RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS

AFTERNOON SITTING

CONTENTS

Thursday 28 November 1991

Rent Control Act 1991, Bill 121 / Loi de 1991 sur le contrôle des loyers, projet de loi 121

STANDING COMMITTEE ON GENERAL GOVERNMENT

Chair: Brown, Michael A. (Algoma-Manitoulin L)

Acting Chair: O'Neill, Yvonne (Ottawa-Rideau L)

Vice-Chair: McClelland, Carman (Brampton North L)

Abel, Donald (Wentworth North NDP)

Bisson, Gilles (Cochrane South NDP)

Drainville, Dennis (Victoria-Haliburton NDP)

Harrington, Margaret H. (Niagara Falls NDP)

Mammoliti, George (Yorkview NDP)

Marchese, Rosario (Fort York NDP)

Murdoch, Bill (Grey PC)

Scott, Ian G. (St George-St. David L)

Turnbull, David (York Mills PC)

Substitutions:

Daigeler, Hans (Nepean L) for Mr Brown

Marland, Margaret (Mississauga South PC) for Mr B. Murdoch

Gigantes, Evelyn (Ottawa Centre NDP) for Mr Bisson

Tilson, David (Dufferin-Peel) for Mr Turnbull

Winninger, David (London South NDP) for Mr Drainville

Clerk pro tem: Mellor, Lynn

Staff:

Baldwin, Elizabeth, Legislative Counsel

Richmond, Jerry, Research Officer, Legislative Research Service

The committee met at 1009 in room 151.

RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS

Resuming consideration of Bill 121, An Act to revise the Law related to Residential Rent Regulation / Projet de loi 121, Loi révisant les lois relatives à la réglementation des loyers d'habitation.

The Acting Chair (Mrs Y. O'Neill): If I may begin the meeting of the standing committee on general government, we will be resuming debate on Ms Poole's amendment to subsection 12(1). Ms Poole, would you like to refresh our minds just as we begin this morning?

Ms Poole: First of all, I have to find my mind. Maybe that would help.

The Acting Chair (Mrs Y. O'Neill): I will let others decide what that means and we will proceed.

Ms Poole: Just before we commence, I thought I would point out something for the committee. This is a rather historic day. We have a female Chair, a female clerk, a female legislative counsel, a female parliamentary assistant, a female opposition Housing critic and a female Conservative Housing critic. I think it is rather a milestone.

The Acting Chair (Mrs Y. O'Neill): Did you mention a female minister?

Ms Poole: Did I miss you, Minister?

Hon Ms Gigantes: I lost count.

Ms Poole: If I did, you certainly were supposed to be on that list, very near the top. We also have a female adviser to the minister and a female Hansard. I think we are taking over the world, ladies and gentlemen. At least we are certainly making great progress.

The Acting Chair (Mrs Y. O'Neill): You must have had an interesting breakfast. Let's begin.

Ms Poole: Perhaps you are wrong, because I did not have any breakfast.

Section 12:

Ms Poole: Going back to subsection 12(1), which we had started to debate at the end of the last session, this amendment would do a number of things. The first is that it would amend the 55% figure provided by the government in the guideline amount, because we felt that would not significantly cover the changes in operating costs for landlords in older buildings. We are extremely concerned about our aging housing stock and the fact that sufficient funds be flowed through the guideline to ensure that the maintenance is kept up to date in those buildings. Quite frankly, I think it is not a landlord issue. It is a tenant issue in that tenants have to live in these buildings. If sufficient funds are not flowing in the guideline to maintain the buildings, they will be the ones to suffer.

The secondary issue is the buildings themselves. I think we all recognize that many of our buildings in Ontario are older and require significant maintenance. The minister tabled a regulation last week which was active under the Residential Rent Regulation Act. These are the various components and the weights they hold when looking at the various costs relating to a building. If you look at the costs, you will find that a significant number of them have a much greater impact on older buildings.

One is heating, which has a 13.82% weight, and this was combined oil and gas set by the consumer price index. Heating is definitely one area where it is not only a significant increase in an older building over a new building; in some cases, it is an astronomical one. In our own house, which is an older house built in 1926, about six or seven years ago we converted from oil to gas. Our fuel bills halved when we made that change. To have a 50% reduction in your fuel bill signifies how important the heating is in the older buildings and the fact that many of them are still based on oil and are extremely expensive to run.

Look at items such as hydro. For those buildings that do have electrical heat, it costs far more. Not only that, many of the older buildings have baseboard heaters. They have to, because the heating system that is in place simply cannot do the job.

There are a number of others, of course. Going down the list, maintenance is 14.92%. Again, it is far more difficult to keep the maintenance up on an older building than a newer one. If you look at the various factors included in that, I think you will agree most of them are significantly different for an older building.

When all is said and done, a major proportion of these components do have a different effect in an older building than a newer one. Even the minister mentioned elevators, and she is right in that new buildings are more prone to have elevators, but I am sure we have all been in some older buildings of three, four, five or six storeys and have seen the elevators in those buildings. They spend more time being broken down than they do repaired, yet the cost of replacing them is so expensive many of the landlords have not done it.

There is also the tendency with our older housing stock that many of the buildings are smaller buildings, and by smaller I do not necessarily mean duplexes or fourplexes, although there are certainly plenty of those. I am talking about buildings which have four, five or six storeys, and those buildings, in many cases, are owned by small landlords. They have not had the money to put into changing over the heating system and the electrical system, putting in new plumbing, wiring, windows -- the type of things that would make significant cost differentials.

The Liberal caucus's position is that the ministry has not established that it has empirical evidence to choose the magic number and it is one of my regrets that the ministry has not chosen to get a study in this regard. I am not one to do study after study, but where you do not have reliable information in an area, particularly when it is something like the guideline, which is so crucial to running and maintaining a building -- it is also crucial for the tenants that they have a reasonable guideline amount, but they have to be reflective of the costs. That is the balance you are trying to achieve.

I do not feel that the government has provided that evidence and that the magic number it has chosen is adequate. That is based on what testimony we have before us. It would appear that 60% is a more reasonable number. I do not like the fact that the Liberal caucus has been forced into the position of just saying, willy-nilly, based on expert evidence, that 60% is a reasonable number. Landlords have contended that even that is too low, but we do not have the resources and the money to go and commission a study to find out. That is the first point, which I think we spent a fair amount of time talking about the other day.

There are several other parts to our amendment. One of significance is the fact that instead of having 2% allocated to capital, we have been very specific in the guideline about what proportion goes to capital and what type of capital. We have recommended that 1% of the guideline go to eligible capital, and that is the type of capital elaborated upon in, I think, section 15 -- anyway, the section on eligible capital.

The second part of it is that 1% be allocated to the part of the guideline that deals with additional operating and capital costs not otherwise covered by the guideline. One of the difficulties when you change legislation is that sometimes you change one portion of the legislation and it impacts on another section. For instance, with eligible capital expenditures, once upon a time it used to be, and I guess still is -- except for Bill 4 -- that you could, if you were a landlord, put through things such as painting costs and fridges and stoves as capital expenditure. Well, they are no longer eligible as capital expenditures. The cannot be so-called "claimed," and yet in many cases it is important that they be there.

I have had calls from tenants on both sides. Some are phoning to complain that their 30-year-old fridge is perfectly good and has been replaced and that they had to pay for this in their rent. But then I have had a significant number of calls on the other side where tenants say they are replacing this 30-year-old fridge, thank God, because it breaks down every second week. Some of the tenants are cognizant of the fact that if a landlord has to constantly repair these old refrigerators -- sometimes they cannot get parts -- it is a very expensive repair, and they support that decision. Others do not.

But getting back to the point, fridges and stoves no longer can be claimed as eligible capital expenditures. Therefore, there has to be a component in the guideline to cover all these things that may seem fairly small. If you do not make a reasonable allocation for that, then the landlord is not going to replace those. Where this has a bearing on another part of the act is that we really want landlords to do the capital repairs. If we do not, our housing stock is going to fall down and tenants are going to live in slums. It is that simple.

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Surely the government members, who say that they are very concerned about protection for tenants, have to realize that getting these capital repairs done is crucial. I have had many conversations with landlords who are telling me that if they are only going to get 60-cent dollars back when they do the capital repairs, they are not going to do them.

What this motion does is it affects later on where the Liberal government -- sorry, Freudian slip there; maybe wishful thinking, maybe not -- where the Liberal caucus has said we think it is fair if you deduct the 1% when a landlord goes to ask for reimbursement for capital he has spent. We think 1% is more reasonable. The landlord will accept the 1% because it is in the guideline. He is getting a certain amount for that capital expenditure and can still have enough left over that he is encouraged to make those capital replacements. While I did not really want to get into what we are doing in another part of the act, it has a great significance on why we are dealing with this right now. That is why we have separated out 1% for eligible and 1% for other capital, so that at a later stage, when we are moving our other amendment, this will be in synch.

I feel this amendment is not a radical one, yet it will provide the landlords with enough flow-through of moneys to ensure that our buildings are properly maintained and cared for. I think in the bottom line that is our goal. That is all I have to say at this time.

The Acting Chair (Mrs Y. O'Neill): Thank you for refreshing our minds. Are there any further comments?

Mr Tilson: The proposed Liberal amendment appears to be very similar to the proposed Conservative amendment we will be introducing shortly.

Ms Poole: Oh, I am going to have to withdraw it. I am sorry.

Mr Tilson: The only distinction I can see -- I guess this is a question to Ms Poole -- is that there does not appear to be any allowance for profit. I believe the Liberal caucus believes that landlords should be allowed to make profits. I am not so sure the government believes in that or it would not have phrased its bill the way it has. But the amendment does not seem to address that issue, unless I am not reading it correctly. We use that word in our amendment. We specifically say that terrible word everybody talks about -- "profit."

Ms Poole: Mr Tilson is perfectly correct. We do not have that nasty word "profit" in our amendment. There is a reason for that. In Bob Rae's Ontario of the past year it has become clear that "profit" is no longer a politically correct word. I have tried to structure our amendments to be workable and acceptable to the government, to get some opportunity that they might pass and to rectify what we conceive as flaws in the legislation. I knew as soon as I put "profit" into this amendment there would be no further consideration of the amendment.

The Acting Chair (Mrs Y. O'Neill): You will not be withdrawing your amendment. That was just in jest.

Ms Poole: No. When Mr Tilson said that the Tories' amendment and ours were very similar, I thought there must be something wrong with our amendment, so I had a fleeting thought to withdraw it, but I was just being facetious.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, do you want to continue?

Mr Tilson: I have no hesitation in dealing with the word "profit." It gives me grave concern. Section 12 is probably one of the most important sections in the bill and it is probably one of the most difficult to understand, at least for the average layman. I can honestly say it is one of the most difficult for me to understand. I hope I am one of the average laymen. It is. I find it very difficult to understand but I know it does not allow for profit.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, I am going to have to ask you to speak to Ms Poole's motion. You are talking to the PC motion now.

Mr Tilson: Madam Chair, I will return to section 12 and the proposed amendment by Ms Poole. The subsection Ms Poole has put forward does not deal with the issue of profit, which leads me to believe the Liberal caucus does not like the word "profit" either. She has said she is doing it because she knows the government does not like the word "profit." She knows the government does not want the people of Ontario to be able to make a profit and therefore she will modify the Liberal position.

I do not believe the housing stock in this province can be maintained or improved, or that new housing stock can be constructed, if the government simply takes it over itself, which is what has been clearly stated by this government and the Premier. Their plan is to take over the housing industry. They do not allow for anyone to make a profit.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, I have to remind you that we have an amendment before us that does not contain the word "profit." You are talking to something you will be presenting later.

Mr Tilson: With all due respect, I am talking about this amendment. This amendment is silent of the word "profit."

The Acting Chair (Mrs Y. O'Neill): Correct.

Mr Tilson: The Liberal amendment does not --

The Acting Chair (Mrs Y. O'Neill): It is a very fine line you are drawing about whether you are speaking to this motion. Ms Poole has explained twice why the word does not appear and I think you are speaking beyond the amendment. I am sorry, but that is my judgement. Unless you can relate your comments to this amendment, as presented, then I am having trouble with your remarks.

Mr Tilson: Madam Chair, with all due respect, it is so difficult that I do not think you understand it. Clearly the amendment is silent of the word "profit."

The Acting Chair (Mrs Y. O'Neill): I understand that quite well.

Mr Tilson: I do believe I have the right to speak on this amendment. I have the right to question the amendment. I have the right to make comments on the amendment. You are precluding me from doing that.

The Acting Chair (Mrs Y. O'Neill): I am trying to listen to you referring to paragraphs 3, 4 or 5 of this amendment or to the main amendment regarding the changing of the amount within the legislation, but I have not heard any of that yet. I am hearing you speak about something that is not before us.

Mr Tilson: I am saying specifically that I certainly support the intent of the amendment but that does not go far enough. Surely I have the right to speak to that. There is something wrong with the system if I cannot be critical of the amendment.

The Acting Chair (Mrs Y. O'Neill): All right, continue. It is confusing because your amendment coming later is about what you are talking about now. That is why I am confused.

Mr Tilson: Well, I had planned to talk about that then too and I wish to talk about it now. Ms Poole is talking about how she is trying to persuade the government to change its mind and I am trying to persuade Ms Poole to change her mind. There is nothing wrong with my doing that.

The Acting Chair (Mrs Y. O'Neill): Fine, fine.

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Mr Tilson: Thank you. Certainly the whole residential complex cost index formula does not allow for profit. It does not allow for drastic inflation in increases, which is why Ms Poole has put forward her amendment. The whole issue of maintenance cost is a concern that both our caucus and the Liberal caucus have. As Ms Poole has indicated, the large percentage, the majority of the buildings in this province are 20 years old or older and are going to require major renovation costs just to keep them safe. They are going to require major expenditures just to maintain the quality of life of the tenants of this province, because if they are not undertaken and the landlords are not encouraged to make these improvements, the quality of life of the tenants will decrease. This legislation the government has put forward does not allow for that, which is obviously one of the reasons Ms Poole has put forward her amendment to partially address that whole issue of renovation costs.

There is no question that we have seen in recent years how maintenance and renovation costs could, for unknown economic reasons, make substantial jumps. In other words, the costs today could accelerate in five years. Those costs could accelerate unbelievably in a year, in which case section 12 would not deal with those increases. That is one of the reasons Ms Poole has put forward her amendment.

There is the whole issue of making purchases for an apartment unit, the necessity to purchase new refrigerators or new stoves, new purchases such as those, particularly in the older buildings where it is impossible to continue to repair the appliances over and over. New purchases are required. We have seen in the past how the costs of such purchases could accelerate. Again, section 12 does not allow for the tremendous increases that could result. It is another reason Ms Poole has put forward her amendment.

There is the whole issue of employment costs. These buildings require people to maintain them, whether it be superintendents or just maintenance people, whether they are on contract or are actually working for the landlord. The employment costs could accelerate far beyond what the formula puts forward.

Again, and more important, there is the whole issue of profit. I support the amendment for all the above reasons I have just referred to, but the one item it is silent on -- I have difficulty as to why it is not in there -- is the issue of profit. The government will come back and say, "Look how the landlords have ripped off the tenants of this province." They will give their standard speech about marble foyers and 100% increases and all those standard speeches we have heard over and over, which are so minute that they are not true.

Interjection.

