Legislative Assembly of Ontario

CONFERENCE BUDGET

ACCOUNTING PRINCIPLES

CONTENTS

Thursday 17 June 1993

Conference budget

Accounting principles

STANDING COMMITTEE ON PUBLIC ACCOUNTS

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

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

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

Duignan, Noel (Halton North/-Nord ND)

Farnan, Mike (Cambridge ND)

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

Hayes, Pat (Essex-Kent ND)

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

*Murphy, Tim (St George-St David L)

O'Connor, Larry (Durham-York ND)

Perruzza, Anthony (Downsview ND)

Tilson, David (Dufferin-Peel PC)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Hope, Randy R. (Chatham-Kent ND) for Mr Hayes

Waters, Daniel (Muskoka-Georgian Bay/Muskoka-Baie-Georgienne ND) for Mr Duignan

Wessenger, Paul (Simcoe Centre ND) for Mr O'Connor

Wilson, Gary (Kingston and The Islands/Kingston et Les Îles ND) for Mr Farnan

Also taking part / Autres participants et participantes:

Otterman, Jim, R., Assistant Provincial Auditor

Peters, Erik, Provincial Auditor

Sciarra, John, administrative assistant to Provincial Auditor

Clerk / Greffiére: Manikel, Tannis

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

The committee met at 1014 in room 151.

CONFERENCE BUDGET

The Chair (Mr Joseph Cordiano): Would members of the public accounts committee come to order. Good morning, everyone. I see that there's a member from each of the caucuses at the very least, so we shall start our meeting.

The first item on the agenda, if everyone has a copy, is discussion of the conference budget.

Mrs Margaret Marland (Mississauga South): Are we in camera or being televised?

The Chair: We're televised. We're live. I'm sure you'll be on your best behaviour as a result, either way.

Mrs Marland: Always.

Ms Dianne Poole (Eglinton): Mr Chairman, are you inferring that Mrs Marland is sometimes not on her best behaviour?

The Chair: No, not at all. I just thought we should make that clear.

Mr Robert V. Callahan (Brampton South): Anybody from Peel is a good person, so I can vouch for Margaret.

The Chair: To get on with the budget item before us, perhaps you could take us through that, Tannis, and just give us some of the changes. There are a couple of changes or contingencies.

Clerk of the Committee (Ms Tannis Manikel): There are a couple of changes, in that when we initially did the budget, we were anticipating that the House would not be sitting. Now it's looking very confused; personally, I don't know what's going to happen. If the House should be sitting, we'll have to go outside for interpreters, so that means we'll need close to $9,000 for outside interpreters. This is something we hadn't planned on.

The other thing, on the Monday night reception, is that Mr Mancini, as the former Chair of the committee, and Mr Peters had sent a letter to the Premier's office asking him, as Minister of Intergovernmental Affairs, to host that banquet. I haven't heard anything definite yet. I have had talks with the protocol office and there is an indication that it might be prepared -- I have nothing in writing, I have nothing confirmed -- to pay for half that but wouldn't pay for the full thing. We felt we should bring this before the committee and get a decision here on how the committee was going to proceed.

Our cost will be a little higher than we had anticipated. When we went to the board in February, we said it would be $30,000. I'm waiting for a figure from broadcast and recording on how much the rental of the equipment will be, because we will have to rent some microphones. I've set it up that there would be only one microphone for every two people so we wouldn't need to rent as many. We will also have to rent one interpretation booth. I had put $1,500 in the budget. I think it will be more that.

Right now, including my cost estimate for the Monday night banquet, it comes to a total of $34,800, so we're over by almost $5,000. This would be reduced if the government did pay for part of the Monday night reception.

Mrs Marland: That's the figure without adding the $9,000 if the House is sitting and we need to have outside interpreters?

Clerk of the Committee: That is including the $9,000 for interpreters. Also, I expect there will probably be about another $2,000 for rental of equipment. I haven't got that figure; maybe I'm a little high there. I budgeted $1,500, which is in this figure. At one point Bill Somerville told me it would be $5,000 to $6,000, and then we worked on something and found out we could use some of the equipment from here. So that figure will go down, and he hasn't got me the new figure yet.

Mrs Marland: How many delegates will require interpretation? The question is, can we manage without it?

Clerk of the Committee: We do have a delegation coming from Quebec -- there are two members and the clerk -- and some of the members from Ottawa are francophone; actually, two or three of them.

The Chair: I'd just say on that point that because it is a nationwide conference, including all provinces, in my opinion, we would definitely have to have translation services.

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Mrs Marland: For three people we're going to spend $9,000?

The Chair: No, not three people. There are others who are officials from those provinces. I don't have the numbers, but regardless of that, there are a number of other people who are attending who perhaps would speak both languages. You may have a different belief, but I think we still are, nationally anyway, a bilingual country, and we have to look at that as a national conference. In that regard, we would not break with tradition by not having translation services.

Ms Poole: Just on that point, before I go to the one I had originally intended to make, I think the other factor that hasn't been taken into account is the fact that we may want to use some of the French transcripts afterwards for distribution to the various provinces where they would require French translation. The market will actually be far broader than just a handful of people. But I certainly support your comment, Mr Chair, that as a national conference, I don't see how we can make an issue by saying we're going to refuse to have any French translation.

The issue I wanted to raise related to the fact that we are in times of economic restraint. At the same time, this is a national conference and it's Ontario's turn to host it. We certainly can't negate our obligations as the host province for this year, and I do believe we have to have a banquet or some similar arrangement. But I wondered if perhaps the clerk could update us on a conversation we had in our steering committee where we asked if we could keep the costs down and take certain measures such as, for instance, instead of having paid entertainment, using some of the community groups, such as not having an open bar, things such as that, to keep the cost as reasonable as possible, given the fact that we have a responsibility to host people from across this province at the auditors and public accounts committees conference. Perhaps the clerk could update us on some of those activities.

The Chair: Before I ask Tannis to do that, I just wanted to raise one point in regard to the banquet dinner. We had this conversation the other day and I'm not sure if we fully put that forward to the committee. Traditionally, my understanding of it is that the government has covered the cost of that banquet because it is a state dinner, an official dinner that the government would host. Perhaps Tannis could shed some more light on that with regard to what the response has been back from protocol office, which would handle that normally.

Clerk of the Committee: Yes, this has been traditionally done by the province, and in other provinces as well this is the way it's been handled, although obviously I can't speak to any financing there and where the money came from. But when the conference was here 10 years ago, it was very definitely hosted by the government, by the province.

My indication from the protocol office is that it no longer has any type of budget that would include this type of conference and that it has no area to get the funding from. The best they can suggest is that they would be willing to go as far as paying for half of the banquet but not the entire banquet.

The Chair: That raises a significant question. First of all, there's a whole question of precedent being set there. Additionally, if that is the case, then we would have to pick up that cost as a committee and inevitably ask the Board of Internal Economy for approval for that additional cost. I just raise it because I think it's something we should discuss.

Mr Callahan: We may be setting a precedent, but I think we're also living in a precedent three or four years. There are people out there who are having difficulties themselves in a whole host of things. In fact, in my community, this is a minor incident in comparison to people who are probably not able to pay their rent.

The Chair: That's not really the issue, if I may, with all due respect.

Mr Callahan: I think, Mr Chair, it is.

The Chair: The issue is, who is going to pay for this banquet? We've already decided to have it. It's not a question of whether we have it or not.

Mr Callahan: Perhaps I wasn't here when you discussed having it, but I think that in a time of restraint we shouldn't have one.

The Chair: That's not the issue we're discussing today. I think it's important to note that we've gone through a whole series of meetings and discussions with respect to how this conference was put together. I believe everyone had copies of various items that we brought forward in other meetings. I don't really want to entertain that debate once again, because that will take us away from what's on the agenda.

Mr Callahan: At the time we discussed this, did we anticipate that this was going to be paid for by the government? Can I have an answer to that?

The Chair: Are you asking me or Tannis? There was an expectation that the government would because it had been done before and other provinces have done the same thing.

Mr Callahan: My second question is, is this within our budget now? Have we got approval of the Board of Internal Economy?

Clerk of the Committee: A budget was approved by the committee and has been forwarded to the Board of Internal Economy. As you may be aware, none of the committee budgets have been considered by the Board of Internal Economy.

Mr Callahan: So we do have within that budget the funds to put on this banquet?

Clerk of the Committee: When that budget was prepared, that cost was not included in the budget.

