Legislative Assembly of Ontario

HOUSING AUDITS

LEA CARAGATA

PEGGY BIRNBERG

SUPPORTIVE HOUSING COALITION OF METROPOLITAN TORONTO

CONTENTS

Thursday 9 June 1994

Housing audits

Lea Caragata

Peggy Birnberg

Supportive Housing Coalition of Metropolitan Toronto

John Loewen, president

Anthony McEvenue, treasurer

David White, executive director

STANDING COMMITTEE ON PUBLIC ACCOUNTS

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

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

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

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

*Crozier, Bruce (Essex South)

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

*Marchese, Rosario (Fort York ND)

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

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

Owens, Stephen (Scarborough Centre ND)

Perruzza, Anthony (Downsview ND)

*Tilson, David (Dufferin-Peel PC)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Cooper, Mike (Kitchener-Wilmot ND) for Mr Owens

Stockwell, Chris (Etobicoke West/-Ouest PC) for Mrs Marland

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

Also taking part / Autres participants et participantes:

Peters, Erik, Provincial Auditor

Clerk / Greffier: Decker, Todd

Staff / Personnel: Anderson, Anne, research officer, Legislative Research Service

The committee met at 0918 in room 151.

HOUSING AUDITS

The Vice-Chair (Ms Dianne Poole): Good morning. I'd like to open this session of the public accounts committee, as we continue to look at issues concerning Houselink Community Homes and the Supportive Housing Coalition. Today I welcome three witnesses before our committee. We are going to take them individually and in the order set out on the agenda. We'll have approximately 20 minutes for each witness. Committee members may not need the full 20 minutes for each witness, but we'll try to divide that time evenly.

LEA CARAGATA

The Vice-Chair: First I call Lea Caragata, former executive director, Houselink Community Homes. Ms Caragata, welcome. I understand that have a brief statement to open with.

Ms Lea Caragata: I am Lea Caragata, a much-maligned former executive director of Houselink Community Homes. I'd like to begin by thanking you for the opportunity to be here, after my repeated requests. I do appreciate the opportunity.

I was the executive director of Houselink Community Homes from 1979 until I left in 1990. I left voluntarily. My departure was unrelated to the matters before you. I was not happy with a board that was not very skilled or committed, and I guess I'd like to make the point that, in contrast to some of the allegations in the Ministry of Health audit, it was not the ex-psychiatric patient members of that board whom I refer to in that context.

I had been off on a six-month maternity leave. I had determined while I was on that leave that life as a parent was not very compatible with the 50- and 60-hour workweeks that I'd been working while I was at Houselink and had advised the board before I left on maternity leave that I was likely to leave. So I got back and did just that.

If there's to be any humour in all of this, and quite frankly I haven't found very much so far, it's that I would somehow be accused of waste and vague allegations of personal gain. Any of you who might wish to do so would be welcome to look at my house. It's not stuffed with furniture somehow stolen from Houselink. It's never been professionally landscaped.

While I was at Houselink I drove two agendas, and I use the word "drove" advisedly. I was concerned with delivering the very best quality, no-excuse service to clients. Clients were to be served in ways which enhanced their dignity and self-respect rather than staff's. That was our very first operating premise. Secondly, we didn't waste money. We did anything but waste money. The fact that we had a budget of X amount didn't mean, unlike almost every other organization funded by either the Ministry of Health or the Ministry of Housing, that we spent that much. It amazes me that aspersions can be cast on my conduct as a manager because I saved $2.4 million in public money.

The "mismanagement," "ineptness," "waste," "gross misuse of public funds" -- I'm quoting from statements made to the press -- that I've been accused of really centre on a $2.4-million surplus which Houselink had accrued. That money was a surplus. It was not in some private slush fund. It was not hidden from the government in any way. It was there. I have copies of audited financial statements for 1988 and 1989, if anybody wishes to see them, that we regularly submitted, as we were required to do, to the Ministry of Health. The funds were discussed on a regular basis, and I'm being hung to dry because the Ministry of Health didn't reclaim those dollars.

Those funds were there. They were there and they were reported on regularly. Those were saved dollars. Those weren't wasted dollars. They were there. Those funds arose because we consistently underspent our approved budgets from the Ministry of Health. I didn't waste or mismanage Houselink funds or misrepresent our financial situation to any funder, ever.

We did not follow the very common practice of making sure that we spent every dime of an approved budget whether we needed to or not. That is the practice of most funded agencies. I'd suggest, perhaps too daringly, that it's probably your own practices with respect to your legislative or constituency budgets. It's the practice of most government departments. All you'd have to do is look at fiscal year-end spending to see that that's when everybody spends every dime they've been allocated.

Houselink didn't do that. We spent what we needed to spend to run a good program. The rest we put aside in treasury bills, you name it -- reasonable, safe things that are investments approved for non-profit corporations operating with public funds. The money was not wasted, the money was not in any way hidden from view, and we certainly were not running a wasteful program.

As the auditors have stated to this committee, the Ministry of Health audit was driven by a number of anonymous telephone callers. The callers made numerous allegations about my deriving personal gain. I believe one of the auditors who has come before you has actually advised you that people were suggesting that I was stealing Houselink property, that they had to do title searches of Houselink's houses. I don't know how many of you have ever bought a house, but do you think your lawyer wouldn't kind of notice if you decided to switch at the last moment the name that you're registering it in?

So the audits were driven by anonymous telephone calls. In fact, at one point during the Health audit, the auditor told me that he recognized the voice of a former employee and told me about the allegations that were being made. He also indicated that he hadn't found evidence to support those allegations. I think there's every evidence confirmed in the people you've heard from so far to support that.

Mrs Margaret Marland (Mississauga South): I'm sorry to interrupt you. You said they were driven by what? You dropped your voice.

Ms Caragata: Anonymous telephone calls.

Mrs Marland: Okay.

Ms Caragata: Numerous anonymous telephone calls.

I left Houselink's employ in 1990, as I described. I had never received a copy of this audit. Yesterday, in trying to get a copy of the draft audit, I was told that it was a confidential document and that I was not entitled to receive it.

All of this has happened without very much regard for Houselink's real reputation, for its reputation as an innovative deliverer of services to people nobody else wanted to serve -- to chronic ex-psychiatric patients, to people who were homeless -- and doing that in a highly cost-effective way.

We built housing for them, we used existing units where we could get them: houses, apartments, whatever, in non-profit co-ops, in Cityhome units, in market rentals. In a very innovative way, we had clients pay the rent directly to the landlord so that they had control of the units, so that these weren't your kind of standard group homes where, as soon as people get a little bit of stability, they're forced to move out. We were in the business of developing long-term supportive housing for a client group that nobody else wanted to serve. I think we did that in a highly effective way.

That kind of highly effective way was not a style that wasted any public money. I suggest that you might compare, should you be so interested, Houselink's cost per client with that of any other similar organization the Ministry of Health funds. Our costs per client were very low.

When I left in 1990, we were supporting in the order of over 200 people with 17 full-time staff. You compare that to standard group homes, where you're supporting 10 people with eight or 10 full-time staff. This was a highly cost-effective organization. This was not some organization that was spending big, where the staff approved whatever salaries they might desire to approve for themselves. This audit and this process have been fuelled by some anonymous telephone calls that got taken seriously by an auditor.

We were not a bureaucratic organization. We tripled in size between 1986 and 1990. I certainly admit that elaborate accounting systems were not our first priority. We did record, however, all our expenditures and our revenues received in appropriate ways. We did, however, do things like using our personal credit cards to pay for Houselink expenses.

It was efficient. We would submit a credit card receipt to Houselink and be reimbursed. This does not make the expenses purchased in that way, however, inappropriate, nor should it suggest that they were personal expenditures or that we then somehow made off with the property purchased that way. This was not a large organization. We didn't use purchase orders, perhaps incorrectly, inappropriately, but we weren't doing that because we were concentrating our energy in other and, I would suggest, highly cost-effective ways.

The Health draft audit, which has been the subject of the press reports and comments in the Legislature, quite inappropriately suggests that expenses that were receipted in the way I have described -- the use of personal credit cards -- may have been made for my personal gain. There's no evidence to support that. In every case where the Health auditor wanted verification of an item purchased, the item was produced and demonstrated to be in Houselink's possession in exactly the same way that we'd reported it to be. There was never any suggestion during those audits that we had made off with Houselink property or that I had received some kind of improper personal gain.

I received my salary which, at the time of my departure, was about $50,000 a year, a quite appropriate, usual salary for an organization of this type.

I'd like to comment on some of the specific issues raised in the audit. There has been much made of a trip that I made to the International Congress on Social Welfare in Berlin. I prepared a written submission to Houselink's executive, requesting authorization for that trip. That conference expense was never approved by the Minister of Health; it was approved by Houselink.

We had never been asked, nor had we ever sought, to get approval for attending a conference from our funder. We received in our approved budget a line for travel and conference staff training. Like any other organization that gets an approved budget like that, we spent within that line. We did not go back to the funder for each specific expenditure within that line. I don't think that was ever expected. It certainly had never been suggested to us that we were acting improperly in not doing that.

The travel that has this air of being extremely inappropriate was a trip to a legitimate conference, quite related to the work that we were doing. It was, I'd just add, the first and only overseas travel I made during my tenure at Houselink and it was not at the end of a long list of conferences which were some sort of boondoggles at public expense. In my dozen years there, I probably attended half a dozen conferences out of Metro Toronto. So this was a big thing; it was a big approval. It was why there was a written submission to the Houselink board and it was approved by the Houselink executive.

0930

The audit points to the lack of a plane ticket. I don't know what your receipting practices are, but I now work for a very large corporation. When we attend a conference or are away on business, we're required to provide an invoice; we're not required to provide a plane ticket. At the time this auditor came in two years later and was saying, "Where's the plane ticket?" I don't know how many of you keep those little coupons on your plane ticket two years later, but it was not the practice --

Mrs Marland: We have to.

Mr Gary Wilson (Kingston and The Islands): For two years?

Ms Caragata: For two years. There was a receipt.

Mrs Marland: We have to submit them.

Mr Gary Wilson: For two years; that's what she's saying.

Ms Caragata: There was a receipt.

The Vice-Chair: Just a point of clarification: Do you mean there was a receipt from the airline?

Ms Caragata: A receipt from the travel agent.

The Vice-Chair: For what you had paid.

Ms Caragata: Yes, exactly, but there was no plane ticket.

In fact, just to give you an example of that trip, which is really an illustration of how we tried to operate, I didn't fly to Berlin for that conference; I flew to Amsterdam because it was a cheap flight, and then I took a second-class train to Berlin. Then while I was in Berlin, I stayed at a cheap hotel, not your standard, Americanized $100-a-night hotel next door to the conference.

That was the way Houselink operated. We didn't spend big. This wasn't an organization that was filled with elaborate expenditures to make the staff feel good about their jobs. This was an organization that operated in a highly cost-effective way. We used scrap paper. We demanded that staff use the most cost-effective ways of getting places. We demanded that people be as cost-effective in every expenditure as they possibly could.

We were constantly after getting donations. Most of the good quality -- if you've seen any Houselink buildings, you could have evidence of this -- built into those buildings was built in as a result of getting donations that augmented the public funds used to build those buildings.

On the item of excess salaries, or what is described as excess salaries, the Houselink board of directors, which did meet monthly, approved all staff salaries. They were adjusted periodically only after extensive surveying of similar organizations. As I've mentioned, my salary was about $50,000 a year when I left.

We never had individual salaries approved by the Ministry of Health, nor were we ever told by the Ministry of Health that we should. We got a salary and benefits line and it was our responsibility to spend within that line. I don't believe we ever exceeded that. I don't believe we ever exceeded the total approved budget of the Ministry of Health in the dozen years that I was there.

Houselink was an independent, non-profit organization, with multiple funding sources. Our board was well within its purview to set salaries, and that's what it did. It also was well within its purview to decide that it could pay reasonable, small amounts into staff RRSPs, in lieu of a pension plan, and that's what it did.

It did not go to the Ministry of Health, however, to say, "May we pay these funds into staff RRSPs?" We'd never had any indication from the Ministry of Health that we should do that. Our understanding was that our contract with the Ministry of Health was around delivering the agreed-to services in return for a certain level of funding. It was our understanding that we were to spend that funding according to the categories broken out in that approved budget.

If our spending on our salaries and benefits category was within that, not in excess of that, then we made those decisions and we made them without going back to the Ministry of Health to say, "We'd now like to put $1,000 a year into staff RRSPs in lieu of a pension plan." It never would have dawned on us to ask them that. We had been funded by this organization for 11 years and never once had we asked them those kinds of questions and never once had we got an indication that those were the kinds of directions they wanted to be giving us.

The items that have been described as excess salaries were properly approved by the Houselink board. Salaries were properly set by the Houselink board. This was not my kind of personal fiefdom where I got to decide what I wanted to get paid. Everything was properly approved by the board and our expenditures in all of our areas were within budget.

The Houselink board, like most other organizations, decided the nature of remuneration to staff, and it did that very judiciously. It really did it with significant testing of what was appropriate given the organization's size and staff responsibilities.

Just to comment very quickly on a couple of the other items that are in the audit. Furniture and landscaping: There are numerous comments and comments made in the press about George's Antiques. We were in the housing business, if I might remind you. We housed in the order of over 200 people. Many of those people had not had very much experience in having stable accommodation, and to be, I guess, frank about it, they often didn't take very good care of their possessions. We were in the constant business of replacing furniture in their units. What we would contribute to each person was a bed and a dresser in their bedroom and the basic furniture in the household. We would often have to replace those beds and dressers.

George's Antiques, although nicely named, was a used furniture dealer. He used to do a flea market in Waterdown, and at the end of the flea market, once every couple of months, he'd come in with dressers and we would look at them and buy them. We would often buy 20 at a time because they were good-quality wood dressers that we could buy for about $100 apiece, and that's George's Antiques. I paid for it with my credit card, but there was never a suggestion that those dressers weren't there -- and they weren't for me. They were just a legitimate business expense. That's the kind of business we were in.

Similarly, landscaping: We were developing new projects. I can't remember the specific site that the landscaping was for, but that year we had been completing our Channon Court project; we'd been completing another project at Harbord Mews. A landscaping expense is not inappropriate. Maybe it's inappropriate that we paid for it the way we did, that maybe using a personal credit card isn't what we should have done, but that's, then, the extent of what we shouldn't have done.

