1991-92 BUDGET














Wednesday 31 July 1991

1991-92 budget

Association of Municipalities of Ontario

Labourers' International Union of North America Ontario Provincial District Council

Ontario Association of Interval and Transition Houses

Canadian Automobile Association Ontario

Co-operative Housing Association of Ontario

United Senior Citizens of Ontario Inc

Ontario Hotel and Motel Association

Smokers' Freedom Society

York University

Ontario Coalition for Better Child Care

Propane Gas Association of Ontario



Chair: Wiseman, Jim (Durham West NDP)

Vice-Chair: Sutherland, Kimble (Oxford NDP)

Christopherson, David (Hamilton Centre NDP)

Hansen, Ron (Lincoln NDP)

Jamison, Norm (Norfolk NDP)

Kwinter, Monte (Wilson Heights L)

Phillips, Gerry (Scarborough-Agincourt L)

Sterling, Norman W. (Carleton PC)

Stockwell, Chris (Etobicoke West PC)

Sullivan, Barbara (Halton Centre L)

Ward, Brad (Brantford NDP)

Ward, Margery (Don Mills NDP)

Substitution: Runciman, Robert W. (Leeds-Grenville PC) for Mr Sterling

Also taking part: Jackson, Cameron (Burlington South PC)

Clerk: Decker, Todd

Staff: Rampersad, David, Research Officer, Legislative Research Service

The committee met at 0911 in room 230.

1991-92 BUDGET

Resuming consideration of the 1991-92 provincial budget.

The Chair: If there are no objections by the members here, I think we should begin. We have a full agenda for this morning and should attempt to stay on track as closely as we can.


The Chair: I would like to begin this morning's proceedings with the Association of Municipalities of Ontario. John Harrison, president, and Grant Hopcroft, past president, welcome to the committee. You can begin your general remarks. You have half an hour, and whatever time is not used in your presentation will be divided equally among the three parties for questioning at the end. If you could begin, please.

Mr Harrison: Thank you, Mr Chairman. As you indicated, the deputation this morning is composed of myself, a member of council for the township of Delhi down in southwestern Ontario and current president of the Association of Municipalities of Ontario, and Grant Hopcroft, our immediate past president, who is a councillor from the city of London.

We are here to speak specifically to the issues arising out of the budget which impact directly on the municipal sector and the functioning of municipal government in the province of Ontario. We have provided members of the committee with our brief. I realize you have just received it this morning. I would like to take the opportunity of highlighting the brief, if I may, and as you said, we would be happy to make ourselves available for questioning by members of the committee.

As a general comment, the reaction of the municipal sector with regard to the budget has been cautiously positive. I think that is the best way to phrase it. For the first time in many years, there is really very little direct impact on the municipal sector contained in this year's provincial budget. With regard to those areas where there is an impact, our analysis to date has identified nothing of a negative nature, and a few positives which we will touch on as we go through the brief.

A further general comment would be that if we have any problem with the budget and the way it has been brought in to date, it is in terms of issues of timing and thus far not having sufficient detail to be able to do an in-depth analysis with regard to some of the impacts. As a general disclaimer, to begin with, I should say we retain the right in the future, when we see more detail with regard to the impact of the budget, to change our view about some of the issues we are going to raise with you this morning.

We did appear in front of this committee in deputation at the end of January of this year with regard to a pre-budget consultation. You will see at the bottom of the first page and the top of the second page of our brief nine issues we raised regarding what we hoped we would see in the budget when it finally was brought down. Some of these issues are being worked on, in an ongoing fashion, between my association and the appropriate cabinet ministers.

Two of the recommendations we made at that particular time were contained in the budget, in sort of a backward way with regard to at least one of them. We had requested that there be no new cost-shared programs included in the budget, and in fact none were; and that the unconditional transfer payment announcement, which had not been made at that point, be an across-the-board increase to every municipality at least to the level of inflation. That took place.

To move from the general to the specific, the first issue we are dealing with in specific terms starts on page 3 and is with regard to social assistance. This is the largest part of our brief and the issue we go into in most detail, again largely because more of the details regarding the implementation of these particular provisions are available than those regarding some of the other provisions in the budget.

The social assistance reform package included in the budget includes about 59 reforms to the welfare system, at a cost of $215 million to the province. Included in that package is what the budget sets out: $25 million in aid to municipalities. That aid to municipalities is divided almost equally between reforms to the general welfare assistance program arising out of what is called the Back on Track report. This makes various changes to welfare benefits. A significant number of those changes cost municipalities money because we cost-share those programs. However, there are some changes that save us money, specifically the shifting of sole-support parents from the GWA rolls to the FBA rolls.

The second initiative that is intended to save municipalities money in the budget is a shift of what I have come to call the 4% solution to a 3.5% solution. Basically, this is an effort to give assistance to municipalities where more than 3.5% of the population of the municipality is on general welfare assistance.

The position of our association for many years has been, and still is, that rather than doing what is included in the budget, the government should be giving a clear signal and beginning to move toward paying 100% of the cost of general welfare assistance, both with regard to allowances to recipients and to the administration of the programs. This clearly did not happen in the budget.

We further requested, in our pre-budget consultations, some immediate interim relief for municipalities hit hard by growing welfare rolls and consultation with the government with regard to implementation of reforms. After the reforms were announced, we set up a mechanism for consultation with the Ministry of Community and Social Services in terms of implementation and we are pleased with it.

We are less pleased with the issue of interim relief. We acknowledge the fact that there is some relief in the budget, but it amounts to about 5% of the municipal cost of GWA in the province at a time when our municipal costs of GWA are increasing by about 62%.

Our other comment regards the change of the 4% solution to a 3.5% solution. We do not believe that is an appropriate way to aid municipalities that are the worst hit by welfare increases. It affects only a few municipalities in the province, and there are a significant number of municipalities, where the welfare rolls have increased by more than 100% between 1990 and 1991, which will not benefit at all from that particular provision.

If I can pass to waste management, the budget provided an additional $28 million with regard to assistance with the 3Rs, 4Rs or however many Rs you want to say there are. We say there are four and the government says there are three. Again, our problem regarding the expenditure of this money is that we acknowledge the fact that this is a more than doubling of the provincial government's commitment to waste reduction. At the same time, since the budget was brought down, we have received no details regarding the implementation of any new programs and no indication of how that money is to be spent. Our contacts within the Ministry of the Environment indicate that the money is to be spent largely in enhancing the blue box program. We have considerable difficulty with that. We think the money should more appropriately be spent in reduction and reuse initiatives. After significant consultation between the government and the municipalities, we feel the blue box program deserves a complete overhaul.


With regard to the announcements that are made, conditional transfer payment announcements in the budget in various service areas appear to be satisfactory. There does not appear to be any shifting of government commitment to conditional transfer payments from the programs we have seen here. Our problem is that the details regarding these fundings are coming slowly, if at all, to municipalities. We are now more than halfway through a budget year, because we run on a calendar year, and our information regarding conditional transfer payments just is not coming forward in the way it should.

Over the past number of years, we have consistently asked for conditional and unconditional transfer payment announcements to be made by the middle of November of each year for the succeeding year. We understand the government had a problem, in terms of when it received its mandate, making those announcements in that timely a fashion, but in the future we certainly urge this committee and the government to attempt to adhere to that particular schedule.

We also acknowledge that the budget identifies the fact that northern Ontario is perhaps the area of the province hit hardest by the current recession and is undergoing structural changes to its economy. This acknowledgement has led to the targeting of a significant package of money into northern municipalities. We are pleased with that and approve of that particular position taken by the government.

Labour relations are perhaps one of the stickiest items for me personally, but I will attempt to keep my AMO hat firmly on, at least for the moment. In his February announcement, the Treasurer indicated there would be $100 million for the transfer partners to assist in paying for pay equity initiatives. That was six months ago. No details regarding how that money is to be spent have come forward. We do not even have any indication of how the $100 million is going to be allocated among the various transfer partners, and we certainly do not have any indication of whether that money is to go for administration, for special assistance to transfer partners to pay for implementation of pay equity or where that money is going to go. Frankly, my personal experience leads me to think that pay equity is still a ticking time bomb out there, in terms of the impact on the transfer partners of the implementation thereof. We need to know yesterday, if not sooner, how this money is to be spent and allocated so that we can have some idea of what assistance we will be receiving from the government with regard to implementation.

In conclusion, we and our association think the municipal sector in general is cautiously positive with regard to the impact of the budget on the municipal sector, with the proviso that we are still waiting for significant details regarding implementation and reserve the right to make further comments when those details become available to us.

The Chair: Thank you. We have five minutes per party and the questioning will begin with the Liberal Party.

Mr Kwinter: Thank you very much for your presentation. I was really impressed with the time and effort you put into it.

I notice that in your pre-budget consultations you had nine recommendations, two of which were taken up. One of them was sort of a non-recommendation, "Don't do anything to us," and they did not. The other one had to do with the whole area of minimum across-the-board increases.

I notice that 25 municipalities were promised a 5% increase in the unconditional grant transfer payments, and because of the equalization factors, they did not receive this amount. What is that going to do to them? How is that going to impact on those municipalities?

Mr Harrison: Our understanding is that the difficulty there is a technical one in terms of calculating the amount of the transfers and that in fact there are still some ongoing discussions between the ministry and those municipalities with regard to the appropriate calculation.

Certainly if there are municipalities that eventually do not receive a 5% increase in their unconditional transfers, that will have a negative impact on their budgetary position for 1991, and certainly if they have budgeted based on the Treasurer's announcement of a 5% increase to everyone and they do not receive that amount of money, they would be looking at the potential for a deficit.

Mr Kwinter: Another area I would like to get some comment on, if you have the ability to comment, is what is happening in various municipalities across the province. As part of this anti-recession package, there are supposed to be all sorts of public works, infrastructure projects under way. Do you have any indication of any of them that are taking place in any of your municipalities? Have you seen any results of that coming into line?

Mr Harrison: I can only speak for the two municipalities where I am a member of council. Both of those municipalities have received anti-recession money at the regional level in Haldimand-Norfolk region. In both areas it was transportation, it was roads money that we received out of the anti-recession package. At the regional level it allowed us to do a moderate amount of extra paving work we would not have been able to do otherwise with our normal transportation allocation.

Frankly, the amount of money received by my township out of anti-recession funds was approximately $100,000, which was a nice chunk of money, but it came in what I thought personally to be a very strange form in terms of a grant to the municipality to allow us to purchase a road grader. I did not quite see how purchasing a road grader was going to be an anti-recession item in terms of putting people to work in Ontario, particularly when we eventually purchased the road grader out of Michigan.

So yes, we have received some money; yes, it is helping some places. Some of the administration of it has been a little strange.

Mr Kwinter: To follow up on that, were these moneys you received for projects you would have expected to be done in the normal course of events anyway?

Mr Harrison: Municipal roads projects are like a bottomless pit. Roads engineers could spend an infinite amount of money on a prioritized basis. What you do is get a long list of the projects you want to do, and start at the beginning and go forward and get as much done as your budget allocation is for this year, and then start there and move forward in the subsequent year.

The projects would have been done anyway, yes, but they would have been done later than they were because the extra money was made available to us. Some projects have been moved forward from what would have been anticipated to be a 1992 implementation into a 1991 implementation.

Mr Kwinter: If that money had not come forward, would that have impacted at all on any of your staff numbers?

Mr Harrison: Again, I am just talking about my municipality. In terms of the projects we were able to do, my municipality hires out that work. So it did not have a direct impact on our internal staffing, but we provided more work to a contractor within our region to do more paving work than we would otherwise have been able to do.

Mr Hopcroft: That is certainly consistent with what is happening in the area of my municipality. It has enabled us to accelerate some works that would not have made it on to the list this year. Generally what it is doing is creating more work in the private sector among those contractors who bid on municipal capital works.


Mr Sterling: I assume, from reading your brief and your comments, that you are directing your brief and your comments to how it affects your members. You have a fairly narrow focus on the budget; you are not commenting on the overall fiscal impact of that budget on your communities. Is that correct?

Mr Harrison: Yes.

Mr Sterling: In terms of your praise for northern Ontario special assistance -- and I think that as a member of an eastern Ontario area and having been a long term member of not only an area within Ottawa-Carleton which seems to survive the bumps and hollows of recessionary times, but having represented the county of Grenville at one stage prior to the 1987 election, I understand they do not have the same kind of smoothness in terms of their economic outlook -- do you at all try to guide or suggest to the Treasurer that perhaps special assistance might be appropriate to other areas of the province? There seems to be a brush, which I have always had a problem with, painting northern Ontario as needing assistance, whereas I understand from some kinds of statistics that you can show certain parts of eastern Ontario, particularly outside of the Ottawa-Carleton area, which I no longer represent but still have a great concern with, need economic assistance perhaps even more than some of the northern communities. Do you ever attempt to try to direct the Treasurer that way?

Mr Hopcroft: In terms of some of our broader policy documents we have certainly indicated that to this government and previous governments as well, that to some extent any geographic distinction is an artificial one and you should really be in the long term trying to develop a funding formula that recognizes the actual need, as opposed to whether they happen to fall on one side or the other of a geographic boundary.

Mr Sterling: I think of Cornwall now, for instance, which is having an extremely difficult time and needs assistance very badly. I would urge AMO to try to track in some way how the economies of its member municipalities are doing so that it can help the province when it is willing to help out particular municipalities.

Mr Hopcroft: One of the great difficulties we find in trying to make those kind of assessments is that there are just so many different factors coming to play on our local economies that it is extremely difficult to pinpoint any one particular issue. There is free trade, there is cross-border shopping, there are a number of other structural issues in terms of the manufacturing sector, and to pin it on just one is difficult from the resource aspect.

Mr Sterling: I realize that, but household incomes and unemployment figures I think are key to the ability of a municipality, and I think that is really the way provincial governments should decide on extra help when they are willing to give it.

Mr Harrison: Can I speak frankly to that question? We have approached the Ministry of Municipal Affairs to do a project of finding some objective way to quantify the economic stability of particular municipalities in order to target unconditional transfer payments. So we do have a project ongoing to attempt to put that in place. We are having a significant problem with collection of the appropriate data, but we are still working on that with the province.

Mr Sterling: The other part is that you asked the province to pick up 100% of the welfare system, and I understand the reasoning for that. One of the problems I have with that is that I think probably regional governments, county governments, are best able to run the system. How do you go to 100% financing and then permit another part of government to run the system, or are you suggesting the province run the whole system and just leave the municipalities out?

Mr Harrison: Our recommendation has been that the province, if you will, farm the administration of the system out to local municipalities, by which I mean upper-tier municipalities, regions and counties, on a fee-for-service basis, that they reimburse us the cost of administration on a fee-for-service basis, allow us to continue to operate the system on a local level but on a fee-for-service basis. That would give municipalities that did not want to do that, and I do not think there would be very many of them, the opportunity to opt out of that, in which case the province would have to administer the system provincially in those areas.

There is already half the system that is administered provincially; the family benefits system is administered provincially. I think what we would like to do is stick the administration of those two systems together and then, as I say, probably farm that out to counties and regions to administer on a fee-for-service basis.

Mr Sterling: Then would the county council or the regional council have any say as to what was going on?

Mr Harrison: Under that system there would be certainly a county or regional council say. I would assume that the province would establish minimum levels of administration and then there would be a number of other things that the county or region could do to top those levels up.

The Chair: Thank you, Mr Sterling. It is time for the New Democratic Party.

Mr Christopherson: John, Grant, good to see you both again. It is always nice to see my former colleagues from the municipal governments coming forward. I appreciate the words you had to say and I think your document is very fair and very balanced.

I would like to ask you specifically what the impact would have been on municipalities in terms of services provided vis-à-vis cutbacks or property tax increases that would have been necessary had the provincial government not been forthcoming with the funding it did for our transfer partners, particularly the municipalities. And no games; I ask that in the context of the amount of heat the provincial government has taken from some quarters with regard to the deficit. As an entity that was one of the priorities we were recognizing in structuring the budget and which in many ways drove the deficit, although it was not just municipalities, I think your answer would be very important to these hearings.

Mr Hopcroft: Clearly, if we had been faced with the situation we had, for instance, in previous years where the transfers, particularly the unconditional transfers, were constrained, we would have seen either significant cutbacks or much higher tax increases in property taxes for 1991. I know that getting an inflationary increase did have a neutral impact in terms of municipalities trying to budget based on previous years' activities. If it had not gone up at that rate, there would have been a great deal more anguish than we already had at the municipal level in trying to set our budgets this year. As you know, a number of us had difficulty at any rate, given the economic activity slowing down, given the number of our constituents who are facing employment difficulties and so on, so the fact that we did get the inflationary increase that we had requested made our job easier this year.

Mr Christopherson: Maybe when John responds, because I see him eager to jump in too, could we get some specifics? I know you cannot judge for each municipality, but what sort of things would have to be looked at by a council in terms of cutbacks?

Mr Harrison: You have played the game, David; you know how it works. Frankly, my feeling is that most municipalities this year, particularly upper-tier municipalities that were dealing with the welfare increases, dealt with their budgetary problems this year by dipping into reserves. There were significant cutbacks in a lot of places, but I do not know anybody -- Grant may disagree with me -- who did not, when the final decision came, look at dipping into reserves.

Frankly, that is going to leave us in a terrible position for next year. I am going to run for council again in the fall, but I have sometimes wondered whether I actually want to win in terms of the problems municipalities are going to have at budget time next year. We have cut the fat, we have cut some of the muscle, and many of us have put ourselves in a position where we are not going to have the options next year in terms of cushioning the blow with the reserves we had put together in prior years.


Mr Hopcroft: I would certainly agree with what John said in terms of the ongoing demands that the welfare system is placing on our municipal budgets. London's did not go up at the rate of 100%, but we have seen over two years, 100% over our 1989 levels, so that has had a significant impact. We have found we have had to cut back services in a number of areas. We had talk of closing library branches, closing recreational facilities for certain periods of time, and we are simply not going to have the same flexibility next year as we did this year unless there is some structural change to the way social services are delivered and, more particularly, funded.

Mr B. Ward: During this budget, our government made the decision to battle the recession, and part of that battle was to attempt to provide as much job creation as possible. Part of that job creation was through grants, whether it was through transportation, whether through the Ministry of the Environment or through the program for renewal, improvement, development and economic revitalization to municipalities, and I think I heard you say the majority of the work for those programs would have been completed by the private sector. I used to be on city council in Brantford and I know we do not do much of road construction in-house. Primarily it is let out in tender and the private sector receives the benefits. In your experience at AMO, is that common throughout Ontario, that primarily the private sector would be doing the construction work that is allowable under these grants through our attempts to battle the recession, over and above what normally would have been given? Is that a fair comment?

Mr Hopcroft: Certainly based on my local experience in the area surrounding my municipality, that is the case. If you want an anti-recessionary impact, putting it into those kinds of capital works that are tendered out to the private sector is a great way to do it.

Mr B. Ward: I think it has been a position of AMO for quite a few years that our infrastructure in Ontario, as well as throughout Canada, through the Federation of Canadian Municipalities, is badly in need of attention. We had the three-tier funding system that was agreeable at the AMO and FCM levels. So you think that this was a proper focus for our government to pay attention to during these tough times.

Mr Harrison: As I have said, every little bit helps. If we are talking about job creation in the municipal sector, roads is at least as good a place to put it as any, if not better than most. With regard to Mr Ward's earlier question, there are places where it is done in-house rather than by the private sector. My experience is that in a lot of the more rural areas where there is not a major urban centre, there may not be the construction firms available locally to do that type of work, and in that type of area you often see the upper-tier government, the county, with a significant construction component in its roads department. In that case, rather than going out to the private sector, the money probably would have been used by the county to hire the necessary help to do the construction work in-house.

Mr B. Ward: And one last question --

The Chair: No, I am sorry, there is no time left. Thank you very much for your presentation this morning. Mr Harrison: Mr Chairman, I wonder if I could take one minute of the committee's time just to take my AMO hat off for a very brief moment and make it very clear that I am not speaking on behalf of my association but on behalf of my municipality. I am very pleased to see Mr Jamison and Mr Sutherland on your committee, and I see that you have Mr Gillies coming in to speak to you later on. Just let me say that from the heart of the tobacco country in southwestern Ontario, my municipality very strongly feels that if the upper tiers of government in this country are going to continue to put confiscatory taxation on tobacco products and, as it appears, attempt to eliminate the domestic industry, then surely you have to find some way to compensate our farmers.

Mr Kwinter: Listen, I have the greatest solution. The idea was to pick the farmers who are growing tobacco and have them fish farm, and when they get finished, they could have smoked fish, which ain't bad.

Mr Harrison: Many of us are already doing that.

The Chair: Unfortunately, as the Chairman, I cannot comment on that, but I thank you for your added comments and for coming and sharing with us this morning.


The Chair: Our next deputation is from the Labourers' International Union of North America, provincial council, Dan McCarthy, in-house counsel.

Our format will continue to be a half-hour presentation. The amount of time you take for your presentation will be subtracted from that half-hour and divided among the parties equally for questions. The party that will begin the next round of questions at that moment will be the Progressive Conservative Party.

Mr McCarthy: Good morning. My name is Daniel McCarthy and I am speaking on behalf of the Ontario provincial district council of the Labourers' International Union of North America. I am in-house counsel with Local 183 of the labourers' union here in Toronto, and we are the largest construction local in North America. The labourers across the province appreciate this opportunity to express our views on the provincial budget.

First, I would like to place our comments in context. The major factor for us, of course, is the severe recession. This is the worst recession Ontario has experienced since the 1930s, and from a construction point of view, it has been devastating. In what should be our peak season, one half to two thirds of our members are unemployed or underemployed.

I spoke yesterday with the person who runs our hiring hall, and of our 12,000 members in Local 183, we are down to -- they have just gone out of province; they have returned to other places, to the Maritimes or west -- approximately 4,000 are out of work, at least a third in Toronto, and that has picked up in the last month. We are still a third unemployed. Those who have been unable to find work have exhausted their unemployment insurance benefits, and this winter when the regular seasonal layoffs occur, many will not qualify for unemployment insurance.

In addition, the major industrial restructuring occurring simultaneously with the downturn in the economy has implications beyond the manufacturing sector. It directly affects construction. One needs only to look at the housing market and the fact that the government has less money to maintain and improve the infrastructure. I would suggest that the housing market is often the weather-vane of the construction industry.

The federal policies also are a part of the context. The major cutbacks instituted by the Mulroney government have increased provincial responsibilities for the public good and decreased its financial ability to meet these responsibilities. I should reiterate that this is a made-in-Canada recession, as we have all heard, that high interest rates and the high dollar caused the recession to hit Canada first.

The federal government has chosen to focus its attention upon the deficit. The deficit is a convenient abstract set of numbers. It shifts the eye away from the plight and suffering of everyday Canadians.

I propose to examine one particular piece of federal legislation, the recent changes to the Unemployment Insurance Act, to show its pernicious effect upon social assistance and our members. I am speaking from experience. I am director of the social services department of Local 183 and, as a service to our largely non-English-speaking membership, we complete their UI applications or, increasingly, advise them they do not qualify.


The usual objections to the changes in the UI have been the increases recently that employers and employees must pay, and a lot of focus in the press has been given to the lack of training which was supposed to accompany these changes in the diversification of the funds.

But there is an impact that was in the act that I do not think anybody has spotted, and I have not seen it in the press or any other form of reporting, and that is that the Unemployment Insurance Act was drafted with the unacknowledged assumption that recessions never occur. It was constructed to be responsive to a degree of unemployment in a particular geographical area and anticipated that the degree of unemployment would be relatively stable in that area. The higher the unemployment, the lower the number of weeks for eligibility and the greater the number of weeks of benefit. For example, when unemployment is under 6%, the eligibility requirement is 20 weeks; the benefit period is 17 weeks. When unemployment is over 10% to 11%, the number of weeks for eligibility is 15 and the number of weeks of benefits is 30. At the beginning of the recession, the figure in Toronto was just over 6% and required 20 weeks to qualify.

At the beginning of the recession, where the eligibility period is at its longest and the benefit period is its shortest, the first people to be laid off when the recession occurs are the most recently hired. Therefore, the workers who are laid off at the beginning of the recession have the least number of weeks worked and will receive the shortest number of weeks of benefits, whereas the workers who are laid off at the worst point in the recession will have the greatest number of weeks of eligibility and will receive the greatest number of weeks of benefits.

This means that when the recession continues to be at its worst, those people who were laid off first are having their benefits expire. The chance of obtaining a job at that point is minimal. Thus they are forced to go on social assistance, whereas the workers with the greatest number of weeks of eligibility who are laid off much later will have weeks in excess of benefits when they will not need them because the economy will recover.

We are now advising our members on how to apply for welfare. We field desperate calls from members who are losing their homes. This places an enormous burden upon social assistance by people who previously never required it. One must realize too that I am speaking for a construction union that is largely seasonal and that having enough weeks of eligibility is a standard way of riding through the off-season.

Therefore, we are very pleased that the provincial budget addresses these issues abandoned by the federal government. Given the reality of the recession and federal government policies and their effects upon construction workers, we agree that the government had to fight the recession in its budget. The NDP had to make a responsible choice that best addressed the interests of all Ontarians. We are quite pleased that the NDP did not abandon its responsibilities to working people, their families and their communities.

In commenting on the budget itself in this context, although we will be focusing our comments narrowly upon the budget initiatives which most affect construction workers, it does not mean that we do not applaud the government's efforts to address the needs and interests of low-income earners, native Canadians, women and visible minorities.

The development of another 10,000 non-profit housing units has a tremendous and positive effect on the construction industry. Building statistics indicate that, for every unit, slightly over two jobs are created. In addition, one must see the initiatives in housing as having a ripple effect on the economy. It creates a demand for building materials for the construction of roads, sewers, watermains, etc. Our members are already benefiting from this measure. It is a bright spot in an otherwise dull housing market.

