Assemblée législative de l'Ontario

MINISTRY OF TRANSPORTATION

AFTERNOON SITTING

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

CONTENTS

Wednesday 26 August 1992

Ministry of Transportation

Hon Gilles Pouliot, minister

Gerry Johnston, assistant deputy minister, planning

Norm Mealing, assistant deputy minister, corporate services

Alex Kelly, assistant deputy minister, safety and regulations

David Guscott, assistant deputy minister, policy

Carl Vervoort, assistant deputy minister, operations

Margaret Kelch, assistant deputy minister, quality and standards

Gary Posen, deputy minister

Ray Hanton, regional director, central region

Tom Smith, managing director, GO Transit

Ministry of Industry, Trade and Technology

Hon Ed Philip, minister

Tim Armstrong, deputy minister

Peter Sadlier-Brown, assistant deputy minister, policy and development

David MacKinnon, president and chief executive officer, Ontario Development Corporation

Gordon Gow, president and chief executive officer, Ontario International Corp and acting deputy minister, international trade and international relations

Peter Friedman, executive director, domestic and small business operations

STANDING COMMITTEE ON ESTIMATES

*Chair / Président: Jackson, Cameron (Burlington South/-Sud PC)

*Vice-Chair / Vice-Présidente: Marland, Margaret (Mississauga South/-Sud PC)

Bisson, Giles (Cochrane South/-Sud ND)

*Carr, Gary (Oakville South/-Sud PC)

*Eddy, Ron (Brant-Haldimand L)

Ferguson, Will, (Kitchener ND)

Frankford, Robert (Scarborough East/-Est ND)

*Lessard, Wayne (Windsor-Walkerville ND)

O'Connor, Larry (Durham-York ND)

Perruzza, Anthony (Downsview ND)

Ramsay, David (Timiskaming L)

*Sorbara, Gregory S. (York Centre L)

Substitutions / Membres remplaçants:

*Caplan, Elinor (Oriole L) for Mr Ramsay

*Cooper, Mike (Kitchener-Wilmot ND) for Mr O'Connor

*Dadamo, George (Windsor-Sandwich ND) for Mr Bisson

*Jamison, Norm (Norfolk ND) for Mr Ferguson

*Mathyssen, Irene (Middlesex ND) for Mr Perruzza

*Ruprecht, Tony (Parkdale L) for Mr Sorbara

*Turnbull, David (York Mills PC) for Mrs Marland and Mr Carr

*White, Drummond (Durham Centre ND) for Mr Frankford

*In attendance / présents

Clerk pro tem / Greffière par intérim: Mellor, Lynn

The committee met at 1004 in committee room 1.

MINISTRY OF TRANSPORTATION

The Chair (Mr Cameron Jackson): I'd like to call to order the standing committee on estimates. We have two hours remaining to complete the estimates for the Ministry of Transportation. When we were last together, we were examining as a committee the expenditures of GO Transit. I'd like to begin the rotation again with Mr Sorbara.

Mr Gregory S. Sorbara (York Centre): Thank you, Mr Chairman. I note in front of us the Jobs Ontario allocation and I do have some questions on that subject, but before I begin, I want to return to the discussion yesterday about the cancellation of funding for the Red Hill Creek Expressway as a prelude to a looming bit of bad news that I expect will be coming from this government and the Ministry of the Environment.

By way of preface to my question, I simply want to read into the record an editorial that appeared in today's edition of the Toronto Star. The headline is "Extending Leslie Street."

"Metro Chairman Alan Tonks is understandably wary about proceeding with a costly environmental hearing next month into the Leslie Street extension.

"A year ago, Metro reaffirmed its 20-year-old plan to extend Leslie Street south of Eglinton to Bayview Avenue.

"But last fall, a scathing review of the project from the provincial Environment ministry put the future of the 3.2-kilometre, four-lane road extension in doubt."

I just note parenthetically that you can smell the rat right there, the same rat that ate away at the Red Hill Creek Expressway.

"In light of that report, Tonks is right to be asking Transportation minister Gilles Pouliot" -- that's you, sir; check your licence, that's you -- "for assurances that Metro isn't `pursuing hopeless initiatives.'

"If Pouliot reviews the case, he will realize that the road is needed to relieve the congested Don Valley Parkway and keep southbound cars off residential streets in Leaside.

"He will also see that it would improve access to the Thorncliffe Park industrial area" -- the government says it's concerned about jobs -- "and pave the way for an express bus route to take Leaside residents downtown in a fraction of the time it takes now.

"It's reasonable for Tonks to ask Pouliot for two things: a $3-million contribution for the environmental hearing and a commitment for half of the project's $141-million cost.

"Considering the rhetoric from Queen's Park about municipal infrastructure projects" -- we dealt with that in the first part of these estimates -- "to help the economy, it's hard to imagine how Pouliot could turn Tonks down."

I'm sure you've had an opportunity earlier this morning to read the editorial and think about some of the implications about what the people through this editorial are asking you.

I remind you that Hamilton-Wentworth region went through a 25-year planning process and a very expensive environmental assessment process to receive approval to build the Red Hill Creek Expressway and then the beautiful people in the Ministry of the Environment and some of their colleagues in your own ministry decided in their wisdom that, notwithstanding the determination of a tribunal, the project would be cancelled, killed, destroyed, eliminated by way of a withholding of funding.

You have an obligation to answer the questions that are raised in this editorial. If I could paraphrase the first question that arises, will you commit to providing the funding that it would be appropriate to provide if this proposal is approved by an environmental assessment panel, and are you prepared to contribute, as normally would be the case, the $3-million contribution for the environmental hearing?

Pretty simple and straightforward questions. You could answer them with a yes or no. The people of Toronto, Metropolitan Toronto and the greater Toronto area have a right to know the answer to those questions.

Hon Gilles Pouliot (Minister of Transportation): We have just received -- timely indeed with you, with respect of course, by virtue of what was highlighted by the press and editorialized -- a letter from Mr Tonks addressing the same subject matter.

Proposals, projects are funded on a formula basis by MTO after the EA panel has made recommendations. There's no hiding in a metropolis such as Toronto. People are very well organized, they voice their concerns and/or approval with knowledge, and passion sometimes, for they live in these neighbourhoods and they have the welfare of the community. It's a very complex endeavour. We don't close the door to any proposal but we must keep in mind that funds are limited.

But more important is that we have a due process. We have a formula that is arrived at, that is established, and we have to follow the rules as they are. I know you're not suggesting that we find ourselves in the poorhouse because of a spend, spend, spend policy. Money is not the catalyst here. It's a very important component, though. But due process is indeed that catalyst.

We will look at the letter, Mr Sorbara, and then we will see how it fits into what needs to be done, ie, EA.

Mr Sorbara: I just want to put it to you, Minister, as clearly as I can. The record of your government is not an acknowledgement of due process and formulas for funding based on that due process. The singular record of your government is to fly in the face of that process, to reject the due process and to cancel projects that have gone through all of the hoops and all of the process required by the government.

1010

The people of Toronto and Metro Toronto need to know what your position is. Are you going to play the same tricks you played with the Red Hill Creek Expressway, or will you make a commitment now that if the proposal to extend Leslie Street succeeds the EA process, your government will commit funding to the extension based on the regular formulas that are there? In other words, will you abandon the trickery you foisted on the people of Hamilton-Wentworth and abide by the due process?

The Chair: Mr Sorbara, the Chair has been rather lenient with your references. This is estimates. It's not a committee of inquiry. I think the minister is responding and I would appreciate it if you'd just temper slightly some of the inferences.

Mr Sorbara: You don't consider it trickery?

The Chair: I respect your opinions. I'd just suggest it may not necessarily be appropriate at this time.

Mr Sorbara: Okay.

Hon Mr Pouliot: More important, with the subject matter being addressed, under other circumstances one could feel provoked, but if you take the time to consider the source you find it immensely less provocative.

The Chair: Do you read the Toronto Star?

Hon Mr Pouliot: The interpretation from what appears, whether it's the local tab down the street -- I mean, one of the media that bless us with information would never deviate from their mandate to better inform the public. EA is not a guarantee that a project will take place, and this government is ready to make difficult decisions when decisions have to be made. It's one of the processes.

You keep going back to the Red Hill Creek Expressway, and rightly so. As you examine the dossier in every detail, you will see the consistency, and I am talking here in terms of finding an alternative. Certainly in terms of Leslie Street, it's not yes, it's not no. What we're saying is that we will give consideration to the content of the letter from Mr Tonks and then due process will take over and we will follow suit, always assuming our responsibilities under the mandate of MTO, no more but no less.

Mr Sorbara: I just invite the minister to measure his words very carefully, because if what you are saying now is that municipalities can well go through the very expensive EA process and then apply for funding under the normal funding provisions of the ministry and have that request for funding rejected on the basis that the government holds a different view of the environmental impact than that assessed by the board, if that's what you're saying in your equivocations, then I suggest to you that you are really putting in great jeopardy the entire system of considering the proposal to build new roads, because you are inviting the municipalities to abandon any consideration until they have an ironclad commitment from you that you will not change the recommendation of the EA board after the recommendation has been made.

I want to once again put it to you whether you will respect the decision of the Environmental Assessment Board that will consider that extension, or do you leave open the possibility that you will do the same thing in respect of the Leslie Street extension that your government did in respect of the Red Hill Creek Expressway?

Which is it going to be? Are we going to get back on the road to predictability and the responsibility of boards, or are you telling the people now that you will leave open the possibility that your government will take a different view of the environmental impact, notwithstanding the recommendation that a board makes to a municipality after a long EA hearing?

It's very important, because you're on the record here. What I'm saying is that Chairman Tonks is listening to your response this morning.

Hon Mr Pouliot: Yes, and I'll choose my words somewhat carefully. I'm not given to too much latitude, so I wouldn't wish to put words on the record that might take extraordinary proportion; not that the record is immaculate, in your views, but with the help of others -- good Samaritan indeed -- that record may go on and take a proportion.

In any event, it would be premature. Speculation and hypotheses are welcome, and we assume and do some planning in accordance with what we think will take place. Logically, we have to wait and see what the recommendations are. Then there are the recommendations to cabinet as well. Then there is the availability of funds. No one would appreciate the literally dozens of project submissions; they go through the loop, adhere to every rule, jump through every hoop, the EA process, and yet you put them on the shelves and claim you don't have the money to follow suit.

I don't subscribe to this kind of philosophy. I think you have an obligation that there has to be a beginning, a middle and an end.

We have the letter from Mr Tonks saying: "I recognize the needs in our community. It's going to get worse. But you can do something. We'll do it together." So we say, "Let's look at it." If there are pitfalls or shortcomings associated with the proposal, they will be identified.

Once we have this in hand, then we can look at it and make a balanced judgement. Our responsibility is to go through the process and generate the funds, but to say yes or no would indeed be to prejudice an issue which we have asked other people to look at meticulously and make recommendations. That's what we're waiting for and we're anxious to look at the recommendations from the panel.

Mr Sorbara: I simply tell the minister that the only way I can interpret that is that your government will not necessarily respect the recommendations of an Environmental Assessment Board hearing an application to extend Leslie Street. That is extremely bad news, not only for Metropolitan Toronto but for any municipality which is preparing to make an environmental assessment application. I want to turn now to this list of Jobs Ontario Capital fund projects that the minister and staff so kindly submitted to us after our request yesterday. Just to clarify the understanding from the estimates book -- I want to make sure I have this right -- the capital estimates for 1992-93 are, according to your figures, $1,714,000,000, and when you add in this $141 million, the net result is that the Ministry of Transportation is going to be spending about the same amount of money on capital projects as it did last year. Is that correct?

Hon Mr Pouliot: Thank you, Mr Sorbara.

Mr Sorbara: Is that correct?

Hon Mr Pouliot: I trust it is, in terms of spending approximately the same amount as we did last year on capital projects.

Mr Sorbara: Right. So really what you and the Treasurer did, if I understand it correctly, is take the amount that you spent last year and reduce it by about $141 million, and then put a new label on that $141 million -- Jobs Ontario Capital fund -- and use that nomenclature to make an announcement that made it look like the government was undertaking a capital fund project to help the economy out of the recession. Would that be a fair interpretation?

1020

Hon Mr Pouliot: I want to commend you on your consistency. I thought I had heard everything, Mr Chairman, but now I know I have. This would be playing a shell game.

Mr Sorbara: That's precisely what I'm suggesting to you.

Hon Mr Pouliot: Oh, my God.

Mr Sorbara: If I say to you, "Sir, last year you earned $50,000 as my employee. This year, I'm going to reduce your pay to $35,000, but I'm going to give you a bonus of $15,000, so you won't be any worse off, and actually, I'm going to make an announcement that my firm is now paying its employees bonuses," wouldn't you describe that as a shell game?

Hon Mr Pouliot: No, I would describe that as an employer who cannot afford me.

Mr Sorbara: Well, few employers could afford you.

Hon Mr Pouliot: There is no secret here. We have a job capital program. It recognizes the need. It's an incentive. It's an injection into the economic system of Ontario; nuts and bolts, shovel in the ground. There's no smokescreen here; there's no witchhunt.

Mr Sorbara: I didn't suggest a witchhunt.

Hon Mr Pouliot: It's straightforward going from point A to point B, putting people to work. You recognize the need. You make the roads safer, you make more roads, better roads, and it puts people to work. This is a win-win-win situation.

Mr Sorbara: Minister, I'm on your side.

Hon Mr Pouliot: Sure you are.

Mr Sorbara: I think your capital budget should be much higher than it is. All I'm suggesting to you is that in the Treasurer's budget, which is the basis for these estimates, he proclaimed "Jobs, jobs, jobs," like another politician who shall remain nameless. In fact, you had three job categories: Jobs Ontario Capital fund, Jobs Ontario Homes, and Jobs Ontario -- I forget the third. These were memorable announcements.

Mr Drummond White (Durham Centre): Training fund.

Mr Sorbara: Jobs Ontario Training fund.

Look at the capital fund. If you want to come clean with the people of Ontario, you have to admit that what you did, at least in your estimates, is reduced last year's expenditures by $141 million and then put a new label on the $141 million and say you've undertaken an anti-recessionary Jobs Ontario Capital fund, but when you add it all up, you're not spending one dime more than you did last year. Where am I wrong on this?

Hon Mr Pouliot: You're not --

Mr Sorbara: Wrong.

Hon Mr Pouliot: No. no. You're not consistent. Yesterday, you were looking for $308 million. We weren't spending as much. I mean, "Spend, spend, spend."

Mr Sorbara: Spend on capital projects, yes. I proudly advocate that.

Hon Mr Pouliot: Then as the day progressed, and this morning again, you seem to have bridged that $308 million.

Mr Sorbara: Yes, we found it.

Hon Mr Pouliot: Oh, you found it, so it's no big deal. Pretty soon you'll be talking about real money, I imagine. Now you chastise in terms of: "You're not spending any more than last year. Therefore, you took the money from one hand and you put it into a vat" or a general fund or whatever. "You shook the can and then you changed the tag; you changed the label."

Mr Sorbara: Yes.

Hon Mr Pouliot: I see you're not alone. You're being encouraged by your distinguished colleague, the member for Oriole.

Mrs Elinor Caplan (Oriole): I understand what he's saying, Minister.

Hon Mr Pouliot: By way of good morning, Elinor. I cannot understand --

Mrs Caplan: It's obvious.

Hon Mr Pouliot: -- how people would evaluate from that premise. Surely, there's a methodology here. We're here in the collective. When all is said and done, you help the people you're here to serve, not to impute motives and go into little childish games. Oh, it may be harsh, but I'm appalled. What makes people function that they would look at the world this way? Have I missed something, Mr Chairman? My upbringing was entirely different. It was to be positive, and heaven knows it has been.

Mr Sorbara: At least there we're on the same wavelength. I am appalled as well, appalled that you can't simply be honest and open and upfront with the people. Just say, "We're going to spend the same amount as last year, but we're going to put a fancy label on part of it."

If you were a private sector industry, I can tell you, my friend, as an ex-Minister of Consumer and Commercial Relations, that you would be before the advertising bureau of the federal Department of Consumer and Corporate Affairs. There was recently a case, for example, of a merchandiser who advertised the price as "special value price," which just happened to be slightly more than the regular price of the item, and they were investigated and found guilty by Consumer and Corporate Affairs.

What I'm suggesting to you is that governments have to stop doing the very same thing. It's not just your government; our government and the predecessor government did the same thing. I plead with you, in your estimates here, just to say to your ministry, "I don't want to do that." Say to Floyd Laughren, "I don't want to have anything to do with your public relations gesture, the special value price, the Jobs Ontario fund." Just say, "We're spending the same amount as last year, and this Jobs Ontario Capital fund is a pretty little advertising gimmick to make our budget look more than it is." If you would do that one thing, the honesty value, if not the competence value, of your government would increase dramatically.

The Chair: Thank you, Mr Sorbara. Mr Turnbull.

Mr David Turnbull (York Mills): I agree with Mr Sorbara that it's time that we had honesty in government, and he comments that other governments of all stripes have played these little games. I would particularly think of the fact that the previous Liberal government starved the transportation system of capital until shortly before the last election and then trotted out the transportation capital program, and that was another of these shell games. We've got to stop it. We've got to be upfront with the people of Ontario, and I don't care which political party it is. That is a shell game you engaged in, backing moneys out of the budget and then reannouncing them, and you're still spending the same sort of money. It's ludicrous, Minister. You've got to start talking to your cabinet and you've got to start talking to all of your caucus, because I can tell you that our party won't stand for it any longer.

Mr Sorbara: The party that invented it will not stand for it any longer.

Mr Turnbull: Well, I guess it hurts my little comment --

Hon Mr Pouliot: Mr Chairman, will these two stop fighting?

Mr Turnbull: -- but I found it rather amusing seeing the two brands of socialists arguing.

Let's turn to the way you've been spending your money, Minister. I want to speak about the Wally Majesky consulting contract for the human resources planning audit. Wally Majesky is a well-known NDP supporter and labour organizer. When he went to your ministry -- I must admit, he went to your ministry before you were the minister -- and asked to do a study, this being an unsolicited study, your ministry said it didn't need the study; it already had the data.

Notwithstanding that, your ministry plowed ahead and gave them the contract for the study and is spending some $160,000 of the taxpayers' money on an unsolicited study that, according to the freedom of information documents I got, your ministry said it didn't need. Further, you didn't tender the contract. All of this is on record in freedom of information.

Minister, explain to me once again, because in the House you were able to dance around this, why an unsolicited contract, untendered, and, by your ministry's admission, unneeded -- why did you go ahead with this study?

Hon Mr Pouliot: Well, we differ on what was and what is needed or unneeded.

Mr Turnbull: Well, I've got freedom of information which says that your ministry said it didn't need the information; it already had it.

The Chair: Mr Turnbull, allow the minister to respond.

1030

Hon Mr Pouliot: I can reassure my distinguished colleague that every rule was followed; that we have the capacity, under a certain amount, to go the sole-source route. In fact, the number of sole-source awards pales in comparison to previous administrations.

Mr Turnbull: Minister, the question I'm asking you --

Hon Mr Pouliot: We don't see it as a policy.

Mr Turnbull: You're answering some other question. I'm asking you why, in view of the fact that your ministry said it already had the information, you went ahead with the study. That's the question, not something else.

Hon Mr Pouliot: I see. Okay, thank you. Mr Johnston, maybe you'll have a better ability to penetrate the subject matter than I do. There seems to be a credibility gap developing.

The Chair: Introduce yourself for Hansard, Mr Johnston.

Mr Gerry Johnston: Gerry Johnston, assistant deputy minister of planning.

In the early stages of the study there was an expression made that whatever is done through the study should not duplicate work that was done before, and that was expressed as a concern. That was fully addressed during the preparation of the terms of reference and the work program to make sure there was no duplication or overlap.

So although in the very early stages that point was brought up, it was fully resolved through the committee that included the operators of the transit properties, the Ontario Urban Transit Association and the ministry staff. That point was brought up as an issue --

Mr Turnbull: Thank you, Mr Johnston. Minister, how many times did Mr Majesky come back with new ideas until he could have a study you could pay for that you could claim there was no duplication of?

Hon Mr Pouliot: Gerry.

Mr Johnston: It wasn't a case that the study wasn't necessary. I think everyone appreciated that there were benefits that would come out to everyone through a study of this nature. It was a case of simply sorting out the terms of reference to eliminate any possibility of duplication. It was more that, until you get down to the point of really understanding the work program, you can't see all the details of what's being done within a program --

Mr Turnbull: Yes, that's a good point. The work program, as of last week, still hadn't been worked out.

Mr Johnston: Yes, the work program was worked out and was approved by the steering committee on, I believe the date was, May 11, so it is finalized.

Mr White: Mr Chair, with due respect --

The Chair: You have to put it as a point of order.

Mr White: On a point of order, Mr Chair.

The Chair: Your point of order is?

Mr White: Mr Chair, with due respect, Mr Pouliot is a very able and experienced politician and I'm sure he can deal with interruptions --

The Chair: That's not a point of order, Mr White.

Mr White: However, I'm not sure it's in the job description of the witnesses.

The Chair: That is not a point of order, Mr White. You're out of order. Please proceed, Mr Turnbull.

Mr Turnbull: Yes. The question then is, why was I given information under freedom of information last week that the terms of reference had not been fully completed?

Mr Johnston: In a committee meeting early this year -- I can't remember the exact month -- it was decided that the terms of reference had reached the point where it could be much more productive to focus on the development of the detailed work program. The detailed work program replaced the requirements for what would be classified as the terms of reference. But the work program is finalized. It's done in considerable detail. It is accepted by all the participants, and the study --

Mr Turnbull: When was that finished?

Mr Johnston: That was done in May. If you specifically wanted access to the work program, I'm sure that could be made available.

Mr Turnbull: What was it that was not completed last week when I got the freedom of information?

Mr Johnston: The terms of reference as a document. There were preliminary terms of reference. They were circulated to all of the people who were participating in the study including the operators, Ontario Urban Transit Association and other ministries. They commented on it, and then they used the basis of the response to those preliminary terms of reference to finalize a detailed work program for the project. I think we're talking more words than content.

Mr Turnbull: Thank you, Mr Johnston. I would hate to think that private industry would ever engage in this kind of conduct, because they'd be bankrupt, Minister. You'd already paid $20,000 before you'd got all the terms of reference settled. That's rather alarming. How many other unsolicited contracts have you given out?

Hon Mr Pouliot: The question is very valid and is well taken. The computer list of all sole-source contracts -- in fact, what we will do is go back a few years and make it available, because it's public money we're talking about.

Mr Turnbull: That's right.

Hon Mr Pouliot: I share in your view that it should be available. You're asking for it?

Mr Turnbull: Yes.

Hon Mr Pouliot: You will get it, and you will get it in rather short order. In fact, I said en passant this morning that this question was to be raised. In anticipation that the question would be raised, "Where is the list?" The list will be forthcoming, I can assure you. I want this to become a matter of record. Let's go back eight or nine years to see the sole-source contract issue. You have a lot of support from me in raising those questions regarding sole-source, for we must all be vigilant.

Mr Turnbull: That's right. I have no problem in going back for ever, in the same way as I spoke to you yesterday about the way we've got to document the way money is being spent. I'm alarmed at the fact that we have in excess of a $10-billion deficit this year and you're plowing ahead and spending $160,000 on some union leader, who wants some pork-barrel scheme, coming to you. I have seen the documentation under freedom of information.

Interjection.

Mr Turnbull: I have seen the documentation as to what was corresponded. I saw the first letter from Wally Majesky and my hair stood on end, where he was thanking the minister for sending certain people to the meeting and that things were moving along very nicely. I think the press will be very interested in that, Minister.

What is your procedure at the moment so far as unsolicited contracts? I'm not talking about just sole-source; I'm talking about unsolicited.

