CONTENTS
Wednesday 29 April 1992
Subcommittee report
Appointments review
Neil Bullock
Stuart Medd
Bing Wong
John White
STANDING COMMITTEE ON GOVERNMENT AGENCIES
Chair / Président: Runciman, Robert W. (Leeds-Grenville PC)
Vice-Chair / Vice-Président: McLean, Allan K. (Simcoe East/-Est PC)
Bradley, James J. (St Catharines L)
Carter, Jenny (Peterborough ND)
Cleary, John C. (Cornwall L)
Ferguson, Will, (Kitchener ND)
Frankford, Robert (Scarborough East/-Est ND)
Grandmaître, Bernard (Ottawa East/-Est L)
Marchese, Rosario (Fort York ND)
Stockwell, Chris (Etobicoke West/-Ouest PC)
Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgienne ND)
Wiseman, Jim (Durham West/-Ouest ND)
Substitutions / Membres remplaçants:
Hansen, Ron (Lincoln ND) for Mr Marchese
Jordan, Leo (Lanark-Renfrew PC) for Mr McLean
Clerk / Greffier: Arnott, Douglas
Staff / Personnel: Pond, David, research officer, Legislative Research Service
The committee met at 1014 in room 228.
The Chair (Mr Bob Runciman): I am going to call the members to order. We have representatives from each party. We have witnesses who have travelled some distance, so I think we will start.
SUBCOMMITTEE REPORT
The Chair: The first item on the agenda is the report of the subcommittee on committee business. That's attached to your agendas, I am advised. Has everyone had a chance to look at this? Are there any questions on the selections for review? No questions? No concerns? We don't require a motion if we don't have any concerns.
Mr Jim Wiseman (Durham West): About this time recommendation, consideration of one to two hours, I thought we all agreed that it would just be half-hour reviews for all those.
The Chair: It's a half-hour, I'm advised.
Mr Wiseman: Is that what it means?
The Chair: It's a misprint.
APPOINTMENTS REVIEW
Resuming consideration of intended appointments.
NEIL BULLOCK
The Chair: All right, fine. We'll move on to the next item, which is a half-hour review of the intended appointment of Mr Neil Bullock as a member of the Produce Arbitration Board. Mr Bullock, would you like to come forward and take a seat, please.
Mr Neil Bullock: Morning, gentlemen.
The Chair: Welcome. I'm sorry to keep you waiting. The process is a 10-minute assignment to each caucus to direct questions to you, and for your responses as well. You were selected by the Conservative Party. We don't have a representative here as yet, although I am advised he's on his way. I'm going to look to government members perhaps, if they are prepared to begin the questioning. Mr Wiseman.
Mr Wiseman: I'd just like to begin by asking, how did you come to know about this job?
Mr Bullock: I received a telephone call from somebody in the ministry who said the position would be coming available and they were looking for some candidates to fill it. They indicated that they felt I was qualified. As a company, we've decided over the years to try to stay involved in the industry, so I volunteered to accept the nomination and see where it took us.
Mr Wiseman: I understand you're the industry appointment, that you're selected for this board by the industry?
Mr Bullock: Correct.
Mr Wiseman: So you have a long history of working with the industry?
Mr Bullock: Longer than I care to admit, I think.
Mr Wiseman: Can you give us an idea of what you will be doing on the board and what qualifications you have that would allow you to be able to do this job effectively?
Mr Bullock: My understanding is that the board is to deal with any disputes that arise between producers, dealers, shippers or processors. They are not too frequent, I understand, but I think that my background, coming from a farm as a child and coming up through the ranks of a small produce company that has now turned into one of the larger ones in the province, selling and distributing the product for 186 growers in the province, which I believe makes us the largest 100% Ontario produce distributor in this province, gives me a pretty good background to be objective. I've seen lot of problems over the years and I've seen how most of them have been resolved amicably. I'm fairly aware of some of the unjust trade practices that can and do take place, so I don't think I come to this position very naïve.
Mr Wiseman: Do you have any ideas about what you would like to change about it, how you would like to make the board work more effectively or how the process of making the deals and so on could become more efficient, to the benefit of everyone? Do you have any ideas about that?
Mr Bullock: I think one of the major problems -- I am not sure this is under the power of the arbitration board -- with the legislation that exists in this province is that when a dispute does arise, particularly between a marketing board and a producer under that board, the legislation that's provided to the board to deal with a renegade grower, as we'll call him, lacks any teeth to be of any real effect.
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Mr Wiseman: What's a renegade grower?
Mr Bullock: One who chooses to circumvent the board or dismiss the regulations of the board, the problem being that the growers who generally choose to do that are of such a size that the financial penalty for going against the regulations is insignificant to them and the time taken to deal with any issue is so long that the crop that's being dealt with is probably harvested and out of the field and money collected and banked before it ever gets to the arbitration.
Mr Wiseman: Without using any names of renegade growers, could you give me an example of how it would work and what the board would be able to do, how the board would be involved?
Mr Bullock: In the case of the Asparagus Growers' Marketing Board, which has since disbanded its marketing function for fresh, the growers splintered off because the renegade situation wasn't dealt with, so the growers lost their faith in the marketing board. This was combined with the fact that the cost of operating the board appeared to be too high, so the board actually dissolved its function.
What had happened was that there were some growers circumventing the system in season, and if you understand the asparagus production in Ontario, it's only a seven-week production period at best, so on the second week of production, the issue was brought to force. By the time there was any reality of dealing with the situation, the asparagus crop was three months over, so you can see how ineffective the legislation is. It can't act fast enough, and I am not saying we can fix that, but this is the frustration of the legislation.
Mr Wiseman: I am a poor urban boy who doesn't really understand a whole lot about agriculture and how this works, so what did this renegade do? Did he just plug the market with --
Mr Bullock: No. The marketing regulation for the asparagus board was that all product had to be marketed through a one-day-of-sales operation handled by the marketing board. This grower chose to market it himself at below-board prices, so he broke the regulation stipulating that he had to market through the board so that his product would go into the provincial price pool so everybody would receive equal benefit for their product. He also sold below market price, which tends to put a downward price -- the board loses credibility in the marketplace because, having said to the chain stores and the customers that there is one price, all of a sudden there are two prices.
Mr Wiseman: The effect on the producers would also be detrimental in that if somebody's putting it on the market below the price, then they may not be able to make money in terms of their own crop.