We also agree that by putting spending power in the hands of the public by not imposing the provincial sales tax on the GST, $470 million will be available for consumers to spend in 1991. This kind of economic stimulus, when coupled with the sustaining and creating of 70,000 jobs and an aggressive anti-recession effort, instils confidence in the private sector. It acts as a catalyst for further investment and helps to level out the worst of the effects of the recession on construction.

Specifically, as you heard from the previous speakers and the municipalities, part of the anti-recession package is road work. This has been of great assistance to our union.

The NDP budget speaks of long-range, sustainable prosperity. The construction industry has long been vulnerable to the boom-and-bust cyclical nature of the economy. This effort to commence long-range planning in which the government can intervene to reduce the effects of a recession will be most advantageous for construction workers in Ontario. We hope that one appreciates sustainable prosperity as a truly important part of this budget.

It was only two years ago that we could not supply enough construction workers for the construction that was going on in the province. The size of the union was expanding. It was not a case of trying to police the various construction sites for non-union members, because we could not supply enough people. A short 18 months later we have an enormous surplus and we cannot take on anybody new.

We are not suggesting that it is the duty of the government to recklessly try to spend its way out of a recession. In fact, we agree that the deficit is modest, especially when one considers the pessimistic figures utilized in projecting the ongoing deficit over the coming years. As you know, and have no doubt heard in other presentations, most of the deficit comes from the financial reality of the recession -- falling revenues, increasing costs in health care, social services and education.

If one considers the Ontario deficit comparatively in terms of total spending, gross domestic product and in per capita terms with other provinces and with the federal government under Conservative governments, the present deficit fares well.

The reaction to the budget overall I would say has been mixed, even at a corporate level. It has been lauded by John Kenneth Galbraith for reviving the economy and accepting the role of government as guardian of the public wellbeing. The Toronto-Dominion Bank expressed guarded support for the Ontario budget and acknowledged its cautious projections for economic growth compared to those of other forecasters. Should the growth be stronger, the budget would be reduced dramatically and quickly.

I am sure everyone has heard the Conference Board of Canada's description of the budget as a confidence booster. But here before you today from the construction industry, and in particular from the labourers -- we hope the view we bring is the view of working people. Our people are hurting. Unemployment is high. Every government initiative in housing, in maintaining and improving the infrastructure and in maintaining the social welfare net and providing health care and education is welcomed.

For many construction workers, the budget has already translated into jobs. We hope the members of the standing committee measure the budget not by abstract numbers, but that they put a human face on the consequences and the human tragedies of the recession. Our members appreciate a budget which attacks the recession, the cause of their suffering.


In conclusion, we would like to thank the government of Ontario for allowing us to present our view on the economic situation at this public hearing. In conversations with our members, it is clear they know that the recession is their enemy. They complain about the boom-and-bust cycles. They would like steady work, sustainable prosperity. They want an economy which is highly productive and socially sustainable. In our opinion this budget has made the proper and reasonable choice. We applaud the government for making the decision to attack the recession.

We recommend that the government stay its course. By providing a reasonable amount of stimulus in the recession and holding the line on spending during the boom periods, it can provide Ontarians, and in particular construction workers, with a more stable existence.

The Chair: Thank you. We have 15 minutes, five minutes for each party, beginning with the Progressive Conservative Party.

Mr Sterling: Thank you very much for coming in front of our committee, Mr McCarthy.

On page 6 you indicate, "The Conference Board of Canada described the budget as a confidence booster and noted that only $640 million of the $9.7 billion deficit consists of new spending." You are quite certain that the conference board has stated that, is that correct? I know Jim Frank has talked about this as an individual, but he made it quite clear that he was not speaking on behalf of the conference board. I know you are a counsel and you would not mislead us intentionally in terms of what you are saying.

Mr McCarthy: I was quoting Mr Frank.

Mr Sterling: Okay. Mr Frank was speaking as an individual, as I understand it. We are having this conference board mixed up with Jim Frank on a number of occasions in front of this committee, and I think it is important that we get that distinction straight. If I am incorrect, if somebody wants to give me some kind of knowledge of which I am not aware --

Mr Sutherland: We will correct you if you are incorrect.

Mr Sterling: I would appreciate that.

Mr B. Ward: Just for clarification, what is Jim Frank's position? What does he do?

Mr Sterling: He is their senior economist.

Mr B. Ward: For the Conference Board of Canada.

Mr Sterling: But he made it quite clear that he was speaking as an individual.

Mr B. Ward: In that opinion column, right? Was it not an opinion column or something?

Mr Sterling: No, it was just to the press, I believe.

Mr McCarthy: It was an article, I believe, in the summer issue of the Canadian Business Review. So I rephrase my comments to say, "Mr Frank of the Conference Board of Canada."

Mr Sterling: Good enough. Yesterday we had in front of this committee a group of workers -- perhaps part of your union; I am not certain. I believe they were from Hamilton, so they would probably not be members of your labour local. But they were very, very concerned, not with the budget, but with Bill 4 and the rent review legislation.

What are your views of that legislation? Do you think it has had any impact in terms of the amount of work your people have been able to get?

Mr McCarthy: We do work in that sector. Our position, and it is a position we have made clear to Mr Cooke, is that reasonable costs -- and by "reasonable costs" we mean those that would affect the integrity of the building -- for example, it is my understanding from speaking with others in the union that a lot of the concrete used in the structure of basements, especially in the 1950s and 1960s, was not as resistant to salt. Our position is that those kinds of costs should be passed on, because if you do not address those in the short term, you are going to take all that housing off the market.

Specifically answering your question, we can live with that compromise in terms of the jobs it will provide. We do not feel the compromise will take away or restrict the number of jobs we get. It may put them out over a longer period of time so that there will not be a mass of renovations all at once, but it will provide steady employment for our members.

Mr Sterling: We have heard from a number of people who are obviously members of the same unions that you are associated with who disagree, but that may be your official position.

In the Ottawa area, which I represent, we have a problem which has been there for some period of time, in that Quebec legislation prevents Ontario workers from crossing over the provincial boundary and having the same status as workers who reside in the area where a contract is being undertaken.

Has your council been attempting to deal with that issue? In effect, what it says is that if there is job in Hull, a resident of Hull has first chance at that job. However, when a Quebec worker comes across to Ontario, there is no distinction between him and a person who might live in Ottawa, if the job is in Ottawa. It causes a great deal of feeling in construction workers of unfairness. Is there any attempt to deal with that issue?

Mr McCarthy: I am aware of the unfairness. Unfortunately, they go a lot farther west than simply crossing over into the Ottawa area.

Mr Sterling: That is where I am familiar with.

Mr McCarthy: My understanding is that our union is addressing it through the provincial building trades council, which is taking action on that. My understanding is that they will be addressing this standing committee at a later date, so they would perhaps be the better organization to address that question.

Mr Sterling: Okay. I think it is an important issue and I urge you to do a lot of work in that area.

Mr Jamison: Thank you for your presentation. I found it very interesting. I would just like to touch on something with you. You seem to recognize in your presentation that there was a major deficit and a limit in new spending. That message has not really got out to the public the way it should, because opposition parties, and one party in particular, would be saying, "Cut back, cut back, cut back," in many different areas. That has been the point of view, especially from the third party.

It is interesting to hear you say that the added spending in this budget, especially the anti-recession and housing programs that are being put forward, have really been a stimulus to your organization as far as providing ongoing employment through a tough time, although your employment is still down, I understand.

Without that input, without that boost -- could you describe to me what position you would be in without the housing starts, without the anti-recession money for roads and construction and so forth?

Mr McCarthy: In the month of May, which is normally a month or a month and a half into the buildup of the construction season, Local 183 was approximately 70% unemployed. Some people were estimating higher, but I think a conservative estimate was that 70% of our members were unemployed. In the two subsequent months we have reversed that, so close to 65% or 66% of our members are employed. The only thing that is really happening in the housing market is the not-for-profit, the co-op.

In terms of the other anti-recession measures, the transportation has had a really good effect for our members. A lot of road crews are building. A lot of private contractors are going again. We are getting calls into the hall.

I am not an economist, but I am attributing the reversal from 70% unemployed to close to 70% employed to those initiatives. I would consider that we would have kept on at the same high, high rate of unemployment had it not been for the initiatives.

Mr Jamison: You talked about the cyclical approach to housing and to construction in general. What you and the people you represent are looking for, and you have said it again in your document and echoed the government's position, of course, is to try to find that sustainable prosperity.

In times that are difficult, I appreciate hearing that you feel it is important for the government to play a role in ensuring where possible that employment is helped and that employment rates are kept up, but in doing all this we have provided the groundwork for what we consider coming out of the recession earlier, and also building that infrastructure. Do you feel the same about that?


Mr McCarthy: I think the building of the infrastructure is critical to construction workers in terms of employment. To use the subway as an example, we tend to build a lot of stops at once and then do not build anything for years. It would seem to me that if construction that is largely publicly financed, such as a subway, was at a very low level during the boom period as opposed to booming with the private development, then in a recession instead of building one stop a year, three stops could be built, but you would maintain a lower level of infrastructure work during the boom periods. That is the kind of thing I was getting at. Those are the kinds of things I think you are indicating, and we are saying, yes, that is important.

Mr Kwinter: Mr McCarthy, what is the relationship of the Labourers' International Union of North America with, say, a union like Local 27 of the carpenters and joiners? Do you have any relationship?

Mr McCarthy: Very peaceful.

Mr Kwinter: But do you have any kind of relationship with them at all?

Mr McCarthy: We just have an agreement as to jurisdiction, who does what in the various industries.

Mr Kwinter: So you are familiar with that particular local.

Mr McCarthy: Yes, very familiar.

Mr Kwinter: I have met them. It is my understanding that they represent carpenters and joiners virtually around the Golden Horseshoe, the industrial heartland of Ontario.

Mr McCarthy: I think District 8 of the Ontario Labour Relations Board is pretty much that.

Mr Sterling: How many are in Local 183?

Mr McCarthy: Right now about 12,000.

Mr Kwinter: What I find surprising is that I met with them, I met with all their executives, I toured their facility up in North York on Signet Drive -- this was just five weeks ago -- and they were absolutely despondent, saying that not only were their workers not working, but that they saw nothing on the horizon, which is really upsetting them. They said, "If anybody is going to work in the construction business, it's going to be the carpenters and joiners." They have to set the forms. They have to have those guys no matter what they do.

They have an apprenticeship program and they said there are people in there, but that they are only in there because they have no work, so they feel they might as well upgrade their skills while they are waiting to get some work. These are people who are allies of yours. They have no reason to tell me something that is not so. They were saying that they see absolutely nothing on the horizon, that there have been no benefits at all to them in the way of public works or government seed money to get their people going.

What I do not understand -- I am not being critical; I just would like to understand it -- is why are they telling me that when you are telling me that you have switched it from 70% unemployment to 60% employment in your sector?

Mr McCarthy: The answer, I think, is very simple. The carpenters are a specific trade. The labourers are a much broader organization. We do sewers and watermains. We do landscaping. We even have a bit of an industrial sector. We do all road construction, whereas carpenters, as you say, do carpentry. We have some carpenters who do the rough form work and roughing in housing and certainly they are still hurting, because there is no private development of housing, so one sector of our union that is doing very poorly is the house building sector. We have 500 or 600 members who work in that and there is very high unemployment in that sector.

I think the answer to your question is that the labourers have a much broader membership and a much broader type of jurisdiction, where carpenters, like ironworkers or steelworkers, have a specific trade. If things are booming in that specific trade, then they do well. We are responding to initiatives in roadbuilding from the Ministry of Transportation in a way that carpenters cannot, so some of our members are getting work, but one of our sectors that is not is private housing.

Mrs Sullivan: I recall your union appearing before the standing committee on resources development on Bill 162 and making some substantial contributions to that debate. I am very interested in your analysis that this budget has translated into jobs already, because I frankly do not see the capital investment at the municipal level in water and sewerage. In fact, in this budget there is no increase over the previous year for water and sewerage, and a real opportunity to lever more capital investment in those areas through the water and sewer corp has been set aside.

I also do not see, from the private sector, the stimulus out of this budget for new capital investment in infrastructure, whether it is building new plant or whether it is expansion of plant or whatever, where some of your people would be affected. Ten thousand units of public housing, or non-profit and co-op, over a period of time is not going to provide sustained work for your members who are involved in the home building sector.

I just do not see why you are so positive about the long-term stimulus that this budget provides. It seems to me that it is not there. Short-term job creation was done through projects that were already on the table at the municipalities, already moving forward.

Mr Christopherson: No.

Mrs Sullivan: Darn right they were.

Mr Christopherson: No, darn right they were not.

Mrs Sullivan: Certainly they were. The municipalities had those projects ready and available to go.

Mr Christopherson: That is not moving along.

Mrs Sullivan: They are over very quickly, and your people will feel the brunt of that.

Mr McCarthy: I am on the board of directors of the Local 183 non-profit housing. Since the recession has occurred -- before, there were many allocations given, as you know, for non-profit housing, but no land in the city was available. We are currently sponsoring a 221-unit building at Duncan Mill Road and Don Mills Road that will be a co-op. Right beside it the operating engineers are sponsoring a 220-unit non-profit building.

The developer who owned that land had already paid all the architectural fees and had gone through the Ontario Municipal Board and had all the drawings for luxury condos overlooking this conservation area. Suddenly the market is not there for condos. They turned to non-profit and said: "You have the allocations. Let's get together. We will give you this land." We have also had feelers for a sizeable chunk of property in Mississauga, in two different sites in Mississauga.

I think what is happening, and I know that other unions are doing the same thing, is that on the non-profit front for the allocations we had we are suddenly getting offers of land from developers who can no longer afford to hang on to it, or the market will not bear building more condos they had already planned.

Mrs Sullivan: I understand that. It has happened in my community as well.

Mr McCarthy: What I am saying is that these kinds of things are providing -- you are right that it is short term, but take a look at what it means to the builder who is now getting 400-plus units built on land that was costing him money and is making a profit at it.

Mr Sutherland: Mr Chairman, just before Mr McCarthy leaves, I have a copy here of the article by Mr Frank. It is called "Frank Talk on the Economy". It appeared in Canadian Business Review, the summer edition. He is highlighted as James G. Frank, vice-president and chief economist, Conference Board of Canada. It also talks about an analysis from the chief economist, and the text is also available on-line from the Conference Board On-Line Service. I think Mr McCarthy's assertion that he was speaking on behalf of the Conference Board of Canada would seem pretty valid by the way this article has been written and how he is identified that way in several ways.


Mr Sterling: Mr Chairman, I raised the point. I think the conclusion you might draw is -- first of all, it is all written in the first person, saying "I believe," etc. There is no statement in the article that the Conference Board of Canada believes the views of Mr Frank.

The Chair: Could I offer a suggestion here.

Mr Sterling: I think it is very important. It is in other papers. I have seen the article.

The Chair: We should phone The Conference Board of Canada and have this clarified later.

Mr Sterling: I think that is a good idea.

Mr Jamison: The truth hurts sometimes.

Mr B. Ward: Before Mr McCarthy leaves, this is kind of off the topic, but I would like to commend Local 183 for the leadership it is showing in retraining and providing skills development for its workers as well as other services. I think they are very progressive.

Mr McCarthy: I appreciate that.


The Chair: Our next presentation is by the Ontario Association of Interval and Transition Houses: Lisa Duggan, vice-president; Trudy Don, executive co-ordinator. We have half an hour. Since you have been here a while, you know the process. The Liberals will lead off on the questions at the end of your presentation.

Ms Duggan: My name is Lisa Duggan and I am vice-president of lobby of the Ontario Association of Interval and Transition Houses.

During the 1990 Ontario election campaign, the NDP developed An Agenda for People, which incorporated into the policy platform many of the demands and needs that people identified and reiterated time and time again to the previous Progressive Conservative and Liberal governments of Ontario. This agenda promised to bring improved changes and renewed hope to the lives of the average citizen.

Clearly, promises and policies need to be secured with finances, and in a period that is being described as a recession, we are told that fiscal realities impact the decision-making abilities of government.

The Ontario Association of Interval and Transition Houses, which is an 82-member provincial organization working to improve the lives of abused women and their children, would like to commend the NDP government on its courageous stand to allow for a greater deficit in the 1991-92 budget.

During tough economic times we believe it is imperative that spending on social programs be increased, not reduced. We are pleased that the NDP government decided to pay less heed to the warnings of doom echoed by the federal government, big business and the corporate world. However, we would like to express some concerns about the budget and the gaps that exist which affect the lives of abused women and their children.

OAITH, shelter workers and abused women recognize and fully understand the fiscal realities of recessionary and non-recessionary times. We have listened to and experienced at first hand the promises made to us by government and then the rationale used to limit spending on those promises on the issue of violence against women.

On January 22, 1991, OAITH presented to this committee a brief overview of the funding history of interval and transition houses, including the recommendations of the standing committee on social development in 1982, the implementation of bail-out and stabilization funding in 1985, the Brian Lowe review of shelter funding in 1986, the five-year initiatives announcement in 1986, the draft of the Ministry of Community and Social Services funding formula and the subsequent development of OAITH's alternative funding formula. For the details of that presentation, we would refer you back to Hansard, and of course we would be prepared to restate our concerns.

We mention it today to remind you that the standing committee on finance and economic affairs, in recommendation 53 of the 1991 pre-budget consultation report, stated, "The funding formula for interval and transition houses should be reviewed with an attempt to institute block funding in 1991-92."

OAITH was pleased to see your recommendation and we believed that future changes in funding for shelters could be possible with the 1991-92 budget of the NDP government. Our hopes were raised further as pre-budget consultations with MCSS, regarding the latest version of the funding formula for shelters, were cancelled until after the budget had been announced. We were told that substantial changes were being considered in this year's funding for shelters. We could only assume from these events, clearly naïvely, that the 1991-92 budget would incorporate funding arrangements that would recognize all the services provided by interval and transition houses.

Block funding for all shelter services has been consistently supported and proposed, in the reports mentioned earlier, for the last 10 years. However, the direction of the province through MCSS policy and practice and the 1991-92 budget announcement still focuses on the same inadequate and insecure funding models. In our 1990 November lobby of the members of provincial Parliament, and in our pre-budget presentations to this committee and to the executive assistants to the ministers -- most ministers have been inaccessible to OAITH; that is why we met with the executive assistants to the ministers -- we pointed out that shelters continue to struggle to provide adequate and consistent services.

One in four women in Canada are being abused by their partners and, as public education supports women's rights to obtain assistance and live a life free from violence, demands on shelter services are diversifying and increasing. The detailed announcement in May of $12 million new dollars was welcomed by our organization, but the demands identified and reiterated by assaulted women and their advocates continue to be unrecognized financially by the government. MCSS has still not rescheduled a meeting with OAITH to discuss the funding formula. Funding for ongoing shelter services is falling far behind the demands for service. Shelters are at a breaking point.

Several municipalities are still refusing to recognize the provincially recommended level of per diem funding, and some shelters are still being forced to limit the length of stays and charge user fees. Approved ministry staffing ratios are low and shelter workers have to work long hours and many hours of overtime to consistently meet the needs of abused women and their children.

When it was announced that pay equity would be expanded in the 1991-92 budget, we expected shelter workers could finally look forward to equitable wages, rather than the present average of slightly over $25,000 per year with very few benefits. We were deeply disappointed.

When the new budget was announced we did not criticize the increase in the deficit, as we recognized the increased social needs of everyone in a period of recession. OAITH realizes that the responsibility of government to financially fulfil everyone's demands is a thankless and difficult task, and we were glad to hear of the expanded commitment to address the issues of wife assault and sexual violence. However, the gap is widening between the services shelters provide and the public commitment to services for assaulted women, as well as between the problems public policy has identified and the actual changing needs of abused women.

Women's lives continue to hang in the balance while government decides if their issue is a priority that should be adequately funded. The assault of women is a human rights issue and money is needed to protect women and give them back their freedom, not study the problem. OAITH has been told repeatedly that funds are limited, but when we hear of new projects being funded, for example, the Hamilton mediation project through the Attorney General's office, the ongoing consultations that lack meaningful action, and a hostel review which will look at hostels funded under the hostel agreement of the General Welfare Assistance Act, which we fear may not recognize the existing inappropriate funding approach, it is difficult to embrace the new budget with enthusiasm. So we are here today not to criticize the deficit, but rather to criticize the lack of response to the stated demands of abused women and their children. Action is long overdue.

The following is only a partial list of the immediate needs that require funding: the financial recognition of all services provided by interval and transition houses as identified in OAITH's alternate funding formula; the removal of services for assaulted women and their children from the GWA Act; the development of new legislated funding of services for assaulted women and their children which does not discriminate on the basis of eligibility criteria; the implementation of pay equity for all interval and transition house staff, based on salary levels comparable to the public service; the immediate increase of the salary levels of shelter workers to $38,500, as stated and prorated in OAITH's alternate funding formula; the immediate increase of the provincially recognized staffing ratios in shelters to address the issue of safety for both shelter residents and staff.

We have not had time to even touch on the other areas affecting funding which address abused women's safety, for example, the criminal and family law court systems, community counselling programs, children's programs, housing, education, economic support systems and so on. For more details of this list we would refer you back to the 1990 OAITH backgrounder report which you all received in November. We thank you for this opportunity and look forward to participating in meaningful consultations and discussions about the 1992-93 budget.


The Chair: We have seven minutes per party, beginning with the Liberal Party.

Mrs Sullivan: I appreciate this brief. It is direct, to the point and very clear. I wonder if you would expand on two areas. You have spoken a lot about the funding formula on the operating side in particular. One is the capital needs you are facing and how they are being addressed; second-stage housing as an issue. Once again, moving back to the operating side, the specific effect you are feeling because of the lack of pay equity action. How you are seeing those needs addressed, if at all?

Ms Don: I will tackle this one, the second-stage housing issue. I take it there is a great confusion about the term "second-stage housing," what is meant by it. We did some research throughout the province and there seemed to be as many interpretations as there are such projects. They range from an old house with two or three separate apartments with common living space, etc, to multistorey apartment dwellings where there are a few apartments set aside for battered women and children who come out of a shelter. As a result, we found it very difficult to come to some common understanding of what there ought to be in place.

We did develop some recommendations of what at least we felt should be there, but as such there really has not been any common research on the best way to go. Personally, I have some concerns about racing ahead with developing second-stage housing without knowing what the ultimate goal of that is. If it is simply another place where a woman and children will be temporarily until she is uprooted again and moved into some other accommodation, then I cannot support that. If it is only for those women who need longer ongoing support and counselling, I think it is a great idea. But my fear is that because of the housing shortage and the shortage of beds within transition houses, this "second-stage housing" will simply be used as the next stopgap before the woman finds permanent housing.

Ms Duggan: In terms of pay equity, there is a lot of talk about proxy comparisons. We have concerns about proxy comparisons because, for example, they would take as a proxy comparison a man working in counselling and then they would look at the woman working in the office with him doing counselling per se and compare their two salaries, and then see the difference between those two salaries. They would up her salary to the level of his salary, and in terms of shelter workers, they are looking at the difference between her salary and his salary instead of looking at the direct comparison between shelter workers and his salary, for example. We have real concerns about that. It is also not clear what they are going to be using right now as a comparison, so there has to be more discussion around that.

But at this point, shelter workers are really underfunded in terms of their salaries, they are working long hours and a lot of overtime, and it is really unclear about what is going to be happening with pay equity. There has not been any mention in terms of the budget of shelter workers per se, and what we are asking for is real comparisons to public service and being consulted, identifying what those comparisons should be. But we do not support a proxy comparison because it does not bring shelter workers' salaries up to an adequate level.

In terms of capital needs and how they are being addressed, I pulled out the announcements. In terms of the breakdown of the announcement out of the new budget, we are not clear exactly how it is going to be broken down further. So we have this broken down into special enhancements to approve access and shelter services ongoing. The money to improve access to shelters is over $4 million and the money for ongoing services to shelters is close to $2 million. The demand on shelters is incredible at this point. Increasing access to shelters is really needed, but the problem is there is no money for ongoing services. You have at least double the amount for improving access to shelters, yet less than half of that is for ongoing services. It is going to really put an increased demand on shelters which we are already facing as it is.

In terms of capital needs of shelters, there are lots of services at shelters right now that are not being funded and are not recognized. That is why I keep referring back to the ultimate vision. As I said in the presentation, we still have not met with MCSS about the funding formula and the breakdowns of those moneys even further, and we have real concerns about the money shelters have right now to actually operate. I know you are talking about capital costs, but there are several costs in shelters not being funded that need to be addressed.

The Chair: Two minutes.

Mr Phillips: In terms of the demands placed on your services, is there any effect by a recession or is that irrelevant in terms of the demands? I just do not know.

Ms Duggan: There is always a question asked, "In recessionary times, do you see an increase in violence against women?" But I would like to repeat, and you have heard us in our presentations before repeat, that the root cause of violence against women is a power and control issue and it has nothing to do with stress, anger or recessionary times.

Shelters, for the past while now, have certainly been operating at full capacities, and overcapacities in many situations, and you often hear those kinds of questions about whether a recession causes an increased demand on shelters. The demand on shelters is constant. We certainly get a lot of calls and that sort of thing because, in terms of recessionary times, their partners may be home more. So women's abusive partners are around more to be more abusive towards them because they are not working. Women do not get those breaks from their partners at all and so they are there a lot more. But that does not cause the violence and certainly the demand is consistent.

Mr Phillips: What reason does the Ministry of Community and Social Services give you for not meeting with you? Ms Duggan: They have not answered that question. We asked them at a recent meeting in Toronto where they were in terms of the funding formula and when they will be meeting with us, and that question was not answered.

