Wednesday 10 March 1993

Pre-budget consultations


*Chair / Président: Hansen, Ron (Lincoln ND)

Vice-Chair / Vice-Président: Sutherland, Kimble (Oxford ND)

Caplan, Elinor (Oriole L)

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

Christopherson, David (Hamilton Centre ND)

*Jamison, Norm (Norfolk ND)

*Kwinter, Monte (Wilson Heights L)

Phillips, Gerry (Scarborough-Agincourt L)

*Sterling, Norman W. (Carleton PC)

Ward, Brad (Brantford ND)

*Wiseman, Jim (Durham West/-Ouest ND)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Brown, Michael A. (Algoma-Manitoulin L) for Mr Phillips

Dadamo, George (Windsor-Sandwich ND) for Mr Christopherson

Johnson, Paul R. (Prince Edward-Lennox-South Hastings/Prince Edward-Lennox-Hastings-Sud D) for Ms Ward

Perruzza, Anthony (Downsview ND) for Mr Ward

Ruprecht, Tony (Parkdale L) for Mrs Caplan

MacKinnon, Ellen (Lambton ND) for Mr Sutherland

Clerk / Greffière: Grannum, Tonia

Staff / Personnel: Campbell, Elaine, research officer, Legislative Research Service

The committee met at 1031 in room 228.


The Chair (Mr Ron Hansen): We'll resume the pre-budget consultations on the standing committee on finance and economic affairs. We'll first turn to the proposed outline draft report, the table of contents. Does everybody agree with the table of contents?

Mr Norman W. Sterling (Carleton): Can I just ask a question? How long is it going to take to write this?

Ms Elaine Campbell: I think it'll depend on what is discussed today. I have the skeletal outline here. It's really a case of filling in and what I want to find out today is what you want to fill it in with. I should have a better idea by the end of the day as to how much time will be needed.

Mr Sterling: Can I just talk in general here before we go into various portions of it?

The Chair: Go ahead.

Mr Sterling: I have no real objection to the outline that our researcher, Ms Campbell, has put forward in terms of how she would draft it, the overview of the presentations under each section and that kind of thing. I would encourage her, from our point of view, to just go ahead and do this.

When you get to the recommendations, "The committee recommends that: Economic and Fiscal Policies," which is on page 6 -- do you have all of the recommendations? You have economic and fiscal policies, taxation, sectoral issues, social issues involved there. I don't know if Mr Brown or the government wants to comment on that first part, but up to page 6, as far as I'm concerned, you can go ahead and write. I'd just like some explanation of the breakdown in terms of the recommendations you have. When you say that this section will open with an introductory overview, could you just tell me what would be in the introductory overview?

Ms Campbell: It would be basically a summary of the gist of the comments that were made. There were a number of comments made that couldn't be categorized under a subject heading. I thought I might summarize some of those as well.

Mr Sterling: Then you ask a number of questions after. "Would the committee prefer to focus on a small number of concerns as opposed to a broad range of issues?"

Ms Campbell: In the previous bullet point I make reference to the fact that in the summary of recommendations, which accompanies the document you're looking at right now, I was able to categorize a number of specific concerns, subject areas. My question there is, does the committee want to focus on a small number of those or does it want reference made to every single issue that's listed there?

Mr Sterling: I don't know. What do the government members want to do with this? Obviously we're going to differ when we get down to the nitty-gritty.

Mr Jim Wiseman (Durham West): In previous submissions that we were sent there has been a preamble and a description of what we've heard, and then there have been specific recommendations from the committee. Some of them have gone through unanimously because everybody agreed, and some of them have not, and the opposition has usually submitted a dissenting report or an addendum to the report.

I guess what we want to ask is if that's the format of the report we want to send this time or if we want to do something different, and if we do, what would be the difference and where.

Mr Sterling: You obviously have the numbers in terms of the committee, and so therefore the report is essentially a government report.

Mr Wiseman: If I could interject here again, just having read through some of the recommendations that have been made, some of them are very contradictory. For example, when we heard the railway presentation yesterday and we read the recommendations of the trucking association and of the Canadian Manufacturers' Association, they're obviously contradictory recommendations. One's recommending that there be a level playing field in terms of taxation on railway rights of way, with regard to the comparison to using the 401 as a means of transportation. The CMA and the truckers' association disagree with that and ask for a cut in their taxes because they already feel that they are overburdened, whereas when you read what the railway association is saying, it's asking for a cut in the fuel taxes that it pays because it subsidizes the roadway that it is in direct competition for.

So that's an example of a contradictory recommendation from both. I think it would be useful for this committee to start to discuss around what kind of recommendation the committee would like to make on the basis of obviously contradictory recommendations from the groups, and perhaps to give some indication or some thrust to the Treasurer in the direction that, in that particular case, the committee would like to go.

Mr Sterling: You see, I guess the disadvantages on those kinds of recommendations are that we hear a 20-minute presentation by one group and then 20 minutes later by another group, often the first group not knowing the second one's coming in and no opportunity to reply by the first group.

What they're asking for are significant shifts in tax responsibility, if you want to put it that way, or whatever. The Treasurer is in a much better position, because he can go to his Minister of Transportation and say: "What do you think about what the railways are saying and what do you think about what the trucking industry is saying? What are the rest of the people saying? Where's the debate on this issue?"

I have a great deal of reluctance in saying this is right or that's right, because I don't know, quite frankly. I've heard the story and I'm intrigued by the story by the railways, but I don't know where the really non-competitive edge lies. I don't know whether it's because the railways just have not measured up or whether in fact we've been too fair, if you want to put it that way, to the trucking industry. I haven't drawn a conclusion, and I think it would be unfair on our part to draw that conclusion in this report. I guess I'm begging off on that decision.

Mr Wiseman: I think you've raised a very good point in terms of the difficulty of grappling with some of the recommendations, and we may want to go in a different direction in terms of that and say that while we've heard these conflicting submissions or these contradictory submissions on this issue, we might want to make a recommendation that the Treasurer take a long, hard look at where the direction should go in terms of what the overall finances of the province are. For example, if it's $20 million to build a six-lane highway, do we want to continue to encourage the erosion of the railway system that is there? Maybe, without making any definitive recommendation, we can put forward an argument that says something should be looked at in terms of an overall direction. I'd be interested in that.

Mr Gary Carr (Oakville South): The only thing I was going to suggest is that we take the main topics, and I don't care who starts, whether it's the debt or taxation, and basically just see. From the government's standpoint, depending on what the Treasurer wants to do with the next budget, if he does want to home in on the fact that he wants to keep it down, he may want to get some type of agreement in this report from the other parties to do that on the debt and to have some type of report that we agree. I don't know what direction you've got on that or whether you're just free to say whatever you'd like.

Mr Wiseman: We're free.

Mr Carr: What's that? You're free? That's good.

My suggestion would be to take some of the main topics, just the ones that we feel are the most important in the public's mind, and then decide what some of the recommendations will be. I think we can fit in the summary.

The only thing I wanted to caution with what Elaine said is that sometimes she said that she wanted to put the ones that can't be categorized up front. My only feeling -- I don't even know what they are; I might agree with them -- is that by doing that it may lead those to look like they're a very important part of the report when they may not be; that's why they can't be put in any type of category. That's the only thing I wanted to caution on that. If you put it separate -- and again, I don't even know if it was something I agree with or what it was -- it may look like that's something very important. I just wanted to caution on that.

But basically my suggestion would be to take the main topics, start out with what the government wants, because you have the numbers to decide, see if there's any agreement, if it's taxation and you call for a freeze of taxes, whatever it may be, then see if we can get agreement, and go through each of the lists, see the ones we can agree on and the ones we can't. Then obviously that will be the minority report of the other two parties. That's just my thoughts off the top of my head.

Mr Paul R. Johnson (Prince Edward-Lennox-South Hastings): I'd like to make a comment, Mr Chair, if that's okay. Sure? Okay, thank you. Mr Carr: You've got the floor, Paul.