Mr Tilson: That is the fact. Facts have been put forward in this committee that show that the marble foyer argument and the 100% increases are not as drastic as this government has been putting forward. It has been almost the creation of the big lie. There have been some installations of marble foyers. There have been some large rent increases.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, you know you are getting awfully close when you are talking about the "big lie." I have to ask you, do you want to place an amendment to this amendment? You have been given quite a few minutes now to try to convince Ms Poole to change her amendment. I do not know whether you have been direct enough that she would know what you would want to change in it, so I am giving you the opportunity now to give us some direction.

Mr Tilson: Madam Chair, surely I have the right to make comments to this committee. You have no right to interrupt me as you are.

The Acting Chair (Mrs Y. O'Neill): Well, "big lie" --

Mr Tilson: You are continually interrupting me and you have no right to do that.

The Acting Chair (Mrs Y. O'Neill): I do when you talk about "big lie." I am sorry, I do.

Mr Mammoliti: You cannot call somebody a liar.

The Acting Chair (Mrs Y. O'Neill): "Big lie" is just verging a little too close.

Mr Tilson: Madam Chair, I have every right to speak to this amendment, and you are continually interrupting me and not allowing me to speak to this amendment.

The Acting Chair (Mrs Y. O'Neill): I am trying to ask you if you would like to place an amendment.

Mr Tilson: I want to speak to the amendment. I want to criticize it. I want to compliment it and I want to criticize it, and you are precluding me from doing that.

The Acting Chair (Mrs Y. O'Neill): Continue, please.

Mr Tilson: Madam Chair, I have listed the reasons for support of the amendment, but the difficulty I have with it is that the section does not, as the amendment is put forward, include the issue of profit. There needs to be some effort put forward in this bill to encourage development of apartment units across this province. There is nothing in this bill that does that.

Anyone who builds an apartment building today, unless they are building non-profit buildings or co-op buildings, is out of his or her head. It simply does not pay them to do it, because they will ultimately be operating at a loss. With the cost of inflation, with the cost of construction, with the increased costs of all of these matters which are not being allowed by this section, there is no incentive for them to put up these buildings.

Accordingly, Madam Chair, I cannot support the amendment because it is silent on the issue of profit. There must not only be some encouragement to improve the housing stock of this province, but also some incentive to encourage people to build the units, because obviously in some areas there is a shortage of units. Thank you, Madam Chair.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, I would like to give you the opportunity again. Do you want to place an amendment to the amendment?

Mr Tilson: We will be putting forward an amendment, as we have distributed to the members of the committee, but I have indicated that I cannot support the Liberal amendment because of its absence of encouraging the whole subject of profit, which relates to the issue of proper maintenance, which relates to the whole issue of renovations and which relates to the whole issue of construction of new units in this province.

Hon Ms Gigantes: Without getting into another prolonged discussion of emotive words such as "profit," could I remind Mr Tilson and also Ms Poole that I tabled with the committee last week a projection of the amount of moneys available to landlords in this province within the proposed 55% plus 2% formula for the guideline, and that over a 10-year period we would be looking at the availability of $8.5 billion to landlords in this province for necessary maintenance, capital works, and, I am sure, a little elbow room for profit.

I could also draw to the attention of the committee the sheet which we have tabled with the clerk. This sheet gives figures which represent our projections of what the effective guidelines would be under the proposed guideline, as in the bill. You will find that labelled "RCA": 55% BOCI plus 2%; under the Liberal proposal, 60% of BOCI plus 2%; and under the four-part amendment which the Conservatives proposed to move, it is modified according to whether it is being applied to a small building, a large building, a pre-1976 or a post-1976 constructed building.

Ministry staff have worked out what that would mean in terms of the real guideline, given the assumptions at the bottom of the sheet which has been tabled. These assumptions are that the inflation rate for all categories included in BOCI would be 3.7%, which is an estimate; that there would be a 9% increase in municipal taxes, which may be low or high; that there would be a 15% increase in electricity rates, which I think was the figure the committee indicated earlier in discussion it would like to see included in projections. We have included an assumption of a 5.1% increase in earnings for staff in apartment buildings -- maintenance staff, superintendents and so on -- which again may be high, given the current economic forecasts.

However, what it leads to over a projected four-year period is a range of rates of effective guideline to be applied. For example, in 1992, under the Conservative amendment, the guideline for a small building built before 1976 would be 9.2%. Presumably we would also be dealing with an application possibility above guideline, right down to the projection which we have made for the proposal included in the bill, which would be 5.3%, effective 1992.

I hope that for members of the committee this will be a helpful summary of the best estimates we can make, given the assumptions, some of which we have been asked to include by the committee, of what the realities of these various proposals for amendment to the guideline would be.

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Ms Poole: I thank the minister for providing those projections. They are quite helpful to us.

To go back to Mr Tilson's comments about the amendment and why he had problems supporting it, there are two ways one can approach the business of providing amendments to legislation. One is to try to make them acceptable to all parties, particularly acceptable to the government, as it has the majority of members on this committee and if the government does not accept an amendment it is virtually impossible for it to pass. That is one attitude.

The other one is that you can put forward amendments for political reasons. You can put forward an amendment so that you have an opportunity to make statements, so that you have an opportunity to make accusations, so that you have an opportunity to expose what you believe another party's viewpoints fail to relate.

I am sorry, and I apologize to Mr Tilson if he thinks this is an inadequate way to look at it, but I am a very pragmatic person. I want to improve the legislation and I want to --

Mr Tilson: You support the bill.

Ms Poole: Mr Tilson, I do not want to get into a debate about support of the bill.

Mr Tilson: The record shows it, Madam Chair.

Ms Poole: The Liberal caucus has not decided to support this bill. Whether we accept it will depend on what type of amendments are accepted by the government and what improvements are made to this legislation.

Mr Tilson: You supported Bill 4 and you are supporting this one.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, I really do think that remark is somewhat presumptuous. We do not know yet for sure how the Liberals will vote on this bill.

Ms Poole: Not only is the remark inappropriate, Madam Chair, and I certainly agree with you, but the comment is also inaccurate, since the Liberal caucus voted against Bill 4 on third and final reading.

I have taken the pragmatic viewpoint. I know that if the word "profit" were in this amendment, there is no way the government would consider it, let alone accept it. Perhaps the likelihood of the government considering it or accepting it is very minimal in any case, but I have never been of the viewpoint that if you cannot have the whole loaf, you will not accept the half loaf. If the half loaf is going to keep your kids from starving, you damned well accept it. So when you get an amendment that you think is going to make a difference, and if you know it has no way of passing if you include a word which is going to antagonize the majority of the committee, then to me, when it comes down to pragmatics, you do not include the word, not if you want to make something workable and not if you want to make some real significant changes to the legislation.

I am not prepared to accept an amendment to this amendment, friendly or otherwise, that would include "profit." I am trying to propose a solution and, to my way of thinking, if I include that word "profit," there is no opportunity to even discuss a solution.

The Acting Chair (Mrs Y. O'Neill): Is there any further debate on the amendment to subsection 12(1)?

Mrs Marland: I do not want to get into the same box I got into with one of our own PC amendments last week. If this amendment should carry, is the Chair still going to accept my following amendment?

The Acting Chair (Mrs Y. O'Neill): I think I will, yes.

Mrs Marland: Well, then, I will save my comments, to place on the record my opinion as to the profit aspect of ownership of property, for my amendment.

The Acting Chair (Mrs Y. O'Neill): Thank you, Mrs Marland.

The committee divided on Ms Poole's motion, which was negatived on the following vote:

Ayes -- 2

Daigeler, Poole.

Nays -- 8

Abel, Gigantes, Harrington, Mammoliti, Marchese, Marland, Tilson, Winninger.

The Acting Chair (Mrs Y. O'Neill): I presume now, Mrs Marland, you would like to present your amendment.

Mrs Marland: Yes. That was quite historic; we were voting with the government members. What a nice way to start the day.

Mr Mammoliti: For a different reason, though.

The Acting Chair (Mrs Y. O'Neill): Mrs Marland moves that paragraph 4 of subsection 12(1) of Bill 121, as reprinted to show the amendments proposed by the minister, be struck out and the following substituted:

"4. The part of the guideline allocated to profit is equal to 1%.

"5. Subject to paragraph 6, the guideline for a rental unit is the sum of the part of the guideline allocated to operating costs for that rental unit, the part of the guideline allocated to capital expenditures and the part of the guideline allocated to profit.

"6. If any part of the residential complex was occupied before the 1st day of January, 1976 as a rental unit, the guideline shall be increased by 2%."

Ms Poole: On a point of clarification, Madam Chair: We are dealing with the PC motion, subsection 12(1), paragraphs 4, 5 and 6. In my book, and I do not know if this was covered while I was away several weeks ago, I also have one subsection 12(1), paragraph 1. Has that been dealt with?

The Acting Chair (Mrs Y. O'Neill): I am sorry, I will have to ask because I was not present either.

Hon Ms Gigantes: Yes, it has. The copy I have of the Conservative motion refers to subsection 12(1), paragraphs 5, 6 and 7, so the numbers I have are quite different when there is reference made in the second paragraph.

The Acting Chair (Mrs Y. O'Neill): There is an explanation, apparently, from legislative counsel.

Ms Baldwin: I believe the Progressive Conservative motion was redone in light of the reprinted bill, so the paragraph numbers changed. The version read out says, "as reprinted to show the amendments proposed by the minister." Perhaps the motion you have in front of you does not say that.

Hon Ms Gigantes: That is correct. We are dealing with paragraphs 4, 5 and 6, then?

Ms Baldwin: That is correct.

The Acting Chair (Mrs Y. O'Neill): Is everybody clear now on what we are --

Hon Ms Gigantes: The reference in the second numbered section would be to paragraph 6.

The Acting Chair (Mrs Y. O'Neill): All right. Mrs Marland, if you would like to speak to your amendment.

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Mrs Marland: I think the Hansard from last week is just coming into the room and I wanted to quote from that in making my comments on this amendment. We ended up last Thursday afternoon with a rather incredible statement by Mr Mammoliti.

Mr Tilson: What, again?

Mrs Marland: I guess I will look up his reference when someone is speaking so that I can quote him accurately so he will not be too disturbed. In essence, what Mr Mammoliti said last week was that he did not care about landlords.

Mr Tilson: Probably allergic to them.

Mrs Marland: I did write down some of his words. He said he was not worried if landlords "had to pay out of their pockets."

In essence, in speaking to my amendment, I want to express that I am worried about landlords because I am worried about tenants in this province. Is your riding Yorkview?

Mr Mammoliti: It certainly is. They are all watching you right now.

Mrs Marland: I hope so. I particularly hope they are watching the member for Yorkview, because the people who are dependent on rental accommodation in this province should not be subjected to rental accommodation deteriorating because this socialist government in Ontario is penalizing the people who own property they depend on renting. Tragically, what is happening with this legislation is very well manifested, I think, by the comments by the member for Yorkview last week when he says that landlords should pay out of their pockets. I wonder if this same member thinks that the man who sells groceries on the street corner should subsidize the cost of those groceries and pay out of his pocket in order to keep the cost of those groceries down?

The two most important elements of survival in this province today are food and shelter. In my opinion, the people who live in rental accommodation have a right as tenants to live in buildings that are maintained, that are clean, with carpeted areas that are replaced with new carpets when it is necessary, where walls are painted and redecorated and where all general maintenance is done. For this socialist government to be so limiting, as this legislation is, on what landlords are going to have to spend to maintain their buildings and yet be limited in the amount of money they can have in an annual rent increase, let alone allowing for any profit on their investment, is unbelievable.

First of all, I should explain that the explanation of this amendment is that the first and second sections of the amendment allow for the addition to the guideline increase of 1% for the purpose of profit, and that was allowed in Bill 51.

Bill 51 was not even a Conservative government piece of legislation, it was Liberal legislation, and I would be anticipating that the Liberal members of this committee will support this amendment if only for the fact that they still believe in their own legislation.

The third section of this amendment allows for an extra 2% under the guideline increase for those buildings deemed, by nature of age prior to 1976, to require additional capital for routine maintenance and repair.

There we get back to the classic comments of the Minister for Housing last week, when she said it did not cost any more to operate an old building than a new building. Of course, we do not agree with the minister on that point. Obviously an older building does cost more to maintain sometimes because of the pure design and function of it. New buildings have all kinds of elements in their design from an architectural standpoint that make them easier to function in, easier for people to move in, and therefore in the general areas the maintenance costs would be less.

Let's look at this question of having 1% for profit. How many of you, I would challenge, would even think of making an investment with your own hard-earned money without getting a profit return on it? How many of you are willing to set aside your legislative incomes and provide housing for people in this province? That is what you are asking the landlords of this province to do. You are asking them to invest in rental property. Tragically, for most of them who have already invested, it is not even a choice any longer. Not only are you not going to allow them to have any return on their investment, they are not even able to sell their buildings, because who would want to buy a rental income property with this kind of draconian legislation?

We are looking at the question of who provides rental housing for the people in this province. This socialist government seems to think it is okay for the existing landlords to do that. We do not happen to think that. Moreover, we think about how unjust it is to expect landlords to have made a capital investment in rental property and not now be able to realize a profit on their investment. If they had left their money in the bank, they could probably get anywhere from 10%, 12%, 14% on second mortgages, etc.

Mr Winninger is shaking his head. I am not talking about interest on a daily savings account, I am talking about investments through a financial lender.

We are saying to landlords, "We're not going to allow you to make any profit at all on your investment." If your answer is, "They've already made a profit because if they bought their building 10, 20 or even five years ago, they could sell it today at a profit," the fact is if they bought their building probably within the last five years, they cannot sell it at a profit. If they bought it 15 or 20 years ago, yes, they could sell it for more than they paid for it. I hope they could, because they have set aside whatever those thousands and thousands of dollars were, in some cases perhaps upwards of $1 million -- and we are looking at the small landlord -- and over that period of time they are entitled to have had an appreciation on their investment.

The travesty is that this legislation is saying to the landlords, "We don't believe you need to have profit under this section." The worst part is that we are also saying it to the tenants, for whom I care equally -- I will have the record show -- as I care for the landlords, because I believe the people in this province are entitled to live in good-quality rental accommodation in return for the hard-earned money they pay in rent.

I think most of you on this committee had the benefit of the public hearings this summer when you heard from landlords and, I understand, even from some tenants who agreed with landlords. The position they are going to be in is that they are not going to be able to maintain those buildings to the level they have in the past.

The irony is that I do not think any one of you can go out today and buy anything cheaper, or possibly even at the same price, as you did a year or two ago. I do not know how many of the men on this committee shop for cleaning materials for the home, but none of those products costs the same as it did a year or two ago.

What we are saying to these tenants is, "Your buildings are going to get just as dirty, the wear and tear on them is going to be just as much, they are going to need the same kind of upkeep, maintenance and, in some cases, necessary renovation, even if it is paint." Very recently I was shocked at the price of paint.

So whatever it is that has to be done to keep the tenants' rental homes -- the ambience of the environment in which they live -- in good condition, this legislation is saying to the owner of that property, "You can't have an increase to cover the cost of inflation on the products and services to service that building, whether you are talking about products in terms of cleaning and painting or whether you are talking about labour in terms of services."

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This amendment is asking for a paltry 1% for the purpose of profit. It is almost embarrassing to ask for only 1%, but I would think that was something even this government might be able to recognize as a necessity. Even this government, which thinks it is the job of government and the rich to provide housing for everybody else in the province, might consider 1%. That is why we kept it at 1%. Frankly, I think 2% for older buildings speaks for itself.

Perhaps while someone else is speaking, I can refer to the record I wanted to comment on from last week.

