1991-92 BUDGET























Monday 26 August 1991

1991-92 budget

John Young

Kingston Insurance Brokers Association

Vince Maloney

John Spragge

Ontario Federation of Anglers and Hunters

Lin Good

Cataraqui Co-operative Homes

Claire LeSage

Agape Association

Justice and Peace Commission of the Roman Catholic Archdiocese of Kingston

Paul Gervan

Ed Agarand

Ken Ohtake

Kingston Waste Not

National Farmers Union

Shaheen Hirani

Kathee Hutcheon

Cecilia Brooks

Wilfred Day

Kingston and District Labour Council


Chair: Hansen, Ron (Lincoln NDP)

Vice-Chair: Sutherland, Kimble (Oxford NDP)

Christopherson, David (Hamilton Centre NDP)

Jamison, Norm (Norfolk NDP)

Kwinter, Monte (Wilson Heights L)

Phillips, Gerry (Scarborough-Agincourt L)

Sterling, Norman W. (Carleton PC)

Stockwell, Chris (Etobicoke West PC)

Sullivan, Barbara (Halton Centre L)

Ward, Brad (Brantford NDP)

Ward, Margery (Don Mills NDP)

Wiseman, Jim (Durham West NDP)


Cleary, John C. (Cornwall L) for Mr Phillips

Conway, Sean G. (Renfrew North L) for Mrs Sullivan

MacKinnon, Ellen (Lambton NDP) for Mr Sutherland

Villeneuve, Noble (S-D-G & East Grenville PC) for Mr Stockwell

Wilson, Gary (Kingston and The Islands NDP) for Mr Wiseman

Clerk: Decker, Todd

Staff: Anderson, Anne, Research Officer, Legislative Research Service

The committee met at 0914 in the Holiday Inn, Kingston.

1991-92 BUDGET

Resuming consideration of the 1991-92 provincial budget.

The Chair: I call this committee to order, being August 26 here in the beautiful city of Kingston. We have some new members with the committee. I would like to introduce them.

I would like to welcome John Cleary and Noble Villeneuve, Mr Sterling, Mr Wilson from Kingston and Ellen MacKinnon. Welcome to the committee.


The Chair: The first presenter is Mr John Young. You have 15 minutes for your total presentation. Try to save some time at the end for questions from the three parties.

Dr Young: How long should I allow for questions?

The Chair: If you run the whole 15 minutes, then no one has a chance to ask any questions of you.

Mr Villeneuve: That is a mixed blessing.

Dr Young: You have a written document from me, but I may condense that just slightly in the interests of time. I want to say simply that I am speaking as a private citizen and in that capacity I want to comment on the recent Ontario budget. I did an introductory course in economics when I was an undergraduate, but I am certainly not an economist and I am going to leave discussion of that kind of data to others.

I want simply to comment on the budget in terms of its effect upon people. First I need to say that I do not like deficits. I do not think any of us do. I do not think that Mr Laughren likes them. I believe that he too would prefer to present a budget that showed a surplus. I know -- I think all of us know -- that government debt eventually has to be repaid. All of us eventually have to cover our liabilities.

That being said, I do think that there are times when a government needs to run a deficit. It does not run a deficit that puts the province in such a financial straitjacket that it can never repay its debt. But any government, including the present one, has to consider three things when it strikes a budget. First, what ought it do, given the platform upon which it has been elected? Second, what kind of society do we as the citizens of Ontario want? Third, what can we afford as a province?

I want to say again that while I do not like deficits, I do think that this was just the time for a budget of the kind Mr Laughren presented. If we had the per capita debt of the federal government or of some other provinces in this country, Mr Laughren could not have brought down that kind of budget and we in this province would have had to suffer more in the current recession or depression -- you can choose which of those terms you like -- than we have.

Because of this province's financial situation, Mr Laughren had the opportunity to shield us from some of the worst effects of the current economic situation in our country. He chose to do so. In making that choice, I believe Mr Laughren was faithful to his convictions and to the platform from upon which he and other members of Mr Rae's government ran.

I still remember hearing the details of Mr Laughren's budget late in the evening of budget day and two things struck me that day. The first was the size of the deficit -- that struck us all. The second thing was that it was the most honest budget that I had heard in a long time. As I note here, I was grateful for his honesty that night, and I still am. I want to applaud him for it.

All of you on the committee are politicians and you know better than I that we live in a time when politicians are not much respected. Indeed, the public esteem for politicians is very low. I believe one reason for that lack of support is the feeling many of us have that politicians rarely level with us and tell us just how things are. They try to paint a rosy picture that puts them in the best possible light. They also seem to believe that we, the members of the general public, will be too dense to see what they are doing. What struck me about Mr Laughren's budget, as I read it and read about its details and listened to commentary about it during the several days that followed its presentation, was its candour.


I recognize that a government's budget, like an individual's budget, is composed of the best estimates that you can make. In a government's budget, like in an individual's budget, events can conspire to reduce revenue or to increase expenditures in unexpected ways, but even as I try to be realistic in my estimating, I expect a government in its budget to do the same.

One of the things that much impressed me about Mr Laughren's budget was his honesty. His estimates about revenue, both in the current fiscal year and in future years, seemed to be realistic. His honesty and his realism contrasted sharply for me with the last several federal government budgets. While I disagreed with Mr Wilson's approach, I was less troubled by his taxation and spending policies than by what seems to me at least to be the basic dishonesty of much of that budget. It presented estimates for the future, guesstimates about inflation, about interest rates, that were simply unrealistic to a plain, ordinary citizen. When I looked at that budget and looked at the figures upon which he was making his estimates and listened not only to economists but also to persons of widely differing positions on the political spectrum, all of them were saying the figures would not wash, and Mr Wilson had to know that. It makes you wonder why one would do that kind of budget. Does he think all of us do not understand?

I use that as an illustration not to rail against the current federal government but simply to make a point about Mr Laughren's budget. In my estimation at least, he has tried to be realistic in his estimates not only about this year's deficit but also about the deficit over the next few years. I would much rather have a provincial Treasurer who gives us those kinds of projections -- projections that show a higher deficit than any of us, including Mr Laughren, would want -- than a Treasurer or a Finance minister who will not deliver the straight goods.

I think that Mr Laughren and the other members of his government, all of you, will have a difficult time over the next few years. The Canadian economy is not in good shape. I hope it will improve -- we all do -- but that improvement almost certainly will not be great. This government has promised to work, will have to work, to bring the deficit level down as it has promised. Mr Laughren and his colleagues, by the way they have handled this budget, have restored some of my faith in politicians as persons you actually can trust to treat you as an intelligent human being and to tell you the truth.

I want to speak about this budget from another perspective as well. Up until now I have simply talked about my own reaction to its honesty, but along with comments about its realism, I might have added that it was also honest in trying to put into practice, so far as possible, the platform upon which this government was elected. That too is a sign of honesty. But at the end of the day, budgets are not just figures or numbers about which you and I and all the rest of us can argue and score political points. Budgets impact human beings very directly, because the figures on the page are translated into very human services that are or are not delivered to those of us who are residents of the province. Those figures are not remote or abstract. They have very real effects. They shape the kind of society we will have and the kind of Ontario in which you and I will live.

At least as I see it, Mr Laughren that day had two choices. He could continue to deliver roughly the same level of services that existed under the previous Liberal government, knowing that to do simply that in the current economic situation would greatly increase the deficit. After all, with unemployment greatly increased and welfare rolls greatly expanded, fewer people were working, paying taxes, and more people had need. One choice was to do exactly what he did, namely, to do what he could in a limited way to respond to the needs of people during this time of recession or depression. Just to maintain existing services in the area of medical care, education and social services would have required expenditures close to what this budget has projected; that is, just to maintain services at existing levels. For as I have said, the present economic situation has put far more people on the welfare rolls. There has been some new spending in this budget, but not very much.

Mr Laughren had one other choice. It has been taken by some other governments in this country. It would have been to balance the budget during this time of recession or depression, to balance it by cutting expenditures at the very time when the citizens of this province have the greatest need for those services, at a time when more and more people have lost their jobs. He could have cut back on social services. He could have cut back on educational funding and thereby forced municipalities to raise property taxes in order to simply maintain services. He could have told hospitals to do with much less and thereby forced bed closures, maybe even hospital closures.

Budgets, at the end of the day, are more than numbers. We can say, and I think all of us do, "We'd like a balanced budget." We can say, "Forget the current economic situation, just balance it." But are we prepared for the cost of that, for the kind of society that measure would produce? Do we, for instance, want to see about a quarter of the hospitals shut down or a quarter of the beds? Do we want to see schools closed or classes with 40 to 50 students per teacher? When I was in high school I grew up in a different province and I had that situation, 45 kids in a class, and it is not a good educational model. Do we want to drastically lower the delivery of social services and welfare funding for those families who are genuinely needy? That is almost all of them who receive welfare.

I, at least, do not want to see those steps taken and I do not think most of us do. But also, at least, I see no way that Mr Laughren could have balanced his budget in the present economic circumstance without making those kinds of decisions. Those who advocate a balanced budget at this point in time will also have to tell us what kind of cuts they would make and where they would make them to bring that about.

I am just going to speak personally. You can read in greater detail later about something that was very much shaping for me. In the late 1970s and early 1980s, I spent five years living in Dallas studying. It was a wonderful program, but those five years certainly changed me and how I looked at society. They made me think about the kind of society in which I wanted to live and the kind in which I had grown up in Canada. That society is one like the one we have now.

There was something that used to happen in Dallas about once a year that, to a Canadian, is simply inconceivable. A poor couple -- and they would usually, though not always, be Mexican-American because there would be the language component as well -- would have a baby or a very young child become critically ill during the night. The frantic couple would go to the nearest hospital and it would be private, and the hospital, of course, without their having private health insurance, would not treat their baby. The staff would be helpful in the sense of giving them directions to the nearest public hospital, because that would usually be across the city somewhere. The couple would try another close hospital and they would try four or five before they finally reached a public hospital, by which time their child would be too ill and the child's life could not be saved.

Inevitably, as these things would be written up in the paper, there would be a lot of outcry. It was always the case that if that nearest hospital could have treated the child, the child would have lived or at least would probably have lived. That situation, as I say, if you are a Canadian, is simply incredible. In the literal sense of that word, it is unbelievable.

One reason why I am here today is that I do not want to see us move to becoming that kind of society -- not meaning to suggest that any of you want that either. But if Mr Laughren had balanced this budget, as some people have advocated, then we would be there. I think a balanced budget in the current economic time would have required us, by way of cutbacks, moving a ways down that road. Frankly, I do not want to see that. It is not the kind of Canada in which I grew up, in another province. It is not the kind of Ontario that I have had the pleasure to be part of for the last six years.

I want to thank you very much for your time and your attention.

Mr Cleary: I will be very brief. You told us a little bit about your background and where you have been. I want to know what you are doing now.

Dr Young: As of a month ago, I joined the faculty of Queen's Theological College. Prior to that I was in parish clergy.

Mr Sterling: I am somewhat concerned that I think you are misled to some degree, because no political party in the Ontario Legislature has advocated a balanced budget.

Dr Young: Certainly. Okay. I may be mistaken in that, but it has been my understanding that Mr Harris, the leader of the Progressive Conservative Party, has put forward a proposal recently in speeches saying that we need to have a balanced budget at least once every three years. Further, there have been many presentations which have been made in the public press which have been very critical of the level of the Ontario deficit, suggesting that it should have been, though not balanced, you are correct, very close to that in a way that would talk about the kinds of cuts that I think would quite devastate social services.


Mr G. Wilson: This is my first time on this committee, and if all the presentations are at your level, it is going to be an impressive undertaking. I like especially your points about the honesty. You say here the Canadian economy is not in great shape and hopefully it will improve, but you are not sure that it will. I was wondering if you have some ideas about the best way of proceeding in this uncertain time.

Dr Young: I am not an economist and in that one I am uncertain. I think there are going to be some very difficult decisions ahead. With the kinds of budgets Mr Laughren is looking at, his projections of revenue, as I say, seem realistic. I think we have to try, as best we can with resources we have, to maintain the level of services we have.


The Chair: Mr Bickerton, from the Kingston Insurance Brokers Association, would you come forward, please. You have a total of one half-hour.

Mr Bickerton: I appreciate the opportunity to appear before you today. I am standing in for Mr John Vogelzang, who is the current president of the Kingston Insurance Brokers Association. Unfortunately he is ill and unable to attend, but I have been asked, as past-president, to do his presentation.

The circulations that are going around are a copy of the text which I will read to you, as well as a copy of the survey, which was commissioned by the Kingston Insurance Brokers Association, by Queen's University school of business specifically to address the insurance-related aspects of what my presentation will consist of. First I will address a couple of points towards the end of my submission. I got the call on Friday afternoon to do this and I was not exactly sure what you wanted to hear, but I made a few notes specifically about the budget.

Every business person with whom I have spoken since the budget was announced has come out absolutely, totally against such colossal deficits. I and the fellow business people with whom I have spoken, and a lot of regular, down-home folk in my small town, are just completely revulsed by the kind of debt that we are going to be inheriting at the end of the current mandate. We just cannot in any circumstance conceive of such a colossal loading on our kids. We have heard it from the federal level ad nauseam and now we are getting it straight in the ear by the provincial level, and everybody to whom I have spoken is really fed up. That is point 10 in my submission. We really feel -- I feel personally -- very strongly that the government should be run like a business, where losses are simply unacceptable. I am, by my own admission, a little bit right of almost anybody you can imagine, but I really feel strongly about that.

I will address more specifically the auto-insurance-related situation, about which I have spoken with Mr Wilson on a couple of occasions, and we have another meeting shortly. This does not appear to have been given a great deal of credence in the budget preparations. The cost to the consumer of taking over this industry has been estimated to be at least in the hundreds of millions, if not billions of dollars, depending on how many court actions the government is faced with.

I will press ahead, though, and just go through this in logical order.

The Queen's University school of business survey sets forth a very high rejection level of public involvement in the auto insurance business. I guess you have to step back and ask why Premier Rae is attempting to take the business over. It was meant to be in the interests of the consumers of insurance. You will have to bear with me a moment. I think it is page 4, table 1. If you look at the number of people who expect lower prices, it is in the centre category of table 1; 28% of the population that we surveyed indicate they expect to see lower prices. The next box down, right immediately below that, says that the people who expect improved service constitute 15% of the polled people. Well, 28% and 15% do not look to me to be a public reaction that they are going to be better served by a government program.

I will not bore you with the rest of the details. I will leave you to look through that on your own, but there appears to be an overwhelming rejection of public ownership by the people we polled in Kingston. That was done, by the way, as you will see in the preface to the report, only of automobile drivers. We did not poll people on the street who might not have anything to do with automobile insurance.

Item 2 in my report talks about the job losses that you might have already read about. We have a potential of 8,000 net jobs lost in the province, 4,000 from insurance companies and 4,000 from brokers and agents. In Kingston alone, by a rather accurate headcount among the various offices, we have 100 female jobs, highly trained jobs, many single-parents earners, but highly trained people who have been in the industry an average of almost 10 years, which is a significant tenure, and those 100 jobs are going to be sacrificed. There is absolutely, unequivocally no question about that. I would dare say that if another industry in Kingston with 100 of the female population was being terminated, it would definitely get someone's attention.

Equity in business: We as brokers and agents develop over many years an equity value in our business, some of which heretofore had been placed on the automobile insurance component of our particular businesses. I have set out in item 3 some of the variations that have occurred since the September election. That has netted out to an erosion of the equity value of our brokerages to the tune of about 30%, depending on the size and mixture of business within that brokerage office. It is anywhere from 30% to 60%, in fact, but in the city of Kingston I have been reasonably conservative in estimating that value loss to be something between $8 million and $10 million. That is just as though the government expropriated and stole 35% or 40% of your RRSP fund, because we as brokers rely on that equity value eventually to sell and fund our pensions. I do not imagine there are a lot of people in this room who would appreciate having 30% or 40% of their RRSP fund stolen.

The local chambers of commerce have come out strongly on the side of leaving the thing in private hands. Mayors of local cities have definitely come out strongly opposed to public takeover. Of 21 mayors interviewed by brokers across the province, only 6% favour public ownership, while 88% prefer private ownership.

Consumers basically are largely content with the Ontario motorist protection plan, which has some foibles in it, there is no question, but it has been a learning curve over the last 12 months since it has been implemented. There are some changes that should be implemented in that program, but consumers are much more content -- and I see them every day; some of them have had very serious claims -- with the situation of the OMPP than they had been under the old tort system where litigation goes on ad nauseam and no one benefits, basically.


The Ontario Insurance Commission now, I am sure many of you realize, controls all the pricing and the product wording of all the automobile insurers in the province. That is a government-run commission which must approve rate increases, decreases and any policy wording changes. Within the mandate of the current government it has total control over the automobile insurance industry now from the standpoint of wording and price. By wording, I mean whether it is fault or no-fault and what the individual endorsements and things on policies say. There is absolutely no question that the government currently, without spending one farthing and without costing one job, can change anything in that auto insurance commission. It can affect the price, it can affect the coverage, and it does not cost any jobs and it does not cost any money. I would ask that your committee record the fact that there does not have to be a ballooning of what is already a nauseous amount of budget deficit to accommodate this situation.

Item 7 is a bit of speculation on my part, but I have in fact heard it from one insurance company executive, and there are obviously two sides to the issue, but if the free trade lobby by the US insurers does not work and is rejected at some hearing, some US insurers are contemplating lobbying their own political people to reject at the border the reciprocity that now exists between US insurers and Canadian insurers in recognizing each other's jurisdiction. When you cross the border now, you do not have to buy any insurance; your Ontario slip is perfectly valid in New York state or wherever. It may be idle speculation, but if an awful lot of insurers get shot square in the ear and lose their value of business in Canada, there is a lot of speculation that the reciprocity may come to a quick end and you would be crossing the border as though going into Mexico, where you have to buy Mexican insurance. I do not know if that will ever come to pass, but it is certainly a threat that is there.

On the next page, Insight Canada research shows that 21% of Ontarians feel prices will be lower under a public system and 16% say service will improve. Those numbers are not terribly different from the Kingston numbers that I read out a few moments go. Certainly neither one is an overwhelming recognition that government plans are going to be better. If Premier Rae is suggesting that this program will be for the benefit of consumers, I am not sure which consumers he means. If he is talking about 16%, then that is certainly not a majority.

Again, last week I heard within the industry that there is already work going on to procure public office space for the new public corporation. I do not know if that is true. I am sure those in the places of power must be aware of those things, but there is a lot of rumour going around that it is already under way.

Item 9 you may look at as a bit controversial, but in early stages of the development of eastern Europe it was thought that a multidistribution outlet system was terribly inefficient, and I would submit that Premier Rae is looking at the automobile insurance industry as being inefficient because there are 100-and-some-odd carriers in Ontario, all representing executive salaries that could quickly be eliminated and so on. That same thought process went through eastern Europe in thinking about bread, bakeries and what have you where there were so many on the street that it was inefficient: "Let's make one." I think in the past week we have seen the ultimate conclusion of that wisdom. I would ask that this be looked upon carefully.

I have not heard anyone speak positively about the budget deficit financing. The accumulation of debt is just totally beyond belief. One year you may look at a $9-billion or $10-billion deficit as being something that, if we were going to war, may be necessary. But let's not do it for five running years. It is just beyond any concept of reasonableness.

Premier Rae, in a recent interview by Maclean's magazine, and it is also in your enclosures, stated in answer to a Maclean's question: "In making policy, do you ever have to say no to the activist groups that helped elect you?" Rae's reply was: "That's a reality. We are elected to represent the broadest public interest. Even if there is something that has been in your program for a long time, if you reach a conclusion that it's not in the public interest to do it, then you have a responsibility to say, `I've changed my mind.' That is the sole test, not what was in your program 10 years ago or what you said in a speech in 1985. You end up disappointing some people who worked for you. And you have to say, `I'm sorry.'"

I would submit, ladies and gentlemen, that this is a situation where the insurance industry is coming to you and saying, "We don't have any question telling you that we're an activist group and we're a lobbyist group and we're a self-interest group. All we're doing is saying leave us alone. We don't want your money. We don't want you to spend public money. We don't want to lose all these jobs. We want you to save money and save jobs and leave us alone."

Surely that is better than having an activist group coming along and saying, "We're desperately out of money. We need umpteen jillion dollars, and we're going to create 34 jobs out of it." Surely Premier Rae's own quotation should come to mind that says: "I'm sorry. I've changed my mind. It might have been valid 10 years ago, but it isn't any more. We can't afford it. We have $10 billion on our back now, and we don't need any more."

Thank you for the opportunity to come and see you today. I would like to entertain any questions that come up.

Mr Sterling: I will ask the first one. Thank you very much for making your presentation. In my talk with my constituents in Carleton and eastern Ontario, their reaction to the budget is the same as yours.

With regard to the auto insurance issue, my party does not disagree, of course, and you know that. We are on record as such. We think it should be left in private hands. I do not think government needs to go into anything more than it already is. Perhaps we are already into too many things that we cannot run properly. But this government has, for two elections at least, maybe three, made the auto insurance issue a cornerstone of its election, perhaps in 1987 more than in 1990. Given the political constraints that they have, what would you recommend to Premier Rae? When I heard Peter Kormos carry the can, so to speak, when OMPP came in -- the Ontario motorists protection plan -- he stood for 24 hours and said that his party, now the governing party, would restore the right to sue. Premier Rae has to find some kind of compromise, and in a constructive manner. What would you suggest he do?

Mr Bickerton: That is an excellent question, and I think there are a couple of things he could do. Bringing back -- and this was Mr Kormos's lobby -- the entitlement to tort and the ability to sue is a very expensive procedure. It is well-documented that it could cost up to 30% more premium if the insurers were to bring back the ability to sue. You say, "Why didn't the rates go up 30% before?" They did not go up 30% because nobody would allow it. The competition would not allow it and the political lobbying would not allow it, but companies were bleeding to death because of the tort thing.

I believe the best situation would be some movement in the level of what is called the threshold, and I think maybe you are all familiar with this threshold that is a bit of a nebulous thing right now. There are not a lot of cases that we know of yet that are going to penetrate the threshold. It is possible that some movement in the threshold would accommodate a lot of the perceived inequities of the no-fault system.

It has been argued that the level of compensation on a weekly basis is inadequate. I would submit that the level of Ontario compensation is vastly greater than any other jurisdiction in Canada, despite what a lot of people have said. There is no other jurisdiction, British Columbia, Manitoba and Saskatchewan included, where the benefits are anything like in Ontario. If you want to bump them up, bump them up, or index them. Do whatever you want, but leave it so there is some profit motive. Profit is not a four-letter word. Even the way I spell profit, it is not a four-letter word, and it should never be considered a four-letter word. If profit is bad, then run out and take over all the bakeries and take over all the steel mills and wipe out profit.


Mr Kwinter: They are doing it.

Mr Bickerton: And see what comes down the pike. It ain't pretty. So mess around with the coverages, if you wish. Be seen to be fairer to people by indexing them or whatever, but having done that, be prepared to accept higher premiums, because there is no free lunch. Nothing comes for nothing.