Mr Johnson: I think certainly we can probably preface this report by making a statement about all the things we agree upon. That's in a sense some of the things Gary's already said, but certainly we have some commonalities. I mean, when we look at the circumstances the province finds itself in today, as elected representatives we have some opinions. Certainly we've heard from a lot of people who have made presentations and they all have opinions based on whether they're maybe funded by the government or believe they should be funded by the government or whether they believe the government should make some major reductions in its expenditures. But I think, again, just as elected representatives who sit here before this committee and sit in the Legislature we probably have our own opinions. We have our party's opinions, but certainly there are some things that I think we would find common. For example, I think that not one of us wants to see the province of Ontario become bankrupt or that our debt escalate beyond a point that's manageable. I think that's a fair commonality. If anybody disagrees with me, speak up, most certainly. Likewise, with regard to taxation and expenditure, I think we have a lot in common in spite of what we may say from time to time to each other across this floor.

Mr Michael A. Brown: (Algoma-Manitoulin): I have a question, being relatively new to this committee, in terms of the report and what happens with the report. The report, I take it, goes to the Treasurer?

The Chair: Correct.

Mr Brown: If, as Mr Wiseman has suggested, we perhaps ask the Treasurer for an opinion on relevant issues the committee agrees to, do we get a response other than seeing what the budget says? Is there a response whatever from the ministry, other than just what we see at the end of April or the first part of May or whatever?

The Chair: As soon as we get done, we send a copy to the Treasurer, but it's tabled in the House as soon as the House is sitting, on April 13 or 14. It'll be tabled as a report from this committee, but the Treasurer will have a copy.

Mr Wiseman: For example, if I may, on the issue of the truckers versus the railways, it may well be that the paragraph could read something like: "This committee is unable at this time to determine a course of action on this issue, given the conflicting reports. We recommend to the Treasurer that further study be done. The study may want to take into consideration what the overall objectives of the government are in terms of greening industries, more efficient transportation modes. We, as a committee, at this point are not able to recommend based on the information we had."

That hasn't been put in any report in the past, but I think we could ask in terms of where the report could go. In the areas where we obviously have some ideas of what we would like to see happen, we could make those recommendations. In the areas where concerns have been raised by the public, we may well want to say, "We as a committee have not been able to resolve this issue and would request that further study be done."

Mr Brown: In that case, there may or may not be a reply from government.

Mr Wiseman: That may not be possible, but we're flagging the issue.

The Chair: Excuse me; just a minute. I'd like the clerk to respond to this. I had given some misinformation there on the report being tabled and no response.

Clerk of the Committee (Ms Tonia Grannum): The standing orders provide, if the committee wants, for the ministry to provide us with a formal response after a report is tabled within a certain amount of days. In the past, what's happened has been that we've been invited by the Minister of Finance to his boardroom, after we've given him our draft report, and he's given us an informal response. If you wanted to go that way, we could see if we could arrange that, or you could go through the standing orders and require a formal response within the amount of days after tabling. Those are options.

Mr Carr: The only comment I would make about the recommendations is that I don't see them being a summary of everything we heard, because they're conflicting. I would much rather see it from the information all the members heard, and then put in what their recommendation is.

If we run into one where we can't decide, like the trucking issue, then I don't think it should be put in there that we couldn't decide. I would like to make it a little shorter, more concise, but come up with a report that whatever is in there, we have agreement, because my fear is that the Treasurer will get a report which basically is nothing but a summary.

I think our function, as we sit and listen to the people, is to see if there is any common ground and then come up with a report to the Treasurer where we can agree; not on what people said. I don't see it being a summary -- some members may disagree -- because my feeling is that if we can get some agreement, even if it's on two things, if it's presented to the Treasurer and we can agree on whatever it may be, there's more of a chance for an impact with the Treasurer, rather than giving him a report which basically is just a summary.

They can read the summary report, which Elaine did and did very well, but to me, I don't see it being really just a Hansard of what happened. We've heard the submissions -- we may agree; we may not; it may be on two things; it may be on 10 things -- but I think to have an impact with the Treasurer, I would much rather see us do a report where the committee says, "Here's a recommendation on the deficit," if we can agree on taxation, and if we can't, what I would suggest is that each side would then make a recommendation on what it thinks is important, and if it doesn't work out, the government side can say, "This is what we would like to see," and the Liberals and so on.

I would just caution us not to try to make the report a summary of what we heard, because I think through Hansard and through the research that's been done, that would happen. I don't see a report of recommendations just being a summary where we say, "We couldn't decide," unless we think it's an important enough issue on the trucking to say, "We couldn't decide, but we think it's paramount that the Treasurer take a look at that." That would be different, but just to sum up everything isn't constructive.


The Chair: Like a recommendation that if the price of fuel goes up two cents a litre, the impact it would have on the trucking industry.

Mr Carr: We're just saying what our recommendation would be, using that example -- do you think fuel taxes should go up? -- taking the two sides. If we can agree, even if it's one or two things, I think there's much more of an impact.

Mr Sterling: What I'd like to do, Mr Chairman, is to instruct Ms Campbell to write the first part of the report down to the recommendations, and then give us until perhaps tomorrow morning to go through the summary of recommendations to see which ones we're attracted to and how we categorize them.

The Chair: Did you want a caucus this afternoon then? Is that what you're saying, Norm? Do you want to caucus with Gary and come back tomorrow morning?

Mr Sterling: Yes, I want to consult. Basically, one of the problems you have here is that when you look at the summary of recommendations, you're dealing with just about every critic or every ministry. The government side may have an advantage in that it can call the ministry and say, "Where are we on this particular issue or that particular issue?" But you cover the whole spectrum here in terms of where you might want to make a recommendation or where you may not want to make a recommendation.

The only thing that I'd like to know from Ms Campbell is, if we decided on that course of action, that we would adjourn and do a little bit of work on our own this afternoon and then come back tomorrow morning and have a better idea of where we might be on the recommendations, if we were going to do that, I just wonder what questions Ms Campbell would need in order to begin writing the first part, or is that needed by you at this time?

Ms Campbell: By "first part," do you mean to the end of the MUSH sector, to the end of hospitals?

Mr Sterling: You have recommendations all the way down, don't you? You say under "Municipalities," for instance, on page 3: "The subsection will provide an overview of the presentation by AMO. It will summarize comments as follows." Have you written that portion yet?

Ms Campbell: No, I haven't.

Mr Sterling: You said, "The committee recommends that"; I suggest that we wait until tomorrow to write that section. I trust you to be fair in terms of interpreting what AMO said about disentanglement, new programs etc. As far as I'm concerned, you can go ahead and write that. I don't know what your schedule is for the rest of the day. As far as everything up to page 6 on hospitals is concerned, you can do that. You can do the introductory overview on economic and fiscal policies, taxation, sectoral issues, social issues; you can do all of those parts.

For the other parts, I would suggest it might be fruitless to send you out with instructions at this time without our having an opportunity to go over the recommendations and trying to formulate where we might be on each of those recommendations.

Ms Campbell: To further clarify, you would like a little more in the way of text under "Economic Summaries and Forecasts" and "Transfer Recipients," and introductory paragraphs to each of the other section headings.

Mr Sterling: Yes. That's it, basically.

Mr Carr: My comment was that what I would like to see -- and I don't know what the other committee is -- is more of an information, rather than saying, "AMO said this," just more --

The Chair: Generalized?

Mr Carr: -- generalized of what the issues are, without taking a position. The problem we've got, notwithstanding I agree with a lot of what AMO says is that if you do that, there is more conflict and it then leaves it up, with all due respect -- I know Elaine does a good job, but it's more her interpretation or more on the numbers of groups that appeared. I would much rather see us leave it a little bit broader and not really take a position, rather than outlining the circumstances, which you've already done very well.

That is my only caution with that, because I don't see, again getting back to my point -- I think on the AMO one there, if we're going to talk about that, I don't think we should specifically put AMO unless at the end of the day, we recommend what AMO does and agree on it. I think you follow what I'm doing.

Ms Campbell: Your suggestion is to put AMO's presentation into the larger context --

Mr Carr: Right.

