Thursday 9 February 1995

Pre-budget consultations

Ontario Federation of Labour

Gordon Wilson, president

Chris Schenk, research director

Ken Signoretti, executive vice-president

Julie Davis, secretary-treasurer

Ontario Public School Teachers' Federation

Reg Ferland, president

David Lennox, general secretary

Jeff Holmes, first vice-president

Canadian Manufacturers' Association

Eric Owen, director, taxation and financial issues

Jayson Myers, chief economist

Motor Vehicle Manufacturers' Association

David Adams, director, policy development

David Penney, member, taxation committee

Bob Murray, chair, taxation committee

Jack Holman, member, taxation committee

Aldo Dibiase, member, taxation committee

Ontario Separate School Trustees' Association

Pat Daly, first vice-president

Mary Hendriks, past president

Peter Derochie, president, Ontario Separate School Business Officials' Association

Ontario Secondary School Teachers' Federation

Pat Wright, board member and member, finance committee

Larry French, member, finance committee

Toronto International Film Festival Group

Allison Bain, director, government liaison

Michele Maheux, director of marketing and communications

Ontario Arts Council

Gwenlyn Setterfield, executive director

Susan Cohen, director, arts discipline programs

Michael Woods, board member

Federation of Women Teachers' Associations of Ontario

Bev Gardner, president

United Senior Citizens of Ontario

Al Smith, first vice-president

Jane Leitch, past president


*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)

Abel, Donald (Wentworth North/-Nord ND)

*Caplan, Elinor (Oriole L)

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

*Haslam, Karen (Perth ND)

*Jamison, Norm (Norfolk ND)

*Johnson, David (Don Mills PC)

*Kwinter, Monte (Wilson Heights L)

*Lessard, Wayne (Windsor-Walkerville ND)

*Phillips, Gerry (Scarborough-Agincourt L)

*Sutherland, Kimble (Oxford ND)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Hope, Randy R. (Chatham-Kent ND) for Mr Wiseman

Malkowski, Gary (York East/-Est ND) for Mr Abel

Clerk / Greffière: Mellor, Lynn

Clerk pro tem / Greffière par intérim: Grannum, Tonia

Staff / Personnel:

Campbell, Elaine, research officer, Legislative Research Service

McLellan, Ray, research officer, Legislative Research Service

The committee met at 1002 in room 151.



The Chair (Mr Paul R. Johnson): The first presentation this morning is by the Ontario Federation of Labour. I'm sure that all the members of the committee know who the representatives are, but if you would identify yourselves for the purposes of Hansard, I'll remind you that you have 30 minutes within which to make your presentation and field questions from the committee members. Whenever you're ready, please proceed.

Mr Gordon Wilson: I'd like to introduce who is making our presentation this morning. Ken Signoretti is executive vice-president of the federation; Julie Davis is secretary-treasurer of the federation; Chris Schenk is the research director of the federation. My name is Gordon Wilson.

We have made a presentation in writing; we believe it's been distributed to members of the committee. What I'd like to do, if I can, is try and summarize that presentation and perhaps leave some chance or some opportunity for dialogue.

Firstly, what we'd like to bring to the committee's attention regarding the economy and the economic reality of Ontario is that we see as still the government's number one priority jobs and job creation. We would urge the provincial government and the members of this committee to report to the House that a full employment strategy is a desirable objective, in fact a required objective, with targets and timetables if we are successfully going to be able to reduce the level of unemployment within the province.

It's interesting to note the cost of unemployment looking across Canada. You can carve out the Ontario figures from this if you wish, but there was a study done in 1994, which is quite recent, by Bellemare and Poulin-Simon which indicated that across Canada the rate of unemployment that we currently have to suffer is costing the Canadian economy $109 billion. We know that for every decrease of 1% in the unemployment rate we're able to carve $2.5 billion off the federal deficit. You can deal with the Ontario numbers from that.

What we're saying is that the economic and budget difficulties that the province and indeed our country face are more a question of revenue than they are a question of expenditure cuts. We would like the government to approach it from that perspective of job creation which brings in additional revenue rather than dealing with the question of cutting services that people require.

In that regard, I would like to compliment the efforts of the Ontario provincial government. I note that the December unemployment level was down to 8.4%. No one's saying that's where we want it to be, but it shows a marked improvement. As well, we want to draw to the attention of the committee that we are appreciative of the growth rate of the Ontario economy at 4.5%, which is the best performance in Canada, indeed in the OECD.

But attached to that is a note of caution in that the growth rate, we can see, is no longer a total remedy for reducing unemployment. The Ontario growth rate, as good as it is -- the best in Canada -- still is three times greater than or ahead of the job creation rate, the new jobs in the economy. So in this new economy that's developing, different than the old economy prior to the trade agreements, there are a number of people being left behind. In fact, if you go closer to the numbers, in Ontario, 47% of seniors live below the poverty level and the poverty line. So that's a clear indicator.

We are aware of the debt and deficit problems that the government faces, and we are also aware that many of the solutions to those problems are not in the hands of the provincial government, when one looks at trade policy, monetary policy, interest rates. But with the interest on the debt now at $8 billion a year eating up about 17.5% of revenue, we would urge the government to look at the revenue side as a solution by increasing their efforts for job creation, because revenue collection through people working is really the solution to reducing debt, not cuts, as has been demonstrated in other parts of the country.

So we are pleased that the government has not resorted, as an example, to the slash-and-burn strategy of the government of Alberta, which victimizes those people in society who are most vulnerable. The people of Ontario, as we all know, want jobs. They want to work, those people who can work. Attached to that, of course, are the people in Ontario who equally require and need the maintenance of public services that the people of Ontario depend upon.

We're asking the government to use its influence at the federal level as well in the discussions you will have with the federal government and the government's nuances about proposing block funding to the provinces for health, education and social assistance. If that were to happen, Canada would become very much a patchwork of standards. There would be no universality, no Canadian standards. It would be the first step down the road to disaster across our country. So we would ask you in your discussions with the federal government to forcefully oppose the suggestion about block funding for those three areas.

It's clear as well that the federal government, which is part of the problem for the Ontario government, has a preoccupation at the moment with deficits and with high interest rates, and it appears that the Finance minister federally has separated the financial economy from the real economy.

Recovery is not for everyone, as we know from the statistics that we see out there. We know that in Ontario there are still thousands of workers who, through the effects of the FTA and NAFTA and the Bank of Canada monetary policy, have not found their way back into the labour force. They have not yet returned, and for many of them their future doesn't look that bright.

There are additional troubling signs as we move to this new organization to work this "new" economy that we face. For example, we see a dramatic increase in part-time workers within the workplaces of Ontario and a concurrent decrease in full-time workers.

We see as well -- the numbers will support this -- that those people who work in full-time jobs, who work excessive hours, additional hours beyond the normal workweek, are those who are still able to maintain their high income by working those additional hours, but those people who are on the lower end of the income scale tend to be part-time workers who are not well paid, and this trend continues to accelerate. It's also important to remember that in that part-time grouping, the three largest groups clearly are women, minorities and those people who are immigrants to our country. So that has to be addressed.

We're also aware of a troubling and disturbing trend with a number of large employers in the province -- IBM and Xerox, to name two -- where they are relying now upon the shedding of full-time employees and their benefit costs in return for employing people on a contract basis through employment agencies. This is a disturbing trend that we see developing out there as employers are trying to find a way to reduce their costs.


In looking for solutions to how we deal with the question of the organization to work, I would recommend to the provincial government the report of the federal government advisory committee which recently reported, which had attached to it a number of ways to deal with the question of the phenomenon of part-time work and the phenomenon of overworked full-time workers. The thrust of their report was that a major reduction in working time would yield more jobs.

For example, if we were to make overtime voluntary, and this is within the realm of the provincial government, it is believed that those workers who were lined up, 25,000 of them, at General Motors might have access to more jobs if GM were working less time. Or at Air Canada there might be more people working, certainly not in the air but differently, on some of their ground operations, if people were required to work less overtime.

We would ask the government to seriously look at a statutory 40-hour work week. There is no reason to have a work week longer than 40 hours in the province of Ontario if we're seeing that the new economy is not providing work for people who want to work. You can deal with the question of overtime as well in terms of putting in place some regulation which says that people who have to work overtime don't receive payment for it but they get time off in lieu.

That was again another way of opening up some jobs, and you can maximize overtime at 100 hours per year. These were all recommendations contained within that report, to apply equally to hourly paid workers and of course to salaried workers as well.

Dealing with the question of part-time workers, if I could just make a couple of points that I think are very important, there has to be some way of applying employment standards which are vigorously enforced to the growing cottage industries of telework and home work and other variations of work, away from what we have been used to, that are starting to develop. But in order to do that, you're going to have to develop some system of formal registration to cover those employees who work at home to enable these standards to be enforced.

We know that is a growth area out there, people being asked to work out of the home, where in effect the home then becomes the workplace in addition to being the home. We would argue that employers should be statutorily required in this regard to provide prorated benefits to regular part-time employees so that we could begin to stifle the phenomenon I mentioned earlier where a number of major firms are reducing their regular workforce and hiring employees from employment agencies in order to shed their benefit costs.

With regard to retirement, we would ask the government to give some consideration to the changing of pension rules to again deal with the question of reduced hours and surplus ownership and, of course, unfunded liability. I note with interest that employers in the province of Ontario are demanding that the Workers' Compensation Board's unfunded liability be retired, and yet I hear no one in the employer community talking about pension liabilities being retired. It's an interesting phenomenon.

With regard to family leave, again there's a way of dealing with the question of distribution of work. We would urge the government to move to adopt the Quebec standard of 34 weeks' leave after birth or adoption of a child.

Education and training: We of course are encouraged by the government's activity in the creation of the Ontario Training and Adjustment Board, and hope that will prove fruitful. I know there are a number of people working very hard in both the employer community and the worker community and other communities to try and make the OTAB initiative be a successful one. But we would argue again that part of that whole plan has to be to encourage the increased adoption of paid education and training leave plans so that people can find ways to equip themselves with some employer responsibility in that process as they try to find their way back into the workforce, and of course, to expand access of the UI work-sharing program to reduce short-term layoffs.

On pensions I just want to hit a couple of things. The question of pension surplus ownership is very important to us. The matter of a surplus on a windup of a pension plan should be enshrined in the Pension Benefits Act in order to protect the rights of the employees who were participants. Where a surplus exists on a plan windup, it should first be utilized to protect against the erosion of pensions due to past and future losses to inflation -- I just draw to the committee's attention those two points, not to exclude the others -- and where there is a dispute, there should be a dispute resolution mechanism whereby an arbitrator could be appointed to bring finality to the matter of dispute with regard to surpluses and other matters attached to pensions.

Let me just make two other quick points and then we'll leave it open to questions to anyone within the federation delegation. Firstly, we'd like to compliment the government on its initiative in creating the Ontario savings bond proposal. The sale of these bonds, we are heartened to see, will give the Ontario government, I think, an avenue by which it can begin to repatriate some of our debt, which is part of our problem, as we are all aware.

But we would urge the government to lift the restrictions on the issue of bonds and RRSP purchases so that they can be done year-round. I don't see anything wrong with the government of Ontario being in competition with the financial sector, and I believe there are a number of people within Ontario, including our membership, who would want to invest in Ontario through the Ontario savings bond program as opposed to putting their money into some commercial financial institution that may be investing the money to take the jobs away from the workers who live here. We've seen examples of that; there's no need to go into that in great detail.

Finally, I would ask the government to pay some attention to the report that will be received at some point by the Royal Commission on Workers' Compensation, which among other things in its mandate is to look at a universal disability insurance program. We are arguing today not just from the perspective of it being justice for injured workers or anyone injured in the workplace or elsewhere to be able to remain an active participant in the economy, but it just makes good economic sense for people to have some process whereby, if they are removed as an economic unit from the economic model, they can continue to participate as consumers at least and therefore continue to fully support the economy and to participate in it as consumers through an unfunded disability insurance benefit.

I thank you for your attention, excepting this final point, and it's important to us and we would ask the members of the government who are of this committee to be particularly attentive. We are asking you yet to abolish the social contract.

The economic growth in 1994 in this province, as I said, was 4.5%. It is projected to be 4.2% in 1995. We would ask, given the perspective of at least the economy continuing to roll, that workers in this province be allowed to return to collective bargaining. This would help, of course, in the whole process of income distribution as collective bargaining always is a major lever in that process; it would help, I think, members affected by the social contract now to be able to deal with their employers directly over the bargaining table to reduce the hours of work that we have talked about through collective bargaining as well as the initiatives we're asking you to make legislatively and through regulations; and it would, I believe, in that process continue to develop more jobs.

We're asking you to let collective bargaining proceed so that those public sector unions affected by the social contract can begin the process of negotiating with their employers to protect any further layoffs taking place in the public sector. We do not want to see in the province of Ontario what we have seen in provinces like Alberta or New Brunswick or Newfoundland. There is no need for that, and we would ask the government members to consider that.

Mr Gerry Phillips (Scarborough-Agincourt): The first issue is fundamental to all of us, and that's employment. I see, looking at the report you refer to, the Ontario Economic Outlook, that Ontario still had around 84,000 fewer jobs in 1994 than it had in 1989, and this same book indicates that the rest of Canada has 240,000 more jobs. So Ontario is still down in 1994 from 1989, over that five-year period, by about 84,000 jobs and the rest of Canada is up about 240,000 jobs. Has the federation got a feeling of why that's happened, and what can be done about that?

Mr Wilson: I think we do. You recall, Mr Phillips -- you were part of the debate that went on in this province at some length -- that the previous government, headed by Mr Peterson, was in full support of opposition to the trade agreement unless a number of criteria were established. It is our estimation in our surveys that, depending on whose numbers you want to use, we have lost somewhere between 175,000 and 195,000 jobs directly as a root cause of the transfer of production facilities, the closure of production facilities and their moving south and then south again.

We all know in this room, I think, that Ontario was probably more adversely affected than was any other jurisdiction in this country by the trade agreement. I would suggest to you that that accounts for the fact that we took the bath, and it'll take us a long time to get out of that hole. And that wasn't the doing of either provincial government, the current one or the previous one, in that the trade agreement was not stopped.


Mr Phillips: I appreciate that view. The other curious thing in the job numbers was that in 1994 we actually saw fewer jobs created, net incremental jobs, than we did in 1993, which surprised many of us, because the economy was growing very well in 1994. Actually, again according to the government statistics, in 1993 job growth was around 79,000 and in 1994 it was around 73,000. What would be the explanation for actually fewer jobs created?

Mr Wilson: I'm not sure. Do you have one?

Mr Phillips: I know the federation does a lot of good research. I don't know whether Mr Schenk -- maybe he knows the explanation for it.

Mr Wilson: It wouldn't be the first time Mr Schenk has an answer that I don't have.

Mr Chris Schenk: I don't know if I have the answer totally, but in every upturn there is always a period of time in which employers, not sure of what the market's going to do, hesitate to hire. They also have debt from the downturn, so you don't necessarily see hiring coming in an even pattern; it varies plant to plant, office to office, and industry to industry. I can only suspect that there was sufficient hiring in 1993 for a number of these firms such that they held off any more hiring in 1994. I can hope that they will hire further in 1995. I don't have any particular breakdown in comparison of the hiring patterns for the two years.

Mr Phillips: The numbers come out tomorrow for January, and my own judgement is that they'll be pretty good. I hope we're starting to see an acceleration,but I was disappointed in 1994 that there actually were fewer new jobs created than there were in 1993.

Mr Ken Signoretti: If I can make a point, Mr Phillips -- it's just something we've talked about -- if you look historically at what happens in terms of employment and unemployment, even in our postwar economy, you'll find that when you have a boom in the economy, the employment goes up, and then you have a recession and it goes down; and then when there's the next boom, it doesn't go up to the same level or higher. I don't think anybody really understands that, and I don't know why that phenomenon takes place, but I think it's something everybody collectively ought to look into: why these things happen. It is just a very interesting phenomenon. That may be part of the answer. I don't know.

Mr David Johnson (Don Mills): Thank you for your deputation this morning. I hadn't intended to mention this, but we were talking about exports; the issue of exports was raised. It's interesting that earlier this week the Conference Board of Canada was before us. They have export growth in Canada and in Ontario; in actual fact, the percentage increase has been phenomenal in exports from Ontario.

Mr Wilson: In certain sectors.

Mr David Johnson: Well, they're looking at the overall picture, and the overall picture has been phenomenal. It's been well ahead of the growth of the economy in Ontario and in Canada. I guess it's perhaps the large reason for the success of the economy over the last year or so.

What I really wanted to talk about: You mentioned concern for the vulnerable, and that's a concern I certainly have, not only today but into the future. You mentioned the elderly, for example; one could mention many other people who are going to need support. My concern is that, with interest consuming more and more of the provincial budget and of course more and more of the federal budget, but we're talking about the provincial budget here today -- you indicated it's 17.5% of revenue; that's about double what it was four years ago, and it's growing. The economic growth, that you've indicated you expect to be about 4.2%, could well be that level this year. But all the forecasts we've seen in the future take a dip, and some of the forecasts we've seen indicate that beyond the next year or so the kind of growth we're looking at is perhaps 2% for the rest of this decade, and the money won't be there.

With the debt continuing to escalate in the province of Ontario -- the auditor kicked off the week by saying that the deficit in real terms is about $10.5 billion this year. That's going to add to the debt and the interest payments are going to continue to climb, which is going to mean that there's going to be less and less money available for the services to the vulnerable, for education, for health etc. I would like you to speak to that. Unless we get serious about eliminating that deficit, the vulnerable will be the ones who are going to be hurt in the long run.

Mr Wilson: I don't think anyone opposes the elimination of the deficit, ourselves included. It's a question of, what is it you do to eliminate the deficit? The province of Ontario is no different from other provinces in that you have some difficulty because many of the major levers that determine that deficit are out of your control: They're in the hands of the federal government.

Our concern with the actions of the federal government is what I said earlier, that it's concentrating on the financial economy and not dealing with the real economy. You've seen instruments like the Bank of Canada, as an example, less and less become an instrument of government or the people in Canada and more and more an instrument that simply caters to the investment and the financial community.

To give you an example of what I'm talking about, when interest rates rise in the United States, American workers by and large are protected by long-term mortgages -- 25- and 30-year mortgages are still a fact of life at 9% in the United States -- so they are insulated from the impact of interest rates going up. The difficulty we have is that the federal government in Canada then reacts to the investment community, as to who it is wants to attract investment dollars, so we must then track the United States a point or two above that. We have lost the ability we had up until the mid-1970s to be the masters of our own house.

This is why I thought the government's action in trying to create an Ontario savings bond issue made a heck of a lot of sense in trying to repatriate some of that debt so we could deal with it. If we did not have to deal with the question of foreign investors and their attraction to the Canadian dollar by higher interest rates, every time the American interest rates went up, so what? That's exactly what happened in this country prior to 1975.

Mr David Johnson: I would have to say we have a disagreement on that. The province of Ontario 10 years ago had a budget of $28 billion. Today it has a budget of about $56 billion. The control we have is that the spending has doubled in 10 years --

Mr Wilson: Of course it has.

Mr David Johnson: -- well beyond the rate of inflation, well beyond population growth. The province of Ontario has the choice to reduce spending, with the modest economic growth we will see over the next few years, to balance the budget through that sort of combination.

Mr Wilson: But to be fair, Mr Johnson, how could you expect otherwise when you had social assistance rates in this province tripling over what it was in the period you're talking about, where you've had unemployment rates going to record highs in this province? Again, a root cause of that was the shift of a lot of well-paid jobs from this province.

I know people personally who were workers in well-paid manufacturing jobs who lost their job because their employer went south and south again. These workers -- and they didn't create that unemployment themselves -- then found themselves exhausting an unemployment insurance program that was available to them, that has continued to shrink in terms of availability, in terms of eligibility, in terms of the level of unemployment, and then found themselves on welfare, a direct cost to this province. Now, surely to God you can't say that's because of the action of any provincial government in responding to that.

The action I understand you to be suggesting is to say, "Well, cut 'em off." We could do what Ralph Klein's doing -- give them all a bus ticket to Alberta -- but that isn't the solution. It sure isn't the solution for Ontario and it sure isn't the solution for Canada. I would hope that you would not want to support what Mr Klein is doing.

Ms Julie Davis: If I might, the numbers show that Ontario suffered 70% of all the job loss in the country, and at the same time, in the same two-year period, 1991 and 1992, our social assistance caseloads skyrocketed and our costs went up by 40%. It's no wonder we're facing the problems we're facing today, when you take a look at those two numbers: the job loss on the one hand and the increased cost on the other.

Mr Wilson: With regard to the level of the deficit, I happen to think the best guy to ask when you want something fixed is the guy who's doing the job, so I'll buy the Treasurer's numbers.

Mrs Elinor Caplan (Oriole): You stand alone.

Mr Wilson: Good morning, Elinor.


Mr Norm Jamison (Norfolk): It's a pleasure to have you here to listen to your presentation. I might add that the presentations we've been listening to have been rather varied. Everyone agrees there are some fiscal problems, but there are very different points of view on how to approach those problems in a way that would put the province on a course to rectifying that situation.

