Assemblée législative de l'Ontario

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

CONTENTS

Tuesday 1 October 1991

Ministry of Industry, Trade and Technology

STANDING COMMITTEE ON ESTIMATES

Chair: Jackson, Cameron (Burlington South PC)

Vice-Chair: Marland, Margaret (Mississauga South PC)

Carr, Gary (Oakville South PC)

Daigeler, Hans (Nepean L)

Farnan, Mike (Cambridge NDP)

Johnson, Paul R. (Prince Edward-Lennox-South Hastings NDP)

Lessard, Wayne (Windsor-Walkerville NDP)

McGuinty, Dalton (Ottawa South L)

McLeod, Lyn (Fort William L)

O'Connor, Larry (Durham-York NDP)

Perruzza, Anthony (Downsview NDP)

Wilson, Gary (Kingston and The Islands NDP)

Substitutions:

Hansen, Ron (Lincoln NDP)

Kwinter, Monte (Wilson Heights L) for Mrs McLeod

Clerk: Carrozza, Franco

The committee met at 1536 in committee room 2.

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

The Chair: I would like to call the standing committee on estimates to order. Today we will continue with the estimates of the Ministry of Industry, Trade and Technology. We have five hours and eight minutes yet to complete. I believe that when we adjourned the rotation was moving to Mr Carr for the third party.

Mr Carr: Welcome, Minister. I want to start with something that goes right to the heart of the mandate of your ministry. You will know that on page 6 of our estimates book it says, "The mandate of the Ministry of Industry, Trade and Technology is to help Ontario become a more productive and internationally competitive economy," I want to get your thoughts and judgements on how you see that being done. It is a very broad, all-encompassing statement, but if we could get fairly specific, I want to see what your thoughts are. How do you see us doing it? In what areas? Is it going to be skills development? Is it going to be better co-operation with labour? Where do you see us heading?

Hon Mr Philip: Let me just get the statement, if you do not mind, so that I have it in front of me.

Mr Carr: It is page 6, the very first line.

Hon Mr Philip: Do you want me to go down each of the items that says how we do that and talk about the kinds of programs we are doing?

Mr Carr: No. I would like to hear in your words how you see us doing that. The statement, I think everyone will applaud on all sides, all parties and so on, but I want to hear in your own words how you are going to do that, with what programs. A year from now when we judge how Ed Philip has done, how would you like to be judged, based on that mandate?

Hon Mr Philip: I think what we have to do, first of all, is recognize that coming out of free trade, coming out of the recession, we are not in the same game that we were in before, that if Ontario industry is going to be more competitive we have to operate globally. We can no longer expect that we will simply rebound with the American economy the way we have in the past, and that requires a number of initiatives.

Part of competitiveness is bringing about co-operation between labour, government and industry, and I think we are in a good position to try to do that.

We have been doing a number of things that I think help to assist us in that. One of the things we are doing is trying to meet with each sector, and hopefully, by the time we are finished, we will have developed some memoranda of understanding so that industry and the components in that sector understand what we can expect from one another to become more competitive and how we can work together.

In addition to that, we have to identify what are the kinds of markets we stand to best move into. One of the things my international office is doing is trying to develop a more objective way of evaluating markets for us. We are developing and experimenting with a kind of grid system with which we can evaluate markets.

We have to work with industries to develop a closer liaison with other ministries that are involved with them. That includes the Ministry of Skills Development. We have to work with communities, and indeed we are developing a community model that we hope to be experimenting with in November, developed by the small business part of my ministry and by myself and my staff, with which we hope to look at individual communities, identify the strengths, the weaknesses, the potentials and where we should move from there. Hopefully out of that will come some kind of memoranda of understandings as to what is the role for each of us in that.

In addition to that we have to look at what the kinds of things are we can best do that can only be done by joint venturing with other countries. I think the role of my ministry is to identify which countries, which international companies, which offshore companies we can form partnerships with and to act as an honest broker, if you want, between our companies and some of the other companies, to develop a new synergy and create new products.

We also have to work with our industries to put together packages of deals. We have to recognize that a number of our companies are often smaller in the international market than the Americans are; for example, in the field of engineering technology. But a number of companies together can often put together a package that can be competitive, or in some instances put together a package as a subcontractor to a larger American company that is working on a world market. I think we have to be flexible and pragmatic about that.

Those are a few of the kinds of things. I guess what I am saying is that a lot of the kinds of things we are doing have to be process-centred things. We cannot simply throw money after money after money. We are not going to buy our way out of the recession. But we can develop strategies that I think will work. As my colleague from the federal government in Germany said today, more and more knowledge is universal, and a lot of the kinds of things we do well are the selling of knowledge, the selling of software, the selling of technical expertise. Those are the areas we have to identify and work on with our industries and put together the packages.

There are a number of opportunities. Maybe Claudette would like to talk about some of her perspectives, as my assistant deputy minister on the international market, on where there are some real opportunities for us, and some of the things she is doing.

Ms MacKay-Lassonde: I am Claudette MacKay-Lassonde, assistant deputy minister, trade and international relations. The thing I would like to carry on with from what the minister has said previously is that we are currently going through an exercise where we are trying to identify the areas in Ontario where we have definitive strength by comparison with the international market. Given those strengths, we are also looking internationally at countries in the world where from several perspectives, one of them being competition, the other being the strength of the market -- the demand, the size of it, the growth of that market -- we have a chance to be more competitive. From there we will establish a much more proactive and aggressive approach to penetrate those markets within those industrial sectors.

Mr Carr: One of the problems, Minister, is this: It is all fine and well to talk about what we are doing internationally. Your officials might be aware of a particular situation in my riding. Robin Hood Foods Multifoods Inc is going to spend $21 million to expand. They made plans to move into the Burlington portion of my riding. They currently employ about 150 people and are going to expand it.

As a result of some of the initiatives by the ministries of Revenue and Treasury and Economics through the Ontario current cost adjustment regulations, the rules of the game were changed halfway through. They now say to me, "If we had known what was going to happen, we would not be making the investment." I think your officials have been kind enough to set up a meeting with them to discuss what is going to be done.

Here we have a company in my riding going to expand at a time when we are trying to keep jobs and they are saying that some of the initiatives, not through Industry, Trade and Technology, but through Revenue and Treasury, changed the rules. The people in the United States say very clearly -- as you know Robin Hood has facilities there -- that if they had known what they know now about the rules change, they would not have invested here. They would have put the plant down in Buffalo.

It is good to talk about how we are going to expand, and yet other ministries, Revenue and Treasury, in their grasp to try to get revenue, are basically taxing jobs and investment out of this province. So here we are on the one hand saying we have got to help some of these industries, and on the other hand we are taking it away.

Essentially what it boils down to is that, some of the write-offs for it are going to be changed. Now we are going to have to have Industry, Trade and Technology come in and say, "What can you do to help us?" You are taxing on the one hand and we need more money on the other hand through incentives." I was just wondering if you could comment on how you are going to change some of the other things.

I will add one quick point about what other ministries may do. Some of us here, I think, sat on the standing committee on administration of justice as well. We went around the province and we heard the chambers of commerce saying, "One of the things we don't need is more regulation." Yet as recently as yesterday we put in a process where now, not only will they have to go to municipalities but they can then take it to the Ontario Municipal Board. We have this wonderful Industry, Trade and Technology ministry trying to defend industry, yet we have people, even at the Ministry of the Solicitor General, which we do not think of as being an economic ministry, and Revenue and Treasury, pulling in opposite directions.

My question is very clear: How are you going to see that changed so that Industry, Trade and Technology can take a more prominent role when decisions are made around the cabinet table that are hurting industries in our province?

Hon Mr Philip: I think that is a fair question and a good question. Not to be overly punishing, I get a variety of people who say that their industry is being affected for one reason or another. The trucking companies will say federal deregulation has put them under and will decry that to me, and others will say the GST and so forth.

I think the role of my ministry is to develop a process whereby a particular company or set of companies has a way of letting its concerns be known. As minister, I have had the good fortune of being granted two parliamentary assistants instead of one, unlike previous ministers. Brad Ward is dealing with international and general issues of the ministry and Norm Jamison is specializing in small business. What we have done in terms of small business is that we have written to the six ministries that have the most interface with business -- that does not mean there are not others because every ministry has some -- and we have asked them to appoint their parliamentary assistants to a parliamentary assistants' committee on small business.

We are hoping that will allow for some one-stop shopping where a business concern or a sector that has a variety of problems can go to this committee and at least make its views known concerning a variety of issues, because often an issue overlaps ministries.

When I was speaking with the minister of technology from Germany today, he was quite surprised at how many ministries in Ontario actually deal in the field of science and technology. I signed a cabinet submission only a few hours ago. I will not tell you what is in it, but it dealt with three different ministries in which three ministers were sponsoring this cabinet submission, Northern Development, Natural Resources and my own. I have signed others with Energy, and so forth. I think you have to have a way of dealing with that.

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The other thing we are doing, of course, as the Treasurer has announced, is that he is holding a Fair Tax Commission. I think we have to look at the whole tax system and the effect on business. Last but not least, and I think it is probably the most important, is that on the first day I expressed my concern about the need to implement the report of the standing committee on regulations and private bills. I am very concerned about overregulation and the fact that they are not even indexed.

The average small business person in a small company of under a couple of million dollars' equity does not have the resources to understand all the regulations that are affecting him. I think we have to come to grips with that. We are working on a process We are going to choose just a few ministries to begin with, ones where we think we can cut down on bureaucracy and regulation, and indeed some of the ministers are already doing this on their own.

The Minister of the Environment has a study on to find ways in which she can reduce the environmental assessment process, which is not particularly friendly to environmentalists, let alone corporations. I have had companies tell me: "I'm quite willing to set up a plastics company in Ontario. I'm not a polluter. I'm willing to abide by your laws, but I don't want it to take three years for me to get all the necessary approvals." That is something else this ministry has to come to grips with. I think the Ministry of Agriculture and Food has perhaps been more successful than this ministry over the years in understanding that there has to be some system of one-stop shopping.

We are looking at a variety of ideas and I would like to hear yours, but maybe certain companies or a series of companies or sectors should be assigned a representative. We know there are certain people in our ministry who deal all the time with certain companies, but there has to be a system whereby somebody can come to a ministry and say, "I've got a revenue problem," "I've got this," "I've got the other thing," and they are dealing with the same person all the time.

The Chair: I was looking for a one-stop answer and I would like to move to your colleague.

Mr Carr: That was 15 minutes?

Hon Mr Philip: They were good questions. I was hoping to get some more, but I am sure you will get another chance.

