Assemblée législative de l'Ontario

HOUSING AUDITS

CONTENTS

Thursday 2 June 1994

Housing audits

STANDING COMMITTEE ON PUBLIC ACCOUNTS

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

*Acting Chair / Président suppléant: Crozier, Bruce (Essex South)

*Vice-Chair / Vice-Présidente: Poole, Dianne (Eglinton L)

*Bisson, Gilles (Cochrane South/-Sud ND)

*Callahan, Robert V. (Brampton South/-Sud L)

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

*Marchese, Rosario (Fort York ND)

*Marland, Margaret (Mississauga South/-Sud PC)

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

Owens, Stephen (Scarborough Centre ND)

*Perruzza, Anthony (Downsview ND)

*Tilson, David (Dufferin-Peel PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Wilson, Gary, (Kingston and The Islands/Kingston et Les Iles ND) for Mr Owens

Also taking part / Autres participants et participantes:

Ministry of Health:

Helm, Dennis, acting director, central region, mental health programs and services

Mottershead, Margaret, deputy minister

Roth, Dale, legal counsel

Ministry of Housing:

Burns, Daniel, deputy minister

Studden, Trevor, regional manager, central/metro Ontario region, field operations division

Peters, Erik, Provincial Auditor

Clerk / Greffier: Decker, Todd

Staff / Personnel:

Anderson, Anne, research officer, Legislative Research Service

Fenson, Avrum, research officer, Legislative Research Service

The committee met at 0926 in room 151.

HOUSING AUDITS

The Vice-Chair (Ms Dianne Poole): Good morning. This session of the standing committee on public accounts will continue to look at the issues of Houselink and other housing-related matters.

Before we begin the questioning today, two weeks ago there were some questions about directors of non-profit corporations and board of directors' liabilities, so there has been a paper prepared by Avrum Fenson, research officer from the legislative research office. Avrum, could begin by giving a brief outline of his findings and then, if members have questions, we could pursue that.

Mr Avrum Fenson: The starting position in looking at corporations is that there isn't personal liability for the directors, the employees and so on for acts done by the corporation. There are many circumstances in which that is gotten around, either by contract or by statute. For example, if a small business corporation wants to borrow from a bank, the bank, knowing that the corporation is a kind of shield, will insist on a personal loan guarantee from the owner.

Statutes often set up instances in which there is a personal liability. For example, the Corporations Act imposes a personal liability on directors where a corporation is unable to pay wages because it's bankrupt or in receivership. The directors might be liable for six months' wages. Business corporations are liable for even more under the Employment Standards Act now.

Also, it's possible sometimes for directors of corporations who are very closely involved with the day-to-day managements to be liable in criminal situations or quasi-criminal situations. A director-owner of one corporation recently went to jail on an environmental offence.

Still, the basic structure of a corporation insulates the people inside from personal liability unless there's some other statute or contract determining otherwise. The duties of a director are essentially to the corporation, not to the outside world, not to the public, not even, in theory, in the case of a business corporation, to its shareholders. It's to the corporation itself. The duties that the director owes a corporation of any kind are honesty, loyalty, diligence and so on, but it's a debt owed primarily to the corporation.

This is a very simple answer. I have not examined the incorporating documents of Houselink. I've been asked for a general account of directors' liability. I can give a more specific answer after looking at the incorporating documents. My sense, from looking at the law and the expenditures which have caused this inquiry, is that the directors would not be a useful target to go after for reimbursement of moneys that have not been returned.

One thing you have to keep in mind is that the standard of care for a director in a business corporation is an objective standard, but the standard that is applied to directors of non-profits is the common-law standard, which is subjective. Those directors of, say, Houselink or any other non-profit who are amateurs without much technical experience are held only to their level of experience, whereas a director who is financially experienced or a lawyer will be held to a higher standard. So that's another twist in dealing with liabilities of directors; the standards are peculiar to each director. A short and simple answer is that the directors really can't be gotten at, but I can pursue this if the committee would like.

The Vice-Chair: Thank you. That's been quite helpful. We'll start with Mrs Marland.

Mrs Margaret Marland (Mississauga South): Are we actually hearing that the liability of individual directors is based on who they are as an individual?

Mr Fenson: The standard of care in their conduct of their directors' duties depends in non-profit corporations on a subjective assessment of their experience. In other words, you can expect of them only what their own experience, background and training would reasonably allow you to expect, as distinct from a business corporation, where you don't have to inquire. You're entitled to a competent, prudent level of behaviour from them, simply because the Business Corporations Act says so.

The level of care demanded from non-profits is the common-law standard, which is couched in subjective terms. It's not embodied in the Corporations Act.

Mrs Marland: So if you were to have a highly qualified business person or professional sitting on the non-profit board, are you saying he or she goes with the level of the non-profit board?

Mr Fenson: No. You could expect a higher level of competence from that person.

Mrs Marland: What would the courts expect?

Mr Fenson: The courts would refer to that common-law standard and expect a higher level from them.

Mrs Marland: Are you suggesting that there might be some circumstances where the court may look at individuals on a board rather than at the board as a whole? If you've got a broad spectrum from one end to the other -- and I don't want to give examples, obviously --

Mr Fenson: Yes, in principle, but I should say that these standards are applied to those duties which are owed the corporation, so it's not going to have much practical difference in assessing the liability of the board as a whole and its members for monetary compensation.

Mrs Marland: So we've got thousands of boards of non-profit corporations around this province representing the investment of millions of taxpayers' dollars that have no liability.

Mr Fenson: The funders know this. Let me give an example. When the Ministry of Housing is making a deal with a corporation that's been set up to provide some sort of non-profit housing -- we'll forget the circumstance of the psychiatric services and social services attached to Houselink -- it requires certification from the lawyer who incorporated that corporation that the corporation's bylaws provide for the purchase of liability insurance to cover any liability the directors may have. A prudent grant giver will not depend on the faint chance that you can go through the common law of directors' liability but will ask for insurance.

Mrs Marland: And if the prudent grant giver or guarantor happens to be the Ontario government --

Mr Fenson: The example I gave isn't the Ontario government; I'm speaking of general housing corporations. The Ministry of Housing does, as a regular policy, require proof of certification by the lawyer of the bylaw requiring the purchase of commercial liability coverage.

Mrs Marland: But when something goes wrong -- and unfortunately, we have today some very grave examples of some very grave situations that have gone wrong in public housing in the province, and we have a whole stream of others coming up behind the ones that have already been publicized -- it is the government that has been the guarantor for the financial situation, that has actually handed over the money.

Everybody thinks it's safe because it's the government, and yet it isn't the government that actually elects those local board members or even appoints those local board members. Whatever the local group is that forms that housing coalition, co-op or corporation -- the local sewing circle or whatever it is that decides it wants to be a housing corporation -- it appoints its own board.

Mr Gary Wilson (Kingston and The Islands): The local sewing circle?

Mrs Marland: I'm being facetious, because I don't want to name --

Mr Gary Wilson: You don't have to be facetious here. Let's get serious.

The Vice-Chair: Mrs Marland still has the floor.

Mrs Marland: The interesting thing is that the first non-profit housing in Canada was the Peel Non-Profit Housing Corp. It still is the leader in Canada both in numbers of units it operates and how it operates. The reason for that is that it is responsible directly to the public, because the corporation board is elected and there's a direct route of accountability.

Part of the problem with how other non-profit boards -- not all of them but the majority of other non-profit housing boards -- are appointed is that they form and they are appointed within themselves. There's no accountability to the public because there's no direct responsibility to the public, because they've got Big Brother government sitting up here saying to the banks: "Fine, go ahead and loan them the money. Let them operate without operating agreements, let them do whatever they want, because we, the government, are the guarantors."

There's no risk at all, when you've just written off $29 million of public money in this housing field. There's obviously no risk to anyone except the people of Ontario, who are paying for these write-offs the Ministry of Housing has to execute because there is mismanagement, and in some cases fraud, on the part of the operators of the non-profit housing corporations.

I find it very interesting to hear about what is the liability and responsibility and how subjective that is in terms of who the board members are. Thank you for that explanation.

The Vice-Chair: The clerk has just distributed something to members and I see some looks of puzzlement.

Mr David Tilson (Dufferin-Peel): We're never puzzled, Madam Chair.

The Vice-Chair: Never puzzled? Somewhat confused, then. At our last steering committee there was a request for some assistance from the auditor. Because we had such a plethora of papers and documents before us, members were losing track of what had actually been answered to our satisfaction and what had not and remained outstanding. So the steering committee made the decision that the auditor would be asked if he could give us some assistance, just to summarize outstanding matters that had not been resolved to date.

Members are free to express any questions arising from these matters that they wish. I would clarify that these matters relate not only to Housing, as the document indicates, but also the Ministry of Health. On any outstanding matters by the time we complete our deliberations, we would probably be asking the Ministry of Housing and the Ministry of Health for a response in writing. Now, we'll continue with Mr Tilson.

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Mr Tilson: Mr Fenson, I'd like to clarify what you've been saying. Are you telling me that the standard of care for directors of non-profit corporations is less than for directors of corporations under the Business Corporations Act?

Mr Fenson: No, I'm saying it's less or more or the same, depending on an objective assessment of the experience of the director. Whereas the Business Corporations Act provides in the statute a standard of care that applies to all business corporation directors, the standard of care that applies to directors under the Corporations Act, which governs non-profits, is the common-law standard, which is essentially a standard which has reference to the personal experience and background --

Mr Tilson: My understanding is that the common law on liability for directors has been expanding over the years. The decisions that have been granted by the courts in Ontario have been extending that liability more and more, which is why corporations --

Mr Robert V. Callahan (Brampton South): Take out insurance.

