Assemblée législative de l'Ontario

REVIEW OF CENTRAL COLLECTION SERVICE

MANAGEMENT BOARD SECRETARIAT

CONTENTS

Thursday 25 February 1993

Review of Central Collection Service

Management Board Secretariat

David McGeown, assistant deputy minister, supply and services

Gary Browne, director, general services branch

Cecil Henley, manager, central collection service

STANDING COMMITTEE ON PUBLIC ACCOUNTS

*Chair / Président: Mancini, Remo (Essex South/-Sud L)

*Acting Chair / Président suppléant: Callahan, Robert V. (Brampton South/-Sud L)

*Vice-Chair / Vice-Président: Cordiano, Joseph (Lawrence L)

Cousens, W. Donald (Markham PC)

*Duignan, Noel (Halton North/-Nord ND)

*Frankford, Robert (Scarborough East/-Est ND)

Haeck, Christel (St Catharines-Brock ND)

*Hayes, Pat (Essex-Kent ND)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud ND)

*O'Connor, Larry (Durham-York ND)

Sorbara, Gregory S. (York Centre L)

*Tilson, David (Dufferin-Peel PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Fletcher, Derek (Guelph ND) for Mr Johnson

Perruzza, Anthony (Downsview ND) for Ms Haeck

Wilson, Jim (Simcoe West/-Ouest PC) for Mr Cousens

Also taking part / Autres participants et participantes: Peters, Erik, Provincial Auditor

Clerk / Greffière par intérim: Deller, Deborah

Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service

The committee met at 1015 in room 151.

REVIEW OF CENTRAL COLLECTION SERVICE

The Chair (Mr Remo Mancini): The standing committee on public accounts is called to order. The information we had been waiting for has now arrived. There are enough copies at least to share and there are more copies of the information prepared by our research officer on the way.

This morning, the committee is reviewing with the Ministry of Government Services its collection branch activities. Members will recall that during the review of the Ministry of Community and Social Services that the committee had undertaken in view of the auditor's work, Mr Callahan had expressed some concern about collections in general within the government. It was decided after Mr Callahan made the motion that the committee invite the Ministry of Government Services officials in to meet with us today to find out more about how you handle the collections, what it costs and everything associated with it. I hope that brief explanation kind of refreshes everyone's memory as to why we're here this morning.

MANAGEMENT BOARD SECRETARIAT

The Chair: I understand that Mr David McGeown, the assistant deputy minister, supply and services division, Management Board Secretariat, is here with us today and is leading the delegation. Mr McGeown, if you would be so kind as to introduce the other officials you have with you and then I'll turn the floor over to you for the presentation that I understand you're going to be making to the committee. My only question would be as to the length of your presentation, so I can better judge what the committee members might want to do.

Mr David McGeown: The presentation part would be about 30 minutes.

The Chair: Thank you. You have with you?

Mr McGeown: Let me introduce Mr Cecil Henley, the manager of the central collection service; Jill Morales, the assistant manager of the central collection services unit; and handling the slides this morning and the high-technology projector, Mr Gary Browne, who is the director of the general services branch.

Let me start by saying that in the Ontario government, of course, there are many sources of revenue. The primary sources are taxes and most of the businesses that the government carries on: what it is licensing and so on. Most of these businesses are cash-and-carry businesses, so in fact the collections that we're talking about today are often out of the mainstream of the government businesses. Taxes, for example, are handled quite separately through the Ministry of Revenue. They have a unit about five times the size of the unit we're looking at this morning, and they have very specific enabling legislation around how they collect taxes and what they can do in order to obtain money from businesses and so on.

What we're talking about this morning are the kinds of collection activities that result from an individual either getting a loan from the government or getting some other kind of a financial amount that has to be paid back, and we're talking about those cases where they are having trouble paying back. So the unit actually has a number of interesting challenges. It has to, of course, collect revenue that's owed to the government; it has to be sensitive to the fact that many of the people it's collecting revenues from are in difficult circumstances; and it has to be very much aware of the fact that it has to treat those debtors with a lot of respect for their circumstances and be very much aware of the difficulties that they find themselves in.

Just to set the scene, perhaps I can just show you where the central collection services resides, and I'll apologize for the confusion around Management Board Secretariat and the Ministry of Government Services. I think three weeks ago it would have been the Ministry of Government Services; today, it is the Management Board Secretariat.

If you'll just look at the slide, you will see that we report to the Chairman of the Management Board of Cabinet. The deputy minister is Val Gibbons, and she sends her regrets for not being able to be here this morning. She had a previous engagement.

Essentially, there are eight divisions in the ministry, of which supply and services is one, the second-largest. Within supply and services there are a number of branches, seven branches. One of those is the general services branch, and one of the units within that branch is the central collection service. So that just sort of puts it in broad context for you.

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The ministry has a vision statement that talks about service excellence through leadership and results, and we firmly believe that statement and try to carry that out. The central collection services has an important contribution to make in terms of that. We believe that we have to be an exemplary example of how collection agencies should behave and should work. It's a mandatory common service, which means essentially that ministries must use the service and the service is paid for out of a central fund. It really focuses, as we say here, on non-tax overdue accounts receivable.

Ministries don't pay for the service. In other words, they must use the CSS, but the moneys collected go directly to the consolidated revenue fund. It's not a new service. It has operated within the government for at least 20 years. Initially, it was located with treasury and recently it sort of received a renewed emphasis in terms of the fact that there are a growing number of debts that are uncollected out there.

Every time the unit deals with a ministry, it actually puts together a memorandum of understanding that governs the actual service that we provide. That memorandum of understanding would talk about the kind of collection that had to be undertaken and the way that the ministry would like us to behave during that collection, including things like the write-off provisions. This allows the ministry to sort of retain control.

We in fact utilize the internal collection expertise of this unit, but we add to that by putting certain contracts through a public tender to private collection agencies. I'll tell you more about that in a few minutes and I'll sort of split it down for you. The major plus to the private collection agencies is the fact that this allows us a lot of flexibility in terms of overload. We don't know when ministries are going to send us a whole group of additional accounts, so we use the private sector to handle some of that.

We of course provide service to all ministries and schedule 1 agencies. They're the primary groups. An example might be the LCBO. We have a legal support unit. They are paralegals who actually go to court and handle Small Claims Courts and similar issues.

Now I'd like to give you a very brief snapshot of the business volumes within the group so that you've got an idea of the kind of activity that goes on. This is as of January 31, 1993.

We service at this point 102 government programs. As I say, each one of them has a memorandum of understanding that governs how that works. An example of a program might be student loans. We currently have 84,000 accounts. That's our accumulated inventory. A large number of those accounts are accounts that in fact have reached the point where we would be considering moving them on as being uncollectable, but there's a core of them that are highly active, and I'll show you how that splits down.

Mr Robert V. Callahan (Brampton South): Excuse me, Mr Chairman.

The Chair: Yes, Mr Callahan?

Mr Callahan: Do we have a hard copy of this?

Mr McGeown: Yes, we will provide hard copies.

Mr Callahan: I wonder if it could be provided now. It would make it a lot easier for members to follow if we had it now.

Mr McGeown: Certainly. Can I just keep talking while we pass it out, Mr Chair?

The Chair: Please go ahead, yes.

Mr McGeown: Thank you.

The value of the actual inventory is $140 million and, as I said, that includes issues that are currently before the courts. It includes items awaiting write-off. It includes issues where we're searching for a debtor and haven't been able to find him.

The gross revenue for 1992-93 is $14.3 million. If I can go to the last slide, you'll see that the actual number of new accounts received in 1992-93 was $44 million, so the new accounts are the accounts that we obviously try to focus on the most, because they are the most recent and the audit trail is a little clearer.

We handle all this with a staff of 40. Each collection officer in the branch has about -- it has ranged over the years between 1,000 and 2,000 accounts during a year. We do compare our staff to people in the private sector and in the private sector organizations we use, and our collections per person compare very favourably. In fact, we collect more than the equivalent person in the private sector organization.

Just to give you an idea about the kinds of accounts that we're dealing with, it's quite interesting: If you look at it by dollar value, the largest dollar value is new venture loans, 45%. Those tend to be high-risk loans for new businesses, and of course one of the difficulties with new venture loans is that people often have to put and normally do put their own actual assets up when they get these kinds of loans to begin with. They've had to put additional money of their own together with the loan to open the business. So when the business goes into difficulty, they often lose everything. So it's not unusual when one goes to collect these loans to find that the people who got those loans are in very difficult circumstances.

Student loans and grants are the next large group. They are loans provided by the bank and guaranteed by the province. Six months after graduation, students are required to pay those loans off, and the loans can be as high as $30,000. The issue of course is that today it's often difficult for students, after they have left school, to have a job in that six-month period, so we have to be sensitive to that part of the collection process.

Other ones that are there -- I think you're familiar with the Community and Social Services overpayments issue. But you'll see that they represent a relatively small percentage of what we deal with: 2%, in fact. Then the 98 other programs sort of fit into the 11% that remains.

If you look at it by number of accounts, actually the newest and largest number of accounts come from the Attorney General, and this is part of the fines control program that I think you've all heard about.

Mr Callahan: Yes, we know about that.

The Chair: Order. Please continue.

Mr McGeown: Thank you. Again, you see that in terms of number of loans, students are next in line, followed by new venture loans.