Mr Mammoliti: I feel compelled to respond to Mrs Marland's comments about my comments last week. I will try to do this as calmly as possible. I did make those comments, but Mrs Marland neglected to mention why. I was responding to her comments last week in reference to investment. She believes this government is taking the right away from the investors and that they are not going to make the big profit they have been so used to in the past. I am glad I made those comments, and my constituents are glad I made those comments. I made them because I believe it.

An investment is an investment; I do not disagree with an investment. I disagree with you and your ideology. That you should be asking and kicking for more money and more profit is what I disagree with, and that is what I said last week. I do not agree that you should be kicking and punching the tenants for more and more money. I do not know if I said it that way or with those words -- I do not have the Hansard in front of me -- but that is what I meant.

I also said I believe the 3% is enough. I do not mind them dishing out a little bit of their money. I have said that consistently. If it is an investment, they will not mind dishing out some of their own money, will they?

You brought up an example earlier. I am going to give you an example. When I take out bonds or RRSPs, I do not go out in the street and start kicking and punching people for money because I am making my investment, do I? When I go out and buy a car, and if I consider it an investment -- which it is not, though if it is an old car, perhaps you could make money on it -- I do not go out in the street and start kicking and punching people and saying, "I have money to invest, so I want more money from you." That is what you expect. It is the same thing.

There is an example I would like to use in this particular case. I think we could relate it to this. I will bring you back to Robin Hood and the days of his merry men. Back then, there were the kings, the barons and the peasants. Thanks to your government and the Liberal government, things have not changed. There are still kings, there are still barons and there are still peasants. You still want to kick and punch those peasants, and I am not going to put up with it.

Mr Tilson: Off with their heads.

Mr Mammoliti: Off with their heads, exactly. That is the type of attitude that has to stop. Frankly, as a part of this government, I want it to stop. In the House we consistently hear from you: "What are you doing about the drug problem? What are you doing about the welfare problem? What are you doing about that big social problem that exists out there?" With your attitude, these problems are only going to continue existing. By kicking and punching people for money and saying, "We want more out of you because I'm rich and I want more," you are only going to get those problems. I am going to try to stop that. If that means I have to say things like, "You can only make $10 and not $12," then that is what I am going to do. Yes, that is what I am going to do and that is what I mean by that.

When you talk about caring for tenants, that is absolute nonsense. I cannot agree with that. I cannot agree with that at all, not with your comments, not with your only thought being profit. I cannot agree with that.

Mrs Marland: Whether this member is aware or not, in our rules of order it is incorrect to impute motives to what another person is saying or, as a result of what my comments are, impute motives to me or what I am thinking. I would appreciate the Chair reminding the member of that.

Mr Tilson: You are a credit to the government, George.

Mr Mammoliti: I am a credit to myself and I am a credit to Yorkview.

The Acting Chair (Mrs Y. O'Neill): I think we will take the warning. Mr Mammoliti, I presume you are summing up.

Mr Mammoliti: I am summing up. I do not want to delay the proceedings. I want to get this bill through as quickly as possible, believe me. I wanted to comment on her talking about caring for tenants. I do not believe that. Maybe we can relate better it if I give you another example. I used to be a doorman at one of the rowdier bars in Toronto. I worked there for five years. There were some good doormen and some bad doormen. I considered myself a good doorman and that certainly helped me with my job today, especially in the anti-drug strategy.

I would say that she cares as much as those bad doormen, in that we used to say we cared for the person who had too much to drink. The good ones would say, "I'll put you into a cab" or "I'll get you counselling if you need it" and that sort of thing, whereas the bad ones were saying, "I care about you," and they would throw them into a telephone booth or throw them through a window. "I care about you so much that I'm going to boot your butt right out of here. This is how much I care for you." This is exactly what they are saying. They are saying, "I care for the tenants" --

The Acting Speaker (Mrs Y. O'Neill): You are making judgements, Mr Mammoliti, and I really do not think there is a need to do that.

Hon Ms Gigantes: That is what he is paid for. He is paid to make judgements.

The Acting Speaker (Mrs Y. O'Neill): He is making judgements about what other people are saying.

Mr Mammoliti: It is an example to which people could better relate her comments.

Mrs Marland: He is not paid to impute motives to another member.

The Acting Chair (Mrs Y. O'Neill): I think we should try to relate our comments to --

Mr Mammoliti: Madam Chair, I will. Just to finish off, it is the same thing. On the one hand you say you care and on the other hand you have got a fist out and you are ready to punch or kick anybody for more money. I say that is not the solution. Our bill is not perfect and we have said that from day one. The minister has said that. We are going to learn by our mistakes perhaps. Perhaps more amendments will be necessary later, but we have to think of a way to protect the peasants I am talking about. Remember Robin Hood and the merry men and the peasants they wanted to kick.

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Mr Tilson: Little John.

Mr Mammoliti: Yes, Little John, and of course Friar Tuck, who had the drinking problem.

The Acting Speaker (Mrs Y. O'Neill): I think we should really try to talk to the bill.

Mr Mammoliti: I will just wrap up. I get emotional when we talk about caring for tenants, because I do care for tenants. When I make my comments, I assure you they are for the tenants' best. When and if my government is wrong at any time, I tell it that as well. I have not been ashamed to do that. I have not been ashamed to say how I feel.

Hon Ms Gigantes: I will be quite brief. It is obvious that this is one of the items in this legislation that brings us down to the very essential questions of what the legislation is about. I will draw to the attention of committee members the projection that was on the sheet we tabled, dealing with the various proposals from each party about how the guideline be constructed within this legislation and the assumption within that set of figures for a 3.7% inflation rate for the period 1993 to 1995. Next year, as far as I know, economists and various financial institutions, you name it, seem to be suggesting that we will be looking at a general inflation rate of about 3%. Certainly, I do not think people are expecting most wage increases to be very high.

If we look at the Conservative amendment before us now and what it would mean for the basic guideline for rent increases in 1993, which will be the first year the guideline under this legislation will become operative, because in 1992 we will be dealing with the old guideline --

Ms Poole: On a point of clarification, Madam Chair: When I looked at the projections of the guideline provided by the ministry, I was having a little difficulty associating them with the Conservative amendment, because according to the projections of the ministry, the PC amendment is separated into four different possibilities, basically taking the ministry's original position that the guideline was to be different, depending on the size of the building. Also they have a component in that it would be different considering whether it was pre-1976 or post-1976.

It may be a deficiency in my amendment package or it may be something that was tabled when I was away two weeks ago, but is it true that part of the PC amendment is that there be these four separations? I do not see that in the amendment before us. Under subsection 12(1) I see no reference to separating into small and large buildings. I wonder if you could clarify that.

The Acting Chair (Mrs Y. O'Neill): Mrs Marland, do you want to respond to the reflection of this projection of your amendment?

Hon Ms Gigantes: Madam Chair, could I perhaps ask Colleen Parrish from the ministry to speak to the question of the projection itself?

Ms Parrish: The reason we did that -- as you will see, we did this on November 6, 1991 -- was that it was unclear whether the amendment agreed with the amendments made in the printed version or whether it was saying that the two guideline distinctions should be continued. Remember, we had that earlier discussion about whether this was an amendment to paragraphs 5, 6 and 7 or whether this was an amendment to paragraphs 4, 5 and 6. As tabled, technically it still includes that differential. I do not know what the intention was, but technically, as tabled, that is what it said, so that is why we did the forecast. If they are moving to one guideline, no differential between small and large buildings, then essentially instead of four guidelines there would be two, pre- and post-1976.

Ms Poole: And they would be based on 60%, not two thirds and one half?

The Acting Chair (Mrs Y. O'Neill): Excuse me. I think it is necessary that Mrs Marland respond to see how reflective she feels this is to her amendment as presented.

Mrs Marland: This sheet that was left at our desks this morning, I assume prepared by the government --

The Acting Chair (Mrs Y. O'Neill): It was prepared by the Ministry of Housing.

Ms Poole: Was this tabled on November 6?

Hon Ms Gigantes: No, it was tabled this morning.

Mr Tilson: We don't even know if it is accurate.

Ms Poole: I think that is the problem. It was prepared on November 6 and yet it was tabled a month later with inaccurate information.

The Acting Chair (Mrs Y. O'Neill): If I may recap what has happened in the last five minutes, Mrs Marland, I think she would like to know if this is reflective of your intent this morning in your amendment, because the legislation we were dealing with on November 6 was in a different form than the legislation we are dealing with this morning.

Hon Ms Gigantes: On a point of order, Madam Chair: I learn now that this was tabled on November 6.

The Acting Chair (Mrs Y. O'Neill): I guess none of us here this morning was around that day.

Ms Parrish: It was attached to this long thing.

Mr Tilson: A long thing?

Ms Poole: We don't read long things.

The Acting Chair (Mrs Y. O'Neill): All right, we have this now. I think we have to clarify right now. I presume the PC members are the only ones who can tell us whether this is reflective of the intent of their amendment as we have it here this morning. We can stand down your amendment if you want to.

Mrs Marland: No, I cannot comment on this because I do not know the accuracy of these figures that are the basis for this. I did not prepare it.

The Acting Chair (Mrs Y. O'Neill): I think there is a fundamental question about what your amendment really means and what Ms Parrish was trying to respond to in this chart. Perhaps, Ms Parrish, you could place a question very directly to Mrs Marland so she would know the basis upon which you base this and how you interpret it applying this morning.

Ms Parrish: I think the issue is actually a fairly straightforward issue, Mrs Marland. I guess what people want to know is whether the basis of the guideline you are proposing in your amendment is essentially two thirds of the operating index, or BOCI, plus 3% or 5%, depending on whether they are pre- or post-1976 buildings, or whether your proposal is that it would be one half of BOCI. I assume it is likely that it is two thirds of BOCI, which is the proposal, but it is not clear, because the government's amendment would be 55% of BOCI. That, I guess, is what people are wondering about.

It is clear that your amendment says that if it is a small, newer building, it would be 3% plus the operating index component, and if it is an older building, it would be 5%. I guess the issue people are asking is, what is the other part? Is it two thirds of BOCI, one half of BOCI, 55% or 60%, which I think are the possibilities there.

Mrs Marland: Madam Chair, I am not clear where Ms Parrish gets a reference to a small complex.

Ms Poole: Madam Chair, I am getting one of my fits of helpfulness again.

Mrs Marland: Where did you get that?

Interjections.

The Acting Chair (Mrs Y. O'Neill): We have to have one person speaking at a time. I think Mrs Marland and Ms Parrish have the floor. Would you like to have the intervention from Ms Poole she thinks will be helpful?

Mr Tilson: It's risky.

Ms Poole: It is very risky. I think part of the problem is that Mrs Marland was not the critic at the time we went through this long, exhaustive procedure. It is extremely difficult to come up to speed quickly on a bill this complex. Originally, when the legislation was first introduced, the government had a section which said instead of having one guideline per year we will have two guidelines: if you are a small building, six and under, we will have one guideline; if you are a big building, seven or over, we will have another guideline. The confusion has arisen because when you tabled your amendment it was based on what the government had in its original legislation.

The Acting Chair (Mrs Y. O'Neill): That is correct.

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Ms Poole: Now we are in the position where the government has amended that and said, "No, we want one guideline and it's based on 55%."

Mr Tilson: That was then; this is now.

Ms Poole: That was then; this is now. This chart has assumed that the Conservative amendment still wants all these differentiations, which would now make four.

The Acting Chair (Mrs Y. O'Neill): Mrs Marland, I think the question you have to help us with this morning is, do you have a differentiation in your amendment regarding the size of buildings?

Mrs Marland: Obviously I would not have, now that the government has decided there is not to be any difference between the size of buildings as it pertains to this bill.

The Acting Chair (Mrs Y. O'Neill): So your differentiation is strictly on age.

Mrs Marland: Well, it is exactly what I read. I mean, if you read the words --

The Acting Chair (Mrs Y. O'Neill): I am just trying to clarify for everybody in the room, because I would say this is a point of great --

Mrs Marland: I am not referring to size of buildings. I am simply referring to age in the last paragraph.

Mr Tilson: On a point of order, Madam Chair: I think the confusion arose because of this sheet of paper that has been presented this morning, which we have never seen before.

The Acting Chair (Mrs Y. O'Neill): Unfortunately, that has been discounted by the person who presented it on November 6 as part of a bigger package. I cannot verify that, but someone else has said they did that.

Mr Tilson: I think this was prepared before they made their changes.

The Acting Chair (Mrs Y. O'Neill): I do not know exactly when the changes were made. Madam Minister does still have the floor. She is using now a piece of paper that does not seem to be reflective of the PC motion. Perhaps she would like to speak to that.

Hon Ms Gigantes: I will not address that directly at the moment, Madam Chair. The points I was trying to make were really relatively simple. One is that what we are dealing with is what the guideline is. The guideline we are proposing is a guideline which produces certain results. The guideline which the Liberals proposed, and which has been defeated, would produce certain other results, which would have been a higher guideline and a guideline which would have worked in a different way.

What is now before us is a Conservative proposal which would produce a higher guideline still, and would also incorporate the notion of profit and separate that out within the guideline.

While we have had a lot of emotional and deeply felt words exchanged on this subject, I think what we are looking for is a balance. We do not expect that most tenants are going to be receiving wage increases next year in even the range of the guideline which will be in effect next year, which is the 6% guideline under the RRRA, as determined earlier this fall under the legislation. We are looking for a balance between what tenants can afford and what landlords are going to need to be able to operate their buildings and make sure that the buildings are maintained and that necessary renovations are done in a reasonable way.

We have also made provision within the legislation where, when landlords have a need for eligible capital expenditures over guideline, there is room for application by landlords to receive a higher rent up to 3% over guideline. All in all, we feel that these provisions are a balanced and reasonable attempt to protect the interests of tenants and provide landlords with those moneys necessary for repair.

Certainly, on the basis of what we know about landlords' applications for above-guideline increases in times past, these obviously provide them with room for profit. We also know that profit for landlords does not just come out of guideline increases. Profits for landlords come out of the increase in the value of the properties themselves over time and, on the whole, landlords in this province have now managed to survive through 15 years of rent regulation.

This bill proposes what we think is a better way of regulating rents. What we are dealing with here is simply the issue of what the guideline is.

I think Ms Parrish would be prepared to provide us with some updates on the estimates of what the guidelines under this particular amendment would be. Perhaps I could ask her for that at this stage and we could certainly produce this in written form if necessary, but perhaps people would just like to hear it.

Ms Parrish: We are assuming here a 55% basis for the guideline, as in the reprinted bill, plus a distinction between pre-1976 and post-1976 buildings. For 1992, the guideline would provide for a 6.6% increase for post-1976 buildings and 8.3% for pre-1976 buildings, thus 6.6% for newer buildings and 8.3% for older buildings. In 1993, the respective increases are 6.7% for newer buildings and 8.7% for older buildings; in 1994, 6.9% and 8.9%; and in 1995, 6.8% and 8.8%.

Mrs Marland: Could I have a clarification on those figures? Does that mean that we are sitting here today deciding what it will be for the next four years?

Hon Ms Gigantes: As you have seen from the sheet which was tabled, assumptions have been included in the estimates we have provided about what would be the effective guideline under the government's proposal. You will see those assumptions listed at the bottom of the page. One can question the assumptions, but on the whole, they are probably no more unreasonable than any others we might make in a mix of assumptions on the components of the guideline.

Mrs Marland: What about the assumption that your government was going to have a $9.7-billion deficit this year and we now know that this is probably going to be 50% out. How can we sit here and assume, knowing how much worse the situation was this year in your own assumptions as a government in planning for finances.

