Tuesday 12 January 1993

Workers' Compensation Board

Brian King, vice-chair, administration

Linda Angove, board secretary and project director, long-term facilities strategy

Edmund Smith, legal counsel

Office of the Ombudsman

Roberta Jamieson, Ombudsman


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

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

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

Cousens, W. Donald (Markham PC)

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

Frankford, Robert (Scarborough East/-Est ND)

*Haeck, Christel (St Catharines-Brock ND)

*Hayes, Pat (Essex-Kent ND)

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

O'Connor, Larry (Durham-York ND)

Sorbara, Gregory S. (York Centre L)

*Tilson, David (Dufferin-Peel PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Farnan, Mike (Cambridge ND) for Mr Frankford

Fletcher, Derek (Guelph ND) for Mr Johnson

MacKinnon, Ellen (Lambton ND) for Mr O'Connor

Marland, Margaret (Mississauga South/-Sud PC) for Mr Cousens

Also taking part / Autres participants et participantes:

Offer, Steven (Mississauga North/-Nord L)

Otterman, Jim F., Assistant Provincial Auditor

Peters, Erik, Provincial Auditor

Clerk / Greffière: Manikel, Tannis

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

The committee met at 1019 in room 151.


The Chair (Mr Remo Mancini): The standing committee on public accounts is called to order. The committee is continuing its hearings regarding its review of the Workers' Compensation Board's decision to construct a new $180-million headquarters in downtown Toronto.

Yesterday afternoon, the committee members asked our panel of visitors representing the board numerous questions, and we received the assurances of Mr King, the vice-chair of administration, that we'd have some of the answers this morning. I was wondering how we were making out in obtaining the information, before we carry on.

Mr Brian King: Mr Chairman, as you've explained, the time has been somewhat limited, given that we testified till after 6 o'clock last night and only had effectively an hour this morning during business hours when certain files were available. We have available for the committee the Atkinson legal opinion on section 64, which all parties were interested in and which the Provincial Auditor was interested in. In addition, we have an opinion on the investment from the consulting firm of Drivers Jonas, and we have a report from Royal LePage on the real estate market. In addition, we have a copy of the entire contract available for the committee.

We are presently trying to inform the parties who sent us these consultant reports that we're tabling them with the public accounts committee, and all we would ask at this point in time is to allow us the time to notify them. I can hand them out right now, but not to distribute them beyond the committee until we've informed the parties that we're handing them to the committee. That's being undertaken right now.

The Chair: We can put a moratorium on the public distribution, say, until 11 o'clock. Mr Tilson?

Mr David Tilson (Dufferin-Peel): I'm sorry. Perhaps we should let him finish what he was going to present to us.

Mr King: In addition, we have many other documents and there were other questions asked. We simply haven't had the time to pull that together or to provide the special reports, because there were some that we don't have readily available. We would have to put them together.

Finally, because there was a good deal of interest expressed in the section 64 situation, and with respect to the potential exposure of the WCB, should the deal collapse at our instigation, I've asked Ted Smith to attend this morning. Ted is acting on behalf of the Workers' Compensation Board and is with the firm of Aird and Berlis. He can answer questions and perhaps can lead off with a brief explanation. I'll ask Linda Angove to distribute the documents I've described. Could I ask Mr Smith to make some opening comments before questions of the committee?

The Chair: Did you have something, Mr Tilson?

Mr Tilson: To be fair to the delegation, I understand that there may have been a misunderstanding as to what this committee wanted. I understand that we kept you here till 6 o'clock and rushing around your office trying to find material; I understand that.

I would assume that you would be having the information you have indicated to us available to us, and there hopefully will be other documents that you would be making available to us. You said you had the contract available. I would hope that you would have the contracts, plural, available because there's a series of contracts that I think the committee would, to properly understand the process -- to see all the contracts, all the proposals, the form of the tender -- we don't know that yet -- the impact studies, the opinions that you indicated you had with respect to the investment you have spoken of. All that material I understand will take some time to be made available to us.

Even if it was made available to us at the hour of 10:25, I and members of my caucus and I think all members of this committee would want some time, and I'm sure Mr McLellan would want some time, to look at those documents. It would be hoped that representatives, perhaps Mr Di Santo if his health improves, could come back at a later date, whether that be in March, April, May or sooner. We may be revising our timetable after we've had an opportunity to properly review these documents so that we could put intelligent questions forward, if indeed there are questions.

That is my purpose in interjecting at this time. Even if those documents were available, hopefully the delegation or Mr Di Santo -- if there could be some indication that it would be in a position to return to this committee at a later date, after we've had an opportunity to review those documents.

Mr Noel Duignan (Halton North): I disagree with Mr Tilson, Mr Chairman. I'm waiting anxiously to hear what the legal opinion is on this particular thing to see, is this deal a done deal or in fact is it worthwhile for this committee to pursue this, because we could end up wasting taxpayers' money here. I understand this is the agreement here, if I'm not mistaken, the four volumes in front of us. This information is available to anyone under FOI, if I'm not mistaken.

Mr Tilson: Mr Chairman, the subject is not just as to whether or not this is a done deal, to use the words of the Treasurer, and that may well be the case. The delegation has indicated the legal opinions it has. I'm sure their solicitor is going to come forward and say, "Yes, it's a done deal," and that may well be the case. I'm prepared to listen to what he has to say. We're also looking forward, with all due respect to the solicitor, to a more independent opinion from the government solicitors as to the interpretation of section 64.

Aside from that, Mr Chairman, we're talking $180 million, and I think it is reasonable to know all aspects of all matters involving the purchase and construction of this building. If you look at the wording of the motion which was passed by this committee, we want to look at whether the whole process has been conducted properly. It's not just a subject as to whether it's a done deal if section 64 has been complied with. There are a whole slew of other matters I think it's imperative this committee look at.

Mrs Margaret Marland (Mississauga South): Yesterday Mr King said that he was going to bring forward the legal opinions he had received. I think you said you had received -- you went from one to several during the afternoon, and I see that the two that have now been circulated by the clerk of the committee are both from one individual, Mr Atkinson with Aird and Berlis. Have you already explained who the other opinions are from and when they are coming?

Mr King: There is another opinion, as I recall, from a solicitor representing the Workers' Compensation Board as investor. I previously indicated, perhaps before you arrived, that given the time constraints on us, we put together what we could find in the little amount of time, but I'm prepared to indicate that we can provide additional material before the end of this week, including the additional aforementioned legal opinion that's in addition to Mr Atkinson's opinion.

Mrs Marland: Yesterday you said you had several. Are you now saying you only have two?

Mr King: I said two or more.

Mrs Marland: I guess we'll see what it said in Hansard. I heard you say several.

Mr King: I said we had two and possibly more.

Mrs Marland: Okay. Can you tell us the name of the other two you're referring to?

Mr King: I believe the one opinion is from Rob Collins, and I could not recall the name of the other one. That's why I was purposefully indicating that I seemed to recall another one but I couldn't be sure.

Mrs Marland: And is Mr Collins in private practice, or would we be able to find him in --

Mr King: He is in private practice.

Mrs Marland: Okay, and you said to him something about another "as an investor." What did you mean when you said "as an --

Mr King: I'm sorry, I missed the question.

Mrs Marland: Do you want to speak to him first?

Ms Linda Angove: No, it's okay.

Mrs Marland: Okay. You said something about "as an investor." You said "an opinion to the WCB," and then you said something about "as an investor." What did you mean by "as an investor"?

Mr King: The workers' compensation investment fund has to be sure that it is legally authorized to make investments under the Pension Benefits Act and in addition under the Workers' Compensation Act, so if it had any doubts whatsoever, it would seek legal advice on its own as to whether it was involved in legal investment transactions. That's what I meant when I referred to the WCB as investor.

Mrs Marland: Under section 64, Mr King, where it says, "Subject to the approval of the Lieutenant Governor in Council, the board may purchase or otherwise acquire such real property as it may consider necessary for its purposes, and may, with the like approval, sell or otherwise dispose of any such property," there is no reference in there to the pension fund and the argument that Mr Atkinson gave. Did you not question that yourself?


Mr King: I don't believe I understand your question. The previous chair of the Workers' Compensation Board, Dr Elgie, wanted to know from the corporate board point of view whether or not the facility fell within the legal requirements of the Workers' Compensation Act. In addition to that, the investment arm of the Workers' Compensation Board wanted to be certain that the investment was going to be legal, and it sought an individual opinion. I don't quite understand your question. I apologize for being a little bit thick this morning.

Mrs Marland: That's fine that you don't understand it. I'll place it again. In Mr Atkinson's legal opinion as it pertained to a long-term lease agreement, it says in the minutes of your February 1, 1991 meeting, which is now almost two years ago, "Legal counsel advised the board of the procedural requirements for a long-term lease agreement as follows -- "

Mr Duignan: Point of order.

The Chair: You have a point of order?

Mr Duignan: Am I mistaken, Mr Chairman, or are we going to a presentation at this point in time? If not, maybe the time could be divided between the three parties so each party can get a fair share of time in asking questions.

The Chair: Mr Duignan, has there ever been an occasion where I have not divided the time equally?

Mr Duignan: I could go into an argument with that, but I want some clarification of exactly what's happening here now, Mr Chair.

Mr Pat Hayes (Essex-Kent): Don't take it personally.

The Chair: No, but if there has ever been an occasion where the time has not been provided equally, instead of insinuating it, please bring it to my attention.

Mr Duignan: I've raised a point of order. I want to know if there is a presentation being made here by representatives of the WCB or if a point of clarification is being asked on that presentation or if we are going to the three parties at this point.

The Chair: My understanding was that there were some points of clarification that were being asked, and I believe you even had one yourself, Tilson had one and Mrs Marland has a couple of points of clarification. I made note of the time that Mrs Marland started; it was exactly 10:29, just so that the committee members know. I was going to allow the same amount of time for other points of clarification if there were any, fully cognizant of the fact that Mr King had a presentation he wanted to make to us, accompanied with the restriction that he has asked us to place a moratorium for a period of time on these documents because phone calls are being made. I agreed to placing a moratorium on this information until 11 am, which would give the staff ample time to make the two or three or four phone calls. Is there anything else the committee wants the Chair to do?

Mr Duignan: No, as long as the time is divided equally between the three parties and everybody gets a chance to ask questions. These are just points of clarification.

The Chair: I repeat, if there is ever an occasion where the time has not been divided equally to the minute, please let me know. Mrs Marland, could you finish your points of clarification so that the other members could do the same.

Mrs Marland: This is to clarify something that was said yesterday by Mr King. First of all, he said that there were several opinions; today we had received the copy of one opinion. I think it's important that we recognize there is one written opinion here before this committee. If the decision of the WCB to go ahead to build this $180-million Taj Mahal was based on legal opinions, I'm surprised that in the time since yesterday afternoon the WCB has not been able to extract from its own files copies of these opinions. I'm amazed that they have to make the phone calls this morning to get these opinions in writing, which I would have assumed, to protect their own interests, they would have had.

However, to get back to the fact that we have only one opinion before us, section 64 of the act that I just read into the record would not permit the board to build this building without the approval of the government through cabinet and ultimately through the Lieutenant Governor in Council. The one opinion that you have, Mr King -- and you like to refer to the fact that all this happened before you got there -- and what I'm saying to you, which is the same thing that we said yesterday, is, are you not concerned about Mr Atkinson's opinion, as stated in the minutes of your meeting of February 1991, where it says: "in his opinion, an order in council is not required for the WCB to invest in Simcoe Place as the investment will proceed through the investment fund in keeping with the provisions of the Pension Benefits Act. He also advised that an order in council is not required for the WCB to enter into a long-term lease agreement with the joint venture proponents of Simcoe Place"?

I'm simply asking you: Have you a legal opinion that separates the investment fund from the board? Do you have a legal opinion that says the investment fund is not an arm of the board and has no part of the Workers' Compensation Board; therefore, the investment fund has this option of not complying with the act under section 64?

Mr King: On a point of clarification: Although I mentioned that a good deal of the work on this facility occurred before I arrived, I made a point to take personal accountability at a time when people told me that I couldn't duck my responsibilities, and I fully accept my responsibilities.

That clarification out of the way, I indicated the report by Mr Collins was to the investment division of the WCB to assure it that its involvement in the facility was perfectly legal under the terms of the Workers' Compensation Act and the Pension Benefits Act, both of which acts it must comply with.

The Chair: Any further points of clarification from yesterday's presentation? We have Mr Fletcher, Mr Duignan and then Mr Cordiano. You have five minutes.

Mr Tilson: Mr Chairman, just so I understand the procedure --

The Chair: The committee members this morning, by their own actions, insisted that they have opportunity to ask points of clarification from yesterday's presentation. That was after Mr King had suggested he wanted to make his own presentation this morning. I've set aside approximately five minutes and 30 seconds for every caucus to make points of clarification from yesterday's presentation. We're going to allow Mr King to make the presentation that he asked to make this morning and then we'll get into the regular rotation again.

Mr Tilson: Thank you, Mr Chairman.

Mr Derek Fletcher (Guelph): You mentioned the numbered company of WCB. How long has that been in operation and how long has it been doing the financial business of the WCB?

Mr King: The numbered company was incorporated in 1988.

Mr Fletcher: And has been doing all the financial investments for the WCB?

Mr King: Yes. The Workers' Compensation Board moved in the late 1980s to broaden its investments beyond the rather conservative bond market that it had been investing in, to move more heavily into the equity market and the real estate market. The investment strategy was enhanced to say that we will aim for up to a 10% holding in real estate as a long-term hedge against inflation. The numbered company was created so that the Workers' Compensation Board's name wouldn't arise and perhaps interfere with negotiations over the purchase of a real estate investment.

Mr Fletcher: How do you go about creating this numbered company? Is that an order in council? Is it cabinet who approves this? How does it work? How does a government agency get a numbered company? Cabinet would have to say yes.

Mr King: No. Perhaps Ted can --

Mr Edmund Smith: Perhaps I can address that. The act permits the fund to invest in real estate in a certain way. The investments in real estate have to be in accordance with the provisions of the Pension Benefits Act. Those amendments to the act came into effect some time in the late 1980s -- I can't remember exactly when; I think it's 1987 or 1988 -- and investments are made through a real estate subsidiary. It's a common method of investing under the Pension Benefits Act for pension funds to make equity investments in real estate in this fashion, so the board, as investor, follows this route.

This numbered company was created as a vehicle to do this, and the board subscribes for shares in the numbered company. That is the investment that in effect is made. The numbered company then holds the interest in the real estate. There are a number of investments it has in other pieces of real estate done in the same fashion.

Mr Fletcher: Just one more point. The investment branch: Is there a crossover on the board of directors between it and WCB, or is it all controlled by the board of directors of WCB?


The Chair: Could you place your question again, Mr Fletcher.

Mr Fletcher: The investment part of it, is it controlled by the same board that runs WCB or is it a separate board that runs the investment?

Mr King: The investments of the Workers' Compensation Board are handled by the investments division of the Workers' Compensation Board, which is another department of the board similar to the rehabilitation or the client services or the planning department. The investment division is managed by a vice-president reporting to me. There are employees who report through to that vice-president, including a director who is responsible for real estate transactions.

The Chair: So the answer is that it's all within the board.

Mr King: It's all within the board. There are independent investment advisers, very senior private citizens who are involved in advising on investments who do give advice to the investment committee of the board of directors on large issues such as, what should the board be doing in terms of strategy? It was those investment advisers, for instance, who advised that the board should expand its holdings in real estate because of the ability of that to be a long-term hedge against inflation. So the board does receive independent advice. At the present time, there are four independent investment advisers who give that investment committee advice.

The Chair: Any further questions, Mr Fletcher?

Mr Fletcher: No, thank you.

The Chair: Mr Duignan?

Mr Duignan: My question has been answered, Mr Chair.

The Chair: Mr Farnan, you have one minute left, if you wish to use it. No? Mr Cordiano.

Mr Joseph Cordiano (Lawrence): The first question I would like to pose is really a query with respect to the dates of any of the documents that have been submitted. I don't see any document referring to the period 1989 or 1990 to indicate that this process was commenced and that any kind of formalized arrangement was made at that point in time to move in this direction on this plan that was brought forward. Are there other documents you are going to make available to relate to that period of time?

Mr King: We had previously distributed to the members of the committee the minutes of the board of directors' meetings, which include discussions which occurred in the 1989-90 time frame surrounding the facility strategy.

Mr Cordiano: Okay, so there were no formalized agreements entered into until the period -- the earliest period was -- well, we have a legal opinion dated February 18, 1991, from Aird and Berlis, at least by the submission of the documents you've entered here today. So I think it's safe to assume that there were no formalized agreements and that simply discussions took place around the period 1989-90. At what point did any of these matters become formalized with respect to agreements having been contemplated and perhaps being documented?

Mr King: The board administration was directed and we were working towards alternative facilities beginning in 1989, at the direction of the board of directors. It was in March 1991 that the first legal document related to this facility was signed. That was when the agreement to lease occurred, when the board of directors approved that document.

Mr Cordiano: So in 1989 we have discussions about the possibility of a move being considered and no specific plans around which that move might be made, and we have discussions entertained by the board with respect to a variety of options that might have been made available to the board, and no process was established at that point.

Mr King: The tendering process for various options had been well under way in the 1990 time frame.

Mr Cordiano: What point in time in 1990? We're trying to establish this because --

Ms Angove: September 1990 is when the public tender began.

Mr Cordiano: Okay. Under a new administration?

Mr Duignan: No. The board meeting of July 5, 1990 --

Mr Cordiano: Just a minute. I haven't asked you the question, Mr Duignan; I'm asking our witnesses the question. Under whose direction would that tendered process have been undertaken?

Mr King: That would be under the leadership of Dr Robert Elgie, chair of the board, and Dr Alan Wolfson, the vice-chair of the board.

Mr Cordiano: The process was under way and tenders were called for?

Ms Angove: In September 1990 we advertised in the Globe and Mail and the Financial Post, calling for public tenders.

Mr Cordiano: For what?

Ms Angove: For submissions of both existing and design-build facilities that would accommodate the WCB requirements.

Mr Cordiano: I see. So there were no definite plans to have a building built. In fact, you were also entertaining options which included existing facilities.

Ms Angove: Yes. At that time, until we surveyed the market, we could not say that no existing facility could accommodate our requirements.

Mr Cordiano: I see. So at what point in time did you then establish that a design-build option was the one to move forward with?

Ms Angove: In December 1990, when we went to the board of directors.

Mr Cordiano: And at that point, you entered into what, another tendering process for a design-build?

Ms Angove: No. At that point, we had shortlisted from 13 to three or four; actually it was four, and we eliminated one very quickly.

Mr Cordiano: And these were all design-build options?

Ms Angove: They were all design-build because we were assured by both our investigation and through the assistance of Royal LePage Real Estate consulting services that no existing facility could accommodate our requirements, that we had to go to a design-build. So we looked at three options, we negotiated with proponents of the three options, and in February 1991 we went to the board of directors with our recommended site.

Mr Cordiano: And that's when this legal opinion came forth?

The Chair: Mr Cordiano, your five minutes have expired. Could I make a request for a copy of the ad that appeared in the Globe and Mail in September 1990 for the committee? Everyone's had his or her five minutes and 30 seconds. We're going now to allow Mr King to make the presentation that he informed us about earlier this morning, and then we'll get into the regular rotation of the members.

Mr King: I had indicated that Ted Smith from Aird and Berlis was along this morning. Two things specifically: One of them is the legal situation of the board of directors vis-à-vis section 64, previously section 70 of the act, in terms of whether or not the board of directors should have sought the approval of the Lieutenant Governor in Council. Secondly, there was some interest expressed as to the potential exposure of the WCB should the contract be breached at our instigation, and Mr Smith is prepared to speak to both points.

