RENT CONTROL ACT, 1991 / LOI DE 1991 SUR LE CONTRÔLE DES LOYERS
CONTENTS
Thursday 21 November 1991
Election of Chair
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)
Vice-Chair: Vacant
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)
O'Neill, Yvonne (Ottawa-Rideau L)
Scott, Ian G. (St George-St. David L)
Turnbull, David (York Mills PC)
Substitutions:
Caplan, Elinor (Oriole L) Mrs Y. O'Neill
Marland, Margaret (Mississauga South PC) for Mr Turnbull
Sola, John (Mississauga East L) for Mr Scott
Tilson, David (Dufferin-Peel) for Mr Murdoch
Clerk: Deller, Deborah
Staff:
Baldwin, Elizabeth, Legislative Counsel
Richmond, Jerry, Research Officer, Legislative Research Service
The committee met at 1533 in room 151.
ELECTION OF CHAIR
Clerk of the Committee: Honourable members, it is my duty to inform you that I have received the resignation of both the Chair and the Vice-Chair. I must call upon you to elect a Chair. May I have nominations, please.
Mr Abel: I nominate Mike Brown.
Clerk of the Committee: Are there any further nominations? Seeing none, I declare Mr Brown Chair of the standing committee on general government.
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 Chair: I would first of all like to thank the members and then remind the members that we have a lot of work to do. For the information of members, we have two new sets of amendments to the bill, one a government set of amendments and one from the Conservative caucus, so there are additional amendments we will be considering.
To this point, we have completed to section 8, with the exception of section 1, which has been stood down.
Mr Tilson: Mr Chairman, just a point of clarification, perhaps a question to Mr Abel or the minister: Are these government amendments in the new printed bill or are these over and above those?
The Chair: Perhaps the minister would like to speak to that. Did you hear the question?
Hon Ms Gigantes: The minister missed it. I am sorry.
Mr Tilson: We have had some government amendments distributed to us. Are they over and above the amendments you have printed in the new bill?
Hon Ms Gigantes: Yes, that is correct.
Mr Tilson: They are additional ones.
Hon Ms Gigantes: Yes, they are.
Mr Tilson: How long is this going to go on? I am quite serious. I made a motion the last time the bill had essentially been rewritten, and now we come for another week and there are even more changes.
Would the minister consider taking it back and rewriting it? You have substantially changed the bill. We have a different bill than what has gone around this province, with extensive hearings where members of the public have come and made substantial representations. It is as if it were all for naught.
Hon Ms Gigantes: I think the explanation for these amendments is fairly straightforward, as you will see when we come to them. I hope the member will find them helpful. They indicate that we have paid attention to people's input, including members of this committee during sessions of the clause-by-clause consideration.
Further, understanding that there were a fair number of amendments, which, as we have indicated before, attempt to meet many of the questions raised during the summer hearings and also to deal with clearer language in the bill, we reprinted the bill, with the agreement of this committee. So we have a reprint.
The principles and the intent of the legislation are the same. Therefore, we feel we would like to operate with the bill with proposed amendments.
Mr Tilson: Mr Chairman --
The Chair: I think you have made your point, Mr Tilson.
Mr Tilson: There is a certain unfairness towards the members of the Liberal Party and the Conservative Party. The NDP has put in a new book, and amendments continue to come. It is as if they are going to be passed without any discussion, without any vote. They are already printed. It does put us in a very difficult --
The Chair: I do not think that is a point of order, Mr Tilson. I think we should proceed with the business of the committee at this point.
Section 9:
The Chair: I will go to subsection 9(1).
Mr Tilson: My question with respect to subsection (1) is this whole principle of a landlord giving a tenant notice in writing. We have had many discussions during the hearings of unequal rents, particularly within buildings, and the unfairness of all that. Unit 1 has such-and-such a rent. Even though they are the exact same units, unit 6 may have a completely different rent, for different reasons.
This proposal you are putting forward in subsection (1) is going to accelerate that difficulty, that confusion. I appreciate I am referring almost to the overall philosophy of section 9, but we might as well start with subsection (1). If this has not been complied with, that unit 1 could have one set of rents and unit 5 could have another set of rents, simply because the landlord did not give the appropriate notice.
In Ottawa -- and you were present in Ottawa for the hearings -- one of the delegations put forward a proposal which I believe would have solved all this. It would be in the standard form lease. In fact, I put forward a motion at one time which was passed but which this committee has never really acted on, that a representative from the Quebec system come and tell us about its system. We have never had that. That is disappointing.
My point is that we were led to believe by the delegation -- and I cannot remember who they were -- that in the standard form lease in Quebec, the last rent would be in all those leases, which would stop this, which would reduce the requirement of section 9, which creates unequal rents, and might even do away with the very expensive rent registration system. Could you comment on that?
Hon Ms Gigantes: The first clause in subsection 9(1) simply indicates that the landlord shall tell the tenant what the maximum legal rent would be.
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Mr Tilson: I am aware of that.
Hon Ms Gigantes: It is just a piece of information.
The other question you raise that has to do with equalization of rents is, as I think you have indicated by your notice of motion to section 18, not directly related to this. The other item of information you raise, the suggestion that we should have a standard lease form which would contain the information, is something we have not dealt with in this legislation.
What we have indicated instead in the terms of the legislation is that landlords can draw up leases which suit the particular situation which is being governed by the contract of the lease but they must give information to tenants about what the maximum legal rent is so that, as you would be aware, tenants who are moving in a situation where the maximum legal rent may not be being charged -- in fact the rent may be lower than the maximum legal rent -- will know they are open to a situation where the landlord may increase to the maximum legal rent if the market allows.
Mr Tilson: I appreciate what subsection 9(1) says; it is the philosophy of section 9 that starts off with subsection 9(1). Would you not agree that section 9 and all the subsections create, if not accelerate, perhaps inadvertently on your part, a continuation of the unequal rents we have heard about in all the Bill 4 and Bill 121 hearings?
Hon Ms Gigantes: No, I think it has nothing to do with the question of equalization.
Mr Tilson: Perhaps I could point out to you what the effect of section 9 is. If a landlord does not distribute the notice set forth in subsection 9(1), subsection 9(3) describes what happens.
Hon Ms Gigantes: Yes.
Mr Tilson: If the landlord fails to give this notice on unit 1 -- or it could be in a building; it could be a cluster of buildings -- for whatever reason, inadvertence or lack of knowledge, then you could have a series of unequal rents within a building or within a cluster of buildings.
Hon Ms Gigantes: You can have a situation of unequal rents no matter what.
Mr Tilson: I am aware of that, but my point is that the process of unequal rents will be accelerated because of section 9.
Hon Ms Gigantes: I hope not. I hope all landlords will let tenants who are entering their premises under lease know what the maximum legal rent for the unit is. That is the point of this section.
Mr Tilson: This is a very serious amendment.
Hon Ms Gigantes: We are not dealing with an amendment.
Mr Tilson: I am sorry. This is a very serious section. One of the difficulties we heard from both tenants and landlords is that this system you are putting forward, Bill 121, is even more complicated than the existing legislation -- not Bill 4 but the legislation put forward by the Liberal government. It is more bureaucratic. Tenants who cannot afford it have to hire legal aid clinics. Landlords have to hire consultants to advise them how to process this. I am not talking about the wealthy landlords you and your predecessor have referred to in the House. I am talking about average people who own small units. It is very difficult for them to comprehend all the intricacies of this legislation you are putting forward. If they do not know about this, it is going to create a lot of difficulties. What proposals do you have to educate both the landlords and the tenants as to the intricacies of this bill you are putting forward?
Hon Ms Gigantes: To respond briefly to that, we consider the matter of landlord and tenant education to be a very significant and important one. We will be developing supportive education programming that will ensure as far as possible that nobody is unaware of duties and rights on either side.
Mr Tilson: Do you intend to elaborate on the section -- I cannot remember which number -- we referred to last week, and would you be proposing regulations or further amendments to this act that, if through inadvertence or ignorance a landlord failed to put forward this notice, section 9 would not apply?
Hon Ms Gigantes: Mr Chair, we dealt with the covering clause that addresses Mr Tilson's concern here the week before last. I am presuming it would cover the cases he is talking about.
Mr Tilson: Thank you.
The Chair: Is it the pleasure of the committee that subsection 9(1) carry? Carried.
Subsection 9(2): There is a government amendment. Would you like to explain the amendment, Minister?
Hon Ms Gigantes: It is really an addition to the information that will be provided to a tenant entering into a new lease.
The Chair: Is that the explanation?
Hon Ms Gigantes: Yes. If we look upon the lease as a contract, it is an obligation on the part of the landlord to explain fully what the nature of the contract is, under this legislation.
The Chair: Are there questions, comments or further amendments?
Mr Tilson: I wonder if you could elaborate, Madam Minister. What is a new tenant? Would a subtenant be a new tenant?
Hon Ms Gigantes: Now, that is a question I cannot answer.
Ms Parrish: Yes, I believe so. I think "tenant" is a defined term and includes a subtenant and people who have the right to occupy the unit for various reasons. A tenant means a person who pays the rent and has the right to occupy the rental unit and includes the tenant's heirs, assigns and personal representative, but not if it is somebody who essentially owns the unit through some indirect method. The right to occupy the unit, for whatever reason, could include being a subtenant with a valid subtenancy.
Mr Tilson: The difficulty I see with that is, if the landlord has been placed on notice of not a new tenant but a subtenant, and for whatever reason someone takes over a tenancy and the rent is paid, is the landlord all of a sudden euchred because of that problem? I am getting back to my question as to what a new tenant is.
Hon Ms Gigantes: The definition we have used for purposes of this legislation is indicated in the definitional section, section 1, as Colleen has just explained it to us.