The Acting Chair (Mrs Y. O'Neill): Mrs Marland, you are on the speaking list, but you are not next in order.

Hon Ms Gigantes: If I could reply to that, there is nothing hidden about the estimates you have just heard. All that Ms Parrish has done is to take the reprinted bill, which you are proposing to amend, use the 55% of the building operating cost index as the base, together with the assumptions listed at the bottom of the sheet recirculated this morning, and recalculate what the effect of your amendment would be on the guideline. That is how the figures are arrived at.

The Acting Chair (Mrs Y. O'Neill): Would the committee like to have those figures in writing if Ms Parrish could present them? All right. Now we have a speaking list. Ms Poole. Have you completed your statements Madam Minister?

Hon Ms Gigantes: Yes, for the moment.

Ms Poole: My list of comments has extended considerably from when I first put up my hand. That is one of the things, when you have a list of speakers, you get to comment on what each person has said.

First, the minister has said they are trying to find a better way, a balanced way. As a member who has been extremely active with tenants for the last four years in my riding, and as somebody who has 40,000 tenants in her riding and who is daily in communication with them, I can say that over the last four years I have not received, nor has my staff, one complaint about the guideline and how it was working.

For the most part, it was under inflation and it was not an issue. We are now making it an issue, and the only reason I can see making it an issue is for political points. I do not like that, because if something is seen to be problematic, I can see changing it. Just as Mr Mammoliti said, "Our bill is not perfect," we have been saying that. By the way, when he said that, the reaction from the NDP caucus was quite interesting. I saw four heads immediately go over to Mr Mammoliti saying, "George, what are you saying?"

It is true their legislation is far from perfect. But the problem is that you are trying to fix something that was not broken, that was working and that was quite reflective of inflation. You are changing it without empirical evidence that it should be changed, or that there is a reason to change it. If you do not have any evidence, there is no logic for changing it. I still have not heard a good reason to change it if it is working.

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Hon Ms Gigantes: On a point of order, Madam Chair: Is the speaker supporting the Conservative amendment or not?

The Acting Chair (Mrs Y. O'Neill): I do not think that is a point of order.

Hon Ms Gigantes: I think it is. One has to get a vague sense of whether she is for or against.

The Acting Chair (Mrs Y. O'Neill): I do not think so. I think that comes with the vote. I really find that kind of confusing.

Ms Poole: Thank you for your ruling because it was a totally irrelevant comment. I think you can be assured that I will be making some direct comments in that regard.

The irony is that when Mr Mammoliti was talking, he said: "It's an investment and if it's investment, the person should not mind kicking in some money. That's the nature of an investment." But what Mr Mammoliti and his government do not seem to comprehend is how an investment works. An investment works because a person expects a return on his money. That is the idea, George.

Mr Mammoliti: They are supposed to tell us how much they want, though.

Ms Poole: If you have an investment where you are not seeing a return on your money, and there is no projected return, you generally do not put more money into it. That is the way investment works. Certainly, if you are a good investor, that is the way it works.

Mr Mammoliti: On a point of order, Madam Chair: I have not heard anybody come forward, even though we have asked the questions, to tell us how much they want. So in terms of your argument there, nobody has told us how much they are ready to make.

The Acting Chair (Mrs Y. O'Neill): Mr Mammoliti, if you want to be added to the speaking list, I will accept your name, but it is not on the list at the moment. Continue, Ms Poole, please.

Ms Poole: I think an interesting commentary on the government's attitude towards investment and towards profit was in their Housing Framework for Ontario document. If I am not mistaken, although I have not seen this for a couple of months, I believe it was on page 55. When I read it, I thought I must be in a different galaxy. In black and white in this document was the statement, "Some landlords are in the business because they want to have a return on their investment." I thought this interesting. Some landlords must be in the business because they do not want any profit; they just like working hard and not making any money. They are philanthropists and they do this out of the goodness of their heart, and this is why they are in the business.

I can tell you, anybody in the business of being a grocer, a dry-cleaner or any other business is in it because they want to see something back for the effort, the initiative, the risk and everything else they put in.

Mr Mammoliti: Nobody has told us how much they want back.

The Acting Chair (Mrs Y. O'Neill): Mr Mammoliti, please.

Mr Mammoliti: How many times have we asked the question in the hearings?

The Acting Chair (Mrs Y. O'Neill): Mr Mammoliti, Ms Poole is speaking.

Mr Mammoliti: How many landlords refused to answer the question? You used that as an argument.

Ms Poole: Mr Mammoliti continually interjects and says nobody is telling him. If you read the Conservative amendment, Mr Mammoliti, the Conservative amendment tells you, 1% in the guideline. It is very specific.

Mr Mammoliti: We are talking about the landlords. I am telling you that in front of us, they did not tell us how much they wanted to make. We asked the question consistently.

The Acting Chair (Mrs Y. O'Neill): Mr Mammoliti, you have repeated this three times. I think we know what you are saying. Ms Poole has the floor.

Ms Poole: Mr Mammoliti obviously either has not read or does not comprehend the amendment. The Conservative amendment very specifically says that 1% should be built into the guideline for profit. I think that is very clear. What we are debating right now is the Conservative motion that refers to the profit.

I found it very interesting that Fair Rental Policy Organization put out a survey, I think it was six or eight weeks ago. The first question I asked was "Who did the survey?" because surveys can be done by anyone and if the questions they ask and the assumptions they make are not valid, then the survey has no validity. I established that the survey was done by a reputable firm.

I was looking through the survey and there was one point that boggled my mind. This was a survey of tenants and how they felt about the rental industry. They asked the question, "Do you believe landlords should be entitled to make a profit?" A vast majority of the tenants said "Yes, they should be." Then, an open-ended question, "What do you think this profit should be?" The tenants said 15%. I looked at this and I said, "This is impossible. Tenants are saying the landlords should be making a 15% profit when the only document we have which indicates what type of profit margin there is in the housing industry, the Royal Lepage study, which is several years old, indicates that the profit margin landlords are making is less than half of that.

Then I was talking to our Liberal researcher, who is a tenant himself. He said, "It seems to me very logical that tenants would say this, because," he said, "most tenants think landlords make 40% and 50% and 60% profit." When I thought about it, it is true. Tenants as a group are not aware that 15% to 30% in most cases is going to property taxes. The single most expensive item in their rent is property taxes, yet if you asked --

Hon Ms Gigantes: It is more like 40% now.

Ms Poole: It depends on the scenario. It can be as high as 40% or it can be down at 20%.

Mr Mammoliti: On a point of privilege, Madam Chair: I would just like to know what those tenants meant by the profit.

The Acting Chair (Mrs Y. O'Neill): That is not a point of privilege by any stretch of the imagination, Mr Mammoliti.

Mr Mammoliti: Was it a yearly profit they were anticipating, or was it an overall profit for the building when they decide to sell 40 years later?

The Acting Chair (Mrs Y. O'Neill): That is not a point of privilege, Mr Mammoliti. Ms Poole, please.

Ms Poole: I sincerely doubt that when tenants had this survey and were answering that question that they looked at what a landlord should earn as profit over a 40-year period, as Mr Mammoliti has suggested, and came up with 15%. Tenants are much fairer and much more broad-minded than to say landlords should make a third of a per cent profit per year on a building for all their investment and hard work.

Mr Mammoliti: You are assuming. Answer the question.

Ms Poole: Madam Chair, I wish Mr Mammoliti would refrain from interrupting constantly. It is extremely distracting and it is extending the debate.

The Acting Chair (Mrs Y. O'Neill): Ms Poole, please direct your comments to the Chair.

Mrs Marland: On a point of order, Madam Chair: In the six years I have been here I have not made this comment, but I notice that when the member for Yorkview speaks, his microphone automatically goes on. I think the rules are that the microphone does not go on until the Chair recognizes the speaker has the floor.

Mr Mammoliti: You are going to pick on everybody else now.

The Acting Chair (Mrs Y. O'Neill): That is the rule in the House, I presume. Most rules of the House are carried into committee, so we will take that under advisement. Ms Poole, please.

Ms Poole: The basic problem is that most tenants are unaware of the property tax component. They think that the 25% or 30% or, as the minister says, 40% of their rent going to property taxes, in some cases, is profit, and it is not true. So what we have here is a situation where tenants believe that the profit the landlords are making is an astronomical profit when in many cases it is not true. In some cases, particularly where a landlord has had a building for an extensive period of time, where there is no mortgage, no carrying costs, yes, that landlord should be making, I would not say a substantial profit, but certainly a comfortable profit, what we would probably still say is a reasonable profit.

But I know of many instances where that is not occurring, and the landlord is either not making any profit or the profit he makes is minimal at best. I think there is a recognition that any time you make an investment and you build up a business there is going to be a certain period over which you will not realize a profit. It is part of the investment cycle that there is a period over which you accept losses because you are building up your equity.

But what happens in a province where the buildings are devalued, not only by the recession, which is a given, but also because of a piece of government legislation, Bill 4, which the financial institutions' expert testimony has told us has devalued buildings? It is not a matter of expecting to sustain a loss for a few years until the hard work can pay off and you make a profit. It is a case of these buildings being worth substantially less than the original investment that was put in. Profit is totally discontinued.

So when there is this constant attack on the Conservative amendment for the profit angle, I have a lot of problems with some of the assumptions that are being made by the NDP members about the amount of profit that is going into the housing sector, and about the PC amendment itself and your understanding of it.

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That being said, there are several parts of the PC amendment that I think deserve discussion. One I think we have covered to a certain extent in our previous discussion about the aging housing stock. That is paragraph 6 of the Conservative amendment, which says, "If any part of the residential complex was occupied before the 1st day of January, 1976 as a rental unit, the guideline shall be increased by 2%."

I think what the Conservative motion is trying to redress is the situation where you have an older building which does cost substantially more to operate and yet there is no relief. Quite frankly I feel that the problem was dealt with in a better way in the Liberal motion. I say that not out of any particular wedding to it because it was a Liberal motion. But one of the things people said to us when they came and opposed the way the government had done this section was: "We do not want two guidelines. We do not want the confusion. We want things to be the way they were, which was fairly simple. Tenants are told once a year what the guideline is and then that is the guideline for the year."

I have a real concern when I see four different categories for a guideline, which is why I asked for clarification of what the Conservative amendment really did. If tenants are sometimes confused by rental legislation as a whole, imagine their confusion where they have to determine whether they are pre- or post-1976 and whether they are a small or large building before they know.

The Acting Chair (Mrs Y. O'Neill): In all fairness, Ms Poole, it has been stated this amendment does not refer to the size of the building. I do not think we should continue to speak to that.

Ms Poole: Thank you, Madam Chair, I will certainly take your advice and not speak to that.

My next line, I think, was going to clarify. I know you do not believe that excuse, but it really was going to clarify. Even when we come down to having two guidelines, which is basically what we did in the pre- and post-1976 formulation, I still find that problematic. The four was extremely problematic, but the two is still going to create a certain amount of confusion. I feel a more effective way to deal with it would be in the BOCI formula, to make that BOCI formula a reasonable one which would provide a cash flow for landlords in the older buildings to ensure the maintenance.

The way the Conservative motion reads now is that for newer buildings it would be 55% BOCI plus 3%, and that in older buildings it would be 55% plus 5% added on. Where this becomes particularly problematic is that if you look at older buildings, which are a significant amount of our housing stock, you are looking at an 8.3% guideline in 1992, 8.7% in 1993, 8.9% in 1994 and 8.8% in 1995.

In my opinion, these are based on quite modest assumptions of a 3.7% inflation rate and a 9% increase in municipal taxes. I personally think the latter is going to be much higher. The projected 5.1% increase in earnings is an assumption; we do not know if that will prove true. So it is possible that these guideline amounts might be significantly higher.

My feeling is that if you are talking about having a guideline that is bordering on 9% or 10%, first of all, it becomes very problematic for many tenants on the affordability issue. But second, if you add on to that capital repairs that might take place, possibly an additional 3%, it becomes a fairly significant rent increase as a base.

So while I am sympathetic to some parts of the Conservative amendment, I cannot see how we can support it, because I am not sure it is solving the problem and it is creating new problems in the way it is set out. I do want to clarify for the record, Madam Chair, that I am not saying, "Because you didn't support our amendment, we're not going to support yours." Parts of the amendment do get to the crux of the issue, but other parts of it, I think, are going to create more problems than they are purported to solve.

Mr Tilson: First of all, Minister, I will apologize. I do have this projection of the guideline. You had delivered it to us previously.

I would like to ask a couple of questions on your assumptions. The issue has been raised whether certain parts of it are relevant and certain parts of it are irrelevant.

Dealing specifically with the assumptions used in estimating guidelines for whatever format you are talking about, you talk about a 3.7% inflation rate for 1993-95 for all categories. I do not know how you can possibly do that. It is very difficult to have a crystal ball that can make that prediction. And the forecast increase of 9% in municipal taxes, that is almost impossible to predict as well. I say that really one has no control over what municipal councils do, what particular type of expenditures they get into. It is very difficult for municipal councils, particularly out in the country, where they are responsible for school board taxes, county taxes, all of those taxes which they have no power over.

Furthermore, downloading is continuing. There is no question that there will be downloading over Bill 143 if it passes, particularly in the greater Toronto area. There will be downloading with respect to certain aspects of day care. The downloading is continuing. I know the government spent much time during the last election talking about how terrible it was with all the downloading that was going on with the Liberals, but the fact of the matter is, downloading is continuing. There is no responsible way of predicting what the increase in municipal taxes will be, let alone saying it is going to be 9%.

Regarding the increase in electricity of 15.3%, I do not know how, Minister, you can make that prediction or that assumption when already we have had comments made to us with respect to hydro of up into the forties: 44%, 43%. I cannot recall, but it was certainly substantially higher than 15.3%.

Hon Ms Gigantes: Per year? Somebody suggested per year?

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Mr Tilson: No, the total over a three-year period of time.

Hon Ms Gigantes: Well, you will notice that this is an annual assumption over a three-year period.

Mr Tilson: That may well be. We have seen astounding increases. My point is it is going to be almost impossible to predict that type of increase.

Further, concerning the forecast 5.1% increase in earnings, I look at the minimum wage projections your government is putting forward, which will be substantially higher than a 5.1% increase.

Having heard those comments on municipal taxes, increases in utilities, increases in earnings, having heard the contradictions your government has found yourselves in, how can you possibly make those assumptions?

The Acting Chair (Mrs Y. O'Neill): The minister first, than perhaps Ms Parrish would also like to add, since it was her chart.

Hon Ms Gigantes: Madam Chair, I no longer have my sheet in front of me. I believe it is off being corrected and reprinted and everything. Maybe I will borrow yours.

The Acting Chair (Mrs Y. O'Neill): Yes, fine.

Hon Ms Gigantes: Mr Tilson is talking about the assumptions. He has every right to question the assumptions. The fact is, the assumptions that have been used in the proposals from each of the parties are the same. So if there is a mistake in the assumptions, then that mistake is incorporated into the projections made for the government's proposal, made for the Liberals' proposal, and made for the Conservatives' proposal. What we can say from that is there is quite a range, and certainly the Conservative proposal is at the top end of that range.

If we look precisely at the inflation rate which he questions, again with reason, there is nothing scientific --

Mr Tilson: You made those assumptions.

Hon Ms Gigantes: I will get to part of that, if I may. There is nothing scientific about projections in this area. We all know that. The Treasury has made some assumptions about the annual inflation rate over the period 1993-95. We all know that can be wrong by quite a significant measure. However, again I want to underline that the assumptions we have used in this chart are the same for each proposal. So wherever the assumption is wrong, at least what we are seeing on this chart is the range of effective difference in the proposals from each of the parties.