Stained glass: There's been a lot of attention paid to stained glass. We bought three run-down Parkdale boarding homes, which had been a nightmare for the Ministry of Health and were putting, I think, at substantial risk 50 ex-psychiatric patients who lived in them. When we bought them, the people who had owned those buildings obviously thought that they could take all the stained glass out and that, being a little non-profit organization, we'd go ahead and close and who would really care, because, after all, just ex-patients were going to live in those buildings anyway. On closing, we demanded of our lawyer that the stained glass be recovered before we would close, because we were aware that it was a public asset and we weren't just prepared to turn around and say, "Forget it."

We finally had delivered to our offices probably in the order of 20 pieces of unframed stained glass. I don't know if any of you have any familiarity with stained glass, but it only stays together, especially 150-year-old stained glass, if it's in a frame. We put it behind somebody's desk and it sat there for about six months until it started to fall apart. I don't know what you would do, and maybe we did the wrong thing, but we didn't want it to fall apart.

We didn't know what the hell to do with it. It cost too much to put it back in the buildings. We weren't going to start designing custom-sized windows in the new building to fit this stained glass, so we had it framed. We had it framed as cheaply as possible. I think the total cost was $2,400. This was not done to give us beautiful offices while clients got nothing. This was done because we had this asset. We were aware of the fact that we had to take care of it. We did it in the most cost-effective way we could. I don't know what else we should have done.

Similarly, there have been all kinds of references to the purchase of used furniture. It seems odd that on one hand we spent too big, but then, on the other, in audits there are a couple of mentions of, you know, they only spent $5 on a dresser. I don't, then, know what's wrong with getting a bargain, and we used to try to do that. We used to go to Goodwill and we used to negotiate, and if we could get a dresser for $5, as far as we were concerned, if it was a decent-quality dresser that could be painted or fixed up, that was a good deal, and that's the way we operated. So, I don't know. Those things are juxtaposed as if to suggest somehow that we spent big on ourselves and poor clients only got $5 dressers.

0940

I can no longer invite you because I'm not a current Houselink official, but I'm sure it might be possible for you to go and look at Houselink's buildings. I don't know what state they're in now, four and a half years after I left, but when I left, I'd like to assure you that they were decently furnished -- decently -- but they were not elaborately furnished. They were basically furnished. But we did that by getting the best quality deals that we could get anywhere.

In summary, I'd like to thank you for the opportunity to appear before you. In spite of these audits, I remain proud of the work that I did at Houselink. The organization was a leader and an innovator, and far from being accused of mismanagement and waste, there are numerous Houselink annual meetings where I was commended by the board for my judicious spending and careful use of public funds. I guess I'm here before you today with my reputation having been slandered and that of the organization having been damaged, and I would contend that that's as a result of a zealous auditor being convinced of mismanagement by a deliberately provocative series of anonymous telephone calls.

I also think that it all comes about because of some fundamental misunderstandings between the practices of the community mental health branch and the practices of Health's auditors, because I really genuinely don't believe that the Health auditors knew what the standard practices were in the organizations funded by the community mental health branch. I won't and can't comment on which practices were correct. I can only tell you that we had been funded by the Ministry of Health for 11 years and there had never been any suggestion that the way in which we spent those dollars, the way in which we saved those dollars, had been inappropriate, that the kinds of approvals we asked for had been inappropriate.

I would just like to remind you that there was a $2-million surplus, and a $2-million surplus doesn't come from wasting public funds. That $2-million surplus was reported. It was reported annually to the Ministry of Health. I can't tell you why they didn't come to reclaim it sooner. I can tell you that we probably would have argued with them about whether it was all theirs, but it was there. It was not secreted away. We were making no pretence or allegation that somehow it was ours and not theirs or that it was somehow for our personal benefit. It was not. It was public money and it was there and so identified in every annual audited financial statement produced by Houselink's auditors and submitted to the Ministry of Health.

I'd also like to leave you with a little bit of a query about why this has captured so much press time. Somebody gave the Star's Jack Lakey a draft document, which he has never sincerely sought my input on, or that of current Houselink officials. I'd suggest to you that these issues cross partisan political lines, for your deliberations. It was a Liberal government that supported Houselink's growth, an NDP government that's allegedly covered up Houselink's mismanagement, and it was a Tory government for years that first funded the Houselink organization and with which the spending approval patterns were first established. This issue has been turned into a political one, and I guess --

Mrs Marland: A point of order, Madam Chair.

Mr Larry O'Connor (Durham-York): Let her finish.

Mrs Marland: I do have a point of order.

The Vice-Chair: What's your point of order?

Mrs Marland: I'm just wondering how long the deputant is going to speak.

The Vice-Chair: She's stated this is her closing statement. Continue, Ms Caragata.

Ms Caragata: Thank you.

This issue has been turned into a political issue, and I guess I would ask you, appeal to you, to consider it, even briefly, from my vantage point, where it's about my work and my reputation and about other people's hard work over a lot of years. The comments of this one audit, driven by anonymous telephone callers, don't square in any way with the reputation of this organization over a 12-year period, don't square with the documented reports and correspondence from all of its provincial funders over that period of time, and don't square with the opinions of Houselink held by senior Health and Housing officials with whom I worked over that extended period of time.

I'd be happy to answer any of your questions.

The Vice-Chair: Thank you, Ms Caragata. I realize that at the opening I had suggested 20 minutes per witness and that Ms Caragata has taken the full 20 minutes for her comments, but in fairness to Ms Caragata, she's had an extensive number of topics which she has had to cover in explanation. So I would propose that we have five minutes per caucus for questions.

Mrs Marland: Oh, well. Can I just --

The Vice-Chair: If you want less, I'm at the will of the committee. Do you want one question per caucus?

Mrs Marland: No.

Mr David Tilson (Dufferin-Peel): We might as well go.

Mr Joseph Cordiano (Lawrence): Point of order.

The Vice-Chair: Mr Cordiano, point of order.

Mrs Marland: Excuse me, you asked and I was willing to answer your question.

There's nothing on the agenda about how long anybody was going to be taking part, so I simply want to say that it would be absurd to limit any caucus to five minutes on such an important issue with such an important deputant. I hope that we can have some cooperation that we can ask questions for as long as we like, as long as the time is equally -- we keep going around in maybe 10-minute segments until we're finished. Why restrict it?

The Vice-Chair: Mrs Marland, perhaps you're not aware, but there was a decision by the committee last week that because this is the last full day we have to explore this issue, we would only go in public hearings until 10:30 and then we would be convening in camera at 10:30 for directions and the report-writing.

I had made the suggestion at the beginning that the time be divided evenly, 20 minutes per witness, and I'm trying to accommodate all three witnesses. I am at the will of the committee. You can spend all the time with this particular witness or you can divide the time however you wish to do so.

Mrs Marland: If I had known that, I would have moved a motion that we limit the witness. The point is, when we originally agreed to investigate Houselink as a committee, we also agreed that when we reached this date of June 9, if we needed more time as a committee to complete that responsibility, we would look then at discussing the subject matter the following weeks.

Mr Robert V. Callahan (Brampton South): Point of order, Madam Chair: I understand what you've said, that the committee decided this, but I have to ask the rhetorical question: What's more important, the examination of this witness or the preparation of the report?

The Vice-Chair: I am at the will of the committee. If the committee wishes to extend the time for public hearings to take part of our report-writing time, I am happy to do that.

Mr Callahan: Let's see if we've got unanimous consent to do that.

Mr Rosario Marchese (Fort York): Madam Chair, can I recommend that rather than debating as we are, we give each caucus five minutes for questions to the individual and see how it goes from there?

Mr Cordiano: Madam Chair, I think there was no real set agreement the last time we spoke on this. It was an effort that we would make to have an in camera session to write a report, but we all noted the ridiculousness of the time that was remaining and we also agreed, if I would say --

Mr Marchese: You're not going to get agreement if you're going to continue to debate the way you are.

Mr Cordiano: Then let's not have agreement.

Mr Marchese: There was agreement that we would listen to these deputants for an hour and 15 minutes. We had that understanding here between us.

Mr Cordiano: It was not an iron-clad understanding.

Mr Marchese: We're wasting time debating this when we could be asking the deputant questions.

Mr Callahan: Was that the subcommittee that made that decision?

The Vice-Chair: Mr Cordiano, Mr Marchese, this is not an appropriate way for the committee to conduct itself.

Mr Cordiano: Why don't we have a recess?

The Vice-Chair: I was not here at the end of the session last week, but I have been advised by the clerk that there was an agreement by all three caucuses that we would deal in public hearing until 10:30 and then go in camera.

Mrs Marland: That is totally absurd. Mr Tilson is not aware of that agreement and unless it was unanimous, it doesn't stand.

The Vice-Chair: Mrs Marland, instead of --

Mrs Marland: We have a responsibility to the taxpayers in this province and we'd better fulfil it. The report-writing has to be done only when we have completed the investigation.

The Vice-Chair: Mrs Marland, let us try to deal with this in a constructive manner instead of wasting committee time debating among ourselves. Do you wish to extend the public hearings this morning until 11:30 or 12?

Mrs Marland: No, I don't want a time limit. I want to extend the public hearings until we can achieve the extraction of answers and information that are important to the report that we have an obligation to prepare.

Mr O'Connor: In other words, an orderly rotation. That sounds fair, Madam Chair. I think we should start an orderly rotation and have some questions.

Mr Callahan: Let's have a time limit on the caucuses, so the Conservative caucus doesn't use all the time, or the Liberals or the NDP. It should be equally divided, but I think we should go until 12 on this issue.

The Vice-Chair: Okay, as long as committee members are aware that we are supposed to report next Thursday in the House on this issue.

Mrs Marland: We can do an interim report.

Mr Cordiano: That was by a motion of the committee. We can also change that.

The Vice-Chair: But we have not had any motion of the committee to change it.

If we have consensus, then, we will begin orderly rotations, 10 minutes, with the Liberal caucus. Mr Crozier, I think you indicated you had a question, and also Mr Cordiano.

0950

Mr Bruce Crozier (Essex South): I'll defer to Mr Cordiano.

Mr Cordiano: I'll leave some time for my colleagues. They certainly have questions to ask.

Let me just start off by saying that we've heard a number of things from all sorts of sources. One of the things I'd like to immediately focus on is the question of the surplus, because at the end of the day what we're really talking about is something that the ministry claims was unsubstantiated or unapproved in terms of that surplus. What you're telling me is that the ministry had audited statements that indicated clearly that you had a surplus accumulated in certain bank accounts and that those bank accounts were in the name of the ministry.

Ms Caragata: No, they were in the name of Houselink Community Homes.

Mr Cordiano: The auditors suggest in their draft report that --

Ms Caragata: Mr Cordiano, if I might, I don't actually have the draft report.

Mr Cordiano: I'm sorry. In one of the reports -- it may have been a draft at the time -- it states clearly --

Mr Callahan: Maybe the witness can be given a copy, in fairness.

Ms Caragata: I would appreciate that very much.

Mr Cordiano: Sure. Do we have an extra copy? The auditors suggest that these bank accounts were in the name of the ministry, as you will see when you're given that report. I don't know what that means, but I would imagine that you set up an account in the ministry's name; this is what they're saying.

Ms Caragata: We wouldn't have any authority to set up an account in the name of the Ministry of Health, nor would we have done that. The funds that we reported regularly -- and I'm happy to leave with the committee copies of Houselink's audited financial statements for 1988 and 1989 -- clearly show the surplus. They were in accounts in the name of Houselink Community Homes.

Mr Cordiano: Let's set that aside for a moment. What you're suggesting is that the ministry knew all along about the surplus funds. Was there correspondence to this effect or any type of communication other than in audited statements?

Ms Caragata: Yes. We would submit to them a copy of our audited statement, obviously, with a copy of our annual report. In every year -- I can't speak for the summer of 1990 because, as I had said, I was on maternity leave at the end of the fiscal year there, March 31, 1990, but in 1989 and in 1988 and in all previous years we would go through a routine reconciliation with the ministry over surplus funds and over the disposition of our approved budget. There were occasional years where they just didn't do that, but in every year we submitted to them a copy of the audited financial statement.

I don't think they could genuinely claim, nor have I actually heard them claim, that they didn't know that surplus was there. Clearly the audit branch, when it went in to do the audit, didn't know the surplus was there.

Mr Cordiano: I just don't understand why then the auditors and the ministry would react the way they did after seemingly having discovered that there's this excess amount of funds in the name of the agency in a bank account, if that would be the case. I've tried to imagine what it would be like, using ourselves as an example, although that would be impossible to do, where we would accumulate a surplus. You mentioned constituency budgets. That would be next to impossible for us to do, but if any other organization were to do that, I think people would be screaming over the fact that surplus funds were being accumulated in an account. You are clearly stating that these funds were accounted for and that the ministry had full knowledge of the existence of these funds.

Ms Caragata: Yes, I'm saying that without any equivocation. We submitted an annual audited financial statement to the Ministry of Health every year.

Mr Cordiano: There's the question of hiring of staff, funding approval for 25 staff members and in reality you only had 18.

Ms Caragata: It's part of the reason that there was a surplus. We received approvals, especially as we began to expand and develop non-profit housing projects. We would go to the Ministry of Health for approval for a certain number of additional staff to operate those. In many of those cases we were in a situation where we'd say to the ministry -- and I know this is a difficult shift for you to make, having no reason to believe that this is an organization that was concerned with not wasting public money, but it was. So we would always go to the Ministry of Health and say: "Look, for an initial six-month period of time when we open this project, we'll probably need four or five staff. We expect that once that project is operational, once people have moved in and settled down, we can cut back to two or three staff," and we would do that.

Mr Cordiano: You see, what's amazing about all this is that the ministry would have us believe the total opposite, that the auditors completely suggest in their report that these were unapproved expenditures that they had no knowledge of.

Ms Caragata: Which ones?

Mr Cordiano: Any of these expenditures we're talking about and any of the expenditures that are questionable. Just as I've cited the example that I've given you now, we can go on and talk about a number of other things. Your own personal card expenditures, for example. The auditors --

Ms Caragata: Credit card, you mean?