Mr Tilson: It appears to be silent on that issue.
Hon Ms Gigantes: No, I would take it, as Colleen Parrish has taken it from that definition, that a sublet would provide a new tenant.
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Mr Tilson: Whether the landlord knows of the new tenant or not?
Hon Ms Gigantes: When would a landlord not know of a new tenant?
Mr Tilson: All you have to go to are university tenants. It happens all the time. As long as someone is paying the rent, they do not care.
Ms Parrish: Perhaps I could speak to that since it is really a technical issue. Subsection 9(2), which is what the notice is, is governed by subsection 9(1), which says, "Before entering into a tenancy agreement."
When landlords enter into tenancy agreements, they must know when they are entering into agreements. If, for example, I enter into a tenancy agreement and during the year there is a subtenancy, I may very well have a provision in my lease that says that the subtenancy has to be with my consent, in which case I am going to know who this person is. If not, then the subtenant is governed by the tenancy agreement of the first tenant.
The Chair: Is that helpful, Mr Tilson?
Ms Parrish: The notice in subsection 9(2) still has to do with subsection 9(1), which is when this information is given. All subsection 9(2) does is tell you what the information is.
Mr Tilson: Thank you.
The Chair: Shall the amendment to subsection 9(2) carry? Carried.
Are there questions, comments or amendments to subsection 9(3)? Seeing none, shall subsection 9(3) carry? Carried.
Section 9, as amended, agreed to.
Section 10:
The Chair: Are there questions, comments or amendments to subsection 10(1)?
Mrs Marland: Subsection 10(1) is the one dealing with maximum rent. The question concerns the words "the maximum rent for a rental unit on a given date is the sum of," which I guess is the sum of clauses (a) and (b).
The difficulty about this section is that nobody is going to have any idea what the maximum rents are going to be. Although the landlord, or for that matter the tenant, may have an existing rent, because of all the other clauses in this bill that can implement change to that rent, there is no security for anybody as to what that rent may be.
My concern is that if you are a property owner and you are looking at planning your budget for the coming year, and you have a clause here that addresses what the maximum rent is, there is no clause anywhere that says what the minimum rent will be. So there is no guarantee to landlords or tenants about exactly what the financial picture will be.
What we are saying, as I understand it, is that, especially if you are in the position of needing new financing, you can go to the bank and say, "Well, there is a clause here dealing with maximum rents, but there isn't a clause that deals with what the minimum rent might be." There are all these other ways of envading what the actual rent will become, because of all the avenues open to envade an existing rent.
We do not have an amendment on this. Mr Chairman, I have not found the section in my amendments. I am just reading from the section in the bill.
The Chair: Perhaps, Mrs Marland, it was my mistake, but there is a government amendment to this section. Perhaps we could ask the minister to comment briefly on it, and by that time maybe you will have found your place.
Hon Ms Gigantes: I think members of the committee will be happy to see one of the technical amendments, which is a correct referencing of this section to other sections in the bill to which it relates. That is what has been added in the amendment, referencing subsection (1) to subsections (3), (5), (7) and (9).
The Chair: Mrs Marland, do you have some further comments then?
Mrs Marland: There is a Liberal amendment as well, to clause 10(1)(b). Is that right? At the moment we are only dealing with clause 10(1)(a).
The Chair: Yes, that is correct.
Mrs Marland: Okay. This is what really intrigues me, now that I see the government amendment. Apparently the reason for the government amendment is -- maybe this is what the minister just said, but I did not hear everything she said -- that this amendment is required to make this section, which provides the general rule about the method of determining maximum rent, subject to other new sections. So what you are saying is, because of other amendments, this amendment is needed. Right?
It just reinforces how poorly drafted this bill was in the first place. You can shake your heads as government members. I would be embarrassed to be a member of the government that presented a piece of legislation and then brought in 99 amendments. It is unheard of.
Mr Mammoliti: A point of order, Mr Chairman. This discussion is clearly not related to the amendment at hand and I would request that the member restrict her comments to that amendment.
Interjections.
The Chair: One at a time.
Mrs Marland: Mr Chairman, as a member of this committee, I have a right to speak. I appreciate your recognizing me for that reason.
The Chair: You certainly do.
Mrs Marland: I say to the government members, who say I am rambling on, that because this bill is so poorly drafted they are going to be in a position where at some point in the future they are going to have to defend what their government has brought to this province.
The Chair: Thank you, Mrs Marland. Perhaps you could return to the subject.
Mrs Marland: I am speaking to the subject. The amendment before us right now is necessary because of other amendments the government has brought to this bill.
I am simply saying that if this bill had been what the government intended it to be in the first place, it would not have had to bring in 99 amendments to it. I would like someone to tell me where there is another example of a piece of legislation brought by any government that has required 99 amendments before we even got it back.
Mr Tilson: How do you get the printing contract for these darn things?
The Chair: Mrs Marland, to clause 10(1)(a).
Mrs Marland: Clause 10(1)(a) is simply a technical, housekeeping amendment required by other changes to this bill. I am simply making the point that this government has brought in a piece of legislation which is so poorly drafted that it needs all these changes.
If the government members think that is okay and they are proud of that, let alone the implications of this legislation on the public and the jobs of the people in this province, then that is on their heads, it is not on mine. I am obviously opposed to this amendment and to this section.
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Mr Tilson: I would like to ask a question of the minister. We are talking about maximum rent. Again, I am getting back to how the average landlord or tenant understands this bill, because it is becoming more and more complicated. I look to the definition. Section 1 has been set down. The definition is "`maximum rent' means the lawful maximum rent for a rental unit." I would like you to tell this committee what "maximum rent" means.
Hon Ms Gigantes: I can certainly appreciate Mr Tilson's question, because when one reads the section, to follow every clause is not the easiest thing in the world. However, the concept we are dealing with here is a fairly straightforward one. At whatever point the apartment unit enters the rent review system -- back in the old days under the Conservative government, in the newer days under the Liberal government or when built under this government hopefully -- the tenant is to be advised of the maximum unit rent entering the premise. This is the formula that will be used: It will be the initial rent, followed by those legal rents allowed by the guideline in each year up to the point of the new rental, plus any of the applications for above-guideline increases which have been granted during that period. That is the simple concept, which takes a fair number of words to describe.
For any tenant or landlord, we have many dozens of offices across this province. Where in doubt, an individual can address an inquiry to the rent review office and get a clear answer. In fact, the rent registry is now in a state of readiness to respond to those inquiries. We can take proactive informational programs. We are doing that. We are mailing information out, in a phased way, to tenants across the province about what the maximum legal rent in their current abode is. If they have any doubt, landlords or any purchaser of a building can inquire about any unit in a building through the rent review offices.
Mr Tilson: Mr Chairman, I was simply asking whether the Minister of Housing could define "maximum rent." I have yet to hear a definition of "maximum rent." If you are putting out a directive, do you have that? With all due respect, the average tenant or landlord would not understand the slightest thing you have just said. What does "maximum rent" mean? What does it mean to you?
Hon Ms Gigantes: Maximum legal rent. It means the rent allowed under this legislation. It is arrived at by means of the section we are dealing with, which describes a process of establishing a maximum legal rent that very much reflects the process used by the Conservative government in earlier legislation and then, following that, by the Liberal government.
Mr Tilson: Minister, do not get into that. We are talking about your bill. The average tenant or landlord is going to turn to section 10, which is before this committee. We are debating that right now. The average tenant or landlord is going to turn to section 10 and is going to see the words "maximum rent" and ask, "What in the heck does that mean?" So they turn back to the definition section. The definition section says that "`maximum rent' means the lawful maximum rent for a rental unit." They are going to scratch their heads.
Would the Minister of Housing tell us what maximum rent means, in layman's terms, terms the average tenant or landlord in Ontario can understand?
Hon Ms Gigantes: You can read section 10. Any landlord or tenant who is in doubt can certainly understand the description I have given.
Mr Tilson: You think so?
Hon Ms Gigantes: I have talked to a lot of people over a lot of years about a legal rent and they understand that concept. If they want to work it out, they most often will seek the advice of our rent review offices.
Mr Tilson: I am just telling you what response this committee received around this province when we went around in two hearings. Nobody knows what in the world you are talking about. Nobody knows this terminology. I do not know whether you are going to elaborate somewhere in the regulations, which you have failed to produce, but it is a simple question. Would you as the Minister of Housing try again, in layman's terms, to tell us what "maximum rent" means?
Hon Ms Gigantes: I just did.
The Chair: Are there further questions or comments to clause 10(1)(a)? Shall clause 10(1)(a) carry? Carried.
Mr Tilson: I said no.
The Chair: Oh. It is still carried unless you would like a --
Mr Tilson: Does not the majority rule in this committee?
The Chair: I do not know. I have yet to figure out what is going on in this committee.
Interjections.
The Chair: Well, there was no recorded vote called. Mr Tilson, if you would request --
Hon Ms Gigantes: There is no automatic roll call. You have to ask for it.
The Chair: You have to ask. Mrs Caplan moves that clause 10(1)(b) of the bill be amended by striking out "all permissible" in the first line and substituting "all required and permissible."
Mrs Caplan: I am hopeful the government will support this amendment. We have been advised by legislative counsel that it would be required if the amendment for the provision of costs no longer borne were accepted. This is a very complex section of the legislation. I think Mr Tilson has had some difficulty understanding it himself and has gone on at length in the last little while. My constituents in the riding of Oriole are very concerned about the provision of costs no longer borne being very clear in the legislation. The hope is that this small word change will clarify the legislation for people who are making inquiries and will adjust the formula so that the costs-no-longer-borne provision will be reflected in this clause as well. We see it as technical but important as a tenant protection issue.
Hon Ms Gigantes: I will ask Colleen Parrish to comment on this.
