Mr Ted Arnott (Waterloo-Wellington PC)
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr David Christopherson (Hamilton West / -Ouest ND)
Mr Doug Galt (Northumberland PC)
Mr Monte Kwinter (York Centre / -Centre L)
Mrs Tina R. Molinari (Thornhill PC)
Mr Gerry Phillips (Scarborough-Agincourt L)
Also taking part / Autres participants et
participantes
Ms Marilyn Churley (Broadview-Greenwood ND)
Mrs Sandra Pupatello (Windsor West / -Ouest L)
Clerk / Greffier
Mr Tom Prins
Staff / Personnel
Mr David Rampersad, researcher, Research and Information
Services
Ms Elaine Campbell , researcher, Research and Information
Services
The committee met at
1002 in room 151.
PRE-BUDGET CONSULTATIONS
INSURANCE BUREAU OF CANADA
The Chair (Mr Marcel
Beaubien): Good morning, everyone. If I can get your
attention, we'll bring the committee to order. Our first
presenter this morning is the representative from the Insurance
Bureau of Canada. Could you please step forward and identify
yourself for the record.
Mr Mark
Yakabuski: Good morning, Mr Chairman. I'm Mark
Yakabuski, the acting vice-president of the Ontario division of
the Insurance Bureau of Canada. I'm first of all pleased to have
this opportunity to appear before the committee this morning. I
should note that I'm not a complete stranger to this building. My
father sat in the Ontario Legislature for seven terms, and I
frequently remember visiting here at Queen's Park as he sat in
the Legislature and in his office, so it's a pleasure to be here
this morning.
I really have three messages
that I would want to enjoin you to consider as you make your
recommendations to the Minister of Finance, and to the
Legislature, of course, with respect to preparations for the
upcoming provincial budget.
First of all, I think that as
the province now moves into a virtuous cycle where one hopes that
there will be budgetary surpluses for at least some years to
come, debt reduction has to take on an importance that we have
not accorded it in the past. I don't have to remind you that, as
you scrutinized the Economic Outlook and Fiscal Review that the
Minister of Finance brought down earlier this fall, you would
have noted that the total provincial purpose debt in Ontario now
stands at $119 billion. That's a large figure. It is costing the
government of Ontario $9.3 billion in interest costs this current
fiscal year. That's about one half, a little bit less than one
half, of what the government is currently spending on health and
long-term care expenditures, and significantly more than the
government currently spends on education. So that to the degree
that we are able to reduce the province's debt-servicing costs,
that will leave the government with considerably more resources
to dedicate to the problems that we know have to be
addressed.
I want to say that Ontario,
in our estimation, just as it has led the country in a vigorous
tax-cutting campaign in some sense-I hope that the government
would also now want to add debt reduction to that equation and
essentially lead the country in trying to establish a coordinated
debt-reduction strategy with the federal government and the other
provinces. That way, we are likely not to have increased interest
rate hikes by the Bank of Canada etc that will add to our debt
servicing costs in the future. I want you to perhaps take
seriously the issue of a national strategy with Ontario playing a
leadership role in this respect.
The second point I want to
impress upon you this morning is the need to continue to exert
vigorous controls on spending. There's no doubt that the
government has, over the past few years, cut certain
expenditures. The need to control expenditures in Ontario was
great, and we applaud the government for having done that.
However, I note, for example, that, as mentioned by the Minister
of Finance when he appeared earlier before this committee,
expenditures this year in Ontario are likely to be about $61
billion. Now, just two years ago expenditures were $54 billion.
That's a $7-billion increase in just two years.
What I'm saying is that there
is a great danger as we move into a surplus situation, human
nature being human nature, that we will loosen the purse strings
and there will be an attempt in many, many instances out there to
increase that spending further. I simply say that there must be
continuous and vigorous controls on spending, particularly as we
move into a possible surplus situation.
If there are to be increases
in expenditure, we believe strongly that they ought to be
dedicated to areas that can clearly be shown to improve the
province's productivity or, in the end, be shown to save
taxpayers money.
I'll give you two examples.
Most of the increases in expenditures over the past couple of
years have been dedicated to health care, in particular, and
education. We would not differ with spending more money on health
care and education. I think the public believes that those
services have to be strongly protected. However, we also believe
that you have to bring some reform to the system and not just
throw money at all the problems. That said, you have to be
careful that you don't throw money at every problem out
there.
The other thing I would say
is that insurance companies are specialists in loss prevention.
That's really the principal reason that I am here today. We try
to reduce losses so that we
can keep premiums under control and make them affordable. What we
note is that there are lots of liabilities that the government of
Ontario faces-most of them are funded. We know that health care
expenditures are going to go up in future years; presumably,
you're going to make provision for that, as you do in other
areas.
One area for which provisions
have not at all been made is the whole area of paying disaster
relief costs in the face of future natural disasters. Yet we
know, based on virtually every climate study that has been made
over the past five years-we know from a recent report put forward
by the United Nations environment program, for example-that it is
expected that severe weather events will become more frequent and
more severe in the years ahead.
Ontario is not immune to
natural disasters. We all lived through the ice storm of just two
years ago. As of today, the government of Ontario and the federal
government combined have spent about $250 million on disaster
relief to clean up from the ice storm of two years ago. That does
not take into account the costs incurred by Ontario Hydro, nor
the cost of bringing in the military to do a lot of that cleanup
work. So that was a very expensive natural disaster. The fact
that it cost insurance companies about $1.5 billion is an aside,
but the point is that there are large future liabilities out
there for which no provisions have been made. I don't have to
remind you-if you didn't experience it personally, your parents
did or it's there in the history books-that Hurricane Hazel, in
1954, left 4,000 people homeless, 81 people dead and cost
millions of dollars in damages. This sort of thing is very likely
to recur in one form or another.
1010
What we have recommended at
the Insurance Bureau of Canada is that all levels of government
get together to essentially address this problem and in the end
save taxpayers money. How? We approach national disaster
reduction in this country by paying a great deal of money after
the natural disaster strikes. As I say, in the ice storm case
here in Ontario we spent about $250 million. We could
substantially reduce the costs of natural disaster relief if we
invested money up front in preventive projects; for example, the
building of dikes in areas that are subject to recurring
flooding. Currently they're developing technologies; for example,
in the case of the ice storm, cables on which ice would not
collect, using different polymer surfaces and all that sort of
thing. If we invested a little bit of money in some technologies
in preventive projects, we could save substantially in the
future.
Probably the very best
example of a preventive project that has saved millions of
dollars over the years is the Winnipeg floodway that was
constructed in the late 1950s and 1960s, again a joint effort
between, in that case, the Manitoba government, ie, the
provincial government, and the federal government. It cost about
$63 billion at the time. It has been used 17 times since it was
opened and it has literally saved billions of dollars in flooding
costs that otherwise would have hit the city of Winnipeg.
That's just one example.
There are many examples that we could use here in the province of
Ontario where by investing a small portion of money up front we
would reduce the liabilities of the provincial government and
other governments in addressing natural disasters. I want to
enjoin you to take that seriously. You have a major unfunded
liability out there and it's better to address it now than to
wait until after the storm comes.
My third message is simply
this: Ontario has made great strides in reducing personal income
taxes. We believe that should continue as the budget allows.
However, it's also time, as Ontario moves into a more virtuous
fiscal cycle, to make sure that our corporate income tax is more
competitive. We would ask that the province undertake a review of
corporate income taxes in the province to make sure that they are
competitive with our most competitive jurisdictions. As part of
this, as part of a general corporate tax review, we would
encourage the government to look at some of the taxes that are
laid on financial institutions in this province and in particular
the property and casualty insurance industry.
In particular, I would like
to simply recount for you how it came to be that auto and
property insurance is the only financial service taxed in this
province at the retail level. There are no other financial
services that are taxed at the retail level, and that's for a
very good reason. Nowhere in the world, except in some provinces
in Canada, are financial services taxed at the retail level. Why?
Because financial institutions pay large amounts of money in
capital taxes, in premium taxes, in payroll taxes and in
corporate income taxes, all of these before the product is
delivered to the consumer.
In 1992 the previous
government here in Ontario, basically as a means of generating
quick and easy revenue, applied the provincial sales tax for the
first time in history on property and auto insurance. That tax is
now generating for the province approximately $600 million a
year. It's very simple: That simply adds $600 million a year to
the cost of property and auto insurance in the province, which
already in some cases is a product that is not affordable.
I would ask you to take a
look at that tax, which was introduced for purely
revenue-generation purposes and is not consistent with the
principle that products should not be taxed twice and three
times, and take into account the large amount of premium tax that
property and casualty insurers are already paying in Ontario,
provincial income taxes, PST on the claims we pay out to rebuild
homes, to repair cars. We are paying an additional $600 million
already to the province of Ontario, as I say, on that traditional
tax base. I'd like you to at least take a look at why you singled
out property and casualty insurance for a retail sales tax that
does not apply to other financial services.
In summation, I simply want
to impress upon the committee the need to commit the province to
a solid debt reduction strategy, to control spending vigorously
in the months and years
ahead, to make provisions for future natural disasters that
represent a huge unfunded liability at the present moment and to
ensure that our corporate income tax system is more
competitive.
The Chair:
Thank you very much. We have approximately four and a half
minutes per caucus. Since the third party's not here, I'll change
the rotation and start with the government side.
Mr Doug Galt
(Northumberland): Thank you very much for an interesting
presentation. I do appreciate some of your thoughts and concerns.
A couple of questions, but first, as you mentioned the debt-and
you're really concerned about it-in the beginning of your
presentation, I want to bring to mind what's going on. At the end
of this year, predicted almost a year ago, $121 billion would be
the debt. Looking at the end of our first year, because I don't
think we can be blamed for 1995-96, the debt at that time was
$101.396 billion, the difference being $19.82 billion. Now if you
take off the Ontario Hydro debt, which has been rolled in there,
the real increase of government activity has been $10.9
billion.
What I think is
interesting-and I hear from the opposition, "Oh, this tremendous
increase"-is that if you really looked at and wanted to look at
the extreme from our side to lobby, you could say we started with
$101 billion, plus $30-plus billion from Ontario Hydro, being
$130-plus billion and we're coming out at the end of this year at
$121 billion. We've actually cut the debt by $10 billion. That's
the kind of creative mathematics the opposition has. I just
thought I'd be a little creative and point that out.
Interjection.
Mr Galt: You
see Mr Phillips really enjoying that, but it's all-
Mr
Yakabuski: Yes, right.
Mr Galt: If
we were to follow the red book predictions in 1995, I can tell
you the debt would be a lot more because it said so in the red
book. Everybody who comes in wants to spend more, so obviously we
know where we'd go.
I have two questions. One
relates to insurance rates and what do you do with your rates to
promote the kind of prevention you were talking about. I know on
poultry barns, for example, your rates are different if there's a
generator, but what about my home? If I have a generator, would
that give me lower rates?
Second is the retail sales
tax on property and car insurance that was brought in by the
previous government. If that was removed, the government would
lose $600 million-your figures-how many jobs would be created in
Ontario?
Mr
Yakabuski: Good questions. First of all on the debt, I
don't want to say that the government has contributed immensely
to this debt. I think your figures make a strong argument in that
case. What I'm simply saying is that having addressed the tax
side vigorously, if we continue to control spending-and we
applaud you for that-let us not forget that we still have a large
provincial debt on which we have to pay debt-servicing costs.
Those debt-servicing costs are very large and therefore the third
part of the equation should be addressed. That's all I'm saying.
I think there's probably going to be a bit of room in future
budgets to be able to do that, and I'd ask you not to forget
that.
Mr Galt: I
just had to get that on the record.
Mr
Yakabuski: I understand that. With respect to what we're
doing for natural disasters, first of all we pay out a huge
amount of money to help people recover from natural disasters. As
I said, in the case of the ice storm the property and casualty
insurance industry paid out almost $1.5 billion-more than all of
the governments combined. But what we do is this: First of all,
you're rated on where you're located. For example, in cities or
in rural areas it's to what degree are you close to a fire
hydrant or to what degree do you have a proper municipal fire
service in your locality. These things bear on the premium that
you will pay.
1020
Most farm insurance policies
in this province are provided by farm mutual insurance companies.
I do not represent the farm mutual insurance companies. Most of
these are old companies that have grown up over a century and
more. I think what we found in the course of the ice storm was
that a lot of farmers out there had pretty bare-bones insurance
policies. When you come to agricultural and commercial insurance
policies, there is no one policy that is the same. It's
essentially a negotiation between you and your broker. What kind
of coverage do you want? what kind of coverage do you think you
can afford? To the best degree possible we try to rate on the
basis of what we think the future risk is going to be.
I would simply say this: As
the evidence mounts that there are going to be more frequent and
more severe natural disasters, we can expect in the future
pressure on insurance rates, particularly at the property level,
to reflect the fact that that risk is probably going to go
up.
Mr Galt: How
many jobs are we going to create in-
Mr
Yakabuski: In terms of jobs, we haven't done a-
Mr Galt:
That really sells to the Treasurer.
Mr
Yakabuski: Exactly. That's a very good question. We
haven't done a complete calculation as to how many jobs would be
created in Ontario if we got rid of the PST, but I can tell you
this much: Give me about a month and a half and I hope we're
going to have a study completed that will answer that
question.
Mr Galt:
Maybe for this budget we need it a little quicker.
Mr
Yakabuski: Well, if we can do it more quickly, we can.
It's an excellent question and we'll get back to you on that.
Mr Gerry Phillips
(Scarborough-Agincourt): Just on the debt, I deal in the
real world. When the government came in the debt was $88 billion
and today apparently it's $119 billion. They can say, "We had
nothing to do with that first year," but actually the revenue
came in higher than the NDP had estimated. The government has
control of expenditures. When I go to the bank, a dollar is a
dollar. The only reason the debt went down a little bit over their estimates was that they
delayed cash payments this year of about $2 billion.
Be that as it may, the first
issue I wanted to raise with you is that I think some people,
when they look at the finances of the province, aren't aware-and
this is into detail now, because you mentioned it in your opening
remarks-that many of the expenditures that are recorded this year
really are offset by revenue in the budget. So when you talked
about the expenditure increase, it really isn't. There's about
$3.5 billion there that is not a new expenditure increase. Some
$2 billion is something called local services, where the province
continues to deliver services for the municipalities but they
charge the municipalities for that because they plan to hand that
over to them. So it's just an offset; it's not really an increase
in expenditures. The $500 million for Ontario Hydro is a new
expenditure but completely offset by revenue. And the capital
budget is $2.9 billion but the government has already said that
over the next four years that's going to drop by at least $1
billion a year. That was a one-time extra infusion.
When you're comparing the
expenditures-because I think in your opening remarks you
suggested that expenditures are up substantially-there is about
$3.5 billion that is, in detail, not really net incremental
expenditures, but that probably is more detail than we need to
get into.
My question is on one of your
major proposals, and that is the removal of the tax on premiums,
which by the way is one of the key reasons why it's more
difficult to blend the GST and PST in Ontario, as you know. Your
first recommendation on finances is to reduce the debt.
Mr
Yakabuski: Yes.
Mr Phillips:
Is it your recommendation that the debt reduction comes ahead of
removing the tax on your insurance premiums?
Mr
Yakabuski: I think there's a way of staging those two
things in such a way that you can achieve both. I've not given
you a time frame within which you might want to address those two
objectives, but I think, given the revenue growth we are
currently seeing in Ontario, it's not unrealistic to think that
we could remove that PST on property and auto insurance and still
get around at some point to reducing the debt somewhat. So I
think these objectives, timed properly, can be achieved, but I
appreciate your point that this takes a concerted strategy and
that you have to do this probably over a staged basis.
Mr Phillips:
As you probably know, the government has already made three major
commitments on the "fiscal dividend," the roughly $5-billion tax
cuts. Future tax cuts have been announced, about $500 million a
year on debt reduction for a total of $2 billion over the next
four years, and about $2.5 billion on health care. So the future
fiscal dividend that you may see on the horizon, you're a little
bit late getting to the table because-you're not too late but
you're later than those other three commitments that already have
been made by the government, and that's the basis on which they
got elected.
You make, in my opinion, a
very good point on investments in minimizing damage done through
future disasters. I wonder if you've had a chance-this is one of
your chances, but there is the SuperBuild fund, and it seems to
me, at least as I listen to you, there's some logic in your
arguments. Have you had an opportunity to date to make this same
case to the-I guess he's now called the president of the Ontario
SuperBuild Corp, Mr Lindsay?
Mr
Yakabuski: We have not had a chance yet to pitch this
idea to the president of the SuperBuild corporation, but we
certainly are looking forward to that opportunity. I have
communicated with every member of the Legislature in the last
couple of months, since I took on my duties, to begin a dialogue
on natural disaster reduction, which, as I have tried to explain,
is really a cost-saving measure in the medium to long term.
I think the attention the
province hopes to give to additional capital spending may be an
opportunity for us to impress upon some of the decision-makers
that when you are deciding infrastructure plans, it would be very
wise and economical on your part to take into account the idea
that if we had some projects out there that addressed the
vulnerability of communities to natural disasters, these
infrastructure projects would prove to be very, very
cost-effective.
We are not talking about huge
sums of money here. Really there are two ideas in our proposal.
One is that a fund, in some respect, should be created in concert
with the various provincial governments, with Ontario taking a
leadership role in co-operation with the federal government and
with the participation of the municipalities as well to create a
fund that would see the Ontario government, for example,
contributing about $20 million a year to the building of certain
projects that are related to natural disaster prevention. Now,
$20 million is not a huge amount of money.
The second idea is picking up
from what they do in the United States. When a natural disaster
of any size hits a community in the United States, after they
have finished the cleanup, they assess what those cleanup costs
were-say they were $100 million, for example-and they immediately
allocate 15% of those cleanup costs to prevention projects to
ensure that a similar kind of natural disaster would not wreak
the same amount of damage in the future. So if you have a
disaster that costs the government $100 million, immediately $15
million are allocated to prevention projects and you get that
work underway immediately. We think an idea of that sort should
be adopted here in Ontario and elsewhere in Canada.
The timing of this is
opportune in the sense that the disaster relief formula between
the provincial and federal governments is currently up for
renegotiation. This would be a very good time to get some of
these ideas built into the disaster relief formula.
The Chair:
Thank you very much. Mr Christopherson.
Mr David
Christopherson (Hamilton West): Thank you for your
presentation. I note that you placed a fair bit of emphasis on
the tax that was introduced in 1992 during the NDP government, which of course I was a
member of. I actually joined the cabinet that year. Let me say to
you that, first of all, I make no apologies for the fact that we
did that, none whatsoever. Of course, 1992 was the depth of the
worst recession we had seen since the Depression of the 1930s.
This government has been in power for five years now and has
brought in a budget every year, and they've deemed it necessary
or decided to leave it in place.
1030
Even their phony balanced
budget legislation provides that at a certain point it's okay to
run a deficit because you're in such dire financial straits. It
turns out that 1992 is the only year where we crossed that
threshold. So even under the Tories' phony balanced budget
legislation, 1992 would be a year where, even with their hard
right-wing ideology, they would run a deficit rather than eat
into health, education, social services, environmental
protection, all the things that we maintained.
Also, we know now from
looking at StatsCan figures that during the Tory regime, where
we've had the biggest economic boom in the history of North
America, the gap in terms of the income of the very wealthiest
and the poorest is greater now than it was during the worst
recession, at a time when you would think that would be
reversed.
So there are different points
of view, different approaches to these things, but personally I
think we made the right decision. We did everything we could to
maintain the health care system that the Tories are now tearing
apart. We did everything necessary to maintain our education
system and its infrastructure, the very system that the Tories
are tearing apart. The same with environmental protection, social
services. In times of a deep recession, you've got to find the
money to do that or you slash the services. I think that's a
whole hell of a lot better than right now, where we've got this
boom, we're awash in money, the economy is just blowing all
records, driven mainly because of the American economy, and
horrible things are happening in society and yet corporate
profits are up.
So when someone like your
organization looks back and says, "They introduced this tax just
to generate money," yes, we did, absolutely. We did it to
maintain those things that make this a strong, great place to
live. Under traditional Keynesian economics, which I know don't
carry a lot of currency in some quarters these days, the idea
would be that you would take whatever measures necessary in a
recession and then in a good time you start to pay down that
debt, eliminate the deficit and, if necessary, go back and change
some of the revenue-generating measures you took.
Rather than give you the
relief you think you should have, this government has chosen to
give this tax cut that the very wealthy benefit from, and there's
$5 billion or $6 billion there. They could have used some of that
to eliminate the $550 million that your report says comes into
the provincial coffers. While no one likes to be taxed, I would
suggest that if you look at the times we were in and the sorts of
things that we made priorities, the fact that the Harris
government has chosen to leave that in place in good economic
times says to me you've got an uphill fight on this one. If it
was that outrageous, I would have thought that the Tories, rather
than giving $5 billion or $6 billion just to the very wealthy in
Ontario, would have come to you and said, "We're going to take
some pressure off you here."
Mr
Yakabuski: If I could respond to that question, first of
all, I appreciate your recounting the circumstances in which this
tax was brought in. I take it from that that you recognize it was
brought in as a revenue-generation measure. At the very same time
the government had its so-called Fair Tax Task Force in place,
our industry was in effect singled out because it was an easy way
of generating cash immediately.
Clearly, we are no longer in
a deficit situation, in the months to come at the very least. We
are no longer in a recession. Therefore I would simply enjoin
this committee to take a look again and say, "Are there other
financial services that are being taxed out there?" There are
not. Therefore, on what basis can you justify this tax remaining
in place?
I should say that this is not
the first time we have raised this question. This has been a part
of our submission to the government in one respect or another
ever since this tax was introduced in 1992.
The Chair:
On behalf of the committee, thank you very much for your
presentation.
Mr Phillips:
Just as you're leaving, you mentioned here the increasing number
of natural disasters. I wonder if you might provide the committee
with any kind of evidence of that. That's very interesting, to me
at least.
Mr
Yakabuski: We will provide information both
internationally and within Canada to show the increase in cost
both in total numbers and the cost to government in repairing
natural disasters.
YONGE/BLOOR/BAY ASSOCATION
The Chair:
The next presenters are representatives from the Yonge/Bloor/Bay
Association. Could you please step forward and state your name
for the record.
Mr Doug
Jure: Good morning. My name is Doug Jure. I'm a director
of the Yonge/Bloor/Bay Association. Next to me is Norman
Bergstein, who is the president of the association, Next to Mr
Bergstein is John Feeley, who is an honourary director of the
association.
On behalf of the officers,
directors and the membership of the Yonge/Bloor/Bay Association,
I thank the committee for scheduling our presentation this
morning as part of your pre-budget consultations.
By way of introduction, the
Yonge/Bloor/Bay Association was founded 80 years ago and is
recognized as Canada's oldest business association. There are
approximately 4,000 businesses and some 33,000 residents within
our association's boundaries. The YBB represents their rights and
interests before the city of Toronto, the Ontario government and
the federal government.
Our association's achievements include siting the
Bloor-Danforth subway line through Yorkville to promote business
development; establishing the largest business improvement area
organization in Canada to promote and strengthen the appeal of
our community; and bringing the Toronto International Film
Festival to Bloor Street to broaden our community, social and
cultural activities.
Our purpose here this morning
is to talk to you about property tax reform-current value
assessment-in terms of the Ontario government's fiscal policy.
There's no better forum than this committee engaged in
consultations that are an important part in drafting the 2000
Ontario budget.
We intend to argue that the
Ontario government must take steps to correct systemic problems
in the Ontario fair assessment system as it relates to commercial
properties and that it must recognize that the property tax rates
supplied by the city of Toronto have created a tax liability that
will drive landlords out of our community and with them retailers
who are important to the social fabric of our city.
Although our membership
stretches from St George Street in the west to Sherbourne Street
in the east, and from Alcorn Street in the north to Wellesley
Street in the south, our community is most often referred to as
Yorkville. As Canada's premier shopping district, our retailers,
contrary to popular belief, are experiencing challenges not
unlike those of other retailers in Toronto and in your own
constituencies.
It's just after 10:30. Our
retailers have been open for over a half an hour. It's another
day in what is typically a six-day workweek. Business hours are
usually from 10 am to 6 pm on Mondays, Tuesdays and Wednesdays,
from 10 am to 8 pm on Thursdays and Fridays and from 10 am to 5
pm on Saturdays. Additional hours are spent on planning
promotions, taking and ordering inventory, managing staff and
collecting and paying taxes. Our member retailers spend an
average of 60 hours a week at their work for very little
profit.
We recognize that Yorkville's
reputation precedes us. Repeatedly described as the tony or
upscale shopping district, the image masks the serious problem
that no doubt is being repeated in downtown shopping districts in
your own constituencies.
Not unlike communities
throughout Ontario, Bloor-Yorkville evolved to what it is today
because of a mix of commercial and residential developments.
Three decades ago, several of the little buildings along rundown
Yorkville Avenue were converted into coffee houses and became
Toronto's locale for a new generation of folk singers, notably
Joni Mitchell, Neil Young and Gordon Lightfoot. Their audience,
the hippies, were drawn to the district. They moved into the old
village's rooming houses and brought new life to the district.
The first major traffic control problem was resolved by the
police who kept Yorkville open despite resident hippies'
intentions to close the street and for awhile an emergency
medical trailer opened for business every summer day in a nearby
parking lot to cope with acid trips gone wrong. Those were the
most significant events since Toronto had absorbed the village of
Yorkville in 1883.
Today, Yorkville is an
eclectic blend of restored Victorian houses and world-class
hotels. The main streets of Yorkville are busy city arteries,
overwhelmed by pedestrians, cars and delivery vans. Yes,
Yorkville has the highest concentration of hairdressers, plastic
surgeons and international movie stars in Canada, all of which,
no doubt, are related.
The Hudson's Bay Centre,
the Holt Renfrew Centre, Cumberland Terrace, Hazelton Lanes and
the Manulife Centre are all major retail centres in our
community. Bloor Street, from Church Street on the east to
Bedford Road on the west, is home to leading Canadian and
international retailers. Throughout Yorkville, small independent
retailers carry out their business in a variety of renovated
buildings ranging from restored Victorian houses to low-rise
buildings on Cumberland and Scollard Streets and on Yorkville
Avenue.
1040
Despite a strong
economy-the popular perception-there is little by way of new
commercial development in Bloor-Yorkville. For instance, Birks
opened its renovated store in the Manulife Centre just before the
Christmas retail season. The Gap opened its renovated and
expanded store on the northeast corner of Bloor and Bay Streets.
Cartier opened its new store at 130 Bloor Street West. The office
building formerly occupied by Crown Life at 120 Bloor Street East
is undergoing a complete renovation. Plans are underway to
construct an 11-storey hotel at the northwest corner of St Thomas
Street and Charles Street West. Construction is underway at 110
Charles Street West for McKinsey and Co's Toronto offices. Only
two of those projects involve new construction. The others are
merely renovations. In reality, what you are seeing when you look
north from this building is condominium construction. Nine
condominium projects are in the final planning stages or have
construction underway.
Although the YBBA welcomes
the initiatives of the province and the municipal government to
support business growth through their fiscal policies, the
implementation of current value assessment on commercial
properties, if left unchecked, will undermine those policies and
drive retail businesses out of Bloor-Yorkville, Canada's premier
shopping district. The YBBA understands the decision taken by the
Minister of Finance in October 1998 to limit property taxes on
small businesses to no more than 10% in 1998 and 5% last year and
this year, to be an interim step. The resultant three-year cap of
2.5% implemented by the city of Toronto in effect delayed the
application of a tax liability that will diminish our members'
capital assets and render their businesses unprofitable. The
commercial properties on one street alone, Cumberland, face a
multi-million-dollar future tax liability. The total 1998
Cumberland Street commercial property tax without the 2.5% cap is
$7.8 million, $5.1 million more than what was paid in 1997.
The substantial and intolerable pending tax
liability is made more difficult to accept because our members
are enduring reductions in municipal services, often with fees
attached. Garbage collection is an example. Other examples
include fewer police services, limited snow removal, less park
and street cleaning and less access to municipal planning
services. In these circumstances, how can the differential
between residential and commercial mill rates go from 15% to a
differential between residential and commercial tax rates of
555%?
For many businesses where
income taxes have become less a concern as a consequence of
dropping profits, property taxes have taken up the slack and in
general have grown to represent a relatively important tax burden
for many corporate ratepayers. Today property taxes represent the
highest single expense to a business, often over 50% of its
operating cost.
To best illustrate our
point, here is what has happened to a member of our association.
She is a fashion retailer whose family owned the building at 18
Cumberland Street. The charts you have in the document before
you, which we will go over in a moment, reveal the impact of
commercial property tax reform since 1997. As you will see in a
moment, if the 2.5% cap had not been applied, her property taxes,
including the business improvement area levy, the BIA levy, would
have increased by a total of 538%. You will note that even with
the 2.5% cap, the BIA levy remained unchanged from the original
1998 assessment. In the first instance, no retailer can absorb a
538% increase in commercial property taxes. In the second
instance, the 2.5% cap was not fully implemented, because the BIA
levy was unaffected.
In your documents you will
see these very simple calculations. This was provided to us by
our member. In the first box you will see that in 1997, under the
old system, a realty assessment of $8,800 applied to a mill rate
of 529.51 gave a cost of roughly $4,400. The business occupancy
tax was set at $2,640 and the mill rate was applied, for a figure
of some $1,398. The BIA levy of $112.20 was attached. So in 1997,
before the reform was introduced, her total property tax bill,
including the BIA levy, came to $5,970.
When the reform came in in
1998-and this was without the cap-her building was assessed at a
value of $414,000, with which she has no complaints. That is
what, if she was going to sell the building, she would expect to
get. But the municipality applied a tax rate of 7.6% and suddenly
the figure is now $31,640. The BIA levy, which I mentioned
earlier, came in at $433.59, for a grand total of $32,074-a
substantial increase from the previous system.
When the cap was introduced
by the government and applied by the municipality, the
calculations dropped her assessment down to $6,004, but the BIA
levy was not capped and came in at $433, for a total expense of
some $6,400.
You'll see also in your
presentation this chart, which is a more visible example of what
happened. This is what happened in 1997. You can see there is
also the business occupancy tax. When the reforms were
introduced, you can see the tremendous increase in her assessment
and then what happened with the adjustment. The question that we
have of course is, where did the business occupancy tax go? It
appears that it is blended into the assessment.
The other point I'd like to
make is that the difference between these is probably one retail
job. That's the impact the system has had on that particular
member.