Hon Mr Pouliot: We have strict guidelines that were established by previous administrations vis-à-vis Management Board's rules and procedures. Gerry Johnston, would you like to spell out the guidelines?

Mr Turnbull: Minister, is that back in the days when we used to have much less of a deficit that you're talking about, when they had these rules?

Hon Mr Pouliot: I fail to see the relevance.

Mr Turnbull: There's a great relevance. You're spending taxpayers' money like drunken sailors.

The Chair: Mr Turnbull, I believe Mr Johnston's been asked to respond to your question which has to do with policy.

Mr Johnston: Mr Mealing will respond.

Mr Norm Mealing: Norm Mealing, ADM, corporate services. We have a consultant assignment process in the ministry that involves dealing with consultant assignments across a range of activities. With respect to unsolicited proposals, we are always interested in ideas from outside the ministry. We have never claimed to have all the expertise within our organization. These ideas, when they come in, are referred to the appropriate area within the ministry for review and recommendation.

It is not unusual to give out contracts based on an unsolicited proposal. As a matter of fact, in terms of our research and development effort, a lot of our R and D assignments are on the basis of proposals brought forward from universities in response to their identification of a number of areas they would like to look at.

Mr Turnbull: With respect to the Majesky contract, I can only see unions benefiting from this information. I fail to see how the taxpayers are going to get any benefit out of this study.

Hon Mr Pouliot: Oh, but they will, immensely so. The issue of improving relationships between labour and management is an ongoing issue. Mr Majesky and his team bring forth a world of experience. They're trying to make things better.

Mr Turnbull: I think there's a conflict of interest.

Hon Mr Pouliot: They're imaginative and they're innovative. In fact, the taxpayers are getting value for money.

Mr Turnbull: There's a conflict of interest. Your party receives very significant amounts of money from these unions, and now you're dispensing the money to these union leaders to do studies which will only benefit the union leaders; not the union rank and file but the union leaders, in order to consolidate their power.

Hon Mr Pouliot: Our relationship with the labour movement, or members from unions, as you term them, brothers and sisters --

Mr Turnbull: No, union leaders.

Hon Mr Pouliot: -- indeed is no different from the relationship we have with all sectors of Ontario society. Again, I say I fail to see the relevance.

Mr Turnbull: That's not the common view. I don't know what newspapers you're reading.

The Chair: Mr Turnbull, please. This is not a debate.

1040

Hon Mr Pouliot: We have friends in the banking community, in the insurance industry and the real estate industry. They're having a difficult time right now, but we have friends, and we tap the expertise across the board, universally. We're not prejudiced; time is too precious to make differences and to be closely connected, as some would suggest. We don't do those things, Mr Turnbull.

Mr Turnbull: Quite frankly, Minister, the real estate industry would differ with you on your view of you helping them.

Let's turn to vehicle driver licensing offices. In your unrolling the road safety organization in June of this year, you suggested that this would take over all existing road safety programs and customer services currently being provided by the ministry. What sort of job guarantees are the people who are operating those agencies going to have under the new agency? I'm not talking about under the MTO, because you will recall, when I asked you a question in the House the very day that you announced this road safety agency, you said, "As long as it reports to the ministry." It was so disingenious of you to say that, the very day you had announced this agency you were hiving them off to.

Mr Sorbara: Don't accuse the minister of being ingenious.

Hon Mr Pouliot: He said that I came to the province to learn English, and I've just been disingenious.

Mr Turnbull: I'm very sorry about my English pronunciation, Mr Sorbara.

Hon Mr Pouliot: I'll turn it over to Mr Kelly, a world of dedication and expertise, one of the architects who put together the proposal to again make things better, to have a different relationship within the confines of the proposed road agency. It's exciting. I know you will want to commend Mr Kelly. Will you tell us -- take your time, Mr Kelly, please, because this is a very important, very insightful question indeed -- about the many attributes. Mr Turnbull is beginning to salivate. He wishes to know everything about the road agency.

Mr Sorbara: No, he's looking for lunch.

Mr Turnbull: Let's do this in the form of very short questions and answers so that we don't eat up the clock.

The Chair: Why don't we let Mr Kelly answer, since all of this is going to go into his next manager's letter anyway.

Mr Alex Kelly: I'm Alex Kelly. I'm the assistant deputy minister in safety and regulations. We have at the present time 288 small companies which deliver our products, and they're distributed throughout the province. As far as vehicle licences, renewing of vehicle and driver's licences, they do most of our business; 90% of the vehicles go through that, and 63% of the --

Mr Turnbull: Yes, Mr Kelly, I know all of this information. I'm asking about the ongoing relationship of these offices after they become part of the crown agency. I'm asking what guarantees they will have of work after it is no longer directly under the ministry.

Mr Kelly: Our present relationship with the issuers is that they're compensated based upon transactions. We have no guarantee that transactions will occur as population shifts and so on and so forth throughout the province, so they have to take a little risk in that themselves.

Mr Turnbull: They've never had any guarantee.

Mr Kelly: They have never had any guarantee.

Mr Turnbull: Mr Kelly, this is what I'm aiming at; I'll be very clear so that you'll understand what I'm asking you to answer. These people have gone into leases on buildings, and in fact in some cases have bought buildings. They have rented photocopiers; they have purchased computers. In order for them to be able to know that they have a future, they need to know that after this comes under the aegis of the road safety organization they will continue to have a job and that they will continue to be able to pay the rent on their premises. I'm not asking for guarantees of volumes of people who are going to use this; I'm talking about the future of these people who operate the offices, the 1,500 predominantly women in relatively low-paying jobs, that they will continue to have work after this goes into effect.

Hon Mr Pouliot: Isn't that word "tendered," Mr Kelly?

Mr Kelly: We advertise for agents when there's a vacancy in the community. But we intend, as a part of the road safety agency, to continue to use the private issuers to deliver our products. Basically they'll continue to be the products that we're delivering at the present time, with maybe one or two additions and one or two changes in the systems. We presently provide all the issuers with all the computer systems, all the programs, all the information, all the supplies and so on and so forth, and we will continue to do that. We will continue to update their equipment and allow them to operate better.

Mr Turnbull: Okay. Mr Kelly, I will direct this back to the minister.

The Chair: It is your last question, Mr Turnbull.

Mr Turnbull: When I asked you what their future was, you said, "As long as it's under the ministry," Minister -- the very day that you'd announced the creation of this road transportation agency. I'm not talking about while it's under the ministry. I'm talking about the future of these agents and the employees as independent operators after it is under the road safety agency, not while it's under the ministry, where you've already said you'll devolve it.

Hon Mr Pouliot: When you have an agency, it has an arm's length quality to it. Nothing is in perpetuity. You don't have a monopoly. You can't guarantee whether in 10 or 15 years the same people will be exercising the same job. This is a constantly changing world. Twenty minutes ago you were making a very strong argument for the tendering process as much as possible, and I'm sure you would wish to say, "When does the next tendering take place?"

Mr Turnbull: I have no problem with that, Minister.

Hon Mr Pouliot: So we don't know; it might change. You've asked in the House, and rightly so. The anxiety created around dispensing machines: Well, dispensing machines are enhancing the delivery of their product. We can't go back to the days of horse and buggy.

There will be changes. There will be more changes in maybe five, six, seven, eight years. I don't know; no one knows. But things move quickly nowadays. The delivery of the product or products might be entirely different from what it is now. It is for the road agency, and the kind of implementation will be reflected by the policies set forward by the road agency. We will not dictate what the road agency does. We cannot. It's not our philosophy.

Mr Turnbull: Minister, I'll make it simple. Just a quick answer to this, yes or no: Will they continue to have their jobs until after the next election?

Hon Mr Pouliot: The formation of the road agency will have, as a natural part of its mandate, a definition of the role of what we refer to now as the licence issuers, all those 288 people. We certainly more than respect -- we recognize, first and foremost, the contribution they make.

Mr Turnbull: But they want to know, will they continue to have their jobs until after the next election?

Hon Mr Pouliot: Thank you very much, Mr Turnbull.

Mr Wayne Lessard (Windsor-Walkerville): A number of the issues that I was concerned with have been raised over the course of the last couple of days. One of them was with respect to the 25-metre trucks. I know this came up in discussions yesterday, and as part of the considerations that were addressed was the safety factor. I know that the safety of trucks on the highway is important to most people who drive on the road, and I've noticed myself that the number of trucks on the highway has increased in the last few years.

I've seen some programs on TV -- I don't know whether it was on The 5th Estate or what program it was -- referring to the strengthening of rearguards on trailers and the possibility of requiring reflective strips on the sides of trailers and indicating that something as simple as reflective strips would really increase the visibility of truck trailers when they were making turns. I wonder whether we're developing a policy with respect to the safety of trucks in considering the length of trucks and trailer combinations and those factors that deal with these safety matters as well.

1050

Hon Mr Pouliot: The point is well taken. It's a safety issue. We're constantly monitoring the safety and its requirements. I think it's safe to say that truck traffic has more than doubled in the past decade, and it is a problem. A good percentage of trucks are not roadworthy, jeopardizing the safety of others and themselves as well. So it's a dilemma. Since it's a technical question, I will refer the question to Mr Alex Kelly.

Mr Kelly: We are concerned about the underride possibilities on the trailers. The standards for vehicles are under the control of the federal government and this ministry has gone forward to the federal government asking that a technical solution come for the underriding ability, running under the rear of a trailer.

The issue is based around the fact that trailers go to different clients and they have different loading docks and it's very difficult for them to come up with a particular standard. That's one issue. The other issue is that trailers move across interprovincial boundaries. They come in from the States and they come in from other provinces.

We have to get the federal government to come up with a technical solution for the underride. They're going to start the research on that. Having done that, we'll want to encourage other jurisdictions to do the same thing, because the trailers move around a great deal.

We have technical reports concerning the stability of trucks in the highway system and we're continuing to track that and to look at various configurations. Indeed, most of the federal government's studies and the studies we have produced are allowing the manufacturers now to manufacture their trucks and trailers with better axle spacing so that there's more stability in the highway system.

Mr Lessard: I was asking about reflective strips along the side as well. Is that included in federal standards as well?

Mr Kelly: That's included in our proposal to the federal committee on standards for trucks.

Mr Lessard: On the next question I have, I don't know how closely related the ministry might be with respect to this issue, but in other parts of Canada there has been a move towards having local airport authorities involved in running airports. In the western part of Canada they've taken over the airports from the Department of Transport. I know the chamber of commerce in the Windsor area is interested in the possibility of turning the Windsor airport into a local authority.

I know that at the present time air traffic is under the jurisdiction of the federal government, but I suppose if it's transferred to more local authorities there may be some possibility of involvement from the provincial government, because there would need to be transportation links, for example, to those airports as well. I suppose that at some point people who are involved in advancing this idea may look to the provincial government for some support. I'm just asking a general question as to what efforts or policies we may be investigating at this point.

Hon Mr Pouliot: A very timely and interesting question, Mr Lessard. A good deal of ink and many, many hours have been spent on proposals for airport authorities. Of course, it does require legislation. It's a problem that borders on the extraordinary, that unless you have local people, be it regional mayors in the Metropolitan Toronto area, to coordinate efforts so that not only is Pearson the hub of Canadian flying, if you wish, but its relationship and its relevance, how do you make things happen between -- what's Sifton's place, the other airport?

Mr David Guscott: Buttonville.

Hon Mr Pouliot: Buttonville, that's right -- Hamilton, for instance, and Metropolitan Toronto.

There are others, but no one is better equipped to answer and to shed some light, give us an update, than Mr David Guscott, for he's been the representative of the government on those panels.

The Chair: Now I know why all the staff show up for these estimates. Welcome.

Mr Guscott: My name is David Guscott. I'm assistant deputy minister for policy.

In response to Mr Lessard's question, the ministry's, the government's and indeed the municipality's interest in local airport authorities stem from two basic principles. First of all, airports are a major generator of economic development activity, and in fact the North American professional association of economic development officials has ranked airports among the top three determinants in the decision-making for companies to locate in a particular area. That has not been lost on municipalities throughout North America. There is a strong movement towards the creation of local airport authorities for competitive economic development purposes.

The other rationale for doing it relates to a desire to have local decision-making about the airports that affect a particular area. In Canada, until the federal government announced its policy in 1987, the decisions about all of our national airports were made in Ottawa with virtually no local input.

You're quite right: There has been a lot of activity since the 1987 federal announcement of a desire to transfer the airports to local authorities. Vancouver, Edmonton, Calgary and Montreal have had local airport authorities up and running within the last four or five months. The federal government showed very little interest in moving towards a local airport authority for the Toronto area, and in fact discouraged it somewhat.

Notwithstanding that, the Ministry of Transportation funded a study in cooperation with the Office of the Greater Toronto Area and with the municipalities in that area for an impact of what a local airport authority could do in the way of the system of airports from St Catharines right through to Oshawa. Their report, which was completed in 1990, came out strongly in favour of a local airport authority to run that whole system of airports.

As I said, the federal government was not particularly interested in advancing that. Pearson, one of the airports which would be included, is the only highly profitable airport in the entire Canadian system and they were somewhat reluctant to include that in the transfer program.

However, in February of this year, when the province was presenting its position on the expansion of the runways at Pearson International Airport, there was a condition on provincial support for that expansion that related to the fact that we needed a local airport authority. Besides the economic development aspect, it related to the fact that an expansion of the runways would have a severe impact on the communities around the airport and there needed to be some local input into some of those decisions. For example, the way the airports are operated and whether some of them are used for landings or takeoffs in particular conditions can dramatically affect the impact of the airport on those people.

Over and above that, there is interest in local airport authorities beyond the Toronto area. Ottawa is investigating it. As you mentioned, Windsor, and Thunder Bay as well are proceeding now to explore the possibilities of local airport authorities, and we are working with those communities in that regard in helping them organize and helping them bridge the discussions with the federal government.

Mr Lessard: Okay, thank you. The final question I have is with respect to the bicycle policy that was released at the end of the session, in June. I know that in my own community it generated a lot of interest in the parks and recreation departments and the public works departments.

A couple of years ago we conducted a bicycle use development study in the community, one which was actually the recipient of several awards in Ontario and I think in Canada. It does set up a planned bicycle route system throughout the city, and since that time the city has been making some yearly progress on extending those routes in the community.

When the announcement of the bicycle policy was made, it didn't go unnoticed that there was going to be some allowance with respect to providing funds in conjunction with road development and road building to include bicycling facilities at the same time with, for example, perhaps a wider shoulder or something of that nature.

One of the questions that came up at our city council was whether they should submit the bicycle study to the minister or to the government for approval so that they might be able to apply for funding for bicycle facilities on roads they might be building. They were interested in knowing what sorts of facilities might be covered through this change in policy direction, whether it only included work that was being done on roads or whether it might include connecting sections that go through parks, for example.

I wonder if those three issues at least could be addressed.

1100

Hon Mr Pouliot: Suffice it to say there is a growing number of cyclists in Ontario: Population a little more than 10 million people, and two million cyclists. One of every five Ontarians is a cyclist, three million bicycles, a contribution to the economy of $150 million per year, a recognition that it should be part of the infrastructure. It's here to stay. A good many people use a bicycle as their sole or main source of transportation to work. It's gone beyond the almost exclusively recreational aspect of bicycles.

What we said is that in the revised policy we will include those facts. We will give it a little clout. There's a wide range of initiatives that will be reflected with the implementation of policy, and there's a buck attached to it. Too often governments pass legislation and they forget to include the cheque. Well, not in this case. It's a step-by-step approach.

There's a partnership involved also, that the municipalities have a say. So one would say that it's to some extent the sort of arrangement that's already in place for the road system for other structures such as bridges. You have an agreement, a formula, with the provincial government. In this case more money will flow from the province to the municipalities to address the needs of cyclists in its infrastructure.

Also, I want to thank George Dadamo for his contribution. We took advantage of this opportunity to recognize the positive contribution of mandatory helmets, and the sponsor was Dianne Cunningham, a friend and a colleague who sits in the vicinity of where Mr Turnbull sits in the House. When it comes to safety, we certainly go beyond the need to have any political stripes to debate among ourselves, so we all in unison said, "Let's go forward and do that."

Gerry Johnston, will you kindly privilege the committee by highlighting what the revised bicycle policy will entail and broadly summarize it?

Mr Johnston: As I'm sure you're aware, the previous policy the government was operating under was over 10 years old and didn't really recognize bicycles as a form of transportation, but we did support certain safety activities and it was probably long overdue to update that policy. The minister has outlined some of the basic elements, that bicycling is now recognized as a form of transportation eligible for the normal support and assistance and that funding will be provided in that regard.

What we are trying to do now is to encourage municipalities -- and I was glad to hear a comment about the municipalities' interest in preparing a plan that would include bicycles and their legitimate role as a transportation mode in all their new planning activities or updating of their official plans or whatever, to incorporate the role of bicycles in that planning activity, and we would work with them and participate in that.

The support that would be provided would be the support that would be associated through our normal transportation programs, in our road programs if the bicycles are being incorporated into the shoulders of the roadways, and then possibly cutting through park areas to provide a continuous system. We will be looking at that network and seeing the form of funding and support in accordance with that.

In some cases the bicycle routes may be incorporated into some transit facilities. This is of particular interest in Ottawa-Carleton, where they have the Transitway and they have a lot of interest in providing improved facilities at transit stations where people will actually bike to the station rather than drive or walk to the station, to encourage more use of bicycling as an access form to a transit station. We are assisting them in the planning for that and the implementation of those bike facilities at a Transitway station. If they get into incorporation of bicycle paths into the Transitway itself, we would include that as a part of the Transitway system and fund it accordingly.

I think there is a lot of interest across Ontario in bicycles, a growing interest, and I'm sure a lot of municipalities will be picking up on this policy and developing plans, trying to get some implementation programs in place.

Mr Sorbara: If we had built a bicycle path across Canada instead of a railway, we would not have incurred all the problems that we have today.

The Chair: Actually, when Mr Johnston was speaking, I found it fascinating. You indicated that it hadn't been updated for 10 or 15 years, and yet I recall that my brother, when he was 18 or 19, ran a red light on a bicycle on his way to the pharmacy and he was charged for failing to stop at a red light by the police, written a ticket, major fine, and lost three points on his driver's record and his insurance went up by $1,000, all for running a red light -- a stop sign, sorry. It wasn't a red light, it was a stop sign. He did not stop and get off his bicycle, as the officer said. So it's hard to believe that this aspect is as far behind as you may have conveyed. I was under the impression that the Highway Traffic Act came into full force and effect for bicyclers.

Mr Johnston: The Highway Traffic Act would be different from the bicycle policy, which more or less lays out the type of assistance and support that the province will give. But the last policy in terms of education and safety and participation in bicycle facilities was in 1982.

Mr Sorbara: If your brother was charged under the Young Offenders Act, he certainly would have been given a new bicycle.

The Chair: Maybe by your government. I will recognize Mr Sorbara. You were big on giveaways, as I recall.

Mrs Caplan: Never enough for you, Cam.

The Chair: When it came to health care, Elinor, that was true. I appreciate the committee allowing me that moment, but I couldn't resist. Thank you. Mr Eddy, please.

Mr Ron Eddy (Brant-Haldimand): Sound barriers are much needed on controlled-access highways, but it concerns me that considerable cost of course is incurred. They are very expensive structures. They are probably draining money off from much-needed road facilities. But I wondered if criteria or warrants had been developed for their installation, or whether there's a policy that they're going to be installed in all residential areas, or whether it's done on a petition or complaint basis.

I also wonder about the material. I expect it's all aggregate, and I wonder if we've looked at the possibility of using recycled tire rubber in those. I've heard that it is a possibility and probably should be it, considering the number that are going up. It would seem to be rather a good thing to do that.

I also wonder -- I'm sorry, a series of questions -- whether there's been any experience with adverse effects with them in bad weather conditions. I don't know whether you've run into that or not. It's perhaps a tunnel effect in places, and I just wonder if we've had any experience that way.

1110

Hon Mr Pouliot: Quality of life and safety aspects: Sound barriers are increasingly, and we feel rightly so, finding themselves in the criteria when you build a road project. Not any road project, but if you enlarge or build a highway, surely the quality of life of people who reside or work in the surrounding area has to be reflected in the policy and devices have to be erected to maintain that quality of life.

In most cases we're dealing with sounds and noise, in some cases obstruction of views as well. But to put it in a better perspective, both Ms Kelch and Mr Vervoort are experts, and their qualities are legion. I can assure you their faults are certainly not many.

We want to welcome you to the family of expertise provided by MTO. We're listening intently to the fascinating subjects of sound barriers and other supplementary questions.

Mr Carl Vervoort: Perhaps I will begin. I'm Carl Vervoort, assistant deputy minister of operations. The first point in your question was, is there a criterion? Yes, there is. There is a formalized process in place whereby the ministry establishes the sites which are eligible for noise reduction barriers. We do have rating and ranking mechanisms that established priorities for those sites that are identified as eligible.

The criterion has to do with two key parameters. There are several but two are key. The first key one is the extent to which the noise barrier would attenuate noise. The practice there is that the benefits from the installation of the noise barrier would result in more than five decibels. This is technical jargon; "decibels" is a term used to define the level of noise. It's sufficient to say that it is a formal measurement of the level of noise. There is a limit that would trigger the need to install a noise barrier.

The other key parameter has to do with the date, and that date is 1977. It is relevant because it helps to decide responsibility for the installation of noise barriers. At that time, in 1977, there were reviews by several ministries -- the Ministry of Housing, the Ministry of the Environment and our own Ministry of Transportation -- to deal with noise resulting from roads.

It was agreed that mechanisms would be put in place where any proposals for housing, plans of subdivisions and the like, after that particular date would have in their approval conditions to ensure that the noise resulting from houses being located approximate to the right of way would in fact be attenuated to the levels that were prescribed.

That is the current practice and the responsibility is with the municipalities to enforce it and ensure that those conditions are made applicable to proposed plans of subdivisions.

Hon Mr Pouliot: Excuse me, that was in 1977, sir?

Mr Vervoort: Yes, 1977. That's the criterion with respect to new subdivisions of course. There is a program the ministry has to retrofit and install noise barriers that predate plan approval for 1977, so there is, as I mentioned earlier, a systematic assessment of candidate sites. Those are ranked and prioritized and funds are made available for what is termed a noise barrier retrofit program. Those are scheduled for construction, and we build anywhere between three and five per annum.

Ms Margaret Kelch: If I may, further to Carl's comments, my name is Margaret Kelch, assistant deputy minister of quality and standards. I believe, Mr Eddy, a further aspect of your question related to the potential use of rubber as the material in the noise barriers. I did mention briefly yesterday, as we talked about asphalt and rubber in asphalt, that noise barriers are in fact one of the other candidate areas we're looking at. We do have a couple of test locations around the province. The major issue seems to be flammability. That's what we're trying to deal with, to ensure that we're not putting a product that's going to create greater challenges for us, as well as providing some benefits in terms of the use of old tires.

We have the test locations identified and we will be evaluating them carefully. If you're interested in the results, we can provide them when they're complete.

Mr Eddy: I also asked about the problem with weather, but I guess the more important question is, are they really effective sound barriers? Are they doing the job they were designed to do? I'd also like to know if there is an estimate of cost per kilometre. I realize that it varies with the site, of course. You get into various problems with sites.

Ms Kelch: The question of weather is an interesting one, because any time we put up that kind of linear barrier along the side of a roadway, obviously we're concerned about it. We have done a little bit of homework and research, but there really is nothing definitive that indicates there is a major problem created by these kinds of barriers being put in place.

In terms of your question on effectiveness, as Carl indicated, the major criterion in terms of their placement is that we need to have the level of assurance that at least a five-decibel improvement will be in place. A lot of that is determined by the geometry of the road as well as the topography on the edges of the road. We do need to be assured that's the case before we will consider the placement of a barrier.