Mr Carr: It went fast.

The Chair: You know you will get more questions. It is my responsibility to keep the flow to the caucuses fair.

Mr Farnan: I have just one question I would like to put to the minister. It concerns the very diverse makeup of our province, and as a result of that, the advantages we have in terms of business connections with other jurisdictions. I wonder if the ministry has given some thought as to how we can tap into this kind of networking of various business connections, whether they be Irish connections, with their great entrepreneurial spirit, or the Portuguese community; for example, in my community of Cambridge, there are over 20,000. As you look cross the province you see this multicultural network of communications. Is the ministry tapping into this?

The Chair: The Treasurer's favourite vacation spot is Cuba, so the whole world is our oyster here, is it not?

Mr Farnan: I should be happy to help the minister out by taking off to Ireland to speak in his behalf, should that be necessary.

Hon Mr Philip: I have not been in either Ireland or Cuba in many years.

The Chair: But you have been there.

Hon Mr Philip: I have been to both of them. I have been to a good many countries.

I think you are right, Mr Farnan. The greatest resource that Ontario has, I think, is the people who have immigrated from other countries. I said this on India Day. I said in Mississauga, in front of Hazel McCallion and all the other dignitaries -- Steven Offer and a few other people who were there -- that we have to work with the various ethnic business groups. I have met with all the consular corps already. I have been meeting with the various chambers of commerce -- the Indo-Canadian Chamber of Commerce, for example. I met with the executive director of the Canadian-German Chamber of Industry and Commerce today, and we hope to set up a meeting fairly soon.

One of the things I think we need in a global market is to look at ways in which we can develop joint ventures, co-operation between companies here that may have risk capital or money, business people here, with their countries of origin. Elaine Ziemba, the member for High Park-Swansea, has approached me about some groups that are connected with eastern European countries and that want to invest in those countries, but also in turn form joint venture companies, companies that are owned on both sides of the border.

I can have some of our staff talk about it, but we have, I think, in our ministry the need to develop a special unit within our external office -- not with a lot of people, maybe one or two people -- that will be in constant liaison with those ethno-Canadian chambers of commerce and groups. I want to spend a lot of time going around and meeting with them and talking to them about how we are willing to work on both sides of whatever border and help them to liaise with their families, with their relatives back home who may have businesses, and see ways in which we can do it.

For example, somebody came to me the other day and he said: "It's not very economical to manufacture furniture in Ontario any more. We may have some highly specialized products, but it is becoming increasingly difficult. But in India, if you happen to be a father waiting to have his daughter married, you may be going down to the furniture shop until the night before the wedding saying, `When is it finished?'"

He said: "That poses great opportunities for us. Perhaps we can form furniture manufacturing and design companies here that are owned by some of our people, and then have some of our families or relatives or friends back in India" -- trade has been opened up dramatically in the last two and a half months, and I can show you some really interesting statements by the government; it is certainly liberalizing trade -- "set up companies there that can be either jointly owned? We can do some of the designs. We can do some of the manufacturing or a lot of the manufacturing there. Some of those products can be shipped back, so the high-tech, the high-engineering, the high-design portion can be done here. The manufacturing or the assembly work can be done there." There are all kinds of opportunities and I do not really think we have tapped that source.

It provides us also with a tremendous source of equity that we have not really thought about. A lot of our friends who have immigrated from other countries have relatives all over the world. If we can work with them to create a business opportunity that they are creating, often they will be able to bring in that $500,000 from their uncle in New York city as an investment, and some other money from another uncle in Australia and so forth. It is a whole source of new risk capital that perhaps the banks and other sources of traditional capital have not developed.

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Companies have said this to me so often as I meet with international companies: The greatest thing we have going for us and compared to the Americans, because they are going in the opposite direction, is that we do not have a highly restrictive immigration law for highly skilled people. If you are a top-flight engineer or scientist and so forth -- I pointed this out to a major electronics firm this morning when I met with them. I said: "You can come in to Toronto, and if you are lacking any skill, we guarantee that with our immigration laws we can get that skill for you. If we do not have it here in Ontario" -- and we have to improve the skills so that people are trained here in Ontario -- "there are people in Hong Kong or in Japan or in some other country who are just so anxious to get into Canada because it is such a marvellous place to live and bring up a family. They have these high skills and their families are living here already, and we can bring in those people with our immigration laws."

The Americans are going in the opposite direction. It is harder and harder to get people from other countries in, and I think, in the short term anyway, that is going to hurt their industries.

Those are just a few of the ideas. Deputy, do you want to add to that?

Mr Armstrong: Perhaps I would add that under the trade and international relations division of the ministry, there is a business immigration section which works very closely with the federal government to encourage prospective business immigrants to apply and to file business plans and to qualify for visas. Over the past three years, the business immigration section has recorded the establishment of approximately 580 business immigrant clients, and the estimated investment by those coming in is approximately $130 million, the creation of over 4,000 permanent full-time jobs.

One of the concerns we have is that under that program, which is a national program, Ontario at the moment is attracting about 25% of those who are coming to Canada, so we rank behind British Columbia and Quebec.

One of the distorting features of that is that many of these immigrants to the other provinces come first to those provinces and then reimmigrate, or immigrate internally, to Ontario. But this is an active and I think largely a successful operation. It engages in assistance to those who wish to immigrate not only by assessing their programs, but by publicizing their achievements in such things as the Korea Times, the Chinese Canadian magazine and other means of publication of successful results. I think that is another area where good work is being done and where the potential exists for even greater activity by bringing together, as the minister said, the indigenous business groups, the social clubs, the foreign banks and others that will assist them in establishing in this country.

The Chair: I believe Mr Johnson had a question next.

Mr Johnson: Actually, all of my colleagues on this side, and I am sure my friends and colleagues on the opposition side, have many questions they would like to ask the minister. I think Mr Hansen was anxious to answer a question.

The Chair: I had you down and was recognizing you, but Mr Hansen is next.

Mr Johnson: Then I will follow him.

Mr Hansen: I am going to talk about a different industry. I am going to talk more on the agricultural issue -- you heard from the official opposition yesterday that it was a very important industry -- and the question is, what provincial agricultural support programs will have to be reduced as a result of the multilateral trade negotiations? As you saw today, $35.9 million was awarded to help farmers in the condition we are in now with the GATT trade and the free trade. Can you give me some answers on this, being the Minister of Industry, Trade and Technology?

Hon Mr Philip: Yes. I am sure my staff will no doubt want to add to this, because this has been an ongoing situation which I am just coming to recently. Ontario fully supports the balanced position Canada has put forward in its agricultural negotiations. That includes clarifying and strengthening GATT article XI and dealing with the rules governing the operation of supply management. We are concerned about anything that would hurt that balanced approach. Our purpose, and I think the purpose of the federal government, surely would be to strengthen and clarify the GATT. The deputy might want to add to that and some of my staff might want to talk about where we are with the multilateral trade negotiations on agriculture.

Mr Armstrong: I may defer to Mr Sadlier-Brown on this question. He is dealing not only with the MTN but with the North American free trade negotiations. As the minister said, the position of the ministry is that there must be a satisfactory result in the Uruguay round for Ontario food exporters to be satisfied that their needs as supply management producers and food processors will be met. Peter Sadlier-Brown, who is the assistant deputy minister of policy, can probably bring the committee up to date.

Hon Mr Philip: Just before Peter answers, I do not know whether you were here when I pointed out that I had written to my federal counterpart asking for a meeting of all ministers so that we can be updated on how the negotiations are going.

Mr Hansen: No, I was not present at that time.

Hon Mr Philip: We are concerned not only about agriculture but also about such questions as environmental considerations, labour transfers -- a variety of issues that are of concern to us. We have not received a reply, but I am sure the reply will be forthcoming fairly soon. I do not know, Peter, whether you have a copy of that letter. I do not know whether I have it.

Mr Armstrong: I think you brought it the last time.

Hon Mr Philip: I think I brought it last time. I referred to it and then I put it away somewhere.

The Chair: Perhaps Mr Sadlier-Brown could respond to the question that has been posed. We will allow him to proceed.

Mr Sadlier-Brown: I do not have a copy of the letter, but we can certainly get one. Clearly the concern that has been expressed relates to the MTN that are happening now, the Uruguay round, as it has been called. What is particularly in question is article XI of the GATT, which deals with agricultural matters. The concern is that the position Canada has taken, that article XI be strengthened, which heretofore has been supported by a number of other countries, is now a source of some anxiety because the Americans, we are told, are thinking of adopting another approach to it. This is fundamental for Ontario's agricultural producers and it is fundamental for the protection of our supply management system.

The specific question that was raised related to what programs in Ontario would be at risk if this turned out badly. The negotiations are not terminated. The negotiations are still proceeding in Europe now, so the final outcome is not known, but we do not expect any Ontario programs to be adversely affected by this. It would apply in the first instance, and probably the only instance, to federal programs. What may well be of concern is how the federal government then develops that and turns it into its own financing strategy, the extent to which it uses an adverse finding or adverse outcome there to affect its allocations in the agricultural sector.

The Chair: We are out of time. We can circulate the letter.

Hon Mr Philip: I wonder if I could just make sure people do not misinterpret that I am somehow criticizing the federal government.

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The Chair: No, I do not think we did, Minister. I said we would circulate the letter. The clerk will be pleased to do that.

Hon Mr Philip: Because John Weekes has certainly provided information to us.

Mr Daigeler: Minister, I have a few questions to start out with based on the document that we received and are actually, as a committee, supposed to analyse.

Hon Mr Philip: You mean you are going to ask a financial question?

Mr Daigeler: Yes. Estimates give us a good opportunity to review a broad range of issues, but I like to look at our primary responsibility, and that is the actual figures that are presented to us. They give us a feeling as to how the money is being spent and where your priorities are, because after all, the money spent does reflect your policy priorities.

You indicated before that you give great importance to international --

Hon Mr Philip: I do not want to interrupt, but --

The Chair: You just did. Please, would you just allow the courtesy of letting Mr Daigeler make a statement.

Mr Daigeler: I have not got to the precise speech yet.

Hon Mr Philip: Okay, I am sorry.

Mr Daigeler: You indicated -- this is just a preamble -- that you support very forcefully our efforts to increase international trade and competitiveness. Some of the questions that were asked related to that, how we can do better in that regard, all of which I certainly support. I am very keen to have you move forward in that way. However, when I look at the figures, at least the way I read them now, your intention does not seem to square with where you are spending your money. Now I am getting to the precise figures. Starting with page 6, which lists the operating summary, I note that in the international relations support program there is a decrease of $17 million over last year instead of an increase, in fact almost a 9% decrease in the money spent in that area. How does that decrease in the international relations support program square with your stated intention to increase our trade with other countries? Do you think we can do it with less money?