He speaks to the question of increases in municipal taxes, and that is quite true. This projection is for 1992, so it incorporates an averaging of increases over the last three years of 8.36%, which then has been folded into the 1992 guideline under the existing legislation. Nine per cent may be low, or it may be high, because once the immediate post-election catch-up has been done in municipal tax increases, we may find them dropping down. We do not know.

Regarding the forecast 15% increase in electricity, I would like to draw Mr Tilson's attention once again -- I noted this earlier when I presented this chart -- to the fact that this committee asked for that assumption. We are not talking about anybody's projection of a 40% increase in electricity in one year. I think Mr Tilson has to acknowledge that. There have been some guesstimates about long-run projections over several years for electricity costs, but certainly not in that range. If we assume 15%, we have done so based on the outside projection of a multi-year increase in electricity rates. This committee read those projections as perhaps indicating a 15% increase. I firmly believe that those are too high.

Be that as it may, a 5.1% increase in earnings, as I pointed out earlier, is another unpredictable. It may be high. However, I will stress again that if it is high for one party's proposal, it is high for them all. What we arrive at is a range, and certainly there is every reason to believe that the ranges we are working at will be higher than the average rate of inflation, given each of the parties' proposals.

On top of that, and I have to stress it again, there is acknowledgement and provision in the legislation for landlords who have eligible capital requirements over the guideline to make application for those requirements.

The Acting Chair (Mrs Y. O'Neill): Ms Parrish, do you have anything to add?

Ms Parrish: No, I think the minister has really covered it, that this assumption on hydro was given by the committee and that is why we put it in. I personally do think that it is a little bit high, because we are assuming it will be 15% every year for three years. I think that is probably high. The taxes essentially come from the previous three-year average, assuming that it would be higher than the past three years. So, that is essentially where we are getting the numbers from, 3.7% comes from the long-term Treasury forecast, which is actually quite similar to the federal forecast. There is not a big deviation.

Ms Poole: Might I ask just a point of clarification?

The Acting Chair (Mrs Y. O'Neill): This is a subquestion?

Ms Poole: Yes, to Ms Parrish. Where you have said that 9% increase in municipal taxes is actually slightly higher than has been the case for the last three years, have you taken into account the enormous toll that the increasing welfare rolls and social assistance rolls and the effects of the depression -- not recession -- that we are now engaged in in Ontario, the effect of all these factors on the municipal tax load? The fact is that most likely 9% may be a grossly underestimated amount over this year and the ensuing two years.

The Acting Chair (Mrs Y. O'Neill): I think the minister made comments. Do you want to make further comments on that, Minister?

Hon Ms Gigantes: No. There is nothing to make us believe that 9% is the accurate figure, but it does not seem unreasonable given the immediate past and what we know of the immediate future.

Mr Tilson: I appreciate the comments that are being made. I think we have just established the faulty aspect of these assumptions -- that we do not know. If we had a crystal ball as to where we are going till 1995, it would be wonderful, but we all know that there could be unforeseen events that may just cause municipal taxes and other things to skyrocket out of sight. The difficulty I have when we talk about these assumptions and the uncertainty of them, which is being admitted by the minister, is that if the government is wrong in those assumptions, the landlord will have to bear the loss because of the strictness of these guidelines. The landlord will have to bear the loss if these assumptions are incorrect. There is no question about that.

If one acknowledges that these assumptions could be wrong, could be substantially wrong, could be partially wrong, I would therefore assume that because of that someone will have to bear the loss, and it appears that is going to be the landlord. The sections you have provided subsequently will not provide for those errors. My question for the minister is, will you perhaps consider a further amendment to allow for the errors in assumptions that the government may have made?

Hon Ms Gigantes: I am really quite amazed at what Mr Tilson is suggesting, I really am. Mr Tilson understands the basis of the building operating cost index at this stage, I hope. He knows that it reflects actual figures. It reflects the actual costs borne by those who are operating rental buildings in Ontario.

Mr Tilson: You are predicting the future, Minister. These are not actual but projected figures.

Hon Ms Gigantes: We are not setting guidelines here.

Mr Tilson: These are projected assumptions.

Hon Ms Gigantes: He understands that each year the guideline is reconstructed on the basis of the actual costs over the previous three years rolled into averages, weighted in a way that can be questioned, but the changes and the absolute figure for the guideline each year is based on actual costs.

He talks about our making mistakes in projections. The only reason we have provided projections is to show that when you put in your amendment you are whacking it to the tenants, at a rate that I do not know you were aware of when you put in the amendment.

We want to show the difference between the government proposal, the Liberal proposal and your proposal. Whatever you assume about actual costs that will be incorporated annually into the BOCI, there is going to be that range of difference: yours is going to be on the high end, ours is going to be on the low end, and the Liberals' will be in the middle range of these ranges.

I suggest to you that of all the proposals, ours most accurately reflects actual experience in the market over the last several years and what information we can garner from external sources. I am very annoyed, actually, to hear Mr Tilson suggest that we are setting guidelines by providing an estimate. We are not setting guidelines. Those guidelines, under this legislation, and he understands it, get reset every year based on actual costs.

The Acting Chair (Mrs Y. O'Neill): Mr Tilson, we are past the hour of 12 noon. As you know, we usually recess till 3:30 at this point. If you want, to, sum up in a minute or two, because I think some people want to go.

Mr Tilson: No, I would be prepared to continue at 3:30, Madam Chair.

The Acting Chair (Mrs Y. O'Neill): All right. Thank you, Mr Tilson, you will have the floor at 3:30. The second person on the speaking list will be Ms Poole.

The committee recessed at 1202.

AFTERNOON SITTING

The committee resumed at 1557.

The Acting Chair (Mr Abel): Mrs O'Neill, I believe you have a motion you would like to move?

Mrs Y. O'Neill: Yes. I hope this is according to the rules, Mr Chair, because I know we are in the middle of discussing an amendment of the PC caucus. Is it correct? There is no problem?

Clerk of the Committee: We have not resumed that discussion yet.

Mrs Y. O'Neill: What I would like to do then, Mr Chair, is offer my resignation from the steering committee of the general government committee, in that my other duties seem to have overtaken me. I would like to place in nomination for the Liberal membership on the committee the name of Ms Dianne Poole.

Ms Poole: This comes as a complete surprise to me, but I am honoured and privileged to take that position.

The Acting Chair (Mr Abel): I am sure a pleasant surprise, Ms Poole.

Ms Poole: No doubt.

The Acting Chair (Mr Abel): All those in favour? Opposed? Carried.

Motion agreed to.

Mrs Y. O'Neill: Thank you very much, Mr Chair.

Section 12:

The Acting Chair (Mr Abel): I believe that when we adjourned we were debating the PC amendment by Mrs Marland. Mr Tilson had the floor. Apparently he is not here.

Hon Ms Gigantes: Mr Chair, while we wait for Mr Tilson, could I indicate to members of the committee that we have tabled a revised projection of guidelines that would be the result of (1) the government's Rent Control Act amendment, (2) the Liberal amendment on the guidelines, and (3) the Conservative proposal, in addition to communications to members of the committee in response to questions that have been raised concerning the training of staff for the implementation of the rent control bill and information concerning job specifications for staff.

The Acting Chair (Mr Abel): While we are waiting for Mr Tilson, would you like to speak a little on what you have tabled?

Hon Ms Gigantes: No, thanks.

The Acting Chair (Mr Abel): We will move on to Ms Poole.

Hon Ms Gigantes: Confess, you have nothing to say.

Ms Poole: Thank you for remembering that I was on the list. Unfortunately, it was so long ago that I am not sure what it was I had to say. I will pass for the moment.

Mrs Marland: Mr Tilson is trying to return to the committee but he has a conflict with another committee at this hour this afternoon. I know he had not completed his comments from this morning.

I wish to speak further on the amendment I have placed because of the significance of dealing with this word "profit." It seems, Mr Chair, from what I heard in response to my comments this morning, that the word "profit" is almost a dirty word with the government. It is as though it feels that socialism is the only way to go and that the only thing that will work in Ontario is when everybody is being looked after by the state. I say that in all seriousness, because when we have a member of this committee who makes the kinds of statements that have been made in both the last meeting, last week, and the meeting this morning, I think it is indicative of what serious trouble we are in with this piece of legislation, and particularly with the socialist government proposing this legislation.

The member for Yorkview is not here at the moment and I do not like to respond to a member who is not in the room at the time. However, what I am responding to is actually the comments he made last week, which are on the record in Hansard.

The Acting Chair (Mr Abel): Excuse me, Mrs Marland. Is this in reference to the proposed amendment?

Mrs Marland: My proposed amendment, yes.

The member for Yorkview said last week, "If the landlord does have to dish out some money out of their own pockets, I do not have a problem with that."

He also went on in another sentence to say: "We have heard consistently from landlords on this committee, telling us that they want to make a profit. We have toured the province, and they have told us consistently that they want to make a profit; they want to make a long-term profit."

He also said: "I am glad that everybody is watching, because I have not hidden my feelings from day one. If the landlords have to pay a little bit out of their pockets, so what? In the long run, they are going to be making a profit in the building. The tenants know that. The landlords know that. Everybody in Ontario knows that."

The relevance of those comments to my amendment is where my amendment is suggesting that the part of the guideline allocated to profit be equal to 1%, and this is dealing with the guideline for the rent control index.

If we have a socialist government in Ontario that thinks profit is wrong, is evil, that where people make investments they should not be allowed to have profit, then what we are going to see happen in Ontario is a very rapid decline in the future of this province, a very rapid decline in any investment in this province at all, either by the people who already live here or by the businesses, commerce and industries that are already doing business here.

It would not be so serious if we did not see this in every aspect of the bill. This piece of legislation, Bill 121, is unbelievably directed against the very bill it is supposed to protect. It is supposed to be an An Act to revise the Law related to Residential Rent Regulation. It is supposed to be a bill in the interests of people who live in rental accommodation.

When the member for Yorkview said this morning something about "the peasants they are talking about," I took strong exception to his referring to tenants as peasants. Those are his words, not mine. What really concerns me is the mentality and the philosophy behind legislation that pretends to protect tenants. In fact, in the long run, tenants are going to be the losers.

The reason tenants are going to be the losers is because if we do not allow people who own property to have a reasonable profit, why would they retain ownership in that property? Even more gravely of concern to me is how we can encourage more people to invest in rental properties to accommodate the ever-increasing number of people who cannot buy their first homes in this province and are dependent on rental accommodation.

With a growing population from all kinds of causes and sources, we have to provide housing in this province. We have a Minister of Housing who thinks it is okay if people live in rental accommodation. She said in response to one of my questions in estimates that a large percentage of people live in rental accommodation -- I think the figure she gave me in the estimates was actually 40%, though I think she has since changed that figure. In any case, if we are talking about a large percentage of people in rental accommodation who may never now be able to afford that first home purchase, and as this Minister of Housing has said that she is not interested in helping those first-home buyers, the question is, where are these people going to live?

There are no government incentives planned, apparently, because I asked three times in estimates whether this Minister of Housing had any plans to help people buy their first homes and each time the answer was worded differently, but each time the answer was, really, was there a necessity to help people buy that first home? I feel very strongly that there are government incentives that do not have to end up costing the government money but can help facilitate people acquiring their first homes.

So if this is the situation, where the rental market is bound to grow, then we are going to have to look for a growth in investment in rental accommodation. When we know that the financial institutions are not now willing, with this piece of legislation, to finance apartment buildings, if we continue with the legislation in its present form, we are not going to have any new rental accommodation built, we are not going to have people wanting to invest in the existing rental accommodation, and these tenants, whom this socialist government purports to protect through this legislation, are the people who shamefacedly are going to be betrayed.

This piece of legislation is a pure betrayal of those tenants' rights. It is a betrayal because while the member for Yorkview talks about Robin Hood, robbing the rich to pay the poor, what really is happening is that those people who have no other alternative to rental accommodation are first of all going to be out of luck for new units. The units they are now living in are not going to be maintained to the standard that in my opinion tenants have a right to.

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On top of that, if we are talking about the people who have made that initial investment, I think the point the government chooses to ignore here is that we are not talking about the large conglomerate ownership of multi-unit apartments. We are talking a lot about those people who have invested their lifetime savings into ownership of apartment units as their own security for retirement, and possibly to move into one of the units themselves, knowing that every single penny they scraped and saved to invest in that building was secure.

I am older than you are, Mr Chairman, but I think most of us in this room can appreciate the fact that there was never anything safer to invest in in Ontario than land and buildings, way better than stocks, shares or any other alternative venue. If you invested in land in this province, especially with an income-generating building for rental housing on it, you were safe. What is happening with this legislation is that you are not safe, because this legislation says you can even have your rent reduced.

Never mind us talking through this amendment I have on the floor now about the rent control index; we also know that whatever rent is allowed by the government, it may well be that an individual's rent may even be reduced as part of another section.

The member for Yorkview talks about his constituents being glad that he is saying what he is saying in this committee; he said this morning his constituents were glad. He said last week, "But I will tell you, the tenants in my riding want to hear from this idiot," referring to himself. I found that really significant. I hope the tenants in his riding are hearing from him because if they are they will know what to do at the next election if they want to have a future in rental housing in this province.

I think his words this morning were, "kicking and punching tenants for more money." I think he should talk to those tenants. I found it very significant this morning, as a matter of fact, when the member for Eglinton mentioned the poll that had been done --

The Acting Chair (Mr Abel): Mrs Marland, could you please restrict your comments to the motion. It would appear you are slightly straying from the discussion on the motion. I would appreciate it and I think it would be somewhat more expedient if you would keep your comments to Bill 121, subsection 12(1), as amended, please.

Mrs Marland: Mr Chairman, I am very happy to keep my comments to the motion. There was a little more latitude this morning, I suppose, when the member was allowed to talk about Robin Hood.

When you interrupted me in mid-sentence, I was about to tell the Chairman that this morning, when the member for Eglinton referred to a poll of tenants that had been done, those tenants in the poll actually agreed that landlords should be allowed to make a profit on their investment. Is that not interesting? Mind you, I am sure the rebuttal from the government members will be: "That was a skewed poll. You can skew a poll to say anything you want it to say. If you asked my tenants, they would not think the landlord had to make a profit."

I have talked to my tenants and my tenants want the quality of life they presently enjoy in their well-kept buildings. They want the security of knowing that if a major piece of work has to be done, a major project undertaken in their building, their landlord will be able to do that work because he will be able to afford to do it.

I know when we talk about profit -- I am asking for 1% in my motion pertaining to the guideline -- my tenants are saying: "We want the buildings we live in, which are our homes, to be maintained. We want that to happen, and we understand it will only happen if the government is just and fair to the person who owns my apartment building."

Justice and fairness do not come from a member of the government who says, "If the landlord does have to dish out some money from his own pocket, I don't have a problem with that." That is not justice and fairness. It is not just and fair to say, "If the landlords have to pay a little bit out of their pockets, so what?" What kind of elected people do we have in the government party of this province who speak this way and think the person who has invested in that property does not have a right to a return on his investment?

I am talking about 1%. I am talking about the loss in real value of millions of dollars in this province in these apartment buildings. Under this draconian legislation, that real value is diminished to where those buildings are virtually worthless. If you think that is an exaggeration, go and talk to your bank. Find a realtor who has a building for sale and then go to the bank and try to get a mortgage on that building. You will find, with this bill almost coming down to its grand finale, those financial institutions are not interested in lending you money. Maybe there are people wealthy enough to invest in apartment buildings without mortgages, but I do not know any. I do not know the kind of people who either have that money or who, in their right minds, would make that kind of investment today. Everybody is dependent on a mortgage, as are most of us when we buy our homes.