I'd like to make a comment that really agrees with something you've indicated, Julie; that is, that 70% of the job losses in this country occurred here in this province, quite simply because it's the manufacturing heartland of the country. We've seen an upturn in the economy that really isn't providing the number of jobs that normal upturns in economic performance provide -- although jobs are being created: One out of two jobs being created in Canada is basically being created here in Ontario.

We had someone come in yesterday representing the Automotive Parts Manufacturers' Association. Elizabeth Mills, I believe her name was, indicated that there wasn't really a great recovery in auto. I have real problems with that. I know that, coming from the CAW and prior to that the UAW, it's of interest to you. There has been $5.5 billion worth of investment in basic auto manufacturing in this province, and when Ford and Chrysler and Toyota and GM are investing that type of money, I would think that would spell a good future here for those auto parts manufacturers. They indicated, of course, that there were some things like Bill 40 that were still causing them great concern. I don't know where they place the facts; the facts, I think, speak differently about that bill.

I just wanted your opinion on where the economic recovery is centred in this province.

Mr Wilson: Bill 40's been law for over a year in this province, and I don't know of an auto parts manufacturer that's been unable to operate because of it -- not one anywhere in the province. And $5.5 billion in the auto sector is a substantial investment, but it's also interesting to note -- our numbers I believe are correct -- that in the period 1992-93, $80 billion worth of new investment came into the province of Ontario.

The auto parts sectoral council measurement of the degree of their success is an initiative that's very important in terms of the manner in which they've been able to deal with the application of technology, how they've been able to deal with information sharing, all those things that help auto parts manufacturers, as a group within a sector, deal with the economy. I don't know how they separate themselves from the health of the auto industry and the auto assemblers in this province. The Bill 40 argument is a bogus argument. It would be interesting to see how one calculates investment that's not been made here, which seems to be the argument that's made. If that's true, let's see the numbers: Take us into the boardroom, tell us what your investment plans were and why you had to scrap them. Of course, employers are never going to share that information.

To suggest somehow that the decision about whether or not investment is made in Ontario is based on labour law is absolutely nuts. It's made in Ontario because there are well-trained workers, there's an infrastructure to support their operations, there is stability. All of those things are factors, are indicators, that employers, in my experience of more than 30 years in the labour movement, base investment decisions upon, not necessarily on a piece of labour law. How else would you explain that the Chrysler corporation has more operations and investment in Canada now than it has in the United States?

The Chair: Unfortunately, our time has expired. I want to thank the Ontario Federation of Labour for its presentation before the committee this morning.


The Chair: The next presentation is by the Ontario Public School Teachers' Federation.

Mr Reg Ferland: Good morning, Chair, committee members. I'll introduce the delegation, and I will then proceed with our presentation to you.

Our general secretary is David Lennox; the first vice-president of our federation is Jeff Holmes; our legislative observer is Vivian McCaffrey. I'm Reg Ferland, president of the Ontario Public School Teachers' Federation.

The Ontario Public School Teachers' Federation represents 36,000 teachers, occasional teachers and educational support personnel who work in the public elementary schools across this province. The federation welcomes this opportunity to present an update on our views regarding government spending priorities, the effective use of tax dollars and recent measures taken by the government to reduce public expenditure.

There is broad recognition that the funding of elementary and secondary education in the province requires major reform. Education finance has been the subject of intense and prolonged scrutiny. A decade ago, the Macdonald commission studied educational funding. More recently, the Fair Tax Commission produced a report, back in 1993, and, very recently, the ministry committee, which also endeavoured to study educational funding, was not able to or did not publicly release any of its recommendations. Most recently, the Royal Commission on Learning has proffered a number of recommendations for restructuring the funding of Ontario schools.

The federation has long advocated three key changes to school financing, and they are: that the major share of education costs be paid from provincial revenues rather than property tax; that per-pupil expenditure grants more accurately reflect the real cost of providing basic educational services; and that a greater investment be made at the elementary level to facilitate early identification and intervention programs for young children. We were therefore pleased that the Royal Commission on Learning identified early childhood education as one of the major thrusts in its vision for reforming education.

The Royal Commission on Learning will indeed spark fundamental changes to the educational system and how it is funded. However, these changes will not happen overnight. In the interim, elementary and secondary schools must receive sufficient funding in order to provide the range of educational services mandated by the province and expected by the public.

Throughout the recession, the federation has argued against the option of cutting public services and has advocated instead the reform of the personal income tax scheme and the closing of loopholes, a focus on job creation, and allowing the deficit ceiling to rise in the short term. The long-term health of the province depends on the existence of stable and viable public services. It does not make any sense to cut public services and thereby contribute to the unemployment problem.

The Minister of Finance and his government are taking great effort to spread the word about the beginnings of an economic recovery in this province. While we agree that a period of economic growth is the most appropriate time to tackle public debt, we are urging the government not to focus solely on debt reduction but to ease up on its stringent expenditure-cutting into the public sector.

The federation understands that much of the province's ability to deal with its own deficit and to support public services depends on the transfers it receives from the federal government. We are deeply concerned by the current speculation that the federal government is planning to drastically reduce the level of services which form our national safety net and to further slash transfers to the provinces. We support the Ontario government's attempt to fight this federal policy direction.

The well-educated workforce in Ontario is commonly touted by the government as one of the reasons the province is in a good position to ride the next wave of economic growth. This sentiment is clearly stated in the Ministry of Finance's pre-budget document, Ontario Economic Outlook. It will amount to lip-service to the value of education if financial support for elementary and secondary schools continues to decline. At the elementary level, additional resources are required to support smaller class sizes, specialized staffing and educational support services which facilitate early identification of students' learning needs and emotional problems. Early identification and intervention are key to reducing the need for more costly remedial programs at the secondary level and to improving the student retention rate.


Page 4 of our brief refers to the research in support of investing in education. Both the Premier's Council report Yours, Mine and Ours: Ontario's Children and Youth and the report of the Royal Commission on Learning draw on an extensive review of the research literature which supports this position.

There is public support for making education funding a government spending priority. The 1994 public opinion survey on education issues conducted by the Ontario Institute for Studies in Education reports that, although the public accepts decreased public spending in general, 54% of the Ontario public "support increased funding for education and over 60% support increased funding for job retraining and adult literacy programs." Furthermore, in spite of the current economic climate and the financial pressures created by increased taxes, the OISE study reports that a majority of the public, 51% to be precise, are willing to pay higher taxes for education.

With less-than-inflation transfer payments, and then the introduction of the social contract and the expenditure control program, school boards are drastically paring their budgets and cutting programs and services. At the same time, we are currently witnessing a flurry of announcements regarding new education initiatives, including expanded student testing, a new common curriculum, the establishment of school councils and the extension of formal schooling to include three-year-olds. We anxiously await to see what the provincial budget holds to fund these projects.

The social contract is also creating extreme inequities among teachers across the province. Teachers are paid according to their qualifications and experience. Almost all teacher collective agreements have an apprenticeship grid, most of them taking 10 steps to reach the maximum level of salary after 10 years of experience. The social contract has frozen teachers on grid, which means that less experienced teachers will automatically lose salary credits for three years of teaching. Over the life of their career these teachers, on average, will have lost the equivalent of at least one year's salary. They are therefore paying a disproportionate amount towards the social contract saving targets.

A small number of school boards and their teachers have negotiated experience increments for teachers moving up the salary grid in exchange for other budget reductions. As a result, teachers with identical teaching experience and qualifications are being compensated differently. All teachers are experiencing the effects of frozen salaries, unpaid days and cuts to staffing and programs. It is totally unjustifiable to expect our younger teachers to shoulder a disproportionate share of the burden of cost cutting.

If I can go back in our brief, having made my statement on the social contract, to page 6, it addresses the impact of the social contract not from a teacher point of view but from an organizational point of view in schools. School board programs have been cut at the elementary level.

These cuts include the delay of implementing junior kindergarten programs, the reduction or elimination of English-as-a-second-language, French immersion, music, art, computer assistance, design and technology and family studies programs. The cuts also include special education programs and the budgets are being reduced for noonhour supervision, occasional teacher coverage, teacher professional development, secretarial and maintenance services as well as equipment replacement and repairs.

As indicated on page 7, some school board restructuring initiatives are positive and don't adversely affect the quality of educational services. Examples include joint transportation, purchasing, warehousing, as well as the collaboration on waste management, computer operation, courier services, payroll, printing and the investment in energy-efficient means.

A few school boards have also expanded their joint ventures to include other public agencies such as municipalities, hospitals and community colleges. Some restructuring initiatives do undermine the quality of educational services. These, as outlined on pages 8 and 9, include the deprofessionalization of education services, for example, the replacement of qualified teacher-librarians by library technicians; the reduction of educational support personnel, including speech and language teachers, social workers, psychologists and diagnosticians who provide key support services to children with special needs and to their families; as well, the last item, the contracting out of custodial and maintenance services.

OPSTF is calling upon the government to introduce legislation in order to restore the rights of young teachers to their rightful place on the grid. I made the argument earlier that these teachers are paying a disproportionate amount over the course of their teaching careers. This inequity, this injustice cannot be tolerated and we are requesting that the government restore the teachers on the grid.

OPSTF is disappointed that this government has not fulfilled its commitment to reform the funding of child care services. We urge the government to take the opportunity to access federal strategic initiatives funding to support the overdue child care reform proposals.

In conclusion, we are urging the government to balance the pressures to pay down the public debt with the need to sustain viable public services. Implementation of the social contract and the expenditure control plan is not simply a matter of figures on a ledger. Cuts to public services affect the everyday lives of Ontarians and, in the case of education, shortchanging our schools today will have long-term social costs in the future.

Chair and members, thank you for listening. We are open to questions from the members of the panel.

Mr Gary Carr (Oakville South): Thank you very much for your presentation. I enjoyed it very much. I want to talk about the social contract. Reg, as you may have read in the paper, the Treasurer sat in your very seat on Monday and said when the social contract ends the money is not coming back in the system. As a result, your members are faced with the dilemma of what happens when the social contract ends.

The province isn't putting any more money in, and the only alternative is to increase property taxes. I can't speak for other areas, but I don't think it will happen in Oakville because we've got seniors who will literally probably be out of their homes if property taxes go up any more. You alluded to that and how you wanted to see the province take over. So there isn't any more room in property tax increases.

I'd like to ask you an open-ended question. Knowing that the Minister of Finance has said there isn't the money coming back in the system, and when it ends your members are going to be faced with a very difficult situation of potentially maybe having to continue on with their wages frozen, what do you see happening at the end of the social contract and what are your members expecting when the social contract ends?


Mr Ferland: Thank you for the opportunity to further discuss the social contract and the increment issue. We are aware that the government is not going to reapportion dollars back to that particular area in collective bargaining, if you will, or back to school boards. Our dilemma is one that has been created by the advent of the social contract and cannot be solved by the teachers themselves and by the school boards themselves. It has to be a team effort that will address this inequity. I am not convinced that it was a target or an aim of the social contract to hit a portion of the teaching population more so than others. This was a result of that particular avenue chosen.

We realize that there are no new moneys and that taxes are going to be very difficult to raise at this particular point in time. We are also taxpayers and welcome that particular comment.

The difficulty is that you're going to have teachers seeking to move to boards that have restored totally or partially the increments to young teachers. You're going to have boards that will be seeking teachers and will not have the attractiveness within their collective agreement to attract new teachers. This will create chaos in the future if allowed to continue.

There's also the pay equity, if you will, of a member, a teacher, teaching on one side of the hallway making more money with the same number of years of experience and qualifications compared to the member on the other side of the hall who may be earning as much as $8,000, $9,000 less per year. We pride ourselves in this province on having built equity throughout our working world and this would now add one that wasn't even anticipated.

Mr Carr: I just had a couple of quick ones because I did want to get this answer on what came out in the commission. That's some of the recommendations and three in particular, if you could answer whether you and your membership are in favour of the standardized tests, the parent council and the core curriculum, because we understand the government's going to move in this area. Will you be supporting the government on those three initiatives, and maybe you could tell us the ones that you disagree with, if there are any.

Mr Ferland: I'd like to invite the general secretary to use his teacher voice this morning.

Mr David Lennox: It's been a while since I've been there. Let me try to give you the answer specifically to your question.

With regard to standardized tests, we are not negative about standardized tests as long as they are used to improve the instruction in the classroom. If they're used for an improper reason, in any type of comparison or evaluation of a school to another school, then we are strongly in opposition to that.

With regard to school councils, we're quite in support of school councils. We have two concerns with regard to school councils. One is with regard to the involvement of school councils in the performance appraisal of teachers. We think the school board is the employer, the principal is assigned the area of responsibility, and that is where the responsibility is for the evaluation of teachers.

The situation that you've got -- and we asked the Ontario Parent Council when we were down to speak to it -- where did they think they would find the insurance to protect the parents in the lawsuits once the parents get involved in the evaluation, because they're not protected anyplace? In fact, one parent down there suggested we send out surveys with the students to the parents out in the community to get a survey answer of how good the teacher is doing. Sounds like a popularity contest to me, so we're dead against the involvement in them in that aspect of it.

Your third area, core curriculum, I don't think we've ever left a core curriculum. We support a core curriculum. We support the striving for excellence. The problem that we've got is that, as we continue to cut back on the support services, we become quite middle of the road. For those students who are gifted and need to be challenged on one side or need support with learning difficulties, we're going to find that the core curriculum is going to have control and not allow us to encompass all the students and meet their needs.

Mr Carr: Good luck to all of you.

Mr Gary Malkowski (York East): Thank you for your presentation. You were talking about federal transfer payments and, as you know, the Liberals and the PC governments, when in power in Ottawa, haven't given us a fair share in relation to the federal transfer payments and we've continued to experience discrimination there. Now we're looking at an upcoming federal Liberal budget and we're concerned about what the decisions on transfer payments will be. We want to maintain the services and preserve the services, but I'm wondering what your comments are if the federal government changes the transfer payments as we fear. What would your comments be as to the effect of that?

My second point: Do you have any specific recommendations? Once the federal Liberal budget cuts are announced, what would you advise us to do? How can we try and maintain a level of funding and services without hurting the schools and without hurting the quality of services?

Mr Jeff Holmes: The great conundrum that we face in education and in all walks of life is the gradual downloading of cost. The federal government turns around and passes it to the province, the province turns around and passes it to the local taxpayer and, finally, the local taxpayer says, "Excuse me, there is no more."

I think the expenditure control that goes on is a necessary part of what's happening. None of us, I don't think, sitting at the table here would dispute the fact that either the pot of money is shrinking or the scoops are getting bigger as they dip into it. It is the most difficult problem for any Minister of Finance to deal with. We see evidence across the country at the current moment of all the tax revolt meetings that are taking place and the endless acrimony that is going on as people register their discontent.

Somehow in this process, we have to find a way, we as the taxpayers of the province or we as the service groups of the province, education included, or we as the government of the province, to balance all the forces and come out at the end with something that everyone can live with.

It's essentially a win-win negotiation, or it should be a win-win negotiation, that nobody wins totally but nobody loses, and the perception at the moment is that there are segments that are losing more than others and therefore have a greater level of discontent.

If I could sit here and tell you the answer to how to solve the whole thing, I would perhaps be Treasurer of Ontario, but I'm not, so I just encourage some sober thought on the process.

Mr Ferland: If I might share as a supplement just very briefly, the educational system in Ontario cannot take further cuts and maintain its viability, its credibility as a system that delivers excellence. If we are going to cut, then we're going to have to release and lessen our expectations of the educational system.

As far as maintaining what we have on a reduced income, if you will, I go back to my earlier comments in my presentation. The public at large and a great majority of the public in many of the polls indicate that they're willing to pay for education. I realize that's in the form of taxes. They're not willing to pay for taxes or have increased taxes, but they do indicate that they're willing to pay for education. I don't know how one brings that about without doing it in taxes. There is no other way. But the public opinion polls clearly indicate that the maintenance and the betterment of education is a target that this province must have.


Mr Phillips: There's a comment that we often get, and that is that we have shifted the spending from the classroom to the non-classroom, as a percentage, fairly substantially in education and that there may be some significant opportunities for efficiencies or savings or cost cutting outside the classroom. I wonder if your organization has looked at that and has any advice for us on whether there are substantial opportunities there.

Mr Ferland: I'm going to question the definition of the word "substantial." If it's enough to save the system without an influx of dollars, I don't believe that would be met. We've highlighted in the report that we do have school boards that have undergone the research and even the implementation of cost saving measures within their own domain and sometimes in cooperation with others. These types of efficiencies will in the long run generate cost saving measures. In the short term, however, they do not, because they are not major costs, as well as we should realize that the major cost of education is to pay the teachers to deliver education. The rest of the dollars is a smaller amount that you have to play with.

The releasing of certain dollars that were labelled to transportation will in the long term generate some substantial savings. We encourage and we cooperate fully with school boards to seek out areas of cost reduction in an operative sense, so that dollars can be put back into the classroom. We welcome that challenge and open negotiations with any school board -- not negotiations from the collective bargaining point of view, but negotiating the areas where cost saving measures can be found. We welcome that opportunity and we'll work with school boards.

Mr Lennox: If I can make a further comment, I want to be very specific to Mr Phillips's question here. We've looked at studies recently, the Windsor-Essex study, for example, to amalgamate the two school boards and the result of that was it was not going to be cost savings. We looked at the Ottawa-Carleton study and it again reported that it was not going to become cost saving or financially more efficient. Even in the royal commission that was pointed out.

The situation is that we can support, for example, some amalgamation of school boards, if they're right, in the province of Ontario; there can be some examples of that. The problem that you've got is looking at the number of dollars spent outside of the classroom, when you're looking at 80% being spent in teaching, directly at the classroom level, and then you have to take a look at administration, maintenance, custodial, that aspect of it. Yes, there could be some type of good analysis done on that and I think we have to stop the attitude of, "Yes, we're prepared to save, but not in our own backyards." So yes, we're going to have to take a look at that and redirect money right to that classroom and it's going to take the will of senior administrators and trustees to do that.


The Chair: The next presentation this morning is by the Canadian Manufacturers' Association.

Mr Eric Owen: Good morning, Mr Chairman, ladies and gentlemen. You'll have to excuse me; this weather's got a bit of a bug in my throat and I'm suffering a little bit. I have with me today Mr Jayson Myers, who is the chief economist of the Canadian Manufacturers' Association. I'm Eric Owen. I'm director of taxation and financial issues.

I don't want to go into the rigmarole of what the CMA is, but the CMA has been around for more than 125 years. It is an umbrella organization of most, if not all, of the manufacturing community. Our members deliver approximately 75% of the GDP in Canada, so I think that that's sufficient.

I'd like Mr Myers to give the first overview of the economic scenario as the Canadian manufacturers have reviewed it, please.

Mr Jayson Myers: From the perspective of manufacturers in Ontario, I think they're optimistic, they're cautious and there's a lot of concern. They're optimistic because 1994 was a tremendous year for manufacturing in this province. Production increased by 7%, one of the strongest rates of growth in 10 years. Shipments were up by about 11%. After-tax profits rose by 65%. As a result of that, 16,000 new jobs were created in this province in manufacturing, and capital investment rose by 26%.

Any way you look at it, 1994 was a good year for manufacturing in Ontario, and manufacturers are optimistic about the spinoff effects of that growth, the fact that the better profit margins that they've seen will lead to stronger employment and capital investment prospects in 1995.

But I have to say at the same time there's a lot of concern and there's a lot of caution. Even given that strong performance in 1994, level of production remains below what it was in 1989. We are about 188,000 jobs short of where we were in 1989. Capital spending is only 4.4% higher than where we were in 1989. Investment in plant facilities is 36% lower than where we were in 1989.

The economy as a whole in Ontario has grown only by 3.8%, and if you look at real personal disposable income, the spending power of Ontario consumers, that is lower than it was in 1989. There's a good reason why people don't think that we're into recovery, and that's because they don't have as much money today to spend as they did in 1989. There's a lot of caution, a lot of concern about the future prospects of our industry and the future prospects of the Ontario economy.

I have to tell you that the growth that has occurred over the past year has been almost exclusively export-driven. Manufacturers are exporting 55% of total production in this province outside of this country, more outside of this province. The domestic market, the Canadian market for Ontario manufacturers, accounts for less in terms of sales than the American market does today.

If you take a look at the American market and the effect of higher interest rates on that economy, we're going to see a slowdown in the rate of growth. I hope we don't see a recession this coming year, but I can tell you there are a lot of companies that are very fearful that that's exactly what they're going to be looking at, particularly in the automotive industry and the suppliers into that industry, because that's where the growth has been coming from.

We're cautious and we're concerned about the effect that the depreciation of the Canadian dollar has on costs of imported materials and technologies, because that's what it takes to grow today, and those costs are going up all the time. The high debt levels that consumers and businesses and particularly governments have in this province also are reason for concern in the face of high interest rates.

I can tell you many companies today are still facing tremendous cost pressures. That 65% increase in corporate profits only shows how low the profit situation was in this province, because after-tax corporate profits remain 19% lower today than where they were in 1989. It's very, very difficult to make the money today to reinvest in plant, equipment, expansion and growth.