Mr Jamison: It is an interesting document that you read today, Mr Bickerton.

I would like to have you expand, if you will, on point 11. Point 11 reads, "I feel that the government should run more like a business where losses are unacceptable and not tolerated." Knowing that the budget has been out since April 29, that the document has been well looked at by various organizations, including your own, I would like you to expand on that to give this committee an idea about where your thoughts are on the budget and how we could accomplish budget levels that are either balanced or greatly reduced at this point in time, understanding that this government, by standing still, would have incurred a tremendous deficit in the first place. I glean from your document that there would have had to have been many cuts, and I wonder where, in your mind, those cuts should have taken place.

Mr Bickerton: I am not a politician and I do not know the absolute details of the budget spendings, but if you are faced with the situation where the expenditures are growing -- let's just nail one, which is public welfare. I would have a very difficult time voting for anything but some reduction in the ability for people to get welfare. I know in our small town, there are an awful lot of welfare recipients who really are not entitled to it. They are welfare recipients because it is convenient, and frankly, that violates me.

I prefaced my comments earlier indicating that I was a little bit right wing, and I do not apologize for that. All I am saying is that if you are faced with revenues less than your expenditures, you have to chop them off. And you may have to be seen to be unacceptably brutal about it, but the fact of life is that if it is not there, do not spend it.

I think that you have to realize, as politicians, that you are public trustees. You are not elected to throw money up against the wall. You are elected to spend my money and your money in a prudent manner. Now, if I, as a trustee of a public purse, or a trustee of your insurance premiums, which I am on a daily basis, overspend my trust money, do you know what happens to me? The government puts me out of business. In one stroke of a pen, I am out of business. I think that is great. I think that is a super idea. Just as we have seen the colossal debacles in the banks where they, as trustees of people's moneys, have gone into things that have gotten them in big trouble, I think those people should be hung out to dry. I think you, as politicians, have to appreciate that you are public trustees of our tax money, which includes your own, and to waste it in this manner is ridiculous.

Mr Kwinter: I want to make an observation and ask you just one question. In 1987, I think the one issue the NDP campaigned on was public car insurance. It was synonymous with the NDP campaign. Their popular support went up one point in the 1987 election.

During the hearings that Coulter Osborne had and all of the things that went on with public car insurance, the NDP kept putting forward its plan. When Peter Kormos filibustered, he had a plan. It would seem to me that if they really had a plan and if I were leading the NDP, the first day back in the Legislature of this new government I would have put it on the table and said, "Here's our auto plan." They obviously have not done that, and they have delayed it and delayed it, and now they are saying maybe in October.

So obviously now that they have had a chance to come to grips with reality -- and I am not saying that in a negative way, but that happens to a lot of people when they are not in government; they suddenly come in and see what the numbers are -- they are having some problems.

As someone who is in the business, what savings do you see effected by the government taking over the business?

Mr Bickerton: I have not been able to hear anyone tell me, with repeated, pointed questions, where the savings will be. If you look at the expenditures that insurance companies make for non-claim-related things -- and I do not have the numbers with me, unfortunately, but I am pulling on memory here -- I think it is less than 20% of the premium dollar that goes towards administration. That includes sales commissions, that includes head office administration. It does not include claims and claim-related costs. Claim-related costs account for over 80% of every claim dollar. So if you take the 80% and the 20%, it would come out somewhere around 100%, plus or minus a few loss years.

If you take the sales commissions out, which are between 10% and 12%, 11% and change, on average on auto insurance, you are left with about 9% or 10%, give or take a bit of room for slippage, to administer the insurance companies' moneys.

If a government program could save 10% of that, I would say it has done very well. Chop out all the big executive perks, chop out a few extra office rents, but be brutal about it, which governments tend not to be, and I think I just commented on that earlier. If they could save 10% of the 10%, they are saving one percentage point out of your premium and mine. But if you pay $800 a year in premium and you are saving $8 or $10, or say $20, I do not think that would make me in favour of public ownership. I have never, ever seen a government take something over and do something more efficiently and less expensively than private enterprise.

One of the things that would occur immediately is that all of the staff would be unionized, and all of the staff would be centralized in one location, probably Toronto or somewhere like Toronto, where you would be paying a lot higher-based salaries than we are out in the various diverse areas we are located in now, together with the fact that you would have this complicated and expensive union structure to go through. We do not underpay our staff now. We are very competitive, but we are not paying Toronto salaries in Kingston and Gananoque, I can assure you of that, nor should we be. If we were paying those salaries in metropolitan areas, we would be paying a pile more than we are now, and I do not think in anybody's wisdom that the government could go into this program expecting to save 10% of the 10% administration cost. But given that they could, they would save 1% of premiums.

I would say that is a total waste of time. Unless someone else can come up with a better idea on the specifics of where they are going to save money, then I do not believe they will.



The Chair: The next presenter is Mr Vince Maloney. Welcome. You have 15 minutes for your presentation as an individual. You may proceed.

Mr Maloney: Thank you. Maybe I can qualify this: I am representing nobody but myself. I am a retired industrial worker and over the years have been involved a bit in politics, municipally and provincially, but I welcome this opportunity to speak on the first budget of the NDP government.

I am here specifically to address the members on the government side, because what time I have I wish to devote to people I trust, who will listen and who will decide if my suggestions merit consultation and action. If I were Conrad Black or any of the thousands of corporate welfare bums who pay no tax, but under this budget will pay some for the first time, I would do the same as they did, namely, contact my Tory or Liberal servant in the Legislature and tell him or her to kill the budget.

During my working career I had occasion to participate in many protests in Queen's Park and on Parliament Hill. These demonstrations were also economic in nature, against high interest rates, in support of prices for farmers, help for the poor when they marched to Queen's Park, plus many others when the real Tories or the ones who wore red ties were in power.

We all know how fruitless these journeys were, so finally the people of Ontario spoke on September 6, 1990. They had been completely ignored except on the way into the voting booth. I wish to state proudly that I am one of the many thousands who have donated, through my membership, 92% of the operating budget for the NDP in the case of the federal party, and I believe roughly the same holds for the provincial party. I have heard accusations of the opposition parties of dominance of the NDP by the union movement, but the election expenses authority has announced that for 1990, the unions' contribution to the NDP was 7.5%, a total of $111,862.10.

You have lived up to my expectations, and this is the first of many budgets to come, I am sure. The Tory party would have heaped the cost on the backs of those least able to afford it; witness the Tories in Ottawa. Single parents, or farmers, almost broken by free trade and the GST, municipalities trying to cope with exploding welfare rolls caused by Michael Wilson and Brian Mulroney, all of those realized the need for an expansionary budget to stimulate the economy.

Mr James Frank, chief economist and vice-president of the Conference Board of Canada, praised the budget as a confidence builder that will help Canada emerge from the recession. Mr Frank argues that only $640 million of the $9.7 billion is new programs. Most of the balance results from normal increases in education, health and the recession's effects on revenue and welfare spending. He adds, "Had measures been taken to hold the line on operating expenditures, which rose by $5.2 billion, or on capital expenditures, which increased by $1 billion, not to mention the $3-billion deficit you received as a gift from the previous government, we would have had a much deeper and prolonged recession." John Kenneth Galbraith likewise praised the NDP budget as being the best in North America. By the way, he was the architect of the New Deal in the United States under Franklin D. Roosevelt in the Great Depression.

As a retired union member, as a farmer for the first 42 years of my life now enjoying monthly pensions first obtained for Canadians by the Co-operative Commonwealth Federation in 1926 and by the CCF-NDP since then, I congratulate you on this, your first budget. Pay no heed to the wailing of the fat cats. All you have done is to step on their tails, and the wail is a natural reaction. For the first time, a measure of fairness was introduced. It is unfortunate that it is being delayed by conservative elements who wish to maintain their special status. However, a conservative is a conservative is a conservative; whether wearing a red tie in Tiananmen Square or the Kremlin, they oppose progressive thinking and action.

Stay the course and be able to demonstrate by your governing that Ontario under the NDP cares for all the people and that taxes will be based on the ability to pay. Your task will be much easier when we elect a federal NDP government in two or three years, but in the meantime keep up the good work.

Mr B. Ward: I think these hearings offer an opportunity for individuals or organizations to express their opinions on whether they feel we are heading in the right direction. For this area, what impact do you feel the budget has had, if any?

Mr Maloney: I was nine years in local government and, as everybody knows or should know, the welfare spending is split three ways and 20% is put up by the local municipality. It cannot be refused, even if people wanted to refuse it.

I feel that when we consider municipalities and boards of education, library boards and hospital boards, had this budget not been brought in, it would have resulted either in many drastic cuts in programs or in vastly increased taxes.

Mr B. Ward: Property taxes.

Mr Maloney: Yes, and property taxes. I think the province has a better rating to borrow money than a municipality or hospital board. It probably gets it a little bit cheaper than they could. It went out on a limb for it and I think it is about time people started giving it credit for what it did.

Mr Villeneuve: I wonder, would there be any political aspirations, or do you belong to a political party?

Mr Maloney: I have run for the NDP three times. I have been a card-carrying member of the NDP since it was formed and I was a CCF voter before that.

Mr Villeneuve: You mentioned that for 40-some years you were in agriculture, a farmer, and you are a retired industrial worker. Are you aware of the increase to agriculture in the last provincial budget?

Mr Maloney: I believe it is somewhere around $100 million, from all aspects. There is assistance from high interest rates and some others that I have read about.

Mr Villeneuve: Would you know what that is and was as a percentage of the previous budget?

Mr Maloney: No, I would not.

Mr Villeneuve: Would you be disappointed if I told you it was 3.5%, less than inflation? And yet you are happy with that?

Mr Maloney: I look at it as probably $100 million more than the last government or the last three governments gave.

Mr Villeneuve: You see, it is not quite $100 million. A question to Mr Laughren in the Legislature, which he was not able to answer for me the day I asked it -- he answered it the following day -- was that almost half of that $100-million increase -- and it is not quite $100 million -- $50 million of that was federal money that is being administered by the province for agriculture. The only new program, and it is an old, recycled program of the Liberals, is $50 million in interest support. The total increase for agriculture year over year was 3.5% and it is less than inflation, so I am kind of pleased to hear that you are happy with that. I am not.

Mr Maloney: I think probably you are not including the increase in the farmer's property tax that would have taken place had this budget not been brought in with the grant system to the hospitals and all these others.

Mr Villeneuve: It is all-inclusive. Those are all figured in -- 3.5%.

Mr Cleary: Just to follow up on what my colleague said, the agriculture people did not get a big increase this year in the budget. Now that you have retired, are you going to be a candidate again in the municipal election this fall?

Mr Maloney: No, I do not expect to. I am 71 years old and it is about time I folded up my tent.

The Chair: Thank you for your presentation. The committee will recess for five minutes, until 10:15.

The committee recessed at 1010.



The Chair: The next presenter is Mr Spragge. You have 15 minutes for your presentation.

Mr Spragge: I will start by reading what I have here and possibly go on with a couple of remarks and then leave you lots of time for questions. No budget, least of all a government budget, is ever simply a matter of numbers. A budget is a statement of values and priorities, a list of the things we want and the things we are willing to give up. Budgets are descriptions of the future we want for ourselves, not only the future we want to build for ourselves, but the people we want to be.

A government budget must be something more than this. The virtues of a good government budget are prudence, justice and fortitude. The justice of this budget is evident, as is the fortitude of this government in sticking to it against the slings and arrows of outraged opposition. Whether or not a budget is prudent depends on whether it encourages the economic development that will sustain the community. The most common charge against this budget is that it fails to do that. Indeed it has been said that the budget will drive business out of the province and that by attempting to justly distribute the wealth of this province the government is reducing the wealth we have to distribute.

The first and easiest answer to this charge is that it is absurd. The businessmen who say they are going to take their toys and go home if we do not play by their rules may be able to pack up and leave the province themselves, but they can scarcely hope to move Ontario's natural resources or educated workforce. Beneath this surface absurdity there is a deeper area: the assumption that productive capital which business leaders can move around is the essential source of economic development. To understand why this is no longer so, a short sketch of the history of capital and business may be in order.

If there was a golden age of capital, the Middle Ages must surely have been it. The principal form of productive capital was land, and land was revered. A block of land was described in the same words we use to refer to virtue, as an honour or benefice. Those who were entrusted with land on behalf of the community were referred to as the nobility. On the productivity of this land the entire community depended and the result of crop failure could be catastrophic: mass starvation, political collapse and epidemic disease.

Yet this capital was so important to the community that those who held it and worked on it were accorded little freedom. The lord of a manor could no more turn the land into a housing estate than the villeins who worked it could leave. Lord and serf alike were woven into a complex web of obligations to the land and the larger community.

The golden age of the capitalist was the age of industry, of Blake's "dark, satanic mills" on which the power and wealth of Europe depended. The mill owner was not caught up in obligations to his workers. Indeed, the new owning class did not need to involve itself in the production process at all. They could profit from the operation of machines they owned without ever having to know what those machines were. But as the productive machinery of society grew more complex, the knowledge required to operate the machines and efficiently distribute the goods grew steadily more important. The new value of information was emphasized by the need to end the waste of raw material and pollution, which is the result of inefficient production. These needs stimulated the development of complex tools to capture, process and use information efficiently. We have seen the beginning of the information age and we need to understand the meaning of this change.

Information is not only a vital part of the production process, it is also the most important measure of the finished product. As Paul Hawken, a business writer in the United States has written: "When a product reaches us, we do not call the information in it, in the production process and in the product itself `information.' We simply call it `quality.'" In all ways, from reducing the cost of raw materials put in or increasing the value of the finished goods, it is information that determines the ability of a company to compete effectively.

In economic terms, the coming of the information age means that the most realistic measure of wealth is not possessions, but knowledge. Today the most advanced production equipment is less important than the information required to operate it properly. Sometimes this information comes in the form of what we call software, electrical impulses recorded in magnetic oxide on a mylar disc. In other cases the information is contained in an organization, in policies, in procedures and even in individual people's habits.

Whatever form it takes, this information has a number of characteristics which separate it from the old measures of wealth. First and most important, information is far less permanent than the old measures of wealth. Agricultural land will last for ever if it is properly farmed. Heavy industrial machinery will last for decades. Information fits the description given by Peter Brook to the theatre, that it is "written on the wind."

Computer programs are typically replaced by a new version after two years or less of use. Policies and procedures are under constant review. Even the machines that process the information become obsolete very quickly. The personal computer has gone through three major phases of evolution since it was introduced only 10 years ago. The only measure of wealth in the information age that remains constant over time is the ability to learn and to adapt.

But since information is not static, it cannot be simply acquired like a capital good. Information can only be included in the production process by an educated workforce. Thus, the only reliable measure of the wealth of a nation or province is the educational level of its people. Consider the relative illiteracy rates of the United States and Japan. That one difference explains much of the trade deficit that has plagued the United States for the past decade.

This means the most important investment in economic productivity that any government can make is to improve the quality of the educational system. The new emphasis is on more efficient production in industry as part of the movement towards a less wasteful society. This means the market for the raw materials our society has been in the business of providing is likely to go on shrinking. To take only one example, the move in American cities towards recycling has already sharply reduced the demand for Canadian newsprint. We can only adapt to this drop in the demand for our natural resources by strengthening our information infrastructure, and the first and most important step in this process is to improve the quality of education in our public schools.

The harsh reality is that in the future people who are not educated are likely to be shut out of society almost completely. The word "McJobs" is often used for low-paying, unskilled jobs in the service industries, but those industries, including the fast food industry, are now experimenting seriously with automation. If the children entering school now are not given a good and effective education, they may face a lifetime without meaningful work at the end of their schooling.

Our children will not be educated by a budget, which is only a list of numbers on paper. But as a statement of social priorities, this budget at least reflects an understanding of the economy of the future. The monetary deficit we can pay off. If we put off providing the education and other services our children need, we will produce a society that is unable to compete in the international marketplace. Such a society can never pay its debts.

Mr Kwinter: Thank you very much for your presentation. I found a couple of contradictions. When you first started out you talked about the fact that businesses can take their money and move but they cannot move the natural resources which give us our strength. Then later on you talk about the fact that the use of our natural resources is shrinking and that what we really have to do is invest in our people and in our education. I do not think there is any question that education is absolutely critical, but when we talk about comparative advantage, education is important but it is not exclusive. In other words, anybody can educate anybody if he puts the resources into educating him. I can tell you the stories of PhDs driving taxicabs in Toronto because they cannot get any work. They have the education, but unless there is some facility to take that education and harness it and turn it to some economic use, it is really of no value. There has to be that balance, I agree with you.

One of the things we have to do is get our people better trained and better educated. But just to do that, without having the ability to utilize that education, without having that technology transferred, is an exercise in futility, because as I say, you are going to wind up with a lot of cab drivers who have PhDs and MAs and all sorts of other academic degrees but cannot utilize them because there is no economic use for their knowledge. How do you address that?

Mr Spragge: Obviously the issue is not simply a matter of providing education in a vacuum. You have to be sure that the education you provide is more or less appropriate and you have to do some guessing as to what the economy of the future is going to need. But there are two points here. One is that the economic issue that is paramount in education in not about PhDs driving taxicabs. That has been made very clear by writers on economics. The problem is that approximately 25% of our population is illiterate. If that does not make everybody in this room hang their heads in shame, it certainly makes me ashamed, that a province this rich has an illiteracy rate that appalling. We cannot take much comfort from the fact that the Americans are in even worse shape.

James Follows from the Atlantic Monthly has written extensively on the economic lessons we can derive from Japan. The Japanese do not have PhDs who are better educated than our PhDs. They do not have business leaders who are more brilliant. What they have is that the so-called bottom half of their society, the ordinary people on the assembly line, are all better educated than the people we educate now in our public schools and the result is that they are slaughtering us on the economic playing field.

Basically what James Follows wrote -- he was writing of the United States and I am afraid that to a great extent this goes for Canadian society too -- is that the Americans have the best top half in the world and the Japanese have the best bottom half in the world, in the sense that the Japanese have the best people coming out of high school. The Americans claim to have the best people coming out of university, and I think we come very close to matching that. The Japanese high school grads are knocking the stuffing out of our university grads, because including information on products and production processes is not a matter of having the PhD in the office who hands down directives being the best there is; it is a matter of having the assembly line worker having the best education possible that we can give him.

Mr Sterling: What is your occupation?

Mr Spragge: I am a computer programmer.

Mr Sterling: Do you work in private industry?

Mr Spragge: Yes.

Mr Sterling: You are not with the university here, are you?

Mr Spragge: No. I have acted as consultant to it fairly extensively, but I run my own business.

Mr Sterling: I do not disagree with some of the directions you are taking, but one of the concerns I have, particularly with the extended deficit financing that is proposed in the Ontario budget this year, is the ability of future Ontario governments to pay for proper education facilities and institutions. I think it now takes about 12% or 13% of our budget to service the debt and I estimate that after Mr Laughren is finished, if we go according to his statistics or his projected deficits, then in about four years it is going to take something like 20% of the budget to service the debt. While you may say we can pay it off, nobody seems to have done that for the last 20 years. You do not express any concern over that part of it. I am more concerned about providing the necessary services -- education, etc -- to the public in four or five or 10 years than I am today.

Mr Spragge: I am not a great fan of deficits either. Basically, because I had 15 minutes, I addressed the thrust of the budget, which goes towards providing services, particularly education, to ordinary people, because I think that is very important. If I had another hour, I would say that reducing the deficit is important. It has to be done basically in a way that tends towards developing a more egalitarian society, because that is what the information age also demands. The social and political effect of the information age, I think, is going to distribute power and wealth rather than allow it to concentrate as it has in the past, and the result is that government has to go along with this. If we are going to be dependent on an enormous body of information in millions of people for what is going to be the working capital of the future of this society -- it is going to be what we depend on -- instead of a certain amount of concentrated wealth, we have to adjust the tax structure to deal with that. Otherwise we are just not going to be a productive society.

Mr G. Wilson: You emphasize spending money now for educating our children. What about training? Do you see that as being a constant feature as well in the new economy you are outlining?

Mr Spragge: Training is very important, but if we fail to educate, we will not have much to build training on. Education basically means, as I understand it, giving people the tools to grasp concepts they have not encountered before. That is going to be a feature, more and more, of the process of technological change in the future. They are both important, but if we do not educate, we will find ourselves crippled when it comes time to train.



The Chair: The next group is the Ontario Federation of Anglers and Hunters. You have one half-hour for your presentation.

Mr Morgan: Thank you and good morning. My name is Rick Morgan and my title is executive vice-president of the Ontario Federation of Anglers and Hunters. I particularly want to thank you for the opportunity to appear before you and let you know the feelings of Ontario's largest provincial conservation association.

As you review the information that we provide, please bear in mind that we are expressing the collective views of 74,000 individual members and 470 clubs which actually pay fees to belong to our coalition. I think, in a broader sense, we are probably expressing the views of the roughly three million people who hunt and fish in this province, as well as many others who do neither but who care deeply about the natural world around us.

OFAH is not here today to talk to you about the total Ontario budget, the total tax burden on individual citizens or businesses or the record-high annual deficit. Others are far more qualified to address those matters. Rather, we are here to tell you about what we do know -- the way fish and wildlife management is being underfunded in this province and the way anglers and hunters are being shortchanged.

The disbursement budget for the fisheries program of the Ministry of Natural Resources is a maximum of $59.4 million, and likely less than that after in-year budget cuts are made. These dollars must cover all MNR fisheries fronts; ie sport, commercial, native, conservation, etc.

However, in direct revenue alone, and I emphasize direct, the Ontario government receives over $105 million in cash payments from just anglers. This $105 million comes directly from fishing licences and the sales taxes on purchases that we have made directly for sport fishing. The $105-million figure does not include all of the indirect revenues the province receives from sport fishing, nor does it include any revenue from the commercial fishing industry. However, even without those major other revenues, the government is making a net profit of over $45 million on sport fishermen. OFAH contends that such a profit is obscene and unfair and that the province's fisheries budget should be at least as large as its direct revenue, particularly considering all the indirect revenues and benefits which also accrue.

While the underfunding of fisheries management is not new in Ontario, it does appear more acute today, in the 1990s, when more benefits are needed, not fewer. A few examples come to mind, but please remember that these are examples only, and certainly far from a complete list.

Fish hatcheries: This year, 1991, sees the closure of three provincial fish hatcheries, including the province's only muskellunge-rearing facility. These facilities should be upgraded and/or replaced, not closed. In fact, Ontario's hatchery program needs expansion, not reduction. More localized hatcheries are required so that specific strains of fish can be used for better results.

Please bear in mind that when the government surveyed anglers about a proposed resident angling licence, anglers agreed, provided that there would be more fish stocking and more enforcement. They were very clear on that. But now they are getting less of both and they have to buy the licence to get less of what they asked for.

