Thursday 14 October 1993

Subcommittee report


*Chair / Président: Johnson, Paul R. (Prince Edward-Lennox-South Hastings/

Prince Edward-Lennox-Hastings-Sud ND)

Vice-Chair / Vice-Président: Wiseman, Jim (Durham West/-Ouest ND)

*Caplan, Elinor (Oriole L)

Carr, Gary (Oakville South/-Sud PC)

*Cousens, W. Donald (Markham PC)

*Haslam, Karen (Perth ND)

*Jamison, Norm (Norfolk ND)

*Kwinter, Monte (Wilson Heights L)

Lessard, Wayne (Windsor-Walkerville ND)

Mathyssen, Irene (Middlesex ND)

*Phillips, Gerry (Scarborough-Agincourt L)

*Sutherland, Kimble (Oxford ND)

*In attendance / présents

Substitutions present / Membres remplaçants présents:

Fletcher, Derek (Guelph ND) for Mr Lessard

White, Drummond (Durham Centre ND) for Mr Wiseman

Wessenger, Paul (Simcoe Centre ND) for Mrs Mathyssen

Clerk / Greffière: Mellor, Lynn

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

The committee met at 1018 in committee room 1.


The Chair (Mr Paul Johnson): The standing committee on finance and economic affairs will come to order. Today we're going to be dealing with business of the subcommittee. The subject was the underground economy. Also with regard to that, once we've discussed that, we'll look at the list of potential witnesses concerning the underground economy. Mr Phillips, you were the keener with regard to --

Mr Gerry Phillips (Scarborough-Agincourt): I'm pleased -- at least, I hope -- that the committee is going to agree to go ahead with this. The subcommittee felt it was a worthwhile exercise. As I said at the subcommittee, I think this is in many respects a non-partisan issue. It's a complex issue. I don't think there are any simple solutions to it. I don't pretend that this one process, this one committee, will find all of the solutions, but I think it can be a very worthwhile exercise to help us understand how large the problem is, what people think, what we think, what the experts think are the root causes of it, and then begin to try and figure out some sensible solutions to it.

I'm quite enthusiastic about the study. I thought the report of the subcommittee captured how we should proceed. My recommendation would be to follow this process and kick it off next week. I would hope that the research staff, if they can find any worthwhile studies between now and then, might forward them to us. But give all of us a chance next week to talk a little bit about this, to articulate the problems as we see them, hopefully with some Ministry of Finance staff here to listen, because I would hope that the following week they might come before us and just give us their best advice on the size of it and what things we should be thinking about. I know that in the Ministry of Finance there are several people who have done studies. There is a Mr Spiro who's fairly widely known for work on the underground economy.

Then I would hope we would allow some time for groups and individuals to come before us to give us their expert testimony. I think there are probably three categories of people. There are some outside experts who have studied this for some time; I think the research staff probably already has identified some of them. Then there are some organizations that have studied it. I've had, as I'm sure most members have, briefs from the home builders and the retail council, and the chamber of commerce has expressed some interest, among others I would hope we would invite to come. Then there may be some individuals who have views. As I say, I think if we can schedule three days -- and maybe that'll be too much; I don't know -- where we can hear from them, then I would think a couple of days to try to draft a report.

My own view on the timing is that it would be ideal to finish this before we recessed in December. I think realistically it may spill over into two or three days in January or February, but I hope we would try to complete it some time by January.

That's how I would hope the committee would agree to proceed. As I say, I think we have to keep our expectations in line with what we're going to be able to deliver, because this is a huge problem. I don't think it's going to be resolved through one all-party legislative committee, but I think we could do ourselves a service by really understanding the magnitude of the problem and beginning to say, "Okay, here are some directional solutions we would be recommending in the Legislature."

The Chair: I guess perhaps I should have read into the Hansard the report of the subcommittee so it's on record. I'll do that. Then we're going to go to Mr Sutherland.

"Your subcommittee met on Thursday 7 October 1993 to consider future business.

