Mr Ted Arnott (Waterloo-Wellington PC)
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr David Christopherson (Hamilton West / -Ouest ND)
Mr Doug Galt (Northumberland PC)
Mr Monte Kwinter (York Centre / -Centre L)
Mrs Tina R. Molinari (Thornhill PC)
Mr Gerry Phillips (Scarborough-Agincourt L)
Mr David Young (Willowdale PC)
Substitutions / Membres remplaçants
Mr Raminder Gill (Bramalea-Gore-Malton-Springdale PC)
Mr John O'Toole (Durham PC)
Also taking part / Autres participants et
Mrs Marie Bountrogianni (Hamilton Mountain L)
Clerk / Greffière
Ms Susan Sourial
Staff / Personnel
Mr David Rampersad and Ms Elaine Campbell,
Research and Information Services
The committee met at 1000 in room 151.
The Chair (Mr Marcel
Beaubien): Good morning, everyone. It is shortly after
10 o'clock, so I will bring the meeting to order. Any comments
from anyone this morning, from any of the members?
Mr Gerry Phillips
(Scarborough-Agincourt): Mr Chair, if I might make a
request of the research staff, last year they prepared for us a
document outlining the relative tax levels in Ontario and
selected US states. I found that useful and I wonder if I might
request them to do that again.
That sounds like a fair request to me.
This is dated February 15, 2000, so I thought on the first
anniversary of it we might just-
You're very consistent.
Rampersad: Any states in particular?
Last year's seemed fine to me. I think they had New York,
Michigan, Ohio and Illinois, actually, and I think you had
Indiana, Minnesota and Pennsylvania. But if it was easy to do
last year, the same comparison would be helpful from our
TD BANK FINANCIAL GROUP
Anything else? If not, our first presenter this morning is a
representative from the Toronto Dominion Bank. On behalf of the
committee, welcome. Could you please state your name for the
record, and you have one hour for your presentation this
Drummond: Don Drummond. I'll try to, at most, use half
of that for the presentation and leave time for questions.
There are two documents
before you. The one with a little green banner on the top is a
set of charts. That's what I would like to go through in my
presentation. There are a few things in the presentation. There's
a chart where there's a lot of information beneath the surface.
For example, when I come to the economic and fiscal projections
that require a lot of assumptions, we don't have the time to go
through all of that, so you also have before you a pretty
thorough narrative going through these charts. But I think I
won't have time to go through all that, so I'll leave that for
the reference of the committee and just go through the
To start with, just to
declare the biases from my own experience, I've been with the TD
Bank since June 2000, and prior to that I spent 23 years at the
federal Department of Finance, so you might notice a few biases
creeping up from that. I like to think of that experience as
having been there when the federal government got rid of the
deficit and turned to surpluses, but I'll give you a warning: I
was also there during the huge deficits, so there's a little
caveat perhaps to the advice I might give to the committee.
Hopefully that won't drown out what some logical positions
Yes. If I could just then turn to the first page of the chart
package, there are three things I would like to do. I would like
to present an economic forecast for Ontario and use that economic
forecast to present a status quo fiscal projection, status quo in
the sense of embedding the policies that are already legislated,
and then address the economic challenges I think need to be
addressed in the 2001 budget.
Before getting into that, I
wanted to speak a little bit on the budget planning framework. As
one of my central recommendations in the case of Ontario, and I
would recommend this to the other provinces, I think you need to
look at a longer-term horizon in budget planning. If the budget
plan this year follows the pattern from previous years, the
economic forecast will be extended just through 2002, and the
fiscal through fiscal year 2002-03, but simultaneously the budget
will address decisions on taxation and potentially many areas of
spending that have much longer-term consequences than that. For
example, the 30% and 20% personal income tax commitments done in
the past and the reference to lowering the corporate income tax
rate last year by 2005 have fiscal consequences and consequences
to the economy going much beyond the fiscal framework. To have a
better degree of comfort as to how these can be encompassed
within that fiscal framework, I think we'd need to look at a
little bit longer-term horizon.
I know this is something I
had pictured at the federal level for many years before it was
finally accepted and there was a great deal of nervousness about
it. There are some things that can be addressed. Obviously, the
longer you go out, the greater the degree of risk, but there are
some things that can be done to address that. Ontario does have a
contingency reserve set aside. It's $1 billion. That's 1.6% of revenues. That could
be increased over time to reflect the growing riskiness of the
forecast going forward. Scenarios could potentially be presented.
You could have one with a lower growth, one with a mid-range
growth and one with a higher growth to sort of bracket the
What I'm going to do today is
present the projections through 2004-05. I would note a point
that the federal Auditor General has been on for quite a few
years right now, urging all governments to not only look into the
mid part of the decade but to not forget that a lot of things are
going to change post-2011 when the baby boom generation starts to
retire. I wouldn't suggest forecasts out through that time
period, but I think it's probably a useful exercise to look at
some of the pressures that are coming in that longer-term
If I could turn to the second
page, then, it simply makes the point that Ontario has an
incredibly open economy. You can see that the dimension of that
openness has been changing at a very rapid pace with the exports
to other countries. In fact, the relative importance of exports
within Canada has declined somewhat. Those exports to other
countries are increasingly going to the United States. In fact,
94% of the external exports are now going to the United States.
That's been a wonderful thing when the US economy has been in a
boom; it won't necessarily be a wonderful thing in 2001,
particularly the first half of the year, as the US economy slows
Obviously, with that export
openness to the United States, what happens to the United States
economy is going to be a key driver of the appropriate set of
economic assumptions for Ontario.
On the top of page 3-this is
the TD Bank's forecast for the United States-we think the first
half of 2001 will be pretty bleak, in fact only 1% growth in the
first quarter, so even a little bit weaker than the 1.4% that
they managed to eke out in the fourth quarter; a little bit
better, 1.9%, in the second quarter of the year. But together it
presents a picture of a pretty dismal first half. We think it
will strengthen by the second half of the year. We've already had
100 basis points of interest rate relief from the Federal Reserve
Board. We think there will be another 75. The oil and natural gas
prices are down a little bit. The exchange rate appreciation has
reversed course somewhat in the United States. So a lot of the
things that caused the weakness are coming down. Then,
critically, it's based upon the hope that some of the excess
inventories, particularly in the auto situation, will have been
addressed by the end of the first half of the year so growth can
get going at a stronger pace. That gives us an annual growth
rate, you can see on the bottom chart, of 2.4%, and then
returning to much more robust growth rates for 2002 and
At the top of page 4, one of
the particular features of this US business cycle that is going
to affect Ontario is going to be on the auto side. There are a
lot of numbers in this chart at the top. The one I would draw
your attention to, though, is that on the first panel, the sales
of light vehicles, we expect that sales of light vehicles in the
United States will come down 7.5% in the year 2001. With
that-because our production is not just Canadian production, it's
in a North American context, with every second vehicle produced
in Ontario being produced for export-we think the production of
light vehicles will be cut back by 7% in Canada in 2001, and 97%
of light vehicle assembly is in Ontario. If you count in the
inputs, the paint and the chrome and the rubber and the plastic
and steel and aluminum and everything that goes into a car, and
some of the after-market, the leasing and whatnot, you could
easily get auto production, writ large, being as much as 10.5% of
Ontario's economy. So you can see that this production cutback
we're anticipating can knock almost a full percentage point off
Ontario's growth rate.
With that context, we're
expecting growth in Ontario to be 2.3% in 2001, and that's within
the Canadian economy growing at about 2.7%, so that's really less
than half the growth rates that we've had in the recent past,
again with the presumption that these inventory cycles,
particularly the auto cycle, have been dealt with in the first
half of the year and return to much more robust growth than
The third-quarter national
account statistics from Ontario were released this week and the
third quarter was a little bit stronger than was imbedded in this
forecast, so that 2.3%, if I was up to date, could easily be 2.4%
or 2.5%. But the key point is that it will be a remarkably slower
rate of growth than in the recent past, particularly not very
robust in the first half of the year, probably to the point of
not much net employment gain in the first half of the year, and
the unemployment rate is sitting around 6% through 2001 and into
On page 5 there are a lot of
numbers, and I'll just draw your attention to a couple. I thought
if I was going to recommend that the fiscal formula actually go
up to 2004, I should demonstrate that it can be done. One of the
very first things I would point out is it's very difficult to do,
and in some cases it strengthens the argument that we should go
out there, because if somebody like myself who does have access
to a fair bit of the information has such difficulty doing a
four-year framework, it really shows that the citizens aren't
very aware of where the medium-term fiscal consequences
are-certain things like, I didn't know how to factor in the
reduction of the corporate income tax rate to 8%; there's no
schedule for that. I'm not even quite sure where we are on the
remaining 20% of the personal income tax cut. So on a lot of
these things we had to make assumptions.
Assuming here that we've put
in the remainder of the personal income tax cuts over two years,
we just straight-lined the corporate income tax reductions down
to 8% by 2004 and assumed that health spending would grow at
about 6% a year and the rest of the spending would grow at 3% a
year, and we've come up with these numbers.
If you can go about halfway
down that first chart, I guess the key line there is the
underlying budget balance. For the current fiscal year you can
see that number of $1.4
billion that was just released this week in the third-quarter
update. We expect the number to be very similar to that next
year: weaker growth and revenues, but the public debt charges
should come down. But if we're taking off the reserve, we have to
keep in mind that for planning purposes, that presents only
somewhat less than $500 million that could be allocated. The year
after that has a somewhat weaker profile, less than a $1-billion
surplus, so there's actually a deficit after taking off the
contingency reserve. The surplus is about the size of the
contingency reserve the year after that, then growing somewhat
larger than that.
I don't think a recession is
in the cards; that's not our most likely. This is really just a
little bit for fun, looking at the sensitivity of the forecast
with different economic assumptions. In the bottom panel we
assumed that instead of 2.3% growth this year and 3.3% next year,
we only had 1.3% and 1.5%, so this is equivalent to a very mild
recession in the mid-part of this year and a fairly sluggish
recovery. That basically eliminates that $1.461 billion surplus
in 2001-02 and brings it to a mere $79 million-let's just call it
even. So in fact a deficit on a planning basis once we took off
the reserve and then fairly large deficits beyond that.
I warn you that these are
very much illustrative; I really don't have the information
necessary to make these very precise. But it does suggest,
assuming a pretty reasonable economic scenario-it's not as robust
in recent years, but I would say that after this year it's
consistent with the potential growth rate of the economy-that
these surpluses for planning purposes and what could be allocated
to tax relief and higher spending are not very large coming in
the future years. The corollary of that is if there is to be
further tax relief, it does suggest that there will probably have
to be a further tightening in government spending beyond what
I've assumed here.
I'll just for one moment, as
a tangent, address a bit of a caveat that's sometimes raised, and
that's the notion that tax reductions pay for themselves. That's
not what is embedded in this forecast. I don't believe that would
be the case in most instances. That's not to argue against tax
relief-you do them for other reasons-but if you look at it, on
average, Ontario taxes 15 cents of every dollar of economic
activity. So you could flip that around, that if tax relief was
to pay for itself, each dollar of tax relief would have to
generate more than $6 of economic activity. I find that would be
quite large. You could see that, as well, to get the tax relief
to pay for itself you'd have to be assuming the real economic
growth to continue at the 5% pace, where we have a more
conservative assumption in the 3% range.
Just turning to page 6, it's
hard, looking at the economic environment right now, not to be
singularly focused on the short term, with all the bleak news
coming out, but I really think the budget planning has to look at
a broader term. Two things here for a snapshot: Canada, although
we've have good growth in the last couple of years, has not done
very well in the last couple of decades. If you look at that top
chart, I'm looking at real gross domestic product, so output per
person. As you can see throughout the entire 1990s, in both
Canada and Ontario it only grew 13%, only a average of 1.3% a
year-far below the US rate.
On a more telling basis, I
think a more important statistic, if we look at what disposable
income is available to individuals-what's left over after they
pay their income tax, Canada pension plan and employment
insurance contributions etc-and look at that on a real basis per
capita, you can see in the Canadian case, to the penny we're
sitting today right exactly where we were at the beginning of
1990. So we went through a decade in the country with no progress
on that standard of living measure, and in fact in Ontario it's
still slightly below where it was, although with the tax relief
and the forecast it should come above that level. But that's not
a very impressive record over a 10-year period.
In that context, my pitch is
that as you look to budget planning you shouldn't be so focused
on the short term, but really the decisions should largely be
around, "Will this bolster Ontario's growth on a longer-term
Looking at the challenges,
really, going through the debt, the tax and the spending side,
I'm one who advocates to continue to make considerable progress
on the debt. As you can see from the chart at the top, if you
look at that black line running through it, the debt-to-GDP ratio
is coming down quite strongly. I think that's very much to be
applauded. At the bottom you can see that sort of puts Ontario's
debt-to-GDP ratio about in the middle of the pack for the
Probably the most telling
statistic is on the top of page 8. Ontario allocates about 15
cents of every revenue dollar to paying interest on the public
debt. That, I think, really shows the key benefit to getting that
ratio down further. That's 15 cents that could be going to more
productive uses and it's basically going to pay for past
consumption, whereas it could go for programs that the citizens
would value or lower tax relief. So I think it is important to
keep in mind to continue to bring that debt burden down rather
On the tax burden side, just
on the debt side, there's been great news in Ontario in the last
couple of years. On the basis of the plans that are already in
place, together with the forecast I presented, if I look at a
very broad definition of the debt burden, just taking Ontario's
own source revenues relative to Ontario's gross domestic product,
you can see that it will come down in a couple of years to about
the burden that prevailed in the early 1990s. So considerable
progress has been made there.
There are a couple of areas
in the tax area that do concern me, though. Turning to personal
income tax-just before I come to Ontario, let me look at a more
global picture of Canada-we have about the heaviest reliance on
personal income taxes in the world. You can see that we're number
one here in the G7, but it's not the category we'd like to be
number one in. If we look back, the last year we have comparable
statistics is 1998, and personal income tax accounted for 14% of
our gross domestic product-way above everybody else. I've
extrapolated that to 2003
on the basis of the federal and provincial commitments already,
including Ontario, and you can see that although we are moving in
the right direction, at 12.5% we would still be the highest. I
presented this in the most unfair way possible to those other
countries because all those other countries have plans to cut
their taxes as well. So as we're moving down, they, and
particularly the United States, are moving further away from
The other feature-and Canada
recognizes this-is that we tend to have high marginal tax rates.
In Ontario the top marginal tax rate is just a little bit above
46%. I'm sure you're aware that in certain income ranges, say
between $20,000 and $40,000, families could easily be facing
marginal tax rates of 70%. The other feature is that our top
marginal tax rate kicks in at relatively low income levels.
Unfortunately the most comparable data go all the way back to
1996, but you can see at that point our top marginal tax rate
kicked in at C$60,000, whereas in the United States, $371,000; in
France, $262,000 etc; so high marginal tax rates and kicking in
at a fairly low level.
One of the things I presume
will almost immediately have to be addressed in the next Ontario
budget is the change in the tax thresholds that were introduced
by the federal level in October. The top marginal tax rate at the
federal level won't start until $100,000 now whereas Ontario in
the budget proposals in 2000 would have had the top marginal tax
rate starting at $60,000. I presume that will get addressed. I
would recommend that it be addressed.
Premier Harris gave a speech
recently and referred to the need to continue to work away at
getting down the personal income tax burden and particularly
referred to the competition from the United States in the context
of President Bush's plan. This compares the top marginal tax
rates in Ontario and a few of the other provinces with the United
States with and without that Bush plan in place. You can see that
at 46.2%, the top combined tax rate faced by an Ontario citizen
is on the high side vis-à-vis those competitors in the
United States, and in particular quite a bit higher than the
Alberta rate of 39.5% once they've gone to their flat-tax
At the bottom you can really
see, to the degree that you can call it a culprit, the factor for
that marginal tax rate being somewhat higher than those other
jurisdictions really comes down to the Ontario high-income
surtaxes. Of that 46.4% top marginal tax rate, about six
percentage points of that are accounted for by the surtaxes. In
other words, without that, Ontario would have a top marginal tax
rate that would be in the range of most of the US states even
after Bush's tax reduction and it would be in the range of where
On the corporate income tax
side I think it's a much happier story and it's a very
encouraging story. My pitch to Ontario and other jurisdictions
like Alberta is to point out to you what seems to be a very well
kept secret so far. I can't tell you the number of business
organizations I've spoken to in Canada and particularly in the
United States that are not aware of the corporate tax reduction
plans of those governments or even of the federal governments.
Once the federal government has lowered its federal corporate tax
rate to 21% and Ontario and Alberta are down to 8%, businesses
operating in those two provinces will face the lowest corporate
income taxes anywhere in North America. This is not just a
question of trying to match the United States or be competitive
within Canada; these will be the lowest tax jurisdictions in
North America. You can see on this chart that the combined
federal and provincial rate in Ontario will be below the federal
rate alone in the United States. So even if you take a state like
Texas that has no state tax, the corporate income tax rate will
be below here. I think the key thing here is to really nail down
that schedule to getting to 2005. Alberta's trying to do it by
2004. I would think, as a minimum, Ontario would want to look at
I must say on the federal
side, when we first put out a fairly vague time reference for
getting the rate down to 21%, we thought that would largely
satisfy the business community, but as I travelled around,
particularly in the United States, I noticed there was a fair
degree of skepticism. They really wanted to see it in
legislation, when it was going to go there, so that might have
some relevance on the Ontario side.
Turning to page 12 then,
although Ontario will be very competitive on the corporate income
tax side, I think one of the very weak points we have in the
Canadian tax structure is on capital taxes. It's beyond a shadow
of a doubt that the strength of the US economy in recent years
has come because of their capital accumulation, particularly in
the information processing sectors of that economy, a much faster
growth rate than we've had in Canada. I think it is very
unproductive that in Canada we very heavily and directly tax one
of our prime sources of growth.
You can see in the little
panel on the right-hand side that most provinces, including
Ontario, do have fairly hefty general rates on capital taxes.
They haven't perhaps seemed to have been all that onerous in the
last couple of years because, of course, they are fixed taxes and
as profits have been rising corporate income taxes may have
seemed to have been more important. But I think these are going
to be very punitive to businesses this year, in particular as
If we're really playing the
game of trying to be competitive with the United States, you can
see in that little panel in the middle of the page that we have
over triple the reliance relative to profits of capital taxes.
You can see at the bottom that basically capital taxes in Canada
hardly existed until about 10 years ago, but you can see now that
they've become quite significant players on the provincial scene
with an estimate that Ontario probably raises more than $1
billion from these. To my mind it's $1 billion that has quite a
negative effect on economic growth.
I only addressed the Ontario
sales tax-really, who knows if there's any basis for them, but
musings about perhaps
cutting the Ontario sales tax rate. If I come back to my context,
if the budget test in my terms is what it would do to bolster
longer-term growth, I don't think this would be a very solid
case. Again, it would be an element that would be a more
stimulating assumption in the short-term than longer-term growth.
I do think there's an element, though, of the Ontario sales tax
that could be reformed for the better of the economy, and that is
to recognize that a very large portion and probably about a third
of the revenues come from intermediate products. Most directly
that means again that continually it may seem that capital
accumulation is really the basis for growth in modern economies.
That increases the price of machinery and equipment about 3.6%.
I'm just taking that estimate from the Ontario Fair Tax
Commission. It also cuts into the profit margin of exporters,
0.2% to 0.6%. One of the current examples where you see the
damaging effect of this intermediate product taxation is on the
Ontario tax on the so-called custom software, where it's
virtually impossible to establish the value of it and it ends up
with double taxation across the provinces. But this software is
really at the heart of the growth of many of the
At the bottom, this was from
some work that was done by the Department of Finance and reported
by the OECD a couple of years ago. It was trying to answer the
question: for every dollar of taxation, what is the output loss
from inefficiencies that raises in the economy? As you can see,
by far the most damaging tax from an output perspective is
corporate income tax, followed by personal income tax, and the
least damaging is a broad-based sales tax. Now Ontario doesn't
have that type of broad-based sales tax, but I think that the
relative ordering of that is probably quite important.
Let me move on to just a
couple of elements on the spending side. Just to point out first
what we all know is that the growth in Canada has been led by the
so-called high-technology sector, particularly in Ontario. It's
been accounting for anywhere between a quarter and a third of
Ontario's growth rates in the last four years, even though it is
still fairly small. It's 10.8% of Ontario's economy. But along
with that has come an insatiable appetite for knowledge workers,
and of course it's not just restricted to high technology. High
technology really runs through all sectors including my own
One thing that I think is
quite telling as we compare ourselves to the United States, over
the last 20 years the United States has been increasing its per
capita funding on a real basis to post-secondary education
whereas Canada has been cutting back. In fact, if we look over
that 20-year period, there's a 50% differential that's arisen. It
may well be one of the elements why the United States has been
doing better. You can see-it's a bit of a wiggly line-that in
both Canada and Ontario, as a percentage of the total budgets,
the post-secondary education budgets have been coming down just
at the same time as we're entering this knowledge-based economy.
We see a similar pattern on infrastructure coming down. We saw a
larger reverse than 1999-2000, and perhaps with the plans that
will stay up. But on the spending side, that's another element
that would meet that test of supporting longer-term growth.
My final comment before
turning it over to questions is that I think we need to recognize
that the regulatory side of government probably has as much
impact on economies as the spending and taxation side. I'll just
give one example of that. Despite this overwhelming trade we have
with the United States, on goods we're 12 times more likely in
Canada to trade within Canada than outside; on services we're 25
to 30 times more likely to trade within Canada; yet, as we've
been trying our best to establish free trade regimes outside the
country, we don't have a free trade regime within Canada. I know
this is not solely in the domain of Ontario, but I think this is
a crying shame in the modern economy. We need to build the
economies of scale to succeed outside the country, and we won't
do that until we get free trade inside. So my pitch would be for
Ontario to continue to play a strong leadership role on that
Just in concluding, there are
two aspects where I worry a little bit that some of the things I
say might get misinterpreted. I seem to be saying, "Do more debt
pay-down, do more tax relief and increase strategic investments,"
and at the same time I say, "Looking forward, there don't seem to
be many resources available." So I seem to have failed the budget
constraint test. But I remind you, implicit in what I'm
saying-and Premier Harris seemed to acknowledge that when he
spoke earlier this month-if you want to have all of those three
elements, of course you're going to have to keep a very tight
rein on all the other elements of spending. I'm not pretending in
any way that it's going to be easy to accomplish everything that
I've recommended here.
The other element I'm a
little bit worried about is it might seem I'm inordinately
concerned with things like capital taxes and corporate income
taxes and the top marginal tax rate, but my main concern here is
to make sure that the overall economic pie grows in Ontario,
because I think that's the best bet: to make sure that everybody
is left with a better standard of living.
I will stop there and turn it
Thank you very much. We have 10 minutes per caucus, and I'll
start with the government side.
Mr John O'Toole
(Durham): Thank you very much, Mr Drummond, for a very
profound oversight-overview, rather. That wasn't a deliberate
slip; it was an error on my part. We also won't hold it against
you that you had some implication with the federal government not
doing enough fast enough. That's our line on that.
Just for clarification on a
couple of things, you were talking about increasing the
contingency fund. I'll just go through the slides one at a time.
We just moved the contingency fund back into the revenue side.
It'll probably represent the surplus this year. A quick comment
on that, if you may. You're saying in rough times we should build
our contingency fund and you're recommending $1 billion. Is
that sufficient, in light of the volatility there?
Mr Drummond: I think in the context
of the shorter-term forecast-again, I'll display my biases. It
was I who came up with the proposal for the contingency reserve
at the federal level, which I guess led to some of these other
adoptions. What I had in mind was 1% of revenues and 1% of
program spending. That combined, each one of those being $1.5
billion, led us to the $3 billion. Now, proportionally, Ontario
is somewhat less than that, if you want me to give a proportion.
Yours lines up to 0.8% of revenues and 0.8% of spending. So you
might want to consider, particularly in this context, something a
little bit higher.
The specific comment I made,
though, in my pitch to look at a longer-term horizon was we need
to recognize that the further out you go, the risk will be
larger. If you have a growth rate bias, if the economy, instead
of growing at 3%, only grows at 2.5%, then your errors are going
to get progressively larger and larger over time. So I thought
you might, in that context, want to ramp the $1 billion up,
so it might be $2 billion or $3 billion by the end. Then, if
indeed you're making tax relief commitments for 2004, you would
have a much greater degree of confidence that those can be
It's probably a bit more of a
quibble, whether the $1 billion should be $1 billion or $1.5
billion in the short term, but my recommendation for an increase
in it was in that context of a longer-term horizon.
Often they criticize governments for having slush funds. You're
suggesting that these are more cushions than slush funds, to deal
with both contingencies and forecast problems as well in the
I think, again, in designing at the federal level to address that
very thing, knowing it was going to come, was why we established
a very tight relationship. If it's not needed, it'll go to debt
You have to demonstrate it was, and Ontario has done that. So I'm
not so sure you're vulnerable to that charge, given that
Looking on page 4, if I could quickly go through to get a better
grasp of it, you're showing in 2001, if I'm reading the chart at
the bottom of page 4 correctly, Ontario growing slower than the
Canadian economy. That's 2001. Is that a fiscal year or is that
an annualized year?
In Canada, for 2001 on an annual average basis we have 2.7%
growth and 2.3% for Ontario. There's really only one reason
behind that, and it's that we have knocked almost a percentage
point off Ontario's growth because of the production cutback in
the auto sector, which is indicated on the light vehicle assembly
as 97% in Ontario. But if you look at it broadly, to encompass
the aftermarket and all of the inputs, you still get about 65% of
the auto industry being concentrated in Ontario.
Is that more aggressive than our own forecasts? We're not showing
as great an impact for the other reasons. The technology sector,
you mentioned, is rather robust and growing. We might have made
the argument on day one that it's stronger than perhaps relative
to Canada. Is there any offsetting effect? I'm saying that
Ontario, showing a lower growth rate in 2001 to the rest of
Canada, is somewhat a juxtaposition to what I see our government
I'm not sure what the government's own forecast is. The only
reference is that the Minister of Finance referred to 2.8%. That
was taking an average of private sector forecasts. I'm not sure
it encompassed ours, however, at 2.3%.
But as I indicated, 2.3% to
2.8% sounds like a big difference. Of course, in referring to
this 2.8%, he had the benefit of knowing what the third-quarter
numbers were for 2000. Because that increases the starting point,
my 2.3% could easily be 2.4% or 2.5%.
I have just one last quick question, if someone else has a
question. On page 11, you're talking about corporate income tax
and the ability to be competitive and actually moving that down
to match or exceed Alberta. If you look at it from a policy
perspective-we hear it in other areas; I hope this makes sense to
you as an economist-really, it's shifting the tax burden. At the
end of the day, if you're pulling it off somewhere, you have to
get it from somewhere, unless you have real growth; that sort of
takes care of it. We're not looking at that aggressive growth.
But if you're shifting the tax revenue from the corporate side,
and I'm sure Mr Christopherson will make the point, is that going
to affect at a policy level services like health and education,
or is it going to be shifted to some other kind of personal
income tax or some other kind of tax? Where is the revenue going
to come from if you're going to lose, and what's the forecast
here that you're working with?
You're absolutely right. The phenomenon that's going on right now
is that corporate income taxes are being arbitraged away around
the world. There will be a day, and I don't think it'll be that
much into the future, when there will not be a corporate income
Where is that revenue going to come from? Is it going to come
from consumption or real growth?
On the spectrum, with the so-called phenomenon, the globalization
and particularly the mobility of capital, it's going to have to
go from the most mobile factors of production of capital down to
the least. So I think you'll see a greater reliance not
particularly on personal income tax but much more on the
consumption side and probably things like property taxes.
That's what the argument is municipally, moving the tax rates
from commercial-industrial to residential, basically.
The interesting thing is that we always compare ourselves to the
US as the benchmark, but we have to realize the United States
very soon is going to be the highest corporate income tax regime
in the world. In all of their debate, they are not talking about
addressing the corporate income tax, so theirs isn't going to go
Mr O'Toole: Then you talk about the
capital tax, which you criticized and I sort of support, because
that's growing infrastructure and the ability to become
competitive and productive.
O'Toole: In the general policy sense, where would you
tend to move the tax load to? Just to consumption?
Drummond: I'll demonstrate to you one of the reasons why
maybe the federal government didn't want me working for them any
more. My recommendation was always to increase the GST and use
every cent of it to buy down personal and corporate income taxes,
because I think it is the least harmful tax. I would not
recommend that Ontario, with its present retail sales tax,
necessarily increase the general rate, because I don't think it's
a very good structure for the economy, with its heavy reliance on
O'Toole: But the argument from David Christopherson then
becomes that the GST or consumption tax affects the person who
spends most of their dollars in consumption.
O'Toole: They pay a higher rate or a higher load.
Drummond: You do have to worry about the income
distribution. There's no doubt we have a progressive personal
income tax. At best, you have a neutral and perhaps regressive
consumption, and you have to worry about maybe low-income credits
to offset that. I think it can be done, though.
Again, we compare ourselves
to the United States and we look like we have a relatively heavy
reliance on sales taxes versus the US, but we're about the lowest
in the world and they are the absolute lowest. I think over time
you're going to see a greater reliance on sales and property
types of taxes, perhaps payroll taxes as well, and certainly less
on the corporate and probably progressively less on the personal
tax side as well.
Mr Raminder Gill
(Bramalea-Gore-Malton-Springdale): First of all, thank
you for being here. One of the things you mentioned, and we've
heard it before, is free trade within the provinces. How do you
see that as being relaxed, removed or eliminated?