Ms Parrish: From a straight drafting viewpoint, we simply do not agree that this is a necessary amendment. It may very well be that there is a question as to how we are reading what "permissible" defines. The way we read this is that you add on all permissible increases or decreases. "Permissible" does not define "decrease"; it only defines "increase." If you want to talk about "required," since there are no required increases in the statute -- you are not required to increase your rents; even if you are given an order, you are not required to increase your rents -- then the only thing that could be required would be a decrease. We do not say "required decreases" or "permissible decreases"; we just say "decreases." Then "decreases" is defined by those things that would have been subtracted under the statute.
Since we read it that way, we do not disagree with you that you would have to do a subtraction calculation for costs no longer borne. We just do not think the word "required" next to "permissible" does that. It could confuse people into thinking there is something in our statute called a "required increase." Since there is no required increase, we felt that it would just confuse people.
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Hon Ms Gigantes: Could I ask this of Colleen and Betsy: Would the purpose of Mrs Caplan's amendment be achieved and would it make the legislation clearer to read if we said "all permissible increases or required decreases"?
Mrs Caplan: The point of this amendment is to ensure that rent reductions are required as well as the permissible increases in the costs-no-longer-borne provision.
Hon Ms Gigantes: Because of the problem Colleen has indicated in her reading of your amendment as written, I think it is quite a practical interpretation. I think what you are after there is something that would perhaps clarify this. Suppose we said instead, just looking at clause (b), "all permissible increases or required decreases"? Would that be satisfactory?
Mrs Caplan: I think that would be satisfactory because it clarifies. I would be pleased if you will support our amendment to adjust that, because the intent of the amendment is to clarify that language. We would certainly be prepared to amend our amendment accordingly.
Ms Parrish: Legislative counsel has suggested that we might want to agree to give us a little more time to look at the costs-no-longer-borne provision.
Hon Ms Gigantes: And return to this?
Ms Parrish: And return to this in that context. We are having a terribly exciting discussion about permissible increases and orders and which ones are which. This is one of these tiresome lawyers' issues. I do not think we disagree with the end result; we are just trying to figure out what the best drafting mechanism is that makes things the clearest.
The Chair: Mrs Caplan, would it be acceptable if we stood down this amendment with the agreement of the committee?
Hon Ms Gigantes: I would be happy to do that.
Mrs Caplan: Yes, we would be happy to stand it down. Again, just for clarification on the record, we would like to ensure that rent reductions are required. I think you were very clear that "permissible" refers to increases. We want to make sure you reflect the requirement for deductions on behalf of tenants. We will agree to stand this down.
Hon Ms Gigantes: We will get a full lawyers' coalition working on this.
Ms Parrish: Get a few lawyers and we will have eight opinions.
Mrs Caplan: I have some wonderful lawyer jokes that seem appropriate.
The Chair: I have heard some of them.
Mrs Marland: Clause 10(1)(b) of the bill only further confirms my argument about the whole section when you are talking about maximum rent. Clause (b) is the one that talks about the areas that can change what the rent is. People who are dependent on institutions to finance their building go to the bank, the trust company or whatever their lender is and say, "I own a building with X number of units." Whether it is a duplex or a 300- or 600-unit building, you go and say, "These are my rents, this is my income, this is the equity in the property and this is the equity in the building."
With this bill, if you talk to them about what your rents are and what your income is, and they read this section that has permissible increases or decreases -- if we change the words, fine; it is not going to change the intent of 10(1)(b). It is still going to say to a potential lender, "This is your rent now, but how do we know what it will be a year from now?" I would like to know how the government thinks buildings are going to be financed with that kind of latitude and that total lack of security of income to the owner of those buildings. Minister, how do you think buildings that need refinancing are going to get it with 10(1)(b) sitting there as a legal clause which says the rents can change? Particularly in this case, of course, I am addressing decreases in rent.
Hon Ms Gigantes: If we look at it from the point of view of the lender in this situation, the lender will not be worried about permissible increases, obviously. The legislation provides that a landlord, given market conditions, can certainly charge the guideline. It also provides that the landlord can make application to charge above the guideline. No lender would object to these things.
There is insecurity in the market anyhow. There are landlords out there now who find they cannot charge the maximum legal rent. That is a market condition. It has nothing to do with this legislation. That is always at risk in the market, and it will remain at risk. This bill says there will be a decrease in rent where the landlord has made a capital investment and the amount provided in the rent for paying for that investment has been paid off. In most cases, that is not going to be a huge amount of money, because if it is a large item in a large building, it will be distributed among many units, and for particular units it is not going to be very much. There is a relative amount of security about it and, further, all the lender would have to do is ask what outstanding items existed on rents that would be decreased after five years or 10 years when their value had been paid off.
These are not major amounts of money in terms of the lender. What the lender will want to know, however, is whether the landlord is going to be able to increase rents. This legislation will restrict the ability of a landlord who has improperly maintained a building to increase rents. I look upon that as rather a benefit, because if the landlord comes in for renewal of a loan and has a record in which he or she has not maintained a building and has not, therefore, been allowed to increase rents, the lender is going to want to know that. I think that is as it should be.
The Chair: Mrs Marland, just before you begin, perhaps we should recognize that what we are speaking to here is a technical amendment.
Hon Ms Gigantes: No, there is no amendment here. This is clause 10(1)(b).
The Chair: We have a Liberal amendment.
Hon Ms Gigantes: But I thought we had set that aside.
The Chair: No, we have not. What we are speaking to is the Liberal amendment to clause 10(1)(b), and I think what I am looking for -- and I think I have it from two of the parties -- is an agreement to stand down both the amendment and this clause. That would make it necessary to stand down all of subsection 10(1). Perhaps, in the interest of dealing with this bill in a businesslike and expeditious fashion, we should have this discussion when clause 10(1)(b) comes back to the committee after being stood down, unless you do not wish to stand this section down. I am just looking for how we should proceed here. I am trying to be helpful.
Mrs Marland: Yes. I respect what you are trying to do as the Chairman, but if we are looking to deal with this legislation expeditiously, we could have started on August 17. We lost almost two months of dealing with this bill because the government was not ready. The meetings were continually postponed and cancelled. So I am not interested in an argument about whether or not we stand it down now in order to deal with the bill expeditiously.
The Chair: I was just really looking to see whether you wanted to stand it down or you did not.
Mrs Marland: I respect what you were doing as the Chair, but I am interested in discussing this section and how the Liberal motion relates to clause 10(1)(b), because the whole subject of the risk of decreases in rent is very significant to the people who own that property. If that property goes belly-up because they cannot get more financing, then the building is out of business, and then when the building is out of business, all these socialist government members who think they are protecting tenants will have to be there to pay for the heat to be turned back on, the water to be turned back on or to find them alternative housing. That is how ludicrous this legislation is, and this is what we are dealing with.
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You can speak to the mayor of Mississauga, Hazel McCallion, if you want to know what happens with these buildings. She is the one in Mississauga who gets the phone call on the Friday or Saturday night when the heat has been turned off or the water has been turned off because the people who own the building are out of business because they have no money left to pay for heat and hydro and water. If you think this is fairyland and we are joking, I am going to read you back the Hansard when the repercussions from this legislation hit the street, because they will be your constituents as well as mine.
I do not want to debate the issue on whether we are for or against landlords or for or against tenants. This legislation is against everybody and this section that talks about permissible decreases is the very section that is going to put property owners in this province out of business and tenants out of somewhere to live. When the minister says it is the fact that they are not allowed increases that influences the financial institutions and the lenders, I say to this minister she is so out to lunch she does not even know how these buildings are financed.
Mr Mammoliti: On a point of order, Mr Chairman.
Hon Ms Gigantes: Let it go.
Mr Mammoliti: No, I am not going to let it go.
The Chair: Mr Mammoliti, on a point of order.
Mrs Marland: If it is a point of order, that is fine. He probably does not know what a point of order is either. We will know very quickly whether it is.
Mr Mammoliti: On a point of order, Mr Chairman: I do not think name-calling is appropriate in these hearings. I would like you to rule on that.
Hon Ms Gigantes: It is a verbal phrase, George.
Mr Mammoliti: No. It is bad enough that she looks over here and she insults every one of us on this side, but when she looks over and insults the minister, I have to say something.
Hon Ms Gigantes: It is all right.
The Chair: Thank you, Mr Mammoliti. I do not think there was a definite point of order there.
Mrs Marland: Thank you, Mr Chairman. The problem is, of course, that not one of the government members on this committee today was here when your party was the government, so they have no conception of what name-calling is. I have sat in this Legislature for six years and listened to the rhetoric of the NDP.
Mr Abel: Why does she not speak to the bill instead of giving us a sermon, Mr Chair?
Mrs Marland: I can speak freely. I have sat in this Legislature for six years and heard the rhetoric of the New Democratic Party in this House against landlords and property owners who made their own personal investments; yes, on a business basis; yes, to make a profit on their investment, as anybody would who was making any kind of investment, whether it is in a manufacturing business or a retail business or a service industry area. In this case they made an investment in buildings. In this case their investment is going sour because of this kind of legislation. Here we have a section that says there can be legal decreases in their rent. The minister says that the legal decreases in the rent can happen if there has been neglect of the building.
There are a whole lot of other sections in this bill where legal decreases can be granted and judged by rent officers, with a whole range of interpretation. Are we going to send all the rent officers to a special school so they all interpret every single section of this bill in black and white to mean exactly the same thing? No way. You know that is impossible. It is like any kind of inspector. The rent officers will make the judgement on an appeal by a tenant about what is neglect, what is not neglect or what is a legitimate claim on the part of that tenant about something going on in his building which affects the decrease in the rent, which in turn puts the whole building in jeopardy because, for the most part, these buildings are not wholly owned by the property owners. They depend on financial institutions to lend them money.