Mr Cordiano: Credit card expenditures. The auditors point out that there were no substantiated receipts for those expenditures. You've pointed out the example of an airline ticket. There are a number of other things which the auditors point to and suggest that there are no substantiated receipts; that there are sums, that there are credit card receipts, but there is no documentation that backs up those expenditures explaining what they were for. It goes on to talk about a number of other things like your trip to Berlin, and again unsubstantiated receipts, the airline ticket being the main point of that.

These are the questions that the auditors put in their report, that you would authorize expenditures for yourself, sign for those expenditures and not get board approval. You've suggested in your comments earlier that board approval was given for everything that you undertook as the executive director.

Ms Caragata: Can I answer that specific point? That's an important one and it isn't anything that I've touched on. Our board would approve salaries, it would approve any benefit moneys and it would approve those in-board minutes, so it wasn't like I could decide that I needed an extra little salary cheque and I could write myself one. That was most emphatically not the case.

Mr Cordiano: That's not what they're talking about.

Ms Caragata: The board approved our expenditures. I did, however, have signing authority for this organization on cheques up to $2,000. But you know, it wasn't like I could just sign any cheque that I wanted. We had a chartered accountant, who was the treasurer of the board, who would review the books, the expenditures of the organization. We submitted quarterly financial statements to that board, so it wasn't even as if I could kind of then, in between board meetings or something, do whatever I wanted and spend any funds that I wanted and not have anyone notice that. This was an organization with an accountant -- not a chartered accountant, but an accountant -- on staff who kept our financial records, and with a board, the treasurer of which was a chartered accountant.

Mr Cordiano: But there are suggestions that the board, for example, was not aware of the surplus funds that were accumulating in those bank accounts and that they didn't have the full --

Ms Caragata: You see, I can't answer that, Mr Cordiano, because I don't know which board members the auditor talked to.

Mr Cordiano: We're talking about the board in general, and it's startling to members and anyone in the public that a board would not be aware of over $2 million in a surplus account. That's pretty difficult to understand and accept.

Ms Caragata: I find that extremely hard to believe too. I don't know what else I can say about that. I don't know if any of you have ever either been on the board or in a staff position in a small non-profit organization, but it is an extremely difficult job to keep a volunteer board involved and current with what's going on in a complex organization.

Mr Cordiano: Sure, but I think at the end of the day, looking at this, an objective observer would say you were acting entirely on your own, in isolation of the board, in isolation of checks and balances. Even if those expenditures were accounted for after the fact, as has been suggested repeatedly, and perhaps there's no question about that, the fact of the matter is that as an executive director, your actions seem to suggest that you were acting without those checks and balances that many people have referred to as being missing, sorely missing, and that the procedures that needed to be followed weren't there.

Even in the absence of guidelines from the ministry, the checks and balances seemingly weren't there and it gave people the impression or the perception that perhaps someone was operating entirely on their own, in isolation of board approval, and questions would be raised after the fact.

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Ms Caragata: You put a lot into one question. It's difficult to answer it, other than in general to say that we did have a board, which met, which approved expenditures. The treasurer of the board was a chartered accountant. The staff prepared and submitted quarterly financial statements to that board. The person responsible for the accounting at Houselink was an accountant with significant experience. This was not an organization where I was sort of the only staff and got to operate in an unchecked fashion.

Mr Cordiano: Do we have any more time?

The Vice-Chair: No, Mr Cordiano. It's now the Conservative time.

I would just ask our witness a question: I think you signified to the clerk when you were invited to attend today that you had a problem with the timing and that you had to leave the committee early. What time can you give us this morning?

Ms Caragata: Obviously, I requested the opportunity to be here, so I'm not going to run out. I do have work commitments, but is 10:30 reasonable?

Mr O'Connor: That will allow the rotation to continue.

Mrs Marland: I can't believe this, that a deputant would ask to be here and then say, "I've got to leave."

Mr Marchese: She just said the contrary.

The Vice-Chair: Mrs Marland, in fairness to the witness, she has been requesting for four weeks to appear before our committee and our committee did not meet and give her an answer until a few days ago. So I don't think that's a fair comment to the witness, and she has rearranged her schedule to try to accommodate. Would you continue with your questions.

Mrs Marland: I'm glad everybody's made a conclusion in this matter. I would like to deal with a very important --

Mr Callahan: Just a second. On a point of privilege: I reject that comment.

Mrs Marland: You may do whatever you wish.

Mr Callahan: You say you're glad that everybody's made a decision. That may be your conclusion, Mrs Marland, but I haven't made any decision at all.

Mrs Marland: Good.

Mr Callahan: I ask the Chair to have her take that back. That's clearly inappropriate.

The Vice-Chair: Mrs Marland, as you are aware, under the standing orders it is inappropriate for a member to imply motivation or intent. I would suggest you just rethink that statement and continue.

Mrs Marland: I'd like to continue.

Mr Callahan: I'd like you to withdraw it.

Mr Gary Wilson: Down to eight minutes now, Margaret.

Mrs Marland: I think there's a lot of gamesmanship going on, which is unfortunate, and if a decision has been made in somebody's mind about what the deputant is telling us this morning, that's up to them.

What I would like to ask you --

Mr Callahan: On a point of privilege again.

Mrs Marland: All right, I'll withdraw it. If that's your game --

Mr Callahan: You're the one with the game that's gamesmanship.

Mrs Marland: If that's your game, Mr Callahan, that's your choice. It's not mine.

Mr Callahan: Like politics.

Mrs Marland: I think it's very important to understand how information is available to the public. One of the ways information is available to the public, whether we like it or not, whether you like it or not or whether we like it or not as politicians, is through the media. There certainly are circumstances where I am the last person to defend the media, but I think it's very important to ask you a question based on what you said about Jack Lakey in the Star.

You said that he had written a tremendous amount about you and had maligned you and yet he had never spoken to you. I would like to ask you directly: Are you not aware of the fact that Mr Lakey of the Toronto Star phoned you every day for three weeks, even went to your house and spoke to your husband?

Ms Caragata: Mrs Marland, nothing gives me greater pleasure than to answer that, because it gives me an opportunity to put that on the public record.

Jack Lakey called me on, I believe it was a Tuesday afternoon, about a week before this first Toronto Star story appeared, which was I think April 20. He made that call to me. He left a message on my voice mail at work. I got home, retrieved my messages after a meeting at about 5:30 or 6 o'clock and returned his call. I had absolutely no reason to expect that the Toronto Star would be calling me. I returned his call. I assumed it had something to do with my work. I left a message for him. I think that call was made to him at 6 o'clock that evening.

The next day, I go to work, and late in the afternoon, my boss summons me in to tell me that he's just received a call from Mr Lakey advising him -- not asking to speak to me, not anything like that -- but advising my boss that I have been implicated in embezzling funds, making a number of fairly damaging allegations about me to my boss and demanding that my boss instruct me, order me, to return Jack Lakey's call, because I obviously was not intending to do so, evidenced by the fact that I would return Jack Lakey's call after 6 pm when God knows no one is at work.

Mrs Marland: Are you aware of the fact that he went to your home and spoke to your husband?

Ms Caragata: If I may just continue to answer that question, the next day, when I had decided after that that I was not going to call somebody back who was calling me with a gun at my head, he then, as he had promised to do to my immediate boss, called the commissioner of community services at Metro to advise the commissioner of all of these same allegations and once again ordered this person to order me to call him back.

Mrs Marland: So your answer is that you did not --

Ms Caragata: After that, I consulted a lawyer who advised me not to call Jack Lakey back.

Mrs Marland: What you said earlier was that Mr Lakey had not attempted to reach you --

Ms Caragata: I said that Mr Lakey had not attempted to reach me in a responsible way, I think.

Mrs Marland: Excuse me, if you could wait until I ask you the question, I'd appreciate it. You said earlier that Mr Lakey had not attempted to reach you. What you are saying now is that he did call you, you did return his call after 6 o'clock and that you received advice not to contact Mr Lakey. So the reason that Mr Lakey for three weeks did not have an opportunity to speak to you was because you had advice not to return his call.

Ms Caragata: If I might answer that, Mrs Marland, as I mentioned, I did not say to this committee that Jack Lakey had not called me. I said that he made no responsible attempt to reach me and --

Mrs Marland: Excuse me, what's a responsible --

Ms Caragata: He did have a libel notice, the Star did have a libel notice, from McCarthy Tétrault on the Friday, I believe, after that first story appeared, explaining to him that I would not be responding to his continued --

Mrs Marland: What you're saying fortunately is on Hansard, so if I'm wrong in what I've said, it will be recorded on Hansard as to what you did say.

I think what is important to deal with here is the fact that your testimony -- although you don't come before a committee under oath per se, I'm sure that your lawyer has advised you about the significance of your testimony to this committee on this particular matter of Houselink and all the accusations that are out there, all the facts that are out there, by a legally conducted audit. So I think while you talk about being the victim of numerous anonymous phone calls, it's my understanding of course, having had the ministry staff before us who did the audit, that an audit isn't done by anonymous phone calls.

What I would like to ask you is how is it that you could have been given approval for three years by the ministry to hire 25 people, yet you only hired 18 for each of those three years, that you were given approval to hire 25 and the ministry didn't know that you were only hiring 18. You said earlier that you only spent the budget for salaries that you were allowed, but you were given a budget based on your request to hire 25 people.

Ms Caragata: I guess, Mrs Marland, I would suggest to you that the ministry did know. I guess the Ministry of Health is obviously a big place, so I think we have to get a little bit more specific about who in the Ministry of Health. We have regular contact --

Mrs Marland: But why did you only hire 18 when you asked for 25?

Ms Caragata: As I've indicated, we would tell the ministry regularly, which we did, that we would need extra staff during the startup period of a project, and that we would then cut those staff back once a project was operational -- ongoing in a stable way. We did that repeatedly over a number of years. The ministry would then derive the saving from that, because they'd get those funds back.

You know, over the years, the Ministry of Health did reclaim significant funds from Houselink. It isn't as if they never noticed us until there was $2.4 million. Obviously, you have received your information from auditors, and the audit branch isn't who we were in regular contact with.

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Mrs Marland: But do you think that a non-profit housing organization like Houselink is allowed to operate under the direction only of the executive director? You said it's very hard to keep a board informed, and actually you are quoted about criticizing the makeup of your board. You've said this morning, quite interestingly enough, that your board was difficult. You said you weren't happy with the board. You said this morning they were an unskilled board. So that gave you full licence to do whatever you wanted to do. You said it would be hard to keep them informed.

Why did you think you had the ability or the authorization to operate as an individual and not report to a board? If you want your board to know how you're operating, why wouldn't you just have regular meetings of the board and seek approval of the board so that when you're faced with an audit like this, with all this criticism, you could have been in a position frankly to say, "Well, my board approved everything I did"?

Ms Caragata: Mrs Marland, that is exactly what I would say and that's exactly what I would say to you now. The board --

Mrs Marland: But you just said a few minutes ago that the board wasn't informed.

Mr Marchese: Let her finish, Margaret. Let her answer the question.

Ms Caragata: The board of Houselink Community Homes approved our expenditures. They set an annual operating budget. They approved the budget that we would send in request to the Ministry of Health. They received quarterly financial statements prepared by the staff. They would meet with Houselink's independent auditor when that person came in to do the audit.

I did say that I had on many occasions, especially in that probably two years after we'd had a very stable, very involved president, that I had difficulties with a board that wasn't always as skilled and as on top of things as I would have wished. But this was a board that did meet regularly.

Mrs Marland: How much did your trip to Germany cost?

Ms Caragata: It was four and a half years ago. I'm sure all of the figures are in the audit.

Mrs Marland: I'm asking you how much your --

Ms Caragata: I'm sorry, I can't possibly remember.

Mrs Marland: You don't have any idea?

Ms Caragata: I don't have any --

Mrs Marland: Did your trip to Germany cost $2,000, $4,000? You must have some idea.

Ms Caragata: I would guess in the order of $2,000 or less. I honestly don't know, but certainly nothing like $4,000.

Mrs Marland: Did Houselink pay for your companion to go, Ms Sears?

Ms Caragata: Ms Sears was a staff of Houselink Community Homes and she also attended that conference in Berlin, yes.

Mrs Marland: So would her trip to Germany have cost the same as yours?

Ms Caragata: I genuinely don't know the answer to that question.

Mrs Marland: Could you tell us --

The Vice-Chair: Mrs Marland, actually your time expired about a minute and a half, two minutes ago. We'll move on to the government caucus.

Mr Marchese: I just have a few questions and then I would leave a few moments for Mr Callahan who obviously had a question that he wanted to ask.

Can you describe, Mrs Caragata, the kind of discussions that went on between you and the auditor? Did the auditor simply come in, audited, and that is the basis of the report, or did he ask you plenty of questions as they relate to a number of the items that have been described in his report?

Ms Caragata: I believe, and this is a four-year-old recollection -- the audit had begun while I was on maternity leave, so by the time I came back from maternity leave, this audit had been under way. I did have numerous conversations with the auditor. He did ask me questions.

As I've indicated, he also did tell me at one point in time that this audit was being driven -- he was getting anonymous telephone calls. In fact, at one point in time he claimed to me that his life was being disturbed because he was getting those telephone calls in the evening, at night, at home, and he found it disruptive. He also at one point in time told me that he had identified the voice of a former employee of Houselink as one of the people making these telephone calls.

When I left Houselink, I had every reason to believe that the audit that would be produced was quite unlike the draft that I understand was produced. As I mentioned, I don't have this draft. It's being denied to me -- I can get it under FIPPA -- even though the whole world has it. So I left Houselink before the audit was complete and before I had any real sense of what this was going to amount to in this long run.

Mr Marchese: So there was no detailed discussion with the auditor about the list that he prepared --

Ms Caragata: Oh, no. He asked me for a plane ticket. He asked that as if somehow to suggest that I hadn't actually gone to Berlin. I guess I want to be careful here, because an auditor comes into an organization they don't know and they're getting telephone calls that say that somebody's stealing Houselink properties. Well, I don't know. If I was an auditor, I guess I'd come in with a different kind of view than if I just came in, so I don't really want to cast aspersions on this auditor. I don't know what that would feel like.

Clearly, he didn't think, I think, that I'd gone to Berlin, to this conference, so he wanted a plane ticket as verification of that. We found him conference proceedings. We did everything we could to satisfy him that the trip was legitimate, that we had gone appropriately and that it had been approved by the Houselink executive. I had submitted a written proposal to them. So there were discussions with him.

