MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS
INQUIRY RE LAND REGISTRATION INFORMATION SYSTEM
CONTENTS
Thursday 17 February 1992
Ministry of Consumer and Commercial Relations
Inquiry re land registration information system
STANDING COMMITTEE ON PUBLIC ACCOUNTS
Chair / Président(e): Callahan, Robert V. (Brampton South/-Sud L)
Acting Chair / Président(e) suppléant(e): Morin, Gilles E. (Carleton East/-Est L)
Vice-Chair / Vice-Président(e): Cordiano, Joseph (Lawrence L)
Conway, Sean G. (Renfrew North/-Nord L)
Haeck, Christel (St. Catharines-Brock ND)
Hayes, Pat (Essex-Kent ND)
Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud ND)
MacKinnon, Ellen (Lambton ND)
O'Connor, Larry (Durham-York ND)
Offer, Steven (Mississauga North/-Nord L)
Tilson, David (Dufferin-Peel PC)
Villeneuve, Noble (S-D-G & East Grenville/S-D-G & Grenville-Est PC)
White, Drummond (Durham Centre ND)
Substitution(s) / Membre(s) remplaçant(s):
Drainville, Dennis (Victoria Haliburton ND) for Ms Haeck
Morin, Gilles E. (Carleton East/-Est L) for Mr Conway
O'Neill, Yvonne (Ottawa-Rideau L) for Mr Offer
Ward, Brad (Brantford ND) for Mr O'Connor
Also taking part / Autres participants et participantes:
Churley, Hon Marilyn, Minister of Consumer and Commercial Relations
Daniels, Art, Ministry of Consumer and Commercial Relations
Cork, Sue, Ministry of Consumer and Commercial Relations
Gillespie, Gillian, Ministry of Consumer and Commercial Relations
Clerk pro tem / Greffier ou greffière par intérim: Carrozza, Franco
Staff / Personnel: McLellan, Ray, Research Officer, Legislative Research Service
The committee met at 1009 in room 238.
MINISTRY OF CONSUMER AND COMMERCIAL RELATIONS
The Chair: We now appear to have a quorum. Recognizing that the minister's time is valuable, we will proceed. Welcome to the standing committee on public accounts, Minister. My agenda does not quite say what will happen. Do you have an opening statement?
INQUIRY RE LAND REGISTRATION INFORMATION SYSTEM
Hon Ms Churley: Yes, I do. With me is Art Daniels, who is assistant deputy minister responsible for registration and who was involved in the early process of establishing Polaris/Teranet. I am here once again to answer questions as best I can. We have sat and discussed this issue at this committee before, and also in the Legislature. I am hoping that today we can further clarify and perhaps put to rest some of the misunderstandings and some scepticism about this whole process. I am hoping today that we are able to deal with that. I am just quite happy to try to answer questions.
The Chair: Who is first at bat here? Mr Tilson, it is your motion.
Hon Ms Churley: Can I ask a question before we get started? The motion has already been put before the committee. Today, will it just be voted on? I am not quite sure where we are.
The Chair: It was never voted on. It was deferred, I think, and we asked to have information on it. Before David asks his question, for the benefit of those members who are not permanent members on this committee, and there are a few, perhaps you could explain to the committee what this is all about. It sounds like neat words and all the rest of it. It sounds like lawyer mumbo-jumbo, in fact. Maybe you can tell us what it is, how it got started and so on.
Hon Ms Churley: I will ask Art to help me with that as well. But basically Teranet is the public-private corporation formed in equal partnership between the government and Real/Data Ontario, which is the private company. It was developed to implement the Polaris technology. Polaris stands for the province of Ontario land registration information system. This refers to the automation of all land registration records in Ontario and the conversion of all titles to the land titles system.
Just briefly, let me tell you why we need this kind of strategic alliance. There are approximately four million properties in Ontario. That involves, on the average, storage of about 50 million records, which is an awful lot of records. This would include mortgages, discharge, leases, and anything that directly affects land registration. Over the past 10 years Ontario has seen, especially in the boom times, about a 64% increase in real property transactions.
The Chair: That has stopped, by the way.
Hon Ms Churley: Yes, it has slowed down right now, but all those records are still there. Obviously this has created really long lineups and greater competition for access to the documents, increased staff and user overcrowding. It has of course increased demand for record storage. It might be useful for Art to describe very briefly the various components of the Teranet consortium, if that is okay with you, Mr Chair.
Mr Daniels: As the minister said, the process of creating a partnership to implement automated land registration began in the 1970s and continued with approvals through the automated system back in 1987. The government approved an expenditure of well over $112 million to implement the Polaris system, which would take 15 years. Realizing the length of time and the amount of government commitment, the ministry was approached by people involved in land registration -- survey companies, universities -- proposing that there might be a better way to do this through a partnership model. This came to pass.
We began to examine this partnership model in 1988 and the government then proceeded to recognize the idea of a partnership between government and industry to implement its Polaris system. It then went out into the public domain with a request for interest to see if there were any companies interested in such a proposal. Seventy-two organizations responded to the request for information, indicating a strong interest in a partnership concept. We went out with a formal proposal which was published in the Report on Business, the Financial Post, the Financial Times, so that all across Canada, companies could make a proposal on a partnership with government.
As a result of that proposal, many of those 72 companies realized that some of them were not large enough to handle an undertaking of this capacity. By the time the proposals came in, two large consortia had formed up to make a bid on the partnership. One of them was called Fimtech and the other was Real/Data Ontario. Each of them was composed of major partnerships.
Real/Data Ontario, for instance: Its managing partners were made up of EDS -- Electronic Data Services -- of Canada Ltd., a large systems distributor which is spun off from General Motors; SHL System House Ltd, a large systems integrator; Landata International Services Inc., which is a land information system made up of large surveying and engineering firms in Ontario such as J D Barnes, Marshall Macklin Monaghan Ltd, Yates & Yates Ltd etc. In fact, that is made up of 25 different survey companies. Another partner is Intergraph Canada Ltd, a large hardware company, which probably is the world leader in hardware related to geomatics, or geographic mapping systems. The other managing partner is Peat Marwick Stevenson & Kellogg and they would bring to the consortium management skills, international marketing etc. These were the people that made up the R/DO partnership.
The Fimtech partnership was also made up of a large consortium of companies: SNC Group Inc, a large worldwide engineering company based in Canada; the Royal Bank of Canada; Sharwood and Co, a merchant banker. So you can see we had two large consortia.
They both bid initially on the partnership model. At that point, both parties failed to meet the government's mandatory requirements of what we were looking for in a partner. So both bids at that point failed. But we and the government felt that there was something there in terms of a partnership that could be achieved from this. At this point the government went back to the two consortia with an outline of what it would take to make a ideal partnership with government. Up to this point the two consortia were bidding in a sense on the product but were not certain what the government was looking for.
On this round we made sure we laid out the government's requirements. These requirements included such things as equal partnership, 50-50, a major investment of finance and equity, and a short time frame to turn this around -- the government had planned to do it in 15 years; it was hoped that these groups could bring it in in a shorter period of time. The government wanted, and must retain, ownership of all the information -- that the government information system would be there. The government wanted to ensure its own staff who were involved in this were guaranteed employment and that they would have an opportunity to work for the new corporation. So these things were all part of the government's list that went into the consortium.
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Against that list the two consortia made submissions, and these are called letters of intent. The government was then able to look at those two letters of intent to see which ones more closely aligned to its request of what it wanted in a partnership. The Real/Data corporation lined up ideally in each of the government's requests. The other consortium fell short in areas of equal partnership, equal membership on the board, and a longer time frame to complete the project. These things were very important to us, and these things were not met by the one consortium but were met by the other consortium.
All throughout this process the government had constant reviews and checks that it was making the right partner selection. They were in the first process of the request for proposal because both consortia were made up of a large number of Ontario and Canadian firms. We engaged a consulting firm and a group of geomatics experts from eastern Canada, the University of New Brunswick and the Council of Maritime Premiers, people who were involved already in the land information system in the east. That gave us a very neutral look at it from consulting services from eastern Canada.
We also engaged Price Waterhouse corporation in terms of the mergers and acquisitions to look at what would be a good product for the province. We also engaged a large legal firm to make sure that the legal aspects of mergers and acquisitions we were involved in would be involved. Also, at the end of that process, the government asked us to engage one more time -- the government in 1989 engaged a large audit firm to look at the business financial case. So it was reviewed in terms of legal services, financial, business and general geomatics, how it would work technically. So that was a four-phase review at that point.
At the same time there was an internal government committee of deputy ministers of all the ministries that would be involved in the Polaris project. This would be Natural Resources, Transportation, Revenue etc. There was also a working committee of ADMs and directors who are involved in geomatics work in Ontario: each of these reviewing the two proposals and partnerships. So you had an internal look at it, an external review, a very careful review by the Management Board and the treasury staff etc.
Then the government changed, and that review was absolutely repeated again by a whole different series of companies, external and internal. I think this is very important because it was approved at one point by a massive review and another long-term look at the business case, the legal aspects; another audit firm looked at the financial aspects; again the treasury staff and Management Board staff reviewed it. So you have quite an extensive review of the process.
Then we end up in February 1991 entering into a partnership with Real/Data to create a new organization called Teranet, and that is -- when you look at the Latin -- land networks. We are talking about automated systems for land information. The partnership with Teranet is made up of the government of Ontario, represented by its members on the board, appointed by the province. The board membership is set up this way: there are four province-of-Ontario nominations, there are four Real/Data Ontario nominations, and there are five members to be agreed on, appointed by both parties, to bring the board total to 13. That is the first of the equal partnerships.
As I said earlier, the financial involvement of the government partnership in Teranet is $29 million. Its original investment was to be $112 million, so we are looking at a substantial savings of over $80 million to the government of Ontario by entering into a partnership. The funds for that $80 million in these times I think can be well used and the government can achieve its automated system in partnership with its private partners.
I think the selection process was very detailed. The development of the program is very detailed, very labour-intensive and very carefully considered, both externally and internally, at all levels of government and by two different governments.
Hon Ms Churley: Mr Chair, I wonder if I could introduce -- since we started, two other people have arrived.
The Chair: Let's preserve their names for posterity.
Hon Ms Churley: Okay, let's do that. Beside me is Sue Corke. Sue is the director of the strategic alliance liaison office, which was set up specifically to monitor the performance of this contract. Beside her is Gillian Gillespie, who is also at the strategic alliance office. They have -- since when was the office set up?
Mr Daniels: February 1991.
Hon Ms Churley: February 1991, so they do monitor the contract.
The Chair: I do not see any hands. This could be the shortest committee meeting in history. Mr Tilson, and then I saw a hand over here. Who had his hand up? Paul Johnson.
Mr Tilson: My question is to Mr Daniels or the minister. One of the questions that pops up periodically, which is why I wanted this committee to review the subject, is the whole question of government tendering. Normally in my limited experience here, but certainly in local politics, there would be details distributed of what is going to go on. Absolutely anyone could bid. Tenders would be sealed, the tenders would be opened publicly and the details of the winning bid and what that company was would be made public. The process that you have described does not comply with that procedure. It does not match that procedure.
I wonder if you could reiterate again the process. I am not talking about how you sent out to X number of firms. I did not make a note of how many firms that you sent out initially. I am talking about: Eventually there is the decision for this process to choose a company to enter into a partnership with the province of Ontario. I would like you to elaborate to a large extent the whole process of tendering.
The Chair: Could I just add something? It was my understanding that an invitation was placed in newspapers as well. Is that right?
Mr Daniels: That is correct.
Hon Ms Churley: Three.
Mr Tilson: Mr Chair, I understand that there was a process as to the interest. You indicated there were about 70 people who responded.
Mr Daniels: Yes.
Mr Tilson: I am talking about: How did you get down between the debate between Fimtech and Teranet?
Mr Daniels: Okay, but I think it is very important, because this is in line and identical to the government tendering process. The first thing -- and this is all part of the same process; you cannot break it into chunks -- is, it all starts with a request for interest, where the government has a concept or an idea of a partnership, basically flowing from the Premier's Council, saying the government should enter into partnerships to create new companies, to compete worldwide and to look at partnership as a model. So the government initially goes out in public in the same three papers in its request for interest to see if anybody is interested in this kind of proposal. Part of that would be a large request-for-interest package. It was about that thick.
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Mr Tilson: What are the selection criteria, Mr Daniels?
