PRE-BUDGET
CONSULTATIONS
ONTARIO ROAD BUILDERS' ASSOCIATION
AJAX PUBLIC
LIBRARY
ASSOCIATION OF MEDIUM PUBLIC LIBRARIES OF ONTARIO
ONTARIO FEDERATION OF AGRICULTURE
MINISTRY OF COLLEGES AND UNIVERSITIES
ONTARIO SCHOOL BOARD REFORM NETWORK
CONTENTS
Monday 28 January 1991
Pre-budget consultations
Ontario Road Builders' Association
Organization
Ajax Public Library; Association of Medium Public Libraries of Ontario
Home Sharing Programs
Ontario Federation of Agriculture
Afternoon sitting
Ministry of Colleges and Universities
Ministry of Education
Ontario School Board Reform Network
McMaster Students' Union Inc
Adjournment
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
Chair: Wiseman, Jim (Durham West NDP)
Vice-Chair: Hansen, Ron (Lincoln 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)
Sutherland, Kimble (Oxford NDP)
Ward, Brad (Brantford NDP)
Ward, Margery (Don Mills NDP)
Substitutions:
Fletcher, Derek (Guelph NDP) for Mr Christopherson
Malkowski, Gary (York East NDP) for Mr Christopherson
White, Drummond (Durham Centre NDP) for Mr B. Ward
Clerk: Decker, Todd
Staff:
Anderson, Anne, Research Officer. Legislative Research Service
Rampersad, David, Research Officer, Legislative Research Service
The committee met at 1007 in committee room 2.
PRE-BUDGET CONSULTATIONS
ONTARIO ROAD BUILDERS' ASSOCIATION
The Chair: I am going to open the proceedings. Welcome back, everybody. Our first presenter is the Ontario Road Builders' Association: Arthur Ryan, the executive director, Leo McArthur, the president. If you gentlemen are ready, could you come forward, please? Welcome to the standing committee on finance and economic affairs.
Mr Ryan: What we would like to do, Mr Chairman, with your concurrence, is to read through the brief which we presented to you, and then we would like to answer any questions you may have once we have finished.
Introduction:
The Ontario Road Builders' Association represents virtually all of the major firms involved in constructing and maintaining Ontario's provincial highways and municipal roads. The association was formed in 1927 and now comprises more than 170 companies in over 50 communities across Ontario. Our members represent a large labour-intensive industry, both union and non-union, working in an area which has a substantial impact on the quality of life of Ontarians and on the economic viability of the province. We welcome this opportunity to present our views to the standing committee on finance and economic affairs and trust some of our concerns will be addressed in your recommendations to the Legislature.
Economic development:
The road building industry is an important segment of the Ontario construction industry, which latter is the province's biggest industry, its largest employer, Canadian-owned largely by small entrepreneurs, pays the highest wages and is the province's largest taxpayer. These facts cause our industry to have a substantial impact on all segments of our society.
As we move cautiously into 1991, it is apparent that external factors will have a significant impact on the Ontario economy. Energy prices, interest and exchange rates, war in the Middle East are all factors which will have a serious effect on an economy already facing recession. The economic indicators for 1991, be it real growth, consumer spending, housing starts, business investment and employment, are all negative and are continuing the downward spiral evident in the latter half of 1990. Treasury will be hard pressed to determine the necessary funding priorities to best address these major concerns.
Employment:
We strongly believe that job creation is the most significant step that a provincial government can take to provide impetus to the economy and instil confidence in the people.
Construction and maintenance of roads can increase Ontario's job creation program and reduce unemployment levels. Roadbuilding is a very labour-intensive industry. It has been stated that the job creation impact of road expenditures is second only to that of the housing expenditures. In addition, there are accompanying payoffs in tax returns, indirect job creation and decreases in the cost of social safety nets.
Road works have an added multiplier effect of 1.85 in triggering other job-creating expenditures within our economy. The unemployment rate is currently forecast to rise from 6.1% in 1990 to 7.3% in 1991. In northern Ontario, we believe these statistics will be substantially worse.
Safety and social services:
Aside from compelling economic facts, there are a number of safety and social arguments which may be made for ensuring that the road system in Ontario is maintained at an optimum level. In 1988, Ontario introduced amendments to the Highway Traffic Act which more fully supported the National Safety Code. The NSC will achieve nationwide uniformity in safety standards. It aims to clearly enhance highway safety, which can best be achieved on unclogged, free-moving road networks.
Many of the day-to-day services that the people of Ontario have come to rely on are major users of the road system. Municipal transit systems, intercity bus services, school buses, police, fire protection, ambulances, hospital services and other emergency vehicles are but a few of the social services that require an efficient road network. We cannot overemphasize the importance of a well-maintained road system for all social services in the province. Free-moving traffic eliminates congestion, reduces pollution and individual stress.
Tourism:
Tourism is an important sector of the Ontario economy accounting for more than 4% of Ontario jobs. Tourism spending in the province, estimated as being in excess of $9 billion, must be maintained. A first-class, efficient road network is absolutely vital to the tourism industry. We must have a direct, uncongested road system which can accommodate travellers and not subject them to stressful delays, traffic jams and poor roads. Approximately 80% of all tourists travel by road in Ontario.
Good roads mean good business:
Roads and highways have always played an important role in the economic and regional development, especially in northern and eastern Ontario, where longer distances must be travelled. Retailers, agricultural producers, manufacturers and countless other commercial enterprises in cities and towns across Ontario depend on this network, particularly as just-in-time inventory management practices are being widely adopted.
The value of commercial shipments using our road system, for example, is greater than that carried by all other modes of transportation combined. Consider that approximately 100 million tonnes of freight are shipped across Ontario roads each year, more than $12-billion worth of goods arrive via road annually in Metropolitan Toronto alone and goods exported from Ontario via truck are valued at over $36 billion per year.
If business and industry are to remain competitive, they must have access to direct, uncongested and well-maintained roads, roads that will allow them to transport goods quickly and efficiently. Highways, roads and bridges are all part of the vital transportation network that we rely on to keep Ontario's economy moving ahead.
Carefully constructed over the past century, our road and highway systems represent an investment of more than $23 billion. Together they serve the needs of business, industry and the general public, providing important surface links for millions of cars, trucks, buses and other vehicles.
In terms of our specific recommendations, long-term planning:
We strongly support the current government's multi-year approach to government planning. Over the years, we have urged previous governments to develop at least a five-year plan for provincial highway funding needs and recommended close co-operation with the municipalities to determine their long-term requirements. As general contractors, the ability to plan for capital and human resources over at least a five-year span would obviously stabilize the industry and would have substantial cost benefits to the taxpayer.
The previous government in some way attempted to address this issue when it announced its $2-billion transportation enhancement program, which was scheduled over five years. We urge you to recommend continuation of the scheduled time frame of this program and recommend that the program be formally approved by the current government. We would stress at this time, however, that the transportation enhancement program still does not meet the funding requirements necessary to maintain our current infrastructure at the optimum level. Recent studies show that current rehabilitation expenditures are only meeting 75% of the needs.
Funding -- capitalization of highway infrastructure:
As are most organizations, we are concerned about current deficits, both at the provincial and federal levels. However, we strongly believe that an increase in the so-called deficit resulting from capital expenditures differs from deficit spending resulting from operating costs. Normal industry accounting practice treats assets as balance sheet items which do not affect operating lines of credit.
We believe that the government should consider defining new highway expenditures on the same basis. The public accounts currently show the investment in water treatment and waste control facilities in this manner. These costs are amortized over a period of years. Why not treat all new highway infrastructure spending in the same manner? We would be willing to discuss this item in more detail with Treasury at its convenience.
Dedicated funding:
During the past couple of years a number of provincial governments have established a dedicated funding mechanism to fund their highway programs. These governments have taken a number of cents per litre from their gasoline tax revenues and specifically allocated these funds to be used on their highway programs. We suggest to Treasury that it consider a similar approach in the province of Ontario.
The current fluctuation in gasoline prices presents an opportunity for the government to dedicate one or two cents a litre from its gas revenues to fund a new highway program. One cent a litre in the province of Ontario generates $100 million on an annual basis. We present the above two recommendations to the Treasurer because we believe that some form of creative financing arrangement must be established by all levels of government if we are ever to meet the ever-increasing costs of new infrastructure and timely maintenance and renewal.
Federal participation:
The government's Agenda for People emphasized a commitment to build a stronger northern Ontario. One of these commitments was that Ontario would undertake negotiations with Ottawa to proceed with the four-laning of the Trans-Canada Highway across the north and to improve this vital transportation network corridor. We strongly support this approach.
The Transportation Association of Canada, TAC, has just completed a study to establish a national highway policy for Canada. Phase 3 of this study, which has just actually been completed, is tackling the funding mechanisms for this new highway system. We urge the Ontario government to become an active participant in this process and in these discussions with the federal government relative to this particular report.
Over the past number of years, it seems that more and more provinces have received funding for maintenance operations on the Trans-Canada system which traverses their province. Ontario has received no part of this revenue. We urge the committee to request the Treasurer to approach the federal Minister of Transport and to press for at least some shared funding to develop a stronger northern Ontario.
In conclusion, in recent years the Ontario government has been neglecting road expenditures to an extent that puts the entire road system in jeopardy of becoming inadequate to the needs of the province. We must ensure that sufficient funds are allocated to maintain the infrastructure which has been created in this province. Our road systems should not deteriorate further.
Ontario is the engine of the Canadian economy. When firing on all cylinders it drives investment, consumes resources, demands more services and creates new jobs. Tragically, we are starving the engine of fuel with a traffic-choked system that is declining rapidly because of insufficient attention. We urge you to reverse the trend.
Mrs Sullivan: I am interested in your view that it is important to proceed with the four-laning of the TransCanada Highway across northern Ontario. I wonder if you would have a cost estimate on that proposal.
Mr Ryan: The cost varies depending on the extent of the work done, but it is many billions of dollars, there is no question about that. One of our problems with that is that as a government initiative, it realistically -- and we as an association would like to have it in place, but we do not see the funding available for that certainly in a reasonable time frame.
Mr McArthur: I would also believe that back in 1985 the Ministry of Transportation did a study on the cost of, I guess, twinning that highway, and maybe those numbers would be available through MOT. That was done, and then all you would have to do is just update it to the current level. I happen to kind of remember a number, but I do not want to say it because I am not just too sure really whether that was the specific number, but in 1985 it was done. But it was very, very substantial.
The Chair: Any other questions for the presenters? Do you have any estimation of how much tax is taken out of Ontario through the gasoline taxes at the federal level?
Mr Ryan: I am not sure of the exact figures at the federal level, no. I could give you the figures provincially. In terms of the revenues that come into the province from the highway system, which are the provincial gasoline taxes, licences and things of that nature, they are way in excess of the actual Ministry of Transportation's budget. Close to $1.8 billion comes in in total revenues, which is the result of motorist and trucking expenditures. In terms of the total payments out from the ministry, it is something like $300,000 less than that, $1.5 million. In terms of the federal excise taxes, I would not know that figure offhand, no.
Mr Sterling: Is there any trend in the United States towards toll roads? Are states backing away from that idea, or are they implementing more and more toll roads in the United States at this time?
Mr Ryan: Actually, they are looking at one now in California. As you know, there is some private financing. The United States is looking at all sorts of creative financing, which includes toll roads, but it is also looking at private participation in the highway system. In other words, as you do in the private sector commercial building, you build the whole package and then you finance it through your own individual tolls at a private level. That is what they are looking at in California at this time. But the toll road system in the United States has always worked very well.
One of the problems we have in Canada -- and this is Canada as a whole, not just the province of Ontario -- is that we spend less money in Canada per capita for our road system than any country, literally, in the western world, substantially less than the United States; substantially less than England, France and Germany. We do not pay attention to our highway system in this country, and Ontario is obviously guilty of that as well, as other countries do.
Some of the recommendations we make, and we have done this to previous governments -- we understand that because the requirement is so great in this province at this time, there will have to be some different kind of financing for the transportation network to realistically get the job done within a reasonable time frame. Just Highway 407 itself, which has been committed over a long-term time frame, the way the recession is going now and the demands that are going to be made, we can see that there will be so much pressure for dollars that some other funding mechanism has to come into the system, and toll roads do have a place.
When you are looking at a toll road system, the first thing you look at apparently is to make sure there is alternative access, and in terms of Highway 407 itself, the new highway which will traverse the province and which will replace, in effect, Highway 401, you could actually toll that because you do have an alternative. In other words, if you did not want to pay the toll, you could use Highway 401. This is a very valid point for the toll roads and that is one of the things the United States watches very carefully. Looking at the plans for Highway 407, that particular highway does lend itself to a toll road system.
Mr Sterling: Do they pay for themselves?
Mr Ryan: I think historically in Canada, when you look at Quebec and places like that, it depends how well they are managed. I think one of the problems is the cost-effectiveness of collecting tolls and the slowdown, the time of the lineups. As I say, it is all part of not having an alternative. As long as it is moving quickly and you have a good collection system, they certainly pay for themselves, no question.
Mr McArthur: I think we understand that in the United States, I guess, some of those toll roads are very marginal, but other toll roads where you have a lot of traffic seem to pay for themselves. But I guess just as a general statement that probably -- and I think this is the feeling of your own ministry staff people -- it is questionable as to whether they really do pay for themselves. But the funds are really kind of available to help build the program.
Undoubtedly, in some situations they may have to require extra funds to be picked up someplace along the way, but I think you would find that it would be tough to have 100% of it. So maybe it would end up being kind of recovered because of the fact that it is tough to do that if you do not have the traffic.
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Mr Stockwell: I have great interest in alternative financing, in particular for transportation improvements. I know in the Metro Toronto region when they talk about any kind of subway or light rail transit extension or improvement, particularly the Sheppard subway line, they talk about participation from the private sector, basically selling density rights to develop the subway lines themselves. I am not certain if it could work in the scenario you have painted, but clearly if Highway 407 does cut through the greater Toronto area, there could be value in selling density rights off abutting that package.
Potentially, I guess, if the development industry wanted to get involved, that is another alternative way you could use to generate revenue to pay for the construction. I am not certain how much it would do, but clearly, in North York along the Sheppard line from Yonge to Victoria Park it is a considerable amount of money. I do not know if that avenue has ever been explored. If it has and has not panned out, I can understand because of the cost. Certainly it is something that I think you should look at. Clearly in the rural areas it is just not going to be much of a density improvement, but really in the GTA, if you could sell greater density rights for the development of a highway, I am confident you would collect a considerable amount more money.
The Chair: Are there any other questions? I would like to thank you for your presentation this morning. Thank you for coming.
ORGANIZATION
Mr Phillips: Before we get into it, I do not see the Treasurer on this schedule here.
The Chair: That is up to the committee to decide when it would like to hear him. I was going to do it at the end, but since you brought it up now, we will deal with it now. We have Thursday 31 January, 12:30 to 1:30; Friday 1 February, 8:30 to 9:30 in the morning, and Wednesday 6 February at 5 pm. Now, Wednesday 6 February at 5 pm leaves the writing crew behind a little -- no time at all -- so for the writing crew either of the first two would be preferable.
Mr Phillips: The key for me is just making sure that the third-quarter results are out. I gather they will be out before he appears here.
The Chair: You know as much about that at this point as I do. All I have heard is what we were told from the beginning: that is, that they should be out this week some time.
Mr Phillips: That is what they say in the media, but I do not know.
Mr Stockwell: Has that been confirmed by the Treasurer's office?
The Chair: It has not been confirmed to me.
Mr Stockwell: Maybe you could try to confirm it.
The Chair: To nail it down?
Mr Stockwell: Yes. I would really agree with the member. I think it is more important that we meet with him after those third-quarter numbers are released.
The Chair: If he were to come on Thursday or Friday, we could ask him.
Mr Stockwell: Yes, but that is a little more difficult. I would rather have an opportunity to review them and then ask some penetrating questions, rather than ask my penetrating questions while I am reviewing them.
Mrs Sullivan: We will wait for that occasion.
The Chair: Some of us are still waiting for penetrating questions.
Mr Stockwell: Some of us are still waiting for a government, too.
The Chair: You mean in Ottawa? We could have lunch sent in on the 31st for the meeting from 12:30 to 1:30. What are the wishes of the committee? I think we have probably eliminated -- because the writers cannot do it on 6 February. What about Thursday or Friday?
Mr Phillips: It is a good day for me. I do not know; either day is fine. The only criterion is that the results be out, that is all.
The Chair: Thursday? Do I have a consensus for Thursday, 12:30 to 1:30? Okay, we will invite the Treasurer to come Thursday 12:30 to 1:30.
There is another item of business. As you all know, we invited the governor of the Bank of Canada to come and speak with us. I am going to try to do this without really being too facetious, but he feels so bad about not being able to come that he has offered to send a designate to meet with part of the committee or the subcommittee to give us some information. The reason he has given for this is that the world hangs on everything he says and he has an effect on the markets and everything, so he would rather give his projections and his information in camera to a select group so that it does not become a media or a public event. Does the subcommittee want to meet with this designate? When do we want to do it if we want to do it? Who would like to comment?
Mrs Sullivan: It seems to me that this kind of information, given that these are public hearings, any information that will be coming from the governor ought to be considered in terms of being a part of public hearings and not an in camera situation. Also, the entire committee should be participating in hearing the presentation. After all, the entire committee will be involved in writing a report at the end. I wonder if the information that he is likely to provide in terms of projections and so on is of such concern that the people of Ontario should not be hearing it.
Mr White: I would like to concur with Mrs Sullivan. I cannot see why our government should have standards of openness and honesty and candour and expect anything else of another level of government. Surely the hearing should be open not only to the full committee but also to the public.
The Chair: We are already stuck with the position where they have said they will not come to do it publicly. What they have indicated is that the information that we have requested from them can be made public. If I boil this down to the correct assumption, it is that we are constrained to having him either come and give part of the group some information or not come at all. I think those are the choices.
Mr Jamison: Our ability to evaluate and establish our report could be enhanced by listening to the Bank of Canada delegates here. I would suggest that we gather the information as well as we can. We understand that there is going to be some difficulty in how it is going to be presented, but I think that the information is going to be important and we should make every attempt to obtain it.
The Chair: Do I take it that you would endorse a designate coming and speaking to the subcommittee?
Mr Stockwell: I think we should probably spend a little more time talking to our staff and trying to get revenue projections rather than worrying about a senior level of government's report to this committee. We probably might have a little more success cleaning up our own house and getting revenue projection that will probably have a greater impact on our recommendations to the government than having a designate from the Bank of Canada coming in, in my opinion.
It seems to me we have a little more clout, considering there are a considerable number of members here who sit on the government side, to get that kind of information. Frankly, I am kind of shocked that there seems to be a bit of concern here that this gentleman is not showing up when there was little, if any, concern about getting our own revenue projections, for goodness' sake.
Let's become a little more consistent. If we are going to spend a little bit of time and send out snooty letters to the federal government, maybe we could send the same snooty letters to our own bureaucrats and ask them to bring in preliminary revenue projections. Let's be a little bit more consistent in dealing with those people we would like to hear deputations from.
The Chair: Given that those letters came from me, I object to the comment "snooty." They were not snooty; they were polite requests for information that I believe and the committee has believed is necessary for this committee to be able to make proper projections in the long run for what is going to happen in Ontario.
Mr Stockwell: Maybe the letters were not snooty, Mr Chairman. I will withdraw that. But certainly your comments to date at this committee have been.
The Chair: Up to this point, it becomes very difficult for this committee to go into pre-budgetary consultation and recommendation, given that we do not know for sure the answer to two questions. The most important question is, will the Bank of Canada allow the Canadian dollar to fall with respect to market forces? I think that is a very important question that we need to have answered, because that has a great deal of impact on what is going to happen in terms of revenue coming in and in terms of borrowing and when we make our deliberations and make the recommendations to the Treasurer.
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Mr Sutherland: I would suggest that if the Bank of Canada people do not want to provide this information to the entire committee in a public forum, then we just take the information they provide and we as a committee interpret what we feel is the meaning of the information they provided, since they do not want to give an explanation of it to the open committee.
Mr Phillips: I do not think we can deal with it in private, and I think we should say that we are a public committee and that whatever they can provide to us in public we will take, although I am concerned that we still do not have a revenue estimate. I have said in the House that I believed, for this fiscal year, that the previous Treasurer's revenue estimates are more accurate than the current Treasurer's estimates. I am looking forward to seeing the numbers, but I do think we need to know what our revenue estimates are for this year and next year, even more important than the dollar, even more important than the interest rates. I would expect that is what the Treasurer will bring us when he comes.
The Chair: I take it yours is a no vote?
Mr Phillips: Absolutely.
Mr Kwinter: I am intrigued by the offer. It seems to me that anything that the governor of the Bank of Canada had to say he has been saying to the federal politicians, and I think there may be some misreading into this that he is going to come and tell us things that he does not want to be public. It seems to me that would put him in an absolutely untenable position. The minute he comes and does that, someone is going to know about it, and if the word got out that the governor of the Bank of Canada was telling a committee in camera things that he does not dare tell the public, as I say, that would be an untenable position.
It seems to me that what they are really saying is that they do not, as a matter of policy, want to come before a provincial standing committee of the Legislature, but "If you want to meet in camera, we will sit and talk with you." But I would not read into it that you are going to get information that they will not share with anyone else. I think it is just a matter of saying, "If we come for you, we're going to come for everybody, but if you want to talk to us, we will come just as long as it is not in a public forum." If that is the case, then I do not see any great value in having them come.
The Chair: Are there any other comments? I have so far, by consensus, that if he will not speak to the committee in public, then he need not come. Okay? Then we will transmit that information to them.
Mr Stockwell: Can we not have a vote of some kind? Can we not vote or is this just consensus?
The Chair: Well, I have got --
Interjection.
Mr Stockwell: We do not vote? Okay. Thank you.
The Chair: I asked if there is a consensus. If you would like a vote, I will ask people.
Mr Stockwell: I just wanted to know if there was ever a vote at the end.
The Chair: There was no motion.
Mr Stockwell: Okay.
AJAX PUBLIC LIBRARY
ASSOCIATION OF MEDIUM PUBLIC LIBRARIES OF ONTARIO
The Chair: Our next presenters are from the Ajax Public Library, Geoffrey Nie, chief executive officer, and Jane Kirkpatrick, chairperson of the Association of Medium Public Libraries of Ontario. Welcome to the hearings, if you would like to begin.
Mr Nie: Mr Wiseman, members of the finance and economics committee, thank you for giving us this opportunity to speak to you about provincial funding levels for public libraries in Ontario. I believe that Mr Decker has handed out a copy of One Place to Look: The Ontario Public Library Strategic Plan to the members of the committee and a copy of the attachments to my presentation. Mr Decker also has a supply of the presentation for you to read at a later time.
My name is Geoff Nie. I am the chief executive officer and chief librarian of the Ajax Public Library. With me today is Jane Kirkpatrick, chairperson of the Association of Medium Public Libraries of Ontario, which is an organization representing public libraries in Ontario that serve communities with populations between 10,000 and 100,000 people. AMPLO represents 89 library boards serving 30% of the population of Ontario.
Our purpose today is to make two points about the level of support provided by the province for its public libraries. First, provincial support for public libraries as a percentage of the total cost of library service in Ontario has been reduced dramatically in the past 10 years. Second, the formula used to calculate the base per-household grant for public libraries is inequitable.
What is a public library in the 1990s? It is more than a place to go for a good read or a place to send your kids on Saturday afternoon to the film program. Today's public libraries serve the information needs of a diverse community by providing information and assistance to all its residents regardless of age, mobility, education, ethnicity or economic background.
In order to address the information needs of our users, public libraries are confronted with a number of challenges. Some of these are as follows:
The arrival of new Canadians in what were formerly primarily Anglo-Saxon communities. For example, some 30 libraries across Ontario have recently formed a multicultural services co-operative to ensure that collections in a range of languages will be available to library users whose language of first choice is neither English nor French.
The need to provide access for the physically and developmentally impaired user is another area of increasing demand. To address this need the Scarborough Public Library has recently introduced a collection of Braille children's books in Chinese.
The impact of technology has created a third issue. It is predicted that by the year 2000, 25% of all data will be available only in electronic form. The Brampton Public Library was the first public library in Ontario to provide dial-up access to its database for any client who has a personal computer and modem.
Shifts in our economic base have included plant closures and downsizing in manufacturing and industry. To address the community need created when the Goodyear plant closed several years ago in Etobicoke, the Etobicoke Public Library established a help service for its laid-off workers.
Finally, there is the tragedy of those who are unable to read or write well enough to function as productive members of our society. It is estimated that one in four Canadians cannot read at a grade 3 level. This means that 25% of our population cannot read a newspaper or the label on a tin of food and they are unable to fill out applications for employment.
Numerous public libraries are endeavouring to address this access issue. For example, the Collingwood Public Library has for some years provided a Leading to Reading volunteer tutorial service to assist those intimidated by the formal educational process.
For the past two and a half years the provincial government and the Ontario Library Association have worked together to prepare a strategic plan for public libraries. I believe that -- I know; I can see them -- you have copies of those with you. Last November they released One Place to Look: The Ontario Public Library Strategic Plan. The basic principle of this plan as expressed in the first line of the statement of purpose on page 13 states: "The public library serves its community based on the belief that every individual has the right to equitable access to information." This principle confirms the province's and the library community's commitment to equal access to information for all Ontarians.
How has the province supported this principle in the past? You will have exhibit 1. If you would turn to it, it will indicate the levels of support for the libraries by the province compared to that of the municipalities over the last 10 years. Since 1979, the provincial support for public library service has been reduced from 19% of the operating cost of libraries to 10.6% in 1989. In 1987, the latest year for available data, the percentage of the provincial budget spent on public libraries was 0.109%, a reduction from 0.162% or 32.72% since 1979. The 1987 figure is the lowest level of provincial support since 1969. Those are the latest data that I have available.
These percentages show an alarming trend; however, they do not present the whole picture. Another way of expressing this is that in real dollars since 1987 the direct provincial payments to library boards have been reduced by $4,034,000. That is a reduction in real dollars of 10.08%.