Mr Tilson: Exactly. They take out insurance. That's exactly what they do. Not only that, the people who are in charge of the money are bonded.

Simply, anybody who acts as a director for any corporation, whether non-profit or otherwise, is absolutely crazy unless they take out liability insurance. You're trying to do a good thing for your community, but you may find -- this is my understanding, and this issue is very important, because this question was a response to a presentation of the assistant deputy minister of Housing, Ms Hill. She said, on page 6 of her report, the community mental health branch "could not have required the directors of the corporation to repay the amount, as the directors of incorporated companies are immune from personal liability for the actions of the corporation."

The reason I asked the research people to give the presentation that you have is that this statement is correct sometimes, but it's not correct. In my assessment, directors of corporations, non-profit or otherwise, could be held liable in certain circumstances. Quite frankly, I wouldn't want to go on a board of directors and have someone say, "You're experienced" or "You're not experienced," "You're educated" or "You're not educated." I haven't seen any cases that talk in those terms. You're on the board of directors, and if you do something as a group that is negligent in handling millions of dollars for these types of corporations, in my assessment you could be held liable.

Mr Fenson: I have a short answer in three short parts.

The first one is that there have been very few cases in the courts dealing with liability of non-profit directors. Most of the law we have arises out of business corporation law, and what people say about non-profit corporations is by way of analogy to what the courts have said about business. That's the first thing.

The second thing is that, as I said, yes, there are areas in which directors can be liable, but they are usually areas which have been specifically provided for by statute as an exception to the general rule that the corporate veil protects all of those within.

The third thing is that I recently spoke to an insurance broker to find out what liability insurance costs. I wanted to see what the market assesses as the relative risks. What I was told was that for $2 million in coverage for each member of the board -- this was the standard in which he compared for me -- the premium to cover the entire board for $2 million each typically for a non-profit was $1,000 a year, and for business corporations the range was from $5,000 to $750,000, with $25,000 being typical.

Mr Callahan: That's cheaper than my car insurance.

Mr Fenson: It's cheaper than your car insurance. It's anecdotal information, but it's a ratio of 1 to 25. The fact of the matter is that in the real world the risks for directors of non-profits are relatively small.

Mr Tilson: Talking from my own personal experience in the country setting I have, which does have non-profit housing corporations, all those corporations that I know of do take out liability insurance. The reason they take out liability insurance is because they can get dinged in the courts. That's why it's very important that this be made clear. I don't know whether you've had an opportunity to look at Ms Hill's report.

Ms Fenson: Yes, I did read the speaking notes.

Mr Tilson: It would seem to me -- and I'd like you to comment on this -- that this point on page 6 should be qualified, that she or the author of the report is correct but that there are certain situations in which directors of non-profit corporations could be held personally liable.

Mr Fenson: Yes. My account is oversimplified and hers is even more oversimplified.

Mrs Marland: On a point of order, Madam Chair: We've had material distributed this morning from Jessica Hill, and I think it's very important material, but it's totally illegible. I guess it was faxed. I'd like to request that if information is forwarded to the committee, it could be forwarded without being faxed.

The Vice-Chair: Perhaps it's just your copy, because mine is legible. We'll ensure that you get a legible copy.

Mrs Marland: You can read the December 1989 package?

The Vice-Chair: The one I have is May 26.

Mrs Marland: Are the latest financial statements we've got 1989 and 1990? Do we not have anything any more advanced than March 1989 and March 1990?

The Vice-Chair: You were referring to a different document than I was. My apologies. You're talking about the figures being indecipherable because they were faxed.

Mrs Marland: And the words.

The Vice-Chair: We can ask the Ministry of Health if they could provide us with a clearer copy. Unfortunately, I'm not sure how quickly we'll have that.

Mrs Marland: Are 1989 and 1990 the latest audited financial statements? Do we not have anything newer than four years old?

The Vice-Chair: This is all that has been submitted to the committee to date, but in the questioning you can ask if there is more recent information available.

Mr Gary Wilson: Madam Chair, on that point of order: I just want to make sure that what gets copied is what needs to be, because there's a lot that is legible. Could you specify exactly what it is you want from the Ministry of Health?

The Vice-Chair: There are three packages: one November 1, 1990; one June 1, 1994, which is I believe the one Mrs Marland is referring to, which contains the 1989 data; and then the third one is May 31, 1994. An extensive amount of photocopying is involved. I suggest the ministry provide one clear copy for each caucus.

Mr Gary Wilson: But that's my point. Most of it is clear, and there's only one that I found not to be clear.

The Vice-Chair: Mrs Marland has just clarified for the ministry which document she's having difficulty with. We'll ensure that we save as many trees as possible and that as little photocopying as possible is redone.

Mr Gary Wilson: I appreciate that.

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Mr Callahan: Mr Tilson makes a very interesting point. If Ms Hill, who is the assistant deputy minister, thought there was absolutely no liability -- that's the way I understand he reads it -- on directors of non-profit corporations, I'd like to inquire of the deputy minister, when we get time, whether that was the understanding of all the people in the various ministries involved in this. If that was the case, where the devil they were getting the advice from? It means they wouldn't bother, it would seem to me, to even go after these people or investigate whether there was a way of recovering the money.

Mr Tilson: They said they weren't going to.

Mr Callahan: Yes, and if it weren't for Mr Tilson asking for the report from legislative counsel, maybe we still wouldn't know that. We'd still be living in the world of dreams that if non-profits don't turn over the money or don't give the surplus back and it disappears, too bad.

I find it incredible that a government that has access to legal advice probably better than IBM's is running around making statements that ludicrous. If that's what was said by the assistant deputy minister, I'd certainly like an answer from Ms Hill about who she got that information from and whether that was the current legal opinion of the day they were getting. If it was, they should damn well fire the lawyers who gave it to them.

The Vice-Chair: Mr Callahan, your question was to the ministry officials. Since we are trying to deal right now with legislative research, can we hold it until they come forward? You can ask it as the first question.

Mr Callahan: That will give them a chance to think about the answer.

Mr Gary Wilson: I really appreciated your report, Mr Fenson, clarifying some of the issues that are raised on boards of directors. It was interesting. The standard of care is what I take to be the responsibility they have to make sure they're paying attention to what they're doing. Is that what you mean by "standard of care"?

Mr Fenson: Yes.

Mr Gary Wilson: Could you clarify how it is different from what has happened to the private corporations?

Mr Fenson: It's simply that a business corporation director is bound by a standard of care which is set out in section 134. It says:

"(1) Every director and officer of a corporation in exercising his or her powers and discharging his or her duties shall,

"(a) act honestly and in good faith with a view to the best interests of the corporation; and

"(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances."

That second part, "a reasonably prudent person," is one of the many formulas you'll find in English and American and Canadian law to set an objective standard. The common-law standard of care from which this was derived and modified and which still applies to non-business corporations does not include in that a little signal that the standard is objective. One way of stating it would be a standard of care that could be reasonably expected from the director in question, given his or her knowledge and experience. That's the difference.

The duty of honesty and good faith with a view to the interests of the corporation is more or less the same, but the standard of care, diligence and skill is objective for business and is peculiar to the experience of the director in non-profits. That's the main difference.

Mr Gary Wilson: In researching this, what's your impression of the way directors approach their job? Could you determine any difference in either the private or non-profit, just where are they in what their jobs entail?

Mr Fenson: I really didn't research that or do a survey. The only thing I can tell you is that I have the impression -- again, this is not a careful survey -- that a lot of non-profits or organizations that assist non-profits in organizing themselves seem to be quite careful in trying to educate their boards of their duties, of the pitfalls, of their obligations to secrecy and confidentiality and care. For instance, the United Way of Peterborough did a fairly elaborate booklet on the subject, which seemed to be of a fairly high standard. Non-profits do have available help from certain organizations, umbrella organizations, which realize that they're dealing with people of varying experience and try to educate them.

That's not a full answer to your question.

Mr Gary Wilson: I know that's not the approach you took, but I find it reassuring. It's important to realize that the number of non-profits that are throughout the community, in a variety of activities, means we have to make sure the directors take their job seriously and know there are things they have to do, that they're responsible for, and that there is somewhere they can turn for training. I think this will accumulate so that, just as you say the business practice is based on legal opinion and that's how that was generated, that the objective standards were fashioned out of the court cases, we'll have the same kind of body of knowledge that we can apply in non-profits.

Mr Fenson: I think training is very important.

Mr Robert Frankford (Scarborough East): I think you said that the ministry or the transfer agency may demand liability in the constitution of the non-profit.

Mr Fenson: They will require the corporation to cover itself with commercially purchased liability insurance to cover any possible risk to which the directors might be exposed.

Mr Frankford: Then presumably in the accountability process the ministry would want to ensure that's being complied with. They might have to put that amount into the budget of what they're transferring.

Mr Fenson: The premiums are not very high because the number of claims that have been made against non-profit directors in the courts is very small; it's not a very common occurrence in the courts. Nevertheless, it seems to be common practice for government funders to require this liability insurance to be in place before they will sign the loan guarantee.

Mr Frankford: Your understanding is that this is standard practice with the Ministry of Housing?

Mr Fenson: Yes, so I was told. I checked with them, and apparently before any money or guarantee is passed -- first of all, they won't deal now with an association which isn't incorporated, and the bylaws of the corporation must include reference to insurance.

Mr Frankford: But you can't say there is a blanket policy of every conceivable ministry and transfer agency?

Mr Fenson: I only spoke to the Ministry of Housing to ask this question.

Mr Callahan: You indicated that you've not looked at the bylaws of the various non-profit corporations.