There's a collection cycle that goes on, and I think it's very important to understand this cycle because there are responsibilities for our ministry and there are responsibilities for the client ministry. So I've tried to put together this chart that shows you that initially, the client ministry creates a receivable of some form and conducts an initial collection effort. Then, if that effort is unsuccessful within the first 90 days, it is available to them to send the account to the central collection services. So there's a 90-day period where the ministries themselves focus on the issue.

We don't always get them at the end of the 90 days. Sometimes it's considerably longer than that, and that's a difficulty. Based on the memorandum of understanding, central collection actually then traces and contacts the debtor -- and sometimes that can take a year if it's a particularly difficult case -- negotiates and counsels on the debt. I think this is a very important point. We find that not only have we got to be out there trying to collect this money, but we have to help advise people on how they might restructure their finances so they can deal with these issues. So our collection officers actually spend a fair amount of time doing counselling.

We can also initiate legal action, if necessary, and we can refer accounts to the private collection agencies. I've used the term "PCA" there, and that's what it means, private collection agencies. We refer certain accounts to them, accounts that we've trained them on how to collect. We just don't throw anything over the wall to them.

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At the end of all this, we either have accepted a payment, in which case we close the account, or if we have been unable to find a payment, we look at recommending a write-off. We recommend a write-off, we send that back to the ministry and the ministry writes off the debt if it so chooses.

We have a very strong policy, and you see it in your handout. This policy is hung on the walls and is available to every member of staff. It governs our collection process. That's because we have to be very sensitive to our role as a collector within the government family. The policy emphasizes the degree of professionalism and integrity that we expect each collector to exhibit in his day-to-day job. It emphasizes the courteousness, the fairness and the consistency with which we have to treat those debtors. It's very much focused on the fact that they have to conduct their business in a way that would be above reproach as representatives of the province.

How do we know how well we're doing in this area? Well, for one thing, people very quickly will get on the phone to the manager or to myself and tell us if they think we're stepping out of line, and of course they write lots of letters should they run into a problem. It's not always a totally mutual admiration society when you've this kind of thing going. Someone's trying to collect money and someone has got himself in circumstances where he can't always provide it. So the basic notion is that we keep track of these kinds of complaints and follow every one up rigorously. At the moment, we're actually running at very few complaints, I might add.

We also monitor our accounts receivable on a daily basis and on a weekly basis, so we know exactly what each member of staff is collecting and how well they're doing in terms of their targets. I won't go through reading the collection policy. I think I've covered the issue.

What I would like to do is go to a slide that talks about revenue versus expenditures. I knew that one of the concerns you had. Can you focus that a little better, Gary, and maybe move it down so people can see it? You're actually better to look at your hard copy at this point.

We've tracked the central collection service's revenue, as per your request, over six years. You can see that it is on the upswing at the moment. We've also put into that slide, in the dark portion, the percentage of revenue collected that we actually have to use to pay for the staff to do the job. So it's self-funding in that sense. At the present time, the ratio is 5.5 to 1. That means we collect $5 for every $1 we spend in that area.

By way of contrast, the public collection agencies we use -- we use three of them under our new contract. We contract for these through an open tender. People bid, and we examine their skills at handling the kind of accounts we have, their capacity to train people and so on and so forth. They get paid a percentage of what they collect.

What you see reflected in the bottom part of this chart is that their collections range in the 2.7-to-1 ratio. At first blush, that would say we are collecting twice as much with our own staff as we are with the outside staff, and some of that is a valid conclusion. But you have to realize that often they get passed on some of our more difficult accounts. They don't get our more sensitive accounts, because we really don't want them handling certain sensitive accounts. In fact, the memorandum of understanding with, for example, Community and Social Services does not allow us to pass those kinds of accounts on to the private agencies.

That gives you some idea of how the two collections compare. That's the external versus the internal.

If you took those and just added them together, you would be able to see the total costs, represented by the dark portion, which include all salaries, expenses, training and the cost of private collection agencies, and the lighter-shaded section is the actual revenues that we've got in. So it's gross expense and gross revenue, and that tells you the kind of return we're getting on that investment.

Mr Jim Wilson (Simcoe West): Can you give us the figures on the 1992-93 peak?

Mr McGeown: Yes. Have you got that exact number there? I can read it off. It's $14.92 million And what's the expense?

Mr Jim Wilson: It's quite a range between zero and $5 million. About $2 million or $3 million.

Mr McGeown: It's about $2 million, but I'll get the exact number for you in a moment. The expense internally is a little over $1 million, and then the public accounts is -- Gary, do you have that number?

Mr Gary Browne: I don't have it exactly, but basically our internal expenditures are somewhat over $2 million. Our expected commissions to the PCAs will probably be in the order of about $700,000 to $800,000. But again, this is projected to the end of March, so these are projected figures for 1992-93 rather than actual.

Mr McGeown: The exact number, I'm informed, is $2.98 million, projected to the end of the year. Any other questions on that, revenue versus expense?

The next slide you might find helpful in terms of understanding what's actually going on on a year-by-year basis. This shows us the value of new accounts received from the ministries and the actual amounts collected. I should point out that the collection ratio we showed you on the previous chart is in the ratio of about 5 to 1, 6 to 1, and that in fact is actually quite high for that kind of business. We did go out and talk to organizations in the private sector and they are collecting in the range of 3% to 12%, so this is at the high end of that. The collections that are actually being taken in are quite in keeping with what one would expect in that industry, in that business. In fact, some of the banks we talked to had much lower numbers.

On this one, you can see that each year we receive a certain amount of new accounts from ministries, and this is what we've collected. For example, this year we will receive $44.7 million and we will collect $14.2 million. That's about 32%. But that does not take into account the fact that we've got an inventory over and above that. It's just a reading of how we're doing on a year-to-year basis.

Mr Callahan: What did you figure that was? What percentage?

Mr McGeown: Thirty-two per cent; $14.2 million versus $44.7 million. In fact, the total at the bottom of the page is that over those years we received $186 million worth of new accounts and we've collected $60 million in actual money.

Mr Callahan: About a third.

Mr McGeown: Yes.

Mr David Tilson (Dufferin-Peel): Mr Chairman, just so we're clear, I wasn't present at the committee when this took place, but in reading the material, this figure doesn't match the figure that was discussed previously, where we were talking 10%.

The Chair: That's correct. I'm aware of that.

Mr Tilson: I assume the Provincial Auditor some time during these proceedings will make some comments as to whether we're looking at 10% or whether we're looking at 32%.

The Chair: I think he's made a note of that already.

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Mr Tilson: It's just that if the Provincial Auditor has some comments on this that aren't the same as what is being presented to us now, it seems to me this would be the appropriate time to talk about that, before he moves on to something else.

The Chair: Do you want to do it now, before we move on?

Mr Jim Wilson: Unless the presentation was heading towards answering the question.

Mr Noel Duignan (Halton North): Why don't we finish the presentation?

Mr McGeown: I think I could clarify that for everyone. The number we're looking at here does not include the inventory. There's an inventory that any collection agency carries, and if you'll recall my earlier slides, there was an inventory of $140 million.

Mr Tilson: I don't know what that means.

Mr McGeown: It means basically that there are accounts that have come in --

Interjection: That haven't been collected.

Mr Tilson: That's what we're talking about, isn't it?

The Chair: We can't continue in this way.

Mr Tilson: Mr Chairman, I apologize.

The Chair: If we're going to have questions, we're going to start up a list. Mr Tilson, you're first on the list, and the gentleman will give us the information. Then you can start a series of questions. We'll keep track and all the members will participate.

Mr McGeown: Would you like me to hold that answer then or continue?

The Chair: Answer Mr Tilson's question. We're going to start running the clock.

Mr McGeown: Basically, the confusion arises because the inventory is an accumulation of debts. You can see from this chart that debts come in and they get handled in various time frames. We have some debts that get handled within six months. we have some that take 12 months, some 18 months, some 24 and some even three years. The time period is based on the kind of debt and the debtor. In other words, if you have to actually go in and search for an individual and locate him -- some of the people we're dealing with have changed addresses five, six, seven, eight, 10 times. Some of the debts we get from ministries may be very old, some of them as old as eight years.

Mr Tilson: Could I just stop you there. The point that I understand was being made -- it's difficult because I wasn't present when this took place --

Mr Callahan: Perhaps I can clarify.

Mr Tilson: No. I wouldn't give you that chance, Mr Callahan.

The criticism that's being made, as I understand it, is the collection, whether you're talking one month or whether you're talking 36 months. The Provincial Auditor -- I hope the Provincial Auditor will jump in here some time -- is simply saying these things aren't being done. Whether it's 36 months or one month is irrelevant.

Mr McGeown: I'm just trying to explain how you get an inventory. We're talking on an annual basis. Something that takes three years obviously is going to go into inventory. Something that takes two years will go into inventory. Something that takes less than a year will not go into inventory, will be dealt with in that year and therefore will be in the figures for that year.

There are two numbers you have to focus on here. There's one that is the percentage of the total inventory, which is collected on an annual basis, and that is 12%. Then there's the percentage of the actual new business we get that year, and that is 30%. That's a 30% number. All I'm trying to point out here is that both of those numbers are in keeping with what you would expect for any collection agency. We do not expect to collect more than $1 out of $10 on these kinds of accounts.

Mr Tilson: I just look at page 34. Those are pretty serious allegations that are being made by the Provincial Auditor. I'm going to read it to you, because it gets back to my question. I know what you're saying, that some accounts are more difficult than others. Notwithstanding that, the Provincial Auditor has said:

"In 70% of the cases we reviewed, none of the outstanding debt had been repaid. We estimated that during the 1991-92 fiscal year, the ministry collected less than 3% of outstanding overpayments. The ministry's collection program relied on voluntary repayment. Legal remedies were not pursued."