Mr Daniels: Okay, that was the request for interest. Obviously there was a lot of interest because 72 companies came forward and said they were interested. Now you go into the very formal request-for-proposal process. Again, that is advertised in the large business journals across Canada so that companies that are interested in responding to that and bidding, just as Mr Tilson said -- sealed bids opened through the bid depository system. At that point in time, when the contract bidding closed, two consortia were in that package we opened. Both consortia then begin to make presentations to the government committee. There is a committee --
Mr Tilson: Mr Chair, if I could interrupt here. Before you get on to that process, how did you get to the process of two corporations? How did you get to that?
Mr Daniels: We did not do that. They formed up themselves.
Mr Tilson: But how did you say there is going to be Fimtech and Data?
Mr Daniels: Oh, I did not. The government put out a request for proposal. It has no idea what is going to come to it. We do not form those companies.
Mr Tilson: I am aware of that. How did the government get down to creating a short list of Teranet --
Mr Daniels: They were the only two that applied.
Mr Tilson: Only two applied.
Mr Daniels: They were the only two that came forward in the request for proposal through the bid process.
Mr Tilson: What were the selection criteria for those two companies to apply?
Mr Daniels: There were mandatory requirements that the government required.
Mr Tilson: For example?
Mr Daniels: For example: major equity contribution, equal partnership, and completing of the process earlier than the original government plan of 15 years.
Mr Tilson: No, I understand what you are saying there. Presumably there must have been certain criteria that must be established to arrive at how you are going to choose which company you are going to choose.
Mr Daniels: Oh, sure. If you would like me to I will read the mandatory requirements into the record. Here is what the government would be looking for:
"There must be an unqualified and irrevocable commitment by the strategic alliance to implement the Polaris project on a province-wide basis." In other words, to make sure they completed Kenora, Fort Frances and not just complete Toronto and stop; that they would have to complete the process.
"There must be a commitment by the strategic alliance to implement the project province-wide by January 1, 2002, or earlier.
"There must be an agreement to maintain the net revenue accruing to government from operation of the land registration system. In 1988 revenue was $55 million; direct operating costs were $35.6 million; net revenue was $19.9 million." Both partnerships had to commit that the government would not lose any revenue.
"The government of Ontario will grant a 10-year licence to use the Polaris databases for a fee based on revenue.
"There must be a commitment to the creation of an LRIS" -- land-related information -- "business. Agreements must contain performance benchmarks for the development of a business plan and other deliverables:
"The partners will make a substantial equity contribution to the strategic alliance which would be in addition to any proposal for debt financing.
"The partners, through appointments to the board of directors and key management positions, will share in the management and key decision-making.
"The partners will contribute staff to the strategic alliance and all staff will be treated fairly and in compliance with applicable legislation." That was very important to our existing staff.
"Government will maintain ownership of the Polaris database." We will continue to own the information. Teranet is a data distributor, not a data owner. The land registry system will still control the intake and the integrity of the data. It does not change the intake; it changes the distribution.
"Government will regulate the use, access to, and pricing of all products..." Products, existing and new, have to be approved mandatorilly by the government.
"The strategic alliance must conduct its business...in such a fashion that Polaris can be disengaged from the strategic alliance and/or the data utility without significant cost or delay." In other words, it can be disengaged at any time without any disruption to the land information system. Those were the mandatories the two companies had to meet.
Hon Ms Churley: Mr Chair, if I could just follow up an answer in your question very precisely, I believe what you are asking is why one was chosen; what the criteria were. Those were the criteria, and Fimtech did not come close in some instances to meeting those criteria at all, whereas Real/Data did. The decision was to negotiate with the consortium which best met those criteria. That is why Real/Data was chosen over Fimtech.
Mr Tilson: Going back to that stage where you advertised around the country, did you advertise across North America?
Mr Daniels: The Report on Business, the Financial Times, the Financial Post, that would be across Canada. I imagine the Report on Business would go across North America.
Mr Tilson: I guess there is a break from that to when you say, "Okay, we are going to go into partnership."
Mr Daniels: No, there was never a break. The partnership was what we were always looking for.
Mr Tilson: Okay. What I am getting at is, you advertised around the country to express the interest and you determined interest from 70-or-some-odd --
Mr Daniels: Seventy-two.
Mr Tilson: From 72 firms. What I am trying to find out is how you got from that to Fimtech and Real/Data.
Mr Daniels: They were the two that formally responded. There were 72 that said that they were interested. Of that 72, I would say about 30 of them were part of these two consortia. About half of them formed up.
Hon Ms Churley: They got together, you see. After the initial process, they, on their own, without any government involvement in both of these consortiums, got together. I guess they got together during the process of the first stage and then came back with their proposals. So many of the original people who had proposed, the smaller companies, upon recognition that they were too small in themselves to be able to manage this kind of partnership, got together and formed consortiums.
Mr Tilson: Who is Real/Data?
Hon Ms Churley: We have given you some information on that. There are five managing partners. Landata International Services, SHL Systems House Ltd, EDS of Canada, Peat Marwick Stevenson & Kellogg, and Intergraph Canada Ltd. Those are the five managing partners.
Mr Tilson: They are the shareholders?
Hon Ms Churley: There are additional shareholders as well and I think that is what you are more specifically interested in. There is a total of 21 individuals and 13 corporations. You are quite specifically interested in who they are, are you not?
Mr Tilson: Yes.
Mr Daniels: The shareholders' agreement right now is under the Freedom of Information and Protection of Privacy Act.
Mr Tilson: Why is that?
Mr Daniels: Under the Freedom of Information and Protection of Privacy Act, commercial ventures are protected. The minister mentioned some of the shareholders, who are the five managing partners and the most notable members of the partnership. The rest are individuals, and I think the important thing is that each of these individuals was reviewed by the government through a process called "due diligence" to ensure they had the financial business backing to meet their commitments. This due diligence was conducted by Price Waterhouse. These individuals, and as the minister said there are 21 individuals and 13 corporations, have the financial acumen, financial ability, to bring the money to the partnership. The other important thing is that 83% of them are Canadian and 17% -- and that is capped -- would be foreign investors. Well and away the investment is Canadian-controlled, and that is one of the things Price Waterhouse, in their completion of the due diligence, said. The company is Canadian-controlled and will maintain its Canadian control.
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Mr Tilson: Why does Price Waterhouse have access to all this information but the province of Ontario does not? Should not the province of Ontario be entitled to know who we are doing business with?
Mr Daniels: That is exactly why Price Waterhouse was retained. It does the due diligence for the province.
Mr Tilson: Why can I not, as a member of this Legislature, find out who in the heck the province of Ontario is doing business with?
Mr Daniels: I think the important thing is, that is being reviewed under the freedom of information act.
Mr Tilson: So you are telling me I have no access to that information?
Mr Daniels: I do not think we are saying "no access." Right now we are saying this is being reviewed and the request for freedom of information and release of that kind of information is being considered.
Mr Tilson: Will you tell me who the members of this consortium are -- not only the 21 individuals, but the principals of the corporations?
The Chair: Mr Tilson, I do not want to interrupt, but I think the answer has been given. That has been applied for, I gather, under the freedom of information act and this deputy minister is in no position to give you that answer.
Mr Tilson: Mr Chair, the reason I am getting into that question is because we are talking about the running of a major part of commercial activity in this province, meaning our land system, which is why it is most relevant that this committee look at that. It is most relevant that when a private corporation is going to be having a major say, if not the major say, in the operation of our land system, we are entitled, you and I as members of this Legislature, as individuals of the Legislature, let alone the individual in the street, to know who these people are.
The Chair: I have no difficulty with that at all. All I am saying is that the question you put to the deputy minister is one that requires an application under the appropriate legislation and I gather that has either been done or will be done. Until there is a decision made by the commissioner either pro or con -- if it is con, I guess we can always bring an application and have that reviewed. But I do not think it is fair to ask the deputy minister, or anyone here, for that matter, what the names are.
Hon Ms Churley: Just to be perfectly clear, this is a partnership, but this aspect of it is a private company. This is not unusual within government or the private sector. It is a private company. To get that kind of information released, you need the company's permission. We are right now in the process of negotiating, talking to them, to be able to do that. But we cannot break the law here. The freedom of information act is there for a reason and it does not just apply to Teranet; it applies to all kinds of private companies in terms of protecting information. Hopefully that information will be released, but we are not going to break the law and release it without that permission.
The Chair: Could I just inquire, Mr Tilson, who has made the application? I have just asked the auditors, and they have not. Who has made the application under the freedom of information act? Was it you?
Mr Tilson: I made --
Interjections.
The Chair: I was just curious because I was not aware I had --
Interjection: Jumping the gun here.
Mr Tilson: Let me get back to the whole question of the --
The Chair: I was not trying to play cat and mouse there, David. I did not know who had made the application.
Mr Tilson: Oh, I know. I am sure you would never consider that.
Maybe we can get back to the question of the philosophy of dealing with private enterprise. Of course our party is a strong supporter of that philosophy. The question of course is dealing with security. The auditor's 1981 annual report spends a considerable number of pages dealing with government microcomputers and the access to that sort of information, who has access to that information and who can control information, how you get into it and how you change it around. The auditor spends at least 20 pages going through that whole subject. I can certainly well remember when the whole subject of Polaris was introduced, because I supported it. I can tell you, going through abstract books is --
The Chair: It saves your eyelids.
Mr Tilson: Maybe it saves your thinking. I welcome that.
There was no mention, as you indicated, until 1988 of getting private enterprise into the system. Did whoever thought this up not think that surely when private enterprise is going to be dealing with a service to the public and dealing with confidential information -- and there is an awful lot of confidential information that one cannot reach. The assessment rolls are a typical example. Some of it is available; some of it is not available to the public. All of that will be made available through this system. Does that not give you concerns that some people will have access to confidential information, namely the private investors of Teranet, and others will not?
Mr Daniels: First, the information we are involved in is public data. It has been a public database since 1795. The land registration system and the land title system is public information. When people buy land or transfer land or assume deeds or register land, it is in the public domain. That is the hallmark of our system in Canada and the world: that people when they buy something must know what they are buying or considering buying so they know if the land is encumbered, if there are liens, mortgages, easements, all sorts of things that could encumber somebody's ownership. That information is and continues and will always be public and has to be public.
What Polaris does is take that public database and automate it. This agreement is controlled by the Freedom of Information and Protection of Privacy Act. Private information, information that is not in the public domain, cannot be put into the Polaris system. The agreements have all sorts of important riders in terms of security, that very important issue you raised in terms of limited access, and quality of that information.
I will just read the implementation-operation agreement, which says, "The parties have an obligation to put in place quality control procedures that will assure all information is secure and accurate, in compliance with the legislation." The ministry and part of the strategic alliance liaison office, part of Sue's staff, is a full-time quality control person. As we maintain the business and operate the business, we control the quality and the security of the information and we have very much that obligation as the provincial partner and as the monitor of that contract.
I do not think I can say much else other than to say that the system is a public base system. We will automate the public base. Remember, as I said earlier, the land registration system is still there. The province still owns the database. People will come to the Ministry of Consumer and Commercial Relations through the land registration system and register as they do now. We will assure that the ownership is correct and will guarantee title. The province guarantees the title.
Teranet, of which the government is 50-50 partner, distributes that information. It is a data distributor. It does not create the data; it does not approve the data; it does not ensure its integrity. We assure its integrity; we take the data in; we approve it. They are a distributor of data, just like any other organizations that would distribute it. What we could not do on our original Polaris, even for a $112-million project, is distribute the data on a remote-access basis. All we were going to do with $112 million was take the land registration system and automate it within the land registration offices.
This product and this partnership is something we always wanted to do. We knew the financial costs of a major electronic imaging would allow us to distribute this information remotely so that people who are now involved in coming down to a land registration office to search can do it through modems and hookups in their own personal computers. These would be law firms, search houses, conveyance companies. When Polaris is completed, they will be able to deal on a remote-access basis. That is what the partnership brings. If we had not gone into partnership, we would only have an automated system that automated the offices. It would not bring the data closer to the users, as a modern information system should. What we get for our partnership is a data distributor.
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The Chair: Can I interject, Mr Tilson? You say the government certifies the accuracy of the title, and that information is then marketed by the non-government side.
Mr Daniels: Yes, of which government is half.
The Chair: It is a 50-50 participant in this company. If there was to be a mistake made by whomever, would the loss entailed by that only be foisted on the government's share of the company, or on the total part?
Mr Daniels: First of all, if there is any error it is in the registration, the input, and that would be done by us. We are the ones who are responsible for it.
The Chair: Is there something in the contract that says the government is the only one on the hook for the mistake as opposed to the entire corporation?