Enforcement: In this fiscal year, fish and wildlife law enforcement is being reduced by at least 10% from a level that was already inadequate, at a time when citizens are demanding more enforcement. Despite the high calibre of Ontario's conservation officers, poachers virtually have free reign. There are nowhere near enough officers, and they have such severe budget limitations placed on them that it is a wonder they can catch or deter the few poachers that they do. Please bear in mind that in 1989 the Provincial Auditor actually recognized shortcomings in MNR's level of enforcement, and in 1991 it will be even worse.

Coho salmon: All of the province's coho salmon program is to be stopped and replaced with nothing -- not another coho strain; not more chinook salmon, which are actually more cost-effective; nothing. Combined with the elimination of muskie stocking, Ontario is sending a clear message to Americans to stay home and to Ontarians to travel out of province to fish for the fish they enjoy.

Experimental management: The developing and testing of new, more contemporary management techniques is to stop. Lack of proper funding will therefore ensure that Ontario has locked into the status quo while other jurisdictions advance. Ontario can look on from even further behind while others prosper from the results of their experimental management.

Remedial action plans: In keeping with its election promises to do more about the environment, the current government is shifting an additional $1.5 million into Great Lakes remedial action plans, but that money is being taken directly out of the fisheries budget. It is, in appearances, a shell game shifting funds from one environmental program to another, and it was particularly devastating when the fisheries program was already underfunded.

Casual staff: Arbitrary reductions are being made in the casual or contract staff which fish and wildlife managers may hire. But in such labour-intensive fields as these, such a move can have very serious consequences. Some programs will not be delivered, others will suffer. Conservation officers and other higher priced full-time staff will need to pick up some of the slack, at both a higher financial cost and at the expense of their normal important duties.

Native issues: Likely because the Minister of Natural Resources is also the minister responsible for native affairs, a major amount of MNR staff time at all levels is being devoted to matters more appropriately funded by the Ontario Native Affairs Secretariat. Both time and financial resources are being taken away from fish and wildlife matters. Major financial and manpower allocation should be made to MNR fish and wildlife programs to offset these strains on their resources.

The minister's own advisory council has on several occasions requested that a needs list be developed at the local, regional and provincial levels. So far, presumably because of insufficient staff time, such a list has not been prepared. Therefore neither the minister and his staff nor the public can benefit from this exercise and the work plans, cost-benefit analysis and budgets that might flow from it. Some anglers believe that is intentional.

Ontario's wildlife and the habitats on which it depends are impressive natural assets worthy of protecting and enhancing. Their dramatic returns to the economy make their wise use and management excellent applications of the concept of sustainable development.

A recent federal-provincial survey entitled Importance of Wildlife to Canadians clearly shows the intelligence and importance of investment spending on wildlife. It proved that for every dollar spent on wildlife conservation programs, more than $4.50 is returned to the provincial and federal treasuries in tax returns alone, never mind the other spinoff benefits. The annual gross domestic product related to wildlife in Ontario is approximately $2.2 billion. Per capita, the average annual and daily values of hunting trips are more than twice those of non-hunting wildlife related trips.

Despite these facts, it is worth noting that, considering inflation, the Ontario wildlife budget has actually declined in recent years. It is more than incongruous that although far more people enjoy wildlife than enjoy provincial parks, Ontario's parks budget is well over double that for wildlife. Things are backwards. Wildlife is very much an important part of the environmental priority agenda for Canadians. That must be reflected in substantially increased wildlife budgets. Just as with fisheries, there are a multitude of wildlife programs which are underfunded and do not even exist due to lack of funds.

Enforcement: Of course the 1991 10% cut in enforcement also affects wildlife. In some areas of this province poaching is at market levels. The Ontario Federation of Anglers and Hunters has asked MNR to put in place a report-a-poacher hotline, perhaps a 1-800-POACHER number, but we are told MNR cannot afford it due to the size of its budget. We have requested an $800,000 grant to help us establish a province-wide reward system, but nothing has been forthcoming.


MNR's wildlife population assessment programs are abysmal and therefore the best management and benefits are not available to the people and the government of Ontario. Using moose as an example, even as important as that wildlife population is to the province and as important as moose hunting is to the economies and lifestyles of central and northern Ontario, MNR cannot make regular annual aerial surveys of the moose populations. Therefore, to a large degree, it must practise retroactive management rather than proactive management.

Although the wild turkey reintroduction program, designed to bring a native species back to Ontario, has been successful on a localized basis, it has been slow going due to lack of funds. Our federation has had to supply the bulk of the funding for the program, approximately $300,000. Now, presumably in frustration with their lack of a budget, some MNR wildlife staff are encouraging a United States organization to move into Canada so they can also try to get some funds from it.

Sensitive northern wetlands have not been evaluated and many southern wetlands are in need of reevaluation and protection. MNR has been unable to move to more integrated resource management. That is a system, like habitat supply analysis, which would permit establishing wildlife and recreational targets for crown lands while at the same time establishing predictable long-term wood product harvest levels.

As with fisheries, these are but a few examples. Many more exist. The bottom line is that an inadequate number of employees are trying to do an important job with insufficient funds.

The result of all this is that neither the government nor the people of Ontario receive the optimum benefit from Ontario's fisheries or wildlife. People do not fish as often as they would if fish stocks were more plentiful. Tourism seasons are shortened when fishing and hunting seasons are shortened due to insufficient management. Hunting camps and lodges suffer. Employees are laid off. Local, regional and national equipment suppliers suffer. Camps and resorts have vacancies when they would not if fishing or hunting were better. Poachers operate with relative impunity. Ontario residents continue to go elsewhere to fish and to hunt. Our employment levels and our quality of life suffer needlessly.

Fish and wildlife budgets not only preserve our quality of life, they are investments in industry and in tourism, with a far more secure return than promotional dollars or make-work or welfare programs. Spending on fish and wildlife programs is the guarantee of sustainable development, an assurance of a healthy, prosperous future for millions of Ontarians. The fish and wildlife budgets of MNR must be increased. We ask that this important committee give such advice to the Legislature, the Management Board of Cabinet, the Treasurer, the Premier and the Minister of Natural Resources.

It seems ironic that during the very time when all three political parties have professed to care more about the environment, MNR's share of the provincial budget has declined substantially. From the 1986-87 to the 1991-92 fiscal year, the total provincial budget has grown by almost 60%. During the same time, the Ministry of Natural Resources budget has only increased by 18%, less than the cost of inflation, and it has had to take on new tasks and new costs related to the government's native agenda. We are counting on this committee to help correct the situation and to ensure that fish and wildlife budgets receive the priority they deserve.

I would, in closing, draw your attention to the first appendix, which is a bar graph showing you what has happened with the MNR budget versus the total provincial budget over the last period of time, from the 1986-87 to the 1991-92 fiscal year. I think it is a graphic illustration of how things have shifted in this province and perhaps of why you need to pay some attention to this particular portion of the provincial budget.

Mr Villeneuve: Thank you very much for a very good presentation and for being with us to express the concerns of the Ontario Federation of Anglers and Hunters. You state that Ontario residents continue to go elsewhere to fish and hunt. Would you have statistics on that? We are all concerned about cross-border shopping and a number of things. Are we actually sending our hunters and our fishermen elsewhere than Ontario to do their sports hunting and fishing?

Mr Morgan: There is no question of that. As a matter of fact, as we sit here in Kingston and we see some of the province's best fishing, we still see people from other parts of Ontario and even this community crossing the border to fish for other strains of fish. The coho was one that I cited. Of course, people are going to the United States and elsewhere for other strains of fish as well. We have great natural resources and wide-open spaces in this province, but we do not capitalize on them by managing them properly.

Mr Villeneuve: These statistics you show financial-wise are not dissimilar to those of agriculture, where we have had a $19-million increase in the budget last year, or 3.5%. You now show slightly more than $100 million in moneys received by the government pertaining to sales of licences and sales tax on sports equipment, yet less than $60 million spent in restocking. That does not address the problem of security; our game wardens not being sufficient in number to enforce the laws and poaching running rampant.

Could you comment, first of all, on the reduction in stocking? I think that is of utmost importance, because we do not stock now. We may not feel it this year or next year, but it certainly will be felt in the not-too-distant future. If you could just comment on maybe what kind of moneys would be needed to address that problem.

Mr Morgan: In the paper we cite the example of coho and muskie, because they are very obvious, very dramatic. They have happened recently. We are getting completely out of the stocking of those species. There are, of course, people who come from all over North American and, I believe, Europe, who wish to fish in particular for muskie in this great province of ours. What is not so obvious is that our stocking program on the other species in this province is askew.

What we really need to do, instead of having large hatcheries at great expense in various areas of the province, is to have smaller, localized hatcheries using a species like lake trout, for example. There are many strains of lake trout in this province, but we tend to look at them as lake trout, so we have some large hatcheries at Harwood and elsewhere dealing with those species. But what we need to be doing is looking at areas like the big sound at Parry Sound, where there is a unique strain of fish that is in great jeopardy. We need to be taking the stocks, the eggs, of those lake trout, raising them in a relatively small and inexpensive facility on the shores of that water body and then stocking the fingerlings back into that water body to preserve the integrity of that species. That particular strain is on the verge of disappearing from this province. It is a very special large strain of fish. That is one example. It happens all over the province. We need to have small, localized hatcheries putting local strains of fish back into local bodies of water. The other thing that happens then is that people in various communities see the government in action right there putting something back into their local fishery and their local economy. They do not have to look elsewhere for something to be happening.

Mr Villeneuve: One final question: What is happening to the hatcheries that have traditionally been operated by the Ministry of Natural Resources? Are they going to be let idle? Will they be leased to someone? What, in your opinion, will happen to those?

Mr Morgan: Three of them are scheduled to be closed this year, including, as I have already said, the only muskie hatchery. Municipalities have been chasing the provincial government, the Minister of Natural Resources, on that one. God bless it, Sir Sandford Fleming College in Peterborough has gotten involved in that one and is doing everything it can to try to get a muskie-rearing program going again, but as we sit here today, that facility, instead of being upgraded, renovated or replaced, is due to be closed.


Mr G. Wilson: That was a fascinating overview of the state of the wildlife and other areas of our natural resources. As you are suggesting, if things are bad now, the possibility is that they are going to get even worse without the funding you are talking about here. In particular, the wetlands are not something everybody thinks about. I am glad you mentioned them. But even there, as you say, they have not been evaluated. Many southern wetlands are in need of re-evaluation, protection.

Actually, you reminded me a lot of the speaker just before you, who mentioned the need for funding in education; otherwise we are going to be left behind in the world economy. Here too we are going to be left behind, put at a disadvantage, if we do not keep the funding. We are already falling behind. If we do not get the funding in there, we are going to be even that much further behind.

In fact, the speaker earlier this morning said we have to cut ruthlessly if the money is not there. So we are faced with this divergence of views here, and I was just wondering what your comment on that is. It seems to us that if we do not find the money now, these things are going to get even worse. As in the case of education, in this case as well we are going to have to pay even more in the future, even if a lot of the stuff will be beyond repair. I am thinking again of the wetlands, where they have even disappeared. What is your view then of the funding and how we meet those needs now?

Mr Morgan: I said earlier that I am not going to comment on the total provincial budget because that is not my area of expertise. This is. One of the great things about fish and wildlife is that investment does bring return. We often look at the natural world and the environment as something that takes money from us, that we spend money on to protect. I commented on the federal-provincial survey that shows that for every dollar spent, $4.50 comes back in direct return to the government, never mind all the jobs it raises, all the quality of life we gain out of it, the people we do not have to pay welfare or unemployment benefits to. Indirectly, of course, if you wish to talk about education, there is the area of youth employment. As you know, when our young people in this province cannot afford the full cost of their college or university education, they can apply for supplementary funding under the OSAP program. But one of the nice things about fisheries and wildlife is that when fish camps and hunt camps and lodges operate, they are employing a great many of our young people, our university students and our college students. The money I spend when I go to that camp goes partially into the pockets of the student, and he or she no longer requires the OSAP grant from the government. It is another financial benefit, as it were, to the province. So we would argue most strenuously -- and I think the facts prove -- that when you spend money on fish and wildlife, you reap a financial reward as well as a quality-of-life reward.

Mr Conway: Mr Morgan, it is very good to see you again and to say that I really enjoyed your presentation. I would like to know a little more about the direct revenues from the fishing licence alone. I am sure we do not have the numbers for 1991. Do you know what they were for 1990? Do you know what the actual revenues to the province were from the sale of the resident angling licence?

Mr Morgan: They work out to roughly $11 million. Of course, that is an amount that originally was to be added to the base fisheries budget to cover the cost of new initiatives, things that could not happen without that money.

Mr Conway: So we could expect that in fiscal 1991-92, we are probably looking, on that account alone, at about $10 million to $12 million. Is that correct?

Mr Morgan: Yes.

Mr Conway: It is your expectation then that the money this year, like last year, is being in part diverted to other government activities?

Mr Morgan: There is no question that when the fisheries budget or the total MNR budget does not keep up with the rising cost of doing business, it has to look elsewhere to pay for things that it has paid for out of base budget in the past. There is no question that if one examines carefully the expenditures attributed to the resident angling licence, many of those are activities which were formerly funded out of the base fisheries budget.

Mr Conway: Those of us who are advocates of that licence advocated it on the basis that it would be a way to generate dollars to do, as I recall, a couple of things: to restock and to work on fish habitats. You are telling me what I think your membership in my own constituency has been telling me, that in the last couple of years those activities are in relative decline.

Mr Morgan: There is no question that out of both the base budget and the increased budget due to the resident sport fishing licence we are not able to do in this province what we should be doing or what we have done. Yes, fish stocking, habitat work and enforcement were the principle directions demanded by the public and agreed to, as I recall, by the government at the time of the introduction of the resident sport fishing licence.

Some of that is being done. I do not want to suggest that there is no benefit to the licence; there certainly is. We are not capitalizing to the fullest extent on some of the spinoff benefits, the non-financial benefits of the licence, but indeed we certainly are not realizing the benefit that we should have by adding on those funds to a base budget that is adequate. The base budget is not adequate, so the add-on does not create the benefit it should.

Mr Conway: I think you and your membership well understand the pressures on any government to meet all the expenditure pressures that are out there, but I certainly get the impression from your brief that your argument is as much now with the way in which MNR is spending the allocated resource, of whatever amount, as it is with anything else.

Mr Morgan: There is no question that we could analyse, I suppose, the total MNR budget and we would come up with our own priority list on how it should be spent. One of the things that is worth noting, however, as I mentioned in my comments, is that the minister's own advisory council has suggested that staff of MNR develop a needs list for fisheries, something started at the grass-roots level within the ministry rather than at the top, something that is based not on, "Here's how many dollars there will be; now what can you do with it?" but rather, "What needs to be done and how much will it take to do that?" Then the government can consider how much of that it can really afford to do and what the loss is if it cannot provide those things. There is no question that needs to be done.

Mr Conway: But it seems to me, by virtue of your own brief, that you have lost out in some of that. Clearly this government, and I think earlier governments, decided that greater investments in parks were merited in relative terms compared to some of the things that might be on your priority list.

Mr Morgan: There is no question that, as I said, again drawing back to the brief, far fewer people enjoy provincial parks than enjoy wildlife in this province and yet the parks budget is over twice that of wildlife. That is not to suggest that the parks budget should not be where it is, but it is to suggest that the wildlife budget is ridiculously low.

Is there a person in this room who does not in one way or another enjoy wildlife and who would not be prepared to have a greater amount of his tax dollars go to take care of the enhancement and the protection of wildlife? That should be part of any government's environmental agenda.

Mr Conway: But given the finite resources of any government, I am interested to draw you out as to what you think explains the relative treatment of parks versus the sport fishery.

Mr Morgan: I think it is safe to say that people see parks as a very simple thing to look at as a means of protecting ecosystems and wildlife for the future, but unfortunately they are a very small part of the total picture that needs to be protected and enhanced.

Mr Conway: Finally, my impression -- not so much from your brief but from reading many of your weekly and monthly commentaries -- is that MNR is a boiling pot at the present time and we should keep an eye on it very carefully.

Mr Morgan: I do not think there is any question that there is a great deal of unrest out there, and you will be hearing far more about natural resources problems in the future if something is not done about it.

The Acting Chair (Mr B. ward): I would like to thank you for your presentation, and very good questions from all parties.



The Acting Chair: Lin Good, you have 15 minutes.

Mrs Good: First, I am delighted to be here. I should explain that I represent no one but myself. I am a member of far too many groups, organizations and associations, but I am also an individual with strong political views, as my member, Gary Wilson, knows. I am also a person who feels very, very passionately both Canadian and Ontarian. I feel that occasionally it is important for individual citizens and taxpayers to record their views, because I also believe that an aggregate of all our special-interest groups is not necessarily the sum of Ontario. I think it is your job as a committee now and the job of the government, with the opposition, to represent the whole of Ontario, regardless of the special-interest groups which may have pleaded their case, including mine, to you.

It is in that context, therefore, that I chose to come as an individual rather than as a spokesman for any of the various groups that I serve with. I would also like to point out that I have not suffered unduly nor have I benefited from the budget, so I have no particular case to plead about the government budget. In fact, the only thing I think I have suffered from in the budgets recently are the annual increases in my federal income tax, and this is not the forum for that, is it? Otherwise I could give you a very impassioned plea for doing that better.

But I do support the budget. I support it in a general way as being the right approach to the financial, business, social and economic management of this province at this time, while nevertheless being heartened by the fact that the Treasurer has pointed out that it is right at this time and that you plan a longer-term strategy to cope with some of the underlying problems, particularly if we manage to get into slightly better, more prosperous economic times.

I would like to mention very briefly the points I especially like about the budget before I get to my suggestions.

I like the fact that you aim to protect and help the vulnerable: the young, the disabled, the weak, the elderly who are not able to look after themselves. I like the fact that you acknowledge that there is a recession and do not pretend it will go away on its own and that we can all just suddenly survive if only we look into the future -- that it does in fact need a different management at the moment.

I would like to record too, though, that I am not happy about any deficit and it is no use pretending that I am. I doubt if you are. I am sure you are just as unhappy with it as any taxpayers, but you have the job of somehow trying to cope with it, get rid of it and run the province meanwhile.

I am particularly worried, and I want to put this note in for those of you who may be in the higher reaches of the economy of this province, about foreign debt. I am much more comfortable with debt owed in Canadian dollars than I am with debt owed in foreign currency, because foreign-currency debt means that we are subject to either pressure or sudden change which affects all of us by forces beyond our control altogether. I believe, though on this I have not yet had time to check, that this is more important in the federal budget, where the last time I looked more than 50% of our federal debt was in fact owed to foreign countries.

That is the background, because I wanted to comment that I was therefore heartened this morning to hear that Premier Rae, who has now arrived at the conference in British Columbia, was also approaching things in the same way. It seems to me that what you are coping with, what I am coping with, to a very large extent is really beyond one province's control.

I like to know that all parties of Ontario are going to help solve the difficulty we have gotten into, because I do believe that the whole picture is what needs to be attacked. Again, Mr Laughren, in one of the speeches I read, also recognized it: that unless we come to grips with co-operative measures among the provinces and between the provinces and the federal government, unless we recognize the appalling impact of the high dollar and the high interest rates on our exports, we are not likely to solve anything.

I mention this because I get rather tired of everybody -- and you have not done that, so this does not include you, but it does sometimes include speakers -- assuming that only economists can understand what is going on. I do not believe that. I believe a lot of us do understand and that we are ready to have the truth about something for a change and not comfortable reassurances, which is another reason I liked the provincial budget. It gave me some truthful data, it seemed. I am a librarian by training. I checked it all in Statistics Canada when you presented it. You gave me the data and you told me what you were doing now and what you intended in the long term.

I just want to draw to your attention, then, the points in the budget package, not just in the actual dollars and cents. I am not going to talk to you about how to spend the budget, what to do, what to take from Peter to give to Paul, because I believe that is your job. I would like to tell you something about it, but in those details I will write.

I want to target the principles which I as a very heavy taxpayer, as a matter of fact, feel are hopeful and which I hope will be worked on, not only by the government but by the other parties as well.

1. I thoroughly support the comprehensive review of the taxation system which, it was stated in one of the many papers I have read, is scheduled to begin soon. The number of taxation methods, direct and indirect, by now defies description. Not only does it bother me that I have to pay them all, but it also bothers me that the complexity of them must take far too much time. Although I agree that public service jobs are important, I would rather they be devoted to something other than calculating taxes.

2. I would like to emphasize that I was delighted to see that the Ontario government of Premier Rae intended to develop a partnership in commerce. One of the things which -- if I may refer to Gary; he will remember -- I believe most strongly in, both in labour relations and in politics, is that it really does not work well to be confrontational, competitive and adversarial all the time. Occasionally it may be necessary, but I believe it is much better to be co-operative, to be straightforward with each other, sometimes to make compromises. Sometimes one person has to give in.

I am delighted to see that Premier Rae and Floyd Laughren both said that they intended to develop this partnership, because I believe very strongly that private enterprise brings in the money, and I am very fond of small business. Everybody who runs a small business in Kingston I am sure would vouch for the fact that I shop in Ontario, and especially in Kingston.

I like private enterprise to bring the money and I like you, as my elected representatives, to decide how to spread it around fairly so that we do not have people -- in the language my grandfather once used; he was an MP in England -- starving in the gutter. That is not my view of democracy, to have such an enormous gap between rich and poor that we do not all benefit to some extent.


Last, I congratulate whoever came up with the idea that you would look at sound fiscal management. I believe you inherited some good things and some poor things from the previous governments, with both of which I worked quite happily, because I believe always in working with the government in power, taking it that it represents the majority view, even if not necessarily mine.

Sound fiscal management seems to me to be essential in times of shortage of money. No longer is it possible to solve a problem by throwing money at it, the wonderful solution that if you have enough money you can solve it. Maybe you can, though it may not necessarily be the best use of money. Certainly I would like to ask in closing that you apply that sound fiscal management first of all to one of the main bases of our society, to one of the cornerstones of our democracy: the health care system.

This, I think, needs your attention more than any other. This is an area in which I have worked as a volunteer for about the last 20 years in various capacities on various bodies. In the report of the Premier's Council on Health Care Strategy, these volumes on health care strategy, you have a very sound working document.

I am sure you all know, but I draw to your attention if you do not, the very good summary that Ted Ball gave in his address to the McGill Club in Toronto some time ago. I know this is not a popular approach. I know that in health care it is much more popular to think that if only you can find enough money, if only you can not close any beds, if only you can add to the system instead of tackling it, that you will in fact in the end win out. I do not believe so.

I am mentioning this because increasingly I note -- there was one in the Sunday Star yesterday -- a plea to consider user fees. I urge you not to consider user fees until there has been a thorough review of this. I am not happy with user fees when I am supporting something with a tax base. That is becoming the method of getting extra money, both at the municipal level and at other levels, but in this there are so many suggestions for a thorough review of the system and perhaps a better use of the money than we now have.

I am delighted with the long-term care proposal, which shows the shift to community and prevention. I would just urge you, however unpopular it may seem and whatever passionate articles denying that you should be doing it may be printed, to start this before it is too late, to echo Ted Ball's words.