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Faced with this loss of support from the province, local libraries would not have been able to serve the information needs of the residents of Ontario if local municipalities had not stepped in to cover the shortfall. Since 1979. the cost of operating public libraries has increased by 135.6%. During this period, the increase of provincial support for libraries has been only 31.3%, while the municipal support has increased by 170.3%. If you look at exhibit one, it will show you the obvious trend that is outlined here. The low graph sinks from 10% to 20% over that 10-year period, while the municipal bar chart goes from 70% to over 80% of the total costs of libraries in that same period.
If this situation continues, the province will no longer be considered a partner with the municipalities in the provision of library service for the residents of Ontario. Therefore, we recommend that this committee recommend to the provincial government that it reaffirm its support for public libraries by establishing a respectable minimum level of support expressed as a percentage of the overall provincial budget.
Each public library receives an annual grant from the Ministry of Culture and Communications. This grant is based on the number of households in each community. These data are provided by the Ministry of Revenue. A household is defined as any place of two or more rooms where an individual can sleep and prepare meals. The Ministry of Culture and Communications sets a base rate for the grant and multiplies that rate by the number of households to determine the grant for each library.
On the surface, this seems like a straightforward process. However, the formula used to calculate the grant has two significant flaws: first, in any given year, the rate of increase to the base per-household figure seldom matches the rate of inflation; second, the household figure currently being used to calculate the amount of the grant is the number of households for 1988. These two facts mean that the impact of the provincial grant is constantly being eroded by the rate of growth in many communities, such as those in the greater Toronto area, and by the rate of inflation.
If you would turn to exhibit two, you will see an indication of provincial support versus municipal support and the rate of increase in CPI. The consumer price index in Ontario increased by 92.8% from 1979 to 1989. Provincial support for public libraries during this period increased by only 31%. Over the past two years, the increase in the grant has been held at 4% per year. This equals a compounded increase of 8.2%. The compounded rate of inflation during the same period is 10.8%, or 31.7% higher than the rate of increase in the grant. With these figures, it is little wonder that the provincial support for libraries is barely more than half of what it was 10 years ago.
The other flaw in the calculation of the per-household grant is the use of out-of-date household figures. In the town of Ajax -- I use that example because I am familiar with it -- the provincial grant in 1981 had been calculated using the figure of 14,739 households. In fact, by 1990, that figure had increased by 24.6% to 18,359 households. This discrepancy represents a loss of $28,586 for the Ajax Public Library in 1990 alone. and this loss increases each year that the formula uses its out-of-date information.
If the inadequacies of the formula used to calculate the per-household grant are not dealt with, then there is little hope that the inequities of this grant will be resolved or that the role the province plays in the provision of library service in Ontario will continue to diminish. Therefore, we recommend that this committee recommend to the government of Ontario that the base figure for the per-household grant for public libraries be increased annually by at least the rate of inflation and that this committee recommend to the government of Ontario that the per-household grant be calculated using the most currently available data.
All of us are well aware that these are recessionary times and that public moneys must be spent carefully and wisely. History has repeatedly shown us that people turn to their public libraries during times of economic hardship. The public uses the libraries to help cope with problems such as looking for information about new and better jobs, acquiring information about available social services, learning basic skills like reading and effective writing, and using the resources of the library for leisure activities.
An analysis of the rate of increase in the use of public libraries in Ontario over the past 10 years clearly supports this historical trend of increased library use during economic hardship. That is exhibit three in your handout. The average annual increase in library use was just under 3% from 1979 to 1989. However, during the recession of the early 1980s, the average annual increase in library use from 1981 through 1983 was 4.51% or 52.4% above the average for the decade. In 1989 the increase in library use spiked to 5.23% from 2.35% in 1988. That is an increase of 122.6% in one year. These figures indicate that public libraries are an even more valuable resource for the average citizen in Ontario during difficult economic times.
Thank you for giving us this opportunity to speak to you today. We hope that you will be able to address the concerns of the public library community during your budget deliberations. If you have any questions, we would be happy to answer them.
Mr Hansen: It is not a question, but is it possible to have a copy of the brief that you just read to us? With all the figures that were in it, I was unable to copy them down. It is to give us a better idea, because with this handout the background is very important also.
Mr Nie: As I stated, Mr Decker has a supply of the handouts. He will distribute them.
Mr Hansen: I did not realize that. Listening to you, I have to say I lost an election over a library on a municipal level by seven votes because I supported the library and some of the councillors of the municipality said that it was only more expense on the taxpayer's back. After the library was built, we did win on a referendum vote. Now it is a place you would never get rid of. The town really appreciates that it went ahead and built it. I know these are recession times. I see going up and down that a lot of people use it for referencing, different types of jobs and study and going back to school. I think it is a very important part of the community.
Mr Kwinter: I have a question about that 1988-89 spike. Do you sort of attribute that to the downturn in the economy or is there some other reason?
Mr Nie: I have done a little investigation. The indications are, not just in Ontario or Canada, that the use of libraries follows the unemployment rate in a geographical area. I would attribute that if we look over the next couple of years, it will follow that they will be, shall we say, heydays for public libraries. The rate of use of libraries will go up dramatically. I believe the dramatic increase between 1988 and 1989 is just the first year of that. I know for a fact among my colleagues and myself that the increase in 1990 for the library I work for in Ajax was 12%. That is three times higher than the rate of increase in 1989. I know that in the Etobicoke Public Library their increase was 6%, which was double the rate of increase of the previous year.
Ms Kirkpatrick: Ours was 17%.
Mr Nie: So I anticipate that, yes, people are turning to libraries now in view of the development of harder economic times.
Mr Kwinter: Are those figures on a per capita basis or on a global basis?
Mr Nie: They are the overall percentage increases for the total use of circulation figures for libraries in Ontario. They are not per capita. They are on absolute figures.
Mr Kwinter: Do you have correlation? I am thinking particularly of a place like Ajax, where the population is growing and the use of the library is growing, but the per capita use may be down. I do not know that. I am just asking, is there any kind of a correlation?
Mr Nie: I do have the figures for Ajax, not for the province. Our per capita use increased at a rate four times that of the growth of the community in 1989. I have to qualify that. I came to Ajax in 1989. The rate of increase in 1990 did go up at a rate four times that of the growth of the community of that year.
Mr Sutherland: You have talked about operating grants here. I want to talk about the state of libraries, their physical state in terms of buildings. I know in my community there are a couple that are still operating due to the generous donation of the Carnegie Foundation way back in the beginning.
Ms Kirkpatrick: In 1902.
Mr Sutherland: Yes, at the beginning of the century. I am just wondering if you could comment on the overall state of medium-sized libraries and the actual facilities. Are a good portion of them very outdated or do we have a lot of modern ones? Have we been able to keep up that way?
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Ms Kirkpatrick: I am still operating out of the 1902 building and probably will be for the next 25 years, I think. I would say in general terms that the majority of public libraries in the medium-sized range are out of their Carnegie libraries and into more modern facilities, although now a lot of those buildings were done in the 1950s and 1960s and they are now looking at new capital expenditures on them.
Mr Nie: May I raise one point on that? The figures I quoted in the document include operating and capital expenses. About five or six years ago, they changed the reporting formula. What they did is include base grants plus special grants. So they are there.
The ministry, over the last probably five or six years, has provided funding at the rate of about $1 million or a little more than that a year for capital development in libraries. So there have been a number of building projects. I know when I worked at the King library we constructed a new library and one third of the funding came from the province. But the library I work in now is in a building that has not received any renovation or addition since 1975. At that time the population in Ajax was around 20,000. It is now over 50,000. We are at one half the ratio of people to square-foot ratio, which is 0.6. We are at half the ratio of that and do not anticipate any capital development of our library over the next three or four years.
Mr Sutherland: Since you mentioned most of the libraries seem to be from the 1950s and 1960s, I am wondering about ventilation and those things in terms of keeping the books in proper form.
Ms Kirkpatrick: Preservation.
Mr Sutherland: Preservation of books, if you care to comment on that.
Ms Kirkpatrick: That is obviously a serious concern for all libraries and librarians, primarily because the paper that books are printed on is of very poor quality and does not lend itself to adequate preservation, right off the bat. I do not know of any library in Ontario right now that is not air-conditioned. Do you, Geoff?
Mr Nie: Oh, yes.
Ms Kirkpatrick: Of a medium-sized nature. I know smaller ones are --
Mr Nie: I know those ones as well.
Ms Kirkpatrick: But yes, that is a concern. Any building that is now touched has to meet the building code requirements. Certain things are built in which make the preservation issue a lot easier to deal with. I come from Perth county and we have a number of Carnegie libraries still operating in the county which have not had any major renovations. They have window air-conditioners. That does not provide adequate humidity control or temperature control for materials -- or for the staff, I might add.
Mr Nie: One of the platforms of the public libraries' strategic plan does raise the issue of the need for preservation for collections.
Ms Kirkpatrick: And the need for adequate buildings.
Mr White: I am wondering, in terms of a number of information services which have not been traditional library services, if there has been special funding or does it just come out of your base budget? I am talking here of a range of computer services, video, those kinds of things which we, in our 1990s and going into the 21st century, will need in all of our communities as part of our information technology. I am wondering, does funding for innovative programming in those areas which would allow the general public access to those kinds of information technologies come out of your base funding?
Mr Nie: In a single word, yes. There are occasionally, although not at the present time, special grants that are available. If you watch them and you happen to be developing your services along the appropriate line, you may be able to receive some funding. But basically, they are only grants for startup. Then it is the responsibility of the library to maintain and develop that service further.
In the Ajax library, we are now introducing video collections for the multicultural community. We are introducing popular music on tape and compact disc and the increase of these services is directly related to our base budget.
Mr White: Those additional services or additional information technologies would in fact be much more expensive than the traditional ones.
Mr Nie: I do not think that can be supported. I think they are comparable costs and as they become more common technologies they are coming down. It was true that when you were dealing with videos five or six years ago, when I introduced them at the King library they cost on average anywhere from $80 and up, but the cost now can come down to around $25 to $40, unless you are getting into the more elaborate productions or you are requiring a public lending rate licence with your purchase. That makes them very expensive and they can be several hundred dollars a title.
Ms Kirkpatrick: I think that for libraries looking at the new forms of technology for storing and retrieving information, the big difficulty is the hardware costs to start up. Once you have the appropriate machinery in place to run these, the subscriptions are now running comparable for print as CD-ROM technology. For example, we have found at our library that we have just bought Books in Print on compact disc as opposed to the print version. We can get an update three times a year and it is only going to cost us another $100 a year. So the prices of the products themselves are running more or less similarly, but the big problem for libraries is acquiring the hardware and then paying the communication costs to keep it running. That all comes out of our operating budgets.
The Chair: Are there any other questions? Seeing none, thank you for your presentation. It was very well done.
HOME SHARING PROGRAMS
The Chair: Our next presentation is the VON home sharing: Beryl Stephen, co-ordinator, and Harry Grant. Would you like to proceed?
Mr Grant: I have very little to say. My name is Harry Grant. I am the chairman of this committee. I am also on the board of the Victorian Order of Nurses in Hamilton. Our constitution calls for us to always have a VON chairman on any committee we look after. I am going to let Beryl say everything today. She has it all written down and ready for you. If there is anything I can give you from a VON point of view, I certainly would be happy to. Incidentally I think we are the only VON in Ontario that supports this particular committee in Hamilton and I would like to say that Beryl is also representing all these committees in Ontario.
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Ms Stephen: I am the co-ordinator of the VON home sharing program but I am speaking on behalf of all 17 home sharing programs in Ontario. Some of the co-ordinators are present here and one consumer is here as well. I would like to point them out. They are this gang here. If you want to know where they are from, there might be people from your constituencies. I would like them to give their names and where they are from if that is permitted.
The Chair: How do we do that?
Ms Stephen: I am sorry. I do not know all their names. We have just got together. Usually we are in our own communities and we see each other very rarely.
The Chair: Perhaps they could tell you their names and you could speak into the mike.
Ms Stephen: Susan Nwosu, North York Housing Connection; Ali Zahedi, East York and Flemingdon housing registry; I know Christine Chun from Scarborough Housing Assistance and Placement Education for Singles; Lola Salmon and Bev Goodman from Niagara; Andraya Hoppe from Waterloo region; Angela Covert from York Community Services; and Lois Parker, an 86-year-old home seeker -- successful. She lives with a 92-year-old. They needed very little help from me. Just a little bit of coaching and they wanted to know what they should be talking about and I gave them a written agreement and that is all the time they took. So I invited her on to my committee. She has been very helpful.
We came here today to speak with one voice as coordinators because we have some things we would like to speak about. I am pretty well following this text. In case everyone did not know what home sharing is, I brought a generic brochure from the ministry. They were very kind to give us a lot. Then I brought a pack of client profiles of what the program actually does, and that article by Michele Landsberg is a very good example of what happens here in Toronto. Then I have brought some letters of support. That is the third thing.
I brought excerpts out of a very recent biennial report. I just finished it the end of December. Table I especially shows you the type of people we deal with: the special needs client, frail elderly, mentally and physically disabled people, people who are visibly in minorities because of the colour of their skin basically, family violence survivors and one-parent families. That is what my agency does. Other agencies deal with homeless people off the street, people living in the Don Valley. They find places for them to live.
The last piece in your package is an idea for the future which has to do with the direction that I see this new government going in and I would like committee members to read it.
First of all, we would like to endorse the new policies and directions that we see the new government going in. We understand and sympathize with your government's unexpected inheritance of a $2.5-billion deficit. We applaud your efforts to date. As taxpayers, we are encouraged by your intention to significantly reduce this deficit in spite of a recession.
As housing workers, we are impressed with your efforts to introduce needed changes in the court system, pay equity, the welfare system, health care and the myriad of essential social and employment services. It is even more encouraging to read that the Premier's councils on health and economics are taking new directions. A council on health, wellbeing and social justice and a council on economics and quality of life sounds like a comprehensive attempt at integration of policies.
Creating such linkages logically leads to more effective and efficient services. This is good news for home sharing co-ordinators across the province as we attempt to negotiate and facilitate adequate social and economic conditions in shared housing arrangements at the grass-roots level.
Now I would like to tell you the goals and objectives of the home sharing program as mandated by the Ministry of Housing. Home sharing programs have been established to screen and match those 18 years or older who are interested in shared accommodation as a safe, affordable alternative. Many programs focus on the needs of seniors, that is, people 55 years or older, and concentrate on intergenerational matches.
Home sharing programs have four main objectives: to provide an alternative for individuals seeking safe and affordable housing; to enable seniors to consider living independently within their own homes and neighbourhoods; to reduce social isolation experienced by both sets of clients by creating opportunities for increased companionship and security; to intensify and preserve the existing housing stock in a unique way.
In short, home sharing is a means of fostering independence, self-determination and autonomy in the lives of many who have been forced to live in socially and economically restrictive circumstances.
The history of home sharing:
Home sharing programs have been formal organizations in North America for over 20 years. Home sharing has had a national profile in Canada for at least 11 years. In Ontario, the Niagara region is the pioneer. In 1985, the Ontario Ministry of Housing began to co-fund programs with the regional government through 75-to-25 cost-sharing arrangements. In the past six years, this partnership has worked very well. Presently there are 17 programs growing. There are not any that are not growing and meeting the social, economic and housing needs of a wide variety of Ontarians. We have special-needs clients and then just ordinary people who, because of the recession, feel the crunch and want to move to a more affordable space and are willing to share their accommodation. That is why our waiting lists are growing and growing.
In fact, the Ontario model of home sharing is internationally recognized for its effectiveness, cost-efficiency and innovations. In 1990, the majority of matches across the province involve special-needs clients. According to statistics recently compiled on 12 of the 17 programs, 44.7% or 265 matches kept seniors out of non-profit senior housing units, and 16.8% or 99 matches kept mentally and physically challenged home sharers in the community off the street, out of hostels, out of emergency rooms and hospital beds, nursing homes, homes for the aged and rest homes -- that is out of institutions, preventive institutionalization.
On the other hand, 28.3% or 168 matches enabled home sharers to come out of institutions, either out of rest homes or hospitals. In Hamilton I am able to take people right out of hospital even though they are facing nursing home placements. The total number of matches made in 1990 was 839. In addition, two programs -- SHAPES, the Scarborough Housing Assistance and Placement Education for Singles, which is Christine's and mine, and the Victorian Order of Nurses home sharing -- deal with significant numbers of new immigrants and multicultural groups while others are able to match the survivors of family violence. I do that too.
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Although the actual numbers are relatively small, the Ministry of Housing's share of $50,000 per program -- that is all it costs the provincial government -- is $50,000 into the communities. The communities pick up the rest and are very glad to do it because these programs are essential for the services that already exist. By injecting that $50,000 in each of these communities, there is a large multiplier effect in other ministries such as Health, Community and Social Services, and Citizenship, and for human rights, the disabled, seniors, race relations and the new division of community health and support services.
Also, there are many other effects that are hard to measure but that are very significant, such as the reduced stress upon family care givers, the reduced stress on neighbourhoods. The police are not called as often, the fire department is not running down the street because some little old lady pressed the button or called 911 when she did not have to or called other informal support systems. This is significant. I am not being facetious here. This really happens a lot.
The cost to the government:
Now I am going to tell you what this $50,000 per community would cost if it were withdrawn. The cost to the government to build one non-profit housing unit is $10,000. We know that is a conservative figure, but we do not want to inflate the value. A hospital bed costs over $400 a day. A nursing home bed or home-for-the-aged bed ranges from $745 to $1,100 per month. A bed in a hostel costs $24 a day in subsidies. I am only talking about subsidies here. Beds in women's shelters and second-level lodging homes are up to $31 a day. Simple arithmetic quickly shows how millions of dollars are saved by spending the $900,000 across the province.
Our concerns:
The reason we are here and not interviewing our clients today is that in mid-January the majority of the Ontario home sharing co-ordinators were told by a senior Ministry of Housing official that there would be $40 million trimmed from base-funded programs within the ministry. According to the official, the home sharing program was one of the most vulnerable programs because they have always existed on the surpluses. They have never become base-funded and so if there are no surpluses, what happens to us? This is what our question is. We were also told that the final decision by the Management Board will be made the end of January. Today is 28 January, therefore we are here asking what is going to happen to this very effective program, this innovation.
We have not been able to get an answer from the ministry. We want an answer from the ministry because our clients are getting upset because we are not sure what we should be doing. We decided last week to form a lobby. That seemed to be the most effective thing to do so that is what we did. As stated previously, we are not questioning the necessity of cuts or tough decisions. We applaud you for certain cuts and tough decisions but we are saying, please save this program because of all the benefits it has in other ministries. The confusion we have is that given the NDP's grass-roots style and philosophy of helping the most needy, we are confused by the potential elimination of a program which effectively serves such groups, to say nothing of the frail elderly and the working poor seeking safe, affordable living arrangements within the community.
Living with this cloud of uncertainty affects the very essence of our matching service, which is built on a trusting relationship established with matched and potential clients. At the moment we cannot provide that trust with any degree of certainty or confidence. The demand for service is ever increasing as the news of our successful matches become public. There is great concern on the part of the needy in the community and among their service providers.
One example is, when a case manager from the Hamilton program for schizophrenia called me last Thursday, I told him I could not take his referral because I was organizing this. I informed him of our predicament. I did not ask him; I just told him I could not take his referral.
Within an hour I had a letter of support within my hands. It was not faxed; it was hand-delivered. It was written by the clinical and executive director of that program because I am able to match and place schizophrenics and physically disabled people. They are the people who need a lot of help. That is not all I do; it is very broad, what I do, but if our program goes, where are they going to live?
We have a solution. We have told you the problems and we know we can run an effective service within the present guidelines. We are only asking to be saved from this $40-million trimming. That is all we are asking, to be saved from the trimming. Many of us have ideas on how to broaden our service on the existing resources. We all have many ideas and we would be willing to sit down and talk with you or the ministry at any time about these ideas.
Some of the ideas are found in the conclusion section in this. Andraya has ideas, Christine has ideas, we all have good ideas to do with what we have now. This document which was submitted to the health innovation fund committee is an idea for the future which builds on the concept, which provides jobs. This document provides jobs and also takes people out of hospitals. We will only deal with home providers who are in hospital awaiting nursing home placement and then we will deal with people who want to be paid care givers. So that is a future idea. We have our ideas. We are willing to sit down and talk about them any time.
However, I want you to know that our present resources are very, very stretched. Basically, we want to hang on at a provincial level until broader evaluation criteria and a different unit of analysis can be applied to take into account a more realistic cost-benefit analysis, because right now it is just directed at housing when it should be much broader. The Ministry of Housing is paying for all these benefits, but we cannot do them all adequately because we need actually every one.
The home sharing program in its present form has much to contribute to the social housing needs of the rapidly growing aging population and the increasing numbers of new immigrants. However, piggyback funding to expand this vital and innovative service to special needs clients is a future consideration. It is not what we want now. We are just saying it is something that we should consider in the future.
We have two recommendations that we would hope, we would urge you to recommend to the Legislature. They are pretty simple. Because of its proven effectiveness, widespread social benefits and cost efficiency we urge this committee, the finance committee. to recommend the proposed $900,000 be found somewhere in the 1991-92 Ministry of Housing budget for all 17 programs. Second, we urge this committee to recommend that broader evaluation criteria and a different unit of analysis, such as "registered client," be considered so that the wide-ranging social benefits can be partially captured. You cannot capture them all but we can partially capture them that way, in an equitable way.
In conclusion, I would like to thank you for your time and consideration. We look forward to a written response from the Ministry of Housing about this urgent matter as soon as possible.
Mrs Sullivan: We have had another presentation before the committee from a home sharing organization in Toronto and it was a very interesting one. I want to say at the outset that I see in your brief that you are very encouraged by the new government and I am glad to see you are. I do not belong to the party of the new government and I want to underline the fact that it was the old government that began this home sharing program.
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Ms Stephen: We understand that.
Mrs Sullivan: You are looking for $900,000 in base funding.
Ms Stephen: No, we are looking for $900,000.
Mrs Sullivan: Let's talk about $1 million. Where else are you applying? I see that you have applied to the innovation fund for about $200,000. Are you going elsewhere as well and did the home share organizations receive money from other sources besides the Ministry of Housing?
Ms Stephen: We have to go after the other 25% ourselves and that basically comes from the region. This house innovation is just an idea from my local agency. It has nothing to do with the other 16 programs. We have tried. We are severely understaffed and this was an attempt to get increased staff and now we find not only are we severely understaffed but we are in jeopardy. We might be all gone and the service will be gone to the communities. At a regional level, regions are very supportive, but they are all on zero-based budgets and so we can get the 25%, but it is contingent upon getting the 75% from the province. That is why we came here.
Mrs Sullivan: I understand that. What I am asking though -- in the past you received funding from other sources in the provincial government as well, comparable to the special application that you have made to the innovation fund -- did you not receive funding through Community and Social Services at one time?
Ms Stephen: No, Niagara did in one way, but it is a very small amount. It was part of the 25% of the regional share. It is not the 75% from the province, so to speak. What we are told is that under the present rules you cannot have piggyback funding. You cannot get funding from one ministry and another ministry; they will not let you do that. It should be done in the Community and Social Services -- I am part of another group and we applied for the program money to Community and Social Services and the housing money from the Ministry of Housing. The problem with us, home sharing, is that we do not have buildings. We are not bricks and mortar. We are social housing so we are kind of an anomaly, but as long as we have Ministry of Housing funding we cannot go to the Ministry of Community and Social Services.
Mrs Sullivan: Has the VON in Ontario taken this as one of the issues that it is seeking funding for generally?
Ms Stephen: I am not speaking on behalf of them. I have nothing to do with them. I am at a local branch. I am from Hamilton.
Mrs Sullivan: I understand that. Have you met with the Minister of Housing or people on his staff?
Ms Stephen: We have tried to get an appointment, but it takes three weeks. We have mounted a letter-writing campaign and we have alerted -- we just knew this. We found out informally and first of all it took a week to convince our agencies that this was true because this is just a shocking matter, and then last week we started getting letters going. We have not talked directly to the minister. Some people have talked close to the minister, but not --
Mrs Sullivan: Have you met with the regional office of the Ministry of Housing in your area?
Ms Stephen: Not yet. I mean, we thought we had to get right to the source of it first. We are willing to do whatever it takes, but when you are told that in two weeks the decision is being made and you are probably going to be eliminated, you want to go right to the source because bureaucracies are kind of slow and we might be out in the cold. It is not us; it is not the workers; it is our clients, because who is going to advocate for them when we are gone? No one.
Mr Phillips: Well, a government that will listen to people and respond to their needs -- the throne speech. But just a couple of comments; one is, I guess, on the good news side. In your brief you say you recognize they inherited a deficit of $2.5 billion. I think that the news may be better than you are aware. I am not sure they inherited a deficit now of $2.5 billion, so as we look at the numbers it may be encouraging news to you.
I guess my comment, though, would be that I am quite familiar with SHAPES. It is a good organization. For those who are familiar with the organization, it takes a long while to build up that network because, first, you have to find a lot of people who have the facilities they want to rent. Then you have to find the people who want to rent. It is kind of a networking thing, which, as you say, is not bricks and mortar. SHAPES, I guess, came out of the Agincourt community services. I was around at the start of 1970, I think, when about five people started that. It emerged out of that.
I agree with you. If your funding is cut off, it takes a long while to re-establish that. Also, I believe these are the kinds of organizations we are going to look to in the future because they are kind of self-help, the things that are quite -- I hate the term -- cost-effective.
Ms Stephen: It is a private solution.
Mr Phillips: I think as we look ahead there are going to be more and more needs. I think you are at the right place with the sound of desperation in your voice because you think it may happen in the next couple of days.
Ms Stephen: We have no assurance that it will not.
Mr Phillips: If I can speak from personal experience with one of the 17 groups that cover all of Scarborough, it is a very cost-effective organization whose needs will grow in the future. The challenge for this committee is that we are trying to look at a longer-term budget, and you are facing a perceived crisis in the next few days, whether or not it is real. I could speak as one who will not be able to have a huge influence on them, but they are listening and I hope they respond to it.
The last thing I would say is that I am surprised we have not seen the Victorian Order of Nurses here as a total organization, because I think it also has some fairly significant --
Ms Stephen: Maybe next week.
Mr Phillips: Maybe next week? I support your thing and say you may have better news than you realize, because they may not have inherited a $2.5-billion deficit. I hope they can handle things for you over the next few weeks.
Mr Malkowski: Thank you for your presentation. It has given us a lot of information. But I would like a little clarification. You say there would be a trim of $40 million. Is that through the Ministry of Housing?