Mr Callahan: That's right, so we didn't anticipate having to cover that. So we have to go back to the Board of Internal Economy for a supplementary budget, and that's why, Mr Chair, even though that decision has been made --

Clerk of the Committee: They haven't passed our first one yet.

Mr Callahan: They haven't passed our first budget and I have grave concerns that they'll even look at a supplementary budget in this regard. I may be anticipating their decision, but if that's the case, we're getting pretty close to the wire and if the clerk hasn't already advised these people of our preliminary agenda, I think it would be more embarrassing to us as a public accounts committee to say, "Yes, there will be a state dinner," and then find that we can't pay.

The Chair: I would just say this to that line of thinking that we could question the whole conference in that regard. I think really the point was, we had a preliminary agenda several months ago that was put out for everyone.

Mr Callahan: I know.

The Chair: The Board of Internal Economy has not deliberated on any committee budgets, so we're premature in thinking what the reaction would be about any of this. It may be as a result of other considerations of the board; I don't really know. I just know that the Board of Internal Economy is bogged down at the present time between House leaders. So at some point they will have to consider these. Whether it's retroactively or not, that's a matter that the board will have to decide. But certainly they will have to make those considerations and decisions as they're approached.

Mr Callahan: Can I ask the clerk what is the outside limit we can go before we have to either advise them or, if we've already advised them in a preliminary fashion, to say it's not going to happen? Not the conference, but the additional items.

Clerk of the Committee: I think I may have missed something, but I'll state this. In February, before we started this, Mr Mancini and I went to the board asking for approval in principal before we started anything. The board was aware that we were doing this conference and that we would be presenting a budget. They approved up to a maximum of $30,000 for the conference. So anything beyond that, we would have to go back to the board for.

Mr Callahan: Okay, but what I'm getting at is, you said that the amount for this dinner was not expected to be within that budget, so we need a supplementary budget. All I want to know is, if we're notifying people from other provinces about the agenda for that conference, including this banquet, when is the last date that we can tell them that it's not being held if we don't get the money? I don't want to sound negative, but --

The Chair: I think that's really extreme.

Mr Callahan: It may be.

The Chair: Do we really have to go that step? If we're going to start to do these kinds of things, then there may have to be a debate around here about a variety of things. So I think if you start piecemealing and you pass judgement decisions about what is important and what isn't, I think all members have to engage in that debate in each of the committees where all of these matters are being entertained at any time.

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I think what we have to say to ourselves is, "This has been done in the past and if it's inappropriate, then let's have a wide-ranging debate." We've done that over the last several months from time to time with regard to what was acceptable in the agenda and what wasn't. I don't want to keep revisiting that question because we get into endless debate about what is appropriate and what isn't. I think we've already decided that we were going to have the agenda as contained now, and part of that was to include a banquet. So I really don't want to go on and on about --

Mr Callahan: Well, I'm not, Mr Chair. I'm just trying to find out when the last --

The Chair: One final point from Mr Callahan and then I'll move to Ms Poole, who was on the list, and then --

Mrs Marland: Can I just raise a point of order? I hate to do it in this way but, Joe, you know, on a personal basis, It's hard for me to say this to you, but I think that as Chairmen we have to try to stay out of the debate. For somebody like me it's very, very difficult because I want to get into all the discussions on everything, and I'm learning, as Chairman, that I can't do that. What I'm hearing right now is that you're drawn into this debate with Bob. I think as committee members, people have to be able to say what they want to say on any subject and, with respect, I think you have to --

The Chair: I can appreciate what you're saying, but the point I'm trying to make -- and you have to be very careful about what it is that I have suggested. I've suggested that there have been numerous occasions, in the interests of being expedient -- and we do have a limited time to deal with this matter because we have a whole host of other matters to deal with. I'm dealing with the process question.

Whether a person feels that way about a particular subject is of no interest to me in my capacity as Chair, but we have debated this matter on several occasions. In the interests of expediting this process, which can lead to endless debate, in my opinion we've had ample amounts of time to deal with the substance of issues of whether or not there --

Mrs Marland: In fairness to Bob, a lot of the discussion has been done in the subcommittee. That's all I wanted to say.

The Chair: I think there were several occasions when the full committee discussed this, and in the short periods of time that we do have, we try to expedite matters because time is limited around here. That's all I'm saying. I don't want to continue to rehash old territory about what's in the agenda or not, so this is really one of those substantive questions.

All we're trying to deal with today is, can the committee accept the fact that we're going to have to pick up some of the bill for this banquet? Really, it's a question of do we do that or do we go back to the Board of Internal Economy and ask for additional funds, or ask that the Speaker decide whether or not this is a banquet that should be held? Because there's protocol involved; let's not forget that. I'm just trying to point that out.

I don't think we should go back and say, "Well, should we have this banquet, because we're not prepared to" --

Mr Callahan: I'm not suggesting that at all. All I'm trying to find out is, to save us -- well, look, Mr Chair. I'm entitled to speak.

The Chair: I'm not trying to stop your right to.

Mr Callahan: If I'm offending you, I'm sorry, but the fact is that it will be an embarrassment to us if we can't. That's all I'm saying. I want to know from the clerk what is the end line where we'd have to tell these people. That's all I'm saying. I'm not debating the merits of whether it's a good idea or a bad idea, but I do have some concerns that if we can't do it and we don't notify these people, we're going to look rather foolish. That's the only point. I have nothing further to say on it.

The Chair: Mr Callahan, you're entitled to your view, and I've given you now at least 10 minutes to give your view. I don't think I've been unfair in dealing with the amount of time that I've granted you. Of course you're entitled to your view. I'm going to move on to Ms Poole, because she has a point to make as well.

Ms Poole: I think Mr Callahan has raised a valid concern in that we don't want to cause embarrassment for the province. But if you go to the bottom line, the taxpayer doesn't care whether the government pays for it or the committee pays for it. To them, we're all the same. The important thing is that Ontario has sent out an agenda which includes a banquet which traditionally has been done by every province that has ever held this conference. We've already notified the member provinces of this. We have very little time left. We're only three weeks away from the conference. I think it would be quite embarrassing at this stage to go to the various members and say: "Well, I'm sorry. We know what tradition has been, but now at the last minute we're telling you that you have to pay for it yourself."

Mr Chair, I think both the points you have made and that Mr Callahan has made are quite valid. We do not want to get into a situation where the Board of Internal Economy refuses to pass our budget, which is several thousand more than they originally targeted for us. So what I would propose is that a representative from each party talk to our House leader, explain the dilemma and see if our three House leaders will agree that when it goes to the Board of Internal Economy, they will support a motion of the committee that our budget be expanded.

As I mentioned earlier, when we had our steering committee meeting, there was concern raised by all three parties about cost, and we've already made a number of suggestions that would reduce the banquet by a substantial amount as far as the final cost. So I think we can trust our clerk to really keep it at a minimal cost level, as little as we can and still maintain the protocol and our obligations as host.

Could I make a motion, then, that one representative from each party approach our respective House leaders and see if we can secure that agreement? That would at least give an opportunity for next Thursday to ratify any decision and put in a supplementary budget, and by then we may know too the final costs on the microphones and what is being supplied by the Legislative Assembly, which may reduce the cost. Could I make that motion?

The Chair: If you'd like to make the motion.

Ms Poole: Yes, I would like to make that motion. Please don't make me repeat it. You got it?

The Chair: Mr Hope, you had a --

Mr Randy R. Hope (Chatham-Kent): Well, unless Margaret had something.

Mrs Marland: I don't mind at all, Mr Chair. I just want to speak to the motion. I had something that I wanted to say.

Mr Hope: So did I, so I'm just going to blend it in with the motion.

Mrs Marland: Can I just get some facts straight? The Board of Internal Economy provisionally approved a budget of $30,000 back in February. When did the letter from the Chair go to the Premier's office asking if they were going to host this?

Clerk of the Committee: I'm sorry. I didn't bring the letter, but it went out in February as well.

Mrs Marland: In February some time.

Clerk of the Committee: Yes.

Mrs Marland: March, April, May -- three and a half months ago, and we haven't had any response at all?

Clerk of the Committee: In the last month I've had some inquiries from the office of protocol, and at this point in time I've never received anything in writing.

Mrs Marland: Just so I'm not confused, the office of protocol comes under the Premier's office?

Clerk of the Committee: Yes.