It almost describes a state of shambles.

Mr McGeown: I believe those references were to the Ministry of Community and Social Services.

Mr Tilson: Yes.

Mr McGeown: We have no control over those. In fact, all I'm talking about is the material they give us to effect a collection on. The statistics I am giving you are the materials that ministries have sent us. I can't comment on what ministries have done with them before they sent them to us.

Mr Tilson: Could I have Mr Peters comment?

Mr Erik Peters: There are really two stages in the collection process. Once an overpayment is detected by Comsoc, the social services, they go into their own effort of collecting and they are only succeeding at the rate of 3% of what they have overpaid.

At a certain stage in the life of that account, under the mandatory provisions that Mr McGeown has just pointed out to us, they turn this account then over to the central collection agency, and at that point they have to go into the collection under the constraints that are given to CCS by Comsoc. In this memorandum of understanding that Mr McGeown refers to, they say: "Here are these accounts that we cannot collect. You collect them, but here are some conditions that we impose on you in the way you proceed on collecting." So that's the 3%.

Now the 10%, if I may come back to that, was really the overall performance of CCS; it was not directly related to only the Comsoc accounts.

In other words, what we were saying at that time, and I think that's what Mr McGeown was getting at too, is the total number of accounts owing by Ontarians or other people that had been turned over to CCS, the average value was about $140 million in 1992. That was outstanding in 1992. There were previous years; there was the accumulation of what was outstanding. Out of those $140 million, they collected about $14 million, and that was where the 10% came from.

If I may, the statistics that you have just seen provided were relating to the new accounts turned over but did not relate to the carry-forward from preceding years that they also collected. That's why you get a higher percentage, like 32%, if you only relate it to new accounts turned over and ignore the accounts that have been going uncollected for a number of years but are still on the books of CCS.

Mr Tilson: There's no question in my mind, having listened to what you said, that the overall process from start to end, stinks.

Mr Peters: Yes.

Mr Tilson: That's a good answer.

The Chair: Mr Callahan, do you have a point you want to clarify?

Mr Callahan: Yes. Just to clarify it, it was my motion, and so that people who are watching this will have some understanding of why the motion was put forward, when we found out that only 10% of the collections were being collected, we wanted to find out how that 10% got watered down when you took the cost of creating the 40 people they've got working there, the fax machines, the computers and all the rest. How did that work out? Were we paying 15% to collect 10%? That's really what the nature of this exercise is today and that's what I'm going to be asking my questions on.

The Chair: Mr Duignan, five minutes.

Mr Duignan: I notice that we assign a number of our accounts to the private sector, and the question is, if we assigned all the moneys to the private sector, would there be more money collected than what your department would collect?

Mr McGeown: Based on the actual figures that we have from our current private collection agency -- and we think they're the best, for they've been selected through a rigorous process -- they actually collect less money than our own internal people and they don't have to deal with some of the really difficult accounts such as the FBA overpayment accounts. We just don't give them those; we can't give them those.

So there's every indication to say that the collection officers that we have do an exceptional job and I think I'd put them up with anybody in the collection business in terms of their professionalism and what they've accomplished. They clearly are collecting at least as good as the private sector, and there are indications that they're collecting much more.

Mr Duignan: I tend to agree with Mr Callahan on why we wanted to hold a special audit. To clarify a point for myself, there are two particular accounts you work from. There is what you call a current year, which is roughly 30%, and then there's an inventory amount of money you collect from, which is 10%. Is that correct?

Mr McGeown: Yes.

Mr Duignan: Of that $140 million in inventory, how far does it go back?

Mr McGeown: Perhaps Mr Henley could answer that. My understanding is that it goes back quite a few years. In fact, some of them could be as long as eight years.

Mr Cecil Henley: Yes. From the time that we've received them, eight years; from the time of inception of the debt, it could be up to 16 years.

Mr Duignan: How many?

Mr Henley: Sixteen.

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Mr Duignan: Why would you hold a debt on the books that long? Your chances of collecting are --

Mr McGeown: We would agree with you. You have to understand the situation here. When a ministry sends us the debt, we can't say, "This one's too old; take it back." What we in fact do is we try to collect on the debt and we move as expeditiously as we can in that arena.

But you're absolutely correct in that the older the debt is, the more difficult it is to collect, which is why just two or three months ago, I think, our deputy minister sent a letter to all other deputy ministers saying: "We would like to have those accounts sooner. The earlier we get them, the more effective we can be at collecting them". So we agree with you.

The Chair: When was the letter sent?

Mr McGeown: I can get you the exact date.

Mr Browne: The letter wasn't actually two or three months ago; it was December 1991.

Mr Duignan: Two further points: Of that $140 million, in your own estimation, how much of that is uncollectible, because of the time lag, for example?

Mr McGeown: Cecil, could you give us --

Mr Henley: Of the newer stuff, less is going to go to write-off; of the older stuff, more of it. It could be as high as a third of the older accounts which are over 36 months. So about 5% of the over-36-months and then that scales down. It's not the kind of figure that you can come up with, because it would be a guesstimate. As the economic situation improves, less of it would be written off. So as long as the people are willing and express a willingness to pay over a period of time, we'll retain the debt. A lot of these people want to pay, but they just don't have the ability right now, and we agree to hold it until such time as they can handle it.

Mr Duignan: Do you have a breakdown on those types of figures that you could supply to the committee, how old the debt is, how much it is and, as you indicated, that people are willing to pay but just can't because of the economic conditions?

Mr Henley: No, I don't believe our system has the ability to do that. We know it from experience in working with people, but we can't break it out.

Mr McGeown: Are you asking for the statistics, sir?

Mr Duignan: Yes.

Mr McGeown: That is a difficult problem. In terms of writing stuff off, essentially under the memorandum of understanding, on a specific account there are certain authorities delegated to us in terms of write-offs and we take those actions under that memorandum of understanding. If, however, the memorandum of understanding does not permit us to do that, we effectively reach a point where we cannot collect the debt and we believe it should be written off, and then we send it back to the ministry with that recommendation.

There's a lot of paperwork associated with that, and there probably is a number of accounts. That $40 million could be dealt with more expeditiously if we had the resources to do it. Right now, every collection officer in the unit is working a long and difficult day, managing about 1,000 to 1,500 accounts, almost twice what people manage in the private sector.

The Chair: Mr Duignan, Dr Frankford has one question. We only have time left for one question, so it's up to you guys how you want to use it.

Mr Duignan: Okay, I'll hold off.

Mr Robert Frankford (Scarborough East): I see the different categories, the big categories you've got, and presumably the policy varies when things are considered uncollectible. With the venture ones --

Mr McGeown: New ventures loans?

Mr Frankford: Yes. Is it often the case that you'd be dealing with a corporation that doesn't exist any more?

Mr McGeown: Usually the corporation still exists, but we often bump into situations where some of the partners have disappeared, or someone is left holding the bag for the whole amount, even though they thought they were only getting in for a third, because it's held joint and several, I think is the terminology. Anyone we find is obligated to pay the full amount. Often they've lost their house and they've suffered ill health as a result of this thing, so there's only so far you can push in those situations.

The Chair: Just before we continue, we've each done a five-minute rotation, approximately. I'd like to know whether or not the presentation is finished.

Mr McGeown: I think I can cut it off there.

The Chair: Okay, we might as well start with our regular rotations then. Is 15 minutes too long? Is 15 minutes about right? It's all right?

Mr Tilson: Mr Chairman, just as a point: Has the Provincial Auditor said all he wants to say about this? When's he going to do that?

The Chair: Usually, we allow the members to do their work first.

Mr Tilson: I have a lot of questions, but it may cut down. The Provincial Auditor's office has expressed some concerns.

The Chair: No, I think the members deserve the opportunity to have their say first, and the Provincial Auditor is here as a backup whenever we want to ask him anything at any time. I believe that's appropriate also.

Mr Callahan, you have until approximately 10 after 11 and then we'll move to Mr Tilson and others.

Mr Callahan: I'm trying to figure out: You've got 40 employees; is that right?

Mr McGeown: That's correct.

Mr Callahan: And you must have all of the necessary equipment: fax machines, computers, Xerox machines, desks, tables.

Mr McGeown: Yes.

Mr Callahan: What is the total cost to the ministry in any one year for that department?

Mr Henley: The total cost is the budget that's been allocated to us.

Mr Callahan: What is that?

Mr Henley: It's $2.91 million for 1992-93.

Mr McGeown: Not the commissions.

Mr Callahan: That pays for everything?

Mr Henley: Not the commissions. Sorry, that includes the commissions; $2.063 million is the total budget allocated for the operation of central collection service. When we add staff, we get our supplies, wherever possible, from assets disposal.

Mr Callahan: But does that pay for all your supplies and all your staff? That's not paid for through another ministry or something?

Mr Henley: No, sir.

Mr McGeown: No.

Mr Callahan: It's not like the ministers, who have separate expenses for their minister's office.

Mr McGeown: No, this is a mandatory service. It's paid for out of the estimates and we do not collect money from ministries.