Ms Campbell: -- of the whole issue of what's happening with municipalities today. Under those circumstances, it might be rather difficult to come up with anything very substantive by tomorrow morning.

Mr Carr: It's a little more work for you.

Ms Campbell: Yes.

Mr Sterling: I know what Gary's driving at, but I also don't want to waste huge amounts of time involved in this thing. Gary, I think the problem with that kind of suggestion is you're asking for general research on what municipalities say about item (a) and item (b) and all the rest of it, and that's --

Mr Carr: Actually, what I was thinking more is not even that. I am not thinking more detailed; just a very short little bit of what the issues are, more for clarification. I didn't see it being detailed where you do a three-page report on transfers; very short, two, three lines. You see how difficult it is.

Mr Wiseman: From what I've been able to read in the recommendations, most of the MUSH sector has recommended that they get more money, get funding or be included in the process for negotiations and that they want to be included in the negotiations in the future. I don't think we need to regurgitate everything they all said. They have that in common. What we as a committee have to decide is what recommendation we're going to make out of that. One recommendation could be, yes, continue to negotiate and continue to discuss the issues facing the sectors. AMO has said they should get the 2%, 2% and three-year budgeting in the future.

I think some serious discussion has to be had here about how viable some of those recommendations are in the face of the current situation. If we all agree that the deficit is of major importance, then I think the debate will hinge around what we recommend in the other sections on taxation, on transfer funds and so on, on what we agree in terms of the goals we should set in terms of the deficit and what we do about the deficit.

Mr Brown: I think the primary purpose of this committee, at least from my point of view, is to decide, especially at this point in Ontario's history, what economic and fiscal factors are facing the province of Ontario. They're quite different than they have been for a long time, and if we can settle on, first, what the facts of the situation are, which would be terribly important, we could then put any recommendations there might be in some kind of context. I think we should be starting out dealing with that as the primary function of this report because I, over the last few days, and you, for weeks, have heard people come in here and say, "We know how bad it is." I'm not sure they do and I think one of our jobs as legislators is to get the proper facts in front of the folks.

This first section, where we talk about the fiscal forecasts and where the province is at, I think, is going to set the context for how we deal with the entire rest of the report. I think members, having seen the various fiscal and economic forecasts, have a pretty good handle on that and I think that's where the debate should centre.

I think we could get on with that relatively soon. We could discuss that, get general agreement upon the broad issues of taxation, deficit reduction or whatever, and then move into the rest of them after that to give us all some time to look at the various recommendations and think about how we might want to deal with particular ones. But let's settle the context before we get going on this.


Mr Monte Kwinter (Wilson Heights): I would agree with my colleague. I think an ideal document would come forward with an analysis of where we are today, a decision -- this may be controversial -- as to whether the thrust of the budget should be to reduce the deficit, whether it should be to increase the deficit, and whatever rationale there would be for either of those particular points of view. We'd have to take a look at taxation -- is there room for taxation, is there not room for taxation, what areas of taxation, is that practical -- and expenditures.

We've heard some comments from some of the deputants, particularly yesterday, saying that it's impossible for us to tax our way out of this, it's impossible for us to grow our way out of this, and the only way we can do it is by tackling the expenditures. Do we, as a committee, agree with that? There may be differences of opinion on those particular points.

I think if this document is going to have any relevance, it really has to deal with that. Then the specific things can be used as commentary. But I don't think it should be the role of this committee to address very specific things because the mental health group wants a particular thing or some other group wants a particular thing. That's interesting and it all adds to the background, but I think we should be dealing with this in the broad approach to what should be the economic direction of the province as reflected by the budget.

Let's give the Treasurer some guidance and some direction from what we have heard from the people who have appeared. I don't think he particularly has to know, on a line-by-line basis, that somebody wants an increase in that particular sector because that's of interest to them. I think we should deal with it on a broad base and see if we can come up with a document that will have some relevance to what is happening.

Mr Johnson: Could I just say that I agree entirely? In fact before you got here, I said something similar. I think if that's what our goal is, then we should hasten to achieve that.

Ms Campbell: I have a question for the committee in general after the discussion that's been going on for the last few minutes. I guess it's a multipart question. Do you still want to follow the very structured framework that appears before you now, or would you prefer to place the comments that were made before the committee into a broader context and focus on one theme such as economic renewal or the issue of productivity or something related to that?

The Chair: Not everybody at once. Norm?

Mr Sterling: Having just received these recommendations and the proposal by Ms Campbell to put this forward, I'd like a little time to talk to my people. I'm attracted by Mr Kwinter's suggestion, and Mr Johnson seems to be in agreement, that we talk about overall economic thrusts that we recommend as a committee to the Treasurer. As I said before, I'm somewhat hesitant to take hard positions on specifics which I've heard somebody plead for 20 minutes in front of this committee. I don't feel that it would be fair for us -- fair for me -- to take a hard position on either side of it, having had that brief experience.

There are some issues where I can take a hard stand. I mean, we have taken a position that the GST and the PST should be melded together in one tax in order to save business the expense of collecting that tax and reporting that tax and paying that tax, so I have no problem with that. But I would rather perhaps adjourn this meeting, come back this afternoon or tomorrow morning and then start talking about the general economic thrusts that we might write in this report.

The Chair: Norm, would it be better that we maybe meet between 4 and 5 tonight so it gives some direction also to the researchers? Do you work at night?

Mr Carr: You do now.

Ms Campbell: Between now and perhaps a meeting later this afternoon, I could work on the economic summaries and forecasts and have something a little bit more in the way of substantive text, filling in the sections there. I could see getting a little bit more in the way of detail there.

The Chair: I think if we come back for that one hour we can give some further direction so when we come tomorrow we can finish the report, but if we wait until tomorrow, it's a little late in the morning to start getting a lot of work done there.

Mr Kwinter: May I make a suggestion?

The Chair: Okay, Monte.

Mr Kwinter: It would seem to me that if we could start the report with an overview of the economic climate, which should be easy -- when I say easy, I don't mean easy to do but easy to get the information, because it's certainly a topic that dominates every discussion. Every political discussion in Canada today is absolutely tied to the economic climate. Everybody who talks, whether it's the three NDP premiers coming together to talk about it or whether it's the Minister of Finance of Canada or whether it's Maurice Strong having his press conference talking about the problems with Hydro, whatever we talk about it is all based on the economic situation.

I think it's important that we as a committee state that so there's agreement, because that will set the course for what our recommendations are. "This is the economic climate." It's a fact. It isn't a matter of opinion. Here's the situation that we find ourselves in. Today Moody's is saying all the provinces may be in trouble with their rating because of what is happening. That is the context in which we have to make our recommendations, so I think we should start off with that.

Then we should have an overview of the alternatives of the things that we have to address, whether it be growth in the economy or what the prospects are there, whether it is taxation or whether it's expenditure control, and then our recommendations. As I say, this committee has to make the decision as to what it feels we should be recommending. This exercise is to provide recommendations to the Treasurer in the preparation of his budget, and it would seem to me that's what we should be doing.

The Chair: Any other comments? Everybody in agreement? Okay. Elaine?

Ms Campbell: Just for clarification for my own purposes, I would like some clarification on the direction the committee would like me to follow today before a meeting at 4 o'clock or whatever this afternoon.

Mr Sterling: I think on page 2 of your paper you're talking about what Mr Kwinter is talking about. In other words, what did the people who were in front of this committee say the forecast was? You might want to present that in the form of a table or the summary of what it is, what are the growth factors --

Mr Carr: Including the government's.

Mr Sterling: -- including the government's forecasts, as to what we can expect.

Ms Campbell: So basically follow the format that appears here.

Mr Johnson: Could I just add something?

The Chair: Yes, Mr Johnson.

Mr Johnson: I think this summary is very comprehensive and it gives a lot of details about viewpoints that presenters have brought forward. I think the report we would give to the Treasurer would be somewhat more simple and more direct.