"(1) Your subcommittee recommends: that the committee review the issue of the underground economy; that one day be allotted for opening statements and discussion by members; that the ministry officials be allotted one day to make a presentation and respond to questions by committee members; that letters be sent to certain individuals and groups whose names will be submitted to the committee clerk by each caucus; that three days be allotted for these individuals and groups to make presentations to the committee; that two days be allotted to prepare the draft report; and that two or three days be allotted during the winter recess to finalize the report.

"(2) Your subcommittee recommends: that the pre-budget process take place during the winter recess."

Those were the recommendations of the subcommittee. I was remiss in not reading that into the Hansard first. We have heard from Mr Phillips and now I'll hear from Mr Sutherland.

Mr Kimble Sutherland (Oxford): I guess just a couple of comments: The issue, in principle, of doing an information-gathering exercise on the underground economy doesn't seem to be a significant difficulty. I think we should just look at the schedule that's been outlined and maybe propose some revisions.

What you're proposing here is seven days, or seven weeks, in effect. That would take us up until December 2, given the fact that we miss a Thursday due to the week off for Remembrance Day. There are other revenue bills, I understand, that are in the works that may be debated and may be referred here to this committee in the sense that those revenue bills would, from my understanding anyway, take some precedence over what we're doing here.

I would like to suggest, just as a beginning, that we combine the one day of opening statements and discussion with the ministry officials coming in; that process can take one day overall. That would help to condense it.

With the rest of it, those revenue bills, I'm not sure we can have it all done before Christmas. I would agree with Mr Phillips that this would be an ideal thing, but if there are two or three revenue bills, taking some time to do that, the committee may have to look at a little bit of time in the new year, maybe even a couple of days, and may still have to have some hearings to do that. I would think also that the quicker we got through the revenue bills, the more time we'd be able to allocate for this purpose. I think that's important.

While we're dealing specifically with the underground economy, I think we also want to look at some avenues for enforcement and have some discussion around that. While legislative research has prepared a list, I don't know if we want to formally talk about that now. But I think there are some suggestions we'd like to make on additions. For example, on that type of list we don't see any enforcement officials recognized or suggested to come in. Maybe we should have some of them on the list.

On the other issue that seems to be obviously an issue, we don't see any native groups. Since some of the underground activity is taking place around issues regarding native jurisdiction, it may be a good idea to have a representative from native groups in as well, as part of the groups, just to give us a broader perspective on the type of comments.

As for opening comments, I would just put them out for discussion right now.

The Chair: It's true that if any bills were sent before the committee, they would pre-empt our ongoing investigation into the underground economy, just to make sure that everyone's clear on that.

Mr Norm Jamison (Norfolk): I'd just like to make a comment, which I believe most of us understand, and that is that this is indeed, as Mr Phillips has said, a very complex issue. If we're going to deal with a complex issue, we're going to have to look beyond the obvious. I believe there are obvious factors out there that people are aware of that really bring one's attention to the magnitude of the underground economy in this province and elsewhere. It's important, I believe, that we explore all the potential sectors in which the underground economy has increased over time.

By virtue of saying that, I believe it's not going to be an issue this committee can deal with in a short, defined period of time. I believe the issue itself is one that is, as I say, complex. Dealing with those complexities and being able to derive the extent of the underground economy that's out there is going to take some extra magnitude of research and information by this committee. I have some difficulty saying that we're going to be able to accomplish what we would like in really revealing the situation to its full extent over a short period of time. I don't personally believe this is one of those issues where there are one or two simple, straightforward answers to the question.

Mr Paul Wessenger (Simcoe Centre): This is really a question to you, Mr Chair. It would seem to me that if we're going to deal with the underground economy, it would help to have witnesses who are involved in the underground economy come before this committee. So my question is, do we have any way of providing immunity to such people who would willingly come forward and provide such information? It would seem to be much more useful to the committee to hear somebody within the construction industry, where there is a great deal of underground economy involved, and some people in, say, the retail business of selling construction materials, which is one of the areas where I'm very much knowledgeable, where I've heard a great deal of underground economy takes place. And the same with those involved in smuggling: Is there any mechanism whereby people could come in here and give evidence with immunity; in other words, without fear of prosecution?