Mr Callahan: You've given us a policy, which I think is a very commendable policy, as to how you go about collecting it, and I would think that with that kind of a policy, if you got a really recalcitrant debtor, he could run you around the block 105 times. It's certainly not the way most collection agencies that I'm aware of operate. In fact, with some of them I've had complaints from my constituents and I've written to the minister about them. And you're telling us that despite your -- and maybe it is; maybe gentleness works better than roughness -- but you're telling us that your collection ratio is better than that of private collection agencies?

Mr McGeown: Yes, sir.

Mr Callahan: How many collection agencies are we talking about? How many are you telling us? One, two, three, ten?

Mr Derek Fletcher (Guelph): We did a survey of 150. Come on, Bob.

Mr Callahan: I didn't ask you the question; I asked the person who's testifying here the question. I wonder if I could ask the question of the people who are here -- they came here, spending their time here -- instead of one of the members opposite trying to answer the question.

Interjection.

The Chair: Order, please. Mr Callahan has the floor and he can ask the witnesses serious questions if he wishes, and it's up to the witnesses to respond.

Mr Callahan: How many collection agencies did the --

Mr Henley: A quick survey was done of three of the agencies.

Mr Callahan: How many agencies do you believe are out there?

Mr McGeown: Plus, I might add, the three agencies that we use on a regular basis, so we really have very detailed statistics on that.

Mr Callahan: No you don't, with all due respect. If there were only three agencies -- there must be more than three collection agencies out there in the private sector.

Mr McGeown: Sure.

Mr Callahan: How many would you say there are? A couple hundred, maybe more?

Mr Henley: When we put out a tender, approximately 30 indicated interest in central collection service accounts. How many there are actually out there, I really couldn't answer.

Mr Callahan: I'll bet you there are hundreds of them out there. And you're saying that the three that you're measuring your experience against are the three that you usually use for purposes of collecting accounts.

Mr Henley: Yes.

Mr Callahan: That's hardly going to an arm's-length comparison, is it?

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Mr Henley: The kinds of questions we would be asking are not readily available from agencies that we don't do business with. These are very private corporate statistics that they don't readily give out.

Mr Callahan: How long have you used the three agencies that you've compared your track record with?

Mr Henley: One of them, going up to nine years.

Mr Callahan: How about the others?

Mr Henley: One of them six, and the other one just started with us on a new tender. They won a position on the new tender.

Mr Callahan: You do this on the basis of a tender. Surely, part of that tender question must be: "What's your track record in terms of collection? How much do you collect?" Isn't that part of the tender? I would think that would be the most important part of the tender, in fact.

Mr Henley: The most important part of the tender is the manner in which the agency will deal with the accounts that we provide them. That's the most important.

Mr Callahan: That's more important than the question of how much of that outstanding debt they can recover for the government.

Mr Henley: It's a fine balance. An agency can go out and be extremely difficult with our debtors and collect a lot of money but create a serious number of problems with complaints, with going to the newspaper and saying how unfair the government is in doing this.

Mr Callahan: That's probably a good reason why it shouldn't be within the government. I mean, we're not talking about moneys that we can do without; we're talking about taxpayers' dollars. You don't pussyfoot around with collecting taxpayers' dollars and that's the impression I get. It's fine to have a nice central collection service policy, which is all very nice, but I find it very difficult that I as a taxpayer would expect a lot more than that in terms of the collection of that amount.

Having looked at your policy, one of the terms of your policy is:

"Collection procedures should be carried out in a professional manner. Scrupulous efforts should be made to ensure courteous, fair and consistent treatment of all debtors."

I understand that you've now had referred to you by the Attorney General's department the infamous unpaid fines and traffic tickets. I've had a lot of constituents, and I'm sure many of my colleagues have come roaring to our offices saying: "We've paid it. What in the world are you doing, using a hammer to kill a flea?"

Mr Tilson: The new, gentle NDP government.

Mr Callahan: That's right, and here's what gets sent out. "Ministry of the Attorney General records indicate you've been convicted of an offence as shown below. The amount due has not been paid. The ministry intends to collect this debt from you. You may have already been contacted by government central collection" -- none of my constituents have been -- "informed about a suspension of your driver's licence or a denial of a renewal of vehicle plates." That's for a parking violation.

Interjection.

Mr Callahan: Let me finish. I've got constituents who have told me that since about five years ago, when you renewed your licence plates you had to pay all your fines, and they said, "I don't owe it any more or I didn't do it." I think maybe the public watching out there should understand there's a new policy by the ministry that you can now go before a justice of the peace -- they haven't told anybody about this -- and swear that you've paid it and you're let off the hook. Did anybody know about that? Did any of the members know about that? No.

The Chair: I'm sure everyone watching is going to know.

Mr Jim Wilson: I do. It was in the paper.

Mr Callahan: They didn't know about it at the time. If you're accepting their fines for collection, I suggest you'd better change your policy, because if that's called, "Scrupulous efforts should be made to ensure courteous, fair and consistent treatment of all debtors," to me that certainly is not courteous, fair and scrupulous. That's trying to ride roughshod over the people in this province and making them pay when perhaps they don't even owe the money.

As the Attorney General said: "It doesn't matter if they've paid it. They've got to pay it again." As I said before, in the private sector that would be called theft; in government it's called bureaucratic administration. I think you'd better look into that. That's one debtor. If he or she refers anything to you, I'd just say, "No, we don't want it," because if you do get it, you're going to find that it's not going to live up to the policy that you have here.

The Chair: Do you want to give Mr McGeown a chance to respond, Mr Callahan?

Mr Callahan: Sure.

Mr McGeown: I think I'd just like to draw your attention once again to the collection cycle. Everything you've talked about is in this first box, which is handled by the Ministry of the Attorney General. I certainly can't comment on their policy or how they're going about undertaking this particular item. We do not have the unpaid fines coming to us at this time. We will at some time in the future, and we will deal with it at that time, but right now all the things you're talking about are in the hands of the Ministry of the Attorney General. We have no say in the policy of that ministry or how it conducts its business.

Mr Callahan: I thought you just told us that you'd had that referred to you.

Mr McGeown: It has been referred in the sense that it will be coming to us at some point down the road. Right now, it's still being totally handled by the Ministry of the Attorney General.

Mr Callahan: So the Attorney General is doing the first hit, and then after she's done that hit, it'll get sent to you. Is that right? She is sending out the first --

Mr McGeown: My understanding is that she'll send out --

Mr Callahan: Well, it's not her; it's her staff. But they are sending out the first hit and that's the first salvo: Scare the daylights out of the citizens of this province. Even if they have paid them, scare the daylights out of them and then they'll give it to you people. From the looks of the policy, the bad guy, good guy routine is what we've got here.

Mr McGeown: Just one other point of clarification --

Interjection.

Mr McGeown: We have actually run for three years, on a pilot basis, collections on fines with the Ministry of the Attorney General on a small number of courts, and we've have no negative publicity at all surrounding that. We have followed those principles, and it has been successful, but it's a small pilot. I can't predict what's going to happen six months down the road.

Mr Callahan: Maybe they should've stuck to that. I didn't get any complaints before this shooting-from-the-hip policy came out. But in any event, does your department have any type of policy area where you might suggest to a ministry, "Well, you know, maybe the normal collection agency route is not the way to go"?

We should perhaps do it the way I thought was smart with fines. I'm not in favour of people not paying their fines, but I think there's an awfully cheaper way of doing it, particularly when it's a fine that deals with a motor vehicles, and that is, "No tickee, no washee. You don't pay your fines, you don't get a licence plate renewal." That was working rather nicely and suddenly, for a one-day media hit, the people in this province are now being treated like they're some sort of convicted felons for a parking violation. I find that absolutely outrageous. I would think that maybe within the framework of your policy, which seems to be a good one in terms of the way you treat people, there should be a general think tank as to easier ways to collect money than this shoot-from-the-hip approach.

You have used collection agencies. How much of your work is referred to collection agencies, what percentage?

Mr McGeown: It's about one third.

Mr Callahan: One third of it.

Mr McGeown: Yes. There's a chart in your package that shows that.

Mr Callahan: To your knowledge -- I think it's 60 day days -- doesn't your manual say that ministries are supposed to refer a debt to you within 60 days if it's not collected?

Mr McGeown: In 90 days.

Mr Callahan: In 90 days. Do you have any authority to require them to -- who polices that if they don't send it within 90 days? I understand that in the ministry, according to the auditor's report at the ministry level, the question of collecting debts was sort of the one on the back burner. That was the last resort. If they finally decided, "Well, maybe we'd better do something with that piece of paper," they'd send it to you guys and you'd collect it or try to collect it.

Mr McGeown: Yes. I can tell you that we do not police it. Our job is to take the accounts they give us and work vigorously to bring them the revenue.

Mr Callahan: Does anybody police it?

Mr McGeown: I can't answer that. I honestly don't know. I think it would be related to the Treasury policy. You might want to talk to someone in Treasury.

Mr Callahan: So Treasury should be enforcing it, I guess.

Mr McGeown: I can't say.

Mr Callahan: We'll save that for Mr Laughren in the House.

Mr McGeown: I can't say.

The Chair: One more question, Mr Callahan.

Mr Callahan: Just before I go I'd like to say I may have been barking but I'm not barking at you people. I'm barking at the silliness of trying to collect funds through a program that could've been done far more easily through just collecting it when you got your licence plates issued. It wouldn't have entailed any more people. It wouldn't have put a burden on you people. You could have gotten on with collecting the things you should be collecting. That's my major concern.

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The Chair: Mr Tilson.