Mr Marchese: How much of the auditor's report was done while you were away during your maternity leave? Is that what happened?

Ms Caragata: Some of it had been done while I was away, and then I assume that the writing of the report was done after I had left.

Mr Marchese: Just as a last question, based on this kind of experience that we've had and the kinds of questions you're getting, what would you have done differently had you been the executive director now?

Ms Caragata: I don't know. It's a good question, Mr Marchese. Believe me, I've thought a lot about it. Obviously, we were not a bureaucratic organization. It was not our first line of business to make sure that every i was dotted. I had been there 11 years. Many of the staff had started when we were quite young -- to give us that excuse -- and we had built up an organization.

When I started, our annual budget from the Ministry of Health was $39,000 a year. We had four staff in one room. We were a small organization. We grew rapidly. We didn't establish elaborate systems of accounting. We had the basics. I don't want to give you a suggestion that it was a shoebox, but we were not highly bureaucratic. I think the effect of that was to save $2.4 million of public money and get me into all this trouble.

Mr Marchese: Thank you.

The Vice-Chair: Before we go to Mr Callahan, Mr O'Connor has a question.

Mr O'Connor: Yes, a short question. There's been some discussion raised by one of my colleagues here that the board was totally dysfunctional. I didn't read that from what you had said. I take from what you had said that, like many volunteer boards, there are times when members will come and go and you have someone new coming on and not everybody is up to speed on all the happenings at the board. Sometimes, because they're volunteers, it's hard to keep them all up to date.

Was the board totally dysfunctional? Was there no rapport between you? Can you give me a description of how the board was operating at the time you were there?

Ms Caragata: Sure. You're right; like a lot of volunteer boards, there were ebbs and flows. We had five years, I believe, of an extremely stable president who'd been a lawyer -- who is a lawyer with the province, in fact -- and she had been an extremely good, involved president. That ended. We had somebody who became president, I think for a year, who was a business person, not very interested in the affairs of the organization. Not to assign motive to somebody, but I think he was interested in it from the perspective of his career development rather than really intrinsically interested in the issues that Houselink was facing.

So we were in a kind of transition time, I guess I would say, with respect to a board that wasn't always as active, as involved as I would have liked, but we still had the basics. We had a president. We had a treasurer who was a chartered accountant. It wasn't a dysfunctional board in any way. I certainly don't mean to suggest that.

Mr O'Connor: There was no lack of accountability. Did you feel you had somebody you were reporting to --

Ms Caragata: Absolutely. There have been some things said about having tenants on the board, and I think some aspersions cast on their ability to be good board members. But one of the things about tenants on the board does mean that you're running into your board members every day in everything you do. So those people were an effective source of keeping the board informed of what was happening.

Mr O'Connor: I don't have a problem with consumers on the board. I'll pass it on.

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The Vice-Chair: Mr Callahan. We have about three minutes per caucus.

Mr Callahan: You've partially answered one of my questions. You had a president who was a lawyer at one time. Did you have legal advice for this board throughout? If you did, was this legal adviser not telling you that under the Corporations Act you had certain responsibilities for conducting meetings and approving things at an annual meeting if it was a major expenditure?

Ms Caragata: We absolutely followed the requirements of the Corporations Act. We had an annual meeting every year. Expenditures were properly approved by the board in terms of major expenditures. Yes, we were aware of that.

Mr Callahan: Were the board members made aware of the fact that you had this surplus?

Ms Caragata: Of course. Yes, we had --

Mr Callahan: Okay, that's fine. "Yes" will do. I want to get on to one and I haven't got much time.

Sabbatical leave: This is a non-profit corporation. You're aware that at the windup of that, all of the assets go back, I guess it would be to the public trustee. How could you approve sabbaticals? How could you approve RSP pensions? I've never heard of that happening in a non-profit corporation. Maybe I'm wrong but --

Ms Caragata: I think actually somebody from the Ministry of Health could speak to this far better than I. But as I understand it, among many small non-profit organizations, contributions to staff RRSPs are a relatively acceptable or quite acceptable way of paying pensions, because there's no pension plan, you see.

Mr Callahan: How about sabbaticals? I've never heard of this --

Ms Caragata: You know what the sabbatical provision was? It was a big debate. And speaking of board accountability, when that item was approved in Houselink's approved personnel policies, it was a huge board debate. There was considerable contention around whether or not staff should be allocated sabbaticals. We got tremendous information from every other organization in the world that had sabbaticals, so ours was modelled on a quite modest version of those.

Mr Callahan: Non-profit organizations?

Ms Caragata: Non-profit organizations, yes.

Mr Callahan: Did you get the names of those? I'd love to know what they are.

Ms Caragata: I did have the names some seven years ago when this was approved.

Mr Callahan: In the report it says, "`Sabbatical leave' was used for family reunion, to raise children or for pleasure trips." It strikes me as a little bizarre.

Ms Caragata: If I might comment with respect to the last one, which was my sabbatical and a pleasure trip: After I had left the International Congress on Social Welfare in Berlin, which was like a four- or five-day conference, I then did a two- or three-week -- I can't remember the exact duration -- study tour of some housing projects in Sweden and Denmark that was arranged by the consulate here that was not --

Mr Callahan: Was that pre-approved by the board?

Ms Caragata: Yes, it was approved by the board.

Mr Callahan: The other one was, "There was no evidence of any purpose of such leave or any work done which benefits the organization." Is there any documentation of what these sabbaticals were for, or were they just leaves of absence with pay?

Ms Caragata: I formally requested mine to Houselink's executive, a written request, so that documentation I assume still exists. I have a copy of my submission.

Mr Callahan: Who else got sabbaticals besides you?

Ms Caragata: I think there were two others. Obviously I'm now going back a significant time. I think there were two other staff.

Mr Callahan: How long were their sabbaticals for?

Ms Caragata: I couldn't say -- like a month or six weeks.

Mr Callahan: How long was your sabbatical for?

Ms Caragata: I think mine was two months.

Mr Callahan: So yours was greater than any of the others?

Ms Caragata: I had been there longer. It was based on years of service.

The Vice-Chair: Sorry, Mr Callahan, we're going to move on. Mr Stockwell.

Mr Chris Stockwell (Etobicoke West): I don't want to talk about dotting the i's and crossing the t's. I want to talk a little more significantly with respect to the auditor's report. The audit says "quarterly reports were not prepared by Houselink for the past five years."

Ms Caragata: Quarterly reports to the Ministry of Health. The Ministry of Health had discontinued its quarterly reporting forms and it had reinstituted those for us in I think the end of the fiscal year while I was on maternity leave, so I guess I'd quarrel with the fact that it was a Health expectation. We had never been advised by the Ministry of Health that we were deficient in any of our reporting to them, ever.

Mr Stockwell: The audit also says about Houselink, "The audit fee was...inflated by the public accountant at the request of the executive director with the agreement to return the inflated amount in the form of donation."

Ms Caragata: I'm very glad you asked me this question. It was one that I had forgotten to comment on. "Inflated at the request of the executive director" is just patently false -- not true. We used a large accounting firm. Arthur Andersen was our audit firm for many years. They would bill us, as I understand it's the normal practice for most non-profit organizations, at their standard corporate rate.

Large law firms, all of those big firms that deal with small organizations I think do exactly the same thing. They bill at their standard corporate rate, and then, so that they get the benefit -- say the standard corporate rate is $200; they bill at that. You use them for five hours and that's $1,000. Because this is a small organization, they then will give some of that $1,000 back in the form of a donation so that they get a tax receipt on the amount that they reduce their fees for. This is standard practice. This isn't some kind of, "I'm asking them, `Please inflate your rate.'"

They're billing us at their normal rate, at the regular rate, the rate that they bill everybody else. Then, because it's a small organization, they make a donation of some of that amount of money back. As I understand it, that's done throughout, when non-profit organizations deal with large law firms, large CA firms.

Mr Stockwell: There seemed to be some debate about the amount, though. They seemed to say the amount is somewhat inflated over and above an average standard billing rate.

Ms Caragata: I don't think that's true.

Mr Stockwell: Do you remember what you were billed?

Ms Caragata: I honestly don't, but these are large firms. I'd be really surprised if Arthur Andersen was willing to play those kinds of games with its billing rates.

Mr Stockwell: The audit also says the same accountant changed firms three times in three consecutive years and you followed that accountant around.

Ms Caragata: Yes, that is true. We were looking for stability. We had developed an extremely good relationship with somebody who was a senior manager at Arthur Andersen. He decided he wanted to move to a smaller firm. He moved. We moved with him.

Mr Stockwell: Then he moved to a smaller firm again?

Ms Caragata: No, he moved to a medium-sized firm, and then he moved to a larger firm. But having got yourself into the situation where you've moved with him once, which may have been a mistake, you're then stuck at a firm that you didn't ever have any commitment to, loyalty to. He then decides to move again. You have the debate, do you move with him once again and how long do you keep this up, or do you stay where you are? So we did move that next time.

Mr Stockwell: Let's track this piece along the way. Five years, no quarterly reports. You're claiming the ministry said, "We didn't want them," or it didn't tell you it wanted them. I would assume they wanted them, but you're saying they didn't commit to you that they wanted them. Secondly, about the billing and then firing back at the non-profit section, do they get an accounting break or a tax write-off because of that? Now you're following the same accountant through three different accounting firms. It looks a little fishy.

It seems to me that what this auditor is saying by stringing these issues together is that it doesn't look copacetic. I guess I'm putting to you, with the other issues that have been brought forward, yes, you can argue sometimes that you're not very astute when it comes to the accounting process or the reporting functions and so on and so forth, but these seem to be directly related to decisions made by whoever that, I would suggest, smell.

I want your reaction. What do you have to say? If you were faced with this information in a public forum, I think a group of people who were stockholders in a company would start saying, "What's going on here?"

Ms Caragata: I agree with you, except I'd like to see a copy of a letter from the Ministry of Health that ever said we were deficient in our reporting, that ever said, "Excuse me, but you haven't submitted quarterly reports, and these are those reports, and they're required." I would really like to see that, because while I was at Houselink --

Mr Stockwell: What I was --

The Vice-Chair: Mr Stockwell, we have to move on.

Ms Caragata: -- it wasn't there. I understand that from your perspective you've got these kinds of --

Mr Stockwell: But I understand you were filing them and then you stopped filing them.

Ms Caragata: They stopped --

Mr Stockwell: Taking them?

Ms Caragata: -- giving us quarterly forms to fill in.

The Vice-Chair: We'll move on to the government caucus.

Mr Robert Frankford (Scarborough East): You raised the comparison of the cost per client, I think you said, compared with group homes. The Ministry of Health presumably has some health objectives in what it's doing. As well as reporting costs, is there some way that the organization reports on effectiveness or the work done?

Ms Caragata: Houselink had an extremely close relationship with its program contacts, including the director of the community mental health programs branch, over the years 1986 through probably 1989 -- extremely close, much closer than most organizations would have had with the Ministry of Health over that period of time, because of our involvement in taking over the Channon Court project, which had been three for-profit boarding homes, which we had agreed to take over.

They had been putting public money into some for-profit operations. There had been some press attention to that. We had agreed, as a non-profit organization, to buy those units and redevelop them for those existing tenants. So we had very close contact with the ministry over all of that, with I think at some points as close as weekly meetings with them and their senior staff to discuss that operation, to discuss our redevelopment. There was tremendous public attention and press attention on that at the time. So we were very involved.

They knew the program. They even knew many of the people we were housing, because we had been housing a highly kind of chronic population in that building. These had been people who had been kicked out of Queen Street Mental Health Centre. There was significant interest and a lot of public support for our endeavour there.

Yes, they knew the program. Yes, we had regular contact with them. During that three-year period of time, we had intense contact with them, not only with our program person who is responsible for Houselink but with much more senior people on a very regular basis, and many, many discussions about the program, about the suitability of our program to house this particular group of people.

We had expanded in 1986 with a house rights program, which was really oriented to trying to house quite hard-to-house homeless people. That had been heavily supported by the Ministry of Health.

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The Vice-Chair: Just before we let you go, we have one brief closing question from the auditor.

Mr Erik Peters: Actually, two very brief ones. Firstly, did you consider the budgetary process that you had to follow timely? Did you get approval of your funds in good time for the year?

Ms Caragata: I guess it depends on what you mean by "in good time." I think for a budget year that would start April 1, we would get our approvals in May, late May maybe. So I guess I don't consider that timely. But I now work for government, and it's the same way there, so I think it's usual.

Mr Peters: The second question, very quickly as a supplementary, had it occurred to you or the board at one stage to say: "Look, we are having a surplus. We don't need any money next year"?

Ms Caragata: We had extremely frequent conversations with the board about our surplus. It was acknowledged at every annual general meeting. I guess there was a real question about the extent to which all of that surplus would be reclaimed and by whom. We reported the surplus to Health. We had those discussions with Health. Houselink also received other sources of funds.

I don't want to muddy the waters at this late date, but I would suggest to you that the Ministry of Health simply reclaiming all of that or the Ministry of Health dividing it up probably isn't 100% fair to those other funders and contributors to Houselink, because presumably if there's a surplus, you could establish that some of it might relate to their funding too. I think it's a little late in the day, given that these funds were reclaimed some four years ago, I understand.

But yes, we did have regular discussions about the surplus. Health was aware of the surplus.

Mr Peters: When you put the audit fee in your budget, did you put in the whole amount?

Ms Caragata: Yes, we did.

Mr Peters: So in other words, part of the surplus that you got was by reverse donation from the accounting firm?

Ms Caragata: Yes, although the donation from the accounting firm would also be recorded as a donation, as revenue.

Mr Peters: As received, but not in your budget. You would not forecast donations in your budget.

Ms Caragata: No, we would indicate other sources of revenue. I can't really remember the Health budget, but I think there's a place on that budget form where they ask for other sources of revenue, and we would report those there.

Mr Peters: But how would you estimate future donations?

Ms Caragata: I'd been there for almost a dozen years. We had a pretty clear sense of what we would anticipate over the next year.

Mr Peters: You think you would have included the donation from the public accountant in that?

Ms Caragata: I think we would have included not specifically a donation from the accounting firm, but we would have included in that budget line what our general expectations were with respect to total donations.

Mr Peters: Just a very quick confirmation on that: Are you registered as a charitable organization under Revenue Canada?