Mr Fenson: I haven't examined the bylaws of Houselink.

Mr Callahan: I'd like to ask the auditor whether in the course of an audit that would be a standard thing that would be done by an auditor: to determine whether there was some liability insurance from which to recover whatever was lost.

Mr Erik Peters: Normally, it's not a standard procedure. If any transaction comes to the notice of the auditor that raises that question as to who is responsible, then yes, the bylaws would be examined and the insurance coverage would be examined.

Mr Callahan: Have we ever examined the bylaws of Houselink to this point? So we don't know whether they have that insurance or not?

Mrs Marland: On a point of order, Madam Chair: I am now leaving this committee to go to the general government committee, which has a housing bill before it. I know that's not really a point of order, but Mr Perruzza likes to note my absences, so I thought I'd like to tell the committee where I'm going. If you need me that's where I'll be, in general government.

The Vice-Chair: Thank you for the courtesy in advising us, Mrs Marland. If we do need you urgently, we'll be sure to know where to find you.

Mr Callahan, have you completed your point?

Mr Callahan: I don't know whether anybody's asked that or not, and I think it's of some importance. If having this insurance in place is the usual thing to do, as I think I'm hearing legislative counsel say, if it was in place, why aren't we pursuing it? And if it wasn't in place, why wasn't it in place, if it was the common practice to take out this type of insurance?

I think that answers the entire question. If this government is out money, it's out money because there wasn't an established practice, if they didn't take out liability insurance. Or, if they took it out, we're chasing our tail here. Why are we wasting our time looking into this if there is an avenue from which we can recover the money? That's all I've got to say.

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Mr Peters: As probably the internal auditors did, and we do, we do examine the law under which particular corporations are acting, and in most of the non-profit very often there are legislative clauses in there which actually indemnify the director.

There are indemnification clauses which permit the directors to escape liability unless -- as I believe those clauses are normally worded. Maybe the legal counsel can help us out on this. There is a difference between due diligence and negligence. Most of these clauses provide for liability if there is outright negligence by a board member, but lack of due diligence is a different story.

Mr Fenson: There is a distinction. I'm not exactly --

Mr Callahan: Maybe what we should do is get a copy of a standard policy coverage so we know what it's covering, because what I'm hearing now is, if the person is negligent, they're covered; or the reverse. If they're negligent, they're covered. If they don't pursue it with due diligence and it's determined, because of their being a particular category of person, that they're not caught by the common-law thing, then there's no coverage at all. Is that what I'm hearing?

Mr Fenson: I'm not sure what heads are covered and what are not, but what I can do is try to get a copy of a representative policy.

Mr Callahan: Okay. Could I ask for two things, Madam Chair? First of all, that we determine whether or not Houselink had this type of insurance, we see a copy of their policy and we find out what efforts, if any, have been made, and whether it's worthwhile making any efforts to pursue recovery under those policies. If it is, well then, let's get started on it. It has been lingering long enough. I'd like to see those.

The Vice-Chair: I assume your request is actually being made of the ministry.

Mr Callahan: Mr Tilson also says, and this is very serious, that normally in insurance policies, if you don't sue within a year of the potentiality of the loss, you're out of court. If that's happened, we've really dropped the ball. That's why I want to see it.

Mr Tilson: No, we haven't dropped the ball, because we didn't know about it.

Mr Callahan: That's right.

Mr Tilson: We didn't know about it. This thing was 1990, 1991? We didn't know about it. That's the problem.

Mr Callahan: But if it has not been done, then somebody's dropped the ball and maybe we should be looking to them for recovery.

The Vice-Chair: I think we'll be continuing this conversation as we bring the ministry witnesses forward.

Mr Callahan: Can we get that information, though? I'd like that information before the ministry witnesses start, if we can get it, because I think it's germane to asking questions of the ministry witnesses as to why, why not, why didn't they and so on. I think it's very important and I'd like it on the record.

The Vice-Chair: Just before we bring the ministry witnesses forward, as members will recall, our mandate was such that, as set forward by a motion of the committee, we would be discussing Houselink and supportive housing issues until reporting to the House on June 9. I believe the government has an amendment to propose or an extension of that particular deadline. Mr Marchese?

Mr Rosario Marchese (Fort York): I move, Madam Chair, that we extend these meetings for one week.

The Vice-Chair: Is that satisfactory with members? Okay. Then let us proceed.

We ask the representatives from the Ministry of Housing and the Ministry of Health to come forward, please. I'd like to begin by thanking the ministry for again sending senior representatives to discuss this issue with the public accounts committee. We do have some additional people present today, so I would ask representatives from the Ministry of Housing and the Ministry of Health to identify themselves for the purpose of Hansard.

Mr Daniel Burns: My name is Daniel Burns and I'm the deputy in the Ministry of Housing. Here with me at the table, as he was last time, is Mr Trevor Studden, who is the manager of our central region office and has held that post for a number of years. Both of these agencies operate within the geography that he's responsible for. In addition, I have with me Mr Andy Glendenning, our director of audit, and Mr Brad Singh, who was the director of audit at the time these took place. They have spoken to you before.

I also have program and administrative staff from central region office with particular acquaintance with the history of our relationship with these organizations. They may join us at some later point. We're all available to help you in your deliberations.

Mr Callahan: I'm not sure who you are identifying.

Mr Burns: I'm identifying those Ministry of Housing officials: Mr Studden; Mr Glendenning, who was here before -- stand up or wave, Andy -- Mr Brad Singh, who was the director of audit at the time.

Mr Callahan: And the other three people who are with you?

The Vice-Chair: Mr Callahan, I think you're pre-empting, because the Ministry of Health officials are going to identify themselves. Ms Mottershead, would you like to do the honours?

Ms Margaret Mottershead: This side is the Ministry of Health side. My name is Margaret Mottershead. I'm the Deputy Minister of Health. With me are Dennis Helm, the acting director of community mental health programs, as well as Jane Cleve, who was the consultant for Houselink during the period in question. In the gallery as well we have some members I believe that you have already met, directors of audit and past directors of audit.

The Vice-Chair: Thank you very much. We'll now proceed to questions from members and we'll start with the official opposition. Mr Callahan and then Mr Cordiano.

Mr Callahan: I guess we'll start off by asking, did Houselink have liability insurance, as indicated by legislative counsel, that's normally taken out by non-profit agencies?

Mr Burns: Houselink certainly has liability insurance right at this moment. To answer the question of what insurance arrangements were in place in 1989 or 1990, my staff advise me they had it in place.

Mr Callahan: I see nodding. They did. Okay. Can we see copies of that coverage? Perhaps I can inquire of the people who know there was coverage there, was there a provision in that coverage that you had to bring a claim on it within one year, which is the normal provision for insurance contracts?

Mr Burns: I think we'd have to examine the document to give you an answer on that question.

Mr Callahan: In addition to that, Mr Burns, I understand from my colleague here that Ms Hill, in a document she delivered to us, made the following statement;

"The community mental health branch could not have required the directors of the corporation to repay the amount as directors of incorporated companies are immune from personal liability for the actions of the corporation."

I presume she wrote that as assistant deputy minister. Was that the belief of the ministry or is she just off on a frolic of her own?

Mr Burns: Mr Callahan, she's an official of the Ministry of Health and I think you might want to put that question to them.

Mr Callahan: Oh, sorry.

Ms Mottershead: Let me clarify what Ms Hill intended by that particular statement. It's a fact that directors of corporations are not liable as individuals for the acts done by the corporation. What she meant was that individually you couldn't go back and make a claim against their personal assets. If there was a claim to be made, it would have to be a claim against the corporation, which in fact has the liability coverage on behalf of all of its directors.

I think she was drawing the distinction that you can't go back to an individual and try to make a claim on their bank account or their personal assets versus the corporation. That I think is the intent of that statement.

Mr Callahan: Can you assure us that someone in the Ministry of Health looked at the liability policy that was in force, which we understand now is in force, and made a determination that under that policy there was no way moneys could be recovered through that liability policy?

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Ms Mottershead: I can't make a statement right at this moment whether in fact the ministry did look at the liability insurance that Houselink may have had at the time. I can only say that in terms of the ministry and the audits that were conducted, we felt very strongly that there was no basis for pursuing damages from the corporation, because, first, as it's been indicated already through previous sessions with the auditors, there was no basis for fraud or any of that kind of activity or, to our knowledge and understanding, was there negligence per se. There wasn't premeditated wrongdoing, intentional wrongdoing, by this organization.

Mr Callahan: Negligence doesn't require premeditation, as I'm sure legislative counsel will tell you. In fact, as has been explained to us this morning, the common-law duty is one of the reasonable person viewed subjectively.

I'd like you to undertake to find out whether there was any consideration of seeking reimbursement through these policies that were there to cover the situation. Particularly when the audits came back and demonstrated that there were difficulties, one would have thought that the first place one would have looked would have been at policy to see what it did cover. To your nowledge, were the policies ever looked at? Can anyone help me with that?

Ms Mottershead: I can certainly ask the libraries if they had a look at that. But I will undertake to find out whether there was any attempt to look at --

Mr Callahan: And we'd like a copy of the policy so that we can have it examined by legislative counsel to determine what the range of coverage would be.

Ms Mottershead: Yes, we will undertake to get that for Houselink. We can do that.

Mr Callahan: Joe, do you have anything?

Mr Joseph Cordiano (Lawrence): My question is really centred on the approval of the expenditures after the fact. It was stated on several occasions that approval was granted after the fact because for these types of expenditures approval might have been granted if the request was made for those expenditures.