Ms Stephen: Yes.
Mr Malkowski: Can you explain where you got that information? You said a senior administrator. How did you come about that?
Ms Stephen: The Toronto co-ordinators meet on a quarterly basis and the ministry officials come. The Toronto people have known about this potential elimination, or have seen the signs of it, since at least December, maybe November. The Toronto people had to write a letter. They might not have had any more funding come 1 January, but they wrote a letter 15 December and got assurance that they have funding until the end of March, and we all have funding until the end of March.
Then there was a meeting I think about 17 January in Toronto and this is where a senior official came and told us specifically about the cuts and the conundrum that they were in. He said, "We're not choosing between buying a truck and cutting you guys." It was between seniors' housing and home sharing. But the problem is that we are a project that has been living on the surplus, so if there is a major cut like that in the base-funded programs, it just seems like it is clear: You are not there any more. He said that the decisions would be made by the end of January or very shortly after that.
Mr Hansen: I met with Betty, I believe -- I cannot remember her last name -- from home sharing here in Toronto and I assured her that I would write a letter to the minister to find out. I did not have as much information then as I have here now in front of me.
The other thing too, and maybe Betty misled us, is that there were 800 brought together in a year. Is that in a year or altogether in the program? She had me believe it was 839 matches altogether, but that is only in one year.
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Ms Stephen: Yes, that is all programs. We are back to 1990. There are many ways, as of course you know, to count statistics. We were counting them in a fiscal year, but all of a sudden now we are counting them in the calendar year. So we found out how many were in the calendar year, and that is 839. That may sound a small number, but the ripple effect in communities, such as what happened to Lois back there. She was not a direct match, but she found out that we were doing this and could give her some advice and she went off and did it herself. So that is a very misleading thing. That is why we would like to be counting registered clients instead.
Mr Hansen: You could actually double that figure, because that is only one half of the match.
Ms Stephen: Right, that is only one half.
Mr Hansen: So there are 1,600, close to 1,700 involved in the match in one year.
Ms Stephen: Well, actually, many of the matches involve more than three people. I match whole families, families of three or couples and their mothers and their children, so that is a very misleading figure. That is one of the problems that we face when it comes to cost-benefit analysis.
Mr Hansen: One thing I have to say. I met with the Niagara district health council, and I was talking to Doug Rapelje, and I was very pleased that it is pioneered out of our area. Doug has done a lot of things in this particular area, and I know that he supports it. He lobbied that particular day, and I know there were four other MPPs from the Niagara area. We are going to be talking to the minister to find out why this funding is stopping.
Ms Stephen: Well, we still need a written response, because the problem is that we do not know what to do with our clients. I have over 200 clients. When the phone rings I am not sure whether I should be making an appointment, taking any new ones or just dealing with my present ones and finding somebody, a case manager, who can look after them in one way or another. So we need to know very soon. We cannot be sitting here waiting for another month or two not knowing.
Mr Hansen: Okay. I can say my assistant here in Toronto has already contacted David Cooke on this. I just have not got a reply back yet.
Mr Phillips: You actually spoke to him?
Mr Hansen: No, his office.
Ms Stephen: Thank you very much.
Mr White: I just wanted to comment briefly about a couple of things. One, obviously the nature of the program is an excellent one, very innovative. I think we got lost a little bit in terms of the immediate short-term difficulty, which I am sure is a bureaucratic mixup which perhaps the parliamentary assistant to the Minister of Housing could take back to her minister. Two, the need for this kind of program, not simply to secure funding but also to be a viable program throughout the province. I do not have such a program in my area. It is obviously a very valuable program, particularly for, say, abused women in rural areas where there is not an institutional setting, nor is it appropriate for there to be one.
So I guess what I am struck with is the difference between the overall program, its merit, how it would fit in in an innovative way into communities and the immediate threat that seems to hang over you.
Ms Stephen: We are facing an immediate threat.
Mr White: I think that has sort of distracted us a bit from the overall value of your program, and I am sure that the Minister of Housing will look into that temporary, short-term problem there. Thank you.
Mr Kwinter: I just want to sound a note of caution. I got the sense of urgency in your presentation, and I just wanted to make sure that you did not think that this particular committee was in a position to do anything about it --
Ms Stephen: We understand that.
Mr Kwinter: -- and that what you really have to do is to pursue the minister now, the ministry and anyone else that you can get to do it. We are having pre-budget consultation meetings. We are listening to you. We will be making recommendations. Whether the Treasurer or the government decides to implement any of our recommendations is up to them. If you are of the impression that by coming here you are coming to the source and we are going to resolve your problems, I just want to make sure that is understood.
Ms Stephen: I understand that, but this is a public forum, and this was the only public forum we could get to this week.
Mr Kwinter: I think it is great. In your presentation, I got the impression that you were looking to us to respond immediately and resolve your problem. We are not capable of doing that.
Ms Stephen: I understand that. But I understand that you make recommendations to the Legislature as a whole, so I thought it was appropriate to come and speak. Some of the matches are very beautiful stories. The Michele Landsberg one is. The top one on this one is between an elderly lady with panic disorder who was recently widowed and who was borderline anorexic before her last home-sharer came. He was a young man. He cooked. He fed her up so that she gained 20 pounds just in time to now console him because he is Iranian and he is very concerned with the Middle East war.
The roles have changed; the tables have turned. She is consoling him now. That is a very beautiful thing and that is what can happen in these matches. I have a match between a physically disabled man and a schizophrenic. One is not able to physically cook, but he can read the recipe and the other guy just gets a little bit of reassurance and he can put the things in the pan. Those guys are going to be together for years. So this is what we are talking about losing. Should not do it.
Ms M. Ward: Some of my questions have been answered. You have never had assured funding?
Ms Stephen: No. We have been living on project funding. It is time to base fund us.
Ms M. Ward: So every year you would have been wondering if it was coming forward.
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Ms Stephen: We only had assurance that we would have project money for two years. The third year was how well we did in our match quotas. We work on a quota system, a minimum of 35 a year. If you do not make your 35, then there is a real evaluation as to whether you get funding for the third year. That is the wrong way, but that is what we have been living under.
Ms M. Ward: Thirty-five matches?
Ms Stephen: A year. But Christine sits there and does 200 a year.
Ms M. Ward: The other point has been brought up about the other contacts that you make, people coming to you with what appears to be a housing problem. People I have talked to who are working in it say you are very often dealing with other problems too which you may refer.
Ms Stephen: Not always. It is your definition of housing. Before you ever get to what kind of housing you are going to have, you have to find out what are the operating factors in the person's life. It takes an hour to find that out. Sometimes you have to do a little bit of advocating for them and what not. You try not to do too much; teach them how to do it for themselves. But yes, there is a large counselling component in it, but the Ministry of Housing calls that a soft service. That is not a hard service.
Ms M. Ward: These statistics are only the matches, not the number of people who contact you or walk into your offices.
Ms Stephen: That is right. If you want that, we have it. We have that information.
Mr Hansen: I agree with Mr Kwinter there. This committee is listening to the needs of the different groups out there. I was speaking as an MPP from the Niagara area, I hope you understand.
Ms Stephen: Yes, I do. Thank you very much.
The Chair: Thank you for your presentation.
Ms Stephen: Thank you for listening.
ONTARIO FEDERATION OF AGRICULTURE
The Chair: Our next presentation is the Ontario Federation of Agriculture; Roger George, president, Bill Weaver, second vice-president. I notice there are more than two, so perhaps you could introduce the rest of the members on the panel.
Mr George: Along with second vice-president Bill Weaver, I have on my right our executive director Carl Sullivan, and on my extreme left, manager of research and policy development Cecil Bradley. They will be with us on any technical issues today. I am Roger George, the new president of the OFA. Along with my wife, I have a livestock and grain operation in Nipissing district. Bill, do you want to tell them about yourself?
Mr Weaver: I was newly elected. I am second vice-president of the federation in hog and egg operation in Kent county. So you have real, live farmers in front of you this morning.
Mr George: We have circulated to the committee a brief, which we do not intend to go through in detail but it will serve you as backup material. We are pleased to be here in these consultations before members of all three parties in the Legislature to hopefully explain to you some of the circumstances that farmers find themselves in as we move into a new financial year in Ontario agriculture and as indeed the provincial government is formulating its financial policy for the next while.
I do want to touch on three major issues you will see on the inside page called the introduction. We intend to talk briefly on farm credit issues, the whole issue of grains and oilseeds stabilization, and a little bit on rural development.
But before I get into those, I kind of just want to give you a little bit of an analogy. I almost feel like Oliver Twist here today. I did see the movie Oliver over Christmas again and I thought it had some sort of appeal to farmers because here we are again coming back and saying, "Please, sir, I want some more." I am quite sure that many newly elected members of the Legislature, particularly those who have no great experience of our industry, will be thinking about, you know, the government is going to be moving very shortly to give cabinet approval, we hope, to a new grains and seeds stabilization plan which we call GRIP. This is short for gross revenue insurance plan, which is part of a new national program that our organization and many others have been working on for the last 12 months. This will indeed put some stability into a sector of the industry that has been very hard hit.
But that is not the end of the story. The agricultural industry is going through some tremendous changes. We have also got some tremendous impacts affecting us, particularly in the whole issue of credit and interest rates. Our industry is very susceptible, probably more so than most, to high interest rates. Inasmuch as by and large we are price-takers rather than price-makers, we do not in many sectors have the ability to crank up our returns to offset ever-increasing input costs, of which interest rates are a major factor -- $4.6 billion is the amount of farm debt in Ontario farms today, which is only down about $500 million from its historic high of a few years ago.
We also want to explain to you, or try to explain to you, the importance of our industry in the economy of rural Ontario -- not just rural Ontario but Ontario, period. While agriculture's gross is something in excess of $5 billion direct prime input generated, the total spinoff effect in the provincial economy is in excess of $40 billion. That includes the food-processing sector and all the different manufacturing jobs that farmers directly or indirectly cause to happen with their activities, and that is $40 billion and tens and tens of thousands of jobs which hinge directly or indirectly on the wellbeing of a good, prime agricultural industry.
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I think in Ontario from time to time we tend to take for granted the farm sector. With Ontario being such a diverse economy, I think that farming tends to get forgotten from time to time, especially among the urban sector. Really, we have to ask the question, what does urban Ontario want? Well, they want adequate supplies of safe, affordable food, and that, Mr Chairman, is what Ontario farmers have given their urban cousins and in fact everyone in the province for the last 100 years -- adequate supplies of safe, affordable food. By and large, I think that is taken for granted, and we cannot afford to take that for granted because of the economic situation in agriculture. Many farmers are for the first time really reconsidering their position as having a viable future in this industry. I do not think that the Ontario government can take farming for granted for ever and ever.
I would hate to be in the position of a future government that has to pick up the pieces if indeed we lose much more of this sector. It is going to be a lot easier to keep it going through difficult times than it will be to pick up the pieces down the road once the wheels have fallen off the cart. So I hope when you are making your recommendations to government and to your caucuses that you do take into consideration and investigate the importance of this industry and try to understand the importance of this industry in the general economy.
On the issue of farm credit, you will see that we have attached a brief that we made to Pat Hayes's committee, which went around the province before Christmas investigating and consulting with farmers on the issue of farm credit. It goes into fairly exhaustive detail on giving the state of the Ontario situation out there in agriculture -- as I say, $4.6 billion in debt. We put in some technical information on all those things that you may be interested in.
I just want to hit the general high spots here and say that the Ontario Federation of Agriculture, along with many other farm groups, is going to be asking our Minister of Agriculture and Food and the Treasurer and the provincial cabinet when we meet with them in April to introduce a long-term credit plan in Ontario. We understand that it may take another year of study and development to put in place that type of sustainable long-term credit for Ontario farmers.
In the interim we shall be asking for an interest rebate program, probably specifically targeted to those farmers in the most need of it. For certainly four out of the last five years, we have had interest rebate programs of one form or another, and by and large they have been highly successful in dealing with this problem, but on an ad hoc basis. The OFA believes that the time has come for Ontario farmers to have the surety of having a long-term farm credit program that they can depend on, just the same as is available in most of our competing major agricultural provinces, namely, Alberta, Saskatchewan and Quebec, where the provincial governments give preferential lending rates on a long-term basis to their farmers.
Clearly, it puts Ontario farmers at a disadvantaged position and the responsibility for that, we have always felt in Ontario, has fallen to the federal government. That is why Ontario has kept out of that, but the federal government has clearly been neglectful in its duties. The federal Farm Credit Corp has fallen away as being a prime and meaningful lender of long-term credit to farmers. If the federal government is not interested any more in that, and we do not see too many signs that it is, then I think this province has no option other than to get back into the long-term credit business. But as I say, that is going to take some time to develop. In the meantime, we are going to be pressing our minister and our Treasurer to come up with an interim program for 1991.
The second point I want to make briefly is on this whole issue of grains and oilseed stabilization. As I mentioned before, we are very close to getting cabinet approval for the GRIP program, the gross revenue insurance plan. That will indeed give a base price to cash crop farmers. I do not want to get into the technical details of that. We think it is going to be a beneficial program. It is not going to be cheap. On a national basis, the premiums are going to total about $1.6 billion. That is for all three parties. It is a tripartite program and the agreement at the national level is that the federal government will pay 42% of the premiums, farmers will pay 33% of the premiums and the provincial government 25% of those premiums, so there is going to be a cost to the provincial government in that respect.
Also, the second portion of the plan, and it is a two-pronged plan, is called NISA or the net income stabilization account. That is a different type of program based on a farmer's, as it says, net income. The figures will be taken directly from the income tax form. The final details are not yet worked out, but we are certainly expecting and hoping that this government will indeed join others across the country in making this a truly national program because the net income stabilization account does have some very long-term, positive aspects to it.
The real problem we have with it is it takes a number of years to get the program up and running in so much as each farmer builds up his own individual account with after-tax dollars. Clearly, the time to be building up an account is in times of good prices rather than, as we are now, trying to start the thing off in poor times. We are not starting it off at a good time -- and I was on the national committee that helped to put this thing together -- but we believe that over the long haul, the net income stabilization account will be of major significance to take us into the next century. I would be very disappointed if Ontario decided, because of fiscal restraints, not to get involved in this one at the beginning, because from the point of view of international trade compatibility, it is going to be a key thing in the future.
The final thing on grains and oilseeds is that, again -- and as I said before, "Please, sir, can I have some more?" -- we are going to be coming back. When I say "we," the Ontario Federation of Agriculture and all our commodity allies are going to be coming back to both levels of government and asking for a deficiency payment for grains, oilseeds and horticultural crops for 1990, because in 1990 there was no effective stabilization program out there. It has taken us over a year to get this far with GRIP and NISA and the cash flow problems facing many producers this spring are going to be horrendous as they come off a year when they had pretty decent crops but the prices of seed were just pitiful. Certainly the world price of wheat is at a historic low in terms of real dollars.
I just again would hope that committee members can get some understanding of these difficulties that farmers have being facing, brought on in large part because of the international trade wars.
On the final issue of rural development, I do not want to get into any details on that. Maybe we can deal with it in questions, but our organization believes, as I think does the Ministry of Agriculture and Food, that there is a need to investigate this whole issue of rural development. Rural development can mean many things to many different people, but to my mind it means spurring economic activity in rural Ontario with entrepreneurial help. We need some seed money from governments, but I think a lot of the thing can be generated in rural Ontario itself on a localized basis. It becomes almost self-help, but it needs some kickstarting from governments.
I think it is an exciting, long-term, multimillion-dollar, multi-year project that I would hope the government would certainly be looking at, because Ontario people I think can be the masters of their own fate as well, but we also need the sort of encouragement that urban areas have had. As infrastructures are being built up in urban areas, I think rural Ontario has from time to time been forgotten.
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With that, Mr Chairman, I think we should move, if you wish, into questions. I just want to say that we are here today to back up in the strongest terms our Minister of Agriculture and Food, Mr Buchanan, when he is going to be making his pitch to the Treasurer to not only maintain the budget of the Ministry of Agriculture and Food but to increase it for some of these areas in which I have pointed out we need the aid. I think it is very important to get back to my original question of, what does urban Ontario want? They want adequate supplies of food. What do they give us in exchange? It often is their garbage and that is just not good enough, because if the farmers are going to do their thing, produce this affordable and safe food, then urban Ontario has to look at the farming community in rural Ontario as a lot more than a playground and a place to dump its waste. They have to recognize it for what it is, as a centre of key economic activity and that farming is the second-largest industry in this province.
Mr Sutherland: Given that last comment you said about being the second-largest industry, I had someone comment to me that in terms of overall economic recovery for this province the fact that what may slow it down is that there are approximately 10,000 or fewer farmers now than there were at the time of the last recession. I was wondering if you can comment. Are those the numbers you have? With that many out of the industry, I was wondering if you could comment on what type of impact you feel that is going to have on economic recovery for the province as a whole.
Mr George: The question of how many farmers there are in a province is one that has eluded most of us. It depends on what you define the farmer as and certainly our organization is never going to attempt to define a farmer.
I guess when we get the 1991 census we shall have an idea, in terms of census criteria anyway, just how many farmers we have lost, but you are absolutely correct: Many farmers have left the land. More important than that, I think many more farmers are working off the farm in order to support their operation.
Cecil might advise me what percentage of farm family income actually comes from non-farm sources and it is fairly significant. I would venture to say that it is probably half. Most businessmen would not expect to have to send half the family out in order to support their business, but that is exactly the state that agriculture is in at this point in time when we are doing that.
Just remember that when a farmer's family is forced to not only maintain his farm but go and work off the land, they are also displacing someone else, probably young people without any experience, who are trying to get that first elusive job in a factory or wherever. Clearly, we have a vested interest, from a total picture, in keeping our industry healthy so that our farmers can actually make a living completely off their farm and so that we are not competing for jobs with everyone else.
Mr Kwinter: I was just curious to know whether either or both GRIP and NISA have been checked as to their compatibility with both the free trade agreement and GATT. Are there going to be any problems as a result of pursuing these particular initiatives?
Mr George: In so much as we do not know the final outcome of the GATT yet, that question may be a little bit premature. However, certainly as a person who sat on the committee, we believe that NISA is absolutely trade compatible no matter what happens at GATT. It is in what we call the "green category," along with crop insurance and everything else in so much as it will have no detrimental impact on trading issues.
As for GRIP, the gross revenue insurance plan, in fairness I think we would have to say that it may be suspect, given the current trade regulations, but it is no more suspect than a lot of other programs out there. Very clearly, when our committee was putting together GRIP and NISA and looking at this whole issue of the grains industry, we decided at an early date that we would do what was right for Canadian farmers at this point in time to address a critical issue, rather than skate around trade issues and develop something that was going to be trade-acceptable when we did not even know what the trade deal might be. Certainly we were not prepared to lay down everything and be completely clean when everybody else in the world is playing games too.
So I think in answer to that question, Mr Kwinter, I just want to say that when everybody else lays down his internal supports, then Canada will clearly be doing the same. It may well be that somewhere down the road when we have resolved some of these trading issues there may need to be modifications. That is the right time, in my mind, to do it, but not now. We have to have a program there to help our farmers in a time when they badly need it.
Mrs Sullivan: There are a couple of things that I want you to elaborate on, particularly in relationship to farm credit. I recall that in the 1990 budget, and I think in the budget before that, there was about $50-million worth of funding for the Ontario family farm interest rate reduction program and son of OFFIRR. In short-term funding, are you looking for a similar program in terms of interest rate reduction programs? And at what would you estimate the cost this year, given that the estimates I have seen are that farm debt will rise in the upcoming fiscal year?
Mr Weaver: I think as Roger has spoken of, we are definitely looking at two parts. Given the realities of developing a long-term program, we are definitely looking at a short-term program for this year, you know, something that is going to keep the cost of lending down to a reasonable level.
I do not know if Cecil is going to have any hard and fast numbers for us right now. Obviously some of the cost involved is going to impinge on what the interest rate is. Fortunately, we see some creeping down in the interest rate, and that is good. It is good for us as farmers because, under any program, all of the debt is not going to be covered but, at the same time, it is going to be good for government because as interest rate does slip down, it is going to mean less of a burden for any programs. Do you have any hard figures you could add, Cecil?
Mr Bradley: No, other than I suppose during its largest payout, I believe the OFFIRR program paid out something in the neighbourhood of $67 million or $68 million. During its peak payment year the OFFIRR program paid out approximately $67 million or $68 million. I think if you were to check the figures now you would find that farm debt is not much changed but the interest carrying cost attached to it is somewhat higher, so to get the equivalent level of support that was provided by OFFIRR in what farmers would call its best year would probably cost something in the order of $70 million. But of course there is judgement that needs to be exercised in what is an appropriate floor level for interest rate and how targeted the assistance is in terms of what sorts of farm operations are eligible for support.
Mrs Sullivan: Okay. That was going to be the next question. What would your best recommendation be for eligibility?
Mr George: Well, certainly we were not too impressed with the last one, where the endeavour seemed to be to spread it out as widely and as thinly as possible. Clearly it has to go to those farmers who need it, and so I think OFA is quite prepared to sit down with the minister and make suggestions as to the groups that should be targeted along, as I am sure there will be suggestions from other commodities in that regard.
The other issue comes down to the extent to which that money goes to help the banks, and I think in some of the past programs there has certainly been some, I hate to use the word "gouging" but it is the only one that comes to mind at the moment, where banks have not necessarily given farmers the best interest rate in town, simply because they know that those farmers are going to be able to recover that interest spread from a provincial government program. Clearly when we have only got a limited amount of government funds, and we are always concerned about that constraint, then we want to make sure that the beneficiary of this thing is going to be the farmers of Ontario and not the Canadian Bankers' Association.
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Mrs Sullivan: That has certainly been the situation in my community. I want to move on to the kinds of farm credit organizations that exist in the prairie provinces. You have mentioned that over the longer term you would see those as viable operations. How would you see them working in conjunction with the Farm Credit Corp in Ontario, and what kinds of moneys do you think should be put into a farm credit operation?
Mr George: The OFA has said in both its brief to Mr Hayes and also to the national farm finance task force that we are prepared to go with some sort of a cost-sharing national farm finance program, but very clearly we are interested in making sure that the federal government actually puts real money into this thing and does not just provide a shopping window in the name of the Farm Credit Corp.
The federal government has got to put something in its storefront and not just offer us the storekeeper and his assistants. At the moment we see the Farm Credit Corp as basically a store with a lot of attendants and nothing to sell. It really bothers us to turn to the provincial government and say the feds have given up on farm credit so the province has to do it all, because very clearly that was not the original commitment.
I am hoping, and I think it is getting to be a slimmer hope by the month, that the feds will indeed reconfirm their commitment to supplying core financing at affordable rates on a long-term basis. But in the absence of that, as we said earlier on, I think we have to work with the provincial government to see just what we can do to create a pool of money to make sure that when farmers enter into a long-term, 20-year plan for their farm, they are going to have matching capital requirements.
That is the real problem now when we enter into that, buying a farm and thinking we are going to pay for it in 20 years, with no idea at all whether interest rates are going to be 10% or 20% over that period of time. Again, a lot of this has to come back on the federal government, but given the situation there, I think we have to look at all sorts of options.
It is clear in my mind that there is no one single fix for this thing. I think it is going to take a whole basketful of different types of programs for different situations and we need to be looking to see where there are other sources of money. We need to be looking at the tax system. Is there any way we can go back to the old agribond proposal, where investors could get a break on investing in agriculture at lower rates? At that point in time we were looking at fleshing out some 7% or 8% money because investors would get that type of rate.
We should be very frank. There are a lot of wealthy farmers out there, farmers who would gladly retire or sell their farm and reinvest back in their industry. So we want to find, if we can, ways in which these retiring farmers will either pass on that farm to the next generation or else will sell it to someone and take back the mortgage at lower than market rates, because this industry cannot stand 16% interest rates. It can barely stand 10% interest rates. I think it is probably one thing that some members of the Legislature do not understand, the difference between our industry and industry as you know it.
Mrs Sullivan: Can I just ask one final question, also on the credit issue, relating to farmers coming into the industry? At one point last year, as I recall, the OFA began to argue that with appropriate stabilization programs, a program such as the beginning farmer assistance program would not be necessary. Do you concur with that?
Mr Weaver: I have been working somewhat in that area. The costs of getting into agriculture, as I am sure anybody who is at all involved knows, are immense. The stabilization programs are going to be beneficial, I think, for developing an ability to plan, because as Roger talked about the idea of having long-term credit policies, right now we see commodity prices going up and down. It is the realities of agriculture today. We are talking about lower margins per unit and the need to produce higher volumes. Those are just the realities we face.
As for your direct question, do we see that stable incomes are going to be adequate for incoming farmers, I think we have to be very careful with that. Beginning farmers have some real needs there that have been addressed with BFAP. They have been addressed very poorly in the past program, which addresses the farm stock program. So we will see a likelihood of some sort of program coming up.
I think this is where we are talking about the possibility of targeting programs. We are presently going through a discussion process within OFA about where our recommendations should go as far as where and if things should be targeted. If we are going to have perhaps slightly larger weighting of targeting of credit policy towards the incoming farmer, then that might be suitable and we will not have to have these other farm-start type programs that appear now and again.
I have been a farmer for 15 years. It does not seem that long. The ability or the need for us to be able to plan, to have some sort of level -- we know there are going to be ups and downs in commodity prices and there are going to be ups and downs in interest rates, but to take some of those peaks and valleys out is very crucial to us, because we just cannot stand the 50% or 60% changes in commodity prices that we see. I think that is why we are after many of these plans that we are looking at here.
Mr Bradley: I would supplement Bill's answer to the question by pointing out that there is an independent rationale for beginning farmer programs, even in the presence of very good stabilization programs which GRIP and NISA promise to be, because beginning farmers generally have disproportionately higher costs in their early years of operation, particularly because of financing and of course particularly in these years when interest rates are where they are.
They also unfortunately oftentimes have below average yields because they are getting into the business and they are trying to establish themselves. They may not have a command of the management skills or the machinery or the land base that they are working from. Since the GRIP program tends to be driven by farm yields, that would suggest that a beginning farmer might not be getting the full benefit of the protections that GRIP can provide. So I think there will continue to be an independent rationale for entry-farmer assistance.