The Chair: We'd certainly have to look into what potential implications there might be for any person who would make a presentation before the committee with regard to the underground economy. I don't have the answer directly to your question, but certainly we'll examine that and see what we can --

Mr Wessenger: That's what we're asking: Could we get a report back if there's a mechanism whereby we could do that? Because I think for it to be meaningful it would be very good to -- that is in the US committee system, I gather, but of course I'm not certain whether we have the same flexibility here.

The Chair: I don't think we're going to enter into a relocation program for the witnesses, but certainly I'll ask the clerk to get the best advice with regard to that.

Mr Monte Kwinter (Wilson Heights): I think one of the things this committee's going to have to do is to define the problem. It would seem to me, from what I've heard of the various discussions this morning, that there's a twofold problem. One has to do with the area of smuggling, which I don't classify as the problem with the underground economy. I think smuggling is an issue that is there regardless of what is happening in the economy. There are always people who will go places and buy things because the prices are cheaper and will bring them into the country either clandestinely, the way we're dealing with cigarettes and things of that kind, or travellers who are just travelling. I don't think they consider themselves part of the underground economy.

The thing I would like to pursue is not so much that particular aspect of it, although I think it's important. I think what has happened is that in Canada we have an honour system for paying taxes in that the number of people who get audited on their tax returns is infinitesimal compared to the number of people who file; there is basically an honour system. The fear of being audited is sort of the whip that keeps people honest, but your chances of being audited are probably as good as winning the lottery, because it's just a matter of personnel.

What has happened, I think, is that the tax regime has fallen into disrepute in that, given the economic times, where people find that their salary is either frozen or reduced, where it doesn't match with the costs of goods and services that they require, and given the fact that there is a GST and a PST, there is a real motivation for the supplier of goods to get cash so he doesn't have to report it as taxable income and the buyer of goods to get the goods without having to pay the additional 15%. Where normally law-abiding citizens would gladly pay a tax, there seems to be a situation where more and more citizens feel that, for whatever reason, their taxes are not providing them with the services they're paying for so they resent paying the taxes. Secondly, the amount of money they're paying is not in keeping with the incomes they have, so there's a real motivation to save that 15%.

That has developed several problems. First, it has deprived the government of tax revenues, which I think is one of the things we should be looking at. Second, it has created an underground economy. I think what this committee should be doing is trying to get a handle on how much taxation is being forgone by the fact that the government isn't getting it, how large is this underground economy and have we reached the point, which I think is the key ingredient, where our tax regime is counterproductive, whereby the more taxes we impose, the less revenue we're going to get because it's going to be the motivation to drive more and more people to the point where they're going to try to circumvent their tax obligations and deal with an underground economy.

I think it's a very, very onerous job to get a handle on it. I don't know, quite frankly, whether this committee has got the ability to do that, but it would seem to me that that is what we should be trying to strive for so that we can give advice to the government on what is the size of the problem, what could be the solution to try to alleviate the problem and where should we be going.

The Chair: Mr Kwinter, could I just ask you a question based on what you said? You said that it has created an underground economy. Not to argue with you at all, I was always aware that there was an underground economy but it's certainly expanded to a large extent. Would you not agree with that? I've always felt that there was an underground economy that was small and I think it's expanded in a large way as a result of those circumstances that you've pointed out so well.

Mr Kwinter: This is why I want to separate the issues. There's always an element of smuggling. It's been going on for ever, where people don't declare things that they bring across the border. It's a national pastime; it isn't something that is new. Most people, if in their heart of hearts they were to admit it, participate. What I'm saying is that you might classify that as an underground economy; I don't. I classify that as smuggling and it's something that is a separate issue and I don't think we can do anything about that.