Mrs Marland: All right. So we wrote to the Premier's office three and a half months ago, and this committee does not have a reply. Now, one thing I do agree with Ms Poole on is that the taxpayers don't care whether this money comes out of the Board of Internal Economy or the Premier's office; the taxpayers pay for this. I agree with her. But I can assure you that I am not going to be voting to spend money as a committee member if the Premier isn't willing to approve that money, and I don't agree with asking the House leaders to go to the board because of the tradition with who hosts these kinds of national conferences.

I agree that when it's our turn to host a national conference, it's an obligation on this province, but I can assure you that it's an obligation on the Premier and the government of this province as much as me as an individual representative in this Legislature. I am not the government and I am not going to vote in favour of additional expenditures when the Premier won't make that kind of commitment, because I'm not going to be in a position as a committee member where I have voted in favour of spending this money and the Premier's office wouldn't back me up. I don't want that responsibility, and I really feel that if we're already looking at $34,000 without knowing -- is it $34,000 if we pay for the whole banquet, Tannis?

Clerk of the Committee: Yes.

Mrs Marland: Okay. Then we may have another $9,000 because of translation if the House is sitting.

Ms Poole: No. That's all included.

The Chair: No, that's part of the $34,000. An additional $2,000 would be required, if I recall correctly, Tannis, on top of that? Yes.

Mrs Marland: All right, so $36,000 would include the total cost of the banquet and the translators.

The Chair: Yes.

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Mrs Marland: Well, that doesn't add up. If we asked for $30,000 without the translators and we were told the translators could cost $9,000, it doesn't add up.

The Chair: Can you go over that again, Tannis, so that we can be clear as to what the facts are?

Clerk of the Committee: When I was initially preparing figures, I was going by a lot of guessing. We at that point didn't have a hotel; we didn't know the cost. So my estimate on what it's going to cost us for the meals and such has come down. Also, I had put $15,000 in the initial budget for the cost of interpretation, thinking that we may have to get one or possibly two interpreters in addition to our own staff. So there was some money in the initial budget.

Mr Hope: Before you go on, do you have a copy of this budget?

Clerk of the Committee: I'm sorry. I didn't bring copies of the budget to be passed by the committee.

Mr Hope: Somebody's telling me $30,000 and what's in the $30,000 has been approved. There are a lot of questions I have, and I'm just waiting to hear -- Margaret's brought up some of the stuff and I'm listening, but it would be nice, because I've been hunting for paperwork; I'm not a regular part of this committee, and before I make a determination I'd like to have some paperwork in front of me.

Mrs Marland: Why don't we deal with this at the end of our meeting and go on with the options?

The Chair: We did go through the whole thing --

Mr Hope: I respect that, Joe. All I'm asked now is to make a decision, because now I've heard we're $6,000 short in overall costs, and I would like to --

The Chair: If there's agreement --

Mr Hope: Well, let the clerk continue.

The Chair: -- we will have a copy of the budget handed out to everyone. We'll wait till the clerk can make that available.

Clerk of the Committee: Go on with the other and do this at the end. Save that for last.

The Chair: Okay, you want to deal with this matter later and you can have copies made available for everyone?

Mr Hope: I just want to continue listening. I was just saying I have nothing in front of me.

The Chair: I can appreciate that.

Mrs Marland: I would just move that we table this for the next portion of this meeting and deal with the other item on our agenda. In fairness to committee members who are going to be asked to vote on this, I think everybody needs that information in front of them. I have the figures in my head and I also have seen the budget when we talked about it before.

The Chair: Would it be acceptable, then, if the subcommittee were to deal with this? That's just simply a suggestion the clerk is making, but I don't know how you would like me to proceed with this. I can do it any way you like. We could deal with this matter this morning and continue on with the full committee debating this or discussing it, or we can have the subcommittee review it once again with those particular items for consideration on the subcommittee, whatever way the committee wants me to move forward.

Mr Hope: I say we move it to the subcommittee.

The Chair: The subcommittee is meeting after this meeting.

Mrs Marland: Are you going to allow a subcommittee to approve a budget?

Mr Hope: No. He's asking them to examine what's going on here.

The Chair: Yes, we can come back to the next public accounts meeting and then submit the final for approval of the committee.

Mrs Marland: You know, maybe what would really help is if I could respectfully ask the government members to get a response to the request that went to the Premier's office three and a half months ago, because that's pivotal to what our decision has to be today. Whether or not they're going to pay for the banquet is very important.

Mr Hope: Whoever pays for the banquet, it still comes out of general funds. You just made the comment earlier that no matter who's paying for it, it's still paid for by the taxpayers.

The Chair: Order, please. I'm going to go to Mrs Poole and then Mr Hope. I'll take people in order. Mrs Poole -- Ms Poole; pardon me.

Ms Poole: I'm certainly agreeable to sending it to the steering committee because we do have a representative, one from each caucus, to discuss it, but one thing I want to get a sense of is, if the Premier's office refuses to pay for this, our options are to either cancel the banquet or to try to find some alternative way of dealing with it. I just would like a sense from the committee members here, and a very quick sense: Are you proposing that we cancel the banquet? What's the bottom line here? What are we working with?

The Chair: Well, let's have discussion.

Mr Daniel Waters (Muskoka-Georgian Bay): From my point of view -- and I am just somebody who's been subbed in on the committee today --

The Chair: I apologize. I should have recognized you, Mr Waters. Sorry.

Mr Waters: What I would like to do is have a bit of time to examine this. Mr Farnan will no longer be on the committee, so we will have some new membership, and there are some of us here today who are just here subbing in and we would like to have some time to examine this.

Personally, I'm supportive of the banquet from what I've heard, but I think I need some time to talk, as Ms Marland has said, to the Premier's office to find out why, in three and a half months, the Premier's office hasn't replied in a positive or a negative fashion. I think that the committee deserves a reply, and I will go to the Premier's office and find that out.

If it isn't going to affect the outcome, then if we can leave it for the week and come back and deal with it number one next week, I think that would be the best way of handling it.

Ms Poole: I'm agreeable to that, Mr Chair, rather than trying to handle this now.

The Chair: That's fine. I'm open to any suggestion that the committee would like entertained, so if that's the committee's wish, then we'll leave it. Is there agreement on that? Can I just ask all members, is there a consensus on that?

Mrs Marland: When we have people here today who have never discussed this before and they're subbed in today, in fairness I think that's the only solution.

The Chair: That's fine. In terms of the clerk, I think we need some resolution of this matter by possibly -- next week is the last, at least foreseeable, date that we have scheduled for us to meet. So if we could somewhat expedite this by next week and deal with it as an item to be discussed next week, then I would say that would be speaking to the interests of the process question and speaking in the interests of having some resolutions, because we do have some time lines we do have to meet. So I would just ask for your indulgence on that.

ACCOUNTING PRINCIPLES

The Chair: The second item on the agenda, is the accountability issue that was raised by the Provincial Auditor. For members who are new on the committee, I'm not sure what members have available to them in terms of information. Do you have some documentation?

Mr Hope: Is this the report you're dealing with?

Ms Poole: There was a package sent.

Mr Hope: There's a package, yes. Okay.

Ms Poole: There's a substantial package which I don't know if you have.

Mr Hope: I've had a chance to read my colleague's, but I don't have one myself. I was looking for the budget we were just discussing.

The Chair: I have a copy of the June 17 letter that was sent to the Chair of the committee from the Treasurer.

Mr Callahan: That's the '92 one.

The Chair: Yes, well, that's just leading up to it. Now you showed me a document, Ray. There's a whole package here with --

Mr Erik Peters: Mr Chairman, may I help out? I want to make some opening comments, and maybe in those opening comments I can refer you to the documents which I consider relevant.

The Chair: Okay. Why don't you take us through that. The auditor will take us through the important documents and raise the important issues that you need to know dealing with this matter.

Mr Peters: Thank you very much. I'm sort of excited that after the lengthy discussion about the dinner, you can now feast on accountability.

There is quite a bunch of paper. Unfortunately, none of the pages are numbered, so I have to give you a little bit of time to find your spot. But the letter that I would like to refer you to is somewhere towards the end of the material. It's a letter that I wrote on February 4, 1993, to Remo Mancini, the then Chair of this committee. It's entitled The Audit Act. It's towards the end.

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Ms Poole: February 4, 1993? Is that it?