As the minister said in the standing committee on estimates when I asked her about what her ministry was going to do to encourage first-time home buyers into home ownership, her answer was, "Well, you know, 40% of the population of Ontario rent their accommodation anyway." She said she had friends who felt there was no difference between renting accommodation and renting money to buy accommodation.
Mrs Caplan: On a point of order, Mr Chairman: I appreciate my colleague Mrs Marland's remarks. My point of order is that I believe we were about to stand this section down and it might be more appropriate if she made her remarks when the section was before us.
The Chair: Maybe I will just ask Mrs Marland. Is it agreeable that we stand the Liberal amendment to clause 10(1)(b) down? I need unanimous consent or we will continue to deal with it now.
Mrs Marland: I am aware of the rules for proceeding and I respect the point made by the member for Oriole. Whether I made my comments now or when this section comes back does not matter. The fact is, the committee is going to hear my comments and I am coming to the end of my comments on this section anyway. With the relative importance that I see clause 10(1)(b) before it is set down, in order that it can be brought back, again with some changes, hopefully improvements, I am sure when it comes back it is not going to remove the area that is of concern to me, which is that decreases will take place by order under the power given to the ministry through this legislation. That is my concern.
It will become a concern of every elected person in this Legislature by the time this act starts to work in the community and we have people in difficulty. If the government thinks that when all these apartment buildings start going out of business because there is nobody to finance them it has enough money to pick them all up and protect the housing for that 40% of the people in Ontario who live in rental accommodation, to use the minister's own figures, then the government is more out of touch than we ever dreamed it was. The government is out of touch to think it is in a position to buy property that, through clause 10(1)(b), goes on the market because the owners have gone bankrupt. What they do not realize is that the government cannot be the landlord for all the tenants in this province.
Furthermore, by allowing decreases in rent, they are going to reduce the quality of life of the existing tenants in rental accommodation today. That is the point this government does not seem to care about. The fact is that if people cannot get financing for their buildings because there is no stability in their rents, there is no guarantee to their income.
Mr Marchese: On a point of order, Mr Chairman: At some point you have to assume that responsibility as Chair and assess whether or not the member has already made the point, which she has made several times already, and whether or not she is continuing to ramble unnecessarily on the same theme over and over again. You, as the Chair, have to assess that and say, "Have we had enough?" I am quite willing to listen to the points of the member possibly once or twice. Could I ask you to comment on that? You are supposed to rule on my point of order, Mr Chairman.
The Chair: I will comment after I hear from other members on the same point of order.
Mr Tilson: This is an astounding request. Surely members of this committee can come to this committee and make submissions and make comments. You may not like what Mrs Marland is saying, and obviously you do not or you would not have interrupted her, but she has the absolute right to come and speak on clause-by-clause discussion. You, Mr Marchese, are preventing her from doing that.
Mr Marchese: Mr Chair --
The Chair: Mr Tilson has the floor.
Mr Tilson: She has the right to come to this committee and express her views. There is no question that she is saying things members of the government do not like, and they are all very good points.
Mr Mammoliti: On a point of order, Mr Chair.
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Mr Tilson: What is he speaking on, a point of order on a point of order? I would only submit that a member of this committee has the absolute right to come and say whatever he or she likes, as long as it is on point, and it is on point.
The Chair: Mr Mammoliti, on the same point.
Mr Mammoliti: On a point of order, Mr Chairman: In terms of what my colleague was trying to express and explain, the previous Chair had ruled on repetitiveness a number of times, if I remember correctly. We feel that the member has repeated herself a number of times and that is where he is asking you to rule.
Interjections.
The Chair: Order. It is, as we all know, interesting to listen to the comments of members, and of course members have the privilege to speak to any section of a bill they wish to speak to. Deciding what is repetitious is a little difficult sometimes.
I bring the committee back to where we are. We are dealing with section 10, or an amendment to clause 10(1)(b), which is a Liberal amendment of a technical nature dealing with this bill. I have been attempting to get unanimous consent to stand this section down. If we do not have unanimous consent, I hope that we will continue to debate it, otherwise we will have to --
Mrs Caplan: Could I ask you to call the question on whether the bill should be stood down so we can see if you have unanimous consent?
The Chair: There is no question needed --
Mrs Caplan: Would it be possible for you to seek unanimous consent?
The Chair: Do we have unanimous consent?
Mr Tilson: On a point of order, Mr Chair, dealing with clause 10(1)(b), either the clause as presented or the amendment: Normally, there has been the introductory part of section 10. The explanation as to why the initial change was made has never been made by the minister. There has been an addition of two subsections.
The Chair: No.
Mr Tilson: Yes.
The Chair: I know it is hard to understand, Mr Tilson --
Mr Tilson: I know it's hard to follow because it has been changed so often, but the original bill said, "Subject to subsections (3) and (5), the maximum rent for a rental unit on a given date is the sum of," and then we go into (a) and (b). Now the section says, "Subject to subsections (3), (5), (7) and (9), the maximum rent for a rental unit on a given date is the sum of," and normally before we get into any of these questions, whether it be the actual section or the Liberal amendment -- in fact, I think that would actually precede the Liberal amendment -- there is some explanation given by the minister as to why we are getting into that area.
The Chair: I believe the explanation was given by the minister.
Hon Ms Gigantes: We passed it.
The Chair: I do not think so. Mrs Caplan, on the same point of order.
Mrs Caplan: I listened carefully and I think if you check Hansard, Mr Tilson, you will find there was an explanation and a vote on the first section. I then read the amendment in and it is, from my experience on committee, just courtesy to allow an amendment to be stood down if the government has indicated a willingness to consider some change that would allow that to move forward. I ask that you reconsider. It is not a major request to ask that it stand down and we will have the opportunity at a future date to discuss fully this section. I believe it is in the interests of the work of this committee to allow that to move forward.
To insist that we discuss an amendment which, while properly before us, may be amended further as a result of the willingness of the government to consider a wording change recommended by legislative counsel I think is a reasonable request, so I ask once again for unanimous consent to stand this section down until the appropriate time.
The Chair: Do we have unanimous consent to stand it down?
Mrs Marland: Mr Chairman, I was interrupted on a point of order three speakers ago.
The Chair: You have the floor then, Mrs Marland. We are debating the Liberal amendment, clause 10(1)(b).
Mrs Marland: If the problem with debating 10(1)(b) can be resolved for now by standing it down, I may agree to that, but what I really take strong exception to is the fact that the government members, who obviously do not know the rules of procedure of debate in committee, are interjecting with points of order because they are upset by what I am saying. I happen to have a different opinion from the government members. They have a perfect right to their opinion; I have a perfect right to mine and that of the people I represent. All I am hearing this afternoon is them wanting to close off my opportunity to speak as a member of this committee in this debate.
If I had not been interrupted on so many points of order because they did not agree with what I said, I might have been more co-operative about setting down this section. I take strong objection to the fact that they are saying subjectively whether I am repeating the same points with which they do not agree and which I think, because they hit home as the truth of the matter, they take very strong exception to.
Having said that, I will agree to standing down the Liberal amendment on this section at this point but I hope the government members will not spend the next three weeks trying to cut off debate just because they do not like what they are hearing. The facts will still be the same once this bill is proclaimed into law and the impact on the tenants and property owners in this province will still be as devastating.
The Chair: Do I have unanimous consent to stand down the Liberal amendment to clause 10(1)(b)? Agreed. That, of course, means we will have to stand down the entire clause 10(1)(b).
Are there questions, comments or amendments to clause 10 (2)(a)? Seeing none, is it the pleasure of the committee that clause 10(2)(a) carry? Carried.
Clause 10(2)(b): Questions, comments or amendments? Seeing none, is it the pleasure of the committee that clause 10(2)(b) carry? Carried.
Clause 10(3)(a): Questions, comments or amendments? Seeing none, shall clause 10(3)(a) carry? Carried.
Clause 10(3)(b): Questions, comments or amendments? Shall clause 10(3)(b) carry? Carried.
Hon Ms Gigantes: Could I suggest, if it is acceptable to you, that you ask, for example, when we get to clauses 4(a), (b), (c), because they fit together, that if anybody has questions on one section he could raise them?
The Chair: That is fine, but instructions to the Chair have been that we go through each particular section, and I guess that is appropriate, but --
Hon Ms Gigantes: This is the section; those are subsections.
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The Chair: Shall subsection 10(4) carry? Carried.
We have a government amendment to subsection 10(5).
Hon Ms Gigantes: I will ask the ministry to give us a little legal explanation here.
Ms Parrish: I believe this is just adding the changes, essentially. It is adding one of these acts. We have the Residential Rent Regulation Act, a second section, and part 9 of the Residential Tenancies Act. The only difference between this section and the old section is we delete the words "without an application," because there could have been increases permitted in the rent that were permitted by an order. By having the words "without an application" in there, it suggested it has to be only the guideline increases, whereas there might have been an order under one of these statutes saying, "Oh yes, you can increase your rent." All this is trying to do is to bring forward orders made under these previous statutes as well as guideline increases made under these previous statutes.
The Chair: Is it the pleasure of the committee that the amendment to subsection 10(5) carry? Carried. Shall subsection 10(5), as amended, carry? Carried.
There is a government amendment to subsections 10(6) through 10(9). Would the minister like to speak to that amendment?
Hon Ms Gigantes: Again, I will ask Colleen Parrish if she can give us an understanding of this amendment.
Ms Parrish: This just outlines the rules you apply in cases where, at some stage or another, a rental unit becomes exempt and then it has to come back into rent regulation. Earlier, when we had our discussion about what maximum legal rent is, we had to say you start out with the rent that was actually charged when rent regulation applied to you.