I don't want to belabour this, but we've talked about it time and again this morning already, about what the presenters before us have said, especially with regard to three, maybe four things, that is, taxes, how we raise revenue, expenditures, where or how we should reduce our expenditures and reduce programs, I suspect, and certainly the debt and deficit and how we deal with that. Of course the other thing is we've received a considerable amount of information as to how the economy may or may not grow over the next short term. So I think those four things. If we could have just a summary based on the information you've received from all the presenters, that gives us some direction with regard to those.

Ms Campbell: You're talking here under economic summaries and forecasts. Would you like an overview of everyone's presentation, or are we just focusing on the forecasters and the Treasurer?

Mr Johnson: I think the forecasters and the Treasurer. They would be the people, in my opinion, who would be the experts, who would give us the best advice with regard to that.

Ms Campbell: Okay.

Mr Kwinter: Mr Chair, may I make a suggestion?

The Chair: Yes.

Mr Kwinter: It seems to me that from a format point of view, if we could have the report start out with the economic summaries and forecasts, then go from there to economic and fiscal policies, then to taxation, then the sectoral and social issues and then go to the transfer agencies and any of the other comments, if it worked through that progression, then it would make some sense. It would build up to, "Now we have to deal with the real problem of how we affect these particular things," and deal with that at the end, but set the stage for why you're making those recommendations.

Mr Johnson: Good advice.

The Chair: Elaine, are you straight now on exactly what the committee is looking for, or do you want to repeat it?

Ms Campbell: No. I think I'm fine.

Mr Wiseman: Don't repeat it, for heaven's sake. We've got it.

The Chair: Can we say that we will adjourn?

Clerk of the Committee: Recess.

The Chair: Recess. I always want to adjourn, don't I? When I recess, I recess. Okay. We're recessed till 4 o'clock and have an hour for further direction that has to be given to the researcher.

Mr Anthony Perruzza (Downsview): Mr Chairman, can I make a quick comment, please?

The Chair: Oh, you're back. Okay.

Mr Wiseman: You wouldn't want to withdraw that, would you?

Mr Perruzza: We're breaking until 4 o'clock?

The Chair: Like in school, recessing until 4 o'clock.

Mr Perruzza: Then we're coming back here at 4 o'clock?

The Chair: At 4 o'clock.

Mr Perruzza: Till?

The Chair: Till 5.

Mr Perruzza: Until the report is prepared?

The Chair: No, not until the report's done, because we still have tomorrow to meet. What you'll do now is caucus with your members on what you feel should be done and the recommendations. We're recessed until 4 o'clock.

Mr Perruzza: Thank you for that explanation, Mr Chairman.

The committee recessed at 1113.


The committee resumed at 1601.

The Chair: We'll resume writing the report for the standing committee on finance and economic affairs. Ms Campbell, will you go over what you've done for us this afternoon and where we're going from here?

Ms Campbell: The document that you see before you is entitled Proposed Out1ine Draft 2. What I did was take the document that was distributed this morning and reorganized the section headings and changed the text a bit under the headings.

The Chair: Can we turn to the title page which is actually page 2, but there's no "2" on the top.

Mr Tony Ruprecht (Parkdale): Mr Chairman, are you showing us this because the numbers are wrong on this?

The Chair: No, we just reorganized it. It's just that there's no number. Actually, the next page will be "Table of Contents." There are no numbers on these pages, just so you are not looking at it upside down or the wrong page.

Ms Campbell: I have a question to ask concerning the title. Would the committee consider changing the title if we are going to be changing the context of the report? Or is the committee happy with the way it's now entitled?

The Chair: What, "Pre-Budget Consultations"?

Mr Wiseman: Do you mean something like "Recommendations to the Treasurer based on the Pre-Budget Consultations"?

Ms Campbell: I suppose something along that line. Or is the committee happy with what appears there now?

Mr Wiseman: I think I might agree more with changing it to "Recommendations to the Treasurer based on the Pre-Budget Consultations."

The Chair: Everybody in agreement on that?

Mr Kwinter: I would prefer if it was "The Report of the Standing Committee on Finance and Economic Affairs on its Pre-Budget Hearings," then we don't have to --

The Chair: Do we agree on that, because everybody knows it's going to the Treasurer.

Mr Wiseman: I have no major problem with that.

Interjection: That's fine.

The Chair: Table of contents: Does everybody agree on the table of contents, the structure? Hearing no opposition, everybody agrees?

Mr Carr: No, I'm sorry I didn't get that. What was that again?

Interjection. The Chair: Wait a minute; Mr Carr.

Mr Carr: I just didn't hear that. What did you say, Ron?

The Chair: Does everybody agree with the table of contents and the way it's laid out?

Mr Carr: Yes, it looks good.

Mr Wiseman: I thought that under "Transfer Recipients" there was going to be a section "Considered: Other Recommendations" or "Other Considerations." Wasn't that what you suggested, Monte?

Mr Kwinter: Yes. I would think that under the section that says "Transfer Recipients," that would really be an anecdotal report on what the transfer recipients who appeared before this committee had to say, but that somewhere in this report or at the end there would be something in the form of recommendations, comments or whatever. Up until this point all of this is really anecdotal, as I said, but then somewhere along the line there's got to be some provision for this committee to make some recommendations, comments or whatever.

Mr Wiseman: So it could either say "Other" or "Recommendations." I have no -- anybody? Am I out there on my own on this or what?

Mr Kwinter: Or "Conclusions." They may not necessarily be recommendations; they may be comments.

The Chair: Okay, Ms Campbell, read out what --

Ms Campbell: Could I suggest that we maybe come back to this after we've discussed the text of the report a bit further? That would probably alter the table of contents a bit.

The Chair: Ms Campbell, do you want to read into the record the introduction?

Clerk of the Committee: Is there any need to?

Ms Campbell: I have a question concerning the introduction. If we're going to be possibly changing the context of the report, should the introduction be changed to reflect that rather than simply stating that we had hearings the week of January 11, 1993, and for six days in February and March and the number of groups that were heard from?

Mr Kwinter: Could I make a suggestion? I would think that in the introduction, as opposed to just stating the facts as to when the committee met and who they heard, there might be some editorial comment about the context of the economic climate in which these hearings were held so that it sets the tone for what is going to come the rest of the way.

Mr Wiseman: That's in "Economic Summaries and Forecasts," I think. Wouldn't it --

Mr Kwinter: Well, "Economic Summaries and Forecasts" sets the tone for what the economists had to say and the banks had to say. But it would seem to me that this committee was meeting in a particular climate that I think should be reflected in the introduction in some sort of statement to the effect that we've just come out of X number of years of recession, the economy is this, that and the other thing and, given that, this is the context in which these presentations were made, just so that it sets the tone for what the document is going to be. That's just a suggestion.

The Chair: You're actually introducing what the report's going to be so everything's sort of tabled in that introduction. Ms Campbell, would you read it back to us what you've written down?

Ms Campbell: I was just writing down Mr Kwinter's comments that we place the introduction in some sort of editorial context with respect to the economic climate in which the hearings were held, and he made specific reference to the years of recession and other things, I suppose, such as the restructuring rationalization.

The Chair: Okay. Everybody agree? Comments?

We'll go to page 2, "Economic Summaries and Forecasts." Ms Campbell.

Ms Campbell: There's really nothing that has changed since the previous draft was presented to the committee other than the fact that two of the notes that appeared at the bottom of the page have been taken out.

The Chair: Everybody agree with page 2?

Mr Ruprecht: Could I just ask a quick question? Was this done the same way previously, exactly the same way, or were there any changes?

The Chair: Do you have the previous copy?

Ms Campbell: The previous draft was exactly the same format.

The Chair: We'll get you an old draft so you can compare.


Ms Campbell: As I said, it had a few notes at the bottom which had been taken out.

Mr Wiseman: Are you asking if previous committees doing pre-budget consultation have done it this way?

Mr Ruprecht: Yes, that was my question.

Mr Wiseman: I would like to think we could have our own stamp of individuality.

The Chair: Done a little bit different, I would say, this year. Wouldn't you say, Norm?

Mr Sterling: Yes.

Mr Carr: What might be helpful are the charts that were done. Is that how you plan on doing it in "The Future," the subsection?