In terms of cost, as you say, it varies, because we've used different materials. As you've probably noticed around the province, we do have concrete as well as metal in place, and the costs do vary, but the estimate Carl reminds me of here is about $500 a metre. So it's not an inexpensive placement, particularly the retrofit program.

Mr Vervoort: Just a supplement on that. With a typical barrier, it would not be unusual for it to approach $1 million in terms of total capital cost of all the necessary works. So that gives you an impression that it is not an inconsequential undertaking or cost.

Mrs Caplan: I'd like to ask the minister a number of questions. How much time do I have, Mr Chairman.

The Chair: You have about five minutes.

Mrs Caplan: I'm also concerned, as my colleague Mr Sorbara was, that the capital expenditures for the Ministry of Transportation have in fact decreased, and that over the now almost two years of your government, I don't believe there's been a kilometre of rapid transit in Metropolitan Toronto that's been actually constructed.

As a strong supporter of the Let's Move transportation plan, and particularly of the Sheppard subway line, I'd like to ask when you expect there will be a shovel in the ground for some rapid transit improvements in the Metropolitan Toronto area.

Hon Mr Pouliot: I certainly share your concern vis-à-vis transportation. You will recall the responsibilities. They were clearly spelled out by our colleague the Treasurer: You had to put people to work, you had to keep on eye on the budget, you had to be fiscally responsible, and you also had some limits in terms of revenue-raising sources.

In my opinion, we were able to accommodate the things the Treasurer has done. I know you will wish to join others in echoing the sentiment that the Treasurer was walking a thin line, and he's done an outstanding job. I think that should be voiced.

More specifically, in terms of transportation, it wasn't too long ago -- "When are we going to see a shovel in the ground?" -- that I helped officiate the sod-turning ceremony on an expansion that will exceed $185 million. Those are massive, consequential sums for an extension.

1120

As to the Let's Move program, part of it is your legacy. It showed a vision. We're attaching some timetable to it and also sufficient dollars to make a difference, not only in Toronto, but we also have to keep in mind the rapidly changing demographics, being cognizant that within a period of 15 years it's estimated that the GTA population will grow from its present four million to six million people and it will further reflect in its demographics the world mosaic. People are coming from all over to pay us the compliment of their visit, but on a permanent basis; they're becoming Canadians and we'll all gain on account of it. Transportation as an essential service has to reflect that.

You will of course wish to deal with more specifics, and I will ask our colleague Mr Gerry Johnston to give us some one-liners regarding what is being done under Let's Move, because we too are very excited. A multitude of projects is happening in front of our very eyes and putting people to work, and everybody has been coming en masse congratulating us and wanting to know, like you, Ms Caplan, what is the next step, what has been done.

Mrs Caplan: I thought maybe you could answer that during this estimates process, Minister. I asked a very specific question. Could you just give us some time line of when you expect to be, not at the ground-breaking ceremony but to actually see the shovel in the ground for additional transportation, rapid-transit construction, in the Metro area? That would be very helpful.

Mr Johnston: At this point in time on the Let's Move program two projects have received the environmental assessment approval: the Spadina LRT system in the south limits and the Spadina subway extension from Wilson up to Sheppard. It's expected that construction will start on the Sheppard subway extension this fall, hopefully in September.

Mrs Caplan: That's great news.

Mr Johnston: So there will be some physical activity starting this year. The other nine projects that make up the Let's Move program are in the process of going through the environmental assessment approvals. Some of them have been to Metro council and have been forwarded on to the Ministry of the Environment. They will all be through that environmental process and through Metro by the end of this year and forwarded on to the Minister of the Environment for the environmental assessment process and determinations on that. So they are moving through the process; the construction will start this fall.

Mrs Caplan: Minister, we know how important transportation infrastructure and maintenance and development of the transportation infrastructure is to the creation of wealth within the greater Toronto area, particularly within Metropolitan Toronto. Many of those environmental assessments which are reaching completion I believe could be expedited, particularly the one on the Sheppard subway.

What I'd like to know from you now is whether you would be willing to do what you can to expedite that process so that construction could begin on the Sheppard line, which has, I will tell you, the most amazing amount of public support, not only in the riding of Oriole, but in Metropolitan Toronto, broad support because of the realization that this is about more than transportation and moving people and solving traffic problems, but about creation of wealth and future development for the Metropolitan Toronto area as well. Will you intervene to expedite those processes so that we can get on with construction, create jobs and create wealth in the greater Toronto area?

Hon Mr Pouliot: Intervene, of course I shall not. But while we wouldn't wish to jeopardize the integrity of the environmental assessment process, I think it's widely recognized that efforts have to be made not to simplify as much as expedite the EAs; that we say there has to be a beginning, a middle and an end to all studies, to projects, food for thought in terms of EAs.

Most people, almost all, in my humble opinion, don't wish to jeopardize it; that's not the issue. But they wish to see the end, the light, the proverbial light. They want to get going with projects, and I share that sentiment. Of course, there's availability of funds, but in my opinion, you're again right on.

If we were to identify one -- and we all have different opinions. That's what makes it exciting; it's a diverse world indeed. I know that in metropolitan areas, public transit is truly the democratic system, because it touches the lives of the great majority of people, regardless of the power of the purse to identify. It's what's worked. We've got to make it more available. I am sold on public transit.

If one would have the liberty, the latitude, to say where you would like to leave an impact -- I mean in the collective, of course -- if you were to show leadership, where you would influence the most, it would be in the endeavours you've mentioned. I'm not talking about specific projects; I'm talking about the philosophy of public transit. In our case it works well, but there's room for improvement, to respond to the needs of the people, so important in people's lives.

Mrs Caplan: When I suggested intervention, I suggested what I consider to be appropriate intervention to expedite appropriately the kinds of processes that often become just very bureaucratic.

This morning Mr Sorbara asked if you would send a signal to Metro council that, after going through these processes on the Leslie Street expansion, in fact the resources would be available to begin, you said no, you wouldn't do that.

I've asked if you would give some assurances that at the end of what is often an overly lengthy environmental assessment process, you would give a signal that you would expedite construction. I'm not suggesting that you interfere inappropriately with the environmental assessment, but you can expedite the red tape, the bureaucratic reviews, that often delay unduly some of these projects which could go forward. I'm disappointed that you've said no, you won't do that.

What I'd ask, Minister -- I believe it's likely going to be the last question -- is, with a minimal operating budget increase and actually a decrease in your capital expenditure, how can you justify huge increases in your administrative costs? I'll just give you two examples. In your legal services budget, vote 3901, you've had an 11% increase, you have had a 33% increase in administrative services in vote 3903-1, and yet overall your capital budget has decreased and your operating budget has minimally increased. I'm really concerned that you've got your priorities misplaced and you're spending money on the administrative, bureaucratic function, rather than creating jobs in the province by getting on with some of these projects.

Hon Mr Pouliot: The questions are valid. Someone whispered to me, "My God, you've changed, Elinor" -- the former minister, the very responsible minister; $18.5 billion of taxpayers' money to provide the most essential service, that of health, under your jurisdiction --

Mrs Caplan: We also provided them in the north, Minister, you'll recall.

Hon Mr Pouliot: Yes. I'm listening to the right person when it comes to knowing about spending taxpayers' money; it's all taxpayers' money.

Mrs Caplan: And I know you'll agree we were very fiscally responsible.

1130

Hon Mr Pouliot: Yes. As to the first comments, in our relationship of course we are willing to recognize the priorities established by Metro. The Sheppard extension, just as an example, is Metro's priority. We have to listen to what their priority is, but we are committed to a healthy and positive relationship with Metro and we don't see it as interference but as a normal way of doing business, and I can assure you that this will continue.

The money being spent on capital projects this fiscal year will be approximately the same as last year. There is no decrease in actual dollars. We've explained that time and time again to people who have stayed the course of this committee. We understand that we all have other engagements as well, so rest assured, the capital money is approximately the same.

In terms of your supplementary question vis-à-vis administration costs and fees, let me ask one of our assistant deputy ministers, who's an expert in this field -- and he helps compile and therefore explains the figures -- Norm Mealing, to help us with value for money in terms of the service that people provide.

In fact, we happen to be understaffed in many areas. I want to take the opportunity, by way of answering your question, to say that you're quite right: We have gone beyond the call of duty. We didn't count the hours. I don't know how people keep doing it, but it's stood up well.

The Chair: You're going beyond the point of the question.

Mrs Caplan: I'm waiting for the minister to give some answers. Is this not a question and answer period as opposed to question and speech?

The Chair: He was inviting his deputy to respond and I was encouraging him to get to that point.

Mrs Caplan: You haven't answered one question, Gilles.

Hon Mr Pouliot: We're trying to help here.

The Chair: Mrs Caplan, Minister, please. Which deputy is going to respond, please?

Mr Mealing: I'm Norm Mealing. I'm the assistant deputy minister of corporate services. With respect to vote 3901, which is the ministry administration program, we actually had an overall decrease in that program of about $410,000. However, with respect to legal services, you're quite correct. There was a $203,000 increase in legal services. Largely that was due to the fact that there had been considerable underfunding of legal services in the ministry in the past. We have added a number of new initiatives, not the least of which is the Ontario Road Safety Corp. We needed to bring on additional legal expertise in that area.

Mr Turnbull: I have two matters I want to speak to you about. I'll just very quickly go through the first one, the question of the placement of signs along provincial highways. It appears that the ministry will no longer allow the placement of non-commercial signs at the roadsides. I'd like you to explain the shift in enforcement. If clutter is the reason for this, I have to tell you that you're now going to be offering this as commercial sign space, so that's a red herring.

I'm going to give you an example. On Highway 86 advertising for the local Presbyterian Sunday school has stood there for 17 years without upsetting anybody. Why are you moving against these people, charities and churches and Rotary clubs, all kinds of service clubs? These people are incensed about it and they want a very clear answer from the minister now.

Hon Mr Pouliot: I'm sure the spiritual leaders of this place of worship, namely, the Presbyterian church that you identified, would appreciate your generosity, Mr Turnbull. We have a complex system. There is nothing deliberate, nothing systematic in punishing people.

Mr Turnbull: So will you rescind this order?

Hon Mr Pouliot: We help people. Ms Margaret Kelch is more able than any of us to bring us up to date on the changes regarding signs.

Ms Kelch: The issue, I believe, Mr Turnbull, to which you refer is that we did have several instances around the province where there were new requests for the types of signs to which you refer. Because of the, as you refer to it, clutter potential, we were concerned that by allowing those kinds of signs in a variety of locations we were going past the point of a reasonable volume of signs to ensure that the travelling public can operate safely and is not distracted. We are very aware that service clubs have a very real interest in ensuring that as people enter communities they know who is there, and often those signs include the times of the month that they meet. Usually it's, you know, at noon on the third Wednesday of the month.

Mr Turnbull: And times of worship for churches.

Ms Kelch: Those kinds of things. We have made a judgement to work with the municipalities in terms of at the entrance to those municipalities; that if the municipalities have a wish to have those kinds of signs continue, we will work to make sure that they can be there. But we continue to be quite concerned away from those municipalities in terms of the potential for increased clutter and, as I say, the potential safety hazard.

Mr Turnbull: Okay. What about the existing signs?

Ms Kelch: Most of the existing signs we will grandfather, if that's still a reasonable word to use. Allow to remain in place?

Mrs Margaret Marland (Mississauga South): No, it isn't.

Mr Turnbull: I don't mind you calling it grandmothering; it doesn't matter to me, now that you've demonstrated that you're incredibly politically correct.

Ms Kelch: We will allow many of those signs to remain in place.

Mr Turnbull: Will you allow them to repair them or replace them as they become old?

Ms Kelch: It depends on whether there's a need for change, whether they are asking for a larger sign, for example, or one that needs to be put into a different location. If that's the case, then the answer would be no.

Mr Turnbull: Thank you. I would just like to move on, Minister, to the question of the relocation of the ministry to St Catharines. There are some 1,400 positions, I believe, that are contemplated, and that's a payroll of approximately $49 million. The survey that was conducted by your ministry indicated that some 38% of the staff were willing to move.

Would you explain to me as concisely as possible without a long diatribe, if that's possible, what measures you've put in place to hire and train the new people who would be required to fill the spots of the people who are not moving, and indicate what cost that will be and whether it's been reflected in the overall cost projections of the move of your ministry, and also what programs you've put in place for repositioning the workers who don't leave Toronto, and whether that will lead to an increase in the size of the civil service?

Hon Mr Pouliot: I certainly appreciate your concern in the dispensing of service, but you will agree with the human dimension that characterizes your style: "What's going to happen to the people? What about those who say no? What is the timetable? How much is it going to cost? How many jobs are you creating? Is it going to be a new building?"

Mr Turnbull: Yes, they were the questions I asked precisely. I'd like the answers, not a repeat of the questions.

Hon Mr Pouliot: I just want to make sure, Mr Turnbull. You know how determined we are to give you the precise answer to a direct question. Mr Gary Posen will do that.

Mrs Caplan: Could I have a supplementary? There was one question you missed.

Mrs Marland: I have a question.

Hon Mr Pouliot: Is there a crossover?

Mrs Caplan: No, I just wanted to ask if you're going to --

The Chair: Mr Posen, please jump in.

Mr Gary Posen: Mr Turnbull, the ministry has formed a relocation team to provide the administrative framework around this move and to deal with the kinds of issues which you've raised. We indeed have 1,400 positions which will be expected to move to St Catharines. We anticipate that move happening in the latter part of 1994 and in 1995.

Mr Turnbull: Is that later than --

Mr Posen: No, I think that's the time frame. I think 1994 was the target in which it would start. We recognize you cannot move all 1,400 people on the same day, so it's going to have to be something that's going to take place over time.

We have not yet identified which of the 1,400 head office jobs we move. That's one of the activities that's facing us over the next one or two quarters. We have been talking to staff about the general move. Most of the activities in terms of having to take staff out to St Catharines to answer their personal questions are going to have to take place over the next year. The initial survey has shown that some 35% to 40% of people are interested in the move. More may be interested. Others, when they look at it individually, may decide that in terms of their personal situations they don't want to move.

1140

There are two sides of the question, I guess. One, as we get out to St Catharines, how are we going to recruit? We are already beginning to talk to the city of St Catharines, the region of Niagara, industries and the educational institutions out there in terms of how we would go about doing that. Two, working through Management Board and treasury board, beginning to set the rules in place for how --

Mr Turnbull: Do you have a budget as to how much this total process is going to cost?

Mr Posen: No. Again, that's being worked on by the relocation team, and I expect that over the next few months we will be in to treasury board with a number of budget proposals. Partially, we're waiting for them to give us some of the framework in which we have to operate so that we can respond with the details of our own situation. I expect that's going to get worked out over the next few months, because the aim would be to build the budget into next year's estimates, when it's pretty clear that at that stage some specific steps are going to have to be taken and decided on.

Mr Turnbull: What about the re-placement of people in Metro who don't move?

Mr Posen: That's the discussion going on with treasury board and Management Board in terms of redeployment, ensuring that those people end up on surplus lists as preferred candidates for jobs in the Metro area. I assume that the government will want to provide the assurance to our staff, as they have to other ministries that have moved over time, that there will be every effort made to place them in positions in the Metro area or the GTA so that they don't have to worry about their employment future.

Mr Turnbull: Is there an expectation that this would increase the total size of the civil service?

Mr Posen: No, I think that has to take place within whatever parameters the government will set for the size of the public service.

The Chair: Mr Turnbull, I have two supplementaries waiting on this line of questioning, but if the committee will forgive me, as Chair I have talked directly to the relocation team and I've been advised by it that three separate proposals have already gone before Management Board. So there have been three Management Board orders already approved by cabinet. On behalf of the questioners, I would ask where in the estimates those moneys are coming from.

Secondly, I've been advised by the relocation team that space has been leased in the city of St Catharines, and I have an address for that, that a contract for $50,000 worth of furniture for the temporary lease facility has been let and that the terms of the relocation for employment have been met. There is still some outstanding controversy about buying out mortgages from families who relocate from Toronto. The cost that was shared with me could be close to $1 million in buyouts just in mortgages alone.

I didn't bring my notes with me, but I have about eight pages of notes I pursued in this matter, and I'm surprised to hear the deputy say that they're not in the estimates book before us when your ministry shared fully and openly with me expenditures for the relocation team and the project. Forgive me for raising these, but it flies in the face of what I just heard.

Mr Posen: Fair enough, because, as I said, there is a relocation team in place. There is a small team that's there that's doing the planning, and obviously we're paying for it. But I think the nature of the question is, what's the all-in cost?

I know the board itself is looking at the framework and the rules of the game for the several ministries that are involved in moves. We have participated in terms of providing the MTO input into that, but I am not aware that the board has made a decision in terms of the rules of the game. I guess we had a briefing on it within the last week, and those rules are not yet there.

That the board has been looking at the range of things would not come as a surprise, but all I can tell you is, within the most recent briefing I had, I've been told the rules are not yet set.

Mr Turnbull: My concern is as follows, Minister and Deputy -- I want to leave some time for Mrs Marland -- I don't want to see any of the costs of this move swept under the carpet. I want to see a total costing, including the estimated cost of all the moves, buyouts of mortgages, temporary leases down in St Catharines, the cost of replacing these workers and then an estimate as to the cost of people shuttling back to Toronto after the move is completed.

The other concern is that service isn't disrupted, because, as we saw with the move of the registrar general, it's been a disaster. People are waiting eight months to a year for documents they should have had within four weeks. It is just an unmitigated disaster. I want an assurance from the minister that you're taking steps to ensure this kind of disruption doesn't occur and extra cost to the taxpayer doesn't occur; that we spend our hard tax dollars on improving the roads and infrastructure of this province rather than some bureaucratic boondoggle.

The Chair: Ms Marland, do you have a question on this? If not, I'd like to allow a short supplementary to Ms Caplan, because we will not come back to the Liberals on this.

Mr Turnbull: Excuse me, I'd like an answer from the minister on what I've just said.

The Chair: Yes, fine. It's in order.

Hon Mr Pouliot: Needless to say, while being vigilant, I treat the rendering of services matter of factly. You're responsible to the public, and this will not be allowed to be jeopardized. So the point is well taken.

We will operate on several fronts. In this case, we're determined to proceed, as per the schedule, to move 1,400 jobs to St Catharines. Not that examples abound, but keep in mind the relatively smooth transition of the Ministry of Northern Development and Mines to a more natural setting, that of northern Ontario.

Mr Turnbull: You're ignoring the example I used, Minister, which affects everybody in the province, and service is just a disaster.

Hon Mr Pouliot: When you say "service," you seem to use such eloquence, but I wish your dictionary of synonyms would be accompanied by one of antonyms to be more balanced. What an extreme expression of bad faith in the system that you help support. You're very much a part of the system. How do you make it better?

Mr Turnbull: What would you call a ministry that is rendering services in eight months to a year that should take four weeks? Is there any other expression you can use in your dictionary?

Hon Mr Pouliot: Stop selling fear.

Mr Turnbull: That's not fear, that's fact.

Hon Mr Pouliot: The system works well because good women and good men, good Ontarians, are making it work that way.

Mr Turnbull: Ask anyone who has used that ministry for service; it's a non-service.

The Chair: Neither of your comments is going to make it into Hansard, which may or may not be a shame. Mrs Marland, was that a supplementary on this question?

Mrs Marland: I don't mind yielding the floor, as long as I get my entitlement in time overall.

The Chair: You will. I'll ensure that. I just wanted to make sure if we could stay on the subject.

Mrs Marland: Mine isn't on this subject.

The Chair: A brief supplementary from Mrs Caplan, please.

Mrs Caplan: What I'd like is a clarification from the minister. I had a constituent contact me. She notified me that ministry staff believed that in fact the move was not going to take place. Notwithstanding the fact that there's a relocation team in place and planning is under way, there is a message that has been sent out internally that in fact the move is not going to happen. If you could just clarify clearly, so I can say to my constituent, "The minister says, `Yes, it will,'" or "The minister says, `It's under review,'" or "The minister says, `No, it's not.'" At this time, it would be very helpful.

Hon Mr Pouliot: It will.

Mrs Caplan: Thank you.

1150

Mrs Marland: This is a matter that the ministry is trying to be very helpful with, Minister. It's a constituency problem for me, and I know Mr Vervoort and some of his staff are familiar with it. It's the fact that now we have noise attenuation walls on both sides of the Queen Elizabeth Way coming up to the Credit River, and we have the example of the Credit River bridge itself.

Now in fairness to the staff, in my personal letters to you, Minister, with great affection, your responses come back well drafted by your staff and wanting to talk to me personally about it, which I have not picked up the opportunity to do. The ball is in my court about responding to them, but I thought you might as well know how the issue evolves.

The fact is that the residents in the area have experienced a tremendous amount of increased noise since the QEW bridge over the Credit River was repaired. In my round of correspondence with you, I've suggested that a study should be made of what methods for improving the Credit River bridge could be introduced to resolve the problem about the increased noise. It's all to do, I understand from your staff, with the fact that the expansion joints were replaced. Now in the last letter that came, the response from over your signature, Minister, said, "A study would not show us anything we are not aware of." What I feel is that perhaps there is an admission that there is a sound problem connected with the bridge. You also said in your letter that the ministry has done what it can to attenuate the noise from the bridge.

On a small scale, if you're looking across the province, I'm sure this isn't the number one priority of the ministry, nor should it be in cases of improving highways for safety, but there is a total lack of comfort level for the people in this area since the bridge was repaired, and that's the problem. The trucks come along and they hit the bridge and the noise reverberation is incredible for the people in that community. I'm sure that were you to leave your wonderful riding and reside in my riding, Minister, you would share the concern of the people who are experiencing this.

I'm wondering if, instead of getting the answer that I usually get and have had now in a series of about three letters about, "The ministry's aware of it, nothing can be done, it exists" etc, you would be willing to conduct a study into new methods of attenuation that might help this expansion joint problem and commit to a noise attenuation solution for this bridge.

The Chair: Who wants to try that one?

Mr Vervoort: I will. Carl Vervoort, assistant deputy minister, operations. I will start the response and my colleague Ray Hanton, regional director central region, will supplement.

Your question is, would we be prepared to look further? I'm advised by Mr Hanton that our assessment to date has left us with the conclusion that there is no immediately obvious remedy available. That is not to say, though, that one does not exist.

The question I would wish to have a review done of is the matter of the expansion joint itself. You attribute the origin of the sound to the change in the expansion joint, and certainly from my point of view I'd be willing to undertake a review of exactly what the differences were between the original joints that existed at that Credit River bridge and the ones that are in place today so that before we begin to look at potential solutions, we understand the true sources of problem.

In that respect I would be willing to undertake a further review of the matter, and perhaps Mr Hanton can add further comments with respect to the findings to date.

Mr Ray Hanton: Yes, Mrs Marland. As you're quite familiar, the Credit River bridge is a fairly long stretch on the QEW. The reference to the fact that there would be little benefit gained relates to the distance between the source of the noise and the residents in the area.

The other difficulty we have, from a technical point of view, is in putting in noise barriers and attaching them to a structure. There is great difficulty in doing that. The information I have from my staff is that it would not be feasible to do that on the Credit River bridge.

What I'd like to do --

Mrs Marland: Excuse me for interrupting. Just so that I can help you, I'm not asking about the noise attenuation walls, because I understand why those can't be on the bridge. The bridge isn't designed to carry the weight of the noise attenuation walls. The residents have accepted that and so have I.

What we're talking about is not the traffic noise that comes funnelling out of these walls; we're talking about the fact that the bridge itself, in its structure, has become more noisy since its reconstruction which, I was told by your staff, was the expansion joints.

Mr Hanton: As Mr Vervoort has indicated, we're quite willing to look into the actual function and the design of that expansion joint. I can tell you that one of the worst engineering problems we have in the province is expansion joints at structures, and we do have difficulties with the design and installation of them with regard to noise and vibration. I'm quite prepared to look into that and make you aware of the findings.

