STANDING COMMITTEE ON GOVERNMENT AGENCIES
COMITÉ PERMANENT DES ORGANISMES GOUVERNEMENTAUX
Wednesday 7 June 2006 Mercredi 7 juin 2006
The committee met at 1104 in room 151.
INTENDED APPOINTMENTS
The Chair (Mr. Tim Hudak): Good morning, folks. I'm going to call to order the standing committee on government agencies for its regular meeting of Wednesday, June 7, 2006. Welcome back. I thank my colleague and very able Vice-Chair, M. Bisson, for filling in at our last meeting.
Mr. Ernie Parsons (Prince Edward-Hastings): He was great.
The Chair: Uh-oh. There may be an uprising brewing; I'll have to be extra nice. Did I tell you about the good coffee that we have now in the urn?
Mr. Parsons: Not wishing to give a smart response, I notice the other committees actually have food along with their coffee.
The Chair: Food? A little late-morning snack, eh? We'll have to work on that.
We actually have a rather light agenda today. In the interests of moving ahead with our intended appointee, we'll defer other business to the end of the agenda, as well as item number 2, agency selections. We're waiting for the third party's agency selection and it will remain the second item on the agenda, but we will begin with appointments review.
MICHAEL GOUGH
Review of intended appointment, selected by official opposition party: Michael Gough, intended appointee as chair, Ontario Lottery and Gaming Corp. board of directors.
The Chair: Our first interview today is with Michael Gough. I remembered the name correctly; right, Mr. Gough?
Mr. Michael Gough: Yes.
The Chair: Thank you. Mr. Gough, welcome back to the committee. Mr. Gough is now appearing in the capacity as an intended appointee as chair of the Ontario Lottery and Gaming Corp. board of directors. Mr. Gough had visited us just over a month or so ago -- was it March?
Mr. Gough: It was three months ago, almost.
The Chair: Three months? Time flies. It just seemed like the other day.
Mr. Gough: I feel that way as well.
The Chair: There you go. So now Mr. Gough has been nominated as an intended appointee as chair of the OLGC and appears before us today.
Mr. Gough, you're welcome to make some opening comments, as you did before, if you want to talk about your last three months as well -- I'll just get through this -- and then we'll begin any questions with the official opposition for our rotation, and then the NDP and the government.
Mr. Zimmer, do you have a question?
Mr. David Zimmer (Willowdale): Yes. Just to help me -- I'm just subbing in on the committee -- Mr. Gough was here three months ago?
Interjection.
Mr. Zimmer: Right. Sorry.
The Chair: He did such a good job that committee members wanted to see him back again.
Mr. Zimmer: Thank you.
The Chair: To be clear, this is a new appointment for Mr. Gough now as the chair of the OLGC, sitting in the big chair as opposed to being an excellent but regular member of the OLGC.
Mr. Zimmer: Thank you, Mr. Chair.
The Chair: My pleasure.
Mr. Gough, the floor is yours for some opening comments.
Mr. Gough: I'll abbreviate my comments this morning just to allow more time for questions.
As you're aware, I'm a lawyer. I've practised law for almost 35 years. I retired from practice at the end of 2005. More than a third of my career was spent in the public service in Ontario. I started in 1971 with the Ministry of Consumer and Commercial Relations --
The Chair: Oh, yes. That's right.
Mr. Gough: -- and in 1974 moved to what was then treasury, economics and intergovernmental affairs, where I stayed for almost 10 years. I think my application has details of some of the responsibilities at the time.
In 1981, I joined crown-owned Urban Transportation Development Corp., initially as general counsel and subsequently as president of one of the operating subsidiaries.
I returned to the practice of law in early 1985 when I joined the firm of Osler, Hoskin and Harcourt. I became a partner in 1986 and, as I mentioned, I retired from Osler's at the end of 2005. Again, I think my application describes something of the nature of my practice while at Osler's.
Perhaps of relevance to this committee is my experience with the gaming industry. I had acted on behalf of a major US casino operator who, in the early 1990s, bid Windsor as an operator. We were shortlisted but not successful. They came back again for the first casino in Niagara Falls, worked very hard at it but ultimately decided not to bid. I advised them generally on gaming and regulatory matters across Canada up until about three or four years ago.