Mr Jamison: I would like to get back on the impacts, so we understand the impacts. I know you have lived through a surplus here of both the free trade and GATT situations on agriculture in general. That is the first part of my question, to give us a real feel for how that has affected you over the last number of years. The second question I have really dovetails that in a smaller sense, and that is how we stand as far as how the provincial government has performed in relation to other programs applied in other provinces; specifically Quebec, for example. Those are my concerns.
Mr George: Maybe if I can take the last question first, if you want to start comparing Ontario's agricultural programs to the province of Quebec, we are not even in the ballpark, and when you start talking about a level playing field, we are not even near the stadium, never mind saying whether the field is level or not.
We were in Quebec last week. You go there with one general farm organization, the Union des producteurs agricoles, that is holding a $1-million conference next week to look at rural development. It is an incredible thing that the farmers are doing and I commend them for it. They are driving their own destiny there in Quebec and Quebec is very clearly getting itself in a position where, if it goes for sovereignty, it is going to have the infrastructure there to be self-sufficient, and not only self-sufficient but it will be an exporting nation. Quebec is a prime example.
Alberta, Saskatchewan and Manitoba are all agriculture-based economies and they have done tremendous things over the years, not only just in finance, but in other programs particularly in the livestock sector in Alberta, to encourage their industries and build up modern competitive industries.
I think that as a major agricultural province, Ontario is just about bottom of the pile. We have constantly pointed that out and it is one of these things that just tends to get glossed over. The only thing that saved our industry, quite frankly as I said before, was because we are so diversified in Ontario and we have so many other options. There are jobs there for our farmers to go and supplement their income. You can all see the tragedies happening, particularly in Saskatchewan where it is a completely wheat-based economy and there are no options. Heaven forbid that our industry ever gets into that state.
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To answer that question shortly, Ontario has been prophetic so we are not here -- I was talking to the minister recently and he is worrying about the budget. We are looking for more money, not less. I think this would be of provincial importance, of importance to the provincial economy that this be considered very seriously, regardless of the fact that we have some major budgetary concerns in this province. The options, as I said before, in the long term are going to be a lot worse if we do not deal with it.
On the issue of where we are on trade and whatever, one issue that comes to mind as a result of free trade is this heightened awareness of competitiveness, where particularly in the food processing sector, processors are scrambling to meet the challenge of United States competitiveness as tariffs are removed.
My research and development has been involved in the national task force on that exact issue on competitiveness and is able to speak to it tonight. The other issue of course is the unresolved GATT negotiations, where the impact of that thus far has been to create a lot of uncertainty, particularly in the supply-manage sector where many dairy farmers and people who come under those jurisdictions do not really know what the future holds. It makes their bankers nervous and they are nervous.
I would suggest that a lot of plans on those farms are on hold until GATT is resolved and we can hopefully secure our supply-manage system under GATT. The whole issue of these export subsidies, which have knocked great holes in the profit margins of grain farms, just has to be resolved, in my mind. It is going to be a tough challenge and the next couple of months will see whether it can be sorted out or not.
Mr Phillips: On page 5 of your document I think you say that the $100-million credit program of the new government, if I read between the lines, will go a long way in the next year in helping your credit issue. Is that a fair conclusion?
Mr George: It depends what we are talking about with $100 million. If it was $100 million into an interest rebate program, yes, that would indeed go a long way.
Mr Phillips: Is that not what is proposed in the document?
Mr George: We are not sure what the $100 million means. If we are talking about $100 million of capital for long-term financing, $100 million is a drop in the ocean.
Mr Phillips: But up to $100 million would be made available, and it is under the interest relief program, so I assume --
Mr Weaver: I think what Roger is saying is that details of how that is going to come out have been sketchy.
Mr Phillips: But it is just because it falls, as it does, on the Agenda for People, interest rate relief and up to $100 million would be available. I assume that is what is meant so that would help your credit issue.
Mr George: The "up to" is the other critical thing. It could stop at $19 million, could it not?
Mr Phillips: No. Then the two things if signed, the GRIP program and the NISA program -- I gather the negotiations on are well down the road, the 11 ministers I gather or thereabouts have signed it and that is what we should be watching for next.
Mr George: I think the GRIP one is the one that is under control. That is ready to get cabinet approval from what I make of things. The NISA program is not quite so nailed down yet and I would just ask members of the committee to pay particular attention to that and make sure that it does not fall off the rails because of any fiscal restraint. The only reason that NISA is still around in our debate -- we have been talking about this thing for 12 months in Winnipeg -- is because of its phenomenal ability to deal with what we call the whole farm issue over the long term. We have agriculture programs come and go. NISA has real potential to withstand the test of time and to withstand the test of trade challenges and all those things as it deals with the whole farm issue and with a farmer's individual accounts.
Mr Phillips: Right. I just have these questions, really. There is a big one and a little one. The little one is just again on the number, that each 1% increase in interest rates adds $9 million in interest charges to Ontario's farmers, whereas I kind of had this mental image of your debt being $4.6 billion, and 1% of 4.6 is not 9 in my mind, I just wondered how you reconcile that. That is my little question.
The big one is the one you touched on earlier. That is an image I have of the food processing business, that it is heading out of Ontario. That is an image I got, rightly or wrongly. Reading the free trade agreement, I think the prognosis was that if there was one industry going to be hit early it would be food processing. That does not necessarily mean the food producers are in trouble, but you would think there is at least a possibility, and I wonder -- it may not be directly related to the budget, although it is indirectly -- if the programs we are implementing are not going to help you long-term, if this other trend hurts you long term, if you could help us there.
The $9 million is the first question and the second one is, should we be really worried about food processing leaving or is there still a good market once they are gone?
Mr Bradley: I guess of the $4.5 to $5 billion in farm debts that is out there, approximately $1.9 billion of it is a floating rate, so as the bank rate is adjusted week to week and month to month, that flows through immediately and directly to interest expense. The balance of the debt is medium- and long-term debt, so it will only notch in at a higher rate if in fact it comes to term while those rates are high. But there is still money out in the farm community, long-term mortgage money at less than 10% and locked in for extended periods of time. Not all of the $4.5 to $5 billion in farm debt is at the current interest expense.
The food-processing-sector question, maybe Roger wants to take a --
Mr George: I think Bill wants to take a stab at it.
Mr Weaver: Well, just a couple of comments. I think in general, in the area I come from there are quite a number of food processors, a strong tomato belt, certainly in Kent and Essex counties, and we have seen one plant just shut down -- Hunt-Wesson shut down -- and the impact of that on neighbours and buying that they did in very recent years. Probably some or most of you have seen a tomato harvester out in the field, a $200,000 investment in a tomato harvester which cannot be used for anything else. So the impact of the Hunt-Wesson closing on I think about 12 producers has them scurrying around looking for contracts in a decreasing market, and some of them are not going to be able to receive that so it certainly does go right back to the producer.
A smaller example in Leamington was Heinz, I think, closing down a pickle run that was going to go completely to the States. I think we also see the attempt at efficiencies. When Nabisco shut down, a smaller plant in the Leamington area put an expansion in Dresden trying to be as efficient, be as competitive as possible.
I was at a dinner with the minister that was attended by some representatives from the food processing sector and one individual there was commenting to him about the need of the food processing sector to have some avenue perhaps for capital investment or enhanced capital investment opportunities for upgrading some of their plants. He was using the example -- I cannot recall what it was -- of one particular piece of equipment, very expensive, that would then allow them to maintain a market share in a particular product and at the same time allow the producers in the area to continue to produce that particular product. So there is certainly a need and we are sitting here talking about agriculture. We have realized the need to expand that into the needs of our customers and people we work with very closely in the food processing sector.
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Mr George: I would just like to add to that, also never forget that the raw product, the tomatoes or the wheat or whatever, is a relatively small part of the cost of that product when it gets on to the supermarket shelves. Very clearly, a lot of our processors are up against other issues like higher energy costs, higher labour costs, the higher cost of doing business in Canada, period, vis-à-vis their competitors. I would say that has become a more major question in my mind, what the federal and provincial governments can do to make not only the food processing industry but any of our industries more competitive rather than worrying about whether a supply-managed chicken costs more money than it would in the States. So, I think that is something we should bear in mind, because that obviously has an impact way, way beyond agriculture.
Mr Phillips: I agree with that. I just wondered if this is an industry which is moving faster than other manufacturing industries and whether that should be cause for concern, because you people know it far better than we do, but you are saying --
Mr Weaver: There is a definite concern, obviously, in terms of affecting us. They realize the need to modernize, be competitive. It is affecting us on this year's products, I am sure.
Mrs Sullivan: You have not raised these issues in the paper, but I thought you might want to have an opportunity to underline your views of the land stewardship program which, certainly in my community, is an extremely popular and well taken up program. In the budget consultative process, you might want to get something on the table about it.
Mr George: We are very positive about all efforts in land stewardship, as I think there has been a growing awareness in the farm community about land stewardship. Whatever governments can do to help farmers to understand new technology and work with it, then, that is good. I do not think it is supposed to be downsized.
Mrs Sullivan: I had a sense that there would have been a lot more farmers involved had the program been larger.
Mr George: Sure. I mean, we keep coming back to you time and time again saying, "Well, great, put another $30 million into the thing, sure."
Mr Weaver: One of the frustrations with that as well is that we made applications, made some decisions on that and then because of the size of the budget and because of the popularity of the program, people saw the need for a land stewardship program. Then they came back and they were apportioned a certain percentage of that. I mean, again, personally we made a decision expecting a certain amount of money coming out of that, I guess even 60% of that, which startled some people. That is the way we have to move with the environmental pressures, we understand that, and that is the way it should be, ample economic returns for the farmer. It is one of the things that encourages and allows him to do the things that he should, rather than the things that he will have to do to survive for another year. So I think the two things do run together, the economics of it and the land stewardship program.
The Chair: I would like to thank you on behalf of the committee for your presentation on a very important sector of the economy.
Mr Sullivan: Mr Chairman, with your permission, just a couple of points. The first is, we appreciate again the opportunity to come before your committee. It is an absolutely crucial committee of the Legislature for an organization like the OFA. Again, it is a $40-billion-plus industry, the second-largest economic sector in the province. It is absolutely crucial that this committee be aware of that.
The OFA itself is the largest general farm organization in the country. We meet on a monthly basis. The board of directors of 135 is larger than the Legislative Assembly. They are open meetings. We would encourage any member at any time to be in touch with the OFA. It is a very complex organization that attempts to arrive at a consensus on agricultural policy for the province and advise members of the House, ministers of the crown.
It is, again, a process that includes nearly 30 commodity organizations, some of the largest commodity organizations in this country, many of them world class; 46 independent regional or county federations of agriculture are represented on the board. The Women's Institute, Women's Farm Network are soon to be involved. There are others knocking at the door to be a part of the process.
We would welcome members of the House, of all parties, as we meet with you on at least an annual basis in your caucuses, to share with you the vision of agriculture, to take advantage of the opportunity of working with OFA. We are right here in Toronto. The board meetings on a monthly basis are always held in Toronto. Any member of the Legislative Assembly of Ontario is always welcome at our board meetings. We would be delighted to have you there and share with you some of the struggles that face the farm families of Ontario. This committee is very important to us. Soon -- next month -- we will meet with Mr Laughren as Treasurer.
I know that the stories you have heard in this room are very tough stories from a variety of sectors in the Ontario economy, whether it is in health care or education or social services, but agriculture is crucial to the health and vitality of Ontario's economy. We would want to thank you again for that opportunity and pledge to you our willingness to work with all members of the House and all parties to advance the cause of farming and strengthen the economy of Ontario. So, thank you very much, Mr Chairman, for this opportunity.
The Chair: Thank you. The committee is adjourned until 1:30 this afternoon.
The committee recessed at 1237.
AFTERNOON SITTING
The committee resumed at 1339 in committee room 2.
MINISTRY OF COLLEGES AND UNIVERSITIES
The Chair: We have a rather heavy schedule for this afternoon. I would like to welcome Dr Brzustowski, deputy minister on the card, but I understand a new position.
Dr Brzustowski: The card is good for four more days.
The Chair: I would like you to begin if you would, sir.
Dr Brzustowski: Thank you very much. Let me first of all express my appreciation that the standing committee on finance and economic affairs should take an interest in the state of university and college funding in particular. I welcome that interest, because I think these institutions represent an instrument by which we make an investment in the future. The more people in government consider more broadly the investment in the future in the people who go through those institutions, the better Ontario will be served.
I would like to make my presentation basically in two parts. First, I would like very quickly to hit the highlights of the material that was distributed -- this is the package that was distributed -- which I think might provide some useful information and useful insights into the system and how it operates. In addition, I have distributed just recently a much more detailed brochure of statistics. You might find later that there are questions that some of the information in there raises. Please feel free to contact me or anybody in the ministry for answers.
In the second part of my presentation, if you allow it, Mr Chairman, I thought I would spend just a few minutes looking into the future and suggesting ways -- maybe not even ways -- suggesting issues of finance and economics for which we have to prepare ourselves. They are in the post-secondary sector. If you agree, I would be pleased to proceed on that basis.
Let's begin with an indication of how large the system is. I will turn to the third page of the handout, the one called "System Overview." The post-secondary system in Ontario is really quite diverse. It has 15 institutions that we call universities, and in fact if you include certain others in that grouping, the number rises to 22 -- I will just mention those very briefly in a second -- and at the moment 23 community colleges.
The universities range from a very large university which is a few hundred yards from us, which has advanced work, graduate study and research in most of the traditional disciplines, in fact all of the traditional disciplines, right down to very small institutions such as Lakehead University and Laurentian University in the north which specialize rather more.
The universities, I think, are experiencing what is almost now a decade and a half of growth. They are still growing and now have an enrolment -- the numbers are in the table here, but I would like committee members simply to think in general numbers -- of about 200,000 full-time students in the universities. It is a little more than that, but if you think of 200,000 full-time students in the universities and 100,000 part-time, these are nice, round numbers to work with.
The colleges, on the other side, are much more complicated institutions. Our colleges are quite different from almost all the other college systems in Canada. They are different from the CEGEP in Quebec; they are different from the transfer institutions in the west. I like to think of them as teaching enterprises which cover everything from post-secondary courses leading to diplomas in various fields, including advanced technologies, right through to institutions which provide basic life skills to people who are being helped by government through various assistance programs.
The numbers in the table are in a sense a little bit misleading, because they underplay one role of the colleges. The number 217,000 listed for part-time students is for part-time students taking post-secondary programs. We estimate that there are another 400,000 people taking non-credit part-time studies at the colleges. If you inflate the numbers by that amount, then in the total you would see that something in the order of one million Ontarians each year are clients of the post-secondary system, either universities or colleges, either full-time or part-time.
The system is supported through two sources of revenues. One is the operating grants from the government of Ontario, and the numbers are indicated here, something in the order of $1.8 billion for the universities and approaching $800 million for the colleges annually. In addition, there are tuition fees paid by students. Although that number is not explicit on this page, the tuition revenue is in the order of $500 million per year, about $400 million plus on the university side, $100 million or so on the college side. So half a billion roughly in tuition fees, something in the order of $2.6 billion in transfers from government and a fund of about $110 million in capital, as you can see.
One of the points that is often made by the institutions in approaching government is illustrated on the first chart which is on the next page, "The Ontario Government Budget Dollar: Expenditure Forecast 1990-91." The point that is often made by the institutions is that in the spending of government dollars the post-secondary sector is at a lower level now than it once was, and there are explanations for that. Nevertheless, we see here that of the expenditure dollar, 19 cents are devoted to education and of those 7 might be listed in the post-secondary area, including 1 cent for skills development. I list that among the post-secondary activities because it does involve the colleges as well.
Now, whether that number is the right number, whether the historical trend is justified, these are moot issues. One can formulate policy on many bases, but the fact is that the percentage of provincial revenues devoted to post-secondary education has been declining and the colleges and universities of this province frequently remind government that that is the case.
If I may turn to the first bar chart, this is the way that the expenditures of the Ministry of Colleges and Universities are broken out by the categories I used in the estimates process. The point I would like to make is that student support is quite a significant amount; in fact, it is $220 million in 1991. That amount of student support is taken up by about 100,000 students, and that amount represents the cost to the province of Ontario of providing, as you shall see later, almost twice that amount of support, given that some of it is in loans. So about 100,000 of those 300,000 full-time, post-secondary students receive financial support through OSAP. The Ontario student assistance program is actually an umbrella of a number of programs, and I will touch those.
You can see from this particular presentation that university support, which includes capital and includes the cost of running the programs, college support likewise and student support dwarf the amount spent on administration of the ministry. I must say I am very proud of that at times like this when I am meeting with a committee. The ministry in fact does transfer over 99% of its total budget to the institutions and to individuals.
There are times when I am less satisfied with that process and that is when we are asked to do things which require resources, because this particular ministry is very slim. It may be some measure of efficiency in government, and if it is, then MCU takes first place. My colleagues decry my boasting about that. They feel things would be better if we transferred less and had more people to carry the load, but that is how it is.
The next chart shows the breakout of the sources of operating funding available to the institutions. Now I should, to explain these charts, point out that the colleges engage not only in post-secondary programs funded by the government of Ontario and by student tuition, but also in programs under the Canadian Jobs Strategy which attract some federal funding. They also do some small amount of teaching and training which attracts industrial funding. So there is a substantial "other" category, but most of that would be federal dollars in the CJS.
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On the university side, most of that "other" category would also be federal dollars and it would be federal dollars tied with the research activities of the institutions. You can see that in the case of the universities tuition is a much larger percentage of the total than in the colleges and the "other" source of revenues is much smaller.
I am sure you are aware that there has been a lot of discussion about tuition fees, and much has been written and much has been said and much has been carried on picket signs on that subject. If you look at this diagram, there is a useful conclusion that one can draw: simply that to increase college revenues by 1% one would have to increase tuition by 10% because tuition represents one tenth of college revenues. On the university side it is very close to needing to increase tuition by 5% to increase revenues by 1%. There is that difference in the multiplier. Whenever discussions of tuition are being entertained, I find it very useful to keep in mind this ten-to-one multiplier for the colleges and the five-to-one multiplier for the universities.
I mentioned at the outset that the post-secondary system has been experiencing growth. In the bar graph the number of full-time students illustrates that for both the universities and the colleges. The colleges have shown a spurt of growth just in the last couple of years; in fact, the growth this current year has been something in the order of 5.6%. The universities, as long as I can remember -- and that is getting on to about 15 to 20 years now -- in projections of enrolment, the enrolment was always going to decline after another two years. It never has. It has continued to grow; there have been plateaus where the growth was slower. A diagram such as this really flattens the presentation, it does not allow you to pick out the plateaus.
Nevertheless, more and more of our young people are choosing to go to universities. It almost seems that the bachelor's degree has become an aspiration for a very large number of people, somewhat parallel to what might have been among my classmates at the time when I was finishing high school, grade 12. One could get quite a decent job at that time -- I am sure this dates me -- with grade 12. In fact, jobs with career paths were open to people from that level.
These days, I think almost any full-time job requires at least grade 12, maybe some post-secondary, and a job with a career path that is visible requires rather more than that. A lot of employers are telling us that they simply do not hire people who do not have diplomas from the colleges or degrees from the universities, and that is a phenomenon which seems to be taking hold more strongly.
I cannot make any prediction that I would have faith in of what will happen to enrolment in the universities and colleges, and one of the reasons for that is that a component reflects immigration. A lot of our recent arrivals place a great value on post-secondary education, and their participation rates tend to be as high as their wealth allows.
Most recently, there has been just a tremendous growth in the participation rate of women in all sorts of university programs, with the exception of the professional programs in technology and engineering. But even there, the growth has been much greater than historical. There has been a growth in the participation rate of students from rural areas, and again it is hard to explain that. Nobody predicted it. It is hard enough to explain after the fact.
I see no basis for any firm prediction that this period of growth will end in some magic way. In fact, I think that if one looks around at the various equity measures that have been implemented and additional ones that are being proposed, not only to provide access to the post-secondary system but to provide access and a successful completion of a program, then when those measures succeed, as I am sure they will, participation rates will increase even further and the enrolments will reflect that.
I think that there will be many, many factors which will contribute to changes in enrolment, I expect to a growth in enrolment in both colleges and universities, and not the least of this will be the success of various social measures designed to promote participation. So, Mr Chairman and committee members, please do not look for a flattening of this sequence of bars. I do not think it will happen.
The next figure, showing operating grants for a full-time-equivalent student, is something which is a fact. These are operating grants expressed in constant dollars.
They indicate in a way which is quite unmistakable that the purchasing power of the institutions per full-time-equivalent student has been decreasing. There was a period of quite pronounced decrease -- there has been some recovery since -- but in fact the levels in 1988-89 are still substantially lower than they were in 1978-79. One could say a great deal about this. One could say, for example, that there must be some benefits of scale in this. One can also put a counter argument for it that against the economies of scale there are the diseconomies of complexity. Let me give you an example.
A full-time-equivalent student represents five part-time students. A full-time student, a single student, will have one admission decision, one program decision, one file in the registrar's office. The five part-time students will have five program decisions, five admission decisions and then five files maintained. The complexity is increasing. One could always say that there is some absolute standard against which one could measure the operating funds provided per full-time student. I really tend not to believe that. I think the people look at incremental year-over-year changes.
Education is a sector in which I believe there are really no normative costs. There are expenses, because one can always trade off quality by whatever measure in what one does, so it is possible to teach a course with 30 students in it; it is possible to have 60 students in there; it is possible to have 200 students in there. What you cannot measure is the output, the quality of the educational experience. That remains one of the great imponderables in the whole area of education finance. I think the best one can do is to compare ourselves with other jurisdictions, preferably ones where we have to compete economically, and those comparisons show that this decline has been too severe, that Ontario's place has slipped in the ranking of the Canadian provinces in the funding for full-time.
The next diagram illustrates that in a way which is quite unmistakable, because this diagram in effect expresses what I just finished saying. These are operating grants to universities per full-time equivalent student, 1977-78 to 1988-89, in constant dollars. The solid line at the bottom of this array is the Ontario performance. The dotted line in the middle of the array is the national average, including Ontario, and the top dotted line is the average of the other nine provinces. These are facts, these are figures that have been assembled with some care. I do not think anybody disputes the figures. This is what they are.
The next chart makes the comparison within Ontario, and it looks at various sectors and looks at an index of expenditures per client served. The language was changed; it would be a little difficult to talk about FTE patients or something of that sort in hospitals, so the language was changed. This is an index of expenditures per client served in constant dollars.
The interesting thing is that you can see that the costs have risen in the hospitals and the schools, they dipped and rose in the treatment of adult offenders, they have declined rather more continuously in the matter of universities and declined quite precipitously, with some recovery, in the colleges.
I suppose one can always look at a diagram like this and explain all the components that go into it, but such a picture does raise interesting questions of public policy. In terms of public policy, is this what the ranking should be? I hope that the committee members will note this particular item of information and maybe devote some of your attention to it.
At this point, if there are any questions on the numbers I would be most happy to fill anybody in before we go to what seems to be a somewhat different set of issues on the next page.
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The Chair: Are there any questions?
Mr Curling: The recession places a heavy burden on the colleges and universities, meaning that instead of finding work now people go back to school. You expect the enrolment to increase more now, do you?
Dr Brzustowski: Yes, I think there will be pressure for people to go back and maybe finish off programs that they had not finished before or to acquire new skills. Yes, indeed.
Mr Curling: Are your figures in any way in your presentation for your next budget making provision for that, or has that been indicated in your budget?
Dr Brzustowski: To the extent that one can. yes. I think that our presentation for the next budget will reflect that as a pressure.
Mr Curling: My last question: Would you say that colleges suffered more from receiving less money than the universities over the years, in the last 10 years?
Dr Brzustowski: I think it is evident from the figure I looked at just recently that the funding available per client served or per FTE student declined much more deeply in the colleges than in the universities.
Mr Curling: My real last question: The money that is given to the colleges is less, as you said; psychologically, would it not be more -- let me put it another way. The clients that are served in colleges are really on the sort of survival base of getting better jobs. In universities, let's say that the students have acquired good academic skills and would survive. I do not know how you would put a ratio to that. If $1 was cut from the college and $5 cut from the university, it would serve a more severe blow there for those.
Dr Brzustowski: It would be a larger fraction of the total operation. As you can see in the trend that I just mentioned, in fact the two lines are converging. The colleges are being brought much closer to the universities.
I do not have the figures in front of me and I do not have a chart, but committee members might fund it interesting that -- these are very difficult numbers to get -- but I think if one took, for the high schools, the sum of the provincial funding plus the municipal funding per student, you would find that that total is greater than it is for a student in the colleges. That was the case in the last year for which we were able to document that, which was about three or four years ago. I have not seen anything happen since that would make that situation change.
Mr Phillips: Just because I am not sure what comes later, just to maybe get the questions out, I have a variety of things. I know in your new role you are going to be quite interested in science and technology and those sorts of things; can you provide us with any advice in terms of what things we should be thinking about financially to accomplish that objective?
The second thing is, I gather that to bring Ontario up to the national average in grants per student might be a minimum of $500 per student, if I can read the charts right. Is that roughly the number, and how much money is that?
The third is just any advice you could give us in terms of how we should view enrolment in our schools. My recollection is that about one third of the students do not finish secondary school, one third do but do not finish post-secondary, and a third finish post-secondary. Should we be thinking of whether that is something that is way out of line with what we should be thinking of as a society? If it is, that would, I guess, argue for more resources to be placed somewhere in this post-secondary stream.
Dr Brzustowski: Thank you for those questions. If I may, could I take the last one first, because really that is what I wanted to talk about in this final little part of my presentation.
I believe that by the end of the decade or perhaps before that, for reasons of our survival in many dimensions, our economic survival, our cultural survival, perhaps our physical survival vis-à-vis the environment, even our psychological survival as individuals, we may need to have a very much larger participation rate in post-secondary education than we have now.
Today's figures show, as Mr Phillips has indicated, that about a third finish post-secondary. At the input end, about 40% of those who register in grade 9 show up in post-secondary education, either in college or university, at the end of their stay in high school. With the equity measures that we are promoting, that is, that all groups in our society should find equal representation and an equitable representation of outcomes in our post-secondary system, and the fact that we will need new skills in new areas, many of which we cannot quite yet predict but many of which we can. I think it would be not unrealistic at all to expect that we should have something like 60% of our students proceeding to post-secondary education.
Mr Phillips: Proceeding or completing?