Hon Mr Philip: Yes. In light of the deficit, what we are looking at with all ministries are ways of doing everything with less money. That is fair to say. One of the things the assistant deputy and I have been looking at is whether some of our operations are really meeting the best objectives; for example, whether our trade offices are in the best places possible and whether they are operating in the most effective way possible. We are in the process of doing an evaluation of that. As a result of that, we may well make some changes. I do not want to alarm anybody by saying we are going to close one office and open up another one, but I think we have to look at where our resources are being spent and whether they are being spent in the best possible way.

Mr Daigeler: If that is the case, if the $17-million decrease, the 9% decrease in support for international relations reflects a desire by the government to be fiscally responsible, I wonder why on page 12, under the ministry administration program, you have a total increase of 10.9% rather than a decrease of 9%. You are obviously being very selective in terms of where you put your priorities. In your main office you have an increase of 4.4%, in human resources 6.9% and in analysis and planning 58.6%. I would like to know specifically what that constitutes. Why is there such a tremendous increase in analysis and planning? The main point is, why are you cutting back on our efforts to increase trade internationally but increasing on administration?

Hon Mr Philip: I think what you will find under the ministry administration program are a number of special projects that have boosted that budget. Indeed, those special projects do have international implications, so that is not an either/or. If you look at de Havilland, for example, that certainly has international implications. We are working on the possibility of a joint venture with companies in both Italy and France. Algoma is another example of where we had to work on the restructuring in order to save a town. We think that company, under its restructuring program, will be capable of exporting to the United States and be competitive and stay in business. Spruce Falls is another example that falls under that.

Those are related to the whole restructuring as a result of the shakedown after free trade, the recession and a variety of other things. We had to deal with specific matters. I do not think you can say those are not international matters. To me, being competitive and shipping steel to the United States is an international matter. It may not fall under Claudette's mandate, but it certainly is part of her concern, so it is not an either/or.

Mr Daigeler: I can see that there would certainly be some international impact of the work that is being done -- at least I hope so -- through the administration, but I would like you to be a little more specific. You are making a rather vague statement that some of this work relates to Algoma and some of it relates to Spruce Falls and other things. Specifically why is there this increase of 58% under analysis and planning? What does this relate to? If you cannot give me an answer today, I am prepared to wait. If you want to do it in writing, that is fine with me as well.

Hon Mr Philip: We have the information. I would be happy to provide you with that information today. If I might ask my deputy to walk us through it, we can do it figure by figure and provide you with that information.

Mr Daigeler: I am specifically interested in the 58% under analysis and planning, because it stands out, it jumps out.

Mr Armstrong: Mr Wood, the executive director of finance and administration, has the details in front of him. He will take us through it.

Mr Wood: With regard to the $550,000 increase, that money was set aside in that vote and item, as the minister has stated, for special projects: de Havilland and professional services related to that -- strategic industry consultants and financial consultants to assist in the project. It is the same with the Algoma project and the same with Spruce Falls. That money was placed there for those types of projects, special projects related to restructuring.

Mr Daigeler: I see. Okay, thank you very much. I appreciate that.

I look at almost every budget item. There seems to be a cutback in the transportation and communication item almost everywhere. I can certainly appreciate and support the effort to be fiscally responsible, even though, quite frankly as a Liberal, if there were any ministry where I would probably put more money in, it would be your ministry. I think the economy of the province and therefore the social programs of the province depend on the success of your ministry. But if you, the cabinet and the Premier have made the decision that you should be --

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Hon Mr Philip: It was not cabinet. We made that decision. The cabinet approved our budget, obviously, but we made that decision.

Mr Daigeler: Why then did you particularly cut back on transportation and communication? Again, I can see the point that in many ministries, communications perhaps could be an effort to make the party look good. I think that perhaps happened under the Liberals and Conservatives, and you do not want to do that. That is fine. But in the Industry, Trade and Technology portfolio, communications to me relate to selling the province and the products of the province. I do not understand why you would be cutting there even though there may be some flights involved. If we want to sell our products, we have to go where those products are bought. So why are you cutting back on that ledger item?

Hon Mr Philip: Let me answer this question very directly, because as my assistant deputy ministers and my deputy will tell you, on the first day I said to them -- and I have told industry this -- that I am quite willing to travel if as a minister I can push a deal over the top. If I can be of particular assistance in convincing the government -- and I have a number of personal connections with parliamentarians in various countries, India among others, with the present government, but in other countries as well.

As I talked to people when it was announced that I was going to become the new minister, and as I talked to some of my friends who are in the international consulting business, people who put together deals all over the world -- Africa, Latin America, etc -- and to a couple of ambassadors -- I will not mention who, because they talked to me privately -- federal ambassadors to certain countries, they said they thought one of the weaknesses of Canada, unlike other countries, was that we tended to go into countries, be unfocused, make a large flash and do no follow-up or very little follow-up.

I said to my staff -- my staff would be happy to share this with you, because I said it in my first meeting with them -- that before I go into a country on a mission, I want to make sure the groundwork is done first, that I know why I am going there, that I know there is some potential for success, that I know we have the infrastructure there to do the follow-ups and that I have enough intelligence service that I know which people to bring with me.

When I was appointed minister, everybody kind of laughed because they said if you check the records, I am the most travelled MPP in the history of this Legislature.

Mr Daigeler: I will have to check that.

Hon Mr Philip: You can check that. It is probably true, mainly because I have been on committees that have had a lot of international trade relations and things like that. The standing committee on public accounts and the standing committee on the Ombudsman tended to have international conventions and things like that which they went to, so I got to travel perhaps more than some of my other colleagues in opposition.

I think we have to be very selective where the minister travels and where his staff travel, and make sure that we are spending the money wisely. I come from a value-for-money auditing system and I do not think simply running around the world with a group of business people necessarily gets you contracts. You may be lucky and go on a fishing trip and accidentally hook something, but I think you need a more systematic approach. That is why my ministry is now trying to develop criteria for trying to look at where it is we can have the most impact, what it is we can do. Maybe it means that we send in individual people first. I have spoken at some length with Frank Miller about this and there are certain areas where he feels I should go.

The Chair: I would like to have heard that conversation.

Hon Mr Philip: He has some other ideas for the leader of the Conservative Party that are not nearly as complimentary.

The Chair: Which one?

Hon Mr Philip: Which one? Which leader?

The Chair: You are out of time, Minister. Perhaps we can move back to the estimates and off the former Premier.

Hon Mr Philip: I would be happy to discuss that further with you, Mr Daigeler. Thank you for your question.

Mr Carr: I will get to more financial matters, because I know that with your public accounts background, you would love to get into that area. When you looked at some of the figures, where we are going to see some of the big increases -- I hate to use this term because it has such a negative impression out there -- is in the bailouts.

One of the problems I think happens is that when government says it is going to bail somebody out, whether it be an industry or a particular company, all the players in that game, which include of course the company, the union, the banks and the suppliers, immediately say, "The government is going to jump in, so all of a sudden we are not going to make concessions." The union says, "We we are not going to make concessions." The company says, "We're not." The bank says, "There's no way we are going to make any concessions, because Big Brother is going to jump in with a big whack of money," and the same with the suppliers."

Often what happens is that something that might have been ironed out by the people involved is not, and a lot of money gets spent. We saw one example on page 12 where the cost includes the management consulting for all the studies that need to be done. Whereas if you put all the players in a room and said: "Okay, you come up with a deal," the company will give a little bit, the union will give, the banks will give and the suppliers will give. I want to see if you are going to attempt to change the philosophy with regard to how we approach these bailouts, first of all.

Second, how do you see that working? How do you avoid the circumstances I just laid out, where you say you are going to help out a company and then all the players in the game immediately say, "Okay, Ed's going to jump in with Floyd with the big chequebook, so we do not need to make any concessions." How do you see that evolving? Obviously that is going to be a big whack out of some of the spending you are going to have in your ministry.

Hon Mr Philip: First of all, I do not think it it is fair to say that this government is pursuing a bail-out strategy. I do not want to argue semantics, but basically what the government is doing at the moment is responding to crisis situations in communities and industries. The manufacturing industries and the communities that depend on them have been particularly hard hit in the recession. Manufacturing employment fell 15.9% between the peak in 1989 and the trough of February 1991.

The deals our government has been committed to are specifically designed to produce better companies, and that is what we are into. We are not into bailouts. We are not going to take companies that stand no chance, because that would not only be unfair to the taxpayers, it would also be unfair to the workers, particularly with our new program of encouraging workers to buy into certain companies, as is the case with Algoma.

What we are saying is that management, workers and financial institutions have to be more focused and creative in solutions to industries if we are going to restructure; otherwise we have to just write them off. I think this is different than throwing money at a company and keeping a company that is uncompetitive in business artificially. I think if you look at the kinds of things we are looking at in Algoma and in some of these other areas, we have to do that. We have to work with them. It may require some government money, but that is not unique to this government. Previous governments have recognized the need to provide assistance to industries that are restructuring.

To me, a waste of the taxpayers' money would be something like Minaki Lodge, where something was started with all good intentions by the Conservative government and then later the Liberals. Finally the Liberals smartened up and got rid of it. They said, "You can't continue to pour money down the drain." But previous governments have provided assistance to industry with restructuring. The Ontario winery adjustment program is one example of where that was done. Another is the substantial assistance to tire manufacturers provided by previous governments. The Ontario government also took part in Chrysler's restructuring in the 1980s. So it is not as though we invented this.

I think what we are trying to refine with this government is the process, and what we are saying is that everyone has to contribute in the process. I can tell you that when Bob Rae and I meet with the unions, we say: "It isn't just the company; it isn't just the taxpayers; it's everybody. It's the community; it's the workers. We're all going to have to bleed a little bit for a while in order to make this work. What are you going to give?"

That is the kind of negotiation we are into and I think that is maybe a little different than what has been done in the past, where restructuring meant perhaps more government handouts, well spent or not so well spent, as the case may be. That is what we are doing and I do not see it as a bailout. For example, I do not see de Havilland by any case as a bailout. I think it is an investment opportunity in a high-tech industry that is really important to this province.

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Mr Carr: I noticed too, I guess it was in the Toronto Sun on September 25, that one of our other aircraft manufacturers is in a little bit of difficulty as well. I read the report with regard to McDonnell Douglas and I think it said that you had had some meetings or were going to have some meetings. You may have already have had them. One of the circumstances is that now I think the government has said it is going to be in the aerospace industry. Hopefully the published report was not correct, but it said they were looking at a loss of about 1,000 jobs.