Mr Daniels: I am not sure of the answer. I am not sure if Sue would know. I can tell you about converting to land titles. Let me back up slightly about who is responsible for the accurate transfer of land. The Registry Act, as I said, goes back to 1795. The Land Titles Act only goes back to 1895. The government has been trying to convert to land titles for almost 100 years. This will make it take place in eight years. Under the Registry Act the law firm will assure that title is clear. Under the Land Titles Act, the province and the government are assuring the title is clear.
As part of this conversion to Polaris, there will be no more registry system. We will be on a full land titles system. So the accuracy of the information and the clearness of the ownership will be up to the province. Our land registration clerks and abstract clerks are the ones who will be approving title, not Teranet and not RDO. The Ontario government is the service deliverer for the data.
The Chair: But the question I am asking is, for instance, if I own 50% of the shares of a company and I do something negligent, unless there is some term in the contract that precludes my 50% of the shares from being assessed for that negligence, it is shared by all the shareholders of that company. That is what I want to know.
Ms Corke: My understanding is, if that error is in the conversion and automation process which Teranet is responsible for, it is our responsibility to ensure that it is corrected, but Teranet bears the cost of correcting it. If there are errors in the original input data at the time of registration, then I believe those errors are protected by the liability fund.
The Chair: The land titles liability fund.
Ms Corke: Yes.
Mr Tilson: It does get back to the question of whether there is an error made anywhere in the entire system.
The Chair: Yes, is it shared by everybody or just by the government?
Mr Tilson: That is right; the input, the output, anything to do with the system. This is a partnership. As I understand what has been presented in the media, if that is to be believed, the sole responsibility of rectifying and paying for any errors lies with the government.
Ms Corke: No, not unless it is original input data. If it happens during the process of work that Teranet is responsible for -- in other words, the automation process -- then the error is corrected at Teranet's expense.
Mr Tilson: What sort of financial resources does Teranet have to cover such a thing?
Ms Corke: Without knowing the detail of it at the moment, I would say that it was contingent operating cost; that these quality control techniques they have that we are putting in place with them now and that we have to sign off on to ensure --
Mr Tilson: They could make a $1-million error very easily, a $2-million or a $1-billion error.
Ms Corke: They could not make a $1-million error very easily. There are very stringent quality control techniques that we are putting in right from the very beginning of the process of conversion through to the end. We are, in fact, in the process of signing off with them now, so they are government standards --
Mr Tilson: Are you telling me this system is foolproof?
Ms Corke: There are many, many checks. I cannot remember the error rate --
The Chair: Have you ever heard of anything a government enacted that was foolproof? Give me a break.
Ms Corke: The error rate over the last six --
Interjection: Six or seven years.
Ms Corke: -- yes, is very, very low indeed.
Mr Tilson: Are you telling us, though, that that has not been part of your requirement as to what Teranet or Real/Data has with respect to covering those errors?
Ms Corke: This is a new company we are talking about, and they are currently negotiating their own liability insurance. Presumably that is how they would handle that kind of thing.
Mr Tilson: But was that not looked into as part of the overall tendering process, as to what sort of financial background these two companies had?
Mr Daniels: That is what the due diligence is all about, how much money they could bring to the partnership. The government's equity contribution is $29 million. That has to be matched by the partner as part of equity.
Mr Tilson: You are satisfied that exists?
Mr Daniels: Price Waterhouse, in its review, through its due diligence, assures us that the partners have that money, and their first requirement on signing last May was that they had to deliver a cheque for $5 million on signing. It arrived. The government also put its $5 million cheque into the partnership, and as each partner contributes towards this $29 million, the other partner has to put in.
Mr Tilson: Eventually, how much money will Real/Data be putting in?
Mr Daniels: They have to match the government's original equity of $29 million.
Mr Tilson: And they have put in $5 million of that?
Mr Daniels: Yes, and that is all the government has put in. Whatever we put in, they put in.
Mr Tilson: I am getting back to the issue of errors that the Chair asked about, as to how you anticipate protecting the people of Ontario. Who is certifying the titles, the province of Ontario and Teranet or just the province of Ontario?
Mr Daniels: The province.
Mr Tilson: Just the province; so if there are errors, then the province is responsible for any errors.
Mr Daniels: We will be the ones who are inputting the data, not Teranet, through the land registry system.
Mr Tilson: Are you able to file with this committee any feasibility study as to the operation of Polaris in the capacity of operating this partnership with Teranet?
Mr Daniels: Not exactly a feasibility study. Polaris has been examined since the mid-1970s. I have a shelf of Polaris stuff that you can go through, and it shows you all sorts of feasibility studies and things that we just talked about, like quality control as we convert to land titles, risk assessment, risk aversion, all the automation things that relate to that.
Mr Tilson: Somewhere along the line it changed. From 1974 to 1988, somewhere in that time frame, it changed.
The Chair: Excuse me. We are being interrupted by the big band sound, which I would like to find out about. I think that should not be going on while committee hearings are being conducted.
Mr Villeneuve: I thought the Liberal leadership was a week ago.
The Chair: It may be, but surely they can go outside and do it.
Hon Ms Churley: Just in terms of your last question, it is my understanding -- and Sue might be able to elaborate on this -- that there was an audit done in 1980. Sue?
Ms Corke: Yes, I think it was an electronic data processing, EDP, audit of the Polaris system.
Hon Ms Churley: So it would have looked at the financial implications that you are talking about. There is no copy here today.
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The Chair: Is that available, Minister? Could that be made available to the members of the committee?
Hon Ms Churley: Yes.
The Chair: Would that satisfy? That is financial, Mr Tilson. I think what you are looking for is a quality --
Mr Tilson: I want to know if the system is going to work and what it costs. Someone tried to convince us back in the early 1970s that it was going to work. All of a sudden we are dealing with a partnership. As I say, the process changed.
Mr Daniels: No, actually the process of distribution changed, not the creation of Polaris. We have been doing the conversion, as you said, since the 1970s. We began the prototype in Woodstock.
Mr Tilson: I am quite aware of all that.
Mr Daniels: But until November 22 the province of Ontario was doing the conversion, and we had converted close to 400,000 properties. Nothing is going to change as of November 22 to make that conversion any different.
Mr Tilson: Why did the province decide to get out of this and put more of it into private enterprise, as opposed to taking it all on itself? Was there not a feasibility study with respect to that?
Mr Daniels: Yes, there was, very much so. If I can answer, that is a very good question. In 1987, the government, at Management Board, approved the implementation of Polaris for the next 15 years, and leading to that would be a feasibility study. In that approval, it said that 17% of the mapping work would be privatized, given to individual mapping companies.
Those individual mapping companies and the universities involved in land systems approached the minister of the day and said, "This could be better done in partnership, rather than done by public servants." This would have required an increase of about 500 staff to the public service over the period of time and would cost, as I said, $112 million. What they wanted to do was say, "Let's take another look at this in a partnership way."
They established a working committee of university professors from the University of Toronto, Sir Sandford Fleming College etc, who are involved in land systems, some of the large engineering firms that are involved in land systems, the Ministry of Natural Resources and the Ministry of Industry, Trade and Technology. There was a large committee that reviewed the concept of partnership.
At first, it looked at just privatization and subcontracting and increasing the subcontracting potential, say, from 17% all the way to 90%. At the same time, the government had commissioned a study by the Premier's Council on economic policy, and it said, "Perhaps government should be looking at partnerships," and the staff who were involved on our working committee from MITT said, "Why don't you take a look at partnering?"
If you go back to that previous council, remember there was a statement in it that said, "Government should use its procurement power," much like Quebec did in the areas of Lavalin and SNC, "to help create industry and to move industry along." Basically, that is what this came out of. We said, "You're right; we can move from the concept of subcontracting to partnership," and that is what happened in 1988. That is when we went out and began to see if this idea of partnership with the private sector would fly, if there was anybody out there who would really want to be our partners on our terms.
Mr Tilson: I guess the type of information I am looking for --
The Chair: Mr Tilson, there are two other questioners. You have had quite a bit of time. I think I am going to move to them. Mr Johnson.
Mr Johnson: Thank you, Mr Chair.
The Chair: Can you hear me, Mr Johnson?
Mr Johnson: Yes, I can hear you, Mr Chair. I have this incredible desire to get up and dance.
The Chair: My card is full, Mr Johnson, I am afraid.
Mr Johnson: Well, then, you may want to pass. Much has transpired since I first indicated I wanted to ask a question. I still am of the opinion that the standing committee on public accounts might, at some later time, want to review the efficiency and the accountability of the Polaris project, but I think this is just too soon, and that is my opinion.
I listened to Mr Daniels give his explanation of the process that reviewed the tendering process, that reviewed the partners that would eventually be the partners of the government in the Polaris project, and I guess there is a sense that often governments take too long when they decide to do things. So there is a tradeoff. You can take too long and have people saying you are taking too long, you are overdoing your investigations, you are overdoing your research. On the other hand, you can have people say you did not do it extensively enough. I think we are at the point in time where we have to get on with this project.
I just want to say to Mr Daniels: Do you think the process at this point in time has been timely? Has the review been extensive enough to satisfy the criteria that the government -- I think you have indicated that; I would just like to hear you reaffirm that.
Mr Daniels: All the way through the negotiating process, which was almost two years -- we are talking two years with about eight to 10 different reviews through that process, probably the most extensive review process of any selection I have ever been in, but we are talking about a very major issue -- I was concerned that the two consortia, Fimtech and RDO, would actually stay around for the full two years of negotiations, and they did. Both of them stayed through the whole process of selection and review. It shows you there was a strong interest and strong commitments from both partnerships to stay the course.
As I say, we had a massive number of reviews, both external and internal, both bureaucratic reviews of all ministries involved and external reviews by law firms and consulting firms. We went as far as the east coast to make sure we had neutrality. I think the process of review is probably the most extensive and I think everybody should be quite proud of the review process and it would stand any kind of scrutiny.
Mr Johnson: This is an idea, again, that you said started in 1974?
Mr Daniels: The concept of Polaris goes back to the law reform commission that said we should automate the land registration system in 1974, and we began to do prototypes, pilots and all the things Mr Tilson mentioned in terms of feasibility, what kind of systems we would use. We were all set and ready to go in 1985 with a prototype in Woodstock, which was quite successful. Oxford county has fully implemented Polaris. At the same time, we started some work in Chatham. We have been working in London to convert from registration to titles, and we have done all of North York and a substantial portion of Scarborough. I think close to 400,000 properties are already in the Polaris system. With the new buildup with the private sector, we will go about 300,000 to 400,000 a year until we are finished.
Mr Johnson: When do you think this will be completely intact and operating province-wide?
Mr Daniels: Eight years.
The Chair: In the words of Michelangelo, when it is finished.
Mr Daniels: Eight years.
Mr Johnson: That is the projected time.
Mr Daniels: That is the agreement time.
Mr Johnson: Do you think then that nearly 18 years down the road, the process has been successful and timely?
Mr Daniels: Absolutely.
Hon Ms Churley: That is a setup question.
Mr Daniels: Yes. But if you went to Woodstock and talked to the people who use the system and have been using it for five years -- seven years now -- they really find it speeds up the process and ensures accuracy. All the things Mr Tilson asked about have been monitored and controlled through EDP audit and constant review of that prototype, and that is the prototype we continue to use as we convert.
Mr Johnson: Will there be any segment of our society that will be advantaged or disadvantaged as a result of this project?
The Chair: The title searchers. They will be out of work.
Mr Daniels: They will not be disadvantaged, because they will form up different types of operations. A lot of law firms are quite small and will not want to invest in the direct hookup, but title searchers will form up consortiums and companies themselves to package up the remote services. I see the little guy having a whole new business to go into, as well as the large law firms. Other ministries and other governments can hook up to Polaris directly through a modem system. It is going to make land information a lot easier in Ontario than the 200-year-old process that exists now. My staff have to lift books that weigh 30 to 40 pounds. A lot of them are probably --
Hon Ms Churley: There is also the fact that we expect 2,000 new jobs, high-tech jobs, to be created as a result of this technology.
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The Chair: I am going to go to Mr White and then Mr Villeneuve in light of the length of time Mr Tilson had.
Mr White: If I could, I would like to review the status of this motion. Has this motion been withdrawn or just deferred?
The Chair: No, it has not been withdrawn. It was deferred to hear from the minister, which we are doing now.
Mr White: It just seems to me that when I look at the questions posed, which are very well-articulated questions, those questions have been very substantively answered, with the exception of the management of the Polaris project, which can only be determined over time, of course, but the other six questions seem to have been very articulately responded to. The criteria for the selection, the terms and conditions of the partnership agreement, a comparative analysis of bids and proposals: all those things have been very carefully gone through.