Mr Bullock: Exactly, because as soon as there is a cheaper price on the market that's available, the buyers tend to take that price and flaunt it to the other sources of product, and eventually it creates a downward pressure on the price unnecessarily. It doesn't always happen that way.
Mr Wiseman: One of the difficulties I read for the fresh produce producer in Ontario is that the major chain stores will make deals -- year-long deals, 12-month deals in the US -- and that creates a problem because our crops are seasonal and they have a difficult time putting it into the stores. Is that accurate or is that a misconception?
Mr Bullock: I would say not. They have their traditional suppliers and they have loyalties or commitments, if you want to call them that, with different suppliers both sides of the border.
The problem in Ontario, or in Canada you could say, is that the growers tend not to get organized enough to be able to supply the chains with the big volumes and continuity of supply they are looking for. Our organization is one of the few where we have a large grower base of committed growers that can put a chain store on a feature -- put a big advertising promotion in the paper, because we can assure them a consistent supply over a period of time and give them a forecast price three weeks in advance. The smaller growers can't do that, so by not participating in a large organization, they shut themselves out of that market quite a bit of the time.
Mr Wiseman: I don't know if this is a function of your board, but would you be responsible for trying to maybe organize a little bit more?
Mr Bullock: I don't think that's the mandate of the board at all.
Mr Wiseman: That would be another function of some other agency?
Mr Bullock: Yes. There's an organization in Ontario called Ontario Horticultural Marketing Services, which is a branch of the Ontario Fruit and Vegetable Growers' Association, that tries to promote grower interaction and get them to organize together.
Mr Wiseman: I have no further questions. Do any of my caucus colleagues have any?
The Chair: Mr Hansen, do you?
Mr Ron Hansen (Lincoln): No, I think he's covered pretty well all the bases.
The Chair: Very well. Mr Grandmaître?
Mr Bernard Grandmaître (Ottawa East): Thank you, Mr Chair. I'm a city boy, Jim, so following you will be easy, I guess, because our questions are not always pertinent to what farmers are expecting of us, but anyway.
Interjection.
Mr Grandmaître: Thanks, Will. Tell me how free trade has affected producers and processors in Ontario.
Mr Bullock: Those are two separate issues. The processors have been affected dramatically, although my experience in the processing side is very limited. Processors by their nature are taking raw material and processing it into something. One of the big industries in Ontario, of course, was tomato paste, ketchup and fruit juice. They don't necessarily have to buy that as raw material, they can also buy it partly processed in bulk, and free trade has made it more attractive for them to buy some of that stuff across the border.
On the fresh side, the tariff barriers and duties on fresh produce were, with the exception of three items, tomatoes, broccoli and I think cantaloupes, never more than 50 cents a unit and they were never really a detriment to trade at all, even before free trade.
Harmonization of pesticides is probably one of the bigger issues in the free trade deal, in that the Americans are allowed to use some chemicals on their crops that we are not. Once they've used it, they can ship the fresh fruit into Canada and compete with ours. The growers are definitely at a disadvantage not being able to have the same materials available to protect their crops in the field.
Mr Grandmaître: If you were the adviser to our Minister of Agriculture and Food, how would you advise our minister to not counteract but become more competitive?
Mr Bullock: That's a hot potato there, one I have an opinion on, though. Over the years the province and the federal government have had several programs to subsidize Ontario growers. That's a bad word these days, but they've helped them out in bad crop years and sometimes they've helped them out in good crop years, even though it was perceived that they had a bad one. But they've always made the money available to individuals, which I've always thought was a mistake.
When the programs known as BILD grants were on back in the 1970s, Quebec had one differentiation in its policies, that it only made the moneys available to growers who would organize in groups. Because of that, they've developed a very strong grower base there, with organized groups, cooperatives and one-day-of-sales operations with several growers, and they are hurting Ontario now, because they are in a better position to supply the chain stores with continuity of supply and forecasts of price.
Giving it to individuals, there's many cases, and I'm sure they've been documented since, where growers who really had no business getting money, who were actually only part-time growers or first-time growers, got the money and just wasted it away. It did no good for the industry whatsoever.
I think reactive subsidies to growers to bail them out is a mistake. I think proactive injections of funds that encourage growers to get organized and strengthen their position in the market to make a better industry is where the money should have gone. I understand that this kind of money is not available now, but my opinion is that it was misdirected in the past.
Mr Grandmaître: Do you think we should be spending more money or investing more money in research?
Mr Bullock: Yes and no. I think research is important, but in Ontario the research has fallen behind the rest of the world. For example, in the greenhouse industry, the research being done in Ontario is probably reinventing the wheel that took place in Holland two years ago. The most progressive growers in this province in the greenhouse industry go to Holland, sequester the technology that's been developed there, bring it here and they're two years ahead of their government's research here. I think the research will continue, but I think there should be some kind of system in place where they access the research that's been done elsewhere in the world, especially when it's well known that the research is there.
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Mr Grandmaître: Having said this, do you think our producers and processers in Ontario are slipping as far as keeping up with the first-class technology or research is concerned?
Mr Bullock: They're doing both. I divide the producers in the province into growers and farmers. They're both the same thing from the street, but if you get into the management of the farm, the growers are the people who are running farms as a business. Farmers are people who are still just farming by the seats of their pants, and those people are sliding and they're sliding fast. The people who are organized to run their farms as businesses are making good money. They're putting out the kind of numbers; they're organizing. There's a future for agriculture in the province, but there's not a future there for everybody.
The Chair: Mr Jordan, do you have any questions for this witness?
Mr Leo Jordan (Lanark-Renfrew): As you know, I am just becoming sort of briefed on the purpose of this. You're being appointed to this arbitration board?
Mr Bullock: I've been nominated.
Mr Jordan: I'm trying to acquaint myself -- you've been nominated. Do you make application to serve on this arbitration board?
Mr Bullock: No, I was approached by the ministry to see if I would be interested in serving.
Mr Jordan: Is that the normal procedure for selecting members of the board?
Mr Bullock: I couldn't tell you. I don't know what the normal procedure is.
Mr Jordan: Is there any public advertisement of people who would like to serve on these boards, or are they approached and selected as you've indicated here?
Mr Bullock: I don't know.
Mr Jordan: Perhaps I'm repeating what you've already said. Have you reviewed your personal qualifications to serve and be part of the board before I came in?