The other question that we
want to raise is fairness. The manner by which the current system
is being implemented raises that question. The Ontario Property
Assessment Corp, OPAC, has established medians to be used by
assessors when evaluating properties. We understand that these
medians are 0.032, 0.050, 0.059, 0.068 and 0.088. These medians,
in effect, identify discrepancies in assessments and, in doing
so, raise the question of fairness. The following chart
illustrates this point by comparing the 1997 and 1998 assessments
in determining the ratio for 10 commercial properties on Church
Street. This chart you have in your document. These properties,
by the way, are converted rooming houses currently leased for a
variety of commercial purposes ranging from convenience stores to
restaurants and bars. Simply what we're saying here is, if you
take the ratio on these properties, you'll see that the majority
of them are outside the median of fairness.
Our intent was to argue
those two points with respect to commercial property tax reform
and its impact on our retailers and their ability to carry out
business in our community.
First, the Ontario
government must take steps to correct the systemic problems in
the current commercial property assessment system as it is being
applied by OPAC and the city of Toronto. Second, the Ontario
government must recognize that the property tax rates applied by
the city of Toronto have created a tax liability that will drive
landlords out of our community and with them retailers who create
jobs and are so important to the fabric of our downtown.
Therefore, the YBBA
recommends that the provincial and municipal governments, through
the Ontario Property Assessment Corp, undertake the following:
first, assess all commercial properties on current use with
respect to building character, function and usage; second,
implement the 2.5% cap for a further three-year period based on
evaluations during the 1996 base year; third, establish a
property class for retail businesses; fourth and finally, modify
the manner and the methods by which assessors conduct their
evaluations.
Our association welcomes
the finance minister's announcement in the May 1999 budget and
his November 30 financial statements that the Business Tax Review
Panel will examine the current personal, corporate and property
tax systems for their impact on the capacity of business to
create jobs. We believe that the panel will come to the same
conclusion as we have: that commercial property tax reform, as it
is currently being applied, will drive retail businesses out of
Bloor-Yorkville, to the detriment of not only our community but downtown
Toronto as well.
Those are our remarks, and
we're prepared to answer any questions.
1050
The Chair:
Thank you very much. We have approximately three minutes per
caucus for comments or statements or questions. I'll start with
the government side; Mr Arnott.
Mr Ted Arnott
(Waterloo-Wellington): Thank you very much for your
presentation. I'm not sure I fully understand the point you're
making with respect to assessments by the Ontario Property
Assessment Corp establishing medians used by assessors when
evaluating properties and then you list the medians. Can you
explain to me further what that means and how it affects you
negatively?
Mr Jure:
Sure. I'll ask John Feeley, who in fact did the research.
Mr John
Feeley: I recently had an appeal before the assessment
appeal board and the assessor representing the corporation
brought up the matter of ratios. I didn't at that time quite
understand what he was talking about, so I went back to my
office-I happen to be in the real estate and insurance business;
have been for 50 years. These were the figures he presented, the
different ratios he brought up. I went back to my office the next
day-my office is two blocks away from here at Church and
Wellesley and has been for 40 years-and worked out the
ratios.
The whole purpose of the
reassessment was to level the playing field, but obviously, if
you look at these figures here, it has merely perpetuated the
inequality. If you look at these particular properties-and this
is only 10 or 12 out of thousands, not only within this area here
but it probably applies all over Ontario-certainly this is
dramatic. These particular properties were previously rooming
houses. They were four storeys, those old-style houses where the
main floor was about eight or 10 steps above the street level.
The person who owned them redeveloped them, put four steps down
into what was the basement, and therefore this particular level
became the main commercial. In the normal context of a commercial
property, this would be the main income-producing level. The 10
steps up, as compared to four down, became a secondary, and the
third and fourth storeys were used for either offices or
residences.
But what was the basement
area and the main floor are the two income-producing levels.
Imagine the scenario that the income-producing ability of these
properties as a rooming house was nominal; therefore the low
assessment in those days. Somewhere along the line-how these
people got building permits to convert them into commercial
properties without going through the process to be upgraded I'll
never know. When the new system came in, whether they do it in
the office-I don't think they could have done it on-site,
otherwise a blind man would have noticed something was wrong.
At any rate, from a
competitive standpoint-I'm a landlord as well, and a businessman.
I'm up the block, overpaying taxes for 40 years, but I have to
sit there and watch this property down the street operating for a
fraction of my cost. That's where the inequality comes in. In
another case at another building up Church Street, somewhere
along the line somebody added on 30 or 40 feet to the back of the
building from the basement right up four storeys high; it was
never reassessed, and that person has had the revenue from all
these years from all that additional space. Since the
reassessment-the person has sold the property and he's gone now,
but he had all his good years so he was happy, but anybody else
in the area that saw that or knew it would have been most
unhappy.
Mr
Phillips: I appreciate your presentation. Just a comment
on the BOT, that it was planned to-that's what the government
said would happen, that the business occupancy tax would be added
on top of the old realty tax. What you see here-your example's a
good one. In the one you used, that person was paying 30%
business occupancy tax. The average business occupancy tax in
Toronto was 45%, because the banks were paying 70%, small
business was paying 30%; it got averaged into 45%, and ipso
facto, or whatever the right term is, small business paid more
and the average bank tower was going to save $5 million a year in
taxes before the cap came in. So it shouldn't have surprised your
organization; in fact, I think the minister himself said that's
what was going to happen.
My question is that one of
your proposals here is establishing a retail class, I think you
said.
Mr Jure:
If I could just comment, I don't think it was always very clear.
With all respect to the minister, what the minister might say and
then what we actually see and hear and have happen to us in
dealing with the assessment community can be confusing, and it
has raised confusion. In terms of what the public policy is and
what we're actually experiencing at the doorstep, it could be
confusing and different. That was our point.
Mr
Phillips: Well, you said what happened to the BOT
units-as I say, it simply got added in. It's not very pleasant,
but that's what happened.
My question is about your
third recommendation, to establish a property class for retail
business, which is a very interesting idea and I'd like to pursue
it. How would that work where you've got a retail business in a
larger piece of property? Let's say you've got two identical
businesses competing with each other, whatever they are-Harvey's.
One is in a free-standing building; one is in a larger building.
How does your recommendation work to establish a retail
class?
Mr Jure:
John, I'll let you answer that.
Mr Feeley:
To establish a retail class, if you've got these properties side
by side-I happen to be a commercial property owner, and it
doesn't function like this any more, but the way it used to was
that every summer an assessor would come to my building and he'd
look through the building to check that the same tenants were
there, the same amount
of space. I'd take him right through the building and everything
was fine.
Yorkville might be a
classic example of what you're talking about, because there's one
building I'm thinking of-there are probably two or three of them
along there, very large buildings that have a tremendous number
of commercial establishments in them, and you might next door or
a couple of doors away have a three-storey building. It becomes
tricky. The proposal would have to be for anything below maybe
four or five storeys in height. I don't think this proposal would
be intended for, say-when they redevelop Maple Leaf Gardens I'll
be very surprised if they don't have a commercial complex,
possibly in the sub-basement, like when Eaton's College Street
was redeveloped years ago, and commercial entirely on the ground
floor. You've got a 30- or 40-storey building above it with the
tenants supporting the businesses within.
But in this case, if you
take Yorkville, where you have two buildings, a relatively new
one with, say, a restaurant in it, and right next door you have a
privately owned three- or four-storey building with another
restaurant, the business that each of these two businesses is
going to do is reasonably comparable, because in the final
analysis the management of a restaurant determines whether it
does really well or really poorly. But physically you've got them
virtually side by side, so I don't think there should be a
dramatic change in that regard. In the case of a high-rise
building, which I think you're talking about, our proposal is
that if a new class comes in, presumably the new building would
be entitled to the same. Did that make sense?
Mr
Phillips: Yes.
Mr
Christopherson: You would know that this whole
boondoggle was expected, given the fact that the government
rushed the whole CVA in so quickly without thinking it all
through. I'm sure you're aware that after the initial bill was
introduced there were six more bills necessary to try to fix the
mistakes of the first bill, and then the subsequent bills to
correct the mistakes in the bills that were in there to correct
the bill in the first place. I mean, it was just bizarre.
Unfortunately, it's not just a stand-up comedy routine. It
affects a lot of businesses.
Just to show how
complicated this is, in my hometown of Hamilton, downtown
Hamilton and Westdale, where we have two very distinct commercial
areas, the imposition of the cap negated the one benefit that
small businesses in my riding got out of CVA, which was that
overassessed properties in downtown Hamilton, in Westdale, were
finally going to get the reduction they deserved. The cap
prevents them from fully realizing all the savings that they're
entitled to, and it's affecting business. We're still losing
businesses out of those areas because our taxes are not
competitive with neighbouring communities like Burlington, for
instance, and ultimately Oakville. It really is a dog's
breakfast.
1100
I wondered how your
proposal would impact on those small businesses, say, in my
community of Hamilton. How would it impact on those that are in
the reverse situation of where you are? I appreciate that you may
not have thought it through, because it's not your situation, but
I wondered if in studying this you'd come up with how that might
affect places like Hamilton.
Mr Norman
Bergstein: I'll try to answer that question. I would
agree with you. Going back to your preamble with the business
occupancy tax, which Mr Phillips had talked about before, it's
the implementation that is really hurting here. It's a big
problem. With the Ontario assessment corporation, there's
supposed to have been AVA, actual value assessment; then it went
into CVA, current value; and now it's the highest and best use.
So this is really broadening, and you're getting the Ontario
assessment corporation giving it that broad view. They're there
almost as if they are going to get some benefit for it-I don't
mean that in that way, but it's raising all these values.
Our area is feeling the
effect of it and the problem comes back to-I think Doug had
mentioned the value of the property in question that we're
talking about, which had been in the family. The mother owns it,
but she had been this small little retailer and she had been
there likely 40 or 50 years before her daughter, who has been
there 20 years. But $425,000, you'd say, "That's likely the right
value. She'd want that type of money." But nobody out there is
going to buy it because of the situation when the business
occupancy tax is unknown, so the real value may be $275,000 or
$300,000, but there's not a value and you can't implement that.
So going back, my wife is from where you're from, so I am aware
of downtown Hamilton, and Westdale a little better. What can you
do with that? It's hard to say, because there weren't
corresponding benefits, and frankly I wasn't aware that there was
a cap in place at-
Mr
Christopherson: At the other end of it.
Mr
Bergstein And where do you go? I think they have to
rethink this through.
Mr
Christopherson: Absolutely.
Mr
Bergstein: At least the cap kept everything in
proportion so there wasn't a dramatic shift. There wasn't a 535%
increase going on in some properties but other properties are
saying-at the end of the day it was supposed to be
revenue-neutral; some would go up, some would come down. But what
was going to happen-and this I guess is the other side of it.
Maybe we're too insular. We're looking more in our area, which
covers a wide spectrum, and not just Yorkville, but Church Street
and everything else-
Mr
Christopherson: That's fine. So you should.
Mr
Bergstein: You're hearing horror stories: People put
properties up for sale. There's no sale; they're not going
through. I think they have to look at both, and I think this what
the government may have wanted, in terms of the local
municipality to apply it or not apply it as it affects their
area.
The Chair:
On behalf of the committee, thank you very much for your
presentation.
EARTHROOTS
The Chair:
Our next presenter this morning is from Earthroots. Could you
please step forward and state your name for the record.
Mr Kyle
Ferguson: My name is Kyle Ferguson. I'm a campaigner
with Earthroots.
The Chair:
Welcome on behalf of the committee, and you have 30 minutes.
Mr
Ferguson: Well, I probably won't need that long, but
we'll see. As I said my name, is Kyle Ferguson and I'm a
campaigner with the environmental organization Earthroots, and on
behalf of Earthroots I'd like to thank the committee for giving
me the opportunity to come here and speak with you today.
As you may be aware, since
1986 Earthroots and our predecessor organization, the Temagami
Wilderness Society, have worked towards the preservation of
Ontario's old-growth forests, and while we've not left behind
this issue, over time we've expanded our mandate towards the
preservation of other threatened ecosystems throughout Ontario.
During this government's Lands for Life crown land use planning
process, our organization played an active role in mobilizing the
public and pushing the government for more protection. Although
we were highly critical of many of the decisions that were made
during the process, in the end we felt that it was a good step
forward towards ensuring that wilderness areas will remain wild
into the future.
The reason that I am
appearing before you today is to encourage this government to
continue the process of protecting threatened ecosystems into
their second mandate. As I am sure the committee members are
aware, there are precious few natural areas left in southern
Ontario, and this is due largely to the growth of urban areas
into areas that had previously been considered "the country." As
urban sprawl continues to expand, the stresses on these remaining
ecosystems will only be increased.
The most striking example
of this problem is the growing crisis on the Oak Ridges moraine.
This area, which lies just north of the city of Toronto in a
160-kilometre stretch from the Niagara Escarpment in the west to
the Trent River in the east, represents the largest area of
wooded habitat in the greater Toronto area. Often called the rain
barrel of southern Ontario, it contains the headwaters of more
than 30 rivers, including the Don, the Humber and the Rouge. It
also serves as the breeding ground for approximately 130 bird
species, including the threatened red-shouldered hawk. This area
also contains several rare kettle lakes and many areas of natural
and scientific interest. While providing crucial habitat for many
birds and animals, the moraine also serves as an important area
for recreation and tourism.
Unfortunately, the
ecological integrity of the moraine is currently threatened by
urban sprawl. Developers have plans to build thousands of new
homes on the moraine in the coming years. This poses a threat to
the connectivity of the moraine and to the water resources which
lie below it. At the moment, over five million people live in the
GTA, and it's estimated that another two million people will live
here by the year 2021. With this continued population increase,
the pressure to build here can only accelerate.
With these things in mind,
it's important that the government act now to ensure that this
important resource is protected for future generations.
Therefore, I want to throw out a challenge to this government.
I'm asking that the government set aside 5% of the proposed
SuperBuild Growth Fund, a mere 5% of this fund, a total of $1
billion, to be put towards a southern Ontario protected areas
acquisition fund. This would be an opportunity for the government
to make an ecological investment in the health and well-being of
the citizens of Ontario and the ecological health of the
ecosystems in southern Ontario.
This fund could be used to
secure some of the most threatened ecosystems throughout southern
Ontario, starting with the Oak Ridges moraine. It would be an
opportunity to build on successes achieved in protecting areas in
northern Ontario. As well, we feel that this fund could help
leverage monies from other sources in an effort to protect what
is left of a rapidly disappearing natural landscape in southern
Ontario.
In 1999, this government
increased protected areas in northern Ontario by 6%. With the
creation of the southern Ontario protected areas fund, we hope
that this government will begin the process of increasing
protected areas in southern Ontario.
I'd like to thank the
committee for the opportunity to present here, and I'd be happy
to answer any questions you might have.
The Chair:
Thank you very much. We have approximately 10 minutes per caucus.
I'll start with the official opposition.
Mr Monte Kwinter
(York Centre): I'd like to talk to you about the Oak
Ridges moraine. That seems to be the hot topic in southern
Ontario at the moment, the one that's getting most of the
attention.
How do you deal with the
conflicting interests that are there, in that in an ideal world
everybody would want to protect everything, but in the real world
there are various pressures from various groups that see their
needs may be more paramount than other people's needs? How do you
address that and how do you resolve that so that there can be
some compatible use of what are common resources for
everybody?
1110
Mr
Ferguson: I think this is really where the role of the
provincial government comes into play. As you know, in 1995 there
were a lot of changes to the way planning got done in Ontario,
and our organization has called for the province to take a lead
to become in a sense an arbiter to set up something. We haven't
specifically said something like the Niagara Escarpment
Commission, but that's a very good example of an institution that
balances the need for protection and development. We would really
like to see, through the use of this particular fund, critical
areas on the moraine purchased or traded or somehow protected and we think the provincial
government has that role. The municipalities are all competing
for development and tax dollars, and we don't think they are in a
really good position to have a broader picture of protection on
the marine. If the province would get back into the game of
looking at development, we think there's an opportunity there to
balance those conflicting interests. Again, I bring up the
example of the Niagara Escarpment Commission. It's recognized by
the United Nations as a really good example of how you balance
those competing interests.
Mr
Kwinter: I used to sit on the Metropolitan Toronto and
Region Conservation Authority. In the 1970s, the provincial
government came out with a very ambitious plan for the parkway
belt. I don't know whether you are familiar with that particular
plan, but it set out a band of green space to the north of what
was then the developed area in Metro. That particular parkway
belt has all but disappeared, and the reason is population
growth-pressures to make sure this can be serviced properly, to
look at the watersheds, to look at all of these things. Even now
we have some other conservation authorities selling off some of
their land that they don't think is absolutely critical to flood
control and things of that kind.
My concern is that these
pressures-and as I say, I'm absolutely in favour of saving the
Oak Ridges moraine, but how do you deal with the conflicting
interests that are out there, the natural evolution of population
growth and the ability to service those people in an economical
way to keep it all in tact? How do you deal with that?
Mr
Ferguson: There are a number of points. As you say, the
population of the greater Toronto area is going to continue to
increase and that will continue to have pressure on areas like
the moraine. However, there are lots of ways to develop without
building on top of the moraine.
I think you have to
recognize that the moraine has this huge aquifer underneath it.
We're only now starting to realize that those aquifers are all
connected, and if the people of Toronto and southern Ontario want
to preserve their drinking water, you can't build on top of it.
What happens when you build on top of it is that you pave over
the surfaces. It's like a sponge, and if you pave over these
surfaces, all kinds of contaminants like oil from your car or
gasoline from the lawnmower, all that sort of stuff will
percolate down into the aquifer.
I was at a meeting at York
region about two weeks ago. A local councillor there from
Richmond Hill, Brenda Hogg, has said that from the numbers she
has looked at, there doesn't need to be any development on the
moraine because you can do all kinds of in-field projects with
the various subdivisions that are already there. There is already
enough capacity without building more capacity on the
moraine.
There was a lawyer from the
city of Toronto who was talking about the fact that the
infrastructure hasn't been developed to service those new
communities up there. If you're talking about tax dollars and
efficiency, you want to have a greater urban density. This
sprawling out to subdivisions is not a very efficient way of
using your resources. Does that answer your question?
The Chair:
I think I said 10 minutes, but my mathematics were not very good
this morning. It's about seven minutes, so I'm sorry, I have to
cut you short. I'll go to Mr Christopherson.
Mr
Christopherson: Thank you very much for your
presentation. You've already made reference to some of the
changes to the Planning Act. If we look at all the changes the
government has made in the area of environment, there are very
few of them that are positive. I think you're very generous in
your comments. We view it a little more cynically in terms of the
damage that has been done, certainly when we take a look at the
Planning Act changes you've referred to. I think they actually
had the audacity to call it the Environmental Protection Act or
the environmental enhancement protection act, some oxymoronic
name like that, which had nothing to do with the fact that the
bill was actually gutting protections that had been in place.
They have decimated the
ministry, as you well know. The funding has been slashed about
30%, and an even higher percentage of staff, about 40%, are now
gone. Then we still hear people rolling in here saying: "We
really like what you did with the Red Tape Commission. Keep doing
that." And we keep arguing, every time they say it's red tape,
that in many cases-not always; sometimes things can be improved
and made more efficient, but in many cases-with this government,
eliminating red tape means eliminating some protection either for
the environment or for citizens as a whole.
Given all of that, what
level of faith do you have that this government is really going
to be there in the interests of the Oak Ridges moraine?
Mr
Ferguson: As an environmentalist, I guess I have
ultimate faith eventually. But this is a government that has
responded to public pressure in the past, certainly through my
experience in the whole Lands for Life process. We didn't get
what we wanted, but considering what the round table
recommendations originally had, a 0.6% increase, bumping that up
to 6%-that was a result of a lot of hard work by the
environmental community and others to get out there and mobilize
public pressure. I think you're starting to see that on the
moraine. You're getting a thousand people coming out to a meeting
in Richmond Hill, not really your most radicalized community.
You're getting hundreds of people coming out to meetings in
Uxbridge. You're getting the city of Toronto taking an interest
in this, York region, Peel, Durham; they're all looking for ways
we can protect the moraine. Even local MPPs living on the
moraine-I can't remember the member from Oak Ridges, but I've had
a copy of a letter that he had written talking about how
important it was.
So I'm hoping this is an
opportunity, through this fund, that we can balance those
interests. We're not necessarily against developers, and we
certainly think that if land were going to be protected they
should be compensated, not at the proposed profit rate but at
what they had invested.
We think this fund is an opportunity that they might be able to
move some of those developments off the moraine.
Mr
Christopherson: You're probably familiar with the
continuing battle in Hamilton over the Red Hill Valley versus the
Red Hill Valley expressway. That valley has been recognized by
the United Nations in terms of its importance. It's the last
natural green space in the east end of the city. The trade-off
there in terms of the development needs versus the future is just
not to the benefit of our community. It's in the courts now; it's
not resolved.
Given that we're here
talking about economics and the SuperBuild fund, its purported
purpose is to ensure that there's efficient decision-making and
strategic investment in capital projects that the government
undertakes right across all its ministries. Given that that's the
focus of both the economics of what you've presented and in large
part what we're talking about here in looking at what we think
should be in the upcoming budget, can you just for the record
give us the reasons you see for ensuring that the environment is
preserved from an economic point of view, in terms of what it
means to us as a society vis-à-vis our economy over the long
haul? I'm not talking about a couple of years; I'm talking about
multiple decades.
Mr
Ferguson: This is an opportunity to think big. I really
think it is. If you look at the next couple of hundred years, how
much is it going to cost you to clean drinking water if we
pollute it?
Mr
Christopherson: Look at what we're going through in
Hamilton harbour. If we could go back and revisit those decisions
at the turn of the last century-
Mr
Ferguson: What's the economic value of Central Park in
New York? The moraine serves not only as an area for wildlife but
it's certainly an area for recreation. We're seeing a huge boost
in ecotourism and a want by people to get out and get away from
the downtown city core to enjoy nature. I think there's an
economic benefit down the road, not just protecting things
because they should be there and it's also good for us in water,
but it's a good recreation area as well and there's that economic
benefit. I think there are lots of reasons, not just because it's
the right thing to do from an environmental standpoint.
1120
Mrs Tina R.
Molinari (Thornhill): Thank you very much for your
presentation. My riding is in Thornhill. It's very close to the
Oak Ridges moraine and it's in York region, so I have received a
number of letters from constituents expressing concern over
that.
I'm pleased to hear you say
that this government has responded to the public, because some
would say that this government is determined and unresponsive.
I'm really pleased that you would highlight that as a point.
It's difficult to balance
the need for houses and roads and protecting the ecosystem, and
I'm sure you can appreciate the difficulties in doing that as a
government. But it has been helpful hearing from
environmentalists like yourself with some of the issues that you
bring forward and certainly bringing the public awareness. I
think it's like a sleeping giant: Unless there's a threat to
them, people don't wake up and realize the effects of it. I think
what you've also done is bring the education of it to a larger
group of people who ordinarily might not have thought it was an
issue. That's important.
We believe that
partnerships are certainly important in anything we do to further
it along. In Thornhill, the maple sugar bush-I don't know if
you're familiar with that, where the Metro conservation
authority, the city of Vaughan and the province joined in
partnership to save that maple sugar bush area, and together with
the builder who owned the property were able to declare that as a
non-building area. So certainly having it in my riding and having
the provincial government support that as an environmental
property was helpful.
I appreciate all of the
comments that you've made here on the Oak Ridges moraine. I will
keep my eyes and ears open for anything further to that. As
you've said, a Richmond Hill councillor has indicated that there
is space there to also accommodate the growing need for homes,
and if we can do that and protect the Oak Ridges moraine, then
certainly I think it's a win-win situation, and at the end of the
day that is what we look for. Thank you very much for your
presentation today.
Mr Galt:
Thank you for the presentation, especially the comment about it
being a good first step, and for lobbying. That's all part of the
democratic process.
We hear a lot about
high-yield agriculture and what's going on in agriculture.
Because of high-yield agriculture what I see in eastern Ontario
are tremendous tracts of land that are reverting to trees. There
are acres and acres that were never in trees before. You may
question the quality or the type of trees, but it's certainly
happened that as a result of that we're seeing deer in areas
where we've never seen deer before. In parks like Presqu'île
it's been threatened that we'll have to go in to cull, and of
course there's some public concern over that. There are also
challenges for farmers when this is happening with deer damage,
and on the list goes.
What I wanted to come
around and question you on was related to the SuperBuild fund.
The idea there is $10 billion from government and $10 billion
from private industry. You're looking for 5%, so I guess I flip
it back to you. You're looking for 5%; in other words, 2.5% from
government. Where would the other 2.5% come from?
Mr
Ferguson: I think as Mrs Molinari said, there are lots
of partnerships that can be developed. In the last three or four
years there have been many trusts set up to either take land or
to try and purchase land. I know there is a private trust on the
Niagara Escarpment that raises money to protect land; there is
the Nature Conservancy of Canada, organizations like that whose
mandate it is to purchase threatened areas. I think there's a
partnership there.
Also, if the local
municipalities can be motivated to see this as an economic
opportunity, as a recreation area or an area that they should protect because it's
going to affect the quality of their drinking water down the
road, then they will probably be interested in kicking in. I
think you can get various levels of government.
I had a discussion with a
fellow down toward Windsor and he's looking at trying to protect
an area of the Marshfield Woods. He's really trying to get some
of the big businesses involved in that area to throw in a few
dollars, or what would be only a few dollars to them, to come
together and protect this area that has traditionally been used,
although in private hands, by the community as a recreation
area.
Mr Galt:
You might look at, I believe it's Minnesota, where they have what
I think they call the One Percent Club, where they give 1% of
their profits for environmental projects and they get a nice
plaque in their waiting rooms, and then some will join the elite
Two Percent Club. That kind of philosophy might go quite a way
with this. Congratulations on looking at the kind of thing. It
sounds like a good idea. As is often said, if you don't own it,
you don't control it. If you have ownership on it, then you have
some significant control over what's done with it. So thank you
very much.
Mr
Ferguson: I just wanted to say that I think the super
fund is meant as building an economic investment. We think
there's also an ecological investment that can be made with, as
well as the economic-together.
Mr Arnott:
I'll follow up on Mr Galt's question. Thank you very much for
your presentation and the ideas that you put forward.
As I understand it, the
SuperBuild Growth Fund is intended to renew Ontario's physical
infrastructure-hospitals, roads, bridges, building projects-as
opposed to setting that money aside for what you're suggesting,
although it's something I'm sure the government will want to look
at. If the SuperBuild Growth Fund is not the vehicle for that
kind of a project, it still might be something that ought to be
considered and worthwhile.
Following up on Mr Galt's
suggestion, do you have any additional ideas as to how we might
encourage private sector money to come into this kind of
initiative?
Mr
Ferguson: I think you have to stress public health as
being-health and the environment to me are intimately connected,
although sometimes they don't seem to be. I'm not sure. Other
than the organizations I've mentioned, nothing pops to mind, but
I think there are opportunities, at least in the local areas, to
have businesses protect a portion of the marine. Maybe they're a
bottler of water-
Mr Arnott:
That have a direct interest in preserving the quality of the
resource.
Mr
Ferguson: -that somehow has a direct interest. Maybe
it's a cross-country ski shop that might be interested. There are
smaller partnerships that could be-I haven't given it a whole lot
of thought, but that's certainly something we should look at.
The Chair:
With that, we've run out of time. On behalf of the committee,
thank you very much for your presentation this morning.
Mr
Ferguson: Thanks for having me here.
ONTARIO HOME BUILDERS' ASSOCIATION
The Chair:
Our next presenters this morning are representatives from the
Ontario Home Builders' Association. Gentlemen, could you please
step forward and state your name for the record.
Mr Dick
Brouwer: Good morning. My name is Dick Brouwer.
Mr Wayne
Dempsey: My name is Wayne Dempsey.
The Chair:
On behalf of the committee, welcome.
Mr
Brouwer: Thank you, Mr Chairman and members of the
committee. Good morning. Like I said, my name is Dick Brouwer,
not to be confused with the other Brouwer. I'm the president of
the Ontario Home Builders' Association and I'm a builder and
developer in the London area. I came to Canada in 1964 and
started Brouwer Plumbing and Heating, which continues to
specialize in new-homes installations of plumbing and heating
systems.
With me is Mr Wayne
Dempsey. Wayne is the first vice-president of the Ontario Home
Builders' Association. He is a builder and developer from
Muskoka. We are both volunteers of the association. In addition
to our business and personal responsibilities, we are dedicated
to serving our industry. We appreciate this opportunity to speak
with you. It will be a brief report, as you have been given our
full written submission. I'd like to begin by telling you a
little bit about OHBA.
The Ontario Home Builders'
Association is the voice of the residential construction industry
in Ontario. As a volunteer organization, OHBA represents
approximately 3,400 member companies which are organized into 32
local associations across the province. Our membership is made up
of all disciplines involved in residential construction,
including builders, land developers, renovators, trade
contractors, manufacturers, suppliers, realtors, mortgage
lenders, apartment owners and managers, housing consultants,
economists, landlords, architects and engineers and lawyers.
Together we produce about 80% of the province's new housing. The
residential construction industry employs approximately 200,000
people and contributes about $20 billion to the province's
economy every year.
Now Mr Wayne Dempsey will
talk a little bit about the housing markets, both current and
future, as well as the impact the housing industry has on the
economy of Ontario.
1130
Mr
Dempsey: A healthy residential construction industry is
a prerequisite for growth. Economic expansion usually begins with
rising housing starts as well as industrial and commercial
development. This leads to new infrastructure projects and
institutional expansion, providing the necessary foundation for
the next generation of economic activity.
Many of the more than 180,000 net jobs created in
the province in 1999 were in residential construction. It's
estimated that every housing start creates approximately 2.8
person-years of employment. That means the home building industry
created 188,258 person-years of employment in 1999, not including
the contributions to employment made by renovation work. This
includes direct construction jobs, indirect jobs as well as the
vast amount of employment created through the multiplier
effect.
Last year our industry
contributed nearly $20 billion to the Ontario economy.
Construction activity also contributes significantly to
government revenues. On average, every house contributes $40,000
to $50,000 in taxes and fees collected at all three levels of
government. Based on 1999's performance, that amounts to over $3
billion in tax revenues. Add to that tax revenues collected from
renovation work and you will see that our industry is a major
contributor to the health of Ontario's economy.
The year 1999 was a great
year for our industry. Ontario's housing market showed a marked
improvement over 1998. Housing starts in 1999 were an incredible
25% higher than in 1998. Growth in housing starts should continue
into the millennium, boosted by high consumer confidence, low
mortgage rates and continued high levels of GDP and employment
growth.
The major highlights of
1999 include increased starts across the province, with some
areas showing spectacular results. The largest gains among census
metropolitan areas were Oshawa at 40%, Toronto at 35% and Windsor
at 23%. In fact, the only decreases were London at 13% and Sault
Ste Marie, which experienced a decrease of 44% over last
year.