Dr Brzustowski: Initially I will say proceeding.
Mr Phillips: I am sorry. Do 60% not proceed right now?
Dr Brzustowski: They do not right now. The reason I say proceeding is that I think we will be very inventive in the ways in which we will make it easier for people, regardless of where they are in the high school system and whether their aptitude is academic or towards more the vocational side of education, to link up with post-secondary education, maybe not initially or immediately, but eventually.
There are various articulation agreements being developed between school boards on the one hand and colleges on the other, to make that happen, to make it easier. I think that a combination of people coming back in, people proceeding directly, people completing, people perhaps returning to complete, all of that could conceivably increase our enrolments in post-secondary education by as much as 50%. I do not think I am taking a great chance by saying that I expect this by the end of the decade. It may in fact have to arrive sooner.
What that faces this system with in the framework of government funding is qualitative change in funding. I mean, you do not find a 50% increase of provincial funding at the level of a couple of billion dollars through sort of minor incremental changes such as this system has enjoyed over the last couple of decades. Thinking will have to change. I do not know how it will have to change, but I expect it will have to change in response to that situation.
Coming back to your earlier question, Mr Phillips, I think something in the order of $600 or $700 per student would bring us much closer to the average. Multiply that by 200,000 students and the numbers become significant.
Mr Phillips: What is that anyway?
Dr Brzustowski: About $120 million.
Mr Phillips: I am never sure where the decimal goes.
Dr Brzustowski: That is where it goes.
Mr Phillips: My third question, just to test me on whether I remember these things: In regard to the science and technology, which I believe is the old Premier's Council recommendation and one that seems to be kind of important, is there any advice we should be thinking about for the ministry in that?
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Dr Brzustowski: Yes. I think this committee should encourage not just government but in fact the people of the province to begin to think about status and recognition according to skills in a more realistic way. The Chairman and I were chatting earlier, and if we compare ourselves with the experience in Baden-Wurttemberg in Germany, where a master craftsman has much higher social recognition and social status, so much so that it becomes quite a respectable and in fact treasured aspiration in some families to have the son or daughter become a master crafts person, we do not seem to have that. We seem to be unwilling to recognize anything other than the highest credential one can get.
I do not know what the pressures are on that, but there are pressures, for example, on all of the programs in the colleges and universities to increase the level of credential which one needs to enter into practice. Some of that would reflect having to have more knowledge. Some of it, though, reflects a set of attitudes. I think this is a problem in Ontario which we have to somehow get our minds around.
But we should provide incentives to individuals, make it attractive for individuals, reward them in terms of recognition by society when they become expert in a whole host of things, not just university-level programs but modern trades and a number of disciplines which perhaps require a very eclectic kind of education which might not be found in existing programs or whatever.
We have to recognize skills in those areas where we need skills. We cannot afford a mismatch between the needs of the economy on the one hand and the choices made by individuals for programs of education on the other, when that mismatch is driven by almost irrelevant perceptions of status and social recognition.
I feel strongly about this. I am not able to express this in as compelling a way as I feel it, but I really do believe that if we are going to compete with countries in which appropriate skills are prized and expertise is rewarded with social status, then we must begin to do the same thing ourselves.
Mr Phillips: I agree with that and I do not think we have even begun to scratch the surface on that. I know on the Premier's Council we talked about that and I do not think even the start of that has yet occurred, but I personally believe that in about three years there will be quite a mind set change in the province.
Dr Brzustowski: I hope you are right.
Mr Phillips: It will be driven because of something you do not like, which is an economic --
Dr Brzustowski: Yes, that well may be.
Mr Sutherland: Talking about growth rates in enrolment, I am just wondering about the physical capacities of our post-secondary education institutions to handle growth rates. You mentioned several and you did not even mention part-time mature students as the group where I think we are going to see the largest growth.
When I stop and think that two universities -- the University of Toronto has just completed a $100-million fund-raising campaign and the University of Western Ontario close to $90 million, yet even though they are raising those types of sums from the private sector, mainly for buildings, it still seems that we are not going to have the capacity to meet the growing demand. Where are the ministry's projections in that area?
Dr Brzustowski: I hope I do not sound outrageous, because the question is an important one, but I think capital is not the problem. I say this for this reason, that at the moment there is construction going on in the university system of a total value of about $270 million, $280 million. There was a program of $40 million over four years called the special enrolment accommodation program in which money was provided very quickly for alterations of the use of space to accommodate the influx of undergraduates, temporary space being created, space being converted to teaching use.
The ingenuity shown by people in the institutions in this area is quite remarkable, and they have not even begun to explore the flexibility offered by expanding the teaching schedule into longer times. Perhaps, you know, you could expand your capacity by 10% by teaching Saturday mornings, for example, in terms of labs and things of that sort. The problem will be that on the human resource side. The problem will be a shortage of people to teach. The problem will be finding those individuals who have both the qualifications in the subject and a willingness to take jobs in these institutions.
A teaching job in post-secondary education in Ontario these days is not a reward from heaven. The workloads are quite heavy. The conditions are conditions under which one has to deal with very large numbers of students. There is not a great deal of administrative support. These are tough jobs. I will venture to say that we will have to compete with the rest of the English-speaking world, particularly with the United States, just to maintain our own best people who are prospects now, let alone get the additional people. The human resource side is going to be the problem, not the capital. The capital we can solve. There is a lot of ingenuity out there.
Mr Sutherland: I wonder if you could comment. I just came out of the post-secondary system last year, but I have a feeling and see it happening more right now with a lot of these property tax coalitions growing within the province. It is something that I think affects both Colleges and Universities and Education. Do we have a real problem in terms of public understanding in terms of what it costs to run post-secondary education or education in general and how we compare, how Canada and Ontario compare with other jurisdictions?
Dr Brzustowski: I can offer only opinions on this. They may sound very uninformed, but I will try. I think that because the post-secondary system is so much farther removed from the municipal ratepayer that it is not a personal issue. It is not an issue dealt with by locally elected representatives right in front of the people. That degree of remoteness, I think, removes the pressure. One tends to think of these institutions as being for a more select group. No matter what the criteria of selection are, it is a more select group. In fact, another useful number is that in Ontario we have 1.2 million students in elementary school; half of that, 600,000, in secondary; half of that, 300,000, in post-secondary. That is the extent of selection, right down to that level.
Mr Phillips: Part of that is number of years.
Dr Brzustowski: Oh, indeed. Oh, yes, it is just the numbers of people in the system, of course. I am not talking of through-puts; I am talking of the numbers of students enrolled. I do not think people are aware of what the costs are, except maybe those who are in communities that depend heavily on university incomes. Take a small place like Waterloo, which has two universities. Both the student spending and the payroll in the community are very much affected. I think that community would be rather more conscious of the economic impact than anybody else. But in terms of the public having a sense of what the spending is now and what it should be, I would be very surprised if there were crisp perceptions on that point.
Mr Sutherland: I have one other question, sort of an efficiency question but looking more at the human side. I am getting a sense that you hear, certainly, stories -- it is hard to get facts -- on dropout rates in first year in post-secondary education. When we are looking at costs and looking at trying to get a handle on that, I was wondering if you have a sense of how we compare with other countries in that area. What directions is the ministry taking to try to deal with that issue so we have a much lower dropout rate?
I know that at university there seem to be many students coming in who feel under a great deal of pressure to succeed while they are there. I think that may be related to cost and other pressures. There seems to be a higher dropout rate in specific programs, and then in other programs it is a question of deliberate attempts to squeeze people out. Are we creating the wrong perception to people when we are saying, "Come and go for this program, but by year two we only want half of you anyway"?
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Dr Brzustowski: This will date me again, but I remember sitting in a classroom maybe 300 yards from here and being told by the professor in my first-year class: "Look to the left. Look to the right. One of you three will be here at the end, but not all of you." Let me try to deal with this in a number of ways.
First of all, the dropout rates are much higher in the colleges than in the universities. One of the reasons this is the case is simply the preparation with which people come to the colleges. There are a number of colleges that have started programs in which they take the first term to prepare students for life in a post-secondary institution, giving them some study skills, doing any remedial teaching that needs to be done in communications, in writing, in whatever. The failure rate of those people who choose a program after completing such a term is much lower. In fact, in some colleges it is the greatest single source of increasing enrolments. So that kind of problem can be dealt with. I think what the ministry will be doing to the extent of its abilities is providing resources for such remedial teaching.
At the university level, it almost varies by institution. There are some institutions that have as part of their educational philosophy that they assign senior and experienced faculty members to teach the first year. This is done particularly in some professional programs, with quite startling effects on dropout rates. It is perhaps not something that all the institutions can do, because sometimes the people who are most experienced in a discipline are not the best people for handling a class of 200 individuals who have just appeared in post-secondary education for the first time. A lot of the measures of that kind are in place. More will be in place; I am quite sure of that.
In terms of comparisons with other jurisdictions, they are all over the map. The experience is absolutely awful in places like the University of Houston's system, where by law everybody who completes high school in the state must be admitted. Their failure rates in first year are of the order of 70%. The toll that takes in human dimensions, motivation, time lost, effort lost, discouragement for future life must be just dreadful. I am very proud to say that we have nothing approaching that. Mind you, we do not have that same requirement either.
There are studies being done recently in Ontario which are suggesting that a very large percentage of the dropouts, a disproportionate number of the dropouts comes from those people who enter in maybe the lowest 10% or 15% of the students who have been admitted to the institution. Again, it is a conclusion that almost seems obvious after the fact, that somehow the marks do reflect preparation.
When one is moved from a system where there is a lot of individual attention to a system where one is on one's own, perhaps among 200 other people who are also on their own, being able to motivate oneself, being able to study independently, are just crucial skills. Not all of our high school students have acquired those, obviously. Some remedial, some resource-centred programs, learning resource centre facilities help.
The Chair: I would like to interrupt just from the point of view that while this is a very interesting conversation, it does not really go in the direction of giving us any indication of pre-budgetary information. I do not normally do this, but we are running a little bit short of time. We do have the minister coming in who is on a tight schedule.
Mr Sutherland: Sure. I just wanted to ask about whether more resources needed to be put in that area, but I think I have got it answered.
The Chair: I do not mean to cut everybody else off. I hope there will be time at the end, but perhaps you could move through the other recommendations you are making.
Dr Brzustowski: I could speed up. On the page labelled "Pressures," I invite you simply to consider two or three pressures in particular that have arisen that are pressures on university operating grants. Some of them are additional costs mandated by government action. Others are such things as deferred maintenance. It has not been possible for all institutions to maintain their buildings over the years. They just have not had the money. That is becoming a problem.
Faculty renewal is the whole issue of looking now for young faculty members to replace those who will be retiring. I expect you will be hearing a great deal about that issue over the next little while. In most of the subject areas in Ontario universities, 20% of the existing faculty will leave by retirement about two thirds of the way through this decade and 50% within the first decade of the next century. We are talking about thousands of people at a very high level: professorates, about 20,000 people.
On the next page, "Ontario student assistance program, OSAP, An Umbrella," the key elements are that it is a program of assistance. It is based on financial need. It has a number of components. In Ontario alone among provinces people who demonstrate need receive the grant first. When they have reached the limit of the grant, they receive the Canada student loan which we administer for Canada, up to the limit of that. If they still qualify for additional need, they get an Ontario student loan after that. The $410 million of support offered to 100,000 students comes at a cost of slightly over $200 million to the province, of which maybe $170 million to $180 million is grants. The rest would be interest paid on behalf of students on their loans.
The next page just has one or two bullet points about the program. Some of the issues: People are eligible only for eight grant periods. A grant period is a term of study. This is perhaps the one aspect of OSAP which is criticized the most because it does not allow people to go into graduate work and get OSAP. It really also makes people use up their eligibility periods if they have studied at the post-secondary level anywhere else, not just in Ontario. So if somebody comes in with an honours bachelor's degree earned in India, say, in four years of study, that person is not eligible for student assistance under OSAP. At the moment this is the single most criticized aspect of the policy of OSAP.
The ministry still has these problems, not because nobody has had the wit to see that they needed fixing, but simply because the money has not been available and other things were greater priorities within OSAP even. The assumption of a family contribution becomes controversial. There will be a major policy review on the threshold, the level of income up to which the maximum OSAP assistance can be provided.
Finally, committee members undoubtedly have seen some of the publicity surrounding the Council of Ontario Universities' recovery plan. This is on the second-to-last page. This was a plan put forward to the minister in the last couple of months and it is a proposal from the universities collectively that they need to find an additional $410 million a year, at maturity, in grants. This would be something which would in fact bring the province to the national average and somewhat beyond. The proposal is that this be made up of an increase in grants and tuition fees.
I should tell you that just about all the stake holders and the minister's advisory council agree that the funding problem, in terms of the quality of service that can be offered and the amount of service that can be offered in the universities, is of the order of several hundred million dollars. Everybody agrees on that: the Ontario Council on University Affairs, the Council of Ontario Universities, the Ontario Federation of Students, the Ontario Confederation of University Faculty Associations.
I think there is agreement that we are talking about a problem right now which needs, in two or three years' time, an increase of about $400 million a year in the annual grant. This proposal has a component which is a government grant increase and a tuition fee increase, and since it has been discussed so widely in the media, I thought I would simply inform committee members of it.
It has been brought to the ministry. It has been presented to the minister. It is on the table as a proposal that has come from the system. There have been other proposals, including the proposal from the Ontario Confederation of University Faculty Associations, that fees be dropped entirely, and that is on the table too.
You can see that the stakeholders have a keen interest in doing something about revenues in the university and college system. They do not as yet agree on what should be done about that. If I may, I would stop here and would be pleased to answer any questions.
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The Chair: I have three questions. I notice the minister has arrived and we know she is on a tight schedule, so perhaps we could have the three quick questions from Ms Ward, Mr Fletcher and Mrs Sullivan.
Ms M. Ward: I have just one question. The difference between the grants for the universities and the colleges is about $1,000, which is fairly significant. Is that justified in terms of costs or does it have more of an historical basis?
Dr Brzustowski: There is a very significant area of activity in which the universities have responsibilities and the colleges do not, and that is research. The federal granting councils provide grants, but not the indirect costs of research, so the provincial grants must pick up those. That is the largest reason for the difference.
Ms M. Ward: So it is justified on a cost basis?
Dr Brzustowski: Yes.
Mr Fletcher: I will hold mine, thank you.
Mrs Sullivan: I want to ask about OSAP, just briefly. Was the program changed to take more into account the needs of people who are leaving the work force and need to go back into the school system for retraining and are not now able to meet the criterion, including because of family home ownership or because the assumption of family contribution means that the family would have to bankrupt itself before a breadwinner could go back into the system? What kind of analysis have you done on needs upgrading to meet the needs of returning students and the impact that would have on your budgetary request?
Dr Brzustowski: The ministry staff up in Thunder Bay, because that is where these people are, have analysed a number of options of extending those to more and more people in need. They tend to come in $10-million chunks. It is not as good an answer as I would like to give you, but we are talking about -- to do, for example, what you suggest, to allow the threshold to be much higher for people who find themselves unemployed, we are probably talking about something between $5 million and $10 million to make it significant for a number of people, enough to make a difference, that kind of range.
Mrs Sullivan: But in a program that costs $270 million to the province to deliver $410 million, $5 million is peanuts.
Dr Brzustowski: It is $220 million. Yes, I quite agree with that. One still has to get it in the allocations.
Mr Curling: Just a quick question: I notice that no mention of counselling was in your presentation at the moment. Pressures: Over the years at the colleges, I suppose the dropout rates are indicative of the fact that proper counselling or proper guidance are not given there. Was that one of your pressures?
Dr Brzustowski: It is very much a part of the strategies being developed to handle the dropout rates explicitly.
The Chair: We do have a couple of minutes. I have been informed that the minister is waiting for the deputy minister, so I will allow the questions that Mr Fletcher graciously ceded.
Mr Fletcher: I have a question about colleges and your vision of what colleges should be. I know it is your own vision and not just a model there either. I was just wondering, has Colleges and Universities started the process of moving towards perhaps polytechnical institutes instead of what we have?
Dr Brzustowski: They have started a process of moving together and the impetus for that has been most recently the work done prior to the publication of Vision 2000, which really advocates it. For all sorts of good reasons, the institutions should get closer together and that is happening. It is happening between existing institutions.
Mr Fletcher: Such as Conestoga College moving towards, let's say, Doon campus in the Kitchener area.
Dr Brzustowski: Right.
Mr Fletcher: Moving all the campuses to that area.
Dr Brzustowski: And Conestoga College collaborating much more closely in certain programs with the University of Waterloo or with Wilfrid Laurier University. That is happening.
Mr Fletcher: What happens to accessibility when you do that? Does that not create more expense for people who have to travel to the campus and perhaps even the residences?
Dr Brzustowski: Let me take that in pieces. The collaboration among institutions generally begins with institutions moving to make it easier for students to do something which they have thought up in the first place. It is amazing how inventive students are in this. I think we can take pride in not having put up impenetrable barriers. There are about 3,000 university graduates who are now finishing off with college diplomas. Nobody invented such a program; nobody designed it. It makes a lot of sense -- a general education, technical specialty -- we just did not prevent it.
But the whole business of making college programs more attractive and specializing -- but this college, because it is close to this university, has a very special program -- has the implication which you mentioned. The colleges have been community institutions heretofore and have not had residences. But if such specialties arise, they will have to have residences because they will attract people from a greater distance. So there are implications for accessibility, absolutely.
Mr Jamison: I would just like to address the area of skills development. We talked about a mindset, the change in mindset, what was considered to be a profile development in the future. How much does the co-operative effort play? I know it is funding in the sense of technology, how technology is advancing in the workplace. How much does a co-operative effort bring players together and so forth related to funding?
Dr Brzustowski: I would say that nothing short of a very intensive and sincere co-operation among all the players, right from educational institutions, through labour, through the business community, is going to make these changes: nothing short of that. I think Mr Phillips is right that there have been words on this, but it is hard to see actions. There are individual actions, and one can point to a pocket here or a pocket there where it has happened, but I think in terms of a massive change in attitude, nothing short of a real partnership where all parties recognize that this is a common interest will do it. I would hope some of this can start happening, and the sooner the better. I do not have prescriptions, but I have that hope.
The Chair: Thank you for making your presentation this afternoon.
Dr Brzustowski: Thank you, Mr Chairman. I appreciate the chance to speak to the committee.
The Chair: Just an announcement to the committee that the Treasurer has confirmed that he will be present on Thursday from 12:30 to 1:30. We have also requested, if it is possible, for him to bring the third-quarter figures.
Mr Phillips: I do not think it is worth while being here unless he does have them with him, so I just assume they will be available. That is the whole basis on which we set the date this morning. Is that the case, Mr Chairman?
The Chair: I have not had any confirmation that he has the numbers.
Mr Phillips: I am just saying to you that the whole reason for his coming, or the major reason, is so that we have some idea of revenue. He announced last week in the media that the results would be available this week. I sent you a note saying I do not think it is worth while meeting -- if we can meet him the next day when he has the numbers, that makes sense, but to go through it and then to release the figures a day later, we are wasting our time.
The Chair: I can pass that along and we can make sure. If he does not have the numbers, then we can discuss what we will do. We have another meeting this week.
MINISTRY OF EDUCATION
The Chair: We have with us today the Minister of Education, the Honourable Marion Boyd; Robert Mitton, the deputy minister; Mark Larratt-Smith, the Assistant Deputy Minister of Education, and it looks like there are a few more.
Hon Mrs Boyd: And a cast of thousands.
The Chair: I would like to thank you for coming and giving us a presentation on what we can expect or what you might be looking for in terms of pre-budgetary consultation.
Hon Mrs Boyd: I would like to just begin by saying that we felt it was really valuable for the committee to have some background information on the funding of elementary and secondary education in Ontario. It is fairly complex and it is important for people to understand the education funding model that is currently in place and for us to be able to demonstrate the kinds of pressures that are on that current funding model.
For the first part of the presentation, Mr Mitton is going to do a total finance overview and Mr Larratt-Smith will talk about the operating system and the capital system, and then we will identify some of our general pressures.
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Mr Mitton: In a very general way, we collect money for education from two sources, one from the general revenue pot of the provincial government, and school boards are given the authority to collect education funds from the local property tax base. So that is how we collect it. In the latter part of this presentation, Mark Larratt-Smith is going to explain the system by which we allocate funds to school boards for education.
I want to just talk about that whole expenditure picture, and revenue for that matter, across the province and in recent years explain a little bit about the magnitude of that. If you have the slides, you can follow along as I go. I am going to speak to the first six slides.
The general magnitude of expenditures on elementary and secondary education in the province is at $12 billion in 1990, in the last calendar year, and that served a total enrolment of almost 1.8 million pupils and 122 school boards. The provincial grants accounted for $5.5 billion of that, which amounts to about 41.5%. The remainder of that $12-billion figure, $6.5 billion, came from property taxes.
On the second slide, the general areas of finance fall into these three categories. The first one and the second one are the ones that get the most attention; the last one is less obvious. The operating expenditures really represent the biggest portion, and the largest portion of that is teachers' salaries. Capital expenditures are $540 million and the teachers' pension fund, $660 million.
On the third slide, the provincial support represents and has represented historically from 60% to 40%, and in 1990, roughly 41% to 45% of total expenditures. The local share of recognized expenditures is about 34%, and the remaining 21% of total expenditures is funded entirely by the local sector, which is not recognized for grant purposes. School boards can raise funds through their property taxes in budgets above the recognized expenditures of the province.
There are five main categories of provincial grants that are shown in that exploded pie diagram. The category 1 grant or the basic per-pupil grant is the largest component and it equals $3.1 billion. The category 2 grant, equalling $200 million, provides additional support to boards for the delivery of a base level of service that experience additional costs as a result of geographic or demographic or socioeconomic conditions that vary across the province.
The category 3 grants of about $1.2 billion are provided as incentive grants to encourage boards to extend programs and services that respond to local needs or meet provincial priorities. Category 4 is the capital slice, $332 million last year, which assists school boards in financing approved capital projects, including new schools and additions, site purchases, replacements and renovations, and in some places, acquisition of portables. Category 5 covers additional provincial support for education, and it is primarily the province's contribution to the employers' share of teachers' pension payments.
Slide 4, total board expenditures, illustrates the province versus the local share as this has varied from 1980 to 1990. The graph illustrates that provincial grants have increased annually in an absolute sense but that expenditures have increased at a much greater rate. Consequently, the rate of support by the province has fallen during that time. Since 1980, school board expenditures have increased by inflation 84% and provincial support increased by 101%, or $2.3 billion in absolute terms.
The recognized spending increased by $4.6 billion, or 120%; the unrecognized spending increased by $2 billion, or 459%. That is the discretionary spending on the part of boards. The large increase in unrecognized expenditures has contributed to the funding inequity which now currently exists among boards. Mark Larratt-Smith will come back and explain how that happens in a moment.
Slide 5, which is the operating expenditures slide, another exploded pie, pieces of that, instructional salaries represent the largest component of total operating expenditures, and that is 63%. The benefits associated with the instructional component represent close to 7%; other salaries and benefits comprise about 9%. This is for non-teaching staff. Learning materials and transportation represent 8% and 6%, respectively. Then other expenditures comprise 8% and they include things such as transfers to the capital fund, consultant fees and contract services.
On slide 6, education revenues, education grants make up 41.5% of operating expenditures and the local sector revenues for operating purposes are generated through commercial and residential taxes. That breaks out at residential taxes contributing about 35% of the total operating revenues. Commercial taxes contribute about 24% of total operating revenues. All those are hard numbers to take, but they are important to understand the breakdown and the orders of magnitude. Mark, I will turn my chair to you.
Mr Larratt-Smith: What I am going to try and do is take you through how the current model works on the operating side and then talk a little bit about the capital expenditures over the last few years. If you will turn to the page that has this particular diagram on it, I think it will be helpful. It is an attempt to show, as best we can, how the model works board by board.
The diagram on the left-hand side has the amount spent per student and it has boards listed along the bottom, boards plotted against that particular expenditure per student. It is a diagram for the elementary panel only, because of course you have some situations where Catholic boards are still not fully extended. So this particular diagram is representative of the elementary panel.
You will note the solid line that runs across about two thirds of the way up. That is the current grant ceiling for elementary, which is a per-pupil expenditure ceiling of $3,500 per student. What that means is that the province establishes an equalized mill rate across the province with data that are given to us by the Ministry of Revenue so that the level of local tax effort is the same whether it is in Kirkland Lake or whether it is in Metropolitan Toronto and plots that against the amount of money it will actually raise per student. Then the balance up to the grant ceiling is provided by the provincial grant. So if you will look up the curving line that is plotted there, that indicates the amount of local wealth on an equalized basis that is raised by individual school boards, given that equalized assessment. The balance, as indicated in the diagram, is contributed in the form of provincial grants. The interesting thing is the very wide disparity in local wealth in that equalized assessment, with the Metropolitan Toronto School Board on the extreme left-hand side raising over $4,000 per student, even with the equalized assessment, and with the Kirkland Lake District Roman Catholic Separate School Board raising only $275 per student.
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There is a lot of talk in the education system these days about negative grant. Negative grant is very visibly demonstrated to you by that little portion at the left-hand side of the chart where the equalized assessment for two boards raises above the ceiling so that the local wealth is such that the equalized assessment generates more than the provincial ceiling.
If you turn a couple of pages back in your package, I believe, you will find what looks like the same diagram with an additional overlay. It really just adds to the story that is on the first diagram. I am not talking about this one. It is the same chart. It is a little further on, but I think it is worth speaking about it at the same time.
This chart is identically the same as the other one except that it adds the plotting of the total expenditure per student. We are still talking about the elementary panel. We are talking of the total expenditure per student by boards related to the provincial grants and the local share. The very up-and-down line that is above the ceiling indicates the total board spending, and virtually every elementary panel is above the ceiling that has currently been set by the province. It also indicates in general terms that boards with a large amount of assessment wealth are more able to make those extra expenditures than the boards on the right-hand side of the chart, which have very little assessment wealth.
The variations, however, are significant and they would reflect obviously different communities' decisions and priorities with regard to education. They would also in some instances indicate the efforts of separate school boards to remain at the same level of both service and taxation as their coterminous public boards.