Mr Bullock: Briefly, but I don't mind recapping. You can see by my résumé the involvement I've had. I grew up on a farm as a boy and worked my way from there. I had a brief stint in California when I thought there was obviously a better way to make money, but there wasn't -- and here I am again. But I've seen a lot of ups and downs in the industry, and I've seen a lot of the kinds of games that can be played in the industry. There's not much out there that would surprise me, and I'd like to think I could be very objective about anything that came on the table before me.
Mr Jordan: What types of things do you expect to find coming on the table to make decisions on?
Mr Bullock: From what I see going on in the industry now, I would think that most of the things that are going to hit the table in the next few years will be board-related, marketing board problems, because those are the areas where there seems to be a fair bit of friction, between the people who are handling the product and the people who are producing it.
Mr Jordan: Can you clarify that for me? There are too many people --
Mr Bullock: No, there's a lot of dissension in the ranks. Some of the people within the marketing boards, even though they may have voted for them previously, are starting to feel that marketing boards are either costing them too much money or are operating ineffectively; partly because when there are growers within the system who don't abide by the regulations, it seems the legislation isn't strong enough to deal with them. When somebody breaks the rules and gets away with it, it tends to break down the system, and that's what's been going on.
Mr Jordan: Is this the result of a consolidation of growers into larger operations? Are these the people who tend to ignore the board and go their own way?
Mr Bullock: Within the board there are people who are entirely committed, there are people who are opportunists, and then there are people who sit on the fence and kind of go with the flow. It seems that most growers, if you get them in a room, agree in principle with the function of a marketing board; they understand the whys and wherefores, why it works, why it has to work, and they'll vote for it. When it's actually implemented, there always seems to be a certain number of the rules and regulations they disagree with, which creates minor friction, but when somebody breaks one of the larger regulations and it's not dealt with, then the people who are sitting on the fence tend to go the other way.
This is what we're seeing now. The Ontario asparagus growers' marketing board has completely disbanded its marketing function of fresh because of that: lack of grower support. The Ontario Greenhouse Vegetable Producers' Marketing Board is shaky; it almost went bankrupt last year. They seem to be coming back financially but there still seems to be an awful lot of internal conflict.
Mr Jordan: These problems would seem to be as much internal to the board as they are to the growers who are abusing or ignoring the board.
Mr Bullock: It's a big concern for the board because, in their own words, they're getting very frustrated as to how they deal with these problems. They have the regulations in place, but the penalties aren't significant enough to really discourage any major producer from breaking the rules.
Mr Jordan: I think I heard you mention that the future of this industry, if I may call it that, is not too good for the person referred to as a farmer but there's money to be made by the grower. When you say that, are you stating that the farmer is a mixed farmer, that he has other --
Mr Bullock: No. Really, it's not a good thing I did to define them that way. My definition of a farmer is a producer in the province who is maybe not capable in management skills, not doing his homework, whereas what I call the grower is a professional farmer: He's managing his farm properly, he's doing his research and he's prepared to go to market. I guess the difference is a guy who finds a market for his product, then buys the seed. The other fellow, the farmer, buys the seed, plants it, gets it ready for harvest and then worries about where it's going. That doesn't work any more.
Mr Jordan: So in that light, would you see the board as giving assistance or direction to the so-called farmer who is planting his seed and then it's ready to crop and he doesn't have a market?
Mr Bullock: Marketing boards make it feasible for the poor grower, the farmer, to survive, because whether he plans or not he's got an organization doing it for him. All he has to do is listen and the technology and the changes that are available to increase his production and quality are available there for the taking, because it's all available at the board. I'm not saying that boards are the be-all and end-all, I'm saying organized marketing is, but not necessarily through marketing boards.
Mr Jordan: Is there any type of quota system in place?
Mr Bullock: Not in produce.
Mr Jordan: Should there be?
Mr Bullock: No.
Mr Jordan: You believe in the free market.
Mr Bullock: Yes.
Mr Jordan: Are there any field representatives who go to the actual producer site or farm site?
Mr Bullock: Within the marketing boards?
Mr Jordan: Yes.
Mr Bullock: No, financial restraint prohibits that. They don't have the funds available to be hiring. They've actually been cutting down on their staff trying to keep things running as smoothly and cheaply as possible.
Mr Jordan: In what three main areas would you see that the board could guide the producer or the grower or farmer? In what three main areas could he limit his production costs?
Mr Bullock: Are you talking about the arbitration board?
Mr Jordan: Yes, from your point of view.
Mr Bullock: I don't believe that's within the mandate of the arbitration board.
Mr Jordan: It isn't?
Mr Bullock: No, I think it's just to deal with disputes. I think what you're talking about is covered by the Farm Products Appeals Tribunal. The Farm Products Grades and Sales Act deals with that.
The Chair: Mr Wiseman has a quick question.
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Mr Wiseman: It arises out of all the conversation this morning. One of the comments you made was about the length of time it takes for the board to make a decision. Can you see any procedures or regulations or any way it can be changed so that decisions can be made much more quickly so they're more relevant and will avoid what you've described as a very negative factor, in terms of marketing boards continuing to exist and penalizing people who break the rules?
Mr Bullock: I'm not well-versed enough to know all the ins and outs of that, but I know the Ontario Fruit and Vegetable Growers' Association is lobbying the government now to try to get some changes made which they feel will strengthen the legislation. I don't know how far they're getting but I know they're working diligently on it.
Mr Wiseman: Would it be fair to say that you really feel the success or failure of some of these boards is going to be based on how fast you can make decisions?
Mr Bullock: That and the financial capability of pursuing the cases. The thing that almost broke the greenhouse marketing board was legal actions it was taking against the renegade growers.
The Chair: That concludes the questioning, Mr Bullock. Thank you for appearing here this morning. We appreciate it and wish you well.
STUART MEDD
The Chair: The next witness is Stuart Medd, an intended appointee as a member of the Travel Industry Compensation Fund Board of Trustees. Welcome to the committee, sir. You're familiar with the process. You are selected for review by the Conservative Party. Mr Jordan is a substitute this morning. I'm going to change the rotation so I can give him an opportunity to become more familiar with the issue and the matters we're discussing, and look to a government member to begin the questioning. Mr Wiseman, do you want to lead off again?