Now that we have said we are going to assist the aerospace industry, and that we are doing it significantly with people like de Havilland, if we are going to carry forth with this philosophy of not calling them bailouts and not pumping money into them, what is your game plan for a company like McDonnell Douglas? Maybe you could give us an idea, because if it is not going to be pumping in money, what is it going to be? Is it going to be in terms of tax breaks? Is it going to be in terms of assistance? How are you going to be able to assist somebody like McDonnell Douglas, which says: "You said you were going to be in aerospace and it is going to be a big part of the Ontario economy. Now we're thinking laying off 1,000 people. What are we going to do?" How do you see helping a company like that?

Hon Mr Philip: I think you have to look at each company and the case for each company. Bill, maybe you can explain how we go in and analyse a company and show exactly what its opportunities are. We met with McDonnell Douglas this morning. I think we have come up with a statement of what we agreed happened at the meeting. I do not have the statement with me, but let me paraphrase what I think happened. We told the Toronto Sun, or at least my press secretary informed the Toronto Sun.

What you have in the case of McDonnell Douglas is basically that the aircraft industry globally is in deep trouble. We all know that. We know it is happening to Canadian Airlines International and Air Canada. We know that even American Airlines, which has been so very successful over the years, is not buying the kinds of aircrafts it was in the past.

We reviewed the situation with McDonnell Douglas and the company reviewed it with its workers. Basically, they are in a situation where there is not a market for their product. They are in the process of looking at other products that their international company may get into, but when you get into the wide-bodied jets or the large jets, which is basically what they are providing wings for, you are getting into competition with three very sophisticated, very expensive corporations that are very good in their field, but there are only a certain number of planes to go around.

For the MD-11 aircraft to be successful, you have to have sales of about 200 to 250 planes. You may break even and make a profit somewhere around 200 and 250 planes. That is a hell of a lot -- a heck of a lot of planes, sorry.

Mr Carr: It is a hell of a lot.

Hon Mr Philip: They see some market opportunities coming down the line. Those are internal to their company. They have to compete the same way as other companies that are external to McDonnell Douglas, which is a good way of making companies competitive. A lot is strategic as to whether or not the international company is prepared to move on a couple of new ventures it is talking about, whether or not there are markets for those, whether or not, with getting into a new prototype of very expensive development of a plane, there is enough market out there for three of them. Having three major jumbo jets is essentially what they are talking about.

We have said we will work with them, and if they have specific proposals that make some sense, then we are quite willing to consider them, but at that time I will have to take that to -- a committee that looks at potential investments and gives advice to me and to Management Board and treasury board and subsequently to cabinet. But it has to be on an industry-by-industry, case-by-case basis. We are not just going to pour money wherever somebody decides it would be nice to bail somebody out.

To their credit, they are not asking for bailouts. They are basically saying, and they have said to their union: "We've got a problem. We don't have enough sales and we're going to have to lay off some people. If sales improve, then we'll call them back." In the meantime, they are working with the union about retirement packages. The Minister of Labour, who was at the meeting this morning, said he would be willing to take back to his staff any proposals on which they might act as the facilitator. I in turn said, "As some of these proposals start to materialize, keep in touch with us and keep back on."

I think that is quite different from the de Havilland situation where 50% of the market for the de Havilland type of airplane is within a stone's throw of where we are manufacturing. I think it is quite a different sort of situation than the international large jet situation. But maybe you can give a little bit more on this. Maybe it will be useful to go through how we go through a process of where we put our investments.

The Chair: If I might, the questions come from the committee, so perhaps Mr Carr is satisfied with that answer, or would you like to hear Mr Corcoran give us his explanation?

Mr Carr: No, I appreciate that.

The Chair: Would you have another question?

Mr Carr: I definitely would, but maybe I could speak with him afterwards. We do not get the minister quite as much.

Of course, from your public accounts background, you have a good idea of being able to look at things with a fine-tooth comb. It was interesting when you talked about some of the waste. I was out in Hamilton a couple of weeks ago and there was a free trade seminar sponsored by the Hamilton and District Labour Council. David Barrett and Leo Gerard were there, and I noticed on the back it said, "Sponsors of the conference gratefully acknowledge the financial assistance of the Ministry of Industry, Trade and Technology and the Ministry of Labour." I do not know what you kicked in, whether it is $50 or $500 or $5,000, but is there somebody who is now in charge in Industry, Trade and Technology, who is looking at all the numbers here? How do you see them being rearranged to make it more efficient?

I guess my feeling is that some of the other ministries do not have as much interface with businesses, and one of the things the Ministry of Industry, Trade and Technology has to do is to operate efficiently. As you know, today everybody is looking at their costs line by line, almost weekly, if not daily. Now that you have been in there, and having a bit of a background in public accounts, where do you see the restructuring happening with your ministry, and do you see any areas where you are going to be able to squeeze out some savings?

Hon Mr Philip: Let me answer the first question. We give an annual grant to McMaster University labour studies program to run a number of seminars. Who they invite and how they conduct the program I think is left largely to them. I do not believe the program you are talking about received any specific grant. Are there any staff here who would be aware of what Mr Carr is talking about?

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Mr Carr: Actually, it was pretty good. Crispo was there, and some others.

Hon Mr Philip: I believe a question was asked on that of my predecessor in the House on that at some point. It seems to me I remember something about that, and I believe at the time he pointed out that there were a number of people from both sides.

Mr Turner: No, it was from McMaster.

Hon Mr Philip: So it is McMaster University, and I am sure you would not want to interfere in intellectual integrity.

Mr Carr: No. What I would like to see is that you do not give them the money carte blanche and say, "Where do you go?" Obviously it is money. I guess this is a little bit of the symptoms. Here we are and Lord knows what it is; it might even be a small amount. But now that you are looking at these big numbers, where are you going to make it more efficient in terms of any restructuring, any changes in the way it is done, any areas where you can see some cost efficiency? I think industry is looking at it and saying that the perception of the public out there is that the government is a little bit bloated. It would go a long way if you were able to say, "Businesses are restructuring, de Havilland is restructuring, and this is how I as Minister of Industry, Trade and Technology see my ministry being more efficient." Have you given any thought to that process at all?

Hon Mr Philip: I have been in the job about six weeks, and one of the things I have said to my ministry is that I want to be fully aware of all of the operations -- I have been going through each of them -- and that I want value-for-money auditing done in each of the areas. So we are proceeding to do that. I have also said, as I did with the Ministry of Transportation, that I want to personally see any of the reports of the Provincial Auditor, even the initial studies, that may cause him to question any concerns, as I do any studies or inquiries by the Ombudsman, because I think these external objective analyses are very helpful to our ministry.

Also, we are looking at our whole internal audit function and I quite frankly have not had a chance to really sit down and go through it item by item, because my first priority was to try to find out what industry's views were of the present state of the economy and to meet with as many people as I could. That is certainly high on my agenda.

I have had some anecdotal things that I thought were perhaps a waste of money. I said to Mr Daigeler earlier that I thought some of these whirlwind trips, unless they are very focused, may be a waste of money. But I think we have to do it systematicall. One of the things we are doing in the international field is trying to look at where our priorities should be, and that to me is a value-for-money sort of exercise. Coming from the think tank, Buffalo experience, which I bother my staff with from time to time -- this staff has not experienced it nearly as much as the Transportation staff, but you will get it all -- I think there are good systems and ways of evaluating things and we have to do them, but so far we are at an early stage of doing it.

I think my deputy would like to add something to that.

Mr Armstrong: The question is a good one. There was an in-year reduction this year of $14.2 million, and in assessing where that reduction was going to come from, we did indeed look at the other direct operating expense items. I think Mr Daigeler referred, for example, to transportation and communication, and really raised a question as to the validity of this cut that we did in ministry administration. We made a substantial cut in that item.

Mr Daigeler: Ministry administration went up.

The Chair: We will revisit this, Mr Daigeler. I know your points are valid, but let the deputy finish. We are wanting to move to the next item.

Mr Wood corrects me. The proportionate increase in transportation and communication in ministry administration was far less than in the other operating areas; that is to say, international trade and international relations support and in the Ontario Development Corp program areas. There was a small increase there and the savings we effected are mainly in the administration areas.

Similarly, in all of the other direct operating expenses reductions, for example in small business and in the other fields, we were looking at things like unnecessary travel and reducing unnecessary communications. Faxes and reducing the incidence of hiring for temporary purposes are big items; those are areas where we can, I think, by working smarter, and frankly harder, affect reductions. Without getting into individual program areas, I would say the basic areas are in the other direct operating expenses, where we have simply got to be more careful and prudent about the nature of the expenditures.

Mr Johnson: Since its implementation some time ago, the US-Canada free trade agreement has had a devastating effect on manufacturing in the province. There are other factors. There have been global pressures and internal and external pressures within the province. Presently we find ourselves negotiating a North American free trade arrangement. I was wondering if you could give me your opinion on the present agreement and the role Ontario is playing in this agreement, which will obviously impact on Ontario and obviously be important to our future.

Hon Mr Philip: As I indicated earlier, I have expressed my concern to my federal counterpart that we be well informed as to what they are doing. The staff has informed our people, but I think it is time for us to sit down with our federal and other provincial counterparts and look at it. I recognize there are two provincial elections going on, which means that in some cases it may have to be the deputy ministers or staff people who will be part of the discussions.

I guess the chief negotiators -- such as John Weekes from Canada, who has informed my staff; Peter Sadlier-Brown can inform you on an update on this -- the chief negotiators are expected to meet. They are meeting on October 9 and 10. The trade ministers are scheduled to meet on October 26 and 27. My concern was that we certainly get on with it and be updated as quickly as we can.

In terms of our concerns, we were concerned about it initially because in terms of a North American free trade agreement we took the position that some of the industry groups took, namely, that we were just trying to deal with the fallout from the American-Canada free trade agreement and that it was premature to move into the Mexican talks at that time until we knew the full impact of that. Ontario cannot afford to lose any more manufacturing jobs to either Mexican or US producers. We are not only worried about the direct effects of NAFTA on Ontario's economy, but also future indirect effects that may prove far more serious than the macroeconomic studies could show today.

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Talks are going on. We have no way of stopping them, but we at least want to be there and voice our concerns about Ontario's interests. That is why I think it is important that we get the ministers together as soon as possible, and we will certainly be active participants.