Single-detached as well as
condominium construction experienced significant gains in 1999.
However, rental housing construction continues to stagnate
despite encouraging new incentives brought forth by the
provincial government.
In our submission you will
see an economic forecast survey of our members conducted in
November 1999 located at the back in appendix A. This survey
found that 95% of respondents expected sales to increase or stay
the same in 2000 while only 5% expected sales to decrease. That
optimism is well reflected on OHBA's forecast for 2000. We expect
70,000 starts this year, which represent the third straight year
of growth, and an 88% increase over 1995, the lowest starts of
the decade.
Renovation spending has
seen has seen a 1.2% increase in 1999, and this trend should
continue well into 2000. We predict that renovation spending will
climb to more than $10 billion in the coming year.
As you are well aware,
Ontario's economic performance has been spectacular over the past
year. Low mortgage rates and strong job creation have encouraged
many new buyers in the housing market. While we're encouraged by
recent positive economic indicators, the home building and
renovation industry sees several potential roadblocks which may
impede future growth.
Shortages in labour and
materials, as well as cost increases, combined with new and
increasing taxes, fees and charges, have the potential to distort
true market demand. More than 75% of our members were concerned
about material costs affecting their business in 2000, while 65%
saw labour shortages as a major problem. Tight profit margins due
to a number of factors, including increased competition and high
taxes as well as underground activity, continue to be the concern
for nearly 60% of our members.
Dick will now summarize
some of the key factors affecting our industry and OHBA's
recommendations.
Mr
Brouwer: OHBA would appreciate your consideration with
respect to the following.
First of all, high and
rising development charges continue to stunt the growth in our
industry in some areas. The recent introduction of new
development charges bylaws in many Ontario municipalities poses a
serious obstacle for the continued health of the Ontario housing
industry. OHBA recommends close government monitoring of
development charges on the home building industry and
intervention if necessary to ensure that the supply of affordable
housing can be maintained.
Secondly, a land transfer
tax rebate for first-time buyers of newly built homes has been in
place since May 1996. As of December 1, 1999, 54,029 rebates have
been issued, for a total of more than $70 million. Because of the
positive impact this has had on the affordability of new homes
for the consumer, OHBA recommends that the provincial government
make the rebate of the land transfer tax permanent for first-time
home buyers of new homes.
Next, excessive regulations
and overtaxation of the home building industry pushes the price
of new homes higher and higher, and consequently puts home
ownership out of the reach of many citizens. OHBA encourages the
government to introduce legislation to ensure user fees are based
on a reasonable direct cost-recovery basis and, further, that
such legislation allow for the appeal of municipal decisions
about fees and levels of service.
Building materials have
been steadily increasing during the past year. Many building
products have been experiencing increases of 25% or more. The
cost of these materials has been driven up by a strong demand for
Canadian product in both the domestic and US markets. A huge
demand exists for building materials in Ontario. Manufacturers of
these materials should be encouraged to stay within Ontario. OHBA
encourages the provincial government to continue its overall
fiscal policy of tax-and-spending cuts for the health of the
manufacturing industry.
Also, the loss of skilled
labour in our industry over the past years has been accelerated
at an alarming rate. Some 65% of our members rated labour
shortages a major concern for their business in 2000. The need
for new skilled trades in our workplace is obvious. In order to
attract new workers, OHBA recommends the development of co-op
programs at the high school and college levels that bring students on to the site and
provide hands-on experience in construction and safety.
Public perception about the
value of skilled trades has to be changed. OHBA suggests that any
campaigns geared at encouraging students into the skilled trades
would be most beneficial to our industry and to the economy as a
whole.
1140
We also know that rental
housing is in short supply in several centres across the
province. In 1998, just four communities had a vacancy rate of
less than 3%, which is deemed a short supply. By 1999, nine major
communities had a vacancy rate below the critical 3%. It is not
only large cities like Ottawa and Toronto but also smaller
centres like Bracebridge and Brantford that are affected. OHBA
recommends that government continue to implement policies that
would encourage the private sector to resume building rental
housing across Ontario. The elimination of the PST payable on the
construction of new rental projects, along with reasonable
development charges, would certainly result in renewed interest
on the part of investors. Property taxes on rental housing
relative to ownership housing should be competitive.
The pressure from the
underground economy has continued to be a major problem for our
industry. In addition to unfair competition, governments also
lose out on billions of dollars in revenues; homeowners lose the
benefits of inspections, suffer little or no recourse in the
event of shoddy workmanship, and expose themselves to a number of
liabilities. OHBA recommends that the government work together
with the industry to seek out ways to encourage and entice
consumers to utilize the skills and services of legitimate,
honest, hard-working renovators and contractors.
Another issue that OHBA has
been carefully following is the Kyoto agreement, which involves
the reduction of greenhouse gas emissions. The reduction of GHG
emissions will be a profound economic challenge for all
industries in the future. OHBA encourages the provincial
government to work with our industry to achieve the objectives of
the Kyoto Protocol. Any concrete proposals must be reviewed with
regard to the effectiveness and cost-benefit analysis.
To conclude, I would like
to say that OHBA strongly supports the fiscal policy of the
provincial government and encourages the government to continue
in the direction of deficit reduction, spending cuts and tax
cuts.
Mr Chairman and members of
the committee, I would like to thank you for your attention and
the interest in our presentation. We look forward to hearing any
comments or questions you may have.
The Chair:
Thank you. We have approximately six minutes per caucus, and I
will start with Mr Christopherson.
Mr
Christopherson: Thank you for your presentation. I want
to focus on the issue of the affordable housing and the issues
that you raise there. We've had earlier presenters this week who
talked about this issue, and in fact a presentation yesterday. We
were reminded that CMHC reports that the annual target for
providing permanent, affordable rental housing in Ontario should
be 16,000 rental units; that's new units. The government's
current business plan calls for an additional 65 private rental
units on top of an average of 215 units built in low-vacancy-rate
areas. That's 65 in their business plan, in addition to 215, when
the need has been identified as 16,000 units. I don't need to
tell you the crisis that's erupting on our streets in all the
major urban centres and, as we're hearing in presentations, even
some communities you wouldn't expect.
Let me ask you, would you
favour the provincial government returning to the business of
ensuring that there is provision for the building and addition of
affordable rental housing units to our stock?
Mr
Brouwer: OHBA has always taken the position that we
would not be in favour of what we used to call the non-profit
housing sector in Ontario. I don't think the Ontario government
should be in the business of building any housing. We've always
believed in shelter allowances and we encourage the government to
work on shelter allowances in order to get those who can least
afford rental accommodations to be subsidized with shelter
allowances.
Mr
Christopherson: You understand that the opposing
argument is that at the end of the day, the people of Ontario who
have paid the supplement have nothing. It's gone. Over time, it's
exceptionally more cost-effective to actually build and add to
the housing units, because it's there and the people of Ontario
own it. So it's not just one family who benefit from it, but
indeed families across the board, as the need is there, have
somewhere to go.
The units aren't being
built by the profit sector and, quite frankly, I'm not faulting
you for that. You're not in the business of providing non-profit
housing. That's not your business. You're in the business of
building houses and making money-fair game-but it does leave a
responsibility on the part of the provincial government to ensure
that through one means or another there is affordable housing for
those who need it and to do it in a cost-effective way.
By way of example, one of
the presenters mentioned the OHC scattered houses. We have them
in all communities, single houses in various neighbourhoods. The
operating costs there in Lanark county were $159 a month, but for
supplementing units in private buildings the average cost is $376
a month in Lanark county. So on a month-to-month basis it costs
twice as much money to go the route that you're suggesting and at
the end of the day when that money is paid out the people of
Ontario have nothing.
My problem is that I can
understand philosophically where you're coming from, but that
still leaves us a huge problem in terms of where we get the units
that are necessary for this growing crisis. We know there are
more people in poverty than ever before. They're in deeper
poverty than ever before. You can see the homeless on our
streets. This is not going to go away.
Mr Dempsey: I think what you may
find is that-and we discussed this earlier-the $2,000 PST tax
credit from the province would be a help. However, there's GST
that we pay. There are also development charges and in some areas
it's as much as $20,000. If we want to look at affordable housing
and rental units that are going to go on the market, we've got to
look at a large number of areas, being PST, GST, development
charges, all the taxes and fees. I think I reported that we pay
somewhere around $40,000 to $50,000 a unit in taxes, fees and
charges. If we're looking at affordable housing, let's look right
there.
Mr
Christopherson: But with respect, if we're going to be
subsidizing the private sector to build them, which goes to the
bottom line-and again I don't question your right and need to
make money out in the market, but when we're talking about
interfacing with provincial taxpayer dollars, you need to do it
in the most efficient way.
I know the government is
going to talk about the fact that they didn't like the plan that
we had, but at the end of the day we were adding more affordable
housing units to our communities than ever in the history of
Ontario. In fact, the NDP was the last government in North
America that was still providing them. Since this government,
with great shame in my opinion, announced they were getting out
of the housing business, we've seen an increase in homelessness,
an increase in middle-class people sliding down into poverty and
a decrease in affordable housing.
If we're going to go the
route of giving you enough financial incentives to make it
profitable for you to build them on the profit side of it, why
wouldn't we take that money and invest it and see it as an
investment so that the bricks and mortar are owned by the people
of Ontario and at the end of the day it's paid for? Why would we
not go that route?
Mr
Brouwer: I had been involved in the non-profit housing
when the NDP was in power. As a plumbing contractor, I thought
they wasted more money than I've ever seen before. Their
specifications on quality were higher than probably you would use
for your house. The people who were moving into those units were
giving no respect to what they got.
Mr
Christopherson: Everybody? Is that what you're saying?
You're blanketing them all?
Mr
Brouwer: A great number of people. I've been in a lot of
units. Coming from Europe, I have never understood why a
government would create slum areas, putting people who could
barely afford housing all in one area and saying, "This is a good
area to put the people who can't afford rental housing." We
believe that people should be living where they want to live, all
over the place. Give them a shelter allowance.
Mrs
Molinari: Thank you very much for your presentation.
Before I begin with some of my comments and my question, I want
to focus on what you just said in response to Mr Christopherson's
question.
What I heard you say is
that there was higher-quality plumbing-if that's what
specifically you were talking about-in those homes than one would
put in their own custom-built home. Then I question, was it
affordable, if you're talking about affordability and you're
putting higher costs into it that negate the affordability
factor? In any case, I'll continue.
1150
I'm going to focus on some
of your recommendations here, and specifically on 4.5, skilled
labour shortages. You talk about the co-op programs that you're
recommending start in high schools to bring students right into
the site. There is a project that was taken up at the York
Catholic board with Mattamy Homes where in fact this happened. A
group of students built a home from start to finish. The students
got a lot out of that in the way of education and what the
building industry is like, and it was deemed to be something
very, very successful. But it was a big commitment also on that
company to come in and join that partnership.
You talk about campaigns
geared to encouraging. I think the boards and the schools are
encouraged to do this; it's finding the partnership with the
building association to be able to do that, because it's a big
commitment on the builders to do that-in time and in money, to
some extent. I encourage you to pass that message on to the
builders, because I know at first hand that the schools are very
encouraged and they would love to do this. Certainly we're
encouraging more to go into the trades. It's not seen as the sexy
thing to do today. Most want to go into different areas. But it's
certainly a need that we've recognized, and I agree that we need
to encourage students to do that.
Before your presentation we
had another presentation, Earthroots, that talked about
protecting the ecosystems. That's where you find the balance,
where you're talking about building and the need to build, and
yet there are the environmentalists who are talking about the
need to slow that down to some extent, to protect the
environment. Give me your comments on what you would do as an
organization to help in a partnership to find some sort of
balance between those two.
Mr
Brouwer: I've read the paper about what is going on in
Toronto and the moraine lands this person before me was referring
to. We believe that environmentally sensitive areas should be
protected. As builders or even as developers, we certainly don't
want to take any more trees out than are necessary in order to
create a home for whoever wants to buy this particular house. As
a matter of fact, the more trees we have on the property, the
more money the property is worth. We certainly would encourage
environmentally sensitive areas to be protected, but in a
reasonable way. I know of some areas, especially in the area
where I come from in London, where we have now been waiting for
seven years in order to try to get some properties on stream.
Somebody saw a frog swimming down the creek and now it becomes an
environmentally sensitive area. There has to be reason being used
in order to work with the industry. We agree that we like to protect as much as
possible. But we also agree that people want to live where they
want to live, and not where somebody else is going to tell them
where to live.
Mrs
Molinari: That's where that co-operation is important,
because it's viewed as the builders are here, the
environmentalists are here, that you're at opposing sides. I
don't think that's the case when we speak to each of you on an
individual basis, but the message out there appears to be that.
So I think whatever you can do to build those bridges and to
impress upon the environmentalists that you are in fact willing
to work together with them, that's helpful.
Just one last question:
Your 4.8, Kyoto Protocol-I'm not at all familiar with that. Can
you just briefly tell me what that is?
Mr
Dempsey: The Kyoto Protocol was a worldwide convention
that dealt with greenhouse gas emissions. Canada has set a target
for greenhouse gas emissions, and we're trying to work towards
that target with the auto industry and with all the other
industries in Canada.
Mr
Phillips: I appreciate the brief. I always look forward
to your annual survey, "If a provincial election were held today,
who would you vote for?" and I'm pleased to see the Conservative
support has dropped from 90% all the way down to 87%.
Mr
Kwinter: Mind you, the NDP have got a 200% increase.
Last year it was zero; now it's 2%. They're on a roll.
Mr
Christopherson: Big momentum; we're on a roll.
Mr
Phillips: They're up from zero to 2%. Dave, you're
moving out.
Within this document
there's something, among other things, that's extremely
disturbing to me. You indicate here that household growth is
about 60,000 a year. I assume that's the number of housing units
you should have. You indicate that for many people buying a home
is unaffordable. You indicate in here something like 20,000 a
year of that 60,000 growth would be in rental. The very alarming
numbers in here are that in the last three years there have been
about 3,000 rental units built in total in the province of
Ontario.
You would have to assume
we're heading to a substantial-I'm maybe understating
it-disaster: many people unable to afford to purchase a home,
20,000-a-year growth in the need for rental accommodation and
virtually none being built. We heard yesterday people saying,
"Well, it's not going to be built because there's always fear of
rent controls coming back in." Based on what you've told us
today, there's no indication that your members are planning any
rental accommodation building.
We need your advice. Here
we have what I would describe as a crisis. I'd like you to
describe how you would describe it. It looks like we're just
creating an enormous problem, not you but we here in Ontario, and
I don't see any solution on the horizon based on what the
government's doing and based on your recommendations. How do we
deal with that enormous growth in people who need rental
accommodation and virtually none being built-a thousand a
year?
Mr
Dempsey: I think what you're finding this year is that
because of low interest rates a lot of the people who would
normally be looking for rental accommodation have been able to
buy homes. There have been quite a few in that situation. There
have been a lot of condominiums built and some of those will
provide some rental accommodation.
As I said before, there are
a lot of problems with the whole rental housing industry: how you
make it fit, how you provide a rental accommodation for a
reasonable cost and get people into rental accommodation. It's a
very fine line to build rental accommodation because of the cost.
You've got to build them big enough that people are going to live
in them, but the cost to build them, and then once they're built
the assessment on them-the taxes are more than a private
dwelling. There are a lot of problems in there and we don't
profess to have the answers to all of them, but we're working on
them, certainly.
Mr
Kwinter: I just want to follow up on that. My impression
is this: The only rental accommodation that's being built is
luxury rental and that's to attract the market where people, for
whatever reason-they're here on a transient basis because their
company transferred them, they don't want to buy, they don't want
to own-don't want the responsibility of ownership but they can
afford to rent. The problem is that there's a whole sector of our
society who can only afford a certain amount of rental and there
is nobody who can build anything that will meet that target. The
economic rent they can afford to pay in most cases-we saw a
study-is half of what it would require for a developer to build a
rental accommodation.
As you say, it's a problem.
What is the solution? I don't know, other than government getting
involved. Who else is going to get involved? You just write off
that whole segment of our society who say, "I can't spend 100% of
my income on accommodation"? Right now we've heard the numbers
are up in excess of 50% of their income. Given that normally the
rule of thumb is 25%, maybe 30%, it's up to over 50% in many
instances. How do you address that as an industry, or do you feel
that's a responsibility that you should have?
Mr
Brouwer: Well, sir, we believe that the $2,000 the
provincial government presently has given on affordable housing
is only a step in the right direction. That's why we believe
there has to be a greater incentive. Obviously as an investor you
wouldn't want to invest any money where there is no return.
Ultimately we have to be fair to each other and we say there has
to be a return on income. Maybe it would be done over a 10-year
period, where you would say: "OK, for this particular housing,
you build these houses for 10 years. If you sell them, we take
away your incentive." There has to be some kind of mechanism down
there that will trick this rental housing issue.
Personally, I've built in London houses of 1,400
square feet for $100,000: air-conditioned, everything, three
appliances. You couldn't give them away. The mortgages on those
houses were lower than what I'm renting them for right now. So
you try to figure out where the need is. I don't know. Sometimes
I'm wondering myself if we're doing the right thing. But I think
ultimately there have to be by the provincial government some
incentives; probably take the PST off, probably do away with some
development charges or make them reasonable enough in order for
us to start building rental housing.
The Chair:
With that, we've run out of time. On behalf of the committee,
gentlemen, thank you very much for your presentation this
morning.
The committee will
reconvene this afternoon at 1 o'clock. We are now adjourned.
The committee recessed
from 1201 to 1303.
CANADIAN FEDERATION OF STUDENTS
The Chair:
Good afternoon. Our first presenters this afternoon are
representatives from the Canadian Federation of Students.
Mr Ashkon
Hashemi: My name is Ashkon Hashemi. I am the internal
coordinator with the Ontario component of the Canadian Federation
of Students.
Ms Erin
George: My name is Erin George. I am the incoming chair
of the Canadian Federation of Students, Ontario component.
The Chair:
On behalf of the committee, welcome.
Mr
Hashemi: I'd like to thank the committee for giving us
this chance to present. In fact, we're happy there actually is a
standing committee this year, as opposed to last year, so that's
a good sign.
The Ontario component of
the Canadian Federation of Students represents over 185,000 full-
and part-time undergraduate, graduate and college students at
over 20 post-secondary institutions across Ontario. Our key goal
is the achievement of a high-quality, publicly funded
post-secondary system that is accessible to all.
Unfortunately, the
post-secondary system in Ontario is moving away from such a
system towards one whose reputation for excellence and
accessibility has been progressively compromised. In this
presentation, we will highlight the importance of an accessible
and high-quality post-secondary system and make some suggestions
as to how to enhance the quality and accessibility of Ontario's
colleges and universities.
We'll start with the
funding picture. That sets the stage for what we feel are some of
the problems in Ontario's system.
By all indications, the
role of post-secondary education in enriching the social,
cultural and economic life of Ontario is becoming predominantly
more important. However, while there is a general acknowledgement
of this growing importance, the government's response has been to
slash funding for higher education in an unprecedented way. Since
the 1996-97 school year alone, Ontario's colleges and
universities absorbed a $400-million hit in funding, a loss that
translates in constant dollar terms to approximately a 17% cut.
Since then, public funding for post-secondary education as been
frozen, with no provisions for increases in inflation.
As it stands, this
government's funding policy will ensure that Ontario's colleges
and universities remain the worst-funded higher education
facilities in the country as we enter the new millennium. Ontario
actually ranks fairly close to the bottom in North American
terms, below such places as Alabama and Tennessee, so we're doing
really great as far as making sure our universities and colleges
get the funding they need.
The impact of this
financial situation for the quality of post-secondary education
is all too evident. Most colleges and universities are now
operating with diminished faculty and support staff complements;
hiring freezes and layoffs constitute the norm across the
province; class sizes have grown significantly, resulting in less
interaction between students and their instructors, while
educational choices have been sharply curtailed by a host of
course and program cancellations. Building repairs cannot be made
or are delayed, posing health and safety threats. Equipment is
way out of date. Underfunding has also impeded co-operation among
institutions and created an unhealthy turf environment in which
institutions point fingers at one another in their efforts to
minimize the impact on their particular institutions.
Cuts to public funding of
post-secondary education have also resulted in institutions
depending more and more on alternative sources of revenue.
Institutions have sought, and the government has approved,
massive tuition fee increases. We'll get to that in a moment. In
addition, Ontario's colleges and universities must now rely
heavily on corporate largesse in order to remain viable. However,
such reliance comes at a price. In return for funding,
corporations are demanding a greater say in the day-to-day
business of our colleges and universities and dictating policy
decisions regarding curriculum. With alarming frequency, we are
seeing pockets of our public institutions being privatized and
funds going towards financing what we feel amount to job training
programs for the private sector.
Relying on private sector
funding to fill the core funding left by government cuts sets a
very dangerous precedent. Private sector funding is neither
stable nor comprehensive since it is often of a short-term nature
and geared to specific programs or projects. At best, it brings
temporary relief to the problem of underfunding that desperately
requires a long-term, stable commitment. More frequently, that
kind of funding compromises the quality of the educational
experience by replacing broad and diverse program offerings with
short-term corporate interests. In this regard, we would bring
the standing committee on finance and economic affairs' attention
to a recent study done by Robert C. Allen, who is a University of
British Columbia economist. The study in question is entitled
Educational and Technological Revolutions: The Role of the Social
Sciences and the Humanities. In this study, released by the
Social Sciences and Human Resource Council, SSHRC, Allen
demonstrates that humanities graduates have rates of employment
and earnings on par with or higher than most business graduates
and those graduating in high-technology fields. In fact, Allen
argues, the so-called "technological revolution" is increasing
labour market demand for university graduates in the social
sciences and humanities.
These findings are in
direct contradiction to policy, tacitly endorsed by the Ontario
government, of providing more funding and extra spaces for
high-technology programs at colleges and universities while
devaluing and eroding program funding in the arts and humanities.
In light of Allen's report, we would caution the provincial
government that an overemphasis on high technology, private
sector job training to the detriment of other programs is a
shortsighted strategy when considering the real social and
economic needs of the province.
The continuing importance
of the public post-secondary sector in addressing Ontario's needs
is clear. However, what's not clear is the ability of our
universities and colleges to meet these needs. From all
indications, our viability both socially and economically rests
largely with the ability of our centres of higher learning to
meet the challenges of the future. As such, and this is a key
point, it makes no social or economic sense for the government to
point out society's need for more skilled graduates, a
well-educated population etc while continuing to make ever
greater funding cuts to those sectors that provide these
services. What is needed is an ongoing commitment to stable
public funding that would allow our institutions to continue
offering high-quality programs without resorting to exorbitant
fee increases or an unhealthy reliance on private sector
funding.
1310
The Canadian Federation of
Students is doing its part in trying to secure this kind of
funding. Through our Access 2000 campaign, we are calling on the
federal government to restore $3.7 billion in operating cuts to
post-secondary education, of which $1 billion would be Ontario's
share. However, we want to make sure the Ontario government does
not feel blameless in these cuts. They have exacerbated and
passed the cuts down to students in an unprecedented way. As for
our specific recommendations, you have the brief in front of you
and can look at those, as far as our recommendations for funding
are concerned.
Moving to the issue of
tuition fees and accessibility, students have borne the brunt of
the recent cutbacks to education by way of inordinate fee
increases. Fees have increased 158% for university students and
147% for college students in the last 10 years, and the largest
increases have occurred most recently. By the end of its first
mandate, this government was responsible for a 53% college
tuition fee increase and a 63% university fee increase.
To make matters worse, the
Ontario government in its 1997 economic and fiscal statement
announced the complete deregulation of fees for graduate and
professional programs at universities and for post-diploma and
other high-demand programs at colleges. For us, deregulation of
entire programs of study within publicly funded institutions has
meant massive tuition fee increases. Already, students entering
deregulated programs are seeing increases of 20% to over 400% in
one year. Consequently, we are not far from a two-tier system in
Ontario.
As it stands, the
accessibility of Ontario's colleges and universities has already
been seriously compromised, and any further increases in tuition,
especially of the kind associated with deregulation, are bound to
have devastating ramifications on the participation rate of
lower-income students and on the socio-economic makeup of the
student population. To put it bluntly, we are not far from a
system in which ability to pay outweighs all other considerations
in determining the future of Ontario's students. Again, we have a
series of recommendations that the committee should have a look
at for our specific take on the tuition fee issue.
In terms of student aid and
student debt, more and more students in Ontario are using OSAP,
the Ontario student assistance program, to fund their studies.
Individual debt carried by these students is rapidly mounting.
Currently, over 50% of all students require financial assistance,
and the debt load picture is very distressing. In 1992-93, the
average yearly loan per student was $3,182. In 1996-97, the most
recent numbers we have been able to get from the ministry, this
number had climbed to $7,713 per student. An Ontario average debt
load for students graduating with debt hovers around $20,000 on
average.
The reasons for the
escalating number of students on OSAP and the crippling debt
loads they incur are manifold. Skyrocketing tuition fees
certainly have had an impact, as have bleak year-round employment
prospects. In addition, the Ontario government cut virtually all
forms of grants in 1993-94, thereby forcing most students to rely
solely on repayable student loans. As a note, Canada is one of
only three OECD countries without a national system of grants.
The combination of these factors on student debt in Ontario
should not be underestimated. Ontario students have some of the
highest debt loads in North America.
Students wishing to pursue
a post-secondary degree or diploma have been required to amass
greater and greater debt loads in the form of repayable loans.
For many current or prospective students, the prospect of
incurring what could amount to lifelong debt is inconceivable.
They are simply left with the option of dropping out of
post-secondary education or never applying in the first place.
From a larger economic perspective, we question the logic of
saddling students with immense debt loads at such an early stage
in their lives. A generation of massively indebted graduates does
not make for a bright economic forecast.
Unfortunately, this
government's response to the growing need for adequate student
assistance, including viable debt reduction strategies, has been
the introduction of
measures that actually increase student indebtedness and make it
more difficult for needy students to access the financial aid
they require. I am going to go over some of our recommendations
in this area, because we feel that these are particularly
critical.
The government of Ontario
should offer an enriched OSAP, designed to alleviate the debt
burden currently facing Ontario students. As part of this, they
should include upfront grants to help reduce the debt loads
carried by students, target assistance for students with
dependants and/or special needs, expand work-study opportunities
for students to earn while they study, and expand interest relief
strategies and debt reduction measures to aid students who
experience difficulties in repayment.
As part of such an
undertaking, the government of Ontario must reverse erosion of
the current OSAP system by providing adequate funding for student
assistance to meet the needs of students; restoring OSAP funding
for part-time students-something that this government cut very
recently; restoring child care bursaries for students with
dependants so that students who have children can actually access
the system properly; restoring access to social assistance to
students with dependants; revamping parental contributions and
dependency requirements to reflect current student realities; and
restoring students' allowable income during the study period to
the previous amount of $1,700 so that students can actually have
a chance to work while they go to school to be able to afford
their education somewhat. I find it very ironic that this
government would actually put a barrier toward students working
and paying their way while they were in school.
The government must also
end immediately the credit checks on OSAP applicants. This last
point is worth reflecting on. Just to point out the difference
between a bank loan and a student loan, student loans should be
available to everyone, especially those with bad credit, so that
they can actually have an opportunity to improve their lives in
the future. People looking to go to school are often those who
don't have the world's best credit rating, and it's very
important that we make post-secondary education accessible to
those people. Those are precisely the kind of people that a
university or college degree can help.
Finally, the government of
Ontario should publicly and aggressively call upon the federal
government to implement a national system of grants as an
effective tool in reducing student indebtedness.
We just want to reflect for
a moment on the use of the millennium scholarships in Ontario. As
part of its 1998 budget, the federal government set aside $2.5
billion over 10 years to distribute approximately 100,000
scholarships per year to students across Canada. This year,
Ontario is responsible for distributing 35,415 scholarships, with
awards averaging $3,000 each.
Despite its many
shortcomings, the millennium scholarship does offer an
opportunity to reduce student indebtedness in Ontario. To date,
however, the Ontario government is using the money from the
scholarships not to buy down student debt, but to help finance
already existing provincial student aid programs. As it stands,
most of the debt being reduced by the millennium scholarship
payments in Ontario would already be forgiven under the
province's Ontario student opportunity grants, formerly known as
loan forgiveness, which forgive any portion of a student's debt
over $7,000 per two-term academic year. As such, the millennium
scholarships are only serving to reduce the Ontario government's
loan forgiveness payments and are not reducing the overall
post-graduation debt of the majority of Ontario millennium
scholarship recipients. Some students actually stand to lose
money if they accept a millennium scholarship, since any amount
over the first $500 of a scholarship is taxable, whereas to date
loan forgiveness has not been taxable.
The Canadian Federation of
Students condemns this blatant attempt by the government of
Ontario to appropriate scholarship money earmarked for students.
By its own admission, the provincial government stands to gain
$50 million from this exercise in diverting funds away from
students and into its own coffers, although some estimates put
the figure at closer to $77 million. While there have been vague
promises regarding the reinvestment of the scholarship money in
ways that help needy students, no concrete proposals have been
forthcoming.
In this regard, we
recommend the following:
The government of Ontario
must move immediately to ensure that all funds allocated for the
scholarships go directly towards reducing student indebtedness in
Ontario. No portion of the millennium scholarship should be used
to replace funding for already planned or existing programs;
and
The government of Ontario
must account for its use of millennium scholarship dollars
through reporting mechanisms that are transparent and publicly
accessible.
We'll stop there and take
any questions if there is time.
The Chair:
We thank you very much. We have approximately four minutes per
caucus. I'll start with the government side.
Mrs
Molinari: Thank you very much for your presentation. You
have listed several recommendations here which are helpful to us
in getting the perspective of where you're coming from as
students. I do want to make some clarifications.
Ontario ranks fourth and
not last when you take into account all of the student assistance
there is to provide for students. You've listed that we rank
last.
As a matter of fact, in the
latest Maclean's survey, Ontario has three of the top schools in
some of the very technical programs that you talked about in your
presentation on the deregulation. You must agree that those are
programs that are costly and much more expensive to offer than
some of the other programs. The flexibility needs to be there to
be able to offer an effective program when it's more costly, and
certainly students graduating from that program would have access to jobs
that would generate higher income than some of the others.
1320
As a government, we believe
that tuition is a shared responsibility and we are moving toward
our Blueprint commitment, which is to have students pay 35% of
that tuition.
Based on the
recommendations here, I'm not getting a clear sense that you feel
the student who seeks post-secondary education has some
responsibility as to the actual fee. I'm getting a sense from
this that you're saying it's totally the government's
responsibility to provide for the students, sort of like it is in
elementary and secondary. Could I just get your comments,
please.