Your government is saying through this legislation, "Go ahead, invest in real estate, provide housing for people who can't afford to buy a house or who may choose not to." Not everybody chooses to buy a house. A lot of people are at the point where they have actually sold their houses because they cannot afford the municipal taxes on their fixed incomes and, alternatively, have moved into apartments. Go ahead and say to the people who are dependent, for one reason or another, on rental accommodation, "We think, as a government, your landlord shouldn't make a profit on his investment." Go ahead and try to explain that to the people living in those buildings. Go ahead and try to explain to anybody why "profit" is a dirty word in Ontario.

This morning the member for Yorkview talked about Robin Hood and that it has to stop. What an insult to people of intelligence to make that kind of statement when we are talking about 1% profit on an investment, or any profit that is fair and reasonable on investment. His mentality in making that statement reflects on what, thankfully, has just stopped in the eastern European countries. I thought communism had ended. I thought we were in a world today in Canada, and particularly in Ontario, where we were going to say to the world: "We'll look after the people who need to be looked after. We'll protect the frail, the elderly, the infirm and the people who for one reason or another cannot afford to meet their housing needs."

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Our party is quite willing to do that through a direct shelter subsidy program, which we have asked this Minister of Housing to look at. In response to questions, she tells us studies exist that prove shelter subsidy does not work. I have yet to receive a copy of those studies I was promised.

In speaking to this motion this morning, the member for Yorkview said, "We've got to stop robbing the poor to pay the rich." Who does he think is going to provide the housing of the future in this province? Who is going to provide the jobs and the employment opportunities in this province, if we do not allow people some return on their investment? That is what this amendment is all about.

Mr Mammoliti: On a point of privilege, Mr Chairman: I am continually being misquoted here. The impression the member is trying to leave is that I do not want landlords to make a profit. I did not at any time say that today. I said I agree with profit and I believe I put it this way: I am going to continue saying that, instead of $12, perhaps somebody should get $10 and not be so greedy.

Second, I said this morning -- and I believe I responded to something Ms Poole was saying -- that when I asked continually in the hearings how much profit landlords want to make, nobody responded. The member for Mississauga South continually gives the impression I said something I did not say.

The Acting Chair (Mr Abel): That is not a question of privilege.

Ms Poole: On the same matter, I just wanted to point out again this afternoon to Mr Mammoliti that the Conservative motion is actually very specific about the amount of profit. They have asked that the guideline have built into it a 1% component for profit, as was the case under the Residential Rent Regulation Act. That is quite specific, and going beyond that is unnecessary at this time.

Mr Mammoliti: That has nothing to do with my point of privilege.

Mrs Marland: The member for Yorkview says I misquote him. I am reading from the Hansard preliminary transcript for the standing committee on general government, Rent Control Act, 1991, Thursday 28 November 1991, afternoon sitting:

"Mr Mammoliti: If it is not, if the landlord does have to dish out some money out of their own pockets, I do not have a problem with that. I have said that from day one. We have heard consistently in this committee, from landlords -- "

Then there is an interjection by myself where I said, "Welcome to Russia."

"Mr Mammoliti: She is talking out of her ear again, Mr Chairman. We have heard consistently from landlords on this committee, telling us they want to make a profit."

Hon Ms Gigantes: On a point of order, Mr Chairman: This really does not advance the discussion on the amendment before us. I wonder if we could not focus on the amendment before us.

Mr Mammoliti: Stop worrying too much about me, Margaret.

Mrs Marland: I think it is very curious that the minister interjects on my response to the member of your --

Hon Ms Gigantes: Mr Chairman --

Mrs Marland: Excuse me. Who is chairing this committee?

The Acting Chair (Mr Abel): Perhaps I could resolve this problem.

Hon Ms Gigantes: Mr Chairman, I raised a point of order. I did not make an interjection.

The Acting Chair (Mr Abel): That was what I was going to say. If I could, hopefully, resolve this problem, it does appear that we are straying somewhat. I think it is very important that we keep our comments and suggestions to your amendment.

Mr Tilson: On a point of order, Mr Chairman: The subject before us is an issue of profit. That is one of the major issues we are suggesting in this amendment, and there have been comments made by a member of the government party on this committee which deal with that subject of profit. I believe it is perfectly in order for Mrs Marland to deal with that issue in her attempt to try to convince the government to support this proposal for amendment on the importance of profit in the survival of the housing industry in this province. That is why she is going through this exercise. Therefore, Mr Chair, I would submit to you that she is perfectly in order in her presentation to you.

The Acting Chair (Mr Abel): Thank you for your contribution, Mr Tilson; however, Mrs Marland is quoting Mr Mammoliti from his comments made yesterday. That is not in reference to this amendment.

Hon Ms Gigantes: It was last week.

Mr Tilson: Mr Chair, the subject deals with the issue of profit, and that is what Mr Mammoliti has been referring to. He has been referring to the subject of profit, and that is exactly why she is emphasizing these types of remarks that have been coming from the government side. It is perfectly in order for her to refer to comments that were made this morning, last week, several weeks ago or last year. It is done all the time. That is why we are trying to convince the government to change its position on this. It is in order, Mr Chair. I will submit it is in order because it is dealing with the subject of profit and the government's position on the subject of profit.

Mr Marchese: On a point of compassion, Mr Chair, for me really: Not to diminish anything the member wants to continue to say -- I urge her to continue -- it is just that I do not believe it is fruitful for her to continue to diminish another member. In so doing, in my view, she diminishes herself. It is undignified to continue to do that. It is not intended through these comments to not allow her to continue, but I would appeal to her not to continue every other moment to mention the other member.

The Acting Chair (Mr Abel): Thank you, Mr Marchese. Based on the information that has been presented, Mrs Marland, your comments are in order. However, I would again suggest that for the sake of expediency, you please keep your discussions limited to your amendment and not to comments that others have made in the past.

Mr Mammoliti: On a point of order, Mr Chairman.

Mrs Marland: Oh, this is great.

Mr Mammoliti: If her comments are in order, Mr Chair, I would suggest that she read the particulars, perhaps more specifically where I said that even though the money is coming out of their pocket, it is an investment in the long run.

The Acting Chair (Mr Abel): Thank you, Mr Mammoliti. Mrs Marland, please continue.

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Mrs Marland: Mr Chairman, I would have continued had the member for Yorkview not interrupted on a point of privilege. His privilege was that I was misquoting him. That is why I am reading directly from Hansard, so that he cannot challenge me on misquoting him. I think the problem with this committee is that, with the exception of two of us, everybody has been here for one year and they have not yet apprised themselves of the rules of procedure. I know quite well that I can talk about anything related to this motion dealing with the subject of profit. That is simply what I am doing, and I am going to continue. Thank you.

To continue:

"Mr Mammoliti: We have heard consistently from landlords on this committee, telling us they want to make a profit. We have toured the province, and they have told us consistently they want to make a profit; they want to make a long-term profit; they want to retire to Florida; they want to retire to Europe; they want to retire and they want to make a hefty little profit on the side."

This is the comment of Mr Mammoliti. As he has asked me to read this, he goes on: "I am glad that everybody is watching...."

I actually read this before you came in this afternoon, Mr Mammoliti, but as you are concerned about me misquoting you, I will continue to read it for your own edification:

"Mr Mammoliti: I am glad that everybody is watching, because I have not hidden my feelings from day one. If the landlords have to pay a little bit out of their pockets, so what? In the long run, they are going to be making a profit in the building. The tenants know that. The landlords know that. Everybody in Ontario knows that."

If that is the case, and this member for Yorkview really believes that, then why would he be opposed to my amendment? It is very straightforward. If he believes what he says -- and I realize he has difficulty recalling what he said, which is why I have the Hansard in front of me --

Mr Mammoliti: On a point of privilege, Mr Chairman: How can she possibly know what I think? I believe there are provisions under the standing orders. How can she possibly come out and say what I am thinking? I do not think she can. I would like you to rule on that, please.

The Acting Chair (Mr Abel): It is true that it would be very difficult to guess what anybody is thinking. Mrs Marland, if you would --

Mrs Marland: Fortunately, Mr Chairman, I do not have to guess. I have the Hansard record in front of me, so I do not have to guess what the member for Yorkview thinks. I do not have to guess what he says. It is here in Hansard.

The minister said this morning, interestingly enough, that this section is essentially what this bill is about. I could not agree more. This bill is about taking the right of investors away. It is about taking away the right of tenants to have well-maintained buildings. It is about the philosophy and thinking of this socialist government that everybody else should pay, to use the words of the member for Yorkview, "Robin Hood." I can hardly wait to read his actual words in today's Hansard from this morning's meeting, because I would not want to be accused of misquoting him, but what he said this morning about Robin Hood was very relevant to his argument and will make very significant reading.

He also said this morning that an investment is an investment. He referred to buying a car and then said that maybe a car is not a good investment. I wonder -- I do not know, of course -- whether this member, who is the only person from the government whom we have heard speaking on the issue of profit at the moment, understands what profit is. I do not know. Maybe he could explain to me why he is now saying this afternoon that he is not against the landlords making a profit.

I would like to feel assured that he knows what the word "profit" means, and that when I ask for 1% profit in the guideline for the people who own these buildings -- and he says now that he has never said he was opposed to landlords having a profit. If he is not opposed to landlords having a profit, then maybe he is in favour of them having 0.5%. Maybe he has some reason he cannot give them 1% profit.

Mr Mammoliti: I am opposed to greed.

Mrs Marland: He talks about his regard for his constituents who are tenants, but it would not be apparent that he would care enough about his tenants to not want them to live in slums. I want to tell you that I care enough about my tenants that I want them to be protected from what will be the inevitable outcome if this piece of legislation proceeds. I simply say to you, Mr Chairman, that this syndrome, this way of thinking of the socialist government against those people who own property, is sick. It is totally sick and it is totally unjust, because if the government thinks it is the alternative to providing housing for the people in this province, an alternative to the private investor, I would like to ask this government, through the Minister of Housing, how it will provide enough rental units in this province without tremendous capital investment by the government, if the private sector is put out of business by having to withdraw from ownership of these units with this legislation.

The Acting Chair (Mr Abel): Thank you, Mrs Marland.

Mrs Marland: I am asking the minister the question, Mr Chairman.

The Acting Chair (Mr Abel): Minister, would you like to respond to that?

Hon Ms Gigantes: Yes, I was next on your list, I believe, Mr Chair. Thank you.

I would just like to go back for a second and suggest to the member for Mississauga South that perhaps if she read some of the letters from tenants who have, under the existing legislation, gone through year after year of double-digit rent increases, sometimes in the 20% range -- in the riding of Yorkview and many other ridings around this province, but Yorkview certainly has had its share of difficulties in the letters that I have to sign off to tenants -- she would appreciate the passion with which Mr Mammoliti speaks on behalf of the needs of the tenants in his area. I also found it interesting; I have always thought of Robin Hood as a robber with a redistributive bent, but I have never heard anybody call him a communist before, and I do not think George qualifies for that ignoble name at all.

Mr Tilson: He sure ain't Robin Hood either.

Hon Ms Gigantes: I should perhaps tell the member for Mississauga South that when we had a discussion during the estimates of the ministry a few weeks back about the plans of the Ministry of Housing to assist people acquiring their first homes, I did indeed indicate that we did not have plans to develop programs to assist people to buy their first homes. What I was not aware of then -- and it is a matter of my unfamiliarity with the full range of programs that affect housing, having started out fairly recently in this portfolio, and I apologize to the member for that -- was that the Ministry of Revenue has a program called the Ontario home ownership savings plan. It was begun in 1988 under the previous government. There have been 180,000 plans opened, and it provides over a 10-year period a tax credit of $1,000 a year for people who are saving up to buy their first homes. Some 85,000 homes have been purchased by first-time buyers under this program.

Mrs Marland: On a point of order, Mr Chairman: It is interesting that you do not rule that the minister is not speaking to the question of profit.

The Acting Chair (Mr Abel): I have been listening very intently, and she was responding to your comments and statements. Continue, Minister.

Hon Ms Gigantes: In fact, that is all I had to bring to the attention of the committee on that point, but I did want to indicate to the member for Mississauga South that there is an existing program which has obviously benefited a lot of first-time home buyers.

On the question of profit and the small amount of 1% to be added to the guideline to be paid by all tenants in the province each year proposed by the Conservatives, for the Conservatives to suggest that this addition of 1% and the designation of it within the guideline as profit -- that does not mean it is the only profit available to a landlord. For them to put forward the argument such as we have just heard from the member for Mississauga South, that without the addition of this extra 1% within the rent control guideline there would be no profits available at all to landlords in this province, is absolutely ludicrous.

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The effect of the addition of 1% will be to increase the rents paid by all tenants in the province. It will ensure that there is an extra part within the guideline which will increase, without any justification from the landlord about why it should increase. It will not have to apply to any particular rental situation or any particular renovation needs or any particular maintenance needs. This is just another bit of icing that the Conservatives wish to place on the guideline cake for landlords.

We can find no justification for doing that. For them to suggest that putting within the guideline this 1% they are proposing is the only way that poor landlords in Ontario are going to be able to subsist at all in making profit, I mean, where have they been getting their profits up to now under the guideline? It is just nonsense. Most landlords do not apply for over-guideline increases during the year. Since 1986, I believe, the pattern has been that about a quarter of the units in the province are the subject of an application by landlords for above-guideline increases, which means that the other landlords in the province simply have not felt the need to go above guideline in that particular year, so for her to suggest that they have been starved for profits out there and that they are barely hanging on, that defies common sense. We reject the notion of the addition of this 1%. We reject the categorization of this extra 1% as a profit margin for landlords as if there were no other, and we reject the total proposal contained in this amendment.

Ms Harrington: There are several points of clarification that I feel are necessary. A lot has gone by in the interim. The very first and I think most important thing that I believe the member should be aware of, and I would hope to clarify for the opposition, is that we have been through this in committee over the past year, I believe since last January. That is why we are bringing this bill in. I think you will remember the Residential Rent Regulation Act. It was a piece of legislation that was not working for the tenants and was not working for the small landlords.

What we have said over and over again, if you would care to look at the transcripts of this committee -- I hope you will believe it; I think many people do -- is that we want a reasonable profit for landlords. Landlords understand that they have to be in business. The government understands that the private sector rental market is a very important part of affordable housing in Ontario. I really hope, because the previous speaker, the member for Mississauga South, has not been with us a long time, that she would understand the whole reason for us going through these hours together is that we want a workable piece of legislation for the next four years and more ahead.

We looked at the existing legislation. It was not working well. It was not being fair to people, whether landlords or tenants, across this province. If you look at the headlines of types of speculation in the housing market over the past many years by the developers across Ontario, besides that point of view I think you will also understand the tenants' point of view, that there were many inequities that need to be addressed and that some of these could be addressed through legislation.

I hate to even touch on a couple of other things that she talked about. Obviously many of us who are home owners or property owners or even landlords understand that when you own a building, as a landlord you are there for the long term. You are there providing a service for your clients, who are the tenants, and that you invest in the building. Many of us who are home owners understand that as well, that it is a long-term investment and that you do put money out of your pocket from time to time, as Mr Mammoliti was quite reasonably saying. It is a give and take and a flow of investment over several years. Many of us have several investments, if not many, and understand.