Ms Don: One of the concerns voiced to me by some of our members is that because of the hearings on the budget, some of this new money that had been announced is being held up until the end of the hearings, which would also explain why a few of these new projects have been started. I have not got the answer to that, but that concern has been raised.

Ms Duggan: So I guess our question would be, are the announcements of the new budget being held up until after these hearings?

Mr Phillips: I am shocked that you cannot -- the speech from the throne was very much around openness and accessibility.

The Chair: Thank you, Mr Phillips, your time is up.

Mr Jackson: Lisa, Trudy, welcome again. I appreciated your brief. Although I was a little late, I tried to get here on time to catch all of it, but I have had a chance to scan it as well. I am concerned about the fact that most of the provinces in Canada currently have under review or in place an adjusted funding formula to recognize the needs -- there are a lot of provinces moving in this direction, but we do not seem to be making much progress here in Ontario.

Although we have seen some improvement in staffing funding rates, modest ones, they are not as great as they are in some other provinces. Can you give any reason our relative position to other provinces may not be as good in terms of positioning on this issue?

Ms Don: I am not quite certain. I also have another hat, which is the chair of the steering committee for a national organization. I am not certain that in fact in other provinces the shelter workers are being better paid. In fact, we had a report from Alberta that they think we are wonderful.

Mr Jackson: I am sorry, Trudy, I did not mean simply the better payment. I know, in terms of per capita access rates, other provinces have done better, or the uptake on the national program was a little better in other provinces; recognition of the need for double staffing, after hours or in evenings, I should say.


Ms Don: The only real advantage we have found is that some other provinces have gone to block funding. My question continues to be that when I hear from other provinces that they have been able to do that under the cost-sharing agreement with CAP -- which has always been the excuse I have been given by the provincial government, that it cannot do it because under CAP cost-sharing you cannot have block funding which does not apply any kind of eligibility requirement. That is why, as an organization, we have been asking for some special legislation over the years.

Under the legislation, I do not know why this cannot be done under cost-sharing, but that is something I would like to find out. It is the same question I asked back in 1981, so I have not got the answer yet. But I do know, for instance, Newfoundland has gone to block funding a long time ago. Quebec, I gather, is not part of the cost-sharing system with the federal government for its welfare programs. I know Alberta has gone to some kind of block funding system. Now, British Columbia is in bad shape, but Manitoba is not doing that much better either.

I would not necessarily say we are falling behind other provinces, but I do not understand why this province has not been able to go over to some kind of legislated block funding. That I do not know.

Mr Jackson: Certainly we have indicated our support for that and we are hopeful we can stabilize and change the formula, which are the two issues, recognizing the broad base of costs, including not simply supervision of children but the psychometric requirements of some children who have themselves been the victims as well of family violence and are resident with the mother in an interval or transition home.

In my own region of Halton, both Mrs Sullivan and I are aware that we had made applications for a second transition home because of the waiting lists. I have a letter from people in our transition home that says they feel they have been misled by the Minister of Housing, because they have been led to believe they should apply under one program and then told that they were ineligible after they had spent considerable moneys preparing for that. Are you hearing that this has occurred in other areas within the province, or is this unique to the Halton experience? They are very angry that after a year's work, they are now back at square one. We are starting all over again now, going to a different minister, when we were told by Mr Cooke, the Minister of Housing, that that was the ministry to apply to.

Ms Don: It is hard for me to comment. If they originally applied under Project Haven, maybe they missed a deadline. That was a federal CMHC proposal.

Mr Jackson: No.

Ms Duggan: That is not something we have heard across the province.

Mr Jackson: Okay. I figure from your umbrella organization you would be able to pick up on that. Maybe it is unique to Halton. There are some level-2 disappointments in Hamilton and other communities that we have been monitoring, but certainly not a proper interval and transition house.

The statistics you shared with a similar committee to this two years ago were that between 10,000 and 12,000 women are turned away. Given the increase in the last few years in publicity, advertising, just exposing the criminal activities of family violence and the reporting requirements, are those demand figures still consistent? I certainly know we are not seeing the expansion in the beds to meet anywhere near that, but certainly I wanted to get a sense from you if you are getting the same sort of demand figures.

Ms Duggan: There are certainly increasing demands on shelters and there is never enough space for women in shelters. I think the other things that shelters do also need to be recognized. Specifically, I am thinking of non-residential counselling as well. My other hat is that I work as a front-line shelter worker in Hamilton, and we see a real demand for non-residential counselling in our crisis lines as well. So I think shelters do more than just give space to women and their children. There is ongoing counselling, there are connections to other services, advocacy, all kinds of things, and there certainly is not enough space in shelters and also not enough money for the other services that shelters provide.

Ms M. Ward: Thank you for your presentation. You recognize in your brief that public education has led to more demand on your services. I would like to ask you what you feel the effect would be on your client base out there if we had followed the advice of some of the opposition, the Progressive Conservative Party and some of the business figures, such as Conrad Black, I guess we could name, and eliminated the deficit or held it at $3 billion. What would be the effect on community services? I think we have to recognize also that there are a lot of other services out there that are the front line in identifying the need for your services and directing people to them, where they are available.

Ms Duggan: Our position, as we stated earlier, is that we do not criticize the deficit. Actually, we would probably say the deficit is not high enough, because there are so many services that shelters provide that have not been recognized in the new announcements. We are not going to say you should have maintained a lower deficit. That is not our position. Our position is that it should have been a higher deficit because there are so many services that need to be provided for women.

In terms of education, there is a constant need for ongoing education about these issues. Society needs to take a responsibility to educate everyone that this is a power and control issue and that things need to be done to stop this, because wife assault is a human rights issue. But there are lots of services that are not funded, and we would prefer to see a higher deficit.

Ms Don: If I may just add to that, I think among the many other issues are also social need issues such as day care, housing, upgrading, retraining, etc, which are all the issues that keep women in the position they are in and why they cannot get out of violent relationships.

We certainly recognize that these are all issues that need to be worked on. I would like to think that at least my grandchildren will not have to deal with transition houses. I know that in my lifetime it will continue to happen. If we do not look at all the other issues that affect the position of women in our society, we are going to continue to build new transition houses, which surely is not the answer.

Ms M. Ward: That is what I was speaking of there, of people's service providers in my riding. Neighbourhood service agencies and so on have told me that frequently someone comes to them looking for housing, in a housing registry and so on. That is not their only problem. Very often their need for housing is related to the violence issue.

Ms Duggan: As we mentioned in our brief, there are lots of issues that we did not discuss in this. I would refer you to our backgrounder report from the November 1990 lobby. All of the issues are addressed in there.

Ms M. Ward: I just want to leave time for a question by someone else, but there was one of your recommendations I wanted to ask you about. In the third one, you are talking about "funding that does not discriminate on the basis of eligibility criteria." Is that related to income levels?

Ms Don: It is related to income levels; it is related many times to the discretion of the welfare administrator. In some cases it will be decided that because the woman has $500 in her savings account, she is not eligible.

Ms M. Ward: Or her husband or her mate has a high income --

Ms Don: That is right, the husband may have a house. To us, to base the services for a woman whose life is in danger on whether she is eligible is totally ridiculous.

Mr Sutherland: Again, thanks for your presentation. It is very thoughtful and directly to the point. I have a very special friend who works in one of these shelters and keeps me aware of what the problems are, and the demands, and the fact that they are constantly growing. You made reference here to the fact that you have talked to executive assistants to ministers and that most ministers have been inaccessible. You are talking specific individual meetings, are you?

Ms Duggan: Yes. After the November lobby we set up meetings with ministers of cabinet so that we could meet with them specifically, all the ministries that affect the issues of women abused by their partners: Housing, MCSS, the Attorney General, the Solicitor General, etc. They have been inaccessible. We have met with, I believe, three ministers out of many ministers who cover the issues of violence against women. So what we had to do was meet with the executive assistants prior to the budget so that we could talk about our concerns and reiterate some of our concerns, because they have been inaccessible.


Mr Sutherland: Talking to the local people, while there is general support for the increased funding that has been announced, the question I keep getting asked is, how are we going to access that locally in terms of the distribution of the funds? I think we have heard that and a couple of the other areas, I believe, with the announcements generally in the public service about pay equity and getting their money out there. Is that what you are hearing: The money is there, but you are not sure where it is going to meet the staffing needs?

Ms Duggan: Yes, absolutely.

Mr Sutherland: In some ways, then, you are reserving judgement until you see where that goes, how it distributes, whether it goes to deal with staffing needs or other issues.

Ms Duggan: We can reserve judgement, and I will keep reiterating over and over again that there is not enough money, yes, absolutely, because we do not know what those breakdowns are in the specific areas.

Ms Don: I think that refers to my question earlier that we did not know whether in fact some of these breakdowns were not being announced until such time --

Mr Sutherland: I should say I do not think that would be a deliberate thing, to withhold the money. I do not think that is to our advantage.

Ms Don: I do not know how that works.

Mr Sutherland: I do not think it is to our advantage not to get the money out there. I think we want to get it out there as quickly as possible to help as much as possible. You are still looking for block funding, though.

Ms Don: Absolutely.

Mr Sutherland: You said you believe there are two other provinces. Newfoundland has it and Quebec, most likely, will be going to it?

Ms Don: Yes, Quebec. But I believe Quebec is under a different cost-sharing arrangement with the federal government. I do not know. Again, that is what I heard. Alberta has some kind of cost --

Mrs Sullivan: Alberta does not get CAP, does it? Alberta is not funding under CAP, I do not think.

Ms Don: No.


The Chair: Our next presentation is the Hamilton Auto Club, CAA Ontario, Catherine Newell, director of government and public affairs. If you could begin, please.

Ms Newell: Good morning. I do work at the Hamilton Auto Club, but I am here representing our 1.3 million members for all the clubs of Ontario that are affiliated with the Canadian Automobile Association. In Ontario we go under the heading of CAA Ontario for public policy purposes.

At the outset, we in CAA Ontario recognize the recession that Ontario is experiencing and the deficit the government was faced with upon assuming office. However, taxes still comprise the largest single segment of gasoline prices. For regular unleaded gasoline, the Ontario average was 12.5 cents per litre in federal tax and 15 cents per litre in provincial taxes. Combined federal and provincial revenue shares from gasoline were 59% of the pump price when the pump price was 46.7 cents per litre. These figures were prepared by Canadian oil markets and emergency planning division, EMR Energy, in its revenue distribution breakdown report for February 1991.

With the budget, as of midnight April 29 the provincial gasoline tax increased to 13 cents per litre, with a further increase to 14.7 cents per litre to take effect 1 January 1992. The wellhead share is 3.7 cents per litre, for a combined total of 16.7 cents per litre in provincial share at this time, increasing to a total of 18.4 cents per litre January 1, 1992.

The unfortunate political reality is that government regards gasoline taxation as a cash cow and ignores its responsibility to ensure that within its jurisdiction the tax burden is fairly distributed and not concentrated on a particular group. The automobile should not be viewed as a revenue producer for the purposes of contributing to the government's general coffers and should not be lumped in with the "sin tax" group of alcohol, beer, wine and tobacco. However, continued increases in gasoline taxes are punitive and an insidious attack on all those who must drive their cars because they have no viable alternative method of transportation.

There are fundamental differences in the three categories of product and they should be treated differently by the tax system. With respect to alcohol and tobacco, both are luxury items. Neither are necessary for the maintenance of a strong economy or personal wellbeing.

Prior to the budget the government had suggested that it might implement a "conservation" or "carbon" tax on gasoline. The reason for using these terms is simple. The most exalted argument for gas taxes is environmental: higher taxes will encourage people to use their cars less, thus conserving energy and the ozone layer. Sure enough, the Treasurer indicated in his budget speech that he raised the price of the gas tax in the name of the environment.

This is simply not an appropriate approach to taxation of the motorist and to energy conservation. It penalizes everyone who is required to use a car, including those for whom there is no public transit or no practical alternative.

Across-the-board taxes of gasoline are regressive and violate any standard of fairness. They quickly become a burden to seniors; single parents, 85% of whom are women; the working poor, the lowest-income car users; and, indeed, a majority of middle-class Ontarians who are obliged to use their cars to get to work.

Gas taxes have little beneficial effect on the environment. Only if these taxes were outrageously increased would there be any real change in people's behaviour that would impact on the environment. As reported by Terence Corcoran in the Globe and Mail:

"A rule of thumb used by a Canadian oil company says that every 1% increase in the price of gasoline produces a decrease of one tenth of 1% in consumption. When Ontario's gasoline taxes rose 1.7 cents, an increase of about 3% in the price, the reduction in consumption can be expected to be 0.3%. Since Ontario consumes 34 million litres of gasoline a day, the reduction in gasoline use could decline about 100,000 litres. As a result, there might be the equivalent of 2,000 fewer fill-ups a day in Ontario as a result of the first tax increase. Environment impact: not measurable."

Approximately half the pollution generated by motor vehicles is produced by 10% of the fleet that is improperly maintained and tuned. Most, although not all, of the pollution-generating cars are older cars. New cars on the road, those with new, cleaner and more efficient engines, generate only small fractions of the automobile pollution in the air. If the real objective is to clean up automobile emissions, and 10% of cars cause 50% of pollution, then efficiency dictates that 50% of the pollution could be sharply reduced, if not eliminated, by targeting the 10% who are causing it. In many cases, a simple engine tune-up could eliminate most exhaust pollution.

Instead, the government should be encouraging private sector initiatives like marketing an electric car or ensuring firm government targets aimed at eliminating carbon pollutants. In this type of area regulation and enforcement work best. For example, it was regulation that produced better engines, cleaner fuels and less auto pollution, not higher taxes on gasoline.

Higher taxes on fuels, by taking money away from consumers, could in fact cause pollution if fewer new and cleaner cars are bought. Gas taxes are simply a means of raising revenues. If the government thinks it is resolving environmental problems associated with automobile emissions with this increased tax, it has not done its homework. If its object is simply to raise revenues, it is deceptive to the public to say it is doing so in the guise of the environment. Without the label of the environment the imposition of this additional tax would be much less acceptable to the public. Furthermore, we have an excellent example where the Liberals, when in government, imposed a tax in the guise of the environment and misled the public into thinking that the moneys raised were being used to find environmental solutions to the scrap tire dilemma.


As of June 1, 1989, the Liberal government implemented a tire tax of $5 per tire on all new tires sold; provincial sales tax and the GST are added for an actual cost per tire of $5.75. The tire tax brings in an estimated $48 million per year. To date, the revenue raised from this tax is in excess of $100 million. However, only $17 million has been used for scrap tire projects. When the tax was imposed the government indicated the moneys would be spent on paying for research into recycling programs and the safe disposal of tires. Unfortunately, the tax is going into general revenues and has not in fact been dedicated to finding the environmental solution for recycling and management of the safe disposal of tires. When he was Leader of the Opposition, Bob Rae said, "What's dishonest about what the Liberals did is they used the environment as an excuse to raise the tax and then failed to deal with the environmental problem."

We recommend that all tire tax revenues raised to date should be placed in a trust fund to be dedicated to scrap tire management only and the government should provide a full accounting annually. If the government fails to dedicate the tire tax to pursuing an environmental solution and fails to place the moneys already raised into a trust fund with full accountability, we would strongly urge that this tax be discontinued.

In our pre-budget consultation with the Treasurer we strongly urged the government not to increase the gas tax or place a conservation tax on the motorist. It is totally unreasonable that motorists should be confronted with an increased burden, especially when a car cannot be considered a luxury but an essential and primary component of the transportation system and a mainstay of the economy.

The considerable increases in federal and provincial gasoline taxes of recent years have had very little impact on consumption primarily as a result of the essential nature of the automobile. A recent survey indicates a tax-weary public is no longer willing to accept them. Further, increasing gasoline taxes only compound the difficulties faced by businesses in competing with their American counterparts. We indicated that recognition of the vital role of the automobile necessarily rules out the imposition of those punitive taxes on auto use.

The burden of increased gas taxes came at a time when the recession we are experiencing is being felt by all sectors of the economy and is affecting employment opportunities for many. In addition, the government will implement an amended gas guzzler tax to take effect August 1, 1991.

The Treasurer's recent change to the gas guzzler tax from the tax as originally proposed appears to be designed to simply raise revenues. Whereas the original tax would have applied to about 10% of all new vehicles in Ontario, a $75 tax will be applied to any car that consumes between 6 and 8.9 litres per 100 kilometres, which includes 90 per cent of cars sold in Ontario. Most smaller cars, including the Honda Civic, Toyota Tercel, Chevrolet Cavalier, Plymouth Laser and Ford Festiva, fit into this category.

Though the amendments to this are seen by the Canadian Auto Workers as much less damaging to the bottom line of the auto industry in terms of how it would skewer the sales of certain models, the government has failed to understand the environmental problem, if the intent of this tax was to reinforce an environmental message.

We feel the appropriate way to conserve fuel and ultimately protect the environment is not to impose a tax on consumers when they purchase a vehicle, but to regulate fuel efficiency standards that must be met over a period of time by the car manufacturers. The trap of market-based solutions to environmental problems is that they raise revenues and give governments more money to spend but do not solve the environmental problems.

In the CAA Ontario submission to the Royal Commission on National Passenger Transportation, the following statistics were presented: 94% of all personal travel in Ontario is done by road; it is estimated that Ontario drivers travel about 71 billion kilometres every year; virtually all trips made by other modes -- plane, train, marine -- are intermodal, involving some use of the road system.

Road maintenance and construction should have been given a higher priority. A significant capital commitment that will increase road capacity and improve declining arteries is absolutely critical. In order to undertake this task, there must be a workable funding mechanism which will not penalize any particular group of users. The present method of funding roads is both unfair and ineffective.

It is unfair in that users pay a far greater amount in taxes than is spent on our roads and highways. It is ineffective in that the road system is deteriorating despite these excessive taxes. A new funding mechanism must be established that distributes the cost of improvements to the system equitably among those who benefit.

For the 1990-91 year, the Ontario government collected $2.7 billion in revenues from direct vehicle user taxes -- fuel, licences, permits -- and $1.3 billion in revenues from sales tax for new and used vehicles and parts. The Ontario government will spend $1.8 billion in road expenditures.

Truck traffic is responsible for an enormous amount of wear and tear to the surfaces of our highways throughout the province. One large truck can cause more damage to road surfaces than 29,000 cars. We encouraged the government to examine the contribution that the trucking industry is making through the province's taxation policy to the construction and maintenance of our roadway infrastructure.

Better public transit is necessary. But it is only a part of the programs and it is far too simplistic to suggest that transit alone can reduce congestion. In most Ontario cities, the principal form of public transit -- the bus -- travels on crowded arterial roads. Even commuter rail lines, which rely on roads as a passenger feeder system, are negatively impacted by plugged roads. There must be a balanced approach between public transit and the use of the automobile which continues to be the most favoured choice of people to transport themselves to and from work and for shopping, recreational and social activities.

Innovative steps to reduce gasoline taxes would help sustain and increase the positive impacts of the motor vehicle on our economy. These long-awaited measures would also reflect the first vital steps to tax reform. This would, in turn, send clear and positive signals to the marketplace that would lead to further economic wellbeing. We believe strongly in the principle that gasoline taxes should be dedicated to road building and reconstruction.

Another tax we feel would be absolutely inappropriate to impose would be road tolls. In the spring of 1990, the federal government suggested the implementation of toll roads to help raise $13 billion over the next 10 years to upgrade the national highway system. We feel this is totally unjustified as they collect $4.5 billion annually from gasoline taxes in Canada. At the same time, they spend nothing on roads in Ontario.

We strongly urged the federal government to use this money for the upgrading program and stated that it could set aside this tax money in less than five years without putting in road tolls. This punishes motorists by making them pay twice for the same commodity, in this case a road. If road tolls were implemented, as the major user group, motorists would have paid for this road by their gasoline taxes and, further, by road tolls. To consider such a tax would be unjust. We strongly urged the Treasurer not to consider implementing toll roads.

The hub of our tourist industry has been and will continue to be automobile travel. Canada's primary foreign tourism market is the United States and the primary means of transport to our country is the private automobile. Over three quarters of all Americans who visit Canada arrive by car. Virtually 100% of all travellers use our roads and highway system during their visits.

The federal policy for the development of Canada's tourism potential, Tourism on the Threshold, states that two thirds of our international receipts are derived from American visitors who stay one or more nights. It states that in 1988 Canada's market share of outbound US tourists hit an all-time low. Furthermore, it states that the US market is by far our largest and even modest growth there means huge income gains for the industry. It also states that an improved highway system would be worth $10 billion to $17 billion to users in time saved.

The national highway policy study for the Canada steering committee's report on phase 2 also recognized the importance of an improved roadway system for tourism. It stated: "An improved national highway system would likely attract increased foreign, mainly American, tourists to travel in Canada. As well, some Canadian who might otherwise travel in the United States could be prompted to increase their travel in Canada. The impacts of increased tourism to the hospital industry could be substantial."


Not upgrading and improving Canada's roads is one of the major deterrents to Americans who would otherwise drive to Canada as tourists. Statistics Canada reported that in 1989, the first year after free trade, Canadians made 54 million visits by car to the US, an 18% jump over the previous year. However, our American neighbours did not have the same enthusiasm about visiting Canada. Their auto visits declined by 4%, or approximately one million. This is simply an extension of the downward trend seen since 1987, just as the United States dollar premium entered into a steep decline. In terms of Canadian dollars, this made purchases in the United States significantly lower-priced with each successive year, as reported in Travel-Log by Statistics Canada.

In fact, during 1989 there were close to 25 million more Canadian auto visits to the US than American visits to Canada. If automobile travel is the hub of tourism in Canada, it follows that gasoline is a necessary commodity and plays a critical role in tourism.

Statistics Canada reports that the relationship between the prices of gasoline in Canada and the United States in the late 1980s was significant. In 1979, Canadian gas was actually cheaper. By 1989, the price gap was the widest of the decade. Canadian consumers paid 49.8 cents per litre of gas in 1989 compared to just 31.3 cents in the United States.

The Canadian auto traveller thus had a pressing reason to cross the border in 1989. Assuming an average fill-up price for gasoline in Canada was $20, the same volume of gasoline was costing only $12.57 in Canadian dollars in the United States.

When gas prices have been significantly higher in Canada than in the US, Canadians have had a powerful incentive to travel in the United States and Americans have had good reason not to travel in Canada. Today Canada is in third place as a foreign tourist destination for Americans, behind Mexico and overseas destinations, yet the federal and Ontario governments continue to practise fiscal policies that punish motorists for using an essential commodity, gasoline. Over the last few years, the disparity between Canadian and American gasoline prices has continued to grow, fuelled by our higher taxes. The solution is to reduce gasoline taxation to an equitable level which recognizes that in Canada transportation is not a luxury but a necessity and stimulates Canada's $22-billion tourist industry.

The Chair: We have time for one question per party beginning with the New Democratic Party.

Mr B. Ward: Part of our efforts in this budget to battle the recession included a number of capital work projects, primarily focusing on one aspect, road construction, as we talked about in previous presentations. During these tough times, would your organization support the initiative to rebuild our infrastructure? As you mentioned the importance roads have in our transportation links and system, is your organization supportive of this initiative during these tough times?

Ms Newell: Absolutely.

Mr Kwinter: I read your submission with interest and noticed there was one glaring omission. You made no comment on the whole issue of cross-border shopping and the relationship of the increase of gasoline taxes, which means higher gasoline prices. Do you have any comments on that?

Ms Newell: Certainly, as far as we are concerned, cross-border shopping is being driven by such a thing as the disparity between the gasoline prices as one issue, as I mentioned in here. It is nothing for people to drive across. In Hamilton, the community I come from, the statistics are coming out showing that perhaps it is much harder hit than we even begin to realize, with people thinking nothing of travelling over to the United States and filling up there because it is so much cheaper, given the gas tax difference, and doing their additional shopping as well. We feel that the fiscal policy, where we are continually raising gas taxes as a means of raising revenues, is hurting shopping and causing people to go across the border.

The Chair: Thank you for your presentation this morning.


The Chair: Our next presentation is by Penny Bethke, president of the Co-operative Housing Association of Ontario.

Ms Bethke: I would like to thank the committee for the opportunity to talk today about the needs of Ontarians for the kind of affordable housing co-operatives can provide.

The Co-operative Housing Association of Ontario was formed four years ago to represent the interests of housing co-operatives at the provincial level. Our organization is composed of the 12 resource groups that develop co-operatives across the province, the seven co-operative housing federations that operate in various communities across the province and a staff association that is formed in Toronto at present.

There are several things in our brief I would like to draw your attention to. We were very pleased with the kinds of initiatives taken in the Treasurer's budget this year, and in particular I want to highlight three things.

The first is the new initiative for a 10,000-unit program for non-profit housing. This is the first new provincial housing initiative since the announcement of the Homes Now progam in the 1988-89 budget. In addition, the government looked at ensuring that the target of 30,000 units established in the Homes Now program would be achieved in two ways. First of all, it extended the deadline for the commitment of those projects from 31 March of this year until 30 September. That would enable those projects that perhaps were having difficulty with their municipal approvals to meet the deadline of the program. In addition, for those projects that could not make even a 30 September deadline, those units were reallocated to other projects that could go ahead in that time frame.

Second, we would like to draw your attention to the fact that the increase of 39% in the budget of the Ministry of Housing, from $549 million to $764 million, is to accommodate the beginning of the payout of the subsidy requirements that have come as a result of the Homes Now commitments that started a couple of years ago. Generally speaking, while you may announce the units in a budget this year, you will not see an eventual impact on the provincial housing budget until subsequent years. In addition, over time, because the government subsidies draw from these programs and this bridge subsidy is repaid to the government by non-profit co-operatives, there is a way of reducing the cost over time.