In cases where units were under rent regulation, then they were not, and then they were under rent regulation, this just really sets out the rules as to what the rent was when a unit has moved in and out of rent regulation. When something comes into rent regulation, the rules have been fairly consistent. It is usually the actual rent that is charged when it comes into rent regulation, or if a unit comes into rent regulation after a statute comes into effect, it is usually when it is first rented after the relevant statute comes into place.
Mrs Caplan: I am sure somebody understands that.
Hon Ms Gigantes: I could give you my understanding of it.
Mrs Caplan: No, I am sure that is clear.
The Chair: Shall subsection 10(6) carry? Carried. Shall subsection 10(7), as reprinted, carry? Carried. Shall subsection 10(8), as reprinted, carry? Carried. Shall subsection 10(8), as reprinted, Carry? Carried. Shall subsection 10(9), as reprinted, carry? Carried.
Section 10 is stood down and will be dealt with pursuant to the actions of the committee on subsection 10(1).
Mr Tilson: I have a question for the minister. I tried to get her to define what maximum rent was. She did not appear to be able to do that. I was looking specifically to section 10 as we have just reviewed it, and it has carried. However, I am interested, just to carry on from the comments made by Mrs Caplan as to whether someone out there understands it. I do not mind telling members of this committee, I have trouble understanding what this section means.
I am not embarrassed by saying that. The minister has indicated that she is going to put forward an education program for both tenants and landlords explaining what the overall bill means. Could you elaborate on what your plans are as far as educating the public on the explanation of Bill 121 is concerned?
Hon Ms Gigantes: I think the essential information is as I described it to you. Are you talking about this section, or are you talking about Bill 121?
Mr Tilson: Whatever the Chair deems relevant.
Hon Ms Gigantes: I cannot elaborate on specific education programs associated with Bill 121 at this point, but I would be glad to describe them to you once we have crafted them.
Mrs Caplan: I suspect you will publish Colleen's phone number.
Hon Ms Gigantes: No.
Mr Tilson: That is the problem I have, listening to the entire discussions we have had on this entire bill. I have gone through, and most people here in this room have gone through, two public hearings. We have had the staff come and give us the rationale on what certain things mean, but we have just passed a section. If we had a test, I doubt whether anybody in this room individually, if he were honest about it, could tell us what it means.
Mr Mammoliti: I can.
Mr Tilson: George, do you want to be first? Tell us what it means. You have no idea what you just voted on.
Mrs Caplan: To be fair, I was being a little facetious. I sat in committee through Bill 51, which was complex. I will agree that this is even more complex than Bill 51 was. As I understand section 10, and I do understand it, it really lays out the formula for the calculation of the maximum legal rent which the rent registry people will have available to them to give to any tenant should someone wish to inquire.
It is a technical part of the bill. It is very complicated. I do not think any average individual out on the street, be he tenant or landlord, really could reasonably be expected to work out the formula. However, there are some very able people in the Ministry of Housing who were able to work through the complexities of Bill 51. I am confident they will be able to work through the complexities of section 10; Pauline for sure, and a few of her colleagues as well.
Mr Tilson: How irresponsible for us, as legislators, to sit here admitting that we have no idea what these sections mean, that we have to hire experts to come and tell us what they mean. What in the world is the average person on the street going to do, when we, as legislators, are passing bills and we do not know what they mean? How irresponsible of us.
Mrs Caplan: If I may, to be fair, these proceedings are being televised. People are very cynical about the work we do. Certainly legislation is very complicated and I think we have a responsibility to try to explain it to people who are watching. I know my constituents in Oriole, my tenants in particular, are very concerned about this piece of legislation. It is not my intent to further confuse matters.
Mr Tilson: But they do not understand it.
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Mrs Caplan: I suggest to you, Mr Tilson, that there are people in the Ministry of Housing who would be happy to come out and explain the technicalities of the legislation. We may not agree with all components of it. It is very complicated and no average legislator, or tenant, or landlord could be expected to understand the legal complexities of any piece of legislation. I think that is a fair comment.
This piece of legislation in particular is very complicated, and there is a mechanism available for people who wish to understand it further. I think it is important for people who are watching these proceedings to know and to understand that. I am pleased to hear that through some sort of education program, or whatever you decide to do, there will be available individuals who will be able to offer people advice and assistance to better understand this very complex and very bureaucratic piece of legislation.
Mr Tilson: I certainly hope there will be a program for members of this committee and members of this House to understand what this means. Something has gone askew when no one understands what in the world we are talking about.
Section 11:
The Chair: Subsection 11(1), there is a government amendment.
Hon Ms Gigantes: Yes, Mr Chair. We have added a number, in effect. In order to add a subsection (2), we have had to identify the first subsection as subsection (1), and that is all that has changed.
The Chair: Questions, comments or amendments to subsection 11(1) as amended? Seeing none, is it the pleasure of the committee that subsection 11(1) carry? Carried.
Subsection 11(2): Minister, is there an amendment? We will have an explanation from the minister, and then your questions.
Hon Ms Gigantes: Mr Chair, this subsection is the section we are proposing as an amendment in order to accomplish the removal of costs no longer borne on capital that has been provided over guideline.
Mrs Caplan: One of the things tenants asked for in this section that I think was very reasonable and that was put forward through the hearings, particularly by the High Park Tenants' Association, the Lonsdale Tenants' Association, as well as others, was separating out the components so that it could be very clear as to what those components were that would be part of this provision. Minister, why has that not been considered, and would you consider it at this time, as I believe it is a very reasonable request?
Hon Ms Gigantes: I do not understand your question.
Mrs Caplan: The separate components regarding taxes, hydro, capital and so forth which make up the capital components, I think, could be listed for clarity. The representations made to this committee had asked, for example, if municipal property taxes, utilities and other capital expenditure components in the rent could be separated from other components of rent, and if so, how.
Hon Ms Gigantes: We are providing an amendment that will do that for increases over guideline, for capital only. Ms Parrish will explain this.
Ms Parrish: What the act provides is that if you have a base rent of, say, $500 and the landlord makes an application for an above-guideline increase for capital that is equal to a rent increase of, say, $50 a month, the landlord will have to show that the rent for that unit is $500 plus $50, which will be the capital component. In the next year, the $500 increases by guideline 6% or 5%, or whatever it is, but the capital component does not. That is what this subsection does. So the capital component would continue to be at $50 until the end of the amortization period, when it is withdrawn from the base rent.
The reason we do not have a separate category for taxes, hydro and so on is that they are all being increased by guideline. The capital component is in its own separate little compartment or package and does not increase by guideline. Essentially, the reason we have that distinction is to say that this is the stuff that can increase by guideline, and this is the stuff which the landlord may charge to the tenant but which is not increased every year by the guideline.
Hon Ms Gigantes: Yes, but the question being raised is a different question, which is the identification for the tenant of the components of the guideline. I am providing an amendment which does that in cases where the landlord has applied.
Mrs Caplan: For example, everyone is really clear on what a capital expenditure is.
Hon Ms Gigantes: We can indicate to you where the amendment on this subject is.
Ms Parrish: We tried to deal with this issue in a slightly different way, through notice of rent increase, which is in subsection 7(2.1) on page 13 of the reprinted version.
The decision was made that the vast majority of landlords actually do not come through the rent review system or the rent control system in a given year. The idea here was to take the view that when landlords come through the rent review system and they get the advantage of rent increases under the rent control system, in subsequent years they should tell the tenants how much they paid for taxes, utilities and heat so that the tenants in future years can figure out whether they should be applying for an extraordinary cost decrease. This was sort of the way we dealt with that problem, as opposed to doing it in every case.
Hon Ms Gigantes: I think that does provide what you were looking for.
Mrs Caplan: There is some clarification there. I am not sure that is exactly what was requested, but it does provide an explanation.
Hon Ms Gigantes: It does not quite meet it. We did a balance here, because to make sure it was happening in every case would be administratively difficult. When a landlord applies for an increase above guidelines, then it is pretty easy to insist on it.
Mrs Caplan: I know that Mrs Poole was concerned about this, because the tenant argument had been that by putting together all the components under one total rent, it was easier to conceal some of the extraordinary operating costs. There may not be as clear an understanding of what was permitted and what was not permitted and why. It was for the purpose of clarity for the tenants so that they would really understand what was going on and have the information available that the request was made. But I hear the point you have made.
The Chair: Any further questions, comments? If not, shall subsection 11(2), as reprinted, carry? Carried.
Section 11, as amended, agreed to.
Section 12:
The Chair: Subsection 12 (1). This is a government amendment.
Hon Ms Gigantes: This amendment was essentially necessitated by our decision, as a result of the discussions that went on in the committee during the summer, that we should set one guideline, no matter what the size of the building. That is what the amendment accomplishes.
The Chair: Are there questions, comments or amendments?
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Mrs Caplan: Subsections 12(1) and 12(2), is that the government motion?
The Chair: It is 12, but I think we should go through them perhaps (1), (2), (3) and (4). Your explanation had to do with them all, is that correct?
Hon Ms Gigantes: That is correct.
The Chair: We will deal with subsection 12(1).
Mrs Caplan: Just for clarification, there are a number of amendments to section 12. Is there just the one government amendment that we are dealing with, subsections 12(1) and (2)? Is that what is before us now?
The Chair: Yes.
Mrs Caplan: I would like to speak to that, then. There are some subsequent amendments to this that I wonder if it would be possible to reorder and deal with first, because I would like to see whether those would be possible. This one deals with the 55%.
Interjection.
Mrs Caplan: No? On subsections 12(1) and (2).
Hon Ms Gigantes: Are you concerned about placing the Liberal motion we have been given? That relates to section 12, but only paragraphs 12(1)3, 4 and 5, right?
Mrs Caplan: No, there is a Liberal motion on subsection 12(1).