Mr Johnson: I would like to add, though, that I think the negative effects of the current free trade agreement we have with the United States are obvious. In my opinion they are one of the major factors for the terrible recession Ontario is facing. Although there are other lesser factors, I think it is one of the major factors. Does the minister have a well-formed opinion or maybe a preliminary opinion as to what kind of major negative effects a North American free trade agreement might have? Are there indeed some positive things that might come out of this agreement? Personally I am not optimistic.

Hon Mr Philip: I think you can get as many opinions on that as there are economists and politicans.

Mr Daigeler: What did you say during the election?

Hon Mr Philip: I think a lot of people said things during the election which --

Mr Daigeler: Which they regret later on.

Hon Mr Philip: I recall a certain Premier who said he had a veto to stop free trade, and suddenly the veto disappeared.

Mr Daigeler: That is what you say.

Hon Mr Philip: No, that is what I believe David Peterson said.

Mr Carr: Bob Rae said he would lead the revolt.

Hon Mr Philip: I do not recall what Bob Rae said. I was not reminded as frequently of what Bob Rae said as of what David Peterson said. But what I have said, and I know this may not wash well with some people, is that The deal is there. Now, with any kind of deal there are downsides, and there are a lot of downsides to what we have negotiated. Particularly in the transportation industry I think there were very many downsides. I think we gave away too much and got nothing in return.

Having said that, I think surely there are also some opportunities with free trade. I am sure that even the most strident opponent of free trade would admit that there are some opportunities as well. What I would rather do is work with industry and say, "What are the opportunities and how can we capitalize on them now that it's done?" Sure, if there were a federal NDP government -- I am not sure what Mr Chrétien's position is because it seems to change from time to time, but maybe even a Liberal government -- it might renegotiate sections of the free trade agreement. But I cannot deal in hypothetical situations. I do not know who the federal government is going to be in Ottawa. I did not think Brian Mulroney would be Prime Minister for another four years, and he pulled it off.

Mr Daigeler: We did not think Bob Rae was going to be Premier of Ontario.

Hon Mr Philip: I am sure a lot of people did not expect that I would be sitting here as the minister. So I am not interested in dealing with hypothetical situations. What I am worried about is dealing with our industry now. What can we do about it and where are our opportunities? I think we can be very competitive with the Americans in certain products. Ontario is particularly worried about labour-intensive sectors as we move into Mexican products in the US market: wood and paper products; textiles and clothing; metal-fabricating industries; machinery and equipment, including appliances, which can be manufactured fairly cheaply in Mexico; electrical machinery; electronics; furniture -- just to name a few. So it does pose some real challenges to us.

Having said that, I would like to ask, where are our strengths and what can we do to work with industries like the aerospace industry and the value-added industries so that we can sell the kinds of things we can sell? Our engineering is the best in the world in terms of turning out the green industries -- the sewage treatment plants and so forth. As for our hydro technology, we are presently selling generating plants in a number of countries, and that provides us with unique opportunities. There are unique opportunities in the whole electronics software area. General Electric and other companies look very favourably on Ontario as a place where they can get high-skilled workers and so forth. We have to start concentrating on those and selling those kinds of products around the world.

Mr O'Connor: Minister, I want to thank you for spending some time with us at this estimates committee hearing --

Mr Daigeler: He has no choice.

Mr O'Connor: -- though, of course, as Mr Daigeler said, you've got no choice.

One area I want to look at deals with small business. I have noticed, in going through the estimates book, that the number of seminars targeted for the next year seems to be down significantly, though the client inquiries have not dropped that substantially. I am looking at page 41 of the briefing book that has been provided. I wonder if perhaps somebody from your staff could relay why the seminars have been targeted at less. It might be just me. We are going to be looking to small business for a great deal of help in coming out of this recession, and I wonder if we are targeting them with the necessary importance.

Hon Mr Philip: Peter Friedman would be happy to initially answer some of those questions, but perhaps I can add that I consider small business of particular concern. One of the concerns I have is that if you look at the figures for small business -- maybe Peter can elaborate on this, because it is an interesting thing we are trying to come to grips with at the moment. If you compare Canada with the United States and look at the graphs, am I right, Peter, in saying that we have roughly, proportionally, the same kinds of success rates with small business as the United States?

The big problem that we have is that unlike the United States, there is a smaller percentage of small businesses that grow into medium-sized businesses. That is where we have to look at what is going on and what kinds of things we can do as a government to help those small successful businesses grow into medium-sized successful businesses that can operate in a global market.

We are working on a variety of programs. We are developing some new programs, such as the restructuring fund and a number of other things, that we have been doing since we became the government. Peter, would you like to add to that and lead us through some of the answers?

Mr Friedman: I think it is important to look at the whole approach we take to small business. Initially we started out with a whole program on business startup. We take people through a series of activities. The activities go from a starting a small business publication which people can read at home through some seminars in which we dialogue with the people, followed by a series of self-help centres we have opened up.

The reason for the changes in the balance of what we do is that we have had seminars for a number of years and the number of people attending seminars in communities has been down. As you noted, the client inquiries are the same. We now have 26 self-help centres around the province. We discovered that people wanted more of a one-on-one discussion with our people in terms of their business plans.

When we started this, we did not have a network around the province so that people could do this. Now, in partnership with municipal governments, we have 26 centres people can walk into, in most parts of the province. We are able to deal with 50,000 of those people in our self-help centres. As a result, the number of seminars we have to give is less, and we target them more to areas where we do not have self-help centres. So we are still able to deal with a mass market client group, such as 175,000 inquiries, through our various networks.

Besides the things I have mentioned, we also have a toll-free hotline that we set up to try to minimize the frustrations of an entrepreneur who wants to find out what he or she has to do in terms of the rules from the governments. That hotline is getting inundated with about 800 calls a day from around the province.

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That is what we have been doing on startups, and our program is continuing to expand. We modify the tools as people seem to require them. The most recent changes we have made involve the ethnocultural community, as we found initially that at these general seminars we were not quite getting the ethnocultural group. We have now set up an ethnocultural self-help centre at George Brown College, on the Kensington campus. We have put kiosks in 15 ethnocultural associations and we are now disseminating the knowhow to all these people.

To follow up on the minister's point, we had a partnership conference with all the players in entrepreneurship around Ontario last fall. The feedback we received was that we had quite an extensive program for business startup and were touching most of the bases. However, the feeling was that as we were getting into the recession, there was a need for programs for growth, not just startup. So we initiated three new programs to deal with growth for people. Those are now in operation and we are beginning to disseminate that system.

Mr Daigeler: I wish to come back to the facts and figures in the book, because I found the first round quite enlightening.

Hon Mr Philip: This is marvellous, for a philosophy major to be actually dealing with the bottom line.

Mr Daigeler: Isn't it? I love the bottom line too.

Hon Mr Philip: I find this quite intriguing.

Mr Daigeler: The church is often very involved in the mundane aspects of life as well.

Hon Mr Philip: Sometimes very legalistic as well.

Mr Daigeler: Turning to page 7 at the top, while I criticized you before for cutting back on the international relations program, I note here that on the capital side for the international relations program, there is a 120% increase. In fact, you seem to be spending $15 million more than last year. Why is that?

Hon Mr Philip: That is great. It just means we are successful.

Mr Daigeler: What does that specifically represent? What are you building?

Hon Mr Philip: We are building new contracts, new ventures and we are putting deals together. That is what that means, and that is success.

Mr Daigeler: Can you be a bit more specific? Can you put something together in writing as to what this represents?

Hon Mr Philip: That is largely the Ontario development corporation's grants and loan guarantees. That means it is actually deals that are being put together to develop new corporations. Is that the correct answer?

Mr Wood: I will speak to it. I apologize for the minister because he has just referred to the wrong page. It was my fault. In fact, this is the first year the government split its budget -- in the estimates process, I should say -- into operating and capital. In setting up the capital, we moved from operating to capital under the new designation "special industrial assistance," which makes up the biggest part of that new number. The rest of it is related to an anti-recession program, the $3.5 million which is in the industrial part, for that increase. I think that basically ties up the whole number.

Mr Daigeler: Can I get the precise list of where that money went?

Mr Wood: The money is within the ministry's allocation for its programs for financial assistance, under those two programs. We can tell you what the status is within this fiscal year.

Mr Daigeler: I would appreciate that. You were talking about special industrial assistance. I am interested in knowing exactly who is being helped here. I do not know yet, so I am not prepared to criticize it.

Mr Wood: We can provide the year-to-date expenditure at this point in time.

Mr Daigeler: I just would like to know to whom that is going. Why is there such an increase?

Mr Wood: This is the first year the government is separated into two categories, operating and capital. We identified that for 1991-92 we would have an increase in the capital program. We moved from our operating to our capital the amount of approximately $16 million or $17 million. It was an adjustment in bookkeeping. This is the first year of separating the two. We moved it from one category into another.

Mr Daigeler: Can I look forward to something in writing then?

Mr Wood: I can give you the details as to where we are at this point.

The Chair: Mr Daigeler, do not be shy about requesting further information in writing.

Mr Daigeler: I did. I think it is understood I requested that. Minister, you have indicated you may prioritize the areas of the world where you want to encourage trade opportunities. Can you give us an indication where you see the primary potential for Ontario today?

Hon Mr Philip: We are looking at that, obviously. My assistant deputy minister might like to add something to this, but certainly we have to have a higher presence in Mexico. Mexico would also cover a lot of Latin America. We have to look at how we want to do that, whether we open up an office, contract with someone to handle our interests there or whatever.

Another area I think is worth looking at is how we position ourselves as South Africa eventually becomes more democratic and more acceptable to the rest of the world. I think we are looking at that possibility. We intend to appoint a full-time, permanent agent in Delhi fairly soon. India has liberalized trade in the last two and a half or three months. Time flies very quickly. Somebody will make me a liar for the sake of a couple of weeks. Those are a few of the areas we are looking at. That does not mean we are going to put in an office overnight. It does not mean it will necessarily be an office. There are various ways of servicing. In the case of India, we do have an office in Delhi, of course.

Mr Daigeler: I am rather curious why you would single out Mexico.

Hon Mr Philip: With NAFTA going on, we have to have a fairly close handle on what exactly is going on in the Mexican economy. I think we have to have a listening post there at the moment the same way as we have several listening posts in the United States.

Mr Daigeler: I can see the need for a listening post, but I guess you do not see that necessarily as a place to do increased business for Ontario companies.

Hon Mr Philip: Just as free trade had some downsides with the Americans, you have to recognize that trade with Mexico also has some upsides. On trade with Mexico, we have to look at opportunities after that happens as well. It is not just a matter of saying, "Oh, my goodness, look at what's happening to us." We have to understand what the impact is on our industries. Therefore, it is important that we have people there on the ground in some form. I am going to ask my ADM in charge of this to comment further.