We are also looking at a situation in the current recession where the production of 20,000 units of non-profit housing will represent close to 30% of all the new housing starts in Ontario. This is a unique position for us to be in, but certainly reflects the current significant impact of the recession in the housing market.

Third, the 1991-92 provincial budget provided a specific mechanism whereby the financial gains from the sale of provincial lands would be dedicated directly to the purchase of other housing sites. Previously, the proceeds from such sales or leases went into general revenues that might have gone for dealing with issues related to road construction and other infrastructure spending, but we are pleased to see that the proceeds of these sales will now more be directly applicable to affordable housing sites.

We have seen that there have been significant public benefits from these 1991 budget decisions by the extension of the Homes Now deadline, the reallocation of units and the announcement of 10,000 new units. We believe this will go a long way to dealing with the problem of renters who are paying more than 30% of their income on rent. The statistics coming out of a report the Co-operative Housing Association did jointly this year with the Ontario Non-Profit Housing Association showed that nearly a third of all Ontario renters are paying more than 30% of their income on rent, and that across Ontario we have more than 100,000 households on waiting lists for one of the various forms of non-profit housing.

The other important public benefit of the announcement of 10,000 additional new, non-profit housing units is that they will create approximately 22,000 jobs in construction and housing-related industries. As I as the executive director of the Labour Council Development Foundation am aware, currently there is an extremely high unemployment rate in the construction trades and this kind of initiative is very timely. Also, by investment in non-profit housing, there is a long-term public asset created that will continue to provide affordable housing at cost to Ontarians over time.

We believe the government will save money over time that it might have had to spend in areas such as social services and health care by dealing with people's housing problems, so that the problems of the homeless and of people exacerbated by inadequate or unaffordable housing will not result in an impact on other parts of the provincial budget.

The other important feature of these kinds of initiatives in non-profit housing, and particularly in housing co-operatives, is the supportive communities that are built across the province. We have a strong track record in communities all over Ontario, and this track record has been validated by a recent evaluation, by Canada Mortgage and Housing Corp, of the benefits of co-operative housing across the country.

Of course the timing of such initiatives is extremely important. Taking a major initiative in housing during a recession period has meant that the government has been able to take advantage of the fact that land and construction costs have been reduced during this recession. As well, lower interest rates have reduced the eventual cost to government of subsidizing the creation of this housing. The ministry also has recently taken an initiative to centralize the borrowing requirements of non-profit housing projects across the province, and this too has resulted in cost-benefit savings.


Finally, by continuing to take major initiatives in the field of non-profit housing, the government is supporting a delivery network that has taken 20 years to build across the province, so we have experienced developers of non-profit housing who can go on working with the architects and representatives of the construction industry to build homes for Ontarians.

As I mentioned earlier, CHAO and the Ontario Non-Profit Housing Association completed a report this spring that concluded that 27,000 units of additional rental housing are needed immediately to raise Ontario's vacancy rate to 3%, and an additional 14,000 to 16,000 rental units will be required annually for the next 20 years to meet the needs of a growing population and changing demographic trends. The largest part of that growth is expected to take place during the next 10 years, gradually declining as we proceed into the next century. While some of our future rental housing requirements will be provided by the private sector, increasingly market forces will erode the financial viability of such housing production. The government's completion of the Homes Now program and the commitment of 10,000 additional units in this budget represent solid progress in the right direction.

If we are going to be able to respond successfully to the backlog of need as well as the future housing requirements of a rapidly changing housing market and population, new ways of developing housing will need to be found and new delivery structures built. The Ontario non-profit co-op housing sector is participating actively in the consultation initiated by the release of the Ministry of Housing's green paper, A Housing Framework for Ontario.

Our new but quickly maturing third sector in housing is extremely innovative. As part of its submission, CHAO will be proposing ways of reducing the supply subsidy costs for new, non-profit housing by lowering the cost with innovative mortgage instruments, such as the index-linked mortgage program we use at our federal level, purchasing land at an earlier point in the development cycle when it is cheaper and generally creating a stronger co-op sector infrastructure that will allow us to operate more efficiently and more effectively.

We believe the significant expansion of the overall percentage of rental housing stock supplied by non-profit housing is inevitable. The task will be ongoing and will require the commitment of substantial amounts of public assistance. Currently the alternative is only inaction. Unfortunately, neglect is also a very costly option. In addition to the obvious human costs that can be witnessed daily in Ontario's overburdened food banks, the high price of indifference is already too evident in the human suffering that is resulting in the increased need for social assistance and medical care, and is straining other areas of the provincial budget.

The rewards for meeting the challenge are great. Non-profit housing permanently creates a stock of affordable housing. It strengthens communities and, in the case of co-operatives, offers direct control over shelter to a portion of the population that cannot afford private ownership.

The Chair: Thank you. We have approximately six minutes per party, beginning with the Progressive Conservative Party. Mr Stockwell.

Mr Stockwell: No questions.

The Chair: Now we will move to the New Democratic Party.

Mr Sutherland: I guess I just wanted to know what type of direct impact you think this is going to have on the other social service agencies in the upcoming year.

Ms Bethke: That is very difficult to quantify. We have tried to look at what kind of research could substantiate those kinds of benefits, because all we have is what is generally referred to as anecdotal evidence. We know of situations where families move into housing co-operatives and are put in a position where a member of the family is able to enter the workforce or is able to return to the workforce because of the kind of confidence he or she has built by volunteer involvement in the housing co-operative, skills he has learned, the fact that there might be day care available in the community. Those are the kinds of stories I hear all the time, but it is not a quantifiable thing.

Mr Sutherland: Would you suspect, though, that if people are living in co-op housing or non-profit housing units and their rent has been reduced to less than 30% of their income, these people generally being low-income people, the other money is not likely to be saved but is going to be spent? Their money is going to stay in the economy and is going to be circulating through the economy?

Ms Bethke: I would turn the argument around. You will hear people, I am sure, coming to you from the food banks and from the social service agencies who will tell you that if they could resolve the housing problem people face, they would not be seeing them at a food bank because they would have enough money left out of their disposable income to spend on food. I am not even talking about the other economic impacts; I am talking about basic needs that would be met. The same is true for social service agencies. It is a consistent theme that we in the non-profit housing sector have been hearing over the past few years, that if we could address people's problems with the affordability of their housing, much else would be resolved: family strains that result from money problems, a number of issues.

Mr Sutherland: And they are likely to spend that money in their local community, because these are not the types of people who are doing the cross-border shopping trips?

Ms Bethke: I do not know that I would go that far, but most assuredly, low- and moderate-income people do their shopping closer to their home. I think there have been statistics about that kind of thing before.

Mr Jamison: We are here today and we are hearing from very specific groups about specific issues and interests. I would like to come back to the budget itself and how it has affected you and your organization. How significant will the amount of money that was put forward in the co-op housing area be in effecting the type of change you feel is needed in the province to provide housing at an affordable price to people? In conjunction with that question, how important do you feel that investment is at this point, during a recessionary period?


Ms Bethke: There are two things, from our point of view, and I will go back to the statistics I quoted earlier. In The State of Housing in Ontario report that we did this spring, we identified that there was a backlog of need of 27,000 units. The government's current initiatives with the 10,000 units and the Homes Now units and the federal-provincial cost-shared program should go a long way to addressing the backlog. In addition, given the growth in population we expect to see, in particular in the next decade in Ontario, we will need 14,000 to 16,000 new rental units every year just to deal with that growth. So if the government is able over time to increase its commitment to a 20,000 unit per year production level for non-profit housing, that will go a long way to addressing that need for new rental housing in the province, because as we have indicated, we feel that we probably will be the key providers of new rental housing forms.

Housing is an expensive commodity to build and finance, and we use the same financial institutions and the same builders that someone building private sector rental housing does, and there is a reason no new private sector rental housing is being built. It is too expensive to build. You cannot rent it for what it costs to build. It has to be subsidized in some fashion. Given that particular situation, I do not see any other vehicle that makes sense to the government but the investment in a long-term public asset that would justify the commitment of substantial government resources at this time.

The other issue you talked about was the recession, and again, a recession creates a certain dynamic in the market that we have seen. Suddenly, land prices have fallen, for the first time in four to five years. My own organization has been offered development opportunities in communities where we could never have hoped to build non-profit housing before because we would never have been able to afford the land, or the builder who had control of the land would have been more prepared to build a condominium than he would have been prepared to build a non-profit housing project. Since condominiums are a very soft market right now, we are, as they say, the only game in town.

So we have seen a reduction in land costs; we have seen significant reduction in construction costs. My own staff were telling me about doing the tendering for the concrete foundation work for a project that was larger than a project we did 18 months ago, and the tenders have come in substantially below what we had 18 months ago. So the costs of construction are in fact being reduced somewhat during this recessionary period.

At the moment, we also have some of the lowest interest rates we have seen in the last five years. That reduces the cost both of building the housing and subsidizing the housing, which is a major concern, obviously, of the government. All of those things make this a very critical time for the government to make an intervention. They will never get more bang for their buck than they will now.

The Chair: Thank you, Mr Jamison. The Liberal Party.

Mr Phillips: Thank you for the brief. With the budget I think there has been a lot of focus on the deficit, but it is much more than the deficit. I think many people are concerned that the revenue side of the budget for now and in the future is in some jeopardy and the economic wellbeing of the province is in some jeopardy. Others say this is a great budget for the future of the province.

I think what is going to really impact your organization is not this budget, but it is going to be the future of the economy, in two respects. One is that the demand for your services will increase if the economy does not pick up, and second, the ability to fund your projects will drop. I am interested in your organization's comments about the economic impact of this budget on the next few years. Do you think it is the right budget that will ensure your future, or are there some suggestions for improvement?

Ms Bethke: We are Ontario taxpayers too, so these are concerns we all share, and we recognize that it is important to look at the long-term future of the delivery of non-profit housing. We do not want to see a massive program for a few years where the tap would be turned off in a few years' time as the costs of the program escalate, and it is why we have been putting our collective energies to finding innovative solutions.

We know that financing these programs is one of the most expensive aspects of the program, and anything that can be done to reduce the financing costs of the program would be very helpful to the long-term future. This is why, at the federal level six years ago, we convinced the federal government to create a new mortgage instrument, an index-link mortgage that would be an inflation-sensitive instrument that might eliminate the inflation-risk premium that forms a portion of the interest rates we were paying when we borrowed money. We have, in fact, demonstrated with the government that the index-link mortgage for the federal co-operative housing program is a less expensive method for it to finance our programs than the previous type of conventional financing it was using. And they have continued that, so that is one area where we feel that, over time, we can find a way to reduce the cost to the government.

As well, we think that creating a significant stock of non-profit and co-operative housing across the province can only strengthen the co-operative and non-profit sectors.

Mr Phillips: My question was, as you look at the budget for the future of the economy of Ontario, are you saying this is the right budget that will strengthen the economy of Ontario?

Ms Bethke: Yes, we believe so. The interesting thing about building non-profit housing is that it has some significant immediate results in terms of job creation. It offers long-term benefits in terms of creating a stock of affordable housing that will, we feel, ultimately reduce the demand on the government to provide services in other areas where it cannot expect to recoup some of its initial investment by having a stock of affordable housing and by having a program that pays back some of the subsidy dollars the government has given it over the years.

Mr Phillips: The reason I raise it is that I think only time will tell on the budget, and I am anxious to have people's opinion because I think we may be here a year from now, two years from now, probably talking with you again.

Ms Bethke: Certainly. Presently the Ministry of Housing represents about one and a half per cent of the total provincial budget. That is a very small portion of the resources of the government going into our area, but we feel we could have a critical impact on other areas such as social services and health.

The Chair: Mr Stockwell, I will allow your question. The format for the last two and a half days has been that the parties in rotation take their time in that rotation and do not waive it, but I will allow your question.

Mr Stockwell: Okay, thanks. I did not realize that. It is not really a question. I am following up on a question that was asked by the previous member. In any studies I have seen, it seems that the co-operative housing operation tends to build units at two to three times more cost than the private sector would build them. We have seen a few studies that indicated you are grossly over costs on a lot of your projects, and the shortfall is obviously picked up by the government, through mortgages, etc.

Whether or not it is a good budget, it seems to me that we are sucking money out of the economy to pay for inflated housing costs, and it would seem to me that it would be better leaving it in the private sector, allowing them to build the co-operatives on their own for considerably less than what you would do it for, and then it will be less money or less taxes.

Ms Bethke: I am not sure if you understand how our program works. We can only build a housing unit up to a budget limit that is called a maximum unit price. As an example, in Metro Toronto it means we have to build a three-bedroom town house for under $170,000. If the private sector is building three-bedroom town houses for under $100,000, I would be happy to find out how they are able to do it, but our costs are well below what the private sector would be producing, and in fact all of our units are built by private sector builders.

Mr Stockwell: I understand that. Maybe I have mistaken you for a different group. You are the Co-operative Housing Association of Ontario.

Ms Bethke: Yes, and I must say that municipal non-profits and private non-profits work under exactly the same rules. There is a budgetary limit.

Mr Stockwell: What about a two-bedroom in Toronto, or a one-bedroom apartment?

Mr Bethke: I guess the amounts would be closer to $120,000 to $130,000 a unit, so if anybody in the private sector is managing to beat that price, we would be happy to work with them to find out how they are managing to do it, but those are the budget limits.

Mr Stockwell: But I see them selling now for those kind of dollars, and there is profit built in.

Ms Bethke: In Metropolitan Toronto?

Mr Stockwell: Well, GTA.

Ms Bethke: There are different budget guidelines outside of Metro Toronto in the GTA.

Mr Stockwell: So you are suggesting that you are very competitive in the costs of construction and in the project unit costs themselves.

Ms Bethke: Absolutely, and the private sector builds our units.

Mr Stockwell: On a tendered basis.

Ms Bethke: On a tendered basis.

Mr Stockwell: I have not seen that. Have you done studies to show that your construction costs in developing these projects are competitive with the private sector costs? I have read all your briefs --

Ms Bethke: We have to operate within limits that are self-evidently less than what the private sector is doing, and I can only conclude, since there is not a lot of new construction of private rental housing being done, that they cannot to it for the price that the non-profit and co-operative sectors can do it.

Mr Stockwell: Did you ever think that there is no private rental housing being done because of rent control?

Ms Bethke: Yes. They have no rent control in British Columbia, and they have no major new rental housing construction.

Mr Stockwell: I am talking about Ontario.

Ms Bethke: And I am talking about an economic environment and an economy that could conceivably be supporting the construction of new rental housing. They have no rent control in British Columbia, and they have no new rental construction either. Rent control is not the issue.

Mr Stockwell: So you are suggesting that if rent control were not on, that you would still see, in those boom years, no rental housing built.

Ms Bethke: Absolutely.

Mr Stockwell: And why is that?

Ms Bethke: Because of the financing. Building of housing is an expensive thing to do, and you require some form of government subsidy to do it. The government has tried a variety of private sector initiative programs that have been demonstrated to cost the people who have to live in those projects more over time. We have done a comparison of a project that was built on Bay Street with one built at the same time in the co-operative program, and the rents in those units are higher and the government subsidies are higher.

Mr Stockwell: I guess this is a never-ending discussion. I fundamentally disagree with you, and I guess that will just be the way it is. I do not think the co-operatives are particularly inexpensive; in fact, I think they are more expensive. Any study I have seen has indicated they have cost more money than your typical private sector development. If you could show me a study saying otherwise, I would be really interested in seeing it, but frankly, in all the years that the co-operatives have been talking, I have never seen one.

The Chair: Thank you for your presentation this morning.

This committee is adjourned until 1:30 this afternoon.

The committee recessed at 1143.


The committee resumed at 1341.


The Chair: Good afternoon. I think we can begin our hearings with the United Senior Citizens of Ontario Inc, Jane Leitch and Edith Johnston. Welcome to the committee. What we normally do is have a half-hour for each presentation. If your presentation does not take that long, we divide up the time for questions at the end.

Mrs Leitch: Thank you. We have given everyone a copy of our presentation, which will be relatively short. We are hoping for a lot of response and questions.

I am Jane Leitch, president of the United Senior Citizens of Ontario Inc, and my associate is Edith Johnston, treasurer of the organization. We represent approximately 300,000 seniors from across the province, some of them in organizations and clubs and some as individuals.

We thank you for the opportunity of meeting with this panel and making our presentation today. Seniors are very concerned about some of the issues in the proposed budget, and today we would like to address three of them that we have chosen as our priorities.

The first one is financial. The cut in income tax for people on lower incomes is certainly to be commended, but seniors on fixed incomes continue to fall farther behind. It is often said that seniors today are better off than they ever were. These are the ones you see out in the community. The others cannot afford to be there. Over 40% of the seniors in this province receive less than Statistics Canada's declared poverty line, and the shocking part is that 77% of that group are single, elderly women. The maximum assistance at present is $891.88 a month, or $10,702.56 a year for a single person. It is extremely difficult to live on that amount, especially with the high cost of housing and the lack of affordable housing. Many of our seniors are really struggling to survive. We feel that you must address that issue.

As are all consumers, we are uncertain about the future of health care in Ontario. Although billions of dollars are allotted to provide needed services, much of that money is now being spent on surveys and advisory committees, and the results seldom lead to productive legislation. I myself have sat on a couple of committees that have met and spent a lot of money, and nothing has happened a year and a half later. Certainly we feel that is a lot of wasted money that could be put into health care.

Dental care for the elderly has been neglected too long. The cost of dentures or needed dental care should not add to but should, we feel, prevent deterioration in other, more expensive health areas. The United Senior Citizens of Ontario Inc is on record as supporting the recommendations of the Hicks committee on dental care. This report states that, according to available fiscal and human resources and manpower, dental treatment for the elderly should be provided on the following order of priority: Gains-A recipients; guaranteed income supplement recipients; seniors with income equivalent to the GIS plus 15%; and finally, all seniors who are registered with OHIP.

What happened to this report? It has been out since February 1989, and we would like to see some action. Some of these people in homes are a desperate state. We support the planned reform for long-term care. However, we need action now. The projected plan is up until 1996-97. That is too long for seniors to wait; some of us may not make it.

One of the resolutions in our convention is the need for consumers to be aware of the costs of their health care. It is suggested that everyone, most importantly seniors, should receive a printout in detail of these costs once a year. This week we heard a proposal for making use of our health cards for this information. It is hoped that the government will follow up on this. We think it could save money if many people realized how much is being spent for them. It would also act as a cross-reference to make sure all these services are really being provided.

Although the budget speaks of funds being provided to improve transportation, there has been no special attention to the needs of northern Ontario. The people up there are in serious trouble with all the cutbacks. Many older adults require trips to urban areas for health and other services, and are often required to stay in hotels overnight because there is no means of transportation for them to get back that day. This results in a financial burden and often neglect of health because they have to depend on neighbours or friends and they will just let their health deteriorate and try to remain independent. We feel if there were some form of transportation it would alleviate a lot of the isolation and things that happen in the north.

Your government supports the idea of seniors' independence and the concept of remaining in their own homes. This is only possible if they have access to services and do not become isolated. We would respectfully submit that school buses could be modified at very little cost so that during the day they could be used to transport seniors to appointments and social events. We understand that about 200 new buses are put into the system every year. Why could they not be modified before they were put in? We urge you to act on this as soon as possible.

We would now like to respond to questions.

The Chair: We have approximately eight minutes per party, beginning with the New Democratic Party.

Mr Sutherland: Interesting, your submission focusing in on dentures. The staff in my constituency office certainly wholeheartedly support you in that and feel that if we could somehow get dentures for many people, they would have a lot less work to do. That seems to be their greatest trouble when trying to help constituents in my riding.

I am just wondering if you have any sense of what the numbers are of seniors who need dentures but cannot get them.

Mrs Leitch: We do not have it across the province. In Simcoe county they did a survey which showed that more than 50% of the people in nursing homes need and do not have access to dental care. Many of them, we feel, would not necessarily be in those homes if they could remain able to eat regular food and have some self-dignity. A lot of people are isolating themselves and becoming health hazards because of the lack of dental care.

Mr Sutherland: I was wondering if you had any general recommendations, besides the buses and what you said about modifying the school buses, for improvements in transportation for seniors.

Mrs Leitch: Do you want to make any comment on that, Edith?

Mrs Johnston: I would say that two years ago transportation was not the important issue within the seniors movement that it is today. One of the reasons it has become an issue now is that there have been so many cutbacks in transportation, but also, I guess, because there are probably more and more seniors wanting to live in rural areas and needing transportation. This is for shopping as well as visiting relatives, and the biggest complaint that we have from seniors is that they cannot go a distance and come back that day. They cannot get up at 8 o'clock in the morning and get on the bus at 9 o'clock and come back at 8 or 9 o'clock that night after a visit. Particularly for health reasons, if they are going to the nearest big town for some kind of treatment or for a visit with a specialist, they are just not going to do that if it means booking into a motel and staying in a motel.

Of course, the other issue that came up with transportation was the high cost of insurance, which meant that a lot of seniors who were helping to drive seniors around were not able to take out the insurance. So transportation and issues surrounding transportation have really become big issues within the seniors movement.


Mr Sutherland: I forgot to ask this morning of the co-op housing people, but I was just wondering what the status is there, given that people are on fixed incomes, the housing situation for seniors.

Mrs Leitch: We need more, that is for sure. There is not affordable housing. One of the statistics that is shocking to us is that many of our seniors are living on food banks because they are having to pay for the high cost of housing and they have little money left to eat on. In fact, talking to the director of the food banks in Metro Toronto, 4,000 applied for help. That is a shocking statistic, that seniors must live on food banks, basically because of the high cost of housing.

Mrs Johnston: One of the things we really, really have to keep in mind about the housing situation is that no matter how elderly seniors get, if they can afford housing, they can stay in their own housing and have some services come in. But there is a tendency, if they can afford housing, that as they grow older and become a bit frailer they end up in institutions, which we really have to try to stay away from.

Ms M. Ward: I certainly agree with you on your point about housing, and your other points also. I find that in my riding I have a very large number of seniors, and about two thirds of the entire population there lives in rental accommodation. One of the most disturbing situations is when you meet someone who is living in constant fear that he is not going to be able to afford his accommodation. I know a number of people like that, particularly widows who are living on pensions, and not just widows, but couples also. They have been there for a number of years and they do not want to rock the boat.

I have a couple of buildings in my riding right now where people are being asked for increases which are not going to be approved -- I am quite certain you are aware of the rent control legislation. They are being asked for 15% and 20% rent increases and asked to sign the lease with that, and of course it will go to rent review. People are afraid they are going to be evicted and they do not want to rock the boat, particularly women alone. I think you would probably concur that with seniors there is a predominance of women.

Mrs Leitch: Yes, 77%.

Ms M. Ward: I notice when I visit nursing homes, that it is -- well, 77%. I was going to say three quarters.

I wanted to speak about the transportation system too. Is the northern health travel grant of benefit there?

Mrs Leitch: That just applies to mileage.

Ms M. Ward: Not accommodation to stay over.

Mrs Leitch: There is assistance for mileage within 200 kilometres, or now they have dropped it to 100 kilometres, with the need for doctors' appointments and so on, but that is only for mileage.

Ms M. Ward: I see.

Mrs Leitch: If they have to stay overnight or all those other expenses --

Ms M. Ward: They are on their own for the cost.

Mrs Leitch: They are on their own.

Ms M. Ward: I know that in my riding, which covers two municipalities, there are fortunately service agencies that run transportation to doctors and so on, but people have to book that beforehand. I suspect that the supply of that service is probably very uneven across the province, is it?

Mrs Leitch: Very much so. It is also curb to curb in most cases, and a lot of people cannot get to the curb.

Mrs Johnston: You talked a little bit in the beginning about income and what seniors can afford. We in the USCO attend a lot of conferences and conventions where naturally the seniors are in the minority, although they are supposed to be the ones who are making the decisions. It is other people, business people, who are talking about housing or health care, whatever it is. We really have to keep stressing the fact that the senior who is visible is not the senior we have to look after. There is now becoming this statement that is being made at all these conferences, "The senior of tomorrow is going to be so much better educated, is going to be so much better off." You get off on that talk and you begin to forget that there are all these invisible seniors who are not well off, and due to medical research they are going to be living longer and are going to be more frail. We really have to keep that uppermost in our minds, taking care of those people.

Ms M. Ward: As to your organization, where you say you have 1,300 clubs, your comments reminded me of something I was thinking of when you started your brief, the immigrant seniors. They are often very isolated.

Mrs Leitch: There are a lot of immigrant clubs that belong to our group. They tend to stay within their own circle of friends, but they join the USCO as a club. Each member joins individually.

Ms M. Ward: There are probably a lot out there who do not belong to clubs.

Mrs Leitch: There are a lot. We have a lot of individual members, but there is no doubt we are missing a lot of the ethnic population, although with anything we do, every senior in Ontario gains the benefit of it.

Ms M. Ward: Keep up your good work.

Mrs Leitch: We are working on behalf of all of them, whether they belong to us or not.

Mr Phillips: I appreciate your thoughtful brief. I am interested in your comments on one of the ones you mentioned, the long-term care reform. I have a big interest in it myself. My interpretation of where it stands now is that the previous government announced its plans and then the new government studied it for about eight months, and essentially it kind of reintroduced the same plan that was there before but it has taken eight or nine months of looking at it. That is my own interpretation. You people are very knowledgeable in this area. I would be interested in your comments on the proposals and any thoughts you would have for the committee.

Mrs Leitch: When the Liberal government first came in it brought in A New Agenda, which was quite a few years ago. It was discussed and rediscussed, and there were consultations and we made sure our members were at every consultation all across Canada. Then the minister responsible for senior citizens' affairs changed and A New Agenda was shelved. A couple of years later the Liberals came out with the new Strategies for Change for long-term care.