The Chair: It might be helpful. I think it is going to be necessary to go through paragraphs 12(1)1, 12(1)2, for example, because there are some amendments to various parts of this. We will deal first with paragraph 12(1)1.
Mrs Caplan: Paragraph 12(1)1 is the amendment by --
The Chair: We have a Conservative amendment to that section. Mr Tilson.
Mr Tilson: We have distributed the proposed amendment to paragraph 12(1)1.
The Chair: Mr Tilson moves that paragraph 12(1)1 of the bill be struck out and the following substituted:
"1. Determine the rent control index taking into account the weights and the three-year moving averages of the operating costs for hydro, heating, municipal taxes, garbage tippage fees, water and sewage fees, insurance, cablevision, superintendent's salary and rent, maintenance, and those provincial and federal taxes the landlord must pay in order to maintain the residential complex, as set out in the prescribed table."
Mr Tilson: We have had a great deal of difficulty. In fact, the minister and the government have indicated they simply are not going to provide any regulations in advance for this committee or for purposes of the House prior to Bill 121 being voted on in the House. Throughout all the cities we spoke to, we heard the representations express concern on a number of these items that we have specified which were not being taken into account by the government.
For example, the whole subject of garbage tippage fees: We raised this during the Bill 4 debates and that was voted down, with some indication by the former minister that it would be dealt with in this legislation and it is not. If there is some explanation in the regulations or if we produce regulations, then it may not be necessary, but we have no understanding it is going to be referred to. We all know what is happening with our environment and how tippage fees are going up around the province and the tremendous effect this is going to have on the operation of apartment buildings. That, we believe, should be taken into consideration.
The same goes for insurance, all these matters. The government appears to be taking the position that there are not going to be any increases in any of these items in the years ahead, that they are going to stay the same, whether tippage fees, water and sewage fees, insurance, cablevision, superintendent's salary and rent; just general maintenance to the buildings, provincial and federal taxes. I do not want anyone to start giving us the old routine about pointing to what Ottawa is doing. We must start looking to what the province is doing.
Unless there is some undertaking that there is not going to be any further increase in taxes -- which we have been trying to get out of the Treasurer, of course, for the last number of days and have failed -- to indicate what he is going to do, surely those items must be considered. Otherwise, where in the world is the landlord going to get the money to operate these buildings?
Insurance rates, whether fire or liability, for whatever reason, appear to be going up. We have had estimates that hydro is going up. For all the items that are referred to, there is very strong indication that the costs to a landlord are going to go up, so the purpose of the amendment is to establish new guidelines upon which the rents will be calculated.
We may not even have all the cost factors. That is another difficulty, but these are as many as we can think of; there may be others. These are the main ones the government appears to have left out for some unknown reason, but these additions ensure that all cost factors will be considered and weighted in calculating the rent control index, because they do not appear to be anywhere in the act as amended and printed as to working into the calculation of the rent control index.
Unless the government is going to put forward the regulations -- unless it has changed its mind since the last meeting, which I believe was two weeks ago -- I submit this is a most relevant amendment. If we want our apartment units to be viable to operate, if we do not want slums created, then there has to be a certain amount of realism put forward as to what the costs of these buildings are to operate.
That is the the general intent of the amendment, Mr Chairman.
The Chair: The minister and then Mrs Caplan.
Hon Ms Gigantes: I draw to Mr Tilson's attention -- and I am sure he is aware of it -- the fact that the ministry has circulated material related to what the guidelines should be under this legislation; in other words, what would be the prescribed table in section 12(1)1. I will just take a moment to explain this: The only item which might be considered new in Mr Tilson's suggestion would be the tippage fee, which I think we would be quite prepared to consider in the consultation process, if that is any reassurance to him.
As far as provincial and federal taxes are involved, they would be included in the items enumerated here. The costs for those items within the table would include the taxes associated with either services or utilities. So if he takes a look at the material which has been circulated and on which the consultation is going on right now, he will understand that the only item he is adding is tippages.
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I would prefer not to spell out these items in the act itself because it means that, if for any reason in the future there is a change in some component of the operating cost structure which landlords are facing, we would have to come back and amend the bill to take account of that, which would be quite cumbersome. I believe it has been the pattern previously, both under the Residential Tenancies Act and the Residential Rent Regulation Act, to have the guideline set out by regulation so that if it is to be changed to reflect changes such as the one he mentioned, tippage fees, we would not have to come back and go through a whole opening up of the act. We could do a consultation around it as we are doing right now and set up a more reasonable guideline structure that way.
Mrs Caplan: This section is a very significant one. As the member for Oriole, with a very significant tenant population, my goals have been to ensure tenant protection, particularly protection from gouging, and to make sure tenants have homes that are well maintained and decent places to live at the same time as ensuring fairness for landlords. So this legislative package is a very significant one and is of interest to my constituents.
Because of the significance of section 12 and the work our critic, Ms Poole, has done, I would ask if the committee, with unanimous consent, would stand down sections 12, 13 and 14 for today. We would be very pleased to proceed with section 15 at this time to help move the sections of the legislation. We would like to speak particularly at length and feel that there will be some discussion. We have some serious concerns with sections 12, 13 and 14 and I do not believe they are going to be dealt with today should you require extensive debate. If you would stand them down, you might be able to make some progress on the other sections of the bill.
The Chair: Do I have unanimous consent to stand down sections 12, 13 and 14? Agreed. We will then move to section 15.
Section 15:
The Chair: One minute, please. The parliamentary assistant has an amendment to subsection 15(1). Do you have an explanation, please?
Ms Harrington: Subsection 15(1) provides for a landlord to base an above-guideline-increase application on eligible capital expenditures. The capital expenditures may be with respect to the residential complex or one or more rental units. This subsection applies to work completed on or after June 6, 1991.
A technical amendment has been made to subsection 15(1) to remove the word "whole" when referring to "residential complex," because such an application can be made for capital expenditures that affect only part of the residential complex.
This amendment also clarifies that capital expenditures incurred on or after June 6, 1991, but prior to proclamation, are covered by the Rent Control Act.
The Chair: Are there questions, comments or amendments to subsection 15(1) as printed? Seeing none, does subsection 15(1) carry? Carried.
Mr Tilson: We have an amendment to subsection 15(1), Mr Chairman.
The Chair: Whoops.
Mrs Caplan: We will give you unanimous consent to reopen.
The Chair: Can we have unanimous consent to reopen?
Mr Tilson: I am sorry. I was talking to --
The Chair: I am sorry. We should have noticed too. We did not.
Mr Tilson: I think we did provide notice to the members of the committee that we were putting these amendments forward.
The Chair: We have unanimous consent. We are going back.
Mr Tilson moves that subsection 15(1) of the bill, as reprinted to show the amendments proposed by the minister, be amended by adding at the beginning of the subsection the following:
"15(1) Subject to subsection 15(4)."
Mr Tilson: This too is a technical amendment and relates to the amendment we are going to be proposing in subsection 15(4). Our amendment to that section allows for those landlords who received an advanced determination for capital expenditures which have been frozen since then to carry out the work. That is the general intent of that amendment.
Ms Harrington: From my understanding, this is a technical amendment in order to allow subsection 15(4) to have no cap on the capital work. Since we are opposed to that, we will be opposing this.
Motion negatived.
Mr Tilson: May I have a brief moment, Mr Chairman? Mrs Marland has just returned.
The Chair: We will just pause for a moment.
We are back in business, are we?
Mrs Marland: If we had more than 20 in our caucus, we would not have to be wearing two hats between the committee hearing and the debate in the Legislature.
The Chair: I will not comment, Mrs Marland.
Mrs Marland: I say respectfully that your members have been doing the same thing by necessity, Mr Chairman.
Are we on the government motion, subsection 15(1)?
The Chair: The Conservative Party's amendment to subsection 15(1) failed. We are now on subsection 15(1). Are there questions or comments to subsection 15(1)? Is it the pleasure of the committee that subsection 15(1) carry? Carried.
Are there any questions, comments or amendments on subsection 15(2)? Seeing none, shall subsection 15(2) carry? Carried.
There is a government amendment to subsection 15(3).
Ms Harrington moves that subsection 15(3) of the bill be struck out and the following substituted:
"(3) A capital expenditure is not eligible if it became necessary as a result of neglect in maintaining the residential complex or a rental unit in it."
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Ms Harrington: Subsection 15(3) provides that to qualify for an eligible capital expenditure, it must be found that the item was not necessary as a result of neglect. It will be the responsibility of the landlord to demonstrate this. Neglect is with respect to maintaining the residential complex or any rental unit in it. It can be either the current landlord or a previous landlord. Note that clause 15(3)(b) has been removed, as capital expenditure replacement provisions are now covered by the cost-no-longer-borne provision.
The Chair: The Liberals have an amendment to this section as printed.
Mrs Caplan moves that subsection 15(3) of the bill be struck out and the following substituted:
"(3) A capital expenditure to replace a system or thing is not eligible if the system or thing does not require replacement."
Mrs Caplan: We think this is very important. We think the desire of tenants is to have needed repairs done. What I have been told by my own constituents is that they want better maintenance. They want buildings maintained. What they are angry about is that often they are being charged increased rents for things that did not need to be fixed and for systems, whether they are water systems or electrical systems, that do not need to be replaced. Our amendment would be very clear: A capital expenditure would not be eligible if it was unnecessary. That is what this amendment deals with. I hope the government will include this, because it is the sort of thing I have been hearing from tenants. Our critic felt very strongly that this was an important addition to this piece of legislation.
Mr Marchese: I have a question to the speaker. Subsection 15(3) as proposed by the government suggests one thing in that it talks about how all or part of the capital expenditure is not eligible to the extent that it became necessary solely as a result of persistent neglect. Your motion appears to be replacing all of that with something completely different, as opposed to this. Are you in agreement with this?