I would like to close by saying that I agree with this phrase from his speech, and I acknowledge that I get it from him, though he gets it from Herman Khan, formerly of the Hudson Institute. He says: "The message is simple. People aren't stupid. When you present them with choices, real wisdom will prevail." I like to think that is especially so in Ontario and I would like you to present us with some choices for coping with the deficit, not pretending it will go away, and beginning with something like health care.


Ms Chan: My name is Rose Chan. I am vice-president of a co-op housing project named Cataraqui. Around eastern Ontario we have some really bizarre names, like Gananoque.

Thank you for the opportunity to speak before the committee. Since I am speaking on behalf of Cataraqui Co-operative Homes, a non-profit housing provider, I will concentrate my remarks on the area of non-profit housing.

I would like to begin by applauding the Ontario government for its forthright pledge to affordable housing in this budget. As an advocate for affordable non-profit housing in Kingston, I have great anticipations from a government that states in its first budget that affordable housing is a key priority of this government. Such statements are, of course, meaningless unless they are backed up with additional budgetary allocations or specific policy initiatives. I am happy to see that this budget has both. The budget makes a commitment to provide an additional 10,000 non-profit units for Ontarians and to increase the Ministry of Housing's funding by 39%.

I would like to address these specifics with respect to the experiences of Cataraqui Co-operative Homes and also to the question of effective fiscal management that is raised in the government's budget.

In September of this year Cataraqui Co-op completed the construction of 26 European-style town houses in the north end of Kingston. The board of directors is currently looking at the possibility of increasing this number through the acquisition and renovation of an existing CMHC development and the construction of new homes in Pittsburgh township, a neighbouring municipality.

As a housing co-operative, we strongly believe that a housing community requires a mixture of income levels and housing styles that are appropriate for the local community. We feel that this is a healthier living environment because it encourages resident participation and the development of a supportive community. In addition, it minimizes the stigma that is attached to residents of concentrated low-income areas. I would like the Ontario government to encourage this type of community by earmarking a number of the 10,000 units as co-operative housing.

Since the creation of non-profit homes is publicly funded, we recognize that there is a limited pool of money available with which to build as many homes as possible. We are, however, concerned that an overemphasis on cost-effectiveness will translate into lower building standards and therefore a lower living standard for residents. We must not forget that people must live in the homes we design and build.

An example of this with our project is that we were not able to use cement block walls between the units because we did not have enough money in our budget. Although the walls were constructed to building code standards without the use of cement blocks, they do not provide a sufficient level of sound insulation. Since these conditions negatively affect the sense of privacy the residents have in their own units, this contributes to a more stressful community. This means that the residents will have to put up with a lower quality of living until the funds can be found at a later date to pay for an expensive retrofit.

Cataraqui Homes believes that it is more fiscally responsible to build quality housing from the start than to build and maintain a lowered-standards home. To ensure that the minimum building standards are enforced, we would like to see all future non-profit and co-operative homes built covered under the extended home warranty program. This is essentially no cost to the government, yet it will ensure that a consistent high standard is maintained by builders and contractors.

The Ontario government also needs to review the mechanism used to determine the cost of building an affordable home. The current system of using the maximum unit price, more commonly known as MUPs, is intended to represent the total cost of developing a particular type of home in a particular geographic location. One problem with this method is that the MUPs, which are calculated at the beginning of the year, may not reflect the actual cost during inflationary times. This means that quality of paint, tiles, wood, insulation methods, etc, are shortchanged in order to meet the MUP requirements. This in turn leads to early deterioration, which in turn leads to higher maintenance costs.

A second problem with the MUP system is that it does not take into consideration local anomalies. For example, the cost of land is actually cheaper in the city of Kingston than in the neighbouring municipality of Pittsburgh township. We would like to see that the MUPs only reflect the cost of building a quality modest home and that the cost of acquiring land be a separate item.


The Ontario government can help non-profit housing providers by releasing or making available underutilized government-owned lands. In Kingston, affordable housing could be built on the old Ministry of Transportation site or on the outer portions of the Kingston Psychiatric Hospital. Another location where land may be available is the St Lawrence College site. Land originally granted to St Lawrence College for educational purposes and now surplus to the college should be returned to a provincial land bank to meet general housing needs rather than be sold directly by St Lawrence College to the private sector.

Besides the previous examples, the Ontario government should consider purchasing suitable urban land and providing it to non-profit housing groups at a reasonable cost. We wish to note the oversight that left Kingston off the list of communities targeted for land banking for non-profit housing purposes. This list is found in the Ministry of Housing's consultation paper entitled Government Land for Housing. The Kingston urban district faces a growing shortage of land available for development, especially in the core of the city, which makes non-profit housing difficult to implement. In Kingston, Queen's University students are competing for the existing stock of low-cost rental accommodation, thus putting modest-income families at a disadvantage. We would like to see a review process which will allow communities such as Kingston to be considered for inclusion.

Another problem with the MUP system is that it does not allow for progressive environmental initiatives. Cataraqui Co-op is heated using electricity. If it were possible within our budget, we would have preferred to heat with gas, since gas is cheaper and would serve to reduce our reliance on the nuclear generation of electricity. The MUP system needs to be modified to provide extra funds for developments with innovative environmental ideas and designs that serve the broader goals of this government and of this province. As for existing developments wanting to be included in more environmentally friendly systems, such as a composting program or a wet-dry system, the Ontario government could guarantee loans with private lending institutions. Implementing these ideas would be in keeping with the government's stated goal of environmental integrity.

The budget states that effective fiscal management will be achieved through comprehensive review and evaluation of existing programs. While we agree that the re-evaluation of any system is important and valuable, the Ontario government must not allow the re-evaluation process to take up an inordinate amount of time or to prohibit the funding of more affordable homes. We need an approval and allocation process that is flexible, accessible and simple. It is especially critical in times of a recession, when construction jobs are a much-needed boost to the local economy and more house can be built for the dollar.

We wish to reiterate that a high standard of quality is cost-effective. The government can assist us by ensuring adequate funding to our efforts and assistance in ensuring quality construction and design while also allowing flexibility in innovative design methods. The local community is the best source of expertise on what it needs to meet local conditions and local community standards. It is our goal in design to ensure that social-assisted housing integrates well with the rest of the community.

We also wish to emphasize our strong commitment to mixed-income communities. We note that the analysis in the Ministry of Housing consultation paper entitled A Housing Framework for Ontario demonstrates that the economic rent is much higher than the market rent. We are sensitive to the fact that the government is subsidizing those who are paying full rents in non-profit and co-operative housing. There are those who would say that government investment should be restricted to the neediest. We think this view is self-defeating. It creates jealousies among those left out and stigmatization of those admitted. It also leads to the ghettoization of people in need.

The housing we build tends to be of moderate value, not at all luxurious. Full market rent payers sacrifice luxury for the values of co-operative living and for lower rental costs. Their presence in the co-operative is an asset. The long-term benefits to the community outweigh the costs to the government.

It should also be noted that governments subsidize rent-for-profit developments through various programs. Residents in such developments benefit from the housing support resources of the province of Ontario. Therefore, the government need not apologize for a similar policy in the case of non-profit housing.

Finally, the members of Cataraqui Co-operative Homes wish to report that we have dedicated ourselves to the development of quality, affordable housing based on co-operative living arrangements. Therefore, we find we are in full accord with the first principle outlined in the Housing Framework for Ontario consultation paper, which states that access to safe, secure and affordable housing suitable to people's needs is a basic human right. We intend to continue to work towards that end, and thus we wish to enforce the government's commitment to providing affordable housing as a key priority. I hope that some of the ideas and suggestions are incorporated in the NDP's vision for the future of Ontario.

Mr Cleary: Thank you very much for your presentation. How many months did it take you to complete your first project?

Ms Chan: From what stage? From the stage of getting allocation?

Mr Cleary: Yes, from when you started, from when you put your committee together.

Ms Chan: We started in the fall of 1987.

Mr Cleary: And when did you open?

Ms Chan: September of last year.

Mr Cleary: I understand that you have applied for another project now.

Ms Chan: Yes. There are 10 town houses that are funded through CMHC right now that we are interested in purchasing and renovating. The program that falls under will be terminated soon and we are afraid that the housing that is affordable now will be turned over to the rental market at a much higher price, leaving out 10 more units of affordable housing in Kingston.

Mr Villeneuve: How many people percentage-wise in your co-operative homes would you say do not have support for their rent?

Ms Chan: How many people are not subsidized?

Mr Villeneuve: Yes.

Ms Chan: I cannot recall the figures offhand. I think one third of them are not.

Mr Villeneuve: So basically two thirds of your residents are receiving support from the provincial government to cover their rent.

Ms Chan: To some degree. Some of those are very needy and get a fair percentage, and others do not get that much.

Mr Villeneuve: I noticed in your presentation you are quite happy to see a number of people who are not receiving support. Do you feel that the mix you now have, one third-two thirds, is sufficient to prevent ghettos and to prevent some of the negatives that you touched on?

Ms Chan: Yes.

Mr Villeneuve: Would you like to see it slightly different?

Ms Chan: No. I strongly believe that we need mixed-income communities and that we cannot concentrate all the low-income people in one area; nor can we concentrate all the high-income people in a separate area and make them exclusive.

Mr G. Wilson: Thanks for your presentation. I would like to hear what you think are some of the major factors in the growth of co-operative housing in this area. For instance, are you finding that there is a lot of interest and do you have a waiting list of people to get in? What are some of the things you could do and the government could help you with to promote the growth in this area?

Ms Chan: Right now in Kingston we are one of three co-operative developments. I am not sure of the total numbers, but I think there are maybe a little less than 300 units right now. Because we are fairly new, we do not have a waiting list yet, but I do know Lois Miller and Kingston Co-operative Homes. There are waiting lists there, and I know there are people who are interested in living in a co-operative development because the residents do some of the maintenance work. Therefore we are not putting in a lot of money towards maintenance, so we can keep our housing charges low, and I think that makes it attractive for a lot of people. One of the problems we are finding, as I mentioned in my presentation, is that we cannot find enough land to develop more co-operative housing. It just costs us too much, and it also costs us quite a bit to build a quality home that is suitable for modest-income people.



The Chair: The next person to appear before the committee is Ms LeSage, of the Paper Circuit.

Ms LeSage: My name is Claire LeSage and I have been a resident of Kingston for approximately 12 years. I am a single parent. Two years ago my mother and I embarked on a business venture together. Our business is a recycling firm. It is a new, emerging business. When we started, there was no other business in Kingston that was operating this kind of business. It is an emerging industry, and so it is wide open for all kinds of people to take part in it and it is also wide open for us to gain experience as we go. In other words, it has been a difficult process.

To give you a brief synopsis of how it works, what we do is we go out to businesses, the industrial, commercial and institutional sector in Kingston and Kingston township and as well in the Napanee and the Belleville areas, and we collect from businesses and schools. When we first started, we were collecting the paper free of charge. We would take it to our warehouse, and there we have to sort through it and pack it and then we sell it to a broker, who in turn sells it to a local mill. We were not able to sell directly to a mill because we did not have the major equipment necessary for sales of that scale.

I decided to come in front of the committee, though, because I have become aware that the tax structure that is set up for corporations is, in my opinion, unfair. It is very difficult for a small business to compete effectively with large corporations that can absorb some loss in certain areas of their business.

We would like to purchase new equipment, for which we have applied for funding, a loan. When we started the business, we did get a business loan. We had to put in a certain amount on our own, so we have been paying off the business loan while at the same time working in the community.

In the past two years of our operation we have diverted 800 tons of paper from local landfill. At a cost of $140 a ton to be hauled to landfill in the Ottawa area, that is a saving of $112,000 to the municipal government. This is what our business does. I am not looking for recognition for that sort of thing, but what I am here to say is that due to the tax structure, if our net profits are 98% of our gross profits, which is what they are, we cannot work effectively. We cannot do the business we need to do; we cannot compete against the larger companies.

We have a concern not only for hiring locally but also maintaining our service for local business. I am a graduate of Queen's University, and that was one of our first major contracts. We collect a ton and a half of paper a week from Queen's.

Now there is a larger firm that has come into town that would be able to move in on any one of our businesses simply because it can afford to offer more service, and I think it can cover its taxes more easily than somebody who is making less money for what he does. The large conglomerate that comes into town with US ties has the ability to absorb loss, but as well it can funnel its profits into the United States -- this is a possible scenario, this is not fact -- where the tax structure may be less structured.

So my major complaint that I would like to present to the committee is that the tax structure should be fair for small businesses so that we can operate effectively in the community. It is a brand-new business, and if there was some sort of method by which our business either could pay less taxes or somehow have some benefit for what we do for the community -- the large businesses in many ways are subsidized because they can get contracts for all across the country. They can work in every major city in the country, whereas a small business just starting out and having to pay the same tax structure does not reflect adequately, I do not think, the way our business is set up. By allowing the monopolies of these large companies of this emerging industry, small businesses and the local economy will suffer. Furthermore, the ethics and dignity of working, operating and starting a business account for a lot. We are concerned with employing local people. As I said, we take pride in maintaining the service we have been providing for local business.

That is the total of my presentation, very brief, but thank you for taking the time. I know it is a tough business.

Mr Jamison: Thank you, Ms LeSage, for a very interesting presentation. I commend you for the initiative of opening a small business. What we have heard today, especially in the area in which you operate, presents some problems in the area of recycling, and of course you find yourself in competition. I wonder if you could expand at all on your presentation by giving some suggestion of what you feel could be done beyond what you have already said.

Ms LeSage: One possible means that would make it fair for small businesses starting out is that perhaps profit or our revenue could somehow be a base for what we would pay in taxes, similar to the way the taxing is set up now, so that people of higher income pay a higher tax. The same for large corporations: If your revenue is over a certain dollar figure, perhaps you fit into one tax structure, and if your revenue is below a dollar figure, then your tax structure would be different in that you would not have to pay the same percentage or as frequently; set it up somehow.

To give you a brief idea of what we had to pay just for the end of the month of August, our provincial business tax was over $500, our federal business tax was over $500 and our GST was $600. That is a total of $1,690 or thereabouts. That in one month presents a considerable hardship to a small firm where, as I said, our net income is perhaps 98% of our gross. Somehow somebody has to suffer. Also, starting out in a small business, for the first year I worked without wages at all and I lived on family benefits while raising my son. It was all very difficult because I had to balance the different working styles, but I think because the tax structure is as it is, we have to pay as much, considering how much we make, as large corporations.

Mr Kwinter: I assume when you started out you got a new ventures loan.

Ms LeSage: Yes. We put up a certain amount of money and then the bank in turn gave us the --

Mr Kwinter: How long ago was that?

Ms LeSage: Two years ago.

Mr Kwinter: I cannot really comment, because I have not seen your operation, but it would seem to me that with a good accountant, and the fact that you borrowed money and you did not pay yourself wages for a year, you should not be paying any tax for some time because all of those expenses are tax deductible. Notwithstanding that they may have occurred in your first year, that should be a carry-forward so that when you start making some money you can pay that down.


Ms LeSage: It is, yes. I understand. We had a loss in our first year of $2,000. We carried it forward to the second year. We do have an accountant, but again this is another benefit of large corporations. They can afford reams of expensive accountants who are experts in their field. We have a very good accountant, but according to our books we made $6,000 in our second year of operation including depreciation, etc. We did not see a whole lot of that. Because it said on paper that is what we made, we had to pay corporate taxes. So even if we have an accountant who can claim all of the expenses and balance things out so we do not have to pay taxes, it is still, in my opinion, a benefit of large corporations. I cannot look around for different accountants to figure out the best way to do this. Our accountant's bill alone was difficult in one month.

Mr Villeneuve: As you are well aware, small business will certainly have some difficulty whenever the total deficit, the total debt of the province, has doubled. Quite obviously someone will have to pay both the carrying charges and the reduction, if ever that occurs, of that provincial debt. Are you competing with American recycled newsprint when you are selling?

Ms LeSage: No, we do not deal in newsprint at all at this time. We are strictly in fine white paper. A fact that you may be interested to know is that of all the mills in Canada, two thirds of the paper they use to produce new paper product is purchased from the United States.

Mr Villeneuve: Yes, I realize that.

Ms LeSage: So what we are doing is good for the local economy and the federal economy.

Mr Villeneuve: Do you do the de-inking yourself?

Ms LeSage: No, we do not. That is done at the mill.

Mr Villeneuve: So you are preparing the paper from the Kingston area here, bundling it and passing it on.

Ms LeSage: And shipping it out. We load it on to a tractor-trailer and then it goes to a mill.

Mr Villeneuve: You said 98% of your gross was profit. I believe you are talking about 2% to 3% of your gross being profit, as opposed to 98%.

Ms LeSage: Yes, thank you. It sounds too good.

Mr Villeneuve: I would like that business as well. Thank you.


The Chair: The next group we have is the Agape Association, Ms Diane Strong.

Ms Strong: My company is Agape Association. It is a Greek word meaning unconditional love. I counsel from a Christian perspective in my counselling practice. I am here today because I wanted to speak about social programs.

The first thing you have to know is I have never spoken out publicly about any political party in my life. I grew up in a very conservative county where you did not talk about politics; you just did it. I felt it was important that I speak today because I believe in Ontario we are seeing the dawn of a new era and I just wanted to reaffirm what I felt about that. I believe that the NDP government has spoken out and said that people are more important than profit. To me that is a tremendously important fact and the message is very important to abused women.

The perspective I speak from is as a Christian feminist. I have a four-year degree from Queen's University. I went back to school after being out 28 years and graduated in women's studies, and I have a year of theology in Toronto as well. I have been also doing private counselling for the last three and a half years, and I deal mostly with abused women or children who have been sexually abused.

I would like to begin this talk with a quote I found that I think really speaks on behalf of abused women. It is rather lengthy but I do believe it really fits our cause. It is called Women Waiting by Linda J. Bailey:

"Life will begin tomorrow, we tell ourselves. To many women, life is a game in which we are only pretending to participate. Somewhere underneath it all, we still hope we will wake up and find it was all a bad dream and then we will begin our `real life'. In this `real life' we will be happy, productive, protected, loved, creative and, of course, financially carefree. But in the meanwhile, we wait.

"We wait for Mom to do it for us. We wait for our breasts to grow. We wait for boys to get old enough to notice us. We wait to be asked to the prom. We wait to be accepted by a college. We wait for a prospective employer to call. We wait for our lover to call. We wait to be asked to be married. We wait for a raise or promotion. We wait for our baby to be born. We wait for our partners to come home. We wait for our partners to fix the washer. We wait for our children to begin school. We wait for our children to grow and leave home.

We wait for our periods to end. We wait for the hot flashes to be over.

We wait for some sign of recognition. We wait for our partners to retire.

We wait to die.

"Women are often protected from the real world and sold a bill of goods, a sugarplum-fairy, soft, safe world that has no relation to the real world at all. We have been trained to wait, to support others at the expense of ourselves, to negate our own needs, feelings and creative energy. We have been taught to distrust ourselves, our bodies and our personal power. We have been taught to not live our lives at all, but rather, submissively to serve others. We are sleeping beauties waiting frozen in a trance, for the kiss of the prince that will magically transform our lives and transform reality into the fairy tale we were weaned on. It is as if we are for ever waiting for our lives to begin."

Some women are still waiting, but others are choosing to take control of their lives and they need a helping hand from our government. To make genuine choices, abused women need three things: They need knowledge, they need freedom from coercion and they need access to alternatives. Without these three criteria we do not have genuine choice.

Due to the influence of the mass media, most women have knowledge of abuse. With shelters, housing and financial assistance comes access to alternatives. Abused women are able to make choices with freedom from coercion.

In times of restraint in the past, governments have cut social programs. Women and children, who are the major consumer of these services, get the message that they are unimportant, expendable, helpless. The NDP government in Ontario today is publicly committed to funding social programs in this budget.

A powerful message has been sent to abused women. This message is that people are more important than profit. Our government has shown integrity. The NDP government cares about the people of this province. Women will be able to survive apart from abusive relationships. Women will continue to have access to alternatives in the future. Due to the commitment of the NDP government, women will continue to have genuine choice and women in Ontario will not have to wait for Prince Charming.

That is all I would like to say right now, and if there are any questions I would be glad to answer them.

Mr G. Wilson: Thank you very much for your presentation. It certainly has put into perspective some of the constituencies in the community that have to be served by this budget, because it was suggested by an earlier speaker that in fact a lot of the people who are receiving this kind of benefit are undeserving. I was wondering, from your perspective, not necessarily whether these people are undeserving but what that does to them when they are considered to be undeserving. Is that an added burden that they have to bear?

Ms Strong: Most definitely. I was an abused wife for 18 years and I also was a victim of incest as a child and I grew up believing that I did not deserve to be happy and I did not deserve a good life. The turning point came for me in 1984 when a government program allowed me to go to Algonquin College and take a business refresher. During that time I learned to do algebra, and I had never been able to do algebra. I said if I can do that, then I can do anything with God's help. The programs were in place that allowed me to go to Queen's University and to speak to others, and I now train ministers to recognize symptoms of child sexual abuse in their churches and youth leaders. Most definitely, the biggest hurdle to get over with women is that we deserve a good life and we are not responsible for what happened to us when we were children.

Mr G. Wilson: This seems to me it is an advance, that this knowledge was not available -- it might have been available but it was not, say, accepted or not so widely accepted. I was wondering whether you see networks forming that will then promote this in the community.

Ms Strong: Many of the networks that are in place right now are reaching out. One of the most important ones, I feel, is in the courts with the mediation, and we have a pilot project in Kingston. What happens in mediation cases is each person in the case is empowered to speak. They are allowed to take control of their own lives and say what is good for them. I think that is a trend that is happening across the province. I am seeing more of it and it is very rewarding in counselling to see women stand on their feet and say: "I am not going to take it any more. I am going to do something with my life."

The Chair: Thank you for your presentation. It was quite refreshing.

The committee recessed at 1153.


The committee resumed at 1304.


The Chair: We have the Justice and Peace Commission of the Roman Catholic Archdiocese of Kingston. Welcome to the standing committee on finance and economic affairs on the budget review. If you could identify yourself for the purposes of Hansard, you may begin your presentation.

Mr Matthews: My colleague and I are here this afternoon as representatives of the Justice and Peace Commission of the Roman Catholic Archdiocese of Kingston. My name is Geoff Matthews; my colleague is John Gomes. I am chairman of the commission; Mr Gomes is the co-ordinator.

Our commission is made up of 12 members representing the different regions of the Kingston archdiocese. Members have come from as different places as Kingston, Belleville, Brockville, Westport, Stella on Amherst Island, Wolfe Island, Perth and Thomasburg. Our role as a commission is to promote understanding of Catholic social teaching within the Catholic population and to represent a Catholic perspective on social issues as we understand them to the wider community. It is in this latter role that we appear before you today.