Ms Campbell: That will appear under "The Future."

Mr Carr: That's the way we had done last year's too, I think.

Ms Campbell: Yes.

Mr Sterling: One thing I think is fair comment in here, and the government members may have an objection to it -- the projections for the upcoming budget year of 1993-94. One of the things we've had to wrestle with on the opposition side is that the Treasurer said in his 1992 budget that operating expenditures were going to be $53 billion; that capital expenditures were going to be $3.1 billion. He also said in his 1992 budget that he expected to collect revenues of $48 billion. During the year -- and he said he expected a deficit of, I believe, $8.1 billion -- he's changed that expectation from $48 billion -- it's now at $42.2 billion -- and the deficit has gone from $8.1 billion -- that's operating -- to $13 billion, I think, in terms of what he said most recently.

In my view, him acknowledging that his forecasting was off that dramatically, I guess, can be viewed in two different ways by the quote, but the forecasting was off and that's a fact. I guess the public or somebody reading it could say, (1), they're incompetent, or (2), things are deteriorating or changing so fast that the Treasurer has a lot of difficulty in predicting what in fact his revenues are going to be in any given year.

I think it's significant to show how different his projections are over a relatively short period of time and the significant difference in them, and I would like that included as a table -- in other words, as he made each readjustment, showing when he realized that these things were changing.

Mr Johnson: I'd like to just comment on what Mr Sterling said. First of all, I'd prefer to think that people would perceive it not as incompetence but the fact that the economy is in such turmoil that even though people who are considered experts at predicting --


Mr Johnson: Absolutely -- that those people who are experts in predicting, those prognosticators of the future of the economy, would find that it's very difficult to predict, given the circumstances under which they're trying to arrive at figures that would seem rational. I think, regardless of who might be the government of the day, assistance would come from the same people -- for you or for whomever was in power -- who are there helping us, plus you have your own political staff who would guide you as well.

I think it's clear that it doesn't matter who is there. The Tories federally have not been able to predict. I think that if we look at the history of revenue predictions in any province in the country of Canada, all the so-called experts have not done a good job. I think that would tend to support the argument that it's difficult, during these very difficult economic times, to predict as opposed to a level of competence, if you will.

Mr Sterling: That may be so. You are arguing the case as to what is the proper conclusion the public should put on the figures. I might want to argue the opposite.

Mr Johnson: You might.

Mr Sterling: I think what you will see is that when the table is prepared vis-à-vis the growth figures as put forward by the experts we had in front of this committee, when compared to what the Treasurer's proposing, you will find that the Treasurer is optimistic about unemployment figures, growth and those kinds of things. If I'm looking at it in a credible way and am listening to whatever experts are saying in coming to a conclusion, then I'm going to say that this Treasurer has a history of being overly optimistic about what's going to happen.

Mr Johnson: I don't want to belabour the issue, but I think that --

Mr Sterling: All I'm asking is whether facts are being presented as they --

Mr Johnson: If facts are going to be presented, then we want to lift the whole range of predictions that were made by many agencies and those people who would predict these sorts of things and see that, certainly within the whole range of predictions, the Treasurer's predictions fell within the scope of all other predictions. It wasn't at the outside. I just wanted to make that comment.

The Chair: Okay, I've got Mr Jamison, Mr Wiseman and Mr Kwinter.

Mr Norm Jamison (Norfolk): I believe, if we're going to look at it that way, that what Mr Johnson says as far as really looking at things nationally is concerned is important, because I think we're seeing every government in this country at this point having a shortfall in its projections. Their budget forecasts are running between 10.1% over to 109% over in the latest figures I've seen, in the case of PEI.

But I believe we have to look at the national scene in general too. We have a federal government that seems to have been struggling with the debt load. The end result looked at least a third higher in the numbers of billions of dollars. I think this is symptomatic of the length and depth of the recession on the whole of the economic fabric of the nation. We're seeing symptoms of the same things in other places.

I've been sitting on the finance and economic committee off and on, but basically on, since our term began. Unfortunately, I think it's very important to realize that governments, which rely very heavily on economic forecasters in making a proper assessment, a realistic assessment, have simply been failures at doing so over that time frame, which really indicates to me a tremendous change in the whole economic fabric of how the business of equating that is actually performed.

I think it should be reflected that this is not a symptom just here in Ontario but in every other province and federally, and in some cases internationally, as we see a globalized recession in depth and duration taking place, making it very difficult on every government to project in that manner.

The Chair: Maybe I'll go to Mr Kwinter and then to Mr Wiseman.


Mr Kwinter: I'd like to just comment on this discussion. I don't think it's a matter of pointing the finger at incompetence. I don't think it's a matter of large-P politics; I think it's a matter of small-p politics. I think that one of the problems -- and when the Treasurer tabled his budget, I said, and it's in Hansard, that his projections were overly optimistic. You don't have to be a genius to figure that out.

One of the things that I track on a regular basis is the projections of the London Economist, because when I talk about the small-p politics, the banks and the financial analysts that come in have a political agenda. If they preach doom and gloom, they're going to see doom and gloom. Everybody tries to put the best face on what the economic situation is going to be because optimism breeds optimism and pessimism breeds pessimism.

If you look at the Economist that I received today -- I should have brought it with me -- they predict, and these are people who are outside the Canadian scene, that growth in Canada is going to be 2.8% in 1993. The Conference Board of Canada had predicted initially that Ontario would lead the climb out of the recession. Three weeks ago they announced that Ontario would trail the climb out of the recession.

It seems that independent, non-Canadian analysts who have no political agenda are saying that the growth in Canada is going to be 2.8%. It seems to me that we would be doing the Treasurer -- and again, I don't want to make this a partisan thing -- a service by recommending that, if anything, the projections of the Ministry of Finance should be small-c conservative as opposed to trying to put the best face that it can on the financial situation in Ontario.

What happens is that if you do that and you are underestimating what your revenues are going to be and you are getting to the point where you may have some windfall, then you have a perfect opportunity to try to tackle the debt. But if you overstate and -- again, I don't want to get into the whole argument -- you cook the books and you transfer the teachers' pension payments into the next fiscal year so that you can have this artificial number, what you really wind up with is a situation like today, where the Treasurer announced that he's probably not going to get his $1.2-billion stabilization fund and he's probably not going to get his funds from the sale of SkyDome and, as a result, he's expecting the deficit to go to $13 billion. That is an incredibly dramatic change from the figures that he started out with.

But, again, you don't have to be an economic wizard to ask why you would include a figure when there's no acknowledgement that it's ever going to get paid, the $1.2 billion. It was put in to make the figures look better. I can understand the large-P politics of it, but it seems to me that if you're dealing with the Ministry of Finance, you would think that of anybody in any branch of government, regardless of what party is in power, it would be the one that would be small-c conservative. They would try to really take almost the worst-case scenario so that, if anything, they would make their adjustment at the end of the year in a positive way as opposed to a negative way.

I think that it might be useful for this committee -- again without trying to talk about incompetence and without trying to talk about anything else -- to send the signal that maybe it's time the people at treasury really come up with that kind of an analysis.

If you take a look at every single projection by every bank and every financial analyst, every one of them is less than what the Ministry of Finance has projected, the low end being the Bank of Nova Scotia at dramatically less than what everybody else has projected, but unfortunately it will probably be closer than most. Yet the treasury people come up with the most optimistic figures, and then they make all their projections based on that.

It's one thing to say, "We think it's going to be this, but having said that, we're going to do our projections on another figure." They sort of convince themselves that this is the figure, and they then project all of their figures based on that figure. Then we have them, almost on a monthly basis, saying those numbers cannot be achieved.

I'm going to make another prediction. If you heard Mazankowski two days ago, he predicts that their revenues are not going to be what they had expected just a month ago.

Mr Perruzza: Nobody believes him anyway.

Mr Kwinter: That is going to reflect in Ontario, because Ontario is a major part. If their numbers aren't coming in, it means that a big chunk of the money they expected to get out of the taxpayers of Ontario is not going to come in, which means that we are going to have exactly the same problem.