The Chair: Is that a question or is that a --
Interjection: He is getting to it.
Mr White: I had a few questions related to where these questions came from and the controversy that has revolved around this. First, on your last point, though, we were talking about 2,000 jobs in this province, high value added, high-tech jobs. According to the release from the previous minister, this was supposedly to be a state-of-the-art technology, a state-of-the-art partnership, something which will no doubt be copied in other jurisdictions. Has such a program been introduced in other areas in North America?
Hon Ms Churley: It is state-of-the-art technology, you are quite right, and it will create high-tech jobs. It is my understanding that because it is so new and state of the art we have been asked to consult with international jurisdictions, which have been coming to talk to us about this. So, yes, we are on the leading edge in this one, I am proud to say.
I think that actually all three parties who have been in government now over the years have been involved in this project. It started back in the Tory government, and as Mr Daniels explained --
The Chair: That was a long time ago.
Hon Ms Churley: -- their participation --
Mr Villeneuve: Those were the good days.
Hon Ms Churley: I knew I was getting into trouble there. Then of course the Liberal government took it a step further, and we came in --
The Chair: Just a short while ago.
Hon Ms Churley: -- just a short while ago, in 1990, and as Mr Daniels said, we were of course coming in after Tory and Liberal governments started a project. We decided we better take a very good, hard look at this, which we did. As has been said by Mr Daniels, both the other governments had done inside and outside reviews on this. I was not in the ministry at that time, but I did review this very carefully and it is very clear that this government as well went through the same kinds of internal and external examinations and the due diligence.
I think the questions Mr Tilson is asking and has been asking -- I would not say all of them, but I think it is quite fair to ask those kinds of questions and be clear where we are going with this, because it is a large consortium we are starting here and it is high-tech and it is value added and it is state of the art and will in fact lead to, as we have talked about, further employment.
I think the issues that have been asked around privacy and around financing are important ones. That has to be taken into consideration while we discuss the actual positive aspects of this. We believe we have. This is a new company, and as Mr Johnson said earlier, it is already up and running but still has some details to be worked out. The idea of an auditor looking at that in a year or two, in my view, is a very good idea.
Mr White: You have entered on to the very issue I was wanting to bring up, which was the review the new government took. Certainly there may have been reason in the past, at the outset in October 1990, to review some of these programs. We have talked about the private ownership in the consortium -- the RDO consortium, the 21 individuals -- and of course part of the review might be looking at what is the proportion of ownership, the extent of private ownership, that was not accessible. I am wondering, along those lines: Was the previous minister satisfied that the level of entirely private individual ownership was of a proportion that was low enough not to bias this project?
Hon Ms Churley: Yes, the due diligence, which was a very important aspect of the reviews this government did, clarifies and certainly makes us very comfortable with the makeup at this time of the consortium. We are convinced that it will remain Canadian-controlled, for instance, that right now the consortium as it exists is Canadian-controlled and will continue to be so, and we in fact will have the right to review any changes that are made. Correct me if I am wrong in that.
Mr Daniels: Absolutely right: any change of ownership.
Hon Ms Churley: Yes, that was an important aspect to find out in terms of the due diligence. The other aspect, which has been mentioned earlier, is the financial aspects. We wanted to know and be very sure that this consortium did have the money to be able to fulfil its obligations. On both those counts the due diligence clarified and convinced us that in fact this consortium is Canadian-controlled and does have the money to proceed.
Mr White: We have also discussed the issue of liability. I am not familiar with some of the firms involved, because frankly it was not my area of expertise or business practice in the past, but certainly for EDS and Peat Marwick the liability for those companies, which is a potential liability to this point, would be petty cash, I would think. EDS is certainly a very large corporation, its Canadian offices of course being in my riding in Durham Centre.
Mr Daniels: That is right.
Mr White: And of course Peat Marwick is a very substantial firm as well. With corporations that size, liability issues are, I am sure, well assumed by their own insurance and their own net worth, to put it mildly.
The other question I had was, going back to my own riding, with a new office in Whitby, why is it that the state-of-the-art technology is not available in Durham?
Hon Ms Churley: It will be one day.
Mr Daniels: Whitby is in the first five years.
Mr White: Great.
Mr Villeneuve: Watch they do not shut it down on you, Drummond.
The Chair: I would like to throw in that little one before Mr Villeneuve. In light of the technological advances, what impact will that have on the number of employees in the registry offices and the size of the offices?
Mr Villeneuve: That was my question.
The Chair: Sorry, I did not want to steal your thunder.
Mr Villeneuve: Go ahead.
The Chair: I always advocated, and I am sure that one day my colleagues in the legal profession will skewer me for this in Hansard, but I always figured that people should be able to put 50 cents into a machine and get their title out, instead of having to go and pay exorbitant rates to a lawyer to search the title and to come up with the opinion that your title is good and valid. It seems to me ludicrous that people have to search title after title after title, year after year after year. I do not know why the government, if it really wanted to do good things for the people, did not just put a machine in a corner store where you could put 50 cents in and get your title out and then go to the lawyer and have him draw up the deed. The magic that is kept there by the legal profession is absolutely unbelievable. I say that being a lawyer.
Hon Ms Churley: You are allowed then. Just to answer your -- well, it was not a question; I think you were being somewhat facetious in terms of putting the information in vending machines, but I think that would be the end of all our land registry offices and their staff right there.
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The Chair: That would save a lot of money, let's put it that way, and make it cheaper for the public to get what it is paying big bucks for today, and will be paying big bucks for even under this process. You have the government, which has to put all this stuff into land titles, and then you have the government selling that service, through this co-partner, to people, through their modems.
The only people who are going to get it, I venture to say, will be the law firms. I, as an individual with a modem, am going to have to pay an exorbitant fee if I want to get access to my title alone. With the greatest respect, I do not think we have advanced one whit towards assisting people in getting very basic legal services that heretofore have cost them an arm and a leg for a reasonable rate.
I think the government should be moving in that direction. Again, my colleagues in the legal profession will probably crucify me for that, because that is their bread and butter, but I do not think that is fair to individuals, if you have it all automated as it is today, to go into land titles -- you go into land titles, get a photostatic copy of the abstract and you have the title right in your hands. There is no risk. When I was in law school they always told you that big fees for lawyers in real estate deals were the risk. There is no risk any more. Let's call a spade a spade and put the price at the proper rate.
Mr Hayes: Excuse me, Mr Chair, have the Liberals used up their time yet?
The Chair: No, no. Actually I am the only Liberal who has spoken. I just had to get that in; that has always bugged me.
Mr Villeneuve: There is nothing like losing power to become repentant. I think we have heard some of that right now.
Under all this great automation, can we anticipate some of our local registry offices closing and having a unified registry office in downtown somewhere looking after everything?
Hon Ms Churley: I will let Mr Daniels follow me, but that is not in the plan. It is not connected in any way. Dare I mention it, because I have not heard about it for a while, raising its ugly head again? But it is not connected in any way to the closing of the land registry offices in the united counties scenario. The idea is to be able to service those land registry offices in communities more accurately and more quickly. Do you have anything further to add to that?
Mr Daniels: No.
Mr Villeneuve: Thank you. That reassures me to some degree. There is quite a lot of bureaucracy required to bring the quality of present titles, as they are not registered under land titles, up to the standard acceptability of land titles. I was exposed to that in my other incarnation doing real estate appraisal work and of course spending quite a bit of time in registry offices. We had one municipality in the area that I covered under land titles that was very easy to work with. What is it costing the land registry offices or the ministry to bring all of this information up to the standards for land titles?
Mr Daniels: The long-term cost of Polaris, as I said, was going to be $112 million. That is the cost of just that kind of work on that many properties. We are looking at around $50 to $60 a conversion for an individual property. By going into partnership we reduced the province's costs substantially, by about $80 million. It is labour-intensive. Individual staff who are now part of the Polaris team, through what they call a risk assessment, go back and search title, just as a lawyer would have, and then look at any kind of adverse possession or adverse possession requirements against any of that land. Then we convert it, in automation, to the land titles system from the registry system.
That is the conversion process. It is very labour-intensive. It requires our staff, who have to be trained searchers-conveyancers in their knowledge of land information, to look at the history of that ownership and that transfer. Much as a lawyer would do the 40-year search, they are looking backwards and moving it to the land titles system. That is taking place in London and has been taking place in London for the last three years without any problems at all. This is very interesting, as we have done close to 40,000 properties in London in a test phase, testing our risk analysis and finding it works really well.
Mr Villeneuve: Your land registrar will also have to certify legal description. Is that creating an expensive problem?
Mr Daniels: They do now. I think almost 45% to 50% of properties in Ontario are already in land titles, so we are just moving the last half into it, Mr Villeneuve. They are doing it now. That is their job.
As to the integrity of the data, we have not transferred that to Teranet. That remains with us. We still are responsible for the land information system, and that, as the minister said, means there will always be land registry offices. Not everybody will be able to deal with us remotely. People will still need to go to the land registry office. It will be automated, it will be easier to access, there will be large firms hooked up. Maybe your vision of the future is not so far away: that kiosks and things are going to be available.
The Chair: Beer in the corner stores was popular. I think this should be too.
Mr Daniels: As the minister said, we see the need for our land registry operation and offices to be intact, because we need to control the intake. We are the intake. We are the data integrity people.
Mr Villeneuve: So the government partner, Polaris, will not bear any of the cost of updating the information now on file? They will take over when it is all under land titles and the cost will have been assumed by the ministry?
Mr Daniels: They are doing the conversion. This organization will be taking the land and moving it to an automated system, either a land titles system and converting it very easily, or converting from registry to title and converting it under our control, through our quality control. But they will provide the manpower involved in the conversion process. The partner will be responsible.
Mr Villeneuve: Once your titles are in such a position as acceptable to transfer?
Mr Daniels: That is right. We assure the quality of the work.
Mr Villeneuve: In 1988 it looks like the LROs made about $19 million of profit. Do you anticipate that under the new deal with Polaris, as 50-50, the ministry will enhance that, maintain it or reduce it?
Mr Daniels: Going into the partnership, it is our belief that we will at least maintain. In fact, the contract requires us to maintain our revenue projections through the 10 years, so that the government will lose none of its projected revenue. But obviously we want better than that. We are a partner in a company that is going to offer remote services, so we will share 50% of that profit.
If they sell the product -- as the minister says, part of their requirement is to sell these products elsewhere, across Canada, the US. Since I have been in the ministry we have had 33 foreign countries -- this is what made me realize that there is a pent-up, strong demand for land information services -- visit Polaris, came to Canada and went to Woodstock, and are on the verge of purchasing this material. It is exactly what we had a vision of, that we would be leading the world in land-related information systems.
Ontario is one of the largest land masses. It has a very good informational geomatics base and the Ministry of Natural Resources has built on what is called the base map. We add value to that base map by adding property maps. A lot of countries have converted their information processes, the deeds and all that, but only Ontario has taken a mapping approach to it. There is an information database of deeds, but there also is a map that shows the ownership of the land on top of the physical, topographical map in Ontario. No other country has done this. That is why we are a leader. We are using geomatic, geographic information, coupled with ordinary information and nobody else has done that.
British Columbia, for instance, in its BC Online, has automated the land information system but not the maps. That is what makes Ontario unique. We have a large land mass and we have invested in a geographic mapping system, so that Third World countries, the eastern countries, are visiting us in the largest numbers right now. The eastern European countries are coming to look at how can they move into a system where ownership of property is important, as opposed to a collective. We are there. We are leaders. We are in the market now.
Somebody asked if anybody else was. One of the states in Australia is also in this kind of business, but it has not used the geomatics approach either. So we are out ahead of that. We have the large land mass, we have a great history of mapping the province and we have made an investment in that over the years. I think we have a lot to be proud of and this partnership will generate for us 50% of that international market.
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Mr Villeneuve: Of concern to me -- I am no computer connoisseur, but we hear of computer viruses and problems that occur. With the government being a 50 per center and Polaris being the other 50 per center, what --
The Chair: It is not Polaris; it is Teranet.
Mr Villeneuve: Teranet, sorry. What safeguards has the government, as only a 50 per center in there, got to protect some of the very vital information? I realize we are looking at the Constitution protecting social services and what have you, and yet the right to the ownership of land is of very grave concern to me.
We see now that the Ministry of Natural Resources has designated areas as class 1 wetlands without the owners even knowing this has occurred at the bureaucratic level. I see this computerization making it even more easily accessible for bureaucrats to do some very restrictive things to the owners of real estate. They find out after the fact and, I tell you, it is creating major problems in some of the areas I represent. What safeguards do we have here to protect the land owner?