The perspective from which we draw our point of view is a living tradition of Catholic social teaching that celebrates its 100th anniversary this year. A hundred years ago Leo XIII put out the papal encyclical Rerum Novarum, and that began 100 years of social teaching; it is 100 years old this year and it continues. The written documents and statements on social issues made by Catholic Church leaders over the past 100 years represent a dialogue between the modern social reality and the Christian gospel. As such, we believe this teaching has relevance far beyond the denominational limits of the Catholic Church and we hope this will be the case throughout our presentation today.

What concerns us regarding the budget: Many commentators have reacted very strongly to the Ontario budget deficit of $9.7 billion. While we recognize that this deficit is large, it in itself does not represent our major concern. We believe that Canada as a whole and Ontario in particular are facing something far more serious than a predictable economic downturn in the business cycle. Rather a major restructuring of the economy as a whole is taking place and extraordinary means have to be taken to minimize the devastating effects of such change on ordinary people.

We reject the idea that market forces alone will sort everything out to the benefit of all. This is patently false. As Pope John Paul II points out in his latest social encyclical, Centissimus Annus, which was released at the beginning of May of this year, "There are many human needs which find no place on the market, yet it is a strict duty of justice and truth not to allow fundamental human needs to remain unsatisfied and not to allow those burdened by such needs to perish."

We do, however, recognize that the size of this budget deficit does place a major responsibility on the government to spend the public's money wisely and in the best interests of all Ontario citizens. We have three concerns to raise regarding the manner in which the budget is spent. These concerns are in the area of health care, employment and social assistance to the economically disadvantaged.

We are all aware of the enormous pressures on the health care system in Ontario. Our region is no exception. By way of example, provincial care to the handicapped has been cut back in the Kingston area. Hospitals like the Great War Memorial Hospital in Perth and the Carleton Place and District Memorial Hospital in Carleton Place are both caught in monetary negotiations with the ministry which are affecting their ability to deliver adequate health care to their communities. This is by no means a complete list, simply a few examples to illustrate the effects on people's lives when the government is strapped for money and hard decisions have to be made.


Yet in spite of these and similar situations across the province, the government has decided, according to press reports of June 20 last, to launch what we see as the promotion of abortion throughout the province. Health care money is now available to finance the operating expenses of abortion clinics and the training of doctors in abortion procedures.

We find it incredible that the government of Ontario would make such a decision given the fact that a large number of Ontario citizens regard abortion as the unlawful taking of a human life. This action implicates the government itself in the eyes of these citizens in activities contrary to the moral principle that the right to life itself is the first and most important of all human rights.

I would like to make some addresses regarding structural changes within the economy. In our opening remarks we stated that the changes taking place in the Ontario economy today are, in our opinion, of a fundamental nature. Technological and political developments driven largely by the corporate sector have been transforming the ways of people earning their living. First of all, there has been an enormous loss of full-time, permanent jobs in meaningful work in Ontario. Second, the nature of work itself is changing to part-time, insecure patterns of employment. We believe these are the two most negative results to date of the economic restructuring that has been taking place for some time.

Unemployment and underemployment represent for us grave social evils, social sin as we prefer to call them, particularly when planned and premeditated, as seems to be the case. Pope John Paul II recently reminded us that "in the developed countries too, there are still pockets of people who are marginalized especially because of unemployment and underemployment. For these people the principle of `justice for the weakest' retains all of its timeliness." The source of that quotation is Osservatore Romano of February of this year.

Our position then is one of support for all initiatives in this budget that protect permanent jobs and increase permanent employment and encourage meaningful work. The protection of Ontario public servants' jobs, the creation of 70,000 jobs mainly in construction, the $57 million to small manufacturing companies; these are examples in the budget we commend.

However, there is one concern we would like to raise. Our reading of the budget indicates little in the way of structural changes that are needed to counter the negative impact of the economic restructuring now taking place. We would like to have seen items in the budget encouraging the formation of worker co-operatives, worker takeovers of companies that are closing viable operations and other forms of community-based enterprises. In this regard, we applaud the government's efforts to save the Spruce Falls paper mill, as well as other such initiatives it may be undertaking along these lines.

In the housing sector, we welcome the 10,000 non-profit units slated to be built, but we would urge maximum use of co-operative ventures to accomplish this task. It is our conviction that the broad sweep of economic policies in this budget should promote more democratization of enterprise involving worker, community and neighbourhood participation. The 1986 statement of the United States conference of Catholic bishops on the American economy seems to us to be particularly relevant to our own situation, and this is a direct quotation from that document:

"If increased participation and collaboration can help a firm avoid collapse, why should it not give added strength to healthy businesses? Co-operative ownership is particularly worthy of consideration in new entrepreneurial enterprises.

"In the principle of subsidiarity, Catholic social teaching has long stressed the importance of small- and intermediate-sized communities or institutions in exercising moral responsibility. These mediating structures link the individual to society as a whole in a way that gives people greater freedom and power to act" -- and a very real sense of belonging and participation. Excuse me, that is my comment away from the quotation. Going back to the quotation: "Such groups include families, neighbourhoods, church congregations, community organizations, civic and business associations, public interest and advocacy groups, community development corporations, and many other bodies...."

"New co-operative structures of local ownership will give the community or region an added stake in businesses and even more importantly give these businesses a greater stake in the community. Government on the local, state and national levels must play a significant role, especially through tax structures that encourage investment in hard-hit areas and through funding aimed at conservation and basic infrastructure needs."

On the matter of social assistance to the economically disadvantaged, this budget calls for a $215 million expenditure for social assistance reform. These reforms were outlined by the minister on Tuesday, August 20. Our position has been to support the recommendations of the Back on Track report, released earlier this year. We wrote to Mr Rae on that matter and we got an excellent reply from him. In so far as the announcements made by the minister coincide with those of Back on Track, we welcome them.

However, we have a deeper and more long-term concern about social assistance in general. Our concern arises from the fact that one of the possible outcomes of the current changes in Ontario's economic restructuring is the number of people who will be left permanently unemployed. As the Canadian bishops warned in their 1983 statement on the economy, we could be left with a new class of people, the so-called techno-peasants.

For this reason we believe that moneys spent on social assistance reform in the province should move towards creating a more just system that respects the dignity of the recipients of aid. The concrete proposal we would like to promote is the replacement of our current welfare program by a form of guaranteed annual income. Such a program was recommended by the Macdonald commission -- originally put forward by the federal Liberal government -- the same commission that recommended the free trade agreement with the United States. While the free trade agreement has in fact been implemented, the guaranteed annual income has until recently been put aside.

We are encouraged in our efforts to promote a form of guaranteed annual income to replace social welfare programs by the release last month, on July 3, of a favourable study on the subject by the Economic Council of Canada. We realize that study and discussion in the past has concerned itself with a federal program. What we are saying here is that Ontario should push ahead with its own reforms with a view to the ultimate setting up of a guaranteed annual income within the province.

Thank you for your kind attention to our presentation.

The Chair: Thank you. We have two minutes for the three parties to split up.

Mr G. Wilson: Thanks a lot for your very thought provoking presentation. You covered a lot of areas, and of course we are hearing other views of this as well. One of them in response might be, what do the bishops in particular, but say the Catholic Church in general, know about economics? Why should you be able to talk about economics in the way you have?

Mr Matthews: The Catholic Church has always brought a moral perspective to our economic views, and it is interesting that a number of economic proposals through history have been put forward. A recent one that is now becoming passé was communism, but it was popular there for a while. The Catholic Church spoke out against that, historically pointed out the flaws which I suggest we are seeing today coming true. Similarly, in the very recent encyclical of Pope John Paul II, Centissimus Annus, which was released at the beginning of May this year, he pointed out that he was not suggesting an argument based on a certain economic technique but that the Western capitalist system must not be allowed to run roughshod over the poor without moral responsibility, because it will be just as great an error as totalitarian communism has obviously been.

Mr G. Wilson: I just wanted to --

The Chair: I am sorry, Mr Wilson, your time has run out.

Mr G. Wilson: That was not two minutes.

The Chair: Yes, but divided among the three parties, and the answer was longer. I would like to thank you for your presentation here before this committee.

The first presenters, the Canadian Union of Postal Workers, did not appear at 1 o'clock. The committee is ahead a half-hour and a lot of the presenters say it is unfair that some of them walk in the room and have to present right away and some of them are not here as yet, so we will take a recess until 1:45.

The committee recessed at 1324.



The Chair: The next presenter is Paul Gervan of the East Asia Co. You have 15 minutes for your presentation.

Mr Gervan: I appreciate the opportunity to make my views known on the current budget. I am a small business person from Seeley's Bay, which is just north of here. I am also an active environmentalist in this area and have been for some years. I am a member of the NDP, to be frank with you. I support the party and this budget initiative. Beyond all that, I am someone who cares deeply about the future of this province and the future of the planet.

My reason for speaking to you this afternoon is to counter what I perceive to be very one-dimensional, shallow and predictable reporting of the budget by the media. I think that reflects itself in the public opinion we have seen, on a superficial basis, of the budget. This shallow and predictable reporting of the budget I think is understandable given the ownership of the media, whether it be the Southam group, Thomson, Baton Broadcasting or whatever. The interests of the media show themselves in the coverage of this attempt to do something different with our economic system.

The media coverage most of us have been subjected to is characterized by several myths. One of them is that business and indeed most informed opinion are unilaterally opposed to the budget. I contend that is not so. The second myth would be that the budget is fiscally irresponsible. I believe it is not. When I went to university we were taught about Keynesian economics and the simplified theory, of course, was that governments should act to counteract countercyclically by building deficits during hard times to stimulate economic activity. I believe that is in part what this budget is attempting to do.

Another myth that I think is prevalent is that the budget is bad for the province; the rather alarmist headlines that the socialist hordes were going to spend us out of existence and bankrupt the province. I think this is a gross simplification and largely inaccurate. With regard to its impact on the province, one perhaps novel approach I will have is to deal with its impact on the environment.

First of all, dealing with myth one, that business and informed opinion are in fact opposed to the budget: I had the feeling the media coverage I was subjected to, and I am sure you were during the release of the budget, could have been scripted well before the release of the budget. It was very predictable in that it quoted chairmen of banks, manufacturers' associations, chambers of commerce and so on as being of course opposed to the budget. We even got extensive third-hand coverage through Brian Mulroney of the views of Hong Kong taxi drivers on the budget. Those looking for more balanced and objective opinions had to scour the inner pages of newspapers days after the budget was released to find more objective coverage of the budget.

One thing that caught my eye was a piece in the New York Times by Professor John Kenneth Galbraith, who most of us are familiar with as the pre-eminent Harvard economist. I am going to quote briefly from a piece that he wrote for the New York Times. Some people may be familiar with it, but I think it bears repeating. He says in part:

"It is truly remarkable to encounter an issue of major popular concern and discover that most everyone agrees on how to respond to it. That issue is the recession and what to do about it. The response by all levels of government is an array of measures designed to make it worse. With the notable exception of the province of Ontario, governments everywhere are tightening budgets, curtailing services, reducing payrolls, furloughing workers or promising to do so. Individuals immediately affected, needless to say, have their spending and resulting support to the economy promptly reduced.

"Many under threat of unemployment are impelled to retrench. So are those receiving welfare and other payments now being threatened with curtailment. It is in this regard that the Ontario government is leading the way. It has decided to cut taxes for people with low incomes, to provide more money for social assistance, affordable housing and capital projects, to offer loans for business hurt by the recession and to look seriously at creating its own pool of investment capital to help invigorate the provincial economy."

Others who have supported the budget are James Frank, the chief economist of the Conference Board of Canada, who called the budget "a confidence-builder that will help Canada emerge from the recession." I would cite also Mike McCracken, president of Informetrica, who called the budget "a move in the right direction." A move in the right direction might indeed characterize the general opinion of an interesting panel, the panel on national issues that the CBC puts on the Morningside program in which Dalton Camp, Eric Kierans and Stephen Lewis had a rare moment of agreement in that all three of those people from diverse political outlooks and economic views, I think it would be fair to say, summarized the budget as a move in the right direction.


I would further cite myself as a local business person in support of this budget. As you no doubt know, it is small business that has been the engine of economic activity in the past decade and it is small business that will lead us out of this recession. It is small business that is hurting now, that is obviously in distress. A year ago I was looking for office space in the downtown area of Kingston and was distressed to see how much vacant space there was in shop fronts and so on in the Kingston area. This morning I had an opportunity to be walking in that same area and found that almost all the places I was looking at a year ago are still vacant and in fact many more have become vacant since that time.

It is no surprise, I am sure, that small business and certainly the retail sector, which reflect the sort of lack of spending power and so on, are in very real dire straits. The economy needs stimulation. That is obvious. When I look around at my colleagues in the small business sphere that I am familiar with, everyone is complaining about low sales at low margins producing low profits and of course resulting in low taxes, low revenues being remitted to the government.

The question is, how much of this spending deficit is due to the recession and how much is uncontrolled spending by the government? The majority of the $9.7-billion deficit is due to the recession. Lower revenues, the impact of federal government cutbacks in transfer payments and higher welfare costs account for about $5 billion of this amount. Only a small portion, $1.5 billion, of the deficit is for new programs or services put in place by this government, such as the social assistance reforms and the wage protection fund. The remaining $3.2 billion is accounted for primarily by expenditures needed to maintain levels of service in existing programs, which of course begs the question of which programs we would then cut in our service sector and education and health care and so on. I do not think too many of us would be prepared to see a decrease in services in those regards.

So I welcome this budget. I have hopes that it will act to in part stimulate the economy and get us out of this unprecedented recession that we are in. I welcome the $700-million anti-recession spending and the 18,000 jobs that will generate. I welcome the construction of 10,000 non-profit housing units and the 20,000 jobs that will hopefully create. I wish it could be more.

I welcome $57 million in support payments to small and medium-sized manufacturers. I welcome $40 million in farm income stabilization and $50 million in interest relief for farmers. I welcome funding increases at greater than the rate of inflation for hospitals, school boards, colleges and municipalities. These measures will stimulate this moribund economy.

The last area I choose to deal with is the effect of the budget on the environment. This is an area which I think has been overlooked. Almost all economic decisions we make have impacts on the environment and we must come to terms with that sooner or later. Let's be clear that money spent on the environment is not an expenditure but rather an investment, not only an intangible investment in the future and the quality of life for our children, but in most cases a financial investment with very real financial returns. I would cite some examples of this.

The $28 million which is committed to expand the blue box recycling and, I would say more important, the waste reduction campaign by the Ministry of the Environment will save us in landfill costs in the future; it will stimulate an indigenous recycling industry and it will reduce waste. Our society, our economy, our industry is one of the more wasteful in the western industrial world and anything that can be done to move it towards a more efficient and competitive position will aid the economy and those industries. The reduction of waste will move our businesses and industry towards a leaner, more efficient and economically competitive way to do business.

I welcome the Ministry of Energy's 75% increase in spending, bringing it up to $10 million for new and expanded energy-efficiency initiatives. The initiatives will save consumers money by lowering the demand for energy and will enhance our competitive position in a world moving increasingly to more energy-efficient homes, vehicles, machinery and industry.

Here is an analysis that I have not heard in the media coverage. It falls under the category of money not spent. The moratorium on the construction of new nuclear generating stations and the new commitment of Ontario Hydro to the most aggressive energy conservation program ever undertaken in North America will save the taxpayers of this province huge amounts of money in saved energy and forgone costs of constructing hugely expensive nuclear plants.

I have no doubts that, had the Liberals or Conservatives been elected in September of last year, we would be facing right now the construction of the twin to the Darlington nuclear station, part B, the additional four units to make eight units. What many of us have lost track of is the fact that the Darlington nuclear station started out with projected costs of $2 billion, which is a huge sum of money. The station is still not completed, it is still not without its problems, and the cost now is $13.5 billion. These sums of money dwarf many of the cuts in social expenditures that more conservative people would have us undertake.

The fact is that we do not need these nuclear stations if we implement energy conservation programs. The fact is that there are still very real safety concerns. I would cite the example of the Nine Mile Point reactor. There was an accident right across the lake from us here just last week that reflects the concerns of many people about nuclear safety. The fact is that the first four reactors of the Darlington station are proving to be a huge economic white elephant.

This is something I would cite in this budget which is not necessarily an item in the budget but it is money not spent, which is just as important as money spent. Conservation is an investment, not an expenditure, so money spent by the Ministry of Energy on Ontario Hydro on energy conservation should be treated as an investment in the future with very real payback in both economic and environmental terms.

Another laudable feature of the budget is its fuel conservation initiatives. Fuel conservation will be encouraged by increasing provincial taxes on diesel fuel and gasoline. To reinforce the energy efficiency message, the current rate of gas guzzler tax on new vehicles will be doubled and two new rate thresholds added to capture more fuel-efficient vehicles. Further, in the area of public transit, to provide an alternative to the private car, $48 million will be provided in 1991-92 for the Let's Move transit expansion program; $11 million dollars of this funding will be used for environmental assessments to ensure sound environmental planning.

The more I learn about the environment and about the fate of the earth that we all face, the more I become convinced that the single most important thing that any of us can do to alleviate environmental degradation is the conservation of energy. Its impact on global warming, on pollutants in our local areas --

The Chair: Mr Gervan, I am sorry, I have got to cut you off.


Mr Gervan: I am just finishing here.

The Chair: I am sorry, but we have only 15 minutes. We have eight presenters, so if I run over about two or three minutes on each one --

Mr Gervan: I have three sentences left. I would have appreciated a warning of 30 seconds or something.

Mr B. Ward: Be quick.

Mr Gervan: Okay. Fine. From the standpoint of a small business person, I am hopeful that this budget will stimulate and kickstart the economy. From the standpoint of an environmentalist, I applaud its measures to move us towards energy efficiency and conservation. From the standpoint of a parent, I applaud the willingness of the government of Ontario to invest in the future.

The Chair: Okay. Thank you for your presentation.


The Chair: The next presenter is Ed Agarand. Welcome to the standing committee on finance and economic affairs. You have 15 minutes for your presentation.

Mr Agarand: Good afternoon. My main concerns here today are, one, Ryandale House for the homeless and, two, the actual Ontario budget. First of all, I would like to address Ryandale House.

Ryandale House is a place for people who have no home. People who are destitute eventually end up in the downtown area. They eventually muster up enough courage to approach a church and ask for assistance. This means that it is mostly the downtown area churches that end up supporting homeless people.

Approximately five years ago, 21 area churches decided to form an organization where these people could be referred to. This organization would provide overnight lodgings and meals. Depending on the situation of the person, referrals would be made to other organizations that specialize in that person's situation.

Only 20% of these churches now support our organization in a financial manner. We therefore find ourselves approaching different community agencies and organizations for support. We have approached the provincial government for support, but since we do not currently provide long-term housing, we are not eligible for funding.

At Ryandale we receive approximately 600 clients per year. Although the intention is overnight accommodation, some of our clients stay two or three nights. In very extreme circumstances, our house manager has the authority to extend a stay up to 10 days. We are the only facility which takes in men or women and even families.

We have five single beds and a room reserved for families at our facility. We charge $15 a night for people who are able to pay. Normally, approximately $900 to $1,000 per month is generated in this manner. We also receive $640 monthly from local churches. It can therefore be assumed that in any given month Ryandale will generate approximately $1,600.

The problem is that to function adequately it will cost us $40 per bed-night. Since we generate 150 bed-nights per month at approximately 85% to 90% capacity, we require $6,000 per month to operate adequately. We are therefore short $4,400 monthly.

People who are no longer eligible for unemployment insurance benefits and who are passing through Kingston looking for work also stay at Ryandale.

I would suggest that the provincial government review our situation and seriously consider assisting our organization in a financial manner. That is presented by myself as the board chairman of Ryandale House.

The next situation I would like to address is the actual Ontario budget, reference page 90 of the 1991 Ontario Budget. While going over the actual budget here, I see that most of the money generated in Ontario comes from personal income tax. In looking at the amount of corporation income tax, as opposed to personal income tax, I see that in the 1989-90 tax year, personal income tax was almost 300% of corporate income tax. I find that a little bit hard to take. In the 1990-91 taxation year, the personal income tax is over 400% of the corporate income tax generated in Ontario. In 1991-92, the personal income tax is over 500% of that generated by the corporations in Ontario. I really find this hard to take.

In the Ontario budget the projection is that we are going to increase the personal income tax in Ontario by approximately 20%, from $13.5 billion to almost $16 billion. Problem: How are we going to generate that income tax if people do not have jobs?

I would like to tell you that I am unemployed right now. I cannot generate any income tax for this province. I was working at a government facility. I came here faithfully from Thunder Bay to a government facility. I am now unemployed. I cannot give this government any help to run this province because I do not have any money. I have no way to pay income tax to this province. You do not necessarily have to feel sorry for me. I would suggest that this government has to get me back working somehow so that I can sponsor this government to keep working itself, because one day, what are you going to do if you have no more money left? We are going to have to go somewhere and we cannot go to Ryandale. I know that.

Anyway, those are my concerns. While the personal income tax revenues are expected to increase by approximately 20% -- that means that people like me, theoretically, who are working are going to increase their personal income tax in Ontario by 20% -- for corporations, between 1989 and 1992, the corporate tax level will decrease by almost 30%.

I know these guys have more money than I do. I know they have more money than you people do and the people behind me. I honestly think that we should look at where we are generating our income from in this province. Thank you. If you have any questions I can answer, I will try.

Mr Villeneuve: Thank you for your presentation. You did not make the statement, but I think you insinuated that Ontario is the most heavily taxed jurisdiction in Canada and indeed in North America. I think tax freedom day in Ontario is August 2 this year, the latest of anyone.

You came here with a job with the government of Ontario. You no longer have a job. You have been speaking to people in businesses. What, in your opinion, is the reaction to people who look at the very large deficit? Mr Laughren, by his own admission, is telling us that it will cost $15 million of additional dollars because of our credit rating having gone down, just on what we already owe, and he is planning to double the total debt of the province by 1994. Could you just comment on those things, as someone who came here with a job and no longer has a job, and from your perspective?


Mr Agarand: My perspective is -- I cannot really give you one. All I can do is look at this budget, what I see here. For example, we are paying $403 million out in UTDC loan guarantees. This is the company that I came here with. So this government today is getting stuck with $403 million of something that a government initiated back in 1982 that is no longer here. Again, I am sorry that it is our government today that has to pay this off, but I cannot do anything about it. As for your question, I do not think I really answered it.

Ms M. Ward: Thank you for your presentation. I appreciate your comments about the tax system. I am sure you are aware of the Fair Tax Commission that has been established and that is studying the tax system in Ontario. Overall, I wonder if you have any comments on that. I think if we look at the tax system in Ontario and in Canada, it is an unfair system. If we had services such as you are providing -- you are not receiving any funding, but if we look at social services as a whole, the municipalities are paying a share of those now and it is generating a lot of difficulty for some of the municipalities. If we had a taxation system where such services were funded through income taxes at a provincial and federal level rather than municipal, and all forms of income were taxable, meaning that you could not have all the tax breaks which higher-income people have access to -- do you have any comments on the Fair Tax Commission?