Mrs Marland: That's fair and I appreciate the offer, Minister. I think the point here is that the bridge was not noisy before these new expansion joints were put in, so maybe we should look at going back to however they were built before. I realize that in a climate like ours we have to have expansion joints. I concede that and so do my residents. It's something to do with how they're in place, how it's designed, and when trucks hit them, particularly empty gravel trucks and so forth, the noise is tremendous.

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

Mrs Marland: I'll look forward to that response from the ministry.

The Chair: Mr Cooper, you've been most patient. You had a question before Mr White?

Mr Mike Cooper (Kitchener-Wilmot): Thank you very much. First, I'd like to congratulate the minister for some of the things that have been going on in Waterloo region with the six-laning of the 401 -- it's really appreciated -- and the two-laning of Highway 7 to New Hamburg. It's really cut down on some of the congestion in that area.

My concern right now is about GO Transit. I understand it was discussed yesterday, but when you look at the central region, what you're doing is talking about Kitchener at the western end, and Kitchener relies on a lot of other communities for a lot of its services. When you're talking about hospitals and things like that, we have to rely on Chedoke-McMaster in Hamilton, on London for the psychiatric services and on Toronto for a lot of services for our transit. When you talk about workers' compensation and things like that, we have to rely on Toronto because Kitchener's been left out of a lot of services for some reason. I can't understand that, because we've always had good representation here at Queen's Park. Right now, in Waterloo region we have a real lack of transit service for these communities, especially coming into Toronto.

What I am asking is, are there any plans to extend GO Transit out to some of these communities where they have to rely on services such as are provided in other cities?

The Chair: Is Mr Smith still here?

Hon Mr Pouliot: Yes, Mr Smith is here. We thank you, Mr Smith. The ongoing success story of GO Transit: You see a certain logic going from Toronto, for instance, to Milton, linking up with the rail that's already in existence in Cambridge, and then on and on with the success story, reaching Kitchener.

Mr White: And Bowmanville.

Hon Mr Pouliot: And Bowmanville.

The Chair: Welcome back, Mr Smith. Did you want to respond to that question?

Mr Tom Smith: I think Mr Guscott might make the first comments.

Mr Guscott: I'll begin. Mr Chairman, let me explain that this is a two-person answer, because the ministry is dealing with some broad issues of transportation policy in southern Ontario and Mr Smith can comment on some of the particular issues.

We are aware of the popularity of GO Transit throughout the area beyond its present service area. Where things reside now, we have two initiatives under way to evaluate that.

1200

First of all, we are completing the development of some standard criteria which would be used in determining where GO Transit service ought to exist. It will include the impact on various other government policies, such as urban form, environmental protection, preservation of agricultural land etc, and the work under way in other parts of the government with respect to the system of communities throughout southern Ontario.

Over and above that, in terms of overall use of various forms of passenger transportation service, we have a study under way -- it's in a preliminary draft stage at this point -- which identifies the fact that we have corridors of service in some areas, we have a hinterland and a commuter shed in other areas, and that we must find a way of balancing both the publicly and privately owned public transportation services as they deal with those communities. We hope to have something ready for discussion later on this year which will address Kitchener's needs and those of other communities in that context.

Hon Mr Pouliot: Mr Cooper has a supplementary to respond to the needs of his constituents.

The Chair: Would you like to enhance that answer, Minister? Do you have a supplementary, Mr Cooper? We only have a few minutes left.

Mr Cooper: When we approached the previous minister, he was talking about a GO Transit rail service where he wanted to make it almost like an above-surface subway, and he wanted to keep it in the GTA. We don't really want to be a bedroom community to Toronto because of the strain on the services back in Kitchener, but there are services that are provided in other communities where we have to come out to them. Have there been any studies on the buses that have been put in place since we've expanded the services and the usage and whether or not people are taking advantage of the bus services?

Mr Guscott: Let me begin by saying that within the GTA it's the ministry's and GO Transit's intention to provide all-day two-way service to those communities. I guess your analogy of an above-ground subway is close to that view.

Over and above that, there are communities beyond that immediate service area that have asked for morning and afternoon commuter-related services. That often and usually includes both rail- and bus-related features, because GO Transit has developed a system whereby in most of the areas it serves, until they have reached the capacity to provide two-way rail-related service, they have rail service augmented by bus service. That's certainly the way we see being able to financially provide GO service in some communities.

Mr Smith may be aware of particular studies on GO bus service in the Kitchener area.

Mr Smith: I think the reply by Mr Guscott is probably adequate, unless somebody has some further question beyond.

The Chair: Mr White, recognizing the hour, a brief supplementary.

Mr White: A very brief question. Yesterday, you commented upon how the progressive and upstanding community of Whitby was integrating its system with the GO system so that when using the Whitby transit, one could combine that cost with the GO pass. For my communities, Oshawa and Whitby, many of the commuters are faced at the other end with another government, the Metropolitan Toronto government, with the TTC. Has that particular transit commission as yet seen the light and the importance of integrating its fares with GO?

Hon Mr Pouliot: We have more and more integration. It makes little sense, in this case, to have the proverbial Miss Jones, 74 years old, going to the comfort and solitude of her apartment to see Fluffy the cat, having to dig in her purse for another quarter or another dollar to feed another fare box because some mandarins, some technocrats or some politicians, or all of them together, have painted a line, imaginary or otherwise, and that's what's happening.

What we're trying to say is put the people first. How do you make it possible to integrate, stop the duplication? Politically it means responding to the needs of people. Put their welfare ahead of our or your own. That's what you're asking and that point is well taken.

In the case of GO Transit, everyone wishes -- and you're right, in some circles there is a tug of war, a philosophy where people will say, "If you provide the service, you are encouraging sprawl." Using that sort of terminology gives a negative and biased opinion before you even develop the team. It's not candid; it's the opposite. It's prohibitive. The other school of thought is that people are paying taxes, and God knows they're high, so what you do is bring the service to respond to the needs of people. So it's this and that.

By the same token, there's only so much money available. You have to act in a systematic, deliberate way. There has to be an organization. GO Transit and its evolution, its expansion, must not fall to the whim of political philosophies because you go into somebody's riding one day and you say, "We're going to have GO Transit because everybody loves their mother." It has to be planned. It has to serve people.

We're determined, depending on availability of funds, recognizing the demographics, the ability to connect the GO Transit expansion with the system, a multipurpose use -- and yet in the strength of an integrated system. That's what Mr Smith and Mr Guscott are saying, and that's what you've asked. We're going forward, but it's a step-by-step process.

It says tout fini here. It being past 12 of the clock, the Chair would like to address the committee.

The Chair: Thank you for the short supplementary. If I might, our time is almost complete, but I did have one item which was brought to my attention recently. It had to do with the Kristen French inquiry and it does affect the Ministry of Transportation. With the committee's indulgence, I'll simply suggest this.

The Ministry operates monitoring stations at several key highway locations, the QEW and several locations, but also the bridge at Welland. It's come to my attention that the tapes kept of the traffic are only saved for a short period of time. Apparently, the police failed to contact MTO for copies of the tapes of the traffic, and it would have been very helpful in identifying the car that everybody's trying to identify. Incidentally, I understand MTO cooperates with the police quite frequently in assisting in apprehending criminals, and enhancing equipment allows us to identify not only how many people are in the car but who the people are.

Given all of this, Minister, I wonder if you could undertake to examine the policy which says the tapes are only kept -- whatever the time frame -- 30 days or 60 days. If this is not a great expense, this simple act may have assisted the police in what has become a most expensive and most protracted investigation of a horrendous crime in our province.

Although the problem is one that was the fault of the Niagara police and their lateness in responding, that's the information that's been shared with me. I would simply like to put it on the record if you might undertake, because I know you share the concerns for ensuring that we're able to assist in these matters. The system which has been explained to me is an excellent one and this is just one of its many uses. But very briefly; our time has expired.

Mr Vervoort: We will undertake to do that review in response to your comments.

The Chair: Thank you very much. Having completed our seven and a half hours of the estimates of the Ministry of Transportation, I am prepared to call forward the votes, if there's no objection.

Votes 3901 to 3904, inclusive, agreed to.

The Chair: Shall the 1992-93 estimates of the Ministry of Transportation be reported to the House?

Agreed to.

The Chair: On behalf of the committee, I'd like to thank the minister and the staff who were present to assist the committee in its deliberations.

Mrs Caplan: Can I assume that those questions the minister did not answer will be answered in writing by ministry staff?

The Chair: Yes. Thank you, Mrs Caplan. That's helpful.

Mrs Caplan: Since he didn't answer any.

The Chair: There was a request for some lists. There were two outstanding requests, as I recall: the lists of contracts that were let, tendered and untendered. Several questions were submitted by both opposition parties; if those could be circulated to the clerk, the clerk will ensure that they are distributed to members of the committee, including the critics and those who were in attendance for these estimates.

There being no further business, this committee stands adjourned until 3 o'clock this afternoon, at which point we will commence the estimates of the Ministry of Industry, Trade and Technology.

The committee recessed at 1211.

AFTERNOON SITTING

The committee resumed at 1504.

MINISTRY OF INDUSTRY, TRADE AND TECHNOLOGY

The Chair: I'd like to call to order the standing committee on estimates. We are here to begin seven and a half hours which have been assigned to us by the House to complete the estimates of the Ministry of Industry, Trade and Technology. We're pleased to welcome the minister, the Honourable Ed Philip. Minister, you can perhaps introduce your deputy and assistant deputy. You have up to half an hour for your opening comments and then we will proceed in rotation. We're in your hands. Welcome.

Hon Ed Philip (Minister of Industry, Trade and Technology): I'd like to start off, before introducing the deputy, by saying how thrilled I am personally, and I'm sure I speak for all members of my caucus as well as all members of the Legislature, that as the minister responsible for protocol and international affairs and all that kind of stuff, Robert Marland did such a great job as our ambassador and showed such great achievements. I know, Margaret, that you're probably never tired of people congratulating you, but I wanted at least to start off by congratulating you and saying you look terribly happy today. I'm sure you are, and very proud, and we're all proud of you, and maybe we can have a little reflected glory then by just having you as a member of the committee today.

Mrs Marland: Thank you very much, Minister, for those kind and thoughtful comments. I am deeply appreciative. It's such a marvellous experience from a family perspective that it's one I wish all parents could share.

Now we have a gold medallist back in Ontario looking for a job. He's a graduate in finance and economics, as a matter of fact. The glory is there and then the reality follows.

Hon Mr Philip: I think if you passed his résumé to the deputy -- because we wouldn't want to say that either you or I were politically tinkering with anything.

Mrs Marland: I do appreciate your comments very much. We were all very proud of all our Olympians in Barcelona this year.

Hon Mr Philip: I'm going to introduce, first of all, Diane Gumbs, the head of research on my political staff. She's sitting over here, and she's the only one I have from that group in my ministry. Then I have a cast of thousands, or at least of half a dozen, from the ministry side, starting off, of course, with Tim Armstrong, the deputy. Tim has been terribly valuable in giving me advice in the last nine and half, or whatever it is, months that I've been minister.

Tim, maybe you'd like to introduce a few of the other people, and I guess some of them we'll just call them up as needed.

Mr Tim Armstrong: Yes. If I introduced everybody I'd be accused of engaging in a filibuster. Let me just say that we have with us Peter Sadlier-Brown, the assistant deputy minister of policy development. Peter is in the front row over there.

Hon Mr Philip: In the blue jacket.

Mr Armstrong: Next to him, Jim McClure, the assistant deputy minister, northern industry division. We have David MacKinnon, the president and chief executive officer of the Ontario Development Corp, and next to me is Brian Wood, executive director, corporate resources division. As the minister said, if we may, we will introduce the others as they come forward to speak to the various items.

Hon Mr Philip: I'd like to start off my opening remarks by saying that this does give me an opportunity once again to meet with this committee. I think it was three weeks -- Norm Jamison may remember this because he was with the ministry longer than I was, as parliamentary assistant -- after taking over as Minister of Industry, Trade and Technology that these estimates were slated. But it will give us a chance to have a discussion, first of all I guess, about Ontario's economy, about the challenges ahead, about the initiatives our ministry is putting in place to meet those challenges.

As I started to work on preparing this speech I was impressed by the fact that I had so much material and I couldn't possibly do it in half an hour. What I'm going to do is give some general overall perspectives and I hope that we can go into considerable detail on some of the items that you may have particular interest in, because we have plenty of information here that my staff and I are very happy to share with you.

I'd like to highlight some of the activities that the ministry has undertaken in the past year and more particularly in the past 10 months since I've become minister, and also the reasons why we're undertaking these activities, because a lot of them are very new activities to this ministry.

I want to look ahead at some of the things that I think we will be doing in the coming year and years, and in particular I want to talk about our new industrial policy framework for Ontario which I announced in July and which, as you know, has been endorsed very well by people from the Canadian Chamber of Commerce, the labour movement and so forth.

But I'm not just here to talk; I'm also here to listen. I appreciated when there were people like Jim Auld and Jim Snow and others who listened to comments that I've had over the years and they used them. I can assure you that I intend to give you the same courtesy and I will listen to your concerns and your ideas. If you've got good ideas, believe me, we'll look at ways of implementing them. Some of you know that I've taken some of your ideas and implemented them. Gilles Pouliot, the Minister of Transportation, of course is moving ahead with some ideas that have come from one of the more articulate members of the Conservative caucus whose views I share on one of her issues. We're open to this kind of thing.

I've never pretended that I, as the minister, or the ministry are the sole repositories of good ideas, and again, I look forward to hearing your ideas.

For my part, I want to see Ontario move towards a higher value added economy, an economy that generates wealth, that creates and maintains jobs, that elevates our standard of living. I want to see an Ontario economy that can compete internationally and attract investment and I want to see an economy where women and other traditionally disadvantaged groups can fully participate in and enjoy the benefits of our workforce.

1510

The 1992 budget underscored my government's commitment to this vision and backed it up with a number of significant initiatives, including the Jobs Ontario Training fund, the Jobs Ontario Capital fund and the Jobs Ontario Homes fund. To support business investment, the government reduced taxes on manufacturing, on small business and on the resource industries and we broadened Ontario's incentives to undertake research and development.

I'd now like to turn to some of my ministry's highlights over the past year. I think that we'd all agree that it was a difficult year for business, for workers, for communities, and this was true not only of us in Ontario but of our surrounding jurisdictions, many of which, if you look at the various research reports, suffered worse than we did, particularly the northern US states.

The recession continued to take its toll. We saw its effects in high levels of plant closures, layoffs and unemployment and in personal and corporate bankruptcies.

There were very few who weren't touched by the recession in some way, including the Ontario government. For the first time since 1945 the provincial revenues went down and this meant that a number of ministries, including my own, were not able to provide the amount of assistance that we felt was needed to be provided.

The effects of the free trade agreement continued to unfold as many feared they would, leading to plant closures and job losses. The GST had a negative impact on retailers. The relatively high Canadian dollar made it difficult for our exporters to sell their goods abroad. These factors, along with high interest rates that have only recently declined, made it difficult for some people in the business world to modernize, to undertake research and development, to upgrade skills in their workforce and, in short, to do the things they needed to do to compete globally.

Given the economic environment, a top priority for my ministry was to work in partnership with business, unions, communities and investors. I want to emphasize the word "partnership" because it underscores the entire philosophy of our ministry. We recognize that the government by itself cannot make Ontario more competitive. We have to pool our strengths with those of our economic partners; we have to make the best possible use of the resources available.

We used a partnership approach in Kapuskasing when the Spruce Falls pulp and paper mill was threatened and as a result we were able to usher in a new worker-ownership arrangement and a mill modernization program. Another important achievement was our partnership with Bombardier and the restructuring of de Havilland. Not only did the deal save a great number of jobs; it will strengthen Ontario's position in the strategically important industry, namely the aerospace industry, that I have such a personal interest in and of course a family background in.

There were cases that required a good deal of individual attention. I can tell you, as the deputy will tell you, the amount of cooperation I had and the amount of work that Michael Wilson and I personally put in, particularly over the Christmas holidays, and the number of faxes back and forth and phone calls back and forth between us. I really appreciate his cooperation and the help that he was and his sensitivity to that issue and the amount of time that he put in. It shows, I think, that two ministers of different political persuasions working together for a common goal and who act in a mature way with one another can bring about a good result.

Mr George Dadamo (Windsor-Sandwich): It's a miracle.

Hon Mr Philip: It's not a miracle. I think it's fair to say that if a minister other than Wilson had been there, things might have been more difficult. I give Michael Wilson full credit for being at all times professional.

On a more province-wide basis, we continued to implement the three-year, $57-million manufacturing recovery program. The program has been quite successful, and as a result more small and medium-sized manufacturing companies are emerging from the recession revitalized and poised for growth.

Let me just give you a couple of examples. One such company is the Huntsville-based Algonquin Industries International, a trailer hitch manufacturer which received a $450,000 term loan under the program. The assistance allowed Algonquin to implement a new business strategy which is expected to add jobs over the next year, increase sales and provide for capital expansion.

We also worked closely with hard-hit border communities to implement a program to combat cross-border shopping. Local committees consisting of business, labour and chambers of commerce were organized in nine border regions. Working in partnership with the ministry, these communities implemented a number of cost-sharing activities such as customer service training and improved merchandising practices.

The results to date have been very positive. As one member of the Fort Frances-Rainy River border zone advisory committee put it: "The loan campaign went overwhelmingly well....The public became aware of just how important businesses are in our town and how we are able to help."

Let me talk about supporting some of the domestic industries. Ontario's economy is not just feeling the squeeze of the recession; it's also undergoing fundamental change in globalization, the changing nature of work and rapidly changing technologies. My ministry has been working with Ontario business and industry to address these changes, to boost competitiveness and to promote economic growth.

Last year our ministry supported and coordinated government participation in 10 strategic industrial investments. These projects will leverage over $3 billion in investment and maintain or create many thousands of jobs. In your estimates book page 45, I believe, has a list of those projects if you want to see them and perhaps ask further details on any one of them later.

In September 1991 we signed a memorandum of understanding with the plastics industry to improve skills training, innovation and technology, environmental considerations and other factors affecting the competitiveness of this very important cluster of industries. Ministry initiatives such as the Industrial Research and Development Institute, or IRDI -- not on acronyms list; re-establishment of ministerial advisory committees for automotive, aerospace and construction industries, and a special adviser on economic adjustment all serve to bolster the competitiveness and the productivity of Ontario's industries.

If you're reading from my text, then let me just diverge for a couple of minutes on the IRDI, because I think that the IRDI is a good example of the industrial strategy framework that we have introduced. It has worked well in many of the European countries. In the case of the IRDI, the city of Midland came along and put in an infrastructure. We got an investment or a donation, if you like, of $1.2 million worth of real estate from private enterprise. We invested $4.6 million, I believe, in provincial tax funds for research and computer equipment for this institute.

The federal government is cooperating with defence industry productivity program, or DIPP, money for training in this institute. Private enterprise is charging memberships for a privately run research institute that will be run by private enterprise, with of course university participation, with fees of $500 to $15,000, depending on the company. They have a way of evaluating what the fee is. We hope that will be completely self-supporting by year five.

1520

I think that's the kind of thing that shows the cooperation between a municipal government, between the federal government, between the provincial governments, between private industry, and where research and development has to be more and more run by private industry and by clusters of companies, if you like, that are close to where the action is and that understand their own business and their own business needs.

You're going to see much more of this. I can give you several other examples that are like this, done through the Ontario Development Corp and so forth, where we are doing that kind of thing. We have an interesting project in Ottawa, for example, in the biological field and done a different way, but it shows the same kind of cooperation.

Large companies are important to Ontario, but small business is a crucial sector of our economy as well. To reflect the importance of the sector, I've assigned my parliamentary assistant, Norm Jamison, to specific responsibilities for small business. Supporting and encouraging small business development is a key component of our overall approach to spurring economic growth and creating and maintaining jobs in Ontario.

The ministry continues to offer a variety of programs ranging from the technical personnel program to youth startup and ODC assistance, all designed to improve the competitiveness of small business.

One service we provide that is difficult to quantify is advice. Many new and established businesses benefit from face-to-face or telephone contact with my ministry officials. Indeed it's not uncommon to have my ministry officials down at the bank talking to the bankers and explaining why a particular loan is a good investment and a safe investment. Sometimes the advice alleviates the need for further MITT services or intervention, but we also see this as an efficient and effective way of using our resources.

Regardless of company size, one of the goals of our ministry and its agencies is to stimulate regional growth by providing local service. We have a network of 38 offices across the province staffed by consultants who are in daily contact with local needs and who work closely with local businesses and communities. This proximity ensures that advice from the local offices is tailored to match local needs. The regional offices work closely with municipalities and business people to attract investment and assist exporters to expand their activities and increase technical capability.

For example, MITT's northern industry division assisted the development of entrepreneurship and the growth of small business, encouraged industrial development and strengthened industry's international competitiveness. In the past year, the division helped attract 78 new clients and investments worth $168 million and helped create and maintain more than 1,900 jobs. It also attracted investment commitments of $362 million on 93 future projects.

MITT's four development corporations also supported the development of business through the province. I must say how appreciative I am of the boards of directors and the business people and others who served so well on those boards. And 1991-92 was a busy year for the development corporations, with lending and investment activity reaching high levels, and this with minimal overhead cost. The administrative costs for the corporations were $15.2 million, only 1.6% of the assets under administration.

Last year the development corporations approved loans and guarantees and investments valued at $368 million to a total of 4,086 Ontario companies. The corporations also approved $23 million in export support loans to 55 companies. Over $62 million in export financing was distributed, a 51% increase over 1991.

New ventures, another ODC program, provided $46.1 million to assist 3,420 small business startups. Two anti-recession program projects were successfully completed at the corporation's industrial parks in Cobourg and Huron county. These projects created jobs for local contractors and suppliers.

I've spoken a great deal about promoting economic growth, and one of the key ways of achieving this goal is greater innovation.

Technology Ontario, formerly the technology fund, is one vehicle of stimulating innovation in this province. The agency administers nine programs which increase the competitiveness of Ontario's economy through development, diffusion and application of scientific and industrial research activity. Last month, I announced a number of important changes to Technology Ontario, as well as the name change for the program, to reflect its broader scope.

First, its mandate was broadened to make it a more effective tool for bolstering innovation, and second, permanent financing was provided. As a sign of my government's long-term commitment to promoting innovation, we are committing $81 million per year to the program overall. This includes extending the centres of excellence funding for another five years, for a total commitment of $216 million. By the end of 1991, 65 patents and 36 licences to industry had been granted to the centres.

Innovation Ontario, one of the development corporations, approved $18.4 million in investments, a 57% increase compared to 1991, and invested $14.1 million, an increase of 79% over the previous fiscal year. This financial assistance is targeted to early-stage technology-oriented companies.

Ortech International also played a role in bolstering Ontario's technological infrastructure. The agency signed licensing agreements for worldwide manufacturing and marketing rights for the gaseous fuel injection system which it helped develop. This project is in the early stages of being launched in North America. I don't know whether you've had a chance to see that, Margaret. It's out there; they'd be happy to show it to you.

I want to mention one further area of activity before I talk about our focus for the coming year. Ontario's a trading province. Our ability to generate wealth, create jobs and improve our standard of living depends largely on our ability to market our goods and services abroad and attract investment to Ontario. Consequently, promoting trade and investment served as a major focus of our ministry. One of the ways we assisted companies to secure new markets abroad and attract investment is through the activities of our international offices. Working in concert with the domestic network, these offices can provide companies with advice and information on opportunities throughout the world. They also play an invaluable role in assisting Ontario companies to form strategic international alliances.

Our Americas branch targets our latest trading partner, the United States, as well as Latin America. For Ontario companies, getting a foothold in the US market is not only important because of its size; it also tends to be the first exporting experience. Success in this market is often a prerequisite for entering into other international markets.