Could you go through those expenditures in detail for me and explain why approval would have been granted, because it's not clear in my mind, if that is the case, what guidelines were in place for the agency to understand that, to recognize that. That they were spending moneys in fact that would have been approved causes me to wonder why they would go ahead and spend those moneys without approval.

Ms Mottershead: Let me start off by saying that there's a category of expenditures that fall under the umbrella of compensation or benefits, and they include contributions towards RRSPs, merit pay and other benefits as one category. Had the organization identified those expenditures as part of an annual budget, they certainly would have been eligible expenses.

I think reasonable people understand that as part of a salary and a compensation arrangement between individuals and boards those things do happen and it's a matter of course and in some cases required by law. Certainly we have the Employment Standards Act, we have a pension act, but some organizations that are so small can't afford to participate in formal plans and therefore make other arrangements.

Mr Cordiano: What I really wanted you to do is break down the $248,000 by category.

Ms Mottershead: With the amounts for each --

Mr Cordiano: Would you have that in the audit?

Ms Mottershead: Yes, we do.

Mr Cordiano: What I would like you to help me understand is why in the first instance the expenditure on each category basis would have been approved and why the agency felt that it shouldn't ask for that approval.

Ms Mottershead: The two categories that represent an amount of $248,000 relate to RRSPs and merit pay. I can't at this point in time tell you what might have happened or might have gone on in the agency that hadn't flagged this as an expenditure. It might simply have been an oversight, but as far as the ministry's concerned, this is the kind of expenditure that is allowable, is eligible and ought to be funded.

We certainly have many other organizations that we fund this as a matter of practice and we did not feel, by allowing or not allowing this particular expenditure, that in fact we would be penalizing them by not doing that. It was a legitimate expenditure.

Mr Cordiano: In the audit that I have for the period April 1, 1988, to March 31, 1990, the audit we're talking about with the $248,000 unapproved expenditures, there are five items: RRSP, merit pay and excess salaries; then under that same heading there's a sabbatical leave of $20,000; there's a landscaping contract for $10,000; there's audit fees; then in section (5) misuse of ministry funds. These are all under the heading, according to the audit that was conducted, unapproved and unsubstantiated payments. That's what I'm talking about.

The $248,000 -- it's not clear -- this is RRSP, merit pay and excess salaries, so we're talking about excess salaries as well. I don't quite understand what that means, excess salaries. Is it excess salaries in terms of the number of hours that were worked, overtime pay? What does that allude to?

Ms Mottershead: I'll ask officials to clarify. My understanding was overtime.

Mr Dennis Helm: Excess salaries really accommodated a number of things: Overtime or even salary increases that were approved for staff but technically not given prior approval by the ministry. I think that was an oversight on the part of the program of not really understanding that prior approval was required before reallocating funds within a budget to increase salaries.

When we looked at the information and looked at the salary increases that were given, it was in line with the community standards from our point of view and we felt that they were an expense that would be allowed. Had we been asked in advance of the increases being given to the staff, we likely would have approved it because it was in keeping with the community standards for that kind of responsibility.

Mr Cordiano: What guidelines would have been in place for the management of the agency to understand and recognize that? There seems to be a lack of knowledgeability about what expenditures were in keeping within the guidelines and what were not. To the best of my knowledge, I don't see why they would have felt they were spending moneys that were unapproved if they had known this.

Mr Helm: There is a program manual that the branch has developed and it was developed back in the 1980s and shared with all the programs. That manual outlines the roles and responsibilities of each party in terms of getting prior approval for certain things.

Historically, there has been some confusion in terms of misunderstandings perhaps on the part of agencies as to technically what has to receive prior approval and what hasn't because over time some of the details within the manual have changed and we've communicated that, perhaps in a specific letter, and the manual itself had not been updated as a whole package, so that added to some of the misunderstanding.

When the issues were identified through the audit process, around bonuses and excess salaries for example, it was clarified with the program, and their policies have now changed in terms of coming to us for the prior approval as required.

Mr Cordiano: I think I asked this question last time of the Ministry of Housing with respect to the projects that were audited: How many of those had operating agreements in place? I think the answer was less than half or just over half, something like that. I'm not quite sure if I did ask if this particular agency had an operating agreement in place at this time.

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Mr Burns: Houselink?

Mr Cordiano: Yes.

Mr Burns: I think we indicated in our earlier remarks that the projects they manage were funded under a number of different program frameworks. For the federal-provincial program, as I indicated, not just last time but last fall, there are operating agreements, and we do have them. For the ones done under provincial programs I've just been told that there are not operating agreements.

Mr Cordiano: Sorry, there are not operating agreements for what?

Mr Burns: For Houselink, what we call project operating agreements, which is the full agreement with the agency, with the exception of one part of our program.

As I indicated, because we talked about our operating agreement situation at length last year, both in the spring and the fall sessions of this committee, we are on a program of both developing and implementing full agreements, but without those it's not that we're operating without any agreement.

We have in place for both these organizations, and in fact for all the organizations we fund, some arrangements and exchanges of understandings and agreements that govern our relationships. We act in accordance with those and we can act under them to intervene, and we do that from time to time with agencies. While we don't have project operating agreements in this case, we do have arrangements with both of these organizations.

In deference to the committee, I actually have here a discussion of what other arrangements we have in place and how they apply to these two agencies. It would take me some time to walk through it. I came because Mr Tilson advised me, and I'm not surprised to know, that the committee wanted to talk about operating agreements this morning.

I'm prepared to talk about alternative arrangements we have in place and how they work. I'm also prepared to talk about where we stand in our general program of creating and implementing project-level operating agreements. However, that's not a two-minute answer. I would ask you and the committee whether you would like me to do that orally here or whether you would like a communication from us which covers the same terrain.

Mr Cordiano: For my part, I would rather have you come back and go through that in greater detail. Today, for the purposes of our discussion, the fact that there were a number of agreements in place at this time, each with its own set of guidelines, criteria etc, tells me that there's a degree of complication or complexity that perhaps led to the sorts of problems we're talking about today. In getting to the bottom of this, it appears as though there wasn't, and there still isn't in many cases, the kind of framework for operating with clear and precise standards, guidelines, procedures etc.

Mr Burns: We do have, and have had all the way along, program guidelines and manuals which we use and which all of our agencies have and are aware of. There were certainly program administration guidelines in place at this period in time and we certainly have them today.

Mr Tilson: One of the issues we left off last week about which we asked the legislative research -- and indeed your assistant, Ms Hill, indicated that she would be asking Health solicitors to provide a comment on this issue of liability. Does your ministry pretty well adopt what legislative research said about the liability of directors?

Ms Mottershead: We believe that it's a current practice, and as a matter of fact, in a partial response to Mr Cordiano's question, we have developed a memorandum of understanding over the last year which actually takes into account all of the components on the framework of accountability, and also the program requirements. Within that memorandum of understanding, we are now making it a requirement to look to see whether in fact non-profit organizations do have liability insurance, and that is a requirement now.

Mr Tilson: My question is not with respect to insurance; my question is whether or not the Ministry of Health adopts -- and I suppose the Ministry of Housing, although we've never really asked the Ministry of Housing -- what the legislative researcher, Mr Fenson, presented to us this morning on the topic of liability of directors of non-profit corporations.

He essentially disputed, with qualifications, the statement made by Ms Hill as to why this matter wasn't pursued. As you recall, in the report it simply says that directors are immune from liability. That statement is true, depending on how you look at it, but in some cases, some situations, those directors may be liable.

My simple question is -- Mr Fenson is here and I'd like to end this issue; maybe the government members wish to pursue it further -- from my perspective, I'd like to know whether you adopt and agree with what he said.

Ms Mottershead: I'm not sure that I fully understand what you mean by the word "adopt," because what we have is a common-law practice with respect to the relationship and the competency of directors of corporations to their boards.

We do have the Business Corporations Act that has a requirement in it, and so as a function of incorporation, I think it is incumbent on the board of directors to ensure that they actually do the test that is required, both through common law and through the corporations act as it relates to the recruitment of those directors.

When you ask, "Does the ministry adopt?" I'm not sure whether you're suggesting that the ministry review the competency level of each of the directors that is independently elected or appointed, or what the question is really.

Mr Tilson: Let me rephrase the question. Is it possible that directors of non-profit corporations, housing or otherwise, could be held liable? That was the question that was left with Ms Hill.

Ms Mottershead: I'm not a lawyer, and I do have a member of our legal branch here. Ms Dale Roth is here, and maybe she can answer that specific question.

Ms Dale Roth: If I understand correctly, you're asking whether we adopt the analysis that we were given --

Mr Tilson: No, I'm going to even simplify it. Can directors of non-profit corporations, or corporations, be held liable for any actions that they do?

Ms Roth: Generally speaking, the law says that directors of non-profit corporations and profit corporations are not liable for the actions of the corporation. That's the general principle.

As Mr Fenson went on to explain, there are situations in which they may be found liable. He concluded, and I may not have it word for word, the short answer is that directors are not a useful target to go after. He made that statement after he analysed the law with respect to directors' liability.

For non-profit corporations, the standard of care expected of the directors of that corporation is a subjective test. You look at the individual experience that each director brings to the board, so that if a particular director doesn't have a great deal of experience, you would not expect the same standard of care from that director of a non-profit corporation that you would if that person were sitting on a business corporation.

Mr Tilson: There are two issues.

Ms Roth: Yes.

Mr Tilson: This is a question to you or a question to anyone, because it applies to non-profit corporations for housing that are dealing with millions of dollars. The first question is, is it possible that directors could be held liable?