Mr Wiseman: To begin with, how were you selected to be nominated for this position?
Mr Stuart Medd: I'm involved in an organization called the Canadian Association of Tour Operators. Until now, a member of our association has been a trustee of the Ontario Travel Industry Act. His time is up, and I believe he recommended that my name be put forward to be a trustee. I was then asked by the ministry if I would allow my name to stand, and I consented.
Mr Wiseman: So you're nominated by the industry.
Mr Medd: Technically speaking, I was nominated by the ministry. My name was put forward by the industry.
Mr Wiseman: That's fair enough. The travel industry compensation fund sometimes takes a pretty good beating when something major happens in the travel industry, for example, when a major tourism company folds. Do you feel the money paid into the fund is adequate, that it provides enough insurance for travellers?
Mr Medd: I would answer that by saying there has been until now a ceiling on the fund that would be payable for any failure. That ceiling has been increased, depending upon the amount of the failure. Is there enough money? Right now there's not. The fund does not have sufficient funds. I believe the fund is operating on a line of credit secured by the provincial government. I don't know whether that answers your question, but I believe the consumer should be protected and that there should be a fund to protect the consumer. We as an industry pay into that. Right now it's depleted.
Mr Wiseman: Is there any other way it could be done, maybe buying travel insurance or something, other than through this kind of fund? Should it really look like this?
Mr Medd: Again, I believe the fund and the regulations are currently under review. I can't speak on the insurance aspect, but presumably, yes, a default insurance could be purchased. There could be a user-pay system or there could continue to be an assessment of the registrants who're registered under the act. I believe there is more than one way, yes. I'm not sure from a legal or practical standpoint how sound those other ideas are.
Mr Wiseman: This question is of a specific nature. I don't know if you can answer it or not, so just feel free not to. There is a case where a person would buy a first-class travel ticket to Europe and then the airline would bump them from first class and they would travel third class but there would be no refunding of the difference. Would your tribunal be responsible for reviewing that or trying to help solve that problem?
Mr Medd: That would be totally out of the realm of the trustees under the act. That would be basically a commercial practice on the part of the airline involved. But no, this group of trustees purely administers the compensation fund.
Ms Jenny Carter (Peterborough): I was just wondering about the general state of the travel industry at the moment and how the recession has affected it. I also have in mind my own feelings when a few years ago we were in Cuba and the airline we'd gone on collapsed while we were there. Different people's holidays were affected in different ways. Some had holidays that were shortened, and there were periods of uncertainty and so on. It seems to me that even if that kind of event is ultimately covered, nevertheless people are going to think twice about committing themselves to trips if they're worried that this kind of thing might happen. I'm just wondering about that aspect of it.
Mr Medd: I'll answer the first part of your question first, on the state of our industry as we see it right now. Certainly the travel industry has been impacted negatively by the recession. If we believe what we hear, we are starting to recover from the recession. Last year was particularly bad because the woes of the recession were compounded by the Gulf war. I don't have to tell you that it literally stopped travel to some regions of the world. We had a double hit last year in the industry.
Certainly, speaking on behalf of the tour operators whom I'm basically familiar with, we are in a recovery mode right now, very definitely. I think I can confidently say that every operator improved dramatically from the previous year. But that was to be expected; there is no Gulf war this year. That's not to say we've recovered. With the last recession, in 1982, it took our industry as well as others probably three years to recover. Why would we think this time around it's going to be any different? We're in a recovery stage right now but the industry by and large is doing better.
Ms Carter: Would you say there's been a shakeout of the weaker firms and that the ones that are in there may be more secure now?
Mr Medd: There will continue to be; I would say so. Our business is no different from any other in that the strong will survive. There are certainly people within our industry who are taking steps to vertically integrate and do all the other things that will ensure their survival.
As to the second part of your question, in the event of a failure, people's holiday plans are disrupted. That's very definitely true and that's very unfortunate. But Ontario is almost unique -- I say almost unique because there's a similar act in the provinces of Quebec and British Columbia. The alternative would be that the holidays would not only be disrupted, but that the consumer would lose his money.
Under the Ontario Travel Industry Act and our compensation fund, in the event of a failure there may be some changes, but generally speaking, the person will get his holiday, albeit altered somewhat. More important, he will be able to get his funds back, which will allow him to rebook a holiday. I think that's the important aspect. We will never, ever have a fund or an act that will protect the consumer against the variables of business. I know. I bought a carpet two years ago. Before it was delivered, the carpet dealer went out of business. There was no fund. I lost my money. In the travel end the consumer is very fortunate.
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Mr Robert Frankford (Scarborough East): I think this has actually been touched on, but perhaps you could clarify it. International airlines are essentially excluded?
Mr Medd: They are excluded. They do not have to pay in the fund; yes, that's correct. I believe the rationale behind it is that they are a federally regulated group, the international and even the domestic carriers, so therefore they do not pay into the compensation fund. Therefore, theoretically there is no protection offered to consumers who have booked with the international airline that may fail.
Mr Frankford: Have you had any thoughts about whether something should be done about this or can be done about it?
Mr Medd: We get into a very grey area, and as I say, the act and the fund are currently under review. My association has a view that we, the registrants, who pay into the fund cannot afford to pay for protection against the failure of a foreign supplier. I mean, God forbid, none of us ever expected Pan American Airlines to go bankrupt. The impact on our fund could've been huge if we had been required to protect the consumer who may have booked directly with Pan American, or booked with any other foreign carrier.
My view of the fund is that it should be there to protect the registrants and the consumer should be made aware that if he is buying through a registered travel service supplier, then his funds are protected. If he does not buy through a registrant, then his funds are not protected. Frankly, if we don't do that then we may be too open-ended at the other end. It's not a taxpayer or a government fund; it's an industry fund. I'm not sure that we can afford to insure the world.
Mr Frankford: Do you think that recreational or business travellers are sufficiently aware of this? Would they be willing to insure themselves, or is it not worth insuring?
Mr Medd: Again, we get into an area where I believe the consumer out there believes that his funds are protected, period, for anything to do with travel. I believe that's what the consumer feels. That's not the case. We as an industry should probably do a better job of informing the consumer. I say, "We as an industry," but also the government as well because it's a government act. We should probably inform the consumer better, but certainly when we now move to review the act and review the coverage of the fund we will be left with something that is pretty cut and dried. Then I think it's our job to make the consumer aware.