While the US is important to Ontario, we must continue to take advantage of opportunities in the global marketplace. The ministry's Asia Pacific, Europe, Middle East and Africa branches assisted nearly 2,000 companies to secure sales and investments in those areas of the world. These activities translated directly into job creation and job retention in Ontario.

The integration of the European common market presents both a significant opportunity and a challenge to Ontario companies. The province's continued relationships with the Four Motors opens doors to the European market. In the past year, Ontario signed a memorandum of understanding for vocational training with Baden-Württemberg and joint declarations with Rhône-Alpes and Baden-Württemberg. These arrangements will lead to activities such as joint venturing into eastern Europe and exchanges of expertise in environmental regulation.

The Rhône-Alpes agreement supports the Telepresence project, a videoconferencing system that facilitates collaborative work over long distances. The agreement will increase the public and private support in Ontario for Telepresence by $2 million.

We are a trading nation and we are also a nation of immigrants. Ontario continues to attract some 55% of newcomers. MITT has a particular interest in business immigrants. Last year, immigrant entrepreneurs established 549 businesses in Ontario for a total investment of $88 million, which created or maintained more than 2,000 jobs. Economic immigrants contribute to the social and cultural richness of Ontario.

Carlos Gayoso is a good example of an individual who was assisted through our ministry's business immigration section, and his efforts have added value to this province. Mr Gayoso immigrated from Peru to Ontario in 1989 and with his three partners established Galbocca Fixtures Inc in Bolton. In three years the company has achieved impressive results, now employing 15 people, with domestic sales of $2.5 million. In 1991, 20% of the company sales were in exports to the US.

1530

It should be noted, however, that the federal government is in the process of pushing forward immigration legislation, and it is allowing little time for public debate on this important issue. I've expressed my concerns to the federal Minister of Employment and Immigration on two occasions regarding certain aspects of the changes proposed. In particular, Ontario's concerned that giving priority processing to immigrant investors over immigrant entrepreneurs will reduce the attractiveness of the entrepreneur program and ultimately lead to the loss of entrepreneur skills which these people can bring to our province.

One fact should be clear by now: In spite of the recession and global restructuring, Ontario continues to attract investment and our companies are successfully competing in the global marketplace.

The Ontario International Corp, an agency of our ministry, actively contributes to increasing Ontario's exporting capabilities. When Ontario companies sell their services abroad, that often means Ontario's manufactured products will follow.

Last year was the most successful in OIC's history. The agency helped companies such as Babcock and Wilcox secure a multimillion-dollar hydro project in Iran. The contract will result in $330 million flowing into Ontario, with benefits including jobs and other spinoff activities. It's not only the size of the project that is impressive. In addition, it is a project that creates high technology, high value added jobs in Ontario, and of course increases our presence there. I'd be happy to talk about some other opportunities in that country and the surrounding area that are perhaps spinoffs or in some ways can be related to some of that.

As we undertook all these activities, we were aware that Ontario needed to lay the foundations for long-term growth. Changes in the global economy have had a profound effect on the types of companies that can succeed and on the way these companies compete.

Ontario needed an organized way to shape its economic future, and the best way for us to do this was a made-in-Ontario industrial policy. By "industrial policy," I don't mean an elaborate blueprint for the economy, nor do I mean an array of expensive government-support programs. I'm talking about a framework that helps business, labour, communities and the government work together to build a higher value added economy: an economy with more and better jobs, more wealth creation, more profitable companies and a higher standard of living. We can do this in a way that reflects our values as a society.

In putting together the policy, we looked at the existing strengths. We saw a well-educated workforce, a well-developed physical and communications infrastructure, a strong resource base and a strategic location in North America.

We also recognized some weaknesses, such as our poor record of: industrial research and development; of commercializing that R and D through innovation; of creating linkages between companies, within sectors and across institutions. Also, we rely too heavily in Ontario on our trade with the United States, and we don't pay enough attention to training and skills upgrading.

Our industrial policy, which will guide the government's activities in the years ahead, builds on our strengths and addresses our weaknesses. It seeks to move the economy to higher value added activities by strengthening our competitive fundamentals. The policy is applicable to all sectors and regions of the province.

To strengthen Ontario's competitive fundamentals, we're going to change the way the government operates. We're going to change the way we invest in the future by focusing on our people and our infrastructure required by an expanding and innovative economy. We're going to invest in people's skills and promote fair and equitable participation in the workforce.

The second area where we will be changing the way government operates is the way we work with companies. We're going to work with strategic groups of companies, with labour and within sectors to promote cooperative actions that solve common problems and that boost competitiveness. We'll continue to help individual companies, but we're going to encourage firms to work together to tackle projects they cannot do alone. I gave you the IRDI example earlier; I think it holds as a good example of what we're about. Projects that will promote the development in their industries is what we're talking about. The key to this effort will be the three-year, $150-million sector partnership fund.

We are creating the Ontario innovation and productivity service to help small and medium-sized innovative growth firms upgrade and overcome hurdles to future expansion.

We also intend to create an Ontario investment fund to make long-term equity and risk assessment more available to innovative growth companies.

Another way in which we plan to facilitate the business startups and expansion is by streamlining bureaucratic processes and reducing red tape. The committee of parliamentary assistants for small business has proposed a new initiative called Clearing the Path for Business Success, and we're acting on this proposal by establishing a province-wide service so that new business owners can obtain all the necessary forms and advice all in one location.

To link potential investors, both local and foreign, with opportunities in Ontario, an investment development office will be established. The office will be a one-stop shopping information centre for investors and will help them obtain approvals from government ministries.

These initiatives are all part of the ongoing effort to ensure that our ministry programs and services are provided efficiently and return full value-for-dollar to our business clients.

Another essential element of competitiveness is the ability to anticipate and respond quickly to economic change. Our policy focuses on four areas: the greening of the economy, changes in the international trade environment, organizational innovation and adjustment in response to structural change.

A particular concern of the government is the impact of the recently negotiated North American free trade agreement. We have concerns in terms of environmental and labour standards, as do some of our American colleagues in the US Congress, and concerns about adjustments that will be necessary. Ontario has asked the federal government to address these concerns. Indeed, I've had some four meetings which Michael Wilson on this topic.

In closing, I'm confident that Ontario can adjust to change in a way that ensures long-term growth and a higher standard of living. Our province has a number of strengths, and the industrial policy will build on these strengths.

The key is partnership. The responsibility for economic development is shared by governments at all levels, by business and by communities throughout the province, by workers and by our institutions. Together we can build an economy that is more productive and competitive. Together we can build an economy that generates wealth and produces higher-skilled and more satisfying jobs.

Our ministry, our team here, is committed to working with its clients to achieve these goals, and we do this by being efficient in the use of our human and our fiscal resources. I look forward to hearing your comments.

Mrs Caplan: Author.

Hon Mr Philip: Author? I wrote it.

Mr White: Congratulations. Well done.

Hon Mr Philip: Thank you.

The Chair: Thank you very much, Minister.

Hon Mr Philip: Did I do it in 30 minutes, the way I promised?

The Chair: It hardly matters. It was captivating.

Hon Mr Philip: I'm sure it was.

The Chair: I got a lot of work done.

Mr Eddy, I understand, would like to comment on behalf of Mr Kwinter, who for personal reasons is unable to be with us and sends his regrets. You have up to 30 minutes, and then we'll move to the third party, and then the minister will have his remaining time of about half an hour to respond. Please proceed.

Mr Eddy: I certainly appreciate the number of good-news items contained in this speech; that's quite helpful. But I did want and I think we all want to talk about the general economy and indeed how serious the situation is, because in spite of the good areas and the announcements that have been made -- thank heavens there is occasionally a good announcement in the economy -- there are many bad ones and the indications are certainly very poor.

1540

If we use September 1990 as a base, which some would want to do because of a particular event that happened then, we note that there were about 314,000 people unemployed at that time, but the jobless lines have lengthened by 90% since then, or some 283,000. Not surprisingly, the unemployment rate has also increased during the same period. In September 1990, 6.4% of Ontarians were without work, and by this July, the rate had jumped to 11%. Winter is coming and it looks like that will increase even more.

The reason for the high unemployment numbers, of course, is simple. More companies are going bankrupt, more plants are closing and more firms are moving to the US. In fact, several US states are present in this very city, wooing our industries that are here, and doing somewhat well. In my own riding, I have had experience with that on an ongoing basis, and it's certainly very serious.

In the past two years, the number of employees laid off has increased by 88% compared to the 1988-89 period. Ontario has suffered more than 75% of the job losses endured by Canada as a whole. One explanation for Ontario's disproportionate share of job losses is the recession and the high level of industrial restructuring the province is enduring.

The country remains mired in a recovery that does not seem ready to end. Indeed, it seems to me to be snowballing. As well, increased global competition has forced many US subsidiaries based in Ontario to consolidate operations, and usually this is at the expense of Canadian operations. The Canada-US free trade agreement, with its mandated reduction in trade barriers, may also -- and probably will -- have a very serious adverse effect.

While world conditions are beyond the control of the government, the policies of the government are not producing economic conditions that will promote business expansion in Ontario or indeed attract new business to the province.

The initial two NDP budgets have produced higher deficits than this province has ever seen. In 1991-92, the government's shortfall reached $10.9 billion, more than $1 billion higher than the Treasurer estimated in his April 1991 budget. This year, Mr Laughren figures the deficit to be $9.9 billion for 1992-93, which is $1 billion above the estimate for the same fiscal period contained in the April 1991 budget. So not only is the government running huge budgetary shortfalls, we doubt the present estimates can be kept.

To pay for these budget deficits, the government has been forced to raise taxes: personal tax rates, personal surcharges, the employer health tax, corporate capital taxes and a special surtax on bank profits. All were initiatives the Treasurer introduced in his last budget. All told, that means consumers and companies will have about $1 billion less to spend and invest because of the government's tax increases.

Boosting taxes can help keep the deficit lower, but at the cost of business and consumer confidence in the economy. We have argued that hiking taxes just as the economy is edging into a recovery is not the best strategy. Removing more tax dollars from people's pockets can shake everyone's confidence in Ontario's economic prospects.

Worse still, other non-measures are hurting Ontario's economic recovery. The workers' compensation fund, paid for solely by employers, is $10.3 billion in arrears -- very serious. Companies know they will have to make up that shortfall in the future.

Then there are the proposed changes to the Ontario Labour Relations Act, the atomic bomb of government public policy that wipes out many things in its path. Regardless of the merits or criticisms of these specific provisions, the legislation has business looking for other provinces and US states in which to place its money, and I think we are well aware of that problem.

Companies like Hayes-Dana are either scrapping potential investments or considering a move out of the province to avoid this law and the anti-business signal it sends out. At a time when provinces are falling over each other to attract new business and investment, Ontario is moving in the opposite direction, bringing new laws and taxes that have companies viewing this province as a place to avoid, and that's certainly very serious.

Now to the Ministry of Industry, Trade and Technology with specific items. The Ministry of Industry, Trade and Technology is doing very little, we feel, to promote economic development and diversification in the province. In July the minister released his industrial strategy for Ontario, which was an embodiment of many previous announcements. Mr Philip talks about the need to develop high value added products as the way to compete in the future. Ontario will not be able to remain as an economic powerhouse by trying to compete with low-wage jurisdictions such as Mexico. Indeed, the province can keep its industrial base strong. The way we can do that is through developing advanced products that can be sold at a decent price.

Unfortunately, the government's industrial strategy offers no blueprint on how to reach this economic nirvana. The July industrial strategy relied upon previous announcements for its substance. In May Mr Philip unveiled his one-stop shopping facility, called the Ontario investment centre for investors, an initiative that he reannounced last month. In May Mr Philip also talked about a three-year, $150-million sectoral partnership fund, but the government has only allotted $30 million for this program in 1992-93.

Government has also relied upon other policy initiatives for its economic renewal package. In this May announcement the minister talked about the evaluation and advisory board for the Ontario investment and worker ownership program. This board is not really part of the government's industrial strategy but part of the government's worker buyout proposal which the Treasurer announced in 1991. In effect, the minister is dressing up an old initiative as a portion of his new industrial strategy. Worse still, back in his April announcement of the NDP's industrial strategy Mr Philip outlined the government's program, which included industry clusters and cross-links between sectors, but he also noted that the cost of these new initiatives will be balanced with the government's overall spending priorities. We trust that the specific initiatives can be stretched out now and developed in future years as the fiscal outlook improves.

So the minister has an industrial strategy, but neither the economic conditions nor the government's finances are in sufficiently decent shape to allow it to proceed. Ironically, in the midst of an economic downturn would be the very time when Ontarians would expect some government initiatives or strategy to get the economy going again. But what Mr Philip has outlined is not enough to pull the economy out of the doldrums. In the end, this industrial strategy is divided against itself. On the one hand, the minister makes the correct noises about developing industry clusters in the proper business environment, but he is a member of the same cabinet that increased taxes in the last budget, boosted the deficit to record levels and introduced amendments to the Ontario Labour Relations Act, all of which we seriously suggest hurt the investment climate in the province of Ontario, and it's very serious.

The Chair: Actually, you have additional time if you wish to use it. Perhaps Ms Caplan or Mr Ruprecht had some comments to make.

Mr Tony Ruprecht (Parkdale): I have some comments. When Mr Sorbara asked me to sub for him today he indicated that the minister would make an opening statement and some remarks. I looked forward very much to that occasion, Mr Philip. I had specific concerns about NAFTA, and I was looking forward to your commenting specifically on NAFTA, since this may be hitting us like an economic truck that may roll right over us, yet on page 17, just before your closing comments, you devote a couple of sentences to NAFTA. I have some concerns about that.

1550

First, are there any economic impact studies done on the effects of this trade deal which has been signed? Of course we know it's not ratified, but nevertheless it's coming down the pipe.

Second, the concern I have would be with the statement that had been made over the last two weeks. This government had indicated that it did not favour the kinds of agreements that were signed. I guess the specific concern would be that if that is the case, a lot of the energy might be devoted to fighting these specific trade deals as opposed to working along, perhaps, with the federal government in trying to come to some kind of knowledgeable working arrangement so that the economy could be developed and put into higher gear. I'm especially looking forward to your comments on those kinds of concerns I have.

Hon Mr Philip: I'm sorry; could you just elaborate a little bit on that? What do you mean by "working along with"?

Mr Ruprecht: What I mean is that the ministry might use a lot of its energy in opposing the kinds of arrangements that have been made or certainly that are in the pipe, yet according to the comments that we find on page 17 -- there isn't really much in here, Ed. There isn't any meat here at all. You're indicating some of the concerns. You're saying, "We have concerns in terms of environmental and labour standards, and concerns about adjustments." Essentially, that's it: two or three sentences about NAFTA.

What I'd like to see here would be the ministry engaging -- and probably it has; I don't know. But if they have, I don't see it in your comments. Of course, you may speak to it in the allocated time. Have there been economic impact studies? How is this going to affect us? How are we going to act? What are we going to do? To what degree is this going to affect us in specific industries, and if it is, what can we possibly do?

Finally, on that specific issue, are we here too early now to think about this? We knew about this for a long time. This is nothing new to Ontario; nothing new at all. We have some concerns about the statements that have been made by the government. Hopefully, something will be coming down the pipe in terms of explanations of how you intend to act in the future and if you do intend to act.

The other comments I have would be about the Ontario trade missions overseas. Apparently, you have 17 trade missions overseas. My comments would be: Are there more planned? Do you plan to expand them? Do you plan to reduce them? Do you plan to have a trade mission going to Mexico, since those are the most recent economic arrangements that have been made between our two governments?

In the estimates, the department expects to sponsor 76 trade missions or exhibitions in foreign countries in 1992-93. That's a drop of seven from 1991-92. If our goal is to promote trade, should we not think about expanding the trade missions, if indeed they are our bread and butter and we can make some economic hay from them?

Then, about the level of export sales influenced, apparently it's estimated to be $865 million for 1992-93. That is supposed to be a drop of 36% compared to 1991-92. I guess the question here would be, why is this figure falling after increasing during the previous two years?

Finally, Ontario's exports for the first three months of 1992 reached $17.1 billion. That was up 18% compared to the same period one year earlier. The 1992 figures only represent a 4% increase from the January-to-March period in 1990. Has this been due, essentially, to the recession?

What do you predict about Ontario's trade performance this year, as the growth in Ontario's trade during the past two years has been flat? Does this mean that the programs have been less than successful or are there any other factors that are included in the assessment of these kinds of decisions?

Anyway, those are some of the comments and perhaps there will be others.

The Chair: Mrs Caplan.

Mrs Caplan: Yes, thank you. There are just a few minutes remaining, I am assuming, Mr Chairman?

The Chair: You could stretch it to about eight if you'd like.

Mrs Caplan: Thank you. It's helpful to know how much time there is.

My constituents in the riding of Oriole are very concerned about the economic climate in Ontario. They're worried about their jobs. I've never seen people as concerned about tomorrow as my constituents are today. They're not satisfied that the industrial strategy which has been outlined by the minister is anything more than rhetoric, and I know they're worried about the lack of direction and leadership that's been shown by this minister in the area of economic renewal and job creation.

Having said that on behalf of my constituents, I was a little distressed when the minister finished his opening comments and I said, "Author, author" -- which are usually words of praise for an opening comment -- and the minister responded by saying that he had written his statement.

I want to give him an opportunity to correct the record, because we know it's very important for ministers to always tell the truth. If in fact the minister wrote this statement I would be very surprised, having served in government and knowing that there are communication departments that draft the statements for ministers. They then perhaps make some modifications to it, but with a large communications budget and speechwriters on staff, I do not believe that the minister in fact wrote this statement unassisted. I think it would be important for credibility for the minister to take the opportunity to correct the record.

I would also say that one of the criticisms of the minister's stated policy and strategy is that it has been agreed it is just a lot of rhetoric, a rehash of former policy statements, and nothing really concrete. I would hope that during these estimate discussions with the Ministry of Industry, Trade and Technology we can get beyond the rhetoric.

I think my colleague Mr Eddy addressed some of those issues extremely well. There are some concerns about some of the specific programs within the ministry, but overall what the riding of Oriole, and I think the people in the province of Ontario, believe is that Ontario has traditionally been the engine of the economy in Canada. The Canadian economy is sluggish in its recovery from this devastating recession. They expect Ontario, whose economic activity in the past decade outpaced any other part of North America and in fact was a world leader in economic growth -- they are really concerned at the lack of leadership of this minister and the NDP government, expecting that Ontario would be a spark for the country and that we would have a climate of confidence that would encourage economic activity.

They don't see and I don't see how the minister's plans have done any of that in the last little while. I know it has been difficult in a time of economic recession, but we're concerned, particularly given the priority of this labour government for labour reforms as opposed to economic activity, how this minister during the estimates process can justify and stand accountable on behalf of his government for the lack of economic activity and the lack of confidence in the province of Ontario.

The Chair: Thank you, Mrs Caplan. Were those prepared comments that you can share with Hansard?

Mrs Caplan: No. I didn't even have a speechwriter.

1600

The Chair: Mr Carr, would you like to use your time now?

Mr Gary Carr (Oakville South): I want to thank the minister and especially his staff for coming in on this hot day. I know the staff, with lots to do, sometimes wonder a little bit about this process. I see some smiles, so I guess they agree. I think it is worthwhile, even though sometimes some of the people from the ministry do not. I think it's a good chance, and I appreciate, Mr Minister, you coming here and your very gracious offer to listen to some of the concerns.

As we all know, people in this ministry better than anybody else, Ontario is in trouble. Our economy is being battered by high taxation, high government spending and high unemployment.

When I took this position as critic, I took it because of my business background. I spend a great deal of time reading a lot of business material; the University of Toronto gives us a card to use its library, and I read a lot of the MBA books. I asked for this position because it was always a good-time ministry: It was a good chance to get to meet with people in an upbeat manner, as opposed to some of the others which didn't have that history.

But this has been a very depressing period. Recently, the Toronto Star said, "Plant Closings Worst Since 1930s." What's extremely scary when I read this article is that it says:

"Eighty-six companies, each employing 50 or more people, closed down in Ontario....The figures, summarized by the office of labour adjustment, show 11,540 people were affected...including stores, furniture companies and manufacturing."

It say that during the same period last year there were 67 closings and 8,781 employees lost their jobs, so it's getting worse. The scary part is that Kimberley Hawtin, a statistical analysis person, said, "`We're only capturing the tip of the iceberg of what's happening'...explaining that companies with fewer than 50 employees that shut down don't report."

The article continues: "The recession that has gripped most of the world for the last two years has hit industrial Ontario particularly hard. In terms of job loss, it has been the worst economic downturn since the Depression, with at least 260,000 jobs disappearing."

So it has been a very depressing period. Two days later, I read the same headlines, that said the manufacturing sector has been the most consistent loser, and Ontario has suffered.

So I think the minister is correct when he says the difficulties we are facing are tragic. As this government is finding out, if you don't have the engine in terms of the economy and growth, all the things we care about, the social programs, become jeopardized as a result. We're in a position now where we're laying off nurses, closing hospital beds, cutting back percentagewise in the transfers we're giving to social assistance, all because of the fiscal pressures that are out there, because this economy is not generating the revenue we'd all like to see.

I'm going to get into some of the specifics, but I wanted just to lay out what I would like to touch on. I'd like to get into a little about the industrial framework. I knew the minister in his speech would be criticizing the federal government. As the minister knows, my mother lives in his riding -- maybe she even voted for you, I don't know -- and I got a chance to read his newsletter in which he said: "The economy has taken a hammering during the last year. The free trade agreement, the high interest rates and the high Canadian dollar" --

Hon Mr Philip: I saw you take that NDP-Ed Philip sign off her lawn. I want it back. I'll lay charges.

Mr Carr: So I wasn't surprised. I know you did amend it when you talked about the high interest rates, because as most people will know now, we've got the lowest interest rates in 30 years. Anybody who renews a mortgage will know that is so. In fact, as we all remember the early 1980s, many of us had the opportunity to renew our mortgages at close to 21%, and today you can get one for substantially less.

You also talked a little about the free trade agreement, and I suspect there'll be a long debate over the NAFTA agreement coming up. I think this government has already had some criticisms of it. It was interesting to note that in the spring of this year, in spite of the fact that the US is in a recession and in spite of the fact that we're in a recession, we had the largest exports ever to the United States. With what's happened in Ontario, I'm am very surprised we've done as well as we have, with all the other impediments we put in the way of business: the overregulation, the overtaxation, the overgoverning. With all the things we put in the way of business in this province, I'm surprised it's been able to continue and thrive as well as it has.

Having said that, we all had an opportunity to watch the political shows in the States, the Democratic and Republican conventions, and we realize that the United States is also facing many of the challenges we are.

I want to get into the industrial framework. As the minister will know, I went to that presentation. Mr Telmer of Stelco made his announcement and said -- I'm paraphrasing -- that he's concerned because over the last 18 months they've lost a tremendous number of their customers. Of course, if you look back over the 18 months he was talking about, the free trade agreement, which the minister says is to blame, came in in 1989. They blame Brian Mulroney, who's been in since 1985, but over the last 18 months the only thing that has changed is that this government has come into power.

Just as Mr Eddy did, I would submit to you that the increases in the taxes, the $1 billion that was taken out -- and, as you know, the surtax was put on: Anybody making down to the level of $53,000 is now being taxed with a surtax. Many of the articles I was reading, also the one from the Globe and Mail, said that putting a damper on it has been the tax increases that came in on July 1 in Ontario, BC and Saskatchewan. The minister would like us to believe that holding the line on taxes for industry and business in this province was a success. He said, I think in a statement, that they were lowered. But the fact of the matter is that vis-à-vis other jurisdictions we still have a higher tax rate. It could only be under a socialist government where we would say we don't increase taxes and take that as being a positive.