Mr Phillips: Right.

Mrs Leitch: I have been on an advisory committee. We spent a lot of time talking about it. I do not know how productive it was. They were supposed to have gone to consultation a year ago in the fall and the committee has been on hold for a long time. Now they have brought out another redirection for long-term care and I understand there is another one coming out this summer.

We are just confused. We have been surveyed to death. We have been consulted to death. We do not think all that money needs to go out on all those papers and all those consultations. We would like to get on with it and do something. What is really frightening is that they hired all these service access workers a year and a half ago and they are paying them and they have not been given direction yet. They are to get to know their neighbourhood. How long is that going to take?

Mr Phillips: That is my understanding. There are 14 offices around the province.

Mrs Leitch: Sure; 14 offices but 140 other support workers for those offices.

Mr Phillips: Yes.

Mrs Leitch: This is a lot of money.

Mr Phillips: The long-term care reform that you support is what?

Mrs Leitch: We think it needs changing. We think a lot of money has been spent foolishly. It might not cost us more money if it were reorganized and if we knew how much it cost. That is our point about wanting to know how much it costs the government on our behalf. We think we as seniors do not always use the money wisely either, but we do not necessarily know what we are doing. We do not get any -- how much is being spent on our behalf? Let me rephrase that.

Mr Phillips: Strike that from the record.

Mr B. Ward: Or what you meant was --

Mr Phillips: It must be a misprint.

Mrs Johnston: I guess the point we are stressing here is the money that is spent on these surveys and advisory committees and papers and papers. Really and truly at the last three or four conferences or conventions that I have been to seniors have got up at the PA system and have said this so many times over: "Let's stop. Let's start doing this. Let's put long-term care into action without all this other expense." It is time now.


Mr Kwinter: From your remarks I get the impression that the number one issue as far as financial viability for seniors is concerned is housing. Is that your problem?

Mrs Leitch: Probably it is most important. We put it first because everything hinges on it. On the amount of services provided, the new theory is to keep people in their own homes, but the services have to be there for people to remain in their own homes. We think a lot of people are inappropriately put in health care institutions when, if the services were provided -- it all ties in with finances.

Mrs Johnston: It certainly all ties in.

Mrs Leitch: Yes, but there is more than that. There is the social isolation that is going on. That is happening.

Mr Kwinter: When you talk about these invisible seniors, can you just tell me a little bit more about why they are invisible?

Mrs Leitch: Because they cannot afford to buy the clothes to go out socially. They do not have dentures. They feel inferior. They are becoming second-class citizens. They are not that visible majority that we see, that everybody says is doing fine. They are people who probably had little education, had little opportunity to save any money of their own. A lot of them are women whose husbands' pensions, if they ever had them, died with them.

Mrs Johnston: There are people who have been at the poverty level for probably a long time, and probably as a younger woman or a woman in her 50s who was not able to get back into the labour force at a decent wage, and then goes into retirement with a lower pension, no Canada pension or a very little one. Through being poor and living at the poverty level, they lose their self-esteem, their energy, their ambition to want to be different. They just get stuck in a rut somewhere and really they do stay invisible. Even though there might be a seniors' club down the road that they could be going to, they are stuck in front of a TV or just drinking their tea. There are an awful lot of them in our society today, but because they are invisible, we are not always thinking about them.

Mr Kwinter: I assume a high proportion of them are women.

Mrs Leitch: About 77% of the people on subsidy are single older women.

Mr Kwinter: What proportion of all seniors are invisible?

Mrs Leitch: Forty per cent are living on or below Statistics Canada's poverty line. It is frightening, is it not?

Mrs Johnston: The media itself portrays the senior who travels, the senior grandma and grandpa who have the telephone to phone long-distance and all this. We get psyched into thinking that this is what life is about, that this is what is going on out there, and it is not.

Mrs Leitch: Many of them cannot afford telephones and they cannot afford newspapers and they do not get them because they just cannot afford the cost. It is important to eat.

Mrs Johnston: That whole thing comes too from what they could afford before they were a senior. They went through the Depression when long-distance telephone calls were right out of the question. They are still thinking that, even in retirement, even if they were able to make the odd long-distance call. They do not, which really tends to isolate them even more. They are not able to get out to be influenced by other seniors. Maybe we are not able to do the research and the outreach to them where we are always reaching them. They are the hardest people to reach.

Mr Runciman: I may be characterizing your recommendations unfairly, but it seems to me that most of what you are suggesting here is going to cost taxpayers additional dollars.

Mrs Leitch: Not necessarily.

Mr Runciman: I agree with you in the sense that you have talked about dental care, and there may be some offsetting savings, but you cannot put a number on those and neither can I.

One of the major concerns about the budget of the current government is the fact that we are running in the neighbourhood of a $10-billion deficit. I guess I would like to know your views and the views of your organization with respect to areas where perhaps this government and future governments can address the concerns of your organization with respect to the people who are living below the poverty line currently, but there are many seniors and others in society who are benefiting from government, if you will, who are not in need of government assistance. I know that in my own community my dad refuses, for example, to accept benefits from the Ontario drug benefit plan because he has an income where he does not feel he should. He has friends who are in a much better financial position than he is who take advantage of the Ontario drug benefit plan.

We could look at OHIP as well, and the universality of OHIP, where people who are the other 60% of seniors, many in society, who are benefiting from so-called free medicine, free health care in this province. You are concerned about the future viability of health care, as I am and as many people are. I am wondering about your views on universality, if you have any views about the idea of a deductible in health care, for example, like any other insurance policy, those kinds of things that can bring some fiscal sanity back to the health care system.

I believe the way we are going now, if we do not take a look at those kinds of options, which are perhaps not politically attractive but bullets that have to be bitten at some point in the future -- I believe it would be very helpful if your organization took a look at them and passed judgement on them as well.

Mrs Johnston: You look at dental care. If all those seniors had good dental care and they were able to eat properly, they probably would not have some of the health problems they have, where the money goes to dental care and is saved in other areas of health care. That is just one little comment I have. I am sure you have something else. I have some other things to say too.

Mrs Leitch: I think on one of the things you alluded to, the high cost of living and the high taxes, the GST and so on, a lot of seniors come from a generation of people who sort of looked after themselves, and we feel that running into a high deficit is putting the government's hands into the pockets of our grandchildren. We are very concerned about that. We feel the government spends a lot of money doing things that are less productive. As we said some of these meetings and advisory committees and so on, if it were spent on some of the services, it would not be any more money; it would be redirected money. We do not think the things we are asking for need new money. We are asking for there to be a better look at the money there is.

Mr Runciman: I appreciate that and I agree with you that there is a lot of waste in government in delivery of programs, etc. I guess in terms of the bigger picture, the question of universality, for example, is one that I think it would be helpful to this government, and other political parties as well, to have your views on and how you feel it can address -- the health care budget represents a third of the provincial budget and it is growing.

Mrs Leitch: Right. We know that.

Mrs Johnston: We have to retain universality. There has to be a way that we retain universality. There probably are different things we can be doing, and I think we can start being more careful of how money is spent. Also, I do not know where you would draw the line as to who can afford it and who cannot, and where government is going to make the decision as to one person being eligible for something and another person not being eligible. I am sure that in retaining universality, we have to assume that our people who are well off to pay for something, pay for it. They do not always want to indicate that they are paupers and have to be using services free.

Mr Runciman: The reality is it does not work that way.

Mrs Leitch: You referred to dental care. We gave you some priorities there that we agree with. The people who need it worst should certainly be looked after first.

Mr Runciman: But your ultimate priority is universality.

Mrs Leitch: The USCO stand is the ultimate. We feel it makes second-class citizens of those who cannot afford it.

Mr Runciman: My only comment is that I think your views and the views of others in society would be perhaps increasingly helpful to all political parties if you took a look at some of the tougher questions with respect to getting a handle on costs for government, rather than the idea of additional dollars.

I was listening to a radio show the other day where a gal was talking about introducing a new sport to Canada, and the interviewer said, "What kind of chance of success do you think you are going to have in getting this widely accepted across Canada as a new and popular sport?" She said, "It depends on how much money the governments are going to give me to promote it." That seems to be a growing illness in this country, I believe, where people look to government for virtually everything to assist them, even promoting a sport.

I am not trying to be critical of your organization. I am saying that I think all of us in this society have to take a fresh look at these things, and a realistic look at what we can really afford. We are all going to suffer in the long run.


Mrs Leitch: We certainly do not want to be a gimme society. We do not want to be asking for things that are not our share, but when we hear that there are all these many people on food banks, seniors living on food banks, and there are people in institutions who have no dental care so they have to remain there because they cannot look after themselves and eat and keep up their health, then we have to speak out on their behalf.

Mr Runciman: But I think you can be helpful by speaking out in the sense of saying: "Sure, I think all of us are concerned about those matters, but how can we fund that? How can we make sure that those people are adequately addressed?" rather than, for example, very wealthy people in society getting free drugs.

Mrs Leitch: Our organization is an organization of volunteers. All of them are volunteers. Throughout the many years that USCO has been around, we have never accepted any kind of government funding for our programs. However, we realize that times change. Times are changing, and we in USCO are changing our thoughts about how we have to do things and we are looking now at the fact that in the future we are going to have to find the ways and means of doing a little bit more research into some of these things and quite likely in the future we are going into a little bit more on how the government is spending the money and what kind of funding there is out there and who should be looked after and whatever. But in the meantime, user fees are not part of our program. We do not want to see user fees. We want to keep universality. Non-universality in a health care system creates a system for the rich and a system for the poor, and the United States is a very good example of that.

Mr Runciman: We could debate this one all day.

Mrs Leitch: We said many years ago, when the old age security was going to come in at -- was it $40 a month? -- that the country could not afford it, and then I am sure they told Tommy Douglas we could not afford medicare. We have been able to afford it, and we are going to have to keep on trying to afford it.

The Chair: Thank you for your presentation this afternoon. Our time for your presentation is up.

Mrs Leitch: Thank you very much. We hope that you will consider some of our suggestions. You are all going to be seniors. We look forward to some positive results from you.

The Chair: What I am hoping for is a little bit of equity in this.

Mrs Johnston: I would like to tell you that, besides treasurer of USCO, I am the editor of our newsletter, and I know that our New Democratic Party does get our newsletter. I just wonder if the Liberals and the Tories might each like to have a copy of our newsletter.

Mrs Leitch: And I do have a few copies of our brief, if anyone would like to pick those up. These are the copies that have been presented by USCO.


The Chair: Our next presentation is from the Ontario Hotel and Motel Association, Diane Karabinos, executive director.

Ms Karabinos: It is Karabinos.

The Chair: I am a little out of practice. I usually do a little better than that.

Ms Karabinos: It is all right. I have always waited to hear how it is pronounced. It has been fun. I have two boys in baseball, and sometimes to hear the sport announcers and what they did to those names made for good jokes.

Mr Stockwell: You should see how they are pronouncing Mulroney these days.

Ms Karabinos: I believe it.

The Chair: Then you probably would have appreciated the first day of school with all of the teachers trying to figure out all of the kids' names and how they are pronounced.

Ms Karabinos: Very much so.

I must apologize. I know you all have a brief, and there is a scratched-out item in there. As I was preparing it, I put a couple of thoughts down that I was going to expand on, but after reviewing the number of pages, and knowing how much time you have to sit here, I decided not to add them to my presentation.

I would like to first of all thank you very much for giving me the opportunity of addressing our industry's feelings and concerns about the recent budget, but also I would like to tell you a little bit about our organization.

The Ontario Hotel and Motel Association is a trade organization which represents over 1,200 members who own and operate large and small businesses in the hospitality industry. These industries are hotels, motels, taverns, restaurants, resorts and lodges throughout the province. The association membership employs over 45,000 people, whose numbers increase during holidays and special seasons. We recognize the importance of working together with the tourism industry and join our efforts with our colleagues under the umbrella of Tourism Ontario to help improve this industry.

Although the announcement was made after the budget, we were very pleased and excited when Peter North, Minister of Tourism and Recreation, announced the commitment and establishment of the Ontario Tourism Education Council. This will provide opportunities in our industry through job apprenticeship, national certification standards, training and education and the promotion of hospitality awareness.

We were disappointed, however, that tourism was not mentioned or supported in the recent budget. Tourism means jobs and revenue. Ontario tourism operators are burdened with taxes: fuel, airport, transportation, property and liquor. Compound those with the GST, PST and the Ontario health tax, plus other proposed taxes on our industry, and it makes tourist operations a nightmare of paperwork.

Hundreds of tourism and hospitality businesses, both large and small, have been brought to their knees by this recession, wiping out countless millions of dollars in personal and family investments while crippling the entrepreneurship which has sustained development and growth in our industry. In the recession of 1982, the small business person was helped. In this recession, one that is deeper and longer than most people dreamed -- and it is not over yet -- the small business person has become a non-entity. It must be remembered that not only are employees people, but employers are people too.

Our industry has traditionally provided meaningful and productive employment and steady incomes for hundreds of thousands of Ontarians, and particularly for women, youth, aboriginal peoples, new Canadians and visible minorities, in greater numbers than in any other sector or industry in our province. Many of them and their dependants are now suffering the hardship of permanent or indefinite layoffs and reduced available work opportunities. There must be a recognition of the vital economic importance of the Ontario tourism and hospitality industry to the economy of the province.

We find that Canadian consumers are going to the US for goods because of price differences. The cross-border shopping greatly affects the hospitality industry as well. This is causing economic pain and in some cases bankruptcies for domestic retailers in border communities in Ontario. Canadian shoppers, in order to benefit from the 48-hour visit, are opting to stay in US hotels and motels so that they can bring additional goods back across the border. The occupancy on weekends of border cities' accommodation properties is down everywhere. This means that the hotels are losing money, retailers are losing business, jobs are decreasing and the government's tax revenue is diminishing, and it would appear that our tax policies are self-defeating. When people continue to shop across the border, it becomes a part of their routine, part of their life. Routines are difficult to break. We are people, but we are creatures of habit. How long before we convince them again to shop Canadian and utilize our own resources?

Sunday shopping, mandatory service training, minimum wage increase, off-premise sales, pay equity, wage protection, sin tax, employee health tax, environmental and waste regulations, workers' compensation, directors liability -- where will this all end? Business has long been recognized as the major creator of new jobs. Business, by its very nature, is innovative and creates new products and advanced technology which can be exported worldwide.

If the government continues to apply more legislation, taxes and restrictions on the employer, it soon will not matter if the employment standards are not met or the employees are being paid a good wage, because there will not be any reason to have employees. Retail, manufacturing and hospitality operations, large and small, are closing their doors already at alarming rates.

I conducted a survey, and I will not go into specifics, since you have them there, but even though it was an 11% response, we felt it was quite substantial, because when you are conducting surveys, 3% is a good number to receive back. But the overall feeling was that everybody is hurting. Business is down, employees had to be laid off, and it is not just for one reason. We recognize it is for many reasons.


I would just like to take this opportunity to highlight some of the requests and recommendations that were collectively made with Tourism Ontario's submission that we would like to remind the government to reconsider. The Ontario government should:

maintain student wages and the tip differential in wages for wait staff;

eliminate the exemption of the current provincial sales tax on prepared food purchases under $4 -- this would net the Treasury an approximate additional $140,000 per year;

eliminate the discriminatory provincial gallonage tax on beverage alcohol purchased by licensees, which will enable them to competitively price and merchandise spirits, beer and wine with food and significantly increase provincial tax revenues;

enhance industry sales of taxable food and beverage by harmonizing the collection of provincial sales tax applied to prepared food and beverage alcohol at 8% -- you may or may not be aware the alcohol is at 10% now and the food is at 8%;

freeze the provincial sales tax rate applied to accommodation at 5%;

eliminate the application of the commercial concentration tax on large hotels and associated parking areas and large buildings in the greater Toronto area;

reduce the unfair employer health tax rate for tourism and hospitality enterprises to a flat 0.5% of gross payroll regardless of their size;

eliminate the application of the employer health tax on taxable benefits and allowances in our industry;

collect the employer health tax from all persons who are self-employed or compensated through unincorporated proprietorships;

reinvest all provincial tax revenues collected annually from provincial fuel taxes, drivers' licences and vehicle purchase, rent and repair taxes, levies and surcharges into the improvement, repair and expansion of provincial and municipal roads.

The hospitality industry today is faced with many obstacles and increased operating costs and restricting legislation. In order to remain competitive and recapture some of the lost business from our neighbours to the south, we must have the ability to compete on a level playing field. We ask the Ontario government to please reconsider our recommendations, as we strongly feel that these recommendations, if approved, will help the economy of Ontario and therefore the people.

I would be happy to answer some questions.

The Chair: We have about four minutes per party, beginning with the Progressive Conservative Party.

Mr Sutherland: Is it not the Liberals' turn to start?

The Chair: Right, it is the Liberals. Sorry.

Mr Kwinter: I just want some explanation for one of your recommendations. The second one reads, "Eliminate the exemption of the current provincial sales tax on prepared food purchases under $4 -- this would net the Treasury an additional $140,000 per year." What is the rationale behind that?

Ms Karabinos: To be honest, I think we were trying to work out -- we are looking at lowering the taxes on alcohol and alcoholic beverages. We realize that the government, in order to offset or lose revenue in one area, will need to look at revenue in another area. We felt that by choosing prepared fast food we are not discriminating against the people who cannot afford to pay the taxes, because we know people who frequent fast-food operations come from all walks of life, and this was one of the reasons we had recommended that. The figures that were looked into I believe were estimated, and we looked at basically a sales projection forecast and what it does. I am afraid I could not give you specifically how that figure came up.

Mr Kwinter: The reason I ask the question is that, with all due respect, $140,000 is a rounding figure in nearly any ministry. I mean, it is statistically insignificant, it means nothing. Why you would sort of upset one whole sector of a whole part of the hospitality industry for so little gain just seems to be strange that that would be something you would be advocating.

Ms Karabinos: I apologize then. I do not mean to upset any sector in particular. There are some that are our members as well. It is the inequities that are coming, that one type of establishment does not have to pay provincial sales tax where another establishment does. You walk into a tavern or a bar and order something and you are taxed to the hilt. This is more of our reasoning. We realize you cannot lower the gallonage tax, so to speak. We were trying to come up with some fair way of compromising.

Mr Phillips: The minimum wage is going to $8.50, I think, over the next three years. Has your industry done any impact analysis in terms of whether that would have any impact on the number of jobs in the field?

Ms Karabinos: Yes, definitely. We have done it in our own association; the Ontario Restaurant Association also has done it. In the survey, as we stated, we asked different questions on the increase of costs. Verbally, doing a spot question across the province, the general feeling without accurate statistics is that they just could not afford to hire any future people; they would probably have to lay off people because the money is not there in a service and hospitality industry. There is not a great profit margin and it is very heavily serviced with people. This is an industry where people are our resource. They are the best allies we have, but the overhead cost -- in our industry we cannot put up computer equipment to take the place of people because it is service, and these escalating costs will result in having to cut back. They just cannot.

One of the strongest points was made when we did the initial survey, when they were talking about increasing wages for students. It was almost unanimous that if we had to pay students the same wages as we would be paying adults, then unfortunately the adults would get the nod for employment over the students because they felt that the adults would be -- I do not want to say better qualified nor educated, but they would have more experience, be more reliable and responsive.

Mr Phillips: If your industry has any numbers on the jobs, I think the committee would be interested because when it does go to $8.50, we are always interested in the job implications of that.

Mr Runciman: I do not have any difficulty with the recommendations you are making here. I would like to ask you, though, about the liquor laws in the province. I wonder, in terms of your industry, if you find them too restrictive; if any liberalization of liquor laws would be of assistance to you as well as the measures you have recommended here. I am wondering what impact that would have on.

Ms Karabinos: Definitely, to put it in one simple word. Our liquor laws do restrict our members many times in making a living, and the laws laid down now in addition to the taxes are just compounding them in trying to stay alive in the business. They are finding it very difficult to cope with it.

Mr Runciman: I am going back to the Conservative government when Robert Elgie cancelled happy hours. I live on the border and I see what is transpiring over on the other side of the St Lawrence River in respect to Alexandria Bay, for example, a major tourist area along the St Lawrence River. They not only have happy hours, they have what they call power hours over there where they give away beverages for a given period of time. There is some question about what is appropriate in terms of drinking and driving and all of those other societal questions, but it certainly gives the people on this side of the border another handicap in respect to being competitive. Coming from a traditionally Conservative riding, over the years my views have changed where I think that perhaps we are just simply being too darned restrictive in respect to our liquor laws.


Ms Karabinos: I agree with you. I feel we are being too restrictive. We have to bear in mind that the operators of establishments that sell the liquor and wine are professional in their jobs. They serve it responsibly. They are the promoters of serving alcohol responsibly. We were one of the first industries to bring in serving alcohol with care. We realize we have an obligation to the community. It is making it very difficult -- the cost of everything, the elimination of happy hour, the perception that people cannot have a good time, that they have a drink -- is really hurting our industry quite a bit. We hope that will change in the future.

Mr Stockwell: Frankly, I think the season is a write-off. At the end of the season you are going to have more businesses going out of business after they find out the numbers this summer have been so disastrous. Have you any interim numbers as to how much business is off? I know where I operate in Midland it is just a ghost town, literally a ghost town. We are not doing any American business. I think the outcry again this summer is just going to be unbelievable. I am just curious to see if you have any statistics.

Ms Karabinos: We do not have actual statistics because people out there are too busy staying alive. I agree with you. I was in Sarnia and I was devastated when I saw the closed shops. Sometimes you went down to some of the American towns where the windows were all boarded up and it was like a ghost town. When I see that happening in my own province and in my own country it scares me.

The people will not say they have gone under until we try to contact them to renew their membership. They just have not survived, they have given up.

Mr Stockwell: So you do not have any interim numbers on bankruptcies or just, "I'm closing up and I'm going home."

Ms Karabinos: I could probably get that for you.

Mr Stockwell: You have been through two recessions now, in the early 1980s and now this. The early 1980s recession was bad. I do not think it was as bad as this one. I think they have doubled the ante on this one. Maybe you can make a quick comment on all the new taxes you are faced with as an employer, the fear of the way the minimum wage is rising to just an unbelievable amount, especially in the service industries. You will lay people off before you have to be able to pay that kind of money. Is that basically the concern you are hearing? It is the recession, yes, it is terrible, we go through recessions, but it is the added increase in taxes that your industry has been hit with and the uncompetitive nature of your industry today.

Ms Karabinos: Yes, it definitely is the legislation that is put down on them, the increase in taxes, the lack of business, the lack of tourists coming into the province, the lack of spending power for the residents in the area, whether southern Ontario or northern Ontario. It really has impacted them.

I had my own business two years ago, and I often think if I were in my business today I would have been one of those who would have folded my doors. It was a service business. I was working seven days a week. Sometimes it felt like 24 hours or 36 hours a day, but quite a long time, in order to afford to pay somebody, and at that time it was just over minimum wage. Today, with the health taxes and everything else, there is just no way I could have done it.

Mr Sutherland: I guess from the comments you have just made, you would not have been supportive of, say, an extra $3 billion to $4 billion in revenue collected in taxes.

Ms Karabinos: You will have to clarify that. In what way?

Mr Sutherland: Assuming those taxes would probably come from the normal traditional areas that are taxed and maybe a few others, you would not be supportive of that.

Ms Karabinos: I think you are putting me on the hot seat a little bit in that respect. Let me just put it this way, I do not think any good citizen is against taxes collected as long as they are used in the proper way, as long as they are collected with people in mind. You have to leave some money behind so people can spend the money, generate further business and generate further jobs. If we get taxed too much, that is just not going to happen.

Mr Sutherland: I was just wondering, because I am reading this document we had put before us. It is the report of the budget review by the official opposition. On page 5 it says, "The Liberal approach, which we call on the NDP to implement immediately, was embodied in the phrase `pay as you go' by the former Treasurer." I am trying to figure out, if we paid as we go along, if we were paying right now, that would have meant that if they were in power they probably would have had anywhere from an extra $4 billion to $5 billion in tax increases this year to have a balanced budget. I was just getting your comments on that.

Mr Stockwell: Have you ever heard the term "quantum leap?"

Ms Karabinos: I am non-partisan. I am not answering that one.

Mr Stockwell: Fair enough.

Mr B. Ward: One quick question. We have to look, during these tough times, at all government programs and expenditures. There is one program run through our Ministry of Industry, Trade and Technology, through the Ontario Development Corp, called the tourism redevelopment incentive program, TRIP. I am sure you are familiar with it.

Ms Karabinos: I am afraid I am not. I am sorry.

Mr B. Ward: It is a loan guarantee program for hotels, motel owners, tourist-type industries that want to expand but cannot obtain at a favourable interest rate a loan to complete their renovations. I can relate directly. This is not all doom and gloom. I was at a sod-turning ceremony probably for one of your members, the Brant Park Inn in Brantford, for a $700,000 renovation expansion program, and $500,000 of that was guaranteed through TRIP. That is one aspect of the government benefiting your membership indirectly or directly. We all have to look at government programs, and if we cut, where do we cut? I am surprised you were not familiar with this program.

Ms Karabinos: I was not familiar with the name, but I am aware of the program.

Mr B. Ward: Is your industry supportive of that type of program? I think it is of great benefit. In fact, the owner of the complex said there is no way their renovation and expansion could have gone through without this loan guarantee from the government.

Ms Karabinos: That is correct, and we recognize that the government has done many things and has created many programs. I guess what I am saying is that the suggestions we are making will help everybody, no matter if they know where to apply for this program or whether they would qualify for the program. Some of these suggestions will help generate business and employment.