In my assessment, from what you've said and what Mr Fenson has said, in some situations, rare or otherwise, the answer to that is yes, and it may well be that those directors should be made aware of the fact that the limit of their liability insurance, if indeed they have it and if indeed the ministries have pointed out to them that they should have liability insurance, that those non-profit corporations should have that, because there's a working relationship between the ministry generally, the Ministry of Housing as opposed to the Ministry of Health, that those policies be obtained, particularly if these people are volunteers who for the good of their community are trying to generally perform. They're not working for salary, that's for sure. They're trying to solve a social problem. So that's the first question.

My assessment from what you have said and Mr Fenson has said is that in some situations, directors could be held liable for their actions. The answer to that is yes.

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Ms Roth: Yes, if they fall below the standard of care required of them at common law, if they've breached their fiduciary duty, if they've put themselves in a conflict of interest. Fiduciary duty requires that they act honestly, in good faith and with loyalty to the corporation. That's a duty owed to the corporation, not to the Ministry of Health; it's owed to the corporation.

If they have liability insurance, you would have to find that they acted negligently. To find that they acted negligently, you'd have to look at the standard of care required. Standard of care, common law, is a subjective test, so you're back to the same question. If there's a breach of that standard, you have to find resulting damage to the party claiming to be damaged --

Mr Tilson: I'm aware of that.

Ms Roth: -- and you'd have to find that the ministry suffered a loss. If the ministry has said that it would approve the claims, then there would be no loss to the ministry.

Mr Tilson: I know we're looking at all kinds of ifs, and that's why the question was asked of course. The statement made by your assistant was that "The community mental health branch could not have required the directors of the corporation to repay the amount as directors of incorporated companies are immune from personal liability for the actions of the corporation."

That statement is what this whole report is based on, because that whole issue was not pursued because the Ministry of Health at least -- the Ministry of Housing hasn't commented -- was of the opinion that one could not go after directors. That is true to a point, but they could go after directors, depending on the situation.

Ms Roth: Sorry, you were asking me a question. What was it?

Mr Tilson: I'm saying that generally speaking, this statement is true, but it is possible in some situations -- I suppose if there's been a loss for example -- to go after the negligence of directors.

Ms Mottershead: Mr Tilson, can I answer that question? As part of the audit and that whole process that was undertaken over a period of time, the ministry really had no basis for determining negligence on the part of one or any of the directors.

What we have been discussing over the last period of time is the fact that there were some not pre-authorized expenditures which in fact we feel are eligible when you look at what the money was spent on. We don't feel that is ground for taking any kind of action against any one individual or the corporation, because we don't feel that was negligent behaviour or fraudulent behaviour or any other kind of behaviour that would warrant action along those lines.

Mr Tilson: To be fair, you didn't pursue the issue or your ministry didn't pursue the issue, because you were of the opinion that directors were immune from possible actions.

Ms Mottershead: That is I think stretching the ministry response and intent a little bit. What we had is the director of audit come up here on the first day of these deliberations and testify that there were no grounds. If there were grounds, then what the ministry would have done was pursue a number of initiatives. When there is no ground, you don't go on a fishing trip when you don't need to.

Mr Callahan: I'd like to follow that up, because in the report of Karim Amin, she says --

Mr Tilson: He.

Mr Callahan: He says. I'm sorry. I beg your pardon. It's always safer to err on the side of right, I guess.

Mr Tilson: Absolutely.

Mr Callahan: He says:

"We observed that the board had little control over Houselink's affairs, particularly the executive director, and lacked accountability for ministry funds.

"Of significance, the board chair and members were not fully aware of the major financial decisions taken by the executive director. Very few board meetings were held during the two-year audit period and minutes were not signed by the chair. Quarterly reports, annual program activity reports and year-end settlement forms were not prepared...and submitted to the ministry. The board did not have active committees such as finance and personnel to assist in the discharge of its duties."

Boy, if that's not negligence, then something's wrong. I mean, the whole definition of negligence is out the window. If the ministry wasn't negligent in terms of not picking that up before an audit was put out -- because they didn't receive any reports. You were supposed to receive reports. Who was keeping an eye on this? My sense is, nobody, and I think the audit proved that. But I really find it difficult to see that this wouldn't trigger right in your mind and say, "Maybe there's a policy of insurance we can recover from," and take a look at the policy.

I'd like to ask your legal staff, was the question of the policy ever looked at and have you seen a policy for Houselink, a policy of liability insurance?

Ms Roth: I haven't seen a policy.

Mr Callahan: Has anybody on the legal staff of the Ministry of Health, as far as you know, looked at a policy of insurance for Houselink?

Ms Roth: I don't know if they have.

Mr Callahan: Before this day is over -- and I've asked for it before, Madam Chair -- I'd like to see that policy and I'd like to see it while we're still questioning these witnesses.

Mr Tilson: With respect, that's an issue that's still up in the air.

The other issue is with respect to comments that have been made by Mr Fenson. There seems to be a distinction between directors of non-profit corporations and directors under the Business Corporations Act; directors, their standard of care.

For example, there's a report that half the board members of Houselink were residents who had very little knowledge of finance and management. In fact, one of the accusations is that the executive director at the time had total control of the funds. Of course, accusations were made that she used the money from the general operating funds to pay for unapproved overseas travel, furniture, dinners, liquor, parking tickets and personal purchases. I'm reading from a newspaper report which in turn referred to the audit reports.

My question is to both the deputies. On the issue of directors and the issue of the financial experience of people sitting on the boards of directors of non-profit corporations, if these people have not had any specific experience, should not your ministers be more vigilant in providing more stringent auditing services to watch over the way in which the province's moneys are being spent before the problem has gotten out of control, as it has been? We haven't had any in the last couple of weeks, but there were a couple of weeks where every time I opened the newspaper, there was something about some co-op or some non-profit housing getting into trouble, all across this province. So there's certainly a problem, if part of the problem is because of inexperienced directors who perhaps do not have the training or the legal experience or the financial experience, because we're talking about millions of dollars.

My question is to both deputies. How do you plan to deal with this problem in the future?

Mr Burns: I think you've covered a fair amount of terrain, so I'm going to make a few remarks in response.

First, a community organization that proposes to participate in the non-profit and cooperative program in the first instance must make a convincing case to us that it is a capable organization. That includes looking at the membership and the directors of the organization that wishes to enter in the first instance.

Secondly, we do require each organization we have a relationship with to retain the services of an auditor and to have their finances audited and to make that audit available to us as part of their regular reporting.

Mr Tilson: That's assuming there's an operating agreement.

Mr Burns: No, no, we require it in every circumstance, whether we have a full operating agreement, as we described it before, or not.

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Mr Tilson: How is that enforced? What if they don't do what you're saying? You've given them the money, meanwhile.

Mr Burns: If an organization fails to meet program requirements, then we will intervene in some form. Sometimes an organization has simply become a little bit inattentive and it just needs some remedial work. In other cases, it requires something more serious --

Mr Tilson: But how are you going to do that?

Mr Burns: That's, in effect, a supplementary question and perhaps I'll return to it in a second.

First, we look at the competence of an organization. That obviously includes its membership, its history and the kind of spectrum of skills that it brings to our program in the first instance, and we require audits on an ongoing basis. In some cases, at the invitation of organizations, we have talked to boards about the kind of training that might be appropriate for the board to ensure that they understand our program.

We fund separately organizations that provide training opportunities to directors, either in the cooperative sector or in the non-profit sector. That training and those materials are widely available in the sector now, and it's an ongoing need in a world this large. As we've indicated before, there are over 1,000 organizations that participate in this program and that means there are a lot of folks who need to ensure that they are acquainted with the program and its requirements on an ongoing basis.

In relation to your supplementary question, I said in response to a question from Mr Cordiano that I'm quite prepared to walk through all of the elements of our relationship with an organization, whether we have a project operating agreement or not, and to give you an update on where we stand on the development and implementation of project operating agreements, a subject that we discussed at some length in the fall. I can't do that in a one- or two-minute answer and, as I indicated to Mr Cordiano, I'd be quite happy to submit a written brief to you in a few days that covered all that terrain. But we do have a whole series of elements to our relationship with people beyond project agreements that define the relationship, that define the program and that indicate what we'll do if there's remedial action required.

Mr Tilson: That's one of the issues, of course, Madam Chair, that's been left up in the air from previous meetings. The Provincial Auditor has raised that issue with respect to the lack of operating agreements, and I assume that some time in the future this committee will come back and ask Mr Burns to reattend and deal with that issue, because that is certainly an issue -- unless I haven't been present. Certainly the last time I was present at one of these --

Mr Burns: I'm prepared to do that. I should perhaps just indicate, Mr Tilson, that in the fall, in the report of this committee, you had within it our communication on our work plan in relation to operating agreements: that we had completed the construction of the co-op one and were implementing it and it is now almost completely executed; that we would be constructing the non-profit one now and it would be implemented this fall. We are still on that work plan in a general way.

I also indicated in a letter to the Chair of this committee some weeks ago that should you wish to look at our progress in relation to some or all of our work plans, we would be quite pleased to come and give you an update.

Mr Tilson: Thank you. The issue of --

The Vice-Chair: Mr Tilson, I apologize, but your time has expired. What I would propose, and I'll say this before we go to the government members for their 20-minute allocation, is that at the end of the government's time, we divide the remaining time between five after and 30 minutes after 11 evenly among the three caucuses for remaining questions and then we go in camera to discuss the writing of the report, since, as you are aware, the committee hearings have been extended by one week, which only allows us one week for any further work that we have to do. I just wanted to let you know that so members could think about directions that you would like to give to research and additional matters that we might have to cover.