On average in Ontario, manufacturers are spending seven hours and 45 minutes out of every eight-hour production shift simply to break even, simply to cover operating cost, 15 minutes to make money, and they'll spend over five minutes of the remaining 15 minutes to pay income taxes.

That leaves slightly less than 10 minutes out of every eight-hour shift to make the money that's required today to invest in technology, in capital, in training, in research, development, new product design and in reorganization, and if we aren't making that investment, we're not going to grow in the future.


We're very concerned about the cost increases that we see coming in and that will be taking place over the next year. Inflation will be up this year. Companies will be passing on more in terms of price increases, but companies will also be seeing higher wage increases. In fact, from January 1989 to the end of 1994, although the average selling price of a manufactured product in this province only rose by 8% over that entire period, wage rates have increased by 24% and they've just kept pace with inflation that's been driven up by higher taxes and higher regulated prices. Payroll taxes and supplementary labour benefits on a per capita basis have risen in this province by 75% over the past five years.

There is a good reason why we've lost 188,000 jobs in manufacturing, and a large part of it comes down to those cost pressures. The rule of thumb for business is, if your unit costs don't keep pace with your prices, you're not going to be in business very long. There are very few variable costs that companies can cut and unfortunately labour has taken the brunt of many of those cuts. I don't see the profit situation, I don't see the cost pressures being relieved in this province for some time and I don't think we'll be getting the jobs back in manufacturing.

The Ontario economy, I think, can be expected to slow down considerably in 1995. We're looking at a growth rate of about 3% in real terms, and yet the Ministry of Finance is predicting a growth rate over the next three years that averages 4.4%. I think this is wishful thinking and I think that some of the problems that we've faced over the last four years have come from overly optimistic growth forecasts that tend to create a situation where governments are overestimating revenues and underestimating expenditures. That's one of the problems that's led to the tremendous deficit situation and pile-up in debt that we've seen in this province over the last four to five years.

Manufacturers are also seriously concerned about the erosion of net new investment in this province. In 1989, 10% of GDP was being reinvested in this province in terms of new fixed capital. That's after depreciation, that's after you take into consideration the capital consumption allowance that represents replacement capital. Some 10% of GDP was being reinvested in the province; today less than 3% of GDP is being invested and the trend is downwards.

I know a lot of companies with cash on hand that will not be making investments in this province over the coming year. They're looking elsewhere: at other provinces, at states in the United States. This is not a good place to invest for many Canadian companies and that has to change.

I think it's appropriate at the end of the government's mandate, as you're looking at a budget that will set the stage for where we go in the next mandate, whatever party is in power, to look back at the performance, both fiscal and economic, of the last five years. I have to tell you, the picture is not very encouraging.

Operating expenditures have increased by 12%. Interest on the provincial debt has risen by 110%. Provincial revenues have increased by 5%. The provincial deficit has risen from $3 billion in 1990 to $8.5 billion or more today. I wish it were $8.5 billion; I wish we knew. A total of $41.3 billion has been added to the net provincial debt. The outstanding provincial purpose debt has risen by 114%. The contingent liabilities of the provincial government have risen by 40%, and Ontario Hydro costs have risen by 33%.

At the same time, Ontario's credit rating has declined. The Ontario economy has risen in total by only 2%. Real personal disposable income has fallen. Residential investment has declined by 19%. Non-residential construction activity has fallen by 60%. Real domestic demand in the province has increased by only 2.2%. Employment has fallen by 66,000 jobs, and there are 121,000 fewer people working in manufacturing from 1990. Unemployment has risen from 6.3% to 9.6% of the labour force.

Quite frankly, ladies and gentlemen, we can't continue to see the fiscal and economic performance continue like this over the period of the next government's mandate. We're facing a serious fiscal and economic crisis in this province and we have to wake up to that fact. We have to put in place today a budget that will address those concerns, the crisis that we face, and we have to look again at the fiscal priorities of this province.

Again, we tell the government that you have to balance the provincial deficit, balance the budget, within three years at least and move into a surplus to begin to reduce the provincial debt.

You've got to understand that you have to create wealth in this province to expand the revenue base before you can collect more revenue. You have to create wealth before you can redistribute it, and you have to understand that it's customers that create jobs; it's not government that creates jobs. In fact it's not business that creates jobs either. The jobs will come only if business can afford to hire people.

You have to understand that taxes are ultimately borne by people, not by corporations, and you have to ask whether corporate taxes are the fairest way to tax. I don't think they are. I think if you look out the window today, if you can find a manufacturer close by, ask them, ask the people who have lost their jobs as a result of higher taxes and higher regulatory costs, ask the companies that have moved out of Toronto and that have moved out of Ontario as a result of higher taxes, and they'll tell you that it's not a very fair way to tax. They'll also, I think, tell you that economists aren't perhaps the best people to tell you what's fair in the tax system.

We've suggested at the back of our submission a number of changes that you can make to restructure government. I think this is extremely important. It's time that government decides how much money is to be spent and then to re-engineer programs and to reinvest the remaining money in programs that make sense -- in infrastructure, in health, in education -- that we all require in this province, but also in areas of government activity where there is a real economic payback, and not in administrative overhead. It's important to reduce that.

I'm going to ask Mr Owen to address some particular tax issues that I think will help to set us on the way to an improved tax situation in this province, but let me conclude by stating one thing: The objective of fiscal policy and the objective of all government policy in this province, and our overriding interest, is to make Ontario the best location in the world for companies to come into, locate, invest, export from, employ and grow. I can tell you that the concerns today from the manufacturing community about the fiscal and economic situation in this province are not leading us to the type of business environment that is conducive to that.

Mr Owen: I was looking back last evening at some clippings of some of the reports of the budget that have come out over the years, and I came across one in 1991 where I was quoted, and I believe that the quote I said at that time is even more paramount today. I was quoted at that time as saying the government cannot spend itself rich, and I think the figures Mr Myers has just quoted indicate that it would have been better had they taken some notice of that.

As Mr Myers has said, the government must cut spending, but in our opinion as well it must also cut taxes. Tax increases are not the solution or even part of the answer to the government's fiscal problems. Any increase in the cost of government borne by business will only lead, in our opinion, to further losses in investment, employment and in government revenues, and every Ontarian will eventually pay.

A number of issues are of continuing concern to the Canadian Manufacturers' Association. While the harmonization of the federal GST and the Ontario retail sales tax is our top priority, we are concerned about the tax competitiveness of Ontario manufacturers when measured against manufacturers located in our major trading partner, the United States.

I see all kinds of studies pointing out that Ontario manufacturers are indeed competitive and that rates are comparable to our major trading partner's. However, what they're looking at all the time is nominal rates and not effective rates.


It must be understood that the importance of taxes will vary from company to company depending on where the most likely and feasible alternative sources of supply are located. For a multinational corporation, tax benefits may need to be more competitive than for any other corporation, especially where people outside Ontario may be making key sourcing decisions.

We have recently undertaken some studies regarding multinational corporations and why they locate where they do locate. We have found that local management tends to look at local issues such as payroll taxes and capital taxes and that type of thing. However, the multinational corporations, where the sourcing decisions and the actual location decisions are being made, look every time at corporate income taxes -- no more, no less.

We have looked at the corporate minimum tax, which was recently introduced, and we again strongly recommend the corporate minimum tax be discontinued.

The capital tax is also a major cost for manufacturers operating in Ontario. We are asking for the government to consider making this creditable against corporate income taxes. I've recently looked to see if I could actually find how much capital tax was being brought into the provincial coffers from the capital tax and I'm not able to find an exact amount. We are, however, looking at other ideas coming forward.

Capital taxes at one time applied to all small corporations, and it was decided that the $50 would not be exigible on small corporations and it was actually removed. However, we are now seeing another $50 registration fee. It may sound peanuts to some people, $50, but if any corporation has two, three or 10 small corporations, you multiply the $50 by the number of corporations and it is something they do have to consider.

Looking at another issue that was repealed, the current cost adjustment, we again recommend that this be reintroduced at the rate of 30%, as it was when it was repealed. We find that Ontario did have a very added advantage over capital placement in the United States of about 2.5%. Right now, with the repeal of the Ontario current cost adjustment, that is reversed and the placement of capital into the United States has an added advantage of about 1.5%.

The R&D superallowance is something that we have always applauded. We recommend that this be continued because we certainly need R&D in Canada. However, the complication of the calculation of the superallowance is causing problems, and what we're recommending is a revenue-neutral adjustment to indeed simplify the calculation and make it to a single-rate, non-incremental allowance.

Our most urgent requirement, however, is one I've left to the last, and it's the harmonizing of the consumption taxes between the federal government and the provinces, Ontario being a rather large player in that scenario. Consumption taxes currently have an important and meaningful role to play in both the federal and provincial fiscal systems.

It would be wrong to say that corporate taxes should take over completely from consumption taxes and it would not, in our opinion, help. The consumption taxes are usually designed to provide a stable source of revenue and are an effective means of influencing consumption and resource utilization as is determined by the various governments involved.

We believe, however, that the harmonization will result in substantial savings in tax collection and administration costs and would simplify the tax compliance for business, consumers and not the least of which would be the government because, if, for example, we're looking at the underground economy, we would have perhaps more auditors out there who would be able to chase the underground economy and bring to light that which rightfully should be paid.

Other major economic benefits, as we see, is that it would be fair to the consumers. It would allow, in our opinion, significant federal-provincial sales tax reductions. It would be simpler for business. It reduces compliance costs and for the small businesses, who are complaining all the time about compliance costs, it would, in our opinion, facilitate simplification.

As I've already said, common administration reduces administration overlap and duplication. We also have looked at it from the point of view of, if it goes the way of the GST whereby there is no actual tax applicable on business and it's reclaimed through an input tax credit, we believe that it increases international competitiveness of Canadian businesses.

In our submission, we have outlined basic principles and I don't want to go through them completely, but we believe it should be revenue-neutral; it should apply to all goods and services. That may surprise you. It should be a single-rate, harmonized tax with a single base. It should be the responsibility of a newly mandated single administration and collection agency.

We believe that this would be, together with some other things that we have said, the ideal tax. However, we do recognize that in evaluating ideal principles, political considerations do at times come into play and to implement a new sales tax without some exemptions might not be paramount in the eyes of a number of people.

We look at a new tax with a complete input tax credit claim mechanism. However, we are aware that this perhaps will not fly and we're seeing, as they call them -- it started off with the 9%, the 10%, now we're looking at the 11% and 12% solutions. What we're looking at in the harmonized tax of an 11% or a 12% harmonized solution would be singularly, a federal share; the rate for the federal government would drop from 7% to 4%. That would allow the difference between the 11% or 12% to be returned to the province.

The other interesting proposals that are being put on the table are that, with the 11% or 12% proposals, there is what they call a time-lag mechanism where they would only return a proportion of the input tax credit claims to business. It would be in the region of 97% of the total claim in the first year, 98%, 99% and, in the fourth year, going up to 100%.

In discussions with the federal and provincial finance departments, the idea of this clawback of ITC claims is being discussed to convince the provinces not to introduce provincial personal income surtaxes and also to show a business is making a sacrifice in containing the deficit. We do indeed accept that.

In terms of dollars, this could be the 3-2-1 percentage reduction over three years. Right now, we're seeing that there is in Canada approximately $18.84 billion. Of that amount, $6.6 billion is Ontario's share, as paid by business. In the first year, with a reclaim, we see that the $2 billion would diminish by the reclaim on the three percentage points of about $840 million, so business is indeed prepared to accept that.

I'll close with suggesting that this is the closest the federal and provincial governments have come to integrating the sales taxes since 1960, and, if rejected, this window of opportunity may not be seen again for a considerable time and federal-provincial harmonization, in our opinion, would be just another dream.


The Chair: Thank you very much. I let the committee members know there is about a minute per caucus for a comment. I suggest it's hardly time to ask a question and get an answer. However, I'll cut everyone off when we've used up our three and a half minutes.

Mr Kimble Sutherland (Oxford): Just on the economic forecast, the 3% for this year is one of the lower forecasts that we've heard here. I understand there are some differences on the out years, but for this year that appears to be below. The Ministry of Finance does use primarily consensus of private sector forecasts in terms of determining its own, so it doesn't just come up with its own forecasts.

I appreciate your comments about harmonization of the sales tax. I'm sure you're aware of Ontario's proposal to the federal government to try and harmonize that in a revenue-neutral fashion. In terms of picking up on that and reducing the costs, we have initiated the Clearing the Path initiative which right now is only in terms of registration. But certainly the hope in the upcoming years of course is unified reporting, and single business registration numbers will try and cut down on some of that paperwork.

Mr Myers: Could I just respond? One thing on the economic forecast, it is low. The best lagging indicator of economic activity is the consensus of private economic forecasts. I hope that the Ministry of Finance takes a very low level forecast to actually do its budgeting by, because it's been burned in the past by overly optimistic forecasts.

Mr Sutherland: Some of the forecasters have come back and told us, "Yes, we were off base too."

Mr Monte Kwinter (Wilson Heights): I want to talk to that exact same point. When the Treasurer was here, and we only get a couple of minutes to really comment, I made that point, that historically the government and its economic forecasters have always been overly optimistic. They've always inflated the revenues and deflated the expenditures, and in every single case they've been wrong. They've been wrong five times out of five. I was just curious to hear your rationale for saying what I actually asked the Treasurer about, and your comments would be welcome.

Mr Myers: It's a serious problem that we've been looking at. The outlook for economic growth could be flat-lined from 1980 to where it is right now. It has varied between about 3.5% to 5% every year. I guess it comes down to it's difficult for people who are in government doing projections to ever forecast a recession, but the reality of the economic situation is that business operates in cycles and a turndown in economic activity has to be accounted for, especially when we're budgeting in such a tight fiscal situation like this.

Just go out today and ask any business doing business in the United States what they're looking at and they'll tell you they're looking at orders coming down right now as a result of higher interest rates, and the Ontario economy domestically remains very, very weak indeed. The consumer spending we're seeing out there is mainly taken out of saving or being done on credit. Saving is at a 40-year low in this province and credit is one of the reasons why high interest rates are going to have a tremendous impact on consumer spending.

Mr David Johnson: A very powerful message you've delivered here today, one with which I'm sure you know we agree 100%. Looking at your priorities of balancing the budget within three years, making Ontario more competitive for business by reducing the tax burden and aiming at wealth creation, these are certainly objectives that we share.

Our position is that the tax rate in Ontario is too high. We're proposing to reduce the personal income tax, payroll taxes. You've indicated that Ontario is not viewed as being a good place to invest. We share that concern. Labour legislation, for example, I think you would agree, is one reason for that, as well as high taxation. That's another objective of ours, to repeal Bill 40.

We think that the balancing of the budget cannot be achieved simply by relying on economic growth, that expenditures have to be reduced in the province of Ontario. I see you're nodding your head in agreement with that. You may not have an opportunity to respond, but --

The Chair: Your time has expired.

Mr David Johnson: -- our economic forecast is the same as yours at 3%. We think that's realistic.


The Chair: The next presentation this morning is by the Motor Vehicle Manufacturers' Association. There are a number of people who will be entertaining this presentation. Whenever you're comfortable, please proceed.

Mr David Adams: The seat is still hot. I'd like to thank you for the opportunity to appear before the committee today. My name is David Adams. I'm the director of policy development for the Motor Vehicle Manufacturers' Association. Perhaps rather than introducing the individuals, I'll allow them to introduce themselves, and we'll make some introductory comments and then get into the gist of our presentation.

Mr David Penney: My name is David Penney. I'm director of the tax department of General Motors.

Mr Bob Murray: My name is Bob Murray. I'm the senior tax counsel of General Motors.

Mr Jack Holman: My name is Jack Holman. I'm supervisor of commodity taxation and trade of Ford Motor Co of Canada.

Mr Aldo Dibiase: I'm Aldo Dibiase. I'm a commodity tax specialist at Chrysler Canada.

Mr Adams: As I said, the MVMA certainly appreciates the opportunity to appear before the committee today. We view this as another and a valuable consultation mechanism in the pre-budget consultation process. We would again like to extend our thanks to you.

I think you'll recall that last year we presented a rather comprehensive and detailed economic overview with commentary on a number of tax changes that could be implemented to the benefit of industry in general and to the benefit of the automotive industry specifically.

In view of the old adage that less is more and in view of the fact other associations, such as the CMA that preceded us, will be providing the committee with numerous suggestions that would help Ontario manufacturers grow and prosper, we have decided to focus our comments on three commodity tax issues that continue to be a source of concern to the automotive industry in Ontario, and by virtue of the concentration of the industry in Ontario, the automotive industry in Canada. These three issues are goods and services tax replacement, taxation of warranty repairs and the tax for fuel conservation.

Before I turn the discussion over to my colleagues beside me at the table, I would like to provide some background on the Motor Vehicle Manufacturers' Association for the benefit of those committee members who were not with us when we met with you last year.

The MVMA is an industry association with nine member companies representing the interests of the traditional domestic motor vehicle manufacturers in Canada. I realize that distinction gets blurred as time tends to go on, but that's the focus of our membership. The primary purpose of the association is to provide an effective bridge for communication between the industry and government at a variety of different levels. A secondary aspect of our work is to act as an authoritative source for statistical information on the motor vehicle industry in Canada.

As further background, it's useful to note the economic significance of the companies the MVMA represents. One in six jobs in Ontario is directly or indirectly related to the automotive industry. Motor vehicle assembly accounts for more than 72,000 jobs in Ontario. Our parts producers employ some 77,000 people in Ontario. There are approximately 38,000 people employed in over 1,370 dealers in Ontario. Motor vehicle and parts sales account for about 47.6% of Ontario's international merchandise exports. Actual and committed investment by our members for the five-year period from 1992-97 will be more than $5.5 billion.

From these statistics, then, there is adequate justification for using the phrase that the automotive industry is the "economic engine" of Ontario. It is imperative that governments understand the significance of the industry and the role it plays with respect to the economic wellbeing of not only Ontario but Canada as a whole. The industry and government need to continue to work together to find ways to sustain and grow this valuable industry and not fetter it. Without vigilance and forethought to the impact of public policy in aggregate on the auto industry, our current competitive advantages, where they still exist, will quickly erode.

On that note I would like to turn the meeting over to Bob Murray, senior tax counsel with General Motors.


Mr Murray: We have three tax issues we're raising today with you. We've purposely kept our list to three issues because we would like to leave enough time for any questions the committee might have. These are very important issues for the automobile industry in Ontario and in Canada.

The first relates to GST replacement. We'd like to let you know that the position of the MVMA is that we're not in favour of any substantive changes to the GST system. We incurred fairly substantial systems costs and programming changes when we went to the GST system; like it or not, it certainly was an improvement over the federal sales tax system for a manufacturing company in Canada. So any tinkering that might be proposed in the system, to the extent that that's a wholesale change, we're against.

We would support one major wholesale change, though, and that would be a complete harmonization of sales taxes in Canada, and we've defined harmonization in our brief today. Harmonization for us means:

-- A value added tax, based on the existing GST base, that is common in all provinces, and the rate also common in all provinces. Having different rates and different bases in provinces causes us a great degree of difficulty.

-- A tax that would be revenue-neutral.

-- Lastly, a single administration. We don't think there would be any need for duplicate administrations. The duplicate administration point can be made for other taxes too, I would note.

We certainly do not advocate increased personal tax, because we see it in the automobile industry when we try to market cars in Canada: Disposable income is a big issue for a lot of individuals looking to buy or lease new cars, and to the extent that you end up taking money out of pockets, it does really pinch our market. So we don't support personal tax increases as a way to balance out the GST issue in one way or another.

One thing I'd like to really emphasize: Unfortunately, I didn't catch all of the CMA presentation before, but I think I heard that the Canadian Manufacturers' Association is not opposed to restrictions on input tax credits. The Motor Vehicle Manufacturers' Association is very opposed to any system that replaces the GST which results in restrictions on input tax credits. The reason is that, because such a great portion of our production is exported, that effectively becomes a cost on business inputs. In other words, it's going back to the federal sales tax system days.

If you thought the federal sales tax system worked and was good for Canada and didn't impede our exports, obviously you might think a restriction on input tax credits would make sense. Unfortunately, the reality in the industry is that it's horrendous because it is a cost to business inputs, and that has to be reflected in terms of a world economy. We compete with other jurisdictions, not only Canada but other areas where cars are produced. It is a very, very important issue for us and we would not support any GST replacement system that would look at restricting input tax credits.

Attached to our submission is the presentation we made to the House of Commons finance committee in 1994, and that essentially runs through in detail the comments I've made.

That is the first issue.

The second issue Jack Holman, from Ford Motor Co of Canada, and Aldo Dibiase, from Chrysler, are going speak about: the taxation on warranty repairs.

Mr Holman: The May 1993 budget extended the retail sales tax to warranty parts and labour. Levying a tax on warranty repairs is double taxation.

Warranty is an acknowledgement of a manufacturer's responsibility for the repair and replacement of defective parts. Motor vehicle warranty is the most extensive of any consumer product. It is a key element of our customer satisfaction, vehicle safety and environmental protection programs.