Drummond: With a great deal of pain. We have an
agreement right now, but basically anybody can apply a veto to
it. So if you as the province are the violator, you can say, "We
don't want to go along with the solution," and that's the end of
We have a citizen complaint
process, but you can only succeed if you're willing to put up
several millions of dollars in legal fees and persist with it for
several years. So surprise, surprise, nobody bothers with it. No
one seems to be willing to cede any of their jurisdictional
control in the thing. It really almost comes down to one of the
difficulties is getting our constitutional arrangement. It almost
needs a body that's willing to impose some rules on that.
Obviously, there's no willingness to have somebody like the
federal government do that, so I'm not that optimistic. My hope
is that people will realize how ironic it is that, as we
establish-I put the quote in there from the director of the
internal trade agreement. We have freer trade rules going outside
of Canada than we do within Canada. I just hope somebody will
realize this is so counterproductive.
The irony is that right now today we are in China drumming up
more business and free trade, but we are not willing to talk. All
the premiers are there, where they could be-
Drummond: They won't trade with each other. Right in the
clause on our internal agreement is that you're allowed to do
some things as long as they don't unduly establish obstacles to
trading across Canada. Why is that in there? Why is it "unduly"?
I must admit, we've been at this in this country for an awfully
long time and I'm not that optimistic.
I'm sorry, we've run out of time. Mr Phillips.
Phillips: Thank you very much for your presentation. I
have just a comment on one of your recommendations, to take a
To the members in the
government, I think it's obscene that we have virtually no
forecast provided by the Ministry of Finance. You can say,
"That's too bad," but we have no revenue forecasts, we have an
economic forecast out eight months, 10 months, that's it, and no
2002 economic forecast.
The Chair will remember
that we tried to get the Minister of Finance to come here to
debate tax policy. The issue Mr Drummond is talking about is,
what should be our tax policy? Where should we be looking at
revenue: corporate, personal or consumption taxes? The minister
wouldn't come. One hour a year we get the minister and two hours
a year the staff.
I think at some stage this
committee has to look at its role. There is a legitimate role
here for us to debate the key issues. Believe me, the Ministry of
Finance has got all this stuff but refuses to give us any of it.
That's my rant. It has nothing to do with Mr Drummond, other than
his recommendation. But if we want this committee to play a
significant role-and it has gone on, probably, with three
different governments, each successive government giving us less
information. Under the NDP, we used to get three-year forecasts
on revenue and economic outlook. That has slowly dried up. I
think it's tragic. They've put a blindfold on us and asked us to
find our way. The government members can reflect on that. I know
you've got your marching orders, that we won't get it.
Having said all of that-Mr
Drummond has and another bank economist has promised to give us
similar data-I'd like to just chat a little bit. Here's what I
think. I think without question there is an economic downturn, as
we all acknowledge, and it has a profound impact on our revenues.
We are being asked to preserve the quality of our health care
system, but we are also being asked to agree to commit to some
things that will have a profound impact on our revenue.
That's where I go to page
5, because I think the committee should be looking at this or
something similar. What
I take from this, Mr Drummond, is that you've got two cases here.
One is that if we recover to a fairly significant economic
recovery, 3.3% real GDP growth-2.3% this year and then going back
up to 3.3%, 3% and 3%, which by most standards is good economic
growth-we still are faced with a deficit position next fiscal
year, 2002-03, not the one that's coming up but the following. If
we are into a downturn that isn't even a recession but is a
significant downturn-1.3% or 1.5% growth-we're looking at
substantial deficits. I repeat, in my opinion the Ministry of
Finance should be giving us these numbers. I take my hat off to
the TD Bank, which has gone out on a limb a bit here. You used
your own modelling to at least give us one view of it.
Have I interpreted those
numbers correctly, though? If we are into very slow growth-1.3%
to 1.5%-are we looking at a fairly significant deficit position
quite quickly, like the upcoming fiscal year, and a very
significant one the following year, and even with a pretty good
recovery are we looking at a deficit position, assuming we
provide a contingency reserve?
Drummond: First let me say I feel somewhat nervous about
presenting these fiscal numbers. I thought long and hard about
whether it was even worthwhile to do it but ended up with the
conclusion that these are the best I could do, and if there are
problems with them it's because sufficient information has not
been provided. So it's a bit of a cop-out, but basically it's not
my fault. That's what the information we've put together
provides. But I wouldn't want to say I would consider these are
accurate, even to within $1 billion. It's sort of like polls that
are accurate 19% to 20% of the time within 4%.
Two clarifications on what
you said: On the base case scenario that we'd be in a deficit by
2002, that's true, after you take off the $1-billion contingency
reserve. But before that there would be a small surplus, though.
That's relevant, in the sense of a planning case. If you're
standing here in the 2001 budget, you don't want to start eating
into your contingency reserve. What you have available on a
planning basis, yes, would be a deficit.
On the mild recession
scenario-as you indicated, it's not really a recession. Actually
it is, in a technical sense. The technical definition of a
recession, of course, is two negative quarters. I do have two
negative quarters within that 1.3% annual number, but it would be
a mild recession. This is nothing approaching what Ontario faced
in the early 1990s. But there are also good reasons why I didn't
simulate that. We do have an inventory hangover in the auto
sector, but we don't have any of the imbalances we had in the
early 1990s. So I think it's realistic to put in a fairly mild
scenario. But you're absolutely right: before the reserve, it
would basically leave you with a balanced budget in the coming
fiscal year and then very large deficits even before subtracting
the reserve of almost $3 billion beyond that.
Phillips: Have you made some assumptions on further tax
Drummond: No, this is the best I could do with purely
status quo. I guess one of the other difficulties I had was that
I was not quite sure-and I couldn't get the answer to this-where
we are vis-à-vis the 20%. I assume that half of it has been
done and half is still to come, and I assume that would be done
over the next two years. I assume we would straight-line the
corporate income tax rate from 15.5% to 8% and get to 8% by 2004,
even though I know the commitment last year was to 2005. So I'm
making a lot of guesses here, but above that I haven't put any
additional tax changes in.
Phillips: But those two are built in.
Drummond: Those are built in, yes, and that's obviously
one of the reasons, if you look at the budgetary revenue, that
the growth rates at 3.2%, 2.1%, 3.9% and 4.6% are all less than
the growth in nominal income, because I'm factoring in the tax
relief that's already been put on the table.
Phillips: Amazingly, when we asked the minister and the
staff where we are on the 20% cut, they couldn't give us an
Drummond: I asked as well, in doing this exercise, and I
sort of read between the lines of the answer, and that's why I
came up with this half. But I'm not so confident about that.
Phillips: This is very helpful, and I appreciate your
caution on the use of these numbers. But in my opinion, the
ministry can do these numbers, and they just won't give them to
us. I really believe that before the government implements the
tax cuts, they owe Ontario these numbers. If these numbers hold
true, by law the government has to cut spending, and it will
come-because the bulk of our budget is health care. I'm just
saying we should demand that the ministry provide this. I've
tried that for two or three years, Mr Chair, and I don't hold out
great hope. But someday our committee may want to examine how we
can make ourselves more effective. I would hope we will look at
your recommendation on long-term planning.
On the job front, on job
creation, we've had very strong job creation over the last four
years. How should we look at job creation over the next two to
three years? I'm not an economist, but I've looked at employment
growth and GDP growth over the last 10 years. Maybe it's a
coincidence, but there tends to be a relationship. Job growth
looks like it has grown an average of about 60% of GDP growth. By
the way, I've never seen job growth occur at a rate faster than
GDP. Can this committee use a benchmark of any sort for
projecting job growth?
Drummond: Yes. The benchmarks all get out of whack when
you go into a cyclical change. The output tends to spurt way
ahead of employment on the cyclical upswing and vice-versa. But
if you're growing at a steady rate, it really comes down to
productivity. Employment growth plus productivity growth equals
Drummond: And in Canada and Ontario in the last couple
of years we've been having about a 1.5% per year increase in
productivity. So whatever your projected growth rate in GDP, subtract 1.5% and that
suggests the percentage growth in employment over that time
Now, the United States has
been having quite a bit faster productivity growth. They've been
in the 2% to 2.5% range. Prior to what hit us starting in the
fourth quarter-our slowdown in our machinery, equipment and
investment boom-it looked to me like we were about to kick into
that higher-productivity phase. You have to be really careful as
you describe that, because the first-round impact of that, of
course, may well be slower employment growth. Instead of taking
GDP minus 1.5%, it might be GDP minus 2. But where it does show
up to the benefit of everybody is stronger real wage gains,
because ultimately real wage can only be driven by productivity.
That's why I showed in those pictures the dismal economic growth
we've had in Canada and Ontario over a 10-year period, which has
shown up in no real wage growth. Looking forward, almost in an
optimistic sense, you might actually get a larger gap between
output and employment but much faster growth in wages per
Thank you very much, Mr Phillips. Mr Christopherson?
Christopherson (Hamilton West): Thank you very much for
your presentation. I will follow up on a couple of things Mr
O'Toole suggested I might, but I'll frame them my way rather than
I guess the first question
will be sort of the large question of recommending that there be
further tax reductions and quicker debt relief, yet still
strategic investments, as you call them. Of course what is
strategic at this time would be open for debate. But with a
downturn in the foreseeable future, where do we get the revenue
to do all those things, bearing in mind that yesterday we had Mr
Stanford here from the CAW, who pointed out that the health care
system in Canada is not only a benefit to Ontarians, because of
its universal accessibility to health care, but it provides us
with a $6-an-hour advantage competitively and is one of the
cornerstones of building the auto industry here in Ontario. How
do we do all of that with less dollars than we've had in previous
years in terms of surpluses?
Drummond: There are really only two ways out of that,
neither one of them very pretty. I'm never pretending that
On the revenue side, the
only scope to generate increased revenues and use that to bring
down the personal and potentially the capital tax side is on the
sales tax side, in my view, whether that's an increase in the
overall rate, which I wouldn't recommend, or base broadening. I
won't say harmonization with the GST. I think there are a lot of
things that would be good, but there are a lot of things you can
do that still fall short of that. To the degree that there's
every opportunity, I would say keep ramping up the tobacco taxes.
We saw Martin musing about that. To the degree that we think
we've got a hold on the smuggling, that can be used to bring down
revenues. But that's really the only source within the revenue
The only other way out of
this box-and everybody will have a different ranking-is that we
really need to rank all the spending by priority, and what's not
a high priority will have to be curtailed very sharply, because
there's a rough period coming up.
Christopherson: You can appreciate that one of the
concerns we have is that when we sit here in relative comfort and
say that it's never easy, what it means is that if we follow the
kinds of priorities that Mike Harris has chosen for the people of
Ontario, the losers are not just paper dollar losers; they are
families. We've had delegations come in and talk to us about the
fact that the United Nations has taken us to task that we haven't
done enough about child poverty, that our rates are way out of
whack in terms of child poverty given the relative wealth we have
It's difficult for some of
us to accept that that's just the way it's got to be given the
impact on individuals and families, and for a government that
says they care about families, you've got to wonder how they
square that circle. The whole notion that it's just the way it
is, that we have to leave people out there when we have choices,
is very hard to accept, particularly when we've seen so much
benefit and money go to those who are already very comfortable.
For most of them, if they take a hit, it is a paper hit, as
opposed to wondering where you're going to find enough money to
give the baby milk.
Drummond: I think we're looking at the same objective.
My objective in framing these recommendations is to make sure all
Ontarians are better off, and particularly that the people who
are living in poverty or near poverty end up better off. My point
is, there are two ways you can look at going about that.
One of the ways is programs
that directly support that, and I think that's a very valid way
of looking at it. My other one was, let's look at a broader
context. One of the reasons why people are having difficulties
with income in Ontario and Canada right now is that we basically
haven't grown as a country in the last 10 years. That's not just
taking income away from higher-income individuals; it's taking
away income from everybody. I think the litmus test for elements
of the budget is what it's going to do for longer-term growth.
I'm not saying that necessarily trickles down and benefits
everybody, but there is no way you can increase the lot of
everybody if the whole pie is not expanding at a reasonable rate.
The pie in Canada hasn't been growing at all in the last 10 to 15
years. In fact, if you look at what the IMF categorized as
advanced economies, out of 46 of them, we've had the third-lowest
growth per capita in the last 15 years. I think our starting
point has got to be to turn that around.
Christopherson: But if we take a look at what's happened
in the last few years, we've followed that course and we've had
growth. We've had phenomenal growth, record levels of growth, yet
more and more people are being left behind. I'm sorry, but once
we move from the stark economics-and I very much appreciate and
respect that's where you are and very much appreciate your coming
in and sharing with us what you know. But in the transition from that
to what happens out there in people's homes and in our
neighbourhoods, that takes us into the political arena, and it's
the choices this government has made that give an awful lot of us
a lot of difficulty, because it has left so many folks behind.
You've got people who were hurting before and they're hurting
more than ever, and others are doing very well. Our numbers look
good, but the number of people who are getting left behind-and I
know a lot of the presentations we're about to hear are from
women or families headed up by single parents, women, with 40% of
the people on social assistance being kids. At some point, we
can't accept that the stark numbers alone are going to drive all
our decisions about society.
If I can, you mentioned
taking a broader view. Again referring to Mr Stanford's
presentation yesterday, he pointed out that as a result of the
income redistribution that we have, if you include taxes,
transfer payments to individuals, and then all public spending,
such as on fire services, police, all of that, if you take a look
at all those things, he pointed out to us yesterday that in
figures from StatsCan, in terms of the relationship between the
top 20% of income earners and the bottom 20% of income earners,
when you start out at raw income, just gross dollars, the ratio
is 27 to 1. By the time we conclude all of the transfers and, as
I say, all of the public spending, and count that as public
goods, it reduces it so that we're at 4 to 1.
Now, it would seem to me
that in the broader view, those kinds of income redistribution
mechanisms are what make this the greatest country in the world
to live in, because there is a lot of wealth. By virtue of the
systems and tax measures we have, we're able to redistribute that
so that everybody gets a share of it. The filthy rich are still
filthy rich; they may be just slightly less filthy rich than they
would have been otherwise. But for someone else, it means the
difference between whether or not they've got a roof over their
I say all of that because
I'm really concerned about your suggestion that you foresee that
we're going to rely more on consumption and property taxes. Yes,
John, I'm going to raise that as a real issue, because there's no
inherent fairness in that. If you pay property taxes, it's based
on the land and the value of the building: no relationship to the
amount of income you have. So the higher your income, the less,
as a percentage of your income, it costs to take care of a
fundamental, basic need, which is housing. As soon as we start
moving away from the progressive income tax and more to
consumption and property tax, we're losing that progressiveness,
and that ratio that I mentioned being at 4 to 1 is going to start
We already know that Canada
has one of the widest and one of the most rapidly growing gaps of
income between those who have and those who don't. To me, when we
talk about going down that road, that's not Canada any more;
that's not Ontario. That's not why the United Nations says this
is the best place in the world to live, not because we give our
richest people the biggest tax benefits, but because we find a
way to use that wealth to still allow a whole class of very rich
people, some of the richest in the world, also to provide some
benefit for the rest of the people, the majority of the folks.
Surely there has got to be an acceptance that that's just not
good enough. It wasn't for Canadian leaders and Ontario leaders
before now; why should it be now?
Drummond: I think there are a lot of difficulties that
come with this trend of moving away from the so-called taxation
of highly mobile factors like corporate and, to a lesser degree,
the personal income tax, but I just don't see as a realistic
model that we can buck that trend. We will not have the
corporations in Canada and the jobs that come along with that and
the income that comes along with that if we're totally out of
sync with everybody else. We can talk about the implications of
that and the shame that comes with that, but it is
extraordinarily easy for multinational corporations to book their
profits where they want and to book their losses where they want.
They will book their losses in the high-tax jurisdictions and
they'll book their profits in the low-tax jurisdictions. That's
what's been happening in Canada for a number of years right now.
On an inside-Canada scale, we're already seeing that that's what
is happening within Canada: the low-tax jurisdictions are
attracting the taxes, and the higher-taxed jurisdictions are
attracting the expenses.
So whether we like it or
not, I think that revenue source over time is going to dry up.
Then we're going to have to deal with a lot of the problems you
had. I'm not pretending they're easy, but I don't see how we can
sustain and have job growth and increase this economic pie, which
I think ultimately is critical to addressing the needs that you
talk about, if we have a 5% to 10% higher corporate tax regime or
top personal income tax rates that are 10% or 15% above where
they're going to be in the rest of the world.
Christopherson: That's fair enough.
With that, Mr Christopherson, we've run out of time.
Mr Drummond, on behalf of
the committee, thank you very much for your presentation this
I have to apologize to the
committee, but we will have to take a 15-minute recess because
work has to be performed on the wall here and apparently it's
going to be fairly noisy. So we'll recess until 11:15 this
The committee recessed
from 1100 to 1118.
ONTARIO ASSOCIATION OF INTERVAL AND TRANSITION
If I can get your attention, we'll bring the meeting back to
order. I would like to apologize for the inconvenience to the
Our next presenters are
representatives from the Ontario Association of Interval and
Transition Houses. Could you come forward and state your names
for the record, please.
Ms Eileen Morrow: Actually,
there's only one of me. My name is Eileen Morrow and I'm the
co-ordinator of the Ontario Association of Interval and
Transition Houses, which is a 66-member coalition of first-stage
shelters across the province primarily for abused women and their
I've distributed a brief
and I'm just going to read a shorter version of essentially the
same thing for you. Thank you very much for giving us the
opportunity to come here today and speak with you again; we've
been here many years.
I'm just going to talk a
little bit about the concerns of abused women. Many of the
concerns of abused women are related to decisions on budget
resource allocations by government and by priorities set during
budget deliberations. While it is true that not everything can be
solved with money, it is also true that serious social problems
cannot be solved without it.
You may be horrified by the
crimes of violence against women. You may hear the statistics and
be shocked by these numbers: 29% of women in Ontario experience
criminal violence from an intimate partner; 75% of stalking
victims are women, most stalked by previous partners; 31% of
women who escape to emergency women's shelters in Canada stay in
Ontario shelters; intimate partners murder an average of 40 women
a year in Ontario.
But in the real lives of
women and children, crime stories and statistics tell only a very
small part of a very complex story. As women attempt to move from
violent control to freedom, they encounter situations and systems
affected by the public policy decisions made here. Whether they
find support or rejection when they escape is to a large extent,
then, up to you.
Here are a few of the
points women and children pass on their way to safety and freedom
where you can help.
Women need to break the
silence. Still today, too many women do not find the support they
need to end the violence in their lives. A 1993 Statistics Canada
survey found that almost one quarter of women told no one about
the violence. We must provide more support for the local
neighbourhood women's groups and women's centres, educational
outreach, and outreach to women in rural and remote communities
that give women a safe place to disclose abuse. We must provide
information to women who are newcomers to Canada and information
to diverse groups of women working at local community levels to
break the isolation, which is the bedrock of violence. You can
help by allocating resources for these points of entry for women
breaking their silence.
Women need to get free of
violence. When women do find the courage to tell, clearly the
delivery of community-based services-from crisis lines to
emergency shelters for women to community counselling programs
and other local support services-is critical for women seeking
the information, support and advocacy both they and their
children need to start addressing abusive relationships. Over 80%
of abused women have found women's shelters and counselling
services to be the most supportive community response to their
But these services remain
under pressure since the funding cuts of 1995. Between 1995 and
1998, demand for OAITH women's shelter services increased from
11% to 30% in different programs. Some 84% of shelters report
that access to many other local services has also decreased,
making it harder for shelters to address women's needs. You can
take action to ensure that underfunded, overwhelmed women's
shelters and other community support programs are able to address
Women need to live beyond
crisis. To leave violence, women and children must have basic
social supports from which they can rebuild their lives and make
their own independent choices. You can help by providing adequate
The first and most
important is social assistance. We know from our experience in
shelters that a large percentage of women and children on welfare
in Ontario are there as a means to escape violence. Canadian
research has not quantified this experience, but studies from
similar US communities indicate that abused women may represent
the majority of women who receive social assistance.
I have included within my
written brief results from one study indicating 65% of women
using social assistance had experienced criminal acts of violence
and another reporting that over 57% of women in one workfare
program had experienced physical violence by an intimate partner.
Can it be much different here in Canada?
In 1996, two thirds of
OAITH shelters reported that they knew of women who were
remaining with or returning to abusive situations because they
could not survive after the 21.6% cut in social assistance. The
Ontario Social Safety Network now calculates that inflation has
further eroded welfare benefits, resulting in a cut equivalent to
almost 30%. So things are even worse for women leaving in
You have the power to
change that situation. I ask you today to do that by recommending
an increase in social assistance rates. Women and children have a
right to adequate financial assistance to escape violence.
Women need housing. If it
is dangerous to live in your home and you must flee, you are
essentially homeless. Accessible, affordable and adequate housing
is critical to women's safety and independence.
Shelters in OAITH have
reported to us that lack of housing is forcing women to return to
abusers, or that abused women and their children are forced to
live in the worst housing in town because they are on welfare or
cannot afford safe, adequate market rental housing.
Although there still exists
a special priority list for subsidized housing for abuse victims
in Ontario, many shelters are now reporting that the eligibility
for placement on the list is tightening to the point where many
deserving women and children are rejected.
Women need legal aid and
equal access to justice. When women leave abusive situations,
they use legal systems, especially family law, to access their
right to safety, to
protect their children from abusive parenting and to access their
fair share of property and assets.
Compared to criminal legal
aid funding, funding for family law legal aid, where most women
go, is low, resulting in systemic discrimination against women in
Ontario's legal aid system. Tightened eligibility requirements
and limits to the number of hours legal aid will pay for women's
legal matters continues to jeopardize women's equal access to
justice in Ontario. Women who need language or other
interpretation services are disadvantaged when hours are limited,
resulting in even greater inequality among women.
You can provide equal
access with strong financial support for family law legal aid and
allocation of sufficient funds to address all legal matters for
women and children escaping violence. This kind of support is
only one of the many recommendations not yet implemented from the
1998 inquest into the death of Arlene May.
Women need to create new
lives. If women are to rebuild new lives free of violence, we
must ensure that women can survive economically and share equally
in the benefits of the Canadian prosperity we so often hear
boasted about by elected officials. There are resource
initiatives and economic policy directions that you can take here
to ensure that women and children have a chance to enjoy their
fair share, including provision of adequate, affordable child
care for women leaving abusive situations; employment and
training resources to allow abused women to upgrade and train so
they can adequately support their children alone. You can provide
workplace standards that recognize that women must not be under
pressure to endure harassment, unequal pay, long, irregular
working hours or working conditions that prevent them from
providing adequate time and resources to their families.
Finally, we must all be
dedicated to ending violence against women. We are not just about
mourning women after they are dead, nor are we concerned only
about responding to continuing violence against women; we want to
end violence against women. This should be your goal as well.
A conservative estimate of
the financial costs of violence against women in Canada is over
$4 billion. The human costs are much higher and far-reaching. It
is long past time for us to be putting greater efforts into
education and prevention actions that would eliminate violence
against women in the future.
Initiatives must focus not
only on education efforts with children in schools, although
these are obviously essential, but also within the public at
large so that we all have the knowledge and commitment to change
the culture of violence against women.
Perhaps most important,
violence against women will not end without recognition by public
policy-makers like you that violence against women is a result of
women's social, economic and political inequality and that, to
end it, those inequalities must be challenged and eliminated. You
can make that happen by providing the political support and
resources to grassroots, anti-violence educators, advocates and
activists who are ultimately at the heart of virtually every
progressive step taken in Canada to end this pervasive violation
of women's human and equality rights.
I have outlined only a few
of the supports needed. They require the resources and the
political will that you deliberate about on this committee. Here
are just a few suggestions for action that you can recommend in
your upcoming report:
(1) You can implement the
suggestions of the cross-sectoral violence against women strategy
group, which has provided a list of 37 measures for addressing
violence against women in Ontario, now endorsed by 165 groups
from across the province. These measures include initiatives in
three important areas: community-based services, legal reforms
and services, and economic survival and workplace safety. All
MPPs of the Ontario Legislature received the full text of these
measures in the fall session and the cross-sectoral group has
called for all-party support for them. A summary of the measures
is attached to this brief.
The measures were developed
by groups of women across the province from all sectors after the
murders of women in the summer, many of whom were very high
profile in the media. I'd like you to know that since then, at
least seven more women have been murdered in Ontario and more
will die this year. These measures have not been implemented, but
they are still needed.
(2) Provide adequate
provincial resources for safe, affordable low-income housing and
(3) Provide sufficient
resources in Ontario so that safe, affordable, accessible and
non-profit child care is available for every child and family
that needs it.
(4) Provide increased
funding resources for education, prevention and public advocacy,
and equality rights work on behalf of women and children.
These and other initiatives
would go a long way to supporting the women and children you are
charged with representing in the House. We look forward to seeing
more than our organization's name listed in the report of the
committee this year. We look forward to seeing these and other
progressive recommendations that will help save the
lives-mentally, emotionally and physically-of women and children
in your constituencies. Thank you.
Thank you very much. We have approximately five minutes per
caucus and I'll start with the official opposition.
Phillips: Thank you very much. Can you help us a little
bit with one of your key recommendations, which is housing at a
time when a women is ready to leave a shelter? I gather then the
staff is looking for a place where that person can go. I know I
get a lot of people in my constituency office who are having a
real problem finding housing now. We heard yesterday and the day
before from the house building organization that there's
virtually no new rental accommodation being built and zero in the
way of social assistance housing being built. How big a problem
is this now in terms of your staff and how do they actually cope with it? How do they
actually find a place for someone to go?
It's a huge, huge problem, more so in some communities than
others. I'm hearing from shelters across the province that
financial assistance and housing are the two biggest problems
women face when they leave abusive relationships. Women can wait,
even if they're on the special priority list, which is getting
more and more difficult for abused women to get on. Even if
you're on the priority list, which theoretically moves you to the
top of the subsidized housing list, it can take up to five months
for you to get a unit. If you don't happen to get on that list,
it can take up to five years for you to get subsidized
Most abused women when they
leave abusive situations, even if they come from a situation
where the family had income, don't have access and control over
the finances and it will take them sometimes years to get their
share of the assets. That means a lot of women end up on social
assistance temporarily after they leave abusive situations and
they will be there when they look for housing. So, it's very
The government of Ontario
has supported in the downloading the continuation of the special
priority list for abuse victims but I have to tell you that I'm
hearing from all over the province that the restrictions on that
list are getting so tight that in effect what's happening
municipally is that women are being rejected from the list. At
this point, we're getting to a stage where if you haven't made a
report to the police, you're not abused. As you know, only a
quarter of women ever call police. My feeling is that eventually
we'll see a point where you'll have to have a conviction and then
it will be the police who decide who's abused and who isn't
Women are being asked for
more and more levels of verification from community agencies, so
you have to be involved with all kinds of community agencies in
order to get priority listing housing because you have to have
all these different people verify that you are in fact an abused
woman in order to get the housing. It didn't used to be like
that. It's getting much more difficult and staff in shelters,
quite frankly, not just in housing but in other services, are
having to spend more time, even though the demand is greater,
getting the same level of services for women than they used to
get several years back. It is getting more difficult and the
demand is rising while the funding is falling.
Phillips: When a person who has an abusive situation
phones for help, are all of them accommodated instantly somewhere
and is there always space in traditional shelters or are you
using any backup systems?
There's certainly not always space in an emergency shelter for
women, no. In some communities like Ottawa and Toronto and larger
centres, shelters are almost always at capacity. So although
women are leaving, obviously, and moving on as fast as we can
move them on, we also then always have women who are needing
space. What shelters traditionally do is bring the woman to the
shelter or try and find some other place for the woman in another
shelter, sometimes moving her out of the community into another
community temporarily, which is quite disruptive because then she
has to move everything somewhere else and then come back again.
Some women, quite frankly, are sitting in hotels or in motels. I
understand that in Toronto the municipal government at one point
was stating that there were 400 abused women in motels waiting
for some kind of housing. So not all abused women are getting the
services they would get from a shelter.
Christopherson: Eileen, welcome again. The last few
years I'm not sure if you've been listened to, but certainly
those who have been around for a while-
We'll keep coming back until we are listened to.
Christopherson: That's good, because it's the only way.
You're probably at least the second, maybe the third or fourth,
who has reminded everybody about what happened with the cuts to
social assistance and the fact that it was 21.6% when the
government proudly announced that they were cutting the income of
the poorest of the poor. That's now risen with inflation to 30%,
and you've made that point here.
If I can make an
observation, one thing about this committee is that it gives you
a really good cross-section of how different people view what's
going on in Ontario. We get some folks who roll in here and
everything amounts to, again, more of what the Harris government
has already done, which means more for those who already have at
the end of the day. Yet your group comes forward and we have
housing advocates and anti-poverty advocates come in and start
pointing out that when you take away the shine and the headlines,
there's a lot of pain going on in this province at a time of
enormous growth. Heading into a recession, it's terrifying to
think that now they've got an excuse, at least some kind of an
excuse, to say, "We can't afford this right now."
Our worry all along during
the boom years has been that if you're not going to make these
investments and spend the money on these things when we have the
money, the ability to make that public argument when there isn't
money, when the services are really needed, becomes more
difficult. Yet that's exactly where we are today.
Also, I want to remind the
members of the government, because they'll probably talk to you
about it-I'll tell you what they do. They either divert and talk
about something that sort of runs parallel to what your issues
are or they'll micro. They'll go into one little aspect of
something that you've raised and hope they can eat up the time in
there. What I'd like to see them talk about is the fact that this
government made a huge deal about saying, "We'll listen to
coroners' inquests," and they do, as long as it gives them an
excuse to do their extreme right wing, hard-line, law-and-order
stuff that plays so well for them. But here you've got the Arlene
May inquest and they've done virtually nothing-I understand
they've started some things, but virtually nothing-on the key
The emergency recommendations that were brought
forward I see are now up to 165 community groups-165 groups
focusing on 37 issues. Let me say very directly to this
government, if that was 165 business groups, this stuff would
already be done. That's the reality.