Mr Tilson: Madam Chair, before you leave that, I guess the question that remains up in the air is whether the government members, who really imposed this time allocation on us, would be interested in hearing from anyone from Houselink. We're saying a lot of things about Houselink, and to be fair to them, I'm sure that organization would like to come and tell its side of the story, and the same goes with the Supportive Housing Coalition of Metropolitan Toronto, which we really haven't spent a great deal of time on. I don't know whom I should be directing that question to, through you, Madam Chair, to Mr Marchese or whoever the whip is over there, as to whether they'd be prepared to extend that deadline.

The Vice-Chair: Perhaps that's something we could discuss at 11:30, whether we want to have part of our time next week for additional witnesses or whether we want to reserve the entire thing for report writing. But I think at this stage we'll continue with the government line of questioning for the next 20 minutes and then we'll give members of each caucus an opportunity for final questions. We have Mr Perruzza, Dr Frankford and Mr Marchese sharing the 20 minutes.

Mr Anthony Perruzza (Downsview): I haven't had a chance to go through the materials that were supplied by the Ministry of Health. They've been sitting on my desk here, and we just got those today, but I did have an opportunity to go through the materials that were supplied by the Ministry of Housing.

I have to tell you that as a result of going through these in a very intense way, my confidence in the process is somewhat shattered, if I can use the word "shattered," because it would seem to me that what these people had was a computer with a program and every once in a while they went in and they plugged in some numbers for requesting moneys from the ministry for certain things and then they would get a letter back from the ministry saying, "Well, okay, your cheque is going to be mailed to you under separate cover." We heard at the last meeting of this committee that nobody actually goes out to assess whether the work or the moneys that they're requesting is actually warranted. From what I can tell, there's very little in the way of checks in the system.

To the ministry people, as the gatekeepers of this system and of this money, my first question would be, where's the accountability? Where are the mechanisms that require and determine accountability?

Mr Burns: Again, you've covered some significant terrain, so let me make two or three remarks and then just see whether you would like us to follow up in a bit more depth on any particular of it.

I think if you asked operating cooperatives and non-profits whether their budget relationship with us was hands off or intrusive, the general response would be that we operate on the intrusive side and that it's excessive in relation to what an appropriate relationship would be.

What you're looking at, if my memory is correct, is the materials related to part of our relationship, which is looking at a proposed budget and responding to that. Around that dialogue is a series of documents that define program administration, norms and standards, that define areas of expenditure that are appropriate and all the things you would expect. Now, you don't have those, because my understanding of what you asked for and what you got is the documents that relate to a particular part of our history of our relationship. That's the first point I'd like to make.

Secondly, the most intense time we have in terms of staff effort and working out of issues with an organization over its operating budget occurs in the first two cycles. Most -- well, 99.9% -- of non-profits or cooperatives open somewhere in the middle of our fiscal year, and they often open without every single piece of the capital phase of the project totally nailed down.

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The first thing we have to do with the organization is establish a first-year budget, and at the end of the process, for the second year, to revisit all of the fundamentals and look at what really is required, on a budget basis, to operate on a normal, ongoing basis. With those two things done and the intense conversation had, we really should be in a relatively stable situation where the patterns of expenditures are pretty close to the budget. For the financial statements there may be small variations which require discussion at year-end, but we don't have a situation in the normal course of events after years one and two where we have to have an extremely intense discussion every single year with every organization we have a financial relationship with.

To fully appreciate the kind of dialogue we have with any organization, or with this one, from your point of view you'd need to have some acquaintance with our program administration guidelines and documents and the kind of discussion we would have with any organization, or with this one in particular, in the first two budget cycles.

Mr Perruzza: I'm confused about that because I can tell you of one example of a group that's been in the mix for, I would say, about four years now, and your ministry and your staff have very little information as to the status of that particular group and who's still involved and who's not involved and who's quit and who hasn't quit and who's living out of the country and who's not living out of the country.

So when you come here and you say, "Jeez, every once in a while we call back and we touch base with these people," that's not in fact the case and, quite frankly, that undermines my confidence in the whole process even more. What's even more difficult to deal with is when you make contact with some of your ministry people and you call them and you expect calls back and you do that for a period of six weeks and you don't get any calls back. That further undermines my confidence in the entire process, because if a member of Parliament can't get a call back from your ministry staff, how do you expect the public and groups out there who are participating in this process to be treated in a positive way and for them to have confidence in the system?

Mr Burns: In relation to the first question, obviously we do not and cannot track the individual status of members of non-profit corporations, or even every single member who's a director, on an ongoing basis. One, it's a huge effort, and two, it's not central to the relationship that we have. We require the submission of budgets and of financial statements and of audited statements and adherence to our program guidelines. That's the central part of our relationship, not whether they have seven or eight directors at any particular point in time or whether it's Joe or Fred.

The second question: Frankly, I'm a little astounded to hear what you said. I'm certainly not acquainted with the individual case, but it is not ministry policy or, to my knowledge, practice to not answer telephone inquiries.

Mr Perruzza: I can tell you that I put in phone calls, in fact, to Mr Studden for I believe a period of six weeks and I didn't get a call back.

Mr Burns: I don't know anything about the circumstances.

Mr Perruzza: I suspect that there are many other examples like that as well. Is that standard practice?

Mr Burns: Of course not.

Mr Perruzza: Is that how you build the confidence of the public and build the confidence within the system, that you require to be able to come before this committee and say, "Jeez, this is how things are going," and expect everybody to say, "Well, okay, fine; we're going to accept this because that's the way things are and that's the way things are working out well"? That doesn't do that for me.

Mr Burns: I think I answered that question just a minute ago.

The Vice-Chair: Mr Perruzza, you're free to use your time as you wish, but there are only 10 minutes left, and we have Dr Frankford and Mr Marchese.

Mr Perruzza: I'm going to pass that and then I'm going to come back after.

Mr Frankford: I don't know if anyone can help me out. I was trying to look in some of these documents to see if there was a line for the actual amount paid for directors' liability insurance.

Mr Burns: You were looking at the Houselink budget document for that particular item, whether it would be separately identified?

Mr Frankford: Yes.

Mr Burns: It would be part of the general insurance line. There is an insurance line in the budget. It wouldn't be separately identified.

Mr Frankford: I would appreciate if it could be separated out, because I think it raises a whole lot of questions around the liability of directors, relating to that.

Mr Burns: There was an earlier question about the state of their liability insurance, its character. There's no reason why we can't also ask for the actual amount that they paid to get the insurance.

Mr Frankford: Following up on Mr Callahan's comments about the way the board's meetings and so on have been conducted, it raised a question in me as to whether an insurer would regard that as being in place. It seems to raise some real questions about the conduct of the organization. I would find it surprising if a commercial insurer would just let anything go and accept it.

Mr Burns: The question enters a terrain in which I have no particular claim on any expertise. I don't have any member of my legal staff here, so if it's appropriate, I'd just like to take that question and get it looked at by someone who does have that competence.

Mr Frankford: It seems to me we've been concentrating on what we understand around Houselink, but thinking more generally about non-profit organizations, there must be circumstances in which the organization could be hit for some substantial amount relating to negligence. I'm thinking of things like wrongful dismissal cases. Presumably, they would want to insure against that or the funding agency would hopefully want to make some provision to protect itself against that so that they just don't have to pick up the cost regardless.

Mr Burns: In our case, I'd just confirm the advice you got from your own staff support. We require the organizations we support to have in their bylaw number 1, their governing bylaw, provision for the acquisition of liability insurance.

Mr Frankford: As far as this insurance goes, are you the lead ministry on that or is this something which is divided between you and the Ministry of Health and any other agencies?

Mr Burns: When you asked the system question, just to go back to the whole world that we fund, we support over 1,000 cooperative and non-profit housing organizations, of which, as an order of magnitude, about 20% also are active in providing some level of service and get some funding support from Health or Comsoc or Correctional Services or from the local United Way or the local municipality or in some cases the federal government. In both situations -- that is, if they're only providing housing services or if they have a situation where they're doing more than that -- they must adhere to our guidelines in so far as they are a provider of housing.

Ms Mottershead: If I might add to that, as a matter of practice, what happens at the process of incorporation is that these organizations engage the services of a lawyer, the lawyer who helps them prepare for the actual process of incorporation, and that individual would advise on the requirements for both the incorporation, what are the legal steps to get there, as well as issues of liability insurance, what other government statutes cover that particular activity, and in fact discusses with them the objects and the full scope and mandate of services to be provided and helps those organizations then define the kind of magnitude or scope of coverage that would be required. So they do get that kind of help. The Ministry of Health certainly doesn't get involved in that and I'm sure other ministries don't. It is a requirement as part of the incorporation process.

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Mr Frankford: Would the Ministry of Health have guidelines for incorporating lawyers?

Ms Mottershead: We have guidelines and a requirement that they do acquire liability insurance, but because you have a range in terms of the scope and magnitude of operations and the nature of the business to be conducted in a particular organization or facility, we don't have guidelines that would dictate what the coverage ought to be. That is the obligation of the board, through its counsel, to determine with its insurance brokers or its commercial agent.

Mr Frankford: Would the ministry routinely review the incorporation once it's been set up?

Ms Mottershead: Not really, no.

The Vice-Chair: Mr Burns, Dr Frankford has asked you for some information. You said you'd like to consult with your legal counsel for the full answer. Because our time lines are so tight, I wonder if you could provide that information by early next week, as well as the list of outstanding matters for you and the Ministry of Health. If you could provide that information as quickly as possible, it would be appreciated.

Mr Burns: There will be a consultation with my legal director a little later on today.

On the question of the memorandum that the Provincial Auditor prepared, with a list of questions that might be helpful to provide material on, some of them we covered in discussion and some we have not. We are certainly quite prepared to provide you with some written material on the issues that are raised that touch on our responsibilities.