If you look at what some of the business groups are saying -- I think Mr Jamison sat through the pre-budget hearings. I went back and looked at what some of the businesses were saying prior to the budget. For anybody who wants that, the Legislative researcher, Anne Anderson, put together a summary.

The Canadian Federation of Independent Business said during that period, "Rather than fiddle around the edges with initiatives like the $57-million manufacturers recovery program, government would do better to tax the small firm sector less and leave more money inside the business to help it cope with economic fluctuations and structural changes."

The chamber of commerce said: "The Ontario technology fund, the R and D superallowance and the manufacturing programs are worthless. Government should keep those funds [and] use them to pay down the deficit" -- this is my own ad lib: "because most people realize a higher deficit means higher taxes."

So there is some concern out there that business is not being listened to. In October of last year, I received a letter from the Federation of Independent Business. I want to read it, because it talks about what the members are saying. They did a poll, and said: "An overwhelming 85% of the firms surveyed find the Ontario business climate to be unfavourable or very unfavourable. The top four categories affecting business owners' assessment" -- are the total tax burden, the recent Ontario budget, the Ontario government's apparent bias against business and the proposed changes to the labour act. "Three of the top four problems are totally under the control of the Ontario government. The fourth, the total tax burden" is not, and on that I would say the federal government and the municipal governments are also to blame.

"It is not surprising, but is none the less disturbing, to find that over one third of the small firms surveyed are considering moving some or all of their operations out of the province." I want to make this clear: This isn't what I'm saying; this is what the Canadian Federation of Independent Business is saying from its members across the province. "Since about 20% of Ontario small firms were considering relocating in an earlier survey conducted in the spring of 1991, a significant deterioration in the confidence level of small firms within this province has occurred in the past six months.

"The survey results indicated that as many as 500,000 jobs in Ontario [and] 100,000 in small manufacturing firms are at risk.... Even if only a fraction of these small firms actually follow through on their plans, job losses...from the Ontario small firm sector alone can be forecast in the tens of thousands."

They go on to say that, although large deficits were extended into the mid-1990s: "Fully 94% of the members found the budget" -- the last NDP budget; that would now be the one previous, so it would be the first NDP budget -- "to be irresponsible. The strongest opposition was directed" to the provincial deficit.

The conclusion in the letter from the federation says: "Small firms have said in the past that they realize it costs more to do business in Ontario, but that other benefits of being here have made this differential worth paying. They are now re-evaluating their choice, as they perceive themselves as truly unwelcome in the current environment, as well as being uncompetitive with the extra cost of doing business in Ontario.... The CFIB urges the government to move to restore the balance."

1610

This was a letter in October 1991. It was interesting as some of the new initiatives came through. I'll speak specifically about Bill 150. I think Mr Jamison may have been on that committee that heard that bill, which is one of the government's major initiatives and one of the big platforms it sees restoring the economy. They came in -- it's on page 2 of their brief. I'll read it to you.

"CFIB's analysis of the program shows that the program is not an appropriate vehicle for encouraging modernization, growth and restructuring in small and medium-sized Ontario companies. It also shows that the Ontario taxpayers, including the small business community, will not get good value for their hard-earned tax dollars.... A better use of the $250 million" -- which is projected to be spent -- "would be accomplished by reducing the employee health payroll tax on the first $400,000 of payroll."

So that the government doesn't feel as if the business community is always slamming it, they came in and said, and I may be paraphrasing a bit, "We really, honestly and truly believe all members, including this government, want to help the small business community." They were very gracious. They said, "We realize you really do want to help us, but if you do want to help us, it would be better spent reducing the taxes with the employee health payroll tax rather than proceeding with this bill." Of course, what happened is that the government proceeded anyway.

It's interesting to note that what they did is look at what business is seeing as the major obstacles, and I think most of this will correspond with what the people in the ministry are hearing from businesses.

The number one concern of 87.4% of the businesses is the total tax burden. Again, that isn't just the provincial government's responsibility, because that includes municipalities and the federal government.

The other area they looked at is the government regulation and paperwork, the local cost of government, the workers' compensation -- which, as we all know, is at a $10-billion deficit and costs are escalating -- the provincial labour laws, shortage of labour, and then down the list, before others, is availability of financing.

Mr Jamison is back. He may remember that. I think he was on Bill 150.

Essentially, they came in said, "This is what we see as the major problems." The availability of financing is not within the top four or five major concerns. So what did this government do? They put together Bill 150, which basically deals with financing. What they said in their presentation is, "Thank you, but if you want to help us, you could do some things in some other areas."

I won't read the chamber's, because it wasn't on substance; it was more on process. People can receive this. They were very critical of the process of what happened on Bill 150. They basically said, "We weren't consulted until after the bill had been drawn up."

If we keep to the topic of dealing with issues here, because I think that's the important thing, you will see very clearly that there are some major concerns.

I want to talk a little bit about the frustration that's out there now. As you may know, in the letter that went out to the Premier on July 13 the Canadian Federation of Independent Business wrote the Premier, advising him that "CFIB is withdrawing from the business steering committee for the Ontario Training and Adjustment Board." They did this to protest Bill 40.

They go on to say, "No matter what the mandate might be" -- of the OTAB board -- "any benefit that OTAB might provide to Ontario's economy will be more than offset by the damage Bill 40 will inflict on the province through lost investment."

I don't want to spend a great of time on the labour legislation. As we all know, I spent some time on that committee. A committee is hearing in more depth on that. I'd rather spend it on ministry time. That bill is being looked at.

I want to touch briefly in the time that's left on the industrial framework. I think we were very kind to this minister and this government, giving them time to prepare the document. As you know, they said: "We need time. We need to get in there."

I think I was disappointed more than anything else, because first-year business students are told that any business plan should be specific, it should be measurable and there should be a time frame. When you look at that, coming from a ministry, there are none of those in here. Some would argue that politicians don't like that because they don't like to be measured, but I think when we're coming to an industrial policy framework, we would've expected something that would've been out there. I know some of the words have been talked about as rhetoric. I want to go through and specifically show some of the members who haven't read that what specifically some of the concerns were.

They start off analysing the problems on page 1, which I think is good. They go through to about page 9 basically describing problems, which I think is very good. Quite frankly, I think it would have been better if they'd said to the business community and people: "Use your library card. Go and grab Michael Porter's The Competitive Advantage of Nations and read it." None the less, they summarize it fairly well in those first nine pages. Essentially, they do what I think would be expected. They identify what some of the problems are.

But then, as you go through it, you see that there is nothing specific. You finally get to about page 20, when we jump into chapter 3, when they talk about OTAB, which I think is a very important initiative. Everybody realizes that the prosperity of particularly the next generation will be in direct proportion to the skills and training we give people through the education program. Essentially what they did is they said in this document, "The biggest factor will be training," and they go on to say, "We spent $930 million on training," and so on.

Of course the problem with that is that it falls under the jurisdiction of Mr Allen, and while that's very important, basically what they're talking about is the initiative of another ministry.

They go on to talk about the $1.1-billion Jobs Ontario fund, and in typical socialist form, the answer to the problem is to throw more money at it. Honestly, as you follow through this and see on page 21, when they talk about the public infrastructure, I really don't believe that the small and medium businesses are sitting there today saying: "That is just terrific. Upgrading public buildings is really going to help my business survive."

When you look through this document you see very specifically what the government has attempted to do is avoid any specifics. I will say this to the ministry: We on this side had been expecting a more, how shall I say, government interventionist type of policies. So I say to some of the ministry people who may have helped write this: If you did nothing but prevent the government from doing that, this do-nothing document would be better than what we had feared this government would do. I say that because I honestly, truly had expected the government to head in a different direction, and if the ministry had anything to do with slowing the government down in that area, it should be encouraged.

I will now refer to where some of the concerns are. As any people who are involved in the ministry may know, the public auditor, in his report which was tabled last year -- I believe it's in November every year -- I want to read out of that, and hopefully, as we get into the debate, the ministry will be able to talk about it, because specifically in this program what the government has said is, "We're going to spend more money on helping industry." I want some of the members to listen to hear what the auditor said about the ministry.

1620

On page 118 they explain what it does: "We audited a representative sample of nine projects funded by the ministry." Financial assistance provided to those projects was about $170 million; over 60% of that total funding was what they audited. Their audit included discussions with the Ontario government. Their audit was to ensure "that the projects were properly evaluated for financial assistance prior to cabinet approval" and also to monitor recipients for compliance.

I'd like to get into what the ministry has done about this later on, maybe even tomorrow if we don't get time today in the questioning. What the auditor concluded -- not Gary Carr, not Monte Kwinter, not the Liberal Party -- was: "the ministry's project evaluation process was unsatisfactory. The ministry's industrial adjustment section lacked a clear mandate. Consequently, some projects which should have been handled by the section were negotiated by an agency. On one such project, the province lost $8 million."

For some of the other projects, "the need for and level of government assistance were not properly evaluated; reasonable assurance of the project's success was lacking; and information in the cabinet submissions was inaccurate or incomplete." In other words, the people sitting around making decisions at the cabinet table were not even receiving adequate information.

If one is to read this document, the answer to the problem is for the government to spend more money on different companies at a time when the auditor says -- not Gary Carr says -- that you're not doing a very good job. The word he uses is "unsatisfactory." Now we're led to believe that we're going to reorganize and spend more money in different areas.

The one we're talking about here, the sector partnership fund, we're going to pump $150 million into, according to our document. I want to go through that specifically, on that page of what they say will happen. As many of you know, one of the big problems with companies right now, particularly small and medium, is the marketing function, so they say the SPF will assist sectors undertaking marketing programs to educate and reach customers. What they say in the bullet points in there is:

"Tourism advertising creating a common Ontario image; sector directories and trade missions organized on a sector basis; helping industrial designers demonstrate the competitive edge that design can provide." They're going to assist the Wine Council of Ontario "for a generic marketing campaign; helping the Ontario road construction industry bring the International Roads Federation Convention to Ontario; promoting Ontario's film industry through...the Toronto Festival of Festivals."

Does anybody in this room really believe that initiatives like that are going to turn around a province that is losing the number of jobs we are losing? I say to the minister, the small businesses out there will not rest assured tonight, reading information that was put together in this document.

I want to discuss a couple of the other ones. On pages 27 and 14 they outline some of the successes. From that standpoint I think it's good. It gives you a good chance to read what companies have done to be successful. I think the companies listed here can be very proud of what they've done. A good point; that part of it I agree with.

So now we're down to page 29, without anything specific dealing with what this government will do. That's well past the first document. On page 29, basically what they admit there -- and I'll paraphrase a little bit -- is that the government has to do a better job in dealing with companies. The auditor says they haven't done a very good job. At least they've recognized it down on page 29.

So what is the response of the ministry going to be? On page 29 at the bottom: "A task force will be established to rationalize and integrate provincial reporting, filing and remitting requirements for small business where it is practical and cost-efficient to do. One idea, among others that will be examined, is developing a unified tax return system for small business."

In other words, they've identified all these problems, and what are we getting out of it? On page 29 of An Industrial Policy Framework for Ontario we get another task force that's going to look at it. Quite frankly, small and medium businesses will not go to bed tonight resting assured that there will be anything coming out of this document that will help them.

As the minister will know, one comment was about the barber in Leamington. It was used as a bit of analogy. Small and medium businesses will get nothing out of this industrial strategy.

On page 30 they talk about the backlog in the Ontario Municipal Board, and quite frankly, we all know the problems that are in that area. We've got many problems with government agencies. The rent review is backed up, our courts are backed up, the WCB has a $10-billion unfunded liability, our tax rates are up. On page 30 they talk about the investment development office, which they're now going to set up to, as they call it, link potential investors and the information they need to make investment decisions.

I hope they keep a lot of the government's initiatives away from this office so the people of this province won't know what is happening in the area of WCB, in the area of regulations, with the labour legislation, because, quite frankly, if anybody calls that office and realizes what's going on here, I suspect nobody will be coming to the province of Ontario.

When I read this over I thought my statement sounded, and it does, very pessimistic. The reason I decided to run for office -- and my background is in business -- is because I wanted to return this province to prosperity. In a document that has come through here, we have fine words, but nothing specific about what they will do, other than the fact that we're going to spend more money in certain areas, at a time when the auditor is saying you aren't doing a very good job of it now.

The rest of that report goes on to look at the green strategy, which I think is good, long term; some of the initiatives are in there. Again, nothing specific. I would have expected a ministry, some of the others, whether they be Health or Social Services, to deal in generalities and political rhetoric. The Ministry of Industry, Trade and Technology, with the crisis we are in, I would have hoped would have been a lot more specific. Quite frankly, if anybody had taken this and said, "This is our business plan," they would have been laughed at. It's written for, I suspect the highest level would be, at best, high school. So to the minister's staff, who I don't believe were involved in writing most of this --

Mrs Caplan: The minister wrote it himself.

Mr Carr: The minister's the author.

Unfortunately, there is nothing in here which will allow businesses to feel more confident. As I read through that and read through what the ministry is doing, as I said earlier, we gave the minister plenty of time. There was a switch in ministers going way back with Mr Pilkey taking over. We said, "Okay, fine, a new minister came in, we'll let him put his handle on it." To come out with this particular industrial framework, quite frankly, is -- I won't use the words to describe it because I will try to be kind, but unfortunately, Mr Minister, this is a failure.

We need things specific, we need to have an action plan of how we're going to reduce some of the impediments that are out there, and quite frankly you don't even need to look for them yourself. If you go and speak to the business groups they'll outline it, they'll do it with charts, as I outlined with the CFIB one, the chamber of commerce. They'll tell you where the problems are.

What we should be doing specifically is looking at the tax burden and saying, "Okay, Canadian Federation of Independent Business, okay, chamber of commerce, this is what we're doing, this is our action plan with regard to taxation, with regard to the labour shortages that are announced here," but that wasn't done and that's why this whole thing has been a failure.

Then on page 38 they talk about labour adjustment. Basically they say, "We're going to lose jobs so here's what we're going to do to help." That particular initiative should have been in with the Ministry of Labour. That outlined some of the programs which many of the people -- I think the Liberals supported the employee wage protection fund. A lot of the things in here are labour-related initiatives to help people when they're out of work. They aren't specifically, "What are we going to do in the province of Ontario to avoid what has happened over the last year," which is a tremendous loss of jobs.

So, Mr Minister, in these discussions what I would like to do is get into, during the question period, some of the specifics of what is happening in the ministry in terms of the programs and where it sees these programs going. I think the minister's staff or the people from the ministry must be complimented in one regard, in that they faced a very difficult task during this period. I suspect, if the truth is known, one of the reasons we've faced these problems is I know Mr Armstrong and many of the other people have spent a lot of time on a number of the crises that have hit us, de Havilland and Algoma. I know in my own area, with the General Electric announcement, the Premier's office spent up to a year working on that deal.

1630

But I say to the ministry, instead of putting out fires on these particular initiatives -- and I suspect somebody with the quality of Mr Armstrong will be needed to do that -- somebody in the ministry needs to have a long-term game plan so that the people, investors, the small business community, managers, employees and workers, feel confident that Ontario knows where it's going. I submit to you, Minister, this didn't do it.

In conclusion, I look forward to the opportunity of getting into some of the programs and asking some of the questions about what the ministry is doing. I know the ministry people involved in a lot of them are very proud of their programs. Some are them are working well. It's a good process. To the ministry staff, I hope they'll appreciate the amount of time that it's taken here as being worthwhile, because your ministry is critical in the economic future of this province.

Madam Chair, I think my time is probably almost up.

The Vice-Chair (Mrs Margaret Marland): It's just exactly up.

Mr Carr: What timing. I thank the minister and his staff. I look forward to our discussions.

The Vice-Chair: Thank you, Mr Carr. The minister now has half an hour to respond.

Hon Mr Philip: Thank you, Madam Chair. I appreciate the remarks of the opposition members.

I hope that in responding I will have an opportunity to have Mr Ruprecht ask some of the questions that he asked again, because I think they're worth exploring. We have staff here, and as we start looking at the documents, I'd like to go into considerable detail because I think they're good questions and deserve a response. My staff are most anxious to do that. Maybe I can take them in the order I thought they were presented in. There is some overlapping.

With response to the general economy, we had a definite problem in that we took over a government at the time of the start of a recession. It was fairly clear that a recession was coming. It was a North American recession, not just an Ontario or Canadian recession, and we had to deal with that. Of course, part of the problem is that in times of a recession there's a lack of revenue, because people are not making as much profit as they are in good times. Therefore, we had a massive drop in revenue.

I find it difficult, and the Premier said this, to listen to the Liberals when they talk as Mr Eddy has done. I know he's sincere in his comments, but he says, "You have to do more for business. You have to spend more," and then, in another breath, he says, "But you've got a deficit and you've got to essentially reduce the deficit." You know, there's no free ride. Then he attacks increases in taxes, and I'd like to deal with the tax matter in just a minute.

But there is no free ride. There are only a few places that you can get revenue from, there are only a few ways of paying for programs, and I think that when we get into the industrial strategy -- and I can give you countless examples -- you'll find that some of the things we are doing as a government, with a very small amount of public funding, are actually triggering an awful lot of private investment.

Let me just give you an example of that. A program that I'm very proud of is the investment in Husky. Husky is an excellent company. With a $20-million loan we have been able to set up a research and development institute on which that company is spending $196 million. That's not counting what we hope to get, because the federal government, I think, will see the merits of this and will want to get in with some DIPP money and some training funds. Even if you eliminate the operating and so forth, you're still talking about an investment of close to $100 million by Husky for a $20-million loan, and I think that's the kind of investment we are putting in.

Mr Carr talked about small business. I like to talk in the concrete, and you'll find me, during these estimates, using a lot of examples. In the case of Husky, for example, you're talking about working with some 100 or so small companies that are working with them, that are in that industry and that will benefit as a result of this training, research and development program.

When you talk about the kind of money that we are putting into business, some of the money may go to a company that would be a medium-sized company or maybe even called a large company -- in the case of Husky, certainly an excellent, mainly employee-owned company in the plastics industry, an international leader in the field. But you're also talking about the kinds of restrictions or, if you want, the kinds of guidelines that we often place on those programs in which we say, "But our policy is that you work with a whole bunch of companies together and that your programs are open, even to your competitors." In the case of Husky, I think we've got a good example.

Both opposition critics have talked about the industrial strategy. They're saying, "It's a combination of some previous policies." Of course, as you develop a strategy, as you look at the strategy, then you are bound to start implementing the strategy. You say, "Look, let's try this set of ideas here." Yes, we introduced the IRDI, and I think it's a very good example of our strategy. Yes, we went up to Ottawa and we set up a health/biotech/sciences development institute or project in which we took 21 acres of land right next to the University of Ottawa biological building and for which we got the cooperation of the municipality.

Both the then mayor and the mayor who won the election after that certainly found it difficult when I kept sending the project back because I wanted more research and development in it and because it wasn't acceptable, but we eventually got a win situation in which we had private enterprise, business, the universities, the various federal research institutes in the area and private enterprise playing a very active role and in which we will get all of our money back. So it won't cost the taxpayers. Projections suggest we'll even make a profit for the taxpayers, while at the same time creating a synergy.

The comments on the industrial strategy I find really strange -- the comments by Mr Carr that somehow this is the same as Porter. Well, the federal government spent $1 million for the Porter report. This report didn't cost us $1 million. Somebody said the federal Tories spent $1 million on the Porter report when they could have gone out and bought his book for $17 and got the same thing and had better value for the money.

Now, I'm not knocking Porter. I think that Porter did one thing that was really very important. That's why it's used in the book; that's why I've used his book and some of his ideas. He basically identified the problems. But like the federal government, like my colleagues in Ottawa -- whom I've worked so closely with and whom I have a lot of respect for -- they've identified the problems but they haven't come up with any of the solutions.

I think that if you look at what the business community and the labour community said about the industrial strategy framework, you'll see that it was endorsed by the business community. It was endorsed by the Canadian Chamber of Commerce. As a matter of fact, if you read the Canadian Chamber of Commerce's strategy, you can see a certain amount of similarity and a certain amount of complementarity, if you like, to many of the ideas found in that.

1640

It's not by accident that when I released the industrial strategy, Paul Nykanen, the vice-president of the Canadian Manufacturers' Association, Ontario division, happened to be there. There were a number of people invited -- we didn't know he was coming -- and he said: "Yes, this is good idea. We've got to move in this kind of direction." Buzz Hargrove, the president of the CAW, was there and said, "Yes, this is the kind of thing that is needed." Stelco's chief executive officer, Fred Telmer, was there and said: "Yes, we've got to have more cooperation between business, labour, management, community and the government. This is a move in the right direction. Let's get going with it."

Some of the members have talked about cynicism. I can tell you of the cynicism of the business community I talk to. I find this particularly in the -- if I may use the word -- ethnic business community, the people who have immigrated from countries around the world, not just Europe but around the world, who are saying: "Why was it that there was no industrial strategy by the Liberals? Why was it that when they were in power they didn't come up with an industrial strategy where we could see a blueprint? Why was it that the Conservatives didn't have an industrial strategy? Why is it that the federal Tories don't have an industrial strategy?" That's the kind of thing that is noted.

Interjection: What about Montreal?

Hon Mr Philip: One of the members has said, "What about Montreal?" Quebec does have an industrial strategy, and I give my two colleagues in Quebec, Mr Tremblay and Mr Ciaccia, some credit for their strategy. Mr Carr and the Liberals attack mine on not having more content, although it's fairly specific, I think. The business community has said it's specific, the labour community has said it's specific and has endorsed it.

They have an industrial strategy of seven pages. It picked winning and losing sectors. I had a very long discussion with Mr Tremblay and I said, "I think this the wrong way to go. I'm not prepared to write off northern Ontario. I'm not prepared to write off certain communities." When I look at other countries -- Japan, West Germany, the Scandinavian countries, even perhaps Korea -- I see that there are better ways of doing it than picking winners and losers and writing off whole sectors. We will develop some very specific proposals as to how we go about it.

It's fine for the doom and gloom of the opposition members, who constantly say nothing but Ontario's going to hell in a basket, to talk about how bad things are, but you know, Ken Harrigan, the president of Ford, when we opened up a very exciting program with him, said: "We're going places here in Ontario. This is a good government." It's on television. We've even got tapes of it if you want. "This is good government to do business with. They understand what an industrial strategy is." He said, "I think we can get the product mandate for a number of Ford companies here."

It's not by accident that GE is starting to put some of their major world product mandates in places like Mr Carr's riding. It's because they know that Ontario is a better place to invest in that kind of thing, in terms of our infrastructure, in terms of our research and development, in terms of the kinds of programs we have, than is the United States. That's why they're locating here, not in the United States, and that's why they're closing down some of their operations in the United States and locating here.

I wish I had more than half an hour. I'd read you the list of companies that are moving from the US, and they're all high-tech companies, but let's deal with some of the Ontario competitors.

The Chair: Free trade's working?

Hon Mr Philip: The industrial strategy of this province is working. Let me get into free trade in a minute. I'm sure that you're all ears and I'd be happy to talk about it.

Let's talk about competitiveness. In 1992 Statistics Canada estimated that there would be a further decrease for Canada of 2.7% compared with a decrease in Ontario of only 1.8%. If you look at where investment is going in this country, Ontario is getting more investment than all the other provinces combined. Where are the Liberal and Conservative governments that are getting all this great investment? They don't seem to be getting very much foreign investment.

If you look at business failures as a percentage of gross product, yes, we're in a recession, and yes, there is a business failure rate. If you compare our business failure rate with that of the 1980-81 recession under the Tories, we're actually doing about the same. Yet what has happened since then is that you've had 10 years of growth that has happened in all jurisdictions around the world, 10 years of growth, yet we're performing about the same.

What was it under the Tories in 1980-81 that created all these business failures? Was it that they were in power at that time? Was it that they had bad policies? Was it that they were sending all the businesses off to another jurisdiction? That simply isn't true.