Mr Peters: That's the letter. Specifically, I'd like to refer to appendix A, which is about --

Ms Poole: Mr Chair, if I might suggest, although these will be technically filed with Hansard, just so that it's clearly on the record, perhaps the auditor could give us a précis of this document, because he's very clearly outlined in it what the problems are and how he proposes to deal with them.

Mr Peters: That's what I'm actually preparing to do. I just wanted you to find it in this wad of paper.

Ms Poole: Oh. I thought we were supposed to silently read it. Okay.

Mr Peters: Well, I saw you start it and I respect that you're having to take some time on it, but if I may then start with my presentation, because it highlights some of the things.

I'd like you to focus on this letter. My overall intent is based on the premise that the Legislative Assembly will be better served if the Audit Act is amended after the legislated accountability framework is put in place. The principal targets of that accountability framework are essentially the recipients of transfer payments. At the moment, some 58% -- that's better than half -- of the province's expenditures are already practically outside the control of the Legislative Assembly, simply because there's no effective legislated accountability framework for transfer payments.

The number that you normally hear is that 70% are transfer payments, and I'm saying 58%. I just want to explain that very briefly. Some 12% of these transfer payments are actually payments to individuals. They are payments either made under the Family Benefits Act or they are payments to physicians directly. So they are payments to individuals, and I've excluded those because I'm not sure whether the Legislative Assembly really wants to get into the details of regulating individuals who receive transfer payments.

But the 58% that I'm referring to are payments to institutions that are constituted in one form or another: have boards of directors, have management, have all the good things in place that should be able to provide accountability. So we're not talking about adding administrative overhead or anything like that; we are talking about organizations that have administration at the moment. I'm talking about expenditures in the $30-billion range, which is subject to only some or very little control by ministries.

There are three reasons for which we are advocating the legislated accountability framework. One, and I believe of foremost interest to this committee, would be that the Legislative Assembly and the ministers need better legislated or regulatory tools to establish more effective accountability for the economy, efficiency and effectiveness of programs.

One case in point has actually occurred already before the committee. It was the one that kicked me off in this direction. When this committee met in January with the representatives of the Workers' Compensation Board, a question was raised as to whether the Workers' Compensation Board was aware of the Management Board directive under which they had to obtain cabinet approval for the establishment of a subsidiary.

That is a directive that applied definitely to the Workers' Compensation Board, the way it was worded. It was read into the record at that particular time. The answer from the Workers' Compensation Board representative was that they were not aware. Subsequent to that, we had some discussion as to what the recourse now is: What can the Legislative Assembly do about this? What can the minister do about this? What can I do about it? In fact, what can the Management Board do about it? They just didn't know.

The point here was that the answer is "nothing," because it is just a directive issued under the Management Board of Cabinet Act and there are no administrative sanctions specified of how to deal now with a management that ignored a Management Board directive.

That was a case in point. So the first reason is really that that's why I'm going after the word "legislated," because once it's legislated, then it becomes a tool of the Legislative Assembly, of the minister and of the various functions that can take action on it.

Notwithstanding that, I should make two comments. Firstly, I'm definitely not proposing any punitive sanctions of any kind. What I'm really proposing are administrative sanctions of some sort. In other words, some fear was expressed to me when we discussed this point as to whether it meant that the deputy minister who doesn't do this can go to jail or something like that. There's nothing of that nature. It is strictly a matter of administrative procedure and of administrative punishment that could take place.

The ultimate is, for example, that in the private sector there are normally two sanctions. If you breach regulation, it is sanctions against the individuals who breach. The other one, if it is an organizational problem, then ultimately in the private sector you have receivership or trusteeship or some such role, way at the end of the tunnel. But those are both administrative matters that can be taken into consideration.

The reason, too, is that periodic audits are not the tools required for ministry management to ensure that value for money is achieved. Audits can only provide periodic, reasonable assurance. Ministry management and recipients of transfer payments need a framework to hold them accountable for the economy, efficiency and operational effectiveness of their actions. Once that framework is in place, periodic audits would then become much more efficient and effective.

The third reason is really that the central agencies need more effective tools to hold ministries accountable for government-wide responsibilities, very simple ones; for example, to keep proper books of account and to have systems, practices and procedures in place to ensure that value for money is obtained.

In the document that I referred to, February 4, we have very deliberately added an appendix A to that document in which we outlined, just for reference, not necessarily as a model, but just to take a look-see as to how the federal government has developed an accountability framework. Essentially, this is taken from part XII of the Financial Administration Act, which deals with crown corporations.

Mr Callahan: Is that the same as the Audit Act? Is that the federal counterpart?

Mr Peters: No. For the federal they have an Auditor General Act, which would be similar to the Audit Act. This is actually built into the central agency. This is administered by the federal Treasury Board and it deals with the accountability that they expect of recipients of public funds when they are incorporated as a crown corporation.

Mr Callahan: So you're proposing a single act such as this to cover all these agencies? You're not talking about each individual act that's set up for one of these agencies to be amended to include this; you're talking about one single act such as this.

Mr Peters: Not necessarily; I'm bringing it up. That would be a decision of the committee, I would think. I don't want to prejudice you, because, yes, the thought had crossed our minds that omnibus legislation may be not the better way, but may be one way to go.

There was also other legislation before where consideration may be given to build it into specific legislation. One example may very well be Bill 17, which is right now setting up, for example, four crown corporations, and to take a look at the accountability provisions in that act as to: Now that these corporations are being carved out of the consolidated revenue fund, how would the Legislative Assembly like to ensure accountability of these crown corporations? There's quite an extensive accountability framework for anybody who is subject to funding out of the consolidated revenue fund, but what is put into parallel in setting up the corporations under Bill 17?

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I'm still concerned that even for the consolidated revenue funds for organizations, schedule 1, 2 and 3 agencies, the accountability framework right now may not have enough teeth in it because it's simply not legislated. It is merely bureaucrats directing other bureaucrats. It's not the Legislative Assembly making regulations, essentially.

Just very quickly, I wanted to go through some of the key features of this appendix A, merely as the features. The first one deals with management responsibilities. It outlines for them that the planning, and there's no difference there other than -- this is of course legislated, but in the Management Board of Cabinet Act there are similar provisions, but they are issued by way of directives.

The second part is after the planning. "Management Responsibilities" has several interesting features that I'd like to bring to your attention. One is that they are charged with maintaining "books and records, financial and management control and information systems and management practices," and then it goes into the qualities of those in a broad way. But I should point out to you that I mention that because, once in place, it certainly eases the audit responsibility. Not only does it give tools to the Legislative Assembly and management, but it also makes auditing easier because standards must have been established by management as to the way it wants to implement this particular section of the act so you don't have to free-form criteria or standards.

The specific provisions are that those systems, procedures and everything should safeguard the assets of the entity. They should give assurances that the transactions "comply with legislation, regulations, bylaws and directives."

The third very important one is that "financial, human and physical resources are managed economically and efficiently and operations are carried out effectively."

As far as the audit is concerned, it also makes the provision for internal audit, particularly where the size of the entity warrants that internal audit be put in.

Mr Callahan: Could I just ask you a question about the interpretation of that? I know it's an appendix, but if we're going to be looking at it as a possible example, when you talk about, "To determine if required systems and practices provide reasonable assurance that assets are protected and resources are managed," would that cover a situation where a crown corporation, let's say, purchased a large number of assets and because they didn't fit in with the decor of the building, it sort of just stored them away in a warehouse? Would that be the type of thing that you could look at?

Mr Peters: Yes. That would be because it deals with managing resources with due regard for economy and efficiency.

Mr Callahan: Very good. I've got a motion, Madam Chair, which I'm going to introduce, a notice of motion anyway. Perhaps I can do it in the context of this discussion. I think it has some particularity --

The Vice-Chair (Ms Dianne Poole): What I was going to suggest, Mr Callahan, is that perhaps the auditor can complete his presentation --

Mr Callahan: Sure. Oh, yes.

The Vice-Chair: -- and at the end of his presentation, if you would just jot down questions in the meantime without going back and forth. We want to make sure you get everything necessary before the committee before we go to questions.

Mr Peters: Thank you very much, Madam Chair. Actually, the appointment, then, not stated in here is that the auditor is the federal Auditor General, in this particular case. It would be the Provincial Auditor. Then the framework spells out the content of the auditor's report and it makes provision for what is called a "special examination." There's currently, in Bill 17, for example, a provision for reviews and there could be a parallel created here.