There's one chance to break
this-and I know my time is just about up. I didn't have a lot of
questions. I know what's going on; you know what's going on. It's
up to convincing these folks. The only chance we have of breaking
that, and this is an opportunity the government backbenchers
have, is that you can include exactly what Eileen has asked. Put
in your report, because you'll carry the majority report-we'll
probably end up having two dissenting reports. You've got an
opportunity, in whatever way you want to word it to cover your
political ass with your colleagues in caucus, to say something
needs to be done here. They expect me to say it. They expect
Gerry Phillips to say it. What matters is if you folks say it. If
you actually go on the record and say, "I sat there and listened
to what's going on in the province, and something has to be
done," you know what? Something may get done, even if it's
because they have to deal with the political squeak that you've
created. The oil will be something that appears in the budget.
There's a chance to do that.
So if there's time for you
to comment on what I've said, I would appreciate that, Eileen. If
not, then I would urge you to do what you can to extract some
kind of commitment from these individual people, who I think
personally care, to put that caring into action where it can do
some good. Either that or say that you don't think this is
important. Tell Eileen to her face that these issues are not
important and it's more important for you to make sure there's
another corporate tax cut. One of the two, but don't just ride it
out. Don't make this process so irrelevant that it's just a
public relations exercise.
You've got time for a quick comment if you wish. If not, I'll go
on to the other side.
I absolutely would plead with you to say something in your
report, please. I've been here many years in a row and I read the
report of the committee when it's finished. I have to say that it
is kind of discouraging to come here and find nothing in the
report except a list of the people who attended. It makes you
think that in fact what you had to say wasn't relevant to the
government's priorities and that the people who do deliberate
pre-budget don't have any interest in the issues that we're
raising. We would like to see that interest reflected somewhere
in your report.
Mrs Tina R.
Molinari (Thornhill): Thank you very much for your
presentation. I was at these pre-budget hearings last year and I
remember you making a presentation, so thank you once again for
coming forward and for all the work that you do on behalf of the
vulnerable in our society.
As a government, we
certainly do care. Safety is one of our biggest concerns, and
certainly safety of those who are involved with domestic violence
and their children. In the 1999-2000 budget we invested $110
million, and $135 million in 2000-01, and it will increase to
$140 million in 2001-02 for programs and services to address and
prevent violence against women and their children. So as a
government, it's certainly one of the priorities.
These hearings are not only
seen by the government members who are here, but they're also
monitored by ministry and staff. So all of the comments that are
made in these hearings would certainly be taken into
consideration once we put together the report to the
You've stated that it would
cost about $4 billion Canada-wide. My question was going to be in
Ontario, but I'm looking at the brochure that you've put together
here that has some of the costs. Are these costs in this brochure
specifically related to the recommendations that you've made here
and specific to Ontario?
Molinari: Having also been involved myself in some of
the hearings with the Domestic Violence Protection Act, the new
bill that was passed in December 2000, the intervention orders
that are in place will make it easier for those who have been
abused to be able to access the court system. As a matter of
fact, it will be available 24 hours a day, seven days a week for
those who need to access the court system in order to get
protection for their families.
Were you involved in that?
Did you come forward and make presentations on that bill as
Yes, we did.
Molinari: So I've seen you a few times, yes. Again,
thank you for all of your input. Certainly the information that
you've provided for us here is very succinct and detailed. On
behalf of my colleagues and all of those from the government
side, it will definitely be taken into consideration along with
all of the other presentations that are made in the next two
weeks as we engage in this very interesting and challenging
Thank you for being here. On the labour front-I've been a
parliamentary assistant to the labour minister-you have three
recommendations. Two of those, I'm glad to say, have been met:
for example, extended emergency leave not only to women, but to
everybody who may need extended emergency leave, and parental
leave benefits up to one year. So those have been implemented and
Christopherson: Not in small workplaces.
But out of three, two recommendations have been met. I just
wanted to point out that the work is being done and we are
I just have to comment on that because women don't have pay
equity at this point. In fact, women who leave abusive situations
are going to be very poor. We're in a situation here where if we
actually want women to leave abusers-and that's what this
government wants them to do. If you actually want them to leave
abusers, you have to set up a community where they can live and
raise their children without the support of abusers. You can't do
that if you're in a situation where you may have to work 60 hours
a week, because it's unlikely that you're going to be able to
fulfill the requirements of your family life in a situation like
that. You can't support
children without child care that's available, affordable,
accessible. You can't do that without having a safe workplace.
You can't do that without having equal pay and without having
equity in terms of employment, so that we have equal access to
employment for all communities of women, and that doesn't happen
Although it's fine to list
the things that have been done and accomplished, and we can
debate whether or not and how effective and useful those have
been, I'm trying to convey to you that it's getting harder for
women and children to get out of abusive situations, and there's
a lot that still needs to be done.
I'm here to convey that
message to you and to ask you to put in place some things that
will move us on, and not just in a situation where we deal with
an emergency, call the police and we'll give more money to victim
services or get an intervention order. I have no problem with
improving restraining orders, no problem with that whatsoever,
but I just need to tell you that it's another order telling him
to stay away, and you and I both know he doesn't stay away. When
there's an order, he doesn't honour the order. Although orders
are fine, and you need orders, no matter how great the orders
are, no matter how perfectly they're framed, it's just another
With that, we've run out of time. On behalf of the committee,
thank you very much for your presentation this morning.
Thank you for listening.
ONTARIO COALITION FOR BETTER CHILD CARE
The next presenters are representatives from the Ontario
Coalition for Better Child Care. If you could please come forward
and state your name for the record. On behalf of the committee,
welcome. You have 30 minutes for your presentation this
Bédard: Thank you very much. Good morning. My name
is Mary-Anne Bédard. I'm the executive director of the
Ontario Coalition for Better Child Care.
Sperling: I'm Susan Sperling. I'm the public education
coordinator for the Ontario Coalition for Better Child Care.
Bédard: We brought with us this morning just a mere
drop in the bucket of the many documents, research papers and
commissions over the last couple of decades that have called for
the establishment of universal, accessible, quality child care,
both provincially and nationally. These studies have made the
arguments more than clear. We know why universal, accessible,
affordable, quality and regulated child care is so important to
our children and our families, our economy and indeed our
society. It's essential for the following reasons: economic
self-reliance, women's equality, lifelong health, crime
prevention, work and family balance, a reduction of pov-erty,
equity for children with special needs, entry to employment and
training, school readiness, social cohesion, support to families,
healthy child development, effective parenting, competent
citizenry, job creation and appreciation for diversity. We gave
you a graphic that's on the back of our brief to illustrate
For each of these documents
and studies that substantiate the legitimacy of the argument,
child care is at the centre of a healthy society. We've got tons
and tons of these. This document here in 10-point type lists
every document that has made this argument. We just brought a few
with us today.
But this leads me to an
overwhelming question that I'd like to ask as part of our
presentation this morning on behalf of the thousands of children
in this province without access to this type of care: what part
of child care do you not understand?
Sperling: At the coalition, our own research shows that
our child care system, once the envy of every other province in
Canada, is being systematically starved by this provincial
government, and we say that's shameful. Some 70% of women with
young children are in the paid labour force, and this government
has responded by cutting child care funding by 15% over the past
five years, and no, we do not consider a child care tax benefit
as a child care space. It does not create child care spaces, as
welcome as it actually is for many hard-working families.
We're conducting our own
tour of the province and our own hearings around the province.
Our municipal tour has already shown us how truly problematic
downloading has been for child care. In Kingston, they've just
announced they are probably going to close one of their two
municipal child care centres.
In Welland, Ontario, a
woman named Marnie McLean had the guts to stand up before the
press and before the public and say, "I make $500 every two
weeks, and I have to spend 200 of those dollars on child care for
my children. I qualify for a subsidy, and I am on a waiting list
with 600 other families." She was assured at that meeting she
would be fast-tracked. She hasn't been fast-tracked. She doesn't
have child care, and she has now become another person on your
social assistance rolls, because she has had to quit her job
because she could not afford to keep it. The picture that's
emerging about municipal downloading and the price that child
care is paying for it is really starting to depress us.
It's all the more shameful
when we look east to Quebec and west to British Columbia and now
to Manitoba and see that universally accessible, quality,
regulated child care is not actually a pipe dream. It's doable.
It's within our grasp as long as the political will is there. In
Ontario, we know there is the money to make this dream possible.
There's a $1-billion surplus. It's not like we all don't know
that child care is an important issue. We've known it for a long
time. We actually have the government's research and commissions
to prove it to us also if we don't believe our own stuff. It all
points to the same thing, which is that accessible, affordable
child care is urgently needed. Here's a sampling.
Ms Bédard: In 1999, an audit
by KPMG, commissioned by the Ontario government, stated that your
workfare program could never work without a huge expansion of
quality child care.
Also in 1999, in Dr Fraser
Mustard's landmark study the Early Years, which the Premier has
so proudly taken right across this country and right across the
world touting its benefits, they stated that Ontario's approach
to early child development should be universal in the sense that
all programs should be available and accessible to all families
who choose to take part. There should be equal opportunity for
participation, and all children should have equal opportunity for
optimal development. Targeted programs that reach only children
at risk in the lowest socio-economic group will miss a very large
number of children and families in need of support in the middle
and upper socio-economic sectors of society.
Sperling: In 2000, the government's own Education
Improvement Commission stated that the government has "talked and
studied enough" and had, as its first recommendation, that the
provincial government strengthen its commitment to Ontario's
children by ensuring their access to affordable, high-quality
child care programs and excellent standards of nutrition, health
care and safety.
Yet another recent report
by no less venerable an institution than UNICEF, UNICEF's State
of the World's Children 2001, gave three reasons to put child
care on the agenda: (1) early childhood care is a human rights
issue; (2) early childhood care is grounded in sound science and
practical experience; and (3) early childhood care is a solid
Bédard: So again I ask, what is it that you don't
get? What is stopping you from investing in our children?
In the UNICEF report, it
says that because child care is a long-term investment with
short-term political returns, that's why we're not seeing
results: because you guys won't get the votes. I think that is
Sperling: Especially when we are reminded, as we so
often are, that the province handed out $4 billion in corporate
tax cuts in last year's budget, all the while claiming that child
care is too expensive to implement. That kind of makes us scratch
our head and go, "Hello? Priorities?"
Bédard: We've just been handed three quarters of a
billion dollars by the federal government over the last five
years to spend on early child development services, to spend on
our children, and our Premier got on a plane immediately after
that announcement and we haven't heard of this subject since.
We've sat in meeting after
meeting that we've asked for with different officials from
different ministries of this government, not one of whom has been
able to tell us what the plans are, and this money is going to
flow in less than two months. Yet our counterparts in every other
province, every single province and territory of this country,
have been consulted. They've been involved. They've had input
into their plans. We have no idea what's going to happen in this
province, which leads us to wonder, is there a plan? Do you guys
know what's going to happen to this money? And if you do, why is
it so secret? Why are you doing it without any input from the
Sperling: Again, we ask, what's the holdup? The money is
actually there; the studies have been done. We stand on the
threshold of a new millennium full of challenge and opportunity,
and to meet the future head-on, we need you to live up to your
commitment that every child should be valued and have the
opportunities to develop his or her unique potential by doing the
Bédard: Returning to your traditional leadership
role and developing licensed quality child care by making
substantial new investments in this sector.
Sperling: Making substantial new investments in children
to address the serious issue of child poverty.
Bédard: To match the federal government's
expenditure with your own new spending, dollar for dollar.
Sperling: And to collaborate with the federal government
and other provinces and territories to develop an action plan
that enshrines national principles and entitlements suggested in
the agreement for early childhood development.
Bédard: Because we need child care now.
Sperling: Thank you.
We have approximately four minutes per caucus, and I'll start
with Mr Christopherson.
Christopherson: Thank you for your presentation. We've
been down this road with this government before in terms of
secret plans and no consultations. We've got major pieces of
legislation now on the books; nobody had a chance to comment on
them. It really begs the question: how much do they really
Again, I want to call the
government on this issue of their saying they're the ones that
care about families. I'm not sure what kind of family it is other
than some kind of retro family of the 1950s that existed only on
TV anyway and really was never a part of our society. It's
certainly not even reflected on TV now-I mean, that's just not
the real world. It's insulting. It's insulting to you, it's
insulting to all of us, for the government to say they care about
families and do absolutely nothing about children who need care;
about the issue of more and more children in poverty in this
wealthy country. It's absolutely disgraceful.
I have a question. You
mentioned that all the other provinces have some type of process
underway where the community is engaged in determining how this
money is going to be spent. Right now, is it fair to say that
Quebec probably has the most progressive child care
Bédard: Yes, Quebec has actually implemented a
model, since 1997 in fact, so they're four years in. They have a
great model. BC has announced a model that they've started
implementing with their school-aged children and it's going to be
further implemented in January. They've been joined by Manitoba
who have just announced that they're going to begin the process
of looking into implementing child care, and we hear that
Saskatchewan and Halifax are not far behind, and Nova Scotia.
Ms Sperling: And Manitoba's
first step toward doing this was to put out a call to the
community for input on how best to implement this.
Christopherson: Are there any studies, or is anybody
coming forward from anywhere in the political spectrum that
you're aware of, to show that the plan that exists in
Quebec-because it does cost money, comes out of the public
coffers, is supported-has created some sort of economic drag that
is counterproductive to creating and maintaining a competitive
economy? Is anybody making that argument from anywhere, that
you're aware of?
Bédard: Not at all. In fact we have many studies to
show the opposite, and that's why we talk about child care as an
investment. The most recent study was done in 1998 and it's a
Canadian study by economists so it's a very legitimate study, and
it talked about for every dollar that you spend on quality child
care, you get a $2 return. This return has been met by parents
being able to be more productive in the workforce, by lower costs
for delinquency and programs like that when children grow up
getting the resources that they need. So in fact this is
absolutely a very sound investment, but it will take a few years
to mature, as all good investments do. You put the money in now
and you watch it grow. That's what we do with our children and
that's what we can do with child care.
O'Toole: I'm sharing with Mrs Molinari. Just a couple of
things. I thank you, first, for your presentation. It certainly
will be and is being considered.
I would start with the
consultation process. I believe in 1995-96 Janet Ecker consulted
quite widely on the daycare issue and its methods of provision,
and I think at a policy level probably the province recognizes
much of what you said. Without trying to make it into a political
statement, the Early Years Study and subsequent follow from that
has affected and will affect the government's priorities; I think
Ontario's Promise, which is the current five principles that the
government has committed itself to, and you may see it manifest
itself differently than perhaps you've outlined; the Healthy
Babies initiative and initiatives like that recognize the
importance of the early beginnings, if you will, and the supports
that are needed. Ontario Works is one of the ways that we've
provided supports. The $40 million in that program providing
daycare, child care, is an important initiative and also the
redirecting of the federal transfers in a method to support
low-income families, specifically where they are in the workplace
in transition. The other program would be the LEAP program,
Learning, Earning and Parenting, allowing young parents,
specifically single parents, to attend training so that they can
in the fullness of time reap the benefits of participating in
society and their children as well. Perhaps Tina would have a
specific remark or question.
Bédard: Maybe I could just answer that before we go
on or I'll lose the point. Janet Ecker did do a form of
consultation back in 1995, but it was by invitation only. It was
certainly not a public process, and people had a very difficult
time in getting invited. So I definitely wouldn't call it a
public process. She did come out with a report that we lobbied
very hard against, and in fact many of those things have not been
implemented and we're very glad to see that.
The Early Years report,
yes, it's a great report and, yes, you got a lot of mileage out
of it. We have not actually seen it come to life in our
communities. We've had a reannouncement of $30 million twice.
We're probably going to get another reannouncement of $30 million
in this budget. The whole process about setting up community
co-ordinators is now in an order of council and that whole thing
is now stalled because we no longer have a children's secretariat
with its own minister. So I find it very difficult to say
anything nice right now about the Early Years other than it's a
good report but has done nothing for the children of Ontario.
Healthy Babies, Healthy
Children: it's not child care. It is a good support, it is a
support that families need, absolutely, but 70% of women are in
the workforce and they need child care. The money that you put
into workfare child care and the money you put into LEAP is not
enough for people to get regulated child care, and that's what
they need. That is where quality child care happens. It's in a
regulated, quality environment with professionals, and that is
not what people can afford to buy with welfare vouchers and with
I'm sorry, where you're
putting your money is not where you're going to get the bang for
the buck. It's a quick, fast band-aid that may get you a vote
today but will do nothing for the children of the future, and
they're your future. They're the ones who are going to be looking
after you. I'm sorry, it's not good enough.
With that, we've run out of time. I'm sorry. If you want to make
Sperling: I just want to make a quick comment about the
early years challenge fund and also Ontario's Promise. That will
not actually help people in many parts of this province where
there are no big corporate sponsors to match money. It's
happening; we're seeing that in rural areas and in small towns.
There is nobody stepping up to take this challenge on to match
The other thing I just
wanted to say was with the workfare money it's the first time
that I know of that public tax dollars are going into unregulated
care where we just don't know how safe it is, and we're waiting,
holding our breath, praying that no child actually gets hurt
while in that kind of care that there is no monitoring system for
that our public tax dollars are paying for.
Mr Monte Kwinter
(York Centre): I was interested in your remarks about
the federal program, the $800 million over five years. You say
the funds are getting ready to be flowed in two months?
Bédard: Yes. On April 1 we'll get the first
instalment of $114 million in Ontario.
Kwinter: Is that conditional on the program being in
place in Ontario?
Bédard: Unfortunately not. We lobbied very hard for
there to be some conditions on it, but it is not. It's flowing
through the CHST and basically there are not a whole lot of strings attached
to it other than the political will of the provincial
governments. That's why I worry in Ontario.
Phillips: I think we had this discussion last year, if
you were here.
Bédard: I was here and so were you.
Sperling: I wasn't here. This is new to me.
Phillips: I did my best to get the numbers, but whenever
a question is raised on child care, it's, "We're spending the
most in the history of the world on it." We don't have the same
numbers that we're debating.
Bédard: That's right.
Phillips: When you don't have the numbers to debate,
then the debate is less meaningful.
On the climate in Ontario,
you indicated that the actual annual child care expenditures
dropped 15% since 1995. Can you help me at least in understanding
the numbers, where that comes from in an apples-to-apples
Bédard: The 15% that is stated in our brief comes
from the money the provincial government spends on regulated
child care spaces. The number they quote when claiming that
they're spending more than any other government is the global
child care budget, in which they've added many things, including
$200 million on the working child care supplement, which we don't
consider child care. The money that actually goes to providing
regulated child care spaces in Ontario decreased by 15% in 1998.
So I'm sure that has decreased even further.
Just in general, speaking
about, "We've increased the child care budget," you've been in
government for six years. With inflation, I bloody well hope
you've increased the budget, because costs have gone up, but you
have not increased it in any way that's meaningful for the
children of Ontario. If they are so proud of their figures, why
are they not releasing them? Why don't they give us a breakdown
of where they are spending the money so we can see? If you're
hiding it, it means you have something to hide.
Phillips: You have not been able to update those numbers
since 1998, I gather.
Bédard: No. It took us two years to get 1998
numbers; it will probably take us another two years to get 1999
numbers. But anything you can do would be great.
On behalf of the committee, thank you very much for your
Phillips: Mr Chair, maybe I could request from research
staff to see if they can get us the numbers on child care
expenditures by the province for the recent time.
FARMERS OF ONTARIO COALITION
Our next presenters are representatives from the Ontario
Federation of Agriculture. Could you please step forward and
state your names for the record. On behalf of the committee, I
would like to welcome you this morning. You have 30 minutes for
Wilkinson: Thank you very much for having us here. There
are more of us here than the Ontario Federation of Agriculture.
It was our time slot and I guess we did some calls, but everyone
will introduce themselves as they go along. As you're aware,
there are a number of coalitions in which the farm organizations
try and work together and one of them clearly is the pre-budget
presentation. So we'll all give very short introductions on one
section of the brief and then move it to the next individual, and
I'll allow them to introduce themselves.
If you want to turn to page
4 of your brief, it will show the order in which I'll follow
through. We'd like to talk about farm income risk management and
marketing structures, research and technology transfer,
agriculture as a primary client of OMAFRA and then competitive
issues as they affect the farm community. I'll be doing the first
section of that and then passing it on.
I'm Jack Wilkinson, the
president of the Ontario Federation of Agriculture. I should
As you know, there are many
commodity organizations in Ontario, as well as two general farm
organizations, and the points that are in this presentation are
all agreed upon by everyone to try and simplify the message we're
giving to government about those areas which we would like you to
address in your capacity as a committee giving recommendations
through the budget process.
Farm income right now in
this province and across Canada is in a very serious state.
Grains and oilseeds in particular, as well as horticulture, have
had a very difficult last two or three years. Normally the grains
market is a very cyclical market internationally. Our prices are
based on the international prices, so for the last two or three
years we've had declining prices in Ontario. As well, this year,
as many of you know, the weather situation impacted very
dramatically on many parts of Ontario. It affected quality
dramatically and in some cases yield was affected quite
dramatically also. So the combination of a very severe price
depression and weather has made it a difficult time period.
Also in the last couple of
years the United States, last year in particular, increased its
subsidization to its producers, particularly in grains and
oilseeds, by close to $25 billion, on top of what they had
currently been supporting their producers, and is anticipated to
spend at least $20 billion-that's the figure we're hearing-again
this year. With an open border, that kind of support being dumped
into one sector really keeps our prices depressed.
To get to the point here,
we've been trying go convince the federal government and
obviously the provincial government to increase its expenditures
in the farm income support program design.
If we move to the chart at
the top of page 6, to illustrate as an example, we think the
federal government has to increase its support. We're talking of
$300 million in grains and oilseeds, and that would be
cost-shared normally between the province and the federal
government 60-40. We
see neighbouring jurisdictions like Quebec-and this particularly
impacts on horticultural and other crops as well-where they
support their producers dramatically more in their agricultural
If we look at the
non-supply management, the first line of that graph, we can see
that Ontario agriculture is almost twice as large as Quebec in
the non-supply management sector, yet when it comes to provincial
spending on safety nets, they spend nearly twice as much in an
industry that's half the size. So you can see very dramatically
how the income programs that are offered in jurisdictions like
Quebec, Alberta and in the United States are able to keep their
producers in business during these downturns and still keep
producing, not following the market signals.
Our individuals are really
having to fight the treasuries of these other governments out of
the income of their farms. Hence, we feel that we need an
injection of capital in grains and oilseeds immediately, as well
as looking at how we can improve program design in the medium to
long term so we're moving more closely to what Quebec would be.
Just to give a number, if we moved up to the level of support in
the province of Quebec, we would be talking of a provincial
expenditure increase of $330 million. It is a huge number, and we
know that, but that shows the difference in what our producers
are having to deal with in the marketplace on a daily basis. With
that, I would like to pass it over to Ken.
Porteous: My name is Ken Porteous. I'm chairman of the
Ontario Agricultural Commodity Council, which is 24 non-supply
A couple of years ago
OMAFRA decided to downsize the department and turned to 13
centres of excellence to provide information to the agricultural
industry and to keep the agricultural industry competitive. We
established a group in conjunction with OMAFRA with 60 to 70
people from the agricultural industry and also the processing
industry to develop a program that would keep Ontario competitive
in this highly competitive industry that we have. We made the
recommendation that $100 million be put into OMAFRA over the next
five years to develop new technologies and new transmission
information centres to agriculture. We also recommended that $24
million be contributed to universities for their enhancement of
One of the things that has
happened is that we find ourselves short of technical people who
are world-class. OMAFRA, in its decision to downsize the 13
centres of excellence, also said to us that they would try to
develop 13 centres of excellence with world-class people to
deliver world-class programs to the agricultural industry. The
problem we have is that competitive wage scales with industry and
universities don't allow the hiring of this world-class expertise
to transfer this information, which is limiting our ability to be
The objectives of this
technology transfer and this investment in OMAFRA are listed on
page 9. The benefits are: development of new products with
functional qualities, biomass-based energy, pharmaceuticals,
neutraceuticals and plantogens at the farm level; development of
new domestic and international markets for both farmers and
processors; retention and attraction of leading scientists;
creation of jobs and economic opportunities in the farming and
rural communities; new technologies for sustaining natural
resources, soil and water quality and improving pest management;
and creation of jobs and opportunities in knowledge-based sectors
With the new development in
food safety and environment and the pressure that farmers find
themselves under, we feel it's necessary to have this infusion of
money in order to keep us competitive again.
If there are any questions,
I'd be happy to entertain them later. Thank you.
Down: Good afternoon, ladies and gentlemen. My name is
Bob Down. I am first vice-president of the Agricultural Commodity
Council and represent the Ontario Corn Producers'
We appreciate very much
this opportunity of coming here and presenting our case. I am
doing the area of agriculture as the primary client of OMAFRA. We
have presented the government with our concerns about this over
the last several years too. However, we are continuing to have
some serious concerns about the direction that OMAFRA is going.
We feel the indication is that the switch in the funding for
OMAFRA is swinging from primary agriculture to rural. When you
take that into consideration, the actual funding for primary
agriculture in Ontario has decreased dramatically, as you will
see in some of the figures here.
We are asking that this
government reaffirm its belief that the importance of agriculture
in Ontario needs to have government support in the core area of
financing with OMAFRA, which funds many of the activities that
OMAFRA does and which they have had serious cuts on, which has
limited their ability to do some of the other things we're
talking about here today that Ken has talked about and that Ron
will talk about. In the executive summary at the front, you will
notice some paragraphs there that have outlined that. If you look
on pages 13 and 14, which give you background to that, it points
out some of our real concerns.
One of the directions that
has happened is project funding. Of course, we have to apply as
groups or coalitions, partners, to get that funding. Through that
process, the OMAFRA system, the ministry does not have any
particular funding to support those activities or others.
The recommendations that we
have listed at the end of page 13 and the top of 14 are: ensure
that agriculture is the primary client of the Ministry of
Agriculture, Food and Rural Affairs, and separate and specify the
budget allocation to support the rural affairs component of the
ministry; work to increase the operational budget of the Ministry
of Agriculture, Food and Rural Affairs and increase allocations
when additional responsibilities are assigned to the ministry,
such as nutrient management planning regulation, which we're into right
now, and we are very concerned about that activity and the
funding of it; ensure that the project-based funding initiatives
produce at least the same value to farmers and taxpayers as
funding for continuous programming; acknowledge the economic
importance of agriculture in the province and the importance of
the Minister of Agriculture, Food and Rural Affairs at the
cabinet table; and ensure the Ministry of Agriculture, Food and
Rural Affairs, as a separate entity, will be enhanced to support
agriculture, Ontario's second-largest industry. The last point is
to recognize the economic benefit and importance of agricultural
organizations and institutions that contribute to the well-being
of rural Ontario and the farm community through financial
support, agricultural fairs, 4-H, Junior Farmers, etc.
Thank you very much for
your time. I'll pass it on to Ron.
Bonnett: My name is Ron Bonnett, vice-president of the
Ontario Federation of Agriculture.
I'd like to make a few
general comments on competitiveness at first and then get into
some of the specific recommendations. One point I'd like to make
very clear right off the bat is that I think we have in Ontario
some of the most efficient agricultural producers anyplace in the
world. They have managed to actually create farm operations that
in many cases are expanding in a business environment that
sometimes isn't on an equal playing field with those of other
countries. I think it's recognized now that most of our
commodities are priced on a world market, so we definitely have
to compete with world markets on pricing. That's reflected in the
price that consumers pay in this province for the food they
consume. They're getting basically a bargain, if you compare it
to a large number of other jurisdictions in the world.
That being said, there are
some issues with respect to competitiveness. It falls into a
number of areas.
It could be with respect to
input costs; what people are paying for fuel costs would be one
good example. There is some concern over electricity costs with
some of the restructuring that's taking place. We want the
government to be aware that this could have a direct impact on
how farm operations are proceeding.
There are still some issues
around taxation. Other jurisdictions have different types of
taxation with respect to retail sales tax. We are competing with
There's the whole issue of
farm support. Jack mentioned earlier the chart showing the level
of support that is provided in Quebec for their farmers. We
compete directly with those farmers on our farms.
In a lot of cases,
government policy both at the provincial level and the municipal
level can have an impact on the profitability of farm operations.
I think one of the things we want to make the government aware of
is what the impact is down the road on some of those policy
To get to some of the
specifics as to what we're asking for, the number one thing is
retail sales tax. We are competing with other areas that have
less in the form of retail sales tax, and we'd be asking that it
be removed from farm vehicles as well as from farm office
equipment and farm communications costs. In Quebec, they have a
system where if the equipment is used at least 50% in the farm
operation, then it qualifies for a tax rebate. We believe that
this one step alone would make quite a difference to the farm
operations, in the neighbourhood of $20 million to $25
The second thing is, we
would ask the government to be careful in their consideration on
the implementation of new regulations. I think one of the key
ones would be the nutrient management farm operations standards
that are coming down the tube. If there is regulatory change that
requires capital investment on the part of farmers, there has to
be a recognition that there may actually be a public contribution
necessary to make things happen. That applies to other forms of
legislation that will be coming down. We know there's some
research taking place now on how to restructure the food safety
acts as well.