I also acted for a number of large lotteries, including one of the very first Toronto hospital mega-lotteries.
I serve on a variety of community and not-for-profit boards, and those are listed in my application as well. I am making my way through the directors' education program at the Rotman School of Business. That's run by the Institute of Corporate Directors. I have my third quartile this coming weekend and I should have completed that in October.
I believe I bring to this appointment a strong blend of public-private sector experience, a sound understanding of the regulatory and business side of the gaming industry. I've got a pretty firm grasp of how public policy is developed and implemented from my time with those two ministries. I've prior experience in working with and for crown agencies in Ontario.
Finally, I'm experienced in corporate boards and have knowledge of their governance. I hope that background and that experience will again recommend me to this committee for approval.
That completes my statement, Mr. Chair.
The Chair: Great, Mr. Gough. Thank you very much for your opening remarks. We'll begin any questions or comments with the official opposition.
Mr. Joseph N. Tascona (Barrie-Simcoe-Bradford): Thank you for coming here once again, Mr. Gough. Have you been involved in the Liberal Party in terms of helping out the party in any way?
1110
Mr. Gough: No. I'm probably in a majority. There were periods in my life, mostly when I was younger, when I was active with the Liberal Party. I've been active with the Conservative Party probably for the same period of time, and there have been long, long periods of time, including the 13 years that I was with the public service, when I was not active with any political party at all. And it's been riding associations, things where a friend of a friend wanted somebody in a riding association to help with a nomination. I haven't been active with either party in terms like you think of as being party business.
Mr. Tascona: Where do you live, your residence?
Mr. Gough: Yonge and Lawrence, at 47 Cheritan Avenue.
Mr. Tascona: So would Michael Colle be your member of provincial Parliament?
Mr. Gough: Yes.
Mr. Tascona: Have you had any involvement with him in terms of that appointment you had back on March 1 and this one here?
Mr. Gough: No. I've had no conversations with Mr. Colle since he was elected.
Mr. Tascona: Okay. You were reviewed by us on March 1. At that time, did you have any indication or understanding that you would be moving to become the chair?
Mr. Gough: None at all. About two weeks after my appointment was approved, each of the directors individually received a call from Tim Reid indicating that he was going to step down from his position as chair. I believe he had informed the minister some weeks and months before, but he had not told anybody else. I was surprised and disappointed by it, because Tim Reid, as chair, was a significant part of my joining that board.
Mr. Tascona: But this happened after you were approved by the appointment process, that he made the decision to leave?
Mr. Gough: I think he'd made it before, but he hadn't communicated it to anybody on the board prior to that time.
Mr. Tascona: Who approached you to fill the chair position?
Mr. Gough: I received a call from one of the minister's assistants indicating that I was on a short list of possible candidates, and would I be interested in allowing my name to stand. I asked for several days to speak to people, including Tim Reid, the former chair, as to what was involved and his views as to my ability to take it on.
Mr. Tascona: Was that Minister Caplan's office?
Mr. Gough: It was Minister Caplan's executive assistant who phoned me to say, "Are you interested in having your name stand?"
Mr. Tascona: What's that person's name?
Mr. Gough: It was Craig MacLennan, who is here today.
Mr. Tascona: Okay. It's nice that you're going to be the part-time chair, I understand, of the Ontario Lottery and Gaming Corp. The government is moving pretty quickly on this one compared to the LCBO. Right now, the LCBO has been operating with an acting chair. I believe it's Philip Olsson who's the acting chair and CEO. You're here within months with respect to filling this position, and they haven't acted on that one. So it's good to see that we've got someone to deal with it who is going to be the chair on a fairly real-time basis.
Do you think the past few months have been sufficient time for you to familiarize yourself with becoming the chair?
Mr. Gough: There's a very good board orientation that I went through. I asked for a lot of background reading materials on issues that were of interest to me and that I thought would be prominent in terms of the activities of the corporation; I've had extensive meetings with Duncan Brown, who's the CEO, and with some of the senior staff; and I come to the post with some understanding of the gaming industry and the issues it faces. But yes, to the extent that anyone feels ready to step into a position like this, I'm probably as prepared now -- that's not to say that I won't continue to learn a great deal in the coming months in that position.