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Ms MacKay-Lassonde: As I mentioned previously, we are doing this study. It is in the final stage. However, at this point I cannot give you the details. Let me give you some examples of the things we are looking at. We mentioned Latin America. Within Latin America we will be more specific as to the actual countries where we feel we have a competitive edge over other countries. For example, the minister has mentioned Mexico. When we look at Mexico we look at the high growth potential of that market, the kind of product they will be needing over the next three to five years. We look at the barriers or non-barriers to entry into those markets. We look at other competitors in those countries and how we fare in comparison with those competitors. I am just mentioning a few of the criteria we are examining.

In Latin America, Venezuela and Chile are seen as potentially very high growth markets over the next few years. If I switch to Europe, we have the Four Motors agreement right now with Germany, Baden-Württemberg; with Italy, Lombardy; with Spain, a very high-growth area in Europe, Catalonia; and with France, Rhône-Alpes, which is also a very high-growth economic area of France. In those four areas of Europe we have a bridge already. We want to take advantage of these bridges with those countries to be more competitive in comparison with other competitors. In the US --

Mr Daigeler: I am sorry to interrupt you, but the purpose of this whole exercise is to get as many questions as possible. I would appreciate if the answers from the minister and his officials are relatively brief so that we get many chances to find the information we need.

Hon Mr Philip: I thought that was a brief answer.

Mr Daigeler: Yes, that was brief, but I think the minister's is another matter. Certainly we instituted the emphasis on --

Hon Mr Philip: My experience of --

The Chair: You have a lot of experience interrupting people.

Mr Daigeler: I know what you are up to, Mr Philip.

The Chair: I would appreciate if you would just respond to the process, now that you are on this side of the table.

Mr Daigeler: I appreciate the emphasis on the Four Motors in Europe. Certainly the former Premier, Mr Peterson, was very supportive of that process. I am glad the new government is continuing in that area. Speaking of Europe, how do you see opportunities with the eastern countries? With the dramatic changes we have seen, how are you taking advantage of those? You have not mentioned that at all. It is almost like a new world opening up. What is your reaction? How are you pursuing the contacts with all of eastern Europe?

Hon Mr Philip: We have been meeting with some of the representatives of eastern Europe and we are in the process of trying to sign agreements in terms of how we will relate to those countries. I think it is important we understand that on March 11, 1991, we signed an agreement of economic trade and technology co-operation, which I think was a key to our marketing strategy.

Mr Daigeler: Which one was that?

Hon Mr Philip: With the Russian federation. We are looking at signing similar agreements with other countries of what used to be the Soviet bloc. I have been meeting, as have my staff, with some of their representatives. We are also trying to work out the best way of helping our business people communicate with their governments. Sometimes our business people will go over and spend a great amount of time in a country, going from one department to another and not getting anywhere. We have been exploring ways in which certain people can be assigned by those countries to helping our companies get through the bureaucracy. Then we in turn can have certain people who will relate directly to them.

I think we also have to look at the individual sectors and work with them in developing agreements and understandings. Numerous opportunities for Ontario companies are being identified by the Export Development Corp: line of credit, when it is available, what the most promising areas of supply are, process technologies, telecommunications, environmental protection and general upgrading of production facilities. There are a number of opportunities for us in eastern Europe, but certain countries look more promising that others.

Mr Daigeler: I would like to leave the thought with you that eastern Europe is the place in the world where Ontario should be present so that we can participate in the changes, hopefully the good changes, that will be coming there in terms of the economies. I hope you will encourage your ministry to make every effort to take advantage of opportunities there.

Hon Mr Philip: We are sending delegations over there. For example, we had a delegation to the Baltics that we think was successful initially and that hopefully will produce some business.

Mr Daigeler: From and through your ministry?

Hon Mr Philip: Yes.

Mr Daigeler: Getting back again to the facts and figures on page 6, basically loans and investments are down by 10%. Why is that? What does that represent?

Mr Wood: I will update you on both of those numbers. In breaking out the estimates this year into operating and capital, one of the difficulties in the ministry is that it also has a budgetary and non-budgetary side. At the point of constructing the budget for 1991-92, it was identified that under industrial assistance we probably had a requirement for more repayable grants than we did for loans at that time. However, as this year is carried out that might not be the case. I will give you the updated information as I get it and present it to you tomorrow.

Mr Armstrong: I come back to a point that was alluded to earlier. I think it is misleading to look at the ministry in the absence of the work of the Ontario development corporations. Under new initiatives this year, we have a very substantial manufacturing recovery program and substantial increases in the amounts available under a program called Innovation Ontario, which is a venture capital project of very substantial dimensions.

Without getting into bureaucratic arguments about autonomy, the Ontario development corporations are very much a part of the ministry operation. The grants and loans and so on under the development corporations are part and parcel of an integral ministry program to assist business. If you look at those as part of an integrated whole, our capacity to assist industry is well up this year.

Mr Daigeler: Could you refer me to where that is listed? I was going to ask you about that. I was going to ask the minister in particular. When I look at the Eastern Ontario Development Corp, the area I come from, it is down by 11%.

Mr Armstrong: You are looking at page 55.

Mr Daigeler: Yes.

Mr Armstrong: The Eastern Ontario Development Corp is down. The other corporations are up. For clarification, I think it might be helpful to have Mr MacKinnon come forward and explain how his programs, which are substantially increased in aggregate, are operating this year.

Mr MacKinnon: I am David MacKinnon, chief executive officer of the development corporations.

As the minister indicated, we are particularly active in two new areas: the enhanced Innovation Ontario and the new anti-recession program. We are also involved in the special capital projects program, as indicated, through the construction of new buildings in our industrial park and the refurbishing of existing buildings.

In addition to those three specific new initiatives, overall program volumes are up dramatically, including some programs which are not specifically broken out for eastern Ontario. For example, one of the largest programs we operate is the New Ventures program. It is the guarantee program for startup enterprises. It has shown an expanded presence in all regions of the province over the last two or three years.

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Overall, that is our activity. There are some components that may drop for a particular period of time, due to program demand, due to other factors, but we find that when that happens the patterns revert to more normal levels in subsequent years. It is impossible to ensure a complete budgetary consistency from year to year.

The Chair: If we have completed that, I would like to move, in recognition of the time, as is my mandate --

Mr Daigeler: I have not finished.

The Chair: Your five minutes are over now. You may as well be seven minutes over.

Mr Daigeler: Perhaps you could put this on the record for tomorrow. I wish to know in detail why the Eastern Ontario Development Corp is down by 11% and whether that relates to the fact that there are so few members on the government side from eastern Ontario. I would like to have a good explanation on this item.

The Chair: You are requesting that of --

Mr Daigeler: The minister, obviously, and he can direct it whichever way he wants.

Hon Mr Philip: I assure you I told my staff, both here and in the Ministry of Transportation, that politics were to play absolutely no part in deciding where money goes or where roads go. I think that if you look at my record in Transportation, you will find that certain opposition members actually got more funds than anybody else. I am looking at one member here who, if we look at money that is going into his riding --

Mr Daigeler: Who is that? It is not mine.

Hon Mr Philip: -- in terms of certain investments, is probably doing better than a lot of government members.

The Chair: Then again, we do not want to be political.

Mr MacKinnon, I have one question for clarification for the committee. When you were referring to volumes, about applications for ODC or were you talking about expenditure approvals? They are two different items. What were you talking to when you indicated that they were much expanded?

Mr MacKinnon: Both. The number of people we actually finance is a relatively small proportion of the number of people who come to see us, typically one in five, one in 10, those kinds of ratios. The applications are up but so also are the actual numbers of approvals under the existing programs. Of course there are new initiatives, the ones the minister referred to at the beginning.

The Chair: Are you talking about dollar volumes or individual applications? You can actually have less money spent with more applications. I just want to clarify what you meant by volume.

Mr MacKinnon: In general, both the number of transactions and the dollar volumes are up, year over year.

Hon Mr Philip: I think it might be helpful if we explained that certain types of programs have a very slow takeup at the beginning. They tend to increase later on, because it does take a while for these to work their way through the system.

The Chair: Mr Carr.

Mr MacKinnon: Would you like me to review that, Minister?

The Chair: You are at the pleasure of the committee and I have recognized Mr Carr. I appreciate that, Mr MacKinnon. You may stay there in case Mr Carr wishes to pursue a line of questioning, but unfortunately this committee is not an open forum. It is in rotation and I must respect that until the committee directs me to do otherwise.

Mr Carr: I will come back to it in a minute, if you want to stay put. I want to jump into another subject very quickly.

One of your most difficult responsibilities, Minister, is around the cabinet table pushing the initiatives. Back in June, I received a letter back from Bill Firstbrook of the Canadian Steel Service Centre Institute. He put together some of the concerns he has. I will give you a copy to take a look at. He talks about a number of initiatives he has some concerns with. They are listed. There is a great deal of correspondence. Some of the officials may be aware of it, because if they have had any part in some of the correspondence, they will know they prepared it. He has put together some of the reasons cited and has put together some of the permanent shutdowns and jobs lost in steel -- consuming, manufacturing, tonnage lost and so on.

Actually it would be interesting for you too, because you can grab some of the information there to slam the federal government with. He talks about provincial and federal, so there might be some material for your next speech about the federal government.

One of the concerns that has been voiced deals with the whole question of taxes. Payroll taxes, in particular, he voices as one of the big concerns. As you know, the Fair Tax Commission is going to look at it. How are you going to interface with that particular committee? The Canadian Federation of Independent Business, the chambers of commerce and the Canadian Steel Service Centre Institute say that payroll taxes are one of the things driving jobs out of the province. How are you going to interface and ensure that like wage protection, which some people have concerns will turn into a payroll tax? What is your personal feeling on payroll taxes and how are you going to fight for that with the Treasurer and the other members of cabinet?

Hon Mr Philip: I wonder if Peter Friedman would like to respond to that. Peter has been doing a study of numerous problems related to taxation. I think he can give us some background.

Mr Friedman: We are going to approach the whole tax theory -- particularly relating to small business, which is where the payroll taxes are the biggest problem -- in two different ways. One is that the parliamentary assistants' committee is going to make a presentation to the Fair Tax Commission on the whole area of taxation for small business. The other is that we in Small Business Ontario are working with the tax policy unit of Treasury, the contact with the Fair Tax Commission. We have some of our staff liaising with the Fair Tax Commission on a number of the programs it is running. The Fair Tax Commission has working groups in a number of areas. When it comes to small-business-related things, and the payroll tax is one of those, some of our staff work with them through Treasury.