The final point I would
like to mention is the whole issue of deregulation. We have seen
natural gas prices escalating. We'd like to encourage the
government to keep monitoring those and, if possible, make sure
that any increases are limited. The other thing that has raised
quite a bit of concern in the papers recently is the deregulation
in the electricity service industry. We are hopeful that the
model being put forward by the provincial government will leave
us with something that looks more like Pennsylvania than
California. I think we have to be conscious as we go to this that
any change in the delivery of electricity has to make sure that
the prices to the farms stay at a level where we can compete.
I think I'd close off at
that because I'd like to give people a chance to go back and
forth with questions to any of us on any of the topic areas that
We have approximately three minutes per caucus, and I'll start
with the government side.
Mr Doug Galt
(Northumberland): I much appreciated your presentation.
You didn't read it; you had what you wanted to say and you told
us very clearly.
Jack, I'd like you to
expand a little more for the committee on the grains and oilseeds
and the target that they've taken in the States to subsidize,
thereby creating cheap livestock products to compete on the world
market. If you'd just expand a little bit on that, it would be
helpful for the committee: why we're struggling with what we're
Wilkinson: Thank you very much for the opportunity to
respond to that. The US has had a long-term policy, as you've
indicated, where it has chosen to subsidize the grains and
oilseeds markets very substantially. It then allows their
producers in many ways to be keeping a very low international
price, which means we have trouble making a living in other
countries that are priced on the international market. If we do
not get close to equal subsidization, we cut back our production
and the US expands their market share internationally. That is
part of the strategy which as well, as you indicate, drives in lower meat prices
and dairy to do the same thing.
They've been very
aggressive around the world to grow their agriculture and their
agri-food industry on processed products so that they keep the
jobs in the United States, they keep their production in the
United States, they feed their country cheap, drive us out of
business on the international and then they choose to support
their farmer with farm income support programs.
Mr Galt: I
think it's something like $20 billion they're-
Wilkinson: That was the additional they put in last
year. They were three to four times ahead of us in the grains and
oilseeds before they added the further $25 billion. That's where
we get very frustrated. When that border is open-which is fair
enough; we didn't lobby to keep it shut on grains and oilseeds so
we don't complain about that, but when you see that additional
support going into the United States, you see a surplus at the
federal government level and, to be fair, on some provinces, we
feel that it would be important then, if we're going to keep
ourselves ahead of the pack, to come closer on the subsidy
Just a quick comment or question to Bob Down in connection with
the two sections of the ministry. Certainly with the Premier's
Task Force on Rural Economic Renewal, many of the provinces and
an awful lot of the states, if not all, have two different
administrations: one for small town, rural, whatever, and one for
ag and food. You are alluding to this kind of thing, but you're
not saying it outright. I know when the federation comes to see
me in Cobourg, in Northumberland county, they're saying,
"Everything goes to the small towns, goes to those cities," and
the people in the town say, "Hey, we're not getting anything.
That's the farmers' ministry." Do you have any comments on
Mr Down: I
guess that's the thrust. We're not saying in particular that we
want the ministry split. All we're saying is we would like to
have the monies-the budgets, what's paid out-defined-
-so that we can see and understand what is going where.
We have an old saying out
in the country and it comes from my friends who are in the farm
supply business, the equipment business, the grocery store,
whatever, in small town Ontario, in Exeter, that, "So goes the
farmers, so go we." It's not possible to say, "So goes rural
Ontario, so go the farmers." It just doesn't work that way.
And with that, Mr Galt, thank you very much. We have run out of
time. The official opposition.
Kwinter: I want to pick up on what Mr Galt was talking
about. I think there's a problem in the minds of politicians and
of the general public. They don't realize Ontario is the largest
agricultural province in Canada. As a result, there is a
perception that agriculture is on the back burner and it's not
really something we have to be worried about; Ontario is a
manufacturing and technology centre.
It seems to me there are a
couple of pressures, other than the perception, that you really
have to deal with. I notice that in your projections you talk
about non-supply management receipts. I know there certainly is a
lot of pressure on Canada and Ontario, through the World Trade
Organization, to get rid of supply management, and I would like
to hear your comments on that.
The other thing I'd like to
hear about is: with the advent of Walkerton and the whole problem
with factory farms, the hearings are still going on, but
eventually it would seem to me they're going to put some greater
pressures on the farming community to deal with that issue, which
is also going to create some problems in financing.
Wilkinson: I would like to tackle the supply management
question. We view that the supply management system has worked
very well in Ontario and in Canada, even though it's under all
sorts of pressure from provincial squabbling over market share
and international pressure. We often hear complaints, maybe from
the grocery people and restaurant industry associations, but even
with supply management there, first of all it requires no
government support other than through regulation, and with supply
management we still have the lowest cost of food of any country
in the entire world. So we think it is a mechanism that is able
to pass its cost on to the consumer, which is the way most of us
think it should be. You pay what it costs to produce, and we
don't have to come and ask for government money.
We know there is a lot of
pressure on supply management internationally, but I think they
will find ways to solve that so that they meet the WTO standards.
I've been involved in world trade stuff for some time as a past
president of the Canadian Federation of Agriculture and an
international vice-president, and it seems to me we are so close
to the United States that it is just a big propaganda machine:
"Everybody is moving in this direction. Supply management only
has a couple more years to live and it's not going to be around
If you go to Europe, I
think you hear quite a different system, not that they have
supply management like we do, but they say, "The borders are not
going to open up any more, or substantially more, in this round
of trade than in the last one. There are still going to be
terrorists in the future. We are bigger than the United States.
We got pushed around last time. We're not going to get pushed
around this time." As long as they manage their system properly
and keep consumer support, I think they'll find a way out of
this, and supply management will be here for a fair number of
years to come.
Could I just add something to that, Mr Kwinter. It's ironic that
the US has numerous supply management systems, and they're not
about to give them up either.
Christopherson: Gentlemen, it's good to see you again.
I'll raise a couple of things, and then you can respond, or not,
to whatever part you choose.
One, I thought it was
really interesting that you raised the comparison with Quebec and
that it works out in such an easy, visualized formula that they've got
half the business-how would I say that?
Wilkinson: Supply management production.
Christopherson: Yes, half the production we do, but they
get twice the assistance from their government. It's interesting,
because the previous presenters were talking about the fact that
the best child care system in Canada right now is in Quebec. It
also happens that Quebec takes a very different approach to youth
crime. They don't take the hardline approach-you know, boot camp,
lock `em up, throw away the key-and they have a lower recidivism
rate than we do.
What's truly interesting
for me, of course, is the fact that aside from their being
separatists, their basic political philosophy is one of social
democrats as opposed to liberalism or conservatism. I think it
speaks volumes about the fact that you can still focus on the key
industries in your economy, and agriculture is part of that,
without jettisoning all the other things that matter in society.
It's not Harris's way or the doorway. There are alternatives that
will work; I just want to point that out.
Then I want to raise a
question, or just pose something. The government likes to
purport-especially Noble Villeneuve, who was the master at
standing up in the House, and by the time he finished answering
one of the lobbed-ball questions from the government backbenches,
you'd swear that the only government that ever cared about
agriculture in the history of Ontario was the Mike Harris
Christopherson: I said you would think so; I didn't say
it was so. The zinger is that while this government seems to have
been prepared to jettison every social issue, health issue and
environmental protection out the window in the interest of its
corporate agenda, you seem to have gotten left out. Everybody
else has pretty much got what they asked for; at least they don't
come in with the same reproach you do, pointing out the same
discrepancies, the same concerns. I mean, philosophically there's
been some closeness historically.
Believe me, I become more
and more aware of this as the new city of Hamilton-a figure was
noted recently in the local media that 68% of all the land now in
the new city of Hamilton is actually zoned agricultural. It's a
huge part of our new community, so I'm very interested in all
this. But why, do you think, from a business perspective, given
your relative or direct importance-it's not even relative; it's
direct-you are being treated like the cousins nobody wants to
Porteous: I'm not going to get involved in a political
discussion here, but obviously-
Christopherson: No, we wouldn't want that. We wouldn't
want to turn this into a political process.
Porteous: One and a half percent of the population of
Canada is now involved in agriculture. One-half of one per cent
produces 80% of the food. Obviously, we're a very efficient part
of the economy of Canada and also of the economy of Ontario. I
would venture to say that if the rest of the economy were as
efficient as agriculture, we would probably have a higher
standard of living than we have. We've done this, as has been
explained, with extreme economic pressure from outside our
boundaries. We've been able to stay in business to this
What we're asking is for
the province to invest more money in agriculture to partner with
us to go even further, to increase our competitiveness, to
increase our standard of living, to resolve some of the problems
we have in Ontario; for example, the situation around biomass and
the production of ethanol fuels, which should be important to all
of us, or is important to all of us. Think of the problem they
have in Toronto in regard to garbage and the relationship to
agriculture and the production of ethanol from biomass. Why can't
that be coordinated and the situation resolved in the production
of ethanol, which is important to the agriculture industry, by
utilizing biomass and incorporating Toronto garbage with that to
produce ethanol, which would reduce the pressures on all of us in
Ontario? It would also alleviate environmental problems that we
have in Ontario.
These are the kinds of
things we're talking about investing $100 million in over five
years. It isn't just to agriculture but to the whole economic
community of Ontario that we can provide a situation that will
create jobs and reduce the impact on the environment. Biological
control of pests, where we can reduce the use of pesticides and
make us more competitive-these are the things we're talking
about. These are the things we really want to impress you with
that you can invest money in the agriculture industry that will
be to the benefit of all Ontario and produce jobs and a better
standard of living for all of us.
Mr Wilkinson has the last word.
Wilkinson: Just one brief comment. It seems that
investment in agriculture has no political party affiliation. We
named the province that spends its largest percent. Quebec is
one, which, as you say, is somewhat social-democratic in some of
its policies. The second is Alberta, which is a very strong
right-wing government. I think the key element that is the same
in both, though, is that they have viewed agriculture and the
agri-food industry as growth industries, not as a sinkhole for
money, and I'm not saying the provincial government-we've had a
number of things that have occurred over the last number of
years. Most of the RST list has been exempt. We have a few more
things to clear off. There have been some changes that have
helped and lowered our costs in agriculture in Ontario, but the
problem we're bumping up against now is that is not enough when
you've seen what has happened, in particular the new standards of
subsidization by the US last year, where a lower tax regime is of
little value with current grains and oilseeds price because we're
not paying a lot of income tax, and I'm not being flippant about
that. That benefit isn't as big now.
We now see that the
automotive industry may become the second-largest industry in
Ontario with the way things are going and agriculture may become
the largest industry, and our point of view is we could be the
largest industry. We
employ 600,000 now. Why don't we employ another 100,000? Instead
of $7 billion gross receipts, why not $10 billion? Why don't we
grow all sorts of things in an import displacement and process
them here? We see it as a growth industry. That's part of why we
want the investment. We want to be here. We want to be expanding
and employing and growing.
Gentlemen, on behalf of the committee, thank you very much for
your presentation this morning.
ONTARIO SEWER AND WATERMAIN CONSTRUCTION
Our next presenters are representatives from the Ontario Sewer
and Watermain Construction Association. Gentlemen, could you
please state your names for the record.
Morra: Certainly. I'm Sam Morra. I'm the executive
director, and I'm joined with Ted Cooper, who is our
On behalf of the committee, welcome, and you have 30 minutes for
your presentation this morning.
Thank you for the opportunity to speak to you this morning, Chair
Beaubien and the balance of the MPPs here today. It's good to see
Basically, we'd like to
give you an overview of what's ailing the water and sewage
systems in Ontario, give you a little bit of an education as to
some of the expertise that we may be able to bring to the table
in regard to some of the numbers that we're looking at. Some of
the numbers are mind-boggling. When you look at the total value
of Ontario's water and sewage systems, we're talking about a
$60-billion asset, $40 billion of which is buried underground and
is never seen. Basically, you're looking at approximately 45,000
kilometres of water mains and another 44,000 kilometres of
sewers. It's a huge, huge asset.
Water and sewage
infrastructure has unfortunately been left to deteriorate,
especially over the last 15 years. This has had a negative impact
on the environment: we've seen more beach closings, we've seen
rivers and lakes being polluted. But it's not an overnight
problem and we're not here to point the finger at any particular
level of government. In fact, it has been a generation of
The key issue is that the
current systems are not sustainable. The current water rates
typically only reflect operational costs, so many municipalities
are not including the needed depreciation aspect of their assets
and aren't putting enough monies away for future replacement
needs. In fact, the monies and the expenditures that they report
to the Ministry of Municipal Affairs and Housing are a mishmash
of maintenance, renewal and replacement monies, but they also
include replacement and new growth monies in their expenditure
reporting. So you may look at the region of York, for example,
that may be spending $80 billion on their water and sewage works,
but fully three quarters of that comes from the development
industry so that in fact when they should be spending more on
their renewal and replacement costs, they are not.
Capital expenditures we've
found have fluctuated greatly and it's been more based on the
level of provincial and federal grants that are available. So if
there have been provincial monies available in the past, you've
seen municipalities go out and spend some money on water and
sewage. The same thing at the federal level: if there was a
federal infrastructure program in place, you'd see more money
spent in our sector. That does not help our industry because it's
a cyclic nature. We'd like a more balanced approach to looking
after water and sewage infrastructure and we really think that at
the end of the day there's legislation that needs to be put in
place that we'll talk about a little later.
municipalities have chosen to put off their water and sewage
infrastructure needs and largely for political reasons, and this
is the majority of them. As I mentioned earlier, three quarters
of the asset is underground, out of sight. It's not a sexy issue.
It's difficult to have a ribbon-cutting ceremony for a water or
sewer pipe. Libraries and ice rinks have gotten a lot more
attention in the past.
In terms of where we're at
from an infrastructure deficit, and that would be the monies that
are required to bring the infrastructure back to snuff, the
Canadian Water and Waste Water Association pegs that number in
Ontario at approximately $32 billion. We think that's the high
end of the range. It's the Rolls-Royce of upgrades and it also
includes growth, which is paid for separately by developers. It
also includes the complete separation of storm and sanitary
sewers, which we think have more innovative technical solutions
When we looked at their
numbers and modified them based on the expertise we can bring to
the table, the numbers we had were closer to $12 billion. That's
made up of $1.5 billion in water main replacement and expansion
needs, $2.5 billion in water treatment plant upgrades, $2.2
billion in sewer replacements and expansion, $4.8 billion on
combined sewer separation, and $1.2 billion on sewage treatment
plants. When you add it all up and divide it over 15 years,
you're looking at about $800 million that's required, $500
million of which is for replacement and expansion and $300
million for the treatment plants, whether they be water treatment
plants or sewage treatment plants.
We wanted to talk to you a
little bit about some of the problems that are coming to light.
These are not new problems, but they aren't old problems either.
As I said, over the last 15 years the issue is beginning to
manifest itself into a potential hazard.
One of the problems is cast
iron water mains. Cast iron water mains are found in a third to a
half of all municipalities in Ontario. Unfortunately, what
happens in a cast iron water main in many instances is that
there's an encrustation that's built up in the inside of the
water main, so your effective diameter basically shrinks. What
also happens is that
the encrustation affects the ability of chlorine to properly
fight off the bacteria that's currently in the system. That's why
you saw in Walkerton that one of the orders from the ministry was
that they had to replace 3.5 kilometres of their cast iron water
mains. There was encrustation built up and they couldn't
guarantee that all of the E coli had disappeared.
One of the other things
that encrustation does that is just as dangerous, if not more so,
is reduce the flow that's available, especially during an
incident such as a firefighting episode. We've already had
examples of that where lives have been lost because firefighters
have been fighting fires and then unexpectedly get a reduced
level of flow because of a piece of the encrustation breaking off
and jamming up their pumps.
One of the other problems
that we're currently experiencing is the leaking of water mains.
Estimates point to 20% of all of the water that's produced in
Ontario being lost through leakage. That represents lost revenues
of approximately $150 million a year. Many times you find with
the leaking water mains that where we spent the money to actually
treat the water, it then goes into a leaking sewer that accepts
infiltration and actually goes back to a plant to get treated
again, even though it hasn't been used. That's a double whammy
that we're looking at from an efficiency standpoint.
On the storm sewer side,
I'm not sure if we're all aware here of what a combined sewer is,
but just a 30-second lesson it. Basically, in the 1950s and 1960s
when they designed subdivisions, they allowed for only one sewer
pipe down the middle of the road. This caught not only the
sanitary effluent but also the storm sewer runoff. Nowadays, you
have two separate pipes. Storm sewers go into rivers and lakes,
and the sanitary sewers go into treatment plants. But in the
older parts of many municipalities right across the province, the
combined sewers take the brunt of the storm flows during peak
storm periods. Unfortunately, what that results in is an overflow
situation for this underdesigned single pipe. What invariably
happens is that you have either basement floodings into people's
homes or you have what are called combined sewer overflows, and
that goes into rivers and lakes. That leads to beach closings and
detrimental effects on our fish and habitat.
We need to look after the
combined sewer overflow problems right across the province, but
we don't need to separate every sewer. There are innovative
solutions to this. The city of Toronto is constructing a western
beaches sewage tunnel which will alleviate a lot of their
problems at probably a quarter to a third of what it would cost
to completely separate the sewers.
If you look at revenue
versus cost in Ontario, basically we're collecting about $1.6
billion in revenue overall from a water and sewage perspective.
Our operating expenditures in sustaining capital estimates are
closer to $2.1 billion. That means we are about $500 million
short on a yearly basis.
When you look at the
average water rates across the province, you'd be looking at
approximately a 30% increase, with some municipalities somewhat
more and others somewhat less. What we found is that most of the
regional municipalities with the larger population bases have
their systems on a full-cost recovery, but a lot of the smaller
outlying municipalities do not. As a result, although the average
would be a 30% increase, you may find that water rates would have
to double in effect to properly maintain their systems. If you
phase this in over five years, the results of the increases could
be as low as $2 to $4 a month on a yearly basis. Really, that
only represents a bottle or two of Evian, of bottled water, which
should not be insurmountable.
One of the other things we
did, and this was even before Walkerton, was to do a public
opinion poll and get some results to some questions that we
wanted to know. We were a little surprised by the public opinion
poll in terms of who is responsible for ensuring the distribution
of safe, clean drinking water in Ontario. We thought it would
surely come out that the municipal level would be seen to be more
responsible, but in fact the provincial government and the
municipal government were seen by the public to be equally
In addition to that, we
asked them-because we get a lot of feedback from concerned
politicians that we can't afford any more increases, and in
particular tax increases. What we found is that people do not
want to see increases in taxes. In fact, they welcome the
decreases in taxes that have occurred. But when it comes to the
provision of clean water and safe sewage, 90% of people said they
would support a mandated, regulated establishment of a special
fund that would only be used to pay for water and sewage
maintenance or related emergencies. So what we're seeing here is
that when the fund is dedicated to a specific purpose, such as
clean water, there is a very high acceptance rate among
Ontarians. In fact, when they were asked whether they would pay
more, 77% were either somewhat or very willing to pay more, and
86% fell in the bracket that would pay $2 a month more to make
sure their sewage was properly treated and their drinking water
We have left the
responsibility of water management recently in the hands of
municipalities, and we know that providing grant money in the
long term is only a band-aid approach. It is not the ultimate
solution. What we really need is mandatory requirements for
municipalities to treat their water and sewage systems like a
utility. They need to put in place things like separate water and
sewage service rates. We can't see moneys being taken off the
property tax base to pay for water and sewage. It just doesn't
make any sense.
Once you establish those
separate sewer and water rates, you also need to establish
separate, dedicated reserve accounts which can't be touched or
raided to pay for other needs within the municipality. You need
to have those dedicated reserve accounts, and what needs to go in
those dedicated reserve accounts is a sustainable level of
revenues that is based on not only the operational needs of the
municipality but also on their future capital replacement needs.
Therefore, we need to move to full-cost pricing to get to that
type of situation.
In terms of mitigation strategies that could be
done by the government to help soften the impact on consumers,
there are a number of tools. Full-cost pricing is the ultimate
answer to the problem. So a phased-in period of five years or
even more would eventually get municipalities to the position
where they become fully self-sustainable and the problem would be
looked after once and for all. That is the real attraction to
Once you get there-and some
municipalities have gotten there. Our chairman used to be the
mayor of Petrolia. He could tell us about his experiences there.
We find that those gentlemen and ladies who have been at the
municipal level typically have more appreciation for the problem
and are very much in favour of full-cost pricing. So what we need
in addition to the full-cost pricing-because you can't do it
overnight; municipalities have been used to 80% or 90% subsidies
through grants-is a transitional assistance program. Over the
five to eight years that you're going to implement the full-cost
pricing, you need to make monies available so that you could have
infrastructure improvements, cost mitigation, perhaps even
provide some financial advisory services for the
Currently, we were pleased
to see that the OSTAR program was expanded to include water and
sewage initiatives and in fact made a priority at the rate of
approximately $120 million a year. Now, if you look at the
$500-million shortfall that we're currently experiencing on a
yearly basis and you divvy that up in terms of responsibility to
all three levels of government, federal, provincial and
municipal, you get closer to approximately $160 million a year
that would be the responsibility of the province. This would only
mean a top-up of about $40 million on a yearly basis.
Some of the other things
that could be done that have been done in the United States, for
example, are revolving loan funds. This is where a pool of money
is made available to municipalities to borrow from. They're not
grant monies but they have low interest rates. As they're paid
back, other municipalities can then dip into that revolving loan
There might be the
opportunity to provide municipal bonds that are available on a
tax-free basis with regard to the interest that's earned on those
In addition to that, you
may have some consulting expertise that could be offered in terms
of their financial restructuring or any negotiations with private
sector operators, for example, if they come into the picture.
It's very important that we
help municipalities at least get to the state where they know the
condition of their existing infrastructure. That's one big hole
that we currently have in Ontario. I was pleased to see that,
from SuperBuild's perspective, they have a study out on doing a
condition assessment for water and sewage infrastructure here in
the province. For the structures that are aboveground, the water
treatment plants, the sewage treatment plants, we have a pretty
good handle on how old they are, what kind of shape they are in.
But for the pipes that are underground, we have very poor records
in general in regard to the composition of the pipe, the
condition of the pipe, the age of the pipe, sometimes even the
diameter, the level of incrustation. Those sorts of things really
need to be developed, and we hope the province helps out in terms
of getting to that stage, at least where a municipality knows the
extent of their problem.
To reiterate, what we are
respectfully recommending, in addition to the $40-million top-up
on a yearly basis through OSTAR, are changes to the Municipal
Act. Those changes need to be done by legislation. We need to
mandate the use of water meters, we need to have sewer and water
rates that are separate from the property tax base, we need
dedicated reserve accounts that are unable to be raided and we
need sustainable pricing for water and sewage services.
We need to do this over a
transitionary type of period, and we need to be flexible in those
local circumstances where municipalities find it very difficult
to cope with the specific situations that they're in. We might
also respectfully recommend that we have a clean-water guardian
that may oversee municipalities and ensure that they are
performing the proper things that are necessary to make their
systems sustainable, whether it be from a pricing standpoint,
whether it be from a condition-assessment standpoint or whether
it be from a regular-capital-program standpoint.
Basically, those are my
comments. Ted, did you have anything you wanted to add? I covered
off most of the information I know.
Cooper: Yes, most definitely covered, Sam. There's one
comment I would make. I come to the industry from the supply side
of the industry. I think it's very important for you to know that
by far the high majority of the products that are used in water
and sewer infrastructure are manufactured here in the province
and Canada, certainly. But most of it that we use in Ontario is
manufactured right here in Ontario.
Thank you very much. We have approximately six minutes per
caucus. I'll start with the official opposition.
Kwinter: You're certainly in an industry that has a very
high profile as a result of what happened in Walkerton. I have
some questions about your proposals. You're right in your
presentation when you say that local politicians usually like to
do things that people can see. If you take a substantial chunk of
their budget and bury it in the ground, it's probably the right
thing to do but it isn't very politically attractive, because
it's very hard to convince people that they should be doing it. I
don't know how you get around that.
You've talked about various
things that I'd like to really get into, but I really don't have
the time. For example, what are your projections as to the
privatization of either sewage treatment plants or even
privatizing the actual maintenance and supply of new piping? Is
that something your association is dealing with?
We haven't done any formal projections on what we think might
happen from a privatization standpoint. Our official position is that we
neither support nor deny the ability of the private sector to
properly operate systems. We are not in competition with the
private sector from an operational standpoint, but we see no
reason why municipalities cannot themselves adopt a more
businesslike approach to water and sewage as a utility and run
the systems themselves. The key is to ensure that they've put the
fundamental business principles in place and have a municipality
that is mandated through legislation to ensure that those
principles are in place and are kept up on a regular basis.
Where privatization will
occur is a very difficult thing to predict. There are so many
different variations, whether it's just operations, whether it's
ownership and operation, whether it's the design-build that leads
to some ownership and operation. There are so many permutations
and combinations of what people refer to as privatization or
public-private partnerships. It's a difficult question to answer,
Mr Kwinter, I have to apologize. I think I did say you had six
minutes, but we have a total of six minutes, so we have two
minutes per caucus.
Kwinter: Then I want to go to something else.
Kwinter: Very quickly. Sorry about that. I was thinking
I had six minutes.
It's my fault.
Kwinter: OK. No problem. In the Angus Reid poll that you
had commissioned, you talked about the people's willingness to
pay more money and ranking the priority of clean water. I'm old
enough to have seen a situation where in Ontario no one even
thought about their water. They turned the tap on, they got
water, they drank it because they felt that was it; that's what
you're supposed to get. Ten years ago, people said, "We're going
to sell bottled water," and people said, "Are you out of your
mind? Who in the world would buy bottled water when all you have
to do is turn on your tap and get it?" The bottled water industry
is huge now. Compounding all of that, of course, is Walkerton,
where people are saying, "I don't really care if you put a new
pipe in, I'm not going to drink the water."
Have you noticed that in
your association? Have you noticed what the impact of that is on
We haven't done any exhaustive analysis on the level of
confidence within the public in regard to their water quality.
We've obviously seen an increase in the sales of bottled water.
We think that lack of confidence that is currently embracing the
Ontario public could be overcome with definite legislation and
programs that show you are taking steps to solve the problems. I
think it wouldn't be that hard to get to the position where
people feel comfortable again about drinking their water; I
certainly do. I know a lot of people who continue to drink the
water, in the newer municipalities anyway, and I don't think we
should lose sight of that. It makes a lot more sense to put more
money into an existing asset that is going to serve us and our
future generations, as opposed to going off and buying bottled
Christopherson: Thank you for your presentation. As a
former municipal councillor, I hear you; I know where you're at.
Although obviously you have a vested interest in wanting more to
be built and refurbished, because that's what your organization
represents, companies that do that, nonetheless your point is one
that not enough people are listening to. Certainly representing
an older city like Hamilton and having dealt with flooded
basements-that's how you can make this a number one political
priority overnight: have a few hundred homes flooded not with
sewer water but the sanitary water, if you've got the old
combined. Let me tell you, it suddenly gets a whole lot of
attention, and then it disappears, of course, until the next time
you get a storm. I wanted to say that.
I wanted to raise a couple
of points, and if you can respond to them, that would be great. I
wondered, do you have comparisons to other jurisdictions that we
compete with? One of the things we've been arguing, some of us,
certainly in the NDP, is that the social infrastructure is
important, and that has been let go, in terms of health care,
education, social services, environmental protection. All of
these kinds of things are your social infrastructure. This is the
economic infrastructure as well as the quality-of-life
infrastructure. We need this part of our world to work, or you
can't have business, you can't have industry, you can't have
retail, it doesn't matter what it is, and you can't have a
quality of life if you don't have decent water management
control, both in terms of intake and dealing with it afterwards.
Walkerton has helped put that on the map, but we need the bucks.
Do you have comparators or an idea of where we stand
vis-à-vis other provinces and other trading partners,
particularly the United States? I know they've embarked on a
massive infrastructure program. Do you have other information
about how we stand relative to even European competitors that we
deal with on a regular basis?
You had said there was 20%
leakage. Do you have the figure-20% of what? How much water are
we losing to leakage? As water is being more and more identified
as the oil of the 21st century, 20% leakage seems to me to be
totally inefficient and something that needs to be dealt with on
a priority basis.
You said that more
innovations are being done, rather than necessarily having to go
to the separation of the combined sanitary and storm sewers, and
I know again that's what we ran into in Hamilton: huge dollars to
separate the two. One of the things we did was to use the
overflow tanks, and at that time they were pilot projects, they
were experimental. Is that part of what you meant too, or are
there other aspects of technological innovations that can
mitigate the expense of taking these unified pipes and separating
them into two complete, different systems?
In terms of how we rate against other provinces and
jurisdictions, in Ontario we have a lot of built-up areas which
are serviced by water and sewage infrastructure. That is not
necessarily the case in the more sparsely populated provinces. I
know that in Quebec they have similar problems. They have older
municipalities that require upgrading. In Montreal, they still
had some of their sewage going into the St Lawrence Seaway in its
raw state; Halifax harbour-they're just getting around to
cleaning it up now; in Vancouver, they're still pumping their raw
sewage out into the ocean. But we still have combined sewer
overflows here in Ontario, which is really sad when you think
that we're in the 21st century. We should not be in a position
where we are dumping our raw sewage into our rivers and lakes. We
should have overcome that by now.
When it comes to the US,
they've put in specific accounting systems that they legislated
that their local states and municipalities have to follow. That's
basically what we're recommending here: that you put in place the
dedicated reserve accounts, the full-cost pricing; you look at
depreciation as a real cost that has to be accounted for at the
municipal level, and you put that into legislation.