It also, though, very clearly spells out the limits of the value-for-money review, and that might be of interest to you. The examiner, reviewer or auditor -- and it's close to the bottom of the page -- is "prevented from expressing any opinion on the merits of the objects" of the organization, because that's the legislation, "on the corporate objectives, on any business or policy decision of the governing body of the entity or the government," because the act would force the auditor into a position of second-guessing the board or directors or, in fact, the Legislative Assembly and that is not within the purview of the auditor. He has to stay away from it.

The last part of the framework is that it would spell out the duties and responsibilities of the audit committee of a board. In fact, it makes an audit committee mandatory. On the next page of the appendix A you'll see that it refers to the annual report by the board and outlines the content of this report. This would be the financial statements audited, the auditor's report on it, whether corporate objectives were met, quantitative information, performance information relative to the objectives and anything else required by legislation or by the minister responsible for the particular activity.

Taking this into consideration -- and I'm very close to the end of my presentation, because what I want to point out to you is potentially a four-pronged action plan to establish this accountability framework -- the first one, and this is why I brought it on the agenda here, is to obtain approval in principle from you, from the public accounts committee, to establish a workable legislative accountability framework before amendments are made to the Audit Act. Basically, because this committee deals with the Audit Act as its principal piece of legislation, I would just like to obtain, if I can, your approval in principle to work on the accountability framework first, and then amend the Audit Act.

The second prong of our action plan is to work with the central agencies to develop an effective and practical accountability framework, especially for transfer payments. In this regard, in the latest material you have received there, there's already a very good and sound step taken by the secretariat of the Management Board in spelling out new mandatory requirements for an accountability framework. They can form a very good basis from which to go forward and develop such an accountability framework.

Mr Callahan: Appendix B?

Mr Peters: No, it's not my appendix B. That is later on in your material, if I can guide you to that right now. It is a document that looks somewhat like this revised document. I so much wish we had numbered pages; I'd just say, "This is on page 28."

The Vice-Chair: For members' information, it's called Administration of Agencies and it has "Draft Revision" crossed out at the top and says, "Approved by cabinet, May 1992."

Mr Peters: Yes, that's it.

The Vice-Chair: There are two documents which look very similar but this one's called Administration of Agencies, 6-3.

Mr Peters: It goes through a whole raft. It establishes a memorandum of understanding. It deals with corporate plans. It deals with auditing arrangement, external audit and rotation of the private sector auditors, if that's required. It deals with internal audits, staffing, salary levels, sunset reviews and a whole raft of issues too lengthy for me to go through. I want to point out in my overview that that work has been done and it's good work. When I refer to the fact of working with central agencies, that's essentially what I have in mind: to work together on establishing those.

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In fact, I would also like you to refer to two items that are not in there, but I'll gladly provide those after. Management Board of Cabinet does have the power of making regulations -- it has just not availed itself of that at this particular point in time -- in section 6. Specifically, they can make regulations for any purpose necessary for the efficient administration of the public service. It's right in the act, so it may not be a requirement of making new legislation. It may be also, and we can explore that further, a method of just --

Mr Waters: Do it through regs.

Mr Peters: Yes, using existing regulations. This is further echoed in the Treasury Board Act, where, for example, the Treasury Board can also make regulations "respecting the accounting for, and the collection, the management and administration of, public money." That's subsection 10(a) of the Treasury Board Act.

So the tools seem to be there; the mechanisms seem to be in place. It may be a matter of just proceeding as to how they can best be used for this particular purpose. That is the second prong of the action plan.

The third prong would be to work with the ministries individually to develop practical performance indicators and criteria for performance evaluation. How does a ministry know it's doing well, is really the fundamental question.

In the beginning, and this struck me in January, we had a number of meetings here where we had ministries before the committee and ultimately the ministries said: "Look, the auditor used criteria that he invented. They were not ours." I consider that an unhealthy situation. The criteria have to be developed by the ministry. We can judge whether they are adequate, that's fair, but the responsibility to develop the criteria should be theirs.

The fourth prong is to work together with the internal audit function in the ministries to develop audit services which are results- and value-for-money-oriented which ensure that controls are built into financial and operational systems, practices and procedures on a timely and practical basis and which ensure that the ministries and the taxpayers, ultimately, get the biggest bang for the audit buck. Overall, audit services need to be more effectively designed to assist in ensuring that revenue and expenditures are properly managed and controlled.

As you can see from the four-pronged action plan, if I can persuade you to approve this approach in principle, it really means a cooperative approach between the legislators, the management of the ministries and the audit function to work together to establish a sound accountability framework. That ends my comments on the accountability framework.

Mr Tim Murphy (St George-St David): I like the four-pronged action plan you've outlined. I have some questions related to what you called practical performance indicators in terms of dealing with individual ministries.

One of the concerns I have about the way governments operate is the degree to which their structure is often not set up so that they are accountable to the public, the people they serve, but that the accountability structures are slightly different; there's no measuring the success of the outcomes of whatever it is they're doing as a group. I'm wondering to what degree you see that as a process of having ministry officials at various levels going as far as identifying the goals their activity is meant to achieve -- I suppose I mean that in a broader sense -- and then what mechanisms you would see that would test how well those goals are achieved. If you think about Education, obviously one of the theories behind testing in an education context is that you test the success of the system in delivering on education. I'm sure there are ways in other ministries. Each of them has goals, and often, they don't test how well they deliver what they're delivering.

When you think about, in the broad sense, the welfare system, I suppose you could identify its goal as being improving the lot of those people to whom that money is directed. I'm not sure at the end of the day that, subject to them actually receiving the money, the lot is changed very much of the people. In other words, the percentage of the poor in our population over a long period of time hasn't changed significantly.

I realize that's a fairly broad-brush approach to the goals of a ministry or a certain service. I'm wondering how broadly or tightly you'd start to define those practical performance indicators and how you envision the tests, in some cases, for those goals being outlined and being done.

Mr Peters: In the broader sense, this normally follows a five-part procedure. As you know, every organization that comes forward with a budget to the Legislative Assembly outlines its objective as to what it likes to achieve. The first step is to translate those objectives into those which are quantifiable and those which are not; there are some that are only qualitatively assessable. After that is done, it is to determine from those which can be quantified, actually those which can be measured -- it's state of the art; you may not want to measure, where the measuring itself takes an incredible amount of administrative effort and cost, but for those where you can measure the performance -- that the performance is measured and reported and that management evaluates these based on the report and takes corrective action. Definitely, the intent is really to be results-oriented and output-oriented: "What are we achieving?"

Currently, what worries me is that in many government departments, simply because there is no real determination of the bottom line, the accountability framework really replaces a bottom line. You don't need to perform and develop a profit, but you should perform within this framework and you should know whether you're doing well.

For example, we have measured for many times the quality of our education by the number of school buildings we built. That was because it was easy and measurable: "We spent so many bucks educating kids, and the average class size is down to this or that, whatever." That is really, in a way, not results-oriented, so we would be looking, in this performance development, for outputs of the education. That would be just a step.

Mr Murphy: If I can follow up, that's my concern. The key, the first step, is identifying what goals are really the proper goals. I think you're quite right in education. How much money we have spent on building schools is one measure. I don't think that's a very effective measure of how good an education you're providing the children. So I see that as being a major battleground: assisting ministries in identifying what the actual goals are. I'm wondering how you see that working in practice.

Mr Peters: In practice, as far as the legislated accountability framework is concerned, it's only that they have as part of their day-to-day responsibilities to obtain value for money, to make sure they use or manage their financial, human and physical resources with due regard for economy and efficiency and that they are carrying out their operations effectively. It's the carrying out of the operations effectively which is the -- there are ministries producing statistics that would fill this room in about a month. In fact, this point of working together with them is really trying to find out, "Which of those do you need in order to achieve the results you're intending to achieve?" That's where the work is going to be done.

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The other one is the number. I've been in organizations where, once you start this process, all of a sudden you find that they want the deputy minister to monitor literally something like 2,500 performance indicators a month. Then they wonder why the administration is going out of its mind and why they are adding staff and all this sort of thing. The other part is to say, "If you really want to know if you're achieving what you want to do, which of, say, the 10 most meaningful can you measure, and which ones should you measure?" That's part of the other approach.

We had that happen here. We had, for example, Community and Social Services tells us that because there are so many recipients -- their number has swelled from 600,000 to 1.2 million recipients of welfare: "Never mind the statistics. What we are worried about is, the person comes to the door, they need help, they get help." It's that sort of workload that we have to take into consideration too, and we have to see what they can achieve as things go on.