The Chair: Mr Smith, you have the floor.

Mr Smith: Unfortunately, I wasn't here yesterday, so I have a little bit of difficulty in knowing exactly what the nature of your questions is. I'd like to make one comment at the outset, if I could, concerning the transaction documents. We have brought the record books of the transaction. There are collateral documents, as I'm sure you can appreciate, in these books, in some of which parties to the agreements may have some confidentiality issues.

I have been able to talk to counsel for some of the other parties. It's our collective view that these books can be tendered to you today without any concern, but there are some concerns involving third parties: that if contents of these documents were published broadly beyond this committee, there may be some issues that could arise causing breaches of undertakings by third parties, not the WCB.

The counsel for Cadillac Fairview asked, if it's possible, that following this meeting I might speak with the counsel of this committee just to discuss that process. These documents are freely available to everyone.

The Chair: We don't really have a counsel to the committee. We're in investigative mode these days and we're trying to get at some of the questions the members had asked. As I said, we don't really have a counsel. We will try to cooperate with you to the fullest extent, but as the Chair I cannot guarantee that those documents will not find their way into the public domain. As a matter of fact, we're on cable right now.


Mr Smith: I understand that. Perhaps I could speak with you, Mr Chairman, after the session, just to explain the issue.

The Chair: I appreciate that, but I'm not going to take responsibility to make sure those documents remain private.

Mr King: If we can't guarantee confidentiality in certain areas where we as a corporate body have made an agreement, I'm not too sure I'm prepared to agree to the tabling of these four volumes which involve the project and collateral documents. We have a responsibility as a corporation to --

The Chair: Well, if you table those documents, Mr King, and the members of the Legislature want to talk about them, how do you propose they ask questions and talk about them and at the same time keep everything under some veil of secrecy?

Mr King: I don't believe we were asking that the entire group of documents be held back from the public. We were prepared to table them today on the basis that there are a couple of them contained herein which have nothing to do with whether or not this is a value for money or whether or not this is legal. They have to do more with a third party. We would want to review the collateral documents to determine whether all of them are in a position to go public or whether we would be in breach of our duty of care as a corporation to protect both our interests and the interests of third parties, who have entered into agreements with us in good faith that we would hold up our end.

The Chair: Instead of getting bogged down and not making any progress for the rest of the morning on this matter, could we just continue to proceed and we'll think about the points that have been made?

Mr Duignan: I need some clarification of a point too. If the witnesses table these documents here today, they become public documents, and when they become public documents any member of the public can view them?

The Chair: I would think so, yes. Mrs Marland, on the same point of order?

Mrs Marland: Yes, on that point of order. I understand why Mr Smith and Mr King are saying what they're saying after the fact of these documents, but when you're negotiating on behalf of the Workers' Compensation Board or its investment fund, being one and the same, you are not negotiating on behalf of a private sector corporation. The people with whom you are negotiating I'm sure are very sophisticated, and they must also understand that. You're not representing an organization that has the option of being shrouded behind the privacy commission. I just don't understand what's at risk, I guess. If anyone is negotiating with the Workers' Compensation Board, I think they certainly know they're negotiating with the government, and anything the government does in this province after the fact is information that's available to the public, or it should be.

Mr Smith: Perhaps I can clarify this, Mr Chairman. I think perhaps my intention has been misconstrued. These books, which are the most convenient way to provide these to you because they're bound and are easily usable, user-friendly, contain documents that are between third parties and not with us. Without the consent of the third party we have a little bit of concern if I give you the book. If there are 38 documents in there, 37 of them relate to the deal but there's another one that's between two other people that happens to be here as part of our private record. Without those people knowing about it, we just have a little bit of concern if that document would be made public. I'm sure those collateral documents are of less concern to you. It's a minor point, please.

The Chair: Mr Smith, let's carry on, unless there are any further points of order, so that we don't use up the entire morning, and as I said, we'll think on the points you have asked us to consider.

Mr Smith: Right. I was asked to address two issues for you. The first relates to the legal opinion of our law firm. I've circulated that to everyone this morning. I don't know if everyone has had the opportunity to read it.

The Chair: Could you give us the date?

Mr Smith: The date of this opinion is February 18, 1991, as signed by my partner, Peter Atkinson, who unfortunately could not be present this morning. In that opinion, in summary, we came to the conclusion, which we stand behind, that the provisions of what was then section 70, now section 64, of the act do not require an order in council.

As you can see in the conclusions of the opinion, perhaps if I could direct you to page 3 of the opinion first of all, part of the opinion is based upon the transaction itself. The land is owned by the Canadian Broadcasting Corp. It is leased on a 99-year ground lease to Cadillac Fairview and the Toronto-Dominion Bank. The transaction called for a portion of that leasehold interest being acquired by the investment division of the WCB through its numbered company subsidiary. That is the transaction that is being addressed in this opinion.

It is our conclusion, as you can see, that the three requirements of that section of the act are not met by that transaction and that for the purposes of the section, if any one of those elements is missing, it is not necessary to proceed in that course of action. The analysis in general terms of this transaction is that it's an investment transaction on the one hand and that it's a space-tenant transaction on the other hand. The space lease is for an initial term of 20 years with two 10-year options to renew. The investment transaction is for the balance of the term of the lease, which was originally for a term of 99 years. So there are two separate streams to that. The conclusions are reached on page 4 of the opinion under paragraph 4, and that's in essence our summary of the opinion. You may want to have an opportunity to review that and ask me questions on it.

The Chair: Is that the totality of your submission this morning?

Mr Smith: Yes. I could read the opinion to you, but I thought it would be simpler to --

Mr Cordiano: I could ask questions.

The Chair: Okay. We'll go into regular rotation. Let's start with 10 minutes for each caucus.

Mr Cordiano: I think this entire opinion probably hinges on what is your opinion or definition of "real property," and I take it by your conclusions that your definition of "real property" does not include the building, the actual edifice that will be constructed as a result of this plan, which will be owned 75% by the company which the investment fund of the WCB has invested in. Is that correct?

Mr Smith: That's one of the three elements, yes, but it is not the sole one.

Mr Cordiano: Am I correct to assume then that the building, the actual structure which will be constructed, in your opinion does not constitute real property?

Mr Smith: The building built on the property is part of the leasehold parcel, so it itself is leased, if you like, by the investment division for the balance of the term of the lease, after which it reverts to the landlord; in other words, the CBC. So the building itself has the same category of interest as the land; that is, a lease.


Mr Cordiano: In other words, the WCB will not own any real property in this entire transaction.

Mr Smith: That is correct.

Mr Cordiano: What it will own is an equity position in a company to be formed by the partners which will then hold rights to leases on this building, or a lease.

Mr Smith: It holds an equity position in a company which itself is a co-tenant with other parties that hold the leasehold interest in the land and the building to be built for a long term.

Mr Cordiano: So when Mr King says there will be an asset that accrues to the WCB for some period of time, in fact beyond our lifetimes, he's not entirely correct.

Mr Smith: I guess I'd have to project that the life of this building will probably be less than the balance of the lease term.

Mr Cordiano: The leasehold being what, 99 years?

Mr Smith: Yes, the balance of that term, to commence in 1988.

Mr Cordiano: So in effect what the WCB ends up owning is paper which entitles it to occupy space, the paper being the lease, and options to renew that lease at intervals.

Mr Smith: As tenant, that is correct. As owner, through its subsidiary, it's in a different category. It has an interest for the balance of the term of the lease. The WCB may choose, 40 years after the commencement of the lease, to vacate the premises as space tenant, but at the same time, as investor, continue to own this building as any other office building in the city of Toronto.

Mr Cordiano: For how long? For the life of the building?

Mr Smith: For the term of the lease.

Mr Cordiano: So it is 99 years.

Mr Smith: Slightly less than 99 years, yes.

Mr Cordiano: That's what causes you to interpret the section we're discussing as relating to a non-real-property interest which is being negotiated here.

Mr Smith: That is one of the three reasons, in our opinion, as we point out, any one of which is enough to take it out of that section.

Mr Cordiano: We would probably, Mr Chairman, want to have a legal opinion of our own. At this point I would request that we do have a legal opinion with respect to that definition of "real property interests." If our own counsel would review that, perhaps that would satisfy all members of the committee. No?

The Chair: As you recall, that was a matter --

Mr Duignan: No.

The Chair: You don't want a legal opinion? That was a matter that was raised yesterday. In order not to use up a lot of the committee time, I asked the members to think about it and we would find out what happened today and we would come to some type of consensus. If we couldn't come to a consensus, then I was assuming someone would make a motion and it would be resolved in that manner. Mr Cordiano, you can continue.

Mr Cordiano: The other two reasons being in your opinion -- I take it it's in the section under "Conclusion," (a), (b) and (c) -- "a separate legal entity," that is, that may hold the ground lease. "The company and not by the board itself" -- that entitles the board to move ahead without an order in council is another reason. Is that correct?

Mr Smith: Yes. Perhaps to expand on that, as with other investments in real estate, as I mentioned earlier, this numbered company is a vehicle for making investments in real property of various kinds -- I'm using that term in the non-legal sense within this opinion -- and the board is purchasing shares of that company equivalent to its equity injection. That is what the board is doing. So that's what (a) is addressing, that the manner of investment is done in this fashion, which was permitted by amendments to the act in the late 1980s, and it's appropriate.

Mr Cordiano: But would you not agree with me when I might say with respect to this that this is really more to do with form than with the substance of the matter, that in fact the WCB ends up owning, or its investment fund ends up owning real property in the form of that structure that's being constructed, and that by using this vehicle it allows it to sidestep the provision under section 70, that it allows the WCB to sidestep that entire section so that it does not require an order in council to do what in fact it is doing here, that the difference is really in form and not in substance? In effect, you are talking about an acquisition of a building here, by some form or manner. In the end, when you do away with all the legal niceties, we are talking about a real property interest in the form of that building.

Mr Smith: I guess my answer to your question is that I don't take the position you do. In my view, this is a valid interpretation of the provision, and the provision itself was created for a different purpose which has been superseded by subsequent amendments to the act which permit investments in real estate, and this is an appropriate interpretation of the provision.

Mr Cordiano: Your legal interpretation may be correct, given the section we're dealing with, given the way this has been handled, but I would say to the board and to Mr King that the difference is really, as I said earlier, in the form that you've taken here, the decisions you've taken, and not in the substance.

In effect, you're really dealing with real property. If this is the way you chose to do it, I'd have to ask why. Why wasn't it more appropriate to have an order in council and have the accountability which we're attempting to have before this committee, this Parliament? In effect, an order in council would require you to have that accountability to the administration in office today and this provision allows you to sidestep that requirement. This assembly, as a result, has less information about what's accountable to it in matters which I think are quite substantial before the Workers' Compensation Board.

Mr Smith: The board, in February and March 1991, acted upon the advice of its counsel that it was not required to proceed under section 70, now section 64, for an approval of this facility through an order in council. Why would the board proceed to go and ask for an order in council when the legal advice the board received said, "You don't have to go that way"?

Mr Cordiano: The point I'm trying to make is that when an agency of the government decides to take initiatives which require public expenditures -- and in effect that's what we're talking about here -- we need some form of accountability. The very reason this committee is attempting to grapple with quasi-public institutions and the expenditure of their funds and to get some value-for-money auditing under way in that entire sector is so the public can have greater accountability, which it does not have today. By circumventing this process, which would bind you to a greater accountability process by virtue of the fact that an order in council would have you do that, you've basically circumvented that entire process.

The Chair: Thank you, Mr Cordiano. Is there an answer?

Mr Smith: A short answer: There is simply no attempt to circumvent legislation. The board of directors, acting upon legal advice that it wasn't required to go to the Lieutenant Governor in Council, did not go to the Lieutenant Governor in Council. As to accountability, we're subject to audit by the Provincial Auditor. We have a group of external auditors, appointed through the Management Board of Cabinet process, who audit us. We submit an annual report to the Legislature. The auditor can comment any year on our operations. We are accountable in normal audit ways.


Mr Tilson: I don't have any questions of Mr Smith on this subject as to whether or not section 64 has been complied with. We have his opinion and I'm sure there'll be other opinions that could be made available to us, if there are other opinions. I'll be interested in legislative counsel providing us with an opinion for this committee. So I don't have any questions, but in the 10 minutes that are being allotted I would like to be able to ask the delegation some other questions.

The Chair: There's been no decision by the committee to get a legal opinion.

Mr Tilson: I understand that.

The Chair: We'll have to address that.

Mr Tilson: If there's not unanimous consent, then I'll be making a motion at a later date.

The Chair: Okay. Mrs Marland, do you want to use up any of that 10 minutes?

Mrs Marland: No. I'd like to use the 10 minutes on another matter.

The Chair: Okay, we'll hold your 10 minutes. Mr Fletcher, do you want to speak on another matter? Mr Duignan?

Mr Duignan: Very briefly, have you seen any other legal opinion in relation to this or is it just your own?

Mr King: I had indicated earlier that we do have another opinion on this matter. I'm trying to have it brought forward this morning for the committee members. I had indicated yesterday that there may have been a third, but that was some vague recall I had. But another opinion that says basically what the Aird and Berlis opinion says, I'm attempting to get for the committee members.

Mr Smith: I might be able to shed something on that as well. This opinion was not arrived at in a cavalier fashion; it was arrived at after careful thought and research and consultation with other law firms. Subsequently involved in completion of this transaction, as you might imagine, were quite a number of lawyers from different law firms representing different interests -- it's a very complex deal -- and they all had occasion to at least comment or review and I have had concurrence from every lawyer who's looked at this on this opinion.

Mr Duignan: In your opinion then, it's a legal and binding document on the WCB and the WCB would pay dearly to get out of this contract.

Mr Smith: That's a different issue which I can address now, if you wish to. I was going to speak to that afterwards.

The Chair: It's up to you, Mr Duignan.

Mr Smith: Do you want me to address that issue? If I could just go through the history of it very briefly, with your indulgence. In March 1991 there was what's called a lease letter agreement and a co-tenant's letter agreement signed, which was a simplified contract which had a number of conditions to be met, including approvals of various boards of directors.

In April 1991, that approval was obtained by the WCB from its board of directors. Following that, there were extensive negotiations to comply with conditions. Those conditions were substantially complied with by the fall of 1991. The final documentation, which you see here, was negotiated from the fall of 1991 through to the spring of 1992, and the documents were finally signed in June 1992. Part of the delay was due to some of the other parties involved in the transaction and getting them to complete various undertakings and so on.

From the time the transaction was formally approved in March, in essence, the board was bound to a transaction. If the other parties to the deal had not complied with what they had to do, then the board could be excused from performance, but the board was in more of a passive role. The municipal approvals, the approvals of third parties were the responsibilities of the developer, Cadillac Fairview, to obtain.

In June 1992 these documents were signed. Today we are in a situation where we have these agreements in place. They are final and binding. They all have conditions and terms, and at various points during the life of this deal decisions have to be made relating to the transaction of one type or another, mostly relating to the details of the building and compliance with scheduling and things of that nature.

I have been asked this question by a number of people and, to make it very simple, at this time the WCB, either as investor or as tenant, looking at the two sides of the transaction, has no legal right to resolve from the transaction, in simple terms. Obviously, if there is non-performance of something towards completion, that may result in a different conclusion, but at this point the other parties to the transaction have fully complied. As a consequence, if we were to terminate this transaction for some reason, it would likely be deemed to be a breach of the transaction. The damages involved will be very significant.

If I could just briefly outline the different ways in which damages would be arrived at: First of all, the WCB would have renounced its obligations as tenant for a 20-year lease. The present value of that lease, subject to a duty of mitigation, would be the measure of damages that the landlord would have. Over the term of the lease, as you can imagine, there's a lot of rent to be paid. In the present marketplace, the ability of the developer to find another large tenant, probably a public sector tenant, will be very difficult. So the chances of mitigation are remote and therefore the exposure to a large damage claim is significant.

The second thing is that under the specific terms of this transaction the CBC has given this ground lease to Cadillac Fairview and the Toronto-Dominion Bank on certain terms. In order to comply with those terms, they have to complete a transaction like the one they have with the WCB. They would be in breach of their lease obligations and could lose their leasehold interest in this 99-year lease, with additional consequent damages. The expenses they've put into this transaction to date will also be damages that they would have a right of recovery for from the party who is in breach.

The third party to this situation is the CBC, and the CBC has engaged in this transaction from the beginning with a view to recovering, for its investment in its building under ground rent, future profits. They might have -- it's somewhat remote -- a claim against us for having breached this agreement, because they did consent to our transaction and were involved.

I'm sorry that's complicated, but it is the simplest way I can put the answer. It is a very complex set of circumstances that could be set loose if this were to happen. I can be absolutely certain, though, that there will be very significant damages. It could easily -- I don't want to speculate on amounts, but they are large amounts of money.

Mr Duignan: Do you have a dollar value on that? The WCB is still proceeding with the building of this building. If so, what's the estimated date that the sod-turning would take place?

Mr Smith: The WCB continues to believe that this is a valid transaction and is economically sustainable. Its advice continues to be to that effect. So the amount of the damages -- I really do not like to speculate because then it will become a matter of public record. It will be a very large sum of money. If you want to think in terms of hundreds, you might put that as a possibility. I'm only speculating at the amount.

The Chair: Sorry, I didn't hear the figure.

Mr Smith: I will say this: Your damages could easily be in the range easily of $100 million.

Mr Duignan: Mr Chair, I can't hear the conversation.

Mr Smith: I prefer to say that the damages are significant without putting a dollar figure on them because I don't know that anyone could put in an estimate on the dollar figure. It would depend upon a number of contingencies. Could another tenant be found in order to mitigate the loss? I'm speculating that it would be a difficult thing to do. When I put that number on it, I just want to suggest that it's a large amount of money without being held to that figure specifically.

I have no doubt that we're looking at, if the transaction were to be terminated -- I'm not certain how that would happen, whether the government is in a position to order this crown agency to reverse something it's done, but assuming that it did that, I have no doubt that the WCB would be in breach of its contract.


Mr Duignan: The second part of my question was when they anticipated the sod-turning date.

The Chair: You have one minute.

Mrs Marland: I think that's 10 minutes, Mr Chairman.

The Chair: I'm being flexible. I'm allowing Mr Duignan to put his final question.

Mr Duignan: It was part of the original question, when they anticipated the sod-turning date.

Mr King: The sod-turning will be within weeks.

The Chair: Mrs MacKinnon, I will allow you to place one question.

Mrs Ellen MacKinnon (Lambton): First of all, I wish to commend the witnesses for the manner in which they've brought forward their presentations. My question may seem a bit trite, but I don't mean it that way. Is there any history or any record in the WCB of anything that compares to what is going on right now? In other words, have you ever had any other time when you had a building you had to justify, or whatever you wish to call it? Is there any precedent, in other words?

Mr King: We have a real property holding at the Downsview rehabilitation site and we're presently investigating options for the usage of that property. Included in our consideration would be the need to have the Lieutenant Governor in Council approve whatever disposition, if disposition was to be the option chosen, because it is considered as real property. It was purchased property for the Workers' Compensation Board's purposes. So we do distinguish that transaction from the present one.

I'm personally unaware of any other transactions similar to this, except for some rumour and innuendo in Hansard, at the time 2 Bloor East was originally leased by the Workers' Compensation Board, about certain payments being made to certain parties, but that was something that would have to be checked in Hansard, rather than my speculating from some old gossip I picked up some years ago.