A purchaser of a motor vehicle buys a product and a service. The cost of the warranty is included in the selling price of the product. Sales tax is collected on the sale of the product, including warranty. No additional sales tax should be collected when repairs are made. The taxation of warranty repairs increases manufacturers' costs. This cost increase is reflected in the price of the product, which is again subject to the retail sales tax, resulting in a pyramiding of tax. Levying sales tax on warranty repairs creates a disincentive to offering consumer warranties, contrary to the best interests of the consumer.

In our view, governments should openly disclose to consumers the taxes they pay upon the purchase of a product or a service and not hide tax increases through increases in manufacturers' price, the effect that taxing warranty repairs has.

Mr Dibiase: I'd like to add that Ontario and Quebec are the only two jurisdictions in North America which tax warranty repairs. However, Quebec provides a full tax credit for any Quebec sales tax paid by automobile manufacturers, so it's not a cost to us. Therefore, Ontario is the only jurisdiction which penalizes manufacturers for providing warranty repairs. Also, because of the intensive warranties on automobiles, this tax discriminates against the motor vehicle manufacturers.

Ontario's position in taxing warranty repairs while being the major centre for motor vehicle manufacturing in Canada is symbolic for the following reasons. Other deficit-ridden provinces may adopt this measure as the enormity of the revenue grab becomes known. This in effect would represent a tax on Ontario automobile manufacturing by other jurisdictions. The proliferation of this tax would serve as an impediment to new investment and job creation. Policies such as these that result in double taxation raise serious concerns about the future direction of this government and causes US-based parent companies to question this government's interest in maintaining its current manufacturing base and in attracting new automotive investment. I'd like to turn it back to Dave Adams.

Mr Adams: The last issue we'd like to speak to this morning is the tax for fuel conservation, which you're all familiar with, I know. You recognize, I think, that it has been a thorn in the side of the automotive industry for some time now. To provide a little history, this tax was introduced by the Liberal administration in 1989. Our industry was not consulted prior to the introduction of the tax. We use the term "gas guzzler tax" colloquially, even though there have been other, nicer names surrounding it. It seems to have garnered that name from US applications as well; however, in the US it is a true gas guzzler tax that was put in place.

Since its introduction in 1989, the industry has stridently opposed the tax, especially the wider application of the tax and the increased rates of tax and the higher fuel-efficiency ratings at which the tax applied when the present government altered the tax in the 1991 budget. From our perspective, the tax is fundamentally flawed because it's aimed at altering consumer behaviour for the benefit of the environment. Because, really, there's a $75 tax that affects 90% of the vehicles that are sold in Ontario, it becomes fundamentally a flat tax and nothing more than that.

The premise of taxing a vehicle with lower fuel economy ratings and rebating vehicles with higher fuel economy ratings suggests that people purchase a vehicle only on the basis of its fuel efficiency. The reality is that fuel efficiency is well down on the consumer's list of important considerations when deciding on a vehicle.

As an environmental tax, the TFFC is too narrowly focused, covering only new vehicles sold, which comprise less than 10% of the total number of vehicles on the road. This has a number of perverse effects. The vehicles with the highest fuel economy ratings and the best emissions control technology are being taxed. Taxing these environmentally friendly, or friendlier, vehicles with better fuel economy only induces people to continue to drive their older, fuel-inefficient vehicles with inferior emissions control technology.

Even if the tax was successful in driving people into smaller, more fuel-efficient vehicles, there would be a certain amount of takeback effect. It's estimated that this could be up to 25%, which is to say that because the effective cost of driving a vehicle is reduced, consumers drive the vehicle more.

The tax makes no provision for utility, either. If a person requires a mid-sized vehicle for their family, no amount of rebate or incentive will induce the consumer into a subcompact vehicle.

As an environmental tax, the TFFC fails miserably. It is narrowly focused on new vehicles, which are the least polluting, and fails to address the larger question of the more than five million vehicles registered in Ontario. The better approach is to induce all motor vehicle owners to use their vehicles in an environmentally responsible manner.


We would urge this committee to recommend the elimination of the flawed TFFC. Such a tax exists nowhere else in North America, it provides no environmental benefit and amounts essentially to a tax grab, as indicated earlier. Ontario is the home of the automobile industry, and we feel this sets a bad example for other jurisdictions as well.

There are suitable alternatives, which include potentially higher gasoline taxes or higher registration fees that could be linked to the amount of emissions technology built into vehicles, depending on their age, and that could be supported by a mandated inspection and maintenance program as well.

We have provided a list at the back of the individuals who are appearing before you today, but, as Bob indicated, we did want to provide a fair amount of time for your questions. We do thank you for your attention and will be prepared to answer any questions now.

Mr Kwinter: I'd like to address the issue of taxation of warranty repairs. Have you estimated how much money the tax actually generates?

Mr Holman: Province-wide?

Mr Kwinter: Yes.

Mr Holman: Not province-wide.

Mr Murray: I can make a comment in response to that. We were asked, through the Motor Vehicle Manufacturers' Association and the import association, the Association of International Automobile Manufacturers of Canada, on an individual company basis to send in to a discreet person what amount of tax we estimated would be collected, because obviously each of the companies has sensitive information as to what your warranty expenses are. That was provided, after the May 1993 budget and the implementation of tax on warranty repairs, to the Ministry of Finance.

With respect to the automobile industry, the amount of tax estimated to be collected based on actual 1993 repair bills that were coming in, the amount of revenue, we were told, was greater than the amount the Ontario Ministry of Revenue predicted for all of the economy on warranty repairs. As to what the automobile industry portion was, I can't say. I can say what GM's portion was, but I wouldn't disclose that publicly.

Mr Kwinter: What I'm trying to determine is that in your presentation you say it would be an impediment to new investment, and I would like to get a handle on how much money we're talking about. Is it a relatively small amount of money or is it an incredibly large amount of money?

Mr Murray: On an annual basis in the automobile industry, my recollection is close to $100 million.

Mr Kwinter: So the figure we're talking about is about $100 million?

Mr Murray: Yes.

Mr Kwinter: That would be the amount the Treasurer of Ontario would forgo by removing this tax?

Mr Murray: That would be the amount of double tax that the Treasurer would forgo, because the purchase price of a vehicle also includes, obviously, a realization that there will be a warranty expense at some time, so prices include the anticipation of warranty expense.

Mr Kwinter: I'd also like to ask you about your GST replacement suggestion. When you talk about being revenue-neutral, I think one of the biggest problems that people have with GST -- and I certainly agree with you that the GST is better than the hidden federal tax that we had before -- is that it was proposed that this would be a revenue-neutral tax when in fact it turned out to be a windfall tax for the government. In your projections and in your examination of this particular rationalization, are you contemplating that the GST would stay at its present level or would it truly be revenue-neutral?

Mr Murray: We're contemplating that it would be revenue-neutral in terms of the country at large, that we would have to have a single rate. Let's assume that in the Ontario context that rate is 7% and 8%. You add it and it becomes now 15%. Obviously, a 15% rate in the maritime provinces would result in a loss of revenue to the maritime provinces.

Our recommendation is that this is a national issue. It would have to be addressed through the federal government and a revenue-sharing allocation formula between the provinces. It just happens to work out that, with the exception of Alberta, all of the provinces which have sizeable economies have sizeable sales tax rates. I don't think the need to share revenue from the federal government to Ontario would be that great at a 15% rate.

Our great concern is that we'd love to see less than the 15% rate if we could achieve it, but we're not here asking for a reduction in sales tax rates. We'd like to see that, but we realize there is a squeeze with respect to government finances, public finances. What we don't want to see, and this is really where the revenue-neutral point is aimed, is we don't want to see a 14% rate, for example, on a national basis plus additional personal income tax increases to make up the 1% which at the end of the day are greater than what would have been a 15% rate.

Mr Carr: Thank you very much for the presentation, and I think more importantly the people of this province should be thanking you people for, quite frankly, keeping this economy going.

I shudder to think where we would be without the automotive manufacturing, and that's a tribute to the management and the workers, because the workers have contributed a tremendous amount. Notwithstanding Gord Wilson's comments this morning about losing jobs to the Americans, the fact of the matter is you've proved that we can do the job faster, better, cheaper and produce cars better than the Americans, and we should all be proud of that.

It's interesting that we're dealing with a taxation issue and you're tax experts. I was sitting here thinking we're looking at $100 million on a $45-billion revenue and that governments, in their squeeze for revenue, are so squeezed that we're not even looking at the 33% we get for personal income taxes or the corporate tax rate. We've got to the point where we're now trying to squeeze the last penny out of companies, and ultimately, as I sit here, I think it's a bit of a shame that you have to come in and talk about these small issues, although big to you, where the government is trying to squeeze the revenue out.

So I want to talk in the broader context. I don't know if you know too much right now, but the big debate is, what do we have in this province, a spending problem or a revenue problem? That will be the big debate in the election, quite frankly. People like Alberta believe that they have a spending problem. We certainly do. We think we do not have a revenue problem and we should not be sitting here squeezing the last $100 million out, that we have a spending problem.

Your industry has done a great job of squeezing costs out. You would not be sitting here, any of you, had you not done that. Looking at the government, we believe the government can do the same thing that you've had to do, that the workers in my riding at Ford have had to do to remain competitive.

So I want to ask you, and I don't know who wants to answer, whether you gentlemen believe that in fact here in the province of Ontario we have a revenue problem, or do we have a spending problem?

Mr Holman: I believe we do have a spending problem. I think the CMA was addressing that and we had left it for them to address, but just looking at the multiplicity of the taxation by various levels of government, simply the harmonization of the GST will take out a level of administration. That will then cut down or reduce the spending by industry and by the government in administering the taxes. So we can look at it simply in our own area where we operate that continually we have people from all levels of government in and out of our office. We dedicate a space to auditors. I'd like to see some relief on that.

Mr Carr: I also want to thank you: You may be familiar that your government affairs people have been meeting with our caucus and giving us suggestions in detail, and they've been excellent. They've been going through everything from WCB, what needs to be done, and I want to personally thank all of you, right up to the presidents of your companies. It's been very, very helpful in the learning process for ourselves on all the issues and they've been very, very fair in how they want to approach it and they've been very practical.

I think it's a good commentary that we've got people in this day and age like yourselves who are swamped trying to keep up with competing with the biggest economy in the world, because your competitors are the Americans, and you're doing that. You're beating them. At the same time, you've survived, I will say this, with all the impediments that governments of all levels and of all political stripes, quite frankly, have put in front of you.

It's a great tribute and I wanted to thank the people who have been involved. Primarily it's been the Norm Stewarts and the government affairs people who have been doing that, but I'm sure a lot of the work has come through all of the people in your management who have put that forward. Things like workers' compensation that need to be addressed and Ontario Hydro costs are tremendous responsibilities that will have to be taken up.

If you could list some of the things that the government should do --

The Chair: Mr Carr, I'm afraid you've used up your four minutes.

Mr Carr: I praised him so much I didn't get a chance to ask him a question. But again, thank you very much and good luck to all of you.

Mr Randy R. Hope (Chatham-Kent): I notice the list of members you have and I notice the partnerships we as government have had with you in helping create jobs: Jobs Ontario and other programs that are out there.

I'm interested in your comments dealing with the GST and harmonizing the provincial tax with the GST. In an earlier comment you mentioned about your consumers. Most of the people I know who buy the Fords, the GMs and the Chryslers and even the Navistar trucks that are out there, people look at the monthly payments. They don't have $10,000 to put down on a car; they say, "What's this monthly payment going to be?"

You talk about incorporating and harmonizing the GST and the PST and you talk about disposable income of individuals. If you were to harmonize them, which has been done in other provinces, into more of the basic everyday needs of individuals to purchase stuff, you take away that disposable income aspect from the working family which is looking at, "What's my monthly payment for the new Ford, the Chrysler or the GM?"

I'm asking, has that ever been considered? You're looking at it from a business perspective and in that business perspective you talk about your consumer. Then I want you to look, on the other hand, at the individual who's living probably paycheque to paycheque -- most people do -- and then is trying to make within that paycheque to paycheque the ability to purchase one of your new vehicles. I'm wondering if you had looked at that broader context when you talked about the harmonization issue.

Mr Murray: I'll answer that. I have a few reactions to it. The first reaction is that someone who pays a 15% sales tax, which is a harmonized single tax, or someone who pays a 7% GST or an 8% provincial sales tax in the case of Ontario, I would think paying that tax would be transparent to the person. It's the same amount of money in both cases.

What do you achieve? You achieve some degree of efficiency in terms of avoiding duplication of audits and efforts at the corporate level, obviously, and throughout the economy, and you avoid having two sets of government bureaucracies administer two sets of rules that sometimes compete with each other in very difficult ways.

At the end of the day, if your question is, can you say that the consumer is going to notice in a tangible way that there's a reduction in the price of an automobile, I doubt we could answer yes, but certainly it makes us more competitive and I think it makes government more competitive, which has to be the goal.

Mr Hope: You talk about those currently having GST and PST. What about those services that do not have PST associated with them? Let's face it, when you talk about harmonization, there is a broader context that the GST covers than the PST covers.

Mr Murray: I guess I have a response to that because obviously there are advantages which have been created over a number of years, that sectors of the economy are not taxed in the same way that goods are taxed.

If you recall, under the federal sales tax system, was it right that automobiles were subject to a 13.5% sales tax prior to the implementation of GST, and was it right that consumer goods like that and the consumers of those goods should bear the brunt of generating all of the sales tax at the federal level for the Canadian economy when so much of our economy has gone from a goods-oriented economy to a service-oriented economy? I have some difficulty in terms of the inequity that's created. And we're not only a goods provider in the automobile industry; we also provide some services.

Mr Hope: On the environmental aspect of things, you talk about the gas guzzler tax --

The Chair: Mr Hope.

Mr Hope: Yes, just very quick. With a $170-million facility being put in place for ethanol, which is an environmental fuel, are you persuading the federal government to move on MMT emissions, for there to be standards to deal with the pollution aspect so that it pleases the environmental groups that are lobbying us to put in the gas guzzler tax and other taxes that deal with fuel?

Mr Adams: If I can make just a quick comment. We've been lobbying the federal government for some time for the removal of MMT and looking at reformulated fuels for vehicles as well. One of the problems with motor vehicles is that you can only take the vehicle technology so far; then you need to get the fuels on stream as well. We need to work with the petroleum producers and what not to make sure that we have the fuels in place that are going to allow the new emissions control technology to be on board and the diagnostic systems and new generation loads to function properly. That's currently a discussion that we're having at the federal level, but yes, those things are being undertaken.

The Chair: I'd like to thank the Motor Vehicle Manufacturers' Association for making its presentation before the committee this morning.

Before everyone leaves from the committee, I'd like you to know that we've had a cancellation this afternoon. The Ontario Taxpayers Federation will not be here. They are going to be replaced by the Toronto International Film Festival Group at 3 pm. I just thought I'd let you know that before you leave for lunch.

The committee recessed from 1205 to 1402.


The Chair: The first presentation this afternoon is by the Ontario Separate School Trustees' Association.

Mr Pat Daly: My name is Pat Daly. I'm the first vice-president of the Ontario Separate School Trustees' Association and a trustee in the Hamilton-Wentworth Roman Catholic Separate School Board.

I am joined by Mary Hendriks, the past president of OSSTA and a trustee on the Lincoln County Roman Catholic Separate School Board; Peter Derochie, the president of the Ontario Separate School Business Officials' Association and the superintendent of business for the Simcoe County Roman Catholic Separate School Board; Patrick Slack, the executive director of our association, and Earle McCabe, the deputy executive director.

The Ontario Separate School Trustees' Association represents 53 Roman Catholic separate school boards of all sizes and from all regions of Ontario. These boards provide Catholic education programs and services to nearly 600,000 students.

We appreciate the opportunity to meet to discuss funding issues that have an impact on the quality of educational programs available to all elementary and secondary pupils in Ontario.

We've provided a copy of our brief, which I believe you all have before you, entitled In Pursuit of Equity. The brief presents the case for equity for all students and all taxpayers in Ontario. It argues that the current funding approach, which is built on a model developed 25 years ago, does not provide equity for students and taxpayers in assessment-poor boards, whether these boards be separate or public.

We are cognizant and appreciative of several initiatives which have reduced the equity gap for elementary and secondary pupils across Ontario over the last few years, and these are outlined on pages 4 and 5 of our brief. I'll just highlight a few of them for you.

First is the increase of the ceilings by $100 per pupil, which took place in 1994.

Bill 160 was passed in 1994, and we believe the recognition of per-pupil funding as outlined in that bill is an important step forward.

The allocation of $620 million for 1996 through 1998 in capital funding was of great assistance.

The enhancement of high-growth capital assistance or debenture relief for boards incurring significant debenture costs was a big improvement.

Finally, there was the $5 million in funding for the Ontario education highway.

In the context of available revenues and competing priorities in these difficult economic times, it is generally accepted that the $13.8-billion investment made by the school boards and the province in elementary and secondary education in Ontario in 1994 is adequate. We believe that while the $13.8 billion may be sufficient, it is most definitely not being fairly distributed.

The former Minister of Education, Marion Boyd, declared in 1991 that the current funding model is broken. The final report of the Fair Tax Commission in December 1993 confirmed that the model is broken with inequities both to students and to taxpayers. The education finance reform project came to similar conclusions on the issues to be addressed, with consensus on a new approach to provide for greater equity and accountability.

Most recently, the Royal Commission on Learning stressed the importance of significant education finance reform, and I quote from that document. The commissioners state, "You can't talk about equity in schooling without talking about equity of funding." I'll refer to one specific recommendation in the report, recommendation 159, which reads as follows:

"The commission recommends that equal per-pupil funding across the province, as well as additional money needed by some school boards for true equity, be decided at the provincial level, and that the province ensure that funds be properly allocated."

We wish to reinforce the need to respond to the recommendations of both the Fair Tax Commission and the Royal Commission on Learning. We accept that a reasonable transition plan is necessary in any major reform, provided that equity is not postponed and that there is relief provided to assessment-poor boards.

It is in this spirit that we recommend on page 7 of our brief that, for the sake of equity and accountability, the government proceed with education finance reform, including a reasonable transition strategy.

Now I'd like to invite Mary Hendriks to comment on some of the immediate recommendations, please.

Mrs Mary Hendriks: The next several pages as begun on page 8 will present interim initiatives in support of long-term reform.

While finance reform, with its focus on a fairer and more accountable distribution process, coupled with a fairer use of the property tax, is essential, OSSTA acknowledges that full implementation of a new approach will require a transition strategy. Consequently, concrete measures must be taken in 1995 to address immediate funding problems, yet support the long-term directions of reform.

We have clustered these into four areas: fairer allocation of available resources; communication and consultation; capital and transportation; and board operations. I will deal with the first two areas, and Peter will address the other two areas.

The first section then: fairer allocation of available resources. Proposals in seven areas are set out to provide a fairer allocation of whatever moneys are available. We also believe these lend support to two principles that guide the determination of the level of provincial support available to a school board as found in the ministry's education funding model.

These two principles are: All school boards must have equitable financial resources to provide a base level of education; and all property ratepayers must make the same tax effort to raise the local share of the costs of providing the base level of education.

The first area then is increased ceilings. In the interests of time, I'll simply read the recommendations in these sections. OSSTA recommends that per-pupil ceilings be increased in the 1995 general legislative grants to a more realistic level to alleviate some of the financial pressures that continue to be faced by assessment-poor boards across Ontario. This doesn't mean adding more money; it means a real allocation of existing resources to provide greater equity.

On page 9, the second area is determination of realistic costs. OSSTA understands that a first draft of a report concerning resources and their costs, using 1991 data, has been completed by Ministry of Education and Training officials. We therefore recommend that a joint consultative process be established involving government finance officials and technical experts from stakeholders to determine a more realistic costing of recognized expenditures. This process will involve (a) identification of human and physical resources required to provide education programs and services to elementary and secondary pupils and (b) their costs. Recommendation 162 of the Royal Commission on Learning report addresses this same issue.


The third area is a fairer use of commercial and industrial assessment. If you move to page 10, the lack of fairness in the sharing of commercial and industrial assessment wealth among coterminous boards remains a key issue. There are two specific areas of concern: the first, the assessment base, is an issue which is described on pages 10 and 11; and on page 11, the second, we see some problems resulting from Bill 64, and those are outlined on our pages 11 and 12.

Given those concerns, OSSTA recommends that legislation be amended to provide that all non-residential farm and farm assessment be pooled except for assessment of property owned or leased by individuals, partnerships of individuals and private corporations with share capital; and that legislation be amended to permit private corporations to direct their assessment to the support of Roman Catholic separate school boards according to the proportion of Roman Catholic shareholders to the total number of shareholders.

The fourth area is the fairer use of residential assessment. If you look on page 13, the recommendation, we recommend that all residential ratepayers be obliged to choose which school board they wish to support depending on their constitutional entitlement and that in those instances where taxpayers refuse or neglect to do so, their assessment be pooled and divided among the coterminous school boards on the basis of student enrolment. We noted in the Royal Commission on Learning report that it echoed our concern in this regard by its recommendation 161.