Mr Daniels: In this agreement there are a number of mandatory safeguards built in. The key one is of course that the government still owns the data; nobody else does. The government controls all the legislation and regulation etc related to the land and the policy around land information systems. That still belongs to us.
We also control the pricing of any new products and any change to existing pricing. We also have to approve any new product you are talking about. Suppose this process of automation creates new products. We have to approve those, but more important, we have to approve those -- this is what the agreement says -- considering freedom of information and privacy provisions of the law. We cannot create a new product or do anything that would impinge on individual privacy and freedoms. That is in the agreements. That is part of this thing. Each of those new products had to be reviewed by the government in view of its public policy. I think all governments have an interest in protecting individual privacy. It says public policy and freedom of information -- I think those are probably the two most important safeguards -- are mandatorily in the agreement with Teranet.
Mr Villeneuve: On the computer virus problems -- this is a new word to me -- I understand computer wizards can access information that you as an owner may not even be aware of. Do you have protection against that?
Mr Daniels: There are a number of things. The minister was just pointing out that in our agreement we will have offsite backup of all our data if something crashes or goes down. We always back up our data offsite, not in the land registry office but somewhere else, on DATs -- digital audio tapes -- and things like that.
The Chair: I think Mr Villeneuve is more concerned about illegal access, like the kid tapping into your bank account at the bank -- hackers.
Mr Daniels: We have major quality control as part of this agreement. We have a special unit in Sue's branch that constantly reviews the quality of the data and the process of quality control. That is very much part of it, so we expect that none of those things -- hackers or viruses -- will be involved because the quality we are building in will ensure against that.
Mr Villeneuve: The president of your partner states that there are about 30 people involved and that the government does not want him to disclose names. Would we be talking about freedom of information? I am referring to an article that came out a while ago. It says: "Real/Data appears headed to win the huge contract. President Mohammed al-Zaibak says he will not disclose the list of owners because the government does not want them revealed."
The Chair: I think you missed that. You may have not been in here when Mr Tilson asked that question. It is protected under the freedom of information legislation.
Mr Villeneuve: I want to make sure that this is what has occurred, because Mr Tilson has requested.
The Chair: This is what we were told, that by virtue of the agreement it is protected under the freedom of information act. I believe Mr Tilson has filed an application.
Mr Villeneuve: Quite some time ago.
The Chair: He has not had an answer. That is the immediate answer to your question, I believe, subject to --
Hon Ms Churley: Yes. Mr Tilson, I think you have received the master agreement but not the rest of your request. Is that correct?
Mr Tilson: I received an agreement that has large sections blocked out --
The Chair: It is like a crown brief.
Mr Tilson: -- as well as an indication that there are a number of other documents that were not produced to me.
Hon Ms Churley: To follow up on the question, the government has no problem with these names being released as long as it is done legally through the freedom of information act. That is quite clear.
Mr Villeneuve: I am always concerned because of the very vital information. I know lawyers have ways of camouflaging a lot of things.
The Chair: Hey.
Hon Ms Churley: Do you want that stricken from the record?
The Chair: Disregard that.
Mr Villeneuve: This is a known fact. I, as an appraiser, can vouch for it. Very often it was very difficult to find out just exactly what was paid -- $2 "and other considerations." I am not sure just --
Mr Tilson: Natural love and affection.
The Chair: That is right. Natural love and affection goes a long way.
Mr Villeneuve: At arm's length, yes, I can appreciate that.
The Chair: I want to ask one question. Has there been some protection built into the legislation to protect people who are creditors and who have filed an execution with the sheriff under the registry system so that when all of this is brought into the land titles system their execution will be automatically protected?
Mr Daniels: We have been working with the Attorney General to link up the sheriff's writs of execution systems in the Atrium on Bay office in Toronto. We are co-located so that people do not have to go to the sheriff's office and then to our office to do it. More and more we are looking at closely aligning ourselves with that system.
The Chair: I appreciate that, but I do not think you are getting my question. When land is under registry you file with the sheriff and it only affects the land on the registry. You are now moving this land from registry to land titles without anybody really knowing it, and certainly not the creditors. So the creditor's execution is filed with the sheriff of the county, which only affects registry land. Since a copy has not been sent to land titles, which would be the case if they knew it was in land titles, how are you going to protect their claim, which was valid when it was in registry and has now been moved to the land titles without any notification to the creditor?
Mr Daniels: I do not know the answer to that. That is a very technical question. We can get you that answer and give it to you in writing.
Mr Tilson: In order for Polaris to be implemented the entire province will have to be resurveyed. As I understand it, one of the contracts that is not being produced to me is a contract with some surveying firm that will result in all of the land in Ontario being resurveyed over a period of time. That is my understanding.
At the very outset Polaris is calling for remapping, so we know perfectly well that under the Polaris system the entire land system has to be remapped, which means all the surveys of this province will become redundant. There is obviously a substantial cost with respect to remapping, resurveying, creating new legal descriptions and certifying titles. You have indicated half the province -- in fact it is more than half the province -- is going to have to be certified. Are you telling me that Teranet, which is 50% government and 50% Real/Data, is going to be paying for all this?
Mr Daniels: Part of the total cost of the conversion involves mapping. We do use existing mapping systems. There are Natural Resources maps, there are Revenue maps, there are MTO maps. We do not create a whole new map base. We build on the existing maps. Where there are problems in terms of easements or things that need to be reviewed, then we will subcontract, as we always did.
Mr Tilson: Polaris has an extensive mapping system. We have all seen the plans.
Mr Daniels: Yes, that is right.
Mr Tilson: It is going to take more than Ministry of Natural Resources mapping.
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Mr Daniels: I am saying that not all of Ontario will be remapped, but obviously there will be a lot of mapping to be done. One of the major partners in the RDO partnership is Landata systems, which is a consortium of survey and mapping --
Mr Tilson: So they will have the exclusive contract to do all this?
Mr Daniels: They must bid on a fairmarket basis. Teranet Services Inc and our partnership must make sure that the subcontracts are fair. It is not just given over to them automatically.
Mr Hayes: I would like to get back to my question, Mr Chair.
The Chair: Is there a point of order?
Mr Hayes: No, I have a question.
The Chair: Mr White, you seem to be in a --
Mr White: I thought we were rotating questions, and Mr Hayes had a question.
The Chair: I am sorry; yes, that is right. He did not at the time that I recognized Mr Tilson. He only put his hand up now, so we will get to him as soon as Mr Tilson finishes.
Mr Tilson: The question that I am asking Mr Daniels or the minister or anyone is. I would like to hear specific figures as to the tremendous costs for remapping the province of Ontario, what it is going to cost to certify the titles for Ontario. There may be other costs. My understanding, from your presentation this morning, is that Teranet is going to pay those costs.
Mr Daniels: First of all, the costs of doing Polaris as we calculated them in 1988 dollars was $112 million. That $112 million over 15 years was to do exactly the things Mr Tilson said. It would do the title information and the title conversion and begin the mapping process but utilizing existing mapping systems, and then, where we needed to supplement, using private mapping firms. In the original Polaris concept in 1987, I think it was about 17% of the mapping that would be done through private mapping firms.
Mr Tilson: That is not my question. I realize you are going to hire surveyors to do this surveying. I understand that.
Mr Daniels: It would have cost $112 million to do Polaris.
Mr Tilson: My question is, who is paying for it -- the government or Teranet or Real/Data?
Mr Daniels: Both parties, we said earlier, are going to commit $29 million each towards that $112 million, while the rest of the money comes from the revenue generated through the sale of the information.
Mr Tilson: The government is going to be paying for all these costs with the exception of --
Mr Daniels: No.
Mr Tilson: Can you tell me who is going to be paying for these costs?
Mr Daniels: Real/Data Ontario is going to put $29 million into the project. The government of Ontario is going to put $29 million, and this is the beginning of it.
Mr Tilson: And who is going to pay the rest?
Mr Daniels: The rest comes through the revenue that is generated through the sale of the remote access information. In other words, it regenerates itself. The revenue goes back in, as it would in any business. You are going to reinvest in the technology as you go.
Mr Tilson: Is Teranet guaranteed a minimum flow of revenue?
Mr Daniels: The government is guaranteed its revenue.
Mr Tilson: The government is guaranteeing Real/Data, which owns a percentage of Teranet, a minimum revenue?
Mr Daniels: No, they do not have any minimum guarantees. We are the ones who have the minimum guarantee. We must maintain our revenue over the 10 years.
Mr Tilson: Why would Real/Data stay in this? What is their incentive to stay in this?
Mr Daniels: They are going to create new revenue sources, such as the remote access, and that revenue source they will keep 50% of, and part of that 50% that they keep will have to be reinvested in the new technology. In order to do remote access they need to go into a digital auto-imaging system. We never would have been able to fund that.
Mr Tilson: Getting back to my initial question, it is going to cost a lot more than $29 million to put this whole thing together; you know that. It is going to cost millions.
Mr Daniels: Yes, millions, and the new sales of the new products that they create, the remote access product particularly, will generate money for them to keep reinvesting.
Mr Tilson: Do you have documentation you can present to this committee as to what this whole Polaris system is going to cost in 1992 dollars?
Mr Daniels: That financial model, as we were saying, is still under the freedom of information and privacy act.
Mr Tilson: So you have no idea of what it is going to cost?
Mr Daniels: Oh, we do.
Mr Tilson: But you are not going to tell us?
Mr Daniels: No. You have asked for that information out of the freedom of information and privacy act. That is being negotiated now. If I release it now, then --
Mr Tilson: I have asked for the names but now you are not going to tell me what this thing is going to cost.
Mr Daniels: I told you, it is going to cost --
The Chair: It is either a question of freedom of information or it is not. They have indicated it is, so I really do not think that --
Mr Tilson: I just want to be clear. I have asked for the contracts and the names, but now I am asking as to what this is going to cost. I am asking for the documentation of the government -- in other words, the feasibility study as to what this thing is going to cost. I have given the examples of mapping; I have given the examples of certification of title.
Mr Daniels: I think I have answered that by saying it is going to cost.
Mr Tilson: No, you have not told me what it is going to cost.
Mr Daniels: I said $29 million is what the province's costs will be.
Mr Tilson: No. I would like to know what the total cost is going to be to implement Polaris.
Mr Daniels: Over the 10 years?
Mr Tilson: Yes.
Mr Daniels: Right now, going on its present straight line the way the government was going to do it, the cost of it is $112 million. The new financial models have to be based on what it will cost to move to a remote access and digital imaging system.
Mr Tilson: To get to that, you are going to have to remap the province of Ontario.
Mr Daniels: No.
Mr Tilson: In the original Polaris documentation that I saw in the 1970s, you certainly were. There were whole projects put forward as far as mapping is concerned.
Mr Daniels: There is quite a bit of mapping involved, but to say we are going to remap the whole province is wrong. There is a lot of existing mapping information that we will accumulate. That is what we have been doing in Toronto and Woodstock. We did not remap all of Woodstock. There were existing and valid surveys already. What we would do was to resurvey those areas that were old or out of date. We do not resurvey --
Mr Tilson: There are lands in most ridings in this province that are not even surveyed. You are going to have to survey those lands. That is going to take an unbelievable cost. It is going to take --
Mr Daniels: That cost was fairly high; $112 million over 15 years is a lot of money for any province to invest. We knew the cost. That included the cost of mapping.
Mr Tilson: Can you provide to this committee the documentation that shows what those costs are anticipated to be?
Hon Ms Churley: No. As has already been stated, you can apply for that information under the freedom of information act.
Mr Tilson: Stop right there. You are telling me that you cannot produce to this committee the cost of Polaris in documentation.
The Chair: Mr Tilson, in fairness, I think what the minister is saying, if I am reading it correctly, is that this information is under the freedom of information act and that the crown is bound just as much as we are by that act and cannot act unlawfully. Is that correct?
Hon Ms Churley: Yes. Just to clarify, during the early processes there was a letter of intent from RDO. Part of that letter of intent included a financial model which did deal with the kinds of issues you are raising today. It is my belief that Teranet is now in the process of adopting this as part of its business plan. Remember that this is a new company; it is up and running, but because it is very new it is still in the process.
Mr Tilson: Will you tell us what the plan is? That is under freedom of information too.
Hon Ms Churley: It is not adopted yet.
Mr Tilson: It sounds like the whole system is under freedom of information, Mr Chair, which is the reason I brought this application to this committee.
Hon Ms Churley: Back to my original statement on this, Mr Tilson. This is no secret deal, which is what I think you are starting to get back to here. This is very open. But as I continue to say, it is --
Mr Tilson: You will not tell me who is in it; you will not tell me what it is going to cost.
