One person says their unemployment went to 16%; another says it's at 4%. I'd just like to have something impartial that says, "This is what it is." It isn't interpretive, the numbers are there, and at least we can put these contradictions to rest and know what they are. People keep referring to it, and it's important that we at least have a benchmark as to what are the numbers, whatever they are. I'm not trying to in any way skewer anything. I just want to know what the numbers are so at least we can have a reference point.

Mrs Marland: That should be available at the library.

Mr Silipo: I would certainly support that request. I'm not sure we will agree on what the numbers are, but if Ms Drummond or anybody else can get us some dispassionate information, that would be useful for the committee. As Mr Kwinter said, we can argue about various theories and approaches, but if we have hard data, that certainly would be helpful in a discussion.

Mr Ford: I agree with Mr Kwinter. I was sitting here today and last week listening to all these figures being bandied around, and I just wrote down a little comment: "Lies, lies, and more lies." I just got so sick of it I couldn't stand it. I would like to second the motion by Mr Kwinter that we carry on with that investigation.

The Chair: Is the quote not "Facts, data and lies," that they're all the same thing?

Mr Ford: You get tired of sitting here listening to this. If somebody comes in with one set of figures and then they come in with an opposite set of figures, you're sitting there in sort of a tizzy. You have to go back to your office and try to check out some of these things, and it's water over the bridge, or under the bridge -- whatever you want to call it; over the falls -- and you're sitting there and you can't get back.

Ms Castrilli: I would most assuredly concur with Mr Kwinter on this issue as well as many others. The only thing I would add is that we should be clear on what we want to have. I don't think we need to have an enormous amount of information, but there are certainly about a dozen or so indicators, the kind of statistics we've had, that we need some clarification on. If I can be of any assistance to the researcher, we've done some research already which we would be happy to provide, or she can go on her own and gather more.

The Chair: Everybody seems to be in agreement. Thank you.

I would make two further announcements. You have had distributed a schedule for the second week of auto insurance hearings, the travelling week. If there are any personal needs you might have concerning those travel arrangements, would you please let the clerk know as soon as possible so we can try to accommodate them.

Second, a report was distributed by Alison Drummond, our researcher, regarding the writing of the report. A number of different formats might be used. I suggest we have a discussion on that after your review of that paper. We could have that discussion Thursday, just before we recess for lunch, if that's acceptable to the committee.

There being no further business before the committee, we stand adjourned until tomorrow morning at 9:30.

The committee adjourned at 1711.