Those are the two ways we are in close contact.

Mr Carr: I was reading through some of my files. The back page of the Financial Post last Friday stated, "Ontario Trails the Pack." "Ontario's tax competitiveness in manufacturing has fallen behind the neighbouring provinces and the United States since the mid-1980s." This was a Conference Board of Canada study of the four jurisdictions compared. Ontario taxes its manufacturers the most. They talk about Petro-Canada and telecommunications. As the minister has said on many occasions, here we are talking about getting into, high-value, high-wage-type industries, and yet as the conference board has said, we are literally taxing them to death.

I appreciate all the work you are doing. How do you see your role in ensuring that Ontario does not fall behind, as the conference board said, in terms of taxes. When all these studies come out and say, as they inevitably will, as the conference board said, that our taxes are too high in this province, how are you going to sell that to your cabinet colleagues?

Hon Mr Philip: First, you are jumping ahead to a conclusion which I do not think we have made. A lot of the information is anecdotal so far. If I sound like the federal Minister of Transport, I have to say that before the studies come in we are not certain what the results will be. I do not want to prejudge the studies. I know that in certain businesses, not just steel but in the transport business, people in the industry say, "We're overtaxed," and the federal Minister of Transport says: "You're not. I've got some indications that you're not overtaxed compared to Americans." The only way to get at that is to really find out what is going on.

The other thing you have to understand is that the problems of the steel industry are not exclusively related to any one factor. If you look at what has happened with the mini-mills in the States and the kind of competition that they are giving us, that is a problem. On the other hand, if you look at a company like Stelco, which traditionally has been -- I do not think it would object to this label -- a somewhat conservative company that always felt it would be around and things would happen for it, with the pressures of the competition in the States and so forth, it is turning around and developing new products. Their latest product line of copper-coated steel is actually coming in much cheaper than the American equivalent and they think they can be highly competitive.

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There are some other good things happening in the steel industry as well. I do not think it is any one item. I think we can be competitive in a number of ways. Stelco has just shown that. It seems to be out of the woods, so to speak. Stelco has said: "We're not going to scapegoat any one person. We're going to look at ourselves and see how we can become more competitive in this market." They have started to do it with new products. The timber industry is starting to do the same thing in terms of developing specialty products, along with some assistance from our ministry and from the Ministry of Natural Resources. There are things happening. I do not think we can blame it on any one factor. It is just too complicated to write it off that way.

Mr Carr: Getting back to the original question with regard to the tax situation, let's be very blunt about it: I know you have met with the Canadian Federation of Independent Business. They talk about how the confidence of the small business firms has been severely shaken by the actions taken by this government. They point to things like "the bloated projected deficits reaching years into the future, effectively doubling the provincial debt." What business is saying is that somewhere down the road somebody is going to pay that. It may be the individuals; it may be business.

I know you can get off into other things, as you did with Stelco, but when it comes to the tax structure, what assurances can you give to the business community? By the time the Fair Tax Commission reports, Lord knows how many businesses will already have gone out of business. What assurances can you give, as the minister responsible for industry, that you are going to attempt to hold the line on things like payroll taxes?

Hon Mr Philip: I do not think it is fair to say that all small business, as you indicated, was against the last budget. I have not found that when talking to people in the small business community. As I went around speaking to many of the ethnic-Canadian business clubs, a lot of them associations, many of them were saying: "It was a good budget. It was the kind of thing that would have been done in our countries. It makes sense to fight a recession. The other provinces and the federal government were wrong with their budgets." As I talked to some of the construction companies around the province, they said, "The anti-recession program made a lot of sense because it kept me in business. It allowed my construction company to do some work I wouldn't have had until perhaps next year or a year later and it allowed me to make the payments on my machinery and stay in business."

A lot of them are more sophisticated than you think. A lot of them do not just simply look at the deficit. They also say, "How did we get at that deficit and what's the government going to do about it?" They recognize that a large part of our deficit was because of cutbacks from the federal government and that we had no choice. With the federal government having downloaded that $3.5 billion, with revenues down and having inherited a deficit to begin with -- when times were good, we did not provide for the rainy day -- it was not our fault.

If we continue to simply say we will have a deficit of close $10 billion this year, so in four years we will have a $20-billion deficit, I think that would be acting irresponsibly, but that is not the position of the Treasurer and it certainly is not the position of the treasury board. The Treasurer is making a statement tomorrow and you will see what you shall see.

Mr Carr: We will await it anxiously.

I go around and meet with some of the business leaders. I have a Toronto Star article here. I will not bore you with the details. Not to get too political, the group that is fighting some of the labour relations amendments, the More Jobs Coalition, has been very very scathing in its attacks. As a matter of fact, when you read them some of their language is even tougher than opposition parties have used. Business community people who are out there said this will probably be even more important than the budget and the deficit that we are looking at, the single biggest factor to drive business out. I know the line that has come from the Premier and everybody else is that these are only proposals and that they are only looking at them. I want to see what your thoughts are specifically on that, what you see, and as the voice for industry around the cabinet table what you would like to see if you had your wish with some of the changes. How would you see it coming about?

Hon Mr Philip: People are commenting and getting excited about something they have not really seen even a preliminary draft of in terms of --

Mr Carr: They have the cabinet document.

Hon Mr Philip: The cabinet document is not the preliminary draft on which the legislation will be based. It was basically an early draft and any of us who have been around here for as long as I have know that there are drafts, and then there are more drafts, there are other drafts and so forth.

Some of of the hysteria out there really is hysteria and is very destructive, the kind of thing that happened yesterday where people were saying that somehow this government was going to put a capital gains tax on people selling their own homes. I have been on treasury board, and on Management Board. I have missed very few cabinet meetings that I can think of, except when I had to be out of town on government business. This is something that never came up. In caucus, and there are caucus members here, it was not even considered, at least not in my presence. I think I would be one of the first people they would come to and talk to about it.

There is a lot of hysteria out there, and I do not think it has been all that helpful. Some of the people who have been stirring up the hysteria have not been terribly helpful to Ontario any more than the people, whom most business people call irresponsible, who put ads in the Wall Street Journal. I do not think that is a great way of building wealth in Ontario.

Most of the people I have talked to say that they are operating in Quebec. Quebec has a fairly progressive labour relations act and people are not leaving the province of Quebec as a result of that act. Some of them may be leaving for other reasons at various times, and some other people are also investing in Quebec at the moment, to their credit. All I can say is, judge the act when it is there.

My ministry is bringing any concerns we may have as we go through this dialogue of exactly what is essential and what is non-essential in the Labour Relations Act. When people see the end product, some people will scream. Some people did not want medicare either years ago and said it would bankrupt the country. It has not bankrupted the country. I think the majority of people will realize that the final product of the Labour Relations Act will not hurt them.

I have had some of the bigger companies actually come to me and say, "That draft cabinet document doesn't mean a hell of a lot to me because we're doing all that stuff anyway ourselves." I am not saying that the leaked cabinet document, whatever it was that got out there, is anywhere near what will eventually be introduced, but even if it was, people said, "If that's all you're introducing, we're doing it already." So there is a variety of opinion out there.

Mr Carr: I can appreciate that you do not want to tip your hand because obviously your thoughts come out in the solidarity of cabinet. I would have liked to have heard what you would like to see, but I can appreciate that sometimes you cannot say that because if it is a little bit different, they will say, "There it is, he didn't get what he wanted and Floyd or somebody else got what he wanted."

The Canadian Federation of Independent Business talks about the bloated deficits. They refer to Bill 70 as the Bill 70 fiasco, and say it is a demonstration of the government's general lack of understanding of business realities. They talk about the prospects of favouring unions more in Ontario's unbalanced labour laws. They talk about the 11% increase in the minimum wage. They talk about no action to check the government overspending streak which was begun by the previous government, with no relief from the merciless burden of payroll taxes. Then they sum it up by saying: "All these have taken their toll. Despite all the talk about partnership, this government is seen not only to be anti-business but anti-small business."

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In spite of all the calming rhetoric that comes out, the fact is that the business community is very scared out there, whether it is for legitimate reasons or not. What I would like to know is, what can you point to as some concrete action on behalf of your ministry that will calm the fears and say, "At least around the cabinet table we have one guy in myself as a minister who is going to be fighting for some of your demands"? What can you point to?

Hon Mr Philip: I think I have already calmed a lot of the fears by meeting with more business people than probably any previous minister, with all due respect to any of my predecessors, in a short period of time. That was motivated by my feeling that I had to meet with as many people as possible so that I could get a grasp on the ministry as quickly as possible.

The fact is that we did change Bill 70. That was done. So we have shown that we are able to listen to people. We listened to the concerns of the insurance brokers and people in the insurance industry. We looked at what amounted to a major initiative, but we also looked at the fact that Ontario, unlike other provinces, is the centre of the insurance industry in Canada. We decided that while public auto insurance would save the consumer money, and I believe that --

Interjection.

Hon Mr Philip: I am sorry, but I do believe that and I think we can prove that. I can tell you that the legislation we are introducing certainly is more popular with more people than the stuff that was introduced by the Liberals.

When push came to shove, we looked at what the downside would be of things we had thought we would do and if it was worth it for the advantage we would have of saving $40 or $50 a year on a premium. We decided it was not worth it at this point in time in the message to business -- I was more concerned internationally than just nationally -- through the dislocation of, what was it, 13,500 people and eventually the elimination of 6,500 jobs. To the credit of the insurance companies, they were able to do some things in terms of their own restructuring to turn out a better product at a cheaper price, some would say under the threat of public auto insurance; I would rather say in co-operation and talking to the government in the recognition that they had to turn out a better product.

I think all those things showed we were flexible and willing to change our position. I can tell you that it was not an easy decision. There are a number of people in our party to whom I have had to explain why we did that. I have to show them figures and when they see the figures they say, "Yes, it just would not be worth this amount of dislocation at this point in time for this advantage."

Mr Carr: I want to get on to some of the loans from the Ontario Development Corp.

The Chair: It would have been great, but unfortunately we have run out of time, so we will move to Mr Wilson.

Mr G. Wilson: I want to thank you for answers which I find complete and informative and certainly give us a good idea. Mr Carr seems to think you have not tipped your hand on a couple of things and I think your answers very clearly do that. For someone as sensitive as he is to what is happening in the world that he gets through the media, I am surprised he has not seen what is happening to the south of us where there is a lot of concern about their problems and the number of jobs they have. A report yesterday showed the homeless in Washington, for instance, who have just been tossed out on the streets. I would say that for the capital of the leading industrial nation in the world, it is quite a disheartening and dismaying development that even it cannot solve its problems.