Mr Tilson: In spite of all the shots that appear to be coming to you, the auditor actually said that the central collection service has a better collection record than Comsoc, which is Social Services, which is how all this got going. There was a statement made, and I don't know whether you've had a chance to look at the auditor's report on the Ministry of Community and Social Services, especially the family benefits assistance section. On page 34, the auditor said: "We found that delinquent accounts were rarely referred to the central collection service of the Ministry of Government Services as required by ministry policy." Then of course they say, "The central collection service has a better collection record than the ministry." I suppose that could be a compliment or it could not be a compliment, but we'll take it as a compliment.

My question to you is -- and I think you made a comment to Mr Callahan or to Mr Duignan; I'm not too sure -- that you can't comment on the policy of the Attorney General with respect to what it's doing. But surely you feel you have an obligation. I mean, you're getting all these debts, and it must come to your attention that some ministries are saying and specifically the auditor's saying that the delinquent accounts are rarely being referred to you from Comsoc. You must know that because you're not getting any mail from them, or it would be appear.

Do you feel it's incumbent upon you to draw to the attention of a specific ministry that perhaps certain accounts should be referred to you?

Mr Browne: Mr Tilson, I feel that, in essence, when our deputy minister sent out a letter to all the ministries somewhat over a year ago, within that letter she requested information on what overdue receivables they were holding that possibly could be transferred to central collections. We were looking, at the time, at the possibility of creating a business case which could justify a good return for the government on accounts that potentially were going to be referred to us with some encouragement. All ministries received a copy of that request and replied back. But I would say that our deputy did take initiatives to basically encourage outstanding receivables that are out there that we didn't have.

Mr Tilson: Did you get any response from Mrs Boyd's ministry, from the Ministry of Community and Social Services?

Mr Browne: We received a response at the time which indicated there was a very significant amount of outstanding receivables. But at that point the ministry did not feel they were appropriate to be referred.

Mr Tilson: Can you tell me what you know of this ministry's policy that says that delinquent accounts should be referred to the central collection service? Is there a standard policy in the government or does each individual individual ministry have a policy?

Mr McGeown: There is a Treasury policy that says a delinquent account should be forwarded to the collection service.

Mr Tilson: Can you tell us what ministries do not appear to be complying with that policy?

Mr McGeown: I can't tell you who is not complying but I could certainly tell you whom we do business with. As I said, there are 102 programs; there is quite a number of them. I suppose you could reverse that out and say, how many programs are there? There are 102. But you have to remember some programs don't have any collections at all. They are doing business on a cash basis. They'll never have collections.

Mr Tilson: Having said that, I need to ask the Provincial Auditor to explain why his staff has said they found that delinquent accounts with respect to this specific ministry were rarely referred to the central collection service of the ministry as required by ministry policy.

The Acting Chair (Mr Robert V. Callahan): Which ministry are you talking about?

Mr Tilson: I'm talking about the Ministry of Community and Social Services.

Mr Peters: To put this into the overall context, the audit of the regions related essentially to the overpayments that were made to recipients. The point we were making was that overpayments should actually be avoided by the ministry in the first place, because whether the overpayment could actually subsequently become a collectable item is a very questionable situation. They do not know whether they can actually collect overpayments in the future. They have a soft policy in terms of not going forward with the overpayments to pursue them in a legal manner. We pointed out some instances, I believe, where even major amounts were not pursued because they said they were not pursuing items of this nature. We were saying that therefore their collection record was very poor.

Our point was really that once an overpayment occurred, collection by the government was not really an available remedy because the percentage collection was very poor. They would collect only 3%. Then, when they turned it over to CCS, CCS very often didn't even have a chance to properly collect because it may have been a question of whether it was actually a claim against a person who could afford to pay. This was not an available remedy. Our point, in the context in which we were making it, was that Comsoc should really make every effort available to avoid overpayments in the first place because it couldn't benefit the taxpayers by the collection effort at the end, regardless of whether it was the ministry or whether it was the central collection agency, although it had a better record.

The Acting Chair: Just to clarify that, as I recall, the reason they may not be able legally to collect that is as a result of a decision in another province which is being appealed to the Supreme Court of Canada as to whether, under the Charter of Rights and Freedoms, you are able to take money from people as an overpayment while you're paying them social assistance.

Mr Tilson: The world's going mad if that's the case.

The Acting Chair: I think that's the issue that will be determined by the Supreme Court of Canada some day.

Mr Tilson: I'd like the Provincial Auditor to comment, because at the time the Provincial Auditor's office made its report, the minister, Mrs Boyd, said -- and I'm quoting from an article in one of the Toronto newspapers back in December -- "The staff problems are well on their way to being resolved. Obviously, when you have a problem that is as deeply systemic as the auditor is identifying, it takes a while to ensure that you can solve all of the problems." Obviously, the problem in this ministry, on this issue, is a mess. Has the ministry communicated with you in any way since your report came out to indicate to your office how it is attempting to correct this problem as identified by your staff?

Mr Peters: Actually, they did testify that the main problem they had identified was that the case load per staff member in their ministry was so high that they actually ended up in a position of paying first and asking questions later in a number of instances. They had resolved the issue or were on the way to resolving it by engaging up to, I believe the number was something like 450 additional social workers to deal with the additional case load, to get the problem under control. I think that by the time they were before this committee they indicated that they had already hired 200 and were planning to hire another 250 more in the near future. That was their way of resolving the problem. They identified it principally as a staff case load problem.

Mr Tilson: Thank you, Mr Peters. If I could pursue another area, Mr Chairman, through you to the delegation, I believe you made some comments, when you were talking of your inventory, that you had outstanding claims of 8 to 16 years. There were some very old files. Why bother? We have the Limitations Act that says you can't go after claims beyond six years, or does the Limitations Act not apply to these things?

The Acting Chair: The crown's probably not bound by the Limitations Act.

Mr Tilson: I don't know; I'm just asking. I just find it remarkable that we're trying to collect claims of up to 16 years.

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Mr Jim Wilson: Our friends wouldn't be in debt.

Mr McGeown: We're not bound by the Limitations Act. We will be, because there's a new Limitations Act coming forward. I guess the bottom line is that even though it's an old account, if you can collect on it, you should try to collect on it. We go through that process. If we collect, then that's money to the good; if we don't, of course we have to put that back to the ministry and ask it what it'd like to do with it.

Mr Tilson: Looking at your policy -- I read it -- to be quite frank, you're trying to do your best, but you're not being that aggressive. I look at the issue. Maybe you'd want to correct that, but before I get you all excited maybe I can ask you a specific question. When you get to claims of 8 to 16 years or long periods of time, I'd like you to tell me a little bit about what legal action you embark on as opposed to writing a series of threatening letters over a period of 16 years.

Mr McGeown: I'm going to ask Mr Henley to address that. I think you'll find that there's considerable legal action. In fact, we have paralegals who work on a regular basis and go to court on a regular basis. I'd just like to say that just because we've got a humane policy doesn't mean we're wimpish about how we implement it.

Mr Tilson: Oh, I wouldn't dare suggest that.

Mr McGeown: I just thought I'd clarify it for the record.

Mr Tilson: I understand.

Mr Henley: What we gave was an extreme example. It could go as far back as eight years, meaning that the original debt might have been incurred eight years prior. For example, in a complex loan that had been issued by one of the ministries, it may be eight years before they finish disposing of all the assets of that original company. You can't collect on the personal guarantee until you've disposed of the assets, which is fair to the person who guaranteed it. I think the question is that by the time we get it the original debt may have been that old. The bulk of our accounts obviously aren't that old. The bulk of our accounts are in three to five, three to six years.

Mr Tilson: When do you decide, if I could continue, Mr Chairman --

The Acting Chair: You've got about two minutes left, Mr Tilson.

Mr Tilson: Thank you. When you do decide when an account is uncollectible? Do you have a policy on that?

Mr Duignan: After 25 years.

Mr Henley: I think it varies with each account. I think you have to look at what the prospects are. If the prospects are a reasonable opportunity of recovery in the foreseeable future, then I think we would be a fool to submit it for write-off. We do vigorously pursue with legal action. Sometimes we're forced into a situation where we have to take what is called a passive judgement. In other words, we get judgement on the account, but for some reason of sensitivity -- maybe it's a matrimonial home involved -- we take a passive judgement and don't act on it until that person decides to act on the property. It's not something where we would harm the individual, but at the same time, if he ever decides to sell the property and take his equity, then the province should get some of its money back at that time.

Mr Tilson: Notwithstanding what you've just said, I find it strange that you have lawyers, staff, whoever, working on files that are years old.

Mr McGeown: I think that if you look at the number, it's clear we have 84,000. We don't have the capacity to look at 84,000, so there is a prioritization that goes on there. We obviously work on the files we think we're going to collect the most on. If we had unlimited resources, we could tackle all of them, but we clearly can't do that. You're correct in suggesting that some of the older stuff, and certainly many of the accounts we have, are not highly collectible. They are not the ones we would focus on, but we do try to examine them all and get some action going on them.

If you recall, I did put up a slide that looked at what we actually get each year and what we try to pump out each year. Of what we're getting, we're putting out, in dollar terms, about one third. That's the focus in terms of moving things expeditiously through the system. You're correct in saying that a lot of these older accounts are very difficult to collect on. We agree with you completely.

The Acting Chair: Okay, we'll have to move on to Mr Duignan. I can never get your name right. What is it now?

Mr Duignan: Duignan.

The Acting Chair: Duignan, okay.