Ms Caragata: Is Houselink?

Mr Peters: Yes.

Ms Caragata: Houselink was when I left; I have no idea if it is.

Mr Peters: Okay. Thank you very much.

The Vice-Chair: Ms Caragata, I'd like to thank you very much for appearing before our committee.

Ms Caragata: Thank you very much for the opportunity to do so.

PEGGY BIRNBERG

The Vice-Chair: Now I'd like to call on Peggy Birnberg from Houselink Community Homes Inc. Ms Birnberg, I understand that you are currently the executive director at Houselink?

Ms Peggy Birnberg: Yes, I am.

The Vice-Chair: Did you want to make a few brief opening remarks?

Ms Birnberg: Yes, I would, and I'll keep them quite brief. As I've just been introduced, my name is Peggy Birnberg, and I'm the executive director currently at Houselink Community Homes. I've held that position since I joined Houselink in February 1991. The previous executive director, whom I have never met and whom I am seeing today for the first time, left in September 1990, five months prior to my arrival.

If it pleases the committee, I have a few brief remarks to make and then I'll be happy to answer any questions you might have. I'm afraid my remarks won't be quite as interesting as the last speaker's, because I'll be talking about fixing the problems; sometimes that's not as interesting material.

First let me say that I welcome the opportunity to talk about Houselink's operations since 1991, and I share your concerns about the agency's operations in the time before I came aboard. At the same time, I really hope we won't lose sight of the important work done by Houselink. Our community-based agency provides permanent, affordable and supportive housing to psychiatric survivors and to people who have been homeless or otherwise marginalized. Houselink's overriding objective is to provide the best accommodation and services to the people who depend on us. We can most effectively achieve this objective by carefully managing the taxpayers' dollars we are privileged to receive.

I have spent the vast majority of the time since my appointment more than three years ago making changes at the agency. I can assure you today that Houselink is now operating under the strongest administrative and financial controls possible. Sadly, as your deliberations and the government audits have confirmed, this was not always the case.

Our board of directors, made up of volunteers, received a preliminary audit in 1990. They responded immediately by conducting a review of the organization, and hired me as the new executive director.

My priority mandate was to introduce new policies and procedures to address the financial management and administrative concerns outlined in the audits. Since that time, we have fully accepted all of the recommendations made in the audit reports and have finished implementing them. I have worked to strengthen and enhance all management practices and have implemented more than 20 major changes. I am submitting a full listing of those for the committee's consideration.

In addition, the board has developed a comprehensive set of policies and carefully monitors the executive director's performance. This is done through monthly reporting, an annual evaluation, and the year-end audit, which is conducted by an outside firm. Our auditors also provide a management letter critiquing our internal controls and checks and balances.

While I can tell you that our financial management is now beyond reproach, I am always looking for ways to improve our practices. If your deliberations result in any specific recommendations about Houselink's operations, I would be pleased to add those to the already considerable list of improvements that have been made.

Madam Chair, members of the committee, I am only able to tell you what happened in the time after the period with which you're concerned. My job was not to investigate the past or to place blame, but to correct the problems and to move Houselink forward. This is what I have done.

The important facts are these: We were very concerned about the audit's findings. We took decisive action almost four years ago. Our management procedures and practices today are strong. We make very efficient use of taxpayers' dollars.

Finally, we hope that very soon we will be able to focus exclusively on serving the 300 men, women and children we house and support, many of whom would otherwise be living on the streets.

Thank you. I'd be pleased to answer any of your questions.

The Vice-Chair: Thank you for your comments, Ms Birnberg. We'll now go into rotations. I'm afraid, after the last incident, to even ask this question, but would you like five-minute rotations by caucus? Shall we start with that and see how things go? We'll start with Mr Cordiano and, if time, Mr Callahan.

Mr Cordiano: I guess the thing that comes to mind and stands out like a sore thumb is the fact that the operations of Houselink, when the previous executive director was the executive director, seemed to occur, by and large, with a great deal of focus on what the executive director's role was. She herself made a lot of things happen in isolation of board approval and all of the other kinds of checks and balances which went missing at the time.

I see we have some of the measures you've taken. I won't have a chance to look at this in detail, but let me ask this: Do you still have sabbaticals at Houselink?

Ms Birnberg: Sabbatical leave and merit pay were terminated immediately when I arrived, at the direction of the board.

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Mr Cordiano: Okay. I won't try to go through that whole list of items, because I'm sure you've covered --

Ms Birnberg: I'd hoped that would be helpful to your deliberations.

Mr Cordiano: Right, and I'll look at that later on. But I think the focus has to be around the executive director's role and how much latitude that person is granted by a board that seemingly -- the former executive director seemed to indicate or imply that the board really wasn't on top of things.

We have had a great deal of concern on this committee about the selection of boards of directors for non-profit agencies, recommendations that we will be making, again, to the ministries of Housing and Health and other ministries that are involved in some of the programs about the selection of boards of directors. Do you have anything in the measures that you've taken around the selection of boards of directors? Do you have guidelines now or a set of criteria that you follow?

Ms Birnberg: We have a process which I'd be happy to describe to you briefly, if that would be helpful.

Mr Cordiano: Very briefly.

Ms Birnberg: We're very careful about who sits on our board. Any prospective candidate must be nominated, go through a nominating committee process where they're screened for their ability to serve as a board member, commitment to our mission and values, conflict of interest and particular skills they might bring. A slate is then put forward to the board. If ratified, it's sent to our general members' meeting for election.

All board members, resident board members and community board members, are screened in the same careful way.

Mr Cordiano: Thank you.

Mr Callahan: Just very quickly: You've cancelled sabbaticals and merit pay. Does that also mean you've cancelled the putting of money into RRSPs for employees?

Ms Birnberg: Absolutely not. RRSPs in non-profit organizations are the same as pension plans in large organizations. I think this is a really important point. I've worked in the non-profit sector for 25 years now. I'm just past 50 years old and I've never had a pension plan, because non-profits don't offer them.

More recently, non-profits have been able to put money into RRSPs. We have contracts with our employees that that money is not allowed to be taken out for any reason. It's there to act as a pension and, when they leave the organization, must be transferred to another RRSP plan.

Mr Callahan: Is the ministry aware that you're doing this?

Ms Birnberg: Yes, they are.

Mr Callahan: And they approve of it?

Ms Birnberg: It's their practice. And in our organization, the amount varies from between 1% and 3% of salaries, which is a very small amount of pension money.

Mr Callahan: And this is just employees. The directors, do they serve without compensation?

Ms Birnberg: Absolutely.

Mr Callahan: Do you have a lawyer on your board?

Ms Birnberg: We do.

Mr Callahan: Does the lawyer serve without compensation?

Ms Birnberg: Absolutely.

Mr Callahan: A chartered account on the board?

Ms Birnberg: Yes.

Mr Callahan: Does he serve without compensation?

Ms Birnberg: Yes, he does. When we need legal counsel, we hire independent lawyers who provide us with counsel.

Mr Callahan: You've indicated you return a surplus to the ministry.

Ms Birnberg: We return our surplus at year-end as soon as we have an estimate. I guess that's a bit of a backlash from the past, but we just want to get it out of our bank accounts into the ministry's.

Mr Callahan: Well, the government can use it, believe me.

Ms Birnberg: I understand that, and the times are different now, too.

Mr Callahan: Thank you.

Mr Stockwell: Just a bit of information: Lots of people don't have pension plans; lots of people don't have RRSPs out there.

Ms Birnberg: That's true.

Mr Stockwell: Your analogy may be fair when comparing to government employees, but there's a whole vast array of people out there who don't have this kind of opportunity. But I understand it's not your policy; it's the ministry's policy, or an accepted process.

There's some concern, at least that I have, with respect to boards, particularly these kinds of supportive housing operations: They turn into socialist enclaves.

Mr Callahan: Can you be a little clearer? Explain what you mean.

Laughter.

Mr Stockwell: Although I see that it does strike people as humorous, I'm not sure really why. There's little, if any, debate, of the boards that I've met with, that they tend to be an enclave for like-minded, like-thinking people. I certainly understand that does happen. With your process of approving board members, it doesn't seem that there would be some interest from others or thoughts of getting on the board if they have a different --

Mr Marchese: How do we get some Tories on these boards?

Mr Stockwell: With all due respect, Madam Chair, I say to the member from --

Mr Marchese: Fort York.

Mr Stockwell: I was going to say "the ex-member from Fort York" -- that there may be some interest, but it seems to me the process design, there doesn't seem to be a lot of --

Mr Gary Wilson: You mean you want to be compensated?

Mr Stockwell: I guess I'm trying to ask my question. There doesn't seem to be much opportunity --

Mr Callahan: It's gratis.

Mr Stockwell: -- the way it works --

Mr Gary Wilson: That's why they're not interested.

Mr Stockwell: The fact is, there's a lot of people I know who do offer to sit on boards etc, gratis, they offer their services free of charge, and they're doing this as their service to the community. But as I hear your process for setting up and approving board members, the chances of them being approved appear slightly remote.

As I look through and review these housing programs and Houselink and groups such as that, they truly are socialist enclaves, and I ask you: How is your process set up that it doesn't just continue and be maintained?

Ms Birnberg: I think probably if you said that to our board, some people on our board might be quite insulted at that description.

Since our board always identifies skills that it feels it needs to manage responsibly, and since those skills are usually financial expertise, preferably a chartered accountant, legal expertise, human resource management, architects and others who have experience in building, and then goes out in a variety of ways to recruit, putting notices up in the volunteer centre, sometimes putting ads in a paper, a lot of word of mouth through board members that we know, I think we get quite a cross-section of the community on our board of directors.

Mr Stockwell: Did the previous board have an accountant and a lawyer on it as well?

Ms Birnberg: Absolutely.

Mr Stockwell: And the previous board ended up in that kind of trouble?

Ms Birnberg: I can't talk about the time when I wasn't here.

Mr Stockwell: It appears to me that there's some kind of argument here about attracting people to do the job and you're trying to get lawyers and accountants. I have never seen an auditor's report of a more screwed-up association than Houselink, at least previous to your operation. It took how long to do an audit report, for heaven's sake? It must have been a very difficult process to work through. I blame directly the board that's in charge -- who else can you blame? -- and the executive director.

I guess what I'm saying is, it may be humorous to some; it was a colossal fiasco, it's embarrassing, it's a public waste of taxpayers' money. All I'm asking is: How are we attracting board members to ensure this kind of fiasco and ripoff doesn't happen again? I don't think that's very funny.

Ms Birnberg: I don't know if you've asked me a question, Mr Stockwell.

Mr Stockwell: It may well not have been a question; it may well have been a statement. But personally, as a taxpayers' representative, I am insulted that there's some humour around this question. Hundreds of thousands of dollars was wasted. You did have an accountant and a lawyer on the previous board.

Ms Birnberg: Mr Stockwell, I can't talk about the previous boards; I can only talk about the boards that have been in place since I've come to Houselink in 1991. They took the audit reports' recommendation seriously, they hired me with my administrative experience to correct things. They were very diligent about making sure that those were corrected. The board of directors has always been extremely serious, effective and have moved us into a very new place. I can't talk about the past.

Mr Stockwell: We just heard the same thing from the previous board, though. It was an effective, serious, concerned group that screwed up seriously.

Ms Birnberg: I have no comments on that.

Mr Stockwell: Maybe there is no answer to that question.

Ms Birnberg: I can only tell you what exists now. We have a different order --

Interruption.

Mr Stockwell: I can only hear -- if you want to come up, I'll ask you questions next.

Ms Birnberg: We have a different auditor, hired through a competitive process. Our auditor is Ernst and Young. They're quite a reputable firm.

Mr Stockwell: Yes, they are.

Ms Birnberg: We particularly picked them not only because they gave us a competitive price, but because we wanted a reputable firm and a firm that could offer us advice on a whole lot of levels that a small organization like us would need. I can only try to assure you that business is being conducted in a very prudent and proper manner.

The Vice-Chair: We'll move on to the government caucus. We have Mr O'Connor, Dr Frankford and, if time, Mr Marchese.

Mr O'Connor: I appreciate your coming to the committee today. There's been a lot of controversy over this and a lot of public discussion. I think what needs to take place is that for a lot of boards that volunteer their time, they need to know they do have some responsibilities with that, and that's got to be an awkward thing.

In what you've presented as some of the measures that have been taken in response to the audit, do you feel that the board that you have in place today is competent to go through a number of these areas: the reviews of the executive director; there seem to be some accounting changes as well.

Ms Birnberg: Many accounting changes.

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Mr O'Connor: Do you feel, if there were recommendations you were to make to us as a committee that we should be putting in a report -- because I'm sure this will be of interest to a large number of people who run volunteer boards, who are part of being involved with a volunteer board -- that we could put forward that is going to allow them perhaps a more in-depth knowledge than was in place?

I know this is a whole evolution over a long period of time, but it's something that needs to be put down clearly, and I think that we can learn greatly from this.

Ms Birnberg: I'm sorry, were you asking me if I had recommendations?

Mr O'Connor: Yes, if you had a recommendation that you could put before us that we could put into our report about what should be included for information to a new board member.

Ms Birnberg: I think that board members require and desire a strong orientation to the organization, a strong orientation to what the responsibilities of board members are, and there needs to be a focus on accountability and that boards are very capable of ensuring accountability once they understand clearly that is their role.

Mr O'Connor: Does that include the consumers?

Ms Birnberg: Absolutely. What is a consumer? I don't even know who all the consumers on our board are. I don't know if there are any consumers among this group. You don't know if I'm a consumer. A person is more than a mental illness.

Mr O'Connor: That's right.

Ms Birnberg: All of our board members have tremendous potential, commitment, experience, a range of experience, education --

Mr O'Connor: That range is important.

Ms Birnberg: -- and ability. That's the richness of a voluntary board, that that comes together and there's a lot of skills when you look at a board of that nature. Our resident board members or consumer board members are just as capable as any other board members.

Mr O'Connor: Thank you very much.

Mr Frankford: A brief, almost a comment, or a request for clarification: It's not your role to select a board.

Ms Birnberg: No.

Mr Frankford: You're a servant of the board.

Ms Birnberg: Absolutely.

Mr Frankford: And the board has its procedures.

Ms Birnberg: Thank you. That's absolutely true. I do not have a vote on the nominating committee and I have nothing to do with that process at all. I'm at arm's length from it.