Mr Tilson: Can the Ministry of Health give the same undertaking?

Ms Mottershead: Yes, we will.

The Vice-Chair: Thanks very much.

Mr Marchese: A number of committee members have touched on different words as they relate to these two agencies with respect to whether or not there was fraud, with respect to whether or not there was negligence or whether it was an oversight as related to unapproved or unsubstantiated matters. I think the ministry people in both ministries have come to the conclusion that it probably was an oversight that we're dealing with with respect to unapproved or unsubstantiated matters, and that it is in keeping with community standards, whatever decisions were made subsequently by the Ministry of Health.

The question for me then remains: What process do you use, have you used, will you use or are you now using to determine what due diligence of the board members is in order for you to be satisfied that the members adequately know what their responsibilities and obligations are so that you as a ministry and we as politicians of these ministries can feel comfortable that you have a process in place that we can be satisfied with?

Linked to that is a question that Mr Burns raised, and perhaps both deputies can touch on this. Mr Burns, you were saying you don't have an agreement in place, a memorandum; you have an understanding perhaps or an arrangement.

Mr Burns: No, no. We require their incorporations to meet certain standards. We require them to submit undertakings and execution of undertakings at various steps along the way. We require them to adhere to our program guidelines. We require them to mortgage their property in a way that doesn't allow them to make any interim changes to their financial arrangements. I've suggested a couple of times that there's a very long answer to what is in place.

Mr Marchese: I understand.

Mr Burns: What is not in place is what in the housing program world is called a project operating agreement for provincially initiated programs in the last number of years for non-profits. They're now in place for cooperatives, and we are now constructing that project-level agreement.

What we do have in place is not just an understanding or a dialogue or a training program; there is a set of documents that govern our relationship. Where we have found weaknesses, we have worked with the organization. As you well know, from this committee and from other things we've done, in some cases we ask for special audits to be done and we act on the conclusions of those.

Mr Callahan: If Mr Burns says it's a lengthy, detailed account he'd have to give us, perhaps he could undertake to give us that, if it's not too difficult, in writing, so the members of the committee would have that.

Mr Burns: I offered to make it part of our written material to you. I also indicated to both Mr Tilson and Mr Cordiano that on the collateral subject of how we're doing in improving program administration, I'm prepared to talk about it here at another time.

Mr Marchese: If that becomes available in the next short while, that would be fine. If not, we have indicated to the members that we would be interested in having some discussion with the ministry about what you've just said, so that there can be a much more considered discussion as opposed to summing up. If it's available, fine.

Have you commented on my question about how members can be liable if they do not exercise the proper degree of care, diligence and skill? Are there discussions with board members, not just with these two agencies now, but in general, about what constitutes the degree of care, diligence and skill, so that you can be protected, so that we as a government are protected, because we ultimately, given that we fund them, are liable?

Ms Mottershead: Do you want the Ministry of Health to attempt to answer that?

Mr Marchese: Yes, please.

Ms Mottershead: I'll start off by indicating that I have Instant Hansard here from your last meeting. Ms Hill has eloquently outlined all the measures we have in place in terms of increased accountability. I will not bore you by going through them again.

One of the essential elements in terms of the ministry exchange and the Ministry of Health's relationship with its agencies is to make sure, as part of the budget development process, that the people we talk to are in full understanding of what is required in the accountability context, which includes the role of directors.

We have been very active and aggressive in promoting the notion of continuous quality improvement, because times evolve, standards change from time to time, accountability requirements or questions come up and different areas of review are now and again contemplated.

It isn't a question of just developing a manual that actually outlines the requirements of board and senior staff members, but it's one of making sure that there is a continuous evaluation. Certainly for the last couple of years, the ministry has undertaken a number of evaluation exercises with a number of the agencies, as well as an internal self-evaluation on ministry practices, to ensure that we are coming up to speed.

We do promote continuous quality improvement. There is an ongoing process there. It isn't just a question of paper. I think members have had a lot of discussion about the budget letter and the follow-up statement, but there's a lot of activity that goes on between those two things. That's the dialogue that none of us has in front of us in terms of the interface that happens on a very frequent basis with these agencies.

The Acting Chair (Mr Bruce Crozier): That limits the time, as I understand it, for that round. I understand also that it's been agreed that the remaining time through to 11:30 will be divided equally. We're at 11:09 and we'll go to 11:31, so the Liberals will have 11:09 to 11:16. Question, Mr Callahan?

Mr Callahan: Just a very quick one: I'd like to know whether or not we've got the copy of the insurance contract that we were promised. I'd like that before the committee is completed.

Also, I'd like to ask the committee if we can have Ms Hill back next week, not that I challenge what you are interpreting she meant by that statement, but I'd like to ask her, so she can tell us what that is, because it certainly appears to me to be a holus-bolus statement saying, "There's no liability on the part of directors; therefore, we won't pursue any possibilities through this insurance policy," I would assume. I'd like to see that before we leave.

The Acting Chair: It's been suggested that could either be raised later or through the subcommittee. I think that could be done.

Mr Callahan: No, I've got an undertaking from them to provide it and I want to see it. I think it's very germane to this entire topic. We're told that it's in place.

Mr Cordiano: We're not talking about that, Mr Callahan. We're talking about your request to have Ms Hill back, and we can deal with that after.

Mr Callahan: All right. Okay.

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Mr Cordiano: There are a number of questions that remain unanswered with regard to more details. We've been at this question for some time on this committee and with the Ministry of Housing, and I know that the deputy minister is endeavouring to do a number of things which would bring the non-profit program up to speed with regard to an accountability framework and getting good value-for-money-type operations.

I think the intention is there and I honestly believe we've been working diligently on this committee, with you, with your full cooperation, and I wish we could have the minister in here to get the same kind of willingness on her part as we've seen with the deputy minister.

I know you speak on behalf of the ministry and are the spokesperson for the entire ministry, but there are a number of things where we are looking back at what has happened and there are a lot of troubling things. There are gaps and time periods between when audits were completed and the time action was undertaken to recover funds etc.

There are a number of other questions with regard to the way in which boards operate. The selection process for boards of directors: Who recommends the members of the boards of directors? Who authorizes them and who approves those appointments? There are a lot of remaining questions that we haven't resolved --

Mr Marchese: Why didn't you ask them before, Joe?

Mr Cordiano: Pardon me?

Mr Marchese: My question to you is, why didn't you ask them before when we had the opportunity?

Mr Cordiano: I did ask them. I asking about operating agreements. I was asking about the fact that there was a shortage, that there was a lack of accounting for a number of things. There were guidelines that were set in place that, depending on how programs were funded, they had different operating agreements; that was the answer I received.

At the end of the day, what we're talking about is putting in place new operating agreements, new guidelines. You're establishing frameworks for accountability that have to be meaningful, that have to include all of these things. If there isn't the kind of accountability with regard to the members of the boards of directors, we have to ascertain whether the people who are selected would be in conflict positions, and what assures us that they wouldn't be? Are there guidelines you're contemplating now for those boards of directors?

Furthermore, and this gets at the point I was making earlier with respect to senior management of these agencies, how are those managers or the chief executive officers of those agencies selected? What criteria are being used? Does it just happen that the board goes out and selects someone? Does the ministry have a say? At the end of the day, that chief executive officer is largely responsible for the functioning of that agency and that person has to have the skill level in order to carry out his or her duties.

We have to reassure ourselves that the people being selected are being selected on a basis of performance criteria that are established for all of these agencies anywhere in the province, and that the ministry be involved in setting out those criteria.

Interjection: You're going to get a brief answer.

Mr Cordiano: Questions are a function of time around here. I don't expect an answer. I'm just setting out what I think. You can't give me answer in two minutes to all those questions, so I'm trying to be realistic with respect to the directions we're headed in. I know the deputy will be delighted to come back, as he's often said, and give us greater detail in terms of what he's about to do and not with respect to past history.

But again, these audits point out repeatedly that there's a great need for putting greater detail into what we expect, into accountability frameworks that will actually mean something at the end of the day and that will allow us to measure performance so that when we have further meetings of the public accounts committee -- and hopefully we won't -- around this question, we'll be able to ascertain very quickly whether performance, according to the accountability framework, was up to the standard we expect and that these agencies are operating within the guidelines that were set out for them. Otherwise, we're just going around in circles repeating the same things about the lack of performance measurement because we don't have the data, because we don't have the criteria, because we don't have a standard that everyone can be measured against equally. I think at the end of the day that's what we're seeking.

Mr Callahan: On a point of order, Mr Chair: I have to leave to speak in the House, but I've been given a memorandum from Knox Vicars McLean which does nothing more, in my view, than explain how you apply for the insurance.

Mr Tilson: Exactly.

Mr Callahan: What I want from them is the copy of the policy that tells us, because it refers to "a wrongful act" in this directive --

The Acting Chair: Mr Callahan, that's not specific to Houselink. That's just a general application.

Mr Callahan: Is this not what we're getting? So we are getting the regular document. Okay. That's all I want to know.

Mr Tilson: A question to Ms Mottershead: Are you aware or have you been informed when either Minister Lankin or Minister Grier received these audit reports?

Ms Mottershead: I'm certainly not aware that they have ever received these audit reports. The way the audit process functions is that it's a direct accountability to the deputy minister. In the ministry we have the audit program, the work plan, the annual plan for audits, and the audit findings are shared with the ministry audit committee, which is chaired by the deputy minister, and the deputy minister has to ensure that the audit findings and the recommendations are in fact pursued and implemented. The accountability, because this is essentially financial and administrative accountability, rests with the deputy.