The Chair: Mr Tilson and Mrs Marland, you can use your 10 minutes now on another matter, if you wish.

Mr Tilson: I'd like to direct my comments with respect to the original tenders and the comments you were making yesterday, specifically the comments that the current landlord, Bramalea, did not make a tender on the venture you're now undertaking.

As a result of those comments, I took the trouble, as did members of my staff, to telephone last night some representatives of Bramalea, specifically Richard Geurts, I think his name is. I'm probably pronouncing his name incorrectly, but he'll have to forgive me for that. He had listened to your comments on television, and he was quite concerned with some of the comments that specifically you made, that Bramalea did not submit a response to the tender document, because the tender document clearly stated that the Workers' Compensation Board would prefer to own a building, and therefore, because of the position taken by the board, Bramalea wasn't able to submit a tender. Could you comment on that?

Ms Angove: I'll have to check this, but I believe we did receive submissions from other proponents that did not involve ownership options, so they certainly were not prevented from submitting. I can't comment on why Bramalea did not put forth a submission to our tender.


Mr Tilson: Mrs Marland has just asked what the tender documents said and I trust that's one of the documents that you'll be filing to us.

Ms Angove: We'll be happy to give you a copy of it, sure, absolutely.

Mr Tilson: I can assure you, Mr Chairman, that some of the issues that seem to be unfolding, if we have a half an hour left we won't have nearly enough time to pursue some of these issues to satisfy myself that the proper procedure was followed.

Mr Geurts commented that the 2 Bloor Street East building was constructed in 1974 and the building now, he submits, could be retrofitted to accommodate workmen's compensation requirements. He indicated to me that 110,000 square feet can be available on two floors for computers, with three additional elevators. He has informed me that lighting levels can be easily adjusted to Workmen's Compensation Board -- I keep using the wrong terminology -- Workers' Compensation Board requirements; that mechanical systems can be balanced to provide fresh air, if this is the issue, which you've indicated was of some concern; that elevator speeds can be increased at a landlord cost of $1.5 million; that a barrier-free access program is under way with the Toronto Transit Commission.

He indicated to my staff that building technologies have not significantly changed in 20 years so as to render 2 Bloor Street East outdated or dangerous to Workmen's Compensation Board employees, which is what you inferred in your submissions yesterday.

The simple question I have is -- a two-part question -- why had you not reviewed all of these issues with the landlord as to what it could make available and compare the cost that could be made available at 2 Bloor Street East and compare that with this determination by your board to purchase a building, as opposed to continuing on at 2 Bloor Street East, which is clearly far more accessible than the out-of-the-way spot that you have opposite the Dome? This building is good enough for the Royal Bank. It's good enough for the Hudson's Bay Co. Why isn't it good enough for the Workers' Compensation Board?

Mr King: Can I answer part of the question? I'm sure Ms Angove will want to answer other parts of it. We cannot know why Bramalea did not respond to the initial call for tenders for the building. I recall Ms Angove yesterday indicating that they probably didn't want us as a tenant at that time because the market looked much different. In any event, Bramalea did not respond to a public tender.

Bramalea is rather desperate now to have us continue as a tenant at the 11th hour. They made approaches through me at the time we had signed agreements with other parties for different facilities, saying, "We would like to begin discussions with you to see if we can't meet your needs." That was at the 11th hour, after they'd initially not responded to the public tendering process. Certainly they would like to keep us a tenant right now, given what the marketplace is like.

I think I'd ask Ms Angove to respond to some of the more technical questions, such as elevators, but we explored this question very, very carefully.

Mr Tilson: Just to respond to that, the current landlord has informed me at least that he was told by officials for the Workers' Compensation Board that 2 Bloor Street East did not meet its space and computer requirements, that tender guidelines, they informed me, state that WCB has a strong preference to own its facility outright. So that's why they didn't do it, because of what your tender documents state.

Ms Angove: If I can comment on the technical aspects of your question, I don't know whether they can add elevators to the 2 Bloor Street East office or not. I'm told by architects that is very difficult and very costly to do. What it does do, though, is if you can add elevators, two problems for WCB: Number one, it cuts into our usable floor space per floor. As you will recall, one of our big problems is that the size of the floorplate at 2 Bloor is too small. We simply cannot operate effectively when we can't put the people who need to work together on the same floor. You cut through that floorplate, you cut into the core and add elevators, and you're cutting through usable space again, which means we've got to bump more people up on to additional floors.


The other major, major problem for us is disruption to service. You cannot add elevators while people are working in the building, which means we would have to relocate our staff temporarily while they did do that retrofit. I don't know if the retrofit includes access floor that we require to address our cable problems, and it sounds like they're just dealing with two floors, as opposed to 35, which is the number of floors in the tower. So it just deals with a very small piece of the problem on the one side and it causes us great difficulty on the other, because it does nothing to address the size of the floorplate. In fact it makes the floorplate smaller in terms of usable square feet.

It does nothing to address our problems and our needs. We are not the Royal Bank, we are not the Hudson's Bay Co and we do not operate the way the Royal Bank and the Hudson's Bay Co do. We have very different requirements from them and we have very different technical operations.

Mr Tilson: Bramalea informed me that this building can accommodate 570,000 square feet and that it can provide large floor areas of up to 57,000 square feet, which would satisfy the expansion of the Workers' Compensation Board and certainly provide large enough floor areas for computer areas.

Secondly, they told me that they submitted a renewal proposal to the board prior to the June contract that was signed by the board. It was submitted on May 25, 1992. I have a copy of excerpts of that proposal, which seem to cover all of the concerns that you have, adequately answers all of your concerns. That proposal was flatly rejected.

Mr King: Can I?

Ms Angove: Certainly.

Mr King: I'm not too sure whether we've got an advocate for Bramalea here present and asking the questions.

Mrs Marland: I take exception to that.

Mr King: I'm certain that Bramalea has an ability at the 11th hour to come up with options vis-à-vis the proposal that occurred before June. I had indicated yesterday that once we had entered into the agreement in March or April 1991 to seriously negotiate with Cadillac, Toronto-Dominion, Bramalea and the CBC the Simcoe Place site, we had a clause in there that said we would not look at other properties until we had seen where that negotiation ended up. Therefore, Bramalea was told, "Until we've determined whether this is an adequate deal, we can't listen to your proposals."

Mr Tilson: I'm not doing work for Bramalea. I'm simply saying that this is a boondoggle out of control, that you've become unaccountable. You're flashing and teasing us with a whole bunch of documents that you're saying you're not going to produce. You didn't put forward adequate --


Mr Tilson: How dare you say I'm an advocate of Bramalea.

The Chair: Thank you. I appreciate everybody's opinions.

Mr Fletcher: On a point of order, Mr Chair: I don't think it's right that anyone badger witnesses or anyone else before this committee, and I think the Chair should make sure that people are at least treated with some dignity.

Mrs Marland: May I speak to that point of order, Mr Chair?

The Chair: I don't think it was a point of order. The committee has no time to waste. I allowed Mrs MacKinnon to place one question after Mr Duignan had used the full 10-minute allotment, and I'm going to allow Mrs Marland to place a question, as the 10-minute allotment has been used in the first round. You have time for one question.

Mrs Marland: I think, Mr King, for you to suggest that my colleague Mr Tilson is here as an advocate for Bramalea is stooping pretty low. I would like to suggest that if the present chair and members of the Workers' Compensation Board were advocates for the public taxpayers in this province, they would not be agreeing to build a building of 755,000 square feet at a time when there is in excess of 20 million square feet of available space in the greater Toronto area today. I would ask that you withdraw your comment.

When Mr Fletcher says that we are being insulting to deputations before this committee, I have never heard the kinds of comments from deputations in front of a committee that I have heard from Mr King.

Mr Mike Farnan (Cambridge): My goodness, you've been badgering this delegation for the last two days, for God's sake.

The Chair: Order, please.

Mr Farnan: For two days you've badgered the delegation. You're going to give this high moral standard of yours that we're so familiar with and it's really a pain.

The Chair: Thank you.

Mr Farnan: If you've got a question to ask, why don't you ask the question?

The Chair: Order, please.

Mrs Marland: I find it really interesting that the government members choose to defend the expenditure of $180 million for a building for the Workers' Compensation Board --

The Chair: Is there a question?

Mr Farnan: The reality of the matter is that all you're doing is making a statement. You're not asking any questions.

Mrs Marland: Mr Chair, I think I have --

Mr Farnan: It's about time you asked some questions rather than just some opinion and badgering. How much of this badgering can we take?

The Chair: Mr Farnan, please, I need your cooperation.

Mr Farnan: You have it, Mr Chair.

The Chair: Thank you.

Mr Farnan: Please, let's have the cooperation of the opposition members and have a constructive debate and not this kind of ongoing badgering and innuendo and accusation without substance.

The Chair: All the interjections are out of order. Could you please place your question, Mrs Marland.

Mrs Marland: There actually is not a requirement in the rules of committee to ask questions. There is a procedural matter here that I'm trying to address. If we're talking about accusations and innuendoes, I think the accusation to the member for Dufferin-Peel, my colleague Mr Tilson, that he might be here representing or advocating on behalf of Bramalea is totally uncalled for by the vice-chairman of the Workers' Compensation Board.

The Chair: Thank you.

Mrs Marland: Mr Chairman, it's obvious that --

The Chair: Time has expired.

Mrs Marland: Can't I ask any more questions without --

The Chair: Time has expired for this first round. What I'm going to do --

Mr King: Mr Chair, might I withdraw any insult committed in error of omission or commission?

The Chair: That's up to you, Mr King.

Mr King: I hereby do so.

The Chair: Thank you. Okay, let's try five minutes and see where we end up. Mr Cordiano, five minutes.

Mr Cordiano: Can I reserve the five minutes, unless my colleague wants to ask a couple of questions? Are you ready for a couple of questions?

Mr Steven Offer (Mississauga North): I have a short question, if I may, Mr Chair, with the indulgence of my colleague. Good to see you again. As you know, we brought this matter up to the Legislature earlier on. I don't know if this matter has been asked earlier, but I would like to know, dealing with the construction of the WCB headquarters, was there a limitation placed by whomever on the number of general contractors in this province who were able to actually bid on this project?

Ms Angove: Yes, there was a pre-selected list of contractors developed by the developer who's responsible for handling that whole aspect of the project. It was established with the parameters that they wanted to make sure only companies that had the experience to build a similar project and could meet the requirements to build a similar project would submit; that these companies were viable, that they would last the three years and would not go under partway through the project; and, number three, that they had no problems in the past in terms of delivering over budget or behind schedule. We're very concerned about meeting schedule and budget requirements here. Those were the parameters upon which that pre-selected list was developed.

Mr Offer: The problem I have on that particular response -- but I thank you for it -- is that it is my understanding, after following this matter for a number of months, that some very long-established, reputable general contractors who had a great deal of experience in projects of this nature were excluded from building, thereby, without any question, eroding the competitive nature of the tender itself.

I'm wondering if you might be able to share with this committee the three selected general contractors who were permitted to bid. All members of the committee will then be able, through their experience, to know of the many reputable general contractors who were excluded from even participating in this process.

Whether one agrees with the building of the headquarters is one issue. The other issue is that there was an exclusion of many very large, reputable general contractors in this province even from making a competitive bid. I would like you to share with this committee what general contractors only were allowed to bid.


Ms Angove: There is an extensive list, but you're talking about the general contractors. The three that were on the list were Jackson Lewis, PCL and Eastern.

Mr Offer: And everyone else was excluded?

Ms Angove: My understanding from Cadillac Fairview is that its experience in dealing with some other contractors has been quite difficult and that it has had recent projects that have come in over budget and quite behind schedule. They're not prepared to take that risk on this project.

Mr Offer: The concern which I have had, even as we raised it in the Legislature, is twofold: first, the need for the building itself; second, in the area of the construction of the building, whether there was going to be a full competitive bid allowed. Just by way of comment, the fact that only three general contractors in this province -- and indeed outside, but certainly within this province -- were allowed to bid when we all know of many other general contractors who have been excluded is one which is worrisome to those who fund the WCB.

I would like to ask a further question, and that is in the area of the subtrades. I have also been led to believe that not every subtrade was able and is going to be able to bid on the work, that there is a preferred list of trades which will be able to bid and that all others will be excluded. Could you please confirm or deny whether that is in fact the case?

Ms Angove: I think I need to clarify to you that the responsibility for the pre-selection and the whole tendering of the general contractor and subcontractor is the responsibility of the developer under the agreement we have signed. WCB is not interfering in that process. We understand from the developer why it has chosen to go this route and we appreciate its concern about risk associated with going over budget and over schedule to meet our project requirements. We share that risk and we share their concerns.

Mr Cordiano: How do you share that risk, might I ask? Mr Chair, there's one minute left; last question.

The Chair: If you can get a very quick answer.

Mr Cordiano: This is very important. If you're sharing in the liabilities associated with that contract to go over budget and you're not given any consideration for making the decision with respect to which contractor is chosen and what subtrades are chosen, then I think you've relinquished all authority and all accountability for tendering that project.

The Chair: Quick answer.

Mr Smith: The quick answer is that rents are based upon cost plus a debt service factor, which is a very low spread from the point of view of the tenants, so the costs are a factor of the rent. We have to keep the costs under control, but there is no cap.


The Chair: No, I'm sorry, we don't have time. Order. Mr Tilson.

Mr Tilson: I have two questions to ask of the delegation, and that has to do with the whole subject of consultation over what appears to be a two-year process, specifically with employers and workers. There appears to be zero consultation with employers and workers, at least from the information you've given us to date.

It's my understanding from individuals I have spoken to -- namely, people such as the Canadian Federation of Independent Business and other groups such as that -- that the board of directors made the decisions you have referred to to purchase the new building and that that decision was based on a grey paper matter or confidential matter. That's what the decision was based on.

My first question is, is that statement that has been made to me accurate, and if so, what was the rationale for that decision? Major employer groups, who are going to be paying for this -- business is going to be paying for this; no matter what financial statements you make, they're the ones that are going to be paying for it -- were not consulted. In fact, these groups were not aware of this issue until November 1992 when the subject came forward in the press.

The second question I have is, why was the decision to invest in a new building not discussed with the employer community so that it could have input on that decision?

Mr King: First of all, it isn't myself as the vice-chair of administration who decides what the board of directors will go out and consult about and what they will not go out and consult about.

Mr Tilson: That wasn't my question. I don't care --

Mr King: The first question was the fact that the material presented to the board was on grey, and why didn't the board go out and consult? You've obviously been talking to someone who understands that regarding material that's sent to the board of directors on grey, the recommendation is that it be kept confidential.

Mr Tilson: Yes.

Mr King: The board of directors decides what is kept confidential and what is not kept confidential. They acted in the best faith, that in order to negotiate something like this you have to be able to negotiate free from the pressures of lobby groups, such as Bramalea, who might want to put their oar in the water.

Secondly, to say that employers and workers weren't consulted -- our board of directors is made up of eight members in addition to the chairman and myself. Four of those members are appointed from industry. Those four members appointed from industry have the backing of industry groups before they are appointed to the board of directors. Four of those members are representative of either injured workers or organized labour through the Canadian Federation of Labour or the Canadian Labour Congress. They certainly have the ability to go out and consult if they so desire. They determined that they could not go out and consult if they were to put this deal together.

Mr Tilson: Sir, no one's building in the glut of vacancy that's available. Some 20% is available and you're the only ones who are building. I would think that the employer groups who are paying for this have every right to provide input on this. You didn't seek it. Not you personally, but the board didn't seek it. They just plowed ahead. Very strange.

These questions have been put to you. It only became available in November. All of these matters are simply quite serious. They're shocked that with all of this glut of tenancy that's available -- and to keep taking shots at Bramalea is totally unfounded. That company has put forward a proposal which would save the business community and the people of this province millions of dollars. You know that, but you've never given them an opportunity to put forward their views. You simply dismissed it outright and said, "We're going to buy and that's the only alternative we're looking for." That's in your tender, and you know that. You didn't look at any other alternatives.

Would you comment on those statements?

Mr King: I have already responded to that concern. We went out to public tender. Other organizations came forward and put forward proposals which did not involve the WCB as an owner. Therefore, there was no limitation on Bramalea from coming forward. They delayed, until after the Workers' Compensation Board had signed contractually binding agreements to head in another direction, with its proposal that we stay at 2 Bloor East. At that time they were out of time.

Mr Tilson: But your tender documents, sir, say that the Workers' Compensation Board has a strong preference to own its facility outright. That decision was made a long time ago and that's part of your tender, so that's why they didn't respond.

The Chair: Short question and a short answer.

Mr King: I've answered this twice already that others did not feel limited by that preference.

The Chair: Thank you. The five minutes have expired. Mr Fletcher.


Mr Fletcher: Workers' Comp used to be called Workmen's Comp; that was set up by the Conservatives. Through the years it became Workers' Comp. Then in 1988, it set up a numbered company which was allowed to do investments. I guess it was in 1990 that things were finalized for a deal to build a new building. The rationale behind this is improved service, lower costs; right now we're in such a good building climate as far as interest rates and construction competitiveness are concerned.

It was a business decision made by Workers' Comp. You put out tenders and in fact went to the trouble of finding out whether it had to go to cabinet and got your legal opinion, which is fine. You could have gotten that from any legal counsel anywhere. You're audited by the Provincial Auditor every year for accountability.

I'm trying to grasp why there are members sitting here who think that you're doing something under the carpet, under the rug, behind closed doors, when so far you've been quite open with us. I'm having a problem with that. The board of directors is made up of employees and employers, different business groups are involved, so as far as consultation is concerned, you already have that built into the system. I'm still trying to get where the nefarious part of this operation is. I can't grasp where they're coming from. Is there something underhanded here? Have you done something wrong? Is there something you should be in back alleys discussing? I don't know.

Mr King: I understand the purpose of the public accounts committee, and perhaps I have a bit personalized. One of the things I tried to indicate yesterday is that we have significant problems in trying to recover the Workers' Compensation Board to the point where it becomes an asset to the people of Ontario, where it begins to provide the sort of service the people of Ontario should be able to expect of the Workers' Compensation Board, that the employers of Ontario and the workers of Ontario and the MPPs of Ontario have a right to expect from its Workers' Compensation Board.

I think, given any other economic climate, the decision that was made by our board of directors on the facility strategy would be applauded as being a wonderful business deal. Unfortunately, given the downturn in the economy, it is receiving a lot of attention.

The reason I have perhaps personalized somewhat is because I know of the other problems in trying to get the Workers' Compensation Board turned around from its present or past position of not being able to provide the proper service. I guess I see this as being counterproductive to my efforts in getting that service delivery agenda carried out. I apologize to members if I have been personal.

The Chair: Mr Farnan, you have time for one question.

Mr Farnan: I just want to make a comment. First of all, I want to say how grateful I am to you for the presentation. I think you've been frank and fair. I believe you've been non-partisan. I think you've spoken very fairly about previous administrations and the current administration. You've been, in the best sense of the word, a professional civil servant. I commend you for the fact that where you felt you may have reacted to a member of the committee, you were prepared to apologize and withdraw. I think that takes a lot of courage.

I regret the fact that members of the committee made accusations without basis and haven't shown the same courtesy in terms of bringing dignity to the process in withdrawing those kinds of remarks.

I recognize the fact that you have partners outside the WCB. It should be very clear that there are limitations on a delegation. When you're talking about whether it's the developer or the bank or other partners in the transaction, there has to be some limitation in terms of the kinds of information that would be provided, but I believe the delegation has indicated a willingness to provide all the information within its power without going against any practice that would jeopardize its partners.