Mr. Tascona: The last time you were here, you touched on the issues facing border casinos, which would be Niagara Falls and Windsor, in terms of US travellers. I was wondering if you would be able to comment a bit further in light of recent developments surrounding travel documents?
Mr. Gough: With the two Niagara Falls casinos and Windsor, it's well known that more than 50% of our traffic comes from the United States. It's disconcerting to see the relatively lower number of US citizens who have travel documents or passports. But there's no question, with the Canadian dollar, which continues to appreciate, with security issues at the border, with huge competition with the three casinos in Detroit and with Seneca opening competitive casinos in Niagara Falls, New York -- it's too early to tell whether smoking is an issue or not. It's only been out there for a week or so.
There are significant challenges in terms of our competitive position to deal with. What we're doing is co-operating with the tourism and development people across Ontario, particularly in Niagara Falls in terms of their efforts to have it dealt with. I was pleased to see that the First Ministers were able to impress on Mr. Harper the significance of the border crossing issue. I'm pleased to read that the technology and the preparedness to implement security documents going across the border look like they're going to be delayed until 2009, at this point, it's speculated. I don't know that there'll be an exemption, but I hope there'll be a travel document that's reasonably easy to obtain and that in three years' time, we will have taken steps to have a system adjusting to it.
Mr. Tascona: I was made aware on the weekend that Art Frank, who is responsible for running the Casino Rama operation, is going to be leaving and going down to run the Niagara casino operation, to perhaps deal with Niagara. Are there problems in Niagara in terms of how they're being operated?
Mr. Gough: You may be aware that a short while ago, the issue of whether we need two casinos was examined, and the board ultimately made a decision that we would keep Casino Niagara open for a period of two years. I think we want to see how we adjust to the issues of cross-border competition. A lot is going to happen with that market within two years' time.
Mr. Tascona: Why are you bringing in Art Frank to deal with that operation?
Mr. Gough: Because he's the guy who's capable. He's done an extraordinarily good job at Rama. He will be responsible for overseeing both of those casinos, including Falls management. There are issues. We would like to have seen Falls management move rather more promptly on some of the undertakings they've given to us. It's functioning on target and on budget right now, but he's a very capable operator and those casinos have been without a CEO for a period of some months.
Mr. Tascona: So what are going to be his main objectives to achieve?
Mr. Gough: To make both of those casinos as competitive as possible in light of the challenges and headwinds he faces from the US side of the border and currency-related issues.
Mr. Tascona: Recently, a new lottery was introduced that will provide new funding for athletes. The lottery is going to be available again during the summer. Do you believe that this lottery should be made permanent and, if so, what impact do you believe it will have on the money now being made available to the Trillium grant program?
Mr. Gough: Earmarking revenue is a government decision that, by and large, we're not consulted on. It appears appropriate in the circumstances. I'd hate to see all of the money earmarked at some point, but a one-shot one like that with, I think, $13 million being earmarked, I think is appropriate. But it's government policy. It was a directive given to us and we've responded to it.
Mr. Tascona: The last time you were here, you testified, "I pick up tickets when Lotto 6/49 hits $30 million, and I haven't won yet either," in response to Mr. Bisson. I understand it's going up to $29 million this week. Do you feel lucky enough to buy some tickets, Mr. Gough?
Mr. Gough: I'm allowed to buy tickets, but there's an insider-win provision. A technician with OLGC recently won. The OPP investigated before there was any payout. I've got to tell you, no matter what the numbers are, the optics of a chairman winning a lottery aren't that good, so I'm not even going to try.
1120
The Chair: The floor is now yours, Mr. Bisson.
Mr. Gilles Bisson (Timmins-James Bay): I've got a number of questions, but I want to ask Larry something on research. Maybe you can look it up and give me an answer a little bit later. On page 2 or 3 of the document, as I look at that, total revenue from gaming, including casinos and lotteries, is about $5.8 billion, and if I look at page 3, 2005 net income for the province of Ontario was $1.9 billion. Why is there a discrepancy in the bottom number on page 2 at $1.7 billion? I don't quite understand that. Can you explain it to me after?
Mr. Larry Johnston: Sure.
Mr. Bisson: All right. You don't have to do it right now, just bone up on your math.
The Chair: We have plenty of time.