Mr B. Ward: I think you are saying let's work together, get over these tough times so your industry can survive and we can all prosper in the future. We are here to gain your views on the budget and how the economy perhaps is going to look in the future, and we very much appreciate that.

Ms Karabinos: Definitely, but as I say, I do not know what the answer is, and I would certainly never want to sit in any of your seats, because I know it is a difficult decision. I also know that our members and the proprietors out there with the businesses, be it retail businesses, Sunday shopping, the hotel or motel large or small, are suffering. We cannot keep pointing fingers at the GST. It is not that. It is the fault of all of us. It is my fault as well as theirs as well as yours. We all have to do it, but we also have to take that first step. We have to start looking at cutting back so we can be competitive with our neighbours to the south.

Mr B. Ward: Okay, so is that perhaps one program we should be cutting back?

Ms Karabinos: I think we have to look at --

Mr B. Ward: Because if we did, then that expansion would not have gone through.

Ms Karabinos: No, excuse me, but I do not think that is the answer. That is not what I am proposing and that is not what our recommendation is, because that is one property. I think those kinds of incentives are needed, but I think we also need incentives for everybody. We need to promote tourism to this province. There is another area where more money could be spent on promoting tourism, recognize that tourism is a valuable part of this whole province and the economy. I looked in the budget book and I saw the graph made up, and the service industry represents, I believe, 67% of the wage earners, and manufacturing 22%. Yet so much focus is put to the manufacturing and their wages, and it really is the service sector we have to concentrate on, because that is the future and we are the --

Mr B. Ward: Good, I appreciate that.

The Chair: Thank you for your views and your presentation this afternoon.



The Chair: Our next presentation is from the Smokers' Freedom Society, Phil Gillies, president.

Mr Gillies: It is an unusual experience for me to be on this side of the table, but it is none the less good to be here. I thank you very much for the opportunity of making a presentation on behalf of our society this afternoon.

We want to thank you for the opportunity of making a brief presentation with regard to the budget brought down recently by the Treasurer. Our society has a number of specific concerns with regard to ever-increasing tax on tobacco products and also with a budget reference to a so-called provincial tobacco control policy.

Let me say at the outset that having served two terms in this Legislature, I know hearings of this nature can turn into a roast of the minister of the day. With that in mind, I do want to indicate to members that while I am not a great fan of this budget, I am indeed a fan of the Treasurer. Mr Laughren is one of the hardest-working and best-motivated individuals whom I had the pleasure of serving with in this House. The Treasurer and the next government assumed their duties at an extremely difficult time in Canada's history. We can only hope that their stewardship of the provincial economy at this time will prove to be of benefit to most Ontarians. None the less, I am here today because we have serious concerns with the references to tobacco products in the 1991 budget.

First of all, let me tell you a bit about us. The Smokers' Freedom Society is a national organization with over 8,000 dues-paying supporters, both smokers and non-smokers, across Canada. The society was established in 1986 to support and promote responsible freedom to smoke "with respect for others." The organization believes smoking is primarily a private matter which should not be subject to discrimination or to excessive government intervention and regulation. SFS activities include information dissemination, lobbying, research, financial support in defence of smokers' rights and public advocacy.

On June 1, I became president with a mandate to considerably expand our fight across Canada against excessive taxation and other legislative and regulatory infringements on the rights of smokers.

I am sure members are all aware of the national tax protest that has been conducted recently by the manufacturers with the full support of our society. I wish to speak specifically against the budget measure which would see the provincial tax per cigarette increased by a further 1.67 cents to 6.5 cents, with an equivalent increase on cut tobacco. Bill 84, the budget bill to implement this change, now sits in Orders and Notices awaiting debate.

The ever-increasing and unfair tax burden on cigarettes and other tobacco products has reached the breaking point. These taxes are hurting our economy, they are encouraging criminal activity and they are infringing on the civil rights of millions of people.

The tobacco taxation policies of our federal and provincial governments in 1991 are counterproductive in just about every respect. The tax component of the selling price of a package of 25 cigarettes is $4.38 in Windsor, Ontario; in Detroit, just across the bridge or under the tunnel, the tax on the same package of cigarettes -- Canadian cigarettes, I might add -- is 74 cents. Cigarettes are cited as one of the driving motivations in our province's cross-border shopping crisis. Indeed, if you ask through a public opinion survey, you will find the two things most likely to send people across the border to shop -- the two triggers, if you will -- are cigarettes and gasoline.

Cigarette smuggling is becoming one of the major areas of criminal activity in Ontario; it is up some 40% in the last two years. You can buy illegally imported cigarettes within three blocks of this building. Indeed, you can find them in just about every town and city in the province. You can have a carton of smuggled cigarettes delivered to your home in Toronto for a total of about $20, including delivery. For a carton of cigarettes purchased legally now the price range would be from about $43 to $50. Small wonder that thousands of otherwise law-abiding citizens are now buying the illegal product.

News reports in recent weeks indicate that organized crime is moving into this lucrative field of criminal activity. We will soon be dealing not with small-time smugglers bringing cigarettes across the Niagara River in kayaks and station wagons but rather with heavily armed professional criminals. Law enforcement agencies, the OPP included, are now expressing a concern that the pipelines being used for smuggling cigarettes are easily adaptable to the smuggling of illegal drugs and other kinds of contraband.

Corner stores are becoming increasingly unsafe places to work as robberies increase. The usual targets are cash and of course cigarettes. Many stores have now been robbed repeatedly. They are having to install steel cabinets in which to lock up their tobacco products at night, another expense for small shopkeepers who are already struggling in the face of a recessed economy. At present prices, one retailer told me recently, you might as well have a rack of gold bullion behind the counter.

Punitive taxes and resulting lost sales are costing Ontario jobs -- jobs for farmers, jobs for distributors and jobs for unionized workers in the tobacco manufacturing industry, which still has a number of manufacturing facilities in our province. According to Statistics Canada, members will know, tax increases have been cited as the single most important contributor to recent increases in the consumer price index.

Total federal and provincial taxes now represent approximately 75% of the purchase cost of a package of cigarettes. Our position is that this is regressive taxation. It places a disproportionate burden on lower-income people who choose to smoke -- people who may not be able to afford season tickets for professional sport, people who may not be able to afford expensive vacations, but ordinary people who may take the simple pleasure in having a cigarette.

I might add that the over two million people in Ontario who choose to smoke simply are not going to take it any more. We know that the mood among smokers in the province, for the most part, is one of ever-mounting anger. This has been reflected in the national tax protest which has been going on for several months now.

Each and every member of the Legislature is, I am sure, hearing from your constituents that they are fed up with these record levels of taxation, both provincial and federal. Your constituents who smoke are paying more than their fair share of the total tax burden. We would like to say, as the present campaign being run by the Canadian Tobacco Manufacturers' Council says, "Tell the government smokers count too!" We urge you to speak against and vote against Bill 84, the budget bill to amend the Tobacco Tax Act.

I am all too aware of how easy it is to vote for increases in tobacco taxes, even if you may be opposing other tax increases. But in this year, a year of unemployment, a year of plant closures, tax revolts and triple deficits, I would ask members to ask themselves these questions:

Is this the time to once again force up the price of a widely used consumer product the retail price of which is already made up of 26% product, marketing and distribution costs and 74% tax?

Is this the time to send many more thousands of Ontarians across the border to the United States to shop for cigarettes which are approximately one third the cost they are here? These same consumers are usually buying other goods while on these trips, goods that Canadian retailers would like to be selling them.

Is this the time to encourage the growth of a major new profit centre for criminals? By encouraging Ontarians to purchase inexpensive, illegally smuggled cigarettes, are governments creating a new era akin to Prohibition?

The Treasurer believes that tobacco consumption will decline as a result of the new tax increases. I ask you again to ask yourselves, will tobacco use really decline or will smuggling and cross-border purchasing simply increase?

Indeed, it is interesting, I point out to members, that while the sales of domestic cigarettes are down slightly since the latest round of tax increases, the sales of cigarettes for export -- these are Canadian cigarettes produced here and then exported into the United States -- the production of that product is up 40% over last year. We know from our surveys that Americans do not smoke Canadian cigarettes, so that huge increase is simply Canadians who are buying from across the border to avoid the taxes.


This is the year, members, to say no to tax increases, including the tobacco tax increase. In the 1990 election campaign, many Ontarians voted against high-tax policies. How refreshing it would be to find that many of our legislators are prepared to keep their word.

There is one other item in the budget which I would like to touch on briefly. On page 19 of the budget document, the Treasurer tells us that the Minister of Health will be announcing details of the provincial tobacco control strategy. As you can well imagine, Smokers' Freedom will be watching keenly to see exactly what is included in this control policy. While we do not wish to rely unduly on rumour at this stage, rest assured that we will be in touch with you again when the details of this policy become known.

We hope the government is not contemplating measures such as generic packaging and restricted distribution through government outlets, an LCBO for cigarettes, if you will. In the present economic climate, removing tobacco products from the shelves of private businesses would spell a death sentence for hundreds of corner stores across the province. It would also be a horrible inconvenience, we believe, for the smoking public.

We want to assure the government that the views of Ontario's two million smokers will be forcefully put on any such measures. We do not want a war over tobacco policies and we hope the government does not either, but if unreasonable measures are forced on the province, then there could well be a war.

In the next while, Smokers' Freedom will be taking a number of measures to strenuously represent the interests of the 6.4 million people in Canada who choose to smoke.

1. It is our intention to move our national headquarters from Montreal to Toronto. We will be opening our new headquarters here effective September 1. By the end of the year we will also have an office open in western Canada.

2. We will be marshalling human and other resources to: commence lobbying of all three levels of government; gather and disseminate information on behalf of our supporters; engage in media relations, promotions, advertising, demonstrations and grass-roots organization in many of your constituencies.

3. This fall, we will see a large-scale membership drive in Ontario, commencing in Metropolitan Toronto. We are now hearing from people in your communities and I am sure we will be hearing from many, many more.

The day when we were able to continue to unfairly overtax the smoking public without being answerable to smokers is over.

Many thanks for giving us the opportunity of appearing before you today. I would be pleased to try to respond to any questions you might have.

The Chair: We have approximately four minutes per party, commencing with the New Democratic Party.

Mr Jamison: Welcome. I thought your presentation very interesting. I think it reflects some of the things that are going on today.

As you may well know, and I am sure you do, I represent a tobacco-growing riding, and my question to you really is on the effects on that community specifically, the growers of tobacco. It seems that all governments have taken the direction to try to reduce smoking by whatever means. Usually it is by whatever means, and that is of course reflected in the tax area quite a bit. I know that you have been in consultation with people from the Norfolk-Oxford-Elgin area where tobacco is grown. Possibly you could let us know what kinds of effects the level of taxation has had there.

Mr Gillies: Mr Jamison, you are quite right. The effect on the farming community in Haldimand, Norfolk and Oxford, throughout southwestern Ontario, is very, very serious. As you represent a tobacco riding and my former riding, Mr Ward's present riding, borders on a tobacco belt, we were well aware of the devastating effects that declining purchases of Canadian tobacco were having. Many farmers, as you know, were forced to leave the field. Many of them lost their farms, there were bankruptcies, and so on. Governments tried, with I think fairly limited success, both federally and provincially, to provide incentives and programs to shift tobacco farms into other types of farming. The problem is that the soil conditions, which are very good for growing tobacco, are not good for a lot of other crops. There have been experiments with growing peanuts; there have been experiments with growing soybeans and some other things. It is simply, frankly, not profitable enough for many of these farmers to convert and be able to make a good living.

The other concern I think we have to have is how much further we go in terms of tax increases in terms of smoking control policies and so on before the Canadian manufacturers or their parent foreign companies -- because often the parent companies are foreign -- say, "To heck with it," and either cease production in Canada or cease purchasing Canadian-grown tobacco. Then we are faced with the worst of both worlds, I would suggest, where the remaining farmers could be forced out of business and our market would be filled with tobacco being imported from the United States.

I think it is a very serious situation. Despite some well-meaning federal and provincial policies to try to convert tobacco growers to other crops, I really think for the most part those programs are doomed to failure. There is no other crop that will grow in that kind of sandy loam which would be profitable in the same respect as tobacco.

Your constituents who are presently growing, the ones who have survived, I think you would agree, Mr Jamison, are doing all right now. They are doing better than they were doing five or six years ago when there were more farms. But I think the future could be pretty bleak for them unless some of these trends are arrested.

The Chair: One minute, Mr Sutherland.

Mr Sutherland: Obviously you are well aware of the situation and you understand how government operates and you understand that taxing of tobacco was something that went on when you were here and as part of the government. How do you reconcile your new role -- and I realize that you are the advocate for this group -- based on stats we had last week from the Canadian Cancer Society that there is still a great deal of concern out there? How would you reconcile them in terms of public policymaking to deal with that issue and find the resources, since health care takes up one third of the budget, to deal with the impacts?

Mr Gillies: First of all, you are quite right; this is not a new problem. It is one we faced when I was here and I dare say it is one that you will face for many years to come in terms of various government programs aimed at restricting smoking vis-à-vis the taxation. There are a couple of things, though, that we should remember.

Federal and provincial taxes now on cigarette products account for $7 billion annually in taxes. I think there was a day when what we call the social cost argument may have been valid, that the aggregate taxes on tobacco products were needed to cover what were perceived as the health and social costs related to smoking. The numbers just do not add up any more at all.

We have seen a number of studies, one done by a former assistant deputy minister of Health and Welfare. There are no numbers around, that I have seen anyway, which would indicate that the health-related costs, if you accept that all the categories of ailments the cancer society, for example, would say are associated with smoking -- I am not saying I necessarily accept all of them, but if you do accept them -- the most you could possibly account for in Canada would be probably $700 to $800 million in costs to the system. You are talking $7 billion in taxes. We have initiated another study, which I hope will be finished this fall, to try to get some more up-to-date and accurate statistics on that, but it simply does not add up. The costs associated with smoking, by no estimate that I have ever seen, come close to approximating $7 billion. They are not even close.

Mr Sutherland: If I can just ask one point, does that include lost days of work and things like that? I am just wondering how you got that figure, because it seems low to me, the $700 million to $800 million.


Mr Gillies: Yes. Actually, when I saw it -- I am referring to the Laframboise study -- frankly, it seemed a little low to me. Just so I can quote it to you, for a pack-a-day smoker in Ontario, the taxes amount to approximately $1,598 a year. By his calculations, the health-related costs could total $200.75 per year per smoker. So you see there is a considerable gap there. He went so far -- and I might add I am quoting here, I would not go so far as the former official of Health and Welfare did when he said that "if you follow the health cost logic, in fact smokers are subsidizing the health care system for non-smokers."

The Chair: Thank you. It is time for the Liberal Party. Mrs Sullivan.

Mrs Sullivan: I was interested in what you had to say about the underground economy. Knowing that about $1 billion of provincial revenue comes in each year through the tobacco tax, and the new tax is anticipated to bring in additional moneys with the declining consumption, what do you estimate the size of the underground economy at and, consequently, lost revenue for the province?

Mr Gillies: There are number of estimates, but I will refer to one here which I think is quite reasonable. This is actually, I think, pretty low. This particular document came out in the early spring, and again, we are talking about, for the most part, Canadian cigarettes which are manufactured here, are exported without the tax and then are being smuggled back in. It is our own product being smuggled back in. The estimates are that type of smuggling is up 40% over last year. A very low estimate is that the illegal cigarette trade in Quebec alone -- so we have a population slightly smaller than Ontario -- accounted for about $116 million in lost revenue last year to that particular province.

Mrs Sullivan: Lost tax revenue.

Mr Gillies: Now, there are other estimates I have seen that are as high as $350 million. I guess it becomes a question of diminishing returns. If, by the province's own estimates, the new increase this year would bring in something shy of $350 million, considerably shy of that, by raising the tobacco tax again, are you just driving that many more people to buy the illegal product? Are you in fact just encouraging tax avoidance, as opposed to collecting that much additional revenue? I think it is open to question as to whether, by further increasing, the province is going to collect any more revenue on cigarettes than it does at the present level.

Mrs Sullivan: Does any of this smuggled product carry the tax-paid band?

Mr Gillies: No, very little of it does. What happens is it is legally exported into states which have a lot of Canadian visitors; not just the border states I might add. You can find Canadian cigarettes all over Florida too and, I believe, in California. They just go down there.

Ontario taxes and federal taxes account for 74% of the purchase price of a pack bought here, so you can well imagine that they are sold much cheaper in the United States, maybe $14 or $15 a carton. So it is good business. It is good business for a smuggler to bring them back into Canada, even if he pays full retail down there. If he sells them for $20 or $25 a carton, he is laughing. It is very profitable.

If you check with some of the senior law enforcement officials of the crown, the big concern is that it started off with small smugglers. It was people bringing, you know, a couple of cases back in a secret compartment in the car, or things we were hearing about boats going across the Niagara River, that type of thing. It has gone well beyond that now to organized crime, the Mafia. I do not want to sound overly dramatic, but very heavy-duty criminal elements are getting into this. It is going to start to get nasty. We have had a number of retailers say to us lately that they think a corner store which sells tobacco products in this country is becoming a very dangerous place to work. There are robberies, there are more violent robberies, and it is causing a great deal of concern.

Mr Runciman: I think you have made some excellent points in respect to your case. I share your view that it is out of whack. I am wondering how you sell this. I know a number of points you have raised are good selling points, but to the average citizen, as you pointed out, there are about two million smokers in Ontario, so we have about seven million who do not puff. The question of this being a sin tax -- we know you do not have to smoke to survive, etc -- how do you deal with that?

Mr Gillies: I am glad you asked that question, because in the present climate, I can tell the honourable members, you are on the side of the angels on this one. Public attitudes, even on sin taxes, have changed dramatically.

As part of the national cigarette tax protest which has been going on, CTMC has been doing weekly polling through Canadian Facts, a research firm, and it is very consistent. The vast majority of Canadians in the present climate feel that tobacco taxes should either be left as they are or rolled back. I can give you the figures for week 7 of the campaign, so this is as of July 11.

"Statistically valid survey across the country: Should tobacco taxes be rolled back?" Forty-four per cent say yes. "Should they be left as they are?" Twenty-eight per cent say yes. "Should they be increased even more?" Only 18% say yes, and then 10% do not know.

It is actually a very small minority of Canadians, quite surprisingly, because it is a minority of Canadians now who do smoke. But the vast majority of our citizens now say enough is enough, you do not need to put those taxes up any more. If you were to vote against the tobacco tax increase in this budget, public opinion is strongly with you to do so.

Mr Sutherland: I would be interested to know if you asked them if you were going to replace the sin tax with income tax increases, whether it would still be that high.

Mr Gillies: It is a good point, but if you could also show them that by leaving the tax as it is, in fact we do not believe the province will forgo much revenue, because every time you put it up in the present climate, you are going to increase smuggling, you are going to decrease the purchase of legal product. I am not at all sure it would not just about net out.

Mr Runciman: Mr Gillies, I do not undermine your submission, because I agree with it, but I am curious, as a member, about how your organization is funded. Do manufacturers participate in the funding?

Mr Gillies: They do. Our organization has three primary sources of funding. We do get an annual grant from the Canadian Tobacco Manufacturers' Council. We receive funding from the tobacco-related unions across Canada, province by province, and we receive funding from our supporters, just ordinary people across the country, of which there are presently about 8,000.

Interestingly enough, because the history of our society is that it was based in Montreal, about 60% of our dues-paid supporters are in Quebec. We are undertaking a recruitment drive and a lot of activities in English Canada to double, I would hope, that number of supporters in pretty short order.

The Chair: Thank you, Mr Runciman. Thank you for your presentation, sir.

Mr Gillies: Thank you very much for your kind attention.



The Chair: Our next presentation is York University, Sheldon Levy, vice-president, institutional affairs. The process is for you to give your presentation. Whatever time is left from the half-hour will be divided equally among the three parties to ask questions.

Mr Levy: First, let me thank you for the opportunity speak with you today. There are few occasions when the university is at the top of the public agenda. The day in June when our children wait anxiously for the letter to find out if they have been admitted to their chosen program and university is one of those days, and a few years later when, as parents, we are bursting with pride when our children file across the stage to receive their degrees is another one of those days.

I really am hopeful that today is also one of those occasions. I understand the difficult position in which you find yourselves as you wrestle with the government's books and try to figure out how to do the difficult job of supporting all the claims upon the public purse.

I am hopeful, because in recent years we have only been able to grab the public agenda when you have reacted to our overflowing classes or our closed doors, but today your invitation for input from the universities means that changes facing our society and our economy need a proactive approach and that universities are considered important players in the economic wellbeing of the province as we approach the 21st century.

Because, of course, things are changing. In the universities this is reflected in the fact that over the last 30 years student attendance at universities has increased fivefold. A statistic I do not think very many people have even thought about is that in the same period of time women attending universities have increased from 12,000 in 1961 to over 100,000 today. During this period York University was born, and it is now the third largest university in Canada with over 40,000 students.

More than half our students are women. We are proud to report that 40% of the students in our faculty of science are also women, and we are equally proud to report that 20% of York students now come from visible minorities, one third of all our students speak a mother tongue other than English and 70% of our students will be the first university graduates in their families.

This is clearly a record of increasing demand and working towards greater equity. We are obviously offering something that people need and want. If we were looking at the record of an industry, we would also expect to find that over the course of the last three decades considerable resources were put into the expansion, to build new factories, to hire new people, and to make sure we were producing what the market demanded.

But the truth is that at the same time as this phenomenal growth has occurred, funding for universities has increased at the rate of inflation, a fact much heralded as reflecting a steady increase in the amount dedicated to post-secondary education. But when you place this in steady dollars against the huge increase in enrolments, the resources dedicated to handling that demand have in fact declined 40% on a per capita basis, and Ontario has achieved the unenviable distinction of near-bottom ranking among the provinces in funding per university student.

What is most interesting is that all indicators point to increasing pressure being placed on universities by the public, industry and government to continue to do more, to place high priority on training the scholars, leaders, managers and technological forerunners of tomorrow. Statistics Canada data show the unemployment rate of university graduates at 4% compared with 12% for those with a high school education. Business leaders are on record insisting that the economic future of Canada relies on a strong university system, and governments rely on universities to serve the social and economic priorities which require the underpinnings of education and knowledge.

We acknowledge our role and our responsibility. Research and education emanating from a strong university system are an investment in the future both for the individual and for the overall economy. Universities are willing to take on the challenge of developing a curriculum for the 1990s, and beyond that integrate technology into the way we do things. We have to provide our students with the knowledge and the tools to make our society competitive on a global scale. And we have a social mission to make higher education accessible to all who can benefit, without limiting opportunities or unjust differentiation.

The point is that the expectation and the reality simply do not add up. Demand from students, including women and minorities, is increasing, and governments are insisting that the demand be accommodated. But funding for universities is declining. There is no question that a university education is a valuable commodity and more and more emphasis is being placed on acquiring the set of skills only a university education can provide. Business, government, technology all look to universities to provide ideas, training and increasingly refined students to society and the workplace, but the priority placed on the provision of a university education results in support for Ontario universities ranking near the bottom compared to the other provinces, and worse compared with the United States.

Our chief competitors in the United States have realized that a university education is essential to progress. In the United States, for example, university per capita funding has risen 35% at the same time as Ontario funding has moved the same amount in the opposite direction. And research shows that in the United States it is recognized that this level of funding is still not enough.

It is simply not possible to offer expanded opportunities at the same time as budgets are declining and capital support is dwindling. We cannot meet our social and economic commitments when we cannot convince you to accord university education a higher priority. The inability to compete for the best faculty, the inability to utilize and teach the most recent technologies, the inability to offer even the basics; books and space for learning, will all contribute to an Ontario deficit, the impact of which will be much more than just economics.

Nowhere is the lack of opportunity to be more obvious than in the greater Toronto area. Data from the Treasury, from schools boards and our own analysis all point to a looming crisis. Eighty three per cent of the secondary school growth will occur in the GTA. The ministry's study shows that in order to accommodate this growth, York alone would need to grow by another 16%, double the system average, by 2011. So far we have worked hard to meet our bottom line each year, even in very tough financial times. We have made major capital investments over $150 million without generating long-term debt, and we have done all this while facing a funding decline of 40% per capita.

But we are suffering. We are losing the competition to keep and hire the best professors, and as the professoriate ages this will become a critical drain. We have had to cut down on the hands-on time we can provide students in our laboratories. We are cancelling library subscriptions to periodicals and books we just cannot afford to buy, and after working with our surrounding community to develop the kinds of relationships that are needed and beneficial, we are having to scale them down. This year we have cut budgets yet again by 2.7% to 5%. Over the next three years, we are committed to a further decline of 10%.

Sure, there are places we can save money, and we will, but the fact is that our students are not getting the level of quality in a university education that they need to achieve your goals and your priorities. If it matters to you to have your children educated by the best professors, with access to the best laboratories, studios, libraries, classrooms and ideas, we have to address priorities and funding. In the face of increasing and demonstrable demand, somehow support for universities has and continues to be a low priority for the province.

All evidence to the contrary, the perception of an élitist system which is not part of the mainstream of Ontario society still persists, and we are most perplexed by the fact that this perception appears to be held in part by those who are products of our system.

Check the facts and you will find that universities have done a remarkable job of providing educational opportunities at a very low cost to this province, and we have seen our priorities slip to last place in our country. We need you to help us move in the only direction we have left to go, to become a first-rate system that promotes opportunity for everyone.

I would be more than pleased to answer any questions you have.

The Chair: We have approximately five minutes per party and we will begin with the Liberal Party.

Mr Kwinter: I was taken with the relationship that you made to American universities, talking about their level of funding compared to ours. Is that York University compared to state-run universities as opposed to private universities?