If you look at the business failure rate in Ontario compared to other jurisdictions -- some of our main competing jurisdictions, for example -- and the difference from 1990 to 1991, Ontario had a 23% increase, yes. But compare that with California, which had a 58% increase, 476 business failures per million residents. You have to compare apples with apples, so you have to take it as a percentage of the number of residents. Georgia had a 76% increase, Illinois 40%, New York 69%. You see, when you compare us with other surrounding jurisdictions in the States, we're doing much better.

One area where we have been lagging, and that's why the industrial strategy was so necessary, was in research and development. That's what our programs are designed to do, to increase research and development, using a small amount of money and good policies of getting the sectors together, to get that private sector stimulating R and D.

For example, as a percentage of gross product, in 1989 Ontario spent only 1.64, as compared to Canada, 1.4. We're better than the rest, but we should be; we're the industrial centre of Canada. But when you compare it with the United States at 2.71 -- there would be a lot of military research in that, so it's probably not a fair comparison. But still, compare it to Massachusetts at 6.49, New York at 2.24, and California, with Silicon Valley and so forth out that way, at 4.43. We have a long way to go in research and development, and that's what our industrial strategy is designed to do.

Training expenditures in Ontario: What our policy is designed to do is increase our training budgets. If you look at the Conference Board of Canada training and development report, it states that companies in Ontario will increase their training budgets by 7.2% in the next fiscal year, and this increase is significantly higher for Ontario than for all the other Canadian regions. For example, compare our 7.2% with Quebec's 3.7% or western Canada's 5.6% or Atlantic Canada's 2.3% and you can see that from a competitive point of view we are moving very, very quickly with our policies of stimulating more research and development and dealing with a problem the previous governments completely ignored.

Let me deal with the tax comments. The corporate tax rate in the budget passed at the end of April, on manufacturing and processing profits, as well as farming, mining, logging and fishing profits, was reduced from 14.5% to 13.5%. The capital cost allowance rate for new investments in manufacturing and processing machinery and equipment was increased from 25% to 30%. You can't argue that we're not competitive and not look at those figures and say, "This is going to improve our competitiveness over what previous governments have done."

For example, Ontario's reduction in the manufacturing income tax rate, when combined with the recent federal government measures, will result in a combined statutory corporate income tax rate for Ontario manufacturers that's four percentage points below the average combined rate in the United States.

1650

I talk to companies and investors from all over the world; they come in. They are moving into Ontario because they see that Ontario is an ideal place to locate. Geographically, we're within two days' transportation of over half of the North American population. We have a cosmopolitan city and province, where people feel comfortable, where we have a high standard of education.

I'm not taking personal credit for it, nor is this government taking personal credit for it. Every once in a while I get a call from my old friend Jim Snow, who's still a good friend. He gave me more advice when I was Minister of Transportation than I get now, but he still gives me a call from time to time. I give him credit for having built a road system and an infrastructure that I think is better than anywhere else in North America; that I've been in, anyway.

For most types of businesses, Ontario's corporate tax system is competitive with other jurisdictions when payroll taxes and the employer-paid health care taxes are considered. So it's not a matter of eliminating those. If you put them all in together, we're very competitive.

To say, as we're saying over and over again -- at least the Conservatives are saying over and over again -- that we're being taxed to death sends out the wrong message. That is really being very destructive to our efforts of showing the truth about this province, namely, that we're a very competitive place to invest. If we weren't competitive, they'd be going to other provinces. They'd be going to the United States. They'd be going to some of the other jurisdictions. But they're not; they're coming to Ontario.

Mr Carr talked about welfare rates going up and so forth. Let me spend a moment on that.

The 1992 Ontario budget: The Liberals have pointed out as well, and not insignificantly -- although they don't shout about it or talk about it quite as much as we do, for obvious reasons -- that Ontario has been forced to deal with a significant loss of federal funding. Cumulative losses are estimated since 1982-83 at $41 billion. That's what this government and the previous Liberal government had to deal with. But in 1992-93 alone, we get the real crunch of $9.4 billion out of our welfare and education transfer payments. That's a lot of money when you're worrying about a deficit.

As Bob Rae said to Mazankowski, "Don't tell us to try and balance our budget when you're doing such a poor job and when you're cutting what amounts to almost our total deficit out of our budget through the transfer payments."

Let me deal with a couple of specific things, and then I'd like to get into the NAFTA.

The Chair: You only have about four minutes, Minister, maybe even less, so I'd encourage you to get to the NAFTA.

Hon Mr Philip: Let me deal with -- I can't resist a public accounting question, knowing my background -- the thing about the Provincial Auditor. I agree with the Provincial Auditor's criticisms 99% of the time. I think I've only disagreed with him 1% or 2% of the time where I thought that his assessment was superficial in some way or did not take certain factors into account.

Of the nine programs Mr Carr refers to, seven of them were programs under the Liberal government. We've taken steps to correct them and we agreed with his criticisms. My staff and I would be happy to take each of them, if you want, and tell you what has been done to correct them. The other two we have also taken corrective action on, and I'm sure Mr Pilkey wouldn't mind if I say they didn't happen under me either; so none of those nine.

But wait for the next Provincial Auditor's report. Then you can come and then I can tell you what I'm doing or what my staff is doing to respond to the Provincial Auditor's report, because I always pay close attention to Doug Archer, and to his successor, who I think is tremendously good.

The Chair: It's interesting that we're interviewing the position next door at this very moment. You have about a minute left, Minister, if you'd like it.

Hon Mr Philip: My deputy points out that the auditor's report -- why don't you point that out?

Mr Armstrong: Because you've got the minute and a half left, not me.

Hon Mr Philip: I can't read your handwriting.

Mr Armstrong: It's the role and function of the Provincial Auditor to point out deficiencies, but in fairness to the ODC and to the work that Mr MacKinnon and his colleagues are doing, they have a record of success which is evidenced by some figures.

I'll spend less than 30 seconds just pointing out that 24 of the 75 Ontario Chamber of Commerce award winners for business excellence were ODC customers, 11 of 25 emerging threshold companies identified by the Premier's Council had used ODC programs and 30% of leading high-technology firms in the most recent Financial Post list had used ODC programs.

One acts at one's peril in being too critical of the Provincial Auditor, but I simply wanted to point out that there were success stories to balance the comments. As the minister says, we'd be happy to get into the nine instances to which the auditor refers in that particular report.

The Chair: Thank you, deputy. Perhaps I could at this point indicate that we will be adjourning this evening at 6 o'clock. In the hour that is remaining, I'd like to commence rotation, but I'm in the hands of the committee as to how you wish to order up your time, whether you'd like to pursue the estimates by policy area or by rotation. I'm in your hands.

Hon Mr Philip: Could we do it --

The Chair: I'm in the committee's hands, Minister. Mr Carr?

Mr Carr: My suggestion would be on a rotating basis. It might not be quite as easy for some of the people in the ministry, but it's because of my own situation. My questions relate in order of preference; as you know, what happens sometimes is that we don't get to all the questions. That would be my suggestion. As to time, I don't know whether 10 or 15 minutes' rotation would be acceptable to everybody.

Mr Norm Jamison (Norfolk): The time in three blocks and rotating would be fine. If there were an hour and 20 minutes each, it would be fine with us.

The Chair: We have a prior agreement which flows from our departure half an hour early today. I assume, having checked with all caucuses, that you're trusting the Chair to ensure that the agreement is upheld.

Mr Jamison: Yes.

The Chair: Then I will proceed on that basis. Do you wish to stack the votes and leave them to the end tomorrow? Fine. Then we are prepared to proceed. I would like to invite the Liberal caucus to proceed for the first 20 minutes. Mrs Caplan.

Mrs Caplan: I'd like to ask the minister the question I asked in my remarks. Did you really write the opening remarks yourself?

Hon Mr Philip: It's good to see the priorities of the opposition party.

Mrs Caplan: The priority is that honesty is important.

Hon Mr Philip: I'm sorry. Would you like an answer --

Mrs Caplan: Yes I would, please.

Hon Mr Philip: -- or would you prefer to interrupt me, the way you do in the House all the time?

The Chair: Mr Philip, you contribute greatly to setting the tone for these estimates. You are the minister and I suspect that questioning is a difficult process, but I would appreciate it if we could all just temper that and proceed to answer the questions and to ask the questions in such a fashion.

Hon Mr Philip: My speeches, as my staff will tell you, are written by a consensus process in which we outline, we agree what will be in them. I frequently make changes, and they're changed frequently. Sometimes, on rare occasions admittedly, I will scrap a speech and rewrite and do it on my own. I'm sure that most cabinet ministers at some time or another do that.

Mrs Caplan: So the process is the normal one, and the remarks today reflected that same kind of process?

1700

Hon Mr Philip: They reflected my priorities as discussed with my staff and as prepared by us, yes.

Mrs Caplan: Thank you very much for that answer. Are you willing today to give us an update on the very unfortunate occurrence with Mr Masters, the Ontario agent general in New York?

Hon Mr Philip: The matter is under investigation. We're dealing with a person's career, a person's integrity. I have sought legal advice on this, and my legal advice is that I do not intend to make any comments at this point in time.

Mrs Caplan: I understand that a report has been completed. Will you make that report available to the committee?

Hon Mr Philip: To this committee?

Mrs Caplan: Yes.

Hon Mr Philip: The report has not been adequately and completely dealt with. I think that any report would have to be first of all supplied to Mr Masters, and Mr Masters would have to comment. I have no further comment.

Mrs Caplan: It's my understanding that in fact the report has been completed and given to Mr Masters and that during the estimates process of this committee it's a reasonable request to ask that the information be tabled with the committee. I ask that you do so.

Hon Mr Philip: I'll let the deputy respond to that.

Mr Armstrong: The investigation, Mrs Caplan, involves, as you would expect, investigation into the assertions by staff members as well as any response Mr Masters may care to make. That process has not been completed. What has been done is that the assertions have been placed in the hands of the solicitors. That's the stage that the investigation is at.

Of course a very important part of the assessment will turn on his response. In terms of producing it, as the minister said, we're under the instructions of counsel. My law is a little rusty, I concede, but I would be very surprised indeed if under the Freedom of Information and Protection of Privacy Act a matter of this sort were available even to a legislative committee having regard to the matters under discussion.

The Chair: If I might interject, that would be the position of the Chair if called upon in this matter.

Mrs Caplan: Thank you very much. I appreciate your advice. My question to the minister is that Mr Masters is unique in that his appointment is by order in council. He is not a civil servant, and it is an order-in-council appointment, appointed directly by the cabinet as a patronage appointment. That's correct, is it not?

Hon Mr Philip: He's appointed by the Premier.

Mrs Caplan: A direct appointment by the Premier, but all Premier's appointments are order-in-council appointments appointed by the cabinet. Is that correct?

Hon Mr Philip: That's correct. I would object, though, to a patronage appointment.

Mrs Caplan: By term.

Hon Mr Philip: Patronage has a certain connotation. I think that the Premier has striven to find the best possible agents general, and when he appointed Bob Nixon, I think he appointed an excellent person to handle that job.

Mrs Caplan: I'm not disagreeing. Often patronage appointments are excellent.

Hon Mr Philip: Just as long as we understand the word "patronage," and it's not something that is in any way considered to be inappropriate.

Mrs Caplan: I think it's important that everyone here understand that the term "patronage appointment" is the term that you use for order-in-council appointments that are made as a political appointment as opposed to a civil service appointment where someone goes through the normal civil service process. If you're sensitive about it, I think that the appointment of Bob Nixon, which was a patronage appointment, was an excellent appointment of a very deserving individual.

What I am suggesting is that the hiring process is different. I understand how that process works. I know that those recommendations by the Premier come to the cabinet -- they are ratified by the cabinet -- and that it is a cabinet decision whom it appoints for those political patronage appointments. By their very nature, that's what they are. You may not like the term, but I think it best describes that situation.

We have a situation here where very serious allegations of sexual harassment have been levelled against a political appointee of the Premier and the cabinet. I'm asking you if you do not feel that some action is required in light of the fact that a report has come forward. I understand the concerns you have regarding the legal advice you have, but all patronage appointments serve at pleasure. I'm asking if you are intending to take any action, and if you'll report to this committee what action you have taken and what action you are prepared to take, given the very serious nature of these allegations.

I would also point out to you that there are precedents available given this kind of appointment process, and I would ask for your comments.

Hon Mr Philip: I think I've given my comments. My comment, first of all, on the question of patronage is not whether or not somebody like yourself who is fully familiar with political science and the processes of government would object to the word "patronage." I think the public has a different view, and it's often the public where I think we have to be concerned that it understands the process. That's why I wanted to make sure I was understood. I thank you for your help in explaining that.

With regard to what action, the action that has been taken is that there is an investigation under way, and part of that investigation is that a person has a right to present his or her case when any accusations are made. Mr Masters is, I'm sure, taking full advantage of that process. No action, certainly, will be taken by me or by the Premier until the investigation is completed.

Mrs Caplan: It's my understanding that the investigation has been completed and that Mr Masters has received a summary of the information that has been collected. I must admit that, given the nature of the allegations, I'm distressed at the --

Hon Mr Philip: I'm sorry. I thought the deputy was able to explain to you that the investigation is not completed. An investigation is not completed, certainly, until a person who may be accused of something has a right to respond to the accusations. Therefore, unless you believe that a completed investigation is a one-sided investigation, then you couldn't possibly come to the conclusion that this is a completed investigation.

I'll ask the deputy to go through the process again so that everyone will understand what stage the investigation is at.

Mr Armstrong: This will simply be repetition. The assertions that have been made have been investigated and, as Mrs Caplan accurately says, a summary of those assertions has been supplied to Mr Masters's solicitors along with a letter inviting him to comment, either by way of being interviewed by the team of investigators or by replying in writing or in any other way he wishes to do. That process is ongoing.

We have not yet heard back from his solicitors. The situation is simply that the investigation therefore is ongoing on the very valid premise that he and the others have to have a full opportunity to have their say about these matters. It would be quite unfair and a denial of natural justice for anybody to say anything more at this stage.

I simply want to make clear for the record -- and I'm kind of searching for words -- that when I say "assertions" I guess that's the right thing because, like any employer, that's all they are at the moment. We're not a court of law. We don't take evidence under oath and therefore it will be our task -- I'm talking about public servants now -- when we complete the investigation, to make recommendations to the minister, and the minister in turn to the Premier and his colleagues in cabinet as to what, if anything, should be done as a result of the material that's gathered and the recommendations made.

1710

Mrs Caplan: When I was referring to investigation, I was using that terminology to suggest the information-gathering. That portion of your process having been completed, I understand the next step is to permit a rebuttal. According to the information I have, that's going to take an additional couple of weeks.

The concern I have is for the decisions the Premier and the cabinet have made as to the process. These are very serious allegations, and certainly I would hope at some point the minister and/or the Premier would have some comments to make. I find their lack of comments at this point in time very distressing indeed.

Hon Mr Philip: If I may ask a question, what comment would you expect before an investigation is completed?

Mrs Caplan: The next point that I would like to make has to do with the development of an industrial strategy. I found the minister's comments very defensive indeed. It seems to me, Minister, it's important that what's missing from your industrial strategy be outlined and highlighted if there's going to be any understanding by the people of this province of what is needed in order to lead this province into better economic times and out of this recession.

I found an article in the Oshawa Times that I thought said it extremely well. It has accused your government of chronic timidity.

I'm going to leave much of the questioning on this matter to my colleague Mr Eddy, but I am concerned, because you have suggested that by not picking the winners, what you've done in fact is not write anybody off, and I think that's where your thinking is particularly flawed.

By identifying your strengths, whether those strengths are auto parts manufacturing, the mining sector, intellectual, property, knowledge-based, medical research, there are a number of areas where Ontario is and could be on the leading edge. Telecommunications is another example. These are areas where Ontario could be, and is perhaps, on the focal point of world leadership.

By not identifying and saying, "We are going to foster and support and nurture these industries," what you are doing is not setting a strategic direction. By setting a strategic direction, you're not writing anybody off. By setting a strategic direction, you're showing leadership and moving into the future in a way which will instil confidence.

I want to point out -- you mentioned a number of countries -- that most countries with successful industrial strategies have identified the sectors of their society where they want to focus their attention. I would ask you, when that was suggested to you by ministry officials and others, as your industrial strategy was being prepared, why you rejected a strategic approach.

Hon Mr Philip: I'm just checking with the deputy. To my recollection and to the recollection of the deputy, at no time did we have ministry officials suggest that we should go the Quebec government route of picking winning sectors and losing sectors. What Quebec's done is decided to pick winning sectors and then listed every sector, rather than an industrial strategy, which I think is a political copout of the worst kind, although I recognize Mr Tremblay has listed within those sectors some of the priorities. He even has them colour-coded as to what the emphasis will be.

What we've suggested is that there are winning activities and those winning activities mean that you don't have to write off certain industries. We have shown that in certain industries, even the most traditional industries, the steel industry -- and I can give you examples of Stelco, with some of its winning activities that are making it world-competitive in a very traditional industry, or the softwood lumber industry, where we are developing new products. I would be happy to talk about some of the things that we are doing in cooperation with other provinces in merchandising softwood lumber and developing new products in the wood industry. There are certain things that you have to do, such as working to have research through sectors and through groupings of companies.

I've given you examples and I'd be happy to talk ad infinitum of more examples -- IRDI is a good example; Husky is a good example -- that there are certain things you can do in terms of raising skill levels. We mentioned not just how much more money we are spending than previous governments have on raising skill levels but also a whole process that is introduced through my ministry and through the Ministry of Skills Development in which we are actually getting skills development closer to corporations, closer to communities and more relevant than what was done before.

There are certain activities and certain processes that you have to take in order to establish home-based industries in Ontario, and we've got incentives and ways of doing that. Indeed, we can give you example after example. There are ways of building international capabilities, and I'd be happy to have Gordon Gow and some of the other people from our international operations explain some of the many activities that we're doing in that area. We have to develop linkages and networks among companies. I gave the example in my statement of the agreement that we've just signed with the plastics industry in which that sector agreed on what activities the province should take and what activities the sector should take.

The industrial policy is strategic. It's based on winning activities, not on an outdated definition of what is strategic. It's based on certain things which have been identified to solve the problems, yes, that Porter identified, but what we have done and what I think David Crane has done in his latest book is suggest certain solutions. To the credit of the Canadian Chamber of Commerce, it has also suggested some very good solutions which are not all that dissimilar in many ways from ours.

Peter Sadlier-Brown, I think, would burst a vessel if I didn't at least -- he's worked so hard at it -- let him maybe comment in response to the question. Would you like to hear from Peter? He's spent months working on this.

Mrs Caplan: Thank you; not at the moment. I appreciate that, Minister.

The Chair: It's very helpful, Minister, but Mrs Caplan has the floor.

Mrs Caplan: I just want to make one comment and pass on the time that we have.

The Chair: Go ahead.

Mrs Caplan: I just want to point out to you that this particular article says that without an assessment of our strength, there is no industrial strategy. That is how industrial strategies work. Further, they say that a timid and uncertain government will never lead us out of the recession. My constituents are interested in jobs. They don't believe your industrial strategy will do that.

I'll pass the floor to my colleagues.

Hon Mr Philip: If I may respond to that last comment, I haven't read that particular article. I have read the Toronto Star and some of the articles there that have been very laudatory.

If you read or even listened to my speech you would have seen that I did identify many of the strengths of Ontario. It's building on those strengths that we believe we can do, and it's by doing certain activities which we have identified can make us competitive. That is why the Canadian Chamber of Commerce, that is why the labour movement, that is why so many business groups and that is why the ethnic business community, which has understood that this kind of thing works in so many other countries, are so overwhelmingly in favour of this strategy and why they wonder why previous governments haven't gotten off their butts and done something about it.

The Chair: Mr Eddy or Mr Ruprecht, I'm going to give you a couple of more minutes. How's that?

Mr Ruprecht: That's great. That's terrific.

We really appreciate here, I think, and know about your personal commitment in this. I think that's probably unquestioned. That's the good part about it. Probably the bad part about it is the kind of people you have to work with here. That's supposedly in question.

I want to get back to NAFTA. You are in the vortex of an economic rearrangement, essentially, that might leave us standing still in North America. You've got to address yourself to a very quick issue. In other words, you've got to come up with a very quick plan in terms of deciding what our response is going to be to the North American free trade deal, which will no doubt include Mexico now.

I suppose the question really will be, what are we going to do? We can't stand in the middle of the road and have this economic truck run us over, as I said earlier. You have to address yourself to it. You have to address yourself quickly and effectively. What is your specific reply to this question?

1720

Hon Mr Philip: Let me respond in this way, Mr Ruprecht, and I think you've asked some really good questions. In your earlier question -- if I'm misquoting you or misrepresenting you, please interrupt -- you seem to suggest that because we were at the table with the other provinces suggesting improvements, as we heard from Mr Wilson about the various difficulties he was having in the negotiations, somehow we were cooperating.

We had a decision as a government, as did every other Premier and every other minister of industry and trade, whatever our belief. We had said at the beginning that we thought a NAFTA was not a good idea to work towards, that we were still trying to digest the free trade agreement and that to move ahead with a NAFTA agreement was premature. Furthermore, we said that we were very anxious to get a GATT agreement and that we thought a GATT agreement would give us a lot of protections that would help us if a NAFTA agreement was ever reached.

We were at the table arguing for Ontario industries and we were arguing because we thought there should be certain protections in there. Some of those things we were able to get. We don't have the full text yet, but some of those changes that we asked for we were able to get. At the same time, I think you have to recognize that one of the things we have asked for and the Premier has asked for is that we think there should be a full, public debate, not just so that we know all the downfalls of NAFTA but also some of the advantages, if there are advantages, and some of the opportunities for Ontario. We've asked for a first ministers' meeting before any initialling or signing of the document is in place and we've asked for a full, public debate.

As you know, both Mexico and the United States have to have it ratified by their congresses or by their parliaments. We don't have to do that. Mr Wilson has assured me that he's going to take it to Parliament, but we think a full, public debate -- we do not have a veto as a province over the federal government, as former Premier Peterson suggested he had over free trade and later found that he couldn't do anything, but --

Mr Ruprecht: Excuse me. Let me interrupt you for a minute then. What are you saying? You're saying that there is a --

Hon Mr Philip: -- we do want a full public debate on it.

Mr Ruprecht: Yes. You're saying that there is a possibility, actually, that there may be some changes in this agreement before it gets signed?

Hon Mr Philip: Yes. I think the Americans, through Congress and indeed the Mexicans through their Parliament, may not even ratify it. That is a possibility. It is a possibility that it could be defeated in the US Congress. There are many opponents in the United States to the free trade agreement with Mexico, and I'm sure you've read some of the headlines.

Peter Sadlier-Brown can comment on this, and also Katherine's here. She's been closely working with our colleagues in Ottawa.

I'd be happy to give you more detail on it.

The Chair: I will get guidance from the questioner. Do you wish additional information?

Mr Ruprecht: I wouldn't mind hearing from them in terms of at least one other question. Do they think there's still a possibility that the Prime Minister, Mr Wilson or the federal government may make a change in NAFTA and permit the province actually to make some recommendations? If that is the point, I'd like to hear that.

The Chair: Welcome, Mr Sadlier-Brown. Please proceed. You've heard the question.

Mr Peter Sadlier-Brown: What's happening with the agreement right now is they have the outlines of an agreement and lawyers are at work in Washington finalizing the text. As they deal with the many complicated and separate components of the agreement and try to bring it together into a unified whole, they're going to run into some inconsistencies. So there will be some changes that take place in the actual formulation of the legal text.