Mr. Bisson: Yes. Okay, a couple of questions; a whole bunch of questions, actually. Welcome back. I haven't won the lottery yet and I'm not worried about the optics if I win. I promise to be very happy. But I've not won yet, so who knows?
A couple of things, in no particular order. You kind of answered it, but I look at the amount of revenue the province gets from casinos. As I was saying, if we look at gaming, which is lotteries plus all other forms of gaming, whether it's charity casinos or commercial casinos, there is a total revenue of about $5.8 billion, of which about $1.9 billion comes back to the province of Ontario. Some of the money is earmarked for different initiatives. For example, the Trillium Foundation gets 100 million bucks etc. But problem gambling is at $36 million and it's been there for some time, as I understand it. It's been like that for two or three years. Is it your sense, now that you've been on the board, that that is an issue that we, as legislators, need to address and put a little more effort into? I heard your comments: It's government policy. Your thoughts in regard to whether addictive gambling is becoming a big enough problem that we should be thinking about upping that?
Mr. Gough: The responsibility for implementing programs and funding problem gaming rests with the new Ministry of Health Promotion. Decisions as to spending had been with MOHLTC prior to that time. Anecdotally, people in the field tell me that it's not clear that they're actually spending the whole amount --
Mr. Bisson: I didn't hear because of the phone ringing. Sorry?
Mr. Gough: Anecdotally, I'm hearing that they're not spending the full $36 million, but it's a question that the government, I assume, from time to time, looks at and determines whether or not $36 million is the right number.
Quite aside from that number, though, Mr. Bisson, we have taken a number of initiatives. In response to the Sadinski report, we've implemented a responsible gaming framework and policy. We continue to train and educate people on the floor. We continue to educate people who game on the symptoms of gaming. We monitor it closely and we have booklets to refer to them. We've signed an MOU with CAMH and with the Responsible Gambling Council that we'll co-operate on these initiatives, and we've put two new kiosks on the floor at Niagara Falls and Windsor to be right there to deal with people who think they might have --
Mr. Bisson: That's all well and good, but I guess my question is, anecdotally, are we seeing a levelling off of the problem, or is it getting worse, or is it getting better? With the initiatives that are in place now, what sort of -- you guys must be tracking this in some way.
Mr. Gough: Yes. The numbers that I have that are most current are 2004 Statistics Canada numbers and they are markedly lower than the ones you see from the council, which does telephone polling. I'm quoting from our annual report, and this is part of a Stats Canada report on perspectives: Of the 7.2 million who gamed in Ontario in 2004, 0.6% were addicted to gaming, 2.1% were at moderate risk and 3.8% were at low risk of becoming addicted, according to Stats Canada. That adds up to about 6%. I have the feeling that that number is probably always going to be with us and that this corporation, in terms of its responsibility to deal with problem gaming, will always have to deal with it.
Mr. Bisson: So you don't have any anecdotal evidence to say it's better or worse or the same as it was, let's say, a year or two ago?
Mr. Gough: I wish I could say it was better, but I have no evidence to say that.
Mr. Bisson: Why wouldn't we track that? I'm just kind of curious. The best place to track it is obviously at the casino. Why would we not track that kind of information?
Mr. Gough: We may well track it and I just haven't seen -- although it's an obvious sort of thing I would have been briefed on, but I haven't been. In the three months there, I've picked up an awful lot, but not all of it.
Mr. Bisson: You're going to be coming back to this committee, because I believe it's one of our selected agencies.
Mr. Gough: Yes. That's right.
Mr. Bisson: I would appreciate, before you come back, getting a little bit more information on that.
Mr. Gough: Yes.
Mr. Bisson: The next question is native gaming. You know that there's a move afoot to change the arrangement with Casino Rama to a new arrangement. I'm wondering if you could speak to that a little bit, where things are at?
Mr. Gough: The agreement that was reached through former Premier Peterson in a memorandum of understanding that was signed will give, in 2011, the Ontario federation of natives -- it's a limited partnership -- l.6% of the gross gaming revenues. What that does is -- the dispute is between 134 bands and the sharing with Mnjikaning -- it takes that off the table. They are now aligned -- they're not tied to Rama and how well it does; they're tied to a system of casinos and charity casinos province-wide, doing well in terms of the 1.6%. It's a more flexible arrangement. It will lead to greater co-operation with them, I think. They will have a board member come on the board of the OLGC once the definitive agreement is signed. The definitive agreement is to be signed by December 31 of this year, and there are incentives to encourage them to do that. I am advised that negotiations are proceeding, and we expect to have that agreement signed.