Mr Hope: I'd just like to clarify something. When the comment was made around social services, "Get them help right away," it was to try to control what the auditor recommended about CPP and other benefits that are out there, that are allowed to recipients, to work with them to access those other programs. That's what the deputy was trying to express, that we're working with them to look at what you have expressed in the auditor's report about trying to fix the mechanism. That's what the deputy was trying to get across, not exactly "Just give them money"; we were trying to look at the whole thing.

Mr Peters: He's looking at the whole thing, but if you recall, the point I'm referring to is that he said he needed about 450 more people in order to merely follow up whether the payments were achieving the desired effect.

Mr Hope: It's just that sometimes they use Hansard for quotes you make, and I think it's appropriate just to correct the record.

Mr Peters: Thank you very much for that.

Mr Robert Frankford (Scarborough East): I can see real benefits from the auditor being, how shall I say, a critical evaluator of non-fiscal statistics.

You mentioned one or two things that interest me and annoy me. One in particular is, in education, the dropout rate. This is a favourite topic of commentators, that our high school dropout rate supposedly is the worst in the world. I believe there's an inconsistent methodology there. I believe it would be very helpful to us as legislators, to the world at large, to know exactly what is meant by it. Just using a figure, sometimes you see 30%; recently I think Statscan changed its methodology and it's now 18%, and the Scarborough Board of Education did its own estimate, which it said is 5%. I don't believe the differences are that pronounced, that each one is performing all that differently.

I think it would be very useful to have as much critical guidance on this as possible. I think things like this could perhaps be very usefully performed by the auditor. Do you have some comments on that?

Mr Peters: I've really two comments on it. I certainly agree with you. The key point is really that the ministry, which sets the curriculum, which is responsible for administering all these transfer payments, sets what its expectations or criteria are for what it considers a well-managed school.

The other part is that it requires a certain amount of expertise. From the audit perspective, we would certainly not expect financial auditors to have the expertise. Part of this value-for-money approach to auditing is that we would bring experts to bear, to help out in particular projects. We would not strictly look at these things from a financial point of view but also use expert services for other areas that are quantified but not necessarily financial.

Mr Frankford: Okay. I'll pass.

Ms Poole: I did want to point out one thing. When the auditor has talked about management responsibilities and providing an annual corporate plan to the minister which would include the entity's objects and objectives for the next five years and that type of thing, I wanted to bring one thing to your attention. Back, I'd say it was probably four years ago, when I was on public accounts, we had a presentation -- I believe Ray could correct me, but I think it was from the St Lawrence Parks Commission. What we found was that they had actually changed their objectives, which had originally been mandated for them, to include a social component. They were going to provide employment to the area and they had added that, but their objectives never stated that.

I was wondering if one of the things you might want to consider is that they would have to annually review their objectives and ensure that the particular agency or commission is actually meeting and abiding by those objectives. It was just something I wanted to bring to your attention for future information.

Mr Peters: That is covered in the next point, "Provide notice of any substantial changes to business activities inconsistent with the latest plan provided." That would be the intent.

Ms Poole: I noticed that, but I would like to see it fairly firmly that there has to be an annual review, because in their opinion they hadn't changed anything. They saw nothing wrong with it. We said, "Well, actually, providing employment to the area, we don't see anything wrong with it, but, I'm sorry, it's not within your mandate." That's, I guess, the point with the annual review, to really ensure that things don't slide by, because they might not think it's "business activities inconsistent."

Mr Peters: Right, I agree with you totally. The intent is probably poor wording, but it is "Provide an annual corporate plan to the minister," so they have to do it every year. But every year they roll out five years in the future, just like they do annually, so they would have to do this. We have found this in Ontario. We have found, for example, organizations that went what I call cherry-picking. They had seven objectives and they said, "These five are fine, we'll do those, but the other two we don't like, so we don't do those," and they have to be accountable for that as well. That's intended.

Ms Poole: That's good. You've obviously taken that into account. I was reading it from the five-year capital budgets and I was thinking that the review would just ensure that they actually did specifically review what their mandate was on an annual basis as opposed to sliding it in.

Mr Chair, there were just two other brief points I wanted to make. First, I certainly would like this committee to give the auditor the authority to deal with the framework first, prior to going to the Audit Act amendments, and if you require a motion to that effect, I would be pleased to put it on the floor.

The second thing, which is more in the nature of a question for the auditor, is that you've mentioned you want to work with the agencies to develop the framework, which I think is very positive, as opposed to going from the top down, to find out some of the problems from the agencies and work it out before you get to your recommendations.

Would you see a place for the public accounts committee in perhaps our summer session to have some of these transfer agencies in or these commissions to talk to us about what they see are some of the problems and some of the solutions or is this something you would quietly want to happen over the next six months, where you'd be dealing with them directly?

Mr Peters: There may be some benefit in having some. I notice from the schedule that is attached to the material that I believe you received, it deals with matters under consideration. For example, the Toronto General Hospital, it's a bit open-ended. It says that on November 24 a letter was sent to the minister requesting that the minister and deputy appear before the committee to discuss the special audit. That may be, for example, one opportunity, but I guess the answer to your question, albeit long, is yes.

Ms Poole: So there is some potential that this summer that might be a good opportunity?

Mr Peters: Yes.

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Ms Poole: Rather than giving you time, for instance, to work with the various agencies before public accounts assisted with the matter?

Mr Peters: Some, yes. There are two ways of doing it. Most likely with this hospital, you may want to have them back and have their perspective on it. You definitely will have the workers' compensation report also to deal with, which is a different agency, not funded. But how one wants to deal with that particular situation is another opportunity. Then in the report itself, there are some crown agencies that were dealt with in the report, and it may be just build it in with the report rather than asking agencies that have not gone through the experience of an audit. That's the only caveat.

Mr Waters: As I said earlier on, I'm just subbing in today, so some of my questions may have been asked before and answered. I'm concerned, I guess, with this auditing, and in some of the statements that you've made you're saying that, although you don't want value for money, somebody has to keep an eye on the store. What I'm concerned about is what might seem to be of no or little value in Toronto -- a program that's out in a remote area of the province in that area could be a very important program -- and how as an auditor or as a ministry do you deal with that, because I get some concern.

You brought up schools for one. I can tell you in my area, which is Muskoka-Georgian Bay, we need more schools because we bought into the government plan of the day, bigger is better, and we now have children being removed from their communities, being dragged out of their communities at three and a half because in order to get ahead you have to be educated. They're being shown by a system that their community has no value. After all, you had to leave it at three and a half.

Mrs Marland: What do you mean at three and a half?

Mr Waters: That's junior kindergarten. You leave your community at three and a half now to go to school in Muskoka. You look at the situation. I'll give you one: Port Carling and Bala. Bigger is better. What did they do? They built the school in between the two communities. Neither of those communities has an opportunity to have its own school.

Mrs Marland: You're not suggesting that we start building schools in this province in every little village and hamlet?

Mr Waters: Yes, I am. I'm thinking that we have to go back to neighbourhood schools and community schools, because the social cost otherwise is so great, and we're seeing it right now. As a rural person I feel very strongly about this. City people don't seem to have the same reaction to it at all, obviously. That's an example of why I get concerned about how auditing is done and I guess some of my concern of what you're talking about here, about changing the system, because I think the system should be looking at the value to the community in which the system is serving.

The Chair: I'm sorry. Is there a point of order, Mrs Marland?

Mrs Marland: No, just put me down. I can hardly wait to speak.

Mr Peters: May I respond, though, first?

On this particular point, actually, there are two very important features of your question from my perspective. The first one is that it is a policy issue and policy is out of bounds for me. I cannot deal with policy. I would be criticizing, really, the Minister of Education and Training, effectively, because it's his role to set the policy as to how he wants to administer education in the province. So I could not cover that particular piece.

Mr Waters: You can't interfere with that.

Mr Peters: No, I cannot interfere with that at all.

The other point, though, is important: Again, how do we know we deliver education well? And there we would look to the ministry, essentially, to raise these points, and it would develop the criteria for the development.

Mr Waters: On the same thing, you would be able to comment on transportation costs and that? Because we now have students who at this present time in Muskoka are going up to two hours each way to school. Now take that three-and-a-half or five-year-old kid, put him on the bus for two to three hours, up to four hours a day, and tell me he's getting a quality education.