When it comes to the
European model, they have much older systems than we do and they
let them slide. If you look at the British model, they were
looking at some 200-year-old water and sewage infrastructure that
they had let pricing slide on, and there was no way they wanted
to take the political fallout for having to increase rates 500%
or 600% to deal with their huge problem, so they privatized. But
we're not in that situation. We still believe we have the ability
to mandate these types of provisions, provide some transitional
assistance and allow municipalities to continue to operate and
own their own systems. That is still doable in Ontario. In our
systems, 70 to 90 years old, we can still tackle the problem.
In regard to the combined
sewer overflows, you're right on the money in terms of the tanks.
That is one of the things you can do, other than separating every
metre of sewer.
Another innovative solution
was a sewage tunnel. That's being built, as I mentioned earlier,
right along the western beaches here on Lake Ontario. Basically
what that does is it intercepts all of the sewers that would
normally overflow into the lake, drops them down into huge
chambers, which are basically manholes 100 feet in diameter by
about 150 feet deep. There are three of them that they're
constructing right across the waterfront. That contains the
sewage during that critical period, which is the storm.
Christopherson: Like the overflow tank.
That's right. So as Mr Christopherson mentioned, once the storm's
over you only see the effects of the flooded basements. This
would hold all that sewage and then regulate the flow back to the
main sewage treatment plant, which is then able to handle the
treatment of the sewage.
O'Toole: Thank you very much, Sam and Ted. I appreciate
your technical buildup to it. As David has mentioned, I was on
regional council and it sort of got lost in the works, for all
the reasons you've explained.
Walkerton says to me that
we've finally learned that water isn't free. Basically, if I was
to summarize it, it isn't. I used to tell my children-I grew up
on a farm and there was a well and a septic, and we had little
symbols for when to flush and when not to flush. To everyone
today the water is free; the tap's running-it's not free. In
fact, I guess I support, not in a punitive sense, what you're
saying, that full-cost recovery is absolutely mandatory. I see
that Toronto is actually considering that, or at least increasing
their fee, which is realistic. I see that in most regions. The
region of Durham was in the paper, I believe yesterday, in that
they're looking at it. It's more or less a full-cost recovery
system in a relatively new area. As part of the transitional
issues in Toronto, because of the age of the city and the
absolute costs of dealing with huge infrastructure improvements,
I suspect there may be some need to look at that in terms of
capital and some way of mitigating it, as you call it.
I don't have anything more
to say specifically, except that the whole debate around
OSTAR-clearly, the money there is dealing with some of the
depreciation you've mentioned in infrastructure and will probably
consume most of it, actually. I suspect SuperBuild will be a
significant part of that, to deal with environmental issues, of
which water and treatment systems are extremely important.
Your report is very
detailed. Specifically, the way of financing-the bond issue and
that are good ways, without legislating and regulating
municipalities and how they finance these. You tie the capital up
for them but they've got a repayment plan, so it's not like it's
going to leak away. That's the problem. Right now, if I look at
my tax bill, these fees are really the most appropriate things.
I've always argued that tax bills should be itemized-so much for
police, so much for a cup of water-so that the taxpayer actually
knows how they can interact with the potential savings. Right now
they have no idea, when they look at the $2,500 tax bill. Garbage
fees should be direct-cost recoverable: if it's a lot of money to
get rid of it and it's a lot of money to collect it, they should
be paying for it. It's the same with the water. So I like what
I also believe, in the
public interest, your polling number is important, to know that
the public hold us in some overarching way somewhat responsible
for the environment and our water and air and the rest-and that's
appropriate. Then there's the whole issue you mentioned about
whether or not the $60 billion of infrastructure should be
somehow-I believe it should be managed in the public sector. I
think there's more accountability, if you will, and no profit
motive and that's possibly something I would support in the
public interest of safety. So looking at a response from that
might be on the SuperBuild: what's the next right move to do in
trying to get the feds, the province and the municipalities to
We've had good discussions with SuperBuild and we're encouraged
to see that the studies that are coming out of them were very
similar to the recommendations we had made in regard to
getting a feel for where we are with our current infrastructure
needs here in Ontario, because that's where you need to start.
The feds have put some money forward in regard to their $350
million, $400 million a year across the country. We'll get our
share of that and I think the goal is to mix that in with the
OSTAR monies and make that available to municipalities to get us
back up to snuff.
We need a little more than
that to get us there, but the real key, long-term, is to start
putting in play these Municipal Act amendments. We have in fact
developed those amendments that would satisfy these types of
needs that we put together with our price impact study and our
public opinion poll, and we'll be coming forward for your support
in the very near future. We're hoping that all three parties
would be supportive of that type of initiative.
With that, gentlemen, we've run out of time. On behalf of the
committee, thank you very much for your presentation this
Before we recess, I have
one announcement to make: for the members coming to Thunder Bay
tonight, the bus will be leaving in front of Queen's Park at 5:30
sharp this afternoon, so be there.
Thank you. We're recessed
until 2 o'clock.
The committee recessed
from 1318 to 1403.
Good afternoon, everyone. We'll bring the meeting back to order.
Our first presenters this afternoon are representatives from
GlaxoSmithKline. I see you're already at the table, so could you
please state your names for the record.
Dibert: My name is Stephen Dibert.
Clarke: Ryan Clarke.
On behalf of the committee, welcome. You have 30 minutes for your
presentation this afternoon.
We're here today representing our president and CEO, Paul Luca,
who unfortunately couldn't be here today. Both Ryan and myself
are senior managers in our public affairs and government
relations department at GlaxoSmithKline.
I'm going to begin my
presentation by telling you a little bit about GlaxoSmithKline.
Last December, Glaxo Wellcome and SmithKline Beecham merged to
form GlaxoSmithKline. GlaxoSmithKline, or GSK, is now one of the
world's largest and leading pharmaceutical companies, and the
largest innovative pharmaceutical company based in Ontario. We
have a $250-million headquarters just north of the 401. Beside
that, we have a $120-million manufacturing and technical
operations centre where we produce more than a hundred products.
Several of those products have worldwide mandates; that is,
they're shipped around the world.
GSK invests more than $100
million in research and development in Canada. We employ
approximately 1,800 people, with 1,200 of those in Ontario. In
addition, GSK is one of the top 10 corporate charitable donors in
Canada, with approximately $4 million annually donated.
Our main therapeutic areas,
by the way, are respiratory disease, central nervous system,
anti-infectives and gastrointestinal.
We wanted to use our time
today not to talk about drugs or ODB or market access or
listings. Instead, we want to focus on asthma, specifically why
asthma is a problem in Ontario, what GSK has done in an attempt
to address the problem of asthma in Ontario and what we think the
government could do to improve the treatment and management of
asthma in Ontario.
Asthma is a relatively
common chronic disease and the prevalence of asthma is increasing
around the world, including in Canada and Ontario. It is probably
safe to say that either some individuals in this room or
individuals within the families of the people in this room know
asthma quite well. About 12% of children and 7% of adults have
asthma. That means we're approaching about one million people in
Ontario with asthma-a significant disease.
Half the asthmatics in
Ontario will have had to visit an emergency room, have had to be
hospitalized or have had to seek urgent care in the past 12
months. Asthma is the leading cause of ER visits and
hospitalizations in children, the number one reason children miss
school. In 1996 there were more than 190 deaths in Ontario from
asthma. Asthma deaths can be prevented.
In 1990, which is the last
data we have available, the total cost for asthma in Canada was
more than half a billion dollars, and in that half a billion
dollars, more than half of those costs were directly related to
physician visits, emergency room visits, hospitalizations,
nursing services and drugs.
There is no known cure for
asthma, but we know that asthma can be managed. It can be
controlled by educating asthmatics and their families, avoiding
those triggers of asthma attacks, using the medicines properly
and monitoring their asthma conditions.
One of the major issues we
have with asthma is that we've found in our research that 90% of
asthmatics or their physicians feel that their asthma is under
control, when in fact, upon further probing, 60% of those
individuals are out of control; they do not have control of their
asthma. Poor control leads to unnecessary burdens, both
individually, personally, as well as to the health system. Of the
asthmatics we surveyed, only 6% had attended an education clinic
in the last year. Only 11% of asthmatics actually have a written
plan that tells them what to do in case they have an asthma
flare-up. This is likely because asthma is a chronic condition
and individuals have just gotten used to living with asthma. They
become accustomed to their breathing problems and they misjudge
the severity of their condition.
GlaxoSmithKline is, has
been and will be a leader in asthma care. We've partnered with
health systems across the country and care providers to build
programs to improve treatment and management in asthma. One such
program is the community asthma care centres.
A community asthma care centre is an asthma
education clinic which educates patients on how their asthma can
be managed and how they can control their asthma. The CACCs also
provide continuing education for physicians and can create
outreach programs into the community, into schools or into
workplaces or into places where people can get their help.
These centres are
public-private partnerships initiated by GlaxoSmithKline with
hospitals or other health care organizations. There are more than
50 of these centres across the country, 16 of them currently in
Ontario. We'll be establishing new centres in 2001 as well as in
GlaxoSmithKline will invest
$20 million over the next three years in Ontario to improve the
awareness, education, treatment and management of asthma.
This is done through
various campaigns-patient campaigns, physician campaigns, those
clinics. One campaign is that 30-second asthma test you have in
front of you, a quick test developed in conjunction with the
Asthma Society of Canada, which will allow people to determine
whether or not their asthma is out of control and whether they
need to seek help by a physician.
In addition, another
innovative project we're involved in looks at asthma hot spots in
Ontario. By studying at the community level across the province
the levels of emergency room visits, hospital admissions and
separations, you can tell where asthma's a problem. Once we
identify these hot spots for asthma, we then can implement
programs such as the CACC and its outreach programs to address
the asthma problems in those areas. This is working in
conjunction with some of our partners, this one being the
Firestone Institute for Respiratory Health in Hamilton.
With our CACCs we evaluated
what kind of impact they were having. We conducted a national
evaluation where we followed approximately 1,000 adults and 1,000
children. We found remarkable outcomes relative to their asthma
conditions and the health care resources which were utilized.
We found a 70% decrease in
emergency visits, a 50% decrease in hospital admissions, a 45%
decrease in physician visits, a 70% decrease in children's school
days lost, a 65% decrease in asthma symptoms, as well as other
quality-of-life measures. These are significant results through
With these approximately
2,000 individuals, those decreases in utilization translate into
about $500 per person potential savings just in the first six
months following the education program they went through. So
these things work. If you did the math, it's 500 people, $500;
2,000 people, that's $1 million which could be avoided in service
In Ontario, in the 2000-01
budget, there was $4 million allocated toward an asthma strategy
in Ontario. The government of Ontario is developing an action
plan, or a broader asthma strategy, looking at improving
surveillance, promotion and prevention and the clinical
management of asthma in Ontario. Actually, our vice-president of
research and development at GlaxoSmithKline represents the
pharmaceutical industry on that committee, so we give input to
This is a good start, but
we don't think it's nearly enough to be sufficient to mount a
comprehensive campaign where we could make a significant
difference in the outcomes in asthma. So we would suggest that
the budget be doubled for 2001-02 from $4 million to $8 million,
and then doubled again the following year-relatively small
amounts of money in the budget scheme of things.
What we found through our
experience and our evaluation, and what the province's strategy
should include in their asthma action plans, are intentions to
implement the treatment guidelines for asthma. There is a series
of consensus guideline developed by the Canadian Thoracic
Society, which gives stepped care plans for the treatment of
The strategy should also
include asthma education. We have our education centres, but
there are also asthma education clinics across the province where
asthma care is improved.
Public awareness of asthma:
asthma is out of control, and it can be controlled.
We should also look at
including in the province's strategy protocols for managing
asthma when individuals show up in emergency rooms, as well as a
referral program that doesn't just let people go to the emergency
room, be treated and then go home. It's a referral program where
the individuals are referred to asthma experts, asthma educators,
where they can learn how to best care for themselves.
An important step, we
realized as we moved on with our programs, is the importance of
monitoring-monitoring to ensure that you're successful, to ensure
that you are delivering the results you predicted and that you
can adjust levels of investment.
The first step, we feel, is
for increased government investment in the treatment and
management of asthma in Ontario. We came here today to ask you to
increase your support for this worthwhile disease management
program to realize long-term savings in the health care system
and to improve the system's health outcomes and the quality of
life relative to asthma.
That's the formal
We have approximately three minutes per caucus and I'll start
with Mr Christopherson.
Christopherson: Thank you very much for the
presentation. I certainly have to say it's a different approach
than I was expecting when I saw it on the agenda and I want to
commend you on the efforts.
I was going to raise two
points, if I have time. I'll just load them up to you and you can
comment on them as you choose. You talked about control, a
disease that can be managed-we're about eight to 10 pages in. You
note in one bullet point that it can be controlled by educating
people, avoiding triggers, the proper use of medicine and
monitoring. One thing that wasn't spoken of here, unless I missed
it elsewhere, was the whole issue of prevention. I wonder what
you have to say about prevention and how much of the work being done is geared toward
identifying measures that can be taken that would prevent
That's my segue into the
second point, which is two pages after the one I have just
referred to, where you state in the last bullet point that you'll
work to determine asthma hot spots in Ontario. As much as I don't
always like to face the brutal truth sometimes, the reality is
that Hamilton is one of those spots we have as an area that you
can identify, and it's there for reasons we all know.
First of all, has Hamilton
or have other cities already been identified and are you working
to identify others? I guess what I'm asking is, what exactly are
you doing once you've identified one? Of course, I'm being
parochial here, talking about my own community, but I'm assuming
that Hamilton would be one of them. What is it that Hamilton,
then, would derive in terms of benefits after you've done all of
You can see why I'm linking
that to the first question about prevention and how much of what
you're doing will build the case for other measures that we need
to take, because these things are clearly after the fact, where
people already have the disease. Ultimately we'd like to be at a
point where they aren't getting the disease.
Right. I'll deal with the second one first. There is one centre
in Hamilton now. It's at the St Joseph's Community Health
Centre. One of the areas for expanding the program for this year,
which is again in Hamilton, is trying to look at a unique
partnership with one of your major employers, to put an asthma
centre in an actual workplace so that the employees can get
access to information about how to manage and treat their asthma.
Relative to the hot spots, yes, Hamilton is one of those spots
where the asthma problems are very high.
Relative to the first
question, which addresses the prevention of asthma, there are
things which can be done to prevent asthma. Probably the primary
one is not smoking. Children who live in households where their
parents or others smoke have higher rates of asthma. It's as
simple as that.
It's difficult to erase all
those triggers of asthma. It's triggered by allergies, pollen,
sometimes air quality. It's triggered by pets, carpets, dust
mites. So prevention is certainly an issue and should be
Our company's primary
concern was the treatment and management because of the nature of
the business we're in. But there are things to do. I believe the
medical officer of health for Ontario published a plan to look at
the prevention of asthma, but the fact of the matter is that
people do smoke and there are allergies and asthma is going to
Christopherson: But there are other environmental
intrusions. I'd like to point out that that's one of the
disappointing things about losing the Occupational Disease Panel,
which the government killed in its Bill 99. It was a
world-renowned organization that had scientists, academics and
health professionals who had no connection with politics or
government bureaucracy whatsoever; it was arm's-length. Their
sole purpose was to identify whether there were linkages between
diseases that workers-and now we're noting too, their
families-were coming down with, and exposure to substances in the
workplace. That's now gone and they've replaced it with some
namby-pamby BS that doesn't do anything near what the ODP did.
But that's a whole other issue.
But there's a key component
of this at some point. I recognize you are limited in terms of
your involvement, and that's perfectly understandable. Again,
thank you. I'd certainly be pleased to lend our support to such
an initiative, if for no other reason than I'm taking care of
hometown. Keep up the good work; it's appreciated.
My question won't be namby-pamby. Thanks very much for your
presentation; I did appreciate it. I have a daughter with asthma,
so we've sort of lived with it for some 25 years.
I want to direct my
question to an article that was in the Toronto Star about two
weeks ago. I'm trying to remember the details, but it went along
the line that in the neighbourhood of 25% of hospital admissions
for asthma were in September, and the major peak was in the third
week. It may even have been 25% in that third week. That's kind
of understandable in Ontario, but they went on to prove that all
the triggers you might think of in terms of starting up the
furnace and back to school sort of got shot when you looked at
other countries like New Zealand and Australia, and the Northwest
Territories. They all had similar spikes in the third week of
September. I was curious what your thoughts were, if you had read
that article or from what I've told you. Do you have any thoughts
why this spike should come in the third week in September?
I'm aware of the research and the work that went into that
article. It was followed up at a presentation at the Ontario Lung
Association's better breathing conference about three weeks ago,
where a researcher from the Firestone Institute for Respiratory
Health from Hamilton, who is our partner in identifying these hot
spots, went on to explain his research, which tracked for the
last three, maybe five, years health system resource utilization,
primarily hospital separations, to try to identify where the
problems were geographically, as well as where the problems were
at the time of the year. The spike in the third week is across
the country. I believe some of the other countries, though, had
different timing in their spikes.
The spike wasn't as high, as I understood, as maybe here.
When he was asked the question-the researcher is an
epidemiologist by the name of Neil Johnson, out of Hamilton-what
would explain that, he related the same causes you spoke of:
school coming back into play and kids remixing and sharing each
other's pathogens, the issue of the furnace, the weather, the
allergies. But that's the type of research we use and support to
try to identify those hot spots.
You see where you can go
with this. If you take that research and identify a geographic
area with the highest peak in September, you go in there in the
summertime and do a program where you invest in physician
education about the treatment guidelines and how to implement
those guidelines, patient management programs through education
centres and work with the schools-if you fund that program over
the course of the summer and early fall, as soon as those
children are back in school, and then monitor what happens with
that peak, you will see that by managing that disease in those
ways, that peak will be a lot less for those periods of time.
That's the type of work that we support and that we do.
Mr Galt, we've run out of time. Mr Kwinter.
Kwinter: Thank you very much for your presentation. I
want to congratulate GlaxoSmithKline on the work they've been
doing, not only in the asthma field but in others. I have an
attachment to that company, because I was the minister who was
responsible for getting them to locate in Mississauga. My only
concern is that I just got used to calling them Glaxo Wellcome
and now they're GlaxoSmithKline.
So did I.
Kwinter: One of the questions I want to ask you is this:
There's no question that asthma, both in the adult and child
population, has a huge impact on productivity in the workforce
and in the schools. I commend you for your proposal, but is Glaxo
or other companies doing anything to get at the root cure, as
opposed to eliminating some of the triggers, actually getting to
a cure for asthma? What are the prospects of that happening?
We, as a company and as an industry, as well as with our partners
in the universities and biotech organizations, are constantly
doing research. The nature of the industry, with the nature of
patents and products, is that patents expire and you need to
replenish the product pipeline all the time. So research has been
there all the time. A cure for asthma has not yet been found.
Research is going on.
As I mentioned earlier,
just our corporation will be spending $100 million in Canada on
research and development. The industry will be spending $1
billion, or approaching $1 billion, in Canada on research and
development just to do those things you're talking about, trying
to find those cures and better treatments for asthma. I might
mention that one of our competitors, Merck Frosst, has a pill
which is used for the treatment of asthma, and that was
discovered and developed in the Montreal research facility. We
don't have one yet. We're looking for the answers to cures for
We've run out of time. On behalf of the committee, thank you very
much for your presentation this afternoon.
ONTARIO CONFEDERATION OF UNIVERSITY FACULTY
The next presenters are representatives from the Ontario
Confederation of University Faculty Associations. Could you
please come forward and state your names for the record. On
behalf of the committee, welcome, and you have 30 minutes for
your presentation this afternoon.
Jacek: Good afternoon, Mr Chair and members of the
committee. Thank you for having us here. I am Dr Henry Jacek, the
president of OCUFA. Joining me today are Henry Mandelbaum, the
executive director; Mark Rosenfeld, our director of government
relations; and David Scott, OCUFA's researcher.
I'm also a professor of
political science at McMaster University, and I was delighted to
see that just leaving this table was Ryan Clarke, one of my
prized former students. That was an unexpected and pleasant
surprise. I was just able to greet him briefly, but that was
something I haven't been able to do for some time.
The Ontario Confederation
of University Faculty Associations represents over 11,000
professors and academic librarians in Ontario's universities, and
we're pleased to be here today. Our brief has been circulated for
your reference. We make four specific recommendations, and I will
speak briefly to each one in turn.
Our first recommendation,
and our main recommendation, is that we increase the base
provincial support for Ontario's public universities by $500
million over the next four years. This investment is required to
meet the needs of future enrolment, to expand the research
capacity of Ontario universities and to improve the quality of
the educational experience in Ontario universities.
One of the most critical
challenges facing Ontario universities is the need to hire 15,000
faculty and academic librarians over the next decade. The need to
hire so many faculty and academic librarians is driven by at
least three factors: we have a surging enrolment demand of over
40% over this period, we will have unprecedented faculty
retirements, and we have right now a very high student/faculty
ratio. It's our desire to see this at least be returned to the
Canadian average. We are currently the worst in the country.
I think all members are
aware that there are changes in population demographics,
participation rates in university education and the secondary
school changes, which will result in an increased demand for
university education probably of the order of 90,000 students by
the end of this decade. Further, the demand for universities is
projected to grow by 25% over the next four years alone. This
means that the capacity of the Ontario university system must
expand by the equivalent of one new McMaster University each year
for the next four years.
The age of our faculty
population is another aspect of this challenge. A large wave of
retirements is coming. One third of our current faculty members
are between the ages of 55 and 64. Unfortunately, too many of
them look like me-grey hair-and will be walking out the door very
soon. Another way of putting it is that a majority of our
university faculty are 50 years of age or older.
The student-faculty ratio
in Ontario universities is the highest in the country. Over the
past 10 years, the student-faculty ratio has increased by 25%.
This increase marks a very clear and measurable decline in the
quality of education
that we can provide to our students. It is a matter of good
public policy to reduce this ratio and improve the quality of
university education through smaller classes and more
The other side of the
faculty shortage crisis is the supply of faculty. There will be,
unfortunately, no made-in-Ontario solution for this challenge,
because we know that the domestic supply of PhD candidates will
probably fill only about one third of the positions we need to
fill. That means we have to get the remaining 10,000 or so
positions filled in an internationally competitive market. This
is at a time when PhD graduates and current faculty are being
sought out by public and private university and other sector
employers. Competition is coming from universities in other
provinces-primarily in western Canada in the Canadian case-and
countries. Both the United States and Britain are experiencing
faculty shortages. In the case of the US, better-funded
universities, higher salaries and enriched research programs have
proven highly attractive. The result is that there is currently a
larger percentage of faculty leaving Ontario universities for the
United States than there are American academics accepting
positions in Ontario, and this percentage is growing. So at the
very time we need to retain our faculty and bring in faculty from
outside the province, the reverse is happening; we're having a
drain of faculty outwards because of our inability to compete
with those universities.
Quite simply, the
competitive challenge for Ontario is that better-funded US public
universities, with 50% more revenue per student than Ontario
universities, can provide better salaries, better research
facilities, better equipment and better resources for their
What would be achieved
through this increased investment that we're asking for? First,
enrolment demand would be accommodated. Universities would be
able to plan and respond to the increased demand of the next
decade through hiring the new faculty and academic librarian,
through setting up the new programs we need for a competitive
society and for new resources for students. The government of
Ontario's promise of a space for every willing and qualified
student would be achievable. That is a goal that OCUFA strongly
supports, but it has to be made realizable.
Second, the ability of
universities to hire full-time faculty would ensure that the
teaching and research capabilities of our universities would not
be diminished. We have excellent universities currently in the
province of Ontario. These universities, though, are drawing on
the legacy of the years of support that came from the Frost,
Robarts and Davis governments. We are now drawing down that
legacy, and the question will be, what will be the legacy of our
current government for the quality of our universities in the
next two or three decades?
Third, the quality of
university education would improve as the student-faculty ratio
was lowered to be in line with the average of the other
provinces. Smaller classes and greater interaction between
faculty and students would be achieved. We don't think it's too
much to ask that Ontario, the richest province in Canada, should
be at least the average in terms of the quality of education that
it offers in terms of class size.
The recommendation to
increase base funding by $500 million needs to be placed in a
context to demonstrate that it is a reasonable and practical
investment for the government to make. We want to emphasize that
we have to distinguish between necessary investments-and that's
what we believe this $500 million is-versus discretionary
spending. I hope the government and the Treasurer of the province
will be able to make that distinction in a careful and proper
In 1992-93, Ontario
universities received slightly more than $2 billion in provincial
operating grants. In the current fiscal year, Ontario
universities will receive $1.7 billion. That doesn't even include
inflation. We know, for example, and it's one thing that has not
been discussed very much, that over the last 12 months Ontario's
inflation has increased by 3.6%, causing further erosion to the
dollars that Ontario universities have to provide a quality
education. Even aside from the inflation, which is now a serious
problem for Ontario universities, we are still trying to make up
for ground lost to the cost-cutting exercises of the 1990s: the
24% reduction in government operating grants that has occurred
through a period of enrolment growth. A $500-million increase to
the base would move annual operating grants up to $2.2 billion,
only $200 million more than they were in 1992-93.
OCUFA is now putting forth
the argument that public policy should be made solely on the
basis of these benchmarks. The case for investment is based on
accessibility-that is, the opportunity for our students to go to
university-affordability-can our students and their families
afford to go to university?-and quality, of which the
faculty-student ratio is one very important indicator. The case
for investment depends on those three things.
The utility of looking at
comparative funding is to place the needed investment in an
important context. The conclusion that we cannot escape is that
the very jurisdictions that Ontario universities must compete
against want to hire faculty from us and in competition with us
and that they are better funded. The faculty shortage crisis is a
critical public policy issue that the government of Ontario dares
not dismiss, especially in light of its funding responsibilities
for higher education and the social and economic importance of
It needs to be clearly
recognized that the universities, as the major purveyors of
knowledge in this province, are the engines of economic growth,
and if this province is to grow, it must nurture its
universities, not starve them for resources.
Our second recommendation
stems from the fact that access, or opportunity for
post-secondary education, is linked to Ontario's economic
performance. Therefore, OCUFA calls for an immediate freeze on
We are troubled by the
relentless increases in student tuition fees and the increasing
share of university operating budgets that must be paid for by
students and their
families. The Progressive Conservative Party's policy document
for education, New Directions II, in 1992 stated, "Tuition fees
should be allowed to rise over a four-year period to 25% of
operating costs of universities." Yet in the most recent
electoral platform, Blueprint, the PC Party proclaims that in
fact tuition fees were brought "to the reasonable and affordable
35% level." Currently, for this academic year, tuition fees
account for over 37% of university budgets, while the provincial
support barely holds above 50%.
Given the unfortunate
inverse relationship between tuition fees and access to
post-secondary education, the government has now placed our
universities in a very difficult position where we must choose
between educational quality and access and opportunity. Not only
is this poor public policy, but it is contrary to the Premier's
own belief that, "The requirements of the knowledge-based economy
will make access an even greater necessity for our province."
We need to give our
students, our potential students, our young people, opportunity
for education and to basically develop themselves to the highest
degree so as to benefit not only themselves but our province.
Our third recommendation is
to shift government policy to deal more effectively with rising
university education costs and student debt load. Therefore, we
call for a reform of the student assistance program to include
the following types of items: first of all, we need grants for
students in need to help reduce their debt load, which we think
is far too high; we need to target assistance for students with
dependants or special needs; we need to expand work-study
opportunities for students so they can earn money while they
learn in university; and finally, we must expand programs to help
students who after their studies find it difficult because of the
nature of their jobs and their salaries to repay the large
student debts they incurred while they were in university.
tuition fees are only the tip of the iceberg when it comes to
barriers to access and opportunity. Indeed, one of the
compounding effects of the government's policy on tuition is the
ever-increasing student debt load. While the government claims
that its increased funding for student assistance has ensured
continued accessibility and opportunity, the unfortunate overall
reality is that in the last academic year the average debt load
for a graduating student was in the neighbourhood of $25,000.
Instead of tackling the issue head on, the government has chosen
to focus exclusively on student loan default rates as the sole
measure of student assistance success. We believe that a broader
measure of students and their ability to go to university must be
focused on and certainly measures that are up front while the
students are in school and how they pay for their education, not
whether they can pay back their loans after they've long since
Our final and fourth
recommendation concerns the research policies of the government.
OCUFA urges the government to act on the recommendations that
have now been made in two government-commissioned reports to
adopt and support a comprehensive research policy. Instead of
supporting research through block operating grants, as in the
past, the Ontario government today has moved toward a model
premised on public and private sector collaboration. In May 1997,
the R&D challenge fund was created. Yet, instead of providing
broad-based research support, the fund primarily focuses on
support for research-intensive universities which conduct applied
research in the natural sciences, engineering and the health
sciences. Disciplines and universities not geared to the
production of applied, immediately commercially viable research
have had difficulty accessing this fund.
In a climate of limited
resources, universities are tempted to divert support away from
less lucrative basic research as well as social science and
humanities research in order to leverage money from the maxed
fund. I must point out that the money doesn't cover even the
grants for these hot areas and does not cover the costs of the
students in those programs, so money is sucked away from the
social sciences and the humanities and the other areas. In fact,
we're supporting things like software engineering and other types
of things. The result is that resources are going there and there
is a subsidy coming from the faculties that are doing most of the
teaching in our universities.
This kind of research
policy, we believe, is extremely short-sighted. Not only does
innovation draw on the full range of sciences, humanities and
social sciences, but Ontario's current research approach puts the
province at a disadvantage in comparison with Canadian
counterparts. The lack of our coherent research policy has placed
the province behind Quebec, Alberta and BC in attracting federal
grant awards. So the research policy is actually costing us
federal money. In that sense, it's dysfunctional.