Mr Frankford: Okay. That's all.

Mr Marchese: Just a point that I wanted to make in relation to Mr Stockwell's remarks about, "These boards tend to be socialist enclaves." It's like saying the board of trade is a Conservative enclave and it shouldn't be, for some reason. We should make sure there are enough NDPers there because, as it is, it's a boondoggle.

Mr Stockwell: They don't take our money, Rosario.

Mr Marchese: I think the point is that he's trying to discredit people by linking them to being socialists, and I just wanted to, for the record, say I reject that statement. Obviously, most boards have mixed boards and I'm convinced there are Liberals, as there are Conservatives, in these boards, but for him to establish that connection to discredit people, I think, is a wrong one. Just for the record, Madam Chair, I wanted to say that.

Mr Callahan: Are you talking about Lieutenant Governor appointments?

Mr Stockwell: I think you're too sensitive about being an NDPer.

The Vice-Chair: I'm assuming you actually didn't want the executive director to comment on that; it was more a statement.

If there are no further questions from members, then we'll thank Ms Birnberg for her presentation and appearance before us today.

Ms Birnberg: Thank you very much for giving me the opportunity.

SUPPORTIVE HOUSING COALITION OF METROPOLITAN TORONTO

The Vice-Chair: I'd like now to call on David White, executive director of the Supportive Housing Coalition. David White seems to have expanded to three people, so perhaps you could identify yourself and the other people for the purposes of Hansard and then we will proceed.

Mr John Loewen: My name is John Loewen. I'm the president of the Supportive Housing Coalition.

Mr Anthony McEvenue: My name's Anthony McEvenue. I'm the treasurer for the board of the Supportive Housing Coalition.

Mr David White: I'm David White. I'm the executive director of the Supportive Housing Coalition.

The Vice-Chair: You're the real David White.

Mr David White: I am the David White.

The Vice-Chair: I don't know, Mr White, whether you plan to make a presentation.

Mr David White: Yes, I have a brief presentation to make and then we'll be pleased to answer questions.

The Supportive Housing Coalition appreciates this opportunity to appear before the public accounts committee. We want to tell you about the work our organization does and give you information about our efforts to respond to the recommendations that the auditors made in their reports.

We would like to say from the outset that the Supportive Housing Coalition, the SHC, has a keen interest in ensuring we spend funds the provincial government makes available to us in a frugal manner. We are well aware that these funds are scarce resources and that by spending them wisely, we are able to provide more service to more people in need, and this is our main objective.

It is for this reason that the Supportive Housing Coalition has adopted the attitude that the ministry auditors are a valuable resource. While no individual and no organization likes to hear criticism, we understand that it is often through the critical eye of an outside observer that we obtain the advice that helps us to constantly improve our performance. It has always been our intention to provide the best possible service to the people who live in the homes we have built and renovated. We also hope that through our discussion with the public accounts committee today we may obtain your further advice and guidance to help us in our work.

The Supportive Housing Coalition is a non-profit housing corporation that accommodates people who use community mental health services and other people of low and moderate income. We were first funded to develop non-profit housing in 1982, and since that time we have developed 45 buildings that accommodate over 750 people. Our tenants include single people, couples and families with children. We retain ownership of 35 buildings that accommodate about 700 people and have transferred title to the other 10 buildings to other non-profit housing corporations.

The Supportive Housing Coalition's most rapid growth, measured in terms of the number of buildings under management -- that is, occupied -- took place from 1987 to 1991. During the period from 1988 to 1990, the Supportive Housing Coalition also acquired 11 properties for future development under the loan guarantee program of the Ministry of Housing. This program was designed to assist non-profit housing corporations to acquire and hold land while they worked on obtaining municipal zoning approvals. At the time of the program, vendors of property were in a strong position to pick and choose from among potential purchasers. Most vendors, most people who had property to sell, were quite unwilling to accept offers of purchase that were conditional upon zoning approval.

The Supportive Housing Coalition was successful in obtaining zoning approvals on 10 of the 11 properties we acquired under the loan guarantee program. The Ontario Municipal Board rejected our application for a change of zoning on one property, 55 Kildonan Road. We have either built or are under construction on eight of the properties and we have not proceeded with two, 1236 Dundas and 1215 Queen, at the request of the Ministry of Housing, although, as mentioned, we have obtained zoning approvals on those properties.

The Supportive Housing Coalition received a copy of the report from the Ministry of Housing auditor in April 1992. As noted in the auditor's report, we had already addressed some of the issues the report raised prior to our receiving it.

For example:

In 1990, the Supportive Housing Coalition board of directors adopted a position on the receipt and disposition of donations that required each transaction to have the approval of the board.

In 1989, we took steps to ensure that professionals who provide service to the organization were not directors of the organization. We took this action three years in advance of the ministry issuing guidelines on the matter.

In July 1990, the board directed staff to interview several development consulting firms for any future work for which the Supportive Housing Coalition was not already committed to the development consultant that we had previously used.

By the time we received the auditor's report, we had discontinued unnecessary advance payments to suppliers. We note that in some cases, in the very active renovations period that existed between 1988 and 1990, we had to pay advances on work in order to obtain quotations from the small businesses that undertook the small renovation contracts that we had to offer.

By the time of the auditor's report, we had already taken steps to improve our financial and accounting controls to keep pace with our rapid growth:

We employed an additional staff person to work on financial management.

We employed the services of a chartered accountant on a contract basis to assist with the improvement of our financial management.

We implemented a fixed assets register and tagged all our moveable assets.

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Since we have received the report, we have taken these actions:

-- Implemented a purchase order system;

-- Developed a better system to obtain and record at least three quotations for each maintenance contract whose cost exceeded $1,000;

-- Implemented procedures to record expenditures for particular items in a precise manner;

-- Strengthened the finance committee and implemented more regular reports to the board of directors;

-- Changed our financial statements to provide the information in the form that the Ministry of Housing has requested since the auditor's report;

-- Implemented the auditor's recommendation with respect to year-end accruals and payments;

-- Implemented the auditor's recommendation with respect to reporting of earned interest as revenue to individual projects instead of consolidated revenue.

Since receiving the report as well, we have directed the firm that conducts our annual audit to continue to issue a management letter each year. These letters inform the board of directors of areas where the Supportive Housing Coalition might continue to tighten up and improve its procedures and efficiencies.

In concluding, we would like to say that over the years we believe we have provided a valuable service to the people of Ontario by providing affordable housing to people in need. We have in the past and will continue in the future to look at ways to improve our service. We are confident that as a result of this continuous evaluation we'll be able to ensure that in supporting our organization, the people of Ontario will be receiving value for the funds they provide.

We thank you again for this opportunity, and we're prepared to answer any questions. Madam Vice-Chair, I do have copies of the submission, which maybe the clerk would like to distribute to the members.

The Vice-Chair: Thank you. In fact, you pre-empted my next question. Because you did itemize a number of the steps taken by Supportive Housing Coalition, I think it would be helpful for members to have this information before them. We'll start the questioning with Mr Crozier.

Mr Crozier: I'm trying to establish in my mind where the accountability lies for the vast sums of money that are spent by your organization and others. To whom or to what group do you see yourself directly accountable?

Mr David White: In my reporting relationship, I'm accountable to the board of directors for the management of the organization. The organization, through the board of directors, is accountable to the funders and is also accountable to the people who live in our buildings and is accountable to the public at large.

Mr Crozier: I'm interested that you went on through that link, because I'm interested to see that you eventually think you're accountable to the taxpayers, much the same as we feel we are.

Mr David White: Yes, absolutely.

Mr Crozier: There's been some suggestion previously by another witness that like many other agencies and/or ministries, I think it was said, you attempt to spend the full amount of your budget. How would you categorize your operation when it comes to annual expenditures and the efficient spending of taxpayers' money?

Mr David White: What we do is spend the funds that we feel we need to spend in order to provide good service. As the auditor's report has pointed out, like the other organization that appeared before you today, our organization has also not spent its full budget and has returned those funds to the funder after having reported them in our annual financial statement.

We feel we do spend money efficiently. There's nothing in the auditor's report which says we have not received value for money. They have said that some of our procedures needed tightening up to ensure that we weren't risking the possibility of not spending money well, but certainly it's the position of our organization that we have responsibility to spend the moneys efficiently, to provide good service and to keep in mind that these are scarce resources.

Mr Crozier: Essentially, you try and balance the service you are expected to provide with the efficient spending of the funds you have available.

Mr David White: That's right. For example, most of our budget is spent on the operation and maintenance of buildings; that's what most of our funding is for. That includes the cleaning of the buildings and the staff salaries that are associated with that, the management of those buildings, the repairs to those buildings and the paying of utilities.

As an example, we ensure rigidly that we always meet the discount dates for utility bills, as one example. An organization the size of ours pays substantial money for heat, light and water. Most of the utility companies offer discounts if we pay on time, and we rigidly ensure that we meet those discount dates.

The Vice-Chair: Two minutes, Mr Callahan.

Mr Callahan: Do you ever have sabbaticals?

Mr David White: No, we never have had that policy in our organization.

Mr Callahan: Do you ever have merit pay?

Mr David White: No. What we have is a salary scale, and if an employee's performance each year is found to be satisfactory, they may move up to the next level in the salary scale. There are five steps in the salary scale. There's an entry level and four other steps.

Mr Callahan: Finally, how about RSP contributions for pension?

Mr David White: Our organization, in lieu of a pension plan, for each of the employees pays a percentage of their income into an RRSP, which is meant to serve instead of a pension plan.

Mr Callahan: Part of their compensation package?

Mr David White: It's part of their compensation package, along with benefits such as an extended health plan and a life insurance policy; typical kinds of things that an employer would provide.

Mr Callahan: Do you have a lawyer and an accountant on your board?

Mr David White: We have a lawyer on our board. At the present time we don't have an accountant on our board. However, we have contracted, as I mentioned, with an accountant who provides advice to the board.

Mr Callahan: I saw that. If you were going to make a major decision, such as sabbaticals or merit pay or whatever, you would certainly understand that that's something the board of directors would have to take to a special meeting of the membership in advance in order to have it ratified?

Mr David White: The board of directors approves all the compensation package. They approve the salaries, the steps in the salaries I mentioned, the benefit package, including the RRSP package. All of that has been approved by the board.

Mr Callahan: You have a membership, do you?

Mr David White: Yes, we do.

Mr Callahan: Is that then taken to a special meeting of the membership as opposed to waiting till the annual meeting?

Mr David White: No, a compensation package is not taken to the members. It`s dealt with by the board. The board has legal responsibility to operate the organization, and those matters have not been taken to the members, but they are dealt with at the board. The board, of course, is elected by the members.

Mr Callahan: If you were going to do something as radical as sabbaticals, you would obviously take that to a special meeting of the members, would you not?

Mr David White: It's a hypothetical question. The matter has never come up with our organization, the question of sabbaticals.

The Vice-Chair: Mr Callahan, we have run out of time. We have Mr Stockwell and, if time, Mr Tilson.

Mr Stockwell: Your letter basically talks about your program and the best cases and the costs involved, and you talk about the tight controls you have. It doesn't seem to jibe with what the end costs of your units are. Consistently, they appear to be higher than the private sector, in some cases significantly higher. Why is that?

Mr David White: Sorry, I actually don't have information here today which would indicate a comparison. I'm not prepared to answer that question; I just don't have the information.

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Mr Stockwell: But you must have a feeling, being involved in the supportive housing program, being deeply involved for the number of years that you have been involved. It seems that it's excessive, significantly excessive in some instances, and always more than the cost in the private sector. I know audit reports can tell you about how the money was spent, and you're talking about the costs and how closely you tabulate these things and that you're trying to get the best value for the dollar. The point is, is that an incorrect assumption, or is that just something that goes with the kind of cooperative housing cost, that we'll just have to accept it's going to be higher?

Mr David White: We're not actually a cooperative. We're a non-profit housing corporation.

Mr Stockwell: Non-profit housing.

Mr David White: Mr Stockwell, you're asking a general question and I will try to answer it in a general way. First of all, comparing non-profit housing to private sector housing is to some degree comparing apples to oranges.

Let me give you some examples of why I say that. For one thing, most of the buildings that we build are quite small. They're in the order of 25 to 40 units, that kind of size. Those buildings nevertheless have some of the same development costs associated with them; the processing of the application, for example, takes as much time as it does for a larger building. So you don't necessarily achieve the same efficiencies of scale as you might achieve if you built a building of, say, 200 or 250 units, which would be not atypical of a condominium building that would be built for the private sector.

And if the footprint of our building is similar to a condominium building, but the condominium building is 30 storeys high and our building is only four storeys high, in a general sense the roofing cost would be the same because there's as much surface to cover in both buildings, but in the larger building the cost of that roofing is spread over many more units. That would be another example of why the costs may be different.

Mr Stockwell: The analyses I've read, though, indicate that unit size to unit size, in fact bigger units, more expensively appointed, same size in terms of number of units -- and you're talking bachelor apartments, or singles, well in excess of $100,000.

Mr David White: Mr Stockwell, I recently attended a meeting of the Ontario Association of Architects in Ottawa. One of the speakers at that conference in fact pointed out that feature for feature, dollar for dollar, in terms of value for money, the buildings that were being built in the non-profit sector were in every way comparable to what was being built in the profit-making sector in the condominium market. I want to make one point clear, however --

Mr Stockwell: Could I just say, if you could give me a copy of that, it would be the first time I've read that.

Mr Gilles Bisson (Cochrane South): Could you repeat that? I didn't hear that.

Mr David White: I said that I attended a conference, and one of the speakers pointed out that dollar for dollar, value for value, owners of the buildings that were being built in the non-profit sector were getting the same or comparable value for money as owners of buildings that are being built for the condominium market.

I want to make one point clear, though. I don't want to get into this debate in terms of the private sector versus the non-profit sector. I don't think that's a fruitful debate. It's widely accepted in the non-profit sector that the proper approach for us in order to achieve our goals, in order to make sure we are accommodating people of low income and meeting those goals, is that what's required is partnerships between the non-profit sector and the private sector.

We of course work in partnership with the private sector; all our buildings are built by the private sector. At this time, given the general slowdown in the building trades, they are in fact providing a fair bit of business to private businesses. We accept that and we find that a perfectly appropriate arrangement.