Hon Ms Churley: You are interrupting me.
The Chair: Just a second.
Mr Hayes: On a point of order --
The Chair: You do not have to raise a point of order. Mr Tilson --
Hon Ms Churley: Just let me finish.
The Chair: Madam Minister, just a second.
Mr Hayes: A point of order, Mr Chair.
The Chair: Just a second. Hansard cannot take down two voices.
Hon Ms Churley: That is a good thing.
The Chair: They are probably becoming schizoid up there, so let's let the question be asked and answered. Is that your point of order?
Mr Hayes: My point of order is that when we bring people in here as witnesses to get information for the benefit of the whole committee, not just individuals, when we ask them a question I think we should have the courtesy to let them finish their question. That is all I am saying. Ask any question you like, but let's have the courtesy for one another so we can hear.
The Chair: Legitimately that is not a point of order but I think it is a point of courtesy, and that is not a reflection, Mr Tilson. I think that in any forum, fairness requires that you allow the person to answer the question.
Hon Ms Churley: Just to continue, let me reiterate what I said earlier. This is a private company. Government must abide by the rules of the freedom of information act, that is a fact, so in those areas that protect all private companies, government cannot say, "We're the government and we're going to step outside the law here." We have to abide by the terms of the freedom of information act like anybody else. People can, as you have, apply for information, and the process will continue from there.
This, as I already said, is a financial model that is in the process of being adopted by a private company, and you must go through this process in order to get further information. It is very clear. There is nothing being hidden. There are no secrets here. It is the way the world works in terms of private companies: protecting certain financial information that could be detrimental to the success of the company.
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Mr Tilson: This private company is going to have access to tax collection information, property assessment, personal information such as statistics gathered for municipal enumeration, assessment records and a whole slew of other documentation that may not even be available to anyone else.
Following through on what you have just said, can you be specific as to the assurances to this committee about the confidentiality, that this private, unnamed group of people -- we do not even know who they are -- will maintain that confidentiality?
Hon Ms Churley: As has already been stated, this kind of land registry information is already public information, and beyond that the government retains control of ownership of the database. I do not know how much more clear I can be on that; I have repeated it frequently.
What you said is not correct; that is what I am trying to say here. The information you are talking about is already in the public domain and the government continues -- I am repeating myself but it is very important that people understand this -- to retain control of the information and database.
The Chair: Could I just interrupt, Mr Tilson? It is five minutes to 12, and this committee normally adjourns at 12:00. Is it the wish of the committee that we continue this afternoon? If it is, we will continue; if not, we would then want to deal with the motion before 12:00. As the alternative, if the committee gives unanimous consent, we could continue until, say, 12:15 or 12:30 and then do what I have just suggested. What is the committee's wish? Do we have unanimous consent to sit beyond 12 o'clock?
Mrs Y. O'Neill: I will not be able to do that, Mr Chairman.
The Chair: One member has indicated, but would you be prepared to join in unanimous consent if the rest of --
Mrs Y. O'Neill: I would ask permission of the committee or we can return this afternoon.
Mr Tilson: I would prefer to return this afternoon, Mr Chair.
The Chair: That does not require unanimous consent.
Mr Hayes: I do not know if I am in order or not, Mr Chair, but we do have members on our side, the government side, who have other commitments too and have scheduled their time for 12 o'clock. Mr Chair, if I am in order, I would like to call the question on this motion, because I think we have had a considerable amount of input and information on it. I would like to call the question on this motion of Mr Tilson's.
The Chair: The only difficulty with that is that if you call the question on it and the motion is defeated, that would end the discussion and there would be no point in coming back this afternoon.
As a matter of fairness, we have had the minister all morning. If it will accommodate her and accommodate members of the committee in their questioning that we should continue until 12:30, that might be the preferable route to take.
Mr White: On a point of clarification, Mr Chair: Are you ruling his motion out of order?
The Chair: Yes, I am at this point, until we have had --
Mr White: On what grounds?
The Chair: The rules of the Legislature allow members to continue asking questions virtually as long as they like.
Mr White: After a question has been called? I wonder that, sir.
The Chair: There is no debate on my ruling it out of order, but there is still debate to be made by other members of the committee.
I would like to get back to the other issue, as to whether or not we can accommodate the minister by extending the time by unanimous consent to 12:30 to allow further questioning. Would that be ample for you, Mr Tilson?
Mr Tilson: My understanding was that this committee would be reviewing this matter this morning and this afternoon. I am in the process of asking a number of questions, and I am sure other members of the committee will have other questions to ask. I find very strange the remarks made by members from the other side that this whole process should end. This was the agenda that was set for this particular committee. I assume the minister has made herself available for this afternoon, because it is on the agenda.
The Chair: The minister is shaking her head that this is not the case. I note that we did have 2:00 to 4:00, and certainly that will be the agenda if there is not unanimous consent. However, I gather it will be in the absence of the minister.
Perhaps in light of that you may wish to reconsider your position in terms of -- is the minister available until 12:30?
Hon Ms Churley: No. I indicated to the clerk when I was notified of this meeting that I have a commitment. In fact, I have to leave at 12 o'clock and I am unable to return this afternoon. I apologize for that. My officials, if it is decided that people should stay, are available for the afternoon, but I simply was unable to clear my schedule to be here for the entire day.
The Chair: Okay. I am advised by the clerk that the subcommittee actually had requested staff, and I was quite surprised, in fact, to see the minister here this morning. She has accommodated us by coming.
Having said that, is it the wish of the committee that we continue this afternoon with staff?
Mr Tilson: Yes.
The Chair: All right. There is not unanimous consent, then, that we conclude the --
Mr White: No, it is not the wish of the committee.
Mrs Y. O'Neill: Mr Chair, the person who has presented the question usually is shown the courtesy of being given as much time as possible, especially when it has been agreed to by the subcommittee. I certainly think Mr Tilson has the right to continue this discussion, and I would find it very difficult if that were not granted.
The Chair: I agree. That was the schedule that was set.
The Chair: All right. Since we are not extending the time, we will adjourn now until 2 o'clock. Thank you very much, Minister and staff, for your attendance.
The committee recessed at 1159.
AFTERNOON SITTING
The committee resumed at 1408.
The Acting Chair (Mr Morin): Mr Tilson, I believe you had the floor.
Mr Tilson: Mr Daniels, I would like to return --
The Acting Chair (Mr Morin): Order. Just a minute, please. Did you want to say something, Mr Hayes?
Mr Hayes: Yes, I do. I want to get back to just before we adjourned, to make something clear and clarify what I was getting at when I made the motion to call the question on the motion. There is no way that I was even hinting at or intended to cut back on any member's time, or to interfere with his input or any of his questions in this committee. But if in fact we are here to deal with Mr Tilson's motion, I suggest we stick to the motion, which did not happen consistently in this morning's session. I would just make that very clear. If that is what we are here for, to talk about Mr Tilson's motion, and that is what I understand, questions should be based on that.
The Acting Chair (Mr Morin): Thank you. That is what we are here for.
Mr Tilson: Mr Daniels, this morning we were talking with respect to the tendering process and I would like to return to that because I am still not clear. Mr Villeneuve referred to a newspaper clipping, which I am sure you are aware of. Ms Francis wrote something on this back in October 1990 and you in turn responded to that newspaper clipping about a month later. I would like to read part of that letter you wrote to the editor and ask for your clarification. In your letter, and I am only going to read the middle portion of it, you talked about the committee establishing the partnership concept and that occurred, of course, in 1987 and 1988. Then you said:
"Then a notice of intent was published on two occasions in major newspapers, including the Financial Post. At a public ceremony on December 7, 1988, a request for proposals was released to 21 interested firms. The media were also invited to that meeting. Of the final three responses to that request, one was disqualified and the other two were examined by the ministry and a team of independent evaluators representing the Canadian geomatics industry and financial and legal communities. Because neither proposal met all the published requirements of this new concept, it was decided additional negotiations were necessary to develop a workable solution. Again, a long list of criteria and a specific process were prepared in advance and released to the two finalists.
"Both consortia agreed to, and accepted, that process. As is standard in any form of bidding, the elements of each proposal must be kept confidential until a final offer has been made and accepted. This ensures the taxpayer gets the best possible deal and that all parties are treated equally. Throughout the entire process the steering committee of deputy ministers reviewed all criteria and selection results and major checkpoints were subject to approval by the Management Board of Cabinet."
The reason I have read that is that frankly I find that a very strange procedure in so far as the tendering mechanism is concerned. In other words, there appeared to be some sort of, not necessarily a tender but a proposal. I have always found it interesting when governments are talking about proposals and tenders. There appeared to be a proposal and not a tender going out.
Mr Daniels: I think --
Mr Tilson: Perhaps I could just finish, Mr Daniels. Neither of these consortia met that, and then you went back at it again dealing solely with those two consortia -- not firms, consortia. My question is twofold. Is that not a strange tendering procedure, looking at what many ministries follow with respect to tendering practices in this province, particularly with the magnitude of this? If initially neither of these consortia, you felt -- not you, but the committee -- were capable of handling this type of project, why on earth did we deal with either one of them?
Mr Daniels: First of all, just to clarify: the government uses words like "request for proposals," and it really is talking about "tender." What they are asking the public to do is to make a proposal. So any kind of "request" -- you are using the private sector word "tender" -- but when the government asks for a request for proposals, that is basically the tendering process. All ministries call it an RFP, a request for proposals.
Now we went out with something called a request for information, an RFI, first of all. We wanted to find out if there was anybody interested. So you have to go back one step. We have what is called an RFI, and that was a request for interest, and that is where the 72 companies came forward. Recognizing there was a strong interest, then we developed a request for proposal. The request for proposal would be very extensive. In the proposal each company would come and pick it up to read it. It would have all sorts of material in it. In fact, we can provide the committee with that request for proposal. That is the tendering process.
That proposal had a closing date, sealed bids and tendering that would be opened simultaneously. We looked at them as a committee rather than as individuals. I think this is the unusual part. Because we were dealing with such a major and unusual program, it crossed over a number of ministries. It was not just the Ministry of Consumer and Commercial Relations reviewing it. We asked for some help from the Ministry of Natural Resources, the Ministry of Industry, Trade and Technology, the Ministry of Revenue, the Ministry of Municipal Affairs, the city of Ottawa -- representing municipal governments -- and the federal Department of Energy, Mines and Resources.
Then, as I said, we had private sector companies, besides all three levels of government, reviewing the proposals, and those are basically tenders. So you have three levels of government, the private sector in the case of Price Waterhouse, and Blake, Cassels and Graydon as a legal group, and then that other party we brought in from eastern Canada, called the Cabot Group. It was made up of the University of New Brunswick and the Maritime Premiers' Council, who are in the process of delivering a geomatic system. We had that kind of expertise to review it.
Mr Tilson: As I understand the difference between proposal and tender --
Mr Daniels: It is the same thing.
Mr Tilson: Proposal means that you are simply asking for their recommendations. You can back off. With tendering, you have made a commitment. If they meet the requirements put forward in your criteria, you are stuck to match that tender.
Mr Daniels: The government uses the word "proposal." I have been involved in this for many years. If I was looking for an auto imaging system, I would be looking for a vendor of record, and that would be a request for proposal; or I am going to buy a pile of software and that is a request for proposal. I do not have the Manual of Administration with me, but government uses the word "proposal" when it means tender.
Mr Tilson: You may not necessarily take the lowest or the highest person or company?
Mr Daniels: In this case, the mandatories and the things we were looking for were partnership criteria, things that would indicate to us that these people wanted to be our partners, not subcontractors, but really partnership, and that is the mandatory things I read into the record this morning.
Mr Tilson: Mr Daniels, does the government have a specific policy on proposals/tenders?
Mr Daniels: Yes, it does. There are various things in terms of how and where to post them, how long to post, a clear set of evaluation criteria that have to be confidential so that we could evaluate proposals in an objective way. In this case, the proposals went out in December in the three major business newspapers. They came in in February. One of the consortia, Fimtech, asked us to extend the time frame, so we then let the other possible bidders know that the time frame would be extended to give each and every one, because it is such a major proposal, more time. But again that would have to be agreed upon by all the organizations contemplating a proposal.
Mr Tilson: Your letter refers to 21 interested firms. When you got down to asking Real/Data and Fimtech to try again, were the others --
Mr Daniels: Those 21 basically formed up into those two major consortiums. There was a third bid but it was an individual who withdrew right away because he was thinking in terms of a physical land registry design.