The Chair: Mr Hayes, you have time for one very short question and one short answer.

Mr Hayes: All right. Thank you, Mr Chair.


Mr Hayes: It's not your turn, Margaret.

There were remarks made here about Bramalea not being aware of this transaction and not being given an opportunity to submit. I find it rather interesting when the statement is made from over there. Correct me if I'm wrong, but I think the member, Mr Tilson, said that Bramalea wasn't aware of this until November 1992. In fact, when did you people notify Bramalea that your intention was to move out?

Mr Tilson: I said there were no employer groups that were --

The Chair: Order, please. The question is --

Mr Hayes: I said, "Correct me if I'm wrong."

Mr Tilson: They made this whole process secret. That's what they did.

The Chair: Order, please.

Mr Hayes: Mr Chair --

The Chair: The question is, when did Bramalea know? Can we have an answer?

Mr Hayes: Mr Chair, first of all, I've sat here and listened to that stupid rambling over there and he can give us the same decency to listen to us.

Mrs Marland: He just answered your question.

Mr Tilson: I answered your question.

Mr Hayes: I didn't ask him --

The Chair: Order.

Mr Tilson: You asked me a question and I answered it.

Mr Hayes: You directed another thing about things being under the table, and I think that's totally unfair.

The Chair: We'll just wait.

Mr King: Bramalea has been involved in this all along because it has certain interests in the Front Street property as a developer, so Bramalea has known, as a corporation, all the negotiations that have been going on at all times. They had to consent to the Simcoe Place project.

The Chair: Mr King, I have a couple of questions before we adjourn today. You'll remember that yesterday I raised a matter of section 64 and the obligations of the board under section 64. The feelings I had yesterday, notwithstanding the legal opinion, the one legal opinion, that was tabled today, still remain. I believe there was a certain intent in section 64 and I'm not sure, I haven't concluded yet, whether or not the intent of section 64 has been met, notwithstanding the one legal opinion we've seen today.

Mr Fletcher raised a question earlier this morning that I thought was appropriate. He had assumed in his comments to you that before a crown agency like the Workers' Compensation Board established a numbered company to acquire property or to investigate a partnership in property, that matter might be discussed at the ministerial level. You informed him that no, that was not the case.

Are you familiar with the Management Board directives which obligate -- I will quote right from the Management Board directive, under the heading "Management Board Approval." The direct quote is:

"Prior Management Board and cabinet approval is required to establish or incorporate all new agencies, including subsidiaries of existing agencies and the acquisition of a controlling interest in an organization."

Clearly, the intent of this directive is for crown agencies to go to the Management Board, which is led by a team of duly elected and duly appointed cabinet ministers, before numbered companies and spinoff subsidiaries are in fact approved. Are you aware of that directive and are you in any way responsible to meet that directive?

Mr King: Do you have a date on that?

The Chair: The date is May 1986, I'm informed.

Mr King: I simply couldn't answer the specifics. I would have to check the corporate record to determine whether or not the then board and administration back in 1988 indeed knew of and complied with the Management Board directive. To the best of my knowledge they didn't, but I don't want to lay blame where blame may not rest. I would have to defer a specific response until I check the corporate records on that specific question.

The Chair: Unless that Management Board directive has been changed between May 1986 until the date you signed the agreement or contract, then I read the Management Board directive in a similar fashion as Mr Fletcher pointed out this morning, that ministerial approval had to be received. Could we leave it that we're going to look into this a little further?

Mr King: I will have to look into the matter of whether the board in 1988 did approach either the minister or the Management Board in terms of that particular directive of Management Board in creation of the numbered company.


The Chair: Unfortunately, time has expired. It's 12 noon. I know there are a number of points of order. Let's start with Mr Cordiano and we'll go all the way around.

Mr Cordiano: In light of the recent arguments you've put forward and the uncertainty of the answers, it raises an enormous number of questions. I would like to put forward to the committee that ministerial accountability and Management Board directives should be a central focus of what we proceed with in terms of questioning along the lines of this subject matter, and as a result I would put a motion forward that we call on the Minister of Labour to come before this committee to respond to some of those questions.

Interjection: Which one? The previous one?

Mr Cordiano: We're talking about a Management Board directive which, by and large, was ignored when the agreement was signed, when initiatives were taken which formalized a process, and we're talking about the current minister under whose administration this process was formalized. That's what we're dealing with here, so I would make that motion.

The Chair: It's been moved by Mr Cordiano that the committee invite the Minister of Labour to appear before the public accounts committee to answer questions posed by members in regard to the Workers' Compensation Board decision to build the $180-million building in downtown Toronto, as it pertains to the Management Board approval I earlier quoted. Any discussion on Mr Cordiano's motion?

Mrs Marland: Recorded vote.

The Chair: The vote will be recorded. Any discussion on Mr Cordiano's motion? Mr Tilson, then Mr Farnan and then Mr Duignan.

Mr Tilson: I would indicate my support for the proposed resolution to the committee, and I say that for a number of reasons. First of all, it would appear that the Treasurer has been making statements in the House and outside the House that this is a done deal, that there's nothing that can be done, that there's nothing he or his government can do to deal with this matter. I think that as a representative of the government, the Minister of Labour is the most appropriate person to come and discuss that with this committee.

Secondly, Mr King has indicated that regular monthly meetings are held with the minister or the minister's staff. Mr King can correct me, but I believe he said that this subject has never been discussed with the minister, certainly since this minister was appointed to the cabinet.

Mr King: No, I'm sorry. I don't want to interject, but I don't believe I said that. I said I didn't recall whether I was the one at the briefing session; just a clarification.

Mr Tilson: I accept that. It would be useful to know exactly how much input the minister has had in assisting the Workers' Compensation Board in arriving at the various decisions that it's been arriving at over the last several years, particularly since I gather there's an indication of several contracts. I think there are a considerable number of unanswered questions as a result of comments that have been made by the Treasurer and as a result of the very unusual silence of the minister. I think the motion is quite appropriate and I would support it.

Mr Farnan: Mr Chair, I am seeking, first of all, your advice. I would like your advice as to the manner in which this session can be concluded. I believe there is no useful purpose in continuing along the process that appears to be put forward by the opposition members of the committee. We've very clearly seen that there is a rationale that has been presented to the committee. I think we can see that there is a long-range plan in which rents are going to be able to be equated at competitive values and that there are many advantages to the agency. The people in Cambridge I spoke to last night are absolutely in horror that by walking away from a deal such as this, there could be enormous, huge costs to the taxpayer. They're saying to me: "Get real, guys. Are you guys going to sink us for extraordinary dollars in terms of costs in breaking a deal?"

Mr Cordiano: No one had suggested that.

Mr Farnan: So, Mr Chair, I'm seeking your advice, and I would be prepared to put a motion that these proceedings be concluded at this time.

The Chair: We cannot do that at the present time. We already have one motion on the floor.

Mr Farnan: I would have this motion moved following the motion of Mr Cordiano.

The Chair: Okay, that's fine. You've given us notice of your intention, and that's appropriate.

Mr Duignan: My colleague Mr Farnan has said a lot of what I wanted to say. I'll simply add that if the members of the opposition wish to ask the minister questions, then I suggest they use question period to ask those questions.

Following along with that of Mr Farnan, the WCB has had a number of legal opinions in relation to this particular deal. They have had two or possibly three legal opinions in regard to this, plus the Treasurer has had a legal opinion on this. Why waste any more of the taxpayers' money furthering this investigation when there is no need for an investigation?

Mr Offer: I'm very much in support of the motion as moved. I think there are significantly important questions that are still out there that have not yet been answered to the fullness that this committee and its mandate demand. But I would also suggest that we not overlook that person in cabinet who really does hold the purse strings, and that is the Chair of Management Board. There is a great deal of work that is dealt with in terms not only of the Minister of Labour and the Treasurer, but also of Management Board, of the person who is really best able to deal with the directives, to deal with the matters which have become before him. I would suggest, as a friendly amendment to the motion, that we also include the Chair of Management Board to respond to the very relevant, real, substantive questions that have been put before this committee and this delegation on this particular issue.

The Chair: If that's an amendment to Mr Cordiano's motion, then we'll vote on the amendment first. The amendment to the motion is that in addition to the Minister of Labour, Mr Offer moves that we have the Chair of Management Board appear before the committee for the same purposes that I described earlier. When we get down to the vote, we'll vote on the amendment first and then we'll vote on the original motion.

Mrs Marland: I support the motion that's on the floor. I know that as soon as I say what I'm going to say, all six government members will do what they normally do, which is try to drown me out because I'm making a point with which they do not agree. But isn't it interesting that they feel they have to jump to the defence of the Minister of Labour? The Minister of Labour is more capable than any one of them to --

Mr Fletcher: Mr Chairman, on a point of order.

The Chair: A point of order.

Mr Fletcher: Shouldn't the member be speaking on the amendment?

The Chair: Please continue.

Mrs Marland: Mr Chairman, obviously I am speaking on the amendment. I remind the member that the amendment is to invite the minister to come before this committee.

Mr Fletcher: Point of order, Mr Chair.

The Chair: There's nothing out of order, but let's try.

Mr Fletcher: That's not the amendment, is it?

The Chair: Mrs Marland, you have the floor.

Mrs Marland: It's unfortunate that the member is interrupting when he chooses not to listen. The point is that the motion which is on the floor is to invite the minister before this committee. The Minister of Labour is perfectly capable of defending himself and coming before this committee. I think that when the whole question pivots around a legal opinion about whether or not the Workers' Compensation Board has a legal right to contravene section 64 of the Workers' Compensation Act, then we have to do what is obvious, which is get an opinion other than the opinions that have been sought to this point by the Workers' Compensation Board.


As of today, Mr Chairman, this committee has one opinion before it, that of Aird and Berlis. That is fair ball, but it's still only one opinion. If the government members of this committee do not choose to protect the interests of the taxpayers of this province by saying: "We don't want to hear anything more. Let's shut it out. We've had enough legal opinions" -- this committee has one legal opinion before it today. Mr Duignan referred to a legal opinion the Treasurer has received --

Mr Farnan: We're not going to let you waste any more money --

The Chair: We're talking about Mr Cordiano's motion to the minister.

Mrs Marland: We have no copy of that legal opinion either. Therefore, it's important to have the minister before this committee to answer some of these questions as to the actions of this government spending $180 million through a government's arm's-length agency, the Workers' Compensation Board.

The Chair: Okay. Mr Tilson on the motion.

Mr Tilson: As a member of the committee, I would promote the amendment that has been put forward by Mr Offer, in other words, that the Chair of Management Board be added to the request, that the Minister of Labour and the Chair of Management Board also --

The Chair: That would be the amendment to the original motion? We would vote on the amendment first.

Mr Farnan: Call the question, Mr Chair.

The Chair: Well, you'd better speak to Mr Farnan for him to withdraw his motion.


Mr Farnan: Call the question.


The Chair: Order. The clerk advises me that when the question is called it's at the discretion of the Chair whether or not a full debate has taken place. I don't think it has. I'd like Mr Duignan to make the point he originally wanted to make and we'll allow a couple more minutes of debate from other members and then we'll call the question.

Mr Duignan: Simply, I wanted to call the question, Mr Speaker; still do.

The Chair: Mr Cordiano and then Mr Tilson, very briefly both of you.

Mr Cordiano: I don't believe for an instant that we have surveyed this matter in its fullness. I think there are many unanswered questions, and for a committee which calls itself the public accounts committee of the province of Ontario to have this issue unresolved with respect to the number of questions that have been put and unanswered -- I don't think we can continue to operate in the way we have.

This committee has always operated on a non-partisan basis. It has attempted and endeavoured to investigate questions which would have us do value-for-money audits conducted by the auditor. We operate in that fashion because we are attempting in many ways to seek out new ground.

We have amendments that we're proposing to the Audit Act. I know I'm getting a little off topic, Mr Chairman, but referring to this question, it's entirely appropriate because what we're discussing here is value for money and I don't think those questions have been answered fully. We don't believe, on this side at least, that value-for-money questions have been answered satisfactorily and that's why we're pursuing this.

The Chair: Thank you. Mr Tilson, briefly.

Mr Tilson: I think that is the issue really before this committee: It's looking back at Mr Cordiano's original motion and whether there is sufficient information to assist the Provincial Auditor in proceeding on that question. The fact of the matter is, the Treasurer has had a legal opinion. We don't know what that legal opinion is. The Minister of Labour may have had some input on this whole subject from day one.

I know there are two representatives from the Ministry of Labour sitting in the back of this committee room, so obviously the minister is taking a keen interest in these proceedings. The Minister of Labour and his staff have been involved in this process. I think it's fair that we hear from all sides of the subject. On the issues that you've raised with respect to Management Board, Mr Chair, I think it's fair that the Chair of Management Board come forward and put his comments forward as to whether its directives have been responded to.

It's fine for Mr Smith to come forward and say that there are all kinds of litigation that may or may not result from this. That's his opinion, and I can respect him for that. The fact of the matter is, if there is law that exists in this province, that law may frustrate this contract, and Mr Smith knows that, and this contract may come to an end. It's called the doctrine of frustration, and if section 64 or any other pieces of legislation exist that preclude the Workers' Compensation Board from entering into this contract or these series of contracts, that's the end of it.

The Chair: I'm sorry, I'm going to have to cut you off. At this point, I want to inform the committee that Mr Offer's motion is out of order as he is not a duly substituted member of the committee.

Mr Tilson: Mr Chairman, with respect, I did correct that. As a sitting member of the committee, I made that amendment.

The Chair: Well, we'll have to change how it reads in our minute book.

We're going to vote on the amendment first. Mrs Marland has asked for a roll-call vote.

Mr Tilson has moved that the original motion be amended to include the appearance of the Chairman of the Management Board before the public accounts committee. All in favour?


Cordiano, Marland, Tilson.

The Chair: Opposed?


Duignan, Farnan, Fletcher, Haeck, Hayes, MacKinnon.

The Chair: The motion is defeated.

Mrs Marland: Mr Chairman? You're still on the amendment, aren't you? Sorry.

The Chair: That was the amendment. The amendment to the motion has been defeated.

The original motion, as moved by Mr Cordiano, is that the committee invite the Minister of Labour to appear before the public accounts committee to answer questions related to the proposed office complex to be built at the Simcoe Street area by the Workers' Compensation Board.

All in favour of Mr Cordiano's motion?


The Chair: Yes, recorded vote.


Cordiano, Marland, Tilson.

The Chair: Opposed?


Duignan, Farnan, Fletcher, Haeck, Hayes, MacKinnon.

The Chair: The motion is defeated. Mrs Marland and then Mr Farnan.

Mrs Marland: Mr Chairman, at the time that Mr Cordiano moved his motion, I had indicated to the Chair that I wished to speak, which was ahead of Mr Farnan's indication.

I wish to place a motion before this committee that the committee request from legislative research an opinion on the interpretation of section 64 of the Workers' Compensation Act as it deals with the question of whether or not the Workers' Compensation Board and its members --


Mrs Marland: It was a decision of the board, so therefore the Workers' Compensation Board members are legally in a position to proceed with the acquisition of property and all the points that you made yesterday, Mr Chairman, which would in fact contravene the wording of section 64 of the act. I would like to speak to the motion.

The Chair: Let's see if we can get that motion down to manageable size.

Mrs Marland: Okay.

The Chair: Mrs Marland has moved that the public accounts committee ask legislative library research services to provide the committee with a legal opinion on section 64 as it applies to the initiative of the Workers' Compensation Board. I think that covers it.

Mr Farnan: Mr Chair, I --

Mr Duignan: Point of clarification, Mr Chair.

The Chair: Point of clarification, then Mr Farnan.

Mr Duignan: I was just wondering, do motions have to be in writing?

Mr Tilson: Oh, come on.


Mrs Marland: I'm happy to put it in writing. You didn't ask Mr Cordiano for his in writing. I can write, Mr Duignan. I'm more than happy to write it.

Mr Duignan: In other words, the motion's out of order, Mr Chair?

The Chair: I will tell the committee this. Yes, the motions have to be in writing. Yes, it's been the practice of this Chair to accept verbal motions from all members. If we want to end that practice, that will be a decision made by the members, not by the Chair. If that's what you want to do, you'll have to insist that it happens, because I'm not going to, but we're going to carry on with that procedure once you do. It's up to the members how you want to run the committee.

Mr Farnan: Mr Chair, I appreciate the fact that --

Mrs Marland: Mr Chair, when do I speak to my motion?

The Chair: We are now deliberating on the fact that your motion may be out of order, depending on what the members of the committee decide, Mrs Marland.

Mr Farnan: I certainly would support the opportunity for Mrs Marland to place a motion and to allow her the time to write it down if necessary but I would indeed agree to accept it orally. Mr Chair, you have conducted these hearings extremely well. I would ask you that, given the fact that this motion has been debated at length during the six hours, we proceed immediately to the vote, and I call the question.

The Chair: Yes, I intend to have a very limited debate on this motion, probably a minute for Mrs Marland and that's about it. I was going to come to that but I appreciate your advice.

Mr Fletcher, on Mr Duignan's point.

Mr Fletcher: Yes, on Mr Duignan's point. I have no problem with this motion being debated right now. At some time, are we going to at least set some ground rules so that we know where we're coming from? I know the rules are already there and we should be following them. Is it going to be --

The Chair: The ground rule I like to work under is that we have flexibility. If the members say, "No, we have to have everything in writing," then you're right. We do.

Mr Fletcher: I think that's something we should discuss at some time.

The Chair: We've never operated that way, but I appreciate the fact that members get frustrated because they want to see the motions in front of them. They want to be able to read what the motions say.

Mr Duignan: If I can be of assistance to the Chair, since I raised the issue, maybe this is a subject that can be dealt with by the subcommittee.

The Chair: All right. We'll have the subcommittee discuss the matter. I like the subcommittee when it appears.

Mr Duignan: It has worked recently.

The Chair: It has worked recently. You're right.

Mrs Marland moves that the public accounts committee request, from the legislative library research services, a legal opinion on section 64 of the Workers' Compensation Act as it applies to the initiative of the Workers' Compensation Board in the construction of its proposed building.

One minute for Mrs Marland.

Mrs Marland: Since section 64 states very clearly that there is a requirement for approval of the Lieutenant Governor in Council for the board to "purchase or otherwise acquire" real property etc and we know that the Lieutenant Governor in Council is in fact the person who enacts the requirements of and direction from the cabinet of the government of the day, I think it's very clear that the whole question of whether or not the Workers' Compensation Board is in a position to be relieved of its contract which it signed in June this year pivots around the interpretation of this section 64.

Since we are talking about the unnecessary expenditure of $180 million of the taxpayers' money in this province, I think it's very important that this public accounts committee, the committee that is accountable for the expenditures of government in this province, have at least one other legal opinion. To date, we have one opinion, as I said earlier, of Aird and Berlis. We do not have another legal opinion, therefore my motion is to request legislative research to give us the opinion as to the interpretation of section 64.

The Chair: All in favour of Mrs Marland's motion?

Mr Tilson: Recorded vote.

The Chair: Recorded vote requested by Mr Tilson. All in favour of Mrs Marland's motion?


Cordiano, Marland, Tilson.

The Chair: All opposed?


Duignan, Farnan, Fletcher, Haeck, Hayes, MacKinnon.

The Chair: The motion is defeated.

I have before me a further motion, submitted by Mr Farnan. It reads:

"That this committee's deliberations on the Workers' Compensation Board be now concluded."

Any discussion on your motion, Mr Farnan? We'll have brief discussion.