When we talk about the underground economy, I think it is a relatively new innovation in which professionals are bartering their services, where they're saying: "I'll do this for you if you do this for me. In that way, we don't have to declare any income, I don't have to pay any money and let's do that." There are people who are more and more offering, "I will pay you cash on the basis that I don't want an invoice because I don't want to have to pay GST and PST." Suppliers of goods and services are saying: "If you're prepared to pay me cash, I am prepared to give you this price. If you want an invoice, then it's going to be this price."

That may have been going on, but I don't think it has been going on to the extent that it is now, and I think that, in my opinion, the motivation for that increased activity is the situation we find ourselves in, with a depressed economy, with increasing taxes and with a cynicism about the service benefits that citizens are getting from their government for the taxes that they're paying. So in fact it's almost like a tax revolt. I think that is the useful kind of investigation that we could pursue to see what is the extent of this problem and is there anything we can do about it.

Mrs Karen Haslam (Perth): I was looking at the potential witnesses, and I understand that you've asked the research department to come up with people who have made comments and so on. I'd like to share the concerns of a couple of my colleagues about the people who aren't on there.

I think we need to look at the some of the details around how it's done, some of the technicalities around how it's done, not just the policy area, because, with all due respect to the Canadian Manufacturers' Association or the Fraser Institute, we know what they're going to say. What I'd like to look at is not just the results, because we know what the results are. I want to investigate some of the possible solutions or some of the underlying reasons for the extension of this economy.

So my comments would deal with including a wider range of people to come in and talk to us about this situation, about the underground economy, and not rehash what we already know, that it's resulting in this and it's resulting in less taxes and, "My business is failing because of this." I think what we have to look at is a little deeper than just somebody coming in and saying, "My business is going under; do something." I think we have to look at the people involved at the grass-roots level.


Mr Phillips: I'll just comment on a few comments that have been made. I understand it's a big problem. My strong view is that if we try to make this a study of overwhelming proportions, we'll never get on to it and we will defeat ourselves before we start.

To Mr Jamison's comment, my own view is, let's get at it; let's spend a reasonable amount of time on it. There are some people who have made a career of studying it, so we're not starting from scratch. I'm not sure what the recommendations will be at the end of our exercise. Our recommendation may be that we need more information in certain areas. I've studied enough big problems in the past to know that you can sometimes quit before you start because you think it's just too complicated.

In terms of witnesses, the research staff gave us suggestions, and I think each of us should go away and figure out which ones we really think would be most useful to us.

I just urge us to not let the magnitude of the problem bog us down from getting started on it. I think we've got the expert advice and testimony, and I think the committee has the skills to say at the end of it, "Okay, here's what we've learned so far; here are possible solutions," or, "Here's the direction of possible solutions, but here's the missing information that we still need more data on."

Mr W. Donald Cousens (Markham): The subcommittee report, which is calling for just a layout of the strategy we would use as a committee to undertake the beginning of an investigation into the underground economy, is, I think, a reasonable position to start with if our expectations are also limited. If we were to do the full evaluation of the problem, I think we could spend literally years on it. It's not unlike some of the other committee work in the Legislature where -- I have seen the amount of time that's spent by members.

I sat on the pension committee back in 1981. I attended 77 meetings, and there must have been close to 85 meetings altogether. When we came out we had a book that was several inches thick with recommendations. When we were finished, regretfully, most of those recommendations were never implemented or followed up or acted upon by the then government. I happened to be on the government side that week. It didn't happen. That's what happens to so much of our committee work in the Legislature.

I have seen the committee work that we have done, and I don't think there is anyone from any party who hasn't contributed significantly in developing quality research and information that will assist the ministries and the government to do a better job. I know the intentions we have as members when we're in committee can be manifested in some of the best reports that never get read and never get acted upon. As a result, probably one of the high frustration levels for me, as a member, is that for all the time and energy we expend, the amount that you realize that's worthwhile is minuscule and lost.

As a result, I think there's a tremendous benefit in scratching the surface, and that's all we're going to do on this.

(1) If we, as legislators, come away with a greater sense of urgency on the problem, we will have done something. I know that among the members in the committee, from the comments that have been said, there's a consensus to do it. I don't think that's the problem. But if we go out of it and then we get the ministers and future ministers on the same wavelength, then we begin to move forward.