Mr Tilson: Are you able to tell members of the committee, because Fimtech has made a number of serious allegations of impropriety about the whole tendering process under this project --
Mr Daniels: I think that is not --
Mr Tilson: Are you able to talk about that?
Mr Daniels: Sure. I would add that it is not Fimtech as a consortium. If you talk to the major Fimtech companies, SNC Group and the Royal Bank, which I have, and various media have contacted them and they said the process was fine. It was elongated -- too long -- I think somebody mentioned that earlier -- hanging together for two years. I would say that if you talk to the Royal Bank, and I have, it has no concern about the process. If you talk to SNC, which is one of the largest engineering companies in Canada, it had no concern. In fact we have correspondence from them saying they were satisfied with the process. What you are talking about is individual employees within that group who felt --
Mr Tilson: What did they say?
Mr Daniels: They felt -- I am just trying to recall some of the things --
Mr Tilson: Mr Adams, I believe. Is there a Mr Adams?
Mr Daniels: Mr Adams was a member of Real/Data, not Fimtech.
The Acting Chair (Mr Morin): Mr Tilson, I do not think that type of investigation -- I think we should stick to the motion itself, please.
Mr Tilson: The purpose of this line of questioning of course, Mr Chair, is to determine whether the tendering process of any government project is adequate, and this is an example as to -- you are right; I withdraw that; I should not have referred to his name.
The Acting Chair (Mr Morin): Please continue.
Mr Daniels: I would say that the process of tendering or proposal was probably the most stringent I had ever seen in terms of constant external and internal review: a deputy minister's steering committee, a steering committee of ADMs, a review by treasury, a review by Management Board, a review by the policy and priorities board of cabinet, a review by cabinet and two governments reviewing it with external reviewers and internal reviewers. I do not think you will ever find any proposal ever examined so carefully by two sets of governments, both internally and externally.
Mr Tilson: It was rejected by both the first time, and then it went back and there were some negotiations or a new set of criteria. Can you tell us about that?
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Mr Daniels: Yes, I can tell you that. The request for proposals by the two organizations fell short of a number of the mandatory requirements, but there was enough information to us in terms of a partnership concept that was still there.
What you had in the first proposal were companies applying to become a partner with government not knowing exactly what government wanted in great detail. Both of them said to us, "If you could let us into your mind." On the first one, we have to look at both of them objectively and we cannot say, "The government is looking for this and this." We would give the broad objectives we are looking for. But they said, "If you let us know exactly what government needs to make a true partnership," and that is where we got involved with the second process.
Both of them had something very important to offer government. They were both bringing technical expertise. They were both committed and a little bit, as it turns out, more deeply committed to partnership than one or the other, so that is where we came up with that list of mandatories.
Then, over the several months, they would be quizzing us. We had 50 meetings, 25 with each consortium, trying to explain those mandatories and what they meant to us in terms of equity, in terms of equality at the board, in terms of time line for approval, in terms of how to deal with the successor rights under the Crown Employees Collective Bargaining Act and the crown employee succession act. We were very concerned that they understood they would be getting our employees, so all those things took time to talk to each party about.
At the end of that letter of intent process, sort of like a final bid, they had to give it their best shot. They were told: "This will be it, because we will judge you on this letter of intent. This will be how you stack up." They knew exactly what we were looking for: those mandatories. The one that would get the closest to that, basically, would be the company the government would look at in terms of going into partnership with it.
One far exceeded the other in terms of coming together, very close on equity and bringing forward cash, bringing money to the table. One came dead-on on a board of directors that was equitable. One of them came in, the one that was successful, in a shorter time frame. One of them came in on, as I say, a better use of partnership; one had a 50-50 board, the other one talked in terms of a 70-30. So you get these kinds of differences. There were quite significant differences between the two consortia proposals.
The Acting Chair (Mr Morin): Are there any question on this side?
Mr Hayes: Could you just be maybe right to the point on why Real/Data Ontario was picked over Fimtech Consortium?
Mr Daniels: Okay. I have the list here. I will just read it to us right on the button.
In terms of partnership, the government and RDO offered equity on the board, whereas Fimtech had four companies and had split. Instead of dealing with two partners, we were dealing with four and us, and that was causing a difference on how the board would be made up, and in partnership.
Shareholdings were clearly 50-50 in one; in another, it was less than 50-50. Real/Data gave us a clear statement of government ownership of data; that was not clear on the other. One offered us $29 million of equity, and the other offered substantially less. I do not want to reveal the details of that, but I can say "substantially less." In terms of exclusive licence, Fimtech wanted 15 years. The government was prepared to go for only 10, and RDO came with 10.
You can see quite a substantial difference in all the various important areas where we selected RDO. It would be an obvious conclusion of anybody who would be looking at the two letters of intent which one you would select.
Mr Tilson: Ms Corke, you monitor the contract?
Ms Corke: Yes.
Mr Tilson: What does that mean?
Ms Corke: That means there are certain milestones that are set out in the contract, certain deliverables and achievables over the next 10 years, and they are set out in terms of explicit time frames. The company, Teranet, has been going about seven months now, I think, probably since May 29, and I have had an office of a small number of people whose responsibility it is to make sure that Teranet comes in on its dates and on its milestones. So we have a very proactive approach to making sure Teranet delivers on time.
Mr Tilson: Who is the president and chief executive officer?
Ms Corke: Of Teranet?
Mr Tilson: I do not know. I am looking at an advertisement that was in the Financial Post.
Ms Corke: Of Teranet, I think. That is a Mr Aris Kaplanis.
Mr Tilson: So this would be Teranet.
Ms Corke: Yes.
Mr Tilson: Who is that?
Ms Corke: Who is Mr Kaplanis?
Mr Tilson: Yes.
Ms Corke: His background?
Mr Tilson: Yes.
Ms Corke: He was hired actually, I believe, in July by the Teranet board. He has a systems and marketing background with Unisys, I believe.
Mr Daniels: Unisys.
Ms Corke: Yes, one of the larger companies.
Interjection: That is impressive.
Ms Corke: He is an impressive guy.
Mr Daniels: We had a number of very high profile people apply for that position, and he held, I think, a senior presidency with Unisys Canada.
Mr Tilson: Listening to some of the criticisms that have been put forward by the press and by me, in your observation of what this firm is doing -- I am speaking to Ms Corke -- now that you have seen it just start, is this the type of project governments should be going into, partnership with private enterprise? Would you say why?
Ms Corke: I would like to answer it in an objective way, which is to say they are achieving the things they are supposed to be achieving, and they are doing it in the manner in which it was anticipated they would do it. Those things are happening. I do not particularly care to pass an opinion on whether or not that is the general sort of thing government ought to be doing, but I would like to say it is working in the sense that the things we are looking for them to be doing are happening.
Mr Tilson: It is a fairly important question, though. One of the big fears, Ms Corke, is the protection --
The Acting Chair (Mr Morin): We are discussing general policies, please. I think it is very difficult to put a civil servant on the spot. I do not think it is fair.
Mr Tilson: On the other hand, I think, with due respect, it is a fair question if it is not working.
The Acting Chair (Mr Morin): You could ask that question of a minister but not of a civil servant. It deals with policy.
Ms Corke: I think the sort of bureaucratic response to that, or a response from my position, is to say that the purposes for which it is set up appear to be feasible, appear to be happening. The company is on track, on target as far as its main deliverables are concerned, and so far there is every evidence that it is going to continue to be on track in a successful fashion. So far it has not required any more money than the initial equity drawdown and it seems to be operating well. It is hiring up. The divestment of staff was accomplished successfully back in November when a vast majority of our staff chose to go and work for Teranet, which we felt was a very positive sign. In fact, out of 90 staff, I think we had only about 12 or 13 who chose not to go, which is a very high success rate for us. By bureaucratic indicators, it appears to be quite feasible and capable of operating.
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Mr Tilson: Mr Daniels, there was an article put forward some time ago with respect to the experimental part of Polaris in Woodstock and other areas. Here it is, the Ontario Land Surveyor, summer 1990. I do not know whether you have seen that, but there were some very critical comments made in this particular article.
If you wonder where I am going, it is with respect to who is responsible for errors and all that sort of thing; I guess the general effectiveness of Polaris. Obviously, it sounded like a great idea in 1974, and in spite of some of my critical comments, I still think it is a great idea. It is just that I have grave concerns over the confidentiality and who is responsible for what.
They talked about obvious human error. The obvious thing, of course, is pumping information into a computer or a machine; the human error element of that and the serious financial repercussions that can be made. This particular article, which is written by Marian Metcalfe, cites the example of "a client who buys a $300,000 home believing he is getting clear title won't make allowances for his lawyer missing an encumbrance on the title because it didn't show up on the computer printout; nor will he be sympathetic if a $50,000 judgement was missed because the vendor's name was misspelled on the printout. One title searcher recently reported receiving a printout which showed the transfer (deed) as the charge (mortgage) and the charge as the transfer."
If we are embarking on this very expensive system, I would like you to briefly tell me some of the findings that have been made from some of the experimental areas -- Woodstock, and there are several others -- as to these types of errors or problems and how they have been rectified.
Mr Daniels: First of all, in its land information system, the ministry has an errors and omissions fund, a contingency fund. The amount of money drawn down from that fund in the whole period of time I have been there as ADM is minimal, compared to the hundreds and thousands of transactions that occur. Each year close to two million transactions occur. We are talking errors and omissions of maybe half a dozen. Those have to be errors and omissions of a clerical nature where the government is responsible. There could be errors and omissions in the legal profession in terms of a failure to search completely, and that would be the lawyer's liability. But in terms of government liability, it is just not there.
The prototype in Oxford county has been operating successfully since 1985, and I have attended user meetings and have not had people tell me there is any problem with the technical aspects of this. Remember, too, there is a process and risk control. Data entry would be double keyed, and all sorts of things would be built in to ensure the accuracy. Quality controls are there. In fact, one of Sue's staff is a full-time quality control person to make sure that in any new standards and in any new processes we develop -- because there will be new ones as we proceed -- the quality is there.
We are very much as concerned as everybody that the data in terms of land ownership be accurate. As I said this morning, the government is the intake. The government is still responsible for data integrity, because we are the ones who will assure title.
Mr Tilson: So it is the government, not the --
Mr Daniels: Not Teranet, because it is doing the conversion; we are doing the intake to the system.
Mr Tilson: What is in it for Real/Data? What consideration are they getting in this contract?
Mr Daniels: They have 10 years, and the business case does not begin to turn any kind of profit to the investors until years 6 and 7. They are in it for the long haul.
Mr Tilson: What is the anticipated profit?
Mr Daniels: A number of things have to be taken into consideration. There is the international marketing, how much that will generate. Will they get the imaging system up and working so they can have remote access? That is within the Ontario aspect of their business plan.
Let me just say that there are three businesses related to Teranet. First of all is the conversion of information from manual to automated; that is business number one. Business number two is what we call a data utility, the provision of land information data, and that is where the remote access by individual users comes in. Business number three is the international marketing.
Business number one is really a matter of gaining expertise. There is no sort of profitability in converting. What is happening there is that they are going to learn about conversion, about risk analysis, how to do the data entry, about the technology and they are going to understand the legislation, so they are going to be a technology transfer to the private sector from the public. That is why most of our staff had to go. We had the technical knowledge the private sector needed. They learned that knowledge through the technology transfer. They take that knowledge, and they can internationally market. Remember, when you are selling land information systems such as we are, you are selling government to government. You are not selling private sector to private sector.
Mr Tilson: What have they to offer? If the government has been running all the expertise, what do they have to offer?
Mr Daniels: They are offering international marketing. They are offering the advanced technology. They are offering us imaging technology. They are providing us through EDS with a massive electronic distribution network worldwide. With Systemhouse they are offering us systems integrators, with LIS, the land information systems, we are getting a partnership with J. D. Barnes and Marshall Macklin Monaghan, who are world players in surveying and marketing. We are gaining international recognition and expertise. They are getting technical transfer from us; we are getting international and marketing skills from them, just what a true synergy of a partnership should bring, and I think this is exactly what we are talking about when government partners for the private sector. Governments are not marketers; the private sector is marketers. Governments do not make hardware; the private sector makes hardware. We make legislation, we can do policy on conversion, we can control security and we can deal with the issues of quality product and assurance of land information. So there is really a tremendous synergy among those partnerships.
Mr Tilson: I think the big fear that has been surfacing as to this project is, number one, the unknown. We do not know who these people are, we do not know what they are making and we do not know what the deal is. In fact, and this is what I would like you to comment on, the media have made the following statement: "Real/Data will pay the province for the Polaris system out of future registry revenues. The government guarantees Teranet a minimum revenue flow. Teranet may make agreements with any government or agency for new data sources. Both sides agree to keep details of the agreement a secret for ever."