It ended the piece of litigation dealing with the 20% win contribution that was at issue. It has not affected the litigation between the Mnjikaning and the other 134 --
Mr. Bisson: And that continues, as we well know.
Mr. Gough: That continues. OLG remains a party, and we couldn't have been dismissed on it because we're holding $90 million to $100 million that's in dispute. The court will ultimately order us as to the disposition of those funds.
Mr. Bisson: I'd like to get an answer to the question I asked the researcher earlier, if you have it, in regard to the difference between the $1.9 billion and $1.7 billion.
Mr. Johnston: I think the difference there, Mr. Bisson, is that table 4, which you're referring to, on page 3, follows a pattern that was in the OLGC's annual reports several years ago of listing a contribution to the province which was their net revenue plus the win tax, and subtracting from that the contribution to the First Nations. That's what is carried here in 2005. So the net revenue for OLGC is $1.7 billion, the win tax is $343 million, and then the net distribution to the First Nations.
Mr. Bisson: So the money doesn't flow directly from OLG; it goes to the province, then -- I always thought it flowed from OLG back to the First Nations.
Mr. Johnston: Yes.
Mr. Bisson: It does, right? I thought you were saying the opposite. Okay, that's all I've got.
The Chair: Mr. Bisson, thank you very much. Mr. Johnston, thank you for pitching in there. The government side?
Mr. Parsons: No questions.
The Chair: No questions on the government side. Okay.
Mr. Gough, thanks very much. You keep saying "OLG" and I've been saying "OLGC."
Mr. Gough: We're in the midst of transitioning in terms of brand. I think on July 1 it will become -- it will still have a triangle, but it will be OLG on it, and I don't think there will be stars around it. I'm not sure what kind of rollout is intended around it, but OLGC never seemed to trip off people's lips. We're trying to make it a little more accessible.
The Chair: So you're not becoming an anti-C agency?
Mr. Gough: No, there's no secret agenda here.
The Chair: I'm correct, though; it's still technically the Ontario Lottery and Gaming Corp.; it's just the image that's changing?
Mr. Gough: It is, and its corporate name will remain that way. For identification purposes, the trademark and trade name will be OLG.
The Chair: Mr. Gough, thank you very much. Thank you for your presentation and your return. I invite you to stick around for our concurrence votes, which will transpire in 30 seconds.
We will now move to our concurrence votes in the order in which they appeared before the committee.
We will now consider the intended appointment of Michael Gough, the intended appointee as chair of the Ontario Lottery and Gaming Corp. board of directors.
Mr. Parsons: I've been practising. I would move concurrence, Chair.
The Chair: Very well done. Mr. Parsons moves concurrence. Is there any discussion or debate? Seeing none, I will put the question.
All those in favour? Opposed? It is carried.
Mr. Gough, congratulations and best wishes as the new chair of the Ontario Lottery and Gaming Corp. I was pleased to hear you talk about Niagara, being a Niagara boy myself. Keep an eye out for those casinos in Niagara Falls and the Fort Erie racetrack slots. Best wishes to you, and thank you for coming back before the committee.
We have now concluded our intended appointees.
COMMITTEE BUSINESS
The Chair: I'm going to revert back to our agenda. Monsieur Bisson has kindly brought forward his two decisions on behalf of the third party for review, which are Hydro One and Ontario Power Generation, OPG. Mr. Bisson, Hydro One is the first? Do you have a preference?
Mr. Bisson: Yes, that would be fine.
The Chair: Hydro One?
Mr. Bisson: Yes, Hydro One; OPG second.
The Chair: Perfect. Thank you. So now we have concluded our full slate of agencies to review. I remind members that we're looking to do the first batch in September. I'm going to have the clerk contact members of the subcommittee so we can try to finalize those dates. The researcher did point out that we'll probably have to include some time in that to do the report writing, as well as the interviews and such. So we'll try to arrange a time to conclude that, because we'll need a motion in the House before we rise so that the committee can sit in the intersession.
Mr. Parsons: On that topic, it's some months away now, but I'm wondering what the next steps are between now and September.