Mr
Hashemi: A few things. First of all, Ontario ranks dead
last in per capita funding for post-secondary education.
Mrs
Molinari: We disagree on that.
Mr
Hashemi: It's not a matter of disagreeing. It's
fact.
Mrs
Molinari: No, it's not. The fact is it's fourth. If you
take into account all of the-
Mr
Hashemi: The reason student aid payments are so high in
Ontario is because governments persistently and consistently
increase tuition fees, so you're paying out more in student
loans. It's a fairly easy formula. If you could take out student
loans from the picture, Ontario ranks dead last in per capita
funding for post-secondary institutions. That's a fact. It's not
a matter of dispute.
As far as our position on
tuition fees, you'll notice that the recommendation is for a
tuition fee freeze and moving toward a reduction in fees. Fees
are way too high.
Mrs
Molinari: So you said freeze, but now you're saying
moving to a reduction.
Mr
Hashemi: Our recommendation to the Ontario government
currently is for a freeze until we can actually secure funding
from the federal government towards funding some of the operating
grants in our institutions. Right now we think a freeze is a very
reasonable compromise to reach in Ontario. It's very doable, it's
very possible, and it would actually go a long way toward
reducing the financial burden on students. That's our
recommendation on fees to this committee.
Mrs
Molinari: I also want to clarify some of the other
points you made. Enrolment in universities and colleges is
growing all the time, and more than 50% of students actually
graduate without any student debt, despite the number of students
who need the assistance of OSAP. By the way, the money that's
been put towards the Ontario student assistance program has
increased by 30%. We're doing what we can to assist students with
their loans, but the picture needs to be made clear that more
than 50% of students actually graduate without any student debt
at all, and for those who have a debt, the government is
assisting those students.
You also talked in your
presentation about those who have bad credit ratings, that they
should get more money because they have a bad credit rating. Who,
in their best business decision, would do that? Where would we
find the money to accommodate all of those default loans? I don't
understand that reasoning.
Mr
Hashemi: I'll start with the credit checks. You said it
doesn't make for a good business decision. We might argue about
that, but our general point is that investing in students in
Ontario and investing in the future of Ontario shouldn't be a
business decision; it should be an investment in actual
humans.
These people who have bad
credit, who often don't have the best credit, are the people who
without a post-secondary education are lost. They are going to
cost the system much more money in the long run in social
assistance payments, perhaps jail costs, all kinds of things.
What we're saying to you is, invest the money up front right now
to make sure these people have a viable way of earning a living
so they are not a drain on the economy five, 10 or 15 years from
now. That's the point around why these credit checks are
unnecessary. A lot of times people with bad credit are trying to
go back to school to improve their lives so they can get good
credit, actually get a decent job and that kind of thing. To shut
these people off is basically telling them: "Forget it. You are
just going to be a drain on our system for the rest of your life,
and that's all we care about."
In terms of student aid
funding numbers, Ontario does invest a lot in student aid, but a
lot of that increase in investment is due to the financial
decision made by this government to increase tuition fees, to
deregulate fees and to make students need to borrow more to
finance their education. You can always inflate the costs by
making people have to borrow more. That's a lot of why it's so
high.
As far as enrolment
numbers, enrolment hasn't gone down but the increases in
enrolment have now flatlined as a participation rate.
Applications to institutions have actually dramatically decreased
in the last five or six years. To see who wants to go to
post-secondary education, we look at who is applying to go, and
those numbers have decreased.
Time and again we have
asked various governments, not just yours but across the board,
to actually fund studies to look at the socio-economic makeup of
the student population so we can gauge whether people from
low-income backgrounds are being impacted by these changes. It's
not good enough just to say, "The enrolment is going up slightly
so there is no problem." That to us is not good enough because we
have no idea who is going and not going to school right now and
that's what we need to find out. In our opinion, right now with
increases in fees and increasing indebtedness it's having an
impact on people from lower-income backgrounds.
Mr
Kwinter: Thank you for your presentation. I want to
follow up on the reference you made in light of a comment that
was made by a member of this committee yesterday. I want to talk
about Robert Allen's study at the University of British Columbia.
You say that his study "demonstrates that humanities graduates
have rates of employment and earnings on par with, or higher
than, most business graduates and those graduating in
high-technology
fields. In fact, Allen argues, the so-called `technological
revolution' is increasing labour market demand for university
graduates in the social sciences and humanities."
Yesterday Mr Galt made a
point of saying that people who study history and the arts
programs are not really being trained to do anything useful and
that we should be concentrating-
Mr
Christopherson: It was O'Toole.
Mr
Kwinter: Was it O'Toole who said that? Sorry, it was Mr
O'Toole who said that. His position was that we should be
devoting our resources to those people who are studying the hard
subjects like technology, the professions, things of that kind.
As I say, I see that Mr Allen's study says almost the
opposite.
Mr
Hashemi: Whoever made those comments is entitled to his
opinion, that hard-core, neo-conservative opinion that the
purpose of universities and colleges is job training for the
private sector. What they are not entitled to is to have a bad
reading of demand curves. The private sector has shown in its
hiring practices that it values these graduates, despite what
they might say publicly or despite what the funding priorities of
government are. I really encourage people to read that study.
It's a great eye-opener in that regard.
Robert Allen actually goes
a bit further than what we've written in our brief. The worst
thing you can say about humanities and social science graduates
is that their employment rates are on a par with business and
computer sciences. In many cases they are actually much higher.
That's a fact we need to be aware of because there are a lot of
myths flying around about what is useful and not useful in our
post-secondary education system.
Mr
Kwinter: I also want to comment on another comment that
was just made about the fact that 50% of graduates graduate
debt-free. I'd like your comment on the statement I'm going to
make.
If everybody wanted to come
out of this debt-free, the government would fund all university
education so that everybody would come out of it without any
debt. The feeling is that those who can afford to pay it, if they
come from families or if they have developed resources of their
own, do come out debt-free, but the purpose of the government
program is to provide an opportunity for those people who
normally could not afford to come out debt-free, and as a result
that is the program. To suggest that using the fact that 50% of
them are debt-free is the benchmark that everybody else should be
measured against makes no sense to me. I'd like your comment on
that.
Ms George:
I'd like to comment on that number as well. Many of those
students who are graduating debt-free are doing so because they
have worked full-time or more during their studies. We have
situations where students are working three or four part-time
jobs in order to fund their education because they are not
eligible for loan programs for whatever reason or they are afraid
of loan programs because of their experience with debt. More and
more students are working and not getting 100% out of their
educational experience because they are under so much financial
pressure and stress from working a number of jobs. This is
becoming more and more frequent. The fact that the current
government only allows students to earn $600 before they start
clawing back the money is a disgrace for those students who want
to work and study at the same time and have a balance between
funding from the government through loan programs, part-time work
and their educational studies. Those students who are graduating
without debt are doing so at a great cost to their overall
educational experience.
1330
Mr
Christopherson: Thank you for your presentation. You're
both very articulate, very effective.
I want to refer to the
statement you make in your conclusion, where you say, "The main
issues facing students today are a direct result of the erosion
of government funding to post-secondary education, and this must
be our primary concern."
You will of course be aware
that the reason the government found it necessary to dig so
deeply into education funding, health care funding, social
services and environmental protection was for the tax cut. The
government likes to portray any of us who think that shouldn't be
the absolute top priority, especially when for the last few years
the tax cut was in effect but the books weren't balanced-we "just
don't get it," is the phrase that one of the members of the
government panel likes to say. "You guys just don't get it."
Well, it was interesting
because on our opening day, Dr McCallum, who is the chief
economist for the Royal Bank, came in, and this is the Instant
Hansard from that day. I'm reading one of his statements. "You
could argue-I don't think I argue this, maybe because I am a baby
boomer-that all these calls for tax cuts today, which will favour
the baby boomers who are in their peak earning years, are kind of
like pigs at a trough from a younger generation's point of view."
Now, that strong, well-known, left-wing individual who is the
chief economist from the Royal Bank calls it "pigs at a trough."
I would be interested to hear both your personal views and that
of the students you represent in terms of the kind of economic
world they're entering that has this situation of, as Dr McCallum
points out, "pigs at the trough."
Mr
Hashemi: A few things. Yes, there is a perception from
students that this is an agenda coming from something that is not
in their benefit, absolutely. What we've tried to point out in
our brief, and what we've tried to point out whenever we have a
chance to meet with government officials at any level, is, if we
want the social and economic benefit, how best to maximize that
kind of benefit. Consistently, it is not tax cuts that do that.
Funding for post-secondary education is a benefit that has
results far greater than any tax cut ever would. That is the
message we are trying to get across, that it's an investment in
the future of the province and the country, and it's an investment in the people who are
going to be driving the economy and who are going to be its key
participants. That kind of investment makes sense not just from a
student perspective, but from a perspective of the province and
the people of this country. That's the point we're trying to
make. It's a much greater investment than tax cuts ever will
be.
Ms George:
I'd also argue that it's not just the younger generation but
actually many members of the baby boomer generation themselves
who are arguing against tax cuts and know that our priority, the
government's priority both provincially and federally, needs to
be social program funding. Poll after poll-Ekos, Angus Reid-is
showing that not just the younger generation but the entire
spectrum is saying we need to reinvest in social program
funding.
Mr
Christopherson: Absolutely.
The Chair:
We've run out of time, Mr Christopherson.
On behalf of the committee,
thank you very much for your presentation.
PEOPLE FOR EDUCATION
The Chair:
Our next presenters this afternoon are the representatives for
People for Education. Could you please step forward and state
your names for the record?
Ms Gay
Young: My name is Gay Young.
Ms Diane
Dyson: My name is Diane Dyson.
Ms Annie
Kidder: I'm Annie Kidder.
The Chair:
On behalf of the committee, welcome. You have 30 minutes.
Ms Young:
People for Education is a parent group working to preserve fully
publicly funded education in Ontario. We formed in 1996 and for
the last three years we have surveyed Ontario's elementary
schools and published an annual provincial tracking report.
We also produce newsletters
and information bulletins and network with parents and parent
groups around the province. To date we've held three provincial
conferences for parents.
Thank you for giving us the
opportunity today to address you. I've introduced myself and
you've met Diane as well. We coordinate the provincial tracking
project together. Annie Kidder is our spokesperson. We will each
make a short presentation and then we will be pleased to answer
your questions.
Whenever ministers are
questioned about concerns around the lack of resources, programs
or services, their most common response is, "We are spending more
than ever before," yet that just doesn't ring true to parents,
nor is it reflected in our provincial tracking report. In fact,
the amount of money spent on education in this province has
remained pretty much the same over the past six to seven years.
At the same time, enrolment is climbing and costs are increasing
and as a result there have been massive cuts.
Our publicly funded
education system is starving. Educating the young people of this
province is not a business to be downsized and privatized; it is
an institution to be proud of and worthy of our investment. So we
are here today to tell the stories of parents and schools in
Ontario, to try to convince you that if you don't act to increase
funding, our publicly funded education system is in grave danger
of dying a slow and painful death of a thousand cuts.
There's not enough money
being spent now and we worry that a 20% cut to property taxes,
which fund education, will result in even deeper cuts. In fact,
Janet Ecker, our Minister of Education, says that her own salary
will be cut by 25% if she overspends her budget this year-balance
the books no matter what it costs our kids.
Is it part of your
education plan, I wonder, to save money by closing schools?
Across this province 133 schools have either closed this year or
are under review to close next year, which will displace 26,848
children even though the Premier promised parents in 1998, before
the election, that no school need close as a result of the
funding formula. Yet many are closing as a direct result of the
funding formula. Small schools are in particular danger and the
EIC, the Education Improvement Commission, has recommended that
the funding for small schools be changed.
Our provincial tracking
report shows that 53% of the schools have fewer than 350
students, but your funding formula states that elementary schools
must have 364 students to generate a full-time principal. Half of
the elementary schools in the province don't qualify for a
full-time principal and it's very hard to run a school without
one. If boards can't staff small schools, then they may be forced
to close them or to twin or triple them. What that means is one
principal is shared between two or even three schools. They work
half a day in one school, if they're lucky to have only two, and
then get in their car and drive for 20 kilometres and spend the
rest of the day at another school. So at times there's no one in
the school office at all, because the secretary is often
part-time too. In fact, our tracking report shows that 34% of
elementary schools don't have enough students to qualify for a
full-time school secretary under your funding formula.
1340
Kayla is deaf. She was
being bullied in the playground. When she went to the office for
help, no one was there. No one was there because the principal
was twinned, the vice-principal had been cut and the secretary
was part-time. It's a safety issue, but lack of funds is forcing
these changes, and you hold the purse strings. When no one is
staffing the office, parents can't contact their school either.
In the Grand Erie District School Board they have twinned 12
schools this year because they can't afford a full-time principal
in each school any more. The Ontario Federation of Agriculture is
fighting to protect rural schools too. They met with Janet Ecker
last month and put forth a request for a rural education
strategy. Van Turnhout of the OFA says: "The entire rural
community is affected when rural schools are closed. These schools provide
a lifeline for rural Ontario."
In its October report the
EIC also recommended that boards be divided into smaller review
areas so they wouldn't have to close schools in order to build
new ones. Right now, if you have schools anywhere in your boards
that are not full, you can't get money to build new ones, even
where the population is growing and kids are sitting in
portables. The Ottawa-Carlton Catholic District School Board
closed two schools last year even though 25% of their students
are in portables. It just doesn't make any sense. Closing schools
causes children and their families great sadness and often means
that children of all ages, including kindergarten, spend up to
two hours each way, every day, on a bus.
Ms Dyson:
For three years now, People for Education has surveyed Ontario
parents and school councils. School by school, parents have
counted class sizes, computers and custodians. Last year, 800
schools participated. They checked for worn textbooks, special
education reports and specialist teachers. We purposely set out
to do a resource inventory of our children's schools. Our annual
tracking report allows us a snapshot to see what is happening in
schools not only within one year, but to track it over time to
see what is happening within the school walls. I'd like to
explain some of our findings which have relevance here.
While we have seen class
sizes drop, these have come at the expense of libraries, which
are open more often on a part-time basis and more often staffed
by volunteers; gym teachers, reduced from 41% to 37% within one
year; music teachers, from 58% to 53%; and guidance teachers,
from 31% to 23%. While we are seeing more education assistants in
the schools, parents are reporting that because of the funding
formula structures, they are tied to a single student. We're
losing the non-special-education assistants.
Some illustrations: My
father admired and loved his Christmas gift this year. It was an
angel moulded out of gauze bandages that we placed on top of the
tree. It was made by my daughter under the careful direction of
her education assistant, who works in the common area outside her
classroom. She taught my daughter that she could create beauty
and magic. This woman has worked at the school for almost 20
years, at a salary of $22,000, and she's a vital part of our
school. Parents are watching our children eating lunch on gym
floors or in school hallways with hundreds of others, and just a
small handful of adults to supervise them, often again on a
voluntary basis. We're watching principals choosing between
cleaning snow off sidewalks and repairing broken windows.
In an effort to create
healthier and safer learning environments, parent and community
volunteers are increasingly being asked to step in. Seventy-five
percent of the schools reported some kind of lunch program for
students whose parents worked or went to school. There is no
provision for this in the funding formula. While we once had an
education minister who promised computers for our children, the
ministry's funding formula is so narrow and low that parents
continue to sell cookies and muffins to pay for the printer to go
alongside the new computer at the back of the class. In fact,
we've seen fundraising levels rise at the same time as
volunteerism has, something that appears healthy until you look
harder.
Some schools in our survey
reported raising $50,000 to $60,000 in one year for their
schools, while others reported no parent fundraising, often
because their children were bused from far away, relying instead
on teachers to sell hot dogs at lunch to raise the few hundred
dollars they could to supplement the school budget. Parents are
increasingly raising more money for the schools. Among the 600
schools we surveyed, two years ago parents raised $5 million; 45%
of these schools reported raising funds for classroom supplies,
textbooks and computers. Field trips and drama clubs were farther
down the list.
We're watching how parents'
labour in schools is being used as a substitute for what was once
paid labour. We're shelving books now, checking attendance,
supervising lunchrooms, and missing the chance to sit quietly in
a corner to read to a rapt audience or to go on a field trip. Our
work has moved from bringing an extra treat to the kids every
once in a while to becoming part of the daily operation of the
school.
Ms Kidder:
What I somehow want to impress upon you here today is that there
is an emergency happening in our education system. I cannot show
you bodies on gurneys, I have no stories of ambulances driving
around searching for hospitals that will take their patients, but
it's an emergency nonetheless. There's no blood in the emergency
in public education, so it doesn't make the front page. But for
the students going without services and for the parents fighting
for their children, it is just as important as those front-page
stories. The emergency has been caused for the most part by a
lack of funding. In their second interim report on school board
restructuring, the Education Improvement Commission said, and
this is a direct quote: "The following areas of the funding
formula are causing concerns-special education, transportation,
pupil accommodation, principals and vice-principals, operations,
and board administrations for small, remote schools and small
school boards. The EIC recommends that these aspects of the
funding formula be reviewed." What's left, one wonders.
In their third interim
report, the EIC added to the list of things that don't work in
the funding formula. In addition to their first list, they
recommended a review of the funding for ESL programs, for
French-language boards, for First Nations students and for the
learning opportunities grant.
Gay has already described
the consequences of the lack of funding for small schools, and
Diane has listed some of the results of our tracking project. I
want to talk about special education, transportation, ESL and the
learning opportunities grant.
The EIC went on at length,
in their second interim report, about the problems in the special
education formula and
in special education funding. The minister made an announcement
last week about changes to the formula, but she did not address
the central problems. She says she is adding $40 million next
year, but when you read the fine print, you realize that's just
the money the ministry knows they'll have to spend next year
because of enrolment increases and newly identified students.
There is no increase in per pupil spending for special education,
and nothing has been done to solve the problem of all the
students and programs that are falling through the cracks, or
what's more like chasms, because of flaws in the formula.
The minister's recent
announcement does not address the lack of funding for preventive
programs and early intervention. It does not help Megan
Standring's son, who has Tourette's syndrome but who only
qualifies for funding for a half-time education assistant. Megan
says, "It's as if the ministry thinks he only has Tourette's
until lunch, and then after lunch he's cured." Her announcement
doesn't help the children like my daughter Katie in grade 2, who
needs help in learning centres, or through early reading programs
so that they won't need much more expensive special-ed programs
later on. In Durham they're cutting the teachers who work in
those early intervention programs, in Ottawa they're cutting
special classes for students with behavioural problems or
learning disabilities and in Toronto we will lose our reading
clinics next year. How can this be happening in our booming
Ontario economy?
When the funding formula
for transportation was implemented, it included a province-wide
cut of 3%. Boards that were the most frugal, that already shared
busing with other boards and already triple-bused students, were
penalized, because they were cut along with boards that had not
yet introduced these reforms. Rural boards, where virtually every
student was bused, were faced with five extra days of school and
a cut in funding. So now, high school students in the Upper Grand
board can't have sports after school any more, because their
board has been forced to cut all their late buses. In Huron and
Perth counties, students can't help with the farm chores because
they're on the bus at 7:30 and not home until 5 o'clock. Bev
Rizzi's son, near Thunder Bay, spends three hours a day on the
bus.
The EIC came down hard on
the lack of funding for appropriate ESL programs as well. They
said there's insufficient funding for children like the ones in
Kitchener, for instance, who grow up on Mennonite farms and enter
school not speaking a word of English. They pointed out that
eligibility for ESL funding is based on the country from which
the student arrives. Therefore, a board won't receive funding for
a non-English-speaking student who recently spent time in England
or the United States. Conversely, a board could receive funding
for an English-speaking student who just happens to have arrived
from Japan.
1350
Most problematically,
funding for ESL runs out after three years and we know most
students require somewhere in the neighbourhood of seven years.
The EIC found that because of the funding formula 50% fewer
students receive ESL program support in the York Catholic
board.
I'm just going to touch for
a moment on the learning opportunities grant. This is the grant
for students at risk because of socio-economic factors. We
mistakenly assume that this is the big-city, lots-of-problems
grant. But when you look at who actually benefits from
it-Superior Catholic, Lakehead, Algoma, London-all need this
funding and all get some of this funding.
When the government was
first developing the education funding formula, it appointed
expert panels to look at all sorts of areas and the learning
opportunities grant was one of them. Their own expert panel
recommended $400 million but, because this formula is fuelled by
fiscal constraints and not student need, the government decided
to spend only $175 million. You have to be more than double the
provincial average in at least one of the four qualifying
categories to receive funding under the learning opportunities
grant. If your board is just under double in every single
category, you get no money.
My daughter Katie crawled
into my bed in the middle of the night last night. It woke me up
and I lay there worrying about what I was going to say here
today. The thing is, she came and got in my bed because she had a
bad dream or she was frightened by something. She came to a
grown-up because she knew I would protect her, keep her safe and
take care of her. As adults, that is our job for all
children.
As governments and as
citizens, it is our responsibility to look out for the best
interests of all our children. Our ambulances are with no open
emergency rooms. Are the children going without special education
programs or riding the bus for hours? They are the students who
have lost their music and gym teachers and they are Kayla, who
couldn't get help in the office when she was being bullied. We
must remember that these children are more important than tax
cuts and that the future of our whole society rests with
them.
The Chair:
We have approximately three minutes per caucus. I'll start with
the official opposition, Ms Pupatello.
Mrs Sandra
Pupatello (Windsor West): Thanks very much for your
presentation. I was especially interested in the comments
regarding the rural schools, having just spent some time around
Algoma. I realized that in the second-largest riding in Ontario
five of the schools in that particular area near Sault Ste Marie,
so clearly rural, can't be identified as rural schools and
therefore none of the grant applies to them and five of those are
closing. Likewise, five are closing in the Sault proper, again
because of the funding formula and their inability to be flexible
and to move the monies from one envelope to another.
I was also interested in
your special ed and was happy to hear your comments regarding the
announcement the other day. If you're just watching the headlines
it appears as though she's responding to this need in terms of
special ed, but the
truth is that there are many students in many areas of the
province who, for this past year now, are in school literally two
hours of the day, if that. There is just no recompense, there is
no recourse for parents. It's pretty astonishing in this day and
age that the parents literally have to take their kids home. They
are simply not being schooled because they don't have the
aides.
I don't know what to add to
your presentation other than to support all of the parts that
you've identified as real problems.
When you spoke about the
parent councils, I wondered if you wanted to comment on the new
role that the government clearly identifies for them. I have
schools in my riding, one of which can raise $80,000 a year; a
very sophisticated and elaborate fundraising plan that they
effect every year. In my same riding I have a school with
difficulty getting the parent council together. It's what would
be considered a compensatory school. For the most part, the
parents aren't speaking the English language yet and don't
necessarily understand the concept of what their role has to be
as a member of a parent council in the school. They're new
Canadians and they're pretty much getting used to the country and
looking for work, let alone all these additional
responsibilities. I don't see any kind of solace in what's coming
down the pike for them because there's such a greater importance
being put on what the parent councils have to do in their
fundraising capacity, never mind the assessment of their role in
the effectiveness of the school.
Then we look at how we seem
to be moving towards identifying the "bad" schools and how their
kids make the grade in the grade 3 testing, for example. What
happens when you have one school with all the wherewithal to have
all the latest of equipment available to kids compared to the
schools that don't, it's just one cycle that continues and you
can't break out and eventually it will result in one school
faring very well when they are being marked or graded versus the
other, and they're not two kilometres apart.
I don't know if you have
comments on that, especially the role of the parent council.
Ms Kidder:
One of our main comments has to do with fundraising. We were very
concerned about the increase in parent fundraising. It goes
against the whole basic premise of the new funding formula, which
is to make funding equitable across the province. When you have
parents acting as kind of the food banks of education, basically
supplementing the education budget, and as Diane said, some
parent councils of schools are able to raise zero dollars while
others are able to raise $60,000, it means that some schools go
without computers, books, classroom supplies, while other schools
have them. It flies in the face of the whole notion of the thing
that's most fundamental to public education, which is that it
provides a fair and equal education to every child.
Mr
Christopherson: Thank you for an excellent presentation.
Again, if you sit here even just for a few hours, if you listen
to some of them talking about the boom, you'd think that this
really was the land of milk and honey and that everything is just
wonderful, and the reality is it's not.
If I can just first of all
underscore the issues that you raised. I mean, they just rang so
many bells. I'm from Hamilton-I represent Hamilton West-and I'll
touch on a couple of them.
First of all, I'm not sure
which one of you mentioned the idea of the ministerial pay cut.
You're the first person after myself to raise that aspect. I've
been a cabinet minister, so I understand that world. I think that
is a key part of this and I'm glad you've brought that forward,
the whole notion that somehow it's a good idea that ministers
will be penalized if they run any kind of deficit. All that does
is say that if money's that important to them, and obviously
money's everything to these folks, then as soon as you're going
to cross over the line where you're going to be running a
deficit, regardless of what the need is in your ministry, whether
it's education or health, you're going to be saying: "Cut it.
Find the cut. I don't care. Get $600 million out of that budget
because I don't want my wages to be cut." That's a horrible way
and a terrible premise on which to base ministerial
decisions.
You mentioned Kayla. Kayla
is the name of my daughter, so that was the start. You talked
about sharing principals. I've got a small school in my riding,
an excellent neighbourhood school that's fought off closure for
probably 60 years. They share a vice-principal. They don't even
get to share a principal; it's sharing a vice-principal.
Tourette's syndrome: We
have a couple of examples in Hamilton where we've got young
students who have Tourette's syndrome. They can't get into
school. There are not the support services for the EAs to let
them get into the classroom.
Eating lunch on the gym
floor: I've been in schools in my riding, and that's what they
do. The only reason they can even do that is because the parents
come in and volunteer. Here you've got a whole gymnasium that
looks like there's been some kind of an evacuation, like there's
some kind of-well, there is a crisis going on, but it looks like
you've had some kind of an earthquake or a flood. You've got all
these kids all over the floor in a gymnasium, and that's where
they're eating lunch.
Ms Dyson:
And it hasn't been cleaned.
Mr
Christopherson: That's a problem because the custodian
services have all been cut.
The $50,000 to $60,000
being raised by some schools and zero for others: Sandra pointed
out the example in her riding. The other thing too is the
socio-economic levels of where you are in terms of your
geography. It's going to be a whole lot easier-pick a community.
It's going to be a lot easier in Markham, where they have one of
the highest per capitas in the country, than it is in one of the
inner-city schools in my riding to be able to supplement the
basic, fundamental money that schools need to operate. This is an
ongoing problem, and yet they'll tell you they've equalized
things. Nonsense. They haven't. They've created more
discrepancy.
The notion of moving from treats to being a main
part of the day-to-day operations-so true. So sadly true. I think
it was your point that parents have become the food banks of
education. This is such an upside-down world from the one we were
raised in and so far different from what needs to be.
I want to ask you-I think I
know the answer, but I'd like to get it on the record. With all
of what you have said, is there any way at all you can imagine
that the tax cuts that have benefited the very wealthy in Ontario
are worth the kind of deterioration to the education system that
you're seeing?
1400
Ms Kidder:
No, they're not. I don't think any parent thinks they are.
I just want to add one
thing to the 25% cut in the ministerial pay. The reason it came
up is that one of the boards went to the minister because boards
had been promised stable funding over a number of years so they
could plan. It's something that boards really needed. The
minister told them they could not have that funding, they could
not know what their funding was for next year, because she had to
have a balanced budget each year or her pay would be cut by 25%.
So now they can only know on a year-by-year basis, and this was
from Janet Ecker.
Mr
Christopherson: Well put. Thank you again.
Mr Galt:
Thank you for your presentation. When you mentioned about that
bus in Huron country coming at 7:30 in the morning and getting
back at 5, it brings back memories. I was just thrilled to get a
bus, because before that there were no buses. That was roughly
the time-
Interjection.
Mr Galt:
Not quite that extreme, but almost. But my father made sure I
still had time to do the chores; there was no question.
Closing of schools: I sat
on the school board locally in the late 1970s and I did close
schools and I took the hard knocks then. Now we don't have to
close schools in my riding because those decisions were made at
that time.
But as we talked about
having lunch on the gym floor, there's one school north of me
that does not have a gymnasium. The school board has seen fit not
to put one in there, and that's been through all the other
governments, ours as well. They've been asking for a gymnasium
since the late 1970s and as yet haven't got it.
One of the problems I have
as an MPP is to try to sort out what is rhetoric and what is the
real thing going on out there. I'll give you some examples. I was
invited to a school earlier in my term, and I think it was 47
students, give or take a student or two. They had the press
there, trying to embarrass me and saying, "Isn't this awful?" It
was a year and a half later that I found out that room had a
teacher and a half designated to it, but they were trying to tell
at the time that it was only one teacher; that was the impression
they were trying to leave. They didn't quite say it, but that was
the impression that was left. I was embarrassed-there was the
press there and all the rest. I found out a year and a half later
what was really going on.
The laying off of teachers:
When I was first elected, 300 teachers a year laid off the first
April, given their pink slips, and they ranted and raved around
my office. I think it was about embarrassing the local MPP. What
happened in September? They were all hired back, plus more.
I think I sorted out on
this textbook thing that we've heard so much about, and that
happened to be the first week in January. We MPPs were being told
there was all this money being spent. The union was coming back
saying, "There are no textbooks." What in reality I understand
was happening was that the textbooks hadn't been printed yet.
But, you know, it was a confrontational approach to come to us
rather than come and discuss it in a reasonable sort of
fashion.
I think we've done a lot
for education accountability with testing, with report cards,
with curriculum, and certainly, in a non-partisan way, teachers
will agree to that.
But my question to you has
to do with the recent UN comment about Ontario being
discriminatory as it relates to our present policies with a
separate board being funded for the Roman Catholic faith and the
public board. I understand you are very adamantly opposed to any
monies flowing to other religious schools or private schools.
Could you expand on that for me, please?
Ms Kidder:
It's interesting that that's what you bring up after this
presentation. It's a pretty amazing question to ask. I also want
to note that all of your comments that you made before were all
about teachers. We're not teachers; we're not funded by teachers;
we're not attached to teachers. We came here as parents to
explain the problems that parents are having, which were none of
the things that you commented on, to do with special education,
to do with busing, to do with lack of services for our
children.
When you talk about that
poor school with no gym, one of the things that the Education
Improvement Commission brought up was that in the funding formula
there is not enough money for school renewal. They talked about
boards with old schools, that there is not enough money to build
additions on schools, that there is not enough money to put new
roofs on schools. That's what your own Education Improvement
Commission says about the funding formula.
We have never made any
statements about funding for religious schools or the UN
appointment. We have never talked about it all, as a matter of
fact. It's not one of the areas we've been concerned about. What
we've been concerned about is the school system that we have,
which funds Catholic schools and non-Catholic schools and French
schools. We believe they are all part of the public education
system. We've been fighting for full funding for those schools
because they are part of our public education system, which as
Canadians we always used to believe in, and that's what we care
about and we focus on.