Mr Farnan: I don't think it's necessary to have discussion at this stage. We've had full-ranging discussion. There is no doubt that there are still questions as far as the opposition is concerned, but from my perspective I find a great dichotomy in an opposition that (a) demands fiscal responsibility and restraint and (b) then would push a situation in which extraordinary litigation costs and penalties would be imposed on the taxpayers of Ontario. I think we've had a full hearing of the board, open and frank. It's time to get on with our work. We have to be back here for 2 o'clock. I would like to see the motion tested immediately.

The Chair: Okay, we're going to have some discussion on the motion.

Mr Cordiano: With all due respect to Mr Farnan, I think he completely misunderstands the work of this committee. Perhaps you have attended this committee on several occasions. I do not recall him being a permanent member of this committee. None the less, I think it's important to recognize on his motion that his intention was that we not further force the Workers' Compensation Board to somehow break its contractual agreement. That is not the issue before this committee. The issue before this committee is accountability. The process that was used by the Workers' Compensation Board was entirely unaccountable to this legislative body and to other bodies. We feel, by right of Parliament, that there needs to be an format in place for any agency of the government to account for public expenditures.

What your motion does is put a halt to that accountability. For some reason, you want to block any further investigation with regard to this decision made by the WCB because it might be a waste of taxpayers' money to break this contract. We do not intend to break this contract. At least, that's not the intention I had in mind when I put the original motion to investigate this question. It was: How was this decision arrived at? Is it a proper decision? Is there a value-for-money decision that's been attached to this? And can we learn from the mistakes that have been made, if indeed mistakes have been made? That's really the extent of this investigation.

Mrs Marland: Let's call this for what it is. The government members on this committee have just voted against having one other legal opinion. They're willing to accept the legal opinion of the Workers' Compensation Board firm. That's what you have just done. Now we have the most colossal motion, which is: "That's the end of it, folks. We don't want to talk about this any more." That's the end of the review of the Workers' Compensation Board building a 755,000-square-feet, brand-new, 30-storey office building, when there are 20 million square feet of that kind of office space available in the greater Toronto area today. This motion is nothing more or less than, "We've opened the can of worms, we've looked under the lid, we don't like what we see, so let's close it."

You are accountable to the people of this province just as much as the opposition members are, I may remind you, and to have your name on a recorded vote against looking further at the options that are available to this committee, in fact to the Workers' Compensation Board -- it may well be that a legal opinion that interprets section 64 of the act may not result in a suit being available. It may well be that an interpretation of section 64 --


Mrs Marland: It's unfortunate that the government members don't wish to listen, but it may just happen that that legal opinion may give us the out we need to get out of this absurd contract to build in a glut of available office space in Toronto. If that opinion were to give us that out, that it contravenes an existing law, then it may well also be that no suit would be possible. Therefore, it might not cost any money to get out of this contract at all, but these government members do not choose to find out what the real options are.

The Chair: Thank you, Mrs Marland. Mr Tilson.


Mr Tilson: Looking at the motion that was put forward by Mr Cordiano, he's quite right. The question is accountability.


Mr Tilson: I don't know what they're babbling about over there, Mr Chairman.

Mrs MacKinnon: We don't know what you are, either.

Mr Tilson: They're upset; they want to end it. I think the problem is that the subject is accountability. Is the Workers' Compensation Board accountable to no one?

The reason I think the motion is completely improper is that we have now received some documents from Mr King, and we've some indication from Mr King and his solicitor that we may receive more documents. We're being teased by being shown four volumes of documents, which we may or may never see, but they're before us to look at, at least in the binder form, and I think this committee would like to look at those documents. This committee would like to look at the proposals. Mr King has indicated that he may provide the proposals as to how this whole process started.

The form of tender we have yet to see. I'm sure that won't be subject to the privacy legislation. I can't believe it is; maybe it is. Maybe the whole thing is subject to privacy legislation, which shows the whole fraud, that we're losing control of what's going on in this province. But it may well be that the review of the impact studies, the financial opinions as to whether this extravaganza that's being planned at Simcoe Place is appropriate or whether other means of leaseholds around this city might be more appropriate.

I, as a member of this committee, want an opportunity to look at those documents. I want an opportunity to share my thoughts and to listen to the thoughts from the government members and the members of the Liberal caucus on those documents. And I think that after looking at those documents there may be other questions this committee may have. Therefore, I think Mr Farnan's question is completely improper and I would recommend that the committee defeat that resolution, that in fact the committee allocate more time to review this very important subject to the people of this province.

The Chair: Thank you, Mr Tilson. Mr Hayes.

Mr Hayes: Some accusations have been made here that the members from the government are not interested in discussing this particular issue. I have to remind the members of the opposition that the members from the government were the ones who supported the motion in the first place to bring the people from the Workers' Compensation Board here to investigate some of the loose allegations that were made by opposition members. I think we have done that.

We've had a lot of discussion over six hours, and just to try to prolong and prolong for the sake of -- I don't know, whatever.

Mrs MacKinnon: Hansard.

Mr Hayes: Media coverage, whatever it is.

Mr Duignan: TV.

Mr Hayes: TV, I guess. We're not going to be on TV this afternoon, I understand, so they might be a little disappointed.

But I think we have discussed this. We've had opinions here. These people came and I find them to be very straightforward in answering the questions.

Mrs Marland: One opinion, one legal opinion.

Mrs MacKinnon: Three.

Mrs Marland: Ellen, show me the other two.

Mr Hayes: The thing is that we have heard comments made here about other properties and all these kinds of things. They have no facts to back them up anyhow, the opposition members, but I think we have had a considerable length of time to discuss this and I support Mr Farnan's motion.

Mr Cordiano: Obviously, you do not want to be accountable.

The Chair: Order, please.

Mr Farnan has moved that this committee's deliberations on the Workers' Compensation Board be now cancelled. All in favour?


The Chair: I'm sorry, be now concluded; that this committee's deliberations on the Workers' Compensation Board be now concluded. All in favour?

Mrs Marland: Recorded vote.


Duignan, Farnan, Fletcher, Haeck, Hayes, MacKinnon.


Cordiano, Marland, Tilson.

The Chair: Mr Farnan's motion is carried. The committee's work on the Workers' Compensation Board decision to acquire a new head office is now concluded.

We want to thank the presenters and representatives of the Workers' Compensation Board for appearing --


The Chair: Order, please. We're not finished our work.

We want to thank everyone who's appeared for their cooperation and for the information that you made available to this committee.

I want to inform the committee that for this afternoon's session, we will be meeting in committee room 1. The Ombudsman will be appearing at 2 pm. I would like, at the very minimum, at least the subcommittee there at 1:30 to hear the researcher's briefing prior to the Ombudsman's attendance. Please take all your stuff with you, as the room will not be secured. Thank you, and this committee is adjourned.

The committee recessed at 1237.


The committee resumed in closed session in committee room 1.



The Chair: The standing committee on public accounts is called to order. The business for this afternoon is to discuss the committee's wish for a value-for-money audit, undertaken by the Provincial Auditor, of the Office of the Ombudsman. This discussion will take place among the committee members and the Provincial Auditor and our staff, along with Ontario's Ombudsman, Roberta Jamieson.

We want to thank the Ombudsman for appearing before our committee today to answer our questions and hopefully give us the needed information so that we can move forward with some of the initiatives the committee has discussed. Ms Jamieson, if you have any opening comments you'd like to make, we certainly have allotted some time for that if you wish, and if not, we'll just go into questions.

Ms Roberta Jamieson: Happy new year, good afternoon. In my community we say "new yah" on New Year's Day morning, so I'll greet you that way.

I will be very brief, but I do have a few things I would like to say. First of all, I'm very happy to be here this afternoon to discuss some matters that I think are very important to the public's trust in the Ombudsman.

Many of you will recall that last August I tabled a special report in the Legislature. It looks like this. In that report I spoke to the appropriateness of this committee asking the Provincial Auditor to perform the value-for-money audit of my office under section 17 of the Audit Act. The passage in the special report that refers to that is found on pages 38, 39 and 40. I also suggested in that report that we have a meeting to discuss this. Last October I followed up on that and wrote a letter to the Chair attempting to get a dialogue going, and since then unfortunately we've been unable to find a convenient date until today, but I'm glad we're here today.

There are two misconceptions I'd like to clear up at the outset. I think that'll clear away some of the brush so that we can have a useful discussion. One is that the Ombudsman doesn't want to be audited. The second one is that I don't want a value-for-money audit to be done.

The truth is that I'm already audited by the Provincial Auditor, and I'm audited each and every year, and that is required by the Ombudsman Act. On the second misconception, having to do with the value-for-money audit, it's a matter of public record that I believe a value-for-money audit is a very important and useful management tool, and I'm fully in support of its use. Now I hope we've put those misconceptions to rest so that they don't hinder us in our discussions.

What I am looking for today and why I asked to meet with the committee is to arrange an accommodation, one that allows the value-for-money audit to proceed but in a manner that does not compromise the public trust and confidence in the independence of my office.

In my mind, there are several goals to be accomplished in conducting such an audit. First, I think it's important that both the Legislature and I receive the information arising out of a value-for-money audit. I am looking forward to any ideas for improvement of service and so on that will come out of such an exercise. However, I am concerned that it be done in a manner that is consistent with the relationship that my office now has, as an officer of the Legislature, with the Legislature. I'm also very concerned that the role of this committee as well as the public confidence in the independence of my office be preserved.

I think there is an accommodation that will accomplish all of those things, and here is my suggestion. I, in the special report, invited -- and I reiterate that invitation today -- the Provincial Auditor, when next he audits my books, which will be just a couple of months from now, to conduct a value-for-money audit. That makes both practical and efficient use of both of our resources.

I will then undertake to table a copy of the final report with the Speaker in his capacity as chair of the Board of Internal Economy. As you know, the board, chaired by the Speaker, deals with all matters relating to the finances of the Legislature, including its officers. As you are also aware, members of all parties have access to information through their House leaders and other members who sit on the board. I believe that this accommodation will achieve the ultimate objective that both the committee and I share; that is, to do a value-for-money audit. It will not only do that but do it in a way that preserves both the role of this committee and the public's trust in my office as one which is independent from government.

I'm happy to answer questions or discuss this further, but that's --

The Chair: Thank you. Mrs Marland.

Mrs Marland: I was not sitting in the summer as a member of either this committee or the committee on the Ombudsman, and this afternoon I am very appreciative of -- do we call you Ms Jamieson, or do we call you Madam Ombudsman, or what do we call you?

Ms Jamieson: Well, I'm happy with Roberta, or Ms Jamieson, or --

Mrs Marland: Ms Jamieson. I'm really very interested this afternoon to hear Ms Jamieson's comments, because I think that she has very briefly and in a most articulate way laid out all the controversy that was swirling around these halls in the summer in probably what were otherwise a few short-news days, and put everything back on the table in the perspective in which I believe it should be. I think it's unfortunate when we have short-news days around here and some individual or some subject gets blown out of perspective, and I think perhaps that's what happened four or five months ago.

As the Ombudsman has said, her office, or the Office of the Ombudsman -- it happens to be her office at the moment -- is audited every year. It's due for another audit in two months' time anyway. If it's the wish that the audit that is in two months' time be a value-for-money audit, that's quite acceptable to the Ombudsman.

I think the most important issue here is: How do we protect the Office of the Ombudsman from being at risk in terms of the public trust and confidence? I think the only reason the functions of that office work for our constituents in this province is because they see the Ombudsman's office as being totally independent from government. This obviously is not a partisan comment. It doesn't matter when the public perception is being taken. It doesn't matter who the government is. This office would not function, it would not work, if it didn't have that total independence.

We're talking now of something more than arm's length. We have government agencies, boards and commissions which are arm's length of the government. Then we have what are referred to as officers of the Legislative Assembly of Ontario. Those officers have their own independent role, and that role simply doesn't function with any responsibility or any credibility if it isn't totally independent.

Frankly, knowing the number of cases that I think all of our constituency offices are faced with on a daily if not weekly basis that end up either in the Ombudsman's office or at least in a last point of court of resolution to our constituents, I think it's very important to each and every one of us representing the almost 10 million people in this province. So I feel that if this office is going to function the way other officers of the Legislative Assembly offices function, we should back off and let the procedure that is in place follow.

When you think of the officers of the Legislative Assembly and you look at who those people are, I think we would be setting a very dangerous precedent if we decided to treat any one of those offices or the individual officers differently than we have in the past. For example, those officers include the privacy commissioner, the Conflict of Interest Commissioner, the Clerk, the election finance commission and the auditor himself or herself. So I think it is a very big responsibility all of us have when we start looking at individual officers of the assembly and thinking that we're going to treat them the way we review, inspect and treat government ministries. If that's the case, then everything else in how we deal with government and government ministries starts to break down the independence and the perception of exactly what the office of that Legislative Assembly officer's role demands.

I feel very strongly that if the budget annually -- and in this case in dealing with the Ombudsman's office -- is approved by the Board of Internal Economy, on which there are representatives of all three parties in the assembly, and there is some falling down on the commitments made at the time that budget was presented, the members of the Board of Internal Economy are going to be the first to jump down whoever it is, whether it's the Clerk's office or any of the offices of the Legislative Assembly I've just outlined. If any of them do not meet their commitment to the Board of Internal Economy, then I think they're going to hear about it. I think the interests of the people of this province are being protected while giving those individual officers the independence that is required of their office, plus maintaining the public trust.

It's interesting for me, not sitting as a permanent member of this public accounts committee, to even hear the term "value-for-money audit," because although the Ombudsman has said she has no difficulty with that and she quite agrees with it, I would like to ask the auditor how one conducts a value-for-money audit without being rather subjective. I'm sure there's an explanation about a value-for-money audit that the auditor can give me in accounting and auditing terms, but when I heard that term I thought to myself, is it the auditor's opinion? Is it subjective or -- even though there's no controversy here about the Ombudsman agreeing to it, I have some difficulty about how that is done and maybe you'd like to explain that to me.


Mr Erik Peters: I'd be happy to. The process that is currently being followed in this regard is really literally a partnership process with the authority that is in place. In other words, there's an initial agreement on both the plan and the criteria against which the value-for-money audit is to be conducted. Essentially, the auditor would look for criteria, developed by the auditee, against which they feel they are accountable. There is a bit of a problem if there are none, and I have no reason to believe that there are none in this case. But some controversy does arise, and that may be one of the things you're referring to -- where in fact no performance indicators have been developed by management there is a bit of a problem, and where no criteria have been developed by the auditee then there would be a problem. But in most organizations it is really agreeing on the criteria.

Now, they are being evaluated by the auditor, normally, against common standards of some sort that are available. For example, to explain, in this particular instance, the point is being made about the standards of the manual being applied to this particular office. There are many precedents where one can agree, pretty well at the outset, which of those parts of the manual or which of the practices would be considered to impair the independence of the office; in other words, enforce rules that would interfere with the arm's-length relationship of the operations of the government of the day. That would be one particular issue. If you have any other questions I'd be happy to --

Mrs Marland: Mr Peters, when the auditor looks at ministries of the government, I know you're using the Manual of Administration as your guide. Perhaps you can explain how you look at the officers of the Legislative Assembly when you do the audit on their offices. I'm talking about your annual audit of the officers of the assembly.

Mr Peters: Because the last audit was not conducted under me, if I may pass this on to you, Jim, to explain as to what happened in the last audit.

Mr Jim Otterman: We would audit to whatever policies they have in place. Whether it's the Ombudsman's office, the chief election officer or the conflict commissioner, if we felt we came across transactions that according to their policy were offside, if you like, with the Management Board directives, we normally would point those out to the officer to make sure the officer had recognized that difference when they set the policy. In some cases it may be that a policy was changed, say regarding the use of automobiles. Being familiar with the government policy, the Management Board policy in that area, we would point out to the Ombudsman or whomever that this had changed and that they may wish to reconsider whether their policy is giving them what they intended, if that's the way they want to go. Normally, that's not been a problem in conducting the annual financial audits of these entities.

Mrs Marland: In general then, do the officers of the Legislative Assembly fall under similar guidelines for their operations as do the ministries? Is that what you're saying? You're talking about a policy such as vehicles and --

Mr Otterman: It's varied over the years. In the case of our own operation, we have said that we intend to comply with the spirit and intent of the Management Board directives and guidelines, although clearly there is no requirement that we do so in our office.

Mrs Marland: Then can I ask the auditor, if you found something in your annual -- I assume it's an annual audit of all the officers of the Legislative Assembly, the same as the Ombudsman.

Mr Otterman: That's correct.

Mrs Marland: Okay. If you found something that, in your opinion and in your responsibility as the Provincial Auditor, was not appropriate or should be changed -- not necessarily inappropriate but should be changed because, after all is said and done, this is public money -- would you not make that comment as part of your report? Are you not responsible to make those kinds of recommendations if you see something like that so that the public purse is protected?

Mr Otterman: Yes, and that's what we do, and we issue that report to the individual officer of the particular entity.

Mrs Marland: Right. Is there a requirement for the officer who's involved to file that auditor's report with the Speaker annually?

Mr Otterman: To the best of my knowledge, there's nothing in the legislation, other than in the Provincial Auditor's legislation, that requires the audit report to be tabled with the Speaker or with the board.

Mrs Marland: So there may not be a requirement for those auditor's reports to become public through the Speaker's office. Is that what you're saying?

Mr Otterman: That's right. However, we have two reporting criteria: one being to the management of the entity, the chief executive, and the other would be that if it's of significance to the Legislature, then we would report it in our annual report to the Legislature.

Mrs Marland: Then, Mr Chairman, I think probably what needs to be addressed by this committee is not dealing with the Ombudsman's office in isolation. Surely we should be dealing in equity with all the offices of the Legislative Assembly, and if there is a concern that the public purse isn't being protected because there isn't a requirement for the auditor's report to be made public, then let's address that for all the officers, not just the Ombudsman's office. If there is a concern, then I think that's the way the concern can be addressed.

Personally, I think it's wrong to focus on one officer of the Legislative Assembly. It just doesn't make sense. If you're going to look at one of the offices of the Legislative Assembly, which I would suggest renders more than an arm's-length service to the public of Ontario, then I think we've got to treat every office the same way.

Mr Chairman, based on what I've heard so far this afternoon, when everyone has finished his opportunity to speak, I would like to place a motion at the end of that to suggest that if it is the wish of the committee to have a value-for-money audit, that it is done as part of the annual audit, in this case of the Ombudsman's office, which is within two months anyway.


The Chair: Mr Tilson, you have about three minutes.

Mr Tilson: Three minutes?

The Chair: For the first round.

Mr Tilson: I appreciate the remarks of Ms Jamieson as to the availability of her office with respect to any sorts of audits; very responsible comments, particularly her comments on the necessity of confidentiality. I suppose you could look at your office, you could look at the privacy commissioner. Maybe there are other independent positions or officials in the provincial government where that's most important.

I guess my question is to Mr Peters, Mr Otterman or Ms Jamieson as to whether or not there is sufficient protection of positions such as the Ombudsman or the privacy commissioner -- we're going beyond the Ombudsman, but it's the same issue, I suppose -- that enables these various audits to be done but at the same time ensures the various concerns Ms Jamieson has outlined. The main one you seem to be concerned with is confidentiality and independence, I suppose. Would that be correct?

Ms Jamieson: My concern today is certainly to make sure there is an accommodation reached where we can accomplish what we all want to accomplish but in a way that preserves the independence of the office. The way the Legislature has chosen to deal with the officers of the Legislature financially is through the Board of Internal Economy. It's there that we go for our estimates. It's there that I or any of us go to answer questions in between the estimates, if they arise. That's why I thought it was most appropriate.