Mr Daniels: No. The fact is that you have the master agreement and you will be getting the other agreements as we negotiate those with our partner. We are very much interested in openness as well as you are. But the Freedom of Information and Protection of Privacy Act protects both individual privacy -- that is why we are making sure we follow those rules correctly. That is an ongoing process, and I think as it evolves you will see more and more of the information you have asked for, but at the present time it is a long process, a negotiated process. The master agreement is now part of the public domain. You have it, as do a number of people who have requested it.
It is a fairly full document. I think somebody mentioned earlier about the amount of black. Do you see a whole lot of black here? There is one little dot there, a couple of lines here, a couple here. Probably 0.1% of the whole document is restricted, and that would prevent any commercial loss to the commercial part of the venture, but in terms of protecting government's rights -- like who owns the data, who controls value added products -- the people should see that and do see that. I think the process is very fulsome.
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Mr Tilson: What prevents this company from taking this information, which you say the government owns, but this private company has exclusive access to --
Mr Daniels: They only have distribution access, and we control what new products they develop.
Mr Tilson: All right; that is what my question is. They have access. They are the only company that has complete access to the discs, to the database. They can do whatever they like with this information. They can distribute it; they can sell it. All this information -- the very fact Bill 126, which is an innocent sounding bill and at first glance seems okay, except that all this information -- you yourself were talking this morning about putting executions, judgements --
Mr Daniels: As long as they are public databases. As soon as they are private databases, those are restricted.
Mr Tilson: I can press a button. I could press Art Daniels and I could find out everything about you, for a certain fee.
Mr Daniels: You cannot, no, not really. Just to give an example, when I first joined the ministry in 1987, I went to Woodstock. I was with the deputy land registrar. We went over to the county office, where they had begun to integrate our land information data with some of their planning data within the municipality. In fact Oxford county won a world award, called URISA, Urban and Regional Information Systems Association, for its automated system, which is based on Polaris.
What it told me about the deputy land registrar -- that is the name I put in the machine. We pulled up his property. It showed us his house, which is on the map. It is like Star Wars, by the way. The whole county of Oxford would show up on this computer. It is like it is a telescoping down to the concession, to the lot, and it sites his house on the lot. It tells us about side yards, the backyard. He does not have to go into the city offices to get approval to build a garage because they can issue a building permit that there is enough side -- this is still public information. It does not tell me anything personally about this person, but it tells me that his side yard is 15 feet. He can build a garage. They can issue a permit. They do not have to go out and measure it any longer. So that is pretty exciting.
Then it tells me -- and again this is public information -- are there liens on the home? Are there any mortgages? Anybody who is going to buy that house has to know, is it free and clear? It also tells me where the easements are. It would show me on the map where the hydro easement would be, where the telephone easement would be or the city power line or the city sewer was. All those easements would be printed out and he would be able to say: "I don't own that part of the land. People can come in and drop a sewer pipe right through there."
Mr Tilson: Will it tell who is living there?
Mr Daniels: Yes; that is, the owner.
Mr Tilson: Tenants?
Mr Daniels: No, it would not show tenants.
Mr Tilson: Would it not give the information one finds under the Assessment Act?
Mr Daniels: No.
Mr Tilson: The size of the house, the quality of the buildings?
Mr Daniels: No.
Mr Tilson: That information of course is available with most municipalities and would be made available under the Polaris system.
Mr Daniels: Not under the Polaris system. That is the municipal assessment system. The Polaris system deals with the information related to title, deeds, ownership of the land.
Interjection.
Mr Daniels: In the survey, that is right, the planometric map.
Mr Tilson: But it will have access to all this information, all government information.
Mr Daniels: No, not if it is private information or individual information; that is protected.
Mr Tilson: When I say government information --
Mr Daniels: Let me read the agreement, because I think it is very important to hear the wording of the agreement.
Interjection: That may reduce some of the questions.
Mr Daniels: Yes, because it really does say what I have been saying myself, but I think you need to hear it.
Interjection: Is this relevant to --
Mr Daniels: Yes, it is. I think it answers very much --
Interjections.
Mr Daniels: It is titled "Restrictions." It says:
"SAC, the Strategic Alliance Corp" -- that is what it was called; It is now called Teranet, but when this negotiation was done it was called the Strategic Alliance Corp -- "shall notify the ministry of value added products the SAC intends to make available for use by others and shall include a description of the value added product and how it is to be marketed. Where the ministry determines that the proposed value added product conflicts in some material respect with any applicable statute or regulation or with any public policy, including and without limitation any policy with respect to freedom of information and privacy, the ministry...shall have the right to object to the product."
In other words, they cannot do anything that would violate freedom of information and privacy. They cannot do anything that will violate public policy. They cannot do anything that will violate statutes and legislation and regulation. It is a very restrictive clause.
Mr Tilson: They will have access to all applicable statutes. If we just realize that the bill we just passed, Bill 126, covers every bill in the Ministry of Consumer and Commercial Relations, as an example, any government information that is available, whether it is assessment information, which would be the quality of the house, the size of the house, the size of structures on the property, all of that would be available to this corporation.
Mr Daniels: No. If the Ministry of Revenue wishes to share the assessment data, that has to be negotiated separately. This contract -- we cannot bind another ministry.
Mr Tilson: How will we know? I live in a house out in Orangeville, which is where I happen to live. How will I know what you are doing down here in Toronto? I have no idea what you are doing. You will have all this information about me in the government, under different statutes, and this is all going to be in the hands of --
Mr Daniels: No.
Mr Tilson: But what assurance do I have that you will not have that information?
Mr Daniels: The agreement only gives them access to distribute the land information system, which is a public database. You can see that if they do anything to that product, if they add value to it, such as I was talking about this morning, we would have to approve the remote quality product and how much it is going to cost. We set the fee. If they ask for an exorbitant amount of money, if they figure this is a good way of gouging and charging thousands of dollars for a remote hookup, and we say, "No, you've got to show what the cost-benefit is to that," that is government acting in its public policy way. These supermajority clauses in the agreement protect the government.
Mr Tilson: I guess what twigged us to ask that question, sir, was when you say you can make your application for a building permit without having to go because all that is on the machine, the size of the --
Mr Daniels: That is land information.
Mr Tilson: Of course. That is my point. Every piece of information the government has is in this disc.
Mr Daniels: No. The other databases -- it is just the land information data that is there in that disc.
Mr Tilson: All land information, which includes who lives there, what their ages are, what size the buildings are; all that is there.
Mr Daniels: If it is in the land title information, it will be there. That would have the last owner, the mortgages, the history of the transfer of the various ownerships, the amount of mortgages and the history of the mortgages, the payments, who the banks are. Yes, that is all information, but that is all public information. As I said, it has been public information since 1795. It has to be public. That is the cornerstone of the land registry system. What good is it if it is a secret? You would not be able to buy. You would not know what you are buying. You would be buying blind every time. You would be buying a car with a lien on it. You would be buying a house that has a mortgage that was not discharged.
Mr Tilson: I guess that is the fear I have as to what they are going to do with that information. You are quite right. I can go and look at a specific parcel of property. There is quite a difference. I go and look at a specific parcel of property in eastern Ontario, for example, and yes, I can find out who owns the property; yes, I can even find out the ages of the owners; yes, I can find out what the mortgages are, and if I search the sheriff's office, I can find out what judgements there are against the current owners or previous owners that affect that property. I understand that.
The difficulty I have is that I press the button Art Daniels and I can find out everything about Art Daniels in Ontario, property you own in northern Ontario, property you own in eastern Ontario, all your holdings are very accessible with the press of a button.
The Acting Chair (Mr Morin): I have to bring you back again to the motion, please.
Mr Daniels: But I am saying that information is protected under this section. I said no value added products would be approved. Say somebody developed a product that would go by name. Right now they only search by property number. You cannot search Art Daniels.
Mr Tilson: Could you explain to us who controls the cost of this information? I want to get information on a particular piece of property. Normally now I go to the registry office and I pay $4, I think, or whatever the fee is, and I can look at the abstract book and the instruments I pull out for free, something like that.
Mr Daniels: Again, it is controlled by the contract and it says here, "The ministry shall set the fees payable including, without limitation, registration and search fees." The ministry sets the fees, not the company.
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Mr Tilson: I look forward to receiving the remaining documents about this project and I look forward to finding out what this project is going to cost the taxpayers of this province.
Mr Daniels: I think we said earlier that the exposure is $29 million, not the original $112 million.
Interjection.
Mr Daniels: The users of the system, actually. It is a true user-pay thing. The system pays for itself.
Mr Tilson: Thank you.
Mr Hayes: One clarification: It really sounds interesting because I think we have all seen cases where if someone sold a piece of property, for example, or bought a piece of property and then wanted to sell it, he or she had to continuously get it surveyed. This process here would eliminate a lot of that. You would not have to have a lawyer, for example, every time you go and say they have to go and do a survey.
Mr Daniels: I think I am alluding to that nirvana. Once you move to a land title system the government is the one that confirms title. But even in western Canada, where they have had land titles right from day one, there are still lawyers involved in the sale of land. I do not think it is going to end, and then people still will be concerned about encumbrances and liens and will need the assurance of a lawyer.
Mr Hayes: It still may reduce the necessity to continuously survey a piece of property. That would be a great help, I am sure.
Mr Daniels: Yes. It should reduce the costs of all those things. Then again, it would be a matter for the people who provide the service to pass that saving along. If it becomes less money for the lawyer to produce a land title search than a registry search, a consumer in an informed public could say, "Isn't it a bit easier?" and, "Don't you have the Polaris system to do the searching?" and, "Can I get a break on this?"
Mr Hayes: Actually individuals could go themselves. If I were buying a piece of property and I wanted to get --
Mr Daniels: Some individuals close their own deals.
Mr Hayes: That could make it a lot easier for individuals to do that?
Mr Daniels: A lot easier, yes.
Mr Hayes: Good; thank you.
Mr White: There was a comment made earlier. Teranet, to the best of my understanding, is not a private company but a consortium of RDO and the government of Ontario.
Mr Daniels: It is a corporation under the Business Corporations Act. It is a private company of which the province is a 50% shareholder, but it is a private company. It is a shared capital company.
Mr White: Thank you on that one. Further, the appointments to the board are four, four and five?
Mr Daniels: Four, four and five; correct.
Mr White: Now the government appointments are?
Mr Daniels: Do you want to know who they are? That is public information.
Mr White: It is not really a matter of who they are. Are they ministry employees?
Mr Daniels: Some are. Harriet Velazquez is the head of our technology area and Vernon Parrington represents the CAW, I guess.
Mr Villeneuve: Do not tell me they were there as well.
Mr Daniels: It is important that this board is very balanced. You have a public servant who has been very helpful in the negotiations with the transfer of staff, to ensure their rights, and John Sloan, who is the former Chairman of Management Board of Ontario, and the fourth person, Anne Foster, who was president of Canada Law Book.
The Acting Chair (Mr Morin): I understand the subcommittee decided there would be no vote, so I leave it up to you. Would you like to have a vote or not?
Mr Tilson: I would, in light of some of the comments that have been made, particularly this morning, and in light of the issues that were raised in the auditor's annual report dealing with security. As I indicated this morning, though not on this particular topic, the auditor does spend a considerable period of time on the security, access and control of information in government minicomputers. The uncertainty as to the cost -- I appreciate that both Mr Daniels and the minister have indicated they are bound by the freedom of information legislation; I understand that. But notwithstanding that, with the emphasis that has been put forward by the auditor, I would like to put forward the motion. I think all of us have copies. I do not think it is necessary to read it unless you would like me to read it.
Mr White: No, it is all right.
The Acting Chair (Mr Morin): Would you like him to read it?
Interjection: Yes.
The Acting Chair (Mr Morin): Is there unanimous consent for Mr Tilson to read the motion? Dispense? Dispense. All those in favour of the motion will please raise their hands.
Mr Tilson: Mr Chair, I wonder if we could have a recorded vote.
The committee divided on Mr Tilson's motion, which was negatived on the following vote:
Ayes -- 2
Tilson, Villeneuve.
Nays -- 7
Drainville, Hayes, Johnson, MacKinnon, O'Neill, Y, Ward, B , White.
The Acting Chair (Mr Morin): I want to thank the witnesses for being here this afternoon.
Mr Daniels: Thank you very much, Mr Chairman.
The Acting Chair (Mr Morin): This meeting is adjourned until 10 o'clock tomorrow morning.
The committee adjourned at 1458.