I think that bringing up all these teacher
issues or how you felt embarrassed by teachers has nothing to do
with us. You can speak to the teachers about those issues.
What we're here to say to
the government is that there's serious damage being done to
children in classrooms right now. It's only this year, when it's
not a crisis now-there are not teachers on strike, there are not
huge polarized fights happening-that parents are feeling this. We
just had a conference in the fall with parents from all over
Ontario saying, "What can we do now that we see what's
happening?" To bring up all these complaints about teachers, I
don't quite understand, or the UN ruling.
Mr Galt:
It was about the union; it wasn't on teachers.
The Chair:
We've run out of time. On behalf of the committee, thank you very
much for your presentation this afternoon.
CENTRE FOR EQUALITY RIGHTS IN ACCOMMODATION
The Chair:
Our next presenters this afternoon are representatives from the
Centre for Equality Rights in Accommodation. Could you please
step forward and state your name for the record.
Ms Sherrie
Tingley: I'm Sherrie Tingley from the Centre for
Equality Rights in Accommodation.
Mr John
Fraser: I'm John Fraser from the Centre for Equality
Rights in Accommodation.
The Chair:
On behalf of the committee, welcome this afternoon. You have 30
minutes. You may proceed.
Ms
Tingley: Before I begin I wanted to just touch briefly
on the committee process.
We were thrilled to have an
opportunity to come and speak with people today. We put a lot of
effort into discussing all the issues that are out there and what
are our priorities and thinking about the best way to explain
things. I'm a volunteer with the Centre for Equality Rights in
Accommodation. It's a volunteer position so I'm coming today as a
volunteer to speak with you.
I want to talk about
homelessness in Ontario and the case for a needs-based shelter
supplement. When the media, politicians and housing advocates
talk about homelessness in Ontario, they generally focus on a
lack of affordable housing. Increasing the supply of rental
housing is seen as the key to combating homelessness. Part of the
reason for this supply-centred conception of homelessness is that
the issue is being defined to a great extent by the specific
housing situation in Toronto. The Centre for Equality Rights in
Accommodation is a provincial human rights and housing
organization and we're coming at things that way. Toronto has a
very low vacancy rate, 0.9%, and as a result increasing the stock
of rental housing is a high priority. Increasing housing supply
alone, however, even in Toronto, will not solve the crisis of
homelessness.
In the recently produced
Where's Home? study, 47% of the Ontario municipalities surveyed
had vacancy rates greater than the commonly accepted minimum rate
of 3%. In addition, as the study pointed out, there appears to be
no correlation between vacancy rates and the extent of
affordability problems in the different municipalities. In 1995,
24% of tenants in Sudbury were paying greater than 50% of their
income on rent, even though with a 6% vacancy rate there was a
plentiful supply of rental housing. In Toronto, 23% of tenants
were in the same situation and the vacancy rate was less than 1%.
The vast majority of municipalities where vacancy rates increased
between 1994 and 1998 still showed rent increases over the same
period.
As the Where's Home? study
illustrates, homelessness in Ontario is not simply a question of
the demand for rental housing outweighing the supply. It is most
importantly a problem of inadequate income to cover housing
costs, especially for families with children. Whether it is
plentiful or not, thousands of Ontarians simply cannot afford
shelter. Unless we recognize the depth of poverty and its role in
homelessness, we will never be able to adequately house our most
vulnerable citizens.
1410
Mr Fraser:
I'm going to talk a little bit about the affordability squeeze
for social assistance recipients and for people who are working
with low incomes and not receiving social assistance.
In October 1995, social
assistance benefits were cut by 21.6% across the province,
causing immense hardship for families already struggling to make
ends meet. Considering median gross rents in selected
municipalities in May 1996-the municipalities are Toronto,
Hamilton, Windsor and Ottawa-the cuts to benefits had an
immediate, staggering effect on the ability of households
receiving social assistance to pay for shelter. As you can see,
if you look at the first table on page 2, a single parent with
one child receiving social assistance would potentially have had
to pay 73% of her income on rent in Toronto, 56% in Hamilton, 65%
in Ottawa and 60% in Windsor. In all of the selected cities, the
shelter allowance component of social assistance was well below
median rents.
Professor Michael Ornstein,
co-director of the Institute for Social Research at York
University, calculated that welfare cuts in 1995 forced at least
67,000 single parents from their existing housing. This was
almost certainly the largest economic eviction of families with
children in Ontario's history.
If we go further, to 1999,
and calculate a rough estimate of rent increases to October, the
situation for households receiving social assistance becomes
significantly worse. In Toronto in late 1999, as you can see in
the second table, figure 2, a single parent would potentially
have to pay 82% of her income on rent, in Hamilton she would
potentially pay 62%, in Ottawa 68% and in Windsor 62%. So we see
that between 1996 and 1999, the single-parent's income remained
unchanged but the rent increased by as much as 12%.
The hardship faced by
people receiving social assistance becomes particularly stark if
we isolate the impact of rent increases on the money a person has
left over to pay for other basic necessities such as food,
clothing and transportation. Using the example outlined above, a
single parent with one child in Toronto was left with $295 to pay
for non-shelter items in 1996, and $199 in 1999. Thus, a 12%
increase in median rents over the three-and-a-half-year period
corresponded with a 33% decrease in the money left for other
basic necessities. Rent increases have an exaggerated impact on
basic-needs income. Food and clothing certainly did not get
cheaper between 1996 and 1999.
The loss of income for
non-shelter items is particularly problematic if we look at
communities that are outside of major city centres, where many
non-shelter costs such as transportation are significantly
higher.
To account just for
increases in rent, shelter allowance levels alone would have to
increase by 20% in many circumstances to place Ontario Works
recipients in the same desperate financial situation in which
they found themselves in 1995, after the cuts. Just to bring
people back to their position after the cuts in 1995 would
require a significant increase to shelter allowances.
The situation for
low-income working households that are not receiving social
assistance is also very desperate in Ontario in terms of housing
in the rental housing market. Those who are employed are
particularly hard hit by housing costs in Ontario, and this is
very much true for families with children where one or two
parents are employed in low-paying jobs. Minimum wage is the same
whether you are single or whether you have children to
support.
If we look at median rents
for 1996 in the selected municipalities, we see that a single
parent making a minimum wage will have to devote an inordinate
amount of her income to shelter. She would be paying more than
50% of her income on rent in all but one of the four
municipalities selected. The picture looks significantly worse if
we project the affordability squeeze to 1999. In each
municipality listed, a single parent working for minimum wage in
late 1999 would likely be paying over 50%, and in some cases as
high as 68%, of her income on rent.
We want to stress, though,
that the numbers we've described above in all likelihood
underestimate the impact and the severity of affordability
problems facing low-income households in Ontario, whether they're
employed or whether they are in receipt of public assistance.
These households usually have to pay more than the average or
median rents. That sounds insane, but that's the experience we
had, and the research we are aware of has supported that. These
households usually have to pay more than an average or median
rent because, when searching for housing, low-income families
face a range of discriminatory and systemic barriers which keep
them from renting the most affordable apartments they can find.
They are refused by landlords because they are on welfare. They
are refused by landlords because of their income levels, because
they have children. They are refused because they don't have the
last month's rent and can't afford to pay the last month's rent
and it's not provided anymore by municipalities. They're refused
because they may not have a credit history yet, if they are a
young family of a newcomer. As a result, low-income households
are pushed into undesirable and overpriced accommodation.
An analysis of census data
by Professor Ornstein found that families with children living
below the poverty line usually have to rent the most expensive
apartments in the market. In 1990, 74% of single mothers with two
children, living below the Statistics Canada low-income cut-off,
who rented an apartment during the one-year period, had to rent
an apartment above the most affordable third of units on the
market, and this is controlled by size. Over half had to rent
apartments, believe it or not, in the most expensive third of the
market. They're not renting the cheapest apartments and they
can't.
The housing affordability
problems faced by the low-income households outlined above are
simply impossible. Whatever way we decide to look at it, we
cannot ignore this one fact: In Ontario thousands of single
parents, young families, people receiving social assistance,
youth, people with disabilities and the elderly do not have
adequate incomes to afford decent shelter, a basic necessity and
a fundamental human right.
Legislated homelessness in
Ontario has been condemned by both the United Nations committee
on social, economic and cultural rights and the United Nations
human rights committee as a blatant violation of international
human rights.
Ms
Tingley: A needs-based shelter supplement: This is what
we really came to talk to you about. Some people are of the view
that the only solution to homelessness is to build more
affordable housing. This should certainly be part of the solution
and makes sense in cities such as Toronto that have a very low
vacancy rate. However, it can only be part of the solution.
Indeed, in cities with
higher vacancy rates, such as Thunder Bay with a vacancy rate of
almost 8%, it would make little sense to focus on building new
housing. The majority of low-income households in Ontario are
housed in the private rental market, and we have no reason to
believe that this will cease to be the case in the future.
According to data from the
Ministry of Community and Social Services, 84% of households in
receipt of public assistance live in market-rent apartments.
Given the reality of the rental housing market in Ontario,
dealing with the income side of the equation is the most
important component of any strategy to end homelessness, which
I'm sure the Ontario government is committed to. This government
was elected on a promise to institute shelter allowances for
households with affordability problems. It is an urgent necessity
that it come through on this promise in the upcoming budget.
There is some misguided
notion among a small minority that shelter allowances or income
supplements to help families living in poverty pay for housing
simply line the pockets of landlords. This myth simply justifies
complacency about the
immoral and unacceptable level of poverty in Ontario, and I'd add
hunger. There's absolutely no evidence that rents are adjusted to
capture housing allowances, which would vary depending on income
and would be confidential information which not even a landlord
would have access to.
A shelter allowance program
is simply a means of adjusting the incomes of the most
disadvantaged households in our society so they can afford life's
necessities, such as shelter. We don't criticize tax credits for
poor families as a means of subsidizing landlords. Similarly, we
don't criticize income supports which are a response to the
reality of rental housing in Ontario. The program would have to
have two components: one for people on social assistance and one
for low-income households in paid employment who do not receive
social assistance. For people on social assistance, shelter
allowance levels must be raised to better reflect actual rents
across the province. Shelter allowance levels could be calculated
based on Statistic Canada's median gross rents for each major
city in Ontario, as recommended by Toronto's Homelessness Action
Task Force. However, we do not agree with the task force's
suggestion that shelter allowance levels be set at 85% of median
market rent. This is inadequate. As discussed earlier, because of
the many barriers faced by low-income households in their search
for housing, it is impossible for most families to find
accommodation under the median rent levels. Shelter allowance
levels should be set at least at the level of median market
rents.
1420
Income supports for
employed people would be equally essential. As discussed earlier,
families with children who are dependent on low-paying employment
have always been particularly disadvantaged in our society. An
income support program for housing would be a means of correcting
the inequality created by a wage payment system which ignores the
financial realities of families. The program must be available to
all those who need an income-based needs assessment. The recently
announced rent supplement program is not the universal shelter
allowance promised by this government and so desperately needed.
It is limited to 5,000 subsidies across the province. In
addition, the program is administered through local housing
authorities, which in Ontario utilize chronologically based
rather than needs-based waiting lists. The result will be that
disadvantaged households will be unable to access the rent
supplements at their time of greatest need. Young families,
newcomers, those most at risk of homelessness, will not benefit
from this program.
The crisis of homelessness
in Ontario is far more than what you see on the streets. Women
and children are by far the largest groups affected by the cuts
and by the erosion of income since this government took office.
If we are to help low-income people get housing, we have to give
them what they need: an income which helps them pay the rent,
prompt access to last month's rent deposit, far better protection
from discrimination so that they can access the most affordable
housing available and in areas with a supply problem more,
affordable housing.
The Chair:
We have approximately three minutes per caucus and I'll start
with Mr Christopherson.
Mr
Christopherson: Thank you for your presentation. I'm
sure you were here for the last presentation about the school
system and what's happening and the group of mothers that were
here. I couldn't help but think that with the two of you back to
back, one dealing with the education crisis and you dealing with
the poverty crisis, the homelessness crisis, at the same time the
headlines are screaming, "We've Never Been Better Off," "It's the
Biggest Boom Ever," "Things are Great." If anything, it just
points to the fact that building a strong economy is only half
the job. What a government allows to be done with the generation
of that wealth is the other half of the job. It's morally
bankrupt in my opinion, and in that of the NDP, to be giving so
much of that wealth to people who are already well off at the
expense of the issues that you've raised, and the group that came
in before. There's just something totally cockeyed about a world
that works that way.
I wanted to ask you about
the issue of income supports, just so we're clear. I don't think
our view of this is different, but I wanted to explore it a bit.
You spent a fair bit of time talking about the issue of providing
shelter allowances because it deals with the reality that
non-profit homes aren't there, affordable housing hasn't been
built. Of course, there were 17,000 units that were chopped
within weeks of the government taking power in 1995, units that
we would now have, where people could be living. There's always
been a huge component of shelter allowance but we in the NDP
happen to believe very strongly that as much as possible money
that's going to go into housing ought to go into trying to build
the right kind of housing in the right locations and the right
mix, all the things that we know from experience will give us the
potential for a maximum outcome.
I just wanted to be clear
it's not that you're opposed to the building of them, it's just
to put all the money there and say that will take care of it in
the short-term isn't going to solve the problem because they
aren't built yet, or are you like the government and think we
ought not build anything and everything ought to be shelter
allowance?
Ms
Tingley: I think we talked about supply being a
component, but you can't allow shelter allowances-for people who
may not have seen the table, the welfare rate for a single parent
in this province is $950 and the shelter component of that is
$511. So you're paying out $511 to a mother and child, or to a
single parent and a child, in this province to obtain housing.
You can't allow that because most recipients rely on the private
market at this point and it will be a long time that that will
happen. You cannot allow shelter allowances to fall that far
behind.
You talked about
prosperity. I would just say that people cannot share in the
prosperity if they're hungry or if they do not have secure
housing. Having spent a lot of time in this province talking to people on
social assistance, they desperately want to share in the
prosperity, they're optimistic because of what they're hearing,
but they cannot do it when they spend their whole day going from
food bank to food bank to ensure that they have enough food, that
their children are able to eat. It's just not possible to
participate or to find the energy to do the things you need to be
a participant and to share in the prosperity.
Mr Arnott:
Thank you very much for your presentation and for coming in
today. There have been quite a number of presentations concerning
the housing issue, and yours is another one which again provides
a different perspective, I think it's fair to say, from what we
have heard to date.
There is a question I had
relative to something you said during the course of your
presentation. On page 4 you talked about a study done by someone
named Professor Ornstein which "found that families with children
living below the poverty line usually have to rent the most
expensive apartments on the market." I just wondered if you could
tell me if he gave you any advice or conclusions in that study as
to why that was the case.
Mr Fraser:
His view on it, to our understanding, is the same as our view on
it, that there are a number of barriers in place both in terms of
discrimination and systemic barriers which essentially reduce the
pool of rental housing which low-income households can apply to.
Even looking at it from a market perspective, by decreasing that
pool you're putting people in a position where rents can be
raised unfairly or inordinately because landlords who do rent to
people who are on assistance know that a lot of landlords renting
the most affordable apartments will not rent to them. So they are
stuck.
Ms
Tingley: I would just add that a large part of the work
that we do at CERA is to assist people who are facing
discrimination in housing. So we do get calls from people, we try
to mediate and then, in some cases, file human rights complaints.
It is illegal to not rent to people on social assistance, but
many landlords go to various means and close off their units to
people on social assistance, although there is no business case
for that.
Mr Fraser:
It's something that's very frustrating for us in our work because
we are trying to mediate with landlords to get someone an
apartment where they would be paying 55% or 60% of their income
on rent. We can't get them that apartment. The person ends up
renting something where they end up paying 75% of their income on
rent.
Ms
Tingley: The previous government recognized the
important role of CERA in terms of the housing sector and funded
us under the Partners in Housing program that supported a whole
bunch of groups that did this work. Your government doesn't fund
any housing sector partners any more. That may be something you
want to look at if you want to influence what does happen. You
may want to look at reinstating some of those funding programs so
that we can do the work to help families save money.
Mr Arnott:
I suppose if there were available resources, that's something the
government might look at, but we're glad that you're still in
existence as an organization and still able to come in and make
such a professional presentation.
Mrs
Pupatello: Thanks for coming in today. I noted with
interest that today we had the Ontario Home Builders' Association
in. You are in agreement with that organization to institute
shelter allowances. Are you making an assumption that the
government, if they are going to do this-I didn't ask the home
builders this-would then increase the shelter allowance, not only
institute it but give a huge increase to what the value of it is
so that it keeps it at the 30% of the total income being spent on
housing?
1430
Ms
Tingley: Welfare benefits in the province have never
been structured that way, so I don't anticipate that that would
happen. But we're saying the shelter component in the welfare
benefit should reflect what it costs to rent in the community,
and it's probably what the home builders said today, I
suppose.
Mrs
Pupatello: So that when you say you're supporting the
institution of shelter allowances for households, that's
different from what is currently happening in the portion of the
welfare allotment for shelter?
Ms
Tingley: We're saying that within the welfare benefit
the shelter component should reflect what people have to pay for
shelter and we're also saying that for the working poor there
should also be a shelter allowance program based on need.
Mrs
Pupatello: There was some really alarming information
yesterday at the hearings about how many units would have to be
built to accommodate the need. It was some wild figure like
20,000. The home builders said today and yesterday they're just
not going to build it. There's no influence, there's no return on
investment to warrant that kind of building and they're not going
to do it. Today one advanced the notion of dropping the PST on
building materials and then suddenly they'll start building
units. I personally don't think that would be the case. There
have been lots of incentive programs in the past that haven't
worked. I think they have to make a profit or they won't build
the homes.
You noted that there's 84%
of these recipients who live in the market rent apartments in any
event, so that if you were talking about what the shelter
allowance was, if it was appropriate, they would go into-I mean,
if you have to find an apartment in Toronto tomorrow you can if
you can spend money on the rent. The rents are enormous. It's not
that they're not there; it's just you can't afford to pay.
Ms
Tingley: I was interested to know what the government
does see as a reasonable expense for MPPs to obtain shelter in
Toronto.
Mrs
Pupatello: You ask an interesting question-
Ms
Tingley: You are paid.
Mrs
Pupatello: -because they all tend to live in the
downtown area, which is going to be the more expensive area, and the allotment is
certainly higher than what is given.
But in any event, I want to
go back to what that figure's going to be. You are assuming that
it's going to go up-
Ms
Tingley: Yes.
Mrs
Pupatello: -that this is the group, the Conservative
Party, that is the most likely to meet their promise in their
Blueprint now, or whatever it was called before, to go with the
shelter allowance. If that's going to be effective and make any
difference at all, it's going to have to be increased by in some
cases 50% to keep it as the amount that you should be spending on
rent.
Ms
Tingley: The way that the welfare benefit is structured
is that your shelter component is only paid out if you pay that
out in shelter. So if somebody was living in a much cheaper
place, they only get what they pay out in shelter. We're saying
to set it at a reasonable rate based on-
The Chair:
With that, we've run out of time. On behalf of the committee,
thank you very much for your presentation this afternoon.
CHILD CARE ADVISORY COMMITTEE OF TORONTO
CHILDREN AND YOUTH ACTION COMMITTEE OF TORONTO
The Chair:
Our next presenters represent the Child Care Advisory Committee
of Toronto. Could you please step forward and state your name for
the record?
Ms Cheryl
DeGras: Good afternoon. I'm Cheryl DeGras. I'm the
co-chair of the Child Care Advisory Committee of Toronto.
Ms Fiona
Nelson: My name is Fiona Nelson and I'm representing the
Children and Youth Action Committee of Toronto.
The Chair:
On behalf of the committee, welcome, and you have 30 minutes for
your presentation.
Ms DeGras:
The Child Care Advisory Committee of Toronto represents more than
600 child care centres, home child care agencies and family
resource programs and special-needs services, as well as
organizations which support the provision of quality child care
in our city. The CCAC, as we're known, is an advisory committee
to the city of Toronto city council and has for many years
provided advice and support to both elected representatives and
staff of Toronto Children's Services.
I'm pleased to have an
opportunity to speak with you today about the challenges, both
financial and operational, facing the child care system in
Toronto. As a major partner from both the financial and policy
perspective, the province can provide the needed solutions.
The licensed child care
system provides many benefits to children, families and society
as a whole. Quality, licensed child care gives children a wide
range of social and developmental benefits. It allows their
parents to work or attend school, secure in the knowledge that
their children are well cared for.
The federal costs and
benefits study released by Cleveland and Krashinsky clearly shows
that quality child care is a sound long-term investment for
governments. These two economists found that for every dollar
invested in quality child care there is a $2 return in social and
individual benefits.
As child care providers, we
believe that recent provincial funding and policy decisions have
threatened the child care system in Ontario. I'm here today to
recommend that the upcoming budget contain the financial measures
and the policy adjustments which will ensure the survival of the
child care system for all the children who need it.
In November, the province
made an announcement on the treatment of user fees from
subsidized parents. The province intends to reverse the change
made to regulation 262 in 1997 which allowed municipalities to
keep 100% of user fee revenue. This constitutes an $11.8-million
annual loss to the city of Toronto and could translate into the
loss of 8,500 child care spaces. This provincial decision is a
serious threat to the child care system in Toronto. The CCAC
recommends that the province not proceed with this change and
continue to allow the city of Toronto to keep all the user fees
collected from low-income parents.
The child care system,
including home child care, special needs and family resource
programs in Toronto are not adequately funded. There are not
enough resources to meet the demand for subsidized care. In
Toronto, approximately 12,000 children remain on the waiting list
for subsidy. Another 21,500 will need care once Ontario Works is
fully implemented.
The province has not been
providing the money necessary to meet the demand for licensed
care. In the city of Toronto, child care programs are feeling the
effect of this underfunding. We have not paid the actual costs of
providing care since 1993. Rates for home child care providers
have been frozen since 1991. This situation of underfunding is
acute and undermines the stability of the system as a whole. The
child care community struggles to make ends meet. Therefore, when
a new expectation arises such as pay equity obligations or
provincial directives for playgrounds, we have no ability to
respond and are thrown into crisis.
Over the past two years,
the city of Toronto has attempted to expand access and to ease
our financial burden by putting up $3 million to fund 2,000 child
care spaces. The province has declined to provide its share of
funding so this expansion never occurred. If the province truly
wants to see its initiatives like Ontario Works succeed, the
Child Care Advisory Committee recommends that the province agree
to cost-share the new spaces in order to allow the expansion to
meet the child care demand.
Not only has the provincial
government limited access to subsidized care, it has constrained
the expansion of the child care system. The province no longer
provides capital
funding to assist child care programs in building or renovating
new facilities. I'd like to add that there is also no funding for
maintaining the buildings that we already have.
To make matters worse, the
educational funding formula will negatively impact the current
stock of available space. Currently, there are 325 child care
centres providing licensed care for more than 17,000 children, as
well as 18 family resource programs located in our public
schools. This partnership is at risk as boards struggle to manage
with reduced provincial funding.
The Toronto District School
Board and the Toronto Catholic District School Board have
announced an initial list of schools to close in June 2000. These
schools house nine child care programs and two family resource
programs. Child care programs located in receiver schools could
also be affected. It is estimated, for example, that an
additional 20 child care programs in the Toronto District School
Board could be affected when the enrolment to receiver schools
increases to accommodate the immediate closures. In addition, the
education funding formula does not recognize child care as a
legitimate cost of education. The school boards are now forced to
increase occupancy costs to programs. Since child care programs
have no ability to pay the rents the school boards are looking
for, the city of Toronto will be asked for this funding. The CCAC
recommends that the province re-establish child care capital
funding and re-evaluate its funding formula to recognize child
care as a legitimate cost of education.
1440
The most recent crisis has
been that, effective this fall, the province now requires all
licensed child care programs to comply with the 1998 Canadian
Safety Association standards. It is estimated that as many as 718
of the 750 licensed child care programs in the city of Toronto
may need major retrofit or replacement in order to comply. The
CCAC embraces the attempt to ensure that outdoor play
environments are maintained in a safe manner, but the CCAC feels
strongly that the province must commit adequate resources to
accompany this directive.
Ontario Works and LEAP:
Other provincial policies such as Ontario Works and the Learning,
Earning and Parenting program undermine the stability of the
current subsidized child care system in Toronto. The recently
released operational review by KPMG Consultants confirms that
there is not enough child care to meet this demand. "It is
inconceivable that the Ontario Works program could succeed in the
long term"-and this is a quotation from their report-"with
inadequate access to child care." The Child Care Advisory
Committee and the city of Toronto are committed to licensed,
quality care provided on a first-come, first-served basis with
geographic and age equity and full parental choice. The advisory
committee is concerned that these clients will be given priority
for service over other clients already waiting for care. LEAP
clients could exhaust high-priority service for infants and
toddlers, leaving the city of Toronto unable to serve other
families. There is a real possibility that Toronto's child care
system will be eclipsed by clients on social assistance, and
working families will be denied access.
In closing, let me again
thank you for the opportunity to explain the pressures on the
child care system in Toronto, a system that is both complex and
delicately balanced. As we have pointed out, provincial policy
and funding decisions threaten to upset this balance and the
ability of the city of Toronto to meet the needs of all our
families.
This week, Finance Minister
Ernie Eves has boasted about the strength of Ontario's economy.
The provincial government must hear that this economy is based on
the ability of parents to work. Parents cannot work without
quality child care options. The time has come for the provincial
government to invest in the future by adequately funding and
increasing access to high-quality child care services. Thank
you.
The Chair:
Thank you very much. We have approximately five minutes per
caucus. I'll start with the government side.
Mrs
Molinari: Thank you very much for your presentation.
It's certainly something that we all agree on, that children are
our future and we need to do whatever we can that is available to
us to protect that. Some of the comments that you've made with
respect to the child care centres that were at risk, as you
mentioned, because of the school closures that have happened in
some school boards-I guess the question came up years ago when
the child care centres were built attached to schools, and doing
that appeared to be a good idea. As much as it's important for
proper child care to be available, I guess the question that
comes is, is it an education ministry matter or is it another
ministry's? That's where the co-operation between ministries is
necessary in order to provide the service, regardless of where it
comes from.
One school in my area in
Thornhill has done some creative things with respect to providing
child care with the schools. One of the schools was at risk of
being closed because of the lack of enrolment and because of the
community no longer having the students who were of that age to
attend that school. So what they did was they got together with
various organizations and came up with a very, very clever plan
and presented this to the school board, and it was adopted. That
was to use a portion of the school for child care services, which
appeared to be a need. There was a growing group of students, of
children of a younger age who were moving into the area. It was a
transition neighbourhood. It was very creative in what they did
in providing for that service.
I'm hopeful that a number
of other communities would work in partnership with the various
organizations to see what needs there are in the specific
communities. I hope you'll agree that not every community needs
the same services. Each community is ideal on its own and so
whatever services are needed are the services that are
provided.
I welcome some of the recommendations that
you've made here and some of the comments. Certainly, as a
government, when we're hearing different views from different
people, we need to take all of that and put it together and then
have the difficult decision of deciding how to distribute the pot
of money that is there to be distributed.
Again, I thank you for your
comments and your recommendations. Certainly they will be looked
at in the next few weeks, along with all of the others that are
coming in. Thank you again for all the work that you do on behalf
of children.
The Chair:
You still have two minutes on the government side. If not, I'll
go to the official opposition.
Mr
Phillips: I appreciate the presentation and clearly
welcome Fiona Nelson. Not that we don't welcome you too, but I've
watched Fiona in action for probably 35 years and I don't think
anybody has done more for kids in Toronto, maybe Ontario, than
Fiona. A lot of us lose our flame as time goes by, but Fiona
never has. Thank you very much for all you've done. You've been
terrific.
Just on your
recommendations, the government will always say to us, "We are
spending more money than any other government in the history of
the world on child care." My suspicion is that they may in fact
be using some of the money that comes from the federal government
that's shown as their own expenditures, as they've done in the
millennium fund. Have you had a chance to look at the
government's numbers when they say they're spending more than any
previous government and what comment might you have on that?
Ms DeGras:
As supervisor-director of a child care centre in the city of
Toronto, you can tell us that you're spending more money and you
can present it to us in many ways, but I can tell you what it
feels like after providing care for 10 years in the same daycare
centre. We are doing more with less every single day.
I want to point out that on
page 2 it talks about the fact that our per diem rate in group
care has not been increased since 1993. That means my staff have
been earning the same dollars. In fact, because some of the
grants that we depended on have been terminated, we are earning
less than we were earning in 1993. Parents' work hours are
increasing so they want us to stay open longer. It's exhausting
our staff. The people who are paying the actual cost for child
care in this province are the staff who work in the daycare
centres. It's an invisible cost. It doesn't show up on any budget
line.
Mr
Phillips: I was surprised at Mrs Molinari's comment on
the schools, about why don't you just go to the schools and set
up child care there. My experience with the schools is that they
are now so handcuffed by the "funding formula," particularly
school boards that need to build new schools, that they can't
build new schools if they've got any space at all in existing
schools. The exact opposite of what she says is what's happening
and that is that school boards are saying, "Sorry, but we can't
have you any longer in there because we have to have pupils in
there or else we're going to have to close some additional
schools." That has been my experience. What's your experience
dealing with school boards, in trying to find the space for child
care?
1450
Ms DeGras:
The Toronto District School Board is the one I'm closely
associated with, because the centre I run is in the City Adult
Learning Centre. For 10 years, the school board has tried very
hard to accommodate our program and to accommodate the community
in which we work, and the demand for child care in that community
is very high. But they are so cash-strapped at this time that
there is nothing they can do. In fact that's another area in
which we are scrambling.
At this point they are
looking at the very serious situation where they are going to
have to decrease their caretaking staff, which is going to add
another cost to our operational budgets. We don't have the money
to do that and we don't know how we'll be able to continue to
meet the standards parents expect without some miracle. It's very
frustrating. As I said to you, this is another thing where staff
are supposed to be early childhood educators working directly
with the children, but the pressure on us to provide additional
services in terms of health and hygiene is pulling our resources
apart. As I said, the Toronto school board tries to do what they
can, but they don't have the money to do what they're supposed to
be doing as educators. They are in difficulty too.
Mr
Christopherson: Thank you both for your presentation.
Just to pick up on the last point you raised, it's increasingly
frustrating for us on our side of the house to watch our
communities battling each other, knowing that it's not the desire
of either party locally to pick a fight. We watched it in
Hamilton with our public transit drivers and the local regional
council-I used to be a member of the regional council, so I
understand the issues.