Mr Levy: There was a report done by the Council of Ontario Universities that looked at Ontario versus state versus private. In all cases, the Ontario system fell at the bottom. If I could, I would like to give an example. We visited the University of Pittsburgh a couple of weeks ago on a joint research project. The University of Pittsburgh, coincidentally, is almost exactly the size of York University, and it is next door to Carnegie-Mellon in Pittsburgh.

The University of Pittsburgh bemoans the fact that Carnegie-Mellon is rich. The University of Pittsburgh has an operating budget of $720 million. York's operating budget for almost precisely the same number of students is about $200 million. There is a 300% difference. Now, Pittsburgh is a semi-private public, where they get private support as well as public, but the fact is that we are very far behind the States.


Mr Kwinter: The next question I have, related to that, is that you are talking about support from government. How does that relate to tuition? Also, could you comment on Queen's formula proposal and what you think of that idea?

Mr Levy: Okay, but there are two different sets of questions.

Mr Kwinter: One leads from the other.

Mr Levy: If you compare tuition rates at the private universities to Ontario, naturally they are 15-fold or 10-fold higher, so they are a lot larger, and then when you are in the public sector, the tuition fees all of a sudden become much closer to the Ontario rate, so it is a mix. It is quite dramatically different in the States between private and public.

The Queen's proposal was supported, I would say, by every one but perhaps one -- I cannot even think -- of the Ontario system last year, because part of it was a commensurate support by the province. It would have been funding that would come from the province and from additional fees, and at the same time a recognition that the support for students to be able to afford the larger fees would be a commensurate follow-up through OSAP or a revised OSAP.

So the Ontario system, I think, has put on record that it is, as a university system, supportive of a combined effort between students and government and ourselves to improve the financial state and the health of the universities, with a recognition of the very high importance we put on ensuring that this does not keep out students who, for reasons, could not find education affordable.

Mr Kwinter: Do you have any idea of how many Ontario students are going to the United States for their education?

Mr Levy: I do not know in volume, but I do know that there was a study done that showed that a large proportion -- I do not want to quote a number because I do not have it available -- of the very best students were going to the United States, because they were given offers and opportunities that no Ontario university can compete with. I cannot say to you that it is large numbers at all, but I am confident to say to you that the proportion of the best students that are heading to the States to get their education is non-trivial.

Mrs Sullivan: I wanted to ask you about the conclusion you have come to relating to future enrolment requirements at York from students coming from the GTA. Certainly one of the things we know about the secondary level is that the schools are in the wrong places, and that is why there is an enormous pressure in the greater Toronto area for secondary schools, but the proportion of young people in society is not, in fact, increasing that substantially. I would have thought York's attraction is not necessarily only to GTA students, that at the university level there is a high mobility among students that is not reflected at the secondary or elementary levels.

Mr Levy: There are two facts. One of them, just going by Treasury data, demonstrates very clearly that the flow of the population from Ontario to the greater Toronto area is going to increase by 2011. About 80% of York University's intake is from the greater Toronto area, so we are a very local university.

Mrs Sullivan: But does that necessarily have to stay the same?

Mr Levy: Partially the explanation is that about 40% of our enrolments are of a part-time nature, of mothers and fathers with families who are coming back to university. Opportunities for them to go to other universities is just limited, so it is either York or the University of Toronto or no university.

Mr Stockwell: A quick question: You made the comparison to the University of Pittsburgh with a $720-million annual budget and York at $200 million. Can you give us an average tuition fee for each?

Mr Levy: York's tuition is around $1,800; Pittsburgh, for in-state students, is about the same, and for out-of-state students it is much more comparable to what we call our foreign student fee, because they look at out-of-state students as essentially foreign students.

Mr Stockwell: You are saying about US$1,800.

Mr Levy: Yes. That is not like Carnegie-Mellon University which is next door. It is their state university so it is about comparable.

Mr Stockwell: Comparing Canadian dollars to American dollars.

Mr Levy: It is not a large difference in the two.

Mr Stockwell: When I talk to business, the last thing it asks me to do is to raise taxes. If we are going to look at a real influx of capital, money, to universities, they are going to have to get the money from someplace. Other than taxes, where do you think we should raise this money?

Mr Levy: We have made a couple of suggestions, but let me first say that raising taxes to provide opportunities for young people, even in these times, does not seem to me to be a bad thing to do.

Mr Stockwell: Maybe not to you, but to the business community it is not a really exciting thought.

Mr Levy: I can understand that, but they are the beneficiaries to a large extent of the products and they are the ones that are --

Mr Stockwell: I agree, but the way we are losing business we are not going to have the beneficiaries around to take advantage of all these wonderful --

Mr Levy: I will answer your question rather than debate. We have also proposed what is available in places like Australia, which is a contingent repayment program. What that does essentially is increase the tuition, provide a loan to students that is payable through an income tax; that is, those who are the beneficiaries of the post-secondary system pay it, but they pay it through their income tax when they are able to afford it.

Mr Stockwell: Is this over and above what they would normally pay in income tax?

Mr Levy: That is right. It is a loan payment, and those who benefit pay it and it is commensurate with their ability to pay through the income tax system.

Mr Stockwell: What is the recovery rate?

Mr Levy: It is extremely successful.

Mr Stockwell: That sounds reasonable as long as it is extremely successful. The trouble is it is not extremely successful now, as I understand it.

Mr Levy: We do not have anything like a contingent repayment program that works through the income tax system, because it works through OSAP, and there are problems with that. But this is directly through the collection of income tax by the federal government.

Mr Stockwell: That is interesting. Anything that would raise revenues and increase your budgets without increasing taxes, I think would be somewhat interesting to review.

Mr Levy: Along with the fact that students can get the loans who could not afford to go, and they pay it when they are able to afford it through the income tax system.

Mr Stockwell: Then you could raise tuition too.

Mr Levy: That would provide the revenue. We have, as I said, put that one on the table for consideration as well.


Mr Sutherland: Thank you for coming today. This is an area I have some experience with, being involved with the student council at the University of Western Ontario. You know the reputation of Western towards other universities. Let me say, looking at your York Gazette, that if you are attracting students of the nature of Sasha Courville, who I know and spoke at her leadership conference, you are certainly doing many things right and getting some very top-notch students.

Mr Kwinter asked about people going to the United States. It is my understanding that it is, as you said, some of the brightest, but more going at the master's level, the doctorate level and the post-doctorate level, and that is where we are losing a lot of people to the United States.

Mr Levy: The very brightest students at all levels, at the master's and doctoral levels certainly. A lot of universities just cannot compete with what the American universities can provide.

Mr Sutherland: I thought your points were quite interesting about the funding levels. I have seen some of the data that support what you are saying in terms of the state universities receiving more funding. I do fundamentally believe that if we are going to deal with the issues of competitiveness, we need to increase funding for the post-secondary education system, both for universities and colleges. I think that goes without saying.

I wanted to ask what York is doing in the area of matriculation with some of the community colleges, and maybe somewhat with some of the other universities. It was always my sense from a lot of people I know from high school who transferred from university to university that it was a bit of a quagmire getting certain universities to accept other credits, because of the independence of deciding courses. What is York doing in that area?

Mr Levy: Between universities and colleges, we have made a considerable amount of progress that, I have to admit candidly, was long overdue. We have, for example, a co-operative effort in the Durham area between Durham College, Trent University, Ryerson Polytechnical Institute and York that put on a program that allows students to transfer between the different universities with considerable ease. We are trying as a co-operative to fill an educational gap in a large, growing area that has no local accessibility to university education, and we are building alliances. I think there is a considerable way to go in that. I think a lot of the walls that have existed are coming down, but I do not want to pretend that it is perfect harmony at the moment.

Mr Sutherland: Let's take a first-year sociology class. Can you give us some indication where the class size would have been 10 years ago versus where it is now?

Mr Levy: I know what you are getting at, so let me try to characterize it rather than being exactly specific. It is more than class size. Let me tell you what it was like maybe 20 years ago. Twenty years ago a sociology student would have the probability of being in front of a full-time member of faculty, probably in a class that was in the 50s, probably with an opportunity for a tutorial after the class, and almost certainly would have an essay-type question, a writing requirement in the course that would have considerable criticism by the full-time faculty member of the quality of the work done.

I would say that if you look, not at York but at a random university today, the probability is you would have a very high chance of finding maybe a full-time faculty member, maybe a part-time faculty member, maybe a graduate student doing that course. The course would be 100 and something. There would not be a tutorial hour after it and those who most need the extra help would not get it. If there was an essay question, you would not get the critical content you would have 20 years ago. I do not think that is a York-specific phenomena. Perhaps Western and York are no different in that regard.

Mr Sutherland: Have you had to eliminate some of your essay courses because you cannot afford the funds for markers or because the class size is so large? I know we hear a lot about people's writing skills coming out of college and university, that they are not what they were 15 years or 20 years ago. Are we seeing that type of thing occurring at York as well?

Mr Levy: I have to say to you, no. We put literacy, writing and mathematics, so high on our agenda that everything will be cut, I think, before that. It is sad in some ways to read reports that give you and the public the impression that universities only care about graduate students. The care of the undergraduate students in writing courses and literacy courses is quite profound. We put a very large proportion of our resources into writing, and it has not gotten bad to the point that we would -- I do not know what we would do. It would be such a philosophical problem for us that I do not know how we would deal with it, so no is the answer.

The Chair: Thanks for a good presentation, showing that even though we have a $9.7-billion deficit, there is still a lot more that we have to do as the government.

Mr Runciman: On a point of order, Mr Chairman: I wonder if it would be possible to try hearing this next submission with the air-conditioner on for a few minutes. If we cannot hear the witnesses, then we will have to turn it off, but it might be helpful to all of us if we cranked it on for a few minutes.


The Chair: Our next presentation is from the Ontario Coalition for Better Child Care; Janet Davis, president. I do not know if all of you can sit at the table because there is only --

Ms Davis: We figured out a way we could do it. We figured it was late in the day and you have probably been listening to dry briefs all day long and we would like to liven it up a bit.

Mr Runciman: As long as it is not against the law.

Ms Davis: We would like to welcome the opportunity to let this committee know what we think about the budget. We would like to start off the top to show you in a concrete, symbolic way what we think about this budget. As you probably see, what you have tied on your microphone is a shoelace or a shoestring.

Critics, particularly the members directly opposite me, have said since April 29 that this is an exorbitant, extravagant budget. We would like to differ. We think it is a shoestring budget. We believe that in child care we have for too many years been operating on shoestring budgets, and in fact the budget we have this year will continue the practice of juggling budgets. We know all about shoestring budgets. We know that with shoestring budgets you have to choose your priorities.

We were pleased that this government did not take the route of other provincial governments and drastically slash its social programs. We had seen other governments doing more draconian things.

Actually, I am not going to follow the brief. It is there for your information. You can listen rather than read it. We prefer it that way.

The deficits that have been created, as most of you probably have heard from other deputants, were mostly a result of the lack of transfer payments from the federal government. We have deplored the kind of economic policies that are being pursued by the Mulroney government, particularly the reduction in transfer payments in social programs which have an impact directly in Ontario and specifically on child care. We know that all the expenditures at the provincial level now, with a 5% ceiling on the Canada assistance plan, will be coming out of entirely provincial and municipal dollars, and this government is struggling with how to deal with that.


But what we are here to say is that we have to continue to spend more money on child care. We are facing a continued crisis, worsened by the recession, and we would like to give you an opportunity today to hear from the people who are actually struggling day to day with the kind of budget restraints that we are.

I want to say as well that the January 31 announcement by Minister Zanana Akande was positive. We felt some relief that there was going to be some movement on child care. However, the three main planks of the announcement have yet to be fully implemented.

The down payment on pay equity to the non-profit sector: We were very pleased there was recognition that there needed to be immediate salary enhancement. However, the down payment has yet to reach the hands of the people working in child care. We are not sure as yet how much and when and if, so we are extremely anxious to see that this money is forthcoming.

The 5,000 subsidized spaces: While they are minimal as far as we can see, there is tremendous need for subsidies for spaces still not taken up across the province. We think there is only about a third of the spaces taken up. Many municipalities are in the position of not being able to cost-share the subsidies available to them, so we again recognize that there are some fundamental flaws in the way child care is funded.

The commitment from this government to reform child care is also positive. We hope it is not going to be a protracted process where we consult for 16 months and then think about what people have said and finally get around to doing something by the end of the term. We expect and want to see some significant reform in the short run.

I must say about the budget itself that, because of the delays, we do not actually have, to date, even the exact amount of the allocations for child care. We have heard, however, that the overall budget is higher than it was last year. But it appears as though the capital allocations have been cut completely; the program development fund money, which is intended to expand child care, looks as though it has been cut almost completely; and both of these initiatives mean that the expansion of child care has been absolutely curtailed. We are extremely concerned about that and we are actually quite angry that this kind of information has not been made available to us to date. The former government in fact allocated $20 million in capital money each year, and it looks as though we are not even going to get that for child care this year. We have not seen any horrific cuts. We obviously, though, are experiencing significant reductions and we are not going to be able to do any major reform or any expansion unless additional funds are available.

I would like to turn it over to my colleagues and fellow members to explain the kinds of situations they are living with daily.

Ms Yardley: My name is Monica Yardley. Over the last three years I have been chairman for the parent advisory board committee which meets once a month to discuss policies and issues that affect the day care at St Stephen's and King Edward. I am also here as a single parent to speak on behalf of many single parents who I am sure are out there.

I am fortunate. I am a bookkeeper and I work for small architectural companies. I have a job, but without subsidy I would probably be on welfare. I am sure there are many single parents out there who would like to have affordable, quality day care, but without subsidized spots they cannot work and as a result they are not being able to live satisfactorily or put their children anywhere so that they can do this.

I know there are 4,200 licensed vacancies in Metro Toronto now, but they are not subsidized vacancies. I am aware that within our own day care the infrastructure is going to suffer considerably. Without any parents being able to pay the full amount of fees, day cares are going to have to cut back on quality, meaning cut back on the staff time, just a lot of issues that are of concern.

Second, my other point I would like to bring up is that, as the chairman of this committee for five years, I am aware that the minor capital expenditure allocations for renovating the playground at King Edward have always been promised and bumped to the following year. This has gone on for five years. I am curious to know what kind of funds will be allocated for this, especially this next year.

Ms Skuly: My name is Mary Gabriele Skuly. I am in York region, at a centre called St John Boscoe. Since inception St John Boscoe has struggled. We are in a middle-class neighbourhood which is mainly mortgage-heavy. Needless to say, we do not access a lot of full-fee families because they just cannot afford it.

We also had a hard time getting a purchase-of-service agreement with York region because it was in a deficit position with quick expansion of child care in the region. York region chose not to access any of the 5,000 spaces. It also chose not to access 250 spaces that the provincial government was going to give it in 1990 because it could not come up with 20%. We are still in operation because the provincial government gave us a grant to carry us through, but it is going to be a tenuous operation. We are not quite sure what is going to happen with this centre.

We are here basically to ask for your help. We need more money in this system. Families can no longer afford child care. There are many empty spaces. There are 1,500 families in York region sitting on a fee assistance list. There are 926 vacant spots in York region. The province has talked about pay equity to non-profit child care workers, and to date we still have not seen any money and we do not know when it is going to come. The province is committed to non-profit centres and we just do not see any incentives for these commercial centres to convert. It is obvious that there is not enough funding.

Ms Marshall: I am Cecilia Marshall. I am a single parent from Jesse Ketchum Child Care Centre. I have two children: one is 10 and the other is four and a half.

I have been with Jesse Ketchum for close to seven years now. It is attached to Jesse Ketchum Public School and provides approximately one third of the population of that school.

The present condition of the building, which was built in 1912, is deteriorating, but unfortunately there are no capital funds available from the province. Without these funds we cannot meet the building codes and fire regulations and, therefore, our licensing standards. My concern is that if we do not meet these licensing standards we will be shut down.

I would just like to add that Jesse Ketchum is Canada's first day care centre. We made it through the Second World War and I am hoping that, with your assistance, we can also make it through this next budget.

The Chair: There is more. Sorry. We have approximately 15 minutes left. If you want the panel to ask questions, please keep that in mind because we may wind up having time for only one question per party, and if it goes the full length, no questions at all.


Ms Hepworth: My name is Gael Hepworth. I am here to tell you as a taxpayer that I am a very angry taxpayer. I have heard rhetoric from my politicians over the past five years about how they are willing to get serious about women's issues and helping families out there and are serious about the day care issue. As a consumer out there, the reality is it is not true. I am a full-fee parent. I have paid full fee since I had my child three years ago. Today I figured out somewhere in excess of $40,000 will be spent by my husband and myself paying child care fees up to the point where he is four years old and he is eligible to go to half-day day care.

What happens out there in the day care system is that because the funding is so spotty, it is very difficult to get a child into a quality day care centre. I moved my child out of a profit day care centre into a non-profit day care centre recently, looking for a better quality of care. I find that because the funding is so spotty across the province, and the inconsistency of approach, it is difficult to get your hands on. Your administrators spend all of their time accessing money from full-fee parents or partial-fee parents and trying to make their budgets meet and still at the same time to deliver a program that is outstanding to the children in their care. It is outrageous.

In terms of women being able to function in this society, you talk about training being important. I tell you, we cannot access training unless we have good, quality child care. We cannot access whatever it is that this society has to offer unless we have access to good, stable, quality child care. The only way that will happen is if we provide a stable funding base for these administrators to get on with the job of providing good, quality child care for all children in Ontario.

As a parent I feel penalized by the fact that I chose to have a child. We are more than capable of sustaining the cost involved, but at the same time I spend my time going out to find that there are thousands of people on the waiting list for child care. Because they cannot access subsidies, the spaces are not full in the centres and the staff get laid off. It becomes a very difficult operation to keep running. It is not a lack of demand; it is a lack of political will on the part of the leadership. You are the leadership and I want to know why you are not putting the money where it needs to be. This is a service that is required by the taxpayers and I do not think we should carry the burden for ever and ever.

Mrs Smith: My name is Carol Smith. I am here today to represent Direction 2000, which is a non-profit organization whose overall goal is to assist interested parents and community groups to develop viable non-profit quality child care. That goal is founded upon the following principles: that quality child care is founded on a thorough understanding of development; that parents have both a right and a responsibility to participate in all aspects of their children's upbringing; and that child care is a family support service, a community service, and must reflect local needs.

Our concern is that there is no commitment in this budget for program development funds, and it is program development funds that allow us to assist the community. Our organization has been without funding since June 30, so our projects are without the support of a consultant and I am without a job. We offer a vital service to the community, one that ensures the fulfilment of our goal. We believe this government wants to be responsive to community needs, this government wants to form a partnership with the community and this government is working towards a reformed system. However, you need to be a good partner to the child care community that now exists. You cannot abandon this system while you are working on a new one.

While I was thinking about the presentation -- and someone earlier said you have a lot of dry facts being offered to you -- I tried to think of a way to illustrate my point. At the moment there is a circus in Toronto. No reflection on this group, but to the child care community it rings true. Picture a circus where just recently the ownership changed hands. The new owners want to be responsive to the community, make some changes, build a better circus, so they look at what they can do; add more animals, more acrobats, more clowns. They study it, they meet with their patrons and they study it some more. But at the top of the tent, the high wire act is still going on. The participants -- read child care community -- are walking the tightrope. They are juggling dollars, enrolment and staff. Others -- read new centres -- are swinging out on trapezes and reaching out for supportive hands and finding none. It will not be long before they will all tumble to the ground because the new owners forgot to put up the safety net.

The system as it now stands needs that safety net. They need to know that their partner is not just paying lipservice to the partnerships.

Direction 2000 asks that you consider the negative consequences that the lack of program development funds will bring to the child care community as it now exists. Our children, our families and our communities deserve your support.

Ms Willard: My name is Mary Willard. I represent the York Region Coalition for Better Child Care. I would like to reiterate that we feel it was a very positive move in the right direction when pay equity was awarded to child care workers in non-profit centres only. There is a very high percentage of the child care centres in York region that are commercial. Where are the incentives to encourage commercial centres to convert to non-profit? Enough centres are willing to convert to non-profit. Where are the funds to make those conversions possible?

Ms West: My name is Cheryl West. I supervise the Pat Schulz Child Care Centre, located in the City Adult Learning Centre in Toronto. The City Adult Learning Centre is for students 18 years and over who return to school for their high school diploma. This year the enrolment is projected to be over 2,000 students. The Pat Schulz Child Care Centre is an infant-toddler centre with 25 spaces, located in the same building. Two thirds of our spaces are prioritized for children of students, and our waiting list, updated just this July 1 through 16, has 197 children waiting. Some 169 of them are in need of subsidy; 28 of them are full fee. At least 80 of those 169 are hoping to be students this September, of course, depending upon child care.

As September approaches, I receive at least four calls a day from students hoping to go to school this fall again, depending upon their child care. I take their names and I advise them to call Metro children's services so that they will be considered for eligibility for Metro subsidy. That waiting list I believe to be 11,000 children long. This is most discouraging for these young women trying to build futures in Ontario.

In January 1990, the student body at the City Adult Learning Centre signed a petition requesting that we accommodate preschool children. The principal agreed at that time that there was the need and he allocated space for the project. We applied for money to the province to renovate and start up the program, but we were told that there were no funds available in 1991. In fact, I believe the Toronto area office is not even accepting applications for this year. The amount of relief made available for child care by the current government's budget is a pinhole of light in a long, dark tunnel for students, primarily women, in families I speak with each day.

In addition to the crisis that we face regarding the lack of money to fill the existing spaces within the community, the new dilemma we will face will be competing for qualified staff as public sector pay equity settlements put pressure on private non-profit centres to keep salaries at parity with municipal centres.

As a supervisor of a centre, I feel and see the hardships and strains on social services through the families I speak with, as well as the staff and problem-solving I have to do every day. The waiting lists speak to the need of the people of Ontario for a provincially funded child care system. As you review today, be mindful that many of these families have been waiting a year or longer for child care, that our operations are currently funded on shoestring budgets and that we need a directly funded provincial system in order to avert the closures we are now facing across Metro Toronto.

I would just like to add that the child care community, as well as myself, would welcome these hearings at a federal level, but it is shameful that we are spending tax dollars on this review today.

Ms Davis: As you can see, we are struggling daily with the crisis in child care. The problems have existed for years. We have had Band-Aid solutions posed to the child care community each year for the last several decades.

I also want to reiterate what Cheryl has said. Why we are even examining the expenditures on social programs is beyond me. Of the total $9.7-billion deficit, $1.5 billion is new programs. The rest is as a result of cost-sharing shortfalls. It is outrageous that we should be spending this time and this energy questioning the expenditures of this budget.

I want to reiterate again that there is a great deal of support for a reformed child care system, there is a great deal of support for the agenda of this government, and all I can say is get on with it. Put aside this dithering over whether this is the appropriate way to go. There are too many people who are suffering as a result of delays and as a result of non-implementation of programs, and we just want to say again that this is not an exorbitant budget, it is a shoestring budget and we need more.


The Chair: We have time for one question per party, beginning with the New Democratic Party.

Ms M. Ward: I have questions. Which one shall I choose? Conversions, perhaps. We had a group of private day care operators in yesterday, and some of your members were mentioning that. I got the impression you feel it is a good idea. They seem to be vehemently opposed to even considering it. Do you have any comments on that?

Just another quick comment: I think there are quite a few spaces available right now. The subsidies are not there. That should spur them on to consider that.

Ms Davis: There are a number of answers I could give you to that. One, I support the NDP's position that we need to move towards creating a non-profit system in Ontario. We need only look south of the border or to Alberta to look at the experience of other jurisdictions to see what happens when we have a large commercial sector in child care. What we need to do is to begin now, while the sector is small enough. One quarter of the centres are commercial. A third of the spaces but a quarter of the sector is for-profit. We need to look at putting in place incentives to have that conversion take place.

It is a question of quality. Despite the fact that the commercial lobby may tell you there are no differences in quality, there is a large body of literature, and a report specifically prepared by the ministry which was a review of all the research done that shows categorically that the quality of care in the for-profit sector is likely to be poorer. It does not say that they are all bad and that all the non-profit centres are great, but overall, if we want to move towards creating a high-quality system of child care, it needs to be non-profit and public.

Ms M. Ward: Is that report recent?

Ms Davis: Yes, it is called Factors Related to Quality in Child Care, produced by the Ministry of Community and Social Services. If you look to the European experience, and I am not just talking about social democratic countries, the commercial sector is virtually non-existent in Europe. They are miles ahead of us in taking the route that we need to go to create a high-quality system of child care.

Mr Phillips: The Agenda for People I carry around with me all the time. I think I have even mentioned to you before that this is because it was the --

Ms M. Ward: It is dear to his heart.

Mr B. Ward: You are going to memorize it.

Mr Phillips: It is the document that was essentially the commitment that was made to people like yourselves, and I think you felt very strongly about it. I am listening carefully to what you said about the implementation of that agenda, which I think called for 10,000 new spaces, pay equity for your sector, and all right away, I think.

As you know, the budget is not being held up; the budget is implemented. This is just a hearing now on what people think of the budget, so nothing has been delayed on it. What explanation do you get of the fact that virtually none of the agenda, if I understand your comments, has been implemented? What is the answer you get when you ask the minister that question?

Ms Davis: You know the answers. It is a question of dollars, and there are not sufficient dollars to implement the programs they would like to implement. It is obvious.

Mr Phillips: But their document, the Agenda for People, said we were in a recession last year. I am just wondering what excuse you get.

Ms Davis: The shortfall in transfer payments from the federal government is certainly a reality that we did not expect to be prolonged -- or maybe we did expect to be prolonged.

Mr Phillips: That was in place last year.