Our fifth area is payments in lieu of taxes. Few, if any, municipalities share with school boards, public or separate, the education portion of payment in lieu. OSSTA recommends that the Municipal Act and the Education Act be amended to require that all payments made to a municipality in lieu of taxes be shared equitably, as determined by the proportional share of educational taxes collected under the applicable mill rate operative in the municipality, between the appropriate school boards and the municipality. The school board share should be divided among the coterminous school boards on the basis of student enrolment.

On page 14 we outline our concerns in regard to ending downloading. We recommend that the provincial government fully fund all new provincially mandated programs and services which impose additional financial burdens on school boards.

Our seventh area in this section is planning for the end of the social contract. The most glaring evidence that the current model is broken is the fact that there are boards in a negative grant position and thus outside the funding model. That is, they do not receive any equalization payments and do not return surplus revenues to the province.

On page 15 we outline our recommendation, that planning for the end of the social contract in 1996 take into account the unfair advantage for boards in negative grant situations versus boards that must deal with a $425-million loss in grant revenues.

Now I would like to ask Peter to continue.

Mr Peter Derochie: The next area that we'd like to comment on is in the area of communication and consultation. In 1992-93 the Minister's Advisory Council on Education Finance Reform was established, and it met seven times and brought together key education stakeholders. It was a useful forum to share mutual concerns and review options being considered.

Our recommendation today is that a formal consultative process be established as a successor to the Minister's Advisory Council on Education Finance Reform. We're aware that the advisory council and some of the spinoff work of that group prepared and developed some models that are ready to be, if they have not been, presented to the government for consideration.

Our second recommendation in that area is that renewed efforts be made to simplify and communicate funding policies and formulae in the general legislative grants in the interest of greater understanding and that annual in-service be organized for board business supervisory officials to brief them of changes in funding policies and procedures.

The background on that specific recommendation is tied to the accountability in our education system. What tends to happen is, because of the lack of clarity, the two parties, the government and the boards, will point fingers at each other and the taxpayer is left uncertain just exactly what the issue is.

The next area we'd like to comment on is capital and transportation, the first being in the area of growth-related capital. Under Bill 17 the government now provides its share of approved capital expenditures as a loan rather than as a direct capital grant. OSSTA continues to believe that the way the local share of capital projects is funded is unfair to those boards which are faced with high enrolment growth and where education development charges are not applicable.

Further, OSSTA believes that the need for new pupil places is generated by migration or immigration, which are factors beyond a board's control, more provincially driven factors.

On this note, OSSTA recommends that the local portion of growth-related capital expenditures be equitably shared by applying a standard mill rate to all ratepayers in the province, and further, that the high-growth capital assistance program -- some would relay that as debt assistance -- be further revised in 1995 to apply to boards having growth capital between 1986 and 1991 that was two times greater than the provincial average.

On the area of renovation and renewal, recognizing the pressure in the province to fund new pupil places, only a small percentage of ministry capital funds have been available to meet this need. Further recognizing the pressure and downsizing in boards, limited financial resources have been available to attend to this.

In order to help assist that problem, OSSTA recommends that renovation and renewal be funded by a per pupil amount adjusted for the age and geographic location of schools and that boards be required to establish board renovation and renewal reserve funds in order to enhance cost-effectiveness and maintain the value of properties. That's to make sure those targeted funds don't roll into operating but rather into the targeted areas they were initiated for.

The last area in this before we move into board operations is on transportation for the gifted. There are a number of programs boards are mandated to provide for students in their systems, which compound costs, and one of those costs is transportation.

OSSTA is recommending that the ministry amend the general legislative grants to include approval of transportation costs for gifted pupils so that the policy for transportation of exceptional pupils is uniform and equitable and that the ministry ensure that the funding be sufficient to provide that no additional costs will be incurred.

On the transportation policy issue, boards are commenting and OSSTA is recommending that boards be fully consulted before any changes are made to the funding of transportation.

The last area we'd like to comment on is in the area of board operations, the first being the timeliness of information. We recommend more timely or earlier release of information so that boards may have time to plan on a longer-term basis the implementations of the impacts so that program impact is minimized.

Our recommendation is that the transfer payments be announced by November 30 of the year before they are due and be published annually with the government's best estimate for the next two years; further, that the 1995 GLGs be released by February 15, 1995, at the latest to enable all school boards to complete their annual operating budgets by March 31.

In the area of fiscal year, that's probably not a new area of concern for the trustees. We basically operate on a school year basis but finance and budget on a calendar year basis, and it poses some difficulties for operations in light of the uncertainties of revenues as we're going into the next school year. OSSTA recommends that the school board fiscal year be changed to September 1 to August 31 as of September 1996.

In the final area, the area of cash flow, the recommendation is that the Minister of Finance take the necessary steps to ensure a more equitable cash flow for operating grants, and that the practice of withholding the 7% of grant payments until the audited financial statements are received be discontinued.


Mr Daly: In conclusion, our paper reinforces the need for a new approach to the funding of elementary and secondary education in Ontario. We believe a new approach is required for the sake of equity for the key clients of our education system -- the students -- and for those who pay the bills: the taxpayers.

This paper recognizes that although moving to a new model requires a transition period, some funding pressures require immediate attention. We believe that education is a shared responsibility between the province and locally elected school boards. Both partners face challenges to provide excellence in education to help each learner in our schools be the best that she or he can be.

OSSTA, representing 53 separate school boards across Ontario, extends its hand to work with the province, with the school boards and with other agencies at the local level in support of steps for a quality learning experience for the almost two million students in schools all across this province.

We urge the provincial government and the Ministry of Education and Training to implement the proposals in this brief.

Again, thank you for the opportunity to present our brief. We'd be happy to respond to any questions you may have.

Mr David Johnson: Thank you very much for your brief. I certainly appreciated the information in it. I don't think I've seen such an extensive brief during the week we've been here, nor so many recommendations.

As I understand it, you're basically saying there is enough money in the education envelope, so what you're talking about then, probably through assessment changes, is a transfer of some moneys from the public sector to the separate school sector. Is that essentially what we're talking about?

Mr Daly: Yes, exactly. We're saying that assessment wealth has to be redistributed throughout the province from assessment-rich boards to assessment-poor boards.

Mr David Johnson: I guess at Queen's Park we're sort of in the middle of this. The public school boards from time to time claim that one of the flies in the ointment with that sort of approach is that the public school system, according to them, ends up with more of the special cases, the special-needs classes, that sort of thing, and their approach is that this adds a considerable cost to the public school system that isn't borne by the separate school system. I wonder what your response to that is.

Mr Daly: We've seen no evidence to indicate the fact that public boards educate, proportionately, any more special-needs students than separate school boards. Clearly, their costs are greater because they educate more students, and their costs, because of their assessment wealth, are higher than ours. But many separate boards, if not all, have very good and extensive programs for special-needs students and we think serve them very well.

Mr David Johnson: Is there an average or a range for the cost per pupil in your system across Ontario?

Mr Daly: I don't think there's an average.

Mr Derochie: At best, I would make the hypothesis that our average cost of education is lower.

Mr David Johnson: But you don't have a number per pupil.

Mr Derochie: No, I don't. I'll use the example in Simcoe separate, where I'm from. Our estimated cost of education for elementary and secondary school pupils is approximately $750 lower than our public counterpart.

I'd like to make one comment, further to what Pat was indicating, around educating more special-needs students or special education students. Recognize that in the province, in the elementary school panel, we admit students of supporters of our system, so our costs are tied to our supporters.

In the secondary school panel, under the open access provisions, where students of families who are public school supporters may attend our system or vice versa, our boards would be paying a tuition fee to those public boards for those high-cost students in attendance in their schools. So although the public boards make that claim, there is provision in the funding model in legislation and regulations, and the separate boards in those cases do pay those costs.

We don't have facts to support that claim, but there is funding in place and provisions for the separate boards to pay the public boards and vice versa. So I'm not sure where the additional burden is, when we actually pay.

Mr David Johnson: On page 15, you make reference to boards that are in negative-grant situations, and your recommendation is that when the social contract expires the province take into account that some boards are in a negative-grant situation. Could you explain exactly what you mean by that?

Mr Daly: We have great concern. The fact is that the government is extracting $425 million from all boards in the province and it's our understanding that $100 million of that is coming from the two boards that are in negative-grant situations. Our concern is how that money will be passed to the province, coming out of the social contract. Our major concern is that the $100 million not be downloaded to those boards throughout the province that are currently paying the $325-million extraction, thereby making an even worse situation for the assessment-poor boards.

Mrs Karen Haslam (Perth): We heard earlier -- and I apologize; I can't even remember from whom -- talking about sharing of facilities. One of the things they mentioned was that there was a different grant situation for separate systems in their transportation budget for running their buses than there was in the public system, and therefore the idea of joining together and providing them was not a viable option for separate boards. They didn't look too kindly on it because they were actually losing money, or there wasn't that impetus to combine the services of transportation. I wondered if you would briefly address that. I didn't quite understand that.

Mr Derochie: The funding of transportation for students is exactly the same for public and separate school students or school boards. There are many initiatives, actually, to the contrary of that, where many separate school and public school boards have formed consortia, task forces, or whatever the local name is. The boards have actively been pursuing joint transportation initiatives; in fact, that was one of the targeted areas for which the province provided incentive grants a couple of years ago to boards. I'm very familiar with a number of successful projects, and the synergies and savings being realized in that area are significant.

Mrs Haslam: I agree.

Mr Derochie: I'm not sure where that resistance is coming from.

Mrs Haslam: I'm not either. I was kind of surprised when I heard it, but I wanted to investigate it further.

One other question around the social contract: I've heard that the boards end up in a very good situation when the increments were frozen on the social contract, that because those increments were taking place, at the end of the social contract the money that was budgeted but not spent on increments has been used to offset some of the cuts, some of the efficiencies you're trying to find within a board.

The issue was whether there would be real restructuring at the end of the social contract if the government merely said, "Fine, everybody goes back into the grid where they belong," because of the cost to the board, and whether there were real savings there that could be found for that issue.

Mr Derochie: This issue, by the way, is part of the arbitration hearings going on around the social contract. Clearly, boards are realizing savings in years two and three of the social contract, as increments aren't being paid. If they're being paid, they're being bought or purchased by the various groups by increased Rae days or staffing adjustments. However, the forced restructuring in that case is still necessary. The debate on whether years two and three freezings are attributable to the social contract, and issues related to that, are still at the arbitration table.

But I would readily admit what your belief is, that years two and three savings in increments are there, but recognize that boards are still wrestling with -- I think the social contract was a $425-million reduction in education and the expenditure control plan was $275 million. So it's also providing relief in that area of the burden boards are experiencing.


Mrs Caplan: I appreciate the excellent brief you've presented to the committee. I have a couple of concerns and questions that I hope you'll be able to answer.

For people watching these proceedings, I know sometimes the language is complicated. Certainly when we talk about negative grants -- I've said here before that I don't think anybody understands the education funding formula. For no other reason than the fact that nobody really understands it, I agree it must be changed to reflect a method people do understand. We can have the debates about how that should be changed and so on, but I think there's a recognition of the need for that kind of reform.

But what I'd like you to address now really is the concern that you have, and that I share, about what's going to happen at the end of the social contract. I'm concerned that you say no planning has taken place. The Treasurer was very clear before this committee when he said there will be no more money. What impact is it going to have on teaching of students in your schools if there are no additional moneys coming in and there's no planning for this ballooning of costs that we have all been concerned about?

Mrs Hendriks: In terms of explaining the boards that are in a negative grant versus those who aren't, all but a very few of those negative-grant boards are reliant on the province for grants. The province has said that after the social contract, that $425 million is permanently gone. It's not just during this period of social contract.

Presently, the boards that are in the negative-grant position are expected to fund approximately $100 million of that $425 million in total. At the end of the social contract, they will no longer have grants withheld; they don't receive grants. Therefore, if the province is expecting to still have $425 million permanently reduced, that $100 million that is no longer going to come from those two boards will have to be redistributed to the rest of the public and separate boards that are reliant on grants.

The concern we have is the impact that will have on the boards at the local level, coupled with the concerns that were outlined earlier in the expenditure control plan. All those impacts will seriously make it very difficult for boards to continue to provide the services and programs that our parents and students are entitled to have.

Mrs Caplan: Could you tell me what you're hearing from the Ministry of Education about that problem? Do they expect the $425 million from all the boards? What's their expectation about what's going to happen?

Mr Daly: We've made it clear, in a number of discussions with the minister and ministry officials, our concern about this matter. We've heard discussion about certain ways of dealing with it, but we've not seen anything in writing or any firm commitments. We again raise it here and will continue to do so with the minister. It must be dealt with. It cannot be allowed that that $100 million be downloaded to make a bad situation even worse.

Mrs Caplan: But you've raised it and there's been no action taken to resolve it?

Mr Daly: Not at the present time.

The Chair: I'd like to thank the Ontario Separate School Trustees' Association for making its presentation before the committee this afternoon.

Mr Sutherland: May I add something, just before the next group comes on? There has been quite a bit of questioning about the ministry's economic growth forecasts and the consensus in what it's come up with in comparison to some of the other groups that have presented. I asked the ministry officials if they would present to us the consensus forecasts. I've tabled a copy with the clerk and I believe she's going to distribute that, both the forecast for 1995, which forecasters they're going with, and then to the out years, to 1998.

The Chair: Thank you very much, Mr Sutherland, for sharing that with us.


The Chair: The next presentation is the Ontario Secondary School Teachers' Federation, if representatives would please come forward and make yourselves comfortable. Certainly you're both familiar to the members of the committee, but if you would identify yourselves for Hansard, it would be appreciated.

Ms Pat Wright: My name is Pat Wright. I sit on the executive of the Ontario Secondary School Teachers' Federation and I have been assigned educational finance, so I guess that's why I'm here. We have Larry French, a member of our staff who is also assigned to finance in some way.

First of all, I'd like to express our appreciation for being allowed to be here and to make our presentation. Our president, Liz Barkley, whose name you'll see on your agenda, has asked me to express her regrets at not being here; she's unavoidably absent. We welcome the opportunity to be here. I don't need to tell you how interested and active we have been in the area of education and what we see to be the need or the area in which education should be going.

As representatives of the service providers in the public domain, we are impacted both directly and indirectly by the disposition of funds from the public purse, so we feel it's necessary to make some comment on funding of education.

But not only should we make comment on the funding of education; we believe the funding of education is in part also impacted by federal government policies.

We also believe there's a need for reform of funding and for taxation models to ensure that there is an equitable distribution of costs among the citizens of Ontario.

So when you look in our presentation you'll see it divided into three main areas: the funding of education, impact of federal government policies, and the reform of taxation.

In speaking directly to the funding of education, we feel it necessary at this point to make some reference to the recommendations put forward by the Royal Commission on Learning, because we have a sense that it may be a direction the government may choose to go in and we want to put our comments on the record. The Royal Commission on Learning was not mandated to address funding issues, but they chose nevertheless to do so, so it's appropriate that we make some response.

They have made in their presentation a concept that we should be looking at the per-pupil costs of education, the accurate per-pupil costs of education. We welcome that suggestion because we feel that indeed the adequacy of funding is something that must be addressed. We would welcome the opportunity of working with boards, of working with our colleagues in the other teacher federations, to develop such a model.

There are, however, other recommendations put forward by the Royal Commission on Learning which we find quite disturbing. There are, for instance, recommendations that deal with the pooling of assessment. We find those of great concern because it could mean there's a possible shift of $250 million, about $125 per student, away from the public boards to the separate boards.

We believe that in the public system you would therefore have public school supporters who may not agree with the values espoused within -- I'm not commenting on the merit of the values, but they have, for instance, fundamental and different religious beliefs in terms of what is espoused in the separate school system, and those public taxpayers who support the public school system will be placed in a position where their tax dollars would be used to fund a system they do not have any belief in.

They would also be used to fund a system which practises discriminatory hiring and which would be in a position to deny them jobs in a system that their tax money was being used to support. We believe that is unconscionable.

We believe that if the recommendation were followed to place a cap on the discretionary funding, it would be a shortfall to all boards of about $1.5 billion -- not "million" but "billion." Our research has told us that this idea has been around for a very, very long time: I'm told since about the 1960s. It was never implemented because it was not workable, because such a cap would have a crippling effect on public education and secondary education, and in fact it is prohibited from being imposed on the separate system.

So you look at two systems and one would have a cap and the other one wouldn't have a cap, and then you take money from the one that has a cap to also give to the one that doesn't have that kind of limitation. I have some problems with that.


We believe that the existing property tax arrangement is protected by the Constitution and it recognizes that the public system has an open-door policy for all our students. I was interested in the answer to the question from the previous presenters, because we believe that we do have more students in need of special education, and therefore it is necessary for there to be more funds to the public education system. So it's not a matter of equity in terms of equalizing the basis.

Because of those responses, you'll see our recommendations 1 to 4 dealing with that.

Now, in terms of the other two sections -- the impact on the policies of the federal government and the reform of taxation -- I turn it over to my friend and colleague Mr French, and I'll come back to close.

Mr Larry French: Thank you, Pat. We would like to push the envelope just a little bit and move you into the area where Ontario we think can have a good influence on federal policies that would benefit the revenue situation in Ontario, which then helps with our public enterprises.

We're very concerned about the impact of the high interest rates on our economy and on our economic activity. As we point out in the opening paragraphs at the bottom of page 9, the United States can afford to raise interest rates at the Federal Reserve board level and not damage its economy the way Canada does because they have longer-term residential mortgages, 20-year and 30-year mortgages, so there's a great buffer against the negative impact on the economy. Homeowners are protected from immediate financial impact. This does not prevail in Canada and therefore we're in a much more difficult, more critical situation. As the Paul Martin papers have shown, we are paying, every one of us in Ontario, about $1,430 per year in interest payments. The social programs, including post-secondary education, cost us about $1,300 per year. So there's a great disproportion in what is occurring.

We would like Ontario to press the federal government to get the Bank of Canada to act within its mandate to relieve some of the debt load and some of the interest rate pressure on Ontario by patriating Ontario and Canadian debt. As the debt instruments come due, the Bank of Canada can help by assuming them at nominal interest rates, maybe zero, and perhaps also there's an increased role for the province of Ontario bank in this role in enhancing the role of the Bank of Canada.

We've also seen the role of currency speculation in our economy recently. In the turmoil around the Mexican peso, the run on the Canadian dollar, we had the bizarre situation of Canadian money speculators creating a panic situation in which the Canadian dollar dropped. They were betting against the dollar and profited from it. We think this type of activity should be regulated -- it is not; Canada can't do it alone; it must be done internationally -- because it is non-productive, destructive, parasitical activity and we would urge Ontario to press the federal government to put an end to it.

Also, to help capture some of the revenue in the economy that is being generated by the interest rates, we would ask that Ontario press for a surtax on windfall interest rate income.

The other concern that is getting more and more attention, I think certainly at the federal level, is the financial transactions tax. A tax on stock and bond and currency transactions would, at a very, very nominal fraction of a per cent, capture billions in revenue. Depending on the fraction of the per cent of tax, you could decide how much revenue you needed from it. There are models around. The federal government has been given a couple of models that would make this thing work. Again, it needs international cooperation. It would amass a great amount of wealth and it would also slow down some of the destructive, hot money currency speculation and the paper speculation that is a feature of the new, modern economies.

Also, as the federal government debates what to do about the federal transfers, we would hope Ontario would use its moral influence to urge it to maintain the cash transfer system, not to abandon it, and the issuance of national standards. If it doesn't, then we might see the situation where the lowest-common-denominator province puts very high pressure on the other provinces to downsize their public programs. We think this would be very regrettable. As it is now, the federal government does have leverage through the cash transfer to maintain the national standards.

On page 13 we're into the Ontario tax reform. The Fair Tax Commission made certain recommendations, which have nou bedn picked up, about enhancing progressivity. As we show you, the wealth gap is very wide in Ontario and it's getting wider, as it is federally. We think that more progressive taxation would allow our wealthier cir`xens t¯ make ' mor$ÄfÏTMÙ_q©ýte coO<_-âution.

The first would be the wealth transfer tax, in partnership with the federal government and the other provinces. That would slow down the widening gap between poor and rich and it would bring in mtch-needed revenue. Then, restoring the former progressivity to income tax: We think that it was an unwise decision to collapse tle 10 tax brackets into three and that we should return to a much more progressive tax situation where wealthier, high-income earners pay proportionately a little more.