(2) If we get the media a little more interested in it, we will have done another key job that we have to do, and that is, educate the general public as to the gravity of the problem.

I have an answer to a question to the Minister of Finance. I was asking him to what extent he measures the underground economy at the present time. He said it's increasing by 1% a year, and according to Statistics Canada it was about 6.7% in 1991. That would still make it under 10% as of today. The Fraser Institute measures it in excess of 22% as the size of the underground economy. I'll bet you we can go around the room and it would be something like any lottery that we've ever had. We're going to have varying degrees. It's probably worse in Markham than I think, and who knows where it's going on. But it's there.

So to me, what we're doing is we're making a conscious effort to open the subject, understanding that we're not going to get to the bottom of it. If our expectations are low and we go a little further, then we will have been the winner, and so will the people of the province of Ontario. I think that Karen Haslam makes a point: We would like to get into it but it's going to be hard to, but if it comes out of it that we can get some of the specifics and things, that actions can be taken, so much the better. That, to me, is going to be an extra benefit. If we at least get the thing started, we will have made a giant leap forward.

I don't think this has ever been done in the Legislature in Ontario, where we've gone into this side of things, because it's not a subject that's been raised. To do so now is a good time and I think that out of it can come recommendations that we will carry back to our caucuses, to the Provincial Auditor, to specific ministries, to the police at different levels and it may well have ramifications at the federal level.

We're now at the point where the underground economy has gone above ground. They're now above ground in the Cornwall area. The smuggling and operations that we've commented on, it's worse than anything we've ever seen. So what we've got to do is get a better understanding of the problem. I believe you're 50% of the way to the solution when you define the problem. If we understand the definition of it after we've completed our preliminary assessment, which is what this is, then we will be, I'd say, 50% on the way to the solution.

The Chair: Thank you, Mr Cousens. You raise a good point. I don't know how any organization or anyone can measure an unknown quantity. Something that we're going to be dealing with here is certainly the unknown with regard to how much and to what extent it's taking place.

Mr Derek Fletcher (Guelph): I have a couple of questions. One first: Exactly what is this committee trying to find out? What is the objective of the committee in studying the underground economy? Is it trying to find out how, why, where or what is happening with the underground economy or is it just to get it out into the public that there is an underground economy, which everyone already knows exists anyway?

As for the reasons for an underground economy, as has been said, it's been around for a long time. I think if we look at Prohibition, the reason for the underground economy was because there was no alcohol in the United States at the time and that's why there was a supply, not because of taxes or anything else but because of the supply and demand market forces that were going on. If we look at offshore clothing that comes into the country with brand names, again it's an underground economy but it's something that's happening.

When I look at the presenters, I would much rather hear from --

Mr Sutherland: It's only potential.

Mr Fletcher: Okay, potential, but even in the potential, I would much rather hear from people who are somewhat involved in the underground economy themselves. I think we have some people from the Cornwall area, as far as tobacco is concerned.

Mr Cousens: Some of the crooks themselves.

Mr Fletcher: Yes, I think so.


Mr Fletcher: You may know some of them.

I think it's important that we not only hear from some of the crooks themselves, but I think it's also important that we hear from people who have been involved in the underground economy, more so than the Canadian Manufacturers' Association or the chamber of commerce, which have done papers on it. I would much rather hear from the grass-roots people who are involved in it and also from the local municipalities where things are happening that are hurting their economy, and again, we look at the Cornwall area. But I think we also have to look at other aspects of the underground economy that are draining revenues, because it is not just in tobacco that we have the problem. I see so much from the tobacco industry and, talking about tobacco on this potential witness list, I think we could be missing a lot more.


Again I have to ask the question, why are we going to spend the time discussing something that everyone knows is a problem? The solutions that are available to us are probably few when we discuss something such as the criminal activity in the underground economy. We can boost up crime-prevention people, we can put a lot of money into crime prevention and it will still be there. I think that we have to look at ways other than just identifying the problem. We know the problem exists. I think that what we have here is an attempt just to, in a way, bring it to light and try to embarrass the government. That's what I see.