A very important part of this legislation, which I believe Mrs Marland was trying to get at, is protection for tenants. Let's look at what her amendment is doing. The Conservative amendment would add another 3% to what people would be paying in rent increases. In this next year, 1992, how many people does the member know or do we know who have a guaranteed raise in their salary or job or whatever their source of income, of 6%? We just heard in the House this afternoon the difficulties in social assistance. We know that across this province there are going to be no more increases in salaries of 6% or more. That is my impression and I think it would be a feeling that most reasonable people would get, that looking ahead, times are going to be very tough. What the Conservative amendment we are debating right now would do is to have a 9% increase in the rent across this province, and then the landlord could apply for extraordinary operating costs above that of 3%. So we would now have a 12% increase that tenants could be faced with. This is what Mrs Marland is putting forward.

That is the type of protection, I gather, that she is thinking of in these difficult times ahead. What we in the government are trying to do is to protect the tenants so they have some stability in their rent increases, to make it reflect the costs of doing business. I think that is clearly what the minister has put forward in the papers today, the guidelines that she has explained, the costs of doing business. That is what we call justice and fairness. That is what we are trying to do.

I just want to reiterate and have it on the record that landlords have to be able to make a profit. That is the other side of that equation and that is reflected in the 6%. If that is not a more-than-generous increase this next year, I do not think anyone in this province would deny that, including the landlords I know in my community. I hope that would be of some help to the people here.

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Mr Tilson: There have been some interesting statements made by both the minister and Ms Harrington with respect to the subject of profit.

What the minister said this morning, as I understand it, is that profit would be obtained on the increase of the value of the building over a period of time. I believe that is what she said. That seemed to be her exclusive area with respect to profit. If she wishes to elaborate on that, that is fine, because this is one of the questions where we have been trying to determine from the government to exactly what sort of profits, if any, a landlord is entitled to receive.

I am not going to deal with the Robin Hood issue. We have had enough of that. But at the same time Ms Harrington then simply said that with regard to the increases that are being allowed under this bill, there is plenty in there for profit. That is not how the calculations are being determined as to the percentage increases. There is no mention of that at all. That is not what it is for, at least on the submissions that have been made by both ministers, Mr Cooke and Ms Gigantes, over a period of time. With respect, Ms Harrington, that is not what you have been saying.

The emphasis does seem to be on the increase of value over buildings. That was reiterated by the minister this morning and further elaborated just a few moments ago by Ms Harrington who said, "Well, it's understood that landlords would be owning their buildings over a period of time." The difficulty I have with that is, who says they are obliged to own their buildings over a period of time, and what does a period of time mean? Should it be a year, two years, five years, 10 years? What rules are we setting? Surely we are not setting down rules of, "Well, you've got to own your buildings for a period of time."

We are hearing more and more facts that are being revealed in the press and elsewhere and in correspondence that I am receiving -- and I am sure you are all receiving similar correspondence -- on the values of buildings, that are falling for various reasons. We will not get into our political wrangling over why they are falling, but they are falling. That is the fallacy, as I see it. The government's position is that this is where the landlords are going to get their profit, that they must hold on to their buildings for a longer period of time and that maybe they will get a few dollars and maybe they will not.

There was a landlord in the audience this morning, for example, and I think he is still here, who spoke to me during the break and made the observation that if you had a $1-million building, 22 units, and you put 25% down, if you follow the government's rationale you are not going to make any profit on that because you are not going to be able to do it for a longer period of time. He says he could take that money, put it into something like second-mortgage money and receive, perhaps not now but earlier in the year, at least a 17% increase and he is right. I think you would have difficulty receiving 17% on second mortgages now, depending on the situation, but certainly earlier in the year you could. That would be $42,500. You cannot get that now.

Again it gets back to the incentive. What sort of incentive is the government giving to encourage people to get into the housing market, to build? It gets back to the question Mrs Marland asked the minister and has yet to be answered, which is, "How are you, the government, going to provide rental accommodation?" Answers have been given in the House: "We're going to have so many units of non-profit housing and we're going to have so many units of co-op housing." At the same time we are hearing statements from the Treasurer that times are tough, that we have got to hold the line now, that maybe things are not quite as hopeful. Where is the money going to come from? The buildings are not being built. There is not one substantial housing accommodation being built in this province, with the exception of non-profit and co-op housing, and that tells you something. That tells you a lot, that the government is the only one that is getting into it. It does not pay for private enterprise to do it, because there is no profit to it.

I have a number of other areas I wish to deal with, but it is a question that Mrs Marland asked and that I would like the minister to clarify, to respond to the question that both Mrs Marland and I have asked. She was away and I will repeat the question: How are you going to provide rental accommodation to the public of this province?

Hon Ms Gigantes: I will just take a moment. Mr Tilson seems to be under the impression that it is the purpose of this government and the purpose of this bill to maintain high prices for land values, to maintain high values for rental buildings, to maintain high profits for landlords and to maintain a system of high rents. He has got it wrong.

Without going into a long and detailed debate about what is currently happening in the housing market -- I do not think Mr Tilson is nearly so naïve as the questions he raises in this discussion -- I can tell him that this is the flexible method of controlling rents and the rate of increase in rents. That is all it purports to do. That is its purpose. It works in a system which we believe provides fairly for the general level of costs experienced by apartment owners. We do not guarantee profits to anyone.

I do not know what you call the opposite of a socialist. If a socialist is somebody who wants to protect tenants in this instance, then what do you call somebody who wants to protect landlord profits and guarantee every owner of every apartment building a certain level of profit? Maybe Mr Tilson has the answer.

Mr Tilson: The question that was asked had to deal with the whole issue of encouraging, of getting this housing market back where it was.

Hon Ms Gigantes: We do not want it back where it was. Back where it was people could not in fact --

Mr Tilson: There are no new housing developments being built in this province and you know it. The only housing developments are non-profit.

The Acting Chair (Mr Abel): Let's have some order here, please.

Hon Ms Gigantes: People still cannot afford the rents.

The Acting Chair (Mr Abel): Order, please. I will not allow a one-on-one debate as such. I believe, Mr Tilson, you had the floor. Would you please continue and we will give the minister time to respond.

Mr Tilson: The question was asked in the spirit of how new housing accommodation is going to be built, how existing housing accommodation is going to be renovated and maintained.

We have heard weeks and weeks and months and months of testimony that landlords, under this legislation and under Bill 4, simply cannot do it. They simply cannot financially operate in that fashion. In other words, the profits are not there. The incentive to enable them to do that is not there.

The Ministry of Housing has produced facts that there is no new housing accommodation being built in this province. There is none. The only housing accommodation of any substance is being built by the government, which is non-profit housing and co-op housing.

At the same time the landlords are making these statements -- to be fair to Ms Gigantes, I am not so sure she did -- certainly Mr Cooke has stated the number of non-profit housing units that the Ministry of Housing intends to be allocating over this year and next and it is substantial.

My question is, in light of the many comments we have heard throughout these hearings, how are you going to provide -- I am not talking about the issue of profits. The whole purpose of this motion is to create some sort of incentive to get developers and to get people in the private sector to build housing, because I know the government cannot afford to do it, the government does not have the financial resources to do it. The deficit has gone as high as it can. It cannot go any higher.

So again, my question to you is, in light of the recession worsening and in light of the fact that no new private housing is being built for rental accommodation, how are you going to provide the badly needed rental accommodation that is needed in Ontario?

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The Acting Chair (Mr Abel): Thank you, Mr Tilson. Minister, do you wish to respond?

Hon Ms Gigantes: Just very briefly. Across Canada there is practically no residential construction going on. That includes private residential construction for homes and it includes rental residential construction. There is practically no condominium construction going on compared to the levels we saw in the late 1980s.

There is market distress and there is tenant distress also. The reason we have condominiums available for rental with nobody in them and landlords who have to lower their rents below the maximum legal rent under the current legislation is that people in Ontario cannot afford to pay the rents. Some of those people hopefully will quickly be back at work and earning more than they are able to earn now. Some of them have to live on assistance from this government and some of them are living on unemployment insurance cheques. Times are difficult out there. I would not expect there to be a residential housing construction boom here or anywhere else across Canada at this point in time and neither would Mr Tilson, if he gave it half a moment's thought.

Mr Tilson is not stupid. Mr Tilson is playing naïve here. He is attempting to suggest that the reason we are not getting residential rental construction at the moment in Ontario is that there is an NDP government and a proposal for rent control with which he disagrees. We are not getting rental residential construction at the old levels anywhere across Canada. We have got empty units available for rent which people cannot afford.

One of the things we are trying to ensure is that in future we are not going to see the kinds of increases we have seen in the recent past so that so many rental units are at levels that people simply cannot afford. I think he understands that.

Mr Tilson: The small landlords, whom I again spoke to this morning, are typical of many of the landlords we have met in our travels here in Toronto and around this province. Their concern is that year after year landlords simply cannot get a return with the Bill 4 type of legislation and this type of legislation. If they are to complete major renovations to their buildings, whether it be concrete work or whether it be for parking garages or whether it be for laying of carpets in the halls or for any type of boilers, and on it goes, money is not growing on trees.

Where are they going to get the money from? They are going to have to go to a bank and they are going to have to mortgage either their building or their own homes. We have heard landlord after landlord say that is exactly what they have done, that financial commitments have been made.

We have also heard evidence from the bankers' association. The difficulty is common sense; no banker or lender of money is going to lend money to a landlord who is not making a return on his dollar, particularly with the depreciation of buildings, the value of buildings as they tumble, so the circle is stopped.

There are no resources for landlords to go to financial institutions or lenders to obtain mortgage financing, whether it be on the buildings they are renting or their own personal houses, which they have done, because the lenders will say, "Well, where is your return?" and they will say: "We don't have one. With this law that is coming forward it is more and more difficult for us to make a return."

The minister has simply said, "Well, they were making profits before." That is not what the hearings have told us. The minister was not at those hearings; we were. I am telling you, there was not a landlord I can recall who said he or she was making the profits that you are suggesting before Bill 4 or after Bill 4 -- right now. They are not making the profits so there is no incentive.

Again, I am suggesting to you that our amendment completes the circle, because obviously capital expenditures are going to have to be made to buildings that are 20 years or older in this province; 75% of them are at that rate and getting older because the new ones are not being built. We know there is a desperate need for capital expenditures to be made, so how are they going to finance them? Any lenders with any common sense -- and most of them have a lot of common sense -- are not going to lend to the landlord.

The other difficulty that was raised by this small landlord here is typical. He is not the only one who has made the suggestion. It was made during the hearings. It gets back to the issue raised by Ms Harrington, the increase on the value of buildings over a period of time. Buildings are falling in value, so if that is the sole basis for profit the lender will look at that too and say: "Why in the world will I give you a mortgage when the value of your buildings is depreciating? They're going down, you're not making a profit and your buildings are depreciating, decreasing in value."

The landlord is in a catch-22 situation. What is the landlord going to do? He cannot renovate his buildings, he cannot build them up and he cannot maintain them. Some of these expenditures will be substantial. Where is he going to get his finances? Money just does not grow on trees. Again, that is the intent of the amendment, to provide some sort of incentive to enable landlords not only to build new accommodation, but to maintain the existing one. If this section passes unamended, that circle will be stopped and there will be no new purchases and there will be no renovations.

I even have landlords saying to me now, "Just little things -- I can't afford to do such things as flower gardens." The government has come back and said, "We care for the tenants." We care for the tenants as well. We care for the quality of life the tenants should have. We should all live the good quality of life that we have had. It is deteriorating because capital expenditures will not be made, renovations will not be made. Already I can tell you -- and I referred to that incident in this committee before -- in my own riding I attended a meeting where a landlord said: "Here are my books. Look at them." He cannot even afford to upgrade the quality of carpets in his units. He has two units.

How we are going to maintain and improve the quality of life of the tenant is a very difficult situation. How are we going to do that when we are so restrictive of the landlord, so he can make a proper return? I hope the members of the committee would consider those comments and support this amendment.

Ms Harrington: I wish people would consider the situation which has been in effect under the previous legislation, what I call a guaranteed investment for landlords, that whatever their situation, whatever their mortgage or what they have wanted to do with the building could be passed through to the tenants. I put to you that if you are investing, whether in a business, a corner store or the dry cleaners or whatever, your chance of going out of business within the first five years is quite high. That is the risk of going into business. But being a landlord, what had been in effect was that you had a guaranteed investment, and that was an increase every year. I just would like to put that in the record.

The Acting Chair (Mr Abel): Thank you, Ms Harrington. If there is no further discussion, I call the question on Mrs Marland's motion to amend paragraphs 12(1)4, 12(1)5 and 12(1)6.

Mrs Marland: Mr Chairman, I would ask that we recess for 20 minutes to allow the Liberals to be present.

Hon Ms Gigantes: Does it have to be 20 minutes?

Mr Mammoliti: Mr Chair, before you adjourn, what are the standing orders --

Mrs Marland: It is time you knew them, Mr Mammoliti.

Mr Mammoliti: Can somebody from the Conservative Party ask for a recess to call somebody from the Liberals? I am just curious.

The Acting Chair (Mr Abel): Mr Mammoliti, anybody can call the 20-minute recess. Mr Winninger?

Mr Winninger: Could I ask for unanimous consent to make it a 10-minute adjournment recess to call in the members?

Mrs Marland: Mr Chairman, I have requested 20 minutes. In the past, when the New Democratic Party has requested 20 minutes, I respectfully have not asked that they amend it to 10 minutes.

The Acting Chair (Mr Abel): I take that, Mrs Marland, to mean there is not unanimous consent. We will adjourn for 20 minutes.

The committee recessed at 1712.

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The Acting Chair (Mrs Y. O'Neill): I understand you have kept the traditions of the general government committee right on the forefront this afternoon and we are now in the position to have a vote after those traditions have been maintained. Are you requesting a recorded vote, Mrs Marland?

Mrs Marland: Thank you.

The Acting Chair (Mrs Y. O'Neill): The question we are going to vote on is the question placed by Mrs Marland, which is the amendment to subsection 12(1) as reprinted.

The committee divided on Mrs Marland's motion, which was negatived on the following vote:

Ayes -- 2

Marland, Tilson.

Nays -- 6

Abel, Gigantes, Harrington, Mammoliti, Poole, Winninger.

The Acting Chair (Mrs Y. O'Neill): All right, thank you. I understand now that we are in the voting mode this afternoon. We should now take a vote on subsection 12(2), as reprinted.

Interjection: Subsection 12(1).

The Acting Chair (Mrs Y. O'Neill): Oh, I am sorry. I have skipped subsection 12(1). I guess we have been talking about it all day. If we may go to subsection 12(1) as reprinted and presented by the government, I would like to take a vote on subsection 12(1) as reprinted. Yes, Mrs Marland?

Mrs Marland: Madam Chairman, I am trying to think when this committee retook a vote. Last week, on the request of one of the members -- I think it was actually the government motion; I cannot recall which motion it was. I think it was the government motion placed by Mr Marchese that we split. There were two sections to that motion.

Mr Marchese: Yes.

Mrs Marland: Thank you.

The Acting Chair (Mrs Y. O'Neill): I am sorry I was not able to be helpful in that.

Mrs Marland: We split the vote on it. I am just wondering if you would reconsider taking the vote on my amendment, which has three sections, and splitting it.

Hon Ms Gigantes: No.

The Acting Chair (Mrs Y. O'Neill): We have taken the vote. That is not usually parliamentary practice, but was there a precedent set in this committee last week?

Hon Ms Gigantes: No. We certainly do not have to go back on votes.