Mr Tilson: Because those meetings are in camera, is that why?

Ms Jamieson: No, that's not the reason. For me, the reason is because that's the way the Legislature has decided to deal with its officers. It's chaired by the Speaker. He's the kind of penultimate independent officer of the Legislature. They make sure the appropriate balance is there between independence and accountability.

Mr Tilson: I guess my question to all three of you is whether there is sufficient protection in any legislation, whether it's the Ombudsman Act or the Audit Act, that ensures that type of protection but at the same time enables sufficient audits to go through. Obviously, there's quite a difference between someone asking you how you use your automobiles or how your staff use their automobiles as opposed to what's going on in a particular file. I mean, those are two very different matters.

Ms Jamieson: I think you'll find this is a very timely discussion for a couple of other reason. As officers we are discussing some of these matters, where there are gaps, where it's clear, and what is the nature of the relationship between officers of the Legislature and the Legislature itself. I noticed from reading Hansard that the standing committee on the Legislative Assembly is also thinking about discussing, what's the relationship between the officers and the Legislature?

I think the acts are different. My act says I must be audited annually, I must be audited by the Provincial Auditor. It provides for certain independence in staffing, leasing office space, that kind of thing. It's right in the statute. I have not been called upon, nor am I obliged in the act, to table my audit report. But I'll tell you, observing that myself, I have undertaken to publish it in my annual report. For the value-for-money audit, that's why I'm undertaking to table it with the Speaker, as the chair of the Board of Internal Economy, because I think it's appropriate. I think they're entitled to know what is found.

Mr Peters: If I may make a comment, this question is very important to us, because in value-for-money audits one of the most important questions the auditor has to ask himself is really who's the client, whom is he serving? One of the latest developments in this area, and one I'm very keen on following -- I've just been two weeks in the job; I haven't had major discussion about this topic yet with my colleagues -- is really who can take action on the recommendations you're making? In other words, there may be a layer of recommendations which you make to management because it can make the action, and the only ones you would take to higher authority is where you have a difference of opinion with management; in other words, management for one reason for another does not wish to take action on a particular recommendation. Then there is also the authority question, as to whether the officers can indeed take action on the particular recommendation. So it is very important to the auditor to report to those levels of authority that can actually take action on the recommendations.

I am grateful to the Ombudsman, Roberta Jamieson, that she has brought up the issue of who is the client, particularly with respect to the legislative officers, as to where you go. The ultimate value-for-money report that I could foresee at one stage is that we issue a one-page report which simply says that all the matters that have arisen in the value-for-money audit have been satisfactorily resolved with management and it is wishing to take action, except for the following; and if there any exceptions, they are then reported to the next higher authority, if there's a problem.

Mr Tilson: What's to preclude you presenting this report to this committee?

Mr Peters: This is the concern: in essence, the instruction. In other words, if you are asking for a value-for-money audit, essentially this committee becomes the client and therefore you end up with a report. I think this is the concern the Ombudsman brings forward.

Mr Tilson: And that `s your concern: You don't like that. Or it's not that you don't like it, it's because the legislation, you say, doesn't --

The Chair: Unless we say, "Give the report to the Speaker."

Ms Jamieson: You see, it's my view that it's inappropriate. It's not that I don't like it or --

Mr Tilson: You're right; the wrong choice of words.

Ms Jamieson: It's my understanding that this committee is to make sure government spends its money appropriately and the Legislature set it up to do that. The Legislature also set up the Board of Internal Economy to make sure the Legislature spends the taxpayers' money appropriately. Since I'm an officer of the Legislature, it seems to me that's the appropriate place to go.

So it's never been a question of whether we should do this. It's always been in my mind a question of how we do it and that we do it in a way that preserves the public's trust in my office as being independent. That's why I've come up with what I think is an accommodation that will serve everybody's needs.

The Chair: We have Mr Duignan, Mr Farnan and Ms Haeck; 20 minutes to be divided.

Mr Duignan: Welcome. I used to sit on the Ombudsman committee and sat on it last summer and a period of last year. I know a number of issues were raised by all sides in relation to the report. I don't want to get into that today. I think basically what you've brought forward here today is a compromise in doing a value-for-audit report along with your annual audit. To me, it would seem to be a fair compromise on that issue.

However, picking up on a point that Ms Marland raised, the issue of the officers of the Legislative Assembly -- and you made reference to it as well -- there is no common mechanism reporting of the officers at all. In fact, your particular office reports to a committee, basically to the Ombudsman committee, and the authority for an audit is done under the Ombudsman Act, not under the Audit Act. Isn't that correct?

Ms Jamieson: It is true that the authority for the audit comes under the Ombudsman Act. I'm required to report to the Legislature through the Speaker.

Mr Duignan: I know there are a number of problems, and the officers of the Legislature have raised that with the Speaker. The Speaker in turn, as Chair of the Legislative committee, has raised it with me. There's need for review of the officers of the Legislative Assembly, but that's another venue for another time. I want to reserve some time later to ask some questions, but I'll turn it over to Mike, if you want to continue.

Mr Farnan: It's just a brief comment. There has been a lot of comment around this particular issue, but I think this afternoon we have been presented with what I would call not just a compromise: I think it's an honourable compromise; I think it's a compromise everybody can live with. It allows for the scrutiny of the operation and it allows for the independence and the integrity of the Office of the Ombudsman to remain intact.

I would caution two things: First of all, I think we should deal with this issue independently of other officers of the Assembly and I think we should move on accepting the compromise. Secondly, if there are some generalized proposals as to process for the future, we should deal with that independently. I suggest that to you, Mr Chair, as a means of proceeding, but I believe we have something before us for which there can be all-party agreement.


Ms Christel Haeck (St Catharines-Brock): I would like to question the auditor, if I may. The proposal is that the audit -- the value-for-money audit, to be clear -- should be done when next the Ombudsman's office is reviewed, which would take place in the next couple of months. Is this correct?

Ms Jamieson: At the end of the fiscal year.

Ms Haeck: At the end of the fiscal year. So I assume you would have the staff and time available to do it. I know that frequently your office has a range of demands before it, but you would be able to do it at that time?

Mr Peters: Yes, we do. We have the staff available.

Ms Haeck: Okay. I know the Ombudsman committee is writing its report in March, so obviously there would be some similarity of time frame between the two. As a member of that committee, I think it would be pretty close to when we would like to have that information. At least as an individual member of that committee, I can lend my support for the recommendation presently before us.

Mr Peters: Can I comment on that? When I said yes to the resources, it does not mean -- we will most likely not be in a position to report by March 31.

Ms Haeck: No, I fully appreciate that. I understand you'll be doing a number of audits at that time and reporting some time later, but it will at least be in some time frame. I think there was a concern on the part of the committee that this would be taken maybe even into the next year rather than this coming year.

Ms Jamieson: Normally the auditor comes in right at the end of the fiscal year and you report what, May, April?

Mr Otterman: May or June.

Ms Jamieson: So that's what we're talking about, are we? Is that realistic?

Mr Peters: Yes we are, but because of the value-for-money audit, we may have to come in earlier to start it out, to give us the total time span. In the annual audit itself we would probably rely on the books being closed and information being available, but we may want actually to start the value-for-money audit if we want to have coincidental termination of the two audits. Value for money, as you will appreciate, demands a lot more in terms of resources from us and a lot more time. So we may want to come in somewhat earlier and arrange that with you than we do for just the annual audit.

Ms Jamieson: I don't want to take up your time. May I have one minute? I know you've got time for questioning. As I understand it, what I'm seeking is an accommodation that would allow the auditor, when he comes in to do his usual audit, to do a value for money at that time. I know we're going to have to have some discussions and I'm happy to start those any time. As to how that's going to be accomplished -- for example, my understanding is you'll want to look at things like case management, that kind of stuff. I obviously have concerns about confidentiality, and we'll have to figure out a mechanism that will preserve that but allow you to look at the issues you need to look at. Those discussions can begin any time, and then the audit would be done when the next audit is done and the report I undertake to table with the Board of Internal Economy.

Ms Haeck: If I can proceed with my questioning, during the interview for the position you now hold, with all the people who were short-listed we had a long discussion about how a value-for-money audit is accomplished. I believe all the candidates stated in one way or another that there are lengthy discussions with the proposed auditee to really lay out a plan of action so that everyone is clear as to what the audit is about, and the confidentiality issue Ms Jamieson raises would in fact be taken into account. Am I correct?

Mr Peters: You're right on. That's why I'm bringing up the point that we may want to probably meet as early as possible, because very often the development of the audit plan and the criteria against which the audit is to take place take an awful lot of time.

Ms Haeck: I would assume there are other agencies or obviously even branches within the government that deal with case work where confidentiality is an issue as well, and you obviously handle those with aplomb on a regular basis.

Mr Peters: Yes, there is confidentiality of information between us and the auditee.

Ms Haeck: Especially where individuals are concerned?

Mr Peters: Absolutely. It's very clear that there are very often different parameters set, but there are confidentiality parameters definitely as far as individuals are concerned, and any other criteria the Ombudsman might bring up that would, in her opinion, impair the confidentiality would certainly be open to discussion.

The Chair: Mr Duignan, some more questions?

Mr Duignan: As my colleague Mike Farnan has stated, I think this is an honourable compromise. This issue has been going around for the best part of a year, longer in the Ombudsman committee, and it's been touched on in this committee as well, and I think maybe this is a way to resolve the situation.

Ms Jamieson: I wonder if I could make one short comment. These matters have been swirling around for a while but without a lot of specificity, without substance coming forward. I look forward to this exercise as a way to again put the facts forward, which I think have been sadly lacking. So I'm looking forward to this exercise.

The Chair: Mr Cordiano.

Mr Cordiano: I did arrive late and I was not privy --

Mr Robert V. Callahan (Brampton South): I come early and he gets on first.

Mr Cordiano: Well, that usually happens. You'll have to bear with us. If you want to go ahead, you can go ahead.

Mr Callahan: It's okay, you go ahead. It's not your problem. The Chairman's written my name in invisible ink, I think.

The Chair: Mea culpa. Go ahead.

Mr Callahan: I've sat on a number of committees over the last little while, Ms Jamieson. If you read the Hansard you'll see that I defended the Office of the Ombudsman when there was a lot of raging and ranting going on by a lot of members, because I do believe that the Ombudsman's office is very specific and very special.

If members are able to shed a cloud of mistrust or speculation on the office and create what I think may have amounted almost to a witchhunt, I think that's very dangerous. I don't think they did it intentionally. I think they simply did it by carrying out a function which -- I think during the Second World War they used to say, "Loose lips sink ships."

I can fully understand why this controversy got worse because, as they tried to lure you or order you before various committees, you took the position that because of your independence, relinquishing your independence by coming before those committees in response to those so-called directions would in fact have breached the integrity of your independence.

And of course we must recognize the fact that if your independence is not total, then members of the Legislature who, for whatever reasons, are not happy with the response they get to a particular concern of their constituents might very well -- one would hope unintentionally, but perhaps even intentionally -- try to create a groundswell again that would give the Office of the Ombudsman a black eye. I think that doesn't serve anybody's purposes.


Having said that, though, there are some concerns that just generally, I guess, we have to feel strongly about investigating. I'm glad you came today and came up with the compromised solution, because I think that certainly this committee, if there's any function to it, is to ensure that governments are held accountable, particularly majority governments. It's not as difficult to hold accountable a minority government, but it's very difficult to hold accountable a majority government because we don't have any control over what it does.

I think equally that your office has a responsibility of independence. We as the public accounts committee also have a role to play in terms of maintaining the integrity of our authority to call before us any body to account. We tried to do that and I think what happened is got into a letter writing contest. I think it was the public accounts committee. Was David Ramsay on this committee?

Mr Tilson: No.

Mr Callahan: Maybe it was the Ombudsman committee. I guess they were trying to craft a letter that would not go so far as suggesting that there was a reward on your head for the return of your body before the committee dead or alive type of thing.

The public accounts committee I find to be different. That's where I think I have to perhaps ride two horses in saying that I think the public accounts committee has a responsibility to investigate matters of anybody where public tax dollars are involved, and that includes the Ombudsman. I think that when we do that we're simply doing it in a way to ensure that the taxpayers' dollars are being spent wisely and properly.

I know that may become a head-on collision with what you and your predecessors have believed that the Ombudsman's role is, that it should be totally independent, and that by being able to review and to look into those areas we are in fact indirectly placing some restrictions on the function of the Office of the Ombudsman. But I think to do anything less would be irresponsible on the part of the members of this committee and the function of this committee.

I know what you've offered as a compromise. As one member, I'm prepared to try it that way and see what happens. I guess my major concern is that on the Board of Internal Economy, without for one minute wanting to perhaps suggest there might be the majority view on that committee that might not give us the full understanding of how or why moneys are being spent -- I don't think I'll say any more about that because that's perhaps espousing motives, but we are all politicians and there can be political decisions and there can be political decisions.

I think that the public accounts committee, as near as I can figure, has always been one which has had a history of being non-partisan, although we do drop into the arena of partisanship from time to time, and this is really the arena where accountability should be reviewed and directed. I guess that's why the auditor is attached to us, to give us the opportunity to be able to make certain that the dollars are spent wisely.

As I say, I like your accommodation, but I have reservations. If at any time I believe that it's not working, that it's not giving us a full accountability, I will tread very lightly -- as I started, and I'm going to end, which will probably give a sigh of relief to everybody, especially Joe -- because I respect the importance of the integrity of the Ombudsman's independence.

But none of us is totally independent. I think Mr Justice Morand when he was Ombudsman, or maybe it was Mr Arthur Maloney, and other ombudsmen who have preceded you have struggled with that very question as to how do you remain independent and yet how do you maintain the accountability for which we are all responsible in terms of the tax dollars that are spent.

As I say, I'm going to accept your accommodation. I think it makes sense and it's one that we can try. But I won't be dispelled from resorting to a different way of approaching it if I have any reason to believe -- and I'm not suggesting it would be your office -- if for any reason I have any concerns, be they real or apparent, that the very pressed, hard-earned dollars of the taxpayers of this province are in jeopardy in any way, shape or form.

I wouldn't hesitate to go the other way, and hopefully not get back into the same contest we were in before, because I think it doesn't serve anybody well for committees to be hunting the halls and putting out a warrant for your arrest and so on, nor do I blame you for what you did. I think you were trying to maintain the integrity and the independence of the position, but it became very difficult as to how we were going to meet. I'm glad we have met. I'm prepared to give this a try, as you've suggested that it be done in that way, with all the caveats that I've already put forth.

The Chair: We have Mr Cordiano and then Mrs Marland.

Mr Cordiano: Oh, there's time left over? I think my colleague has covered quite extensively the basic areas I wished to discuss, but I just wanted to say that I think each member of this committee, and in fact of the Legislature, respects and expects the Ombudsman to be independent and to maintain the integrity of that office and your position. None of us has approached this with a view to eliminating that autonomy or eliminating any shred of that independence from the Office of the Ombudsman.

I think it needs to be reiterated and emphasized that this committee deals with value-for-money audits for the most part because essentially it's the realm in which very few assessments are made in the main by either the Legislature as a whole or the government, and it allows the public to view whether in fact there is accountability, and not just in the normal course of accountability by the accounts that are audited each year in the normal financial way. I think we're asking for something that goes a little bit beyond that, because it's essential that we do that.

But I think, having said that, we would want to maintain the independence of this committee, as my colleague and others have pointed out, and that it's absolutely a must that this committee and the auditor have access to any agency or officer or office of this Legislative Assembly or government and the expenditure of public funds, because it's, after all, the expenditure of public funds that must be accountable. Therefore, we can be flexible and we can work with you, but we have to maintain that very basic principle, that the expenditure of public funds, whenever it takes place, must be accountable to the people of this province through this Legislative Assembly and through this body which has been appointed to do that.

That's where we start. We start with that basic premise. That's the principle under which we operate on this committee, that if there are expenditures of public funds, then those expenditures have to be accountable. I don't think there's any office that comes under the mandate of this Legislative Assembly or this government which is beyond this committee for that kind of scrutiny. So if we have to accommodate your particular needs, we're prepared to do that.

If it's to maintain the integrity and the independence of the Ombudsman's office, we understand that and we have to do that. But by the same token, we believe that we have the right, and in fact we're obligated, to look at those accounts in a value-for-money audit. That's why we start with this basic premise.


Mrs Marland: I think I'm next, so I think I'll take the privilege, with the Chairman momentarily out of his chair. Through the Chairman, however, I would like to speak to the member for Brampton South, Mr Callahan.

The Chair: Margaret, you can do whatever you like.

Mrs Marland: I would like, Mr Callahan, knowing you for a long, long time --

The Chair: Be careful now.

Mrs Marland: -- back into your municipal council days, to hear you withdraw some comments that you've just made, because I find them personally offensive and not in the best interests of the Office of the Ombudsman.

You said something to the effect of an outright suggestion that there had been a warrant for the arrest of the Ombudsman. You said, "Instead of having all this stuff going on in the halls, including a warrant for your arrest," and I think that being a responsible litigator in your own right, you would want to withdraw that inaccurate statement.

Mr Callahan: If I could just respond to that, I didn't say "warrant." I said there shouldn't be -- I can't remember the exact wording. If that's the way it came out, I withdraw it, but I don't think that's the way it will be reported in Hansard.

The Chair: Mr Callahan withdraws anything and everything he said that may have been offensive.

Mr Callahan: That may have offended you, Margie, or Ms Jamieson.

Mrs Marland: I appreciate that, because I think it was a very serious comment. You see, the point is that as we sit here as members of this committee and perhaps say things differently than we really intend them to be said, Mr Chairman, this just confirms the argument that I think perhaps most of us are supporting this afternoon in this committee, that the officers of the Legislative Assembly do have to be treated differently than do the departments of government.

It's not for their sake; their job isn't for their sake. If you look at any of those officers -- I mean, heavens above, why do we have a Conflict of Interest Commissioner and an election finances commissioner? It isn't for the sake of the individuals; it's for the protection of the public. It's for the opportunity for the public of this province to be well served to the best of the abilities of the individuals who are appointed as those commissioners, and also for the benefit of the elected representatives of the Legislative Assembly, to know that they always have this other office to which they can refer their constituents, an office that is totally apart from any ministerial or government department.

The very fact that we have a process where government agencies, boards and commissions and government ministries can come before the Legislative Assembly committee, can come before the estimates committee, before the public accounts committee and before the agencies, boards and commissions committee -- we've got all these vehicles out there that well serve the protection of the public of this province. Then we come to this separate group of people who are in none of those categories. They're officers of the Legislative Assembly.

So, in my opinion, until there's some very strong argument about why we should change the system that exists, I think we should allow the current system to continue, and until somebody comes forward with a strong argument and example where there is some blatant problem with the current system of audit and review of those officers, I think we should just continue as we are. If that were to happen -- listen, folks -- wouldn't the first thing be that the person would be removed from that office and there would be a remedial solution developed to address whatever the problem was?

I think the bottom line of what we're saying here is either we have confidence in a system with a Provincial Auditor or we don't.

Mr Cordiano: I don't think that's what we're saying.

Mrs Marland: Excuse me. I think I have the floor.

The Chair: Order.

Mr Cordiano: Are we rotating again?

The Chair: Yes, we are.

Mrs Marland: I feel very strongly that we should do as Mr Farnan said as well, that we proceed with the direction that has been suggested this afternoon by the Ombudsman herself. I've already worded the motion once for the committee, Mr Chairman, and I think perhaps now would be as good a time as any for me to move that motion.

Mr Cordiano: We should have another round first.