That's the test to me, because the Education Act says children must be educated to the best of their ability. To the best of their ability, you put four hours on a bus in a day, you're not getting the same education as the student who walks a block. I guess that's what my concern is. Who sets the test criteria?

Mr Peters: Essentially, the minister and the ministry, because that's a policy issue. I can get into this to the effect that they are not effectively scheduling the buses. For example, it should take them 10 minutes to get from A to B and because of scheduling problems they make the kids sit in the bus for two hours -- I can comment on that, but I cannot comment if they sit on the bus for two hours because of a policy.

Mr Waters: So if the policy is big schools in larger communities, and that's been the policy of the Liberals and of the Conservatives historically to do away with community-based schooling, then you can't comment on that?

Mr Peters: No, that would be totally outside my purview.

Mr Callahan: I don't think you should even have to comment on that.

Mr Waters: But going the other way then, the other concern I have is that in Toronto -- and I'm going to pick on Comsoc for a little bit here -- where you have a number of agencies and there are enough people in each agency that they can be self-supporting or free-standing within the system -- but then you go to a place like Muskoka where we have the same number, but each one has its own administration and all of that, you can't comment on that either because it becomes an efficiency problem then.

Mr Peters: That is an overall governmental efficiency and again, the establishment of each office is governed by the ministry and the minister in that regard. I don't want to hide behind anything on this, but service delivery by government is certainly going to be an issue.

Mr Callahan: It's policy too.

Mr Peters: Yes. Where it's policy I can't touch it, but where it's service delivery, economic use of resources of the government --

Mr Waters: Yes, I guess that's what I'm trying to get at. Exactly where is the dividing line or what is the test or whatever to where you step over the line, or what's your half of the pie?

Mr Peters: The test is really within the ministry, where does the ministry put the line. In other words, I cannot and do not as auditor determine where that line rests, but the ministry determines where its policy line is.

Mr Waters: I'm starting to understand now.

Mr Peters: Certainly there will be some debate but you are quite right, this is a grey area and subject to quite extensive negotiation.

Mr Waters: And when you get into small communities there are things set up historically that were very well intentioned. But because they're so far removed, you get a ministry like Comsoc that is so vast, and this is something that's way out here on the end and then it's removed once again. The accountability of some of those leaves a lot to be desired, I think, at times in very remote parts of the province. I guess that's what I was trying to get at, who they're accountable to and on what side.

Mr Peters: I hope I've answered your questions.

Mrs Marland: Is it my turn now?

Mr Waters: Margaret, you don't like schools.

Mrs Marland: First of all, to place on the record without going into a lot of detail, I totally support the direction that the auditor is discussing with us this morning and I agree with him.

Now, I cannot let the comments of the member for Muskoka-Haliburton, or Muskoka-Parry Sound in any case -- Mr Waters, what is the name of your riding? I want to get this on the record. Is it Muskoka-Parry Sound?

Mr Waters: No. Georgian Bay.

Mrs Marland: Muskoka-Georgian Bay. When he talks about value for money versus value for the community, he opens up a very interesting question because he is giving an example of the fact that there is not a school in every little community in his riding, nor is there a school in every little community in this province. What you're saying really begs the question. Would you want a school in Santa's Village in Bracebridge? What you're saying is so -- for someone I respect as being an intelligent member, I can't believe what you've just said this morning. I can hardly wait to give a copy of the Hansard from your comments this morning to whoever is running against you in your riding in the next election. I may even give it to the Liberal candidate as well as the Conservative candidate.

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Mr Callahan: What's that? Are you contributing to my campaign again?

Mrs Marland: You know what I want to tell you, Dan? Through you, Mr Chairman, to the member, I would like the member to know that school busing in urban areas can amount to an hour or an hour and a half on a bus, so don't think that your children are badly done by because they have to spend an hour or an hour and a half getting to their schools on buses. We have examples in the region of Peel, which is the largest public school board in Canada, where by necessity we bus children sometimes from the south of Mississauga to the north of Brampton or the reverse, depending where the school accommodation is available, because the school accommodation crisis in a growth area like the region of Peel is unbelievable.

So let me just say something to you. You say we're pulling children out of their communities at three and a half because we don't have a little school in their village for them to walk to. There's a choice here. I have to ask you if, when you're arguing for this, what you're really arguing for is in favour of going back to the old one-room school concept. That's what we used to have in this province, with all the so-called, at that time, disadvantages. There were people in this province who didn't want a one-room school house in every village and every small community.

Just one final shot that I can't resist: As someone who owns a 100-year-old cottage that's 1,000 square feet on which I pay $3,000 in taxes a year, I cannot even send my children to the schools in Muskoka. When there was a strike where we live in Mississauga, we could not send our children to the schools in Muskoka, although we pay full school taxes.

So if we're looking at value for money under the auditor's jurisdiction -- and I agree totally with him that right now you and I are discussing something that's policy and not under his jurisdiction --

Mr Waters: I was wondering when we were going to get to that.

The Chair: I'm being very lenient.

Mrs Marland: But I say with respect that if we are looking at value for money -- we can't look at exclusivity, which is really to come under the discussion of the tax commission, but isn't it interesting that here you're saying, "Well, there should be a school in every community"? I would ask the people in your riding, personally, if they would want to have the burden of the cost of that kind of system? The people in your riding, frankly, wouldn't have the schools they have if it wasn't for the non-residential taxpayers who pay 80% of the tax load to provide the excellent schools that are in that riding today as it is.

The Chair: Point of order, Mr Callahan.

Mr Callahan: I think the auditor has asked us for a specific motion, and we're getting off the topic, with all due respect. We've only got about 10 minutes left, and I think it's important that we give the auditor that direction.

Maybe you could repeat for those who were not here what you're looking for, the direction you're looking for. I gather it's that you want -- I wrote them down someplace and I can't find them -- approval in principle to establish a framework of accountability before the Audit Act is amended. Is that correct?

Mr Peters: That's right.

Mr Callahan: And work with central agencies to develop a -- I can't read my own handwriting.

The Chair: Perhaps the auditor could review or summarize those.

Mr Callahan: Yes, and maybe what we could do is put it into the form of a motion, and let's deal with it. Is that all right?

The Chair: Sure, we can do that. I think the point of this today, if I just may, just to help with the discussion and where it's going to lead to, was to order this for some time in the future, perhaps in our hearings at some later date to deal with some of these other items.

Mr Callahan: That wasn't the impression. I think you weren't here when he -- and also with reference to his letter that he sent to Floyd Laughren, I guess.

The Chair: No, I understand there's further work to be done by the auditor with the clerk.

Mr Callahan: Yes, he wants a motion now to allow him to do this because the Treasurer --

The Chair: I understand, so if you want to put that motion, we can --

Mr Callahan: Maybe the auditor could do it because he's got the wording properly, then I will say I moved it and the clerk can copy it down and read it back and let's vote on it, because I think that's a precedent really to -- and getting that done before the Audit Act is amended itself because after that it might be not a good idea or it wouldn't be as effective.

Mr Peters: Or we know the verdict better. That's what I wanted --

Mr Callahan: So can you just read it out for the clerk?

Mr Peters: The first one was to obtain approval in principle from the public accounts committee to establish a workable legislated accountability framework before any amendments are made to the Audit Act. That is the first one.

Mrs Marland: I'll move that.

Mr Peters: That would be the PAC motion. It's up to you whether you want to build the other steps that I have in mind. The action that I take, based on your approval in principle, would then be to work with the central agencies to develop an effective accountability framework and practical accountability framework, especially for transfer payments.

The Chair: Can I just interrupt for a moment, please? When you're completely finished you can give it to Tannis.

Mr Callahan: The auditor has it in writing.

The Chair: Okay, why don't we repeat the first one so that we can get it down on paper and then Tannis could record that. Repeat it slowly.

Mr Peters: The motion would be to approve in principle that a workable legislated accountability framework be established before any amendments are made to the Audit Act.

The Chair: That the public accounts committee approve, that's what you're asking for.

Mr Peters: Yes, that's right.

The Chair: Just bear with us until we get this straightened out and then we'll repeat the motion.

Mr Peters: And the other points are just for your understanding as to what action plan I propose. Once you have put it in motion through the principle, that's what I propose to do.

Mr Callahan: So what you've moved is sufficient, then. Perhaps we could vote on that, Mr Chair.

The Chair: I'm just waiting for the final motion.

Mr Murphy: Just a point of clarification: The action plan that you've outlined, that is in essence part of your development of the accountability framework.