We had a three-month
strike, and what hurt was that the whole community was divided
between who supported the regional councillors and who supported
the bus drivers. Yet I and others who watch the provincial scene
knew that the invisible hand in this fight, the one that was
poking both sides in the eye, was the provincial government. It
was their cuts in transfer payments that put the regional
councillors in an untenable position.
You raise the same issue
when you talk about school boards versus parents or school boards
versus teachers. It's pitting one part of our community against
another, which of course this government knew all along. There
were those of us who were on the record in Hansard way back in
1995 and 1996 who pointed out, "Look, all these cuts in transfer
payments are meant to do two things: (1) give the government the
ability to stand up in the next election and say `Aren't we
wonderful? We cut taxes at the provincial end by X dollars,' and
(2) to push the fight to the local scene." Because it's the local
councillors, the local aldermen, the local school board trustees
who have to make the decisions on which schools they're going to
have to close. It's not whether they want to but which ones they
are going to have to close. It's the same with the child care
programs. The tightness of money or the lack of money is not the fault of the school
board; it's the fault of the province, which now controls 100% of
the dollars.
I want to ask you
specifically: In her comments, one of the government members
talked about, "Well, we had to look at whether it's education
funding or community and social services funding, or should it
come from somewhere else?" Do you give a tinker's damn which
ministerial pocket it comes out of, or are you far more concerned
about making sure the money is there to take care of our
kids?
Ms DeGras:
Well, the last picture you painted is the one that best describes
our situation.
I just want to note that
Fiona Nelson, from the Children and Youth Action Committee,
hasn't presented her position. We need to do that.
Ms Nelson:
Mr Chair, ladies and gentlemen, the children and youth action
committee of city council was set up a couple of years ago with
the specific objective of making sure that the non-voting members
of the society were front and centre at the city level. We were
therefore very pleased when the government commissioned the
Honourable Margaret McCain and Dr Fraser Mustard to produce this
quite wonderful report. We are assuming of course that in this
budget it will be implemented. The recommendations are very
clear. While you have heard from Ms DeGras and other deputants
today a great deal of statistical data backing up the reasons to
do some of these things, I'd like to give you two other contexts
within which to look at the problem.
One is the economic context
and the other one, perhaps the more compelling one, is the moral
context. To start with the economic context, I am quite sure that
you are familiar with this excellent book that has just come out
called Developmental Health and the Wealth of Nations. We take a
great deal of pride in Ontario in being part of an extremely
wealthy and economically healthy province. But when one looks
under the covers, one finds that in fact while some people are
doing remarkably well, there is a huge gap developing between the
haves and the have-nots.
Among the large and
increasing number of have-nots in this province are our children.
While there are 1,000 children a day born in Canada, 100 of those
children are born in the city of Toronto, which gives us a rather
large window on the needs of children. To that end, for example,
on Tuesday we invited down to council all the children who were
born on January 1. There were about 100 of them and 36 of them
actually came. What it did, more graphically than almost anything
I can think of, was to show us what a significant shift in the
population has taken place. There were children from every part
of the world represented in the council chamber that day. It was
quite lovely to see in the middle of a working day the number of
parents who took time from work to come and bring along the
grandparents and various other aunts, uncles and all the
siblings. What it did was point out to council that in their
decisions, they have an enormous impact on people who are much
too young and much too vulnerable to be able to state their own
case and therefore it's our job to state it for them.
But we also know, from
studies such as the ones in this book and the ones done by McCain
and Mustard, that if we really pour on the horses from conception
to school entry we will in fact have to spend a great deal less
once they get to school. Therefore, it makes absolute common
sense for us to be looking at all the children in this society,
and however shiftless and useless and poisonous their parents
must be, we cannot visit on the children the sins of their
parents. It is essential that we make sure that there is as level
a playing field for them as is possible so their potential can be
exploited, not only for their own and their individual good, but
also for the good of this society. Whether or not you like
children, they are the ones who are going to be paying our
pensions and looking after us in our old age. It seems to me very
important to remember that while they may only be some 20% of the
population, they are 100% of our future. It's absolutely critical
that we keep that one in mind.
We have an enormous moral
imperative to do this as well. Mr Phillips mentioned 35 years
ago. I'm afraid I go back a lot longer than that. I do remember
from Sunday school days the injunction in the New Testament that
says, "Suffer the little children to come unto me and forbid them
not." It seems to me that we're doing an awful lot of forbidding
these days of the children of this society. Whether they're your
children or your children or yours doesn't matter a fig. They are
children and they need us and it is absolutely required that we
make sure that they are all properly fed and housed and provided
with whatever their basic necessities are.
1500
I represented for nine
terms a ward in the city that probably had no business electing
me. It was Rosedale and Forest Hill and Moore Park and various
other very prosperous parts of the city. One of the election
leaflets that I used, in two elections, in fact, was this one,
because I like recycling. It says: "Let's get down to basics.
Children first." It didn't matter where I went in the ward, I was
able to make, and be agreed with on, the premise that we are all
required to support our children. The most efficient, effective
and fair way of doing it is through the taxation system. We can
have all kinds of bun feeds and chocolate bar sales; they are
never going to replace a decent tax system.
It seems to me that it is
incumbent upon us all to do what Mr Justice Oliver Wendell Holmes
said: "I don't mind paying taxes. They buy me a civilized
society." Surely one of the biggest marks of a civilized society
is one that looks after its weakest and most vulnerable members,
and those are its children.
Whatever the statistics
that back up the argument, whatever the economic arguments that
back up the argument, surely the most significant one of all is
that we do it because it's the right thing to do.
The Chair:
On behalf of the committee, thank you very much for your
presentation. It was very enlightening.
TORONTO COALITION FOR BETTER CHILD CARE
The Chair:
The next presenter is a group called the Toronto Coalition for
Better Child Care. Could you please come forward and state your
name for the record.
Ms Jane
Mercer: Good afternoon. I'm Jane Mercer, with the
Toronto Coalition for Better Child Care.
The Chair:
On behalf of the committee, welcome.
Ms Mercer:
Thank you very much. I had hoped to be joined today better
Theresa Radwanski, who is the supervisor of the Children's
Circle's child care program, so if somebody slides in and sits
beside me halfway through, then that's OK.
The Toronto Coalition for
Better Child Care is a network with a membership of more than 250
programs across the amalgamated city of Toronto. Our members
include non-profit child care programs as well as child welfare
agencies, children's services organizations, social planning
councils, family resource programs and licensed home child care
providers. The Toronto Coalition for Better Child Care works
towards a system of child care which is high-quality, regulated,
accountable, affordable and accessible to parents.
On behalf of the Toronto
Coalition for Better Child Care, I would like to thank you for
this opportunity to speak today on the budget for 2000 for the
province of Ontario.
Why do we need child care?
Why must it be quality child care? Why does it have to cost so
much? I know those are questions that you ask yourselves probably
on a regular basis.
Why do we need child care?
The reason we need child care now is the same reason we've always
needed it: Parents need to work-the pressures on families and the
absolute necessity for them to work, brought on by the financial
pressures of the last few decades or the policies of this
government over the past five years. The reality is that the vast
majority of parents of our young children work, or they are in
school, or they want to be. That includes, across Canada, 70% of
the mothers of our young children, and in Toronto the number of
mothers working must be much higher. Parents work. They want to
work. You want them to work.
Child care has been around
in Toronto for over a century. It has grown steadily since the
end of the Second World War, when many mothers had to join the
workforce. Over the last two decades, we have seen literally
hundreds of programs spring up across this city and hundreds more
across this province, not really because there has ever been any
government plan to address this crucial need for families, but
because communities have seen the need. It is communities that
have worked incredibly hard, on their own, making the most of the
resources available to them to put this system in place,
persuading governments to support them along the way. It is
testimony to the value that parents and communities place on
child care that they would work so hard to build themselves a
system.
If we need to have child
care, why must it be quality child care? Because we all know now
that the early years of a child's life are absolutely critical to
their overall development. The results of extensive research,
including that commissioned by yourselves, support the importance
of quality early childhood development opportunities for young
children, and with the vast majority of our parents in the
workforce, this quality programming has to happen in child
care.
Why does it have to cost so
much? Child care is expensive. But surely you would expect that
the dollars required to care for the different individuals in our
society will relate to how vulnerable those individuals are. This
should not surprise us. Of course, it will cost a lot to provide
a quality child care system, just as it costs a lot to provide
for the elderly, the sick and those with special needs in our
society. But if we want to build a strong society, those of us
who are able and strong must support all of those more vulnerable
individuals. Every parent knows that young children take an awful
lot of caring for. But we must care for them, and we must care
for them well, or we will pay an enormous price in the future.
The earlier speaker, Fiona Nelson, reminded you that although
children may only be 20% of our population now, they are 100% of
our future.
As we enter this new
millennium, a turning point, surely, that we could harness here,
some 13,000 children wait for a subsidized child care space in
the city of Toronto, and thousands more wait for the privilege of
paying the full fee for a child care space in this city. Since
the introduction of this government's Ontario Works program some
years back, another 21,000 children could require a child care
space in the city of Toronto. We are looking at well over 34,000
children in Toronto in need of child care spaces now. By the way,
34,000 is the exact number of babies that are expected to be born
in Toronto this year. We'll count them and we'll let you know how
close we were. But this is clearly not a problem that's going to
go away.
We know that over the past
five years this government has had a very hard time coming to
terms with the high cost of child care, especially in Toronto.
That was undoubtedly one of the reasons that in the fall of 1998
the former Minister of Community and Social Services, Janet
Ecker, ordered a review of the Ontario Works workfare program and
the child care system of Toronto. We are not sure exactly what
you were expecting to find when you commissioned this report, but
at the end of what must have been a very expensive audit, this is
what you were told: It is inconceivable that the Ontario Works
program could succeed in the long term with inadequate access to
child care.
We have a huge problem in
Toronto. There have been massive cuts to our province's child
care system over the last five years. An analysis of provincial
allocations for regulated child care shows a difference of $70
million between 1995 and 1998, and it is our underpaid child care
workers across the province who have been carrying this system
while this government balances its books, the vast majority receiving no pay
increase for over six years.
The systematic underfunding
of this system for the past several years has led to a problem of
catastrophic proportions. In Toronto, our child care system is
facing a total of almost $50 million in service and financial
pressures brought about by both the cuts and the policy changes
over the last few years at the provincial level.
The service and financial
pressures currently facing child care in Toronto arise from the
following main sources: failure to pay the operators their actual
costs of providing subsidized child care; insufficient child care
fee subsidies to meet the service need or demand, especially
since the Ontario Works program came in; the impact of school
closures on child care located in school facilities; the
playground retrofit and replacement required by licensing; the
health and safety expenditures required by licensing; the loss of
user revenue for provincial policy changes; funding pressures
associated with downloaded programs-wage subsidy, family resource
programs, special-needs resourcing; pay equity. These are the
financial services and pressures that our city is facing at the
moment.
There is no way we can hold
on to our child care system without this government's help.
Everybody else is pitching in. The school boards are pitching in.
City council is doing its best. The parents across this city are
working as hard as they have ever done before.
1510
Over the last five years,
parents and underpaid staff have had to work harder than ever
before to defend the system they built. As you have seen, parents
will work hard and they will fight for quality child care for
their children. They will fight for it because they know the
value of it. The vast majority of them have to pay the full cost
of it. They will fight you for quality child care, but they are
also very willing to work with you to preserve, build and expand
this system. They will not let you put their children at risk
while you get your books in order.
I have three very clear
recommendations I'd like to make to this committee and then I
would love to hear, as I know you would, from Theresa Radwanski,
who has her hands right on the program.
Our recommendations would
be: Restore the full level of funding to the licensed child care
system in this budget in real dollars. That means those dollars
have to be there, not just moved around.
Work with the
municipalities to really examine the possibilities explored by
the KPMG report. You paid for that report; now be prepared to
fund appropriately so that we can see some of those
recommendations they came up with. Listen to the municipalities
and expand this system so that it can adequately meet the
demand.
Finally, but certainly not
least of all, please work with the parents of child care
programs: not handpicked, but nominated by the community as ones
who really know the programs. They are the users, the governors
and the funders of this system. No one knows this system better
and no one is more motivated to make this system work well.
Thank you.
Ms Theresa
Radwanski: Hi. I'm Theresa Radwanski. I have been a
supervisor at Children's Circle daycare for the last 20 years.
The daycare has an excellent record and reputation and is based
in the Riverdale community of Toronto. I'm here today to urge you
to put the necessary funds into the daycare community, and that
when there is a budget or policy change, there are realistic time
frames and consultation with the daycare community.
Let me first tell you about
Children's Circle daycare. It is a private, non-profit charitable
organization based in the heart of downtown Toronto. As
supervisor, I juggle the needs of 107 children plus 200 parents,
along with 26 staff. I work with a volunteer board and I oversee
a budget of over $1 million. We provide care for 10 children with
special needs. This year, we averaged 25 children who are on
subsidy.
Children's Circle is a
special place. We have had an excellent safety record and have
developed the reputation of a top-quality program with a caring,
stable staff. On average, the children stay at least six years,
and my staff an average of 10 years. The daycare is made up of an
ethnically and economically diverse community of children and
staff. Many children visit the daycare for years after they are
enrolled. Parents often tell me that their children learn more at
Children's Circle than they do at school. We offer a very
creative program. Today-why I'm late-we were celebrating Chinese
New Year and having a dragon dance. We're also going to celebrate
Black History Month. We have a dance group coming in, a youth
steel drum and an African storyteller.
Last year, Children's
Circle had a really tough year. The children used to run, climb,
play in tunnels, swing and play on the climber. Now they have a
sandbox. On the old structure, the children learned new skills as
they moved to more challenging equipment. Now the staff are
challenged daily trying to provide adequate stimulation in an
unstructured free play space. It is crucial that the children
have this area to play in so that they get social and cognitive
development.
This year at Children's
Circle, everybody worked harder than ever before: the board, the
staff and parents. As a group, we have fundraised and reviewed
policies and staff salaries. Over the last few years we have
struggled to have a break-even budget. Some 74% of our budget
goes straight into staff salaries, and 10% goes into rent. That
leaves 16% for food, insurance, trips and anything else we need.
This year we have sold calendars of the children's artwork. We
had a barbecue and a silent auction. All of this was very
work-intensive for staff and families. We made $6,500.
It is a difficult balancing
act, setting fees high enough to adequately reward the staff and
low enough to be affordable to our families. The board of
Children's Circle has had to make some tough choices. The gap
between full-fee-paying children and subsidized children is now
$1,500 per child per year. We have to have our costs met.
We have to have
ongoing funding for pay equity. This year the board has decided
to reduce the number of subsidized children because we cannot run
the kind of deficit that we have been seeing.
Let me clarify the
situation at Children's Circle. The ministry came out with a
directive. There was no money. There was a collision course with
the child care community and Children's Circle, and the children
lost their playground. Parents, staff and board put in an amazing
amount of time to try and solve the problem. The government
looked really bad. Now our playground will be funded through
health and safety money.
What should have happened
is that the ministry prepares a directive, works with the child
care community and the municipalities, works with the child care
programs to see how the new funding can be matched, and come up
with the funding needed to do that. The money flows, playgrounds
get fixed, and both parties look good.
Let's learn from the fiasco
at Children's Circle. The children have had no playground for
over six months. The staff cannot provide a program that was
needed outside. Our parents were outraged by the process and they
rallied to help fight for a new playground. I, myself, put in 500
hours, which was taken away from my role of being a supervisor at
the day care.
Let's work together in the
future so there's a win-win solution and the children of Ontario
get the best care they deserve.
The Chair:
Thank you very much. I'll start with the official opposition. We
have approximately three minutes per caucus.
Mrs
Pupatello: Thank you for your presentation today. I'm
curious to know exactly the number of spaces, because I know your
organization tracks them. This government, as my colleague
mentioned to the group that presented earlier, is famous for
saying they have spent more money on child care than ever before.
That is always astounding to me because I've attended many of the
meetings in the Toronto area as well, attended by hundreds of
parents who are outraged by what is happening in the child care
community. I can't find any of the new spaces. I'm interested to
know where you think all of the new money is that the government
has supposedly put into the system.
Ms Mercer:
If we could find it, we'd get our hands on it so fast. There has
not been more money put into this child care system. You can call
a number of different things "child care." You can order your
child to sit at the kitchen table all day and call that child
care. We're talking about a regulated, accountable child care
system. There has been no more money put into that child care
system. In fact, we know that $70 million has been taken out of
that system.
The only money that I would
guess Mr Eves is referring to each time he says, "We've put more
money in than any government before us," etc-and I can tell you,
parents will cringe all over the province if we hear that line
again, because people know it's not happening. I can only assume
that maybe that money is the 21% cut in welfare spending. Maybe
it's the $70 million they took out of the regulated child care
system. Maybe that's the money they are now handing out in the
form of benefits or sort of allocations so that for the welfare
mother who goes back to work, who does get to work, she then gets
an allowance per day per child to purchase child care.
Mrs
Pupatello: You mentioned in your report, as did the
group before you, in regard to workfare and what the requirement
was going to be, assuming that this is what the government wants
to happen, that they had done an extensive review of the
Wisconsin model at the time and they failed to-or maybe they
missed an entire chapter when they were reading the book on that
model that talked about the huge investments which that state
made in particular in child care. What they recognized at the end
of it all was that it was a very expensive program to implement,
because they deemed that their goal wasn't a cost-saving measure,
it really was appropriate training, as they saw it, and they
couldn't make it happen without the child care component. We've
raised that in the House over the course of the last four years,
that if that's the kind of program they need to implement, it's
not going to happen. They will not be able to revisit, revise and
improve a welfare system without a child care component that has
been completely neglected by this government.
1520
Ms Mercer:
That was the strongest message that came out of the KPMG report,
the audit that the government requested and paid for to tell it,
presumably, what's going wrong, how come municipalities can't put
this Ontario Works program in place. The words were-and it was
quoted by me and it was quoted by the previous speaker-"It is
inconceivable that the Ontario Works program could succeed in the
long term with inadequate access to child care." That seemed very
clearly stated. You can't have 21,000 mothers go back to work if
you don't provide child care for 21,000 children, and that's just
in Toronto.
Ms
Pupatello: They managed to cherry-pick the parts that
they wanted, that seemed convenient or was more in line with
their message.
Ms Mercer:
That might look good on paper but it can't work, because a
mother, no matter how badly you have cut back her welfare and how
badly she needs that money-and there are women in Toronto, and
single parent fathers too, who are hurting so badly through these
kinds of cuts. There is no way with all the goodwill in the world
that they can go off to work if they can't find child care. They
can't find child care within the regulated system.
Your government talks a lot
about choice, but if there isn't the regulated system, then
that's the bit of a choice that's missing in all of this.
Certainly with 13,000 already on the waiting list in Toronto,
that choice isn't there. I should have, but I don't even know the
dollars that have been allocated for child care on a day-to-day
basis for that parent to go back to work, but I can tell you that
you can't get child care, even the neighbour in the apartment
next door, for under $25 or $30 a day. That's what people
charge. I can't board
my dog in Toronto for less than $18 a day. It is so upsetting to
hear that that kind of dollar allocation is less than I have to
pay to put my dog in a kennel.
Ms Marilyn Churley
(Broadview-Greenwood): Thank you very much and welcome.
Theresa, I really want to take this opportunity to congratulate
you and all the people who worked with you on your victory in the
playground fight. As you will recall, I asked a question in the
Legislature about that, and at the time, if I recall, the
minister, as all the ministers do when they're asked questions
about child care, we get the litany, "We put more money than your
government and any other government before into daycare," instead
of addressing the issue that's put before them, which was what
was done in this case. But I was so happy to see through your
very hard work-you have no idea how much work this woman put into
that particular issue and succeeded. The message here is, you can
fight these guys and you can win sometimes.
I raised that because,
thank you for pointing out yet again that when the ministers and
the Premier say you put more money into child care than ever
before, it isn't so. Hopefully the committee members here are
taking that to heart, which is why these committees are so
important, and can go back to the finance minister and to the
ministers and say: "We've heard it. We've got documented proof
that in fact when you say you're putting more money in, you
aren't. You're playing with the numbers here. We have a series of
crises in the child care system that need to be addressed, and
furthermore people don't even want to play the game of who put
more money into the system, when and where. The issue now is,
there's not enough money going into it and there's a crisis."
I got my start and partly
what got me into politics was fighting for child care in Withrow
school in my riding. By the time I got it-there were empty
classrooms there-I didn't need it any more. But I'm happy to say
it's still there in that school for other parents. I just find it
extremely disheartening that we're going backwards now instead of
forward, particularly with all the studies.
If I have time left, my
question would be: Over the past few years, with so many reports,
early childhood education is the issue here; it's not about
babysitting. Could you expand on that a bit, why we need to
expand not just child care but the licence in terms of giving the
children that early education that's so important?
Ms Mercer:
This is not new research. What is new about it is that there are
now so many studies out there and so many reports and so much
research that nobody can get through the room without tripping
over it. I remember 25 years ago in teacher training college the
line being, "You show me the five-year-old and I'll show you the
man." That is so true. We have a window of opportunity in those
first five years to work with kids. Also, as the saying goes,
after that you're really just talking about a draft blowing
through here, because whatever you do after the five years-not
that it's not worth doing too, but it just takes so much more to
impact on the child's life. Those early years are so critical,
and they're critical whether you're talking about parents in the
home or the grandparents or the caregivers at the family resource
program. All of these things are important. The research is
overwhelming that we must work with children when they're
young.
Look at the other piece
that tells us that the majority of parents of young children are
in the workforce, and if they're in the workforce-and 70% of the
mothers of young children are in the workforce-then it stands to
reason that we have to have that quality early childhood
development piece happening in the child care environment. It's
not just enough to do the library thing and the family resource
program thing when 70% of your children are in some form of child
care.
Mr Galt:
Thank you very much. I appreciate your presentation and also Ms
Churley's comments, entertaining as usual.
Ms
Churley: And true as well, I may add.
Mr Galt:
The problem I'm struggling with as I sit here-and I'm trying to
be serious with this-is that we've ended up in an "I said, you
said, we said, she said," type of thing. You're saying we have
exaggerated the figures. I haven't heard many figures coming from
you people as to how much, other than, "We need more." We had a
lot of groups coming before us that need more money. That's kind
of a standard-I'm not being nasty. It's a struggle as a
government as to where the spending should be of your money. It's
not our money, it's your money. Others come before us saying,
"You've got to get that debt down." So society tries to balance
that out.
Let me just mention a
couple of figures. I heard you say you didn't want to hear them
ever again, but let me share them with you, and then I need to
hear back from you, in hard dollars, what are we talking about?
Where is it at? For example, I'm being told-and I'm not a
specialist; child care isn't my background. Mine is veterinary
medicine. I love to hear this $18 looking for a kennel. That
sounds marvellous. Maybe I should be getting back into that
business.
A 15.2% increase in child
care spaces, for 19,000 spaces; for Ontario Works, some $40.2
million is being spent; for the LEAP program-Learning, Earning
and Parenting-$25 million. We're up to $738 million; a 30%
increase, or $173 million. These are the figures I'm given and
then I come here and I hear you saying: "You've cut, you've
slashed, you're not giving us anything. It's worse than it's ever
been." I don't understand. How much has been cut? If so, how much
are you saying needs to be replaced? What I'm seeing is a 30%
increase. I don't understand. Sorry. I'm just a politician. Maybe
you can explain.
Ms Mercer:
Yes, and you're a politician in the government. This is really of
concern to us because if none of us really knows what's going on
here, then it sounds as though we should maybe be going through
the freedom of information act to access those. I strongly urge
the opposition to do exactly that, to get to the bottom of
this, to ask for these
hardcore numbers to be out on a sheet of paper for us.
I haven't come prepared
with your numbers to explain those. As to this $70 million that
has been taken out of the system that I referred to, I can tell
you that that information comes from Child Care in Canada:
Provinces and Territories (1995 & 1998). It has been put out
by the Child Care Resource and Research Unit of the University of
Toronto.
The LEAP program, the
Ontario Works program, the way that those dollars are allocated
is that you're requiring a woman who's had her welfare cut by 21%
to go out to work. That's not going into the child care system;
that's in your Ontario Works program. That I think is where the
confusion is coming from. These are the dollars. I don't know
enough about how the government is counting its dollars. I tune
into the budget and will tune into the budget just like everybody
else. I don't how those dollars are being counted.
The Chair:
With that, we've run out of time. On behalf of the committee, we
thank you very much for your presentation this afternoon.
Mr
Phillips: Mr Chairman, maybe we could ask the staff to
request of the ministry an explanation-some of those figures that
Mr Galt had might be of interest-of the numbers on the increase
in spending and where it's gone and the spaces that have gone.
That would clear up any confusion.
The Chair:
I don't have any problem with that. We'll follow through on that.
We're going to have to recess because the 3:30 presenter has
cancelled. However, I would like to point out to all the
committee members that we will be flying out from the ESSO
Avitat-I don't think it's a terminal, it's probably a hangar-on
Sunday night at 7 o'clock sharp. We'll recess until 4
o'clock.
Mr Arnott:
Is the 4 o'clock presentation in the building? Do we know?
The Chair:
I don't know. We tried to get the 5:30 moved up, however, there
was nobody, so we'll recess until 4 o'clock.
The committee recessed
from 1532 to 1601.
CANADIAN ASSOCIATION OF NOT-FOR-PROFIT RESP
DEALERS
The Chair:
The next presenter is a group from the Canadian Association of
Not-for-Profit RESP Dealers. Gentlemen, could you please state
your name for the record.
Mr Tom
O'Shaughnessy: Mr Chair, my name is Tom
O'Shaughnessy.
Mr Ken
Goodwin: My name is Ken Goodwin.
The Chair:
On behalf of the committee, welcome. You have 30 minutes for your
presentation.
Mr
O'Shaughnessy: Mr Chairman and members of the committee,
it's a pleasure to join you today. My name is Tom O'Shaughnessy.
I'm the executive vice-president of Canadian Scholarship Trust
Foundation. I'm here with Ken Goodwin, who is the executive
vice-president representing USC Education Savings Plans. We have
provided for you a handout to leaf through as we go through our
presentation to ease the process.
Mr
Goodwin: If you go through this handout, beyond the
basic introduction, the first slide I want to refer to is our
goal. Our goal today is to demonstrate how the Ontario government
can make post-secondary education more accessible and, at the
same time, reduce student loan debt. That's what we'd like to
show you today.
Mr
O'Shaughnessy: Last November, we made a presentation to
the federal finance committee recommending increased benefits to
low- and moderate-income Canadians. At that time and with them,
we also recommended that the various provinces should be engaged
to participate in the Canada education savings grant program.
Mr
Goodwin: The next slide: Last week, the federal
government announced that they would forgive $100 million to the
banks who were not able to collect outstanding students loans.
This is a clear indication, we believe, that the student loan
burden is just too onerous for the graduating student. As a
result, it is very costly for the Ontario government as well.
Mr
O'Shaugnessy: If you turn to the next page, you see that
the federal government has made changes to the Bankruptcy Act to
potentially try and deal with the number of students who are
declaring bankruptcy early after finishing their post-secondary
education studies. The move to a 10-year hiatus on bankruptcy, in
looking at the statistics, seems to be very successful, but in
reality what is happening is that many of these students actually
go to third parties, to organizations that do provide credit to
them, pay off their student loans and then ultimately declare
bankruptcy immediately. So the problem hasn't gone away; it's
just been shifted from the public sector over to the private
sector and ultimately will start shifting back on to the public
sector once the private sector recognizes the impact of this.
Mr
Goodwin: If you turn to the next page, you've seen in
the paper, January 26, there was an article and an editorial in
the Toronto Star which shows how the provincial government has
received some negative reaction to the use of the Canadian
Millennium Scholarship funds. This again is just another
counterproductive process that's going on. In the presentation,
we also have a copy of the particular editorial that we were
speaking to.
Mr
O'Shaughnessy: One of the things we, as organizations,
have been doing is trying to find ways that we can encourage low-
and moderate-income families to participate in the program. We
have been having discussions on the financial level but also on
the social level with individuals who are really interested in
the development of children to, ultimately, post-secondary
education.
We've had discussions with
Dr Fraser Mustard. I'm sure many of you are aware of the report
that he issued for the Ontario government on the early years of
development of the child. We think that there are some
opportunities to be able to somehow blend this social process of trying to get the
young kids developed appropriately with the financial process of
having parents set aside money for their post-secondary
education.
Mr
Goodwin: The next slide: The Ontario government has many
programs that do help parents concerned with post-secondary
education. We can see that coming forth with things like the
early years study. But if you go on to the next slide, there
still continue to be obstacles for the students. The graph on
that slide, which talks about the cost of tuition, clearly shows
that tuitions have grown at five times the rate of the consumer
price index over the time period of five years. In fact, for
Ontario, our studies show that the average tuition has risen from
$1,653 in 1990-91 to close to $4,000 this year, which is clearly
an increasing burden for the students.
Mr
O'Shaughnessy: If you look at the next page-not
something new to you today; I'm sure the Canadian Federation of
Students has gone through the growing student debt problem and
the defaults that are being generated out of it. Student loan
defaults, according to Statistics Canada, have grown over 20%
between 1997 and 1998. These defaults are costing all governments
a significant amount, with no end in sight. We've looked at the
Canadian Federation of Students' proposal, which is more
short-term funding to deal with the issue. What we're talking
about is more of a long-term plan to move away from an immediate
funding process to a longer-term funding process that will reduce
the requirements for student debts in the long term.
Mr
Goodwin: In the next slide, I guess we talked a little
bit about the fact that the Canadian education savings grant was
introduced in February 1998 by the federal government. The
purpose of that grant was to encourage people to save their own
money for post-secondary education, with participation on the
side of the federal government. We have found through studies
that, while this has been a very successful program, still only
about 13% of eligible parents have opened an RESP as of 1999.
There are therefore still a limited number of people who are
actually taking advantage of the Canada education savings grant.
In fact, as we're a not-for-profit organization and we do focus
mostly on the lower-to-moderate-income families, the feedback
we're receiving across Canada is that the
lower-to-moderate-income families are less aware and have less
understanding of this program and are therefore less motivated
towards it. That's an issue that we're concerned about.
Mr
O'Shaughnessy: On the next page you'll see that our
objectives today are to increase the amount of savings across the
province for Ontario residents for post-secondary education; in
the long term to lower student loan costs and debt and the
write-offs related to those student loans and debt; to lower the
number of students who are dropping out of post-secondary
institutions-I think our studies indicate that the majority of
dropouts are related to financial difficulties. The programs that
we are in show that a significant number of the children who have
an RESP set up will actually go through and complete their
education-a much greater participation rate than you would have
in the general public. And, as well, to increase the
affordability of post-secondary education, especially for
moderate- and low-income families in Ontario.