Mrs Marland: Certainly; you can speak to the motion. I'm not cutting anybody off. But the point is that I think we step on very dangerous ground when we start treating the offices of the assembly the same way as we treat the government ministries, because all of us sitting here as elected representatives know better than anybody where the public perception is about how the business of government is done today, and they've got to know that there is this independence and demonstrated integrity of these particular offices, apart from government ministries. It's not a matter of them only being visibly separate; it's a matter of them being totally functionally separate, and therefore it follows that the review of those offices has to be conducted differently too.

The Chair: Mr Farnan and then Mr Cordiano.

Mr Farnan: I would support Mrs Marland's motion being placed on the floor at this stage. I think there's been considerable debate --

Mr Callahan: How about on the table?

Mr Farnan: My apologies. That'll be fine, on the table. I'm glad you were able to make a positive contribution this afternoon, Mr Callahan.

Mrs Marland: Do you want me to write it or can I just do it verbally?

Mr Cordiano: Mr Chairman, on a point of order: We have the Ombudsman before us, and I thought it would have been more appropriate to direct questions to the Ombudsman and allow us --

The Chair: I've not limited anyone from asking questions.

Mr Cordiano: No, but I'm just saying we're kind of getting into a debate about the parameters for this discussion, for this subject matter, among committee members. I think we had decided prior to this meeting that we were here for a very definite purpose, that the subject matter to be debated today was with respect to conducting a value-for-money audit and the ability of this committee to do that in the face of what interpretations the Ombudsman had regarding her office's independence vis-à-vis the auditor and the ability of the auditor to conduct a value-for-money audit. We're getting away from that and we're getting into the realm of discussion with respect to the independence of all officers of the Legislative Assembly, whether this committee has its independence and integrity intact. I mean, we're going off on all kinds of tangents here.

Mrs Marland: Would you like me to place my motion then? Would it help?

Mr Cordiano: Sure. I don't think it's appropriate, but you can place it.

Mrs Marland: I'll place the motion, because --

Mr Cordiano: Sorry. I just wanted to finish by saying, before I was interrupted, that I did not wish to waste the Ombudsman's time by being before us and members of the committee debating among each other whether this is an appropriate initiative or not. I wanted to have the opportunity to discuss the details of the issue before us with the Ombudsman, and obviously we haven't been able to do that.

The Chair: Any member of the committee who wishes to ask the Ombudsman questions is free to do so. We're still in rotation, and if you want to make statements, you can make statements; if you want to ask questions, you can ask questions.

Mr Duignan: On a friendly point, Mr Chair: I think Mrs Marland has tabled a motion on the floor and I was wondering if Mrs Marland could read the motion.

Mrs Marland: Now it's tabled on the floor.

Mr Duignan: Or whichever way you want to put it.


Mrs Marland: Mr Chairman, I would like to move the motion I outlined at the beginning, which would be that I move that the standing committee on public accounts request that a value-for-money audit of the Ombudsman's office be executed as part of the annual audit of that office, which is due within two months' time, at the regular scheduled date for that audit to be done, and that that report by the auditor be tabled with the Speaker, as suggested by the Ombudsman herself.

Mr Callahan: Can you re-read that motion?

The Chair: We're going to work on it. Just give us a second.

Mr Duignan: On a point of clarification: If it's a report from an officer of the Legislature --

Mr Cordiano: Let's hear the motion first.

The Chair: Okay. I guess we could refine the motion somewhat, but basically it reads that Mrs Marland has moved that the standing committee on public accounts request that a value-for-money audit of the Office of the Ombudsman be conducted during the regular audit of that office and that the audit be tabled with the Speaker.

Mr Duignan: On a point of clarification: My understanding is that when a report is tabled with the Speaker, then a copy of that report is made available to all members. Is that correct?

The Chair: That's normal procedure.

Mr Callahan: I'm not sure if that's what your --

The Chair: Hold it, hold it.

Mrs Marland: Could I ask Ms Jamieson to clarify what she was --

Ms Jamieson: Would you like me just to run over the accommodation I was suggesting? I have invited the auditor, when next he audits my organization, to conduct a value-for-money audit, to proceed with that. Because he'll then give me the report, as he normally does, I will undertake to table a report of that report with the Speaker in his capacity as chair of the Board of Internal Economy.

The Chair: So as I understand you, you want to do a report of the auditor's report?

Ms Jamieson: No. Let me try one more time; maybe I'm not being clear. The accommodation I'm suggesting is that the auditor, when next he audits me, as he does annually, do as well a value-for-money audit.

The Chair: Right.

Ms Jamieson: I will undertake to table that report with the Speaker in his capacity as chair of the Board of Internal Economy. If I could suggest something for the committee's consideration, perhaps it would be enough -- I don't know -- for the committee to move that it approves or accepts the accommodation suggested by the Ombudsman. Would that be clear enough?

The Chair: It might be clear enough. Let me get a handle on things here. I see a lot of individual members wish to speak, so we might as well start in appropriate rotation. Mr Callahan.

Mr Callahan: I just want to get clarification. That was my understanding. I think Mr Duignan is wrong that in fact it would be tabled with the Speaker, because anything that's tabled with the Speaker becomes a public document for all and sundry in the House and, I guess, everybody outside too. That's not what you're suggesting at all. What you're suggesting, as I understand it, is that there would be a value-for-money audit done, that you would receive it and you would file with the Speaker your report --

Ms Jamieson: No, I would file it.

Mr Callahan: You would file it with the Speaker.

Ms Jamieson: As chair of the Board of Internal Economy, so the whole board would get it.

Mr Callahan: Okay, but you're not intending then that it go beyond the board unless --

Ms Jamieson: It's my understanding that members have access to information through the board members. If the board wants to circulate it widely, it can.

Mr Callahan: All right. Maybe I can --


The Chair: Just hang on. Everybody hang on.

Mr Callahan: I just want to get further clarification. I thought that was what perhaps was being said. Certainly, I don't think it's what Mrs Marland's motion says.

The Chair: I think it's close. We can work on the wording.

Mr Callahan: Let's take the worst scenario. Let's say the Board of Internal Economy says: "No way are you going to see it. Nobody's going to see it. It's a Board of Internal Economy document. You can't see it. If you want to get it, go through the privacy and information route." The auditor is muzzled. He can't say anything about it. Am I correct? I'd like to find out whether you agree that this could be a possible scenario -- I'm not suggesting it would be, but it could be -- that it would never see the light of day.

Ms Jamieson: Mr Callahan, I can't speak to what the board might or might not do. I know on any issues I've talked to the board about or any issues that members have raised which they wanted the board to chat with me about, there certainly has been ample opportunity. I'm suggesting that this accommodation is consistent with the way the auditor and I work together now on our usual audit and it's consistent with the way I relate to the Board of Internal Economy.

Mr Callahan: In fact, that does put this committee in the position where it would have no access to that whatsoever except through the Board of Internal Economy. Is that right?

Ms Jamieson: It's my understanding that you'd go to your board member for access to the information.

The Chair: It's out of the hands of the Ombudsman. She can't give you those answers. It's up to the board, if that's the route we go.

Mr Cordiano: I say this mostly to the members of the committee, as a committee matter. Perhaps at this point in time it's most appropriate to put it in this way. I would respectfully say to the Ombudsman -- this is probably apart from what role you might play -- if you're intending to do that, then that would be a request you should make of the auditor, to have your office audited in a value-for-money audit, as you become the client of that report.

That's not the way in which this committee functions nor has it functioned that way. When this committee asks the auditor to do a value-for-money audit, it's for the express purpose of this committee to review that audit in its deliberations. This committee conducts its work that way. Whatever we do is done in camera for confidential reasons. We would respect that confidentiality by going in camera.

If that did not satisfy the requirement for confidentiality, which in your case I think would be satisfied with respect to individual cases and personal information, which we really would not have any interest in -- it's really more a question of expenditure of funds and the management of those funds and does not enter the realm of personal, confidential information. Perhaps we could deliberate on that a little further for me to understand what confidentiality requirements there are with respect to individual cases, which we really would not be interested in. What we're interested in is the expenditure of moneys and seeing that those moneys are expended efficiently.

Confidentiality for me is not really an issue in this regard. I think, as a matter for the committee to decide, it has to decide whether we should move in that direction. I would recommend that we do not do that, because it does not fall within the ambit of this committee's responsibilities and therefore sets a new precedent for this committee, which does not bode well for the independence of this committee. We're violating that basic principle for ourselves, and I don't think that follows for this committee.


The Chair: Do you want me to try to read this motion again? We've reworked it and we'll see what the committee thinks.

"That the standing committee on public accounts direct the Provincial Auditor to conduct the value-for-money audit of the Office of the Ombudsman during his regular financial audit of the Office of the Ombudsman and that this report will not be tabled with the standing committee but will be tabled with the chair of the Board of Internal Economy."

Mr Farnan: I think, included in the motion, Mr Chair, is the commitment of the Ombudsman that she will table the report with the Board of Internal Economy. I'm not sure if that's part of the independence the Ombudsman is seeking.

The Chair: Okay, we can add that. Anyway, we're getting closer.

Mr Tilson: You told us this, but perhaps you could repeat it. You're appointed by whom?

Ms Jamieson: By the Legislature.

Mr Tilson: By the Legislature. I understand your concern is that if the report were tabled with this committee, you would have concerns about that because you are answerable to the Legislature and not to this committee. Is that the rationale as to why you're concerned with the wording of Mrs Marland's motion? I think I understand the distinction. There's quite a difference between your tabling it or filing it and the auditor filing it, because then who are you answerable to? That's your issue. Am I correct? Is that what your position is?

Ms Jamieson: I think that's certainly getting close, Mr Tilson. Maybe I can answer it this way. This is a necessary piece of information. I did a survey over a year ago of members of the public to find out what they knew about my office, what they thought about the office and what they were worried about. The single issue they were most cynical and sceptical about for my office was independence from government. They said, "We're not sure we believe you're independent."

I'm asked that question every time I speak anywhere in the province. They say to me: "Well, how is it that you're independent? You get your money from the government, don't you?" I tell them my budget comes, like that of all the other officers of the Legislature, through the Board of Internal Economy that's chaired by the Speaker. So no, it doesn't come from cabinet; no, it doesn't come from Management Board; it comes from this Board of Internal Economy. That is one of the most persuasive bits of information in telling the public, guaranteeing to them, that I am independent.

It's my understanding that you've got these two bodies. You've got the public accounts committee, which is a watchdog on government spending of taxpayers' money, and the Legislature has also created the Board of Internal Economy, which watches the spending of money internal to the Legislature. Involved in that are our committees, members and the officers of the Legislature. That's the body I relate to, that's the body that looks at my estimates, that's the body that asks me questions, and that's why I'm saying this is the body to which I feel it's appropriate to table the audit. I'm happy to both request the audit and table the audit, because that will give the information to the Legislature, absolutely, as well as to me.

Mr Tilson: Do you have any problem with the Provincial Auditor, notwithstanding what you do, bringing his or her report to this committee?

Ms Jamieson: Yes, I do, because that's not consistent with the legislation that was set up creating my office or the current setup. In the future that might change, Mr Tilson.

Mr Tilson: That gets back to the very first question I asked you and Mr Peters and Mr Otterman, and that was, is there any amendment that needs to be made to either the Audit Act or the Ombudsman Act? We can make all the resolutions we want today, and tomorrow we can change them. Big deal. It's very fine to say we're going to accommodate each other, wink, wink. The fact of the matter is, what does the law say?

That's why I asked you, and I asked Mr Peters that question, either through the procedures of this committee or the House or whatever, but no one has told me that. You've referred me to section 17 or whatever it is in the act, but there doesn't seem to be any section that you've referred to or Mr Peters has referred to that defines this topic. I understand your rationale. I'm not so sure I understand anything that --

The Chair: Let's see if I can help, Mr Tilson. The way I understand it, after having reviewed the matter some months ago and reclarified it again this afternoon, this committee, in my view, has the authority to request a value-for-money audit of the Office of the Ombudsman. Having that authority, then the report of the Provincial Auditor would automatically come back to this committee, but we also have the authority to request that the report of the Provincial Auditor go to a different body, a different committee, the Board of Internal Economy, for example, as is being suggested today.

Mr Tilson: But we could change that tomorrow. We could change that question.

The Chair: How do you mean we could change that?

Mr Tilson: You referred to legislation that allows this committee -- maybe it's not legislation, maybe it's regulation, I don't know. It's section 10 that authorizes this committee to --

The Chair: It's 17, isn't it? It's 17.

Mr Tilson: It authorizes this committee to request the Provincial Auditor to do an audit.

Mr Duignan: Shall I read this section?

The Chair: I read this to the committee some months ago.

Mr Tilson: My point is, Ms Marland or someone else makes a resolution to set forward this accommodation. Tomorrow, another committee -- it could be a different committee or a different group of members of the House who are sitting on this committee, another year -- could just reverse all this.

The Chair: By unanimous consent, we can do a great number of things.

Mr Tilson: That's right and that's why I asked the question. Is it of concern to either the Ombudsman or the auditor that any piece of legislation be amended if you're of concern that section 17 challenges your independence?

Ms Jamieson: If I could answer it this way, I am not looking for an amendment to the Audit Act today and I am not looking for amendment to the Ombudsman Act today, nor am I looking to debate the intricacies of section 17, which I could. It's a pretty tortuous route that you have to go through to find section 17 and then get to an officer of the Legislature. We all know that.

I was hoping to transcend that discussion so that we don't get bogged down and we can achieve the ultimate objective, which is to get the value-for-money audit done. I'm happy to do that and I have found, I hope, an accommodation that won't offend some of the committee members' views of their role and that won't offend the principles of my job.

That's why I've put forward the accommodation I've put forward, because I don't know that the ultimate questions are going to be settled. I think the ultimate questions are going to be looked at in places like the Legislative Assembly committee. It's going to look at the whole relationship between officers and the Legislature. I don't know for the future perhaps, but what I am trying to go is find a way of getting this done without offending anyone.

Mr Farnan: I would suggest that indeed the Ombudsman has found a way. It gives us the kind of tool in order to provide the information we require. It provides a process which allows the Ombudsman to maintain the independence and integrity of her office. I think we would all endorse the view of the Ombudsman that it is of primary concern to the public and indeed to all legislators that this office must be perceived as at arm's length, independent of the government.

Now, having achieved all of this, there is nothing that mitigates against changing laws or acts that change the process, but I think what would happen this afternoon, if all parties can support this particular proposal, is that we will have become problem-solvers and yet retain the goals both of the Ombudsman's office and of ourselves as legislators. It probably has a basis in terms of setting precedents or establishing a procedure that others can look at and follow and incorporate into law, if that's the will down the road.

At this particular moment in time, I think we have an opportunity as a group of legislators to resolve what has been a thorny problem, and in a manner in which I think the goals of everyone are met, so I would endorse the committee accepting the proposal.

As Mr Cordiano has pointed out, I don't think we have to look at other, similar types of offices at this moment in time. We have an opportunity to resolve this particular one. Let's do it, and when we've done that, then perhaps we can have a more encompassing debate about process in general. But I think we've got a golden opportunity here to do something very constructive, very positive and to look upon the work of the government and the Ombudsman as partners, as well as watchdog.


Ms Haeck: Maybe my having been absent from the room for a few minutes during Ms Jamieson's presentation meant that I misunderstood the ultimate venue of the report. I have to say that while I concur with the idea of doing the value-for-money audit at the same time that the normal audit would have been done, I cannot concur with where in fact the report will be tabled, as in Ms Marland's motion.

I think this is sort of the essence of the controversy that has been going on between the Ombudsman committee and the Ombudsman's office, as well as our standing as a committee, because we are basically also an arm of the Legislature and as such I believe are entitled to receive that report. So I think this is the long-standing nub of the problem as to what our role as a committee is, what the role of the Ombudsman committee is and who's entitled to see what.

I personally don't want to get into the long legislative wrangle of who's entitled to do what, but there is this difference of opinion and as a legislator, someone who is empowered within this office to see these reports, I feel that this committee is the appropriate venue to see the auditor's report. I just think it's part and parcel of our job, as it is part and parcel of the Ombudsman committee's job, to review some of those cases denied. So that motion, as it currently stands, I will not be supporting. I cannot.

Mr Duignan: I will be supporting the motion, even though I'm not totally happy. I believe it's along the sentiments that my colleague Mr Farnan has indicated. The problem I have is that if the report goes to the Board of Internal Economy, the Board of Internal Economy may choose not to release it to the members and we can't get access to that, not even under freedom of information. That's the problem I have with it, but I will be supporting the motion.

Mr Callahan: That was a concern I had. I gather, Ms Jamieson, that you're anticipating that if this is filed with the Board of Internal Economy, it will remain with the Board of Internal Economy, that it will not become a public document.

Ms Jamieson: I don't know. The Board of Internal Economy will do with it as it sees fit, but normally it doesn't sort of publish its -- Jim might know better than I would.

Mr Callahan: Let me give you a scenario. This is totally hypothetical and I'm sure it will not happen, but let's say the auditor's report is highly critical of the Office of the Ombudsman, for financial or whatever reasons -- financial would be the major one that would concern this committee -- and it's filed with the Board of Internal Economy and the government of the day, of whatever political stripe, which I understand has the majority of members on the Board of Internal Economy, decides: "Hey, we don't want this out. We'll just keep it back." Where does the accountability come from?

You say you're concerned. I indicated earlier that I share your concern about the independence of the Ombudsman's office, but at the same time, by putting it in the hands of the Board of Internal Economy, I think you may win perceptually the battle that you're independent, but in actuality, I think it would be perceived by the public, particularly in that scenario -- I don't think that will happen, but if that did happen, that would be the bombshell that would destroy the totality of the Ombudsman's office.

Ms Jamieson: It's hard to figure out hypotheticals. During the time I have been the Ombudsman, we've done three audits. The three audits have been unqualified. There are no recommendations there. I can say that in all honesty. They've been fine audits. I've no reason to believe this one is going to be bad. I hope we'll learn something and --

Mr Callahan: I'm not suggesting it will be. Don't get me wrong. I'm not suggesting that's the case. I'm just saying that somewhere down the line, what we're doing now today for you as Ombudsman will be done as a precedent that will continue for other ombudsmen unless there's legislation that changes it. In fact, who knows what your successor -- God forbid, but it could happen.

My major concern is that this committee is a watchdog of the taxpayers' money -- as I said at the beginning, and I'm not going to repeat it -- and I think we run the risk if we do that. That's my major concern. For that reason, I'm going to vote against the motion.

Ms Jamieson: Could I just say one other thing, Mr Chair?

The Chair: Please go ahead.

Ms Jamieson: We all spend taxpayers' money, everybody: all members, all committees, all officers, I do. Legislatures try to figure out a way to make us all accountable. So they set up this committee to say, "Here, you're the watchdog on government expenditures." They set up the Board of Internal Economy to say, "You're the watchdog on Legislature expenditures, including the officers and committees." That's where the issues go, that's where the budgets go, that's where the estimates reports are and so on.

My concern is that if you say no, the officers or the Ombudsman have to come and relate solely to the public accounts committee. First of all, that's not in line with the current understanding with the board. Second, that says, "Ombudsman, you're like a ministry, you're like a deputy, and we're going to treat you that way." It seems to me that's very different than what the Legislature had in mind at the time it created these two streams, these two ways of dealing with accountability for taxpayers' dollars.

I don't know that we'll resolve that today. That's why I hope this accommodation will allow us to do the job we all want to do and not prejudge anything.

Mr Duignan: Could I have a point of clarification? Actually, the act states that you have to file the audit report with the Board of Internal Economy.

Ms Jamieson: It does not.