It's not going to show up in this fiscal period, because you've only got less than three weeks till the end, but it's certainly going to impact on the next fiscal period, but the treasury people will probably still overstate, because politically it's more palatable.

Mr Wiseman: I remember back when we first started this in 1991, we had all the same groups come forward making their projections. I've written them down and I've got them all at home. They were all projecting that we would be coming out of this in April 1991, if you remember, because you were on the committee.

I agree with you in the sense that it's very difficult to get a handle on the true economies of what we're talking about. As Malthus says, economics is a dismal science, and it's especially dismal when you're in the midst of a recession the way we are.

If I remember correctly, the Treasurer did indicate that not only did he recognize what you have said in terms of revenue income, he also took that revenue number and deflated it even further, by a further amount, and it still came in lower than that.

I think I would agree that it's counterproductive to try to argue around putting political statements into this. It's more productive to try to reflect our best judgement on what is happening and to give that recommendation. I think we'll probably find ourselves wrangling a whole lot less if we try to do that than if we try to turn this into a document containing political comments and political finger-pointing.

Mr Sterling: What I'm saying has nothing to do with finger-pointing at all. It has to do with us producing facts and figures.

Mr Perruzza: On a point of order, Mr Chairman: Is this like an informal discussion we're going to have here today or what?

The Chair: I'm sorry, we're just rotating, going back and forth.

Mr Perruzza: I thought he had the floor.

Mr Wiseman: I haven't completed yet.

I think it's counterproductive to use words like "incompetent" and so on when everybody else has been incorrect in terms of suggesting where we would be by this time. I don't call them incompetent. I just say what has happened is that things are in such a volatile state that it's very difficult and, as Mr Kwinter has pointed out, your guess two weeks ago, three weeks ago, no longer holds up this week. I think that's a valid point to put into the document, to say, "Account for the volatility of the economy, account for the volatility of revenues, account for all of these things and try to compensate as best you can."

In terms of projected spending, if I'm reading the right document, operating expenditures planned for 1992-93 in the budget were $50.947 billion, and in the projected revenues in table C2 on page 81, the total was $44.925 billion. In fact I think our revenues are around $42 billion and our expenditures are somewhere in the neighbourhood of $580 million to $600 million below the projected expenditures.

While there are some major difficulties on the revenue side, some things have been happening in terms of coming in under on the expenditure side, on the constraint side. Of course the final numbers aren't in, but there have been some indications that holding to the budget plan in terms of expenditures is much closer in terms of spending than it has been in the past. Where the projections have failed is on the revenue side. I think it would be far better to try to work in a way towards giving the Treasurer something he can read and think about, as opposed to haggling here over the subtleties of the political implications of the language.


Mr Sterling: It seems that the New Democrats are the people who are arguing the case. We're not arguing the case. What we're saying is that we would like information presented in this for the Treasurer to draw his own conclusions. I want to tell you that I'm not pleased he's out by as much as he is at this stage of the game, because I don't think that helps our credibility as a province etc. What I think he would read into it is the conclusion Mr Kwinter has put forward that maybe his officials should be a little more small-c conservative in their estimations about revenue forecasts in the future.

The problem you have is that in the 1992 budget he says he's going to get this further the next coming fiscal year, which he put in his budget. He made an estimate a year ahead of what was going to happen a year ahead. I give him the fact that maybe he was crystal-balling two years down the road, which is difficult in these times, but notwithstanding that, I believe the opposition said, "You're optimistic here," etc. The Treasurer maintained his stance. The problem is that if he overestimates his revenue, then the people who are coming in here asking for money are saying, "There's enough money there to meet our requests." All I want to do is include a statement as to how far off those figures were a year ago.

As I say, you guys can make the argument that everybody else is off. That's a fair argument. But I think the conclusion you come to, if you're the Treasurer, is, "I may have to be a little bit more small-c conservative in what I do." I don't know. It will be included, one way or the other, in the report.

I just think it's most relevant in terms of looking at what the forecasters are saying now about next year, showing what he said about last year, so that when he puts it in his budget, I hope he's realistic about what he's going to collect. I really take great offence in terms of some of the things that he did last year in terms of the $1.2 billion. Nobody believed that he was going to get the $1.2 billion save and except him, and perhaps your side of the bench. Some people might have thought he might have got some part of that. Under that particular program, nobody's ever got what he asked for. So our concern is that figures be presented to show how far off he is.

If you want to go back and look at what the forecasters said two years ago and what actually happened in Ontario, I would be pleased to include that kind of a graph too, to show how far off Mike McCracken was in terms of how -- he seems to have been the most optimistic all the way through and is forever painting a rosy picture. I've lost all faith in his predictions in terms of his ability to predict the future. But I'm willing to look at all of them and if you want to say, "Here are all the economic forecasters; here's what happened," that's fine and dandy. I think somebody should raise the whole idea of budget forecasting by the economists and by this Treasurer are, whether or not they're trying to accurately reflect what in fact is going to happen.

Mr Perruzza: Just to pick up on that point a little bit, when we engage in crystal-balling what the financial returns for provincial governments, for federal governments, are going to be, I can't say or undervalue how difficult an exercise that is. I guess in recent memory I can point to at least half a dozen budgets and budget projections by all parties of all stripes.

I think of the Mulroney Conservatives in their fiscal statements, when they made their fiscal announcements, how far off they've been, especially on the revenue side. I can tell you that they've applied the Consultation Central Coordinating Committee approach to revenue projections and the rest of it. I can think back in recent memory with the former Liberal government provincially, when it sat down and projected its budget numbers and issued its statement just before it went to an election. We were supposed to roll into this place and discover a $39-million or $40-million surplus.

The Chair: Come to the point. We haven't got too much time for history.

Mr Perruzza: History, I think, is important, because if you forget history, Mr Chairman, you're bound to repeat it. I think we need to be reminded of what we're actually doing here. The Treasurer, essentially, has to sit down and take all of the indicators and take all of the advice that he can get from all of the experts out there -- and they're all forecasting -- and then at the end of it all he has to sit back and say, "How is public confidence going to reflect the numbers and the numbers I'm going to map out in my statement?"

How do you monitor that? How do you monitor the people who are out there and who are going to be spending their money on goods and services and engaging in economic activity. They can all go and on the basis of everything that everybody says and all of the numbers that people toss out, everybody can just simply go and hibernate, and what have you got?

You could have applied a small-cccc approach to your budget numbers and your budget projection and you will be way off because confidence is, by and large, what dictates and essentially what asserts or verifies the numbers in budget projections. Tomorrow, people can get out of that crouched position they're in and go out there and engage in all kinds of economic activity and what have you got? All of a sudden, bang, you shatter your numbers in terms of revenues. So it becomes sort of a very difficult exercise.

I can appreciate what the member for the Conservatives is saying here today, but I would remind and caution you that this is still a major exercise in crystal ball gazing. It's very difficult indeed and I don't for one minute envy the Treasurer in his task in having to do what he has to do.

The Chair: I guess we had a lot of crystal ball people who came before this committee, because they gave us their information, what they've studied. I don't know what to say on that, Mr Perruzza. All the experts: I don't know what colour balls they had, either rose ones or whatever.


Mr Johnson: It's easy to speak retrospectively. We all do it, and I could. I could make commentary, and I'll make a little bit, about the Liberals when they were in power previously and when the Conservatives were in power previously, and things that they did are coming back to haunt us today. There's no doubt about that. They did some good things; they did some things that weren't so good. The Liberals did some things that were good and not so good. I think in Ontario we've been living in a false economy, beyond our means, for a long time. I think that's clear, so we have to adapt to the realities of the economy that we live within today.

I think what Mr Sterling says is indeed a fact. It's factual. I think the Treasurer was overly optimistic in his predictions and I think that's fair, but why he was overly optimistic I think becomes an editorial comment.

Mr Perruzza: I don't agree with that at all.

Mr Johnson: I think that's where I have a little bit of concern with that.