That's something that the lawyers will work out and that is something that is between the three countries. The province would not be involved in that. We don't know some of the very important specifics about the agreement right now. For example, we're expecting --

Mr Ruprecht: Excuse me for interrupting, but you said the province will not be involved in this whatsoever. Is that correct? Am I assuming that? In other words, we will have no input here to change anything except maybe making some very minor adjustments in terms of the legalities.

Hon Mr Philip: I think that's not fair to the federal government. The federal government has been seeking the advice constantly of the provincial governments and we've been giving them that advice. But when push comes to shove at the end of the day, then the federal government is the one constitutionally that has the sole jurisdiction over proceeding with it or not proceeding with it. They will listen to the opposition parties in the House of Commons, I'm sure, the same way as they'll listen to the public and to feedback from us, but the ball is in their court, and as a province we don't have any veto.

Mr Ruprecht: Just one last point and that is -- not a question -- I would simply recommend very, very quickly that you look at this agreement in detail and work out a possible plan or some action orientation the province can take so that we're ready for it once it comes down the pipe as being signed, so that we're not being caught with our proverbial --

The Chair: Go ahead and say it. You got yourself into it.

Mr Ruprecht: -- pants down.

The Chair: Thank you, Mr Sadlier-Brown. Mrs Marland, please.

Hon Mr Philip: Believe me, the hours --

The Chair: Mrs Marland, please.

Hon Mr Philip: I thought I'm allowed to respond to a question.

The Chair: No, you're not. It was a fast comment. I would like to recognize Mrs Marland. I can continue to shave more time, but I'm afraid I have to allow this process to go on a little faster than it's going.

Mrs Marland: Just a comment on the subject of NAFTA. I do want to recognize and give the minister full marks for his attendance and his presentation to the meeting on NAFTA that was sponsored by the Mississauga Board of Trade earlier in the year. He made a very important contribution to that two-day meeting on that subject.

Minister, I have a concern involving the role played by the Ontario Development Corp in the sale of Summerhill Press and, with due respect, I don't expect you to have the answers.

Hon Mr Philip: I just happen to have something for you. Can I give you my briefing note and save some time?

Mrs Marland: Of course, I have to put my concerns on the record first. I notice in the estimates, on page 66, that under loans and investments there's an increase of 506% under that agency, which I assume is the Ontario Development Corp.

We have had a slight problem with getting information back from your office and getting responses to letters that I've had on this, which is unusual, because your ministry has the fastest turnaround on correspondence since you've been there and I think the opposition members acknowledge that, usually within 30 days, whereas I'm still waiting after seven months for a response, even an acknowledgement, from the Minister of Education on another matter.

So I also give you full marks for turnaround, but something's happened here and we actually have a situation where Mr Michael St Amant, who I understand is the chief operating officer of the Ontario Development Corp, had promised at a meeting on June 29 to get back to a Mr Greig, who is an author.

Mr Minister, you know as well as I do the rules about orders and notices questions. I placed an orders and notices question, 403, on June 29. Despite the rules of the standing orders that I get within 14 calendar days either an answer to the question or notice that you need more time or an indication that you decline to answer, I haven't had anything. I tell you that so you are aware of what's going on.

In the case of Mr Greig, he is an author who is awaiting payment of his outstanding royalties and the reversion of his publishing rights. He isn't able to write or earn any other income until this matter of the sale of Summerhill Press is resolved, so for him, as an individual, it's a very serious matter. But also, we feel that because of the questions that I've had to ask about this sale, we are really beginning to wonder about the competence of the Ontario Development Corp in dealing with this particular matter, this particular sale. I know when you are briefed about them you will be very concerned about it also.

1730

First of all, the main question arises out of the substantial loss of $400,000 by the Ontario Development Corp in loan guarantees to Summerhill Press. We wanted to know what guarantees or securities were provided by Summerhill principals that would justify a loan guarantee of this amount by the ODC and what activities were undertaken by the ODC to monitor its investment, ie, its loan guarantee with this publisher.

What monitoring policy does the ODC have concerning its investments in or loan guarantees to all businesses? How does the ODC ensure that the companies it supports will utilize the funding provided to them in an ethical and professional manner? In the case of Summerhill, for example, rights to certain books were sold unbeknownst to the authors.

What amount of money was received from the sale of Summerhill assets to Breakwater-Gilpen? Following the demise of Summerhill, were any other moneys recovered by the Ontario Development Corp from any sources, loan guarantees by principals etc, to offset this $400,000 loss? On what basis did the ODC feel at liberty to sell Summerhill Press as a going concern, without the benefit of an audit of both assets and liabilities?

Why was Price Waterhouse retained to sell Summerhill Press instead of this activity being handled directly by ODC? What was the fee charged by Price Waterhouse for this undertaking, and why did the ODC and Price Waterhouse ignore one author's written request to Price Waterhouse that the rights of his books not be sold as part of the Summerhill package? As a result, this author has been unable to publish subsequent editions of his book and has lost a substantial amount of income.

Why is the author who is owed the largest amount of money in outstanding royalties being asked to "settle his claim," ie, to reach a compromise on the amount owed to him, when the ODC has not disputed other authors' claims put forth by the Writers' Union of Canada?

What has been the cost to the Ontario Development Corp and the government of Ontario of the decision to sell Summerhill Press as a going concern rather than place the company in receivership? What initiatives have been undertaken to prevent this type of activity, for example, selling assets without properly auditing assets and liabilities or preventing the consequences from happening in the future? More specifically, in the case of failing publishers, how will authors be protected?

Hon Mr Philip: Do you have any more questions? First of all, let me thank the member for her kind initial words.

When I became Minister of Transportation, I demanded that any letter, not just from an MPP but those from mayors or federal members of Parliament, get a priority, because they were representing constituents, and that no letter take more than three weeks' turnaround time. I've done the same thing here and we've changed around our correspondence unit. Any time I get a letter that is more than three weeks, I have to have an explanation as to why it's taken more than three weeks to answer the person.

I remember signing off the response to your order questions. Since staff are not around, or maybe some staff in the Clerk's office would have difficulty getting it, I will get it for you tomorrow and supply it to you first thing tomorrow morning. I remember signing it. So you will have it.

What you're dealing with is a number of fairly complicated legal matters. ODC has worked closely with the writers' union in verifying various types of claims that may be made, and settlements have been made. This one is particularly different for a number of reasons. I'm going to ask David MacKinnon to come forward and explain some of the circumstances within the bounds of understanding some of the legal complications of this, but there are problems about whether manuscripts have been received or not received and some other things that complicate this. I believe everybody else has been paid off. Is that not correct, David?

The Chair: Mr MacKinnon, please identify yourself and your position with the ministry for purposes of Hansard.

Mr David MacKinnon: I'm David MacKinnon, chief executive officer of the Ontario Development Corp.

I should say that my recollection is, Mrs Marland, that all of the questions you did list have been dealt with in the response the minister referred to and, I think, dealt with quite substantially. I wonder if I could just comment on the specific circumstances of this case. The reason why one particular claim has not been honoured is because there was a prior --

Mrs Marland: Is this Mr Greig, just to be clear?

Mr MacKinnon: Yes. It has not been honoured because there was a prior dispute between him and Summerhill, before the Price Waterhouse engagement, as to whether that was a valid claim. There was an exchange of lawsuits between them. The other principal involved in Summerhill at that time, the one with whom we have had discussions throughout the piece, is of the view that it was a substantial and serious dispute. Our view was that there was no explicit basis to pay that claim, given the nature of that dispute.

I should say additionally, if I could comment briefly on Price Waterhouse, that we have been advised throughout this entire process by legal counsel, both inside and out, and by the best advice that Price Waterhouse and indeed our other external financial advisers have been able to provide. Our actions have been consistent with that advice. The legal advice, I believe, has come from the firm of Lang, Michener. Our view is very definitely that we have been governing ourselves in accordance with the requirements of law and in accordance with the best financial advice available and that we have generally displayed a willingness to honour moral obligations even when we did not have a very strict legal obligation in respect of several of the other claims.

I think, if I could comment as well, that in cases where there is dissatisfaction with our methods of dealing with customers -- and we have something like 24,000 or 25,000 customers of all kinds follow our programs -- there is a variety of measures we have used to verify the substance of complaints made against us. We have actually used all of those techniques here.

I guess in summary the advice from our lawyers and Price Waterhouse is that the nature of the prior dispute between this particular author and the company makes it very difficult for us to see a basis for paying out this particular claim.

Mrs Marland: Mr MacKinnon, I'm obviously not in a position to evaluate your answer. I'm speaking as the shadow cabinet person for Culture and Communications; that's why my involvement in this matter. I think when my executive assistant spoke to Mr St Amant, on 19 July, she was told that he would have a response to Mr Greig by the end of that week or the beginning of the following week. You may very well have a valid reason for the position that you've taken based on the legal and other advice that you've received, including from Price Waterhouse, but the thing is, we can't deal with the people in Ontario in an unfair way.

Mr Greig may be right or wrong, but he's entitled to a response to his questions. I think that my job and what my staff are trying to do has been somewhat thwarted by the fact that nobody seems to have been following up on Mr Greig. We did go through the Minister of Culture and Communications initially, and you're probably familiar with the questions that I asked in the House to Ms Haslam. I feel very strongly that the taxpayers of Ontario have lost $400,000 in this sale of Summerhill Press. I suppose I feel somewhat disappointed that it was sold to a company outside of Canada.

If I'm not correct, I'd like to know that. But I think we're going to find we have such a blatant situation where we have a lot of struggling authors and other people in that category in our province, in our country, and we have an obligation to do as much as we can for them. If this individual is wrong, then I think at least there should be a letter saying, "This is our opinion based on our information." I don't think ignoring the matter is the right way to handle it.

1740

Mr MacKinnon: Mrs Marland, if I could say, my understanding is -- I've seen the very extensive file that exists on this matter; I've reviewed it personally prior to these hearings -- we've replied to Mr Greig on several occasions. The substance of our views, I think, is certainly known to him. I don't --

Mrs Marland: Excuse me. I haven't even been able to get a reply within the required time of 14 days to an Orders and Notices question, so that speaks for itself, I think.

Mr MacKinnon: In respect to the question about this particular person, we have replied to him on several occasions. Our staff have met with him on several occasions. I want to assure you we've devoted extraordinary resources to this file, to be sure not only that are we being fair to this individual but that we are being fair to all the others involved. I must say that our staff have met with the Writers' Union of Canada and the Ministry of Culture and Communications. We've been heavily involved in managing this file and we've gone well beyond the legal requirements on us in terms of honouring the claims of authors. We feel we have handled this matter substantially, and from time to time the process of seeking advice has occasioned perhaps longer than normal times in terms of responding to specific details.

But I have reviewed the file personally. We are very concerned about these authors. We have, I think, dealt with this individual honourably and substantially. I think the questions the minister will be presenting in the response to your order paper request will demonstrate that to a significant degree.

Mrs Marland: All right. In view of the fact that we have very little time to deal with all the issues related to this ministry, I will thank Mr MacKinnon for his response as an interim answer until I receive the minister's response to my formal question in the Legislature. I don't want to take up any more of our critic's time for this ministry.

Hon Mr Philip: You'll have it tomorrow, so if you want to ask further questions tomorrow once you have the answer --

Mrs Marland: I accept that. That's great. Thank you very much.

Hon Mr Philip: You're more than welcome.

Mr Carr: The time, Mr Chair?

The Chair: About four or five minutes.

Mr Carr: If I could, and I said this yesterday when I was in the chair, Minister and some of the people in the ministry, there's very little time for this, even though it might seem like a long time when you're answering questions. If we could, once I get the answer, not be impolite, because I know some people jump in and so on. If I do say thank you or whatever, I've gotten the information I need, so they don't jump in and be impolite and so on, and that'll keep it a little bit easier.

On page 37 -- and this one's to you, Minister, although maybe some of the other people would like to look at it -- you talk about the international offices under the description of activities, "Operates international offices in strategic locations around the world whose objectives are to provide commercial intelligence," and it goes on to say, "and encourage businesses to select Ontario."

I'm interested in your viewpoint, because I know you've done a lot of travelling around the world. I've seen the schedule of some of the places you've been to, as have the Treasurer and even the Premier, of course, spent some time. What formal mechanism do you have to receive feedback from those offices about what people are saying in Ontario?

The reason I ask this is, as you know, when the ministers come back and Floyd kiddingly says in the House one day, "Oh, they just think Ontario's great," there are some major concerns of investors about what they're saying about Ontario. Do you have any formal process of knowing, as this is one of the activities of these offices, about what they're saying about Ontario, for example, in the New York office? How do you know what the international community is saying about Ontario, to then judge what we need to do? How does that work?

Hon Mr Philip: There are a number of ways I know. First of all, I have some excellent staff out there who do report directly to me, and I'm sure Gordon Gow will want to add some information to what I say, because he's been able to bring back some very large contracts for Ontario. But I had some concerns, as I do with every program. Whenever I have anything to do with any program, I'm concerned about value for money. At the present time we are having a study done of all of the international offices, an evaluation, with some constructive proposals. When I get that, then I will certainly share it with you, and I'll also tell you what we intend to do about it.

I get a lot of feedback at all times. I get feedback from my federal colleagues. Michael Wilson of course travels around the world, as well as I do, and some of my other federal colleagues and cabinet ministers. I get feedback from the other cabinet ministers who tend to be economic cabinet ministers. I'm talking about Elmer Buchanan, who has agricultural people in our offices. I'm talking about communications, which is becoming an increasingly more important portfolio in terms of telecommunications technology, and we are selling that around the world. I get it from Shelley Martel, of course, and so forth.

I've been meeting with a lot of what would be called ethnic chambers of commerce. In your riding one night I met with the Arab Canadian chamber of commerce, which consists not just of immigrants from the various Arab countries but also people who may have been here for 200 years but are doing business with the Arab countries. So we get all of that feedback.

Mr Carr: What I'm thinking of is something you may be able to table with this committee saying, "The New York office is getting this feedback," that the concerns are in this area. You can even do it: "The good things about Ontario are this, this and this."

What I'm worried about is the feedback of what they're saying. I appreciate the verbal things Michael Wilson talks to you about, that "Boy, they're saying great things about us in Iran" or whatever, when they're over there for the detail. I'm thinking in terms of our being able to take the proper action. Are there any formal things you could give us from the international offices, a report that goes to the minister that says, "On this item," whether it be labour on the negative side or something on the good side -- that could even be good; I don't know -- "this is what people are saying."

Is there anything we can see? As you know, the problem is that you've got a lot of people saying negative things. People saying positive things is the government's chore. Is there anything you can show to us from these offices saying, "There are concerns in this area, but this is what the office is saying"? If one of the activities is to provide feedback -- the exact term is "strategic commercial intelligence" -- what is the process you could give us to show us what the people around the world are saying about the province of Ontario? Is there anything at all?

Hon Mr Philip: I'm going to ask Gordon Gow to respond to this in some detail. I meet regularly with the agents general and others who are responsible for the various regions, and they report to me on personnel matters which I don't feel free to share with you, for obvious reasons; we learn about the strengths and weaknesses of some of our people out there. But we are having what we think is as close as possible to a scientific or empirical -- "independent" is a better word -- evaluation, and when that is available, I'd be happy to --

Mr Carr: Is there any process where we can get something definite saying, "This is what's happening," as that is one of the --

The Chair: Mr Gow, please identify your position with the ministry.

Mr Gordon Gow: My name is Gordon Gow. I'm president and CEO of Ontario International Corp and the acting Deputy Minister of international trade and international relations.

Yes, there is. We have adapted over the last couple of years a very extensive electronic mail system which brings the messages to us almost immediately. You can visualize that when the person out in the field does hear of a concern or needs an answer, it's immediate to us to get back to that person to give him the proper answer. It's within that process that we collect the data which we can in fact feed back into the system to say, "Consistently, we're getting this message" from a particular jurisdiction, whether it be Japan or Italy or Germany, or it may just be in one specific area, which we will then address with our policy people and the rest of the ministry. It can be made available.

1750

Mr Carr: Would it be possible to get some of that information on what people are saying?

Hon Mr Philip: It's very voluminous, but if you want to come to our offices, we can let you look through some of that. We don't want to reproduce a lot to ship over to you, but we'll make appointments for you to go through some of this.

Mr Jamison: Mr Minister, it's a pleasure to see you here today. My question will be coming, but I've got some lead-in to the question.

All of us here today understand the type of difficulties we've all experienced in North America. Specifically, here in Ontario those difficulties are not any different. There are a number of factors or contributors, and I think we could all understand that these are factors and contributors: the recession itself, coupled with the restructuring going on in the province; free trade I and II. It's like Jaws I and II; the films get worse as they go on.

Many of the people who commented today talked about investing. I read just today in the Financial Post, for an example, "Foreign Investors Rush In." It's an interesting article, but I'd like to quote just in the lead-up to my question:

"For the year to date, foreign total net investment in Canada is $17.1 billion" -- and you've indicated we lead in that area -- "well ahead of the comparable period for 1991, which saw a record pace of $10.9 billion.... Statistics Canada noted that there was a surge in foreign interest in bonds issued by the province of Ontario and Ontario Hydro.... `It's a sign of a bit of confidence in the Canadian economy,' Cross said. Foreigners also increased their holdings of Canadian stocks by a margin of $68 million in June" alone.

Understanding that, I think we are still hearing a lot of rhetoric back and forth here.

My question deals with de Havilland. As a government, as a minister, you've had to deal with some very significant, very difficult problems. De Havilland is in the aerospace industry. In other countries, of course, governments support those industries. It's a very difficult situation, very difficult to find the appropriate buyer, as we heard as the deal went on. My question deals with the area I'm most interested in: how a large industry like de Havilland -- not just the specific jobs in de Havilland, but de Havilland itself -- would have a tremendous impact on smaller businesses associated with de Havilland. Putting that deal together provided again a positive situation, but what would have happened? What would be the effect if de Havilland had been left to go under without government support? Most governments in the world support their space industry.

Hon Mr Philip: De Havilland accounts for something like 10% of the aerospace industry in Ontario, so it's a pivot. In 1991, there were about 29,000 -- my deputy's given me the real figures -- 28,300 workers in the aerospace industry in Ontario. If de Havilland had gone down, it would have been a major problem to us.

One of the things you probably know is that with me it's a very emotional issue. When I spoke to the de Havilland workers on the 50th anniversary of their union, I was filled with memories of the kinds of decisions that were talked about around my dinner table when my father came back from Chicago at the time another government decided to trash the aero industry, or the Arrow industry, in Canada. He had three job offers, two of them solid offers, so luckily, he decided to stay on in Canada. But we lost so many people, so many skilled workers, and I almost became an American. I probably would have been in Congress trying to fight the NAFTA agreement on behalf of workers down there.

It's a real emotional issue with me, and I felt very strongly that we should save de Havilland. As a kid, I learned to walk over aeroplanes, and personally I love flying, so it is a very important issue for me that we save that company, and I think it is competitive. I think it's got good products, and it's a pivot to our aerospace industry. That's why, quite frankly, we're putting so much effort into the aerospace industry here. We think it's important for a technologically sophisticated society to have a strong aerospace industry. Hopefully we will win the international space university. We're working very hard on that and we think we're in the top contenders, and we're putting a lot of sector dollars into that field.

Mr Jamison: I have another question for you. I found that answer to be saleable, on my part anyway.

Hon Mr Philip: We have Martin Walmsley, by the way, an award winner in the whole industry, hiding away in the corner back there, but who deserves a medal every year for all the work he does in the space industry. Probably some of the technical questions we'd better send back to Martin.

Mr Jamison: I can understand it was a very difficult situation.

My second question deals with the area you've given me responsibility for, the area of small business. We should all be aware of the impact that particular sector of our economy has and how entrepreneurship in this sector is something that should be promoted in this province, more today than ever. Our economy didn't rely as much as the United States economy on entrepreneurship until recently. I think entrepreneurship is very important. Could you give me and the committee your view on the importance of the development of entrepreneurship in Ontario, considering the structural changes that have happened to our economy and the need to further promote the ability of people to become entrepreneurs or develop that skill? And it is a skill.

Hon Mr Philip: In addition to praising Martin Walmsley in the aerospace industry and the aero industry, particularly de Havilland, my deputy deserves a medal for negotiating that deal. I wouldn't want him not to go recognized when we're recognizing others.

As you know, I think you have to start entrepreneurship with entrepreneurship education; you've got to start off in the school system. In the same way, if you want engineers, you've got to start teaching little girls that mathematics and science -- that Dr Bondar is a legitimate role model they can aspire to.

One of the things I'm most enthusiastic about -- Peter Friedman, who's sitting back there, knows what a strong promoter I am of the program -- is our entrepreneurship education program, even to the point where I want to go out and teach a few of the courses just to get the experience of working with the kids and seeing how it works. We have expanded our entrepreneurship education program tremendously, and I'm so proud that since 1990 Ontario has experienced a major expansion of entrepreneurship education.

You've got to teach skills, you've got to teach attitudes. I learned some of those attitudes and some of those skills working and consulting in the United States and working with people like Sidney Parnes at New York State University, and Dr Gillespie, who worked on the US space program. I was convinced that if I ever really had any power, I'd want to do that kind of thing wherever I was.

We've got so many programs for grades 7 and 8 and grades 11 and 12 in entrepreneurship, such an expansion of the program, and we're getting more and more educators involved in the program. In the last school year, it's estimated that 15,000 students completed the grade 11 and 12 entrepreneurship program. What I find exciting about it is that it doesn't just teach people how to be successful business people but teaches them creative thinking skills that allow them to be the very best creative scientists, the very best teachers, the very best innovative people, the very best innovative farmers, no matter what field of life.

I'm going to ask Peter to say a little bit about the program and allow him to talk a little bit about some of the new things that we're doing in it. I love to go around giving speeches on this and meeting the teachers who are doing it, particularly meeting the kids involved.

The Chair: Please introduce yourself and give your title to the committee.

Mr Peter Friedman: My name's Peter Friedman. I'm the executive director of domestic and small business operations.

In reviewing the field of entrepreneurship, this is one area where Ontario can be very proud. We've heard a lot of negatives here and there. We are recognized as leaders in Canada, certainly, and one of the leaders in North America in entrepreneurship education, at the public school and high school level particularly. We are asked regularly to speak all over the United States on the subject and we're asked to send our materials to Latin America and Europe, because five or six years ago we initiated a fairly long-term process of trying to get entrepreneurship with young people.

We have, as the minister mentioned, an extensive program, with 50 boards of education in Ontario at grade 7 and grade 8, where we bring role models into the classroom and they're able to impart some of the family values and the creativity and other things that are involved in running your own business. That's gone over very well.

We now are introducing a new version of that, which is called Visions in Technology, where we're bringing technical entrepreneurs into the classroom, so the young people will be able to understand not only what's involved in running a business but what's involved in attending university and getting involved in engineering and science programs, and how that leads to an interesting life in a technical business in the future.

Then, from grade 7 and grade 8, we have an extensive program, as the minister mentioned, in grades 11 and 12, where 15,000 students this past year have taken courses in entrepreneurship, not just to start a business but to be able to understand the concept of creativity.

Another important aspect of this is that the way this program is taught allows a different way for teachers to be able to interact with students. One of the problems in the high schools is dropouts, because of the yes-no or black and white answers. This allows teachers to be able to broaden on that subject, and I think it's going very well with students, families and teachers. Next year we expect every high school in Ontario to be carrying it and over 30,000 young people to be involved in the program.

The Chair: Thank you very much, Mr Friedman.

I do recognize the hour, and the Chair has announced that we would adjourn at 6, but if I might, as a personal note, I recall when the Liberal government announced the entrepreneurial program in the House. It was severely chastised by a dear friend and close colleague, Mr Richard Johnston. I personally would like to commend the minister for retaining that balance and bringing that view to his ministry now that they're the government.

This committee now stands adjourned until 1 o'clock tomorrow, and we will continue towards completion of the estimates of the Ministry of Industry, Trade and Technology.

The committee adjourned at 1804.