The corporate tax share has been a theme that many of the federations and unions have stressed should be addressed. It's low by OECD standards. Our!c,rà_àžeoicmšßtax brings in about 1.8% of GDP and the OECD adep`ššß-<ßž_out 2.5%, so that we would n_<ß_e disadvž`<ži*g CanÑ>ôž nepÝ-ãškHP C0/00 did move up that contribution, at least ty uhe OECD average, whic -- ß^_tlD fe s†ÿ~¹'Ü`~£tl%_e is one othdr t_‡ß^šßŠ_~šß†_Šß<_ß__`_->š_ß<__Ñ߶`ß__>š_ß<_ß -- š"_ß_ž_<Š_šß__'šß_TMß< -- šß>-TMTM-_Š"<Ò<_Ò`ž-"Ò>_^`ß-`__'šßTM__'ß<_ž`_`ž<-_`ž"ß______ž<-_`_Óß^šß"-"šß< -- šß_†_<š'ß_TMßTM__'Š"ž_†ßž____<-_`'š`<ß< -- ž<ß±š-"ß½___"_ß_Š~~š_<š>ß-`ß -- -_ß'-`__-<†ß_š___<ß<_ß< -- šß¹ž-_ß«ž‡ß¼_''-__-_`Ñߺ__š`<-ž""†Ó߆_Šß~š<ßžß<ž‡ß__`<_-_Š<-_`ßTM__'ß<_ž`_`ž<-_`ž"_ß______<-_`ž<šß<_ß< -- šßž'_Š`<ß_TMßš__`_'-_ßž_<-0/00-<†ß< -- ž<ß< -- š†ß -- ž0/00šß^-< -- -`ßž`†ß·Š_-_>-_<-_`Ñ߬_ß-TMß< -- š†Ø_šß___>Š_-`~ß< -- š-_ß~__>_ß-`߶`>_`š_-žÓß< -- šß______<-_`ž<šßž'_Š`<ß_TMß_ž"š_ß< -- ž<ß__'šß<_ß¼ž`ž>ž would generate a proportionate amount of income. We think that would be a better system than what we have now.


Ms Wright: We have proposed a model, which I am sure you have heard of before, called our confederated school board model and we feel that this model could provide cost savings in education by removing overlap and duplication. The model is really contained in the appendix. If you have not seen it before, it's in appendix D.

What we are really proposing is that we confederate, as it were, the school boards, and in confederating the school boards there will be necessarily some sharing. We believe that is necessary. The pie is not getting bigger and there are more spoons dipping into it. So we have to find ways in which we can make the system work. We have to determine what the adequacy of funding is.

But I do not believe that we can any longer afford to have or fund two parallel systems. The question then becomes, how can we make the systems work together? We do not believe that robbing Peter to pay Paul is the way to go. We believe that we could be sharing.

If you look at the model, for instance, on page 14 of appendix B -- it's towards the very end -- what we are suggesting is that we should confederate at the upper echelons, as it were, in the management levels, so that we can leave the resources in the classroom, where they should belong, to provide equity and quality in our educational system. We have had this checked out constitutionally, and it does satisfy all of the constitutional requirements.

The fiscal policies of the federal government, the lack of tax reform both federally and provincially and the funding recommendations of the Royal Commission on Learning are aspects of funding which we believe undercut public services and hinder the ability of public boards to offer accessible, universal, quality education. Funding in education has had periodic reviews from time to time. Some recommendations have been accepted, others have not, and there has been a resulting patchwork approach to finance reform. We believe that the implementation of the Royal Commission on Learning recommendations would be another patch in that patchwork quilt of reform.

We would urge you to consider our recommendations. We would urge you to consider our confederated school board model, because we believe that is the way in which we can maintain our first-class public education system.

Mr Malkowski: Thank you for your presentation. You have raised many points and we're taking those into careful consideration, but talking about the federal transfer payments, as you know, the transfer payments have been decreasing, and that policy, the established programs financing, which was started under the previous federal Liberal government and then under the PC government, the amount of transfers under that program has been decreasing and we've suffered discrimination and we haven't gotten our fair share under those programs.

As you know, the situation we're now facing is that the federal government is advising us we may not get the transfer payments from the federal Liberal government. Also, we have 98 federal Liberal MPs who should be lobbying on our behalf, on behalf of the province. But I'm curious about your recommendation 9. That may be a good opportunity for those MPs to take a role and lobby to get a reconsideration of the federal payments.

Now, can you tell me, what would you advise us? How can we best deal with the situation that if we aren't getting the federal dollars that are due to us, how can we keep and maintain the level of services and programs? Can you comment on what kind of impact there will be if the federal government doesn't continue to provide the transfer payments for 1995-96? How can we manage with the lack of money and how can we maintain the educational programs?

Mr French: That's quite a question. No, it's quite true, the impact of the federal transfer shortfalls has been very devastating and the shortfall accounts for approximately half of Ontario debts, of which a good share is the established programs financing. I think Ontario has done a little bit of educating about that, about the impact of the shortfall and the need for the federal government to be more equitable in its financing towards Ontario.

If the dollars do continue to shrink and if the tax transfers shrink, then post-secondary education will be immediately impacted. I think we've seen the forecast that tuition fees could double in a very short period of time. This would be a very heavy impact on educational opportunity, especially for low-income students, which we would have a problem with.

The cost of social assistance, even though the pressure's off a little bit as the economy goes up, is still very, very high in this area, and any help that the federal government could offer to Ontario, if it can get its fiscal house in order, would certainly ease the financial pressure here in Ontario and leave us more for the public programs like education.

Mrs Haslam: I looked at your confederated board -- I've looked at it in a cursory way -- and my question is, what kind of cooperation do you think you would receive from separate or French systems in putting forth this model? Are they aware of the financial constraints and do they agree that this is the way to go, to a confederated board?

Ms Wright: That's a very almost loaded question. To be honest with you, I do not --

Mrs Haslam: To be honest with you, I did not mean it to be loaded. It is simply, I wanted to know if this is such a good idea. If you're asking the ministry to come down with such an idea, then we have to know how hard it is, to say to other systems, "Is this a good idea?"

Ms Wright: I believe that it is a good idea but I believe that what happens here is you've had parallel systems running for such a long time that they have had their own bureaucracies that are developed and built. So it will take a certain amount of political will, discussion and negotiation between the systems to get to this idea, because many of them -- for instance, who will be the director to be wanted? That's a reality. So, yes, they do have some problem with it, but I believe that if there is a financial squeeze, necessity might of itself put people into the position where they have to think laterally, have to broaden their vision, and we have to look at new solutions.

It is a difficult idea for them to accept, but I think we will eventually come to recognizing that it is probably the only workable idea that we have.

Mrs Haslam: Efficiently.

Ms Wright: To work efficiently.

The Chair: Thank you. Ms Caplan.

Mrs Caplan: I think Mr Phillips has a question.

The Chair: Mr Phillips.

Mrs Caplan: I'd like just to put one on the record and then let him ask his question and they can answer them all at the same time --

The Chair: By all means.

Mrs Caplan: -- because there's just one minute.

The Chair: You still have four minutes.

Mrs Caplan: Right. Do you understand the education funding formula as it exists today? Gerry? I'm trying to see if anybody does.

Mr Phillips: I'm sure they do. Just a question so I'm clear on the educational funding: My understanding is that the province has reduced its funding on education by it looks like roughly $1 billion over the last three years. I'm just going by the spending on the budget here, from $9.8 billion to $8.7 billion. And in the document that we got from the government on federal transfers to Ontario on what's called EPF, which we've just been talking about, over the same period it went up by $200 million. I'm just wondering what the explanation would be for why the province has cut $1 billion out and the federal government looks like it's provided $200 million more in transfers over that same period of time.

Mr French: No, absolutely. I think the transfers have grown to a certain extent, Mr Phillips, and part of that problem, I think, is that the transfers like the CAP transfer and so on --

Mr Phillips: This is just the EPF.

Mr French: Just the EPF, okay. The transfers have grown, but less than what might have been expected under the previous formula. So I don't think they are matching what might be considered to be the increased costs at the post-secondary level, and the impact of the transfers on the elementary and secondary is only indirect in that it freezes up revenue elsewhere.

Mr Phillips: I see. So the federal government doesn't provide any money for elementary or secondary.

Mr French: A little bit at the French level.

Mr Phillips: But just a small amount.

Mr French: That's right.

Mr Phillips: Most of the funding for education, elementary and secondary, in Ontario comes from the property tax or provincial revenues and not from the federal government. It doesn't have a role in this.

Mr French: Yes.

Mr Phillips: The other question I'd have for you is just how we should be viewing the implication of the end of the social contract and what advice the OSSTF would have for us in terms of how we should be thinking about what impact is going to occur at the end of the social contract and its fiscal implications, obviously.

Ms Wright: I've been in many negotiations as liaison to some boards which have gone on strike, which have done work to rule, and it is very clear that the boards are saying to us, "We want a mechanism to ensure permanent savings, because the government wants permanent savings from us."

When we look at our grid structure and when we look at the staffing, we would argue that they have already achieved permanent savings. If you have a permanent downsizing of 4.75%, you have in fact got permanent savings in staffing. That's one.


Secondly, if a teacher is retiring at the top end -- and our estimates tell us that we will expect to have a turnover of about 50% of our members within the next five years. That's because a lot of them came in 30 years ago when there was a shortage of teachers and they had to be rushed through teachers' college, as it were. They're reaching the point where they now have 30 years and they will be retiring. We expect that we may see an average of about 3,600 teachers retiring every year for the next five years, starting in about two or three years' time.

That being said, if you cost out the cost of a maximum salary of a teacher who is retiring and the cost of the replacement, that teacher who is coming in, the replacement teacher is coming in at about half of what the leaving teacher is. We believe that there is adequate funding generated by what we call rollover to pay for the increments, so that there should not be any need for boards to try to demand that.

For those savings that the boards have made over the last three years, we have paid for those by taking additional Rae days and actually bumping up class sizes and going above the 4.75% in the reduction of staffing, because you will hear, when these negotiations come in and the results come in, them say, "We have achieved 4.75% reduction plus one."

So the teachers are paying. Whatever it is in the collective agreements, we have bought it, we have bought the increment. It has not been a gift; it wasn't freely given. We have a mechanism in rollover to take permanent savings forward, so we do not see that there should be any increased costs placed upon us.

On your question about whether we understand the funding, generally we understand how the funding works. However, when you look at the specifics and you see how it goes, shifting from one year to the next, you begin to ask yourself what it is really up to.

The Chair: I just want to say most of Mr Carr's time has been used up. He's got two minutes. With that very lengthy answer, I just wanted to make that clear.

Mr Carr: Holy smokes, I graciously give it to whoever took it. I know you wanted to answer that, but I want to get into something else very quickly.

Thank you very much for your presentation today. I was hoping Liz Barkley would be here to ask her because she does a great job in terms of marketing, getting it out. I watched her on Focus Ontario. I take it it's the position of the OSSTF as of this morning, reading her quote, that you will not be supporting the NDP in the next election.

Ms Wright: We have taken a position at our council and through our annual meetings that we will not support and we will not endorse any political party. We will go through it issue by issue, candidate by candidate.

Mr Carr: Good luck.


The Chair: The next presentation is by the Toronto International Film Festival Group, if the representatives would please come forward.

Ms Allison Bain: My name is Allison Bain and I'm the director of government liaison with the Toronto International Film Festival Group. This is Michele Maheux, who is our director of marketing and communications. We're really pleased to be here today. We benefited from a call this morning about a cancellation and got the opportunity to appear here.

The province is one of our biggest supporters, so what we'd like to do today is just give you a little good news and show you what your support has meant to us and some of the successes that we've managed to bring into this province. Although we're a cultural organization, what we want to talk about is our economic contributions to the economy of this province.

Ms Michele Maheux: What you have in front of you that have just been handed out are copies of the economic impact study which was commissioned a year and a half ago and also copies of an information package or marketing kit. We'd like to take you through that kit today and just highlight for you some of the areas of interest that will help you know who we are and what we do.

The Toronto International Film Festival Group is comprised of three divisions.

Ms Bain: The first division of course is the festival, which is probably our most well known operation. It's a 10-day event which runs every September. We show about 300 films from 45 different countries every year. The Toronto festival is now acknowledged as the premier film festival in the world, second in the world only to Cannes. Of course, the big difference between ourselves and Cannes is that we are a public film festival. Last year more than a quarter of a million people attended our film festival.

Ms Maheux: Just to let you know and to add to what Allison just said, we are actually perceived by the industry to be number one in terms of all the film festivals that are operated in North America.

The second division within the group is Cinematheque Ontario. This is the provincial Cinematheque and is a year-round screening program or a year-round festival which takes place in one of the most stunning facilities for screening in all of Ontario, down at the Jackman Hall of the Art Gallery of Ontario. Annually, we show more than 400 films, two films a night, and that actually attracts thousands of members each year to our screenings.

Ms Bain: The Cinematheque also tours Ontario films internationally. Recently we've shown Ontario films in Greece, in Japan, in France and across the United States. If you were watching the news last week and the coverage of Robert Redford's Sundance festival, for the first time ever they featured a Canadian program. Those Canadian, mostly Ontario, films were selected at last year's festival.

Ms Maheux: That brings us to the third division within the group and that's the film reference library. This is a publicly accessible library located in our offices at the corner of Yonge and Carlton, which is extremely accessible. It is also the province's collection. We are the caretakers of this collection, which is an incredible array of film-related materials and in fact is now considered the pre-eminent resource centre for English-language Canadian-related film materials in the world. Students, researchers, international industry representatives and the international media all look to the film reference library when they're doing research on various film-related projects.

Ms Bain: All three of these divisions are supported by the province. The province provides approximately 20% of our base operating funding. So what do you get for that money? For every dollar the province invests in our organization, it's getting about $30 back. Last year we had a direct economic impact of $30 million.

Ms Maheux: Of that $30-million annual impact, we count $7.5 million in tourism impact alone. We consider this to be quite an impressive number, but we think we can do better. So in the last two years we have initiated a number of tourism initiatives. This year, as a matter of fact, we're partnering with an American company that's involved in wholesale travel and we're hoping to bring in a junket actually triple the size of last year's, which was 300 tourists. We're hoping to bring in more than 1,000. Now, these are directed, obvious efforts. We know there are tourists coming from all over the world in addition to those we're actually trying to bring in specifically through packages.

Ms Bain: There are two sides to the festival: one the public sees, which is the public screenings; the other whole half of the festival is all the industrial initiatives we do and all the support we give to the Ontario film industry. That includes things like the symposium. About 1,300 people attended last year, and that's Canada's largest business conference for film and television.

We also run something called the sales office. At a film festival there are essentially two types of people. There are people selling their films or attempting to, who are usually Canadian, and there are people buying films, usually international and American. We host all the international buyers through the sales office and facilitate their meeting the Ontario filmmakers. What this has resulted in, with over 1,200 film buyers last year, is an unprecedented level of sales for Ontario films.

It's been estimated within the economic impact study which you have that, in terms of replicating the industrial services the festival provides, without looking at the public screenings, it would take $4.5 million for somebody to replicate what we do.

Ms Maheux: Also within the $30-million impact is a media impact. Each year, annually, the festival hosts more than 600 journalists from around the world. Just to put that in perspective for you, two years ago when there was a World Series, Toronto hosted only maybe 400 for the entire program.


This contingent represents media outlets as diverse as the largest TV crews from Moscow, Los Angeles, the largest newspaper in the world from Japan, and actually has a larger media corps than probably any event of its kind of Canada that we know, and of course, we can't touch Cannes because they're in the thousands of press contingent. But our corps delivers more than 410 million impressions in the media worldwide, which represents $3.3 million in media impact.

In the last two years alone, we have seen a three-page spread each year in Time International magazine. As an impact for tourism within the province and exposure for Toronto and the province, this is of course phenomenal and almost impossible to measure.

Ms Bain: The festival also provides 462 person-years of employment a year. Although we only have 24 full-time staff, we bring on about an additional 135 people each year. A lot of these people are students or recent graduates and many of them go on to full-time jobs in the cultural industries based on the contacts they make at the festival. On a year-round basis, we run internship programs, and actually currently in our offices we have three college interns to whom we're providing free training in corporate fund-raising and in marketing.

That's just a brief summary of all our contributions. The continuing partnership of the province in what we do is absolutely essential, and through some extremely difficult economic times the province has maintained its support of our organization. We work very closely with the Ministry of Culture, Tourism and Recreation and the Ontario Film Development Corp and they have been true champions.

That support is absolutely crucial. Although we have more than 100 corporate sponsors who bring in more than $3 million in revenues for us and we have a quarter of a million public attendees and we have thousands of public members of the Cinematheque, it's impossible to do what we do without public support.

We just want to take this opportunity to thank you for your support to date and hope it continues and hope we continue our contributions.

Ms Maheux: That more or less sums up what were here to say to you today. Now we'd be happy to take any questions that you may have about our organization.

Mrs Caplan: The information you've provided us is extremely interesting. I'm pleased that you were able to come on such short notice with such a full brief.

As I understand it, you receive now just over $1 million from the provincial government?

Ms Bain: We receive $1.3 million. We receive $400,000 for the festival. The remainder goes towards running the provincial Cinematheque and it's basically taking care of the provincial collection.

Mrs Caplan: The impact on our economy, in job creation as well as spinoff economic activity, is extremely impressive. I think that taking the opportunity to come before this committee and explain that to us is very, very helpful. One of the concerns I have as we head into this election time, we know that there are no new dollars available, these are times of restraint and that there are going to be some advocating massive cutbacks in expenditures that could have negative impacts on the economy. I think you've made your case extremely well here at committee and I hope you have been heard.

The only question I really have is on some of the data you have at the back about the impressions that people have had about Ontario and about Toronto. I'm impressed with the questions you've asked and the fact that you've asked some of the tough questions also.

The survey is at the back, and I wondered if you'd just add a little bit, if you could, to some of the information you have about why you do this kind of surveying and how it influences the direction of the festival. Why would you do the kind of public opinion surveying that you're doing?

Ms Bain: One of the key motivations behind commissioning the economic impact study was because public funding at best is being maintained and we've actually taken fairly substantial cuts federally and municipally. We commissioned this study to sell ourselves. There's a whole section on consumer demographics: what you buy, what you sell. Actually, in the last four years, and we've had this for two and a bit now, we've managed to double our corporate sponsorship by utilizing the study.

The reason we asked the questions about impressions of Toronto was to help us get things like this American wholesaler who's going to sell our festival and this city abroad. They wanted that kind of information, so many of these questions were targeted for specific purposes, mostly corporate sponsorship.

Mrs Caplan: What would happen to your organization if your funding was cut by the 45% that we estimate it would be cut under the Harris plan for Ontario?

Ms Bain: Well, even though there were fairly minimal cuts last year, they directly resulted in a cut of services. We lost $40,000 in one grant. We immediately had to cut the Prospective Canada suite, which is the people who help Canadian filmmakers package and market their films.

We're a very, very lean organization, so there really is no room to cut. Any time it comes down, we lose something. We try not to touch the public screenings because that generates $1 million in revenue. What we have to cut are services that don't directly generate revenue and those are services that are used to support the Ontario film industry.

Mrs Caplan: Thank you very much. I found the information very helpful and very interesting and I think you are contributing to the economic wellbeing of Toronto, Metro Toronto and the province.

Mr Kwinter: I know this isn't directly related to you, but it is certainly peripheral to what you're doing: Toronto has been the third-largest film production centre in North America. Is that continuing, and what are the prospects for that particular sector of your industry?

Ms Bain: The Toronto film liaison office with the OFDC just put out its press release I think last week and it was something like a 20% increase in production. They're now estimating about a $600-million impact. It's growing and growing and growing.

Ms Maheux: This is the first year that the Ontario production community actually beat out the BC production community. It's been a huge battle back and forth between the provinces, and Ontario for the first time outstripped BC in production. That doesn't look like it's going away, it looks like it's going to actually increase.

Ms Bain: One of the reasons I think for that is programs like OFIP and programs that the province has brought in to support its film industry, so that now we're second only behind New York and LA.

Mr Carr: Thank you very much for a fine presentation. I'm glad you filled in. Following up on what Elinor Caplan said, she's right, there's going to be dramatic cuts. We've also said there will be cuts to business and funding to groups like yours.

We also are going to have massive tax cuts, the biggest tax cuts in the history of this province that will give us the lowest income tax rate. For an average household making $50,000 -- whether that's one person making $50,000 or two people making $25,000, let's use $50,000 as an example -- we're going to give them $4,000 back over the next three years. We believe that fine organizations like yours in the community will be able to get some of the funding from those people who will now have money in their pockets. They'll look at groups like yourself and say: "It's a terrific project. I'd like to donate."

The reason you come under pressure: as you know, we've got the health care system being hit, now deteriorating, and we've got longer waiting lists; we've got the education system that we can't pay for -- and you may have been here for those presenters -- and we have to make major change here in the province. What we're going to do is reverse and take it away from the governments, which have taken our money -- the highest-taxed jurisdiction -- and doled it out to various groups, and say to the people, "You decide where the money would go."


Are you confident that the public will give you money if the money is taken away, changed from the government giving you grants to the public? You've put a great presentation together, the longest, most in-depth one we've seen yet, without a doubt. I know one of you is doing marketing, so you've done a terrific job. Going out to the public, are you confident that if people have more money in their pocket you'll be able to get some of those dollars back to your organization?

Ms Bain: I certainly understand your point. The problem we're facing at the festival is that over the last four years we've increased our box office by 50%. We've been around for 20 now, so that's a very significant increase. What happened to us last year is that we have run out of seats, so we can no longer, short of somebody building more theatres in the downtown core -- the public, I feel extremely confident, would come, but we have nowhere to put them any more, so we can't raise any more box office revenue.

Mr Carr: What about donations in terms of people saying, "We'd do it"? Of course, in a lot of the arts there are donations from various people as well, not just people who've got a lot of money but average people giving donations outside the cost of tickets. Do you think people will think your services are good enough or provide enough service that they would be willing to do donations, just like a lot of other groups have to do to raise funds, outside of box office? Do you think you're well-respected enough that you could actually get some money through those fund-raising efforts?