Mr Agarand: Fair taxation I would like to comment on, in that there are ways to beat the income tax system. Poor me, I'm destitute. Let's say I am destitute. I owe Revenue Canada $1,400, which I did last year, because I could not pay my 1990 income tax. I was unemployed that year too. So Revenue Canada is haunting me. "Mr Agarand, we want you to pay your income tax that you owe us." How am I going to do it? "I've got an idea. I'll rent out my house." So that is what I did. I rented out my house, and do you know what? I made money renting out my house and I put it in my right-hand pocket, and then I looked at my income tax and it said: "Mr Agarand, you can deduct this now, you can deduct this now and you can deduct this now. You can deduct the interest that you paid on your mortgage. That is applicable to the area of your house that you rented out."

So although I made, let's assume, $5,000 and put it in my right-hand income tax, I was able to tell Revenue Canada, "Here, Mr Revenue Canada, I lost $10,000, and therefore I now have a tax loss." But I put that $5,000 in this pocket. I walked away with it, and I lost $10,000 out of this pocket.

Ms M. Ward: On paper.

Mr Agarand: On paper. Now we know where the money is going. People are just taking it and running away with it. In 1986, I had an idea. I even went and started my own corporation, and it was a good idea at the time. It is too bad Via Rail is not running any more the way it used to or I would be making a lot of money. At that time, reading over how corporations operate, etc, and all the deductions that you can get, do you realize I would have been able to retire now, and I just turned 40?

The Chair: Your time is up, sir, and I appreciate your comments here today. Thank you.


The Chair: We have Mr Ken Ohtake. Welcome to the standing committee on finance and economic affairs. For your presentation on the budget review, you have 15 minutes.

Mr Ohtake: Thank you. I think we will have lots of time.

Good afternoon and welcome to Kingston. I am grateful for the opportunity that this committee provides for ordinary people to have their opinions heard on the subject of the government's budget.

My name is Ken Ohtake. I am a Canadian of Japanese origin whose family roots in Canada extend four generations. I grew up in the Regent Park-Cabbagetown area of Toronto and settled in Kingston 14 years ago. I have worked for 20 years with Ontarians who have been considered at the margins of our society and economy: people with physical disabilities, people with developmental handicaps, people who have needed the protection of human rights legislation. I am pleased to be currently employed by a social service organization providing support to people who are re-entering our community often following extended stays in psychiatric hospitals. However, while I know the remarks I am about to make are widely held, I speak for myself.

One of the most eminent social commentators of the past decade, Father Guido Sarducci, in an essay entitled The Ninety Minute University, observes that five years after graduation -- I think it is five years; I may have the numbers wrong -- from longer academic programs, physics graduates remember E=mc2, historians remember that in 1492 Columbus sailed the ocean blue and English majors remember that it is "i" before "e" except after "c." He says nothing about political scientists, which may reflect what he thinks they recall. Regarding economists, Father Guido Sarducci states that they remember supply and demand.

From my four years of economics, I remember another homily: The solution to any economic problem is a political question.

I am overjoyed that the economic problems of this recession -- I am not overjoyed with the problems -- including unemployment, plant closures, loss of employment, increased need for social support are at long last being addressed by a government whose political answers take into account the basic reason for the existence of all of our society's economic and social institutions, which I believe to be to make things better. Those political beliefs include the notion that investment in the social and physical health of ordinary people blossoms upward throughout the economy as opposed to the discredited notion that investment in wealthy corporations will trickle down. I think it blossoms up and I am glad we are now seeing policies that reflect that belief.

Many of the people whom I work with consider themselves survivors, survivors of a system of psychiatric care which they believe cares more for the caring institution at the expense of intended recipients of care. Others are satisfied that they have been served well by the medical care system and can resume lives in our community.

Both groups remain concerned about the decency of their lives, decency which is hard to attain at less than $700 per month on disability pension; decency which results from being able to contribute back into our society and have a sense that they are part of the society, and a society that accepts them; decency which is enhanced by an economic optimism whereby people who are able to work can work and where others are embraced without condescension; decency which uplifts the society at large.

I receive with great enthusiasm and hope this budget, a budget which views a significant yet politically comparable deficit as both a social and economic investment. I am convinced that the payback will be a healthier society and an economy for both our children and ourselves. I think the payback is not going to be that far off.

Mr Christopherson: I thank you very much for an excellent presentation. I think you provide a number of thought-provoking ideas. I particularly liked what you said about blossoming up as opposed to trickling down. I would say to you that your observations are very accurate in terms of what we are attempting to do with the budget and what we are attempting to achieve for the future of the province.

You talked a little bit towards the end of your presentation about payback and that we would have healthier people and a healthier economy. Again, we do see the money that we have spent and maintained in certain areas of the economy to be an investment, an investment in the people of this province, an investment in our future, quite frankly.

Could you give a little more detail, be a little more specific in terms of -- I will put it to you this way -- how would you argue to someone who said to you that money spent on the education system, on the health care system, is not an investment, that those are non-returnable moneys? How would you argue that indeed it is an investment that will pay a return?


Mr Ohtake: I think we are living in a world society, a global society. First of all, I would like to address the question in terms of investment in education. Increasingly, it is a knowledge-based society. Knowledge is not something that we can yet just plug into at night and have by morning. It is a longer-term process and it is a process which is going to require significant investment. We have to make it. I think that nations that have perhaps neglected that side have done so at their peril, with perhaps an imbalance of funds going to areas such as defence. I think of the situation the Soviet Union finds itself in now. Even with the liberalization and the freedoms it now has, it is going to take a long time to catch up in terms of providing the basic needs for that society. I think we need to keep our vision on education and our children's needs as well as our own.

With regard to social services and health services, I think a healthy society is a healthy society and you cannot overinvest. I work in community mental health as opposed to institutional mental health. I think there is an edge that I would grind, in that perhaps money could be better spent. However, I think it cannot be simply pulled out and not reinvested. The notion, for example, that deinstitutionalization from psychiatric hospitals and other institutions was going to save us money is a fallacy because the money simply has to be reinvested in other forms of services.

Finally, in terms of one comment I would make with regard to disability pensions and the money that the people I am in daily contact with are receiving -- and I guess it might be considered a bit of cheap shot -- I do not know any of them who shop across the border. The money they get is spent on this side, in this community, for basic necessities. Hopefully, that kind of investment, that blossoming up is what is going to continue to keep our economy strong and strengthen it through these very difficult times and to a brighter time in the future.

The Chair: I have to cut you off.

Mr Sterling: I have a great concern for the people you represent and my concern is that if we spend 20% of our budget servicing debt, that means any future government only has 80% left to take care of or help people who need the care of the government. Now we are spending about 12% or 13% of our budget to service that debt. The federal government spends about 25% to 26% of what it spends to service its debt. They spend about 35% of what they collect. There is a difference, because they operate with a deficit as well.

My concern is that the Treasurer has brought in a budget which not only incurs a huge deficit this year but also a huge deficit in the next four years. What happens to the next government that comes in and says: "We want to take care and we have to take care of these people. We want to improve their lives"? If we do not have any fiscal responsibility or any attempt to reprioritize how we are spending, or there is no attempt to hold down the lid on the expenditure side, which is what has happened here, then how is any government going to take care of the people in the future?

Mr Ohtake: I return to the comment that the solution to any economic problem is a political question. The political question seems to me to hinge on one's belief. I believe that a deficit which is comparable to other jurisdictions and one which is, I suppose, wisely invested is going to make what is currently 12% or your feared 20% perhaps smaller by virtue of making the pie bigger. If we can have a more vigorous economy as a result of people feeling better, then surely part of being effective as a worker is how you feel about what you are doing. If you are feeling positively, I think -- well, it may not be money in the bank, but I think it helps to make the pie bigger, and by making the pie bigger, the percentage that deficit or the debt service represents is going to be smaller.

The Chair: Thank you, Mr Ohtake, for your presentation.


The Chair: The next group is Kingston Waste Not, Mr Jim Martin. Welcome. You have 15 minutes for your presentation.

Mr Martin: Thank you very much. I own and operate a small company in Kingston, as you mentioned, Kingston Waste Not. It is a commercial services recycler. We largely recycle corrugated cardboard. It was for us a market created only when the city and the township council of Kingston earlier this year decided they were not going to allow corrugated to go to the landfill sites any more. Having not much to do and having watched another of my businesses fail at the beginning of the recession, I thought it was a good opportunity to start a business that might end off with a bang as the recession ended with a whimper.

However, I do not believe the recession has ended with a whimper. I also do not believe we are going to be out of the woods for a long while because we see that high unemployment is going to continue for many years, if the recovery following the recession of the early 1980s is any benchmark. For this reason, I believe the spring 1991 budget that was introduced by the Ontario government is a laudable step, a step in the right direction. I have always believed that if people pay their taxes all their lives there should be a reasonable expectation that those of us who are not well off or those of us who are not well taken care of should be taken care of to some extent. I think the budget shows a degree of conviction that is not readily apparent in other budgets tabled throughout provincial legislatures and in the federal Parliament this year.

If there is one beef or one disagreement I have with the provincial budget, it is the same disagreement I have with every budget I can remember seeing throughout my lifetime, and that is that there is always a quick reflex to tax fuel to a greater and greater extent. Since my business is dependent on the operation of vehicles, it becomes ever more expensive as taxes on fuel go up. So I would like, immodestly, to suggest an alternative which is used in some states in the United States, and that is that when you buy your licence plate you buy a licence sticker that allows you to buy fuel at a rate that will be rebated at some point in the future or is rebated at the pump.

For those of us who operate vehicles, for those of us who are contributing to the economy of this province, we have no alternative but to drive our vehicles. If we are going to pay a higher licence tax at the beginning of the year and can look forward to a somewhat discounted fuel price through the rest of the year, then it may certainly help some marginal operators. Since I am sure that no one wants to antagonize the independent owner-operators association any more in this province, it might be an idea whose time can finally come to Ontario. If a licence sticker is granted to vehicles that are part of the operations of an Ontario registered corporation or partnership, then it should be able to see that this complies with article 1402 of the free trade agreement, if in fact you care about complying with the free trade agreement.


I would like to spend the rest of my time here talking about something that was popular during the last recession, has been popular with some of us for a long, long time, but does not seem to be getting much attention as we are supposed to be leaving this recession, that is, a comprehensive industrial policy.

Canada and the United States are alone in the world as the only notable industrial countries without a comprehensive industrial strategy. Even such a very conservative country as South Africa has an industrial strategy, which targets key players in the economy, key sectors. They discount the tax rates, they provide grants, they provide startup funding.

I think what would make me even happier than seeing the spring budget in 1991 is to see a spring budget in 1992 that addresses concerns for industrial policy. We have in Canada always experienced the benefits of a mixed economy: small and large corporations, domestic and foreign-owned corporations, as well as a mix of private and public enterprise in the economy.

Even a basic step such as setting tariff rates shows that the government has a place in the industrial economy and ought to continue that. By targeting certain emerging technologies, certain emerging industries, we may be able to replace the horrendous loss that we as a province have suffered as a result of the recession and the free trade agreement. I think many people are being less than honest when they look at the devastation of the industrial economy in Ontario and do not recognize that we are seeing essentially the decline and the destruction of our industrial economy; that we can no longer take for granted that we are going to have a high value added economy in 10 years, in 20 years and so on. It is only by encouraging the government to be an active player in the economy through an industrial strategy that we can help to offset the devastation that has been caused over the past few years.

I think one of the keys to an industrial strategy is a comprehensive Ontario business development bank, somewhat along the lines of the Federal Business Development Bank but by no means hampered as that tool is. I think an Ontario business development bank should not only be a lender of last resort to Ontario-based businesses, but also ought to be able to provide knowhow, ought to be able to provide suggestions and, most important, ought to be able to pull together the many strands of economic assistance that are available in this province.

As a recycler, for instance, I can go to MITT or to the Ministry of the Environment, industrial waste diversion program, to seek funds if I believe I have a worthy project. I think there is far too much duplication there. I think there should be a comprehensive structure that will administer programs from all departments or pull together the program so there are fewer programs that we need to concern ourselves with.

Recognizing that small business is largely responsible for job creation in this country and has been for many, many years, I also think it is time that the government recognize that there have to be special policies for small business. A development bank addresses some of those concerns.

In conclusion, I have suggested a business development bank as part of a larger industrial strategy to help defray some of the devastating effects of job loss in this province. I think if we are to halt the deindustrialization of Ontario, we have to allow the government and encourage the government to take an active role.

A recent study by some University of Maine economists has suggested that if the United States were to enter into the same kind of free trade agreement with Mexico which Canada did with the United States, they would suffer a million jobs lost in the first year, and those would be permanent job losses. We do not expect the Americans to sit there and let a million jobs go down the drain, nor can we afford that. So I immodestly suggest an idea that has been around for a while, and maybe its time has come.

Mr Kwinter: I am curious regarding the last statement that you made. I would like to get your comment on this Mexico-Canada-US free trade agreement. At the present time, negotiations are taking place. We do not know what the outcome is going to be, but given the past history, there is a very strong reason to believe that the United States and Mexico will make a deal. What the terms of that deal will be I do not know, but everybody assumes they will make the deal.

As a small businessman, do you think it would be to our advantage to have the United States making an independent free trade deal with Mexico, and the United States having the Canada-US free trade agreement, without Canada being a participant in both ways?

Mr Martin: I am going to answer that somewhat indirectly. I think that while the intention of a free trade agreement with the United States was to secure our market, we have seen that market become further harassed through the economic pressures of the recession. If there are any benefits to be realized through the FTA, the recession has just about taken them away and just about made sure that we are not going to get those benefits for a long, long time.

If we are going to sign a three-way agreement, I think we can break it down pretty easily into Canada supplying many of the raw materials, the United States supplying a huge market and Mexico supplying a relatively cheap labour force. In my kind of business, I do not really have to worry about that too much, except that as companies continue to close in Kingston and area, I will lose clients, and if I lose clients and I lose the ability to collect recyclable materials, then I lose my access to my market. I believe that any agreement with Mexico is devastating because of the low wage of labour.

Mr Villeneuve: Thank you very much, Mr Martin, for your presentation. You fear duplication, and yet you are suggesting a new lending agency comparable to FBDB. Have you looked at or investigated and inquired about the EODC, the Eastern Ontario Development Corp?

Mr Martin: I think that with all the programs that are available, with all the knowledge that is available through the government, there ought to be an umbrella organization. I can fill out grant applications and loan applications for the provincial government till I am blue in the face. I think that the easiest thing to do and something I suggest is an Ontario business development bank with branches throughout the province, that not only is responsible for being a lender of last resort but also offers the expertise and can act as an agent in joint ventures. I think there are just too many programs and too many departments.

Mr Villeneuve: But are you not creating a duplicate to FBDB?

Mr Martin: No, I do not think so. The FBDB has largely gotten out of the lending business because its budget has been clamped down for many, many years. The types of controls on the money they have been lending have been relatively lax, so that they have made many questionable loans. Also, for small industrial ventures, their starting dollar amount is $100,000. Many companies do not need that much. Many companies need more than they can get through the new ventures program or, if you are younger, through the youth ventures program. I think there ought to be a program that takes into account all of these different strands of participation.

Mr G. Wilson: Thanks a lot for your presentation. I commend you for your survivability in this recessionary period.

Having worked in two different areas here, you have pointed out the federal government's policies and the provincial. I was wondering whether you think there is enough co-ordination between the two jurisdictions. Somebody in your position, I would say, needs all the help he can get. Do you feel you are getting a co-ordinated effort there to give you the most help you can get?

Mr Martin: No. One of the things, in a larger sense, that disturbs me about federal-provincial relations, whether it is getting money from one or the other or whether it is getting assistance or knowledge from one or the other, is that there are too many people knocking up against each other.

To go along with the question about the FBDB, I think it would be wonderful if Ottawa would say, "Okay, you now have jurisdiction over the FBDB in your province." I think it would be a wonderful opportunity for the provinces to really shine if there was more co-ordination, if the feds would say, "Okay, this really isn't an area that we can afford to be in, in a wealthy province like Ontario."

The Chair: Thank you for your presentation.



The Chair: Mr Rick Munroe from the National Farmers Union. Welcome. You have 15 minutes for your presentation and question period at the end if you wish so.

Mr Munroe: Good afternoon. Before I get going on the budget itself, I probably should tell you a little bit about myself and the people I represent. My wife and I have a commercial sheep flock of about 140 ewes on Howe Island, which is one of the Thousand Islands just down the river from here. Our farm is not large -- it is only 115 acres -- but it is worth noting that it is a farm which had one of those "Century Farm" signs on it when we bought it 10 years ago. In other words, it was at one time, and for a considerable period of time, a viable farm operation. But my family and I would have starved to death long ago, I think, if we had to rely solely on the income from that farm. Today I am like the majority of Canadian farmers -- the great majority, by the way -- I have another job. In my case it is teaching, and we use my income to subsidize the farm operation. My wife is home and farms full-time, as do three of her brothers and another sister.

My wife and I are members of the National Farmers Union, which, as some of you will know, is a national organization which represents the interests of family farmers exclusively. In other words, it is unconnected with other sectors of agribusiness, which we think is an important distinction. Within the NFU I serve as a director at both the local and the district levels.

I will begin by saying here today that we appreciate being asked for our opinion. We believe that democracy works best when the public is actively involved in it. Also, the NFU has a wide range of well-thought-out policies which we believe can help this government and this country, and we welcome the opportunity to share these ideas.

In terms of the budget itself, I am here today to speak in defence of the government's budget. We recognize that the budget is not perfect. We would have liked to see more financial support for farmers, of course, among other things, but the budget is a very reasonable compromise between the needs of the present situation, which for Ontario farmers borders on an emergency, and the need to be responsible as far as running a deficit is concerned.

Speaking of the deficit, which is clearly the chief complaint which has been levelled at this government, I get rather annoyed when I hear critics trying to portray this government as suddenly having landed us with a $10-billion deficit, as if it was entirely its creation and was something it could have easily avoided. One would hope that critics of the budget would have at least been honest enough to concede that $3 billion of the $9.7 was inherited from the previous administration, so the NDP really has to answer for about $6.5 billion of that. When we subtract the money which was used to cover federal contributions which Mulroney suddenly decided Ottawa would not pay any more, another $1.6 billion, we are down to about an even $5 billion, or about half the figure that we continually hear being tossed at Mr Laughren. Then there is another $1.4 billion for various forms of social assistance which the government had very little control over because of legal or statutory obligations. There are explanations for the other $3.5 billion, which I am sure you have heard hundreds of times already from people who understand things a lot better than I do.

I would like to move on to the flip side of the deficit coin, which has to do with taxation. In other words, you get a deficit if either you spend too much or you tax too little -- or both, of course. I believe there is a bit of both in this present deficit.

Ontario has been in something of an economic emergency during the past year. We have all heard the stats about our unemployment rate being the highest since the Depression and how we have lost 170,000 manufacturing jobs, two thirds of them because of permanent plant closures. The point is, I guess, that emergencies warrant extraordinary measures, so we see this government putting forward an increased effort to keep people working. For this the NDP deserves a pat on the back.

We would not have as much of a deficit if we could get a little more in the way of tax revenue from those who are most able to afford it. Canada is almost unique among western countries in that we do not have a minimum wealth tax. It is beyond Mr Laughren's abilities to impose one, I guess. But my point simply is that we ought not to cry too loudly about our deficits if we are unwilling to adopt measures which seem to be pretty widely accepted everywhere else in the world.

On this issue of fair taxation, we are pleased to see that the NDP has done a couple of things: first, to create a Fair Tax Commission, and we expect to see some progressive changes from that; and second, to make some reforms to our provincial tax laws to help out 120,000 low-income Ontarians, and at the same time demand a little more from people earning over $84,000.

On the environment front, the government has killed two birds with one stone; that is, gaining revenue and hopefully reducing pollution by taxing both fuel and gas-guzzling vehicles. That is just fine with us.

In terms of infrastructure spending, we also want to give the government our support for the $4.3 billion that it is spending on the province's infrastructure. You probably saw some of that money at work up on highway 401 as you came in. I have seen a couple of American TV documentaries on the precarious state of American bridges and overpasses. New York City's water supply hangs by a thread until 1998, when they can get a third water main in, and that kind of thing. I am glad to see that this government is a little more farsighted than that and is prepared to put people to work on things like roads and bridges and sewers and transit systems in a systematic, preventive sort of way. The general public should realize the folly of neglecting these things and be prepared to support these initiatives.

If we can look at the agriculture budget specifically for a moment, we are pleased to see that the total budget was increased. This was certainly in order. The food production system is the second-largest industry in this province, and it certainly has been under the gun for some time now. The new increases are entirely in two areas: $50 million for interest rate relief, which we regard as an effective short-term response to the farm debt crisis; and second, $40 million for the province's contribution to the gross revenue insurance plan, which we regard as ill conceived for a number of reasons, although it is better than nothing, which is what we were told we would get if we did not accept it. The only other good thing you can say about it is that farmers knew where they stood prior to the budget, so it gave them a chance to do a bit of planning prior to spring planting.

We would have liked to see more money for some of the more established Ministry of Agriculture and Food programs which are effective. One of the better ones, in our opinion, is the land stewardship program, which is now in its second phase. My brother-in-law is on the committee for Frontenac county and he told me that the entire three-year allocation of $133,000 was gone in the first round. When you hear of farmers having to spend something like $85,000 just for a manure-handling facility, then you can see how $133,000 for the whole county for three years is not going to go very far. In other words, it would only reach a small percentage of the farmers and help them with only a small percentage of these capital costs.

We would like to see more emphasis on on-farm research, particularly in the area of land stewardship and ecological agriculture. In fact, we would like to see a major redirection of agriculture towards what is commonly called sustainable agriculture and towards the concept of food security. All of this has to do not just with the environment -- people should know that agriculture is the greatest interface between human activity and the environment -- but it also has to do a lot with farm income. We certainly will not have any sort of agriculture unless farmers can stay in business.

While we are on this point, I would like to say a few words about free trade. Food security has a lot to do with food self-sufficiency, and food self-sufficiency is not at all compatible with free trade and open borders. Free trade may be fine for something like children's toys or maybe tea towels, but it is not a very intelligent way of approaching a country's food supply. Every country leaves itself very vulnerable if it is not able to provide its citizens with essential food items. The next time we get a major blight or some fungal infestation or something like that someplace in the world, we will find out how fast, I think, this sort of new global free market system will grind to a halt and how important it is for each area to be able to more or less feed itself.

Here in Ontario we have about one third of the best farm land in all of Canada, when you take into consideration climate. We are going to lose our farmers and we are going to lose that land -- a lot of it has already been paved over -- unless we can ensure that farmers can make enough to stay in business. The point here is that the best any provincial government can probably do is just to apply Band-Aids until we can get some controls at the border.

The new model, this sort of global free market model, is wrong. Family farmers in Canada should not be out, or intending, to undercut small farmers in other areas of the world. I do not think we should take any particular pride in that. Canadians should not stand for cheap foreign produce, subverting our own food system. Niagara fruit growers, for example, should have to compete, but they should have to compete against others locally. They should not have to compete against the entire world.