Turning back in your package, you will find a slide which is entitled Summary of Pressures on the Current Model. I think I can summarize those fairly quickly with brief reference to one other chart. The decreasing provincial rate of support is demonstrated on another chart which is included in the package right behind that first one and indicates that from 1980 to 1990 the overall rate of support has declined on total provincial support. That would include all of the components that Mr Mitton outlined to you. It would not include the pension contribution; it would include capital. That has gone down over that 10-year period from 55.9% to 45.2%.
Mrs Sullivan: If you included these teachers' pension moneys, what would those rates of support be in that instance?
Mr Larratt-Smith: I cannot give you over the 10-year rate of support. I can tell you that for 1990 the rate would have been 56.9%.
The rate of support on total operating, which is just the operating portion of school boards' expenditures but includes all of their operating expenditures, both those approved under ceilings by the province and those which boards choose to fund and raise above ceilings, the decline in the rate of support over 10 years has been from 52.1% down to 41.3%.
Returning to the summary of pressures, the second point there is the very large wealth differential between wards, and I believe that was demonstrated in the two charts that we discussed in detail a few moments ago. There is an increasing expenditure variance among boards and that certainly is shown by the variety in that total expenditure line on the expenditure per elementary student.
There has been an experience of double-digit mill rate increases over the past few years and there has been an increase in the number of boards with operating deficits, which has been a problem that the ministry has been addressing over the past several years. I pointed out the negative grant phenomenon, and the final item of pressure is an increased backlog of unmet capital needs.
Turning to the capital --
Mr Phillips: Just a point of clarification on the provincial rate of support, the $5.4 billion includes capital and pension, is that right?
Hon Mrs Boyd: Everything but not pension.
Mr Larratt-Smith: That includes the provincial support rate not including pensions.
Mr Phillips: You are sure of that?
Mr Larratt-Smith: I apologize, Mr Phillips. I did say it did not include pensions. In fact it includes everything, including the above-ceiling expenditure. The 56.9% is the percentage of approved, including pension and capital. The 45.2% is everything included.
Mr Phillips: We used to try to use that number, but it never flew, and I do not think it will fly. I think it is too late. Nice try. The $5.4 billion is pension and capital.
Mr Larratt-Smith: If I could turn to slide 12, if they are numbered in your package, that is the first slide that outlines the capital component of this presentation. That is titled "School Inventory."
It indicates there is currently a set of schools of institutions out there in the province with a replacement value of approximately $20 billion. That includes 3,900 elementary schools and 800 secondary schools for a total of 4,700 schools. There are currently about 8,300 portables in the system and there are roughly 900 child care facilities operating attached to school buildings.
The growth in school capital needs has been remarkable over the last few years. Prior to 1985, the ministry was spending in support of capital construction in the order of $70 million per year. Since that time, there has been very rapid growth and that rapid growth has tended to be highly localized in two areas, in the greater Toronto area and to a lesser extent in Ottawa-Carleton.
That has been a function of the baby boom echo, a function of net immigration into Ontario, and that would include both immigrants and movement within Canada to Ontario. It has also been a function to some extent of a growth in kindergarten and junior kindergarten classes in school boards.
The final point is it has been affected by lower pupil teacher ratios which have either been identified and mandated by the province, as in the case of grades 1 and 2, or have been negotiated as part of collective agreements with teachers' federations.
Provincial initiatives over that period of time have also contributed to the pressure on capital in the school system. The separate extension of Bill 30 has created a number of situations where schools had to be moved, with inevitable dislocation and with demands for students moving from one system to another.
Child care is now and was mandated several years ago for all new schools. All new schools, both elementary and secondary, would include a child care facility. Pressures been placed on the stock of schools through the introduction of Bill 75 and the creation of French-language schools and, in a couple of instances in Toronto and Ottawa, French-language school boards.
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I have already mentioned the class size reduction in grades 1 and 2 and the extension in junior and senior kindergarten. The renewal of technological education has also placed a particular cost on schools in terms of a need for what are really quite expensive facilities.
The next slide indicates the total requests that have come in in the annual capital expenditure forecast exercise which the ministry conducts with all school boards. In 1985, the request from all boards was in the order of $398 million. This last year, it has been over $2 billion in requests.
Turning to the next slide on funding, there has been greatly increased funding from 1985 onward. Initially, $900 million was granted in 1989 and extended to $1.5 billion, so that there is, from 1989 through 1993, $300 million a year being assigned to capital construction. In addition to that, there is $32 million a year in special capital, related basically to the tech ed and the junior kindergarten initiatives, which has also been committed. In summary, $3 billion worth of capital approvals have been made since 1985.
Turning to the next chart on capital allocations, this shows the breakout as between the growth areas of the province and the non-growth areas. I should mention that one of the issues that certainly the ministry has to deal with is the fact that the Education Act requires that students be provided with instruction. Where their facilities are simply inadequate for the number of students, that becomes a very high priority in terms of both the school boards' and the ministry's allocation of available dollars.
What that has resulted in is a very heavy orientation of the ministry's capital program towards the growth areas. You will note over the six years from 1985 to 1990 an average in the high 80s or low 90s of the percentage of the ministry's capital budget has gone in the growth area: 88% in 1985, rising to 96% in 1988 and 87% in 1990.
The final slide just summarizes some of the school capital pressures that are currently being experienced in the province. The first one is unmet new school needs in high-growth areas. Even with that very high percentage of money allocated to growth areas, there are a number of needs that have not been met within the budgets available.
There has also been a backlog in renovation and retrofit projects because of the relatively small amount of money that the province could devote to supporting school boards in undertaking those particular activities, and there have been school space pressures, many of them created by provincial program initiatives such as the 20-to-1 initiative or the JK and senior kindergarten extension.
As a final pressure, there are a variety of environmental issues, most of which seem to occur with relatively little notice, although often they are the result of an older school stock, schools built to standards with materials that would not necessarily be used today but that were used at the time of construction. So there have been a number of issues related to the environment of school buildings, asbestos perhaps being the most widely publicized one, which have created additional pressure on ourcapital grant program.
Hon Mrs Boyd: Our real question is where we go from here. There are a number of education and finance issues that need to be addressed. Part of the problem is that the issues are often fairly complex and they overlap into other areas. Given the kinds of initiatives that we want to make in terms of children's social service needs and also the way in which we overlap with municipal financing and what the interlock is there, it tends to make this already complex situation that much more complex.
We do not believe that anyone in the province is satisfied or happy with the way in which education is financed. We may have different reasons for being unhappy depending on what sector we come from and what our particular local issues are, but we believe that the system is not working well. It is important for us as a government to invite the province to examine fully ways in which we might alter the current funding arrangements so that they meet need more exactly but also so that the equity issues that arise are dealt with in a fair way.
It is important to have a hearing such as this for people to get some of their concerns out on the table and to be sure that this committee understands where the pressures are for us in the Education ministry. It is our hope that, as we go on through the process of the Fair Tax Commission, we can find ways to relieve the current burden on the property tax base which, I think is fairly agreed across the province, is much too burdensome because it takes no account of people's ability to pay.
We need to ensure that we are continuing to provide a fair and equitable opportunity for education in every area of the province and that is indeed a challenge, given the disparity that you saw between the assessment bases in different communities and also within the confines of our decision-making process with local boards having a good deal of local autonomy about the choices that they make in terms of program availability.
The select committee on education finance made a number of recommendations in its third report on directions for reform. It is our belief that those need to be considered very carefully, and the ministry has every intention of pressing for a thorough consideration of those reforms. The funding principles as described in the report on equity, on the adequacy of financing and on the issues around accountability are ones that concern us all. Those are the major areas where we feel the study of education financing needs to be placed.
Mr Phillips: Looking back to the big consultation that took place six months ago, if there was one issue that I really got hammered on in Metro, it was this one. I think the people of Ontario are expecting a fulfilment of the commitment that was in An Agenda for People, certainly the teachers. I look back on the teachers' campaign and it was extremely effective.
The trustees in Metro Toronto ran a campaign and your party, in response to that, said it would fund 20% of the cost of Metropolitan Toronto education and 60% across the province. I think there is going to be, particularly as property tax bills come out and that commitment was made to them six months ago -- I am not sure that the Fair Tax Commission and other things are going to work, are going to fly because, as I say, if there is are one thing that the trustees in Toronto, trustees in Ontario, the teachers of Ontario and the property tax people of Ontario are watching, it is the 60%. I think they will recognize a study and what not for what it might be.
What is the timetable for moving to the 60%? How many dollars need to be committed this year to do that? Second, I just want assurances that your 60% does not include capital and pension because I do not think that was ever the expectation of the trustees and the teachers and the public. A third issue is the Metro funding. I think after the election you committed to funding 20% of the public Metro board's cost and I would like to know the timetable for that, because they are the board and you have two of your current members who sat on that board who also made that commitment. The last is a smaller one, but there is a group coming on with us afterwards that I think may be interested in lot levies. I would like to know what the position of the ministry will be in terms of funding facilities through lot levies.
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But my three major ones, as I say, which I think are going to be absolutely crucial to the people of Ontario are: first, your timetable on what funds are required to move to that 60% -- I think in your agenda you had a five-year timetable, the first two years $1.6 billion; second, the timetable of commitment for the 20% for Metro public board; third, just assurances that in your 60% you are not including pension and capital.
Hon Mrs Boyd: First of all, you are quite right that in An Agenda for People we were talking about a five-year timetable. It is really important that we be very clear that given the current financial circumstances, we think it will certainly take that full length of time to make the changes and that it fits well with our intention to look at the entire tax structure, the way in which we collect revenues and then the way in which we distribute revenues.
Basically the issue of 60% or 40%, however we want to do it, gets very muddy because of the very difference in assessment base and so on. Obviously some boards get a much higher percentage of provincial funding and others lower. One of the equity issues we need to look at is how that works. When the whole issue of 60% came up, it was to restore the balance that had existed in 1975 of the financing. That did include, at that point in time, as far as my understanding is --
Mr Phillips: Easy.
Hon Mrs Boyd: I am sorry?
Mr Phillips: It included capital and pension.
Hon Mrs Boyd: Yes, it is certainly my understanding, in a different way, because the formulae were different.
Mr Phillips: The teachers would be interested in that, but go on.
Hon Mrs Boyd: Superannuation was in a whole different kind of situation at that point, but my understanding certainly was that the change in the way the funding went meant that that money was separated out.
Mr Phillips: So your 60% promise included pension and capital.
Hon Mrs Boyd: That is certainly my understanding of it. I stand to be corrected by my fellow members, but we were talking about the total funding.
Mr Phillips: The Ontario Secondary School Teachers' Federation will be interested. Go ahead.
Hon Mrs Boyd: It is certainly my understanding of it and certainly what I was campaigning on. It was to restore that balance in terms of the costs that the province was putting into the cost of education, to renew the disproportionate share that was coming out of property taxes.
Mr Phillips: The timetable for getting the 60%, how much we need to provide this year, the timetable for the 20%.
Hon Mrs Boyd: I think I made it clear in the Legislature that we were not in any way prepared at that time in December to make any commitments about the changes this year because the general legislative grant had not been decided. We are still discussing that.
My sense is that given the financial situation, as I have been warning school boards and trustees as I go around the province, we cannot expect a great deal this year in terms of change. It is our position that we need to be not just jiggering with this particular formula, which we do not feel is really the kind of vehicle that is going to make that balance more equitable in the long run. It has been fixed and poked at and changed and so on for a long time.
As we have been saying as we go around the province, we do not believe we can make any great improvement in the situation, if at all, this year but that over the period of time with looking at the whole system and figuring out new ways in which to raise funds and to distribute them indeed we can make a major move within five years. My hope is to make that target.
Mr Phillips: So just to clarify, then, you are not going to be moving to the 60% although it was promised in the agenda --
Hon Mrs Boyd: I did not say that. I said I cannot tell you that now because the GLG has not been decided yet. We are still working at the figures and still deciding on the transfer payments in all areas, so I cannot tell you one way or the other at this point in time because that decision has not been made yet. But I would certainly tell members of the committee my belief is that if we are able to make much improvement it will not be much of an improvement this year, given the financial circumstances we find ourselves in.
Mr Phillips: I have a view on the financial circumstances that will come up later. I think the commitments were made saying there was a recession and I am sensitive about this because, believe me, those were fairly solid commitments to the school boards, the property tax people and the teachers. I think it is going to be very difficult if progress is not made on them to explain that.
Mr Fletcher: Just a couple of questions. I am looking at the back page, "School Capital Pressures." I heard the minister say that school boards would be given more local autonomy when it came to provincially mandated programs. Does that mean more local autonomy when it comes to some of the high-priced programs that the previous government implemented, such as junior kindergarten and some of the tech programs?
Hon Mrs Boyd: I am not sure I quite understand.
Mr Fletcher: I heard you mention that school boards would be given more local autonomy when it came to provincially mandated programs. I am sure that is what I heard. Did I hear you wrong?
Hon Mrs Boyd: No, what I am saying is that there is a fair amount of local autonomy, that the decision-making is made at that level. One of our problems as a provincial government is, because of the way in which the power to make decisions at the local level is very much the responsibility of local school boards, the issue of limiting those discretionary costs of local school boards is extremely difficult for us as a provincial government, as it has been for any other government. Part of the problem we have is that the disparity between the provincial share and the locally raised share grows exponentially if the discretionary costs of a board grow over and above ceiling. That creates some really big problems for us. I mean, in 1975 when we were talking about the 60%, we were looking at a situation where boards were not putting on the variety and the kinds of programs that they now feel they must do.
We also have to remember that in 1975 there were expenditure controls in place by the ministry which were subsequently removed. So the 60% figure, which did include capital costs, was controlled in terms of the expenditure ceilings that were there.
Mr Fletcher: As a former trustee, I can mention right now that reaching the 60% figure is not the goal; as long we start to move in that direction. I understand you are moving in that direction.
One other thing that I noticed was accountability. Is that the accountability by school boards as far as how much they can raise taxes or how they spend their budgets?
Hon Mrs Boyd: I think it is both. As a matter of fact, we do have school boards in the province that have knowingly not raised their mill rates as much as their budgets indicated they needed to meet the expenditures they were proposing to make. That is a real concern for all of us in the rest of the province when other school boards are prepared to do that.
In terms of the accountability of spending, that would apply of course to school boards as well as to the ministry. There need to be really good ways in which we can be sure that accountability is a shared responsibility between local boards and the ministry. I think many local boards feel sometimes that all the pressure has been on them, and what we are saying is that we know we need to be accountable and we need to be responsible and we are asking the same of local school boards.
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Mr Fletcher: Yes. I think that is about time. I think that is what school boards are asking for.
Mr Sutherland: On page 5, the graph about total operating expenditures, learning materials are here at 8%. Has that figure been growing as a percentage of the overall costs?
Hon Mrs Boyd: Historically, I think it has been between 8% and 10%.
Mr Sutherland: With the large input, both at the technological level and with computers, do we see that figure growing?
Hon Mrs Boyd: Certainly we are going to be in a position where in order to support that kind of situation, of the equipment costs, the training costs, the difference in space requirements, to really fulfil the technical need, that is going to be extremely difficult, in percentage terms, to make sure that that piece of the pie stays intact.
Mr Mitton: I think that in an absolute sense there has been significant growth with technology and increased use of technology in the classroom, but on a relative basis everything else is growing so fast as well, in terms of teachers' salaries and other benefits and operating costs, that it does not show in this context being out of proportion, plus or minus 2%.
Mr Sutherland: Thank you. The other question -- I asked it earlier when the Colleges and Universities rep was here -- the growing trend with these property tax coalitions that have sprouted up across the province, it seems one of their major focuses is education and increases in education taxes at the municipal level. I was wondering if you see that as part of a lack of understanding by the general public about what it costs to have a good quality education system, and maybe just some comments on how we are comparing with other jurisdictions in terms of funding within the country and maybe with some of the European countries.
Hon Mrs Boyd: I think you are quite right that in fact the general public has very little idea how education is funded or what is involved. Part of our argument about this whole system of funding is that it is extremely complex, and if you live in Kirkland Lake, this means a whole different thing to you than it does if you live in Metropolitan Toronto and anywhere in between the two extremes.
The whole issue of equalized assessment is extremely difficult for people to understand. I think, as citizens, we do not understand very well how we are taxed and what the purpose of that is. I do not think it is well understood. I do think it is difficult to explain to the average person. However, I must say I think it is something that we need to be much clearer about so that people have a better understanding.
In terms of the other, I am sorry, I have forgotten --
Mr Sutherland: Just how we compare with other jurisdictions within the country and internationally.
Mr Mitton: In Canada our expenditure per pupil is not the highest, but it is in the top two or three. Mark, you may help me with this. I believe Sweden and Japan have greater expenditures per pupil than we do, but we also rate in the top five or six worldwide in the free world.
Mr Larratt-Smith: That is basically true.
Hon Mrs Boyd: So we are not in the abysmal position that we are in in post-secondary education and I think we need to be aware of that. Where we need to be controlling costs and where we need to be looking at it is in the choices we make about the programs we offer and the way in which local communities are prepared to support those. I think sometimes local communities are not aware enough of what the choice around program means or the choice around building a new school means and what that will eventually mean to their share of the costs of education.
Mrs Sullivan: Minister, I was interested in your response to Mr Phillips's question relating to the provincial underwriting of operating costs. I have some questions relating to capital, but I wanted to clarify again your 60% promise, which you have indicated would take place over a five-year period. For the first time today I heard that that included teachers' pension plan contributions and capital. I wonder if you are also limiting it to recognized expenditures?
Hon Mrs Boyd: I am sorry, to the recognized expenditures?
Mrs Sullivan: Yes.
Hon Mrs Boyd: In the original Agenda for People, no, that was not the intention.
Mrs Sullivan: I see, all right. So, that clarifies that.
On the capital side, will you continue multi-year funding? Is that your anticipation?
Hon Mrs Boyd: It is certainly, we think, to everyone's benefit to have a long-range plan and that people know in advance and are able to do their preparations in advance. That seems to have worked well. It does certainly add pressures in terms of rapid changes. We are seeing the greatest pressure in terms of capital expenditures, for example, where there have been just rapid changes of population that were not anticipated and children are coming on stream, ready to go to school earlier than was expected. There is not much flexibility with the multi-year planning on that and that is where a lot of the pressure is that we are seeing. But at the same time, in order to plan effectively, it certainly is our belief that the long-range plans are important. It also adds to the local accountability of boards, that they interface with the municipality around planning issues to ensure that that multi-year plan is taken into account when there is an expansion of development.
Mrs Sullivan: If you are going to continue the multi year funding, given that the requests which have come in through the compiling of the lists at the trustee level are significantly higher for this year over last year, would you be looking then to expand your capital commitment this year, say, from the $300 million that was spent last year to perhaps $500 million?
Hon Mrs Boyd: We certainly know that that demand is very high. I guess we are in a situation where, given our financial situation, given the revenues as we anticipate them to be, we are going to have to be making difficult choices about the priorities there. I cannot give you a commitment one way or the other because, to be quite frank, the decision has not been made at this point, but we do know that the pressures are very high in terms of capital requests, both catch-up requests, ones that have not been approved before and have sort of been bumped up a year, but also new requests, and that is a serious problem, I think, for many communities.
Mrs Sullivan: When you were soliciting the capital lists this year, did you ask again for A lists and B lists, the renovation and the new as well?
Hon Mrs Boyd: Yes.
Mr Mitton: Yes, we did.
Mrs Sullivan: Are you looking at about the same proportion, 87 to 13, or where are you seeing that pressure situation? Are you seeing it coming in for new or are you seeing a substantial increase in renovation requests?
Hon Mrs Boyd: I do not think the balance is substantially different, but we know with the aging stock that we have in no-growth areas that it is going to increase substantially over the coming years. We have certainly had lots of warning about that, but I think it is around 15%,16%.
Mr Larratt-Smith: We have not got the final answer on that yet.
Hon Mrs Boyd: Yes. The ones we have looked at, it looks as though it is within a couple of percentage points, but that bump has not hit us yet. I think boards, particularly in Metro Toronto but all boards that have an aging school stock, are recognizing, as the universities are, that indeed that is an increasing problem.
The other issue for us is that while we may talk about growth boards as boards where there is potential growth in terms of assessment, there is also growth because of housing intensification in older boards, and we are not talking about new schools there but we are talking about growth in enrolment, and that is creating an enormous pressure in some communities.
Mrs Sullivan: For this year's budget, would you be expecting to look at some innovative financing mechanisms that may be outside of the regular routine, whether it is lot levies or whether it is developers providing the school over a long-term lease and so on? Would you be factoring that into your budgetary proposals?
Hon Mrs Boyd: Certainly we will be looking at all ways of maximizing the fund-raising, but I would caution you again that it is our belief that we do not want to make major changes until we get the feedback around the taxation commission.
Mrs Sullivan: In other words, you will not be making that kind of a recommendation to the Treasurer this year?
Hon Mrs Boyd: I would not go so far as to say that. Certainly we know that in order to begin to meet our commitments, we do have to find new ways of raising money and we are considering a number of possibilities.
Mrs Sullivan: When will you be announcing the GLGs?
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Hon Mrs Boyd: You will have to ask the Treasurer, actually. I know the final decision on transfer payments has not yet been made and is still in the discussion stage, but we are also aware of what pressure that puts on local communities that are trying to budget, so we are trying to do it as quickly as we can. I would expect by the middle of February at the very latest, personally, just in terms of the way the process is going, but I understand that the Treasurer is coming to speak to you on Thursday and you can certainly ask him.
Mrs Sullivan: Finally, are you going to be addressing the question of the deficits among the Roman Catholic separate school boards as part of your budget request this year, and do you know what the totals come to?
Hon Mrs Boyd: The totals of the deficits? They are not all Roman Catholic boards, just incidentally.
Mr Mitton: They are not all Roman Catholic boards and we are doing work with them, so the numbers are changing daily as they work on plans to balance their budgets.
Hon Mrs Boyd: Generally, those plans are looking at ways in which they can factor out those deficits over two or three years in order to prevent the cost to the local taxpayers from being exorbitant in one year.
Mrs Sullivan: In developing that longer-term kind of plan, would you be looking for an injection which would be an increment to your budget this year, that can be transferred on and then perhaps come back through another route, another clever route later on?
Mr Mitton: You mean an injection from the province to help them with the deficit? Not in any way that would put them in an inequitable position with other boards.
Hon Mrs Boyd: We are very concerned that those boards that have been responsible, that have pared their budgets to the bone and have done that in a responsible and accountable way, not get the message that that work has been for nothing, that a board that has a deficit and has not done that kind of hard work is going to get bailed out. Now, in some of the situations that have deficits it is not that kind of situation at all. They have been very, very responsible in terms of budgeting, but there has been a change in their assessment base. The North of Superior board is a very good example where, because it has a little gold mine situation that did not work out, the assessment just did not materialize and it put them in a dreadful position. That is a different situation from that of the board that has consciously chosen not to increase its mill rate in the hope that the province would bail it out, or has not taken those tough decisions that so many boards have about the kinds of programs they are able to offer and the way in which they are able to manage what assessment base they have.
Mr White: I have several questions, but I am not an economic whiz; I am just a humble taxpayer and social worker.
Mr Curling: And a politician.
Mr White: Thank you. I am not sure if I understand whether it makes a lot of difference if you are paying 65%, 60% or 55% of the cost of education if my property taxes keep going up. My understanding during the election campaign, from the many thousands of people I spoke to who were concerned about this issue, is that they were concerned about their property taxes increasing at a dramatic rate, not about the per cent of the cost for education the province is paying. My concern here, to relate to you, Minister, is, in what way can we ensure that there is a direct reflection between the dollars spent at the provincial level and the lack of increase in the property tax or in fact possibly even decrease? We were talking about the autonomous boards that set their own budgets and their own tax levels.
Hon Mrs Boyd: Let me be very frank. You cannot, and that is why we are saying that under this particular funding system we cannot have the assurance that if we increase our funding, that will necessarily mean that local boards drop their mill rate, nor can we be sure that if local boards were to drop their mill rate for the education portion of the taxes, the municipalities would not step in and take up the slack. That has happened in the past. This is a real issue around surety and certainty, around being sure that whatever moves we make will translate into property tax savings for home owners.
Frankly, under the current system, the way it is, there is no way for the provincial Ministry of Education to ensure that that is going to happen. We can try to exert lots of public pressure and lots of moral suasion on local school boards around the way in which they raise taxes and hope that that rolls over into the municipal area, but quite frankly, our experience in the past has been -- and there was one particular point in time when a lot of school boards amalgamated and there was considerable cost saving incurred by that in terms of economy of scale, but in fact the municipalities just moved in and took over the gap in taxes and the home owners got no relief at all. We have real concerns with just jigging with this number, before and until we have some way as a population to get some control over those expenditures.
Frankly, previous governments have struggled with the same kind of issues. The growth in discretionary spending by local school boards has just been enormous over the past few years, so we cannot make an assurance of that and that is what we are concerned about. When we talk about 60% we always have to say, "Well, 60% of what in terms of that discretionary spending?" But then we also have to look at who decides about that property tax base, and it is not us as the provincial government.
Mr White: So that is why you have mentioned previous governments having had the same concern. I feel sort of a duty in terms of my own constituents, in fact of our government, of ensuring that while they may have had those same concerns, this is a very central part of our mandate. Mr Phillips has reminded us of it several times.
Mr Phillips: I am reading it here. You have several school board expenditures. That is your policy. School boards were very interested in that, but it was not part of it. It was very straightforward in here.
The Chair: Excuse me, Mr Phillips, this is not a cue for you to jump in again.
Mrs Sullivan: It was a perfect opportunity.
Mr White: It was, though, it was. Just verifying.
The Chair: Mr White, have you finished with your question?
Mr White: No, I have not.
The Chair: Could we move along? We are running over time.
Mr White: But that would certainly be a central concern of your ministry, the fair tax issue.
Hon Mrs Boyd: Very much so. When one looks at this whole issue, unless we have some certainty about what that breakdown in cost is and where the accountability lies, we are not going to be able to get that kind of control.
Mr Curling: Mr White, it is wonderful to know that you did not omit, I hope you did not omit, that you are a politician too, because the question of 60% of what was the thing we were asking when we were in government. Now I hear the minister is saying too, 60% of what? My question is not that, Mr Chairman.