Mrs Caplan: It is our feeling that you are going to have a great deal of difficulty enforcing this section of the legislation. As a former member of North York council, I know how difficult it was for tenants even to get work orders placed on the buildings. That is very difficult to do. To prove neglect is going to be difficult, simply because what is neglect is often in the eye of the beholder. We think it will be much clearer and easier for tenants to be able to come in and say, "This was necessary and this was not necessary." The test of necessity is much easier to prove than neglect. We think this offers greater tenant protection, because when they come to try and show what was neglect, that is a totally new concept. We think to take the concept of necessity, which is easy to prove, would be an improvement to the legislation. You know whether you need a new fridge or a new stove or whether you have to replace all the electrical wiring in the building. Whether it is needed can be proven. The concept of whether you have neglected maintenance and repair is, I think, unenforceable. What you are doing with that concept in the legislation is not in the interest of tenants.
Ms Harrington: I understand why you are putting this forward. It is a very difficult concept. We will not accept this amendment. We believe the test for neglect is a very important protection for tenants and this is a very important part of our bill. But I understand that it is difficult and I would like Colleen to comment on the test.
Mrs Caplan: Perhaps I can ask a question of the counsel or the policy adviser. Has this concept ever been in any legislation before?
Ms Parrish: There are variations of this test --
Mrs Caplan: But this is new.
Ms Parrish: -- but the exact wording of this test does not exist. It is similar to the test in the RRRA. Essentially what we did was to take the test in the RRRA and we analysed why it was not a very good test. One of the reasons it was not a very good test was that people had to show there was some sort of deterioration. Since hardly anybody was around, it was very difficult to show some sort of change over time, because you had to actually show that things got worse over time. At some level you could actually be in the ironic situation where things did not get worse over time but were still, at some objective level, really terrible and you could not pass the test. So the idea was to look at the old test and take out the things which had caused it to be almost unusable as a test.
There is no doubt there is an exercise of judgement in asking, "Is it necessary because of neglect?" just as there is an exercise of judgement in asking, "Is it necessary for structural integrity?" Obviously you are going to have to look at evidence, and the evidence is likely to vary from building to building. It is like any other question of judgement of evidence. That is the sort of question I would add. We have tried to move to a situation where you look at neglect causing repair. Those are fairly straightforward approaches.
The second issue I think you are speaking to is that this amendment, in addition to maintaining the neglect test, takes out the test that said you also had to show that a thing or system required replacement. The reason for that, in my understanding of the government's explanation for this, was that with the costs-no-longer-borne provisions coming in, you could be in a very difficult position if you were a landlord. The problem would go sort of like this: If you bring it in too soon, people will say, "It doesn't need to be replaced." If you bring it in a little too late, it would either be neglect, because you did not do it on time, or the allowance may have come out under costs no longer borne.
We felt that with the addition of costs no longer borne, it seemed like a lot of regulation of the same thing. It got to be like the porridge test: It is too hot, it is too cold, it is just right. Landlords would almost be in the position of having to have superhuman perception to get it exactly at the right second. So we just felt that under the circumstances, with costs no longer borne, it might be perceived as overregulation of the replacement issue.
I agree with you that tenants are concerned about this issue. I also think tenants are very concerned about the issue of neglect and the situation where there is a perception that a landlord has allowed a building to fall apart and then has come in and received rent increases.
Mrs Caplan: I would like to put on the record that I do not think this section, as you have it, is enforceable. I do not think you are going to find that it does what you want it to do. I believe there would be better protection for the tenant interests if you accepted the amendment we have put forward, which has the test of necessity for replacement. I think that is more enforceable and is a better test to have in the legislation. I just want to be really clear: We do not think your approach is going to work and we do not think you will be able to enforce the tests of neglect.
Ms Harrington: We certainly hope this is going to be an important protection for tenants. That is the whole idea behind it.
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Mrs Marland: Mr Chairman, I heard a motion moved by the government, and then I heard a motion moved by the Liberals, and then I heard discussion on the Liberal motion.
The Chair: Yours will be next.
Mrs Marland: My comments are really on all three motions. How are you taking our comments, since the Liberals just made their comment on their motion?
The Chair: We are dealing at the moment with the Liberal amendment to subsection 15(3). The committee has decided --
Interjection: By unanimous consent.
The Chair: -- by unanimous consent, that the bill, as printed, is what we are dealing with. So we are dealing with the Liberal amendment. We are cognizant of the fact that your party also has an amendment to this section, so when we are finished dealing with the Liberal amendment, we will deal with your amendment. Is that clear?
Mrs Marland: Can I speak to what was the government amendment, which is now --
The Chair: No, you will speak to the Liberal amendment. Then we will deal with your amendment and then we will deal with what the government's amendment, so to speak, is.
Mrs Marland: Because it is part of the bill.
The Chair: Do you wish to speak to the Liberal amendment?
Mrs Marland: Yes, I do. I just listened very carefully to the policy adviser, who talked about making this section enforceable. I agree totally with the Liberal member who said this is not enforceable. Of course it is not enforceable, because there are no clear definitions. I think the policy adviser said there would be examples where it would require superhuman perception to make the interpretation. I do not know who these rent officers are going to be; I do not know where they are going to be trained. Since they are the enforcers of this section, I would ask the parliamentary assistant, how are you going to train rent officers to interpret this act?
Ms Harrington: I think what our policy adviser was trying to say is that the definition for "necessary" was a very difficult one timewise, and I think we heard this before under Bill 4 or during the committee hearings, and we understood that. We were trying to make a test for neglect that is workable, and I believe our policy adviser was explaining to you that this test for neglect would be more workable than trying to define exactly the timing of "when necessary."
Mrs Marland: Okay, now could you answer my question about the people who are going to interpret this test? They are the rent officers, I assume.
Ms Harrington: I am not exactly familiar with how the enforcement is going to work, but I will ask Colleen.
Ms Parrish: Yes, the decisions, under the statute, are made by rent officers.
Mrs Marland: Right. So if the decisions are made by rent officers, could you tell me how those rent officers are going to be trained to recognize neglect causing repair? What kind of special training are they going to have in order to enforce this act?
Ms Parrish: We will be having a training process for rent officers for the new statute, as we always have when we change any element of the bill. In fact, recognizing neglect under the new statute is significantly easier than under the previous statute, which was very difficult. In any event, I think recognizing neglect is an easier decision than deciding whether or not something did not need to be replaced, and that was the point I was making. That is why we do not have a provision in our statute in relation to when something has to be replaced. But I understand from my operational colleagues that they have a plan of education and, in addition to that, we have the capacity to pass interpretative rules under the statute, if those should become necessary.
Mrs Marland: Who are these rent officers going to be?
Mrs Caplan: Civil servants, bureaucrats.
Mrs Marland: Yes, I understand that. I know they are going to be civil servants, but who is going to be trained to be able to look at a building and decide on the structural integrity of that building? If it is the balcony, for example, that people stand out on at 27 or 37 floors above the ground, and they step out on the balcony of an apartment about which a tenant has said, "I'm concerned about the structural safety of my balcony because I happen to live on the 29th floor," and the challenge is made under this act and the rent officer comes and looks at it and says, "Yes, the structural integrity is safe," or, "No, it isn't safe," I want to know what kind of training that individual has to make that decision and who these people are.
I say with respect to the parliamentary assistant, it is not good enough to say you have a plan to train these people. We need to know exactly who they are and what the requirement is for them to be eligible to make a decision on structural integrity. Are they going to be structural engineers? I can assure you that I would not want the responsibility of making the kinds of decisions that we are talking about that might or might not be under this section and qualify as a capital expenditure.
Ms Harrington: Certainly your point is well taken that the opinion has to be a valid decision. It has to be someone who knows exactly what has to be in the building structurally. I would like to ask Colleen to comment on whether municipal inspections are going to be involved in this or whether it is going to be from the rent review office. Definitely we have to have people who are qualified.
Ms Parrish: The capacity to call evidence in the bill is very broad and it is like being a judge. If you are a judge, you do not have to be a structural engineer or whatever. What you have to do is be a person who says, "Ah, I need this kind of evidence," and you ensure that the evidence is before you. The rent officer does not personally go over and take samples of concrete. What they do is ensure that the evidence on which they make a decision is before them. That is essentially how all decision-making bodies operate, because no one person could have every kind of expertise.
But if a landlord is coming forward and making a very straightforward application to replace the roof which is 20 years old, you would have probably a pretty straightforward kind of evidence. If you are dealing with a much more complex kind of case, you would have somewhat more complex evidence, but there are quite wide powers in the statute to request additional evidence from the parties if there is some technical issue involved.
As well, for example, there may be municipal work orders on the building and municipal officials may testify as to various structural problems or whatever. It depends on the kind of case. But the individual would look at the evidence, and evidence is tested by the other parties so that the landlords and tenants can ask questions of the people on the other side and test their evidence.
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Mrs Marland: Okay, so now you are saying the rent officers are not going to have the expertise; they are going to have to call for experts in whatever the field is to gather the evidence.
What I would like to know is, who is going to pay now for the evidence that is required by the rent officers? Who is going to pay for the opinion of a structural engineer or a roofing contractor to come in and say, "This should be done because it needs to be done now," or even worse, to have somebody come in and say, "You know, this should have been done 20 years ago"? But they have no evidence to prove that it was needed 10 years ago, let alone 20 years ago. How do you see this evidence being gathered, and who pays for the professional opinion?
Ms Parrish: The statute provides for a number of possibilities. One is, where the municipality is involved and it has issued a work order, then it has already paid for that regulatory action and, in most cases, it would be pleased to adduce the evidence because it wishes to have the defect in the building dealt with.