The Chair: For those members of the committee who weren't here shortly after we started, Elaine Campbell, the research officer, has prepared us a cursory list of people who might be witnesses with regard to our investigation into the underground economy. If any of the members of the committee have any people they would like to suggest as potential witnesses, then certainly I think if they were presented before the committee and eventually to the clerk, we could look into that.

The other thing is, also for those members who weren't here very early on, that we have put the question to the clerk to look into what the implications are of people who are actually engaged in the underground economy coming before the committee and what kind of immunity we can offer them. That will be examined and we'll get back to you with regard to that.

Mr Sutherland: I think we've had quite a bit of discussion about what we want to do. We've recognized that there are limitations. My sense from the subcommittee was that this exercise would be similar to the exercise we did on cross-border shopping. This committee examined the issue and at the end of the day there were different recommendations from the different parties on what should be done and how it was dealt with. But it was a good information-gathering exercise from all the groups that we had come forward.

We had quite a wide cross-section of groups come forward and talk about what they felt the issues were with cross-border shopping etc. Many of the groups put forward several recommendations, some that committee members had already thought of and others that they hadn't thought of, but it was a good information-gathering exercise. I think if people went back and didn't even look at the recommendations section, if they looked through the content of the report, they would find some good information to use as a basis for examining that issue. I think the sense was that we should be trying to do the same thing here.

With that in mind, I'd like to come back to the actual mechanics of how we're going to do that. I suggested that what had been put forward, that we condense the ministry officials with the day allocated for opening statements and discussion by members, that that should come down to just a one-day process to get on with it -- Mr Phillips has suggested that we take the initial cursory list prepared by research and go back and see what our thoughts are on that. I guess if we accepted my suggestion to condense that in one day, we'd probably be doing that first day next week and then we may want to be right into having certain people come the following week.

Only giving one week's notice to folks to appear may be too short a time. I guess that would leave me with the idea that I don't think any of us were really looking at meeting this afternoon, but maybe we should come back this afternoon with some suggestions on what types of groups we'd want to come forward to allow the clerk to give these folks some more lead time in terms of preparing presentations. Certainly, whatever groups are going to come forward, if we said the second day of hearings was going to be presenters, they would probably want at least two weeks to put it together.

Mrs Elinor Caplan (Oriole): I've been listening to the comments from a number of members around the committee, and my own experience is that committee investigation and discussion of issues such as this -- we also discussed cross-border shopping. I remember serving on this committee when we looked at the whole trade issue. This was a number of years ago. The opportunity that it affords both members of the committee as well as the public is a chance to consider the implications as well as to make specific recommendations to governments.

The concern I have is that there's a general acceptance today of an underground economy that frankly didn't exist a few years ago, and there may be many reasons for that. I think my colleague was correct when he said it's complex. Certainly, I couldn't say that I can sit here today and give you all the answers, and therefore I think it would be very valuable for this committee to hear a broad range of opinions from people who would bring different perspectives on the whole issue.

I don't know whether it would be possible, but if it would be, I think it would be valuable and helpful to see if we could hear from some individuals, not those who would be in need of any kind of protection for having engaged in the activity, but rather individuals who just might have a perspective on the person who perhaps has been approached, has been tempted, or who doesn't feel there's anything wrong, doesn't understand the implication of engaging in that part of economic activity, but just sees it as a normal way of proceeding, or who are interested in what some of the implications might be. I don't know how we'd find them.

I've had some constituents, when I'm talking on the street, say, "Look, everybody is quite comfortable with a cash transaction. What's the big deal?" Perhaps these hearings and this investigation can raise the consciousness of those individuals, can discuss what the implications are for our society, because what we're really talking about is a general breakdown in the value system within our system -- I thought Mr Kwinter said it well -- in the sense of value that people feel they get from tax dollars and therefore why it's important for us all to properly remit and pay our taxes.