Mr
Goodwin: If you turn the page, what we would like to
consider is that we need to target the low-to-moderate-income
families. They're the people who need most to save for education.
We would like to increase the number of families taking advantage
of the Canada education savings grant, which would in turn
motivate more parents to save earlier. That's our strategy and
our motivation.
Mr
O'Shaughnessy: The general recommendation that we'd like
to provide is that we encourage the Ontario government to become
involved in the RESP regime, to look at the RESP very much like
the RRSP, where it's in effect a jointly supported program of tax
incentives for parents and individuals in the province to carry
out an appropriate process of savings.
Mr
Goodwin: If you turn the page again, the specific
recommendation is for financial incentive. We would like to
recommend that the province provide a financial incentive of a
10% top-up towards education savings, similar to the grant from
the government of Canada. This would encourage more Ontario
parents to save for education. It would also encourage more
educated workers to stay within Ontario to take advantage of this
regime and fight possible shortages of skilled labour and that
sort of thing.
1610
We believe that the grant
regime, if it's large enough, will incent the lower- to
moderate-income people because it will motivate them to put some
of their money away to participate. This is a long-term solution
to a long-term problem. We won't see any reduction in student
loans in the next year or two as a result of it, but they'll have
more ability to go to post-secondary education if they start
putting away some money now for the future.
Mr
O'Shaughnessy: The next page is some other, secondary
recommendations. There are many programs that the Ontario
government provides in terms of communication and funding to
Ontario residents, and we'd like to pursue an opportunity to
educate especially the lower- and moderate-income families more
about the benefits of this program, and the benefits for their
children, of setting aside small amounts at a very young age for
their children's post-secondary education.
One of the problems we're
identifying right now in the various communities is that social
service agencies do not allow individuals who are relying upon
social assistance to accumulate any amounts of savings for any
purpose. There is a small, diminimous amount of savings, but not
a significant amount. So we have many families who are in a
situation where they've saved for five or 10 years for their
child's education who, as a result of family circumstances,
ultimately have to apply for welfare. Because these education
plans have amounts over the diminimous, they are being instructed
to actually collapse them to be eligible for welfare benefits. What
we'd like to see is some kind of a process that would allow them
to maintain at least a basic amount of savings in this
tax-sheltered vehicle for their children's education, with some
kind of reporting process to the government if the plans were
collapsed by the individual at some point in time. That's an
example of how we could use the cross-promotion.
Mr
Goodwin: The last two slides in the presentation simply
provide some more information about the Canadian Association of
Not-for-Profit RESP Dealers and information about how to contact
us. We have over 600,000 RESP accounts today and we service about
300,000 children's education savings through our various
companies, in about $2.5 billion in assets. As an example, we've
paid out over $200 million into the education system since 1998
just from our companies alone. That money is helping to support
students in their ability to pay for their tuition and housing
costs and that kind of thing.
It's been a pleasure for us
to make this presentation to you today. We look forward to any
comments, or if you wanted to have any questions. Hopefully we
can work towards some solutions.
The Chair:
We have approximately five minutes per caucus. Mr
Christopherson.
Mr
Christopherson: Thank you for the presentation. Could
you just expand a little bit further on the collapsing of the
fund in the case of social assistance. I don't profess to be an
expert on the rules of RESPs, but I thought that once it was
committed, you couldn't touch it, that it was dedicated to your
child's education and you could only touch it if they chose not
to go on to education. I didn't realize you could collapse it any
time at will.
Mr
O'Shaughnessy: You can collapse it with significant
penalties. Obviously, the income that has accumulated in the plan
would then either revert to other individuals or to an
educational institution, and the person would be able to withdraw
their savings, but that would be it. So it's a significant
penalty to actually withdraw at that time and then potentially
try to start up at a later time.
Mr
Christopherson: Have you made this proposal to the
government directly?
Mr
O'Shaughnessy: No, we have not.
Mr
Christopherson: So this is the first go around?
Mr
O'Shaughnessy: This is the first.
Mr
Christopherson: I hope they would be open to that,
because there's no real cost; at least the cost is negligible
and, given the fact that the cost of education is going up, it's
one way the government can do something without spending a lot of
money.
Mr
O'Shaughnessy: The concern obviously is an individual
building a significant savings account in one place while
collecting benefits from the province in another place. But
because, as you say, these are restricted amounts, potentially,
if there is a capability for us to report a collapse by the
individual, the individual can collapse it on their own at any
time with those significant penalties. It then would create a
check-and-balance process so there isn't any abuse of the
program.
Mr
Christopherson: Do some of the penalties include a
return of the money the federal government has given, or do you
keep that and you just have to pay an increased tax penalty? How
does that work?
Mr
O'Shaughnessy: The federal government grant that would
have been received on the program would be repaid to the
government. The individual would lose the benefit, the 20% that
was accumulated.
Mr
Christopherson: Do they have to pay tax on that
money?
Mr
O'Shaughnessy: No. The contributions come in on an
after-tax basis, so when they get their contributions back, it
would be on an after-tax basis.
Mr
Christopherson: So it's the money off the total capital
that they would lose.
Mr
O'Shaughnessy: That's correct. The income on the grant
would be lost.
Mr
Christopherson: Do you have any figures in terms of
projections of where you see the cost of post-secondary education
going if we continue down the road that Harris is taking us?
Mr
O'Shaughnessy: Do you want to comment on that one,
Ken?
Mr
Goodwin: Obviously, we have our statistics of the
historical development. Based upon what we have seen so far, it
looks like the rise is going to be at least another 10% or 15%
per year for the next couple of years until things settle down.
The question becomes what level of funding the government is
providing, and we don't have any insight into that.
Mr
Christopherson: Has the federal government given any
indication that they are going to do anything else with this? You
talk about treating it from a tax point of view, the same as
RRSPs. Is there any indication that they are looking at that?
Mr
O'Shaughnessy: We have had some discussions, but I don't
think anything really serious at this time.
Mr
Christopherson: You said one of the goals of your
organization is to apprise people of this opportunity,
particularly moderate-income families. Can you expand for me on
what sorts of things you are doing: Where do you make
presentations? Where are you trying to penetrate the public
psyche?
Mr
O'Shaughnessy: We go into the community, anyplace you
find people with young kids: malls, country fairs, that kind of
stuff. We tend to do most of our promotion and advertising at
that level. Most of the larger banks and financial
institutions-mutual fund companies-advertise on television and in
the newspapers, generally targeting higher-income
individuals.
Mr
Christopherson: I worry that young people are going to
grow up thinking all this stuff is the way it has to be. It has
only been in the last few years that there has been an acceptance
by parents. If we keep going down the road we are, we'll be into
the American situation.
There are so many American families where the
only way they are going to get an education for their kids after
high school is that they would have salted money away, they have
to borrow money or they have to be wealthy to start with. It has
always been a huge thing for Americans. If you watch old American
movies, even decades ago they talked about having to set aside
money for their kids' education.
We have never had that.
This is something new. In the years when I was growing up, as
long as you had the ability, then you were going to go to college
or university, period. Full stop. Now we are into this world
where you have to start planning 10 or 20 years ahead to make
sure your kid can go to university, at a time, and I keep
hearkening back to this, when the economy is booming like it
never has boomed before. In many ways, the world in Mike Harris's
Ontario is upside down. It's nuts.
The Chair:
For the government side, Mr Arnott.
Mr Arnott:
I'm not sure I see anything wrong with encouraging parents to set
aside some money, if they have extra money, for their children's
education, and encouraging it at an early age. I think this
program that the federal government has initiated is good and
will benefit a lot of families over the next number of years.
I want to ask you a
question about your first recommendation. I want to make sure I
understand the distinction between the tax treatment today of an
RESP and an RRSP. You are suggesting that the tax treatment
should be the same. Can you tell me the difference?
Mr
Goodwin: I'll answer that. As an example, with an RRSP
you get a federal tax deduction and a provincial tax deduction.
Say you're at a 25% tax rate federally and whatever Ontario tax
rate, so you get a two-pronged tax deduction. On this program-and
we agree with it-instead of giving a tax deduction, the federal
government is putting away a grant. The effect to the taxpayer is
essentially the same: They get a 20% credit. But there is no
provincial participation in that. We are suggesting that the
provinces get on the regime as well and put in their side of
it.
Mr Arnott:
Do you have any idea what that would cost the treasury of
Ontario? Do you know what the federal government is spending on
it?
Mr
O'Shaughnessy: Obviously that would depend on the
parameters that would be established. But our preliminary
estimates on the top end are somewhere in the $50-million to
$75-million range per year. Again, if the program is extremely
successful-as we've seen, the federal government has reaped some
significant rewards; it's been an extremely successful program
for a certain group of the population-we anticipate that it might
be something higher than that.
1620
We recognize that the
program actually has penetrated the higher end quite nicely. It's
really what I would call lower- and middle-income individuals,
who potentially would put away $20 to $30 a month, who are the
ones who would actually get excited about it and potentially
participate. So in terms of the number of people participating, I
think it would be quite significant. The dollars per individual
would be relatively small.
Mr Arnott:
I agree. I think the mutual fund companies are increasingly
trying to promote this as one of their important product lines,
not quite as aggressively as we're seeing with RRSPs at this time
of year.
Mr
Goodwin: I'd like to comment on something that was said
over here as well. Years and years ago education was taken care
of by the social structure. Our company's been around for 30 or
35 years, and we see lower- to middle-income people, largely, and
they're saving small amounts of money, but we also see the track
record, that those students do go on to post-secondary education.
There is a lot higher participation in post-secondary education
than the general averages: 85% of the people who actually save
the $50 a month for 18 years. It doesn't pay for their education
but there is this motivation in the family because they are
putting some of their own money away. It really does help to
encourage people to go on to post-secondary education.
Mr Arnott:
Because I'm sure as they're saving the money they're talking to
their kids about the fact that they're saving this money with the
objective of sending them to university at some point and all of
that.
Mr
O'Shaughnessy: Absolutely. It's the process of accepting
the responsibility for sending their kids on, and the children
then accept the responsibility to ensure that they go through and
complete the education. It's a proven fact.
Mr Arnott:
Thank you very much for your recommendations.
The Chair:
Are there any other comments from the government side? If not,
I'll go to the official opposition.
Mr
Kwinter: I have two questions. The first one: I'd like
an explanation on one of your first slides where you say, "To
bypass this rule," of not being able to go bankrupt, "students
have been taking out lines of credit, paying their student loans,
and then declaring bankruptcy." I don't understand how that
works. Do they go into the bank and say, "Look, I have an $8,000
loan; I want you to lend me $8,000 so I can go bankrupt"?
Mr
O'Shaughnessy: They're not going into the banks,
actually. If you have seen what's going on in the credit markets
these days, there are some large organizations that have come
into the Canadian marketplace recently that are offering
unsolicited lines of credit for individuals who meet certain
qualifications. They don't go through a pre-qualification screen.
So what has been happening is that in those situations the
individuals have been taking advantage of that credit and then
turning around and going bankrupt.
I can tell you personally
my experience. I sit on the board of the Credit Counselling
Service of Toronto. We've dealt with a number of situations where
individuals have come in for advice from us and have gone away
and said, "I think I'm going to do something different," and have
advised us that they've gone through this process. It is
happening in Ontario and across the country. Very soon what's
going to happen is that these organizations that have been offering this free credit
are ultimately going to go through a pre-qualification process
and the problem is going to re-arise.
Mr
Kwinter: You said that you have no trouble penetrating
the high end. It would seem to me, when we have citizens in
Canada with the highest debt ratio ever, that this would only be
attractive to people who have disposable income. To borrow to do
this is counterproductive because they don't have any real
benefit other than if they get the same tax treatment as an RRSP
and if there is some grant money in there that makes it
attractive for them to do it. But it would seem to me-and I'd
like to get your comments-that to get to the economically lower-
and middle-income people who are finding it very difficult just
to stay ahead of the game because of what's going on is going to
be very difficult.
Mr
O'Shaugnessy: It is difficult and that's why we're here,
obviously, to say there has to be a joint responsibility to try
to ensure that they do the right things. Oftentimes we say that
the role of government is to do the right things for the people.
Sometimes we have to show the people and encourage them to do the
right things for themselves. The process of moving away from a
debt society back into a saving society, which we had maybe 25 or
30 years ago, I think is a good initiative. The more that it can
be jointly handled and the more of an incentive there is for the
parent to be able to put aside even only $20 or $30 a month, it
means that it breaks that cycle of debt, where the child has the
capability to be able to go on, gain some skill sets and
potentially without debt be able to be a contributing partner to
society.
Mr
Phillips: Thanks for the presentation. Just a request:
You mentioned earlier that based on some analysis you did, of the
people who appear to be dropping out of school, many or most are
doing it for financial reasons. It would be helpful, if you've
got any information on that, to send it to the committee.
Mr
O'Shaughnessy: Absolutely.
Mr
Phillips: Just so I understand the proposal, you're
suggesting-the way it currently works is, people can put up to
$1,000 a year into this?
Mr
Goodwin: Up to $4,000 a year, but they get a 20% grant
from the federal government on the first $2,000 they put in per
year per child.
Mr
Phillips: You could put $2,000 in and get a $400 grant
from the government?
Mr
Goodwin: That's right.
Mr
Phillips: The federal government?
Mr
Goodwin: The federal government.
Mr
Phillips: Does it then accumulate tax-free?
Mr
Goodwin: Yes, it does. It is given to the trustee who
then invests it. It accumulates tax-free on behalf of the
students or the subscribers, as they call them, and it's allowed
to be used for education purposes only.
Mr
Phillips: Right, and it has to be with an organization
such as yours that is licensed or registered to administer
this?
Mr
O'Shaughnessy: That's right. The federal government has
set up a whole process of monitoring. So the infrastructure is
there already to handle the process.
Mr
Phillips: And your judgment is that the cost for the
province to essentially provide half of what the federal
government's doing in the way of annual grants would be $50
million to $70 million in Ontario?
Mr
O'Shaughnessy: That's correct, $50 million to $75
million in Ontario.
Mr
Phillips: The challenge, I'm sure, for all of us is how
many more people would invest in this as a result of that,
because presumably all those who were going to invest anyway
under the old one would continue to, and this is, dare I say,
like a bonus for them, although it helps a lot. Have you any
indication or any estimates for us of how many incremental people
might do it?
The students I worry most
about in the future are those who come from families of very
modest means where the family early on is saying, "I just don't
know how we're going to do this," and the student fairly early on
starts to do that. This particular program you're suggesting
isn't targeted specifically at them. I don't know whether you've
thought of any other things we could do along these lines that
might be even more targeted at families of more modest means.
Mr
O'Shaughnessy: Obviously we've had some discussions
about how we structure the program to make sure that those with
modest means would take more advantage of it. Potentially, one of
the ways would be that the Ontario government money could only be
used for institutions in the province. That way, the cost of the
program might be somewhat less and could be a higher amount
that's allocated to those people who stay within the province.
Generally speaking, our experience has been that the lower- and
moderate-income people stay very close to home when they do
pursue post-secondary education. That's one possibility.
We have talked to the
federal government about certain things related to the child tax
benefit as well and whether or not we could get some process to
get some-not kickback but a rebate if individuals participated at
the lower level. We're looking at many ways from that standpoint,
but I think the concept is, and what we've seen is, that if the
carrot is big enough, then individuals in the lower and moderate
income levels will say, "I think we do want to participate."
The Chair:
On behalf of the committee, gentlemen, thank you very much for
your presentation this afternoon.
ONTARIO TRUCKING ASSOCIATION
The Chair:
The next group this afternoon is the representative from the
Ontario Trucking Association. Could you please forward and state
your name for the record.
Mr David
Bradley: I'm David Bradley, president of the Ontario
Trucking Association.
The Chair:
On behalf of the committee, welcome and you have 30 minutes for
your presentation.
Mr Bradley: It's a pleasure to
be here. I appreciate the opportunity to talk to you. Of course
we could talk about all kinds of things, but I'm going to try to
focus on one issue. But before I do that, why I think it's
important for the trucking industry to be here-and I'm always
somewhat mystified that some of these numbers get lost in the
mist. But at least 40% of Ontario's GDP is dependent upon trade;
90% of that is with the United States and 65%, overall, is with
four or five of the contiguous northeastern states. Trucks haul
80% of Ontario's trade with the United States. About 30% of the
province's GDP moves by truck. We've seen a doubling of that
trade over the last five years. We'll see another doubling in the
next three to five years, to the point where now we have a truck
crossing the Ontario-US border once every three seconds. You
could say that Ontario moves by truck and therefore distortions
in our marketplace are not only going to impact directly on our
industry, obviously, but on the economy overall.
1630
In terms of our own
situation, trucking is a low-margin, highly competitive business.
There are tens of thousands of trucking companies licensed in the
province of Ontario alone. We compete on pennies. We have been in
a free trade marketplace for 12 years, so we compete with
carriers from outside the province, whether they be from the
United States or from Michigan, so anything that tips the balance
from a competitiveness point of view impacts upon our
industry.
Trucking is one of the
major employers in the province. On a national basis, the 1996
census of Canada, which is the most recent, found, and I think
this surprised a lot of people, that truck driver was the major
occupation for males in Canada. In fact, over 220,000 Canadian
males said their primary occupation was that of a truck driver.
We indeed have a qualified shortage today. We could employ more
people if we could find them.
In Canada, in Ontario,
transportation costs are a significant component of the final
cost of goods sold. Because we have to export our goods over
longer distances into the United States, the transportation costs
of our products can run anywhere from probably 3% to 12% or 13%,
depending on the type of commodity. Again, anything that would
add to the costs of the freight transportation or to trucking
would inevitably find its way through the marketplace in terms of
higher costs of goods sold.
We're also great believers
in things like tax equity and fairness, ability to pay and all
those kinds of things. We've listened to successive governments
talk about those kinds of things, yet at the end of the day we
still see a tax system-a retail sales tax system, at least-that
discriminates against service sectors like trucking and has some
anomalies in terms of taxing of some services that impact upon
our sector more than others.
I have with me a large
document that was recently produced by the chartered accountants
at Deloitte and Touche, where they conducted a study for us,
looking at how Ontario applies sales tax on the major business
inputs in the trucking sector in Ontario versus our competing
jurisdictions. We looked at Quebec; we looked at Manitoba, not so
much as a competitor jurisdiction but it's one of the few
jurisdictions in Canada that has a sales tax system that's still
similar to Ontario's. Ontario, quite frankly, is rapidly becoming
antiquated in terms of the way it deals with sales tax, compared
to other jurisdictions. Then we looked at the major competitor
states of Michigan, New York, Pennsylvania and Ohio.
A picture is worth a
thousand words, because you don't want to, at this late stage of
the day, start reading the Deloitte report. You can do that when
you need to sleep tomorrow evening, perhaps. When you look at the
picture there, I think it's pretty descriptive in terms of the
sales tax burden that's placed upon the domestic trucking sector
versus other jurisdictions. Ontario is one of the few
jurisdictions in North America that applies retail sales tax on
the acquisition of new trucks and trailers. It's one of the few
jurisdictions in North America that applies sales tax on
maintenance and repair labour, whether that is on a warranty
repair or not. It's interesting that successive governments in
Ontario have been opposed to the concept of the goods and
services tax, the federal VAT tax, and part of the justification
is that the government doesn't want to move into taxing services.
Yet it's quite odd to me that in this one particular
area-maintenance, repair and labour-we do indeed pay sales tax
every time we take our truck to get fixed or maintained, not only
on the parts but on the labour as well; not only if it's on
warranty, where it's already been factored into the price of the
warranty in the first place so that it's double taxation, but on
non-warranty repairs.
In addition, Ontario and
Quebec stand out like a sore thumb across North America in terms
of imposing retail sales taxation on automobile insurance
premiums. The sales tax on warranty repairs and auto insurance
premiums was introduced in the 1993 budget. The government of the
day was quite open as to why they did this. We were in a deep
recession, we were in a fiscal deficit, and the government of the
day chose to raise taxes to finance some of their expenditure
programs. So it was, pure and simple, a revenue grab.
I can recall that the
current governing party, while in opposition at the time, sitting
around this very table, was quite agitated by this and felt that
definitely there needed to be a reversal in those two particular
taxes. They were seen as regressive and unfair at the time. We're
saying that times are pretty darn good now and if there's any way
we can address these issues now, it would be the time.
New York, Pennsylvania and
Ohio don't impose any of these taxes on their domestic trucking
industries whatsoever. While Ontario, if you look back over the
course of the last 10 years, has only added to the tax burden on
our sector in this regard, other jurisdictions have been moving
in the opposite direction. Every province east of Ontario has
moved to a harmonized goods and services tax, harmonized with the
federal goods and services tax. Consequently, trucking companies
in Quebec and Atlantic
Canada do not pay sales tax on the purchase of equipment or on
maintenance and repair labour. They get a tax credit, so they pay
and get the credit back. They have a competitive advantage there.
In the west, they also are moving in a slightly different
direction, looking at annual sales taxes and the like.
More importantly, as for
our neighbours to the south, last May Michigan extended a sales
tax exemption that carriers that crossed boarders in Michigan
were exempt from sales tax. They have now included the domestic
industry there as well. Ohio, back in 1993 or 1994, also moved in
that direction. I think most tax policy analysts would agree that
taxing business inputs is a drag on employment and
competitiveness, and they are moving in the opposite
direction.
Some of these taxes are
borne not only by the trucking industry but all motorists.
Earlier this week we joined forces with the Canadian Automobile
Association and the Ontario Motor Coach Association in attempting
to bring to the attention of the government the fact that under
the new Drive Clean emissions testing program the government had
committed to the public that that would not be a tax grab and
there would not be a net cost to the taxpayer so they didn't tax
the $30 market price emissions test. However, every time you have
a compulsory, mandatory repair that you have to undergo as a
result of Drive Clean, you are having to pay tax on that. Our
three associations have estimated that the windfall to the
government of Ontario from that mandatory repair bill comes to a
total of anywhere from $50 million to $70 million a year. We
don't think that's right. We think that runs against the stated
policy, which was to try to encourage people to conduct
preventive maintenance, to maintain their vehicles, and not force
them to do something and then have a tax on top of that. So we're
calling for some restitution there.
1640
Similarly, with the sales
tax on automobile insurance premiums-I guess the last election
was the only one I can remember where auto insurance wasn't
necessarily an issue. But it certainly is an issue for the road
user. I would go so far as to say it is yet another tax on safety
and on public protection. Indeed, I would argue that the sales
tax system in Ontario today, as it relates to trucking, is a tax
on safety. Every time one of my members invests in new equipment,
every time one of my members sends his vehicle through a
maintenance check and introduces new parts or whatever, he pays
sales tax on that. I don't think that's consistent with the
policy of trying to get people to maintain their vehicles and be
safer.
What do we do about these
things? A number of approaches could be taken. One that doesn't
appear to be particularly popular at this time would be for
Ontario to get with most of the rest of the world and begin to
move toward a true value-added sales tax. Barring that, I think
we are into looking at wind-downs or exemptions from some of
these taxes. We estimate that the combined impact of these taxes
on the trucking industry comes to $200 million. We are also
realists and don't anticipate that anybody is going to sign a
cheque to us for $200 million right away. However, there are
precedents for these kinds of things.
In the past, in the early
1980s, the Progressive Conservative government introduced an
exemption on the acquisition of new tractors and trailers-new
trucking equipment-and we would certainly love to see an
exemption. But I think if people buy into that philosophy, we
could begin to phase out those kinds of taxes over a period of
time, and not have a negative impact on the treasury but at the
same time begin to provide our industry with some relief. I think
that things like automobile insurance and the tax on warranty
repairs are so repugnant to most people-the dollar value to the
government is not great in the scheme of things, and we would
like to see more immediate relief there. Similarly, we would like
to see that the sales tax burden doesn't become greater by
continuing to impose the tax on Drive Clean mandatory repairs.
That number will only get bigger as other communities or other
regions of the province come on board with that program.
A lot of freight is being
generated in the economy right now. Obviously the economy is
strong, and truckers have been beneficiaries of that. There is no
doubt about that, and I am not here to cry poor. Notwithstanding
that, I don't think we can use that as an argument for not doing
things that make sense from a tax policy perspective. Moreover,
if you look at the events of the last few months, in our
industry, for example, we've seen the price of diesel fuel go up
176% in Ontario since this time last year. That is having a
significant impact on our margins. Our industry, because of its
size, is not a big player in the equity market. We are the
smallest of small-cap that you can find. As a result, we are an
industry that has to rely on debt to a great extent, and we are
starting to see a creep-up in interest rates. I think there is,
particularly on the transportation side, some cost-push inflation
effect that will begin to play itself out through the
economy.
So I don't think we should
take for granted the growth we have had over the last few years.
Trucking is a good leading indicator of economic activity. When
economic conditions change, we'll know it six months before the
banks do. Right now I think there is some jitteriness in the
marketplace that wasn't evident even a few months ago.
I thank you for your time.
I hope you take a look at the study, and that you make mention of
this in your report to the treasurer and to the people.
The Chair:
Thank you very much. We have approximately five minutes per
caucus, and I'll start with the government side. Mr Galt.
Mr Galt:
Thank you very much for the presentation and for this fancy
document. It's quite thick.
Mr
Bradley: We set certain criteria and thickness is one of
them, so there must be something useful in it.
Mr Galt:
I'm interested in your comments about the tax, particularly as it
would relate to jobs. Some of these taxes, as you remove them,
create jobs. As announced today, there are another 21,300 net new
jobs in Ontario, bringing us up to a total of 664,000 net new
jobs since we took office.
As I look at this-and you
mention $200 million, you've worked that out, would be the
cost-there are these six weights that are sitting on this little
truck here. Visually, it's really neat the way you're laying it
out. If that tax was all we moved, how many jobs would be created
in the province as a result of that?
Mr
Bradley: We have a shortage right now, notwithstanding
the tax situation, of 50,000 qualified drivers over the next 10
years in the province of Ontario. We can employ people today. The
situation here is that the freight will move one way or another.
It's whether you want it moving on trucks from New York,
Pennsylvania, Ohio or Michigan, or do you want it moving on
Ontario trucks, employing Ontario drivers? That's really the
issue.
Mr Galt: I
see that $200 million sooner or later gets applied to the
commodity. It makes our own truckers less competitive and it's
more than just truck drivers where the jobs are being created. I
know it's a tough one.
Mr
Bradley: Exactly. It is tough.
Mr Galt:
Is it the kind of thing that sells to the minister, to this
government?
Mr
Bradley: I would think, given the finance minister's
background in our industry, he might understand these concepts.
Clearly, trucking is a derived-demand industry. We exist to serve
Ontario's industrial sectors. We have, as a result, a very large
GD multiplier in our industry, and what happens in trucking is a
reflection of what happens in the rest of the economy. But also,
you're absolutely right. Again, the costs of transportation
represent anywhere from 4% to 13% of the final cost of goods sold
for Ontario manufacturers and shippers. We serve every industry
in the province. We serve the high-value-added manufacturing
sector particularly because we're able to provide the
just-in-time service. Anything that increases their costs
eventually-and sometimes it takes longer for the market to
adjust-does show up in higher export prices from Ontario. What
that means specifically is difficult to say.
Mr Galt:
It would be fun to see an economist come through with some
figures on that.
Mr Arnott:
Thank you, Mr Bradley, for your presentation. I represent a
considerable number of your members in my new riding of
Waterloo-Wellington so I continue to be very interested in your
industry. You mentioned the significant increase in the price of
diesel fuel in the last year. You said it was a 176% increase.
What's the outlook in the year ahead? Will it stabilize? Are you
expecting it to come down?
Mr
Bradley: Everybody's got their crystal ball on that, I
suppose. In the last few days I've heard everything from
stabilizing near current levels to doubling again over the course
of the next year. We would prefer, at the present time, to try to
deal with that through the marketplace. That's a very definable
shock that most people can understand so we're trying to collect
that from our customers right now with, if you've read the papers
this week, some mixed success. There are independent operators in
the province today who are parking their vehicles because they
can't make ends meet. That could create some havoc in terms of
getting goods to market.
Seeing as we're here before
the standing committee on finance and economic affairs, we're not
asking for government to move in and regulate diesel prices or
regulate truck rates or anything like that. That's a throwback to
the days of the past. It never worked then and it won't work now.
However, if the provincial government were serious about wanting
to provide some relief, in the appendices to this report, it
wasn't part of the key feature, we do provide some information
with respect to the tax on diesel fuel in Ontario compared to the
competitive jurisdictions.
Quebec is a little higher,
but remember, they do have a GST-type sales tax credit system. On
average, Ontario's provincial tax on diesel fuel is two to three
times higher than what it would be in Michigan, New York or
Pennsylvania. So if you wanted to provide some temporary relief-I
know you're not saying you necessarily do, but if the government
did-that would be the first area quite clearly under provincial
jurisdiction where they could. We'll be meeting with Mr O'Toole's
committee and I'm sure we'll be talking about that.
1650
Mr
Phillips: I appreciate your presentation. I happen to
think you've got your finger on one of the huge issues for us
over the next five years. I'm with you. You call exports the
engine driving the Ontario economy. I believe that. The
government's document says that there's no jurisdiction in the
world that relies as much on exports as Ontario does now: 90% to
the US.
I was a little bit
surprised that the minister, when he came in here on Tuesday,
kind of downplayed exports, that when you net exports and
subtract imports, it's not that big a deal. But I think this is
going to be a huge issue. This little table shows the issue. I
think that now that so much of our economy is exports, we are
going to see industry after industry come in with the same chart.
I noticed that four of the six jurisdictions here are in the US
and that will show-
Mr
Bradley: That's where the trade is going.
Mr
Phillips: Exactly. The pressure is going to be on us to
obviously continue to grow exports. But people like yourself, as
you've done, will say, "Our taxes in this area, this area and
this area are higher than they are in the neighbouring
jurisdiction." In fact, we heard from others on the income tax
issue, on the corporate tax issue, on property tax issues. So the
inevitable push will be to try and find a way to get levels the
same as the US.
At the same time, we have a
different system in Canada. We fund health care to a dramatically
larger extent. We've decided that we will insure ourselves. The
biggest insurance company in Ontario, that funds 60% to 65% of
health care, is the Ontario government. The premiums are income
tax, or whatever we want to say.
If we harmonize taxes with
the US and everything, are we able to maintain that unique health
care system? In my
mind, it's difficult. I guess what I'm saying is that I'm
strongly of the view that we can't deal with this on a piecemeal
basis. Over the next two years, we are going to have to look at
this in its totality: How do we continue to help develop our
export business? Because on the tax front, frankly, you're a
little bit late. Harris has already announced his big tax cut,
which is the $4 billion on income tax and the $1 billion on
property tax.