The Chair: For us technically, as a committee, we'll need a motion through the House to grant us permission to sit. We will settle on the dates. We've received some input on the questionnaire, which the clerk and I will then finalize to send to the three agencies who first begin. They will respond to that questionnaire, and then that information will be distributed to the members.
As well, as part of that process, we'll communicate with groups that may want to appear as well before the committee to discuss a particular agency. Then, through the subcommittee, I'd suggest we would determine which of those groups would be allocated time to have their advice heard by the committee. As I said, at the subcommittee I think we can settle some of these details on the exact timing and such.
Mr. Parsons: That's fine.
The Chair: Super. Any other points on this?
Ms. Monique M. Smith (Nipissing): Have we determined how many days we'll be sitting?
The Chair: I think we have to finalize the exact number, because one thing that Larry pointed out, rightly so, is, how many additional days for sitting and report writing? I think we had basically agreed how each day is going to be structured for the actual agencies to be before us, but for the report writing, we'll have to figure out how much time that's going to take.
I hope that next week we can meet at subcommittee and just finalize those details. It does appear that the House will sit until June 22 or so, but that always may change. So I prefer to get that finalized next week.
Mr. Tascona: So we don't have anyone scheduled to review for next week?
The Chair: Let me get to that point, too. We do not currently have anyone selected to appear before the committee at the next meeting, which would be the 14th. We do, however, have one scheduled for 21st.
Interjection.
The Chair: Okay. If a new certificate comes out and there is a selection by any of the committee members for the next certificate, that would be scheduled for June 21.
Interjection.
The Clerk of the Committee (Ms. Tonia Grannum): The deadline is tomorrow.
The Chair: The June 2 certificate would be normally scheduled for the 21st. So to answer your question most directly, we do not currently have anybody scheduled for next Wednesday, the 14th. I do, however, recommend that members keep that open in their schedule, because if, for some reason, there's a House leader agreement to close the House early, we may need to have it at that point in time, as opposed to the 21st.
Mr. Tascona: Mr. Chairman, on the subcommittee, do you have a proposed date that we're looking at that?
The Chair: Last time we met, didn't we have Tuesday, just before the House at 1:30, I believe?
Mr. Tascona: Yes. That would work with me.
Mr. Parsons: That would be fine. So next Tuesday?
The Chair: Okay. So we will aim for next Tuesday at 1 p.m. I think we can get it all wrapped up within half an hour, hopefully.
Mr. Bisson: For the subcommittee, 1 p.m.?
The Chair: Yes. We'll confirm, but it seemed to work well in the past.
Is there any other business to attend to? Members will have received, through Carrie Hull, the research officer, the response to Mr. Tascona's question from the May 31 meeting with respect to the members of the Ontario Labour Relations Board. You should all have that in your packages.
Seeing no other business, folks, we are adjourned tentatively for June 14.
The committee adjourned at 1134.
CONTENTS
Wednesday 7 June 2006
Intended appointments
Michael Gough A-175
Committee business A-179
STANDING COMMITTEE ON GOVERNMENT AGENCIES
Chair / Président
Mr. Tim Hudak (Erie-Lincoln PC)
Vice-Chair / Vice-Président
Mr. Gilles Bisson (Timmins-James Bay / Timmins-Baie James ND)
Mr. Gilles Bisson (Timmins-James Bay / Timmins-Baie James ND)
Mr. Michael Gravelle (Thunder Bay-Superior North / Thunder Bay-Superior-Nord L)
Mr. Tim Hudak (Erie-Lincoln PC)
Mr. John Milloy (Kitchener Centre / Kitchener-Centre L)
Mr. Ernie Parsons (Prince Edward-Hastings L)
Ms. Laurie Scott (Haliburton-Victoria-Brock PC)
Ms. Monique M. Smith (Nipissing L)
Mr. Joseph N. Tascona (Barrie-Simcoe-Bradford PC)
Mr. John Wilkinson (Perth-Middlesex L)
Substitutions / Membres remplaçants
Mr. Khalil Ramal (London-Fanshawe L)
Mr. David Zimmer (Willowdale L)
Clerk / Greffière
Ms. Tonia Grannum
Staff / Personnel
Mr. Larry Johnston, research
officer,
Research and Information Services