If the consumer wants protection for his funds on a non-registrant, I know one of the things we're investigating right now is default insurance. For example, if a consumer walks into a travel agency and books 10 seats on Air Timbuktu, the travel agent will probably say: "We want to make you aware that we do not cover your funds in the event of the failure of Air Timbuktu. However, we have insurance you can purchase for $5 per person that would protect you."
The Chair: Mr Medd, I'm going to have to jump in there and move on to Mr Grandmaître.
Mr Grandmaître: I agree with you that the recession has affected our tourist industry and curtailed some of our travelling habits. Let's go back to the travel industry. You will recall that four or five years ago this province was booming and a lot of companies were going bankrupt. Were there any reasons for those bankruptcies five or six years ago? Were there too many travel agencies or too many wholesalers in Ontario? You'll agree with me that we had some very serious bankruptcies in this province.
Mr Medd: Unquestionably I will agree with that. I don't think they happened at any one moment in time five years ago. We had one as recently as two years ago, but they have been interspersed. I suspect that's a product of perhaps overcapacity or not-well-run businesses or underfunded businesses as times change. I'm not being flip, but I don't recall there being a great number of them at one time five years ago. We've had a number of very serious failures over the past 10 years and I've been personally involved in assisting the ministry in the administration of those failures. You're absolutely correct; they were very serious. If I had to analyse the ones I was involved in, I couldn't come up with any single or common reason that they failed. I believe each of them failed for different reasons -- too rapid growth -- a lot of different reasons.
Mr Grandmaître: Too rapid growth?
Mr Medd: That was in one case. In another case it was just simply not fulfilling their risk agreements and failing as a result -- no common reason, but each one of them differed, the same as any other business.
Mr Grandmaître: Do you think the ministry could have done a better job of supervising? I'm going back five, six or seven years.
Mr Medd: I guess in hindsight the question can always be asked: Gosh, why did they fail when they failed, and could someone have prevented that? I don't think the ministry is in the business of keeping people in business. I think they are there to monitor the business.
Mr Grandmaître: If they're going to charge a fee, you have to be registered --
Mr Medd: Yes.
Mr Grandmaître: -- so they have a responsibility.
Mr Medd: And there are financial criteria to be registered as well that they do monitor through periodic audits and that type of thing. In my personal opinion, with the failures I witnessed, I don't know that the ministry could have moved in earlier or avoided those failures. I think they were simply business failures. I think they were on top of it in terms of how it was handled after the failure, and I believe that's part of their responsibility. In my experience over the last 10 years being involved with the ministry, it did a very good job in administering the failures to the least impact on the consumer. My belief is that this should be their role. We're involved in the consumer aspect here.
Mr Grandmaître: I was interested in your comment about buying a carpet and losing a carpet for the lack of insurance. This program dates back how many years -- 15 years, 10 years? Why do you think it was started? How come that industry had to be protected or that consumer had to be protected and not you, the carpet buyer? Why do you think that industry was picked?
Mr Medd: Again, my personal opinion -- and I was around when the act came in -- is that I think we as an industry would be partly the reason. We were unable to police ourselves. We were unable to come up with our own industry fund that may protect the consumer. It's a highly visible business. When consumers' holidays and money on holidays are lost it becomes a very visible thing. I don't know the true answer to that, but it's an interesting question. I would accept some responsibility by saying we couldn't look after ourselves.
Mr Jordan: Thank you for coming this morning to discuss the Travel Industry Compensation Fund Board of Trustees. Is it correct that the consumer has to wait for a decision from the board to get his or her refund or compensation?
Mr Medd: Yes. My understanding of the process, and forgive me if I'm not totally knowledgeable about it, is that the board of trustees approves the payment out of the compensation fund.
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Mr Jordan: And this is time-consuming.
Mr Medd: It can be, depending upon how quickly the documentation goes in. My experience is that it is not unduly time-consuming. For example, in one aspect, the fund covers the refund of moneys paid for a vacation, but if there's a business failure while a consumer is out of the country the fund also steps in and covers the repatriation of that consumer. I can assure you that there's no undue delay in that area, because when we have dealt with failures, the immediate aspect of it is paramount. For example, if we have people in the Dominican Republic who are due to return this Saturday, and it's a Friday, the fund moves immediately to protect those consumers and repatriate them.
So there are the two aspects. Do they have to wait unduly long for their money? I don't think so, providing the documentation is correct. Does the fund move quickly in repatriating consumers? Absolutely, and has reacted extremely well to those.
The Chair: I have a supplementary on that. Relating to what you've just said, you mentioned a failure a couple of years ago. What company was it that failed?
Mr Medd: That was the Thomson failure.
The Chair: Okay. Constituents of mine were on a group holiday in Florida. I know many of them had to pay for their own return tickets. They were struggling with the ministry for over a year to get compensated for that additional cost. When the company failed, they were stranded, and they had to get back to jobs and what have you. They had to buy return tickets and one-way tickets back to Toronto, Montreal and so on. When you talk about speedy compensation, my own experience in that one particular instance was that it was anything but speedy and it was a real hassle for most of them to eventually receive compensation.
Mr Medd: I certainly am not aware of that individual situation. If a consumer is required to return, for example, and maybe can't wait to take advantage of what the ministry arranges in terms of return transportation -- for example, if they were due to return Friday and the ministry secured return transportation for the large group on Saturday and someone couldn't do it and chose to pay his own way back -- then they would have to make a claim against the fund through the proper channels. Yes, that would be more time-consuming. I don't know how time-consuming. You say they had to wait up to a year. I'm surprised; I don't know why that would happen.
Mr Jordan: It states a consumer is not entitled to make a claim when he or she has been provided with alternative travel services. Again on that subject of being stranded, if the alternative service pleases the majority, is that how it's accepted?
Mr Medd: I'm not sure specifically what you're referring to.
Mr Jordan: For instance, if I was supposed to come back on Friday, but you're going to get me home on Saturday and that doesn't suit; I have to be home Friday night.
Mr Medd: When you're dealing with a failure, you deal with logistics. If there are 500 people in the resort and you can secure two airplanes to go down and pick them up on a Saturday as opposed to a Friday -- if you simply can't get the equipment -- then there may be some alteration. That could happen, yes. If they must return, then certainly they're allowed to claim against the fund. That's my understanding.