Mr Duignan: Thank you, Mr Chair. Just following along and picking up some of the points from Mr Tilson, that number of accounts is roughly some 84,000 people. But you have debts that go back 8 to 16 years. If I'm correct, that represents about $47 million to $50 million of that inventory of $140 million. How much of that $47 million to $50 million is represented in those 84,000 accounts?

Mr Henley: Could you repeat the last part of your question, please?

Mr Duignan: Of the 84,000 accounts you have right now, how many of those accounts go back eight to 16 years? What does that $47 million to $50 million represent in the number of accounts, one third roughly?

Mr Henley: The 8- to-16 year category? Probably less than 2%.

Mr Duignan: Less than 2%.

Mr Henley: That has to be a guesstimate because we don't have that figure from our system, but you're not looking at a huge volume of accounts. The bulk of the accounts is in the earlier stages.

Mr Duignan: But you would be actually looking at some large accounts. If that $50 million represents only about 2% of the 84,000 accounts --

Mr Henley: It's not $50 million.

Mr Duignan: Maybe I'm getting confused here.

Mr Henley: Yes, a little.

Mr Duignan: I'm wondering, of the $47 million to $50 million, which roughly represents the accounts that are 8 to 16 years old --

Mr Henley: I don't know where that figure came out.

Mr Duignan: That's from an question I asked earlier. You said roughly one third of the inventory of the $140 million is 8 to 16 years old.

Mr Henley: No, sir, I don't believe that was quite what was meant. Roughly half of our inventory is aged beyond -- and I think that was from the pie chart -- 12 months. Half of our inventory is 12 months old and half of our inventory is in excess of 12 months, and that's by dollar.

Mr Duignan: I will check Hansard. I won't be able to check --

The Acting Chair: It may be that if he said that, it was a mistake. I think he's correcting his mistake now, if that was it. I don't think we have to --

Mr Duignan: Okay, I'd like to move on, Mr Chairman.

The Acting Chair: If you want to, we can check Hansard.

Mr Duignan: No, I will check it later.

When this issue arose in January, I know my good friend the member for Brampton South was promoting the idea of sending all these debts to a private collection agency. He said -- he can tell me if I'm wrong -- it didn't make any difference whether these agencies charged 50% to 75% fees, that any money the government gained would indeed be a plus. You have alluded to the costs of sending these debts out to private collection agencies versus doing them yourself. I want to discuss the process of how your department goes about operating versus a private collection agency. I'm thinking, for example, of a single parent who would be, say, on GWA and may have an outstanding student loan, or something similar to that. How would your department deal with this differently from a private collection agency? In my office I get a number of complaints from constituents saying how collection agencies harass people on the phone. Would you do something like that?

Mr Henley: Would we harass them? No, it's expressly forbidden.

Mr McGeown: I think the key point I would make here is that we would be sensitive to that person and that person's position. We would actually turn around and counsel that person on his financial status and maybe suggest a way out of it. Sometimes we will accept $50 or $100 a month in order to work the debt off. It may take years and years. That's another reason why some of them are around for a long time, but that's part of dealing humanely with the individual.

The other thing is that we train our officers over an extended period of time to be aware of those kinds of people and the kind of condition they might find themselves in. The memorandum of understanding from the ministry makes it very clear how it would like us to operate in that condition. That's not to say that someone in a private collection agency couldn't learn all the same things. They just don't have the same kind of access we have to those government programs.

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Of the agencies in the private sector that we do use to collect, one of the criteria that we put in the tender is their capacity to spend the time to train their people and to get them up to a level where they can operate in an effective manner in this environment. You can't just look at collections as collections; you have to look at it in terms of whom you're collecting from and the environment that you're in. We check up on that, we actually go out to those private collection agencies and ensure that the people have had the right kind of training and that they're dealing with those issues in the right way.

Mr Duignan: I know my friend from Brampton South, who appears to be a very strong proponent of the use of private collection agencies to get money owing to the government --

Mr Callahan: On a point of order, Mr Chair: I didn't suggest that at all. What I did suggest was that we should investigate the question of whether or not it might not be more fruitful for the taxpayers of this province, in the final analysis, to use people in the private sector as opposed to creating a bureaucracy in the government that may be costing us more than what we are collecting. That is what I do support.

Mr Duignan: It's nice to see that my friend from Brampton can skate around an issue. You can correct me if I'm wrong that you have stated on the record that the current central collection system, if I can quote you, is loony tunes. Can you relate to me what has happened in other jurisdictions that have turned their entire collection policy over to private agencies, if you know of any other jurisdictions.

Mr McGeown: I'll ask Cec to address that. He may know more of the specifics. I know of a few, and they have run into problems when in fact they've sold the debt, if you can understand that distinction. If you've got $140 million, maybe you sell it for $10 million and then the agency can take whatever steps it wishes to collect. If it collects $12 million it made a $2-million profit; if it collects $20 million, it made a $10-million profit. So there's a total disincentive in that system to adhere to the kind of policy restrictions that we were talking about and that we think are very important. That's one part of it.

The other part of it, of course, is that there are certain parts of government collections today which we just don't feel are appropriate to be handled by the private sector. Do you know specifics? I think Manitoba did something.

Mr Henley: CCS has had phone calls from both Alberta and British Columbia, which are interested in the central collection structure that we have here in Ontario. From what they told me, as a result of, first of all, the demands on their revenues, and second of all, complaints that they have had when on occasion they've sold accounts to agencies, they felt that they'd lost control and they felt that our organization bore at least a serious look and potentially copying.

Mr Duignan: So in fact there are other jurisdictions in Canada that have used private collection agencies that have been told to collect money outstanding owing to the government, and their experience hasn't been good. In fact, they're looking at getting back into handling the accounts themselves because of the problems created by outside agencies.

Mr Henley: That was my understanding. They had two reasons: One was the sensitivity issue, and the second was the cost factor, that it was more economical to do it with a quality organization than it was to send it out to a private agency at whatever rates the agency would be charging. Obviously, those rates vary, but they're usually averaging around a third or higher, depending on the age of the account.

Mr Duignan: Given your ratio versus the private sector, in fact you have a good track record for dollar value of getting back in those accounts again. If we double, for example, the size of your organization, would you double the amount of money collected?

Mr McGeown: No, we would not double it, certainly not right away, simply because the latency and getting back into that inventory of accounts; but over time, you in fact would. There's a direct relationship between the number of collectors we have and the amount of revenue we return, and I've tracked that over a number of years. Actually, there's another interesting inverse relationship, which is that when we put too many accounts on the collectors, say when we move them from 1,000 to 2,000, the revenue actually drops. They just can't handle it; there is so much wheel-spinning going on in trying to handle that number of accounts that we actually ruin our effectiveness.

So there is a relationship, and yes, if we had additional collectors, we would immediately pick up on money. We wouldn't double it, but over a period of time it would get up to doubling as we gained experience with the accounts.

Mr Pat Hayes (Essex-Kent): Do you have a breakdown on the 55.4% the Attorney General finds? In other words, are some of these just parking violations or other traffic offences?

Mr McGeown: I'm sorry, we don't have that information.

Mr Hayes: You don't have anything other?

The Chair: Mr Hayes, you have the floor, and we have a list of presenters here who can answer all the questions.

Mr Hayes: Thank you, Mr Chair. I think that's quite appropriate.

Mr McGeown: I was saying that I'm sorry, we don't have the breakdown on that figure. I understand that a lot of them are related to parking fines, but I wouldn't guarantee that.

Mr Hayes: A lot of them are related to parking fines.

Mr McGeown: Mr Henley was just pointing out to me that the ones that we have today as part of our pilot project actually include more than parking fines. I think there are speeding fines and other related things.

Mr Hayes: That would be included in there.

Mr McGeown: That's in the pilot that we're talking about.

Mr Hayes: What I'm trying to get at here is the fact that there are comments made about how ridiculous it is for the government to go out and try to collect fines from people, outstanding bills from people for traffic violations, and we've had a system set up that they couldn't get their plates.

Mr Callahan: On a point of order: Who said that?

The Chair: A point of order.

Mr Callahan: He's suggesting that I said that. I didn't say that. I said the mechanism that's being used --

Interjection.

Mr Callahan: I think I have an opportunity to speak to my point of order. I said the mechanism that's being used, putting it through these people who are already overburdened rather than using the technique that has been used in the past of not getting your licence plate renewed until you paid your fine, was not the wiser choice. I didn't suggest that they shouldn't be paid or collected.

The Chair: That's not really a point of order; it's a point of clarification. I'm going to add a minute.

Mr Hayes: I agree with you, Mr Chair, it's not a point of order. If the member feels guilty or paranoid, that's his problem. What I was trying to get at, and it's not to get personal with any of the members, is that there have been comments made about the system that has been in place, that it's a better system than what we're trying to do now. I guess that's what the member was trying to say.

What I'm saying is that with your driver's licence, for example, if you have violations or unpaid bills or fines, this really wouldn't show up until the third year. So I feel that it would be wise for a government to collect fines within a year instead of waiting for three years for the system that is in place. Would I be correct in saying that?

Mr McGeown: Again, it's hard for me to comment on the specific plans of the other ministries in this area. I believe they're thinking about ways to collect fines much earlier in the process, and no doubt if you asked them that question, they could give you a more fulsome answer.

Mr Hayes: I'd appreciate it if you could get any information. You're back here this afternoon.

Mr McGeown: I think the easiest way to handle that would be for this committee to ask the ministry to come and explain that.

Mr Callahan: That's a good idea.