The Deputy Minister of Colleges and Universities, who preceded you, had concern about dropouts. and counselling was mentioned. In the elementary school system, that is a great concern, but there is another concern. My question to you will be coupled with the other concern too, both of them. I wondered if there is a provincial strategy. I am sure there is a pressure on the fact that also literacy -- illiteracy, to be more specific -- that we do not have a great record, and this would answer also my colleague too, the question about how we compare with others. We have a disgraceful record of illiteracy in this province. Talk about competitiveness, etc and the dropout rates and, as I said, improper counselling and the diverse multicultural society and all that. Is that one of the pressures? Are you coming forward with this budget with some provincial strategy to say there will be money needed to do this strategy too?
Hon Mrs Boyd: Absolutely. I think it is a very serious pressure and the ministry, as you are probably aware, is carrying on with an initiative that the previous government started in terms of looking at our curriculum throughout to find out what is going on. We are not getting that kind of equity of outcome in terms of the various groups that we have in our schools.
We have very, very deep concerns as a government about the way in which success is measured for students, the reasons why students are leaving school, the reasons why students are not learning in school. You are quite right that a lot of those issues have to do with multicultural issues, with the wide differences in socioeconomic status the effect that poverty has on children in terms of their learning, and we see that as a very integrated kind of situation and certainly are most interested in pursuing some of the notions in the Maloney report on Children First and how that impacts specifically on education and how our curriculum policies and our literacy policies and indeed our setting of benchmarks can make some real difference in terms of ensuring a better equity of outcome for our students.
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Mr Curling: Am I getting from you then that there will be no more studies really but that we understand what is causing illiteracy, we do understand what is causing dropouts? You mentioned quite a few of those things and the program that is coming forward is a program; it is not a bunch of funds that we put forward to study the problem any more. We keep studying it to death.
Hon Mrs Boyd: There are a number of initiatives which have already been undertaken and a number which are planned that are specifically to address that in an action-oriented way. There will of course also be continued study around the curriculum issues, because that was a long-term plan. We were not prepared to interrupt that process, but as that plan goes forward, there are many, many different ways in which communities want to tackle those problems. We want to see what works in terms of the pilot projects that are already going on and others that we are beginning, to see what impact they have on that so that we can have a generalized idea. In an urban community, this approach works best; in rural communities, this approach works best; if we have a high group of people for whom English is a second language, we need to take this tack, and that sort of thing. So we are not trying to have a system that speaks to everybody by being the same, but to have a system that speaks to every student by speaking the language and using the methodology that reaches him best.
Mr Phillips: This is the first time I have heard about the general legislative grants not coming out until February. Normally they are out in November. I believe the general legislative grants have been out in November for three of the last four years.
Hon Mrs Boyd: I think so. Oh, yes, I think you are right.
Mr Phillips: Your official is nodding no. They have been out in November. The school boards will be six tenths of the way through the year, I think, because they set their budgets at the end of June pretty much in shape. I would just make that point. It makes it very difficult for them to manage their finances.
This has been very illuminating for me. I had never realized, because we got really hammered on this 60%. Your 60% includes pensions, capital and it is 60% of an approved ceiling that you will set.
Hon Mrs Boyd: You are putting words in my mouth. What I said to you is yes, it does include pensions and capital, and that certainly is so. In terms of an approved ceiling that we will set, there is and has been under the GLG scheme, a ceiling in terms of per-pupil grants. That is not a change, so I am kind of puzzled.
Mr Phillips: You should not be puzzled. You said that your 60% would not be 60% of spending; it would be 60% of some pre-approved number.
Hon Mrs Boyd: I said that what we are going to have to do is get a clear idea and a clear commitment from school boards as to their ability and willingness to control expenses in a way that they have not been before. We simply have to look at the way in which those expenditures have grown over the past few years. Frankly, no government can allow another level of government to jump up that cost without having some notion of how it is going to meet it.
Mr Phillips: Like the federal ministry.
Hon Mrs Boyd: Well, there is the other problem of course, because as federal transfer payments drop, it puts that much more pressure. We did not even talk about that particular little intergovernmental problem, but we know that it is facing us all in terms of the caps.
In terms of your question about the announcement of the GLGs, in the past the municipalities, universities and colleges, schools and hospitals sector has been announced in November but the individual allocations have been announced in the spring, in February. In other words, the overall percentage increase has been known, but how that breaks down for the board according to the statistics has not been known until the spring.
The Chair: I would like to thank you for your presentation and for coming this afternoon.
ONTARIO SCHOOL BOARD REFORM NETWORK
The Vice-Chair: Our next presentation will be the Ontario School Board Reform Network. Mr Bennett, would you like to announce your associates there?
Mr Bennett: Yes, I will. As chair of the recently formed Ontario School Board Reform Network, I am pleased to introduce our delegation and our submission to your pre-budget consultation process.
For our presentation we have assembled a delegation of Ontario School Board Reform Network trustees representing different public school boards and expressing concerns about financial accountability shared by our reform network members in various parts of this province. The presenters here today are Trustee Bill Crothers of the York Region Board of Education beside me; Trustee Carolyn Parrish of the Peel Board of Education, and Trustee Dianne Austin of the Victoria County Board of Education.
First a word about the Ontario School Board Reform Network. The Ontario School Board Reform Network was officially founded in June 1990 in Ottawa as a province-wide coalition of individual school trustees representing a variety of political persuasions but all committed to reforming our system of local education governance. We were founded with 24 original trustee members drawn from a number of school boards, and we have now won the support of trustees in 15 different boards across Ontario, from the Toronto region to Windsor and from Thunder Bay to Cornwall. We are committed above all to strengthening the role of elected trustees in relation to senior administration and to establishing proper public accountability for board program and financial decisions.
The School Board Reform Network is a coalition of reform-minded trustees committed to five basic principles: strengthening the trustees' role, democratizing school boards, improving access to information, promoting reform coalitions and working with the Ontario Public School Boards' Association to further these objectives.
The Third Report of the Select Committee on Education was released in January 1990 and in it was recommendation 27, which reads as follows: "In consultation with the key partners in education, the minister should examine the responsibilities and duties of directors of education under the Education Act and any other relevant matters in order to clarify and solidify the authority of trustees over board program and financial decisions."
It was really recommendation 27 that gave birth to the Ontario School Board Reform Network. It struck a responsive chord among reform-minded school trustees in various corners of this province. It sparked an adverse reaction, I should mention, from the directors of education. And it also convinced some of us that now is the time to take up the cause of local education governance reform.
We are here today to raise a number of financial issues and to propose reforms in certain areas. Among the major issues that we have chosen to address are: the financial management and auditing of school boards, the school board fiscal year, the level of local funding for education, school board capital needs and education lot levies, and capital allocations for school renovations and repairs. We believe these are fundamental issues and issues that your committee should examine, and we hope that you will do so.
I would like to now introduce Trustee Bill Crothers, who will address the first two issues.
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Mr Crothers: I would like to talk first, if I could, about something about the scope of audits of school boards. In January 1990 the select committee on education in the report referred to by Trustee Bennett made its third report to the Legislature. The focus of that report was education finance, with one section being devoted to local governance, entitled "The Question of Accountability."
Recommendation 25 in that report reads: "The office of the Provincial Auditor should be encouraged to carry out comprehensive audits of boards on a regular basis and report its findings and conclusions to the public and the minister." Today I would like to spend some time discussing recommendation 25, which is also very much concerned with the issue of governance of school boards.
Section 207 of the Education Act requires all boards to appoint an auditor, and specifies that the auditor "shall perform such duties as are prescribed by the minister and by the Minister of Intergovernmental Affairs and also such duties as may be required by the board." In most, if not all, school boards in the province, the director of education is also the secretary-treasurer of the board, and there are very few, if any, school boards that assign additional duties to their auditors. Control over the process is very much in the hands of the director.
I can illustrate with an example from my own board, the York Region Board of Education. Like many boards in the province, my board does not have an audit committee, and despite concerns raised by some of us, the total extent of the exposure of the board auditor to trustees is about 10 minutes per year during a visit of the auditor to the board to present the financial statements. Despite asking for one, I have never seen a management letter from the auditors to the board. My board does not have an audit committee because most of the trustees do not understand the need and the role of an audit committee and the director does not encourage the creation of one.
My board had a budget in 1990 of $381 million. Clearly, this situation is not in the best interests of the taxpayers of the region or the province. While the legislation provides the mechanism for the board to become more accountable, it has chosen not to do so.
In 1990, the Provincial Auditor audited two school boards and has undertaken to audit six boards in 1991. Among the findings identified in the reports of the 1990 audits were the following: Controls over purchasing were less than adequate; some Ministry of Education grants were not spent according to terms approved; errors in calculations that led to overpayment of accounts; weaknesses in budget processes; non-compliance with the Education Act; weaknesses in portable asset control.
The audits conducted in 1990, and those planned for 1991, were far from comprehensive audits, and only in the area of transportation expenditures did they touch on the value-for-money examinations. It would be unfair to attempt to use any of the early audits for the specific purpose of criticizing the practices of a specific board. because at the moment, the audits, limited as they are, are being conducted in the absence of provincial measures and standards.
Most of the situations identified are correctable, and many were not known to the trustees of the boards. However, school expenditures are increasing tremendously and constituents are becoming much more insistent on evaluation and accountability for the system. Increasingly, they want assurance that moneys are being expended properly and productively.
Even where audit practices are expanded, very rarely are school board audits either comprehensive or value-for-money audits, and very rarely do school board audits relate actual expenditures to budget approvals. Most school board audits do little more than indicate that the financial statements of the board reflect the actual expenditures of the board.
In our view, current audit practices are not sufficient. The Third Report of the Select Committee on Education compared the recommended comprehensive audits to the operational reviews conducted on the 51 children's aid societies in the province. By coincidence, I am and I have been the chairman of the board of the York Region Children's Aid Society for a number of years, and I can make a few observations regarding those audits.
First of all, most CAS directors did not openly welcome the operational reviews in advance; most were, however, appreciative of the process afterwards. While the process initially was time consuming and initially traumatic, the results were ultimately seen to be beneficial and the exercise not a witch hunt.
Fourth, in 1989 the total expenditures combined of all the 51 children's aid societies in the province was $289 million. There are more than a dozen school boards in the province that currently have budgets equivalent to that.
Clearly, if trustees are to exercise any semblance of responsibility for the expenditures of their board, and if there is to be any meaningful level of accountability to the constituents of the board, certain fundamental practices are required.
First, in the area of board audits, all boards should be required to have an audit committee, whether it is trustees only or trustees plus members from the community. Second, all board audits should be required to compare board purchasing and tendering practices to board and/or ministry policies. Third, all board audits should be required to measure, quantify and comment upon budgetary transfers that are made without specific board approval. Fourth and last, the degree of sophistication of board audits should be related to the size of the board budget. Many board budgets are now in the hundreds of millions of dollars.
In the area of the Provincial Auditor, we believe that the scope of the audits done by the Provincial Auditor should be expanded: (1) They should be comprehensive in nature. (2) Audits should include value-for-money examinations. (3) The budget process itself in the board should be audited. (4) They should be regular in nature.
We understand that the standing committee on public accounts, in its second report of June 1990, also recommended that all audits, including school board audits, be value-for-money audits and that the audit branch has prepared legislative amendments to support those recommendations. We firmly believe that subjecting school boards to regular comprehensive audits by the Provincial Auditor will provide significant impetus to local boards to strengthen their own audit practices and ultimately lead to trustees recognizing and accepting more responsibility for spending decisions within their boards.
In the area of the school board fiscal year, I would offer the following comments. One of the difficulties standing in the way of trustees understanding and accepting more responsibility for policy and spending decisions of boards of education and therefore being more accountable to the community, is the fact that many of the decisions made are not reflected in a single board budgets but rather the impact is spread over several budgets. Most policy and spending decisions are made on the basis of the school year, while in the current situation school board budgets are based upon the calendar year.
We believe that altering the budget year to correspond with the school year will help to strengthen the role of trustees in the boards and to increase the accountability of trustees to the communities. We would recommend that the government give some priority to examining the feasibility of changing the board of education budget year to correspond to the school year.
In the area of education finance, we share the same concerns as do virtually all groups concerned about public education regarding the level of education finance in Ontario. We believe that the government must address the issues of the level of grant support to the boards, grant ceilings, the impact of provincial policies on local boards of education and the appropriateness of the property tax to finance such a large share of education costs.
We are, however, encouraged with the promise of the government to create a Fair Tax Commission, but would suggest very strongly that school boards have significant input into the deliberations and the outcomes of that commission.
Mr Bennett: I would like to now ask Trustee Dianne Austin of the Victoria County Board of Education to address the issue of financing capital projects.
Mrs Austin: I am just going to speak on a section of capital funding that has to do with renovations. Presently, the capital funding grant system moneys are divided into three separate categories: (1) site purchases and new pupil places, (2) renovation and replacement costs, and (3) program upgrading.
There is a demand that exists for new pupil places across the province due to overcrowding, but at the same time some of the demand for funding of new schools is driven falsely by current ministry practices and policies. The small amount of funds available for renovations is producing an artificial demand for some new school sites. In many cases it is much cheaper to repair and upgrade an existing facility than to construct a new building.
Why, then, do boards of education decide to abandon existing facilities and replace them with new structures? Let's examine the factors which influence board decisions when faced with a school in need of renovation.
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1. The chance of receiving funding for new construction is far greater than receiving funding for renovations. Of the $300 million allocated for capital grants in 1988, $15 million or only 5% of the total went towards the cost of renovating existing school facilities.
2. Boards of education receive substantial busing subsidies from the province. Thus, increased busing to a new school facility has little impact on the board's budget and is not considered as part of the operating costs of a new facility.
3. Ministry policies stipulating what renovation funds can be used for are very limiting. For example, one ministry official, while attending a public meeting of a board, was quoted in the local media as saying, "When asked about funding to upgrade the schools, the official said there are very few funds available for renovation and those funds that are available could only be used for renovations to the fabric of the building, ie, roof repairs, boiler repairs. There would be no money for the addition of a gymnasium, a library or a kindergarten."
At a conference in Ottawa held to discuss the problem of renovation funding, board trustees spoke of schools within their jurisdictions that were built prior to the implementation of kindergarten programs, prior to gymnasiums and libraries becoming integral parts of the school building.
Others spoke of schools built in the boom years of the 1960s which will soon be eligible for renovation grants. They described the structural problems in these newer old schools, arising in many cases from the use of construction materials or techniques that have since fallen into disrepute.
So what decisions are boards reaching when faced with such problems?
1. A board in central Ontario, when faced with a school requiring approximately $800,000 in upgrades, voted to close the school and request funds from the province for a new facility. The cost of the new school is estimated at $4 million. Construction has started.
2. A board in western Ontario, knowing the improbability of receiving renovation dollars, has voted to tear down a high school and build a new one two blocks away because funding is available for new construction. The cost of a new high school is in excess of $20 million.
3. A board in central Ontario voted to close five schools and replace them with two consolidated schools. Estimates by the board set the cost of renovating four of the schools and replacing one at $1.3 million and the cost of building the two new facilities at $4.5 million. The rationale for the decision was that the board could get funding for the new schools, but could not get funding for the renovation and upgrading of the existing facilities.
Recommendation 19 of the select committee on education states, "The ministry should reinstate designated allocations for renovations within the capital funding model."
We believe that if renovation funding became more available to boards, it would result in a reduction in capital demands for new school buildings and allow us to get more for our money.
With a change in renovation funding practices, boards would make decisions based on need and financial accountability, instead of on the false economy that now exists.
Mr Bennett: Trustee Carolyn Parrish of the Peel board will address the issue of financing growth related capital needs.
Mrs Parrish: Just before I begin, I would like to point out that we represent a wide variety of boards in this coalition. Much of what was said about audits and reviews at the beginning by Mr Crothers in fact is being practised in Peel. We have a trustee audit review committee. It has total co-operation from the administration and in fact it works very well. So what he is asking for works in Peel. It is well under way right now and as a matter of fact Peel is one of the boards that is being audited this year. It was welcomed by both administration and trustees.
The reason I was asked to speak on financing growth-related capital needs was I was chairman of our board for two years and as chairman of that board worked very hard on a growth boards coalition when the green paper on lot levies to finance new construction came out and made several delegations here. So I am the pseudo expert on growth related capital needs.
What you have on page 11 -- there is no point in going into all the details; I am sure you can read it -- is over $2 billion in construction projections from the eight growth boards, half separate, half public, in the four growth areas. These are five-year projections based on 1989 statistics. I do not have anything that is really up to date.
The growth boards consumed over 90% of last year's $300-million allocation, and as Dianne has pointed out there was very little money left for renovations. So those four giant areas, those eight boards, tend to consume millions of dollars every year.
The $300 million that was put aside by the government last year did not begin to meet our needs.
As you can see when you read through here, we have 90.000 students in 2,500 portables. The lot levy legislation that was passed last year, but so far has not been implemented, does not even address those backlogs. All it talks about is new capital needs, which is what we described on page 11 as $2 billion worth.
I am here to help you. Do you not love it when they come to help you?
Interjection.
Mrs Parrish: No, I am not with the government, but I would like you to help us.
One of the difficulties we have is that the levy legislation is sitting there and it seems to have been mothballed. We would like to help you free up money for renovations and other things that you want to put money into in education. One way of doing that is to help us implement lot levies, and that is only a beginning.
After lot levies there are many creative ways of funding schools. Developers have spent years making money in this province and I am sure they are here to help us as well. There are many creative ways of funding capital expenses like large $20-million secondary schools. They are listed here on page 13 as a starter.
Allow school boards to buy and sell land and buildings, thereby developing a capital pool and providing more flexibility and greater cost saving over time. With the levy legislations we have received permission within the last six months to start buying property ahead of when we need it and that is a major step forward, because the price of land is dropping right now so that we could be in good shape if we are now allowed to continue doing that.
Expand the possibilities for boards to receive land or actual school construction from developers in lieu of levies.
Permit boards to lease commercial space for education purposes with appropriate grants. There would be no difficulty for most large boards in setting up on site strip plaza schools, renting space, if we could get grants for it, which we cannot.
Encourage the building industry to pursue leaseback proposals and reassess the types of grants given to boards for this purpose.
Consider designating school sites in the same way park land is designated now, at no cost to local taxpayers. Schools are no less significant than parks are to the wellbeing of a community.
The Roman Catholic separate school boards and the public school boards have had little reason to co-operate since the introduction of Bill 30. Competition for funds and facilities has been a significant barrier to this co-operation. We remain strongly unified in pursuit of an innovative funding proposal that will equitably distribute much needed funds for the ultimate benefit of all students in all communities.
The NDP government made very strong commitments to education in the last provincial election.
The NDP government has an opportunity to support and encourage an innovative and forward-looking alternative to the funding of new pupil places. Education development charges are radically different from previous methods which serve to increase debt while falling well short of what is absolutely essential to the health of the education system of this province.
I remember sitting here in front of the Liberal government about a year ago and congratulating it on doing something really innovative and I really hope that legislation is implemented and I really hope that this government continues it because it will be beneficial to all of us.
As a little footnote, I have attached some statistics, if you will forgive me, particularly for the Peel board, because if you are considering where you are putting your money in the next year, one of the things that I have heard a lot about and all of us have heard a lot about is putting maximum class sizes on junior kindergarten and kindergarten. This is a capital funding problem.
As you can see on the last page, it will cost the Peel Board of Education $55 million in one fell swoop if you put those maximum class sizes on JK and K, so I would just caution everyone, unless you have a lot of money to hand out with it. The local taxpayers in the growth board areas will be hit very hard if maximum class sizes are put on those two grades.
Mr Bennett: I would like to close by simply saying that what the Ontario School Board Reform Network exists for is to provide opportunities for reform-minded trustees like ourselves to come before committees like this to urge changes and reforms which we hope will improve our system of local education governance, and in your particular case to enhance and to strengthen financial accountability, which we believe should continue to reside with trustees. We are the stewards and are responsible for managing those resources, but we need your help. Some of the things that we have advocated today we hope will open up some new possibilities for co-operation with the people here at Queen's Park.
We look forward to a few of your questions.
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Mr Fletcher: I am addressing this question to Mr Crothers who was speaking before. When it comes to your budget presentation and the wish list or whatever else is going on in the number of meetings you have, the final decision does rest with trustees when they vote on the budget, does it not?
Mr Crothers: In the school boards themselves, yes, it does.
Mr Fletcher: And you want more autonomy, you want more power over that budget?
Mr Crothers: The reference is in two things: One is an audit process, which in fact measures, relates the expenditures during the course of the year to the actual budget processes. Collectively, trustees have the authority to request that, but it has to be done collectively. If the majority of the trustees on school boards do not request it, then it does not happen. I think it should be required. I think that is the essence of the presentation.
The other difficulty, which is in the second part of what I was talking about, has to do with the school year. With so many of the decisions regarding policies or programs to be implemented, you really do not get an initial immediate reflection of the costs on the budget because your school board budgets are done on a calendar year, but your school year is on a September to June school year. You do not get the full impact in any one single budget. It is spread over two budgets. So you do not really get the impact of the cost of some of these programs.
Mr Fletcher: One more: Is this action being taken because school boards are not fiscally responsible? Is that what you are saying?
Mr Crothers: I am not saying that. What I am saying is that I do not think the trustees in many of the boards really understand and have all the information that is required in order to make a reasonable educated decision regarding the budget. That is different than suggesting that the budgets are not responsible, because the administration does produce budgets which, for the very most part, are pretty responsible documents. What I am saying is that the trustees who are responsible for that do not have the wherewithal in the current situation to really make informed -- they are acting on trust, and that may not be the best situation.
Mr Bennett: Could I add a little bit to this, because I think you pointed out a bit of a dichotomy on what we presented, and that is how the role and the authority of trustees can be enhanced by the further activities and extension of the Office of the Provincial Auditor, which is a good question because on the surface it appears that it might restrict local authority.
Our position, and our view of this, is that by conducting these audits it turns up enough evidence, enough material and enough background evidence of the way the boards operate to give the trustees information and evidence and, if you want, a bit of ammunition to come forward and try to enhance accountability at the school board level. What we know is that when the audits are announced in the school boards that have been done, right away there is a flurry of activity and it in fact has a beneficial effect on the school board systems.
We have heard the case of Peel where it has provoked a serious look at its budget process, where it provokes a more careful accounting of what is going on. It also serves to educate the trustees who, after all, are ordinary lay representatives, and many of them do not have the financial expertise that is required to properly scrutinize board expenditures. Indeed the whole financial control system is not in place in many of the school boards anyway.
Mr Phillips: I found it a very interesting presentation, and it is much broader than just the just the finance. It is almost like part of this should be at another committee somewhere, I guess; social policy or something.
Just to respond to your various recommendations on the fiscal year, I think there is some merit in that argument, the point I made earlier in saying I think right now six tenths of your budget is gone, right now, until the end of June, and then you have four months in the fall. So you do face an unusual circumstance. The problem, I gather, is going to be marrying the tax levy with the municipalities and that sort of stuff. I think from experience that is a challenge you have and maybe there is some merit in that recommendation.
Mr Crothers: From what I understand, in Canada, Ontario is the only province now that does not have school budgets based upon the school calendar year as opposed to the --
Mr Phillips: Yes. If you get a surprise in the general legislative grants now, you are dead. You might get a surprise; I do not know.
The audit committee one is a balancing act, I think, for the government. I cannot speak for it, but it is, where do you help the school boards and where do you intrude on the local autonomy? You are suggesting that the government should instruct all boards to have audit committees. Maybe that is right, although Carolyn's board has already set its own up.
I always found it difficult when I was a school trustee. I said: "Province, keep your nose out of our business. If we want an audit committee we'll set one up," that sort of thing. I think that will be just a challenge for the government, but maybe an audit committee is sufficiently central that it should look at it.
Mr Crothers: Part of what I was suggesting, and I suggested this as perhaps a valued reform -- I backed away from that and said that if you instituted regular provincial audits, I think most of the boards would do that on their own without being required to do it.
Mr Phillips: Just on the last three points you made, your suggestion on the capital program I think is a solid one. Are there examples where we end up encouraging boards almost to build the school rather than doing something more creative? Maybe there is something. I know in the health area that rather than looking at building more beds, those same funds have been used for community-based facilities sorts of things.
Again, we will have little impact on that, frankly. It will be the government that does that. But I think there is some merit in giving school boards the option where they see that they could justify and get a capital project, a new building, done. A better alternative is renovation of giving them the chance to make that point. I think there is some good merit in that.
The lot levy, I tried to get an answer for you with the earlier presentation and did not, so I guess you will hear in due course, as they say. On the creative capital one, I think probably the government will be looking at that, not only in education but other areas. I think the Treasurer has given some indication of more creative capital.
The challenge in all of that, in my opinion, is to make sure that we do not just further in debt ourselves, if you will, because it is very tempting to say to someone, "You build us a school and we'll lease it," and all you are doing really is just paying someone else for the debt. It is a very seductive sort of thing. I think you will see that even in hospitals and stuff like that. I know in Alberta they are building private sector hospitals and leasing them.
I think if the government goes in that direction, and again it will make its own decision, it will have to be careful that it does not put itself just into debt in a noncreative way; again, I think with probably some creative thinking.
Mrs Parrish: One of the things Peel has done as a board is to decide leasing is something to pursue, as long as it is lease-to-purchase. I think if you are in a position where 20 years from now the developer still owns the school or the property or whatever it is, then you are doing exactly what you said; plus, in 20 years try to close that school because you do not want to pay exorbitant fees to buy it or whatever. Any lease proposals we are looking at with Toronto home builders are intricately involved with lease-to-purchase.
Mr Phillips: I do not know how much help our committee can be to this group because of the subcommittee's recommendations. They touch on the pre-budget, but they are almost an operation of schools.
Mrs Parrish: I would suggest that if you can encourage lot levies to go through, you are going to help your budgeting considerably.
Mr Phillips: I tried my best.
Mrs Sullivan: Mr Phillips has asked a lot of the questions and made many of the comments I would have made. Coming from a growth area as I do, I think many of the things you have raised are particularly significant in terms of capital, and I am very supportive of some of the recommendations you have made relating to creative methods of financing that could be introduced.
I am looking at a comment that you have on page 12, suggesting that most boards are carrying increasingly burdensome debt loads from debenturing new construction. As I recall, and you may remember these figures better than I, the school board debenturing costs are certainly well below their portion of the OMB maximums allowed for borrowing. In fact, the recommendations most recently have been that school boards are not debenturing enough. I wonder how you have reached that conclusion. Is it around 6%?