Obviously, in the operations of our buildings, they need maintenance. We employ private businesses, large and small, to do that work --

Mr Stockwell: These are lovely answers, but they're not answers to my questions. I don't want to be so abrupt as to interrupt, but I have a few questions I want to get answers to.

The debate is not whether you have a partnership between the private sector and the non-profit. That's wonderful stuff. What I'm dealing with here is auditor's reports, value for dollars --

Mr Gary Wilson: It's about time you got to what we're doing here.

Mr Stockwell: Well, this is what we're doing here.

Interjection.

Mr Stockwell: You know, I never hear Mr Wilson speaking in the House. I'm so surprised that he's so active in committee. Maybe we should take this forward to the House and you could be as active there.

Interjections.

The Acting Chair (Mr Bruce Crozier): Your minute's just about up.

Mr Stockwell: Thank you, Mr Chair. The studies and reports that I've seen have not indicated what you've said. I don't know who that speaker is. If you could supply me with the information about that architect, whoever was speaking in Ottawa, I'd love to read it.

Mr David White: I'll try to do that, sir.

Mr Stockwell: The comparisons I've seen are very clear that it's not competitive. When we read the auditors' reports, read the financial statements, look at the value for taxpayers' dollars and then measure it against this private and public sector approach you're using, I would like to ask, in your opinion, are there specific -- are there consulting costs built in that drive up the fees? Are there costs with respect to programs and processes that are put in place that drive up the fee? Something is driving up the cost of these projects on a comparative basis, on a site-by-site basis, identical in size, same number of units, and we're still getting a higher cost in the non-profit housing sector.

The Acting Chair: If I could interrupt --

Mr Stockwell: They're not talking about roofs; they're talking about internal costs, consulting costs and costs along those lines.

The Acting Chair: Obviously, I can't interrupt. Mr Stockwell, thank you. There won't be time for an answer.

Mr Stockwell: Are there any studies you can provide me with that would back up your analogy? I'd be happy to have them, if you could bring them forward.

The Acting Chair: He wants a yes or a no.

Mr David White: I'll try to bring forward such a study.

Mr Marchese: After the audit reports were done and all the procedures you're putting into place to deal with some of the concerns they had, what has been your regular, ongoing connection in terms of reporting on all your practices and your work? What is your connection to the ministry officials, both in Housing and Health?

Mr David White: We have of course responded. The way it works is, when these audit reports come out, the ministry responsible will review them and then our ministry contact will be in touch with us and ask us to respond to the comments and ask us to indicate what we're doing to deal with any of the issues that have been pointed out as requiring approval.

Using the Ministry of Housing as an example, which in terms of the material you have before you -- that was the major audit that was done on the Supportive Housing Coalition. They first of all invited us in, the president and the treasurer and me and some other staff of the organization. We went in and we met with people from a number of different sections in the Ministry of Housing, both in the development and in the administration end and the finance end, and we reviewed the comments of the auditor and had a discussion. Then we were formally asked to reply to all the items. We did that, and the ministry indicated whether it was satisfied with our responses or not.

They also requested our organization to submit what they refer to as their management plan. What they had wanted us to do was to update it, given that our organization had grown very rapidly. Month by month we were growing, essentially, through that period. They asked us to submit a management plan, which we did. I believe you heard officials of the Ministry of Housing indicate that that management plan went far beyond any expectation the ministry would normally have for management plans.

Those are the steps we went through.

With respect to the Ministry of Health, and I mentioned that those audit reports were not as extensive as the one from the Ministry of Housing, there were two different ones, but the way that worked was that again they asked us to respond, and then they sent an auditor in to do a follow-up to see how well we had done.

If you compare the two audit reports, what you will note is that while the second time, the auditor had further comments -- and quite frankly, I think that's the nature of auditors; they're always looking for continuous improvement and, as I mentioned, we accept that as an approach. But they mentioned a few other items in the second audit, and we've also dealt with those items. To the best of our knowledge, and certainly in terms of comments back from the Ministry of Health, we feel they're satisfied with how we've dealt with it.

Mr Marchese: You don't have an operating agreement with the ministry or ministries, yes?

Mr David White: We have not signed the operating agreement, again as I think Ministry of Housing officials indicated. However, there is an agreement that we're aware of and have read and we consider ourselves to be bound by it. There is one issue which our organization and a number of other organizations are working out with the Ministry of Housing. I think their officials are trying to figure out how to draft the language, essentially, at this point, but it goes to the issue of the fact that we provide supportive housing.

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Normally a non-profit housing corporation takes one half of the applicants who will be living in the deep subsidy units, the units with the largest amount of subsidies, from, in our case, being in Metro, the Metro housing authority list. However, we were funded with the view towards providing housing to people that the Ministry of Housing refers to as having special needs, in our case people who use community mental health services, and we're just working out the language on that issue.

Apart from that, the agreement is before us. We consider ourselves to bound by it and we're operating by it.

Mr Marchese: So it shouldn't take very long to have an operating agreement.

Mr David White: I anticipate it wouldn't take very long at this point.

The Acting Chair: That concludes the time. I guess we had agreed that at this point we would conclude with the witnesses. I'd like to thank you for coming before the committee and just remind you that if --

Mr Tilson: On a point of order, Mr Chair: Who agreed to this? You've made a decree at this point. I'm just wondering what the agreement was.

The Acting Chair: I don't think I made a decree. I said I thought we had agreed. If we haven't, I'll go through the same process as the Vice-Chair did and we can go right on.

Mr Marchese: If Mr Tilson has questions, we're okay with that.

The Acting Chair: We're okay? All right.

Mr Callahan: Well, if we're going to do that --

The Acting Chair: We'll go through the rotation again. I'll give you each five minutes again.

Mr Callahan: Just as a general observation, each non-profit group in Metro has their own list, do they? Or is there a central list and people who get on the list get access to any non-profit group?

Mr David White: This is an area which really, in detail, I think is something we shouldn't be answering. I think it's really something the Ministry of Housing should be answering. But generally, the different non-profit housing corporations have their own lists for people who are in higher-income brackets and for some of the people who would live in the units that are designated for what's referred to as deep subsidy.

The Ministry of Housing, however, through the Metro Toronto Housing Authority, maintains a list of people as well and they refer people who are on that list to the non-profits, and the non-profits are supposed to have arrangements with the housing authority so that half of the deep-core units are occupied by people coming out of that list.

Mr Callahan: The reason I ask the question is that you're probably familiar with Peel Non-Profit Housing Corp, which I think is probably the Cadillac program in Peel.

Mr David White: I wouldn't want to comment on Peel Non-Profit, except to indicate in a general way that I'm aware that it is an organization which is providing a valuable service out in Peel and we're certainly familiar with some of its officials.

Mr Callahan: You should be running for politics, with that answer.

Mr David White: I've never gone near the subject.

Mr Stockwell: You've been near twice.

Mr Callahan: The reason I asked the question, as I say, is because I understand that out there, in addition to the buildings that are held such as your organization does, there are other non-profit groups that individually get moneys from the province to develop individual non-profit housing, much the same as in Metro.

One of the difficulties, certainly from the standpoint of us as MPPs, probably one of the most difficult questions we have to answer, is when we get a call from somebody who is in very great need and they have to be on the list, as it were. Well, if the list is one list for, say, your group and one list for each one of these non-profit groups, people can jump the queue. That's what disturbs me. In other words, if they happen to be within the group that's formed, say, a single building, they may jump the queue over the person who's been waiting for a place in your buildings on a significant list. Is that a fair statement?

Mr David White: I don't know if I would characterize it as jumping the queue.

Mr Callahan: Having insider information. Let's put it that way.

Mr David White: Well, that's even stronger. I don't think I would want to characterize it that way either. The funders, the Ministry of Housing in this case, in this province, and Canada Mortgage and Housing Corp, which cost-share some of these programs, the federal agency -- the wisdom of the two levels of government is that housing should be delivered through a number of non-profit housing corporations. I believe we heard ministry officials indicate that there are over 1,000 in Ontario alone. Having gone that route, it means the entry is decentralized, that there's not a central point through which people get into housing, except, as I mentioned, the housing authority here in Metro does maintain a list of people who have applied to its units and it requires non-profit groups to take a percentage from that list when they're filling the deepest subsidy units in their buildings as well.

Mr Callahan: I jokingly said your answer was one which would put you in line around political options, and you said you'd never had.

Mr David White: I was sort of winking at Mr Stockwell. I served on Metro council with Mr Stockwell's father in the late 1970s, early 1980s.

Mr Stockwell: I think you were in the same caucus, weren't you?

Mr David White: Absolutely, Mr Stockwell. I served on Toronto city council for a number of years as well. So I was being facetious when I said I would never go near the subject.

The Acting Chair: Thank you. We move on.

Mr Tilson: I'm sure you've gone over several times the audit report by the Ministry of Health, and I'd like you to comment specifically about how it happened -- and we're going back to the late 1980s -- with respect to the computer system that was purchased without tender, without a feasibility study, without quotations, the fact that these items weren't budgeted, and a number of other things. As well, the ministry allowed the organization, when there were unspent budget items, to use them to purchase capital items. I know that happened some time ago, but due to the very fact that it happened, I'd like you to comment on that.

Mr David White: In the comment where it says it's unbudgeted, I believe what the auditor is pointing out there is that, as you pointed out, the Ministry of Health in those days -- not now, but in those days -- permitted sometimes at the end of the year, if all the operating funds had not been spent, the non-profit group to make a submission with respect to purchasing one-time items of the nature that are described there in the report, and upon approval the organization could proceed to do it.

As pointed out by the auditor, we didn't undertake a feasibility study. If you'll note, the dollar amounts are quite high too and reflect what computers cost in those days. They're considerably cheaper now.

Mr Tilson: My question is with respect to procedures that went on then, and you're implying it has stopped. But I'm trying to determine why this happened. Without being critical of the organization -- obviously, the ministry has set this procedure up and has provided funding, but this committee is concerned that the ministry doesn't seem to be monitoring what different organizations are doing, specifically your organization at that specific time. Clearly, that is the concern of this committee, when we read this report and there doesn't seem to be any monitoring process of an organization such as yours that can purchase equipment of that substantial amount of money without any authority, without any process.

Mr David White: No. They required us then to get authority to buy items of that nature. I believe what the auditor is saying is that what the ministry should do, if I understand his report, is require us to budget for that at the beginning of the year and not use that procedure. They've discontinued those procedures where they would allow an organization to come and use year-end money that way.

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The other criticism which was directed towards our organization was that we didn't get the necessary quotations that would be appropriate. As I mentioned, we are doing that now for anything over $1,000 and, when it comes to Ministry of Health budgets, anything over $500, which is their requirement. Those are the procedures we now follow. The ministry, however, would require us to get approval. The further criticism in that section --

Mr Tilson: Before you go on to the further criticism, how long did this process continue? How long did this lack of approval continue?

Mr David White: It's not a lack of approval. The criticism was that we didn't get the quotations. The approval was always required by the Ministry of Health. I was just going to say, the further --

Mr Tilson: Are you telling me the ministry was part of this?

Mr David White: The ministry would require us, if we were going to use money that was not spent in a line, let's say, for legal or something, or for salary --

Mr Tilson: So the ministry knew that a feasibility study had not been done. Is that what you're telling me?

Mr David White: No. The ministry would require us to seek its approval if we were going to take money out of an operating budget that we had not spent in, say, the legal line or in the postage line. If we wanted to take those funds that we hadn't spent and we wanted to buy a year-end item such as this, a capital item --

Mr Tilson: I understand. They gave you a certain amount of money and said, "Spend it as you see fit."

Mr David White: No, no. Again, that's the further criticism that the ministry had of us. They said --

Mr Tilson: Are you saying that what is in this report didn't happen?

The Acting Chair: And could we conclude?

Mr David White: No, it's not what I'm saying at all, Mr Tilson. We're not denying the criticism of the auditor. We concede -- and in fact we obtained approval to buy certain things. One of the things, however, they did criticize us for there was that we requested a certain amount of money for a computer and a printer and I think something else. Another item was --

Mr Tilson: No, that isn't what it says. You went out and bought it.

The Acting Chair: We're going to have to conclude fairly quickly, Mr White, please.

Mr Tilson: You didn't get approval.

Mr David White: Yes, we did get approval.

Mr Tilson: After the fact.

Mr David White: No, no. We got approval. One of the things we also sought approval for was to paint the office walls. We didn't paint the office walls. We bought --

Mr Tilson: Sir, the report says, "The budget request for these items was not approved by the ministry" -- page 3 of the report. You didn't get approval.

The Acting Chair: Our time has expired.

Mr Tilson: Don't say you did; you didn't.

The Acting Chair: Time's expired, gentlemen.

Mr Marchese: Mr Crozier, I would like to give Mr Tilson the time to finish his question.

The Acting Chair: Great. There you go.

Mr Tilson: Thank you very much, Mr Marchese. Page 3 of the report says, "The budget request for these items was not approved by the ministry." What does that mean?

Mr David White: That would mean the budget request for these items was not approved by the ministry when we submitted our budget at the beginning of the year. Then the next sentence goes on to say, "Towards the year-end, the ministry allowed unspent salary budget to be used to purchase capital items." Then it listed the capital items.

The criticism was that we had asked for some money to paint the walls and instead what we did with that was that we bought some further computer equipment with it and left the walls unpainted. They said, "You should get that change approved by the ministry too," and we accept that.

Mr Tilson: Are you telling me that the $15,000 for the laser printer and the computer system and the $4,500 for the fax machine came out of whatever was left? Is that what you're telling us?

Mr David White: As pointed out here, it was unspent salary budget, yes.

Mr Tilson: So it wasn't approved?

Mr David White: It was approved because, as it points out here, "Towards the year-end, the ministry allowed unspent salary budget..." and that would mean specifically allowed. We would have on file a letter where we asked for that and we would have on file a letter where the ministry approved it.

Mr Tilson: We're talking about a capital expenditure, and that was not approved. Are you telling me that that capital expenditure came out of the moneys that were left over from the unspent salary budget? Are you telling me that that amount of money came out of that?

Mr David White: With the specific approval of the Ministry of Health.

Mr Tilson: So you don't agree with this report?

Mr David White: No, no. You have to understand what the auditor is referring to here.

Mr Tilson: I understand what the auditor is referring to, but we seem to --

Mr Marchese: I don't want to give him any more time.