Mr McGeown: It would be very difficult for me to go there and get all the information from them and bring it back here, and you'd be getting my translation.

Mr Hayes: But the point I'm trying to make is that it's wiser for a government to try to collect fines or moneys owing to it within a year rather than waiting for three years. I think it makes a lot more sense to do that.

The Chair: Mr Fletcher was on the list quite a while ago.

Mr Fletcher: I have just a quick comment. I'm just looking at the auditor's report from 1990. "In our opinion, much of the unit's collection success" -- and they're talking about the central collection service -- "is due to the diligence of its staff. However, we noted some accounts where there was a lack of timely follow-up." Then they give examples. They also looked at the fact that perhaps you needed more staff in place. Have you thought about hiring more staff or is that in the works, coming up?

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Mr Browne: I'd like to comment on that. About a year ago, we did make a submission to treasury board for an increase of about 16 staff, and we justified that on bringing in somewhere in the order of $4 million additional revenue. Treasury board did approve that. We have undertaken the process and staffed up, and I think if you take a look at the revenue results on the charts that we put out, that is the prime reason why we've been able to come up with something in the order of $14 million this fiscal year.

Mr Fletcher: Do you still need more staff or are things getting better? I know you can always use more people.

Mr Browne: Again, if you take a look at the handout, the inventory continues to grow, and we can only handle so much with the given resources. So, again, it may be appropriate. Another business case could be looked at.

The Chair: Mr Frankford, one question.

Mr Frankford: This is a point of information. Do the accounts that you have accumulate interest?

Mr McGeown: No. Well, I shouldn't be so quick. It depends on the ministry, of course. Certain ministries do have it set up so that they accumulate interest, and some do not. But I think it's fair to say that the majority do not. So there isn't an incentive on the part of many of the debtors to pay earlier.

The Chair: I'd just like to clarify a point. A couple of members have indicated that they might have questions this afternoon, and we haven't scheduled ministry officials to come back this afternoon. I don't know if at this late date we can even make that request. I'm not sure what other business has been arranged, but there were other things scheduled for this afternoon that I want to talk to the committee about before we adjourn. But we have time for another round of questions, and I know you've been waiting, Mr O'Connor. You'll be first the next time around. Mr Callahan, five minutes.

Mr Callahan: I'd just like to clarify something. If we go back to your in-house versus public collection agency collections, because I think that's really at the heart of this entire reason for my putting the motion forward, you've got two comparisons. What you're doing is a comparison of the private collection agency. You're not comparing the private collection agency's rate of return on all of its accounts other than government accounts, right?

Mr McGeown: No.

Mr Callahan: You're talking about the ones that you've referred to them.

Mr McGeown: Yes.

Mr Callahan: You've already told us that you refer the most difficult accounts to the collection agencies.

Mr McGeown: We do give them difficult accounts, but not the most difficult. Regarding the most difficult accounts, if you recall, I said that there are certain accounts we cannot give to them under the memorandum of understanding, especially FBA overpayments.

Mr Callahan: Okay, but you'll agree with me that the ones you do give to them are the ones that you've found you can't possibly deal with; you can't get a successful result.

Mr McGeown: No, that's not the selection process. That would take us far too long. There are certain types of accounts that we use them specifically for.

Mr Callahan: Like what?

Mr McGeown: For example, in the pilot project on fines control; that's one of the things that they do some work on for us.

Mr Callahan: You're going to send the fines from the Attorney General?

Mr McGeown: In the pilot project, which has been in place for three years, we have used a private organization to handle some of those accounts.

Mr Callahan: I would think they'd be the easiest ones to collect, particularly if they were in government, because all you've got to do is say, "Your licence is under suspension," or, "You don't get your licence plate renewed," or what have you.

Mr McGeown: I think it's fair to say that there's a mix of accounts that go there. That's my point. We send them some difficult ones, and we send them some easy ones. Obviously, they have to make a profit, and this is how.

Mr Callahan: This chart and the information you've given me really haven't satisfied my original concern as to whether or not your collection of accounts and the percentage that you collect is equivalent to what might be collected out there in the private sector if -- and I hope you'll not be offended by what I'm about to say -- but if your entire section of the ministry was collapsed and the private sector dealt with these issues. That was really what I wanted and you really haven't given me a chart to show that.

Mr McGeown: I --

Mr Callahan: Just a second. What you've given me is a chart to show how well you've done versus the ones you've referred. I have to assume that, at least in most of the cases, those are the toughest ones, because I can't see the point of referring them if they weren't. I'd like to have more detailed information on whether that's the case, this afternoon, if you come back, because I don't think the chart really tells me what I wanted to know about the motion. I wanted to know, quite contrary to what my colleague over there said, if we were to refer these matters out to private collection agencies, whether they could collect more than is being collected presently by the government collection agency. The hooker to that -- the additional factor is that those people are small business people and you're going to collect business taxes from them and you're going to collect a whole slew of other things from them that you won't get by having it within government. That's what I wanted and I don't think I've got that information. It may be necessary to ask the auditor to go in and look at that aspect.

The Chair: Do you want to give the gentleman a chance to answer your comments, Mr Callahan?

Mr Anthony Perruzza (Downsview): Sometimes I wonder if you're a Liberal --

Mr Callahan: I'm concerned about the taxpayers' dollar, which he should be too.

Interjection

Mr Callahan: We didn't have a deficit of $10.5 billion.

Mr Perruzza: The commercial concentration tax is your baby.

Mr Callahan: Not of $10.5 billion going up to about $14 billion or $16 billion. You better enjoy it, you won't be back.

Mr Tilson: Glad to have you with us this morning, Tony. Glad you could drop in.

Mr Perruzza: Unbelievable. When I hear that stuff, unbelievable. The commercial concentration tax -- pin it on your lapel.

Mr Tilson: Mr Chairman, will you bring this man to order, he's interrupting the meeting.

The Chair: Thank you, Mr Tilson. We're just going to ignore the interjections and Mr McGeown is going to be given a chance to answer some of the questions posed by Mr Callahan.

Mr McGeown: We have attempted to demonstrate that the central collection service is an efficient operation in every way that I can imagine how to do that, by taking exactly the same mix of accounts. I think I may have misled you by saying we give them the tougher accounts. That's not really true. I think they are pretty well the same kind of accounts. We give them some additional accounts that have additional skip tracing, for example, and Mr Henley could give us the details on that. We've tried to get what is an equal comparison. I firmly believe it is an equal comparison in terms of the kinds of workload being done. All I'm saying with these charts, which I think are very accurate and to the point, is that it's very similar. There's no huge gap between what the private sector is collecting versus what we are collecting, and that's the only point I can make.

I think it would be impossible to do much more than that, other than put the entire business out and see how it functions. We've had examples of other governments who have done that and they are now thinking of coming back. There are no indications that I can see, in terms of the numbers I monitor on a monthly basis, that would say to me I should be privatizing this whole thing. In fact, by using the private sector I'm constantly able to check how my people are performing against how their people are performing. I'll have to tell you there's a certain amount of competitive spirit in this. My people want to be as good, in fact they want to be better, and so far that's where they are landing. I think it's important that we recognize that.

The Chair: Thank you. Your time has expired, Mr Callahan. Mr Tilson, five minutes.

Mr Tilson: I'm interested in the last comment you made because it leads to a question I have concerning the overall collection process. The Provincial Auditor, as I indicated to you, was not critical of you, he was critical of an earlier process. Quite frankly, I think we have got the wrong culprits here. You appear to be doing what you can do. It's an earlier process that the auditor appears to be concerned with. I'm going to repeat a form of question that I asked before. You are able to observe the overall picture of accounts coming to you; the picture of accounts not coming to you. Having said that, can you make any comments as to how the overall system can be improved -- the system, perhaps, not enough accounts. I was interested in one of the little periodicals the ministry puts out -- I think it's called In Touch, which is an interesting thing -- talking about, "The central" -- this is 1991 -- "collection service staff must be feeling very popular these days; they've got so much business they've had to move to a bigger office," which is good and bad, I suppose.

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Mr McGeown: Yes.

Mr Tilson: Can you look at the big picture and tell us the collection process in Ontario -- to use comments I made earlier -- stinks. I think it does. The Provincial Auditor thinks it does -- not being critical of you necessarily, but the overall process stinks. How can we as legislators improve the system?

Mr McGeown: I have to say it again: The piece of the action we deal with is the central collections and it starts when the account is given to us and it ends when the account returns. We are tightly focused on that and we're trying to give good value for money.

Mr Tilson: If I could stop you -- with all due respect, I don't accept that, because you must get accounts.

Mr McGeown: I haven't finished.

Mr Tilson: Okay. It's just that you must get accounts. As you say, "My goodness, why didn't I get these earlier?"

Mr McGeown: There's no doubt that we would like -- and we've stated it before -- to get accounts earlier. We've talked about the letter the deputy minister wrote about a year ago asking ministries to in fact get those accounts to us earlier because it's easier for us to deal with them and the net result is more positive all round.

We don't disagree with you that there's a problem back there in the system, but it doesn't come into my area of responsibility. You have to look further back into the ministries and what goes on before they actually release the account. Once it's released to me, I deal with it.

Mr Tilson: I believe this committee is in the position to say to the House, "This is how you can improve the system." You, being involved in a part of the collection service, must have some observations to assist this committee in making such recommendations to the House other than saying, "We're okay, it's the earlier group that's causing the problem."