Ms Davis: But what angers me very much about the federal cutbacks is that they are in programs that are mandatory programs. Social services and welfare --

Mr Phillips: I am sorry, but the Agenda for People knew all of that. I am just wondering what you get from the provincial government as an answer.

Ms Davis: The answer is that there are insufficient funds.

Mr Runciman: I just have one question, a comment really, with respect to the covering letter you had on your presentation. You have a quote in here: "`It's not enough, to say there isn't enough money,' Davis stresses."

From my perspective, it is not enough for you and others to approach government and say, "Look, all we want is more money." I think it would be helpful for all of us, regardless of what political stripe we have, if interest groups appearing before legislative committees suggested innovative and constructive ways in which a government could trim costs. I know you are talking about transfer payments from the federal government, and perhaps that is an easy knock, but I think you are looking at this government incurring close to a $10-billion deficit, the federal government an annual deficit in the neighbourhood of $30 billion, and I do not think that all of us as taxpayers can last indefinitely running those kinds of deficits at the federal and provincial levels. So I think, from my perspective as a provincial politician, it would be most helpful when a group like yours appears before us to say, "This is the justification for increased funding for our particular interest and here are ways in which we suggest those funds can be achieved and without incurring additional deficits for all of us as taxpayers."

Ms Davis: We would support the government's proposal for a minimum corporate tax and looking at some revisions to the tax system and some obviously progressive forms of taxation that would increase revenues. We are not economists. We come forward to talk about child care because that is what we know.

Mr Runciman: I do not think we all have to be economists. We are all taxpayers and we all have concerns and we all have views to express. From my perspective, it would be helpful if all interest groups took a look at the broader picture rather than focusing simply on their own area of interest. That is all I am suggesting to you, when you appear before us in the future, any legislative committee. You may be criticized for making specific suggestions, but you folks are here to criticize us quite frequently, so I think you should be prepared to take some of that heat as well to come up with some specific suggestions.

Ms Davis: I think we did mention some proposals. We support the proposals that have been suggested by this government and we are hoping to see them implemented.

The Chair: Thank you for your presentation this afternoon.



The Chair: Our next presentation is the Propane Gas Association, Ontario committee: Rene Chartier, director; Tim MacDonald, officer; Marshall Wice, officer; Al Hindmarsh, officer; Alex Goerk, officer.

The Vice-Chair: The Chair has just stepped out for a minute, so maybe we will just start the presentation anyway. Just to let you know the format, you have a half-hour altogether. Whatever time you take for your verbal presentation will be subtracted from the 30 minutes, and the time left will be divided up among the three parties to ask questions.

If you would like to start, just before each of you is speaking please introduce yourselves so we have that on Hansard.

Mr Chartier: Thank you, Mr Chairman. My name is Rene Chartier. I am the director of communications for the Ontario committee of the Propane Gas Association of Canada.

I would like to thank two members of the clerk's staff for helping us to be here today, Mrs Karen McKay and Monica Marshall. We are very grateful for their advice and their kind thoughts.

The principals of my association, representing all persons who live and work in the great province of Ontario, are Al Hindmarsh from Oakville, Bob Callow from Aurora, Tim MacDonald from Unionville, who will be our spokesman this afternoon, and Jack Patriarche, his colleague from Unionville. Behind them are Marshall Wice and Alex Goerk.

Mr MacDonald: Thank you very much for allowing us to present our position today.

I just outline the background in terms of how the auto propane industry was established in Ontario back in 1980 in response to energy security concerns that first occurred in 1974, with the first Arab embargo and oil shock and subsequently higher prices of crude oil and gasoline and diesel fuel oil. In 1979 there was another oil shock with the Iraq-Iran war, which again resulted in shortages of crude oil and higher prices for gasoline, diesel fuel oil, etc.

In 1980 the Ministry of Energy in Ontario established an alternative transportation fuels program, of which propane was a very key and integral part. There are a couple of key principles with respect to that program, of which one is that government and industry would work together in the area of demonstrations and research. By far and away the most critical aspect was the fact that there was a fiscal regime in the way of no motor fuel taxes for propane and other transportation fuels and a sales tax rebate to encourage vehicles to go off gasoline and diesel and on to propane and other alternative fuels. At the same time, the federal government had a $400 grant program to foster the same kind of activity. What we have seen in the last few years is a move away from that original fiscal principle. That has hurt the industry and we have experienced declining conversions in recent years.

It is critical for this industry to have a proper fiscal regime to survive. Any country that has a viable alternative transportation fuels industry requires proper fiscal support from government and requires government and industry to work together to develop alternative transportation fuels.

Our purpose here today is to outline the benefits of propane in terms of its benefits for energy security, for the environment, for job creation and for investment, the importance of auto propane to the whole propane industry and the importance of a proper fiscal regime to ensure its ongoing viability.

Just in addressing the first issue in terms of energy security, you can see here from this chart that back in 1980, when this program came into effect, in terms of the proven oil reserves in the world -- and this is world demand and reserves -- the Organization of Petroleum Exporting Countries controlled 60% of the world's proven reserves; non-OPEC countries controlled 40%. In 1988, OPEC controlled 77% of the world's crude oil reserves and non-OPEC controlled 23%. The key point here is that energy security was a very important issue back in 1980 and today it is just as compelling as back then, if not more so. We have all seen the recent events with Desert Storm and the war in the Middle East. That certainly is not a very stable area in the world. This issue of energy security is just as compelling a reason to diversify our energy options today as it was back in 1980.

I just want to outline here energy consumption within Ontario by key sectors. You can see in that green piece of the pie -- that is industrial -- 28% of demand consumption of energy in Ontario. Basically that is mining, major industries, steel industries, etc. Commercial -- restaurants, commercial operations -- is 8%. Residential is 13%; that is energy used for hot water, heating, cooking, clothes drying, etc; electrical generation, that is energy used to produce hydro, such as nuclear energy and hydro-electric energy; the energy industry is 15% of demand. That is energy used in refineries, etc. In transportation it is 24%.

The point I want to make is that in all these segments there are choices; there are options. You can use natural gas, hydro, propane or oil-based products. In the transportation segment, the energy used in transportation is 98% oil-based. The balance is basically propane and compressed natural gas. I guess the key issue then is that the key energy security issue rests with oil and the key sector is transportation.

Turning now to propane, we will say at the outset that the propane industry in Ontario and Canada is a very small energy segment. It represents only 1.5% of energy in Canada. The big players are hydro, natural gas and oil-based products. Within Canada, the domestic demand for propane -- that is propane used for residential, commercial, industrial, etc -- is 3 billion litres. The production in Canada is 8.5 billion litres. The key point is that there is abundant supply of propane within Canada, and today most of that is exported to the United States, which is totally different than with oil. We are importing light crude oil in Canada.

Looking at these various segments within the propane industry, we have the same segments as any other energy. We have industrial, which represents 23% of the propane consumed in Canada and likewise in Ontario. That is used for mine, air, heating; also, a major segment in industrial is forklift. Propane has been used in that application for over 40 years because it is clean-burning and has very positive emissions relative to gasoline and, as you know, forklifts are used inside warehouses, etc. Propane has been used for many, many years because of its environmental benefits.

Residential represents 15% of propane demand in Canada and, again, that is furnaces and water heaters and clothes dryers, etc. Commercial is 23%, agriculture 7%.


The main point I want to make here is auto propane. Auto propane in Canada is one third of this industry's demand. If you look back at this industry, we were a 3-billion-litre industry in 1980. Auto propane did not exist. Today we are a 3-billion-litre industry and auto propane represents one third of the industry across Canada and 38% of the industry in Ontario. I am saying this industry is very, very important.

You are probably wondering what happened to the rest of it. The expansion of natural gas mains has taken away a lot of the demand from what we call the traditional propane market. Propane is a gaseous fuel like natural gas. It is used beyond the natural gas mains. Natural gas mains have expanded and taken that market away from propane. Fortunately for the auto propane market and industry, auto propane developed in 1980 and has picked up the slack. But the key point I want to make here is that auto propane is extremely important to this industry. It has become the largest segment. Within the province of Ontario, it represents 35% to 40% of our industry.

The other point I want to make is that like natural gas, it uses high-efficiency furnaces very well and can be used as a great product to go off hydro or go off oil, and it burns with the same characteristics as natural gas.

Now I want to talk about the environmental benefits of propane. Propane as a fuel is extremely good in all the major areas of concern: smog, greenhouse effect. We think it is the best alternative fuel in terms of global warming -- very low carbon dioxide and methane emissions. We have been working with Environment Canada to measure emissions. We have material in the handouts you have in front of you with respect to emissions. We will just go through some of the highlights here very quickly.

On this chart we have taken some information with respect to a Chev Silverado. You can see that the far, dark left set of charts is the government standard. The pink is cold weather urban starting, the blue is normal city driving, and the darker blue is highway driving. You can see that propane is measured against the government standard in all different types of situations: highway, city driving and cold weather driving. If you look at hydrocarbons, that is under the government standard. It improves in highway driving and is very good in cold weather driving. Carbon monoxide is significantly better than government standards and also in nitrous oxides. One thing I will say is that propane is a gaseous fuel. It runs clean in all applications; gasoline runs dirtier in colder weather.

Last October, World of Wheels sponsored a rally across Canada with four fuels: gasoline, compressed natural gas, propane and methanol. I will say at the outset that these were brand-new Tauruses. They were not optimized or set up for the various alternative fuels. They were just converted to propane or natural gas or whatever, and the optimization was not complete. But you can see here the results of propane with respect to other alternative fuels and to gasoline.

The first chart indicates propane against gasoline and other alternative fuels with respect to regulated emissions, hydrocarbons, carbon monoxide and NOx. Propane is the green fuel; gasoline, pink; the government standard is light blue and CNG is the dark blue. With respect to hydrocarbons, which are particularly important with respect to smog, you can see that propane stacks up very well against all the other alternative fuels. With respect to carbon monoxide, again propane stacks up very well with the all the alternative fuels, better than CNG and better than methanol. Finally, in terms of NOx, again propane stacks up very well. It is the best fuel in the area of NOx, which is very important for global warming and acid rain and photochemical smog.

The other thing I should say about propane is that it is in a sealed system. You have two kinds of emissions: tailpipe emissions and evaporative emissions. Propane runs in a sealed system, so right off the bat you eliminate the potential for a lot of emissions.

In the area of unregulated emissions -- formaldehyde; VOCs, which are volatile organic compounds; methane and non-methane hydrocarbons, which are critical for the creation of smog -- again we have the same scale. We have gasoline in the light purple at the far left of these bar charts, CNG in the dark blue, propane in green and methanol in light pink.

You can see in the area of formaldehyde that propane is the best alternate fuel. In the area of VOCs, propane and CNG are neck and neck in terms of their emissions. With regard to methane, propane again stands out very well, considerably better than CNG. And in the area of methanol, again propane stacks up very well.

We have other information on emissions which can be made available to members of this committee if they want.

The other thing I should say about propane is that back in 1980 there were virtually no vehicles running on propane. Today there are over 50,000 vehicles.

We have been the most successful in the field in grabbing hold of this challenge and creating an alternate transportation fuel. We had to, given our market dynamics, as I went over. But we certainly have proven we are successful. We have an infrastructure in place today of 1,700 outlets. We can provide a solution today, and we are doing it right now, but we can expand that solution further for the environment, for energy security. We are here today. We are not saying we are the whole solution, but we are saying we are a very strong part of the solution.

We have a number of challenges as an industry. We are not saying we are perfect. There is a low awareness of propane. We are a very small energy source -- as I said, only 1% to 1.5% of total energy in Canada -- so there is a low awareness. We are working as an industry to improve that awareness. Second, at times that awareness is negative, and we have tried very hard to alleviate those concerns with the public. In the last three or four years there has been a government-industry committee looking at the propane industry with industry, with the Ministry of Consumer and Commercial Relations, with the Association of Municipalities of Ontario and with the Consumers' Association of Canada.

A study was completed in terms of the fuelling of auto propane. That study indicated that propane was as safe as gasoline in terms of safety incidents, so we have a job to do in terms of promoting the product and ensuring that it continues to be a very safe fuel, which it is today.

As an association, we have developed various pump island attendant training courses in the last couple of years to properly train people in the fuelling techniques of propane.

Declining conversions is a very, very critical issue to this industry. Clearly if we do not have conversions, our volume will plummet. We have seen some impact on that. I just want to show you some numbers very quickly with respect to conversions.

The total numbers at the top -- for example, 23,000 in 1990 and 17,700 in 1987 -- are the total conversions done in Canada. The pink are non-Ontario conversions. That is particularly in Alberta and British Columbia. The green ones are in Ontario. What we have seen in the last few years is a decline in conversions. There is a perception out there by the public that propane has less support from government than it did before.

Back in 1989 there was an imposition of a motor fuel tax in two stages. That sent a message out to customers, who said: "Look, I am looking at converting my vehicle, but are the economics going to stay the same? Are the assumptions I based my original decision on going to remain the same?" That was a concern for a lot of our customers.

We have seen declining conversions. Last year we did 4,500, and we are working very hard as an industry to increase that number. That is the critical lifeblood of this industry. Back in the early years there were a lot of conversions that came off very quickly. Today we are working to make sure that the conversions are done properly. Several companies warranty conversions so the customer has a comfort level that the conversions have been done properly.


As I mentioned, back in 1980 this program was launched as an alternate transportation fuels program. One of the key principles was that there be a level playing field. All transportation fuels would have the same terms and conditions in terms of government support and in terms of a fiscal regime. That level playing field has been changed. Propane is now the only alternate fuel that pays a motor fuel tax, and that has hurt us.

We feel the support that other alternate fuels have been getting is not the same as what propane has been getting, although I will say that in the last budget there were some bright signs and positive indicators -- I want to talk about that next -- with respect to propane pricing.

One of the issues we have faced is that with the advent of the road tax, the spread between propane prices and gasoline prices tends to narrow. What that did was change the economics. The fleet user who was using propane saw his economics deteriorate because all of a sudden instead of propane not having a road tax, it had a tax of 4.3 cents a litre on it.

The advent of the GST, which arrived in January this year, impacted on our economics another 2.5 cents; it narrowed the gap another 2.5 cents. Gasoline had a federal sales tax on it. The federal sales tax was taken out and GST was put in. The effect was neutral. Propane had a small component of federal sales tax, about two tenths of a cent a litre. The advent of GST narrowed the gap between gasoline and propane because we had to put that right on the pump price. Right off the bat it was narrowed.

I will commend the Treasurer on his recent budget. He did not increase the motor fuel tax in the last budget. In it there is a 1.7-cent tax on gasoline right off the bat, and another 1.7 in January. That will tend to widen the spread.

Technology is a very big issue for the industry. The automobile industry is constantly progressing in terms of technology. We are working very hard to maintain a technology both in engines and in refuelling infrastructure, but that requires investment. I will talk about that a little bit further.

We have had some concerns with respect to the application of government regulations at the fuels safety branch level. We have information on that in your handout. It is a concern for us. We are working closely with the fuels safety branch and the MCCR to try to make sure we work together in a more positive way.

With respect to employment, this is a new industry. It did not exist in 1980. We have had a very positive impact on employment in Ontario and on economic activity. Looking very quickly at conversions, conversions generate economic activity. If you take 4,500 conversions, each costs about $1,800. That is retail spending of $1.8 million. We have looked at the impact of this based on an input-output model. Every $10,000 of retail spending generates $12,000 of gross domestic product impact. That is a benefit to the Ontario economy of $9.7 million, or 324 person-years of employment.

Concerning motor fuel sales, 400 million litres of motor fuel sales at, let's say, 28 cents a litre generates $112 million of retail spending. The GDP, or gross domestic product, impact of that is $130 million. Again, that was not there before. The person-year number of jobs is 4,500, so in total you are looking at 5,000 jobs. I will say that a lot of these jobs in the refuelling infrastructure are for those people in the 18-to-24 age bracket, where unemployment is particularly high. We have, as I said, brought out training programs to help them do their jobs better. What could this impact be if these conversions were 20,000, like they were before? What could the impact be on jobs and economic activity?

What is the impact on the Ontario budget, on the cash flow of the Ontario government? We do kick in, through our motor fuel tax of 4.3 cents per litre, $17 million. Admittedly, the government forgoes road tax on our products, but that is essential; if we do not have a proper fiscal regime, our industry is dead. The province does forgo tax revenue. That represents about $38 million. That has not been updated for the recent changes in the budget, but I think it is basically very accurate. The provincial sales tax rebate for converting vehicles of $750 a vehicle represents $3.4 million, but on the previous page, I indicated the gross domestic product impact of this industry of about $144 million. Based on that same input-output model, 16% of that traditionally flows back in terms of tax revenue to provincial coffers. That is a plus of $23 million.

The net negative cash-flow impact on the province, in terms of finances, is $1.6 million. What could it be? That does not count, by the way, the impact on society in terms of having cleaner air. What are the benefits of having lower costs in terms of hospitalization and the health program? That is not factored in there, so there are a lot of other benefits that are not factored in there that are real costs.

In conclusion, the energy and environmental reasons for supporting all the transportation fuels, particularly propane, are even more important today than they were in 1980. Propane offers an alternative to gasoline that can meet public policy objectives, create employment and investment in Ontario and provide long-term security of supply. But the initial policy of fuel neutrality has been eroded to the detriment of the auto propane industry, and this is harming the industry directly and making it difficult to make the necessary investments in infrastructure, marketing, research and development and demonstrations.

Our recommendation is to make the playing field more level, as it was back when the program came to light, because we are experiencing declining conversions. Specific recommendations are: increase the sales tax rebate for propane conversion to $1,000 from $750 to match the one currently available for CNG; extend the period of eligibility for the rebate from three months, as it is today, to 12 months; provide some tax relief to propane to mitigate the effect of the GST on auto propane and the gasoline price spread -- I will say that the recent budget went a ways to help do that; and, in association with the federal government, permit accelerated depreciation of investment in refuelling infrastructure.

In summary, propane provides a great opportunity for Ontario in terms of energy security, in terms of the environment, in terms of job creation, in terms of investment. The auto propane industry is very important to the propane industry. There are a lot of companies in Ontario that are 90% or 100% dependent on auto propane. They jumped into the market when this opportunity came about. If the auto propane industry disappears, this industry will shrink by one third to 40%. But if you look on the upside, what is the potential that could be there? Cleaner air, more jobs and better energy security in the transportation sector, which today is 98% dependent on oil.


The other thing too is that I think it is an excellent example of industry and government working together. We have worked well for the last 10 or 11 years. We want to continue to work together to build this industry for the betterment of the public policy goals I have mentioned. We would like to expand that partnership and work with industry and government to have more government vehicles on propane, and maybe have government work with us to approach the Chryslers and Fords and GMs of the world so they can produce vehicles that run on propane.

That would help the provincial government too. If vehicles are produced at the factory level, conversions are not necessary. The Ontario government can look at that $750 sales tax rebate; that may not be necessary. The pricing of vehicles coming out of the OEMs -- the original equipment manufacturers -- the Chryslers and Fords and GMs, is similar to gasoline because off the line it does not have to be converted. The Treasury saves that money and it still has the benefit of a clean-burning fuel and energy security; there is an abundant supply in Canada. I appreciate the opportunity we have had to speak to you today. I am probably taking too much time, but we appreciate the opportunity, and that concludes my presentation.

The Chair: Actually, time expired, but if committee members have questions, perhaps we can start with having one or two questions per party, beginning with the Liberals.

Mr Kwinter: In your total conversions, what proportion are commercial or fleet users and what proportion are individual consumers?

Mr MacDonald: By far and away the majority are fleet users. I would say 90%-plus. The benefits of converting to propane come to the fore in that fleet application because you drive more miles. Keep in mind that because you have to pay for a conversion of $1,800, you have to drive enough miles to generate savings to get that pay-back back. Fleets generally like to have that pay-back within a year to 18 months.

There are, though, opportunities, we believe, in the commuter market. If you drive enough miles the pay-back will be there. There still is pollution coming out from lots of vehicles, but clearly the lion's share, 90%-plus -- that is an estimate but that order of magnitude -- is fleet users like couriers, taxis, limousines, those kinds of vehicles.

Mr Kwinter: The reason I want to know that is it seems to me that is where you really have to concentrate your effort. That is where the greatest growth would be. I agree that one of the major hurdles would be to get the original equipment manufacturers to make that a factory option.

Mr MacDonald: Yes, precisely.

Mr Kwinter: That would solve a lot of your problems. We saw that in the 1970s with diesel. A lot of people went to diesel and a lot of commercial vehicles are still diesel. That should be, I would think, one of your major thrusts, to get original equipment manufacturers to make this a factory option.

Mr MacDonald: That is exactly right; no question about it. It has been very successful. If you look at Holland, 20% of the fuel that is used in the vehicle market is propane. There are 500,000 vehicles. There is no reason Canada could not have 500,000 vehicles on propane. In Ontario we could have 250,000 vehicles. We could handle five times more, with the supply we have. We are there now. We have an infrastructure in place today. We have 1,700 facilities in Ontario available today.

Mrs Sullivan: I want to follow specifically on your recommendation relating to the motor vehicle tax on alternative fuels. As I recall the history of this, and I would just like you to bring us up to date, when the incentive was put into place, it was put into place and considered by virtually all of the subsequent treasurers as a temporary tax until the industry came to maturity and the alternative fuels were seen as a real alternative for users. There was, as I recall, concurrence between your industry and the Treasurer a couple of years ago that in fact your industry had reached that maturity level where it could compete, because there still was a differential between propane and regular gasoline, and that it was an appropriate time for that tax to go back on. Would you just like to comment on that?

Mr MacDonald: I could be wrong, but I do not recall the industry saying, "Now is the time to put on the tax," per se, or "an appropriate time." You are right that a critical thing is the spread between propane and gasoline.

When the program was launched, as I understand it, back in 1980, it was a long-term program, a 15-year program, and the principle was: "Let's create an environment where government and industry work together in the area of research and demonstrations. Let's provide a fiscal regime and a level playing field and let the marketplace decide which fuels are selected by the public, fleet users or private individuals, whatever. That was the original intent.

I guess what happens is that you get a mindset out there that: "This fuel tax has gone on. When is the next one going to happen?" In many ways it is a fear of the unknown -- Once a fuel starts to get taxed, is another tax going to get on. I convert to propane when there is not a fuel tax. A fuel tax was put on? It first came in at 2.3 cents in July 1989, then another two cents; it was announced at the time of that budget for a total of 4.3 cents. Then the GST happened, then all these sorts of add-ons, so it is a combination of a number of things. Clearly it is critical that the spread be there. You are 100% right there, but a lot of it is perception.

The fleet users are very much concerned with the economics of things. They are converting to propane because of economics. I would like to think they were converting because of the environment, but when it comes right down to it, they are converting because of economics. If they feel there is more tax to come, they get very nervous. They rethink. They tend to think a little farther.

You are looking at a conversion. They are high mileage users. Every two or three years or four years they rethink their decision, and if the economic environment has changed or if there is some doubt about it, they pause for thought.

In terms of your comment about whether the industry thought it was okay to put a 4.3 on or it was negotiated or whatever, I do not recall those discussions. It does not mean there were none, but I do not recall them. But you are right that it is critical there be a price spread between propane and gasoline and diesel.

Mr B. Ward: I have a quick one. It is more of a clarification from a fiscal standpoint. You are suggesting that the fiscal support the government has shown your industry, now and in the past, should continue, and in fact should be enhanced if possible. The other clarification is that you agree with the fuel taxes that were implemented because it increases the spread, as I think you just stated, which the GST closed and that by not taxing the motor fuel tax, it has benefited your industry.

Mr MacDonald: The GST came in this year, as you well know. It added two to 2.5 cents to our price, and not so to gasoline. It is true that the 1.7 cents a litre from the Ontario budget that was announced in April, which was instituted right away, and then the upcoming 1.7, will help widen that spread. That is, I guess, your point of clarification.

We have to have a positive fiscal regime to be successful. If we do not have a sales tax rebate to foster conversions, we will not have conversions. You see $1,000 for compressed natural gas -- I am not knocking any fuel; I am just stating facts -- and you see it is $750 for propane. That sends a message out to people. You see other alternative fuels with no motor fuel tax, and you see propane with 4.3. That sends a message out.

I guess what we are saying is that we need a fiscal regime which allows us to provide the fleet users, the public, the economic benefits. I commend the Treasurer for not putting on the road tax, not increasing it, and widening that spread again, but what we are here to talk about and why we are here is to say: "Look, we need a fiscal regime. We want a level playing field with all alternative fuels."

Mr Sutherland: It is nice to hear a group saying that the gasoline tax increase was a good thing. What I want to know, just for some personal interest, is, roughly how many miles or kilometres a year would you have to drive to make it worth while to have a conversion, or what do you think from the economic standpoint?

Mr MacDonald: It depends on many things, of course: the fuel efficiency of the vehicle itself; the spread between gasoline and propane.

Mr Sutherland: With the current situation, what would it roughly be?

Mr MacDonald: I would say you are looking at about 4,000 to 4,500 litres of propane a year. You guys can help me out if I am wrong here; I would say 20,000 to 30,000 kilometres a year.

Mr Sutherland: I am at 39,000.

Mr Wice: By good measurement, if you have a gasoline vehicle and you fill it up two and a half times a week, then that is a vehicle that should be on propane.

Mrs Sullivan: You have a customer.

Mr Sutherland: I thought about it. I may still do it. I did not think I would be driving this much.

Mr MacDonald: We can take orders for conversions today, if you would like to.

Mr Sutherland: I am at 39,000 kilometres over 10 months, so we are pretty well there.

Mr MacDonald: We can arrange something.

The Chair: That is it until 9 o'clock tomorrow morning.

The committee adjourned at 1652.