I think that shows that this thing is on an international basis which you made clear in your answers, that we are working in an international setting. That is where the need for the value-added jobs is found, as you have mentioned a number of times today. We have to find the jobs that will allow us to compete in a global setting. That being the case, I think a co-operative effort has to be found which you have suggested.

One of the things that is happening here with the dislocation that is occurring is that a lot of plants are being left empty. I was wondering whether the ministry has looked at that situation. In my own riding, for instance, a firm came in a couple of years ago and has now left. That is an example of a plant that potentially will sit unused, and I was thinking that this is an area that bears looking at so that this investment is not lost. I was wondering if the ministry has looked at this and what kind of program exists.

Hon Mr Philip: Yes, we have. I must say that I have been in your riding a few times and I am looking forward to speaking on October 9. I chose to speak in your riding, much to the consternation of my wife who wanted me to go with the King and Queen of Denmark to see the Phantom of the Opera. But instead I chose to be with you for the Shaping Our Economic Development Future. It is too bad this is not on television, but between 7 and 9:30 I will be with you on that night.

The Chair: This is starting to sound more like the Carson show every minute here.

Hon Mr Philip: On the Carson show, the chairman smiles, but anyway.

The Chair: I would have a sense of humour if I was making his money.

Hon Mr Philip: In answer to your question, my ministry has implemented an industrial property listing system that provides current, comprehensive and province-wide data on industrial buildings and land for sale and lease. This allows Ontario municipalities and my ministry to market these properties to prospective domestic and international investors, and it allows municipalities to use the system on a customized basis for their own economic development purposes. We think that is very helpful and the municipalities seem to be greeting it with considerable enthusiasm. Is there one of my staff who wants to elaborate on some of that?

Mr Armstrong: I think you have described it adequately. We have the field staff that is available there. They are aware of the facilities that are being vacated. The plant location people are aware of that and are working in the field and identifying opportunities for the sale of property, the reoccupation of the property by others, and we get periodic reports in the domestic industry sector of Mr Corcoran's division.

Hon Mr Philip: The latest figure I have is that 29 municipalities representing about 100 communities are now involved in the program. We are hoping this will grow as we get more on stream. So it is a new program. Peter Friedman, did you want to add to this?

Mr Friedman: Besides the plant locations where we are assisting companies which are looking to find properties, in eastern Ontario we have an eastern Ontario community economic development program where we are working with 26 communities and getting them so that they can be more self-reliant in their own situation. We are in partnership with communities including Kingston and many of the others, and we have flowed over $7.5 million to support 95 capital and non-capital projects valued at $30 million involving development of strategic planning and infrastructure and industrial parks, so we are in partnership with those municipalities to attract companies in that area.

Also, the manufacturing recovery program is there to assist companies that are suffering because of the recession. Hopefully before the buildings become empty we are trying to work with them so that they can recover and grow in the future.

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Mr Hansen: In my office, starting in January last year, I hired a chartered accountant who is a former marketing manager and 50% of his time is in the riding. He is going out, taking a look at developing business and helping in the business aspect. There is one thing he asked me a few questions on and maybe it is a good place to ask this. Some companies he has gone to take a look at are having financial problems. They have no business plan and they do not look like they are going to survive down the road. We have seen two that have actually folded up and declared bankruptcy.

The one thing that did concern him was that the money the ODC had loaned out in 1988 and 1989 would not be repaid, which I believe would go into the Treasury. Taking a look at this money not being paid back into the Treasury, back into the ODC, there comes a point where there could be a little less money coming back to Treasury.

Are there outstanding amounts with the ODC that have to be paid back, and how much is the government losing on some of these bankruptcies? I take a look at the actuals in 1989-90. This is on page 56. The actuals were $6 million. Then over to 1990-91, as we took over as a government and with the recession being on, we estimated it at $7.2 million, but the actual losses were $15.59 million. I wonder if you could elaborate a little bit on that. I think Mr Carr was getting to that point before his time ran out, so I thought I would ask the question for him.

Hon Mr Philip: I wonder if David MacKinnon can add to that and explain what we are doing on that, where the outstanding loans are and so forth.

Mr MacKinnon: There is a substantial volume of ODC loans outstanding at any given point in time that are not reported as part of the estimates process. At this point, in terms of loans, loan guarantees and so forth, the total outstandings of all kinds would be about $930 million in terms of the total activity base of the corporation, including loans and loan guarantees out there at any given point in time.

In the recession there is an impact on that total and there is an impact in terms of the annual repayments to Treasury. So far, in terms of loans and investment write-downs or write-offs, those levels have been manageable. For example, in the fourth quarter of 1990-91, they total, in terms of loans, $3.2 million in round numbers, and a total of $26 million for the year. In terms of investments of both kinds, there would be about $4.6 million in the fourth quarter and about $6.5 million for the year, and I am rounding the numbers. So there is an overall total of loan write-downs, investment write-downs and so forth of approximately $7.9 million in the fourth quarter of the year, and a total of $32 million for the whole year out of the total activity base.

Mr Hansen: I think that pretty well covered it. The concern was that I knew one company was $800,000; the other one was just close to $1 million. That was just two companies we knew of in the Niagara area. When you add up for two companies and then take a look at all of Ontario, it is a little scary.

Mr MacKinnon: If I could make one supplementary comment on that, the percentage increase of loan losses and loan write-downs for the chartered banks in the quarter ending January 31, 1991, was about 75% higher than in the same period for the preceding year. That number actually, for that quarter only, decreased by us by a figure of about 23%. So we have experienced a reasonably good loan loss record in that particular quarter.

It is true, though, that sometimes it is a lumpy thing. Sometimes there are quarters where we have to take a major write-down or write-off, and other quarters where it seems less severe. It generally tends to average out over time. Our record which we keep track of in relation to the private sector financial institutions is reasonably consistent, although it has risen in terms of the recession. It has risen by less, apparently, than for some major private sector financial institutions and certainly our levels of write-down have improved greatly over what they were several years ago.

Mr Hansen: I just want to make one comment here. I would like the minister to be familiar that most of the small companies or businesses coming to see my CA are more interested in information, and in not waiting for the cheque to be written to be helped out. Usually you always say: "Where's my cheque? I'm ready to start opening business." There is a different attitude out there.

Mr Kwinter: There are a couple of things I would like to talk about. I notice that in the budgetary statement of the government it announced that the operating expenditures for the ministry were $192 million last year and $192 million this year. They also go to great lengths to say, "Ontario's technology fund will provide $131 million for research, development and technology," and there were press reports that this was some great new program. I notice that in effect the technology fund program has actually been reduced by $4 million over last year, so that in effect there are fewer dollars going into the technology fund than went into it the year before.

There are other areas I would really like to get an explanation on.

Hon Mr Philip: May we respond to that first?

Mr Kwinter: Sure.

Hon Mr Philip: I think, Mr Kwinter, that we dealt with it earlier, but I would be happy to have the deputy explain the way in which we are accounting for this at the moment. I think it is useful.

Mr Armstrong: Let me just start it and I will call on Mr Wood to supplement this. The $4 million out of the technology fund is correct. Those were funds that in this fiscal year it was judged could not be expended, given the applications that were before the -- as you know, there is a peer review process and it was judged that those funds could not be expended in the fiscal year. As part of the constraint process where we were being asked to find $14.2 million, those in charge of the fund indicated those were funds that could be deferred. Those were not permanently taken away from the fund but were deferred in terms of expenditure in this fiscal year.

I guess this is implicit in your question. There has been some previous talk about this. The budget shows, when you total it up, a total of $305 million for the ministry, whereas the ministry estimates show $353 million. The ministry estimates include the ODC loan amount, the so-called non-budgetary loan, of $51 million, so that accounts for the discrepancy. In point of fact, the total expenditures of the ministry this year as opposed to last year are roughly $353 million versus $333 million, an increase of approximately $20 million.

Mr Kwinter: On the manufacturing recovery program, how much money has been expended out of that $57 million?

Mr Armstrong: Those figures are available.

Mr MacKinnon: Because of the way these programs start up, usually there is a period of time when we really have not disbursed the actual cash, although we have made commitments for the loans. At the moment, of the total of approximately $50 million authorized for the program in terms of loans and loan guarantees, we would have committed to approximately $20 million of that total. We expect the remainder of the allocation to be used.

Mr Kwinter: But in effect none of it has been paid out to date?

Mr MacKinnon: Mr Kwinter, the actual number would be quite low. It would be $1 million or $2 million that would actually have been disbursed. I should say in making that comment, though, that sometimes the beneficial effect of the program comes at the point of commitment by the government, rather than the actual flow of cash, because it is at that point that the behaviour of bankers and others concerned with the welfare of the program actually changes. In other words, if they see we are committed, then their behaviour changes at that moment, rather than the actual dispatch of the cheque.

Mr Kwinter: The reason I am asking the question --

The Chair: We need to wind down, Mr Kwinter, if this could be your last question. We are out of time. I apologize.

Mr Kwinter: I have to make it a statement and hope to get an answer for it the next time we meet.

The Chair: You can request that this information be brought back in detail. If you would like to put on the record very briefly those items you would like the ministry staff to return with, then that would be helpful both to your question and to the committee.

Mr Kwinter: If I can ask one question, when you read the estimates, they tell the criteria of the manufacturing recovery program. How does that differ from the criteria ODC uses for providing any other support? They have put another name on it, but to me it looks like it is exactly the same kind of program. I notice that last year there was a decrease of about $24 million in funds that were provided for industry and technology development. How does that program differ from what you normally do as the ODC?

Mr MacKinnon: It differs in many important respects. The first is that there is an upfront component of it that is managed by the staff of the Ministry of Industry, Trade and Technology, the regular ministry staff as opposed to the ODC staff. That includes the preparation of a business plan and some upfront hiring, if necessary, to ensure that the management capacity for a turnaround is there and so on. My colleague Mr Friedman could go through that in detail if you wish, but there are several initial sequences that play out without ODC involvement at all. In many cases that may be all that is done. If, however, it comes on to us for a financial program, then we evaluate it. We use many of the conventional tools that we use in evaluating the regular programs, but we also bear in mind economic conditions in particular areas and other criteria that are supplementary to that.

The Chair: Recognizing that it is 6 of the clock I advise the committee that we have two hours and 43 minutes remaining to complete the estimates of this ministry. We stand adjourned until 3:30 tomorrow.

The committee adjourned at 1803.