So there we have it. We believe that this Ontario government has struck a reasonable and humane balance in the budget. We also believe that a good deal of our immediate problems are due to the recession and to the folly of free trade.

The best that we can hope for is that in the next two years people will wake up and rethink the entire concept of free trade, particularly when it comes to the food system. In the meantime, we thank this government for making the best out of a very bad situation. I thank you for allowing our voice to be heard here today.


Mr Villeneuve: Thank you very much for your very good presentation. You mentioned $50 million to agriculture, and that is my area of concern, as it is yours: $50 million to support interest and $40 million to GRIP. Were you aware that the absolute and total increase in the budget for agriculture was $21 million?

Mr Munroe: I thought it was $70 million.

Mr Villeneuve: It is $21 million.

Mr Munroe: I thought it had gone from $535 million to $602 million.

Mr Villeneuve: We have it right here, and it is $21 million; 3.5%. You have to remember that in that 3.5% increase, civil servants who work at 801 Bay Street and other places got a 6.8% increase. How much do you think that leaves for the farmer out there earning a living?

Mr Munroe: If your question is, did agriculture get enough or is the agriculture budget sufficient, our answer certainly would be no. It is also our understanding that about a quarter -- is that right? -- of OMAF's budget goes to the farm tax rebate.

Mr Villeneuve: Some $150 million.

Mr Munroe: Yes, out of $500 million and some odd.

Mr Villeneuve: That is in there for a long time.

Mr Munroe: That is correct. To us, that is sort of a misleading arrangement. What you are really doing is taking from a budget that should properly belong to agriculture and using it to fund public education.

Mr Villeneuve: Really it is levelling the playing field on a tax basis for agriculture, but it is considered as support.

Mr Jamison: I notice that a certain portion of your presentation dealt with free trade, although you did not really mention GATT and the effects of the GATT negotiations on the potential wellbeing of agriculture in general. I wonder if you would like to expand on your views there.

Mr Munroe: I think this intention to move to reduce tariffs, to move to a global free market system, is just as wrongheaded in GATT as it is in the free trade agreement, if that is what you mean. I think the problem, as far as the food system is concerned, is not really just the specifics of this Canada-US free trade agreement. It has to do with the model itself. I think it is very easy, in the absence of things like fungal infections and in the absence of a shortage of oil and that sort of thing, to say, "Oh, yes, let's move in that direction and may the cheapest producer win out."

I think those who have thought about the system for some time recognize it is not that simple. It is not that simple at all. One serious fungal infection -- we see what is happening this summer in PEI and how difficult it is to eradicate what began as a fairly small problem there. We will see how fast borders and ports shut down and how important it is for people to be able to feed themselves. If your question was, is GATT in the wrong direction, I would say yes, it is.

Mr Conway: One of the interesting aspects of cross-border shopping for me is that a lot of people I know along the front here in southeastern Ontario report that among the most popular items that Canadians going across into New York state are buying are dairy products. To me, it is quite surprising. What would explain that?

Mr Munroe: Probably the record bankruptcies of dairy farmers in upstate New York. I am just guessing. I have some friends in Syracuse. Other than that, I rarely go to the US. I certainly would purchase as little as possible on a trip like that. I sure do not do my dairy shopping in the United States, so I could not tell you about the price difference or an explanation for it. But I do know that the Americans are having record bankruptcies. Just last week four American dairy organizations had lobbied Congress -- no, the group of them had put forward four different proposals to the House committee, all of which were rejected, asking for some sort of supply management system like we have here in Canada.


The Chair: The next presenter is Ms Hirani. Welcome. You have 15 minutes for your presentation.

Ms Hirani: My name is Shaheen Hirani, and I am a student at Queen's University here in Kingston. I come before this committee as a representative of whom the members on this committee may have heard very little in their travels. I do not claim to represent all of youth, but I do believe that the concerns I wish to address today are prevalent among the overwhelming majority of youth. As a student of economics and politics, please allow me to present a general commentary on the budget first, and then outline specific impacts this budget has on youth.

There are several economic realities which must be realized. First and foremost of these is that Ontario is in the midst of a recession. Ontario has felt the current recession more severely than the rest of Canada. Job losses have been dramatic, and appear to be permanent due to a variety of factors, including the free trade agreement, as many people have pointed out today. Sixty-seven per cent of job losses in 1990 were due to closures and only 33% were due to reduced operations.

Not only free trade but a number of federal economic policies have led to a substantial impact on the Ontario economy. The 1991 federal government budget extended the expenditure control plan introduced in 1990. It capped federal transfers to Ontario to 5% and this hit Ontario much harder than it hit other provinces. It had the effect also of transferring some of these costs to the Ontario government. It increased pressure to provide services. The Ministry of Treasury and Economics has estimated that the new federal constraints will cost Ontario $1.6 billion in 1991 and 1992. So even if this government had decided not to turn its back on the workers and help out those who are hurt most by this recession, there would be a deficit. That, I think, is a point to be taken.

When the media and the opposition parties have looked to the deficit, they have rarely examined what the spending has been targeted to. They also often condemn all spending altogether. I just want to point out some examples of this anti-recession spending, and some of the specific impacts on youth.

The initiatives included an employee wage protection fund of $175 million to guarantee wages for workers whose employers go out of business. Another long-overdue measure that has been undertaken is assistance to municipalities, school boards, hospitals, colleges and universities for pay equity. Twenty million dollars in additional funding has been allotted for victims of sexual and domestic violence and for emergency shelters, and a 7% increase in social assistance benefits. I could go on and list a dozen more examples but I think the point is quite clear: the budget is designed to help people during the difficult economic period. Deficit spending during a recession is a time-proven effective strategy, and I believe the government has taken the right strategy in targeting spending to those who need it most.

Moving on to specific impacts on youth, this budget has proven to be not only immediate in its help to youth, but seems to have some long-term strategy for the development of this province in terms of job training and education.

Also, immediately effective measures will have a definite positive impact on youth in the long term. Starting November 1 1991, the minimum wage will be increased to $5.55 an hour. Now this is one thing that we really commend the government on because youth poverty is a huge, huge problem affecting thousands of youth across the province. Also they will be eliminating the differential between the adult and the youth minimum wage by 1992, and we think this is a very positive step for working youth across the province.

Another initiative particularly important to me and other students in the Kingston area is the rent control legislation that restricts rent increases to a level that will not force me to drop out this year because now I can afford my rent. This is something that will affect many students across the province, so this is also a youth issue.


Educational spending, which is the most important factor to affect youth, has also been bolstered. In addition to the $36 million committed to OSAP, a fundamental restructuring of the program has been promised. This will be dramatically felt by thousands of students across the province, especially during this hard summer where many youth have found it difficult to find jobs.

There is one area in which the government failed, I think, and that is in tuition increases, which were promised by the government to be frozen but were not. We are hoping this will change in the next budget, where tuition can be frozen and another barrier to education can be lifted. This is just a sampling of the good impacts this budget will have on young people. I hope I have been able to enlighten the committee members about some of the less publicized aspects of the budget and their effects on youth. That is all.

Mr G. Wilson: Thanks a lot for your presentation. I was thinking that part of the strategy of the federal government here is to open up Canada to competition. You are at the beginning of your career and you are going to a university that is, I think, acknowledged to provide an education that puts you in good standing to compete with the best. What is your view though on, say, what the proper role of the government should be? Do you think that is what a government should be doing to clear the path for competition, or should it be providing other things for people, students in particular, but more generally for the people at large?

Ms Hirani: I think what the government has been doing so far, putting more money and more resources into skills development and job training programs and education, is a step forward. I do not think we will be able to survive the economic climate of the 1990s without a definite investment in the youth of today and in what skills we will have to manage the economy of the future. In terms of competition, as much as the government can do to alleviate or help people to compete on a more level playing field is good.

Mr Cleary: Thanks for your presentation. You touched on a number of good things. I know you are a student and you are looking to the future. How did you feel about the cancellation of the interest-free loan for eastern Ontario, for businesses here, which has happened in the last six or seven months?

Ms Hirani: For businesses?

Mr Cleary: Yes, the interest-free loan. They used to be able to get an interest-free loan to start a business. How do you feel about this government cancelling that program?

Ms Hirani: I was not aware of that actual thing, but obviously it is a bad thing if they are cancelling things that will help out young people or businesses. Many governments have done things in the past that have hurt people. I do not think that was their intent, if that was what they did.

Mr Villeneuve: As a young person getting near the end of your studying -- I guess we never do stop studying -- as one who is still in university, does it concern you, as one who is going to be paying taxes, that the total debt of this province will be literally doubled in the next four years?

Ms Hirani: Obviously debt is a problem, and I do not think that can be put down as something that should just be dismissed. But I also think that in a recession the government has an obligation to the citizens of this province to spend and to alleviate the difficulties that are faced by people. I am quite willing to pay my taxes and deal with whatever will come in the future, but I think the government is right in spending during a recession and I do not think deficits in their entirety are all bad.

Mr Villeneuve: In spite of the fact that Ontario is probably the most heavily taxed jurisdiction in North America?

Ms Hirani: In return for our taxes I think we get a lot which we take for granted -- our health care system, our educational system is one of the best -- and I think people should be willing to pay taxes for the level of services they have in this province.

Mr Villeneuve: Cross-border shopping is a major problem in the area I come from, and it is primarily stemming from very high taxes on fuel. There are many areas of concern but that is the catalyst that is bringing people over to the US to do some shopping, high taxes, and with this doubling of the total debt of the province, inevitably we will be paying even higher taxes. I would like a solution to this and it is not an easy one.

Ms Hirani: I do not propose to have all the answers. You mentioned fuel taxes and I do not think that is something that should be compromised at all. The taxes on fuel are intended to promote a more energy-conscious environment and I think that is a good thing.

Mr Villeneuve: There are many ways we can be environmentally conscious, by the production of ethanol, which is a renewable resource which would be a renewable octane enhancer. I am a little disappointed that the National Farmers Union gentleman did not talk about it. As you said in your presentation, we must be competitive while attempting to preserve and not deteriorate our environment further, and that is quite a trick in itself. Thank you.

The Chair: Thank you for coming before this committee. This committee will recess until a quarter after three.

The committee recessed at 1506.



The Chair: The next person to make a presentation is Ms Hutcheon. Welcome to the committee. You have 15 minutes for your presentation.

Ms Hutcheon: I would like to thank the government of Ontario and members of this committee for providing this opportunity for me to share my views on the 1991 Ontario budget. I am here to speak in favour of that budget from a couple of different perspectives: first, as the owner of a small business in rural Ontario and second, as a fairly average citizen of Canada and Ontario. I operate a small variety store in a hamlet just north of Kingston. My clientele ranges from local people year-round to an infusion of tourists and summer residents from southern Ontario and from several states south of the border.

Had anyone asked two or three years ago, many small businesses in small-town Ontario could have told the government of the day that the warning signs of an economic slowdown were beginning to show. Fewer American dollars were appearing in my till, there were increased numbers of advertising flyers coming out to rural areas from the larger urban centres and orders to my salespeople were declining in size. Some of the reasons behind this downturn are obvious. We have all heard them: the frustration and confusion surrounding the Canada-United States free trade agreement and its failure to stimulate the Canadian economy except in very specific areas; constantly increasing interest rates; an overvalued Canadian dollar, and most definitely the goods and services tax. I hear about that on a daily and regular basis.

None of the political or economic rhetoric of the past few years has given me, a small business person, much reason to expect anything other than the recession in which we currently find ourselves, that is, until the 1990 election and the subsequent budget of April 1991. This budget, I believe, is based on a philosophy of economic fairness and the preservation of social programs that are an integral part of the Canadian way of life. It is a budget designed to do what I believe is the economic purpose of government, that is, to act countercyclically, to build up deficits in order to give economic support and stimulation when other sectors of society cannot or will not, and then to pay down the deficit as the economy improves.

How does this budget help my small business in a time of recession? Any initiative that puts money into the consumer's pocket or does not remove it through unfair taxation makes it possible for businesses to do better. Economic initiatives that do just that are evident in this budget. To cite a few: not piggybacking the retail sales tax on top of the GST, a policy that is leaving $470 million in the consumers' pocket in this year alone; more favourable Ontario income tax for low-income Ontarians, again leaving money with the consumer; providing new funding for small and medium-sized manufacturing firms, thereby forestalling more bankruptcies and permanent plant closures; a clearly stated commitment to fighting the recession instead of the deficit, a move which indicated to many people in business that we had reason to be confident in the economic future in Ontario; infusion of money into the gross revenue insurance plan and the farm interest assistance program -- a farming industry that is alive and well is a strong supporter of small businesses in small-town rural Ontario; increasing and improving on the affordable housing program -- jobs are created in the construction industry, and a variety of businesses benefit from the subsequent spinoff effects of people buying homes.

The list does not stop here, but I believe the points I have mentioned clearly illustrate the reasons for my support of this budget as an owner of a small business.

I would like to continue my presentation by addressing the issue of maintaining our social support systems. It is clear that slow economic times not only erode government revenues but also increase demands on money from many of our social programs. This current recession, it has been noted, is the worst recession in Ontario in 50 years.

In Ottawa we have a federal government that has increased taxes and cut funding. In Ontario we have a government that is prepared to reverse those trends by giving people help and support now when it is needed, prepared to review and improve service delivery with an eye to the future needs of our society and prepared to invest in research and development, job retraining and manufacturing recovery.

The province of Ontario is noted for the high quality of its health care and educational systems. With the appropriate handling of expenditures and allocations of health care resources, we can maintain this high standard. People who need cancer operations, dialysis machines or open-heart surgery will still receive treatment because they need it, not because they can afford it. Several of my daily customers have undergone bypass surgery in the last two years. Without our principles of universality and accessibility, not one could have afforded that operation without serious financial burden.

Ontario spends about $10 billion a year on education. To cut spending would reduce the number of positions available for students in colleges and universities, and at the current level of unemployment there would be few jobs available for those who were not able to attend post-secondary education.

Futurists are predicting that the current generation of young people will be changing jobs at least 10 times in their employment history. Training and retraining in an educational institution or at the workplace must be appropriate and timely for those changes to be successful.

Social assistance has become a vital support to the stability and security of people who lose their jobs. More assistance, not less, is needed in times of high unemployment. More people, not fewer people, need food, shelter and job retraining.

Again, it should be obvious why this budget is receiving increasing support among average people and why history will prove it is the only sensible and defensible way to go.

The third aspect I would like to deal with is the fact of the deficit itself. Most of us are familiar with the component parts of the deficit: a reduction in government revenues caused by the recession; federal funding cutbacks to health care, education and social services, accumulating over the last few years to well over $3 billion; new program and anti-recession program spending; maintenance of already existing programs, and the deficit inherited from the previous government.

From my perspective, the only acceptable place for budget reductions was in the area of new programs and anti-recession spending, but this would have a small effect on the overall picture and would not have provided the boost the province needs right now.

It all adds up to a somewhat frightening total, and it would be even more so if we saw no light at the end of the tunnel. But a budget is more than a statement of where we are; it is a document that must deal with the past, the present and the future. So let us look at the future as this budget sees it.

The money put into the educational system in training programs today ensures that our workforce will be better equipped to handle the challenges of tomorrow.

Dollars put into strong environmental programs dealing with waste reduction and management, coupled with high priority given to energy efficiency and conservation, will help to provide us with a cleaner, healthier environment in which to live and work.

There is probably no system in the country or the province that needs an overhaul more than the taxation system. The setting up of a Fair Tax Commission to undergo a comprehensive review of taxation in Ontario has to be one of the most important decisions made by this government. It is essential that changes be made to the tax system so that people's attitude towards taxes can change. Do not expect us necessarily to welcome taxation, but if it is seen as fair and equitable we will accept it as a necessary part of our way of life. As it stands, many people are convinced that the taxation system is an unfair pile of gobbledegook designed by lawyers for lawyers and the people who employ them.

Another commission created by this government that will have an impact on the future is a three-person commission of inquiry to examine all aspects of land use planning and regulation. The agricultural paradise of the Golden Horseshoe has been virtually destroyed by residential, commercial and industrial development made possible by shortsighted people who focused too narrowly on immediate financial gain. This region had the best agricultural land in the country, bar none, and yet we see more and more imported food items on the shelves of our grocery stores. I sincerely hope that the members of this commission take their job seriously and recommend appropriate measures to preserve our farm land.

There are many other items in the budget to which I would offer support, such as initiatives to counter violence against women, stronger pay equity legislation and greater funding for the cultural industry in Ontario. But I think I have made the point that the Ontario budget presented in April 1991 is a fiscally and socially responsible plan for the future of our province.

Mr Kwinter: Ms Hutcheon, one of the things you said was that you support the budget and you feel that in times of need a deficit is fine and you would pay down the deficit when the economy improves and that you see light at the end of the tunnel.

I would like to get your response to these figures. In 1990-91 the government brought in a deficit of a little over $3 billion. In the coming year, the year that we are in right now, they are anticipating that there will be less revenue than there was last year but they are going to be spending 13.4% more than they did last year. So there is a 13.4% increase in expenditure but the revenues are going to be less and that is why we have this $9.7-billion deficit.

Next year they are projecting that revenue will go up by 10% and they claim that their expenditures are only going to be up 6%. That happens for the next four years. Every year it will go up 10% in revenue and expenditures will be up 6%, which is at the rate of inflation.

One of the things we have heard from virtually every single social agency that has appeared before this committee is that they applaud the government for what it is doing, realizing that they need more money but, because times are tough, they are prepared to take what they are getting because they understand there is a recession.


If you take a look at the projections of this budget, according to the government there will be no more expenditures because all that is happening is that the expenditures are going up by the rate of inflation. How are you going to tell people, when times are good: "Sorry, we can't give you any more money, because times are good. You're going to have to wait until times are bad, because when times are bad, we'll give you some extra money. But when times are good, we can't give it to you"?

Yet for every one of the next years until the end of 1995, there is a deficit. The smallest deficit is $7.8 billion in 1995, which means there is no money to pay down any of the debt. So all of these people are praising Keynesian economics, saying, "We support it and everybody knows that it's great, that when times are bad you spend the money and when times are good you pay it down," but there is no provision to do that. How do you respond to that?

Ms Hutcheon: I am not an economist and I do not know if I am supporting Keynesian economics or John Kenneth Galbraith economics or whatever, but I think there are a lot of people out there who believe, and I am one of them, that as times improve, the demands for those funds will also go down, and that could well have a positive effect on the deficit.

Mr Villeneuve: Cross-border shopping is a problem to everyone across Ontario. It quite obviously is affecting you as one operating just north of town here. What are the comments you get from Americans when you set out the price and then the taxes, or what are the general comments from the Americans as they come here? With this very drastic increase in the deficit we are going to have additional taxes; it is inevitable.

Ms Hutcheon: The most frequent and virtually the only comment I hear from my American customers concerning taxes is the GST. I have never, in this season particularly when we are all listening for negative and positive comments on a variety of issues, heard anyone reflect negatively against the retail sales tax, perhaps because we are all familiar with it. They are all used to it. I have a lot of return American customers, but it is constantly about the GST.

Mr Villeneuve: They are quite obviously not aware that the 13.5% manufacturers' tax was removed and replaced by 7%, but that is beside the point. You say, and this is my final question, that a farming industry that is alive and well is a strong supporter of small business in rural Ontario. Do you feel the agricultural business right now is buoyant?

Ms Hutcheon: I see that it has probably declined over the last two or three years since I have been in business, but in eastern Ontario it is not very vibrant and buoyant anyway. My real rural agricultural concerns are in southern Ontario, where I grew up.

Mr Villeneuve: But you are in deeper trouble than we are.

Ms Hutcheon: It is an agricultural and economic disaster as far as I am concerned.

Mr Villeneuve: But the comment here that everything is alive and well and supporting small business --

Ms Hutcheon: When they are alive and well.

Mr G. Wilson: Thanks a lot, Kathee, for your presentation. I found it quite wide-ranging and certainly thought-provoking. I like your comments about the Fair Tax Commission, that people are willing to pay taxes when they are seen to be fair. Just to pick up on what Mr Villeneuve is saying about the situation of farming and the protection of farming lands, you say they are wasted in the Golden Horseshoe area. I was wondering what our position then should be on future use of farming land. Are you hopeful about the future of protecting our farm lands? I am thinking about this area, southeastern Ontario.

Ms Hutcheon: In southeastern Ontario? I would hope there would be strong measures put forward to stop the rezoning of agricultural land into residential and commercial and industrial development. There are lots more appropriate places to live in the great Canadian Shield than in the Golden Horseshoe and in the Hay Bay region, etc. It is wonderful farm land down there. But where I am from we grow stones and farmers continue to farm that land, but because it does not produce the way one needs it to produce and have a good quality of life, they have to take outside jobs. There are very few good, top-quality, sole-income farming operations as far north as I am from, which is not that far north of Kingston really.

The Chair: Thank you for your presentation.


The Chair: Our next presenter is Ms Brooks. Welcome. You have 15 minutes for your presentation.

Ms Brooks: My name is Cecilia Brooks. I work at the library at Queen's University, but for the last four years I have been working with my co-workers, teaching them English as a second language and literacy. It is a program that was set up by the Ontario Federation of Labour and it is funded by the Ministry of Skills Development. Most recently, I have been working with the Ontario Federation of Labour to develop approaches and materials for literacy and second-language programs that will better meet the needs of workers in Ontario who are facing layoffs and closures.

Workers facing unemployment due to layoffs or closures react in much the same way as to any major loss. They face denial, anger and fear. They repeatedly experience rejection as they search for jobs and their self-esteem is shattered.

To make matters worse, the federal government has passed Bill C-21, which has increased the eligibility requirements and shortened duration periods. More and more workers are being told that they have been disentitled or disqualified. In the first 11 months of 1990, close to 500,000 people in Ontario were affected. Of those, about 75,000 were disqualified for incomplete documentation.

Although the federal UIC does have an appeal system, the procedure is complicated and confusing. There have been over 15,000 umpire decisions. If an unemployed person fails to successfully appeal or gives up in frustration, he or she then turns to the province or municipality for financial assistance. Locally in Kingston, our social planning council is now assisting 36% more people than last year. This has increased the dollar amount by 50%.

Bill C-21 has freed the federal government's financial responsibility for the unemployed of Ontario, but how has the province's new budget responded to the unemployed of Ontario?

We have $215 million for social assistance reforms, which will allow people to earn 25% above their welfare before deductions, which will help people to get into the labour force and help overburdened municipalities; and $32 million has been given to adult literacy programs. This money will help so many more people take control of their lives, and as a provider of literacy in my workplace, I can certainly tell you what the money will mean to those people.

There is $32.5 million for new training and assistance programs for laid-off workers; $50 million in tax cuts for low-income families, and I understand that this means that the number of low-income earners whose Ontario income tax would be eliminated or reduced will increase to 700,000 for the 1991 year; $700 million for the anti-recession program to create 18,000 jobs, and most important, the budget will create or maintain approximately 70,000 jobs.