Mr Duignan: Are you talking about section 11 of the Ombudsman Act?

Ms Jamieson: The Ombudsman Act obliges the auditor, as I said earlier, to do an annual audit.


Mr Duignan: But section 11 of the Ombudsman Act states: "The Ombudsman shall report annually upon the affairs of the Ombudsman's Office to the Speaker of the Assembly, who shall cause the report to be laid before the assembly if it is in session or, if not, at the next session." Is that the section you're talking about?

Ms Jamieson: For the purposes of the audit, are you saying?

Mr Duignan: Yes.

Ms Jamieson: Section 11 says that the audit must be conducted annually by the Provincial Auditor.

Mr Duignan: That's section 10.

Mr Jamieson: I'm sorry, it's section 10 now; I have an old act. Section 11 requires me to table an annual report with the Speaker. What I have said is that the office has not been called upon to table its audit, but this year in my annual report I fully intend to do that, as well as tabling with the board, if you accept this proposal, the value-for-money audit.

Mr Duignan: So you would be tabling with the Speaker of the House, who will table in the assembly the report of the auditor and the value-for-money audit.

Ms Jamieson: No.

The Chair: I think I have a suggestion as to how we can resolve the difference that has now arisen.

Mr Cordiano: Before you do that, I would like to have a few comments of my own, because I don't believe this is resolvable by any compromise. I think what we're dealing with here is a fundamental question, and here is my fundamental question: Either this committee --

Mr Farnan: Mr Chair, I would certainly like to hear your suggestion.

Mr Cordiano: I'm sorry, I have the floor.

Mr Farnan: I know Mr Cordiano has views --

Mr Cordiano: Can I finish?

Mr Farnan: -- and I would like to get to them, but I would like people to be speaking now who are going to help resolve the impasse, and if you have an idea, I think the committee would want to hear it.

Mr Cordiano: But it's on the matter that was put before the committee with respect to an accommodation. I don't believe that's accomplishable.

Mr Farnan: You've told us that six times already, Mr Cordiano. What we're looking for are people with solutions rather than objections.

Mr Cordiano: Mr Chairman, you're either going to determine the speaking order or you're not. You're the Chair, so you decide it.

The Chair: Usually I reserve some time for myself when all the members have concluded. I think I'll stick with that particular policy. It's worked the best. Mr Cordiano.

Mr Cordiano: Thank you. I just want to reiterate, and again I am reiterating. This is not for the Ombudsman. It's more to do with the role of this committee, so it's not to do with us coming up against the Office of the Ombudsman in some sort of macho showdown. It's not this kind of a question. It's really the question of how this committee operates within the parameters of this Legislature and the independence of this committee, because this is fundamentally what we're trying to determine here.

Either the auditor has authority, under section 17 of the Audit Act, to conduct a special audit of any office, any agency, any crown agency, any part of the government or bodies related to the government or he does not. I think we have to determine that. I believe he does. I believe the auditor does have that authority under section 17, including the Ombudsman's office, including the Conflict of Interest Commissioner, including any other officer under the purview of the Legislative Assembly.

I'm going to give you an opportunity to respond to that, but I think that's really the fundamental question for this committee to answer. If in fact we do not believe that, then the Ombudsman is correct and we're really chasing our tails here. The Ombudsman's independence and her view that she is directly accountable to the Legislative Assembly through Internal Economy or the government itself may be upheld, in which case this committee does not have authority to do those kinds of audits, not for the Ombudsman's office, not for any other office, if they so choose to determine that that is the case.

Mr Peters: If I may address this issue for a moment, the motion as it was made and, as my understanding is, the compromise that was made, in my opinion does not muzzle my office, does not impair the independence of the Office of the Provincial Auditor, because nothing in the motion would prevent me -- if we found something terribly wrong, and I doubt whether there is, we would have to report that to Parliament. So in that regard we are not muzzled.

All we are acceding to is the authority of this committee to redirect, and there's precedent for that, the primary reporting purpose. There will be, firstly, the report on the annual audit, which would go the normal course as prescribed in the Ombudsman Act, and the report on the value-for-money will be tabled as proposed by the Ombudsman. I can give the assurance to the committee that I do not feel muzzled if we were to determine -- and the Ombudsman would be the first person to know about this. If we feel obligated that one of our findings has to be reported to this committee and to Parliament, that is a duty of my office that I cannot relinquish and therefore I will follow that particular duty.

Mr Cordiano: I understand that. I just want to respond to that. I think the point I was trying to make was that this committee then does not have any authority. You would act entirely independently, and the directions we might give you you may accede to from time to time as you see fit, that that's the interpretation we're following.

I was under the impression that this committee could, in conjunction with and in cooperation with your office, commit to these kinds of special audits under section 17 and therefore, working with the committee, you would move in that direction. It would also be my understanding that as a committee we would determine that we want these kinds of reports to be dealt with by this committee. If that's not the case, then we should determine that as a precedent for this committee as well. Perhaps that was done in the past, but all I'm saying is that I'm not prepared to do that in the future.

Mr Peters: May I speak to that point? When I say "speaking to Parliament," under the standing instructions right now, it is this committee that is the recipient of our report, so that is the technical issue.

The second particular issue -- and I may give you a little bit of comfort here -- is that there are precedents for this. I give you an example at the federal level which is occurring, where the standing committee on public accounts, for example, has decided that all matters relating to the Canadian Broadcasting Corp will be handled by the standing committee on communications and culture, even the matters that normally come before that committee. That is, for example, one precedent that might give you a little bit more comfort in this, and it is to safeguard the independence of the CBC from becoming the state radio.

We have a proposal along those lines that I'm relatively comfortable with, in as much as here we have you, as a committee, giving the authority to direct the report. It is not muzzling at all the annual audit. It is just that you have given us -- that's my office -- a special assignment to do a value-for-money audit.

Mr Cordiano: That's what we're dealing with, though, is a special audit.

Mr Peters: That's right.

Mr Cordiano: That's what we've requested the auditor to conduct under section 17, not the annual audit, not to be mistaken with the annual audit. What we're talking about is, under section 17, a special audit, which was initiated by this committee giving you direction to do that. Essentially, that's been the gist of my comments directed in that regard. I think we have to distinguish that, because we're getting a lot of misunderstanding about what it is we're dealing with.

The Chair: I'll allow the Ombudsman to make a final comment. Then I have a comment of my own and then we're going to deal with the motion.

Ms Jamieson: I am trying to work very hard, and I thought long and hard about this meeting before I came, about a way we can work together to preserve the health of the Office of the Ombudsman, that you've got a vigorous Ombudsman, that we can reassure the public that they can have trust and confidence in my office to do a job independent of government. The more you treat the office like government the less the public will trust that I'm apart from government. That's one of the fundamental truths. The more government treats the Ombudsman like government, the less it's willing to open itself to scrutiny of its actions. That's a fundamental truth of my office. I'm trying really hard to find an accommodation. I'm really looking at the committee and saying, will you work with me to find a way so the value-for-money audit can be done that will still preserve the role of the committee but also the independence of the office and the trust in the office?

I think the accommodation I've put forward accomplishes the ultimate objective. I'm not resisting the value-for-money audit. I'm saying, let's do it. I'll invite the auditor in. Let's do it. It's not being kept from the Legislature. It's going to the Legislature, but in the way I deal with the Legislature on financial issues, through the Speaker and the Board of Internal Economy.

The goal, it seems to me, is being achieved, and I'm trying really hard to see what's wrong with that accommodation, because I think it achieves it and I don't think it prejudges any of the other questions that are there. There's no question about it, there are other issues there, but I think this one doesn't call for anyone to make a final decision on the other issues.


The Chair: Just in conclusion, and recalling the debate that took place some months ago, my sympathies probably lie with the belief held by Mr Cordiano and Ms Haeck that we do in fact have the authority to ask for a special audit. I'm concerned when the only time we can get a special audit appears to be when the recipient of the audit is in agreement with such a special audit.

However, having stated my personal concern, my job as Chair is to try to come to a consensus that the committee will deal with either by vote or by deferment or by some other manner. After listening to all members of the committee, I see the committee reaching for a compromise with the Ombudsman, and the stumbling point in reaching this compromise is, what happens to the auditor's report after it's tabled with the Speaker, who is chair of the Board of Internal Economy?

I would suggest that we amend the motion whereby we suggest or instruct the Speaker that after he receives the report, he table it in the Legislature. That in itself would satisfy all of the points made by the Ombudsman and then it would satisfy the points made by the members who are very concerned that the report may in fact stay within the offices and confines of the Board of Internal Economy and never see the light of day.

The way the motion reads now is as follows:

"That the standing committee on public accounts direct the Provincial Auditor to conduct the value-for-money audit of the Office of the Ombudsman during his next regular financial audit of the Office of the Ombudsman and that this report will not be tabled with the standing committee, but the Ombudsman will table the report with the chair of the Board of Internal Economy within 30 days of receiving the report from the Provincial Auditor."

That's the way the motion reads now after consultation with the committee and the clerk. My suggestion would be to add that within a further 30 days the chair of the Board of Internal Economy table the report received in the Legislature. We'll go around.

Mrs Marland: Well, Mr Chairman, I think -- and I say this with respect to an old friend and colleague --

Mr Callahan: Is that me?

The Chair: No, you're too old, Bob.

Mrs Marland: That's the Chairman. I can't ever really remember disagreeing so strongly with you, Mr Chairman, but you see, the caveat that you're now adding defeats the whole purpose of my original motion.

To tell you the truth, sitting here I'm trying to remember, what is the average annual budget of your office?

Ms Jamieson: At my office?

Mrs Marland: Is it three and a half million or so?

The Chair: It's eight or ten.

Ms Jamieson: It's about nine and a half.

Mrs Marland: You see, the point is that as far as I'm concerned, if we really want to protect these special officers of the Legislative Assembly, which happen to include the Ombudsman, if we really want them to be apart from government, then I'm --

Mr Cordiano: Apart from everything.

Mrs Marland: Look, I didn't interrupt you, Joe, when you were speaking.

Mr Cordiano: I'm sorry. I apologize.

Mrs Marland: Of paramount importance to the Ombudsman and to every one of those offices of the assembly is the function of their office, the credibility of their office in the eyes of the public. Now the credibility of the office in the eyes of the public certainly revolves around whether or not they're wasting money. If they are wasting money, the public needs to know.

I was very impressed actually by the way Mr Peters worded it a few minutes ago, because he said that if there was something that was of major concern, or whatever his words were, he would bring that to the attention of the assembly. So either we don't have any faith in the system as it exists or we have to change it for all the officers of the assembly.

Now, if I don't have any faith in the Provincial Auditor, I can tell you, I'm in big trouble, and I think all of us are, because not one us is going to be in a position to follow the Provincial Auditor around anywhere. Are we going to start doing their job? Are we going to say, "Let's follow the Provincial Auditor into the government, into the ministries and certainly into these offices of the Legislative Assembly"? That isn't what any of us are saying, because that's absolute nonsense.

But we can't go halfway down this road to destroy the independence and the integrity of these offices that are apart from government. Therefore, if we really believe in the trust and the faith of the public to know that when they go to the Ombudsman or they go the conflict commissioner, they're not talking to somebody who is listening with the other ear to the government -- they have to know that, and the only way they can know that is if they have the assurance of the value-for-money audit conducted by the auditor.

That, I would hope, is an ironclad assurance, or else we've got problems with the auditor. If that takes place and we have his assurance that if there's a problem, we will know about it -- but if we turn around and then say that within 30 days afterwards, we file this report for the public, then we might as well file it with them in the first place for the public.

I just don't see the necessity to do that, and I see a lot of disadvantage to the people of this province if that is done. We might as well forget about their independence.

The Chair: I'm only going to make one comment, that I'm going to be quiet and I'm only going to allow one more speaker from each party. I had noted Mr Farnan and I apologize to the other members, but we have had lengthy debate.

Mr Farnan: Are you making a statement first?

The Chair: No, go ahead. I'll just hold my comments.

Mr Farnan: I believe, Mr Chair, that your motion destroys the carefully balanced compromise presented by the Ombudsman and incorporated in Mrs Marland's motion. As we've said before, this particular compromise does the two things that I think we all want to do and that the Ombudsman has agreed she endorses and supports. She wants to have this value audit take place. She wants the integrity of her office to remain intact and to be perceived as remaining intact. Very clearly, the dividing line comes to the reporting system.

Mrs Marland has incorporated the intent of the Ombudsman's compromise within her motion. Your amendment, Mr Chair, much as I admire your direction as Chairman, destroys the intent of that compromise. So I will be voting in favour of Mrs Marland's motion, voting against your amendment and asking all members of the committee to seize this opportunity for constructive progress and a reaffirmation of the independence of the role of Ombudsman.

The Chair: I appreciate the comments. It wasn't an amendment; it was a suggestion. I was trying to get some consensus in the committee to agree to. The suggestion I made was that at the end of Mrs Marland's motion, we add the words that the chair of the Board of Internal Economy, who is the Speaker, would then table the report, the special audit, with the members of the Legislature or in the Legislature within 30 days, basically those words.

I thought that would bridge the two views that we have here in the committee. Obviously it's not going to. We have had a full and thorough discussion, so I'm going to ask members to prepare themselves for a vote. Ms Haeck, we're going to vote on Mrs Marland's motion.

Mr Callahan: Do I understand that the auditor has indicated that if my hypothetical took place, he would report that matter? He wouldn't feel compelled by this not to report that matter independently?

Mr Peters: We would be muzzled.

Mr Callahan: All right, fine.


Mr Duignan: On a point, Mr Chair, very briefly. Members got a copy of a letter to the Chair dated December 8, with proposed changes to the Audit Act. Some of the concerns the members have raised here today have been addressed in the summary of some major changes to that act such as reporting requirements no longer being prescribed by the Audit Act; instead the auditor would determine what audit findings are significant enough to be reported. There are a number of other features in there as well. It was handed out yesterday, so maybe if members had a look at that particular --

The Chair: I appreciate that and I also appreciate what the auditor has stated. I just don't know what's worse: to release the report or have everybody speculate that it should have been released.

Anyway, the motion made by Mrs Marland --

Mrs MacKinnon: Mr Chairman, could you read the motion again, please?

The Chair: Yes, right away.

"That the standing committee on public accounts direct the Provincial Auditor to conduct the value-for-money audit of the Office of the Ombudsman during his next regular financial audit of the Office of the Ombudsman and that this report will not be tabled with the standing committee but the Ombudsman will table the report with the chair of the Board of Internal Economy within 30 days of receiving the report from the Provincial Auditor."

All in favour of Mrs Marland's motion?

Mrs Marland: A recorded vote.

The Chair: A recorded vote.


Duignan, Farnan, Fletcher, MacKinnon, Marland, Tilson.

The Chair: All opposed?


Callahan, Cordiano, Haeck.

The Chair: The motion is carried. Do you have any final words?

Ms Jamieson: Just to say that I've saved the best for last. I want to introduce Michael Taylor who is here with me, the new director of finance and administration from my office. He is a dynamite catch, as I've found already. Only to say also that I am very pleased that we've been able to reach an accommodation that I think will strengthen the relationship between my office and this Legislature that respects the health and independence of the office and that will still see the public get the answers it's entitled to. Thank you very much for the invitation and the meeting.

The Chair: The committee will resume its hearings tomorrow morning at 10 am in committee room --

Mr Tilson: Mr Chairman, there's a notice of motion or a motion. If you'd prefer to deal with that tomorrow morning --

The Chair: No, let's deal with it now because tomorrow we'll be short of time.

Mr Tilson: You have my only copy, Mr Chairman.

The Chair: Mr Tilson has moved, be it resolved that the Minister of Housing shall appear before the standing committee on public accounts during its consideration of the Provincial Auditor's report on non-profit housing.

Mr Tilson, would you like to explain the reason for your motion?

Mr Tilson: The reason is that there are very serious comments made in the Provincial Auditor's report concerning the government's policy of non-profit housing and the presentation of the development of the non-profit housing philosophy and I feel it's imperative that the Minister of Housing attend and discuss with the committee her thoughts on the auditor's report and that whole subject.

I realize the minister is very busy and I see from the agenda we're discussing that in March, I believe -- am I correct? -- early part of March, and it is for that reason that I wanted the committee to put that invitation to the minister so that she would have sufficient time to block off to come to this committee.

The Chair: Does she have to attend the entire day or the whole hearing, just maybe a morning or something?

Mr Tilson: No. Hopefully we could accommodate her.

The Chair: In a couple of hours. Is there consensus? All in favour? Carried. Let's extend the minister an invitation to the committee.

Mr Duignan: I wanted to make a comment before we took a vote on that.

The Chair: Everybody was nodding in the affirmative, but go ahead.

Mr Duignan: I think the question of Mr Tilson's motion should be referred for discussion to the subcommittee, which is meeting on Thursday morning, because there may be other people who, for example, our side would like to have appear at the committee as well, and maybe a list of witnesses could come as a recommendation from the subcommittee to this committee.

Mr Tilson: I have no problem if the government wishes to have other people attend. The purpose was that, realizing the busy schedule of the minister, she would be able to block off that time, or some time during the --

Mr Callahan: Why don't you give her a call?

The Chair: Anybody else?

Mr Farnan: I think, just speaking in terms of practical reality, the minister may or may not be able to attend. Obviously the minister or her delegate to appear before the committee would appear to me a more reasonable request. I think what should happen is that the subcommittee should get together, make a list and then work on it, but I do believe it would be reasonable and fair to suggest that the minister or her delegate appear before the committee.

Mr Tilson: Mr Chairman, I have no problem with this going to the subcommittee.

The Chair: Yes, it's going to have to be resolved there.

Mr Tilson: My purpose was to give her plenty of notice.

The Chair: The matter will be resolved at the subcommittee. Ms Haeck.

Ms Haeck: I'm wondering if, as a result of the motion that just passed relating to the Ombudsman, we could have maybe five minutes in camera to put forward at least one concern on behalf of the Ombudsman committee and possibly put forward another motion which may expedite getting some of the information from the auditor's report.

The Chair: I don't see any objections.

Ms Haeck: It wouldn't take very much time.

Mr Farnan: I don't see any point in pursuing this. We've decided on a process.

Ms Haeck: Let me be blunt. I was going to put forward a motion that we try to get a note in, possibly either to the Speaker, or particularly to the Speaker, about the distribution of that report to the committee, so in fact it wouldn't languish there as some things do. I understand that a lot of those things are a matter of public record, but at least to be advised as to when in fact that report was submitted.

The Chair: I'm not going to allow a debate on that. We had two hours of debate on that subject. Every conceivable alternative was put forward. Even my most reasonable alternative was blown out of the water by two of my old friends and colleagues, and I'll know better than to acknowledge them the next time around. I'm just teasing.

I have great sympathy for what you're saying, I really do, and I think you know by the comments I made just how sympathetic I am with your views on this matter, but to reopen the whole thing all over again would just lead us back --

Ms Haeck: I don't want to reopen it. I was just wondering if as a committee there could be a small request made of the BOIE to let us know when the report has been submitted.

The Chair: I'll ask the committee if there's consensus to discuss that point in camera, if you wish to do so.

Mr Cordiano: There obviously isn't, so let's not waste time.

Ms Haeck: At least you know it's out there, and I think you have a chance to follow up on it.

Mrs Marland: Do you know that the Legislative Assembly committee, which is really the committee of the Speaker, is going to be looking at where all of these reports go? It's a subject that is going to be reviewed anyway, and you have a member on the Board of Internal Economy.

The Chair: Seeing no further business, the committee is adjourned until 10 am tomorrow in room 151.

The committee adjourned at 1609.