Mr Tilson: These are serious issues. Millions of dollars are involved. Perhaps my question is more towards the Ministry of Housing on non-profit housing, but in matters that involve millions of dollars, I don't understand why that wouldn't have been drawn to their attention, particularly when this report, at least the draft report, was originally in 1990, I think, 1990, 1991?

Ms Mottershead: I'm not aware whether my predecessor discussed this audit report or findings with either of the ministers of the day.

Mr Tilson: Do you have any of your staff who would know here?

Ms Mottershead: We can certainly check.

Mr Tilson: There's a whole roomful of people here.

Mr Helm: We're not aware of any discussions.

Ms Mottershead: No, we're not aware of any discussions, apparently.

Mr Tilson: Mr Burns, on the issue of Mr Cooke or Minister Gigantes, when would they have been made aware of this series of audits?

Mr Burns: Our audit practice in terms of reporting and follow-up is similar to the one the Deputy Minister of Health has just described for the Ministry of Health; that is, the reports come to me and it's up to me to ensure that there's a process in place to have the program staff analyse the conclusions and respond to them. In the normal course of events, there would be no passing of that material or briefing of a minister.

In the case of these documents, I'm not aware that in the Houselink case there was any discussion with the minister of the day, or this one, up until very recently, and in our case we were looking at $200,000 and a little bit more than that in terms of a surplus identified in the financial statements, and analysing that in relation to our program guidelines is not a huge amount of money on the scale you were just describing.

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In the case of the Supportive Housing Coalition, because of the audit recommendation that while the organization focused on its internal practices, we should make a decision that it shouldn't apply for new development funding, or that if it did, the application should be set aside during the period it was focusing on the administrative practices, I did have a discussion with the minister about that, because the issuing of an allocation is a decision that requires ministerial review and execution. In that case, I did advise her of the fact that there was an audit and that it had made that recommendation and that we were acting on it.

Mr Tilson: When was that?

Mr Burns: At the time that I received the audit, whenever that was. I don't actually remember the time.

Mr Tilson: She wasn't the minister then, was she?

Mr Burns: In 1992? Yes, she was. At the time, the responsible field operations executive wrote to the organization confirming that.

Mr Tilson: These audits didn't appear to go beyond the confidential stage for a long time. They were never made public. I have a concern with that. I wonder if both deputies would comment on that.

Mr Burns: It's not been the practice in the Ministry of Housing, and as far as I know in any ministry, to regularly publish audit documents. They are documents that can be requested under a freedom of information request.

Mr Tilson: A request was made, Mr Burns, and was turned down.

Mr Burns: When that happens, they are scrutinized from the point of view of the tests that are in the act. It's an interesting question of general public administration whether audit plans and audit conclusions should be published on a regular basis, but as far as I know, it's not the practice of any provincial ministry to do that at the moment.

Mr Tilson: The draft report, the audit report on the Supportive Housing Coalition of Metropolitan Toronto included many statements that the final report omits. The reason, presumably, for many of these, is wording changes, but in some cases figures were missing from the final draft. For example, on page 2 -- I'm talking of Supportive Housing -- the fee structure negotiated with this firm allowed the Supportive Housing Coalition to retain 20% of unexpended organization expense funding allowed by the Ministry of Housing. The final report didn't point this out. Can you explain the omission?

Mr Burns: I'm not personally acquainted with the file in this way, but perhaps Mr Studden or one of our audit staff has a specific answer. If we don't, then we will put it in our written supplementary communication.

Mr Trevor Studden: I'm not sure of the translation from the draft copy of the audit to the final copy, but it was probably felt that the amounts that were provided there just followed program guidelines, so there was no need to include it in the final document.

Mr Tilson: Twenty per cent's a big amount.

The Acting Chair: Thank you. You have till 11:32.

Mr Marchese: I want to make a few points. Mr Peters has kindly submitted some questions that Mr Cordiano's been asking, and some of us as well.

Mr Burns: Mr Peters made them available to us.

Mr Marchese: Very well, good. In your writing of the report that you will do for us, I suppose you can use these as questions that can and should be addressed.

Mr Burns: This and a review of today's Hansard.

Mr Marchese: Wonderful. The other point I want to make is that in the course of trying to solve questions of fraud or negligence or oversight, we have on the other hand lost sight of the fact that these organizations have provided a tremendous need in the community. This is a statement I want to make for the record, because I might forget otherwise as I ask the next question.

Very few organizations in the 1970s, government included, were offering housing programs for persons with psychiatric, developmental or physical disability, seniors who over time become frail, AIDS victims and, more recently, persons with substance abuse problems, victims of family violence and children with special needs. These are the kinds of people these kinds of organizations have been working with for a long, long time. Without them, neither government nor the private sector was there to say, "Someone has to serve these people."

While I am interested in solving some structural and administrative and reporting weaknesses that might be there, I want for the record to say that I and many of us here have supported these organizations that have provided these needs. In the midst of all of this we forget, so for the record, I wanted to state that.

Mr Burns, I wanted to give you an opportunity, because you didn't have the chance earlier on, to satisfy me again that you are putting into place structures and processes that will satisfy us that you can deal with some of the questions that have been raised, particularly some of those areas of unapproved and unsubstantiated expenditures. That's what we're here to do: identifying weaknesses and solving them. Can you satisfy us that we're dealing with this and have dealt with them?

Mr Burns: On that part of it that has to do with governance, I touched on some of the elements in response to Mr Tilson's inquiry. We look at the competence at the time they enter the program. We require them to have auditors. We require the organization to prepare a management plan and submit it to us. It must cover human resource policies, which was a question someone raised as well. That plan must be a plan of the organization. The directors themselves have to be part of that.

We've provided and continue to provide funding to organizations that provide training to both staff and directors. Some of that is tailored to organizations of the co-operative character because they have a somewhat different legislative base and operations, some is tailored to the municipal and private non-profits. We will continue that program.

Our regional offices themselves will provide counselling and advice, when organizations have questions or difficulties, on request, and for those cases where we see operating trouble developing, we will intervene.

On the question of financial administration, I've indicated a number of times we operate and continue to operate with a program guideline framework. It requires organizations not just to adhere to our budgeting and administrative practices but to retain an independent auditor, to have that auditor not only work but to submit that report, after they've dealt with it, to us so that we have it. We need it in order to give final sign-off on the financial statements, and they are of course required to look at the next year's budget.

Again, sometimes you have organizations that develop troubles that can be identified by their auditor or by our look at their budget situation. There are a number of different forms of intervention that we make to sort out problems, or in very difficult situations, to take stronger action.

I think we all know, and we talked about this the last time when we looked more generally at the social policy issues at stake, that successive governments in Canada and all the provinces have fostered the growth of a large number of relatively small community organizations to deliver services, preferring it to direct delivery by big government institutions and organizations. The broad issues of governance and training and accountability apply across that entire spectrum of small organizations that have grown up in this country, particularly in the 1970s and 1980s, in response to that large social policy change.

That challenge you've just identified goes well beyond what we need to do to ensure we have good housing program administration. It applies to a very large part of the way social and public services are delivered.

Mr Marchese: Ms Mottershead, do you have an additional or last comment you want to make with respect to all of this?

Ms Mottershead: Yes. There has been, and my colleague Dan Burns was alluding to it in his final comment, a lot of discussion today about the role and accountability of boards of directors and liability etc.

I just wanted to highlight what you all know, and that is that there has been a tremendous tradition of voluntarism in Ontario and that these boards of directors on many, many of these agencies have an obligation to the particular agency, but also do this as a matter of their own personal commitment time and again, so that you see that many of them are of many organizations. It takes a lot of time, it takes a lot of effort, and I just want to acknowledge that although improvements can be made in terms of the relationship and some of the management accountabilities, we shouldn't underestimate the level of personal commitment that's gone there and the fact that these people are there by and large to serve and to make sure that the objects of their organizations are fully executed in the public interest.

Mr Marchese: I'd like to thank the deputies and their officials for coming.

Mr Gary Wilson: My colleague very eloquently stated what I wanted to make sure was there as well, that the types of housing now have to answer new situations in our communities across the province. I think the important thing is to make sure that these programs are working, and that where improvements are needed, they have to be done.

In thinking about this, it sprung to mind, especially in light of Mr Tilson's questioning, that it's almost as though he's looking for traditional forms of housing that have to be changed to meet differing circumstances, which as I say, Mr Marchese has so eloquently outlined.

It's a question of how we do that in an accountable way. I think we're all in the committee maybe wanting to ensure that provincial money is spent effectively and efficiently. We want to make sure the processes work that way. Certainly, the Ministry of Housing is adamant that it be done, and the Ministry of Health as well.

Mr Marchese: Mr Chair, on a process issue that is of interest to us, we're writing a report, obviously, in the next week; it's our intention. Can I ask of the deputy, when can we expect some responses to some of the questions that were raised?

Mr Burns: I was asked earlier to ensure that be made available at the earliest possible opportunity, which is what I will seek to achieve. We have scheduled a staff round table at noon today in order to assess what material had been asked for and what we should do next. I believe that at the end of that round table someone in our ministry will be able to contact the committee staff and give you an indication when we can make the material available. In order to be helpful, we might actually break it in two and do the things we can do quickly very quickly, so that you don't have to wait. We'll break it in three perhaps, too. By this afternoon, we will contact your staff.

Mr Marchese: Thank you.

The Acting Chair: On behalf of the committee, I'm sure I can thank you for your attendance here today.

It's the intention of the committee now, as I understand it, to go in camera for discussions as to how the balance of the committee time will be spent on report writing and directions to research etc.

The committee continued in closed session at 1133.