You've heard our four
recommendations. We believe the challenge facing Ontario
universities is unprecedented, yet there is an opportunity for
public policy to ensure that the shared goals of university
education are achieved. Enrolment demand would be accommodated by
our recommendations. The ability of universities to hire
full-time, qualified, high-quality faculty would ensure a high
quality of teaching and research. The quality of university
education would improve through the lowering of the
student-faculty ratio. Access to universities would not be
constrained and our research capacity would improve.
The government of Ontario,
we believe, must act this year, in this year's budget, to
preserve and enhance public university education in this
That is the conclusion of
my remarks. I would like to thank the members for their time and
attention, and I welcome any questions or comments any of you may
The Vice-Chair (Mr
Doug Galt): Thank you very much for your thoughtful
presentation. We'll start with the government side. We have about
three minutes per caucus. Ms Molinari first.
Mrs Molinari: I'll begin, and I
know my colleague John O'Toole would also like to make some
I want to thank you for
coming and making this presentation today. You were here last
year as well and we've had several opportunities to dialogue with
you, along with Minister Dianne Cunningham, about some of the
concerns you've raised here today. The retirement of a number of
professors is going to need to be addressed within the next
little while, to deal with the students who will be coming in,
and the dialogue that is going to continue to take place between
the ministry and yourselves is helpful.
You've raised a number of
issues here that are things we need to look at as a government.
It's a difficult job trying to balance all of the requests that
come forth from presenters and trying to split that pie when it's
only so big and the number of dollars that are there in all of
the areas. Your plan calls for an injection of large amounts of
funds to be invested. I hope we can work on some dialogue to
address some of the concerns and also with the realities that
presently exist within the economy as it is. As a government,
students and post-secondary education are very important for all
our futures. I hope we can continue that dialogue with you.
I hope I've left some time
for John O'Toole, who has a question to ask.
O'Toole: I follow the reports and the issues in the
press more academically as well. I have five children and two are
still in university, or at least undergraduates. I applaud you
for the three points: access, affordability and quality. Your
report does expand on solutions to that, but I just want to ask a
couple of questions.
First of all, I'm looking
at the version of the private university discussion. Two of my
nephews are both doing PhDs, one at UCLA and one, I think, at the
University of Georgia. One is from Mac. He got his masters in
biotech or something like that and he's on a full scholarship,
making money at a private university. I don't get it. They can do
that and they're private, and we're public and we're not doing
it. We're way behind. That's two of them. The other is in
computer animation and he did his undergraduate degree at Mac as
My question is, what is
outside the box? We've got the Ivey business school, $25,000
tuition, advertising on television. Queen's is doing it now.
These are kind of outside-the-box approaches to the issue of
where the money is. Then there's the whole issue of e-education
for certain undergraduate programs. I know there's a social
aspect to university. Can you respond to that? These are not in
the report, but they're important components of the solution. The
same old ain't going to work.
I think there's a very different tradition in the United States
to university education than there is in Ontario. Many years ago,
many private institutions were set up in the United States. They
had their investments in companies that went on to make a great
deal of money and they have very large endowments. We essentially
went a different route in which our private universities over
time became incorporated into a public system. In Ontario, we
cannot simply in any way replicate the American private
university system because it's based in many cases on hundreds of
years of portfolio investment that has been compounded over time.
The cost would be incredible.
I doubt that private
universities are going to set up in such a way that our young
people coming out of high school want to go with them. Our young
people want universities with walls. It's very clear. I know
myself, I tell my students, "You can call me or e-mail me any
time," but what they simply say is, "Can I come in and see you?"
Unless they are sitting right next to me, they feel they're not
getting their money's worth. These are the same students who will
play video games or all types of computer games, but when they
want to talk to a professor, they want to see that professor and
they want to interact with him. That's why I think actually these
private on-line universities are really overstated. There has
been a report coming out lately in the United States that the
cost of on-line education is much higher than the universities
expected and that demand for it is much less. The result is that
they're not making the money they thought they were going to
make. That report came out within the last week.
This has surprised me. I
think we tend to overestimate the cheapness of technology. People
who want to use technology tend to underestimate cost and
overestimate revenue, and I think the report that came out from
the United States is like that.
I think you said those were
nephews of yours. I hope we can bring them back to Ontario.
O'Toole: So do I.
The only way we'll be able to bring them back is to offer them a
competitive salary and, if they're scientists, we have to be able
to set up laboratories that they feel comfortable working in.
That's what I hope.
Vice-Chair: We'll have to move on. We can't run over our
time. The official opposition.
Phillips: I'll try and get two questions in at once. I
carry around this little document of why you should invest in
Ontario produced by the Ontario government. It's what they tell
business, why they should come here, and, with all due respect,
all their programs head in the opposite direction. It talks about
our exceptional workforce here in Ontario; that Ontario workers
are well educated and well trained; that 60% have attained
university or college, a big advantage over the US; a
high-quality education system. They have a chart here of
educational attainment, well above the US. I think on another
page here they talk about-oh, this is on tuition fees, which is a
big selling point. They point out how much lower basic tuition
fees are in Canada than in the US: "Ontario tuition fees for law,
medicine, computer science and electrical engineering are also
much lower than American fees."
Of course, all of that is
changing now. My old business school, a $25,000 one-I would not
have gone to that school if that's the way the fee structure had
been in 1958.
My two questions are these. The government
frankly has been able to get away with it. They've dramatically
reduced support for universities and have dramatically taken
tuition fees up. As you point out, the percentage paid by
students is dramatically higher now than it was. But they've been
able to get away with it in spite of all the things they said
about, "The future economy depends on our knowledge-based economy
and investment." That's my first question, how they get away with
My second question is, you
point out a clear, obvious, looming crisis, and that is
recruitment of staff over the next few years. Can you tell us
what in your opinion is being done right now, and are you aware
of a government program that is going to tackle that issue in a
The first-I've just gone blank.
Phillips: They've gotten away with it.
Why that has happened? As one of my colleagues at Queen's
University said, if the student-faculty ratio gets worse year
over year, nobody dies from it. You just have a larger classroom.
You have the students sitting on the steps of the classroom. It's
not like an emergency room where somebody dies if you don't have
the emergency room properly funded. So essentially it doesn't
have an immediate consequence. What it does is have a consequence
on economic growth and quality of life five, 10, 20, 30 years
down the road. That is why it's so important for us to deal with
this problem in a reasonable way, looking to the future. As I
said earlier, we're drawing on the legacy of previous governments
but we're running down that legacy because the quality of
universities is dependent on past decisions, not on something
that happens today or that happened in the immediate past.
I can imagine it's tempting
for the government of the day that's looking for money. They'll
say, "We'll cut the universities," as they did drastically in
1996, and the public doesn't notice. They don't realize that 24%
cut and what it did to the quality at the time.
The second question about
hiring faculty: the universities are trying to do their best in
different ways. The board of governors of Carleton University,
which is in a deficit position, said, "Rather than paying back
the deficit, as important as that is, we have to hire faculty,
one a week, because our faculty base is eroding so quickly." So
universities are desperately trying to hire faculty.
They are doing things like
deferring maintenance. We have a huge deferred maintenance bill.
You look at the leaking roof in a building and you say, "Do we
fix the leaking roof or do we try to go out and hire a young
faculty member?" The result is that we're ignoring the
maintenance and our buildings are really falling apart. But how
long can you do that? It's pay me now or pay me later and it's
really false economy.
Even under these
situations, we're not hiring enough faculty and can't continue to
sustain this to replace those who are leaving.
Vice-Chair: We'll have to move on to the third
Christopherson: On behalf of Marie and myself, I welcome
a fellow Hamiltonian. Henry, it's good to have you here, and
everyone else in the delegation.
This scenario is one of
those that just perplexes the hell out of me. There are some
things the government has said no to since they've taken power
that, as much as we might disagree, you at least know where
they're coming from. You understand the why of it. This one, like
a few others today, escapes me.
One of the questions I want
to leave with you, if you have time to answer it at the end-you
touched on privatization, Henry. Is there any concern within your
organization that the long-term goal is to eventually see private
universities overtake, to use the term the majority market share,
of post-secondary education, where clearly now it's with public
universities? I just leave that with you to comment on.
What I want to draw to your
attention, and it may be helpful to you, is that one of the first
presentations this morning was from the senior vice-president and
chief economist of the TD Bank Financial Group, Mr Don Drummond.
He presented 17 pages of slides, charts, things they consider to
be of key importance for us as we go through our deliberations.
Two of those presentations both deal with the issue of funding of
higher education. One of them speaks to the declining Canadian
government support for higher education, it speaks to the dollars
and the 24% cut in constant dollars, and also the declining
relative budgetary importance of post-secondary education, and
again they show the chart where, although it has come back a bit
in the last few years, we're still well down from where we were
in the past.
If you need somebody to
point to, to say there's a business case being made, there are
copies of these from the clerk. It should resonate with the
government members that the business case is not being made
solely by you as a convenience; the business case is being made
by bankers as being an important part of the equation of growing
One of your main focuses
was the whole replacement of faculty. Just to look at the
worst-case scenario, so we understand what the world looks like
if we don't do anything: in five years, 10 years, if we don't
begin to recruit the quality professors and other staff that we
need in the universities, what happens? Obviously, if the people
aren't there to hire, you've got a number of choices: you either
have fewer students or you're hiring less qualified people, but
that's just my view from the sidewalk. What's your sense of
I think you will see two things fairly quickly. If we don't pick
up the hiring of faculty, with more money, we're going to have
potential students who are going to get rejection letters.
They're going to get letters from the university saying, "There
is no room for you. You're qualified but there is no space in
Ontario universities, so you'll have to do something else; either
not go to university or go to university outside the province or
outside the country."
Then eventually the
universities will run down further, because it's the full-time
faculty who go out and get external money, from the federal government,
from private foundations, from outside the country. The huge
amounts of money that support our universities come from faculty
members going and getting money from foundations, from the
federal government. That money not only supports their research
but they use that money to hire the students, to support graduate
students and undergraduates. The result is, if those full-time
faculty are not there, or in reduced numbers, they don't generate
the income for the universities and there's a further slide
downwards. That's how the quality of a university erodes. It
doesn't have the full-time people who are going out and getting
the money to contribute to the operating budget. This is a
vicious cycle in which you just start going downhill faster and
faster until suddenly you're left with third- and fourth-rate
universities, with few numbers, decrepit and without much
Vice-Chair: We've ended up that each party got a good
extra minute there. We appreciate your enthusiasm and your
presentation here today.
Thank you very much. I would say you are going to hear something
pretty close along these lines when you hear the Council of
Ontario Universities in about an hour or so.
RETAIL COUNCIL OF CANADA
Vice-Chair: We now call the Retail Council of Canada as
the next delegation, Peter Woolford. Welcome. When you get set up
there and start, just give us your name for recording
Woolford: Thank you very much, Mr Chairman. It's a
pleasure to be back with the committee members again. I think
this is my 12th year appearing before the committee, and it's
always an enjoyable opportunity to come back and-
Christopherson: Is it?
Woolford: Yes, it is, sir. I enjoy this. It's a chance
to kind of step back and review what has happened in the year and
look forward and talk with some people who are very knowledgeable
about what's happening in the province.
Christopherson: He has a meeting after this one.
Woolford: No, no. Say it isn't so.
As always, I'd like to
start with a quick review of last year, and our members' forecast
for this year. I know that's very helpful to committee members as
they start to consider budgetary matters for the next fiscal
I'm delighted to say that
2000 was another good year for the retail trade. Reports out of
StatsCan and from our members suggest real growth in sales last
year was between 2% and 3%. That is down somewhat from 1999, but
we must remember that 2000 was building on a very strong previous
year, which itself was building on a strong year before. So we're
looking at purely incremental growth at this point, and we feel
it was a pretty good year for the retail trade.
Our members said that
Christmas was a good season for them. We did a survey of
independent retailers just after Christmas. While the numbers
were quite scattered, the average was between 3% and 4% growth
over the Christmas season of the previous year.
Looking forward to 2001,
our members are equally optimistic-a bit of a surprise for us.
With the bad news that was starting to come out of the States in
the last quarter of 2000 and with some of the concerns that were
being expressed with respect to the Canadian economy, we thought
they would be a little more cautious about 2001. In fact they
forecast their sales this year will go up between, let's say, 2%
to 3% again. So our members are relatively positive going forward
into this year. Certainly the very early returns in 2001 suggest
that January was a pretty good month for them.
For our formal pre-budget
presentation this year, I've taken a slightly different
perspective from doing a traditional submission. What I've tried
to do in this little presentation I'm going to run through is
give the members of the committee a bit of a sense of the role
that retailing plays in relation to individuals, communities and
the economy of the province.
More than anything,
retailing is a people business. Retailers are in the business of
providing individuals with the goods and some services they need
to live their daily lives. Roughly half of all the dollars you
and I spend are spent in retail operations. These are the
merchants who provide the kinds of things we fill our houses, our
cupboards and, yes, our garages with. So it's very much a
business that relates to the ordinary human being. The citizen,
the voter and the consumer are all one and the same person.
The second key piece I
would draw to your attention here is that retailing is relatively
more important to low-income Canadians, and low-income Canadians
are relatively more important to retail. Why is that? Well, there
are a lot of lower- and middle-income Canadians, and they're the
people who spend the great bulk of money in our members' stores.
Equally, retail is important because lower-income Canadians, as
you can see from the chart, are people who spend relatively more
of their income on consumption in retail stores. So this is an
industry that connects very directly to the ordinary man and
woman in the street.
What do retailers sell? As
I said, they carry the merchandise we need for the necessities
and little pleasures of everyday life: clothing, sporting goods,
cars, food, health and personal care-the full range of products
that any of us buys over the course of a day.
I guess that's the other
piece that we're trying to get members to understand, that this
is an industry that deals with ordinary people in their daily
lives every day. We buy something in the store-well, men don't.
Most of the people here probably don't go in a store here every
day-shame on you-but certainly most Canadians and all women go in
a store pretty well every day. That means that they come in
contact with this industry on an ongoing and regular basis. Men
go in on December 24 and right before Easter and February 14.
Woolford: Yes, you were all in a store yesterday.
Now let's look at who sells
what. Traditionally, the retail trade was broken into some
well-defined categories. We have found that under the pressure of
competition, foreign competition coming into Canada, new
technology, restructuring of the industry, those traditional
specializations are blurring and we're seeing that retailers are
competing with each other in sectors they would not have been in
in recent years. We have also seen, of course, the emergence of
large general-purpose retailers, the so-called big boxes, which
have been very successful in setting new standards of competition
and productivity and competitiveness.
Well, where is retail,
then, if we've got these stores? Again, as I said, retailing
follows people. It's a people business. In fact, you'll find
retailers in every village, town, city, suburb of Canada. I would
suggest that you don't have a town until you have a store. So
this is an industry that is very connected to the daily lives of
citizens. On the other side for you as economic policy-makers,
this is an industry that provides jobs, income, investment and
opportunities right across the face of the province. Unlike just
about any other industry, we are an economic factor in every
single place that Canadians live in the province.
This next slide usually
gets a better reaction in provinces outside Ontario than it does
here. What it compares is employment between retail and
manufacturing, and you find that in this case Ontario is
something of an anomaly. In Ontario, manufacturing actually
accounts for more jobs than retailing. Through most of the rest
of Canada, retailing accounts for the same amount or more jobs
than manufacturing. The other key point here is that retailing is
remarkably consistent: between 6% and 7% of all jobs in every
province are accounted for by retailers.
Retailing is, above all, a
small business activity. When you look at this chart, you can see
the overwhelming majority of retailers are small businesses. The
large beige-coloured portion of the pie labelled "Indeterminant"
represents partnerships in family-owned businesses, which in
almost all cases are small businesses themselves as well. So you
can see that when we get into larger companies with, let's say,
more than 200 employees, there are so few that they show up in
this chart as 0%.
Not only are independent
stores important in terms of the number that they represent in
your community, they're also important in terms of the dollar
value of sales. Something people have often assumed is that there
are lots of small retailers but they don't count for much in the
market. As this chart shows, that's not really the case. In a
number of the subsectors, you can see that independent merchants
make a significant portion of the sales in their sector.
I mentioned earlier that
this is a very competitive business. One of the consequences of
that is that retailing is a business where it's hard to make a
profit. A lot of people think retailing's easy: "I bring some
stuff in. I pay less for it, I sell it for more and I get to keep
the rest." In fact, under the pressure of competition, the data
from StatsCan show that roughly a third of all retail businesses
are losing money at any given point in time. This is not a
business in which you succeed easily, nor do you get rich easily.
The other side-I don't have these data here, but StatsCan data
also show that roughly a fifth to a quarter of all retail
businesses at any time have negative equity in their business. So
it's a very challenging and precarious business, serving the
needs of consumers.
I put this slide in because
of the role of retailing in terms of encouraging the rest of the
industrial economy to adopt new technology, and particularly
computer and telecommunications technology. Our largest members
are very sophisticated users of modern technology and are forever
pushing the edge of the envelope. But something that really does
concern us is that we've got almost a quarter of our members who
have no computers and almost a fifth who have no intention ever
to buy one. In this day and age, as I'm sure committee members
can understand, that's a real concern. The point here is that not
only are these firms going to be less competitive in the
marketplace, but they have an effect on their suppliers. If the
retailer is not following modern business practices and is not
productive and efficient and effective in dealing with his or her
supply-chain partners, they don't have that incentive to upgrade
their operations either. We see that as being important both for
our industry and for the industries that support it.
I'd like to talk a bit
about employment. These are the numbers for all of Canada, and
then by province. As you can see, over 650,000 people in this
province earned their living in retail in 1999, and since then
the number has gone up. I'm going to talk about job opportunities
in a minute, but I should mention that last year retailing alone
accounted for a quarter of all the new jobs created in Canada.
Canada created about 320,000 jobs last year; retail accounted for
83,000 of those. I think that's the largest single contribution
of an industry. So we had tremendous growth in employment. These
are all new jobs, incremental, and we're very proud of that kind
of dramatic growth in the industry.
The other side of job
creation is also what we call job opportunity. This chart shows
the percentage of people in the industry who have been working in
that job for less than three months. These are essentially people
in a new job. That could be a brand new job; it could be a
promotion; it could be with a new company. But it's a new job in
the industry. You find that roughly an eighth of the labour force
in retail started a new job within the last quarter. That's a
very steady pattern. If you look at it going over a number of
years and by numbers, what that shows, for example in 1999, is
that every quarter throughout that year 40,000 people in Ontario
moved into a new job in retail-160,000 job opportunities over the
course of the year. Those are not brand new jobs, but they're
opportunities for an individual to get a paying job. I imagine
when the data come out for 2000, we'll see that number go up even higher. It's a great
opportunity for people to enter the labour force, to better their
skills, to move up and to get a paying job.
I'd like to talk now, just
to finish off very briefly, about the number of businesses in
Ontario in retail. Again, just the sheer size of this industry
somewhat overwhelms me when I consider it. Look at the thousands
and thousands of companies that are represented in Ontario and,
again, the very large number that are small businesses. We found
it helpful to take these data and break them down into a couple
of sample communities that we picked. We picked a couple almost
This is Vaughan, just north
of Toronto. When you look there, you see-what is it?-98 gas
stations, 125 stores selling health and personal care, 63 for
sporting goods, hobbies, books and music. That's a lot of small
businesses in this one sample town. We chose Parry Sound for
reasons that will be obvious but are less relevant now, as a
result of changes in the last couple of weeks. I didn't have a
chance to change my slides. You can see, in a town like Parry
Sound, just how much the retail industry contributes to the
economic and the personal life of the community.
I'd like to finish off with
some policy observations. This year our members asked us to be
fairly general. We don't have a shopping list of fiscal or other
changes. They feel that the broad directions this government is
pursuing are largely ones that they would support, so they asked
me simply to flag three pieces to the members of the committee
here: first of all to remind you, as I'm sure you're very much
aware, that it's terribly important that we promote the growth of
personal disposable income, especially of lower-income Canadians.
It's easy, sometimes, to forget that when the economy is strong,
but the purpose of having an economy, of having economic growth,
is in fact to improve the well-being of our fellow citizens.
That's a fundamental policy principle that a lot of our members
keep referring us back to as one that we should keep emphasizing
as a priority-particularly lower-income Canadians. Now you
understand why: because they are by far the people who shop in
Secondly, on the basis of
our concerns about the employment of technology, we would suggest
the government might consider better tax treatment for computers
and software. I don't have any hard and specific recommendations
in that area. I hope to come back. We're just starting to look at
that, as a result of the data that we've gathered.
Finally would be, where
possible, to lower per-person employment costs-we are an
employment-intensive industry, as you've seen-and to give us the
opportunity to promote some flexible labour practices. Certainly
we welcomed the changes in the Employment Standards Act that came
through just before Christmas. We see some positive developments
there in terms of allowing employers and employees to arrive at
more flexible arrangements.
Those are my opening
remarks. I'd be glad to take any comments or questions.
Thank you very much. We have approximately three minutes per
caucus, and I'll start with the official opposition.
Phillips: First, oftentimes the retail industry is one
that feels the economy earliest, you would think. But I gather
from your comments that your members are not seeing any slowdown
Woolford: No. We had a board meeting a couple of weeks
ago, February 1, and just as part of the process of introducing a
couple of newer members, the other members went around the board
and indicated their company and sort of a rough explanation of
how they saw things going. The reports back were uniformly very
positive. Admittedly, we tend to get larger companies and
healthier companies on our board, but again, the forecast from
our independent members was very positive for this year. It's
very anecdotal, but talking to independent members, they still
see quite a good year ahead for them. Like you, I'm a little
surprised at it. I would have thought they'd be more
Phillips: You were saying that they project a 2% to 3%
increase in sales. That's kind of inflation. Is that what they
Woolford: I think in retail that's probably not
inflation. Retail prices are still not going up that fast, so I'd
say there's real growth in there of at least 1.5%. When you take
out population growth, that means that real after-tax disposable
income growth being translated into consumption would be less
than 1%, I would guess. So you've got 1% employment growth, a
little less than 1% growth in spending power, if you will, and
maybe a little more than 1% in inflation.
Phillips: Judgmentally, I would have thought on the
employment side, because I see so many of the box stores being
built-the Wal-Marts, the Home Depots, all of those that look to
me like they employ fewer staff per million dollars of sales than
the stores they are replacing-that employment would be stagnant
in the retail business, so I was pleasantly surprised to see that
growth. What am I missing there? As the huge stores come in, are
there also lots of labour-intensive smaller stores being
Woolford: Certainly there is no question that the larger
formats are much more labour-efficient. You can move a larger
value and a larger volume of product with fewer hours of
I think what has happened
is that in the last two to three years we have finally seen some
significant growth in personal disposable income, and that has
flowed directly through to our members' stores. They have seen
customers show up who now have a job, who have a better-paying
job, who have got a promotion, and they're prepared to spend.
We've seen much higher rates of growth in spending in 1997, 1998
and 1999, and somewhat softer but still positive growth in 2000.
When retail is growing, that's when retailers make their money,
on growth. So I think they've been able to go out and hire a lot
more people. You've probably seen more businesses start up as
Mr Phillips: I've always
worried when I see a large box store go into a community about
who then won't exist, because they take a huge volume. There's a
store in the area that's open 24 hours a day. You can go into
Home Depots at midnight.
But my question is this: in
good times, maybe the ones that might have been hurt by it aren't
hurt by it, but are there any danger signals to us, when the
times slow down a little bit, that the casualties of the big box
stores may be accelerated?
Woolford: This is something we've wrestled with over the
years. There's no question that in a downturn, retail feels it
first and they feel it hard. Less efficient, less competitive
retailers will be pushed to the wall. The larger formats are more
successful. Customers like them. They are certainly lower-cost,
and so they will survive a downturn better than your typical
The position of the trade
association, though, is that this is a consumer-driven business
and what's good for the consumer is good for the industry. So it
is better for the industry to see that bloodletting, if you will,
because it reflects the demands and needs of consumers, than to
try to somehow protect it from the effects of consumer demand.
It's a brutal business, there's no question. This is a very tough
business to make a living in. You can see it in the data for
profitability. I think those data were from 1997, which was a
relatively good year for retailing, and yet roughly a third of
businesses were still losing money. This has never been and never
will be an easy business.
Christopherson: Peter, welcome again. You and I mixed it
up before on labour issues, and since you referenced it here, I'm
going to touch on it, but that's not going to be my sole focus
this time, because the legislation is behind us. I know how you
feel; you know how I feel. Again, I won't just argue the point
about the flexible; we could go into that. But I do want to ask
you how you square the fact that your first point, and you
mentioned it a number of times after, was to promote the growth
of personal disposable income, particularly at the lower end,
which is understandable because, as you mentioned, that's where
the money circulates and in a local economy that's what makes it
go, but then at the end you say you supported the last piece of
labour legislation. That was the Employment Standards Act, where
the government refused to increase the minimum wage. Ordinarily,
you and I can lock horns over the issue of minimum wage. I raise
it this time not because debate between you and I is anywhere new
that we haven't been, but rather you started with the issue of
talking about disposable income, so I'll mention other things and
let you comment, but I would hope to hear you say that some
movement in the minimum wage is something that you wouldn't
oppose in light of what you deem to be your most important issue,
which is people who are earning minimum wage.
If I can, I want to pick up
a bit on where Gerry Phillips was, because those are the notes I
made. It's fine for all of us to say at the end of the day,
"Well, it's a tough business, it's cutthroat," and so the box
malls go in and the anti-union Wal-Marts go in there and they get
a lot of business. But it has an impact not just on the dollar
side of business; it has an impact on our communities big time.
If you look at downtown Hamilton or any of the other smaller
business areas, such as Concession Street in my colleague from
Hamilton Mountain's riding, Westdale in mine, the smaller
downtown centres of the former municipalities of Dundas and
Ancaster, over time, they lose their whole character.
Is there something above
and beyond just the dollar dynamic of the markets that
government, at whatever level, should be looking at, if not
incentives, something to preserve our downtowns so that they
become something more than just little mini Las Vegases and lose
that liveability? Because it seems that in order to revive older
communities like Hamilton one of the key things is your mix of
business, service and residential, and then a mix of income
within that residential component.
Just standing back looking
at it with all your years of experience and your pan-Canadian
breadth of view, are there aspects of this that government ought
to be looking at that aren't necessarily going to interfere with
the marketplace-see, John, I can say that-that don't necessarily
have to do that but do allow us to preserve an important part of
our communities? Just your thoughts on that, Peter.
Woolford: That's an interesting question, and it's one
that we've wrestled with. First of all, I have to tell you, Mr
Christopherson, I am going to disappoint you.
Christopherson: Oh, no.
Woolford: I know this comes as a shock.
Christopherson: How can you keep these people in
poverty, man? How do you sleep?
Woolford: I think the answer there is that the market
for labour is like everything else: there's a market. What you
want to do is ensure that people respond rationally to signals. I
think you'd find today in fact, if I'm not mistaken, that the
average retail wage in Ontario now is significantly above the
minimum wage. That is driven there by market pressures.
Christopherson: A lot of that's also driven by the UFCW,
which negotiates good rates for their members who work in grocery
Woolford: In the general merchandise retail trade, the
UFCW is not a significant factor.
Christopherson: No, but they would affect the average.
But anyway, sorry to interrupt.
Woolford: Our argument there would be again that we feel
it's better for buyer and seller to operate in a free way.
The impact of big boxes on
communities is a tough one. We've actually had a lively debate
within the trade about this. As a matter of fact, if I'm not
mistaken, it may be in this copy of Canadian Retailer or an
earlier one-I'll send you a copy, Mr Christopherson-where I
wrestled this through, because our retailer of the year last year
was in fact Dave Ferguson of Wal-Mart Canada, and we had a number of independent
members come to us and say, "How can you honour somebody who's
the Darth Vader of retail?" and our answer was, "He is in fact a
very good retailer. We should be proud of him and small merchants
should be proud of him as well."
Those big boxes have built
a format, a style and a way of retailing that is very attractive
to the consumer. If the consumer wants to go downtown, they will
go downtown, but they have voted with their time, their wheels
and their dollars to visit those stores and it's not the
retailer's business to tell them they can't do that. That's the
hard nut we have to chew on in the retail business. The consumer
is the king or the queen of our business and what he or she wants
drives the retailer.
Mr Ted Arnott
(Waterloo-Wellington): Thank you very much, Peter, for
your presentation. I haven't been here for 12 years to hear you
but I've enjoyed the last three or four.
I wanted to ask you about
the minimum wage because our friends in the NDP continue to raise
this. The adult minimum wage, I believe, is $6.85 an hour and it
was raised considerably under their tenure in power. Was it 40%
that it went up, Dave?
Christopherson: A little under, but I'll take credit for
I believe it is their position that it should be raised to $7.50
Christopherson: It would make it equal with the American
It seems to me our position in 1994-95, as a caucus, was that we
would freeze the minimum wage until competing jurisdictions
caught up. To be fair, I think some of our competing
jurisdictions have caught up, if you convert American dollars to
Canadian dollars. That's my understanding.
Christopherson: Didn't that just support my
One discussion at a time, please.
Just let me finish. There have been some economic studies which
indicate that an increase in the minimum wage actually costs jobs
and that employers choose not to hire people as the price of
labour goes up. What do you think the impact of an increase in
the minimum wage to $7.50 an hour would be in terms of jobs in
the retail trade in the province?
Woolford: I think the impact would be negative. At the
present time, the negative effects might be somewhat muted
because conditions are so strong. Where you'd probably see a
stronger effect would be whenever growth does slow down.