My own personal view, and I
don't know how you feel about it, is we're going to have to as a
province look at this in its totality, and not piece by piece by
piece.
Mr
Bradley: In a perfect world, I would agree. I would also
agree that corporate income taxes and those kinds of things need
to be adjusted. I would also say, and this might surprise you,
that if you look at all taxes in Ontario versus the United
States, this is the side of the border to be located on,
specifically because of US health care and social security costs,
which are paid by employers, versus the situation here. However,
at the same time, I would argue that because of the nature and
the structure of our economy, the taxes, notwithstanding that the
folks over at the Frost building may say they are in parity, are
still too high. We do not have the economies of scale to generate
the wealth internally here and it's from taxing wealth that you
get your key revenues to pay for education and health care.
I don't want to make this
trucks or roads versus health care. A strong and vibrant economy
has to have all of that infrastructure in place. But the reality
of it is that we need to generate our wealth externally, which
means we have to export. High imports are only an indication of a
strong economy and people not being able to satiate their
consumer demand domestically; they want to buy radios from Japan
and that kind of thing. It has to start first, though, with
strong exports.
Mr
Phillips: I agree.
Mr
Bradley: We didn't have strong imports in Ontario until
we got the export trade going. To the extent that our industry,
which is so integrated into the mid-continent manufacturing
process-and when you look at the fact that business inputs in
manufacturing are not taxable, specifically the policy
perspective being that we have to keep our exports competitive,
it make no sense that we would then tax the trucking element as
well.
I don't know if we're too
late because we come here every year and say this kind of thing.
Maybe we just haven't been heard yet.
Mr
Phillips: I wouldn't say too late.
Mr
Christopherson: Thank you for your presentation; nice to
see you again. You can appreciate we've heard from a number of
umbrella associations in the business community that make exactly
the same argument. Just jotting down a couple of thoughts, the
Ontario Federation of Agriculture came in and made a very
impressive presentation in terms of their needs; the same for the
mining association. The home builders did the same thing. The
road builders also did the same. I understand your argument or
your concern that we have to have a vibrant economy, but we do
seem to have achieved that. I mean, this is the government's
slide from the opening day: "Corporation profits surge." They
even put a nice little arrow there in case we miss the point.
Every single economist who
has come forward has pointed out that we have the biggest booming
economy that we've ever had in the history of North American.
Certainly the President of the United States, in the state of the
union address, wasn't suggesting that he saw this thing changing
any time in the near future. But in addition-
Mr
Bradley: I wouldn't place a whole lot of stock in that
speech, though.
Mr
Christopherson: I had a hunch you weren't a big fan of
Clinton's anyway.
The issue is more one that
the other presentations we've been getting have been talking
about the decimation of providing affordable housing is gone
because Harris has decided to give away $4 billion to $6 billion
a year in tax cuts. By the way, the whole issue of exports
driving our boom was recognized by virtually every economist. As
much as the government wants do downplay it and say they spurred
it on, they're riding that wave. You couldn't have screwed this
one up if you tried. They can make that argument. Everybody is
saying that the economy in the States is what is driving this and
yet, at this time of boom, we have people coming in and pointing
out that their neighbourhood education system is falling apart,
the health care system is falling apart. I had a woman in my
riding recently who couldn't get a bed for her mom who was being
airlifted back from Mexico because there's just enough beds and
the procedure wasn't clear.
The difficulty is that as
much as I think you're sincere when you say you don't want to get
into a situation of truckers or health care, the reality is
that's where we are. My own brother is a broker. To that degree I
have a vested interest, if you will, in seeing your part of the
economy take off too.
Mr
Bradley: Let me try to respond to that. I said yes, we
are in a boom right now, but of course every economist will also
tell you that things are cyclical. I talked about the underlying
cost-push inflation that I see, the underlying push in interest
rates that we're seeing. Also, we're now finally starting to see
the Canadian dollar begin to creep up again. I'll tell you that a
good deal of our export competitiveness-and the thing that's
masked a lot of the underlying uncompetitiveness in our economy,
in our tax system, is the fact that we've had a dollar that's
been at 68 cents or lower. If that starts to reverse-I mean, many
of you were sitting around here in 1988 when we had a 89-cent
dollar and we were not competitive, both in the service side and
the export side.
I would simply say, Mr
Christopherson, with all due respect, your party produced a
report of the type that Mr Phillips was asking for. It was called
the Fair Tax Commission, if you remember that. It-and I can
almost quote it verbatim-was saying that applying the sales tax
on business input is a killer of jobs. At some point, we're going
to have to pay the piper and we're going to have to be competitive over the long
term. We're going to have to be competitive even when the US
economy, at some point, decides to take a breather, which we are
not at the present time.
Ultimately, we have to
generate our wealth externally. When you've got the population
we've got, the kind of economy we've got, the distances spread
across the border, then we've got to be generating wealth, we've
got to make sure that our infrastructure and our transportation
links to get those goods to market are efficient and
productive.
The Chair:
With that, we've run out of time. On behalf of the committee,
sir, thank you very much for your presentation today.
1700
URBAN DEVELOPMENT INSTITUTE
The Chair:
The next presenter this afternoon is a representative from the
Urban Development Institute. Would you please step forward and
state your name for the record.
Mr Stephen
Kaiser: Good afternoon, Mr Chairman, members of the
committee, ladies and gentlemen. My name is Stephen Kaiser, and I
am president of the Urban Development Institute. On behalf of the
membership, I would like to thank your committee for giving us
the opportunity to share our perspective as part of the
consultation related to the formation of this year's provincial
budget.
During this short
presentation, I would like to update you regarding the
performance of our industry and its role within the overall
economy of the province. Further, I will share with you some of
the challenges we face within our sector, along with a related
success story. Finally, I'll leave you with some food for thought
in preparation for the upcoming budget.
The development and
construction industry plays a vital role in the economy of the
province, yet its benefits are often underestimated and rarely
acknowledged. Every new housing start, every commercial project,
every industrial development creates significant levels of
employment, including direct construction jobs, indirect jobs in
related industries and induced jobs resulting from spinoffs in
the general economy. Collectively, these different sectors have
traditionally accounted for between 9% and 11% of Ontario's
GDP.
In the early 1990s, similar
to other industries, we suffered through a very tough recession,
and an estimated 230,000 jobs were lost. In 1989, the
construction share of Ontario's GDP was $37 billion and the
construction labour force stood at 344,000. In 1999, that same
construction share of the GDP was $25.5 billion and the labour
force is estimated to be nearly 300,000. We believe there exists
substantial potential for further job creation in our sector over
the next four years.
Obviously as a result of
many factors, including a positive business climate in Ontario,
the industry has experienced a huge recovery since 1995. The
residential sector has bounced from a decade-low number of urban
starts in 1995 of almost 32,000 to a decade-high 62,928 in 1999.
In many areas across the province, the non-residential sector has
experienced a similar trend.
Enclosed with today's
presentation is a copy of the city of Mississauga's building
report summary illustrating the construction activity from 1996
through December 1999. You will see that when all sectors are
combined, building activity grew from $773 million to over $1.8
billion in 1999, a huge increase.
There has been a
substantial recovery in all sectors in Ontario over the last part
of the decade, and the strategy of this government has played a
substantial role.
One of the tax cuts which
was a catalyst to the residential recovery was the first-time
homebuyer land transfer tax rebate. That program was suggested by
our organization in a similar pre-budget hearing early in 1996
and implemented in the spring budget. To date, over 56,000
families have used the program to assist in the purchase of their
home, a substantial portion of the total market. We ask that this
program be extended again, as it has allowed many families to
realize the dream of home ownership.
In order to illustrate how
important this rebate is to some homebuyers, we have included
with our submission a copy of a recently completed study by our
organization entitled Government Charges That Drive Up the Cost
of Development: A Study of Taxes, Fees and Charges in the Greater
Toronto Area. The study clearly illustrates the huge burden of
taxes, fees and charges that drive up the cost of both
residential and non-residential development.
The study compared the
cumulative impact of taxes, fees and charges on a townhouse,
commonly a first-time-buyer product. The results are staggering.
Consistently, almost 25% of the purchase price is due to taxes,
fees and charges from three levels of government. In real terms,
a $160,000 townhouse in York region carries a burden of taxes,
fees and charges of over $40,000. This myriad of charges often
causes the dream of home ownership to be simply that-a dream. The
first-time homebuyer land transfer tax rebate program for many
purchasers has made that dream a reality, and it should be
extended in this year's budget.
We congratulate the
government on its efforts to achieve a balanced budget. However,
as we celebrate the elimination of a fiscal deficit, we must
understand that this quest has left a huge infrastructure deficit
that must be addressed. We need to reinvest in the essential hard
infrastructure items such as roads, sewer, water and
transportation in order to facilitate the Blueprint that your
government has outlined. This morning I joined representatives
from 27 other organizations in signing the Transportation Accord,
which is a call to action for a transportation investment
partnership for the greater Toronto area and Hamilton-Wentworth.
It clearly indicates the need for investment in transportation by
all levels of government. A copy of that accord and a list of the
endorsing organizations are included in your brief today.
The need for immediate hard infrastructure
spending and the size and structure of the SuperBuild Growth Fund
cause the industry concern. As structured, provincial
infrastructure dollars must be matched with private
infrastructure dollars in order for them to flow. The magnitude
of the commitment of the $10 billion in provincial dollars
appears to be based on the success of achieving similar private
sector investment for all infrastructure. In many cases this may
not be achievable and there is a concern that the investment will
not be made. Public-private partnerships are the way of the
future for many components of infrastructure and service
delivery, and we strongly encourage the government to continue to
pursue that direction.
In 1997, our organization,
working with the Dufferin-Peel Roman Catholic Separate School
Board, presented to the Minister of Education the results of a
comprehensive use study to explore public-private partnerships in
the construction of new schools. That piece was titled Working
Together to Build Ontario's Schools, and I have a copy of it here
with me today. To date, though, that work has not resulted in the
private sector designing, building and operating one new school
in the GTA. These partnerships take time and may not fit every
scenario.
It should be noted that the
example of the 407 highway is often used when discussions of the
SuperBuild fund take place. To date, there are no other similar
infrastructure projects close to reality at the provincial level.
Many of the infrastructure dollars are needed for much smaller
undertakings, such as fixing a bridge, repairing a section of
road, replacing a decayed section of pipe, or a new highway
interchange-none of these conducive on their own to a
public-private partnership.
The growth forecasts for
the greater Toronto area indicate that an additional two million
people will make their home within these borders by the year
2021. In order to facilitate that growth, a defined program of
infrastructure investment must begin now. The SuperBuild Growth
Fund must be unbundled and restructured in a way that allows it
to partner with other levels of government and, in many cases,
make specific unconditional infrastructure investments where
needed. These investments are the tools to harness future
prosperity within Ontario.
In closing, on behalf of
the membership of our organization, I would like to thank you
once again for allowing us our part in this very important
process. We believe that there's huge potential within the
borders of this province. We look forward to rolling up our
sleeves and working with this government and all sectors to
ensure that we capitalize on this opportunity.
Thank you, and I'd be
prepared to answer any questions you might have.
The Chair:
Thank you very much. We have approximately six minutes per
caucus. I'll start with the official opposition.
1710
Mr
Phillips: Thank you very much, Mr Kaiser, for your
presentation. It's thorough, as always.
Let me start on the
public-private sector partnership because the success of that is
key to our infrastructure. The province is counting on half of
the infrastructure over the next five years being funded by the
private sector. They hold out the 407 as the example. I think
it's a terrible example. They essentially gouged the users of the
407. They sold it off at $1.6 billion more than it cost to build
for one reason: They guaranteed the buyer that they could take
tolls up at inflation plus 2% every year for 15 years. If you
don't pay your tolls, you don't get your licence renewed. If some
poor individual owed a penny, they couldn't get the licence
renewed because it's all computerized. They own it for 99 years
now.
I've been listening today
to the Minister of Energy, Mr Wilson, tell municipalities, "We're
not going to let you sell off your electrical utilities for a
cash grab and use the money elsewhere." The 407 deal closed May
5, 1999, the day the election was called, at $1.6 billion, a cash
grab, and now the poor users of the 407-I happened to ask the
trucking people what their view was on the 407 and they said,
"Our trucks can't afford to use it." We haven't relieved the
pressure on the 401 from trucking.
We don't have difficulty
with the concept of public-private sector partnerships, but if we
are going to proceed with them, have you any advice for us on
some of the things we should look for when we're structuring
deals with the private sector to build our infrastructure?
Mr Kaiser:
Mr Phillips, I'm certainly not an expert on public-private
partnerships, but we did sit down with the separate school board
and work at length through pro formas and examples of how the
private sector could actually build schools. It's a tough way to
go. At the end of the day, when we crunched all the numbers and
looked at all the efficiencies, it seemed that the school board
could get money at less cost. The capital cost allowance that
companies would have to deal with when dealing with the federal
government was an impediment. There was a host of factors put
together as to why it didn't work, at least in this scenario, for
the private sector to build schools. Even today, in a
conversation with the region of Halton, they've looked at length
in terms of doing a deal with the private sector for their
infrastructure and at the end of the day that didn't make sense
in a business deal for them also.
We're a big believer in
public-private partnerships. I think Mr Lindsay's a very capable
individual and we look forward to working with him, but coupling
$10 billion of private sector money with $10 billion of public
money over the next five years is a Herculean task.
Mr
Kwinter: I want to just pursue that. To date, there are
really two big public-private sector partnerships certainly in
the Toronto area, terminal 3 and the 407. Both of them have
worked. Whether they've worked successfully-and my colleague has
just stated what he thinks is wrong with 407. The same thing
happened at terminal 3, but the only way the private sector
really went forward with it is that they had a long-term upside,
because they had control. They provided the facility and then
they could charge. They could charge fees for landing, they could charge fees
for all of the franchises that were in the building. With 407,
for 99 years they can raise rates almost at will.
The problem I have-and
you've said that schools didn't work-is, how do you get any kind
of public-private sector involvement if you're asking the private
sector to get involved in a financing that has no revenue stream?
If you build an interchange, what are you going to do, set up a
toll booth at the interchange to say, "If you use this
interchange, you have to pay for it"? How does that work in your
estimation?
Mr Kaiser:
In my estimation it doesn't work, and that's your point exactly.
It's got to be a business case scenario. It's got to work on a
pro forma in order for the private sector to get involved in it.
Absolutely.
The Chair:
I have to go to Mr Christopherson.
Mr
Christopherson: Here you are back to putting it like
it's a big burden again.
The Chair:
It's not. It really isn't.
Mr
Christopherson: Thank you very much for your
presentation. I just have two questions, and they're based on the
third paragraph of page 4 where you talk about signing the
agreement regarding the transportation accord through the GTA and
Hamilton-Wentworth: One, how big a component of that do you see
for public transit in terms of the overall intermodal aspect of
looking at transportation, or is this just strictly the corridor
and nothing more? Which, I'll go so far as to say, would be
somewhat problematic to us given the importance of getting as
many people off the highways as possible and into public transit,
given the environmental issues and everything else. And the fact
that we're way behind in terms of public transit to what's
happening to our competitors, both in the south and the quality
of life that it brings to some of the European countries that
have gone way ahead of where we are in public transit. With
Harris, of course, we've gone in the wrong direction.
The other question I wanted
to ask you-because I happen to agree. I was a former regional
councillor before I came here to Queen's Park so I understand the
importance of the transportation linkages that you're talking
about, infrastructure, all of that. You almost have to be on the
inside, if you will, to fully appreciate the importance of that,
because it's not the sexy, headline-grabbing kinds of things that
people think about. I just wanted your opinion, as the second
question, on whether you think a serious percentage of the $4
billion to $5 billion that Harris gave away in the tax cut in the
last term, invested in our transportation and infrastructure
network, in the long run would bring us stronger economic
activity and better returns over the business cycle. Or do you
think that they did exactly the right thing, having all that
money go straight to a personal income tax cut that benefited the
very few wealthiest the very most and left the poor and
moderate-income right out of the whole equation?
Mr Kaiser:
Two good questions.
Mr
Christopherson: Try not to spin in too much.
Mr Kaiser:
On the first question, the accord is part of the documentation.
You'll see it's very broad, it's one page. It's basically a call
by all the signatories for three levels of government to come and
understand that there's a huge problem here and a concern, and
it's going to need to be addressed by the three levels of
government and the private sector coming together for that
concern.
Part of it is certainly
public transit. One of the looming issues out there is a
$735-million price tag for capital improvements for GO Transit
and now, as we speak, there is no way visualized to pay for them
unless we divvy up the portion and put it on top of new growth
here. Obviously, we're interested in finding a new solution, to
be candid in that.
In answer to your second
question about tax cuts and what I would have done differently, I
think that's been done and happened and we're here now sitting
and looking at this position. I would rather strategize going
forward and be part of the solutions going forward than
questioning what happened in the past.
Obviously, I alluded in the
presentation to the strength of the first-time home buyer land
transfer tax rebate. We've seen the magnitude of dollars that
were spent for that, and you could debate that equation in
itself, but we feel as an industry that was money well spent, so
to speak.
Mr
Christopherson: I appreciate your comment about, why
review history? Sometimes that's good to do and other times it's
more important to look ahead. But if you want to look ahead, we
still have Harris committing much the same thing again. He's got
another 20% out there, billions of dollars, so it's still a live
issue in terms of what's in the best interest.
I'm sure some folks are
getting tired of hearing me say this, but all of this is still in
the context that we've got crises in the education system and in
our health care system, in our social services, environmental
protection, and every one of those also has an economic factor as
well as just a human factor. So it's a contemporary question.
Mr Kaiser:
It's a tough balancing act. I watched many of the participants at
committee over the last couple of days. The TV was on in the
office. There are some tough decisions to be made; there's no
doubt about it.
Mr
Christopherson: Thank you very much.
Mr Galt:
Thank you for an excellent presentation. It was most interesting,
particularly as you were talking about the tax load on a given
unit of construction. I appreciate Mr Christopherson's comments.
In the best interest we made tax cuts, the type of tax cuts we
thought would really stimulate the economy and stimulate job
creation, and I think collectively that has been a success.
I'm concerned about the
number of people who have come before us and the number of
organizations talking about affordable housing, and this is where
I'm headed into. I think one of the pressures on our housing
market today relates to the fact that back in 1995 one of the big
things I was hearing from people was, "My young son or my young daughter who
graduated from university doesn't have a job so they have moved
back home."
Well, they do have a job
now and they've gone out and bought a home or have gone after an
apartment. So there are tremendous pressures put on the housing
market just because of those people getting jobs, moving out of
mom and dad's home and now wanting to be out on their own.
1720
You're telling me that on
$160,000 construction there is $40,000 in taxes by the three
levels of government?
Mr Kaiser:
That's correct.
Mr Galt:
In your opinion how is that $40,000, or 20%, affecting affordable
housing and keeping people out of housing? If some of that tax
were removed, how many more units might be constructed or how
many more people might get into affordable housing?
Mr Kaiser:
That question relates to all levels of housing, all the way
through the spectrum, because it is the system. This relates back
to the development charges discussions we had through the last
mandate and the new legislation.
Part of the concern in the
industry was this huge level of service that a homebuyer is
buying into. Basically you're buying your piece of every piece of
infrastructure in the community, and that is tagged on the front
end of a home. I think we have to look at taking some of those
costs and putting them on the back end of the purchase price
through property taxes, as opposed to the current system where we
have the municipality, and rightly so, concerned with getting
paid for the cost of growth. I think we need to look at what
we've done with some of those costs because there is too much on
the front end and that front end becomes the hurdle for home
ownership. You see, as you look at the $160,000 townhouse, that
it just makes it that much harder to achieve home ownership. We
can take some of those costs and put them on the back end where
they can be financed over a mortgage, because for young couples
it's that down payment, as you know, that is the lynchpin to home
ownership; it's not necessarily the payments. If we can do that,
I think we can work towards better affordability across the
board.
The same goes for
apartments. The debate is that with the three levels of
government and the taxation we're going to have to see movement
from the three levels of government in order to see apartments
coming out of the ground here in Toronto.
Mr Galt:
Just for the record, if I could have it corrected, I said 20%. I
did a little mental math and it was 25%.
Mrs
Molinari: Thank you for your presentation. I just want
to quickly focus on one of the comments in your presentation, and
that's the Dufferin-Peel Catholic board report, Working Together
to Build Ontario's Schools. I'm familiar with that report and I
compliment you on the excellence of the work that went behind
that. As you say, those partnerships don't work everywhere, but I
think having that report is something for the future and it may
be looked at at some other point in time. There are partnerships
happening with schools and municipalities. There is some of that
happening and I think that's just a step forward. Having that
report already done, when there is an interest from the private
industry to work with that, at least there's a basis there. So I
don't want to discourage you that, having done that work, it's
not being considered.
Mr Kaiser:
Great. Actually, we have a good rapport with the board and we're
now discussing joint-use sites for high schools involving the
public board also, and the community centre, library and those
types of things. So those discussions are underway. There is a
host of new ways of doing business, I agree.
Mrs
Molinari: And that's what we're looking for, new ways of
doing business.
The Chair:
On behalf of the committee, thank you very much for your
presentation this afternoon. Have a good weekend.
DOUG BENEDICT
The Chair:
Our last presenter for this week is Mr Doug Benedict.
Mr Doug
Benedict: I'm going to make it very short because I see
that you have been sitting most of the day and you're anxious to
get home. I'd like to thank you in advance for the opportunity of
speaking with you.
My name is Doug Benedict
and I do not represent any special interest group or
organization. I live in the riding of Oak Ridges, which is
represented by the Honourable Frank Klees. I have two children, a
15-year-old daughter and a 16-year-old son.
What I want to talk about
is the education system. My daughter is the honour student in the
family and my son, the 16-year-old, has had 10 years of hell
within the education system.
I'm not going to ask you
for the spending of any more money, nor am I here to criticize
the government in the way that they are spending their money.
What I want to do is to discuss the allocation of dollars in what
is referred to as special education.
Some of you may argue that
I am speaking to the wrong people and some of you may truly
believe that I'm wasting the committee's time, but I don't think
so. The allocation of dollars to be spent in the province starts
right here in this room and ends here in this room. The number of
students requiring some form of special care in the education
system is rising at an alarming rate. It is my understanding that
some experts say that 25% to 30% of the student population
requires some type of extra care.
The youths who concern me
are the ones the schools refuse to teach, that they force out of
the system on the pretext that they do not want to learn. They
are the problem students, the troublemakers, the dummies. The
ones I'm talking about are the ones everyone in this room has
come in contact with through their own families, through their
neighbours' families. There is not one of you who hasn't had contact with this
situation. It is like alcoholism; there isn't anybody who hasn't
had contact with somebody who's had trouble with alcohol.
How many times have you
heard parents in your own constituencies stating, "My child is
not getting what he or she needs in the school system", or you
hear from the student, "I don't want to go to school any more
because everybody thinks I'm a dummy"? These are the kids who
have been told that they have ADHD or ADD or hyperactiveness or
inattentiveness or behaviour disorders. The experts say that 20%
to 30% of these kids will eventually commit a crime. The largest
portion of people in our jails have been diagnosed as having
ADHD.
The failure of the school
system to deal with this problem has lasting implications on
these kids as well as the province as a whole. We have a
perceived problem with street youth. We have a perceived problem
with youth unemployment. The education system is the problem. We
have a perceived problem of youth crime, but the education system
is the contributing cause. We have a perceived problem of youth
homelessness. The education system is the contributing cause.
I said I was not going to
give you a lot of research data, but I am going to mention one
document and I think this should explain the argument. This
document was the SHOUT Clinic's report on homeless youth
unemployment. This survey was conducted in the summer of last
year by an organization right here in the city of Toronto. I want
to quote one section, section 5.4:
"One of the most common
characteristics of a street-involved youth is clearly an early
exit from the education system. While this phenomenon is partly
due to family breakdown and the absence of parental support at an
early age, frequently these youth display behaviour or emotional
problems that undermined their ability to adjust successfully to
the expectations of school.
"Participants were asked if
they had ever met with guidance counsellors or doctors due to
learning difficulties or emotional problems. A reasonably high
46.9% of the sample population responded that they had in fact
had some counselling, whereas 47.7% had not. Of those who had
some intervention in school, 25.6% reported that they had been
diagnosed as having anger management problems, 19.1% were
diagnosed as having attention deficit disorder, 15.2% were
diagnosed as being hyperactive, and 4.5% as having dyslexia.
There were then clear indicators that many of the street youth
were having difficulties that came to the attention of the school
authorities."
Look straight at the
education system and you'll see the major cause of street youth
problems.
1730
The Honourable Margaret
Marland did some work last year with regard to the mental health
program, but unfortunately nobody knows the results of the work,
nobody knows what happened to it, nobody knows what the
government did with it
Those in the education
system have taken the position that these kids are not wanted in
the education system. They've taken the position that this is a
mental health problem. This is garbage. These so-called
intelligent people have their heads buried in the sand.
Today I want to make
basically four suggestions.
In the next budget, I want
the government to allocate dollars to the education system in
such a way that the school boards will address this problem.
That an ombudsman be
appointed to address the problem of the rapid growth of special
needs in the education system.
That the question be put to
the courts, "Is education a right or is it a privilege?" This is
something that has been asked by many people who have been
involved in the same situation as I am, "Does my child have a
right to an education?" Nobody's been able to answer that
question for me. People tell me it's a privilege for him to be
going to school, but because he has ADD and he acts in a
particular way, he has been in and out of school more times than
you can possibly imagine. Without any reason, the school board in
York region-the last time my son was out of school the principal
of the school did not know. It took six weeks for him to know
that he was out of school.
The last question I'd like
to ask is, what responsibility do schools have in providing basic
education for the special needs student?
To conclude, I want to say
I'm not convinced that more dollars are needed in the system. I
do believe that government must assure proper administration of
the dollars that are in the system. This requires you, the
members of the Ontario government, to allocate the funding and be
specific with that funding. If the experts are correct, that 25%
to 30% of the student body requires special needs, then 25% to
30% of the money budgeted to education should go for those needs.
Is this not fair? Is this not democracy? Better still, is this
not common sense? Thank you.
The Chair:
Thank you very much. We have three minutes for each caucus. Mr
Christopherson.
Mr
Christopherson: No.
The Chair:
The government side.
Mrs
Molinari: Thank you very much for your presentation. I
know it's a very emotional topic, especially when you're talking
from the heart and it's something you have experienced
personally, unlike a number of the other presentations we have
heard here this week that have been more detached. Yours speaks
truly from the heart, and I thank you for sharing that with us
and some of the difficulties you've experienced.
I guess if there were a
perfect way of doing it, and somebody knew what that perfect way
was, we would do it. It's evolving, and special education
certainly has been an area that has been of great concern to all
of us. The minister made an announcement last week precisely on
that. It's not to say that is going to solve all the issues and
all the problems, but certainly it's an improvement. We need to
continue to move towards improvements because a lot of the
special needs students-and I sense that a lot are not identified
and that's part of the problem, that there's a difficulty
there.
I know from personal experience that they seem
to be allocated as behavioural problems when in fact there is
more than just a behavioural problem. Behaviour is only the
reaction to an underlying problem. I think the identification
certainly needs to be a very first area where school boards
identify and then look at means and ways of servicing
students.
The Chair:
Mr Galt, you have one minute.
Mr Galt:
Do you want to respond?
Mr
Benedict: Tina, this problem has been there. I've heard
the rhetoric, I've heard the talk, I've heard the same type of
thing that you are saying. You've had the opportunity of meeting
my son. What I am concerned with is that all that is being given
is talk with regard to these particular problems with special
education. It's all talk. There's nothing else there. The
Conservative government has come out and they've taken a look at
education. They've taken a look and said that they are going to
evaluate teachers. That hasn't been done yet. We've heard very
little about that.
We have a system in Ontario
where we have the unions dictating to us what they're going to do
and what they're not going to do in the education system. Until
we break that down, until the government turns around and says,
with their money, that they'll allocate the money in such a way
that these problems are looked at and these problems are
addressed. You can only do it with money, because the teachers,
the people who are involved with education don't seem to address
anything but the dollars. If there's not enough money, they
scream.
Mrs
Pupatello: Thank you for your presentation today, Mr
Benedict. It's interesting to note that in fact announcements, as
we've already addressed early today, that are being made in the
special education area still don't get our levels of support back
to where they were before the Conservative government took over.
In fact, I think it's cruel to do identification of young people
who have specific needs in school, because we're identifying them
now actually more than ever, and to not provide support when
we've identified that there's a need is cruel.
We are doing that with
young babies now. We are identifying more young babies than ever
before with this whole focus on prevention. Unfortunately, the
identification process itself means that we're finding babies
with issues and families with issues, and the social system has
been so dismantled over the course of the last five years that
there literally is no service to put in place when you've
identified that there is a need in that family. So I think it's
cruel to do that kind of identification. Now you're going to go
out there and say, "We have no service to give you,"
unfortunately. We have never had such a dismantling as we've had
since 1995.
We actually appointed a
supposed minister for children in this government, in about 1997,
which we feel was just a reaction to the opposition party having
a children's critic. The first thing she did was say, "Geez, I
guess we'd better find out what services exist." Well, had they
not cancelled half the services they had in 1995, there was
actually an organization within the government that knew what all
the children's services were.
Mr
Benedict: Excuse me, for a second-
Mrs
Pupatello: I actually have a question for you.
Unfortunately, what that
means is that the government doesn't know what services exist
within its own government. They have cut some services that were
actually very good and now, with the work of Dr Fraser Mustard,
for example, they are making announcements to recreate what they
cut in 1995, which is very frustrating to watch.
If you could choose one
area where the government was going to make an investment in
terms of assisting children with whatever the issues are, in your
case it may be ADD, the types that you mentioned in your brief,
what's the one area that you would specifically focus on in order
to address the problem that you have seen within your
experience?
Mr
Benedict: First of all, I want to say that I do not
believe that the problem is a lack of dollars. I happen to know
what the Honourable Margaret Marland did. I think that what has
happened is that if you were out there and involved in the
system, you would find that what Margaret Marland did was
actually a benefit to the system and not a detriment to the
system.
Mrs
Pupatello: Do you know what it was?
Mr
Benedict: Because the system was a duplication of
services, if you're talking about social services and you're
talking to health services. It was a duplication of services. I'm
not talking here about adding any dollars to the system. I'm
talking about the administration of this system. The money is
there. Damn it, administer it and make the people do what is
there. The money is there; it's the people in the system-
The Chair:
With that, we have used our time. Mr Benedict had 15 minutes. On
behalf of the committee, I would like to thank you very much for
your presentation this afternoon.
This committee will
reconvene on Monday morning, February 7, at 10 o'clock in Kenora,
Ontario.