Mr McGeown: I understand, and I suggest that further examination of what happens before the account leaves the ministry is the fertile area for investigation.

Mr Tilson: We've had some discussions which I'm not so sure I've been following, or understanding at least. The business of collection agencies -- are you satisfied with the process after it leaves you? Those accounts you don't deal with that are dealt with by private collection agencies: Are you satisfied with that process?

Mr McGeown: Yes I am, not because of the fact that they leave us, because in fact we continue to manage them all the way through it. We monitor them on a regular basis and we send them out.

The areas of dissatisfaction tend to be in those cases where there's been inappropriate handling through an inexperienced member of the organization, where they have done something or insulted someone in some way and we get the letters coming back to us and to the minister that we have to deal with. Then we have to go back to them and review their training program and talk about, perhaps, the individual who may be a little out of sorts and get that taken care of.

It's not an abandonment; it's not a toss-it-over-the-wall. We constantly manage the process. In fact, we spend a fair amount of actual people-time managing that process.

Mr Tilson: I'm sure no civil servant likes to criticize another civil servant. I'm going to ask you a difficult question, but I don't know how else to put it. Are there specific ministries that could improve their ways as far as -- talking about the cases that don't reach you ever, or the type of cases that reach you late. Are there particular ministries this committee should be looking at that perhaps could improve their ways or tighten up in following their own policies?

Mr McGeown: I personally don't have that kind of information.

Mr Tilson: I didn't think so.

Mr McGeown: I just don't have it.

Mr Tilson: Thank you.

Mr McGeown: I'm relatively new at the job, so maybe that's part of it. The other side of it is -- I think information could be obtained simply by going to the ministries and asking them what is the status of their accounts receivable, how is it aged and where is it going?

Mr Tilson: Or that they're going beyond the 90 days.

Mr McGeown: Yes.

The Chair: Mr O'Connor, five minutes.

Mr Larry O'Connor (Durham-York): I probably won't need the entire five minutes and maybe I'm going to ask the wrong people this question.

Recently I had a phone call. I represent a rural riding and I had a phone call from an elderly gentleman who phoned in and said: "What we need more of are some barbers. We should start up some barbering schools." Of course, we all get some very interesting phone calls, and so my constituency assistant passed that on to me.

So while I was getting my hair cut a couple of days later, I did mention it, in passing, to my local barber. She was saying she's a recent graduate from barber school, she got a student loan to go to barber school and she's been paying it back over a long period of time. She stated that student loans aren't allowed to be paid off any quicker than what the original term of negotiation's been. If that's the case, perhaps there's a problem there too. Maybe it's in the way the deal was written, or the deal stretches it out so long that perhaps we're losing out just because some people move or whatever, and we're losing in that way.

Mr McGeown: Yes.

Mr O'Connor: This individual, the barber, wanted to pay off her loan and was told she couldn't pay off her student loan. To me, that seems rather ludicrous and, in noting that you do quite a bit of work in student loans and grants, I thought maybe you might be able to comment. Maybe we'll get a helpful suggestion out of that as well.

Mr McGeown: Mr Henley has the direct experience here, so I'm going to ask him to answer.

Mr Henley: I've never heard that complaint before. As Mr McGeown has related a number of times, we only get the accounts after they go into default. I'm pretty sure that what you're speaking of is an individual who is very diligent in paying her bills and has arranged a loan with the bank, guaranteed by the province. I'm not even sure at this point whether even the Ministry of Colleges and Universities would be able to answer that. I think that is a negotiated agreement between an individual and the bank. It sounds strange to me, again, but you were the one who spoke with your constituent. Usually, people don't complain that they have too long to pay something. That's a new one.

Mr O'Connor: This constituent wanted to pay it off quicker and maybe, as we write our report, legislative research can take a look at that issue for me. If that's the case, we could put that in our report, because here's an individual who wants to pay it off quicker. If arrangements were made a little bit easier, maybe you wouldn't have to be going out there and trying to collect on some of these debts that are needlessly put there. I'll just stop right there, Mr Chair.

The Chair: Dr Frankford and then Mr Duignan.

Mr Frankford: In the last two days we've been talking with the Ministry of Health about health cards and inappropriate payments there. Do you deal with the Ministry of Health if, say, a hospital claim is paid to someone who is ineligible? Would you be trying to reclaim that?

Mr Henley: The Ministry of Health does not refer those accounts to us. I believe they have some internal collection organization in Kingston.

Mr Duignan: Very briefly -- constituents, for example, contact my constituency office and complain about collection officers, about how they go about collecting the money owing, whether it's harassing phone calls, profane language, or whatever. Do your collection officers go to any training program?

Mr McGeown: Yes, they do. In fact, they're extensively trained. Maybe Cecil could give us the brief run-down on the training program they would go through.

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Mr Henley: As Mr McGeown stated, training is provided rather extensively and in particular, to newer people. As Mr Browne relayed to you earlier, we did bring on a total of 16 new staff -- or the authority to bring on 16 new staff. All of them were not collectors, however, so the new people are trained. They're trained, first of all, on what CCS is and what our responsibilities are. They're trained on the collection policy. They're trained on all forms of legislation that may affect collections, and there are a number of pieces of legislation that do affect how you are to collect etc. They also have to be trained on collection process. Many of these people have come from organizations that have maybe a different approach to collections than we do. Maybe some of them have come from the private sector and don't have the kinds of sensitivity that we have to deal with. They're trained on the technical aspects and recent developments in collection techniques. They're trained on various aspects of counselling, which of course has to involve some financial analysis, at a fairly basic level, however. A lot of these things are also done on an ongoing basis, on a repetitive basis, as refreshers and as new developments come along.

But one of the things we've had to do, particularly recently, is to have them deal with hostility. There's a great deal of hostility out there, and when people contact us, if they're mad or they start swearing at us, we can't hang up on them. That's not going to solve a problem. As everybody here is, we're all human beings and we react to those kinds of things, and we have to train people into reacting in an appropriate manner that's not going to create a problem.

So there is a lot of training that has to be provided to people on an ongoing basis.

The Chair: Okay. Time has expired. Mr Callahan indicated he wanted a point clarified. Quickly, Mr Callahan.

Mr Callahan: I just wanted one point. I'm sure if we played Hansard back, your answer would have been that you refer the most difficult cases to those private collection agencies, and I wanted to give you an opportunity. I thought you were trying to say that was not the case.

Mr McGeown: Yes.

Mr Callahan: That is not the case?

Mr McGeown: That is not the case. We're not sending them the easiest, we're not sending them the most difficult. We're trying to send them a certain number of cases. Some of the very, very difficult ones we have to keep in-house, and we do, because they're just not appropriate and the memorandum of understanding doesn't let us put them out anyway. But I also didn't want to leave the impression that we send them the easiest cases. They get an equal mix and it's a very equal comparison.

The Chair: Yesterday the committee expressed some interest in having Mr Decter back in regard to the OHIP cards and I asked for 24 hours to think about how we were going to work all that out. At the same time, we made contact with someone at the Royal Bank who's an expert on these smart cards. We had hoped to get the gentleman over this afternoon. That's not possible, but he has agreed to come when the Legislature reconvenes in April.

I believe it would probably be more appropriate not to have the session this afternoon based on how we're going to write the health card report because we're not finished with the matter. We're going to see this gentleman from the Royal Bank some time in April. Then I think, based on that, the committee's going to want to see Mr Decter again, and I think at that stage we would be prepared and able to suggest to our research officer how we want the report to look.

That means, ladies and gentlemen, that there is nothing officially scheduled for this afternoon. There have been a couple of members this morning who have indicated that they'd like Mr McGeown and others to come back this afternoon. I don't know if these gentlemen and lady are available to come back this afternoon. I'm not sure if the members have enough questions --

Mr Perruzza: Point of order, Mr Chairman: Just a quick clarification.

The Chair: Point of order on me informing the committee on what our options are?

Mr Perruzza: No, no, it's not a point of order then, it's a point of clarification, something I didn't understand. You said that there's nothing this afternoon, we come back in April, not before then, right? Is that what you said?

The Chair: No, we have a week's worth of business the week after next.

Mr Perruzza: Oh, I'm sorry.

The Chair: Where we expect full attendance from all the members.

Mr Tilson: You wouldn't miss non-profit housing for the world, would you?

The Chair: Okay, let's get back to the point. We have three hours this afternoon that we could use with these people, if they're able to come back. I'm not sure; I haven't asked them yet. It's up to the committee members whether or not they wish to ask, and if we get to the point where we wish to ask, then we have to find out whether Mr McGeown and appropriate staff are available. I'd like to hear from the committee first.

Mr Duignan: I know Mr Callahan raised a couple of points to our witnesses here this morning, but I think that's the type of information you requested. Correct me if I'm wrong, but I don't think that information would be available from the ministry at this point. We would have to go to the other jurisdictions to get that particular information, and I don't think that would be available by this afternoon. I know from our side we have no further questions. I think it's up to the auditor to take over from this point.

The Chair: Mr Callahan, it was your motion.

Mr Callahan: In light of the clarification I just got, I'm prepared to accept that. I may still be asking that a value-for-money audit be done at some point, when the auditor has that authority.

The Chair: I think that's fair ball. The committee stands adjourned until the week after next and you'll hear from the clerk as to the time and schedule and all other parts of the information you need.

Mr McGeown, I want to thank you and the officials from the ministry who've joined us this morning and given us this information. You've been very elaborate with the information you brought to us, and also very helpful.

The committee adjourned at 1206.