Ms Maheux: We actually have a huge contingent of private supporters whom we call our gold patrons, and essentially I think they do what you're suggesting. Yes, they do get access to the festival. They give very far above and beyond the cost of a single ticket, and that circle seems to be widening to a huge degree. Again, as Alison has pointed out, access is obviously difficult when you're running out of seats.

But that's why we wanted to come here today and stress to you the importance of our industrial relationship with the province and the business relationship we bring to the partnership in culture that the province has been so stellar in supporting over the years, because we don't know to what degree we can continue going back to that same pool of individuals.

You're right, we probably should be looking to new individuals once this process begins, and hopefully they'll see the importance.

Ms Bain: But having said that, while we have doubled our corporate sponsorship in four years, there are certain segments of our organization, especially the caretaking and making publicly accessible the province's collection, which, to be frank, are probably never going to be sexy enough to sell to a corporate sponsor. I mean, that's a cultural, educational mandate, and I'm not sure you'll find a willingness in the corporate sector to take that on regardless of tax breaks.

Mr Carr: It might not be for corporations, but what about for individuals, who have an opportunity to go and like it? Historically, I guess, we've talked about people at the upper end of the income scale, with more money in their pockets. I'm thinking more of average people, who will have access to events like this and tickets and more money to be able to go.

You said tickets won't help, but what about just average patrons, average people, the hardworking guy at the Ford plant who's never thought of giving to your organization? Can we tap into that market because of the great job you're doing?

Ms Bain: I don't know. We'll see if the average man who works in a Ford plant wants to contribute to housing a film reference collection. We'll certainly have to look at that, but I think it's unrealistic to think that an organization like ours can exist without public support.

Mr Carr: Just one closing point: I think everybody recognizes the fine work you've done, and you've laid it out here. What we'll be proposing is that it will be up to the public to decide, and if you do the fine work they will give the money and support you. But at a time when we're cutting back nurses' salaries, cutting back on services, it's going to be the public, not the people in this room, who are ultimately going to decide whether you survive. I certainly wish you both luck, and I'm glad you came here. You did an excellent presentation; you really did.

Mr Sutherland: Separating the two parts of what you do, the collection for the province part from the festival, I think some of my constituents would say about organizations like yours that maybe we should fund you for five or six years until you get up and established on your own etc. There's no doubt, with the information you've presented today, I certainly understand the argument of how, for the amount of money the government gives you, you provide a much greater economic impact back to the province. You indicated you're bigger than the Blue Jays, more media coverage than the Blue Jays get in the World Series.

Mr Carr: At least they work. The Blue Jays are on strike.

Mr Sutherland: Exactly. There you go. It's going very well.

What would you give me to say to my constituents who may make some comment like that, that you should only do it for five or six years, because then you could circulate that money back to other, smaller groups that want to start up other things in other cultural areas?

Ms Bain: For us, one of the problems in what we've seen recently is continual cuts in operating funding and then people attempting to replace that funding with projects. When you target project funding, it brings this incredible instability to the organization and you can't plan for the future. If someone gave us five years and then you're cut off, I'm not sure what that would do to our organization. What you'd end up with at best -- you've already got a Famous Players and you've already got a Cineplex. That's not what we're about.

If you lose the public funding, you lose all the other things: You lose all the free public events, you lose all the industrial services. If that's the choice, I don't think people would make that choice, if you gave it to them, when they know what we accomplish in this province. It's not just going to the movies. There's this huge mechanism behind it.

Mrs Haslam: I couldn't agree more. I wouldn't be nervous about the Harris plan; I'd be scared to death of the Harris plan. I've been in that ministry and I know the work you do, and you have done an excellent job.

This has been coming over the last two or three years. You started out, as most cultural entities do, saying: "We're a cultural entity. We are the people who put into words and actions who we are and what we do as Canadians."

Through the hard times, I think that, like many other cultural entities, you realized that in order to prove what you did, you had to prove it economically. I'm so pleased to see this kind of presentation. When you think of what you can do with $1.3 million from the government, it is amazing.

I want to talk about a couple of things. You talked about other jobs in cultural industries, where people from your aspect go into the other cultural entities, and I wondered if you would elaborate a little bit on that. Also, you did a study on how to sell yourself. I know how hard that job is, and I wanted to know, is it getting easier out there to say to people: "We are an industry. We have a $1-to-$5 ratio for input into the economy"? Is it getting better to sell what you do?

Two questions, because I'm not sure I'll get time for a third one.

Ms Maheux: I'd like to speak to the question about the jobs, because the office that I run during the festival, with the help of an enormously talented staff, is the press and media office. From our contingent of part-timers, volunteer workers and contract employees, over the past six years, since I've been working within that office, three of them have gone on to management positions at the Ontario Film Development Corp. One of them is now working with the pre-eminent contract publicist in Canada. One of them just got hired by Disney last week. One of them just left, and we're heartbroken, to do my job at the San Francisco International Film Festival. And that speaks only to the marketing and publicity department.

That doesn't talk about some of the other administrative positions and people who have moved on to bigger and better and more permanent positions elsewhere in the community, for American, international and Canadian companies. So it's a pretty international achievement.

Mrs Haslam: They in turn sell us when they go into those particular areas.

Ms Maheux: Absolutely.

Mrs Haslam: Especially when you talk about your sales office at the film festival and how beneficial that is and the different types of people who come.

I think people think of films as being only the Robert Redford films, and it isn't. It's Canadian films. It's Atom Egoyan. It's industrial films. It's all those other little films that we produce in this area.

Mr Hope: Chuck Norris films.

Mrs Haslam: Chuck Norris? No, I don't think so. See what I have to deal with?

I know all the other aspects of film and the film industry that you deal with that are very important, and that brought me to the question about how hard it is to do your job, how hard it is sell what you do.

I'm going to slip my third question in. If you get a chance to, you might explain -- in two seconds or less -- to some of these people what the OFIP program is, because they might not understand that the money the government puts into an OFIP program or the Ontario Film Development Corp are again additional amounts of money that have phenomenal spinoffs within the economy.

Ms Maheux: I'll speak to the issue about selling ourselves, and then I'll turn it over to Allison to discuss quickly with you OFIP and OFDC.

After we did the Decima Research project and came up with our economic impact study and an actual profile of who our audience is, which pointed to the fact that we are known by more than 82% of the population within Metro and its surrounding area, we took that to various corporate sponsors.

Essentially, what our development department has been working on for the past 18 months is projects with various companies, large ones we can't tell you about just yet, for a long-term funding commitment, to tell them and explain to them that we speak to their product buyers, that the people who come to the festival are opinion-makers, that they like to be the first on their block to own anything or do anything. We've now got a document we can take to these people to show them who we speak to, and the result has actually been quite remarkable. Allison pointed to some of the numbers in the last two years, and we think to a huge degree the study has helped us take that message out and tell them what they need to know.


Ms Bain: OFIP and the work the OFDC does with the ministry is just part of this huge infrastructure that's developed around Ontario film. When I started at the festival eight years ago, you literally could not give a ticket away to a Canadian film. Last year it was the first program to sell out, because you've now got OFIP that helps make it, we help market it, and there are all these different partners that come together, which is really building an industry, which is why we're number two in the world, which is why our film industry, as a location, is number three in the world. Without some people noticing, we have become a world-class city for film production, and it brings a lot to the province.

Mrs Haslam: How much would you like in this budget? I think you've done good work on $1.3 million. I just thought I'd give you the opportunity to say how much you would like to see in the budget.

Ms Bain: Thank you. We're hoping that at worst we maintain. We haven't had a raise in five years, so of course in real dollars we've lost funding and lost funding. We know the economic circumstances. We don't want to be fighting for the same dollars; they shouldn't be the same dollars. Every "developed" country in the world supports culture. Anyone's culture, especially, being so close to America, Canadian culture, needs the support of the government if it's going to remain competitive. It's been proven that, with the support of the government, we're not only competitive, we're number two in the world.

The Chair: On that comment, I'd like to thank the Toronto International Film Festival group for making a most interesting presentation this afternoon.


The Chair: The next presentation this afternoon is by the Ontario Arts Council.

Ms Gwenlyn Setterfield: My name is Gwenlyn Setterfield. I'm the executive director of the Ontario Arts Council. With me are Mr Michael Woods, board member of the Ontario Arts Council and an accountant who lives in Toronto; Susan Cohen, director of arts discipline programs at the council; and Mr Daryl Novak, our director of administration.

The Chair: I understand you have a video for us to watch?

Ms Setterfield: We do. We have a very short clip at the end of our presentation.

We'd like to thank you again for allowing us to appear before the committee and to speak about some of the new developments this year and some of our achievements. I'd like to say at the beginning that our new chair, Mr Paul Hoffert, very much wanted to be here this afternoon, but he is away. However, you'll have an opportunity to see a little clip of him at the end.

Since we met last year, there have been some welcome developments that have recognized, in a public policy way, the importance of the arts in the new economy. There have been a number of reports that have acknowledged the role of the cultural industries and the not-for-profit arts in economic renewal. The ACCISS report in Ontario, the Advisory Committee on a Cultural Industries Sector Strategy, clearly identified this sector as a growth one and specifically acknowledged the place of the not-for-profits, where the talent and the creativity is developed and which in fact is an essential component for commercial success. You've just heard about the commercial end, and we too are involved in that kind of development.

Again, the report of the federal committee on foreign policy noted that a not insignificant fraction of Canada's cultural output is sold abroad. For example, SOCAN, which collects royalties in the music industry, is now collecting as much from abroad for the use of Canadian music as it does domestically for foreign product, and that is an amazing change over the last two or three years.

The committee noted that all of the evidence suggests that the promotion of a country's economic interest abroad depends in large part on the image it projects through its exports of cultural and educational products, and that committee recommended increased support to Canada's creative artists, whose development happens, of course, in the not-for-profit world.

The federal government recently announced a cultural human resources council as one of 18 sectoral councils to address training and development needs, again acknowledging that the cultural sector is a legitimate and growing part of Canada's economy. Study after study in cities and communities around the world are saying the same thing, and I think in Massachusetts they said, as they very often do plainly, simply and very eloquently, "Every economic development survey demonstrates that the quality of our educational and cultural institutions gives us the competitive edge in attracting new investment and retaining what we have."

Business writers, both here and abroad, refer to the social capital of communities that are achieving economic renewal, and in every case the arts are included as a vital component of that economic advantage.

OAC continues to work with the entire spectrum of the arts and culture sector. Last year the number of applicants was up by nearly 15%, and we assisted 1,900 individual artists and nearly 900 organizations in over 300 communities in this province, all with less than one tenth of 1% of the provincial budget, in a sector that contributes over $10 billion to the GDP.

OAC supports everything from community choirs to publishers -- and you'll hear a little bit more about that later -- and in every case OAC support is only one component, and a small one, in the partnership that includes private corporate funding and earned revenues. Mr Carr may be particularly interested in this. On average, in the performing arts, for example, earned revenue is over 50% of the revenue of the companies, and in theatres it's around 75%, but for all performing arts companies government revenues in total average just over 15% -- just over 15% for total government revenues altogether. So this is a very small amount of money.

Those small amounts -- and the average grant that the OAC provides is just over $2,000 to individual artists and about $20,000 for organizations -- provide the leverage for really amazing things to happen. For example, there's a small publisher in Dunvegan, in eastern Ontario, whose titles have gained a total of 29 awards and/or nominations. They are the publisher, for example, of Nino Ricci's books, and this publisher is selling Canadian books into several markets abroad. For a grant of just around $21,000 from the Ontario Arts Council, the publisher wrote just the other day:

"OAC's continued support and cultural focus is essential to the existence of a small press in Canada. We are encouraged by the general acknowledgement of the economic role of the arts and culture sector, and the challenge for the future is to ensure the continuing core support to artists in arts organizations who will provide, we hope, the content for what is potentially the most potent opportunity for Canada and Ontario to distribute its cultural capital around the world," and that is of course via the information highway, "and that will only happen if we have continued commitment to basic arts creativity in this province."

Now Mr Woods is going to say something about some of the economics.

Mr Michael Woods: The Ontario government's current-year investment in the Ontario Arts Council amounts to just over $4 for every person in Ontario. This small investment in the Ontario Arts Council pays off in a number of ways at several levels. It helps to maintain an arts and culture infrastructure that generates over 230,000 jobs in Ontario. It reaches over 750,000 students in classrooms all over Ontario.

The importance of the arts and arts education to the development of the new skills and attributes required to succeed in our complex world was stressed in a recent report of the Royal Commission on Learning. That report states that: "Students denied access to the arts are denied literacies and are impoverished as learners.... Any school system that fails to open up the spirit of the arts to its students is unworthy of public support."

At another level, support to the arts is paid back in taxes, increased tourism, talent resources that supply the commercial, for-profit cultural industries and exportable knowledge and products to world markets.

The second area of comment I'd like to make is concerning the management in the well-managed arts sectors. As mentioned, I'm an accountant in my real life and have a number of arts organizations as clients. In my experience, they're very nimble in adapting to changing circumstances. Only a small number of arts organizations have closed their doors during the recession. Good management, creative development of partnerships, developing alternate income sources and just plain cost cutting enabled arts organizations to serve their audiences during the past years.

It's also a growth industry. Between 1987 and 1991, at a time when other industries saw their sales drop, revenues in the cultural industries in Ontario increased by over 40%.

Finally, I'd like to make a plea that the arts needs the maintenance of the current level of financial support from the Ontario government. The 1991 census figures show that the average income of artists is just under $15,000, compared with $26,000 for the experienced Ontario labour force as a whole. Those are my comments.


Ms Susan Cohen: Ladies and gentlemen, what I'd like to do is to give you some specific examples of the partnerships that the OAC engages in with members of the community, whether they are in the public or the private sector, whether they are businesses, governments, community members or other artists. Our support may not be large in scale, but frequently, as Gwenlyn and Michael Woods have described, it provides leverage to other partners so that artists and arts organizations can build their ideas, their support and extend the marketplace.

I want to draw your attention to three programs of the council. Each of them is different, but they all illustrate the leverage that we've talked about. One of these programs is run by our visual arts, crafts and design office to provide assistance to individual visual artists with exhibition costs. The average grant is $500. Last year we gave out some 550 grants.

The program operates with 54 local partners; those are art galleries and organizations that cover the province in communities as large as Metro Toronto and as small as Atikokan. The OAC holds an account at our offices for each of these partners. Artists apply to their local gallery for assistance with the costs of framing, transportation, matting. They're for exhibitions within their community or elsewhere. The local community decides to support an artist based on its own criteria, its own local concerns, and then we cut the cheque. It is simple, it is cheap, it is community controlled and it is accessible to local artists throughout their careers.

Deanna Austerberry, an artist from the Sault, got $1,000 from the Art Gallery of Algoma towards an exhibition in San Miguel, Mexico. Catherine Cribbs from South Porcupine got $500 from the Art Gallery of Timmins for an exhibition in Kirkland Lake.

These small amounts lever other support. Exhibitors, whether they are traditional venues, such as art galleries, or untraditional venues, such as restaurants, bars and shopping malls, pay for artists' fees, they pay for insurance, catalogues and promotion, and they extend the marketplace for all our Ontario artists.

Rita Anne Piquet from Scarborough received $140 from the art gallery in Whitby for her participation in the annual Boutique Jacob contemporary art show. You may know this particular fashion outlet. Every year this fashion store, with stores across the country, displays selected Canadian works throughout its outlets. The Boutique Jacob insures the works, promotes the artist, hires the curator to develop the catalogue, promotes the catalogue and the artist in all its stores and intervenes with the public for education and awareness. That's what a $140 grant can do.

I'd like to tell you about another program. It's our music office, which provides assistance to Opera Atelier, a baroque opera and dance company. After eight years this company has reached an international pinnacle. It has been invited to be part of the Houston Grand Opera's 1995 season and the Opéra Comique in Paris. This year it got a commitment of $110,000 from the Paribas Foundation. This is an offshoot of a French bank and it marks the foundation's first-ever sponsorship of a group outside France. The directors of Opera Atelier have acknowledged they couldn't do this without the ongoing support of the Ontario Arts Council.

Finally, I'd like to tell you about the miners' memorial in Kirkland Lake. It's a project of two artists from Charlton, Ontario, that has been assisted for four years through the Ontario Arts Council's Artists and the Workplace program. It was originally an idea of the United Steelworkers of America and it is a tribute to the miners of Kirkland Lake, a 40-ton granite, steel and bronze sculpture unveiled last summer.

A grant of $30,000 in total from the Ontario Arts Council amounted to less than a quarter of the total cost of the project, but our money, which was first given in 1990, levered and then acted in concert with businesses, professional engineers, the mining companies, the ministry of northern affairs, community concerts, nevadas, bingos, the chamber of commerce and the Rotary club. Everybody helped out. There were donations of dollars, but equally important was free studio space, materials, equipment and expertise. The miners posed for the sculpture and the local Macassa mine supplied the miners to work on the site and the installations for almost two weeks.

The artists put it very well. They said to us: "Six years ago we were absolutely unknown in Kirkland Lake. But, you know, on opening day, the 75th birthday of Kirkland Lake, we rode at the head of the parade behind the mayor."

Ladies and gentlemen, I think that gives you some real demonstration of how the artists, the community, public and private partners, corporations and businesses are all working together to create enduring works of the human spirit.

Ms Setterfield: Just a couple of other points. Last year Mr Phillips asked us what we were doing -- we're from the Ontario Arts Council.

Mr Phillips: Yes, I know.

Ms Setterfield: You asked us specifically last year what we were doing to find other sources of income and to streamline our operations, and I want to assure you that indeed we have done that. You will see a clip about our annual trade show, Contact, and it says in that clip that we spent $68,000 on it. We in fact are spending half that now and we're on the way to making this a cost-recovery activity. We've streamlined our application process, we're combining programs and we hope to undertake a study to determine how we can best use new technologies to expand and streamline the whole application process, although we may need a little financial help to do that study.

Our very best news this year was the announcement of a major gift to the Ontario Arts Council Foundation. The Lieutenant Governor, the Honourable Henry Jackman, made a personal gift of $1 million to establish an endowment at our foundation. That will provide three awards annually to arts organizations that have demonstrated strong community support and private sector donations to their organizations. These awards are designed to encourage the private sector to get involved with their community arts organizations. So we are in fact working to help ourselves.

With that, we'd like to show you just a little short clip, and that's the end of our presentation.

Video presentation.


The Chair: Through modern technology, we've seen a very interesting video, and I thank you for that. We have a little more than two minutes per caucus, and we'll start with Mr Carr.

Mr Carr: Thank you very much for your presentation again this year. I appreciate it very much. I guess, Michael, you talked about the amount of the tax that goes to you is the equivalent of about $4 per person, I think you said.

Mr Woods: That's right.

Mr Carr: I don't want to get into a big debate here, because this isn't what we're here for. I think you understand the problem the Ontario government is facing. The debt for every man, woman and child provincially is $9,000, and that's provincial. Federally, it's $15,000. So combined, every man, woman and child in this province owes $24,000. I'm married with three kids. What we owe as a family is $120,000, which is more than our mortgage. You alluded to me with the question. That's why I said it.

Nobody but nobody around this table does not see the good work that you do, but I think you should understand the pressures are there, and I will say this: You should be very, very leery of any politician who sits and says that you won't be cut before the election. At least with ourselves -- and I may be not the typical politician, liking to tell the same thing before the election, during the election and after the election, but I'd be very, very leery of politicians who say, "Well, don't worry, you won't be one of the ones who will be cut," because I want you to appreciate the fiscal situation is horrendous in this province.

I wish you luck. I think with the calibre of people we see coming forward like yourself, the calibre of the presentations that you put forward, I sincerely have the confidence that regardless of what happens, which of either of the other two parties gets in, groups like yourself are going to survive. And it's not because of governments; it's going to be because of the good people like yourself.

So I want to thank you. We look forward to it. We don't have much time to give you, but we sincerely appreciate it. I would love to spend the time jumping all over the government and so on, but I think we have to work together, because our fiscal situation is horrendous, and at the end of the day, I honestly, truly believe, with good people like yourself, we still are going to be able to say that we have one of the finest arts councils in all the world. So good luck.

Mr Jamison: Thank you for your presentation and, again, yours is, if I might use the word, an "industry" that sometimes is undervalued within our community and within our society and is really a cultural industry that's so important to the wellbeing and fabric of a number of communities. I just want to say that communities like Stratford, for an example, the Shaw Festival, which is something we wouldn't want to lose, and the art area -- bringing the Barnes collection to Toronto did wonderful things. The economic spinoff to those communities is tangible, to say the least, and the economy, the flow of dollars and the tourist aspect of things go far beyond what has been said here today about your importance to our economy.

I must say this to you, that you've just heard about the physical problems, the economy as it exists, but I believe you contribute to our economy. I want to let you know that.