Mr Tilson: Mr Marchese is cutting me off.

The Vice-Chair: I think Mr Marchese has withdrawn his offer of his time.

Mr Stockwell: Mr Wilson must have questions. They're champing at the bit there.

The Vice-Chair: We have only three minutes left of the government time; Mr O'Connor.

Mr David White: Madam Vice-Chair, if I can just point out, we would be happy to supply the letters, for the committee's benefit, in which the ministry gives us the approval to spend the $15,000.

The Vice-Chair: We would appreciate that.

Mr O'Connor: The question I have for you is -- and anything that you can answer today. I know that my colleague Mr Stockwell had some questions and you're going to get back to him on it. If you could circulate them through the clerk -- that's the process we go through -- I appreciate that, so we'll have an opportunity to take a look at that.

My concern is that at the end of your spending, as Mr Tilson has given us to believe, there are huge pools of money that have been there at the end of the year. Is that practice still continuing? I know that it was rather more commonplace, but I don't believe that's the case now. In fact, I know that the Minister of Finance, the Treasurer, has said that process was to end a couple of years ago. Does that still continue today?

Mr David White: As I mentioned, the Ministry of Health, although it had that practice at the time, has made it clear more recently that if we have surplus funds because a staff person leaves and it takes some time to hire a new one and there's therefore some salary money left over, in those circumstances they just want the money back, and there aren't approvals for expenditures such as there were at the time these audits reported on.

With respect to our operating on surpluses, we have in past years had surplus funds that went unspent, and those were returned to the Ministry of Housing. However, times are tougher now and essentially our budgets are flat-lined. Nevertheless, costs are increasing to some degree -- not as rapidly as they were -- and as a result of that we end up a few dollars short of budget these days; at least we spend a few dollars less than the budget simply because the budgets are much tighter than they were before.

The Vice-Chair: I'd like to thank the witnesses for taking the time to appear before our committee today.

Mr Marchese: I have a point to make in terms of suggesting what we do for the next little while, in the next meeting. Could I suggest, as a process, that we allow the legislative researcher to include in the report that she's already done things that have been stated today that pertain to the report that has already been written and that we have a subcommittee meeting on Monday or Tuesday. Hopefully, we can arrange to do that early enough so that if there are changes that the researcher needs to make for next Thursday it could be done and that within the two and a half hours or so we would be able to write that report.

Mr Callahan: Can we send that out to Margie so that we can get her input on it?

Mr Tilson: That's the very point. I find it strange that a subcommittee would deal with these matters. Hopefully, the whole committee would be able to deal with the full report. I would like to hear the input of all members. My big fear is that --

The Vice-Chair: I think the suggestion had been that the full committee deal with the report next week.

Mr Tilson: Let me finish, Madam Chair. My big fear, as I've had from the very outset, is that we're simply not going to be allowed enough time to deal with this. Now it appears we're going to have one morning to deal with this report, which would have to be submitted that afternoon. Am I correct?

Mr Marchese: That's why, David, I suggested we have a subcommittee meeting, which could last an hour, an hour and a half --

Mr Tilson: No. Any committee that I've been on, when we review a report -- this is a report of the committee; this is not a report of a subcommittee. I would hope that if we don't have enough time to prepare our report -- and it's our report; it's not the report of the researcher; she's here to assist us -- after the next meeting, the members of the committee would agree to extend the time.

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I'm not in favour of a subcommittee preparing this report; I'm in favour of this committee preparing this report, and I expect full debate. We've spent a considerable amount of time on a wide range of topics from two ministries and two organizations, and I quite frankly think we'll need more than half a day to deal with that.

My suggestion is that we continue on next week. If, by some miracle, we can complete the report that morning, that's fine. If we need more time, hopefully the government members will concede that additional time would be given so that we can properly do the report.

Mr O'Connor: Just on that point, I would suggest that perhaps, because this committee has always worked in an extremely cooperative fashion, if there are areas that are of concern to any of my colleagues, they get to the researcher if they are going to be absent. What we've got is a preliminary draft report that the researcher has provided for us that might allow her to actually expedite the process she needs to go through, because it does take a great deal of time. Maybe we can assist in that way. Mr Tilson's right: Our researcher is writing this report for us and preparing it, so if there's anything we need to have put in there, it should be put in there quickly to help expedite that.

Mr Marchese: I have a sense of what Mr Tilson is getting at, but what I would propose doesn't preclude anything. I'm saying, let's meet as a subcommittee -- the opposition has a majority on subcommittees -- to discuss the report and whatever additional information we put into that report. We can take as much as the hour, hour and a half that it might take to do that. We'll see at the subcommittee whether there's any disagreement about what there is in the report that you might agree or might not want to agree on. At the end of that, we'll get a better sense of whether we can, in two hours and a half, complete the report on Thursday.

But rather than predetermine the conclusion, which Mr Tilson is suggesting we do -- or he's suggesting, let's assume we might not get it done, so let's say now that in that event we will extend the discussion. I'm saying, prior to doing that, have the subcommittee, let's assess what there is agreement or disagreement on, and then get a better view at the next Thursday meeting on that, before we agree that we should extend these discussions.

The Vice-Chair: Mr Tilson, just before we go back to you, you made a statement about the fact that you didn't believe committees usually operated in this way. My only experience in dealing with this kind of situation, where you had a very tight time frame, was with the select committee on education, which was in the previous Parliament.

In fact, in two of our reports we did decide, as a committee, that the steering committee, which had a representative from each caucus, would do the preliminary drafting with the researcher, and if any members of that particular caucus had ideas to contribute, they would do it through their representative. Then we came as a full committee in what was left of the time we had allocated to do the report.

Mr Marchese: We've done it often.

The Vice-Chair: This does not prejudice you in the way that you have to operate. I'm just saying that there have been precedents before in dealing with it this way.

Mr Stockwell: Thanks for not prejudicing us.

The Vice-Chair: No, I'm telling you it's an option.

Mr Stockwell: We heard his option.

Mr Marchese: We do that all the time.

Mr Stockwell: We don't want to do that now.

Mr Tilson: I'm quite aware it's an option, Madam Chair. I'm simply saying that this is a very important topic. The whole topic of non-profit housing is something that this committee has been working on for months and months over different periods of time. The work has always been by the committee and I, quite frankly, would like the input of other members of the committee.

Mr Marchese: You can come.

Mr Tilson: I know what you're saying, Mr Marchese, but I'm simply saying that I believe that more fruitful work can be done if we hear the input from all members of the committee, as opposed to a member from each caucus. I can tell you that our caucus would prefer that this topic be dealt with by the full committee, as opposed to by a subcommittee.

Mr Callahan: Over all the years I chaired, I don't believe that the committee was ever bound by what the subcommittee did. It had to be submitted to the committee for approval. I suggest it's the same thing here. If they want to go ahead and do a preliminary review of it -- I would imagine that your Housing critic will be one of the ones on the subcommittee, and if that's the case, good luck to all of you; you'll be longer than two hours in your subcommittee. But then it can come back here and then we can throw it all out if we want. Anne will be unhappy if we do that, but --

Mr O'Connor: That's why I suggested we put any points we might have in there already, so that Anne might include them.

Mr Stockwell: There are a couple of problems, I think, in the subcommittee approach. I don't know if it's in camera. It probably would be a public meeting, I assume -- the subcommittee.

The Vice-Chair: Actually, the public accounts by precedent and practice over the years has met in camera, with full committee even, to discuss reports.

Mr Stockwell: Yes, you see, that's even a difficult process that I think we're going through at that time, because of the public nature of this issue. By moving it off into a subcommittee, you even distance it further from the public forum than I think you want when writing this report and that I'm certain the government members want, including Mr Wilson. They would insist this would be as public as possible. By moving it again now down a stage to the subcommittee level, it seems that -- I'm not saying there's something you don't want the public to know or there's a coverup, but it gives the perception that you're trying to move it away from the public light, and I think that's a huge mistake.

The Vice-Chair: Mr Tilson and Mr Callahan were both at the public accounts committees from across Canada meeting last year, when this very topic was discussed, and there may have been some government members here as well. I think Mr O'Connor was there. We actually had this debate. One of the considerations --

Mr Callahan: Actually, nobody went except the Chair. That was the one that was in --

Mr O'Connor: No, it was here.

The Vice-Chair: I'm talking about the one that was held in Toronto. We had this discussion over whether the meetings to do reports should be in camera or not. The point you make was made at this. The other point that was made on the other side is that when the cameras and the microphones are not there, members seem to be slightly more willing to come to a consensus. Not that we would ever grandstand, but there seemed to be more willingness to get together on a report. That was one of the reasons for in camera.

Mr Marchese: Again, I understand what Chris is saying. I'm not sure I agree with him and I'm not sure if I understand fully what he really wants to accomplish by all of this. First of all, I want to propose that if three members of the Conservative Party want to come to the subcommittee, they can and should. That may not help you, based on what I think you're getting at, but if that helps, I think you should all come to the subcommittee.

But I would argue that even though that subcommittee may not be public, once you come into committee you can say what you like. That becomes part of the public process. If you disagree with anything that's in that subcommittee, you can then come to the main committee and say what you like to the public. If you think we may have hidden something, when we come to the committee you can say, "The NDP is hiding this, as usual," whatever you want to say, as you are free to do and you do anyway.

We should invite anyone who wants to come to the subcommittee. We're trying to facilitate, not obstruct. I think this will help the process.

The Vice-Chair: I was remiss in not pointing out that when we did this on the select committee on education and did it by committee, we did invite all members of the committee to participate, if any so chose.

Mr O'Connor: I just wanted to point out for my colleague and friend Mr Stockwell, who may not be as familiar with the report-writing process of committee, that quite often, especially when you get into a very time-limited circumstance, for example, a 125 order, where you have limited time -- in fact quite often, subcommittee meetings were worked towards a report because you have only a limited amount of time, 12 hours' debate. I'm sure you're aware of that. People have probably told you.

Because you can only put so much in there in that time frame, quite often the subcommittee actually makes up the entire committee, so what I suggested is if you have something you'd like to have put in there, you get the information to legislative research so that can be put in there right from the beginning so we have an opportunity for us all to have some full input into that process. I know some members of the committee aren't used to the committee process quite as much as others.

Mr Stockwell: You see, you're not used to dealing outside caucus. I understood that when you told me the first time.

Mr O'Connor: It's nice to see you back in the committee.

The Vice-Chair: That's the list of speakers I had on this particular topic. I would prefer not to have to do this by vote. Do we have a consensus that we could, in fact, have the subcommittee look at it, with an invitation and notification of all members of the committee that they may attend the subcommittee meeting if they choose?

Mr Tilson: Madam Chair, I'm unavailable Monday and Tuesday. I have committee meetings.

Mr Marchese: Okay, we'll take Chris.

Mr Tilson: So do you, Mr Marchese. You are Chair of the very committee that we're on and you haven't got the time for a subcommittee either.

Mr Stockwell: So Gary's got to go now.

Mr Marchese: We don't have to meet at 3:30. We could meet at 12, to 1:30 or 2. All right?

Mr Tilson: I'm simply saying you and I are on the very committee and you don't have time to sit on it.

Mr Marchese: I know, but we don't have to meet at 3:30. We can meet at 12, till 1:30. We've done that before. We do that all the time.

Mr Tilson: We could meet at 8.

Mr Marchese: Let's meet at 8 then.

Mr Tilson: Right.

The Vice-Chair: Mr Stockwell has asked that this be put to a vote.

Mr Marchese: Thanks, Chris.

The Vice-Chair: Mr Marchese, would you like to make it an official motion, because I think we had a suggestion, not a motion on the floor.

Mr Marchese: Madam Chair, I would move that Ms Anderson include in her report matters that have been raised here today and that we meet as a subcommittee, to which anyone is invited, on Monday or Tuesday when members are available at whatever appropriate time, 12 o'clock or 9 o'clock.

Mr Tilson: Madam Chair, if you're trying to do this by vote, my understanding is that when you have a subcommittee meeting, all parties have to agree, and I'm telling you the Progressive Conservative Party doesn't agree with the proposal.

Mr Marchese: David, you're obstructionist, really.

Mr Stockwell: Madam Chair, I don't want to create such controversy, but I'd like to take a 20-minute break here so we can consult.

The Vice-Chair: Mr Stockwell, you well know if we have a 20-minute break that there cannot be a decision on that and I'm not willing to undertake --

Mr Stockwell: I'm not trying to do that. I want to talk to Margaret.

Mr Tilson: You have no choice.

The Vice-Chair: We haven't even accepted the motion on the floor yet.

Mr Callahan: Yes, but he'll get it on a vote anyway. I mean, if he asks for 20 minutes to confer with his members --

Mr Stockwell: Yes. I have to. She's the key player here.

The Vice-Chair: Mr Stockwell, I'm trying to get a consensus on this committee, which is at times very difficult. Would you please help me to understand what we are going to accomplish by a 20-minute recess?

Mr Callahan: He's got to talk to Margaret.

Mr Stockwell: So we can talk to our critic.

Mr Bisson: How come you guys have three minds in the Conservative Party?

The Vice-Chair: I think it has been clear that --

Mr Stockwell: I don't have to put up with this. It's a fair comment. Our critic isn't here. We're asking for 20 minutes to consult. I'll be happy to reconvene the meeting after the 20 minutes.

The Vice-Chair: We are not allowed to do so. We are only authorized to sit as long as the Legislature is sitting this morning, which means we cannot make a decision --

Mr Stockwell: I'm asking for the 20 minutes, Madam Chair.

The Vice-Chair: Okay, I would just tell committee members that when I call for the vote and Mr Stockwell asks for his 20-minute recess, that means that the steering committee can meet at its will next week at the call of the Chair, that they may make any decisions they wish to make on this and the matter will be brought for full discussion next Thursday. Is it the wish of the committee members present that they be notified of any subcommittee meeting next week?

Mr Bisson: Sure.

The Vice-Chair: Okay, I will now call for the vote.

Mr Tilson: Who made the motion?

The Vice-Chair: Mr Marchese made a motion.

Mr Stockwell: I'll ask for the 20 minutes.

The Vice-Chair: Mr Stockwell has asked for a 20-minute recess. This committee stands recessed for 20 minutes, which means we will stand adjourned till next Thursday at 9:15.

The committee adjourned at 1154.