Mr Jordan: Is there any direct settlement with the consumer? Does it always have to be done through this fund or through the board of trustees?
Mr Medd: It's direct with the consumer when they're dealing with repatriation. The board has a responsibility at the time of a failure to be present and protect the fund. I guess the fund deals directly but indirectly with the consumer in returning him to Ontario. Does the person in the resort reach out and touch the fund? No, but the fund deals immediately with the situation to return him. The claims against the fund are made through the registrant and it has to be made to the trustees. There's a process, that the trustees must approve all payments. In the case of Thomson, for example, they approved a $5-million payment to I'm not sure how many consumers, but they gave bulk approval. It wasn't an individual thing involving 5,000 consumers; it was a $5-million payment out of the fund that was approved.
Mr Jordan: Which is a maximum.
Mr Medd: Yes.
Mr Jordan: Is the travel agency something the consumer should check before doing business with, that it has paid its compensation to this fund?
Mr Medd: If they have not paid their compensation, they're not allowed to be registered, or their registration is withdrawn and they're not licensed to be in travel. There is a licence that is displayed prominently in the place of business by all registrants. It would be very unusual for a consumer to walk into a travel agency that was a non-participant in the fund, because he participates in the fund only if he's duly registered.
Mr Jordan: I was thinking of these last-minute clubs that operate.
Mr Medd: They are all duly registered under the act.
Mr Jordan: They are.
Mr Medd: Yes, and pay into the fund accordingly.
The Chair: Thank you, Mr Medd. We appreciate your appearance here this morning and responding to the questions. We wish you well.
Mr Medd: My pleasure.
BING WONG
The Chair: The next witness is Mr Bing Wong, who is an intended appointee as a member of the Durham Regional Housing Authority. Welcome to the committee, Mr Wong. This review is a selection of the government party, but as Mr Jordan and I have to attend a brief press conference in a few minutes, if no one has any objection I'm going to ask Mr Jordan to begin, if he has any questions of this intended appointee.
Mr Jordan: Thank you, Mr Wong, for your attendance this morning. I'm always interested to know how the applicants for these boards or authorities become interested in them. In some cases, someone has approached you; in other cases, there are different forms of obtaining suitable people for them. Could you give us how you became interested?
Mr Bing Wong: I was approached on two separate occasions by my member of provincial Parliament, and on the second occasion I agreed to stand for nomination.
Mr Jordan: What were three of your main qualifications to be a member of this regional housing authority?
Mr Wong: I have 16 years of community development experience. For the last eight years I have been working in the co-op and non-profit housing sector. I have the ability to work cooperatively with many people.
Mr Jordan: In the Durham Regional Housing Authority, are there enough housing units required to meet the demand at present? Do you have knowledge of that?
Mr Wong: Some knowledge, somewhat. I work as a consultant in the co-op and non-profit housing development field, and on behalf our clients making submissions to the government for funding of new projects I am in touch with the Durham Regional Housing Authority for what they call CHUMS, the community housing unit management system data report. Essentially, they are statistics maintained by the housing authority of the numbers on its waiting list. As I recall, the January 1992 numbers show roughly about 1,000 people in the region waiting for affordable housing units.
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Mr Jordan: Are the people using these housing units generally people who need subsidized housing? Is that screened pretty well?
Mr Wong: These thousand people or households essentially are the people in the most desperate need. The housing authority maintains its list based on applicants who meet its selection criteria. It has priority rating systems, so these people really are in the most desperate categories.
Mr Jordan: Have you been involved with any of the committees relative to the construction of these housing units, like preparing and tendering and so on?
Mr Wong: Yes. My current job is development consultant for a non-profit and cooperative housing corporation. I work on the development side at the moment that is essentially involved with searching for property and negotiating with contractors, really the actual physical construction of the buildings.
Mr Jordan: I wonder if you could shed some light on the information I have, that the cost per unit for one of these housing units is much higher than a similar construction project in private enterprise. Have you any comments on that?
Mr Wong: The Co-operative Housing Association of Ontario recently commissioned a study by the Starr group that compared the cost of developing social housing units with private sector development. In its findings, the costs are comparable. I guess the area where the costs may differ is the amount of time the private sector has held land in the development process; therefore, the only differentiation is that the private sector has the resources to hold land and speculate on land and then eventually develop it when it suits its economic needs or requirements.
Mr Jordan: What percentage of cost of the non-profit housing unit would you relate to government administration and that type of overhead cost?
Mr Wong: Is that on the operating side or on the development side? There are separate budgets drafted for projects, as we shall see.
Mr Jordan: On both. But from the time you start the project, there are a lot of people involved in non-profit housing.
Mr Wong: Yes, there are.
Mr Jordan: Are all those costs added into the comparison when you are making it?
Mr Wong: On a 100 percentile basis, the land will usually average. Land and other costs -- charges, levies and fees and everything -- usually work out to about 20% of the cost. Construction is roughly about 55% or 60% of the cost, and then there are other permits and fees, professional charges and consulting fees; they are roughly about 10% of the cost. I guess the rest usually adds up to about 1% or 2% basically for the administration aspects.
Mr Jordan: From your experience, would you feel we should be, in conjunction with the government, leaning more towards private housing for these tenants who require this rate of subsidization?
Mr Wong: Are you referring to the rent supplement programs?
Mr Jordan: Could more of these housing units be provided by private enterprise rather than tying up the capital of government? We are short of money now in government.
Mr Wong: There are some units, I understand, that are provided as public housing through arrangement with private landlords and developers through the province's rent supplement program. This has gone on for the past 10 or 15 years, I'm told.
There have been studies to compare the cost-effectiveness of the rent supplement program, ie, providing social housing units through the private sector and also developing non-profits and independent cooperative housing corporations. In the short run it may be cost-effective for public policy for government to make arrangements with private landlords, but that's only if market conditions are favourable; that is, there is a glut of vacancies and rents are fairly stable. But once in times of short supply, the units will be more and more sought after and the rental prices will go up.
Therefore, the overall control of the costs that are associated with a rent supplement program are not as cost-effective over a long term. Over the long term, non-profit and cooperative housing corporations, once they are built, are able to maintain their costs a lot more reasonably. There is some measure of control. So over the long term, studies have found that the cost-effectiveness of non-profit and cooperative housing projects is better. Studies have been in the United States as well as by CMHC and David Hulchanski, who is professor of planning at the University of Toronto.