Mr Sterling: I didn't say put in any comment. I just said put in the figures. I mean, you guys are making the editorial comment. We're not making any. If you want to debate, we'll debate. But what I'm saying is, put in the figures so that the people can --

Mr Johnson: You were the one who mentioned that word that I found offensive, and that was "competence."

Mr Perruzza: Mr Chairman, I think you should clatter together those people.

Mr Sterling: I can say that the day the budget was put down, we estimated that the real deficit was going to be $13 billion. What's the Treasurer saying this week? That the real deficit's going to be $13 billion. I could say I told you so. We were right.

Mr Johnson: Well, for once the Tories had an opportunity to prognosticate accurately, and it amazes me, let me say. We could go on like this ad infinitum, I'm sure, but I think --

Mr Sterling: No, I don't want to put that in the report, not in the main report. I want to put the facts in the report.

Mr Johnson: That's right. So do we.

Mr Sterling: Okay, good. We agree to put the chart in back.

Mr Wiseman: The process of determining some of these numbers is actually based on -- the numbers, for example, in personal income tax collection are based on what the federal government actually supplies to the provincial government in terms of its best guess.

Mr Perruzza: Oh, I see. So if they're way off, we're bound to be strange.

Mr Wiseman: In 1990-91, the personal income tax collection in Ontario was $15.4 billion and the interim collection in 1991-92 was $13.7 billion and the projection planned for 1992-93 was $13.88 billion, and in fact those numbers have come in even lower than that. The numbers supplied to the Treasury come from the federal government, so in terms of guessing, I would have to suggest that a lot of people have guessed wrong.

In terms of some of the other things, for example, the equalization money that's supposed to come from the federal government, that's a calculation.

Mr Sterling: So you don't want those figures included?

Mr Wiseman: I think what we need to do is to --

Mr Sterling: I don't want to make the argument who was at fault. I'm saying, put the figures in. What's the problem with putting the figures in?

Mr Wiseman: Well, the figures are there. I don't have any problems putting them in. I just want to be really careful about the kind of language we use around them.

Mr Sterling: Don't use any language.

Mr Perruzza: Quite frankly, I have a problem, because when you talk about these figures, by and large they're arbitrary.

Mr Sterling: They're arbitrary because the Treasurer --

Mr Perruzza: There's nothing that's hammered out in marble or in stainless steel, so to do that, what would be happening is we'd be led down the garden path, nailing in stone, in stainless steel, numbers that we can't actually attest to. I mean, no.

Mr Wiseman: Where are we going with this? Are we going to do something here today or what?

The Chair: We're on page 2. It seems like the auto insurance bill, first clause. What's the direction you want to give to the researcher here on writing this? Can we hear something that's acceptable to everyone? After hearing all the debating here, can you give us a line to put in that you feel would accommodate all three caucuses? Do you want to sit on the hot seat?

Ms Campbell: Crystal ball gazing. I guess I have two questions. Would the committee like a second table to be inserted along with the table of projections which would show projections for 1991 or 1992 and what actually happened? I don't know whether there would be actual figures for real growth for 1992 available yet -- perhaps up to the third quarter of last year -- but there might be something for 1991.

The Chair: What do I hear from committee members?

Mr Perruzza: That's precisely it, Mr Chairman. We'd be sort of navel-gazing as well and we'd be engaging in the same exercise. I don't know whether that's appropriate, because then what you end up doing is sort of comparing fiction with fiction.

Mr Sterling: That's what this committee does.

Mr Johnson: I think that if we were to have a history of what has happened recently and, as you indicated, maybe 1990, 1991, 1992, that would give us an indication of how things have certainly changed and it may give us a more realistic perception of what's happening so that when we come to some conclusion here, it would be based on the direction that the economy has taken, as opposed to something else.

Ms Campbell: Would you like a statement saying something to the effect that the committee does recognize the volatility of the economy at the present time --

Mr Johnson: Yes, I would.

Ms Campbell: -- and, taking that into account, also recognizes that some projections may not be totally accurate? Pardon my phraseology, but --

Mr Johnson: "Projections may not be realized" might be a fair comment.

The Chair: I believe that's what Mr Kwinter said in the introduction, or along that line.

Mr Sterling: Well, you see, there's a quid pro quo on the other side.

The Chair: Mr Kwinter?

Mr Kwinter: The thing that I would like to get here, and again I'm trying to cast it in as non-partisan a way as I can --

Mr Johnson: I recognize that.

Mr Kwinter: When the Treasurer was here, he said a couple of things, and I didn't get a chance to really question him about it, but this was two weeks ago when he appeared before this committee. One of the comments he made was that he didn't really think they would close the Dome transaction in this fiscal period.

Mr Wiseman: That wasn't what he said. He said at this time he didn't think it would be done in this current fiscal year. That was not the hope.

Mr Kwinter: That's what I said. But he didn't say that the $1.2-billion stabilization payment would also not be realized at this time. In his figures, he still included that $1.2 billion as if it was going to happen, when everybody knows there hasn't even been an acknowledgement by the federal government that it's even going to consider that. As a matter of fact, the Minister of Finance has said that he's not going to consider it.

The point I'm making is that that particular fallacy is perpetuated in all of their discussions, so that when he appeared before this committee, he didn't say: "We're not going to get the $1.2 billion this year. We may not get it next year. We may never, ever get it." He assumed that it's going to be there. Today he announces, "I don't really think I'm going to get that, and as a result, we'll probably have a deficit of about $13 billion."

All I am saying is that if the people at Treasury -- I'm not particularly blaming the Treasurer per se. I'm just saying that somewhere along the line, there have got to be proper accounting procedures in that ministry. There isn't a business going that would be allowed to put in as a receivable a figure that they have arbitrarily suggested could be owing to them without any acknowledgement by the person who is going to pay it that in fact it is owing and it is going to be payable.


Mr Kwinter: The point I am making is that they perpetuate these particular fantasies to try to keep the numbers looking proper, but somewhere along the line they have to come to terms with it. Today was the day where he's saying: "Given the fact that we are almost at the end of our fiscal period, those moneys will not be forthcoming. As a result, I anticipate a $13-billion deficit."

It would seem to me that if that realization had been made at the time when he knew that wasn't the case, we could have been adjusting some of the things that we're doing to try to deal with the reality as opposed to the fantasy. All I'm saying is I think it would be a worthwhile endeavour to send that kind of a message, that there be some -- I don't want to say "truth," because it isn't a matter of truth -- acknowledgement of the true state of the affairs of Ontario as opposed to perpetuating what I consider to be some of these fantasies. That is really the point I'm trying to make.


The Chair: Just a little clarification: Where would you put that $1.2 billion? Where would you put the Dome on the page?

Mr Johnson: Nowhere.

The Chair: I think maybe that's the problem: Where would you fit it in? In other words, is anticipated revenue on another page?

Mr Kwinter: If you were a public company, you would not be able to list on your balance sheet any receivable unless you had a bona fide offer with a substantial down payment and a firm closing date within that fiscal period. If you didn't have it, you could have it as a note in your financial statement that this is possible, but you couldn't include it. The auditor would not allow it.

The Chair: Okay, that's what I was asking. So it's a note there, "Possible additional revenue."

Mr Kwinter: You might want to make a note to the budget that: "It isn't included in our figures because we don't have confirmation. We have no guarantee it's going to happen. It is possible that this could happen and as a result would change our figures." But to include it as a fait accompli and to have $1.2 billion and $500 million, whatever the figure is, and list it as a receivable so that you can balance off your payables to show that your deficit isn't what it's going to be, in the public sector that would be considered fraud, and I'm saying that advisedly.

You couldn't do it. The auditors wouldn't allow you to do it; the securities commission wouldn't allow you to do it; nobody would allow you to do it. Again, without being partisan, I'm just saying that it would be kind of nice to get that message to whomever is the Treasurer at any time that it would be a good thing to use proper accounting methods in presenting your budget.

Mr Wiseman: It's not quite the same thing. The budget's a different thing.

Mr Kwinter: Why is it any different?

The Chair: Okay, what are we going to do, include the chart for how many years to show the revenue going down or going up or expenditures?