It might be helpful for
members to understand how retailers go about the business of
paying. A retailer will have a certain amount of margin on the
product which generates the revenue to the retailer above the
cost of the goods sold, and out of that margin they have to pay
all their operating costs. Typically what a retailer will do is
calculate a certain portion of that margin as their salary
budget, their wage budget, and out of that comes everything: the
Canada pension plan, employment insurance premiums, workers' comp
premiums, pay, benefits, the whole works. So in a sense, the
salary or the wage that a retailer can afford to pay is the
residual after you've taken the other elements off. Then you
simply calculate out what you can afford to pay or what you're
required to pay by minimum wage and that becomes in essence your
wage per hour.
What it means in our
business, then, is that if the cost per hour goes up, as a
retailer, if there's not additional money in that pot, you simply
reduce the number of hours the people work in the store. Retail
hours are somewhat flexible. You can dial them up or dial them
down. The saying in retailing is, "You're only as good as
yesterday's sales." They watch their sales very closely. Most
medium- and large-size firms have computer programs that measure
it almost to the quarter hour. They know exactly when the
customer wants to shop and they try and ensure that set staff are
there for those times. So they do manage those costs extremely
closely, they watch them on a daily or weekly basis, and if the
base tends to get raised, then the impact at least in the medium
to longer term will be fewer hours of work for people and
probably somewhat fewer opportunities.
We've run out of time. On behalf of the committee, thank you very
much for your presentation this afternoon.
O'Toole: See you next year.
Woolford: Same time next year.
ONTARIO SECONDARY SCHOOL TEACHERS'
Our next presentation is from the Ontario Secondary School
Teachers' Federation. Will you please come forward and state your
name for the record. On behalf of the committee, welcome. You
have 30 minutes for your presentation this afternoon.
Manners: On behalf of the 50,000 members of the Ontario
Secondary School Teachers' Federation, I'd like to thank you for
the opportunity to present today. My name is Earl Manners. I'm
president of the Ontario Secondary School Teachers' Federation.
On my right is Mark Ciavaglia, who many would probably know from
our staff, who is our legislative liaison, and on my left is Dale
Leckie, another member of our staff, who works in the area of
You have a copy of our
brief and, knowing we have just half an hour and wanting to
ensure there is time for questions, I do not intend to read it or
go through it page by page, but I will try to highlight some of
the key points that I think need to be emphasized.
To cut to the chase, it is
our position that there are not enough teachers and education
workers to provide for the needs of Ontario's students today.
Therefore, there needs to be a significant infusion of money into
the education sector. The lack of funding and the inflexibility
of the funding formula and other related legislation have served
to make Ontario schools less attractive places to work. Finally, there is not enough
money to support the educational reforms embraced by this
government, whether they be your safe schools policy, the
integration and provision of programs for special-needs students
or the new curriculum.
There is an illusion out
there, though, that there's been a lot of new spending on
education in this time of prosperity. Throughout the last year
there has been a series of announcements about education funding,
which we have listed in our brief. For example, new funding for
the learning opportunities grant has been announced four times,
funding for new textbooks has been announced five times and
special education funding has been announced 10 times throughout
the past year. It does, I think, create the illusion. Some people
may believe that each time these announcements are made, they are
really announcements of new funding for the education system. If
you add them all up, they come to $4.7 billion. I don't think
that has been an accurate reflection of how much money has been
invested in education in the year 2000. In fact, most independent
analyses of the education funding formula have agreed that over
the term of this government more than $1.7 billion has been
extracted from public education when you take into account
enrolment increases and inflation as well.
We see this as a missed
opportunity, because there has been no new investment in
education, despite the prosperity that has been emphasized by
both the previous finance minister and the current finance
minister. The government has said that in the last fiscal year
they have increased funding to public education by $190 million
in net new money. But when you take into account inflation in
Ontario, enrolment increases and the fact that the funding
formula continues to claw back pension contributions and any
savings from retirements and hiring new teachers, there has been
an actual decrease in the past year, as there has been in
previous years under this government.
I don't often quote the
finance minister, but I will. In Hansard on February 13, the
Honourable Jim Flaherty said, "we are on track for a $1.4-billion
surplus in 2000-01." We know that Minister Ernie Eves indicated
there was a surplus last year, but none of it went to the public
education system. We believe that if there are real surpluses
this year, it is time to reinvest in our public education
In that same presentation,
the Honourable Mr Flaherty noted that Ontario has the most
educated workforce in the OECD. He also indicated that in order
to be competitive, we have to remain competitive with the Great
Lakes states that surround us. If the logic is accepted that we
have to remain competitive with our colleagues in the Great Lakes
states, then I think it would apply to education expenditure as
well, if one of the drawing points for the Ontario economy is
that we have the best-educated workforce.
When you look at a
comparison of Ontario with the Great Lakes states, we just don't
measure up competitively. In New York, our neighbour to the
south, they're spending over $10,000 per pupil; in Pennsylvania,
over $9,000; in Wisconsin, over $8,000; in Indiana, over $7,000;
in Minnesota, almost $8,000; in Ohio, almost $8,000; in Illinois,
just over $7,000. In fact, the average of the Great Lakes states
on per pupil expenditure is $8,458. What is Ontario's
expenditure? Almost half: $4,992.
As a result of that, we're
in danger of losing the most highly trained and educated teachers
and educational workers in this province. In our brief, on pages
10 to 13, we highlight the teacher shortage in particular. I'd
specifically like to reference page 12 of that section, because
the shortage of teachers is not just due to the demographics of
retirement; it's due to a work environment that is increasingly
unattractive and not competitive. Last year, over 9,000 people
left the rolls of the Ontario teachers' pension plan. Of them,
5,142 were due to retirement; 4,414, though, were quits. That's
almost half the number of people who left the rolls.
This is unprecedented, and
they are not people who are just nearing retirement and decided
to leave with penalties. They are people like Dan Duquette, who
happens to teach at my old high school, Grey Highlands Secondary
School in Flesherton, who is recognized as an exceptional trades
and technology teacher, and after many years of teaching has
decided to quit and leave the profession in its entirety. He is
an example of many young people who don't want to teach any more.
His leaving is particularly poignant, because as a technical
teacher he is one of 1,525 technical teachers who will be leaving
the profession in the next year. There are only 77 technical
teachers being trained in our faculties of education across this
province. I don't know who is going to replace Dan Duquette in my
hometown of Flesherton.
Last year, 6,669 teachers
graduated from Ontario faculties of education; however, 662 did
not apply for college accreditation, which they need in order to
teach in this province. That's 10% of the students who graduated
from Ontario faculties, a 135% increase from 1999. Applications
to faculties this year are down 35%, and the number of spaces in
the faculties doesn't match the number of retirements even if the
faculties filled up all their spaces.
This is a problem that in
part was predictable due to demographics but was also predictable
due to the changes in legislation and funding formula that have
hurt our education system. In fact, since this government has
been in power, because of the impact of the funding formula and
legislation, the number of teachers and education workers,
whether directly or indirectly, has declined by over 9% across
this province. There are only 58 staff per 1,000 students in our
schools today, and that has a direct effect on school safety. The
more adults in the school, the more safe the school. That 9%
reduction does have an impact.
I'd like to talk directly
for a second about students and the impact of the funding formula
on student opportunities. I will not reiterate the concerns
that are raised in our brief about special education funding and
other areas. I think they're well known to everyone in this room
and to the public at large. But I want to bring up an aspect of
the funding formula that concerns teachers and educational
workers greatly, and that is the underfunding of student
The funding formula, as
it's written, only provides funding for an average of 7.5 credits
per student. Many boards, when they look at their student
enrolment in courses, find that the average number of credits is
greater than that. That's something that should be applauded. Our
students are trying to take as many courses as possible. They're
trying to get a wide-ranging education in a number of fields so
that they've got greater opportunities for the future.
These average credits per
student should get higher with the introduction of the new
curriculum in an attempt to try to ensure more students graduate
in four years. But today, even under the old method, in Thames
Valley, for example, the average credit is 7.56. That doesn't
sound like an awful lot of difference between the average of 7.5.
But in terms of the number of credits it generates and the number
of teachers that's required to teach those extra credits, that's
an $800,000 shortfall on the funding formula to the Thames Valley
board of education. Halton region also has a 7.56 average credits
per student ratio, and that means a shortfall of $450,000. We
just use those two as examples, but there are many more like that
all across this province.
In conclusion, I would just
like to say that this government likes to look to the United
States when it comes to making comments about competitiveness.
Some of our American neighbours have made a number of the
mistakes that we believe are being made here in Ontario today, in
particular that the American education system has seen the
effects of funding neglect over many, many years. Recently, New
York state, for example, is revisiting its state-wide funding
formula. On page 6 we've included a quote from Governor Pataki of
New York, who has stated that the state funding formula is a
straitjacket and that school districts need more flexibility when
it comes to funding for education because they can better meet
the needs of their communities that are served by those district
We have seven
recommendations. We believe that there should be some measure of
flexibility in the funding formula that allows school boards the
historic right to raise funds locally. We believe that the
provincial support for public education should match and indeed
exceed the inflation rate on a yearly basis. We believe that
workload provisions, like those established in Bill 74, introduce
a level of province-wide bureaucracy and red tape that is hurting
the education system; and that the student-based funding formula,
if it is to be a student-based funding formula, should not limit
the number of student opportunities by limiting funding for the
number of credits that students take. Recommendations 5, 6 and 7
reiterate concerns about aspects of the funding formula that
we've talked about before, whether they be special education or
the clawbacks that are introduced when school boards hire new and
younger and well-educated teachers.
We'll end on that point.
Thank you very much.
Thank you very much. We've got approximately three minutes per
caucus, and I'll start with Mr Christopherson.
Christopherson: Thank you, Earl and colleagues, for
coming forward. Just to stand back for a second-I was trying to
think exactly where I'd like to go when I had a chance to get the
floor-in as short a time, obviously, as possible, Earl, is it
possible to just give us a snapshot of where we were five years
ago, before the government started down its road of creating a
crisis, and compare it to where we are now, and some sense of
where we're going to be at the end of, say, this term of the
government, hopefully the last, in terms of the changes that are
happening? So where did we start out, where are we now, and if we
keep going down this same road, if they don't listen to you and
they don't listen to anyone else who's coming in and saying
education at all levels needs to be funded for a whole host of
reasons, including good business, if they don't do that, where's
that going to leave us four years hence? What's the system going
to look like?
Manners: In 1995, we had an education system that had
one of the best graduation rates in the western world. It
included more students than anywhere else in the education system
to make sure their needs were met. It was flexible enough that
local communities had some say and influence over the kinds of
programs that were available in schools and throughout
communities, and where there was some democratic access by
parents and the community through their school boards to the
That has dramatically
changed with the introduction of a province-wide funding formula,
province-wide legislation that has created more and more
inflexibility in the system and has led to significant cuts to
programs and services for students.
Today, communities can't
meet all the needs that parents would like to see met for their
students. There are waiting lists for special education. Adult
education, for example, which was probably one of the most
impressive programs in the world here in Ontario, has been
eliminated and privatized throughout Ontario and does not reach
the number of students that it used to reach in any way, shape or
form. The money's just not there.
In 1995, when people
entered the education system as a teacher or an educational
worker, they chose that as a calling and because they had an
interest in education and it was usually their working life
commitment. Today what we're seeing is a dramatic increase in
people leaving within their first five years of work because
their idealism is no longer being sufficiently realized because
of the changes to the education system. And we're not getting the
kinds of people entering anymore, wanting to work in education,
with the qualifications that this education system has depended
on for years. That doesn't bode well for the future.
The Chair: Mrs Molinari.
Molinari: Thank you very much for your presentation. I
have some comments but I'll start off with some questions.
I find the chart that you
gave us here, that shows the breakdown in per pupil expenditure
in various areas, quite interesting. I have some questions on
what assumptions were used in preparing this chart. It's been my
experience that you can take numbers and, depending on what you
put in it, you can make it look like whatever you want it to look
To be more specific in this
area, to compare apples to apples, I would like to know what
assumptions have been used to come up with these numbers. What
percentage of this is in fact salaries versus ours? If you could
start off with answering those questions, it would help.
Manners: The comparisons are based on the same basket of
items from the various states through the various provinces, the
District of Columbia and the territories. If you're talking about
the per pupil expenditure rankings for North America in its
entirety-and that's where we got the statistics for the border
states around Ontario that I quoted specifically in my
presentation-they reference the funding formula and the program
services, salaries etc that are required to run the education
system, so we are comparing apples to apples.
As we note in our brief, we
have used the January 31, 2000, conversion rates of Olsen and
Associates of Zurich, Switzerland, to make sure we're controlling
for the differences in the value of the Canadian dollar and the
Molinari: Would you know what percentage of that would
be salaries? In Ontario 75%, 80% of the budget is salaries.
Manners: Education, like health care, involves people
working directly with students, so salary is a significant
portion of the budget in any state or province when it comes to
public education, just as it is with public health care. I would
suspect-and I could probably check some of these figures and
provide them for you if you like-that in some of those American
states and other provinces the ratio for the salary component of
this would be about the same as Ontario.
Molinari: It would be interesting to know.
Several studies have been
done in the past that have stated that the old funding model was
inadequate and flawed. It had been presented to previous
governments numerous times and no government had the courage to
actually come in and change that funding model, whereas in 1995
this Conservative government came in and put forth a per pupil
funding model that was more fair to all of the students in
Ontario, rather than areas rich in assessment, which always had
more money and were able to offer more for their students, versus
poor in assessment.
The other difficulty with
the old funding model was that when boards were allowed to levy
tax increases, there was a threat of strike action, so boards
were forced into positions of increasing salaries to a certain
extent and taking money away from classroom expenditures, because
that's not as tangibly seen by the parents and students as a
strike. Some of the changes that were made in the present funding
model put more parameters into what classroom spending should be
and gave boards more restrictions as to what that should be with
respect to administration, staffing and supplies and services for
the schools. So there have been a number of changes that were
made that were positive, that would directly benefit the students
and would not put boards in a situation where they were forced
into certain decisions because of public pressure and the
pressures of all of those around them. I'd like your comments on
Manners: I appreciate the question. There is no question
that the previous funding formula was not working as well as it
might, but there were no studies ever suggested that I'm aware of
that the province should take over complete control of the
funding of education. In fact, one of the problems with the old
funding formula was not the principle it was based on but the
fact that the provincial share of funding had decreased to the
point where it put too much strain on the local property tax
system, which is not a progressive tax system like income is. So
more and more burden was being placed on local school boards to
go to the local tax base to pay for the basic costs of education
that historically had been the responsibility of the provincial
When the funding formula
was developed, it was based on the assumption that about 60% to
70% of the funding would come from the province and 30% would
come from the local tax base. As that dwindled-it ended up that
70% of the funding was coming from the local tax base-you ended
up with problems related to rich assessment bases and poor
assessment bases. If it had stayed at the original ratio, that
would never have happened, because that was already built into
the assumptions of the original funding formula.
School board tax increases
over the last 20 years are tied more to the decrease in
provincial funding than to negotiations or to the demands of the
community for new programs. School boards were asked every year
to pick up more and more of the burden and that's why there were
increases in the local tax base.
I don't know why you were
trying to emphasize salary in both of your questions. Salary is a
factor that is part of the education system. If the salary was so
good in Ontario, why is there a teacher shortage in this
province? Why are people leaving in droves from this province?
Perhaps to get out of education in its entirety, or to go to
places like New York state, where they recently had over 400
people apply to work in places like Harlem because they thought
that was a better place and better environment to work in than
I don't apologize for
teachers who are highly trained, well educated and dedicated to
the cause getting a fair salary. At no time have our salaries
ever taken advantage or gone beyond inflation or other factors
that the previous speaker here talked about-supply and demand-in
Ontario. In fact,
teachers and educational workers in this province have not had a
pay increase for 10 years and they cannot be blamed for the
inadequacy of the funding formula.
Molinari: Just to clarify, 85%-
Ms Molinari, we've run out of time. Mr Phillips.
Phillips: Just an observation, then a comment and then a
question. They gave us some numbers yesterday or the day before
on funding, and it was interesting to note that while Mike Harris
now sets all the property tax rates, he is actually raising more
money off property taxes today than 10 years ago, in spite of the
fact that it was all supposed to be, "We're going to take it off
property taxes." I see that 10 years ago they were raising $5.473
billion and today they're raising $5.739 billion. So that's the
shell game you talked a little bit about.
I got elected to the school
board in 1969, when the TVs were coming in, and I had this
thought that they were going to replace teachers and all that
sort of thing. I learned in 10 years on the school board.
Education, to me, is very simple: it is a well-trained, motivated
teacher in front of a bunch of students in a safe environment.
It's just that simple and it probably hasn't changed in 3,000
years. I believe that to the core. That's why I always say to the
government, "If this were a business, you are making a huge
mistake in demoralizing your prime asset, which is the motivated
teacher. It just doesn't make any business sense."
I hate to live in the past,
but we had the 40th reunion of our old football team and,
amazingly enough, all three of our coaches were there when we
went back after 40 years. They remembered not only our names but
our numbers, every play, every mistake we made. My point is, from
my own experience in school and my experiences as a trustee, that
we've got to understand what this is all about. As I say, it's
putting students in a safe, clean, warm environment with a
motivated teacher. We just make a huge mistake in demoralizing
our prime asset.
Now my question: the
challenge, Mr Manners, is that there's a lot of jargon in
education. The funding formula is a trap, because the government,
in my opinion, can hide behind it and say, "We've increased the
amount of funding for X," and they do it by taking away in a
bunch of other areas, but then we're debating the details of the
I'm searching desperately
to find ways that we can humanize this. I know you try your best
in this, but I think until we do that, the public who observe us
will simply be confused about what the true state is. I guess I'm
pleading with you to do a very difficult task, and that is to
help humanize this for us and the implications of all the changes
that have gone on-you've done some of that for us today, but for
now and in the future-just so that when the public are subjected
to the funding formula and this and that, they also have a human
side of it. That's somewhat of a comment but also a question. Is
there any way we can get some measurements that the non-educator
can relate to easily so we can begin to gather what I think
should happen, and that is, overwhelming public support for our
public education system?
Manners: Thank you very much. We always try to humanize
this and sometimes the best way to humanize the situation is to
talk about people. I don't intend that to be self-serving, just
to talk about teachers and educational workers, but also students
and the people who are involved in education throughout the
The government makes a big
deal that they've taken money from administration and moved it to
the classroom, yet their definition of the classroom has become
ever smaller so that it doesn't even include large aspects of the
school. Yet I think most people in the public would believe that
anything that is going on in the school is classroom or
You can't operate a school,
you can't have students in a safe, welcoming, clean environment,
if you don't have a custodian, yet a custodian is defined as
administration under the funding formula, a definition that any
custodian would have a hard time rationalizing. The secretary in
the school, who is often the first person to phone home when a
student is absent and may be the first person to discover that
there's been an accident on the way to school, is defined as
administration yet is integral to the operation of that school.
Other support staff are also defined as administration. It's a
nice way to shrink the school, to shrink the services and
eliminate the programs.
Adult education: because
they turned 18, they were no longer considered students and
therefore all of the expenditures were defined as administration.
Here were people getting a second chance, getting off the welfare
rolls and getting back into productive life, yet that was defined
as administration in order to eliminate the program from the
public education umbrella. I think that's the best way to
Let's just take a look at
that arbitrary definition between administration and classroom
and say that's the point where we need to rethink and re-look at
the funding formula. If we come up with a real definition, where
the whole school is considered a classroom and administration is
something else off campus, then perhaps we can get back to a
better funding formula that's serving the needs of students,
parents and communities.
On behalf of the committee, thank you very much for your
presentation this afternoon.
COUNCIL OF ONTARIO UNIVERSITIES
Our next presentation is from the Council of Ontario
Universities. Could you please come forward and state your name
for the record. On behalf of the committee, welcome. You have 30
minutes for your presentation this afternoon.
Rozanski: I am Mordechai Rozanski, vice-chair of the
Council of Ontario Universities and president of the University
of Guelph. I'm joined by Dr Ian Clark on my right, who is president of the
Council of Ontario Universities, and Ken Snowdon to my left, who
is the vice-president of the council.
Thank you for allowing us
to present to you today. In doing so I note the fine OCUFA
presentation made earlier. As you will hear during our
presentation, there is agreement with many of our colleagues' key
points. Knowing that our time is limited and that OCUFA has drawn
your attention to many of our shared concerns, we'll be very
focused in our presentation.
The evidence clearly
illustrates that a highly educated population and a dynamic
research culture are vital to positioning a jurisdiction to
compete in the new knowledge-based economy and to contribute to
improvement of the quality of lives of Ontarians. The outcomes of
the Premiers' conferences held in 1998 are clear reinforce-ment
of these facts. Over half of the priorities identified in the
summary report, Road Map to Prosperity, revolve around education.
It is widely acknowledged that education is inextricably linked
to our province's vision for economic vitality, social
advancement and cultural improvement.
You have all received a
package which contains our brief to the committee and two other
documents that provide yet more very compelling arguments for
investing in Ontario universities and, therein, Ontario
Ontario universities make a
vital difference to the quality of life of this province and its
people. In addition to the very important social and cultural
reasons for investing in our universities, there are sound
Let me share with you a few
key points from the Economic Impact Study: The Economic Impact of
Ontario Universities. This report, by Enterprise Canada, was
commissioned by the Council of Ontario Universities and has just
been released here today. I hope you will be impressed, as we
First, Ontario universities
are provincial leaders in job creation. This means that Ontario
universities are major contributors to economic growth and job
creation, directly or indirectly sustaining more than 375,000
jobs in this province.
Second, for every dollar of
investment in universities, the government gets back $1.50. This
means that with the direct provincial investment in Ontario
universities of about $2.1 billion per year, the province
receives more than $3.2 billion back in revenues generated
directly and indirectly by the university sector. You might see
this on your pie charts on the front cover of the newsletter.
Third, Ontario universities
generate more than $10 billion in economic activity each year.
This means that the gross domestic product of the Ontario
university sector is larger than any of the province's plastic
products, textiles, paper products, fabricated metal, electrical
and electronic products, communications or chemical products
You have a copy of the
report and the special edition newsletter in your folder and I
hope you will be able to steal time from your busy schedules to
review these materials. The newsletter also provides a glimpse,
through specific examples, into the scope of the contributions
that Ontario universities make to the province and its people. I
know these examples will make you immensely proud of the rich
resources we possess in our universities and the direct relevance
to us, both as individuals and as residents of the province.
The evidence is clear: an
investment in Ontario universities is an investment in this
province. The social, cultural and economic dividends are
significant and far-reaching. University education benefits
Ontario in the aggregate by creating jobs and wealth in the new
high-growth sectors, by developing a high calibre workforce that
is one of the greatest attractors for new economic investment and
by preparing graduates to contribute to society in the arts,
humanities, social sciences and sciences as creative and
well-rounded individuals. A university education benefits
students individually by increasing their employment and income
prospects and stimulating personal growth. Ontario's investment
in university students produces immediate gains for the province
that accrue over time.
Let me also say that a
jurisdiction's research capacity is another key determinant of
prosperity and quality of life. Among its many benefits, research
spawns innovation, commercialization and technology transfer, and
attracts investment. Canada depends on the higher education
sector for almost one quarter of its national research and
development effort and Ontario is home to over 40% of the
scholarly and research activity in Canada. Research and scholarly
activity, the wellspring of innovation, pervade every aspect of
university teaching and learning, pushing the boundaries of
knowledge and encouraging free inquiry.
Allow me to place this
important point about innovation in a context that was cited
earlier by our colleagues from OCUFA. A vibrant and diverse
research environment is central to our teaching and learning
success. It also stimulates our ability to attract and retain the
very best faculty and graduate students in what is an extremely
competitive international marketplace. When I say "diverse
research environment," I join OCUFA in referencing Heather
Munroe-Blum's study, Growing Ontario's Innovation System, which
makes clear that innovation draws on the full range of basic and
applied research in the sciences, humanities and social
Why is investment in
Ontario's universities so important at this particular juncture?
Ontario is on the verge of the greatest surge in demand for
university opportunities in more than 30 years. Yes, the
challenges are considerable and universities have been working
closely with government to plan for the expansion for some time,
but there is reason to welcome these challenges, to build on our
strengths and in turn to ensure Ontario's success in the new
Over the next decade, an
additional 90,000 students are likely to be seeking admission to
Ontario universities, bringing the student total to some 320,000
by 2010. You can see that on our chart. Our population of 18- to
growing. It is expected to increase by over 18% by 2010, and
within this age group there's an increase in the number of
individuals participating in post-secondary education.
Conservative projections indicate that increases in participation
rates may reach 25% by 2010. It is also expected that
participation among those in mid-career will increase as the
knowledge economy requires more working adults to renew their
As most of you here know,
secondary school reforms in our province, particularly the
elimination of grade 13 in 2003, will create a significant
increase in demand. In less than two years, we will see the last
of the students in the former secondary school system and the
first of the students in the reformed secondary school system
seeking university admission at the same time, resulting in an
abrupt increase in the demand for first-year places. At the
height of this peak, in 2004, secondary school reform could
result in an additional 33,500 students seeking admission to
Ontario universities, which are at capacity. Remember, that's
over and above the normal first-year admission numbers, which
total close to 50,000.
Let me make you see one
other point if we go out further, to 2005. In 2005, we expect to
see total full-time undergraduate enrolment approach 300,000
students. Just as our student numbers are peaking, our faculty
numbers are on a steep decline. We must reverse this trend as
quickly as possible. It is faculty who help guide students'
thinking, challenging them to deepen their understanding. Through
teaching, research and their ability to nurture innovation, they
generate the advanced knowledge that Ontario needs for leadership
in the new economy.
It is estimated that, at a
minimum, 13,500 new faculty will need to be hired in Ontario;
that means 1,350 faculty to be hired each year for the next 10
years. Seven thousand five hundred will be needed to offset
faculty losses, due primarily to retirement, a trend that is
mirrored across North America, resulting in competition from
virtually every jurisdiction on this continent. It makes good
economic sense for Ontario universities to be in a position to
seek out the best and the brightest. Four thousand two hundred
will be needed to meet the projected enrolment expansion over
this decade and 1,800 will be needed to improve the quality of
the educational experience that is currently undermined by
Ontario's disproportionately large student-to-faculty ratios,
which lag behind the other nine provinces and the United States.
You might take a look at page 4 of the brief.
Consider that Ontario's
ratios are some 10% below the average of Canada's nine other
provinces and some 30% below our peer public institutions in the
United States. We must start recruiting faculty as soon as
possible. The surge of new students will arrive on our campuses
by 2003, two years away. It takes 12 to 18 months to recruit new
faculty in an environment where universities in other Canadian
provinces and in the United States are also competing for
This situation also
reinforces the importance of expanding graduate studies to
develop the pipeline of new faculty. Let me mention that
currently Canada produces 4,000 PhDs per year. Government and
industry recruit some 50% of these graduates. We have a daunting
A number of other factors
contribute to the quality of students' learning. Faculty rely on
the support of numerous individuals to deliver excellence in the
classroom and beyond. Our students count on a host of resources
to round out their life as a student, from academic and
administrative support staff and well-maintained labs and
learning resources, to heating, lighting and food service
facilities. Given the inadequate funding, Ontario universities
have had to defer the maintenance and renewal of these teaching
faculties and resources.
Providing our students with
the deeper tools and the proper tools and resources for success
creates the solid grounding that stimulates the pursuit of
excellence. That results in the acquisition of knowledge and
skills that will make the province a winner in the new
The university of 2001 is a
different, more efficient and dynamic institution than that which
existed just a few years ago. But significant reinvestment by
government in basic operating grants is necessary to enable
Ontario universities to move forward and develop the
infrastructure that provides the necessary tools for teaching,
learning and research.
A predictable planning
environment will create more stability for the well-being of our
universities and, more importantly, for the ultimate economic,
social and cultural well-being of our province. That well-being
is fuelled in direct proportion to the level of investment in our
universities. The Ontario government has recently begun
substantial reinvestment in university education through
innovation programs such as SuperBuild, ATOP and improved student
assistance programs. As you will note from page 7 of our brief,
the Ontario government is also making exceptional investments in
research through doubling the Ontario Research and Development
Challenge Fund, expanding the Ontario Innovation Trust by $500
million, doubling the Premier's Research Excellence Awards for
the remaining years of the program and creating an annual
research performance fund to support research overhead costs.
Universities have responded
to these forward-thinking initiatives, resulting in increased
enrolment, new and expanded courses, increased use of
technology-mediated learning and innovative partnerships with the
private and public sector. Ontario universities are well-placed
to ensure that Ontario students can access world-class education
and, as a result, can help position this province to compete in
the global economy.
Some excellent work has
taken place thus far. What we need to turn to now is an
investment in university operations, to meet enrolment demands,
to hire new faculty and retain them, to ensure that students are
offered the highest quality learning experiences, that university
physical infrastructure is sound and to build the province's research
capacity. Here we have an opportunity to do something terrific
for the future of our province, to contribute toward the
objective of making Ontario one of the world's leading
jurisdictions, as well as one of the best places to live, work,
invest and raise a family.
The people of Ontario have
every right to expect maximum return on their investment in their
universities, and to achieve this, it is clear that further
investment will be required. But it is also clear that it is a
wise and necessary investment that will generate considerable
payback for this province in the new economy.
Before concluding our
presentation, I'd like to ask Dr Ian Clark, who has been
intimately involved with the Investing in Students Task Force
consultation, as well as the economic impact study, to add
anything that he may wish.