Mr Jordan: When you say "non-profit housing" -- I know we use the term in a blanket way -- how do you define this non-profit housing?
Mr Wong: Non-profit is not for profit housing. Essentially it's either autonomous or part of the public housing stock. The operation of the housing project is on a not-for-profit basis; that very thing is on a cost-break-even basis.
Mr Jordan: So if we as the government had $1 million invested in non-profit housing, would we not be entitled to, say, a 10% return on the people's money back to the government?
Mr Wong: I think government is involved in housing as a social service, not really on a profit motive or basis. The idea of the government's involvement in housing is really in the socialist view. I believe if the government were not involved, then the housing stock would run into short supply. If you're having a housing crisis like we had about five or six years ago, the private sector is not prepared to build any more private rental stock, given the economics, the difference between economic rent and the market rent that's there. The gap is too wide. The tax incentives are no longer there for the private sector. Really it has no motive whatsoever to get involved in large-scale private rental housing.
Mr Jordan: Maybe this isn't a fair question, but don't you think it would be wise for us to provide a climate and an incentive because this non-profit housing is getting to be a fast-growing industry in Ontario?
Mr Wong: There were incentives with the National Housing Act back in 1945 and in the early 1950s and early 1960s with the limited dividend program. The federal government provided interest-free loans to the private sector to develop private rental stock. In the terms of agreement, over the number of years for the loan the private landlord had to supply a number of units within his project for one-supplement units. But there was really a lack of controls and mechanisms, so that a number of years after the projects were built and developed, more often than not a number of these projects were sold, and then the new landlord would pay the old landlord the mortgage money or what was outstanding, and in turn he repaid CMHC and the obligation was gone. So there was really no mechanism to keep those affordable rental stocks in the marketplace.
Ms Carter: It seems to me that you have a great deal of relevant experience, both professional and voluntary. You've been eight years in social housing development and management, and you've worked in federal and provincial non-profit housing programs. Currently you are a volunteer director of the social planning council in your area. I'm just wondering what value you feel that brand of experience will have in your new function.
Mr Wong: I'm approaching this possible appointment really from a community development point of view. My interest and emphasis always has been in community development areas, essentially people working together to improve their communities. When I discovered the co-op housing sector movement, it fit in very nicely with what my beliefs are. I've learned about the program in working with the people in the community. I'm also aware that currently there is a movement afoot, a change in direction which started recently, of getting more tenants involved in the management of the local housing authority.
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Ms Carter: I was going to ask you that too, yes.
Mr Wong: This interests me greatly and I like to be involved in that type of environment, situation, where positive change can be effected.
Ms Carter: Do you feel that the point of view of tenants is not sufficiently taken into account?
Mr Wong: Not in the past, no.
Ms Carter: That's something that you want to change?
Mr Wong: That's essentially the difference between really cooperative and non-profit housing. I guess I'm really showing my bias for cooperative housing in that it's a system and structure that allows the people who live in the housing project to have control over their lives and the communities in which they live.
Ms Carter: They are the ones who are using the amenities so they're the ones who need to be listened to?
Mr Wong: Yes. I think they know the operational problems a lot better than the outside administrator or people sitting on a board of directors, who really have no physical contact or experience with the communities they are managing.
Mr Will Ferguson (Kitchener): This is a volunteer position, correct?
Mr Wong: Yes, sir.
Mr Ferguson: Will you be receiving any honorarium for this position?
Mr Wong: No, sir.
Mr Ferguson: Essentially you want to serve the people in this housing authority out of the goodness of your heart and your interest?
Mr Wong: For interest.
Mr Ferguson: Obviously you are not doing it for the money?
Mr Wong: No.
Mr Frankford: I'm from the neighbouring area of Scarborough East and we have a significant amount of public housing there. Could you tell me, what is the image of public housing in Durham, both by residents and by the general public?
Mr Wong: The public image is an area that can be improved, mainly because I believe some of the public housing stock is associated with the Ontario House Corp and then the images are tied in and associated with larger projects in the Metro area. Physically, I think the problem is that the housing stock is aging. Proper maintenance and everything else has to be kept up, sort of has to be maintained.
I think because the area is maybe not as well maintained ordinarily, the image is fairly bad. Additionally, because the housing stock is aging, so are the tenants who are currently living there, and currently whether there is compatibility or not with respect to the housing stock and the people who live there is something that people have difficulty coming to grips with.
Mr Frankford: Your job in this position will not really be to develop new buildings, but it will be around the maintenance and the conditions of life in existing ones?
Mr Wong: Yes. I understand it's related to the management, which relates to property management or maintenance related to tenant selection, community development and improvements and maybe just overall general management.
Mr Frankford: Can you give us some idea of how you would like to encourage that, what practical thoughts you've had on how to develop tenant participation?
Mr Wong: Tenant participation: I am informed they are different from local housing authority to local housing authority in the province.
I worked with one of the staff members of a housing authority on another committee, the subcommittee of the Social Planning Council of Metropolitan Toronto. We exchanged notes fairly regularly and she tells me that Durham Regional Housing Authority is more progressive in that respect, that it is involving some of its tenants on its board, but also it is starting sort of tenant committees within the individual project which will provide some type of information input to the board regarding the committee atmosphere and spirit that will try to be developed in these projects.
Mr Frankford: Are you aware of the proposal to go as far as to actually convert, maybe on a trial basis, some public housing rental stock to co-op?
Mr Wong: Not in the Durham region. I've read that they are experimenting with some of those conversions in the Toronto area.
Mr Frankford: I don't know if they've gone so far as to do it, but you would favour the idea, would you, I gather?
Mr Wong: It may be one method for the province to divest its involvement in the public housing projects that are still around. I think philosophically I'm agreeable. I support that, because it then provides the people who live in those public housing projects more control and more interest in their communities.
Mr Hansen: Mr Frankford has taken quite a few of the questions I was going to ask. The longer he talked, I ran out of questions, but I do have a couple.
I've been involved since about 1975 with co-op housing and the starting place in Welland. With new ideas coming up -- and it looks like you have some ideas -- I've always had the feeling that maybe there could be a little bit more cooperation between private and co-op in the sense that when a co-op is being built, it doesn't always have to have the same image. It could be commercial downstairs and apartments upstairs. So in a complex, the commercial establishments down below could be rented out for market rents. Do you have any ideas on this or other ideas upcoming? This will be changing constantly as the world is changing, as Ontario is changing. Have you got any comments on the remarks I've made?