Mrs Parrish: I think it is even higher than that. I think we are allowed to debenture up to 10% or 12%.
Mrs Sullivan: I mean the existing levels. There is still lots of room.
Mrs Parrish: Some boards do not debenture at all.
Mrs Sullivan: Right.
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Mrs Parrish: The Peel board, for example, was given permission to build five schools over the next three years, but we need them desperately so we have interim-financed a couple of them until the grants come in.
Another example of where we have to debenture is that we had to buy 120 portables last year. By the time they are installed, wired and fireproofed they are $65,000 a portable, and because we are a growth area we do not get any money for portables at all. A portable is going to have a shelf life of 20 years, so we debenture those on a 10-year debenture. But I know the Peel board carries a much lower debt load than whatever its limit would be.
We do not debenture frivolously. For example, we would not debenture a renovation now; we just postpone it. So what we are debenturing in the Peel board is absolute necessity and what we are debenturing on short term in some cases is just to get those elementary schools up and running, because we have schools with 13 and 14 portables on them. The problem with that with a junior school is that you have a lot of kids using the same washrooms, the same library facilities, the same lunch facilities and it is really a heck of a strain on the whole facility. And then you have all the busing costs for holding schools. So we debenture only what is absolutely necessary. We do not do it frivolously.
But I know some boards do not have any debentures at all. I know Durham does not. And that has just been their policy for years, and I know the government says: "Okay, we carry debt; let's transfer some of it down to you guys." Peel is doing its share. We are debenturing what has to be done.
Mrs Austin: Can I add something to that? At the board I am with, we are building several schools because we have a lot of growth. But when we went to debenture for our capital funding, we had quite a bit of trouble getting a debenture because the county and the town had gone way up to their limit and we were told that because we wanted to debenture, to share that with all the same taxpayers, it would be very difficult for our community. We are faced with several other new school constructions and we probably are going to have difficulty even getting debentures.
Mrs Sullivan: Are you talking about debentures for interim funding of schools that have been approved or sort of leaping the list, if you like?
Mrs Austin: No. These are schools we have received approval to build, so we get about 50% of the amount the school costs, and the additional 50% we are debenturing. We ran into difficulty when we went to debenture because of the situation we are in in our community with the county and the town.
Mrs Sullivan: Just as an aside, and there is not a question involved here, I do not think, but I was interested in your suggestion that some boards are in fact moving into new capital expenditures rather than renovation. I can tell you that is sure not happening in our area. We are taking whatever we can get and doing with it what we can get, but I thought that was an interesting comment.
Mrs Parrish: Could I also add, in Peel we renovated a large secondary school and we are only two thirds of the way through -- it has been a three-year plan -- and we have exposed asbestos, we have had problems like you would not believe. It ended up that by the time we are finished it is going to be $18 million to renovate; it would have been $21 million to build a brand-new facility. So I do not agree that it is cheaper. I think what Dianne was talking about was small renovations in a fairly solid building. When we get to the position where we get absolutely no money for renovations in Peel because we are sucking up so much for our new capital expending on population, then it costs us a fortune to do that. And we have to do that all on the local taxpayers' hook.
Mr Bennett: It is an interesting thing. The demand for renovation and repair funding comes from the urban school boards like Metropolitan Toronto and some of the older areas that would like to see more money put into renovation and repairs, and from some of the rural and small-town school boards such as Victoria county where they have buildings that are a part of what is called the consolidation movement. People like Dianne Austin and others are trying to ensure that these small schools are not closed unless there is a good reason to close them. So you have a rather interesting combination of forces at work there urging more money being put into renovation and repair.
Mrs Sullivan: You did not talk at all about transferring assets between boards, between separate boards and public boards, depending on changing demographics. Is that something your committee has looked at?
Mr Bennett: One of the things you have to keep in mind is, with our network we try to stay with our mandate. Our mandate is to promote reform and our mandate is to bring forward things that strengthen public accountability and financial accountability. Our view so far has been that that lies outside our mandate, and we certainly have different views within us on some of those questions, so we try to focus on those particular things that are within our mandate.
Mrs Parrish: And speaking very practically from a growth board area, the Dufferin-Peel Roman Catholic Separate School Board's needs are every bit as desperate as ours, if not more so. So there would be absolutely no question of transferring property between the two of us, because we are both sitting there with -- we have 600 portables; they have about 550. So there is no need to transfer. What we just need is more space.
Mrs Sullivan: We were able to do it in Halton with one school in the downtown core of Oakville, and that worked and saved a lot of money in the long run.
Mr Bennett: I think the spirit that underlies our movement and the reform movement of trustees is that we are in a post-Bill 30 environment in education in Ontario, and we are looking forward; we are not looking back. We are trying to confront some of the issues that exist now and not fight old battles and return to things that were settled some time ago.
The Chair: I have two questions myself about the lot levies. I had a meeting with one of my school boards, and the board indicated to me that it was hesitant about moving in the direction of collecting the lot levies because of the impending lawsuits that the first one who starts to do the lot levies is going to meet. We were told last week by the Ontario Home Builders' Association that in fact the first person who uses those lot levies is going to court.
Mrs Parrish: If it is a constitutional challenge, I would hope that the government will foot the bills for the legal challenge because it will mean it is going to save you $300 million a year. If it is an individual one, I find it highly doubtful that there will be individual lawsuits. I think what is going to happen is that it will be a constitutional challenge against all boards.
As a growth boards coalition we were trying to have our bylaws prepared at exactly the same time and lodged at the same time so they will take on the strongest of us rather than some little tiny board that rushes in. So I would really hope -- and I probably should have thrown this in here -- that when that constitutional challenge hits, which it will, the government will take on that challenge.
The Chair: Maybe you can bring me up to date a bit. The lot levy legislation has not been implemented yet? Or it is about to be implemented? Where is it?
Mrs Parrish: It has been made law but the difficulty we are having is that we keep getting new sets of regulations coming out. "Okay, fill in all the blanks." We fill in all the blanks, we send them back and they go, "Oops, we just changed it again." And to me, in my humble opinion it looks like stalling. It looks like, I think, the government is a little bit afraid of the challenge. They are a little bit hesitant because they are not as familiar with the legislation as the previous government was, and I just think it is one of those things that they are a little bit afraid; they put their toe in the water but it is a little bit chilly. I would hope that somebody speeds it up because the challenge is inevitable, but I think the benefit to the province over the next three years is $900 million. I would hope that is something that is worth fighting for.
The Chair: My other question has to do with the expansion of schools, and I know what it is like to be in a school with 15 portables. When the population boom hit in the early 1950s, can you give me any indication of how they financed the rapid expansion of the education system in those years?
Mr Bennett: If you are looking at me, I am the historian.
Mrs Parrish: He is older than the rest of us.
The Chair: I was just sort of looking.
Mr Bennett: It is not that I am the oldest; it is that I study history, Ontario history as a matter of fact. I guess it was a different regime, the provincial support for education was much greater. I could go back and we can look at the percentage of support for education. Every school board got more in terms of provincial grants, and I think it was just the different setting.
I need not point out to you that education was the number one priority of governments here at Queen's Park throughout most of that period. The result of that was that a higher percentage of the provincial budget went to education. So an awful lot more money was put into education and there was less of the burden transferred to the local taxpayers. That is what financed the growth of the system in the 1960s, and provincial support for education reached its peak -- what year was it?
Mrs Parrish: Early 1970s.
Mr Bennett: Early 1970s, 1971 I think, in around there, and it has been significantly falling off ever since then. That would be the answer to that particular question. Of course, we have an entirely different financial regime, and an entirely different approach to financing education that has evolved over the last 10 or 15 years.
So it would be nice to turn the clock back, but I think the answers to our problems, frankly, lie in a combination of provincial legislative grants, increased and enhanced capital grants, and some of these innovative schemes which will draw capital from other sources and bring it to bear on the problem. Some of those things are illustrated in our brief. That is what I think is where we are going to find the solutions to our problems.
Mrs Parrish: And if I could add something, back in those boom days they were building brick and mortar buildings and then in the Peel board in the early 1980s we shut down 13 schools and transferred them over to other facilities and got money or whatever. What Peel designed about eight years ago was what we call portapacs. We build core schools and they have movable wings on them, where the kids do not have to go outside; they can just traipse down the hall. But these are demountables and Peel takes credit for designing those. Other boards are duplicating them all over the province, so we will never get in a position where we will be selling off schools.
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As educators, builders and planners, we are being far more careful about that, because it is very traumatic to close down a local community school. Now you can just demount some of the excess classrooms and move them somewhere else, or whatever. So we are building far more carefully now. Those boom days created a lot of problems. Schools went up on every corner and then were all sold off in the early 1980s. What we are doing now is building something that is far more practical.
The Chair: My last question has to do with this line on page 13. It says, "Schools are no less significant than parks are to the wellbeing of a community." Given that most developers are responsible for giving somewhere in the neighbourhood of 5% of the land that they are developing to the town in terms of park land, in a quick answer, is this what you are advocating here, that they also be responsible to give land?
Mrs Parrish: The quickest answer I can give is yes.
The Chair: Thank you for your presentation. I understand the Ontario Women's Action Coalition cancelled. Is that correct? They are not here.
MCMASTER STUDENTS' UNION INC
The Chair: Our next presentation is McMaster Students' Union. Today we have Brian Leblanc, who is a researcher, and Gary Collins, president of the Manufacturers -- sorry, McMaster Students' Union. I should have got it right because I went to McMaster.
Mr Leblanc: A long time ago?
Mr Collins: I would like to thank you for allowing us to make this presentation today. My name is Gary Collins. I am the president of the McMaster Students' Union and today Brian Leblanc and I will be making a presentation concerning university education here in Ontario.
A few introductory words about the McMaster Students' Union. We are a student organization that represents 11,000 full-time undergraduate members at McMaster. The students' union provides representation and we also provide services. The services that we offer range from a day care centre to a licensed establishment to a grocery store to a graphics department to a radio station. In the representation we provide, we try to make briefs to municipal, provincial and federal politicians and we try to represent the view of students. We have a 35-member assembly. Today we would like to outline some of our concerns with education in Ontario. Brian will speak on education.
Mr Leblanc: There are several things we want to touch on. It is too bad that Kimble Sutherland is not here. I met him when he was president of the students' council at the University of Western Ontario. I am sure he and I share almost identical views on this topic, so it would be nice to have some support from him. I am just going to run through sort of a preliminary overview and then some things we think need to be done.
We think government expenditures on education are an investment in our society. I think if we do not invest in our human capital, then we will be going nowhere as a province and as a country. Ontario is the engine that drives Canada, essentially, and if we are not producing qualified graduates, then our country will be in dire straits.
I am sure that you are all aware that our universities are chronically underfunded. Student-faculty ratios are rising. The space shortages, delayed maintenance and decreased real expenditures on capital purchases and library expenditures and things like that are all over the system. Clearly we do not have the kind of system that I guess you all had when you went to university, if you did. I am sure you would recognize McMaster, if you came back now, as a very different place than when you went. I think if we do not give a tremendous amount of more money to the system, the myth of quality and accessibility will be exactly that, as there is no way we can sustain the system as it currently is.
I will give you an example of this kind of decline. In the political science department at McMaster, there is a tremendous lack of professors and there is a lack of continuity in education because of that. Honours students have to produce a thesis in fourth year for the faculty adviser who taught them the course. That is proving impossible because none of the professors who were there could give them courses. They are all on leave or they are all taking off or they have simply left the system or they have gone to the United States or they have just moved out. It is becoming impossible to finish an honours degree in the four years that it would normally take you.
Increased expenditures on faculty would eliminate that problem because there would simply be more faculty for the students. Enrolment at McMaster has gone from 8,300 students in 1979-80 to 10,700 in 1989-90, and at the same time, over those 10 years, the province is spending $1,900 less per student. I think it is almost ridiculous to think that we are delivering the same kind of education to students today as we did then. I am not saying that 1979-80 or even 10 years was some kind of nirvana for the system because if you look back at the materials from that period, they were screaming that they were underfunded then.
If they were upset then, than clearly we should be quite upset now. The government has consistently said that it is committed to accessibility and quality. It has not backed that up, though, with money, essentially over the last 20 years.There are available resources to give to the university system that just have not been getting there. Over the last 10 years, increases to universities have gone up 5.7% in real terms and transfers to health care have gone up 113.8% in real terms. There is money there, obviously. It is just a matter of political will and desire in spending it in the system.
The current government pointed this out consistently when it was in opposition. They would scream up and down every time there was a funding announcement about universities. I think they have a golden opportunity to arrest the decay in the system right now in their first budget. It is time to put some action to the words that they had said for years.
It is NDP policy to to eliminate tuition fees because I believe as a party it shares our belief that the university system is a system whereby you create social change. It is not a system where you go and you purchase a commodity which is education, but a system where you use it as a tool to change our society and to make our society more equitable. You have a beautiful opportunity in your first budget to actually put that idea into practice.
Another thing I want to talk about is a problem, I believe, in the way the universities are funded by the government. Currently, if you are not all aware, it is a sort of convoluted corridor funding system formula with a series of other envelopes for special projects. I am not sure how you people feel because you have never made a funding announcement about universities, but they used this scheme to sort of distort the amount of money they were giving to the system. Last year, then-Treasurer Nixon said there was going to be an 8% increase for universities. In fact that was not true because it was not an 8% increase in operating. It was 8% in total outlay and most of that went to special programs. The actual increase in operating was about 2.2% to 3.5% per institution depending on the institution, and as we all know, inflation was somewhat more than that and enrolments have risen 25% in the last six years.
Clearly they are not getting the kind of money they should. What we think should happen is that they should move the envelope funding system down one more level and create a series of targeted envelopes for universities based on undergraduate education, graduate education, administration, libraries, physical plant, whatever.
You can compartmentalize it and target the funds going to the universities in the way you want them to or in the way they are meant to be spent by some formula, because 70% of the funding for McMaster University comes as a direct result of the undergraduate enrolment that is there, yet only 30% of that money goes to undergraduate teaching and undergraduate services. I think that is ridiculous. I think the undergraduates, if that is the way we are going to fund our system, should be benefiting from that money and I think the provincial government should exert some kind of control over the way that is going.
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We can restructure the way we fund it all we want, but we also need money and the Council of Ontario Universities has said in its brief about fixing the system, which I will touch on in a minute, that we need an extra $410 million in base operating this year to bring the system back to some kind of health. I share that view, except my figure that I calculated was about $506 million. That was based on last year's Ontario Confederation of University Faculty Associations funding request which was ignored by the government. We are talking about a considerable amount of money -- $500 million is not peanuts -- but in relation to the size of the provincial budget it is not actually that large.
Now to tuition: In 1987-88 Ontario universities got about 63% of their income from government grants. The rest of Canada got about 70%; that is, about 7% more. Tuition fees in Ontario were about 15% of operating expenditures. In the rest of Canada it was about 10%. I think at the very least, in terms of tuition, the government should freeze tuition fees where they are now until our average tuition fee contribution to operating funds comes to the national average, to about 10%.
I think that the COU recovery plan -- I do not know if everyone is familiar with it, but it was calling for a $550-dollar-per-student increase, and I think that is ridiculous because in its own brief it said the provincial government should obviously be the one paying this. They say they will not, so let's hit the student. I think it is deplorable that these university administrators are having to call for tuition increases which they know will hurt students. They know it. They say, "Let's use some of the money for accessibility." I think it is ridiculous if they are forced into that position because of government intransigence on this issue. I think the government should pick up the cost, and they said so in their brief. I hope you people believe that when you are making the funding announcement.
In 1978-79, OSAP was allowing $65 a week as an allowance to students. I do not know where they got the figure of $65 a week, but I guess they assumed it was adequate then. In 1991, it is $121 a week per person to live. The cost of living index over that time increased 128% and living allowances only increased 86%. Students are being starved in terms of assistance when they go to school, so I think that issue also needs to be addressed.
There is a series of recommendations at the end. I will not run through them to save time, but I hope you people read this. If you have any questions, I would be happy to answer.
Mrs Sullivan: I have a question. I know that you did not read through your brief and I am caught by a sentence on page 15 as one of the questions that you are asking, "Is the university of the masses inherently low quality due to the presence of a greater number of average students?" We were interested today in a conversation we had with the Ministry of Colleges and Universities officials who were discussing some of the needs of the university system and college system over a period of time. One of the predictions that came forward was that there would be perhaps an increase in post-secondary enrolment in colleges and universities. I am wondering why you are asking this question. Are you suggesting a limit in admissions based on academic merit and with attendant changes and funding pressures? Why is this here?
Mr Leblanc: Actually, that question is sort of almost a facetious question because when we had --
Mrs Sullivan: It does leap out of the page.
Mr Leblanc: Yes. The system people referred to as one which was of good quality was in the 1950s, and as we all know that system was essentially for rich white men. In the 1960s we embarked on a process of accessibility and it was government policy. Since the accessibility policy has been attempted to be implemented, it seems quality has gone down because the funding levels have decreased radically since then. So it is sort of a facetious question that: Will we only fund an élite system properly? That is essentially the point I was making.
Mr White: Perhaps in deference to the committee members, you should have said a majority of white males with a few very exceptional women.
Mr Leblanc: True. Actually I think that is horrible, because I do not think you have got to be exceptional if you are a woman to go to a university.
Mrs Sullivan: That is not the case these days.
Mr Leblanc: No. It is not the case. There are more women than men in the system.
Mrs Sullivan: Except at the graduate level.
Mr Leblanc: Except at the graduate level, yes.
Mr Hansen: I would like to say we know your concerns. I have two of my children, one in college, one in university, so I have related back to me exactly what is going on there on certain levels. Not only that; Kimble, our fellow member of the government, gives us quite a few examples back there in London. We do hear your concerns and we are going to have to address them as best we can. Your concerns are being listened to, and the other universities and colleges also. It seems to be about the same voice coming across. It is no different whether you are at McMaster or you are at London.
Mr Leblanc: It is true. It manifests itself in different ways on different campuses, but the situation is truly horrible. Mr Wiseman, if you went to McMaster, when you went there were about 15 students for every faculty member; now there are about 20, and that is ridiculous.
Mr Hansen: I am a little bit older than even Jim Wiseman. I had my education in the United States because that was the closest available college and university to go to.
The Chair: I have a question. It stems from the brief that we received from the Western student union. They suggested that a policy for funding and moving towards zero tuition could be funded out of tax increases for students who have graduated from university and therefore are in a better position to fund it because they are in the higher income-earning jobs in the economy. Do you care to comment on that?
Mr Leblanc: It is fascinating that Western would think that. I guess you are talking about an income-contingent repayment plan similar to what they have in several other countries. Well, first off, I would say that we have a truly progressive and proper income tax system. Talk like that would be ridiculous because, if you are making more money, you would be paying proportionately more taxes. Something like that would be ridiculous because it would already be happening without any special programs.
If you are going to tell me that you are going to institute a truly progressive tax system and eliminate tuition fees, I think that is wonderful. I think that should happen anyway. If you are talking about an income-contingent repayment plan, what you are talking about is students paying about 10 times as much in tuition as they are now because the interest on the loan, because it will still be sort of a loan. They will keep a running tally and -- there are some figures in the recent OFS report -- if you borrow $14,000, you will end up paying another $16,000 extra that you did not borrow. I think that is ridiculous.
The Chair: That depends on how long it has been amortizing and on what your rates are.
Mr Leblanc: I believe they were doing it over 10 years. I think an income-contingent plan is ridiculous. I think what we should do is redress the province's tax system and do it through that avenue. If we did have a progressive tax system, then we would not need tuition fees because if I benefit from the university system, I will be making more money obviously, and if I am making more money, I will be paying more taxes and I will be paying progressively more taxes.
Mrs Sullivan: That is a very questionable point of view. There are many people without a university education who are in fact earning very large amounts of money and making their contribution to the tax system now. Frankly, I get upset, and I did with the Western students who were here, with the assumption that post-secondary education automatically will now and in the future keep you in the maximum income levels of society. Surely to goodness, if that is the case, then we are doing something awfully wrong with other levels of training.
Mr Leblanc: I think I would agree with that, although statistically the highest income earners are all holders of university degrees. That is not something that I mean; that is just a fact of our society. I agree.
Then let's use the education system and the university system in particular to effect some kind of equality across the board in this province. It is a tool for social change; it takes people and it gives them opportunities that they otherwise would not have. I do think that, sure, people who do not have university educations earn lots of money and they are in high income brackets, but I also think that education is just in general a social good.
You are not just learning how to do something, how to be an engineer, how to be a political scientist or how to be a lawyer. University experience teaches you much more than that. It is not simply classrooms. It is creating good citizens. University education creates good citizens, and I think there is a general benefit for the society in creating good citizens.
Mr Phillips: Just in fairness to the previous students, I heard what they said differently personally. I thought what they said was, "Reduce tuition fees until they are zero and you will get it anyway from us because we will earn more." I did not hear them say a specific tax.
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Mr Leblanc: Actually, that is very true.
Mr Phillips: In case you bump into them and get into a fight with them.
Mr Leblanc: I have heard that same thing. Actually in increased taxation due to augmentations in income, you pay off the subsidy the government gave you for your tuition. They are usually talking about eight years.
Mr Phillips: That is what I thought they said. You would have to look at Hansard just to find out what they really said. That is how I interpreted it.
Mr Leblanc: But you pay off your subsidy in about eight years now apparently.
Mr Phillips: I believe that the direction the last government took was to increase the grants to the universities and colleges at the same rate as the increase in tuition. That I think was to try to get more money into the system. I know this is a difficult question for you, but you have two recommendations here. One is to increase the rate, to get the $410 million incremental money in here and the other is to have tuition fees decreasing as a percentage of --
Mr Leblanc: Sure, in other words, freeze tuition fees.
Mr Phillips: I am just trying to get an idea if you can give us any hint on your priorities. Is it more important to the system to reduce tuition fees or to increase the funds in the system?
Mr Leblanc: That is an interesting question.
Mr Phillips: Normally it does not get an answer, by the way.
Mr Leblanc: Let me talk about the previous government. Sure, they increased tuition and grants by the same number, and if they had increased tuition in operating grants by the same number, then that would have been fine. But as I said, tuition went up 8% and real operating went up about 2.5%, so that is not really the case. I am not really sure but I think if we freeze tuition fees, you would not have to touch them. If you just gave the extra $410 million, that would redress the problem right now and tuition fees would drop to about 10% of the take.
Mr Phillips: Is that right? I thought that the system said it needs $410 million more in it.
Mr Leblanc: Yes, for next year. So if the government gives all of that money, the tuition as a percentage of the new figure will be about 10%.
Mr Phillips: Just in case that does not happen, which I doubt, but just to provide a contingency plan, have you any direction for the --
Mr Leblanc: I would say give us more money in operating and, if you want increased tuition by CPI, if that is what you are asking me --
Mr Phillips: That is what --
Mr Leblanc: I am saying tuition levels are too high right now and I just fear they are just going to get higher. But if you are asking me to choose between $410 million for the system or an extra $50 on tuition, I will take the $410 million.
Mr White: I just want to add to a couple of things. One brief comment along the lines that Mrs Sullivan suggested, and I think you replied excellently, that the purpose of a university education is not simply an input towards the desired output of increased income, but rather a broadening of human perspective and an increase in general benefits to our community as a whole. Certainly, that has been the discussion we have heard through decades at the university level in erudite and sometimes useless conversations.
Mr Leblanc: Never useless.
Mr White: No, no, they are part of the broadening experience, are they not? But I am curious in terms of the tuition issue. There is a need of course, if there is any kind of tuition increase even comparable to the increase in operating expenses, etc, for that increase to be equitable, to be done in a way which does not deprive those who have limited income of the opportunity of gaining access to the college and university system. Do you have any suggestions as to how that might occur, if there needed indeed to be any increase?
Mr Leblanc: How to maintain accessibility in the face of tuition increases?
Mr Phillips: Yes.
Mr Leblanc: It is a very difficult question, because tuition is a very small percentage of the outlay of cash for university education. What it is is a number that people say, "Oh, I can't pay that." It discourages people. They say for every $100 increase in tuition you lose 1% in enrolment, in demand. So it is not the tuition itself that is an impediment; it is the notion that it is so high. It is a psychological barrier, not necessarily a financial barrier, although it is a financial barrier as well. It is a psychological barrier because they see living costs and everything.
If we move to an all-grants OSAP system, which would in effect be cheaper than the current system because of the interest costs the government pays -- this program, OSAP, was invented in the 1970s when interest costs were really low and the real cost of carrying a loan was about 0.5% to 1%, so it was really cheap. Now the interest costs are so high that the government carries them for four years and it ends up costing almost as much in total interest as it would cost if you just gave the money away without carrying the interest for four or five years.
If you go to an all-grants program and fix the holes in the OSAP system -- I mean, the method of assessment is ridiculous. I think it is demeaning for adults to have to send in their parents' T4 slips to get student assistance. I mean, my God, I am an adult. What does how much my parents make have to do with whether I should be receiving a student loan? I think if you could fix that, that is another avenue.
But how to fix the psychological barrier that tuition is? I have no idea, I really have no idea, because I have talked to people who did not go to university and they said, "I saw the tuition fee and I couldn't go." I said, "You know, your real costs are just to live or to live somewhere else or for books or whatever." And they said, "Yes, but I just looked at tuition and I said, `Well, that is something that I can't pay.'"
Mr White: And yet tuition is only a small part of the cost.
Mr Leblanc: Tuition is a relatively small part of the total cost, sure, but it is a large psychological barrier because they have to pay it all at once. If you asked people from a low-income family, "Give me $1,800 now," they just cannot see a way to do it.
The Chair: I would like to clarify the quote from their brief: "The money should come from us, as students, and the money should come from us after graduation through a progressive income tax system." Then they went on to say, "Therefore we do feel that through the corporate tax system there should be revenues raised towards post-secondary education also."
Mr Leblanc: Sure, because next to the graduates the greatest beneficiary of the post-secondary system is of course the corporate sector, because we give them ready-trained graduates that they can plug into whatever job they want. So perhaps progressive corporate taxes might be another good idea.
The Chair: On behalf of the committee, I would like to thank you for your presentation.
Mr Leblanc: Thank you.
Mr Collins: We will be lobbying the minister, who is our local representative, Dr Allen. We will be continuing to call him and meet with him.
The committee adjourned at 1658.