Other incentives that I would like to mention are the wage protection fund, $175 million; the development of another 10,000 non-profit housing units; $131 million for business research and development, and $57 million in loans and guarantees for small and medium businesses.

This recession has hit Ontario very hard. The number of unemployed in this province is now over 530,000. Since December 1988, we have lost 3,269 jobs in the Kingston area alone. Ontario's unemployment help centres are a lifeline for the unemployed. These centres provide programs, services and assistance to enable workers to access meaningful employment and/or retraining.

It is my belief that the province of Ontario must find a way to police the federal government's unemployment insurance system. We must address the criteria which were established by the Peterson Liberal government which did not allow these centres to assist unemployed workers in their appeals for UI. The province must act on the flow of unemployed from UIC to provincial assistance.

It is also extremely important for dislocated workers to be well informed of their rights under section 26 of the Unemployment Insurance Act, not only for the protection of their UI rights, but as a way of lengthening the period that they qualify for benefits while at the same time upgrading to meet the required qualifications for entry to a retraining course. Workers forced into this situation need assistance to find their way through the training bureaucracy, and these centres can provide that help.

The community industrial training committees are given huge amounts of federal funds as well as provincial funds to sponsor training initiatives and to promote skilled occupations. However, this organization seems to have extremely high administrative costs, and it appears to me that the provincial funds are spent only on administration and not on training per se. This is extremely frustrating for people who are unemployed and want to upgrade their skills.

I would like to stress that the present problem is that there are not enough jobs available. It is not that our workers lack the skills to work. There are many workers in Ontario who are underemployed, working at jobs which demand very few skills and pay very low wages. It is also vital that we set up bridging programs to assist underemployed workers to access training programs, as well as literacy and English as second language, so that we can all contribute to society in a more effective way. Having these services available in the community in the form of help centres helps keep workers, both employed and unemployed, together.

In closing, I would like to make the point that I support the provincial government's choice of putting the wellbeing of people before the deficit. I am not an economist, and although I have read much about the causes and effects of the deficit, I do not really understand it. But I do know that you cannot walk away from the members of our community when they are down and out, at a time when they need it the most. I think this budget is a major step in the right direction, and I would like to thank the government of Ontario for holding public hearings to allow people this opportunity to share our views.


Mr G. Wilson: Thanks very much for your presentation. I find it is based on a lot of experience. I see you had work in the adult literacy program. I guess that was the basic education for skills training program at the workplace.

Ms Brooks: That is right.

Mr G. Wilson: The thing that I want to centre on, though, is your section on the unemployment help centres. I guess the sense that I get is that these workers need more than a job posting on a wall, that there is some kind of support that they need over and above that.

Ms Brooks: That is right.

Mr G. Wilson: I just wonder if you could elaborate on that. I suppose it has partly to do with the morale problem of being either unemployed or underemployed. Anyway, I will not prejudge what you are going to say.

Ms Brooks: Do not take my speech, Gary.

Mr G. Wilson: Yes, right, go ahead.

Ms Brooks: The plight of the unemployed really is a very desperate one. The stigma that is attached to being unemployed leads a lot of people to stay at home and wait for the phone to ring: read the paper, write résumés, send them in and expect that a call is going to come. Rejection sets in, self-esteem is shattered, they start spending less and less time with friends because they are embarrassed, ashamed, whatever, and do not have the money to go out and do the things that they used to do before.

The unemployment help centres, where they are running in the province, are a very good way to get people to come together for workshops, for job search clubs, as they call them, where they help one another. They strike up a friendship with other unemployed people and they help one another get jobs, they help one another upgrade their skills. We have cases where they go together in groups to community colleges because it is less frightening to go together in a group, but we have the unemployment help centre which gets them together and gives them a new sense of community that they lost when they lost a workplace.

Mr Kwinter: Ms Brooks, I was interested in your comment about the people who were underemployed and that there was a greater need for jobs. This morning we had a presenter who claimed that in fact it was just the opposite, that one of the problems we have is that we have not got enough skilled people around and that the literacy rates were 25% in Ontario. How do you reconcile the two points of view?

Ms Brooks: Literacy is very wide-ranging. There are many degrees of literacy or illiteracy. There are people -- probably very few people in Ontario -- who cannot read and write at all, but we have quite a number of people who are probably reading at about grade 9 level who still qualify for and need literacy programs to upgrade their skills, to build their self-esteem to get back into community college programs and so on, who have had jobs. Some of these workers went and found a job immediately out of school, were trained in that job and were skilled in how to do that job, but when they go out and apply for a new job when their plant closes, they find that they are not necessarily trained, nor do they have the skills to do the job in the new plant with the new technology and so on.

The Chair: Thank you for your presentation.


The Chair: Mr Day, welcome. You have 15 minutes.

Mr Day: Thank you very much. My presentation will take eight or nine minutes and I will then be pleased to answer questions. I am speaking, as my brief notes, as an individual. I am a school trustee representing the town of Port Hope and the township of Hope on the Northumberland and Newcastle Board of Education, but I am not here officially on behalf of the board.

The main reason I am here is to tell you how furious I was when the Conservatives, criticizing the provincial budget, said that grants to municipalities and school boards should have been frozen. If the press and the public had fully understood that the Tories were calling for property tax increases of around 15%, they might have been less likely to climb on the bandwagon of looking at nothing but the size of the deficit.

To prove what I am saying, I will have to give you some figures about the Northumberland and Newcastle Board of Education, on which I have served for the past nine years.

I should tell you first that our board serves 22,000 students in the county of Northumberland and the town of Newcastle, which is part of Durham East riding. This makes us the largest board between Oshawa and Ottawa. Our 1991 budget was about $132 million. We are a growth board. Right now we are building two new elementary schools and one major addition. About 28% of our elementary students are in portables, so we need to build a lot more. Our size allows us to be leaders in many ways. For example, the percentage of our secondary students in co-op placements is the highest of any board in Ontario. As our official slogan, we are proud to call ourselves "Leaders in Learning." Despite all this, our costs per student are several hundred dollars lower than the average county board in Ontario -- about 6% below the average.

Under Ontario's 1991 budget, our board's operating grants are up 8.8%, including enrolment growth. Provincially, the budget put school board operating grants up 7.9% If our board's operating grants had been frozen, we would have lost $4,935.562. Our mill rate this year increased 6.98%. Losing those grants would have caused a further 8.92% increase, for a total mill rate increase of 15.9%.

Of course the public in Northumberland and Newcastle would never have bought that in the middle of a recession. We would have had to make more cuts. But because of the recession, we had already cut practically everything. The only major new initiative in our budget was an extra $618,000 for building maintenance. If we had chopped that item right out in response to a grant freeze, our mill rate increase would still have been 14.78%. If we had chopped all other new initiatives, the mill rate increase would still have been 14.52%.

This is because our base budget, our uncontrollable costs, had a built-in increase of 7.16%: inflation, GST, UIC rate increase, pay equity and enrolment growth. Provincial grants made up about 46% of our budget last year, so if provincial grants had been frozen, you can see why local ratepayers would have been hit with a mill rate increase of over 14%.

Why are there so few cuts we could have made? Because we long ago made all the cuts we could. Our provincial funding has been dropping since 1974. Please look at the graph at the back of my brief. You will see that it has been dropping. Last year it was 46.1%; this year it is 47.6%. Before anyone gets too excited about the fact that our provincial share in 1991 is up, I should tell you that was due to capital grants for new schools. The ministry's share of the board's operating costs this year was 46.09%.

Over the past 17 years, as a result of declining funding, we cut everything we could find. We closed the last of our small, inefficient schools around seven years ago. We streamlined our administration. We did everything else possible, and then we started cutting building maintenance as a short-term expedient until provincial funding would, as all three parties promised, improve. We have been doing that for seven years and it has not improved yet.

Since 1984, our plant department reports that we have built a maintenance deficit of $13.6 million. So last year we passed an eight-year plan to wipe this out, needing each year an annual increase in our maintenance budget of $618,000. If we had cancelled this year's increase, not only would we have added to unemployment in the construction industry, but we would have been indulging in false economies. Even some of the more conservative trustees on our board who said they wanted to get our mill rate increase down to 5% still voted for this $618,000 maintenance budget increase.

We could not have coped with a grant freeze by dipping into our reserves, because we did that already. To keep the mill rate down in this recession year, we budgeted for everything we could legitimately call a onetime cost, $817,000 worth, to be paid out of reserves. I do not expect we will be able to do that again in 1992. And of course, the local share of everything we can legitimately call capital, even new portables, is debentured.

I have told you all this to show that a grant freeze would have left us no alternative to a mill rate increase of almost 15%, even though that would have been totally unacceptable to our ratepayers.

I am not the only school trustee in Ontario who gets really amused when the private sector and Conservative politicians tell us it is time we started to cut back, as they have had to do in recent years. They obviously have no idea that school boards all over Ontario have been living with cutbacks for 17 years. After all that time, we really tend to feel we are the experts in how to live with it and what it really means.


From our narrow point of view, some us probably thought the biggest news about the provincial budget was that the government had postponed bringing back succession duties and had therefore postponed moving towards a return to 60% provincial funding.

One of our board's top priorities in the next few years is women and technology. We already have very good numbers of female students choosing math and science options in their senior high school years, but our problem is technology. Our enrolment in old-style tech courses is still declining and we have had mixed results trying to get more girls to take those courses. Over the next few years we are going to spend a lot of money introducing new design and technology courses geared to the computer age and appealing equally to male and female students. If our grants had been frozen, we would have been trying to do all that at the same time as playing catch-up after a grant freeze. It is such an absurd proposition, I do not know whether to laugh or cry.

I get even more angry when people say we have to clamp down on welfare payments. Most welfare payments cannot be controlled. The easiest people to clamp down on, the most powerless, are the potential high school dropouts who have left home in conflict with their parents and are looking for student welfare. They are easy to cut off the welfare rolls -- you tell them to go home or get a job. They get a deadend job, drop out of school and all we have to offer them is speeches by Brian Mulroney urging us to lower the dropout rate.

It really makes me sad to see suggestions of freezing education grants coming from the party of Bill Davis, the man who proved that it was indeed possible to raise the provincial share of education funding, when he raised it from 47% in 1969 to 60% in 1972. They should be thoroughly ashamed of themselves.

When you look at that graph and see that our provincial funding dropped from 57.6% in 1985 to 46.1% in 1990, I have to say I do not really see how the Liberals have any credibility on education finance either.

In conclusion, I say, thank God we had a Treasurer who did not use the recession as an excuse to take yet another kick at the school boards.

Becoming a school trustee was never one of my career objectives. Sometimes it is a pretty thankless job, constantly having to maintain some kind of balance between the needs of children in the classroom and the ability of the taxpayer to pay. Despite the fact that I have children in school, which is obviously why I ran, I have to keep those interests in balance. So does every other school trustee. But as the Supreme Court of Canada said in the Mahé decision dealing with the question of what numbers are sufficient to warrant separate French language schools, and I am paraphrasing, if the proper balance between finances and children's education is in doubt, the best interests of the children should be given the benefit of the doubt.

That is what I like about Ontario's 1991 budget: it is proud to say that it puts people first.

Mr Jamison: Thank you very much for your presentation, Mr Day. I understand what you are saying about education in general, about transfer payments to boards and to municipalities and so forth. I wonder if you could enlighten us as to basically what a freeze on those payments would have meant to class sizes and numbers of teachers. Would it have caused layoffs within the board itself?

Mr Day: The administration of our board did a calculation on what would have been necessary to hold our budget-to-budget increase to 5%. That is not the same of course as holding the mill rate. To hold the budget-to-budget increase to 5% we would have had to lay off 400 teachers, which is completely out of the question. What it would have done to class sizes is unimaginable. What it would have done to our collective agreements which contain class size provisions is it would have violated them. It was impossible to even contemplate. However, they did make the calculation at the request of one of our trustees.

Mr Cleary: I just wondered. You said that our mill rate increase this year was 6.98%. How did that compare with the previous two or three years?

Mr Day: A little lower. We squeezed it as tight as we could this year.

Mr Cleary: How much was it in the last two or three years?

Mr Day: I do not have the figures with me at the moment.

Mr Cleary: Was it in double digits?

Mr Day: I think the 1989 budget was probably a double digit, yes.

Mr Villeneuve: I see you have taken a few strips off my party. That is quite all right. We are fair game. Would you consider your board to be one of the have or have-not boards? It is rapidly expanding. We seem to have two breeds of boards: those that do very well, thank you very much, and those in rural parts of Ontario that struggle at best, and it will always be a struggle. Where do you sit on that scale?

Mr Day: We are definitely one of the assessment-poor boards. We are around about the 75th percentile in that category. We are right in the middle of the bottom half of the assessment-poor boards, which is because we have relatively little commercial and industrial assessment. Our growth tends to be the bedroom variety of growth.

Mr Villeneuve: But rapidly expanding growth, though, in the residential area.

Mr Day: We start at the eastern boundary of Oshawa. The whole area, Courtice, Bowmanville and so on, is growing like mad as a commuter community. There is no commercial and industrial out of that, though.

Mr Villeneuve: Having sat on the select committee on education a few years ago, I was always intrigued by the rather novel ways that some of the have boards have of spending money. Then of course it comes to us who say, "Well, we cannot be discriminated against and therefore we have to provide some of the services the downtown Toronto boards have," and we wind up in very difficult situations. Your particular case would probably be an example of that because you are one of the have-not boards and yet you are within pretty easy earshot of some of the big downtown Toronto boards that have money to burn, literally.

Mr Day: Quite so.

Mr Villeneuve: That makes your position even more difficult possibly than some of the other assessment-poor boards.

Mr Day: It makes it difficult in two ways. First of all, we are trying to provide as good a service as they do in Toronto with about 75% as much money per student. Second, we run into voters who know about school boards only what they read in the Toronto Sun. They assume I am earning $50,000 a year as a school trustee rather than $8,000 and they assume we have money to burn.

The Chair: Thank you for your presentation.



The Chair: The last group to appear is the Kingston and District Labour Council. You have one half-hour for your presentation.

Mr McPhail: Essentially, I do not think I will be using the half-hour, so we will let everybody out early.

Mr Villeneuve: No overtime, shucks.

Mr McPhail: Yes, right.

The main thrust of the arguments presented by the labour council is fairly normal across the province in a lot of respects. Essentially, they are based around the aspects of the budget proposals being fairly evenhanded in a lot of different areas, whether it is health care, education, social-service-based organizations or whether it is in the neighbourhood of local municipalities receiving the ongoing type of transfer payments or the onetime type payments that are being received through the anti-recessionary program. That also extends into the education field and other types of institutions within the province.

You might ask, in a sense, why is it an element of interest to the labour groups in that they are normally out for contractual obligations? We have developed this social service network throughout the province that is really second to very few in the world. In a lot of respects, the people who are out there who work every day have relied on that and have been part of it and want and will maintain, in terms of paying taxes, that type of health care system.

The real point of the argument in a lot of things is that when you take away those types of moneys, if it was that type of situation, we would end up with considerable economic deficits in the Kingston area that we would have to consider. Being not necessarily a unique community, we have representations from large, different areas in here. We are a large centre for health care, education being represented through the colleges and obviously the public and secondary school boards and the university itself, which contribute largely to the economy of the community.

Again, obviously, and not to leave out the other aspect, because it is a very large group, you would have to talk about the business community itself, whether it is Alcan or the different Millhaven transit groups or things of that nature.

The only difference between them is that the provincial government budget itself -- we are not talking necessarily about free trade or anything else, but relating to the provincial budget -- does not necessary address the concerns of industry. A lot of the cases or arguments that are being used today are outside that budget, so I have tended to step away from that to a certain extent.

The other area we all recognize is the social service agencies. Particularly, we have to find that the provincial government, in two aspects, has come across reasonably well. We all recognize that through the provinces of the country there have been a lot of cutbacks in terms of the provincial governments that provide the services, whether it is employment or not. We do not see that within the Ontario government, which is quite unique and is also very pleasing to the labour community obviously.

The other thing is the need for social services. I am involved presently with the United Way of Kingston and also involved in other aspects, employee assistance programs and that in the workplace, and coming out of an education area such as the university where we keep getting this great feedback from people saying: "Look, you're the educated people of the world. You're part of a large organization that has lots of education. Why are you concerned about the employee assistance program? There are no problems in those places."

Dealing with average individuals and the concerns they have on a day-to-day basis, I find it very interesting if they repudiate that type of situation, because there is a need. The average person out there, whether he has a PhD or a grade 12 education, working within that structure has the same concerns and the same problems. It is maybe only elevated whether you have dollars or not. I always say that is more of a whimsical type of comment than anything.

The root point is that I think what we come down to in the long run is that the budget delivered basic across-the-board maintenance and that, at the minimum in this time of recession, is important. We cannot as a community, and that is largely what we are, whether it is province-wide or local, turn our backs on people. This is where I draw an interesting analogy. It is not to slight business in a respect. We have a considerable argument out there that we must reduce the budget for the sake of reducing it. I will use the analogy that when in business, the economic factors are there. Whether or not you are losing money and you decide to make economic decisions, they are usually based on the aspect that you know you are there to create a profit for the corporation itself or maintain a certain level of profitability.

Whether or not you can do that is usually a relatively easy decision, but when you come into the aspects of government and the aspects of the social community, you cannot treat the organization, whether it is government or local groups, as a business. They are an individual person or an individual group of people and it has to be recognized that they are not labelled with dollars and cents on them or they are not labelled with numbers on their heads. I think that is very important. As a person or as a member of the labour movement, that is where I find it can support a budget of this nature.

To step aside from those four main areas, the other thing I see -- to get away from the more global arguments of labour itself in dealing with the pay equity question or whatever, which really the labour movement in Kingston supports -- is that there is another real problem this budget helps address in this area in particular, although it is going to become a greater problem over time and maybe will require more assistance, and that is what I will call the Toronto syndrome.

Coming from that area, we have all recognized in the last 20 years that the city has grown in great leaps and bounds, Toronto, that is, and the economic and growth effect it had in the rural communities around the area. Since coming to Kingston in the last 10 years, I am starting to see that essentially Kingston has a very wide-ranging community for employment, not necessarily social agencies or whatever, but people come to Kingston for employment in ever greater numbers from Belleville on the west side of the 401 to Brockville at the other end and as far as Westport to the north. You draw a nice arch there. You can see a very large area where there are a lot of local municipalities and this is where my argument comes in, the aspect of ongoing transfer payments, if you want to call them that, to local municipalities and the onetime annual inflationary program.

We have a large number of people in there who essentially are in small municipalities. They are in the order of 5,000 or 6,000 people who essentially rely on the Kingston area as an economic benefit and provide the economic infusion, whether it is through taxes or through providing buying power to local businesses in those regions. This is where you can start seeing and then tying together the whole aspect of how the budget for this region has provided a fairly balanced economic condition. It is as likely more by a fluke, but in a global sense it has recognized and provided a certain element of stability here by providing the maintaining of the health care education and social services and things of that nature, the only things in this region that really have changed substantially. Whether it has gone from larger to more moderate-sized business is arguable. But essentially, in terms of large businesses in the area, we have seen a distinct decrease in the number of people who are employed. We have gone to a greater number of moderate businesses or smaller, and whether they have filled a gap I have no figures to prove or disprove.

This brings you back to the whole argument of local municipalities. If you are going to provide a quality of life, which is generally what the labour movement in a roundabout way is trying to get at, if we get into one of these local municipalities, as always the society today is demanding an ever-increasing number of services. This also relates to the aspects of the planning that were talked about earlier and things of that nature. The local municipality has a designated amount of cash on hand or the ability to raise taxes through whatever way. What we are seeing in this area and what I suspect will heavily increase is the inability of these municipalities to provide these services. It is based on the aspect of planning in a lot of respects, but on other aspects too.

Of course we have to provide the increased elements of education in our public schools and our high schools, and when you get into the rural areas of the north, you always run into the inevitable problem of how far to draw them in. Once you draw them in from great distances and you have large numbers, how do the actual schools themselves affect the community through the aspects of pollution, or whatever, in terms of their septic beds and stuff of that nature? It provides a very mixed and problematic situation for an average individual to live in.


To cut it short, once you have developed these problems, whether it is through the school problems or whether it is through having a rural road with one-acre lots strung down the side where everybody is living more or less in a subdivision and the municipality cannot provide the services because obviously it does not have the tax base, whether that service is lighting or garbage collection or, in the future could be the demand through such instances as the Westport instance where a large number of people lost their ability to obtain water through that type of thing -- that could occur in the rural areas through pollution or the local quarry -- once you get to that point you have real problems and there is no way those municipalities can provide those services.

I will always use this line: Coming out of the area north of Toronto, as I said, I remember getting a phone call one evening for my father. He happened to be a mayor of the area. A lady gets on the phone, or a person -- I will not identify the gender -- and says, "I have a problem with my sewers." I say, "Where do you live?" The person says, "I am out in concession road such-and-such, lot whatever." I say, "Sorry, but there are no sewers out there," and the person says, "I bought out here and it is in this municipality and I am sure I have sewers."

It is an exaggeration, but you can see the type of problems we are running into in this area. To make a long and short type of thing, I see economic infusions such as the $700 million to provide jobs, first of all, because the labour movement is there, but second, to provide those essential services that provide an element of quality of life for the people who are living in the region. I would just like to conclude more or less on that note and show our support in general for the budget. I am sure you have heard everyone in this world who had always wanted or expected more, but this time I am not so certain it is there. I would just like to end on that point. Thank you.

Mr G. Wilson: Thanks for your presentation. Coming from the labour council, I think it shows that the labour councils are interested in more than just the jobs in the area and the wage levels, but also the quality of life the working people in this area experience and what is needed to ensure that the people here have a good standard of living.

I would like to follow up on your last comment about the uncertainty of the future. I took it to mean the basis that we have come to expect, the manufacturing sector in this area -- I know it is eroding to some extent. What do you think is the future here about that? Did we establish if that is possible, or do we need something that I think a couple of other presenters touched on, the information sector or some kind of clearinghouse like an unemployment help centre, to make sure the workers are moving from the manufacturing sector, which has been strong in this area but is slipping, to other areas in the economic sphere?

Mr McPhail: Essentially, in respect of the business aspect slipping, the whole question bases it around the local municipalities and how they have handled themselves and the labour movement to a certain extent, but the real point is that Kingston is always seen as Kingston. I think what you have to get across is that there is much more than the city of Kingston in this area. There are greater services around here than in the old city of Kingston. It extends along the 401 quite nicely. Argumentatively, to my perspective, it should start extending north because we are getting this great, big, long stretch.

That is the real crux of it. There are a large number of industries that have come into this general area -- Belleville to the east, because of the low cost of land -- but when you get to that point and you have a large infusion of businesses or government agencies, you come back to the fact that you have to find a place to put the people. That is the real dilemma in this area at the moment. You have to get that planning.

The Chair: Thank you for your presentation. Before closing here, I thank the constituents of Kingston and The Islands area for their presentations before this committee. It has been very helpful.

This committee now will recess until 9 am tomorrow in Cornwall. We are adjourned. It is a long recess.

The committee adjourned at 1616.