Clark: Thank you, Dr Rozanski. The committee has
probably heard in the course of presentations lots of claims of
different groups of how their particular sector is good for
Ontario. This economic impact analysis that we are tabling today
is very surprising to me, because it's the first time I've been
able to see how this has actually been calculated. It just seems
like magic that you put in $1 and get out $1.50. Let me just draw
your attention to the analytics very briefly on page 4 of this
document, so you can see how this magic occurs.
This is actually a very
conservative kind of analysis, because it's looking just at the
Ontario government-the Ontario government puts out money, what
comes back into the Ontario government, not what goes into the
general economy, not what goes into people's increased incomes,
but just the government. The provincial transfers, the first
line, are $1.9 billion, and another $225 million for student aid,
and the right-hand columns show what comes back every year. So
$771 million comes back directly from universities in terms of
the taxes and these other various components. Coming down, the
one that makes it such a dramatically important investment is the
payback, which is the third from the bottom line, the increased
income taxes that university graduates provide to the province
because of the increased incomes that they generate by virtue of
having a higher education.
That's why, in terms of
when you think of any sector, I don't think there is any other
sector where this occurs. You put the money in and it really is
an investment in the most sort of classic, bean-counter sense of
an investment. You actually put the money out from the Ontario
government and here the government gets back in more than you put
out. We're just making this public today. It's quite a remarkable
Rozanski: It's remarkable. It's a case where you can
actually say that we're doing well by doing good.
Let me conclude with the
comment that we are very appreciative that Minister Cunningham
and her colleagues in the Ministry of Training, Colleges and
Universities have a profound and sympathetic understanding of
these needs and are committed to trying to meet them. Because we
have worked so constructively in partnership with the ministry
over the last year to develop plans to meet these various
challenges, we remain hopeful that the government will be able to
commit the necessary resources to make this happen.
On a closing note, I want
to thank the Chair and I want to thank the members of the
committee for giving us the time to be present today. We'd be
very pleased to answer any questions that you have.
We've got six minutes in total for questions and answers, so two
minutes per caucus. I'll start with the government side.
Molinari: I know my colleague John O'Toole has a
question, so I'll just make a very quick comment just to thank
you for all the work you're doing with respect to the issues
you've brought forward. I know Minister Cunningham values the
work and the constant dialogue with your organization and also
the work you've done in the Investing in Students Task Force. I'm
anxious to have a look at that report that's coming out.
Certainly, I know the work you've done is appreciated by all of
the ministry. So thank you and keep up the good work.
O'Toole: Just very quickly, you've made a statement, and
I appreciate your presentation, and I do believe it's an
investment in intellectual capital. We've heard that argument
from the business side, but this is an interesting investment
proposal. You mentioned that Ontario has 40% of the research of
all of Canada, and yet when I look at the other numbers, we're
the lowest funded, the way it's put to me. How would you explain
that? Is it the traditions of the great universities like Guelph,
like U of T and Queen's and Western, or is it something else? Is
it this synergy of industry, research and universities all
working together as part of-it's the right place to be in
technology and medicine and-
Rozanski: You've answered the question wonderfully, so
O'Toole: Governments can't do it all.
Rozanski: That's clear, and we understand this
partnership. I think part of the reason why it's so concentrated
here is the excellence of 17 world-class universities with
outstanding faculty. The key is that to be able to sustain that
activity, we need to keep attracting these people. We're going to
lose 35% to 40% of our faculty over the next 10 years, plus we
have to have a significant portion of that for the growth that
we'll have and the quality.
But let me also indicate
that when we talk about investing in resources, while we may
represent 40%, by comparison to other jurisdictions, the dollars,
while they've been tremendously increased in the last few years
both by the province and the federal government, our focus is
also on the operating grants, which is the key. It's great to get
research funding, but we need to have the faculty, we need to
have the laboratories, we need to have the technicians to be able
to bring that into practice and have technology transfer that
results. Otherwise, the research activity will be moribund.
The official opposition.
Mrs Marie Bountrogianni (Hamilton
Mountain): Welcome. A great presentation, as always,
from the council. Less conservative research studies on the
impact of public money spent on education, of course, have shown
that for every dollar spent on colleges and universities, $4 goes
back to the local economy, sort of more general research
outcomes. I think I may have read that from one of your
Rozanski: That's the number in our local community. That
would be true. But we tried to be extremely conservative and look
at direct impact, and I'd let my colleague speak to that. But
you're absolutely right: one could say that the number is
Bountrogianni: With respect to your discussions and your
optimism that the government will co-operate and give the need
money for universities, how soon would you need to know how much
you will be getting at the university sector for 2003 to deal
with the faculty shortage and the influx of extra students? I
have another question if I have time, so please answer
Rozanski: We're always hopeful. We've been working for
over a year in developing plans that deal with enrolment and
focus on funding issues. It is of course our hope that we would
know as soon as possible because we need to begin the task, as
we've said and as you have mentioned, of the hiring and
investing. We're already at capacity with our students and we
need to go forward, so the sooner the better because of the lag
time just in hiring. We're competing with every other
jurisdiction, including in Canada the other nine provinces.
Bountrogianni: Duly noted. Government, as soon as
possible, they need to know.
Lastly, again with respect
to your optimism, you also made a presentation for the private
universities bill and made a number of good amendments. How many
of those amendments were passed and integrated into the bill?
Rozanski: I don't believe any were.
Christopherson: Thank you very much. It seems to be
education day today. Hopefully, the folks at the ministry are
I don't know if you were in
the room. I did point out-I won't go into the same spiel; if
you're interested in how it'll play out, it's there in the
Hansard-but there are two examples cited by the chief economist
for the TD Bank first thing this morning. Two of the charts that
he presented were very much a detailed analysis. Two of these
charts speak to the underfunding of universities in the context
of their importance to business.
Rozanski: I'd love to have a copy.
Christopherson: I'm sure if you ask Susan she can make
arrangements for you to get a copy of the TD presentation.
There's probably one kicking around.
I made the point earlier
with the faculty association that it's not just you making the
case, that there are good business reasons to do this. You've now
got business making the argument that there are good business
reasons to do it, so you might want to be sure you remind people
A lot's been dealt with
with the underfunding. I just want to maybe deal, in the short
time I have, specifically with the double cohort. Number one, you
say there are some plans in hand. That's probably the most
optimistic and all you said was you've been working on it for a
year. I hear a lot of folks who are terrified about exactly
what's going to happen.
There are a few things in
this I'd like you to address for me if you would. Number one,
what sort of things are being looked at specifically? Just a
little more sense of on-the-ground. In my community, at McMaster
University, what are we going to see there?
Rozanski: A great university, number one.
Rozanski: Number two, we have developed, in partnership
with the government, a five-year plan, institutional plans at our
institutions, to be able to respond to the double cohort. Of
course, that is contingent on getting the funding we need to hire
the faculty and maintain the facilities that we have.
Christopherson: One's a nuts-and-bolts question and the
other is a philosophical one, if you will. But the nuts-and-bolts
one is, if there's going to be a lot of money-and obviously
there's going to have to be a lot of money to deal with this
double cohort-how much money is going to be spent that is sort of
a one-off, that's lost because the bulge comes in and then the
bulge isn't there any more?
Rozanski: Can I make a point, if you'll allow me?
Whether you call this a bubble or whatever, the fact of the
matter is the combination of the four factors that are at work,
which is demography-the baby boom echo is here, they're here-so
even with the double cohort coming in and out, just the increase
in participation numbers in the cohort will absorb that bubble
and continue on. So this is not a momentary phenomenon.
Christopherson: So there won't be a drop-off after-
Rozanski: No. As you can see, the numbers grow and even
if we project out, while there may be a stabilization, the
numbers, some projections, they go on. But we know that for the
next 10 years there is a steady increase. This is not a momentary
phenomenon. Our numbers have been going up before that.
Christopherson: The other concern that I have, like all
members, I'm sure, is I have quite a few constituents whose
children are in this and on the cutting edge-and not too thrilled
about it, by the way. The experience hasn't been so great so far,
going through the early years of high school. However, what about
the fact that there will be twice as many graduates competing for
what will arguably be the same number of jobs? How do we come to
grips with that?
Rozanski: My hope would be, and I'll let my colleagues
join me, that by investing in university, the goal is that we
will be expanding the number of jobs; that by the research we do,
by the technology transfer, we will fuel the economy to create
We have created many jobs.
I would only add one example. During 1990 to 1998, even when one
says good times or bad
times, if you look at the total new jobs created between those
years, there were 2.1 million jobs created out of the
post-secondary system, those who were post-secondary graduates.
Those with a high school education or less lost a million
Christopherson: I still wouldn't want to be one in that
group. If I had my druthers or if it were my daughter, I'd rather
go one year before or one year after. I wouldn't want to see them
out there, having to compete with twice as many graduates for the
same number of jobs, because I'm not aware that there are any
special plans being made around provisional jobs to get us
through that. Now, again-
I think I'll end the discussion, because we're running out of
time, on your positive note that if you get a college education,
your chances of getting a job-
Rozanski: Particularly if they're graduates from the
University of Guelph sitting up here. I see at least two of
We won't talk about which year, either. Thank you.
ONTARIO PHARMACISTS' ASSOCIATION
Our last presenters this afternoon are representatives from the
Ontario Pharmacists' Association. So if you could please come
forward and state your name for the record. First of all, on
behalf of the committee, welcome.
Stuart: Good afternoon, Mr Chairman and committee
members. My name is Barbara Stuart. I am the chief executive
officer of the Ontario Pharmacists' Association-and a University
of Guelph grad, so I had to go shake Dr Rozanski's hand.
Thank you for allowing us to make our submission. I guess we're
last on the agenda today. We'll be brief. I know you must be
tired. Before we begin, I'd like to introduce my colleagues with
me today. To my right is our chairman of the board, Mr Sal
Cimino, who is a practising and licensed pharmacist in Ontario.
To his right is Holly Rasky, who is our director of government
relations and our general counsel on staff. To my left is Ruth
Mallon, who is our senior director of pharmacy services.
The Ontario Pharmacists'
Association, for those who don't know, is a voluntary,
not-for-profit, professional association representing pharmacists
and pharmacy students. We have approximately 5,000 active members
in the association, although we represent all 9,000 pharmacists
in the province.
With the government we have
an official memorandum of understanding, which is an agreement
between the Ministry of Health and Long-Term Care and the Ontario
Pharmacists' Association, recognizing our association as the lead
voice for pharmacists in the province.
We are a significant
stakeholder in the health sector, certainly giving a lot of our
time and attention at the front line, dealing with patients on a
daily basis. We take the obligations of our memorandum of
understanding very seriously. To this end, we constantly are
searching for ways that we can help the government save valuable
dollars, because pharmacists at the front line spend a great deal
of their time during the day looking at medication use and how
that's being spent.
Every year we participate
in the pre-budget process. We view it certainly as a good
opportunity do so, mostly because we know that there are
opportunities to save valuable health care dollars. We also know
that there are other stresses that can be relieved at the front
line with pharmacists having input. So it's to that effect that
we're here today.
I want to talk about three
programs that are up and running that we are very active members
of, because they are significantly postured to make savings for
the government. One that was launched this morning, and I'm sure
you're well aware of it, is the Telehealth program. We are a key
partner in that program. In fact, I left them this morning at 8
o'clock. The phones started ringing at 8:30. By noon they had 30
calls, and the number has not even been published yet. So I think
we're off to a good start. Pharmacists are partnering with nurses
to provide the medication information and expertise on the calls
that the nurses are handling frontline.
In addition to that, we
also are going around the province presenting seminars to our
seniors in what's called the seniors' safe medication use program
that was set up by the Ministry of Citizenship, Culture and
Recreation, focusing primarily on seniors and their safe use of
medication, which has been very effective thus far. We're also
involved in another government program, with the clinical tobacco
intervention program, where we're working with dentists and
doctors in front line primary care provision, in trying to get
patients to stop smoking, hoping that will in turn impact on the
health care system.
We encourage the government
to continue the support of these programs. However, we would also
like to see the government initiate other cost-saving programs.
Since we've been here five years running, there's a little bit of
frustration with this particular presentation because this will
be the sixth time we'll be presenting programs we have brought
forward that would save the government significant numbers of
dollars in terms of health care savings.
At this point in time I'd
like to turn it over to our chairman of the board, who will share
with you what those programs are, because they have not yet been
Cimino: On behalf of the board of directors of the
Ontario Pharmacists' Association, I am very pleased to be here
today. Pharmacists have an important perspective to offer, both
as primary health care providers and as the owners, operators and
employees of small businesses across the province.
The first thing I want to talk about is the
future of two programs we have presented to this committee over
each of the past five years-which still have not been
implemented, as Barbara has mentioned-the trial prescription
program and the prescription clarification program.
In March 1999, the Ministry
of Health and Long-Term Care announced that it would work with us
on these two key initiatives. Based on the effectiveness of these
programs in other jurisdictions across the country, we are
confident that these initiatives will improve patient compliance
with their medications and reduce adverse drug reactions. This
will lead to overall cost savings for the provincial government
and improve health care for the people of Ontario.
Unfortunately, nearly two
years later, these programs have not yet been implemented. The
result is that the Ministry of Health and Long-Term Care is
failing to take advantage of two programs that could (1) save
potentially millions of health care dollars, (2) reduce the
number of emergency room visits by patients with
medication-related problems, and (3) improve the health of the
people of Ontario.
The trial prescription
program would allow pharmacists to use their professional
expertise to ensure each patient gets the right drug and uses it
appropriately. All ODB program patients receiving medication for
the first time would be given an initial trial supply. The
pharmacist would follow up with the patient to ensure that the
claimant is tolerating the new medication and is taking it
properly. If the treatment is safe and effective for that
patient, the pharmacist would fill the remainder of the
prescription. We estimate that each year that the government
fails to implement a trial prescription program, it forgoes a
saving of at least $3.6 million, or almost $10,000 each day.
clarification program would allow for the payment of a cognitive
fee to the pharmacist for not filling a prescription where, in
the pharmacist's professional opinion, and in consultation with
the patient's physician, the filling of the prescription may be
harmful to the patient. Examples of these situations include
interactions with other medications the patient may be taking, or
a previous history of an adverse drug reaction.
We estimate that each year
the government fails to implement a prescription intervention
program, it forgoes a saving of approximately $500,000, or more
than $1,100 each day. You can refer to page 3 of our paper for
references on how we calculated these numbers.
We had the opportunity to
meet with the outgoing Minister of Health and Long-Term Care just
before the cabinet shuffle to discuss this and other issues.
Following that meeting, she provided us with a written commitment
to bring these programs forward to cabinet by the end of this
year. We hope we can count on your support for these
The next issue I would like
to address is drug pricing on the ODB formulary and the impact it
has on pharmacists. Despite the fact that ministry bureaucrats
say they froze prices on the formulary in 1993, this price freeze
is not being enforced. There is a growing list of products on the
formulary, approximately 140 drugs, that have increased in price,
both through actual price increases or through pricing related to
packaging. In some cases these increases are over 100%-that's
over double the costs we were paying before. In these cases, the
price listed on the formulary remains the same, but the price at
which the pharmacist can purchase the product exceeds the
formulary price. The list includes high-volume products such as
Tylenol 2 and Tylenol 3.
In our paper we use
Lanoxin, a common heart medication, as an example of how much
money the government is losing each year and how pharmacists are
not being adequately compensated in this situation. If Lanoxin
were available to pharmacists at the formulary price, the
government would be paying just under $2 million per year
for this drug. Of that amount, 10% is a legislated markup on the
product that goes to pharmacists to compensate for business costs
such as inventory carrying costs. However, in the last year
Lanoxin has more than doubled in price. The government is
actually paying just over $4 million per year for this product,
and pharmacists are denied the 10% markup. We are only reimbursed
for the amount we paid for the product, with nothing for the
business costs we already mentioned.
In addition to losing the
10% markup on approximately half a million prescriptions for
Lanoxin that we fill each year, the pharmacist must go through a
cumbersome procedure called "cost to operator" to recoup the cost
of purchasing the Lanoxin. So there is an extra step we have to
do, actually a couple of steps. This is time-consuming and takes
us away from caring for the patients. We explain the
administrative steps involved in carrying out this procedure in
appendix D of our written submission.
This is just one example.
As I said, there are approximately 140 products on the ODB
formulary that are not available to pharmacists at the formulary
price and require pharmacists to perform the cost-to-operator
procedure and forgo appropriate reimbursement from the ODB
The government has the
legislative tools to deal with this issue. The regulations under
the Ontario Drug Benefit Act require manufacturers to be able to
continue to supply their products at the prices listed on the
formulary as a condition of remaining on the formulary. I want to
read the actual section for you from the Ontario Drug Benefit Act
regulations: "The following conditions must be met in order for a
designated listed drug product to continue to be designated as a
listed drug product." Condition 3 reads, "The manufacturer of the
product must continue to be able to supply the product at the
drug benefit price in a quantity that is sufficient to meet the
demand for the product."
Basically, the government
is not enforcing its own legislation, and as a result the
government is losing millions of dollars every year and has not
instituted any measures to control spiralling drug costs. Whether
enforces its own regulations to address this situation or uses
some other means, pharmacists cannot and should not be made to
continue to subsidize the Ontario drug benefit program.
We are seeking full
reinstatement of the 10% markup. In addition, we request a
written commitment from the government to conduct a comprehensive
review of the ODB, similar to its hospital restructuring
initiative. The purpose of the review would be to achieve a more
responsible and accountable approach to drug costing and
The next issue I would like
to address is Ontario's economic climate and the shortage of
pharmacists. It is essential that the government take immediate
steps to stem the shortage of pharmacists in Ontario. One of the
actions our government must do to attract and retain pharmacists
in Ontario is ensure that pharmacists receive sufficient
compensation. The government has not provided pharmacists with a
raise in over 10 years. The current ODB dispensing fee of $6.47
was set in 1990. A conservative estimate of the current cost to a
pharmacist to actually dispense a prescription in Ontario is
$9.50 per prescription. This number will increase as the shortage
of pharmacists impacts on pharmacists' wages-fewer pharmacists,
costlier to hire one. The government must take immediate action
to correct this discrepancy.
The government must also
consider and take responsibility for the administrative impact
government programs have on pharmacists; for example, the
administrative burden associated with the government's
limited-use program. This alone costs pharmacists approximately
$3 million out of pocket each year. Pharmacists must be
compensated for their time. We will lose more pharmacists if
we're not properly compensated.
The OPA recognizes that it
must do its part to assist the government to achieve health care
savings. Every year we propose a number of initiatives that we
believe would achieve that end. In addition to pursuing the
programs we already discussed this year, the OPA is proposing two
programs: medication use reviews and an antibiotic resistance
strategy. It should be noted that both programs were presented in
the OPA's 2000 pre-budget submission, though to date the
government has not pursued either program.
First I will explain what
we mean by medication use reviews. Drug use varies among the
population. For individuals who utilize a particularly high
number of drugs, such as is the case with many seniors, the OPA
proposes that the government utilize the pharmacists' expertise
to implement annual medication reviews. This relatively simple
program could, first, save the government millions of dollars by
identifying and correcting improper medication use and waste;
second, prevent possible interactions with other medications;
third, optimize drug therapy; and fourth, again, improve health
outcomes and the quality of life for the people of Ontario.
The second initiative we
would like to work with the government on is a province-wide
antibiotic education program. The OPA has been working
collaboratively with the private sector to implement an
antibiotic awareness program across Ontario. The purpose is to
reduce the growing threat of antibiotic resistance by educating
the public on the appropriate use of antibiotics and various
over-the-counter products, and highlighting the risks associated
with antibiotic resistance. In short, the program seeks to reduce
inappropriate antibiotic utilization and expenditures through
Programs we have run in
communities such as Brantford and Belleville were highly
successful in demonstrating a significant reduction in the
inappropriate use of antibiotics in those communities. These
areas respectively saw a reduction of antibiotic claims at a rate
of 245% and 72% greater than the overall reduction of claims for
antibiotics in Ontario during that pilot period. We anticipate we
could produce similar results across the province if given the
chance. We encourage the government to work with OPA on a
province-wide antibiotic education program.
In conclusion, I would like
to highlight our recommendations, which are also found in our
First, the government must
get on with implementing the trial prescription and prescription
clarification programs. Other new initiatives that will save
money and improve health care, such as medication reviews and a
province-wide antibiotic education program, can be easily
implemented and should be discussed with OPA.
Second, the government must
ensure that pharmacists are appropriately compensated or we are
going to lose them to other jurisdictions or face a situation
similar to what arose in Quebec. This includes the restoration of
the 10% markup, increasing the ODB dispensing fee and paying
pharmacists for time spent dealing with administrative burdens
caused by government programs such as the limited-use
Third, the government
should conduct a comprehensive review of the Ontario drug benefit
program to ensure its viability.
Fourth, the OPA encourages
the government to continue to support programs such as Telehealth
and the funding of the medication information service, the
seniors' safe medication use program and the clinical tobacco
Chairman, I thank you and
your colleagues again for allowing us to make this submission
today. Any questions?
We have approximately three minutes per caucus. Mr Phillips.
Phillips: Thank you. A very thoughtful presentation.
Many questions, but time is sort of limited. The first one would
be on your comment on Lanoxin, as your example. Are you saying
you actually have to purchase that drug for more money than you
Over double what we were paying last year.
Phillips: But more money than you can receive from the
persons who reimburses you?
Mr Cimino: No. The government
has regulations in place that are supposed to stop manufacturers
from increasing their prices or to make certain adjustments for
increases. Nothing was done with these particular 140 drugs. They
arbitrarily raised their prices, and what has happened is that
we're now paying double what we paid for Lanoxin last year. We
used to get a 10% buffer to offset any administrative costs. Now
we don't even get the 10%. Obviously, on double the price it
would be a little higher-it would be twice as much-but we're not
getting that. But we are spending more money to purchase it, plus
we have the administrative headache of tracking down the invoices
to prove to the auditors that, yes, we purchased it at a higher
price, even though they know the price has gone up.
Phillips: On the surface, it seems that if the
government is not living up to the legislation, there's almost a
legal case. It's surprising to me that there hasn't been a
resolution of this issue. What's holding up the resolution?
That's a very good question. We don't know.
The simplest way to
describe the formula is, there's a mathematical formula and we'll
use a very simple, basic example. On the drug formulary, if you
were to purchase a drug for, let's say, $10, pharmacists are
entitled to their $10 reimbursement plus 10%. In theory that
should be $11. Now let's say the same drug costs $15. What they
have to do is fill out a cost-to-operator form, which means they
get reimbursed the $15 but don't get their 10%. So if you take
$10 on the basic formulary plus that $1-$11-and subtract the
difference, it's one of two things: the pharmacist is losing $1
or they're subsidizing the system by $1. Either way, they're out
of the mathematical formula. We have raised this now for 16
months and still have not had the issue resolved.
Phillips: It seems like almost a legal matter, that
they're violating the legislation.
It may become that. The point we're trying to make is that the
drugs are becoming so expensive and the regulation is not being
enforced, and that's our concern. The pharmacists are seeing it
day to day.
Phillips: You have at least two recommendations here of
how you can help to limit the inappropriate use of drugs. Again,
they seem like relatively straightforward things to me. What is
the answer you get back from the Ministry of Health when you
pursue them? You'd think almost on a pilot project basis that
they're certainly worth investing in.
It's all been funded privately up until now. Pharmacists have
taken it on with some of the pharmaceutical companies; local
associations have done it. The response from the government is,
"We'll do it," but nothing has gone on yet.
Administratively it seems to be where it's bogged down.
Christopherson: One observation and two very brief
questions. We've been hearing an awful lot of delegations come in
and talk about a shortage of skilled workers, and we've heard
from a lot of professionals and professions where people are
leaving because they're demoralized over working conditions and a
lack of decent income, or at least commensurate with their
experience and their education. The observation would be that it
seems to me we're now beginning to see some of the fallout of
this government's very serious attempt to lower the value of
labour right across the board. I've been one of those maintaining
that in the Employment Standards Act, where it talks about
minimum wage, you ought to care about that because everybody who
is trying to reach for the ceiling in terms of the highest dollar
they should get is going to find it that much harder to do if the
government is constantly lowering the floor. It looks to me like
here's yet one more profession where, because the government is
not matching its financial obligations, your quality of life, the
value of your labour, is lowering and that's causing
demoralization. I'll leave that with you for a comment or
The two questions are
these: I was curious as to what percentage, on average, of a
pharmacist's income is related to ODB clients or business; the
other one is on page 7, where you talk about the prescription
clarification program. I have to say, and I'm just putting it out
there, that what struck me was, when you said examples of these
situations-meaning mistakes-include interactions with other
medications the patient may be taking or a previous history of
adverse drug reaction, that you think there is up to half a
million dollars in errors that are related to that. I know that
no profession wants to point fingers at another one, but I
thought it would be the rare exception where a doctor for
whatever reason has given a mistake or the wrong prescription or
overlooked something, and yet, when we're talking half a million
dollars, it suggests to me there's a problem.
That's not necessarily an error. Patients tend to take
medications from more than one physician. If they're seeing a
specialist and the communication hasn't been that good or
Christopherson: The communication should be, though.
It's expected that would happen, though, right?
Absolutely, but that's the implicit strength of having to go to
the same pharmacist all the time: you have that record. Patients
don't always go to the same pharmacy all the time. Because of
convenience, they may stop someplace, so you don't have a full
profile at times. Yet, when we have all the information, you can
certainly intervene and make these recommendations with the
physician's knowledge. It's not necessarily an error.
Over-the-counter products, herbal products, which are huge
now-alternative medicine sells products-the physician doesn't
even know they're taking them. They're afraid to tell the doctor
they're taking something because they're afraid the doctors-
That patient is afraid sometimes to tell the doctor, so the
pharmacist is the other-
Mr Cimino: But they will speak
to us on the front line. They're much more open to us. They
always have been.
Christopherson: Actually, I'm glad you've got good
answers to that. It kind of worried me that that was what it
And on the ODB
About 50%, 45%.
Christopherson: About 50%?
Well, it actually varies. Some can be 50%, but it depends on
where the pharmacy is relative to-
It could be even 90%.
Christopherson: It's significant, nonetheless, across
Some have 80% to 90% ODB recipients.
Christopherson: Any thoughts or comments on the
demoralization within the profession?
I think you've put it very well. Just to add to that, though, the
physicians bumping into the nurses bumping into the
pharmacists-with the shortage of nurses, that means pharmacists
are doing more front-line work, so they're staying open longer
and it adds to the whole equation of what their workload is.
To the government side. Mr Galt.
I'd like to explore just for a few minutes the trial prescription
program that you're putting forward. I'm not sure why the
Minister of Health is resisting, but I'm just curious on how it
might or might not operate, particularly when I think of rural
Ontario, where the pharmacy isn't exactly next door. It may be as
much as 30 or 40 miles between villages in small-town Ontario to
get to a pharmacist. I can see some difficulties there. You also
hear concerns about even those on welfare getting taxis to go and
pick up their prescriptions. This would possibly mean extra costs
The other area I'd like you
to respond on is how it would work with-and I've been told that
in Europe, most if not all the tablets for prescription come in
blister packs, so they're dispensed that way. In this way the
medication is uncontaminated and, I would think, could be
returned. Is that possible? Is that a way of handling it? Or is
packaging it in blister packs extremely expensive?
You've asked a lot of good questions. The previous Minister of
Health, Elizabeth, has been very supportive of the program's
moving forward, and I can only hope and anticipate that Tony will
be the same. It's not from the Minister of Health's perspective;
it's administratively trying to move the program forward at
another level. That's where our challenge has been. She's been
fully behind our moving forward on the program.
You asked a good question,
and I'm going to ask Ruth if she'll answer that, relative to the
rural, because there are some exceptions that have to be included
on the trial prescription administrative details of the
Mallon: One of the things we've put forward all the way
along is that there be an exception from a professional point of
view for pharmacists when they recognize that there may be an
issue. The very last thing a pharmacist wants to do is interrupt
therapy for someone who should be getting that proper therapy. In
a case in a rural environment-in fact, trial prescription
programs have been going on in Saskatchewan, and that's one of
the things. There's a general override that can be done: "I'm
sorry, this patient is just not going to be available. I'd rather
dispense it and then I'll call her in seven days anyway to make
sure the medication is working OK."
Welfare patients, by the
way, are not anticipated to be part of this trial program. The
first phase is a 30-day trial. Welfare recipients only get a
34-day supply maximum, so they wouldn't be affected by it.
As far as the blister packs
are concerned, yes, as a practising pharmacist you often get
patients who bring back those packages saying, "I didn't use it,"
even seniors. They hate to see waste because they were brought up
in the Depression. The problem with that is that we can't legally
re-dispense them. It's unfortunate, but one of the things some
pharmacists do is that they collect them and give them to a
company that gives them to Third World countries. As far as to
Ontario citizens, we cannot re-dispense them.
The time has expired. On behalf of the committee, thank you very
much for your presentation this afternoon.
Thank you for your time.
I don't have any further announcements, but just to remind the
members that we do have transportation available in front of the
building at 5:30. We should be there on time.
Mr Chair, if I might make a request of staff. We were given a
sheet by the secondary teachers' federation with some figures on
it pointing out where Ontario comes with the average of the Great
Lakes states. I'm wondering if we could have those figures
checked by a neutral source.
I think you probably should submit that sheet to the
Christopherson: Is there some reason for that request?
Is there a reason why you're questioning their data and nobody
else gets a copy?
There have been different requests made by different members in
the past couple-
Christopherson: I haven't noticed anybody since we
Mr Phillips made a couple of requests, I think.
Christopherson: Did he ask for material to be checked
because he didn't believe it to be true?
No, but he's asked for-
Christopherson: What evidence-
We'll adjourn until tomorrow morning in Thunder Bay.