In many cases the evidence is quite straightforward. For example, there are provisions that say that something has to be done because it is a requirement under the fire code or whatever. That is not very difficult evidence to obtain and it does not cost very much to obtain. There are some issues that may become complex, and it may very well be that landlords will have to bring in some information, just as they do under the current statute -- about why they are doing this or what it is for. There is also the capacity in the statute for the rent officer to order an inspector to do the inspection, in which case it would be paid for by the rent control services. Obviously, however, it is up to the parties to prove their case. It is their case; they are the people who want whatever.
Mrs Marland: Okay, if it is up to the parties to prove their case, and I think you were suggesting the landlords in the example you were just giving --
Ms Parrish: It could be the landlord; it could be the tenant. It depends on who is proving the case.
Mrs Marland: Okay, I did not bring in the fire code because, first of all, the enforcement of the fire code is straightforward. That has already been paid for by the owner of the building and the tenants in the building through their municipal property taxes, because the enforcement of the fire code is the responsibility of the fire department in the municipality.
What I am talking about is, we have two possibilities here. We have the possibility of a tenant claiming neglect and we have the possibility of a landlord being challenged on what work is required, based on the complaint of neglect by the tenant. My question to you is, who pays for that information in that situation? Is the onus on the landlord to pay for professional advice about whether the structural integrity of the building is in place, or is it upon the person who is appealing or grieving under this section of the act? It becomes so complicated because there is nowhere in this act that you have the word "neglect" defined.
If your answer is that no, it is not defined, it is up to interpretation and the interpretation is done based on evidence, I just want to know, before we pass this, who is paying for the evidence. If you are asking a tenant who can barely pay his or her rent and who has a legitimate concern about something that is unsafe -- maybe he is concerned about the wiring in his old building because he has had some problem with electrical outlets; maybe he is concerned about the fact that he has a new stove that is not working correctly -- are you saying that whatever the complaint is by the tenant in that building, he has to provide evidence of neglect?
Ms Parrish: Anybody who wants to adduce a case has to provide evidence. Perhaps where we are getting a little tangled up is in the assumption that the only kind of evidence that counts is expert evidence.
Mrs Marland: No, that is not what I am saying.
Ms Parrish: In fact, tenants can come forward and say, for example, "I have lived in this unit for 10 years and my windows have never been caulked." That is evidence. You do not have to have a structural engineer to give every piece of evidence. There are kinds of evidence. I am a public servant, so I am trying to explain what these sections are. Sure, there is a range of evidence, but not all evidence has to be expert testimony.
Mrs Marland: No, I agree.
Ms Parrish: There could be cases where parties will wish to call expert testimony, and that is not prohibited, just as under the current statute parties call expert testimony. But it is not required. They have to have evidence of some kind. They cannot simply say, "I say there is neglect." And then I say -- I am the rent officer -- "Why is there neglect?" They say, "That is just what I say." There has to be some why, but that evidence may or may not be expensive. It may or may not be professional or technical evidence. In fact, in many cases, the evidence of long-standing tenants as to what actually happened in the building is good evidence, and if their testimony is credible, that evidence is just as good as any other kind of evidence. But there is a range of potential kinds of cases that could occur.
Mrs Marland: Absolutely. I am not disagreeing with you, and that is not the point I am making. I totally agree with what you have just said, because it stands on its own. Even a new tenant moving in who finds there is a gale blowing through the window can recognize whether the windows have been caulked recently or not.
But take, for example, the new tenant who moves in and takes his lawn chair out on the balcony and while he is sitting there realizes there is a tremendous amount of rust and erosion to the iron railing on his balcony going down into the concrete platform he is sitting on, and then he reaches over and he finds that this moves, so he is concerned about the safety of the iron railing. Then he may even be concerned enough to want to question whether, through neglect, the iron railing has not been maintained, but also that there is some structural failure possible with the platform of the balcony itself. As a tenant, what happens if I phone the ministry and say: "I have this concern. I want to know who is going to make the decision as to who pays for the evidence to make a decision on the structural safety of that balcony"?
Ms Harrington: I would think that normally the tenant would either call the local rental review office or, if he wanted an inspection to have a qualified person assess the danger or the situation, he would normally call the municipality and have an inspector come and assess the situation for him in that kind of situation.
Mrs Marland: So what you are saying is that the possibility of structural failure in a building and the decision on the structural integrity of a building is the responsibility of the municipality to interpret?
Ms Harrington: I know with all kinds of things within a building, whether it is electrical or plumbing or the heating system, the tenant does contact the municipality and it would issue a work order if it felt something had to be done. I would think the same situation would occur here. If you get into very technical things, such as whether or not the cement is in a very dangerous situation, then maybe the municipality would have to go a little further and bring in an expert.
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Mrs Marland: Right. That is where the crunch comes, because up till then this is all very straightforward. We have now found that the balcony is unsafe and the balcony railing is insecure and the tenant out on the balcony is now unsafe, and the municipality has paid for staff to make that judgement.
Now what we have is the question under the legislation we are debating here this afternoon in subsection 15(3) of whether the existing situation with my unsafe balcony is because of neglect. That is the point at which we deal with an opportunity for the landlord, the property owner -- as soon as you use the word "landlord" there is a connotation that goes with it, so I am going to refer to the property owner, the person who is responsible for ensuring that the balcony is safe, only as an example -- now we are dealing with the question of whether he is eligible to pay for this as a capital expenditure or not.
It is so critical because the interpretation of whether or not it is neglect decides on opportunities for that property owner to recover the costs, and if we are talking about something structural, we are talking about a major expenditure. When I say "recover," I mean get the money to pay for it: I do not mean to make a profit on it but just get the money to pay for it out of the income from the building. That opportunity pivots on this section of the bill, which says, "A capital expenditure is not eligible if it became necessary as a result of neglect in maintaining the residential complex or a rental unit in it."
That is such a powerful section, and I suggest that unless you can come up in the next two weeks with a better, or any, definition of "neglect," which currently does not exist, you cannot go forward with a section that would be totally unenforceable because there is no definition.
There were examples in Bill 51 which were difficult to enforce because of the words. The words did not have a qualifying description and they were open to a whole latitude of interpretation. In this case, we have tenants possibly at risk and we have the property owners possibly at risk, because the work needs to be done, and who is going to pay for it? It all pivots around these people we call rent officers, and we do not even know what their training is going to be.
Mrs Caplan: I just have a very brief interjection, if maybe you would allow it.
Mrs Marland: That is fine.
The Chair: Brief interjections might be permitted.
Mrs Caplan: They are very brief. I think Mrs Marland raises a very good point. She refers to Bill 51, which, as I said earlier, was a very complex piece of legislation. It introduced some new concepts which proved to be difficult to enforce. The point that I believe needs to be made is that I think what has been produced by the government is not going to serve the interests of tenants because it again introduces all these new concepts. If I were offering advice, I really would suggest that it would have been in the interests of fairness to landlords and simplicity and a greater understanding for tenants if you had chosen instead to bring forward amendments to Bill 51 to have made it better, to address those areas where it was not working as well as we had all hoped it would, rather than bringing forward this whole complex new approach, which I think is not going to serve tenant interests and will lead to the kind of confusion Mrs Marland has just spoken to.
Ms Harrington: Certainly that is your opinion. We have been dealing with this now for some time and, as you know, we have a commitment to bring forward a system that works well for tenants and enables landlords to maintain these buildings. This is a reflection of that.
This particular section is very significant. It is what we feel is the real crux of the protection for tenants, and that is this word "neglect." I know it is going to be difficult, and possibly I could ask my policy person to try to revisit that definition or test. I think there are other people who may want to comment further.
The Chair: Actually, I have two members on the list right at the moment. Mrs Caplan was just in there for a brief interjection. Mrs Marland did have the floor with a question to the parliamentary assistant.
Mrs Marland: If I may respond to the parliamentary assistant, for whom I have personal respect, I have to wonder, Margaret. When you say this section enables landlords to maintain these buildings, if we are talking about a major expense, it is this very section that does not enable them to correct it, because they risk under this section, with the latitude of the interpretation of the word "neglect," not being able to claim what has to be done as a capital expenditure. That is what is wrong with this.
When you say it enables them to maintain these buildings, what about the property owner who just bought the building, say, in the last five years, and there is an example of something that, through someone's interpretation, may be directly attributable to neglect, but it was neglect five, 10 or 15 years ago? Maybe it was a building that through some void in administration missed an inspection in a certain area, and maybe now the building is at risk because there is a structural fault in that building.
This is not fictional. There have been examples where cement has not been the right strength for that use and application of concrete, for example. That can be interpreted as neglect at that time, and now, 10 or 15 years later, somebody is going to come along and say: "It was neglect. It can't be eligible as a capital expenditure."
I am simply asking you, "Who is going to pay for it?" If it is not eligible as a capital expenditure -- and you can talk about any example you want to give, that is thousands upon thousands of dollars worth of work. There will be two options. You will either allow it as a capital expenditure and the work will get done or the work will not get done and the building will be shut down and those tenants will be out of their accommodation.
It is great to think, "We're going to make these decisions on what's neglect and what's eligible as a capital expenditure." In the real world, what is going to happen, whether you like it or not, is that it becomes a capital expenditure by the very volume of cost itself. If we say, "Oh no, it's neglect, it's their fault. If it had been done earlier, it wouldn't have happened. It should have cost less," the fact is that today they will not be able to borrow the money to invest in making that major repair, and they are not eligible under the capital expenditure clause.
I realize we now have a vote, with the bells ringing, but I look forward to our getting back to this debate.
Ms Harrington: I cannot comment?
The Chair: We are being called to the House for a vote. I will recess the committee. I suggest we will take up this matter on Thursday at 10 am. We are adjourned.
The committee adjourned at 1759.