Mr Wong: If co-ops could be developed outside the various federal and provincial programs -- more provincial now than federal, because the federal government has just withdrawn its involvement in the federal co-op housing program -- then I could see this type of development taking place or starting to happen to a certain respect. The idea of cooperative industrial spaces or condominiums is really an indication of that. But to try to mix the use of residential and commercial developments in a single project, where the project is funded by government programs, the administration is very nervous of the separation. We have in the past incorporated day care centres and things that are community-based facilities in projects, and we believe that has worked well.
Mr Grandmaître: Just a few short questions: I believe in social housing programs and also the co-op housing program. I always feel somewhat sorry for municipalities that are adamant in turning down more social housing in their municipalities. Do you think the government should be much more forceful in imposing a quota of social housing units in municipalities? Some municipalities are simply not doing their fair share.
Mr Wong: There is a policy directive statement from the Ministry of Housing regarding --
Mr Grandmaître: Yes, 25%. Do you think the government should be much more forceful? They are not responding to the 25%. Do you think government should go further?
Mr Wong: That's really a political decision.
Mr Grandmaître: What are your thoughts? You're not running.
Mr Wong: Essentially it's the jurisdiction of the province and the municipalities. You're asking whether the province should carry a heavy hand or not. I think the province and the municipalities should work together. The province does fund municipalities to undertake municipal housing statements, which really gives it an overview snapshot of the housing stock and housing conditions within municipalities. Given the bilateral and trilateral relations that exist in this country, to enforce is something that can be a very sensitive issue.
Mr Grandmaître: You should run for municipal councillor. You'd do an excellent job. Thank you and good luck to you.
The Acting Chair (Mr Jim Wiseman): Thank you for appearing here this morning.
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JOHN WHITE
The Acting Chair: Our next candidate for review is Mr White, intended appointee as member of the Crown Employees Grievance Settlement Board. Could we begin with the government party and some questions to Mr White on the grievance settlement board.
Mr Ferguson: Mr White, could you tell us why you're interested in applying for this appointment?
Mr John White: That's a good question. Recognize that I have been involved in the labour movement for more years than I care to remember; have done a great deal of arbitration; am concerned about the delay in getting arbitration cases heard and hope that by adding myself to that committee more grievances and arbitration cases will be heard. Those are primarily the principal reasons.
Mr Ferguson: Could you advise the committee how you feel your labour or professional background will assist you in your deliberations.
Mr White: I'm currently instructing workers on how to handle worker compensation appeals, have been an instructor for approximately 25 years and instructed workers on how to handle arbitration cases. I certainly have the background. I have presented any number of arbitrations myself.
Mr Daniel Waters (Muskoka-Georgian Bay): Nice to see you again, Mr White. I believe we met during the standing order 123 consideration of the Workers' Compensation Board. As soon as I saw you, I knew the face, but I'm lousy with names. For your information, we are expecting an interim report from WCB on that within a month.
Coming out of the private sector where you use settlement officers extensively, do they use them in the public sector as much?
Mr White: Not as much.
Mr Waters: Would you see that as a way of intervening at a lower level that the public sector should really pursue?
Mr White: Yes, the grievance settlement officer proposition is a good one. A lot of grievances are settled at that level.
Mr Waters: In 10 years, I think I ended up with two grievances that went to arbitration; the rest were settled there. I doubt if you can effect change within the union -- I don't think you can on this -- but it's my understanding in the public sector unions that a grievance can be carried solely by the grievor and that the union holds no right to that grievance. In other words, the union cannot decide to drop the grievance, as they can in the private sector.
Mr White: Not within CUPE, that I just retired from. What happens is that the representative would make recommendation to the executive, first of all, that a grievance not proceed to arbitration. The member's then advised of that decision and has the right of appeal. The member must be advised as to the date and time of the next general membership meeting and the right to appeal the decision primarily of the representative who, for one reason or another, is suggesting it not proceed.
Mr Waters: If membership says, "We suggest it proceed," it proceeds as it does in the private sector. I don't believe that to be the case necessarily with the Ontario Public Service Employees Union.
Mr White: No, but with CUPE that's the case.
Mr Waters: You feel there should be intervention at a lower stage. Do you see that we have to change somehow the way we deal with the grievance procedure, as in sole arbitrators? Do you think that's the way to go? There's a lot of different models out there. I understand, especially in the public service unions, that there is a major backlog of grievances, some dating back several years, that have never been heard and which create a lot of frustration between employer and employees. Could you comment on any way of resolving this so we get on with the job at hand?
Mr White: First of all, that if we had more qualified arbitrators, that would help. I phone Ross Kennedy, Howard Brown or Kevin Burkett, and they're lined up until 1994 currently.
Mr Waters: Yes, Mr Burkett in particular.
Mr White: Exactly. So you're waiting a year just to get an arbitrator, and that's one of the major problems. I suggest the other problem is that we certainly need to educate more fully our unions in taking what I would refer to frivolous grievances through to arbitration. I don't know that you can change the legislation any more than it has been changed. You have the grievance settlement officer proposition, which I think is good. The problem is that there aren't sufficient arbitrators.
Mr Waters: So basically, unless we change the law, the best thing to do would probably be education of the fact that the settlement officer is available and by all means should become part of -- in the private sector, I think it's section 35, is it? I can't remember where you used the settlement officer.
Mr White: It used to be section 45. They've renumbered the act and I'm not sure of the numbers any more.
Mr Waters: Neither am I, after a year. Thank you very much for your comments.
The Acting Chair: Are there any other questions from the government? Do you have any questions now, Mr Grandmaître?
Mr Grandmaître: No, I don't. Good luck to you.
Mr White: Thank you.
The Acting Chair: Then this hearing is concluded. Thank you for attending.
The next order of business for the committee is the determination on whether the committee concurs in the intended appointments reviewed this day.
Mr Ferguson: So moved.
The Acting Chair: I have concurrence moved. Any discussion? Seeing no discussion, all in favour? I see this is passed.
Motion agreed to.
The Acting Chair: Thank you. This committee stands adjourned until 10 o'clock next Wednesday morning.
The committee adjourned at 1138.