I don't think anyone realistically would ever suggest that tax avoidance wasn't a very legitimate activity, and it is. Everybody would like to pay as little as they can and there are, as we know, many professional lawyers and accountants who give advice on all the legal ways that you can properly minimize tax payments. On the other hand, maybe hearing from some of them would assist us in understanding, because it's perhaps a fine line between that kind of legitimate and legal avoidance and the kind of activity which is having such a potentially negative effect on the psyche as well as the economy of Ontario.

I wanted to make these comments because I do think there is a fine line between avoidance and the attitude of the public that says it is a legitimate activity to try to minimize taxes, and those who participate in the kind of cash economy which we call the underground economy, and maybe that's part of starting to understand what is really happening and how people are feeling at this time. We know they're all feeling overtaxed and that the burden is very heavy. I think it's an opportunity for the committee in its work to explore some of those realities in our society today as well.


Mr Drummond White (Durham Centre): I find myself agreeing with Mrs Caplan and I think there are some significant issues that really do bear some exploration: the value breakdown Mrs Caplan mentioned and the concomitant social consequence of an expanded underground economy, something which I imagine has always been with us but has expanded greatly in the last little while. I think those issues bear some exploration.

Some of the exploration we've heard on this issue to this point has been very conjectural. There's a hypothesis of X number of dollars. We can read in Maclean's magazine or the Toronto Star or the National Enquirer or whatever some suggestions of the extent of the underground economy, but with the list of organizations cited, I don't know that they themselves would not have a bias already towards an exaggeration of the extent of the underground economy. I'm not sure that these groups would necessarily offer us that much of substance. They are groups which already are greatly affected by it and would tend, I would suggest, to exaggerate its extent and its effect upon them. So I have some concern about some of the groups that are cited.

The other thing I'm wondering about is whether or not there has been a study already of this issue, whether or not suggestions have come forth from the federal level. After all, it is a much more profound issue at the federal level than it is at the provincial level, especially when we're talking about not only income, not only GST avoidance, which has been a prime incentive to tax avoidance in the underground economy, but also of course in terms of tobacco and liquor. A great deal of smuggling has been involved, which of course is beyond our jurisdiction. It's something we haven't any power to control. We end up with recommendations that the RCMP do X and Y. It won't do us much good, seeing as the RCMP is beyond our jurisdiction.

I wonder if we have any information from the federal government, or has it been effectively avoiding its responsibilities to this province, as has happened in the last nine or 10 years, and not done anything on this issue and left us bearing the brunt? I wonder if we could solicit some information from that level of government.

Mr Phillips: I have to go to the Legislature to speak on the next motion.

I have no trouble with Mr Sutherland's proposal, which is to combine the two days. I think Mr Cousens, on behalf of, as we say, the third party, doesn't either. I have no trouble meeting this afternoon for each of us to kind of say, "Here are our priority witnesses," because it was the research staff who prepared it on the basis of some discussions. A member of the native community is a good suggestion. I think some of the enforcement community is a good suggestion. I have no trouble with that. I think maybe we should reconvene this afternoon, each of us with a little priority list of witnesses.

The Chair: I think at this time then it would be wise to deal with the subcommittee report. Mr Phillips has suggested that he agrees with Mr Sutherland's recommendation to combine the first two days into one. Does that then make the report, as amended, agreeable? All those in favour of the amended subcommittee report? Carried.

With regard to meeting this afternoon, we can either meet as a whole committee or as a subcommittee to bring forward the names of individuals or organizations or representatives that each caucus would like to bring forward, to submit to the clerk to request their appearance before the committee.

Mrs Haslam: That sounds fair. I'll give my names to Mr Sutherland, if I have any.

The Chair: Is it agreeable then that we meet as a subcommittee, have the subcommittee authorize the final details of how we will proceed? Okay, that's agreeable.

Is there any other direction you'd like to give the clerk with regard to the business of this committee at this time? Seeing none, this committee stands adjourned until further notice. The subcommittee will meet at 3:30 pm this afternoon in committee room 1, right here.

The committee adjourned at 1106.