The Acting Chair (Mrs Y. O'Neill): Okay. I think if you had requested that before we took the vote, it would have been quite admissible.

Mrs Marland: Madam Chair, there are lots of precedents where the votes are retaken, at the request of all parties at different times in the House. Most notably, recently one of the government motions in the House was retaken. It requires unanimous consent to retake a vote. We have done that with all parties.

The Acting Chair (Mrs Y. O'Neill): I will ask for the show of unanimous consent for the request of Mrs Marland. Is there unanimous consent? All right then, that request has been denied. As I say, I think it is now time for us to vote on subsection 12(1) as reprinted. Those in favour of the section of the bill, numbered 12(1)?

Subsection 12(1) agreed to.

The Acting Chair (Mrs Y. O'Neill): Subsection 12(2). Mr Tilson?

Mr Tilson: This is a question that was asked during the hearings and I do not know whether the staff have had an opportunity to deal with it. The wording, I believe, is the same as it was.

The Acting Chair (Mrs Y. O'Neill): Is it the publication of the guideline you are speaking to, Mr Tilson?

Mr Tilson: Yes. The wording is the same. The question was asked during the hearings and never really got an answer that I can recall. The residential cost complex index is to be published not later than August 31 in the preceding year. The question is, what happens to the 1992 guideline? I guess a lot depends of course on when this legislation is going to be proclaimed.

The Acting Chair (Mrs Y. O'Neill): Madam Minister?

Hon Ms Gigantes: Madam Chair, if the member refers to the subsequent subsection 12(3) he will see the 1992 guideline is the one that was published before August 31 of this year. It will be 6%.

Mr Tilson: I do not know whether that answers it or not.

Hon Ms Gigantes: Whether this bill passes or not, Madam Chair, the rent guideline will be the 6% that was published.

Mr Tilson: The difficulty is that subsection 3 indicates that it will be calculated under the Bill 51 guidelines.

Hon Ms Gigantes: You have got it.

Mr Tilson: That is right. That is the purpose of the question. Is that a fair assessment?

Hon Ms Gigantes: Assessment of what?

Mr Tilson: A fair assessment for the formula; basing it on the Bill 51 guidelines.

Hon Ms Gigantes: It may be or it may not be, but we are required by law to do that because we are still operating under Bill 51.

The Acting Chair (Mrs Y. O'Neill): Is that a satisfactory answer, Mr Tilson?

Mr Tilson: She is right. It is done, and it is difficult. We are voting on something that has really been done.

The Acting Chair (Mrs Y. O'Neill): If there are no further questions, perhaps we are in the position then to take the vote on subsection 12(2).

Subsection 12(2) agreed to.

The Acting Chair (Mrs Y. O'Neill): Now we are at subsection 12(3). Any comments or questions or discussion on that subsection? Those who are for that subsection? Those who are against? I declare subsection 12(3) carried.

May we consider the whole of section 12 carried?

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Ms Poole: I have an amendment 12.1 to section 12.

The Acting Chair (Mrs Y. O'Neill): Yes, I understand from the clerk that we must complete section 12 before that amendment will be permitted.

Section 12 agreed to.

The Acting Chair (Mrs Y. O'Neill): We will now entertain your amendment, Ms Poole. I understand this amendment is a suggestion for a new section to the act, the section being 12.1. Excuse me before you begin. I have a copy of it and it seems the minister does not have a copy. Does everyone have a copy in the committee, beyond the minister? Please begin.

Ms Poole: This one was actually tabled with the committee with the balance of the Liberal amendments on the first day, so it must have just inadvertently not been in the minister's book.

The Acting Chair (Mrs Y. O'Neill): Mrs Poole moves that the bill be amended by adding the following section:

"12.1(1) Every landlord of a rental unit in a residential complex that is partially exempt from this act under subsection 3(5) (time limited exemption) shall maintain a separate account for future eligible capital expenditures in accordance with this section and as prescribed.

"(2) The landlord shall deposit into the separate account an amount equal to 2% of all money received in respect of rent for the residential complex.

"(3) The landlord shall not expend the money in the separate account while the residential complex remains partially exempt from this act.

"(4) When this whole act applies to the residential complex, the landlord may expend the money from the account on eligible capital expenditures for the complex."

Ms Poole: The effect of this amendment would be to create a capital account for new buildings. The term used in the motion is "complexes that are partially exempt." We say partially exempt because they are exempt from most of the provisions of Bill 121, except, for instance, the provision that they must provide notice to their tenants of any rent increase.

These are new buildings, and what we are suggesting is that a capital reserve fund be created for each new building in Ontario. I am somewhat concerned that given the limitations on the new buildings, there may not be many of them to go up. But I think for any that do go up, it is important that we create a capital reserve so that at such time as the roof gives in or new windows are required or work is necessary to be done, there is a fund available so there is no need for rent increases at that particular time.

This has been a request of tenants for several years now, that in all buildings in Ontario a capital reserve fund be established. Partially, I think, it was taken that the Condominium Act had a reserve fund that could be established for buildings and that this would march along with that idea.

The problem with having a capital reserve fund on all buildings is that much of our housing stock is more than 15 to 20 years old. It is extremely difficult to build in a capital reserve fund when the building is in need of repair today; you do not have time to build up a capital reserve fund. So I comprehend that the government might not want to put a capital reserve fund into every building, but surely it does not make any sense not to put one in new buildings.

New buildings can be treated the same as condominiums, and that was one reason, under the Condominium Act, it works so well to have reserve funds. Condominiums were new creatures, it was new legislation, so from day one of the condominium being built, it had a reserve fund in place; it was very easy for them to build it up. That is what we are suggesting in this amendment.

We had another section to the amendment, which was defeated earlier, that proposed that the exemption for new buildings be carried forward for a 10-year period. This was to encourage new construction, because we heard from the financial institutions that it would take considerably longer than five years for a landlord to reach a break-even point and they really felt buildings would not be put up if the exemption was for only a five-year period.

Unfortunately, that section was defeated. However, the capital reserve fund stands on its own and can be accepted on its own merit, so I hope the government will reconsider its position on it and will accept the idea, at least with our new housing stock, of having a capital reserve fund.

The Acting Chair (Mrs Y. O'Neill): Just to clarify, Ms Poole, this is directly connected with the five-year exemption then, is that correct?

Ms Poole: It is, in that it refers to buildings that are exempt, new construction.

The Acting Chair (Mrs Y. O'Neill): Okay. Any further discussion on Ms Poole's amendment?

Ms Poole: Do you like it?

Mr Tilson: No, I do not like it, to be quite frank. In fact, do you have some NDP working for you, I wonder? This in fact waters down the section that was put into the bill to exempt new buildings for five years. They are under rent controls, but if this is passed, they will not be under rent controls.

The issue of reserve funds was raised in both sets of hearings, the Bill 4 hearings and the Bill 121 hearings. A great deal of time was not spent on it, but it did surface periodically. The principle of that, of course, was comparing it to condominiums, where there is a fund for renovations created, and how that is put into by the owners of units of condominiums. That principle was attempted to be put forward here.

The question of course that I ask Ms Poole is that if you create -- and that is exactly what this is; this is a reserve fund. This is, as you call it, a separate capital account for new complexes, and that is a reserve fund. So I guess the question I have for you, having listened to you support us at least on the whole issue of profit and having heard comments made by landlords around this province as to the difficulties they have in operating their buildings, is, how is this going to happen? How is it realistically going to happen?

I get back to the question we have been harping away on, emphasizing continually: encouraging new housing accommodation. This takes away from that theory. To give the credit due, I do not think the five-year exemption is nearly enough. In fact, I think you had an amendment suggesting even extending it to 10 years.

Ms Poole: To 10 years.

Mr Tilson: But this waters it down. This waters the proposal of the government down further. So I would like your comments as to how you think the landlords are physically going to be able to manage that, having heard the testimony around this province.

Ms Poole: As I mentioned in my opening comments, the original amendment, if you will, was in two parts. The first part was to extend the exemption or partial exemption for new units for a 10-year period. This was to give the landlord an opportunity to reach the break-even point. In conjunction with this amendment, it would also mean that when the landlords were setting the rents, they would be aware that a capital component would be built into the rent and they would take it accordingly when they set the rents.

What this would do is to force the landlord to think about future repairs and to make sure an amount is set aside. It would not have restricted the landlord in what he or she could set as a rent. All this would do is to ensure that when the landlords set the rent, they could put a portion of it aside. How the landlord did this would be up to the individual landlord, whether he wanted to increase his original rent by a 2% amount, or perhaps some landlords would say, "Well, the market can bear only this, so that will be what I put in." In a sense, it is an investment by that landlord in the building, because that money would stay with the building. That money would be used to improve his or her building.

I am very cognizant of your concern. Your concern is that the motion is now imbalanced because before, you could say to the landlords, "We are going to make it more feasible for you to build and for you to realize a return." But with this standing alone as section 12.1, it puts one more impediment in the way of the landlord wanting to build to begin with.

Quite frankly, I agree with you. I think, having taken away the possibility of that 10-year exemption, there will be very little new construction in Ontario. It is difficult enough in the housing area because the cost of land is so prohibitive that you cannot build affordable housing. I mean, we are not talking affordable housing. A landlord, no matter how he cut costs or what he wanted to do, could not put up a unit on which he could carry the costs for $500 or $600 a month. It is impossible.

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The government of Ontario cannot do it; the units it is putting in cost $2,000. So the first thing is you are not going to increase the affordable housing supply by trying to encourage new construction. What you can do is try to encourage new construction so that people who can afford a market rent of $2,000 are in those units which are new, which would probably tend to be more luxurious. If they have the income to support it, why should they not be in those units? Perhaps some of those people would get out of the $400, $500 and $600 units they occupy right now.

That was the original intent, to make it very balanced, saying, "Okay, let's see if the landlords can have an incentive to build and create a vacancy on the other end of the market in a kind of a bizarre way," but on the other hand to realize the tenants' concern that a certain proportion of rent should go to covering capital repairs. It would just make a lot of sense.

You will notice that the last part of this particular amendment, the last two subsections actually, says the landlord could not use it while the building is partially exempt from the act. The landlord would have to build it up in the fund, and then once the building comes under the act fully, at that stage the money would be there -- I had hoped it would be a 10-year period, but it is not -- and then the landlord could have access to that money to spend it on the necessary repairs as they come up.

I am not happy with the separation. It defeats part of our original intent. But I still think from a purely philosophical point of view -- because I think that is what we are talking about now; there is only a five-year exemption -- the government should be supporting a capital reserve fund in new complexes.

I would be most interested in hearing the minister's response as to why this was not included as an NDP amendment to the act, because we certainly heard from many tenant groups that if the government was unwilling to consider the plan as a whole across the province for every building, there did not seem to be a whole lot of rationale for why it would not at least be considered for new buildings. I am quite anxious to hear the government's response in this regard.

The Acting Chair (Mrs Y. O'Neill): Mrs Marland, you are on the speaking list next.

Mrs Marland: I am really a little amazed by this motion by the official opposition and I guess I am a little confused by it, because I have heard the member for Eglinton talk about her concerns about landlords and some aspects of their ability to run a business, which is what it is if you own a building and you rent living accommodation in it. She has talked about her concern about tenants, and yet she is placing an amendment here which is a further penalty on the landlords. I do not know where the member is saying the landlords are going to get the money from. If she is concerned about tenants, then I do not think she would be wanting to put more pressure on the landlords to do one more thing with their income. How far can you spread the income they are going to receive based on the guidelines this socialist government is bringing in?

I guess the whole process is so terribly frustrating because we sit here, on a good day, with a maximum of five opposition members. So it really does not matter what we say or do, the government is going to put through this legislation and they are going to have this bill look whatever way they want it to look. This bill is going down the pipes to affect tenants and landlords in this province regardless of what we say.

I did say last week that maybe if the government is interested in making progress, then instead of dealing with the opposition and our amendments one by one, which is what we are dealing with on the floor now, maybe we should find out from the government if there are any amendments they are willing to accept. We know where they are going with their amendments; they are already printed in the bill. When the government members came in with their 99 amendments to this bill, we certainly knew how well drafted the bill was.

So here we are now dealing with a Liberal amendment. I do not know where the Liberals think the landlords are going to get the money from. If they take it from somewhere else to establish this reserve fund, is there suddenly some other money sprung loose for the landlords to maintain the environment in which tenants in rental property live?

Ms Poole: Did you want me to answer that?

Mrs Marland: I would be happy for you to answer.

Ms Poole: I think I have already partially answered.

The Acting Chair (Mrs Y. O'Neill): The minister has requested to speak. I think it might be good, since we have about two minutes left, if we could hear her response to this amendment, and then you would be speaking.

Ms Poole: Sorry, Madam Chair. She had said she wanted me to answer.

The Acting Chair (Mrs Y. O'Neill): I had just turned to the clerk. I am sorry, I did not see the exact -- but I do not think it is proper to ask another member of the committee without going through the Chair.

Mr Tilson: On a point of order, Madam Chair: Surely Ms Poole has put forward an amendment and Mrs Marland is asking for an issue of clarification.

The Acting Chair (Mrs Y. O'Neill): You usually say, "Madam Chair, may I speak with Ms Poole?" or, "May I ask Ms Poole a question?" It is very difficult; I turn to discuss something regarding the adjournment with the clerk and then I get a conversation going between two members. I am sorry.

Ms Poole: Sorry. It is probably my fault because I said to Mrs Marland, "Did you want me to answer that?" and she said, "Yes, would you."

Mrs Marland: If the problem is that the member for Eglinton is not the next person on your speaking list --

The Acting Chair (Mrs Y. O'Neill): No, she is not.

Mrs Marland: -- and therefore is unable to answer my question, then I will continue to make my comment and wait until she is in a position to answer my question.

Ms Poole: On a point of order, Madam Chair: On this committee we have previously allowed flexibility when a member is in the middle of a line of questioning and asks the mover of a motion or the minister for a response, that the member be allowed to do so at the time and then revert back to the questioning.

The Acting Chair (Mrs Y. O'Neill): I would not want to destroy the beautiful traditions of this committee because I know how -- what should I say? -- exemplary they are.

It is almost 6 o'clock. I was trying to decide what to do about that. I presume now that we will begin this place next Thursday morning, but if you want to answer the question I did not hear because I was talking to the clerk, please do it.

Ms Poole: I will be very brief.

The Acting Chair (Mrs Y. O'Neill): Thank you, Minister. I am sorry that your remarks were not able to be placed today, but maybe next Thursday we will get around to your response to this amendment.

Ms Poole: I can be quite brief. I did not want to wait until next week, because I might have forgotten what my answer was.

Mrs Marland has basically asked, "Why would a Liberal bring in this amendment which would tie a landlord's hands even more and make it more difficult for a landlord to make a profit and to run a business?"

When a landlord is setting a rent for a new building, if the landlord knows and is able to take into account the various cost factors -- and this would be one -- the landlord can set the rents appropriately. So if the landlord is aware that 2% must be put into a capital reserve fund, the landlord can plan for that. Part of the problem we have got into in business in Ontario right now is that operating businesses have had their plans thrown into flux by changes in government legislation. We are starting fresh. Landlords can make that decision.

In view of the fact that the House is now adjourned, perhaps it would be more appropriate if we continued this discussion next week.

The Acting Chair (Mrs Y. O'Neill): I would like to just close by saying thank you for your co-operation this afternoon. Mrs Marland has the floor when we resume debate next Thursday morning, and the order of speaking will then be the minister and Ms Poole following.

The standing committee on general government is adjourned until next Thursday morning at 10 am in this room.

The committee adjourned at 1803.