Mr Sterling: I think we're talking about 1993-94, and Mr Laughren told us that it was going to be a deficit of a certain amount in May 1992. In October he told us it was going to be a higher amount, and he's now told us in February that it's even going to be higher: $13.9 billion is where the 1993-94 deficit is right now. I believe that those predictions should be put down on paper.

I can make all the arguments Mr Kwinter made and I feel as strongly or stronger than he does about the fact that the Treasurer is playing hokery-pokery here and that he's got to be called into line. We can do that in straight words in a dissenting report or we can put forward the figures and let you go out to your constituents or the people you're talking to and argue that the figures are that way because things change so much. We will argue that they didn't change that much, that there was hokery-pokery. But that's fine and dandy; we'll make those arguments. All I want are the figures, as presented by the Treasurer, and the fact that he's having to shift ground dramatically over a relatively short period of time.

Mr Johnson: Because of the volatile economy, right?

Mr Sterling: That's your conclusion.

Mr Wiseman: If you're going to include that, then perhaps you might want to also include the fact that the expectations on the $1.2 billion are based on an agreement and based on a formula that is in existence, that other provinces have been able to access and that the federal Tories have decided arbitrarily to ignore, to the extent that it's not going to be paid, although there's been no indication that they have said they wouldn't pay.

Mr Sterling: That's total bunk.

Mr Wiseman: No, it's not total bunk.

Mr Sterling: Yes, it is.

Mr Wiseman: No, it's not. Your leader got up in the House and said that there wasn't any money coming. I remember this distinctly, that he had been told we weren't going to get any money.

Mr Sterling: There's no indication of that. Nobody has said --

Mr Wiseman: That's what your leader said in the Legislature; it's in Hansard.

Mr Sterling: Yes, that's right.

Mr Wiseman: Then the Treasurer got up and said that there has been no indication from the federal government that this money is not owing and that the applications have been put in and that they're being considered.

Mr Sterling: There's no indication that I'm not going to win the lottery tonight.

Mr Wiseman: It's probably a good guess that you aren't. Now unless you're --

Mr Sterling: That's what we're guessing in the other --

Mr Wiseman: No, you're not, because in this situation, if you have agreements which don't seem to matter a whole lot to the federal government any more and you have expectations that these equalization payments are going to be made, given a certain circumstance, and we're in that circumstance, and then the applications are made, there are expectations that they would be paid within the agreements.

Mr Sterling: You'd better find out something about the program, the formula and how often it's being done. It has been done twice before, once successfully. One province was turned down. The one that was successful only got a part, a very small part of what it requested. What are Floyd Laughren's chances of asking for $1.2 billion and getting $1.2 billion? Zero.

Mr Perruzza: Mr Chairman, I'd like to know why the Progressive Conservative Party of Ontario doesn't get on the phone this very minute today, call the Progressive Conservative Party of Canada and say, "Give Ontario what you owe them.

The Chair: Well, the leader resigned.

Mr Perruzza: "Otherwise, we're not going to work for you guys during the next federal election.

Mr Wiseman: Call Kim to send the cheque.

Mr Carr: The sad part is that Audrey McLaughlin is behind Brian Mulroney in the polls. That's how bad it is; he resigned.

Mr Sterling: Bob Rae's behind Mike Harris.

The Chair: Okay, will the committee give some direction to the researcher here as to exactly what we want on page 2?

Mrs Ellen MacKinnon (Lambton): I told the woman. Do I have to sit here and listen to all this garbage?

Mr Sterling: You weren't here to hear any of the other garbage.

Mr Ruprecht: Why don't you tell the researcher exactly what you want to put in the report?

Mrs MacKinnon: We certainly aren't going to put the word "incompetent" in. I'll tell you what you won't put in.

Mr Ruprecht: You got a crystal ball?

Mrs MacKinnon: He's not incompetent any more than anybody else is in government today.

Mr Sterling: Well, you're all incompetent; that's right.

Mrs MacKinnon: I didn't say that.

Mr Wiseman: Was that a "we" or was that "you"?

Mr Perruzza: Point of order, Mr Chairman.

The Chair: Yes, Mr Perruzza.

Mr Perruzza: He said --

The Chair: I didn't hear it.

Mr Perruzza: Well, let me refresh your hearing.

The Chair: I didn't hear it.

Mr Perruzza: Let me refresh your hearing, because Hansard has it.

The Chair: No, it doesn't have to be said.

Mr Perruzza: Mr Chairman, Hansard has it. I'm sure Hansard got it, and we could probably verify that, right?

The Chair: Are you going to repeat something that shouldn't be said?

Mr Perruzza: Yes, I think that what he said was totally and completely unparliamentary and I think that should be retracted or at least apologized for.

The Chair: Okay, we will retract it. Okay, it's retracted.

Mr Perruzza: I think any fairminded honourable member of this Legislature would look at that in light of circumstances and I think that any fairminded person would take that and apologize for it, I'm sure of it, 100%.

Mr Sterling: I've called the Treasurer incompetent before and I'll call him incompetent again.

Mr Carr: If it's incompetent, I'll call him incompetent too.

Mr Sterling: There's nothing unparliamentary about that.

The Chair: Okay, can we get -- it's 5 o'clock.

Mr Perruzza: Mr Chairman, part of your function as a Chairman is to uphold the integrity of this place and the executive officers of this place. I think the Treasurer of the province of Ontario is an executive officer of the province and an honourable member of the Legislature, and I think that when that in any way is tarnished or infringed on, it's his responsibility as Chairman of a committee or as an officer of this group, to step in and say: "That's inappropriate, apologize, take it back. Do what any fairminded, honourable member of this place would do."

The Chair: You mean that was the word that you were thinking about? I thought it was a word worse than that.

Mr Ruprecht: Mr Chairman, if it helps the committee, I will apologize.

Mr Johnson: What did you say?

Mr Ruprecht: That's the point.

The Chair: Okay. I guess this committee will be adjourned.

Ms Campbell: Wait a second.

The Chair: Okay, wait a minute. Miss Campbell's confused.

Ms Campbell: The committee will be meeting again tomorrow. What would they like done over the evening, on my part, for tomorrow morning's meeting?

Mr Ruprecht: You're doing great so far.

Mr Johnson: I don't think we should give you any direction, quite frankly, and I don't have any expectation.

Clerk of the Committee: We do have a deadline.

The Chair: We have a deadline of March 22.

Mr Wiseman: How many more times do we meet after tomorrow?

The Chair: We can meet Friday.

Mrs MacKinnon: I can't.

Interjection: No, we can't meet Friday.

The Chair: The committee can meet Friday.

Clerk of the Committee: It's authorized to meet on Friday.

The Chair: It's authorized to meet on Friday.

Mr Perruzza: That wouldn't be bad.


The Chair: But a lot of the members here have other commitments on Fridays, so let's see if we can get through it.

Mr Johnson: If I could just offer this, I know it's tradition around here to be partisan and I guess that's the way it will always be. I guess, being a new member of the Legislature, I thought maybe things would change and I guess I was --

Mr Wiseman: You'll learn what it's like around here.

Mr Johnson: I was just wrong in thinking that. But I think we could put our noses collectively to the grindstone tomorrow and we could probably come up with some kind of summary recommendation to forward to the Treasurer. If we persist in going back and reflecting on what has happened up till these pre-budget consultations, I think we're going to be doomed to fail in this process.

Ms Campbell: Would the committee like me to work, over the next little while, on the outline as it now appears before you and flesh it out a bit in terms of content? I will take the liberty of focusing on issues that attracted a tremendous amount of comment under each of these headings and put that forward tomorrow morning.

Mr Johnson: If I could just offer, I believe this is what you're saying: If there's a duplication of --

Ms Campbell: Or pick up on some of the major themes that were expressed.

Mr Johnson: Yes, exactly. If you could bring those, I think that would be advantageous for us to start, anyway.

The Chair: Any comments? Mr Carr?

Mr Carr: No.

The Chair: Okay, this committee is adjourned until tomorrow at 10 o'clock.

The committee adjourned at 1703.