Mr Peters: That's right.

Mr Murphy: So that what we're approving in principle is your moving in essence on that four-pronged action plan.

Mr Peters: Right. At this point I'm in your hands because I'm not sure whether you as a committee want me to take an active role in developing that. Right now I've used very neutral wording in terms of "that the framework be established." But if the committee wishes me to take an active role, then we can build that into the motion.

The Chair: Could I just clarify something in the motion? Perhaps you could read it and then we'll clarify it.

Clerk of the Committee: Mrs Marland moves that the public accounts committee give approval in principle for a workable accountability framework to be established before any amendments are made to the Audit Act.

Mrs Marland: Could I add that the auditor be invited to be involved in establishing that framework, because obviously he's the one who knows how to do it?

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Clerk of the Committee: My question was going to be, who would do this accountability framework? It's not clear in the motion.

The Chair: Yes, that's what we were going to clarify.

Mrs Marland: Obviously we would have to involve the auditor. I don't know who else you would suggest.

The Chair: Could we just get from the auditor, Mr Peters, what you had in your notes?

Mr Peters: Yes. Could we build in at the front that the committee resolve to approve that the Provincial Auditor pursue the establishment of a workable legislated accountability framework before any amendments are made to the Audit Act?

The Chair: Yes. So it refers to the Provincial Auditor and I think we could just put that in.

Clerk of the Committee: I'm just trying to figure out what would go in.

The Chair: Okay, that the public accounts committee give approval in principle for the Provincial Auditor to establish a workable accountability framework.

Mr Peters: To pursue the establishment of it.

The Chair: Right, the establishment of a workable accountability framework.

Mr Peters: Yes, and if you want to say "by the central agencies."

The Chair: Is that sufficient or is there anything else you would like us to add? Just bear with us on this -- a little patience -- so that we can get this right.

Mr Peters: Jim is making the point that the action has to be taken, really, by the Management Board or the treasury board. That's the central agencies.

The Chair: How would you like us to word that, then, more specifically? Because as it's worded now, that the committee give approval in principle to the Provincial Auditor to pursue the establishment of a workable accountability framework --

Mr Peters: By the central agencies.

The Chair: Okay, so you want that added there, "by the central agencies."

Mr Peters: Yes, definitely, because they have to do it. I can't establish it.

Mr Hope: What's the power of authority? Do we have the power of authority, as a committee, to pursue that?

Mr Callahan: Oh, yes.

Mr Hope: I see you're saying, "Oh, yes." I just asked for clarification. Do we have the power of authority?

Mr Callahan: It's probably the only committee that has the power of authority.

Mr Hope: Oh, okay.

The Chair: What we're doing, in a sense, is allowing the auditor to pursue this course of action. It's giving him the opportunity to do that or the authority to pursue this course of action. It really then depends on, I believe, treasury board and Management Board to comply with that, if they deem it appropriate, and they'll deal with you on that basis.

I think Tannis is just clarifying that and getting it in one complete motion now and then we'll read it back into the record and I'm sure it'll be clear to everyone.

Mr Hope: Before the committee rises, there is a point I'd like to clear up that I think is important around this conference stuff.

The Chair: Okay, if committee likes, after we deal with this motion, we have an additional five minutes.

Mr Callahan: I have a notice of motion I'd like to put on the record before 12 o'clock.

Mrs Marland: Randy's been trying to speak for some time.

The Chair: We'll deal with Mr Hope's point and then the notice of motion from Mr Callahan, if I can order the next five or seven minutes on that basis. We now have that motion completed, so would you like to read that into the record?

Clerk of the Committee: Mrs Marland moves that the public accounts committee give approval in principle to the Provincial Auditor pursuing the establishment of a workable accountability framework --

Mr Peters: Legislated.

Clerk of the Committee: Legislated? Okay, let's try it again.

Mrs Marland moves that the public accounts committee give approval in principle to the Provincial Auditor pursuing the establishment of a workable legislated accountability framework by the central agencies to be established before any amendments are made to the Audit Act.

The Chair: Is that completed? Yes. That was moved by Mrs Marland. All in favour? Unanimous.

Mrs Marland: Did you note that it's unanimous, Mr Chairman?

The Chair: Yes, the vote is unanimous.

Interjections.

The Chair: Order, please. Could I ask for your indulgence because we're running out of time. Mr Hope has a point that he wants to raise and then we're going to move to Mr Callahan's notice of motion.

Mr Hope: As we entered into this discussion after 10 o'clock, I've had an opportunity to review the letter that was sent to the Premier about the national conference that's being held. The specific part of that letter only asks that the Premier be the guest speaker. The second paragraph states that it's just the host. It doesn't make any reference to funding it or whatever. The only request of the Premier in that whole letter is that he be the guest speaker, or other ministers be the speaker.

I guess we were arguing at the beginning about the letter that was sent to the Premier. I've had an opportunity to review the letter, and I say that if the committee is looking for direction from the Premier to support it, then you should be putting that specifically in the letter.

Mrs Marland: I would have assumed it was in the letter.

Mr Hope: I guess, to make all clarity, the letter could maybe be read into the record.

The Chair: Can I just ask the clerk to clarify that? Would you like to comment? I think the letter was addressed from the Chair at the time.

Clerk of the Committee: This is a letter addressed to the Honourable Bob Rae, Premier of Ontario and Minister of Intergovernmental Affairs.

"The Canadian Council of Public Accounts Committees and the Canadian Conference of Legislative Auditors have held annual conferences for the past 14 and 20 years respectively. This year's conferences will be held in Toronto at the Hotel Inter-Continental on July 4-7.

"It has been customary for the government of the host province to provide a reception and dinner for the delegates of both conferences and their spouses or guests. Total attendance is usually in the range of 150-200.

"As host chairs for the 1993 conferences, we would be very pleased if the government of Ontario would sponsor a similar reception and dinner on Monday, July 5, 1993. It has also been the practice for the Premier or a senior minister of the host province to be a guest speaker at this social function. We would be honoured if this tradition could be continued.

"Your early consideration of this matter would be much appreciated."

Signed by Remo Mancini and Erik Peters.

The Chair: Before I allow further debate, we're not going to have enough time to sufficiently deal with this if we allow everyone to -- we may have one minute for each caucus. Mr Hope, would you like to comment?

Mr Hope: All I would do then is ask, because it's his sponsor, if we're asking for direct funding from the government or from the Board of Internal Economy, then let's put that forward, that the endorsement of the Premier endorse the Board of Internal Economy, because the Premier doesn't have that budget. It's the Board of Internal Economy, and all that will get lost in a paper trail because it will be referred to another ministry.

The Chair: If I may clarify, because I'm going to not allow further debate on this because of the --

Mr Hope: I just want clarity so that we can really deal with this issue.

The Chair: Just let me make one point of clarification. The protocol office in Intergovernmental Affairs was dealing with this matter. Informally, we were notified that they would not be picking up the full costs of the dinner. That's how we got to this point. So it was requested that the government sponsor this through the office of protocol, which is customarily how it's handled. Here's where we are today. The response was -- I think the debate was clear this morning.

I'm going to move on to Mr Callahan's notice of motion.

Mr Callahan: If I could just serve notice of motion: I move that the auditor be authorized, under section 17 of the Audit Act, to carry out a special audit to investigate large quantities of assets purchased but not used and presently being warehoused by Ontario Hydro, and further, the recent renovations and replacement of furniture at the General Division courthouse at 361 University Avenue, Toronto, including the costs thereof, and when such renovations were last carried out.

I serve notice of motion on that. I will elaborate on it on the next occasion, but I understand that there's something like half a million dollars worth of furniture that was purchased by Hydro. They decided it didn't fit the interior decorator's mode of thinking and it's now stored in a warehouse someplace and they keep moving it around. I think it's very important, particularly in light of the cost of our hydro rates, that we have Hydro here under the terms of that audit at some point to find out exactly whether that's the case and where it is, and also with reference to the courthouse. Those are expenditures that we can hardly afford if they're --

The Chair: Thank you, Mr Callahan. I'm sorry; I'm going to cut off debate there and call for the adjournment of the committee because the bells are ringing.

The subcommittee will be meeting immediately following the votes in the House.

Mr Waters: Which government member?

The Chair: That's a good question. If I just may ask, is one of the government representatives --

Clerk of the Committee: Mr Duignan will be there.

The Chair: Thank you. I adjourn the public accounts committee for this morning.

The committee adjourned at 1200.