The thing that concerns me is, we have a party in this province that's basically, whenever they speak to people -- and it's the first time I've heard this different approach which concerns me even more -- when they speak to business or when they speak to the farmers in the province or whatever, say, "Well, we have to make the cuts but, of course, we may not be talking about you." That concerns me even more, because those cuts will have to come from areas that are maybe not as recognized as being an integral part of the economy as the arts, and it's something that I think once people are more educated about, really they would quickly recognize how your industry really enhances our quality of life also in this province.

I would say to you that there are some serious economic realities that are out there but to simply cut you loose, as I believe some people in this room would do, would be a grave, grave error. I know you've done some streamlining yourself, but at the same time, do you not think that it would take governments working much closer with you to ensure that the quality of our culture isn't in jeopardy along the way?

Ms Setterfield: Yes, I think that's right. I think we do need some really close and careful discussion with all parties, all governments, to make the case to look at those areas where there are gains to be made, where we can make some partnerships, where it might not mean new money and where the arts sector may have access to certain kinds of money that they haven't had before, small business support and so on, that hasn't been there before for our sector. I think there are a lot of things to be done, yes.

Mr Kwinter: I'm sure you know that you have in our caucus a kindred soul and I'm sure you know I'm a graduate of the Ontario College of Art and a former vice-president of the Ontario College of Art. Really, I'd like to just pursue and get on the record so there's no mistake in the signal that is sent to the arts community.

I've been listening to our colleague in the Progressive Conservative caucus and I haven't heard a more naïve or simplistic response: "Don't worry. As long as you people are good and you're going out and doing your job, people will support you."

Mr Carr: What are you going to do for them, Monte? Are you going to give them the money? Tell them what you're going to do.

Mr Kwinter: What he's saying is in fact: "You're on your own. Go out. You're good people. You will go out and you will get the confidence of the people. They will support you. We're going to give them money and instead of them paying down their mortgage, instead of them paying down their credit cards, instead of them paying down their debts, they're going to give it to you." To me, this is plain absurd. I'd like to get your comment on it.

Mr Carr: What are you going to do, Monte?



The Chair: Order.

Mr Carr: Tell them what you're going to do for them, before the election.

The Chair: Order.

Ms Setterfield: I have no wish and no intention to wade into a political argument here.

Mr Carr: I haven't either; he started it.

Ms Setterfield: I would just like to refer back to the figures that I put forward originally. On average, the organizations are getting, from government support, in total about 15%. We're talking here about the performing arts organizations. About 15% of their revenue comes from government, just a little over, in total. So all the rest of it they are raising themselves.

The organizations have become very mean and lean in terms of their fund-raising and their expenditures, and I would like to remind all of the members that this has been going on in the arts community since the very early 1980s. The arts did not really enjoy the kind of huge influx of money that other sectors of the community did through the 1980s.

We can show you many examples of companies that have been consistently cutting the numbers of dancers, the numbers of actors, the numbers of performers and so on. The National Ballet is a perfect example. That has been continually shrinking since the early 1980s. They've been expanding their pool of donors, their pool of corporate sponsors, but also there is not a level playing field for major donors in this province.

The universities now have foundations which enjoy crown status and therefore can give 100% write-offs to very large donors. This is not available to the arts, not even through our foundation. Therefore, if you're talking about the kinds of half-million or million dollar donations that are available in the US, for example, they are not attracted to the arts. If the donor is a wealthy person and can give that kind of money, they are more likely to give it to their university through the crown foundation. So we're trying. We would like a level playing field.

We have absolutely expert fund-raisers. The other thing is that most of our arts organizations hire fund-raisers and they're able to pay maybe $20,000 or $25,000 a year for a fund-raiser. They train them. They become super fund-raisers, and the universities and the hospitals and everybody else who's into fund-raising now snatch them up and pay three, four, five and six times that amount and we are just a training ground for development of marketers throughout the economy.

The Chair: I'd like to thank the Ontario Arts Council for making this presentation before the committee this afternoon.

Ms Setterfield: Thank you, Mr Chairman, and everybody on the committee.

Mr Hope: On a point of order, Mr Chair, before you call the next presentation: Isn't the yelling supposed to go this way, back and forth, versus the opposition sides?

The Chair: With respect to your point of order, Mr Hope, I would just like to remind the committee members that interjections are out of order. Yes, we as members of various parties do have various opinions and we don't always agree. However, interjections are out of order and the Chair would appreciate it if they were kept to a minimum.


The Chair: The next presentation this afternoon is by the Federation of Women Teachers' Associations of Ontario, Ms Bev Gardner, president.

Ms Bev Gardner: I will try to take just a little bit less than the 30 minutes because I have an important meeting with Mr Cooke at 4:30. Thank you for receiving us today. As you can appreciate, the teachers' federations are somewhat preoccupied these days in responding to the Royal Commission on Learning's recommendations and anticipating the government's reaction to those. We usually bring with us a cast of thousands, but I'm on my own today.

As you know, the Federation of Women Teachers' Associations of Ontario represents about 41,000 teachers who teach in the public schools in the elementary system. Our concerns in our brief: Rather than dealing with how the budget should be spent in terms of specific allocations or what the government might do in terms of revenue collection, we would like to, as we have in the past, remind the committee and the members of the importance of young children in this society and, in particular, our role with young children in the elementary schools.

I'm not going to read through the entire brief. I will summarize in my own words and indicate to you what page I'm on as we go through, for your reference.

Every day the teachers in the elementary schools in this province see the effect of children living in poverty and in increasingly worse conditions, particularly in some of the urban areas over the last little while where the recession has had a major impact. We know that for many children the success that they have in school is determined long before they come to school by the conditions that they live in the first three and four years of their lives. We encourage the members of this committee and the members of the government to remember that a society is as valuable and as valued as it values its children.

We think, and we have thought in the past, that public expenditures for children have not been a major priority in this country and indeed in North America and, in particular, for us in this province. We hope that the Royal Commission on Learning's focus on young children will also be reflected in the budget.

Moving to the issue on the second page in terms of educational funding, rather than say what the funding ought to be, we would like to point out one more time that there's been a long-standing disparity in the province between the funding available for elementary education and for secondary education.

We've never understood the rationale for the lower per-pupil spending at the elementary level and urge that this is one of the priorities that gets addressed when we look at financing of education as this budget will direct it in the future. We can't say, on one hand, that children are our best resource and our most valuable resource if, on the other hand, we're not prepared to put the money into those early years.

The Royal Commission on Learning, as you know, has provided better support in its recommendations for those who have guaranteed rights under the Constitution, particularly the francophones and the Roman Catholics, and we applaud these goals.

We wonder, however, where the money is going to come from in terms of enhancing the boards that have been assessment-poor. The pie is too small already, and if it's the same pie that gets split up differently, then obviously the public schools that have X number of dollars, if that's the simplistic translation, will have fewer, and that just doesn't sit.

We don't think the kind of educational financing that was in place in 1990 when the government promised the restoration of 60% from the province is the model that should be followed, but however those dollars get struck, we think that target of 60% from the provincial government is one that should be paid attention to.

The Ontario government has done a lot for early childhood and primary education through the mid-1980s, and we commend the current government for mandating junior kindergarten. We look forward to the recommendations and the minister's announcement on bringing even younger children into school and we encourage the government to continue to pay attention to younger children, not only in the traditional education setting but in all areas that will bring them into education better prepared.

Children need access to the teacher's time, and lower class size is one of the ways of addressing this. We know that classroom teachers who can provide true child-centred programs -- and what we mean by that is increased opportunity for the teacher and the child to interact in a meaningful way. Then the education for those children will be enhanced.


We would urge the provincial government to ensure that school boards maintain those low class sizes in the primary grades as they face the kinds of fiscal pressures that we all know. We can't endorse seeing yet again a good thing being jeopardized because there are only so many dollars and what was good a few years ago in bringing down class sizes now has to be expendable. It simply doesn't make sense, and we ask that the government ensure that school boards don't find a way out of their financial crisis by reverting to very large class sizes.

The Royal Commission on Learning also makes some statements about every child having an opportunity to develop to his or her own potential. We are continually dismayed when we look at statistics from around the world and see that Canada has the second-highest rate of child poverty in the industrialized world, and particularly dismayed with the report that came out a few months ago that showed how different countries were reacting to the recession in terms of their expenditures for the young child.

Canada was pretty much alone in terms of reducing that overall expenditure in the years of recession, where other countries equally hit by the recession managed to at least maintain the amount of money they were spending on young children or increase it.

We would also like to direct your attention to the government's own research in this area. The Premier's Council on Health, Well-being and Social Justice issued its report, Yours, Mine and Ours, in May 1994.

The report outlined what Ontario needed to do to improve the health and wellbeing of children and youth and many of those recommendations are still sitting unreacted.

The standing committee on social development of the Legislative Assembly in July 1994, in its report Children at Risk, called for a new vision in children's services. This vision calls for services that are preventive and integrated. The Royal Commission on Learning I believe picks up on some of those, and we're hopeful that we will see those incorporated in the government's announcements on three-year-olds in school and what that might mean in the broader context.

We ask you to consider those recommendations seriously in terms of budget allocations. We also ask you to consider that spending on social programs is not a drag on economic growth, that the World Competitiveness Report produced by a private Swiss organization ranked Denmark, Netherlands and Sweden in the top 10 in its ranking of economic strength and competitiveness. All three of these countries have a high level of social spending. We believe that social spending is something that has to be attended to and can be in the context of our tough economic times.

Finally, we leave you with some thoughts on the social contract and its ongoing impact on schools and on teachers. Wherever we turn we hear concerns raised about unemployment, and this government has prided itself on the employment it has created and has stated that this continues to be a major priority to be recognized in this upcoming budget, yet the social contract determined that jobs would be lost in the broader public sector. The government justified the action as necessary to deal with the debt and has quite proudly stated that very few layoffs have resulted from the social contract, but we fear that we haven't seen the worst of that yet.

Much of the downsizing has occurred through attrition, but this still represents total job loss. The job loss for young adults, especially women between the ages of 25 and 34 in Metro Toronto, has increased by more than 30% since 1992. Although that's not directly in the context of the school system, many of these are young mothers who have children, who are impacted by their employment and then directly relate to the kind of services the school needs to be providing.

Government promised us when things were getting better that the social contract and its limitations would no longer be necessary. We're hearing that the economic situation has greatly improved, so we expect that we would see some change in the limitations and would recommend that this legislation be withdrawn.

In conclusion -- and I'm looking now at page 9 -- what we really want to say to you in our very brief presentation today is capsulized in the quote from Yours, Mine and Ours in the middle of that page, which I will not read to you, but it does reiterate the belief of the women teachers in elementary schools in this province that it is the children, as well as our members, that we represent and that we care about.

We ask that this government act now to ensure a more egalitarian society. We are thoroughly convinced that the road to such a society is not through reduced spending but through a more equitable distribution of the wealth. Societies that have a smaller gap between the top and the bottom income levels have a healthier, more productive population, with lower poverty rates, and we beseech you to act now, before it's too late.

If I may conclude with just a couple of personal notes, in the last two months I've had an opportunity to meet with and visit educators in Costa Rica representing a number of Central American countries and, most recently, in Nepal. It reminded me of how important and how first-class our education system is in this province and the kind of commitment that Ontario has made to education and to young people over the years.

I say that because what I see in Central America is a real threat to public education as public education. Part of the beginning signs of that sort of threat is that there isn't enough money, we can't do it and we find other ways of achieving it. We're not a Third World country and I have no fear that we are going to be in the situation they are, but the privatization of education didn't happen overnight in Central America. I leave that as a concluding personal thought.

The Chair: You indicated that you wanted to meet with the minister at 4:30. I'm asking you how much time you would like. We have about 10 minutes until 4:30. Would you like to take seven minutes, eight minutes?

Ms Gardner: Enough minutes that I can run across the way, six or seven minutes. I'd like to be out of here just before 4:30.

The Chair: Okay, so we'll keep the questions and comments to two minutes per caucus.

Mr Sutherland: The question I wanted to ask you of course is, we've had in many of the different education groups -- teachers' groups, school boards -- during the last two days. Everyone talks about education finance reform, but it would seem to me there isn't a consensus among all the stakeholders there as to how we do education finance reform to ensure that there is some equitable distribution of the funds, clearly, across the province. Do you have any quick thoughts on how we can get to that consensus?

Ms Gardner: No.

Mr Sutherland: Okay. That's it for me.

Ms Gardner: If I may, everybody recognizes that this is not an easy issue. The fact that there are rich assessment boards and poor assessment boards and the bulk of the poor assessment boards are in the separate school system is a reality. That reality, we think, is untenable. It does not allow for equity of educational opportunity across the province.


Obviously, the simplistic answer isn't to take money from the public school system and enhance the poor assessment boards in the separate school system, but we believe that there is money in this province. As much as we are in a difficult financial situation, this is still a very rich province in terms of the resources that are available and there should be sufficient resources in a province like this to provide a good-quality education system for all kids.

Mr Hope: I'm just intrigued by the comments dealing with poverty and the issue of children, because I have some of your own members in my riding and they fall into the Mike Harris trap of cutting welfare and workfare and all that stuff. Making a presentation on behalf of your members who also live in my riding and trying to deal with this whole issue of funding -- according to your report, you're asking for more funding dealing with child poverty and education. At the same time, I'm also hearing from the members who are in my riding, who are affiliates to your association, falling into the Mike Harris trap saying, "Chop, chop, chop." I guess I'm having difficulty balancing the provincial end of things to the local end of it, because they are the ultimate taxpayer.

Ms Gardner: When you say the members of our federation are making these statements, they're making those statements as public citizens who are taxpayers and they're establishing their own priorities, as we all do.

I'm speaking to you as the spokesperson of the federation whose policy it is on behalf of our 41,000 members to acknowledge the situation that children are in in this province, and our members see them first hand. Some of our members choose to have political views that lead them to a different kind of solution to the problem. That's their view as a private citizen.

Mr Phillips: I'll try and give you a fairly brief question just because I'm conscious you're going to have to leave very shortly to get to your other meeting. Have you any advice for us on the implications of the end of the social contract and just what things financially we should be thinking about and any advice you've got for the finance committee, because you know how each of the boards that you're dealing with have been dealing with it and what the implications might be for us.

Ms Gardner: I think the social contract legislation presented all of us with a very difficult challenge. The fact that the legislation is now being played out board by board is only increasing the kind of inequity, and when we get to the end of the social contract, there's going to be such a disparity around the province about how it has impacted teachers who are doing the same job with the same qualifications and experience. It's going to be extremely difficult. It's a frustrating situation for us right now.

In terms of coming out of it, I think the members of the House have to pay real attention to the fact that this has created some haves and have-nots in terms of the members of the teaching profession through no fault of their own except that because of age and circumstance and the particular part of the province they live in, they were impacted differently. You have a challenge ahead of you in terms of how you make something that was unfair to begin with come out more fair in the end. And it's going to cost some money.

Mr Carr: Thank you very much for your presentation and good luck with Mr Cooke. I'll be very brief, too. Just quickly on Randy's point, what we've done is earmarked $400 million, even with a $6-billion cut, for children's mental health services. A teacher would know that we probably have 10,000 kids who are on the waiting list and a tremendous tragedy in that area that's falling on the teachers.

But I wanted to ask you on the social contract, as well, and you may want to ask Mr Cooke, when the Treasurer sat in your very seat on Monday he said the money isn't coming back in the system. As you know, we've got the United Senior Citizens of Ontario coming. In my area, if any property taxes go up, we're going to have seniors out on the street, because, as you know, property taxes are killing seniors in particular.

What is your membership expecting when the social contract ends?

Ms Gardner: Well, we know that money isn't coming back into the system. The 4.75% reduction that the social contract asks us for is a substantial amount of money, and that money isn't coming back into the system.

The dilemma that has been created is, because the legislation restricts the manner in which school boards, or maybe allows the manner in which school boards have interpreted it for our individual members, it's different board by board. Again, it's based on the rich assessment boards have been able to handle things in a way that probably by the end of it there will be some degree of fairness and the gap will be closed, but the poor assessment boards, which are already stripped, which have no flexibility and no place to go, can't.

We've got a situation where we talk about equity and excellence in education where we have teachers who have no way to recover equity in terms of their colleagues, and that's untenable. It just doesn't go with the philosophical statement that we're going to provide opportunities on the same basis for everybody. If we're going to do it for kids, we'd better be doing it for the teachers who teach those kids.


The Chair: The next presentation this afternoon is by the United Senior Citizens of Ontario.

Mr Al Smith: Thank you very much, Mr Chairman. My name is Al Smith and I'm the first vice-president of the United Senior Citizens. Jane Leitch is our past president and whom you probably know because she was mixed up in the coalition -- she was chairman -- for long-term care. Wally Connon is an executive board member of the USCO. I'd like to thank you for this opportunity to present this brief paper for your consideration.

The United Senior Citizens of Ontario represents thousands of seniors in the province through membership in over 1,200 clubs. Each of you has been a recipient of our annual brief, sent to all members of the provincial government. Premier Bob Rae has acknowledged receipt. We are still waiting for a reply from the Premier and the leaders of the other two parties, as requested. I hope we get this before we go to press with information to our members.

Seniors in our province have been devastated by the continual attacks by our federal government through increased taxes, clawbacks, the GST and other forms of taxation which drastically reduce their ability to maintain a decent standard of living. It is estimated that approximately 47% of the seniors in the province are living below the poverty level. It is obvious, therefore, we cannot tolerate further inroads in our diminished income.

We applaud the government for establishing the long-term-care committees under the jurisdiction of the district health councils and the passing of Bill 173 to form the multiservice agencies. This will provide a continuum of health services for seniors and the handicapped and will generate considerable savings.

The Premier, in a recent television program, would not commit himself to forecasting any tax moves until Mr Martin brought down his budget on February 28. However, there are some irritating factors which should be considered.

Many seniors who have automobiles not only use them for their own necessities but provide transportation for other seniors and handicapped who cannot drive shopping or banking, visiting to the doctor or the dentist or other essential purposes. New insurance regulations imposed by the government will in the space of two years increase the premiums by up to 20%. To add a 5% provincial sales tax to their automobile insurance is a certain way to reduce their desire to provide volunteer service of any kind whenever the use of their car is required.


Below the border, many states are providing tax concessions for expenses incurred while doing volunteer work. The 20% increase in premiums, coupled with the regressive tax, may well cause seniors who volunteer to no longer do so.

Seniors consider it essential that adequate education is available to every youngster. Since education funding is frozen in 1995, the implementation of junior kindergarten and the increase in the number of new students will throw a heavy cost burden on the local boards. This will result in an inevitable increase in local taxes. We strongly urge that this program be postponed until such time as the economy improves.

The imposition of fair market value in establishing property assessments has disturbed many seniors. In order to file a complaint, it is now necessary to pay a fee of $20 payable to the Minister of Finance. There have been so many inequities in establishing the assessment and many seniors have been so angered that in some areas they are demanding the policy be rescinded or amended. The complaint fee is being considered as none other than a cash cow for the government.

Many seniors have worked all their lives and in their latter years have contributed to the Canada pension plan to provide a financial income for their retirement. This has been payable at age 65. We cannot help but be angered when our MPPs are eligible to receive a retirement pension of approximately 25% of their income after a five-year term. They contribute about 10% of their income. When their age and years of service add up to 55 years, they are eligible for a full pension. There is some evidence of double-dipping when an MPP is defeated and goes on pension and is hired by the government in another capacity. We believe that all members of Parliament should be adequately paid. However, they should be comparable to all other employed people and receive their pension when retiring as a senior at age 65.

Finally, our justice system is sadly in need of an overhaul. In spite of the fact that funds are now available to assist the victim through a 5% surcharge on most fines, the victim is rarely compensated for the time lost or the suffering. The major cost, however, is due to the lengthy, prolonged period of trial. The court costs must be tremendous. As the trial lengthens, the cost of lawyers, judges, clerks, witnesses and juries soars at the expense of the taxpayer. Therefore, we strongly suggest that a study be made to bring in legislation to reduce this lengthy trial process. The result would save millions of dollars of taxpayers' money.

Once more, we would like to express our appreciation for this opportunity to present our views to this committee. Thank you, and if there are any questions, we'll be glad to try to answer them for you.

Mr Kwinter: Thank you very much for your presentation. I always enjoy hearing it as I get closer and closer to being eligible to become a member of your group.

I should tell you that just by coincidence, and we didn't see this particular presentation beforehand, our leader announced today that if we were to form the government, we would rescind the 5% sales tax on automobile premiums. We sort of anticipated the concerns and, as I say, we made that announcement today.

Mr Smith: I would appreciate, just to answer you, if you would suggest to your leader that we would be very interested in having her comments to our brief in writing. We've asked them so we can put it out in our Voice, which is our magazine to our people, so we'll know where everybody stands. I would extend the opportunity to the other parties too.

Mr Kwinter: One of the issues that seemed to be a hot button for seniors, which I don't see in your brief, is the idea of out-of-country expenses on the medical plan being reduced from the $400 to $100. Is that an issue that has gone away or that you're not as concerned with?

Mr Smith: No. This was an issue that was hotly debated at our convention in Ottawa last year. There were mixed feelings on it and I will say that, as you are probably aware, any motions that are passed at our convention become our mandate. This one did not pass, probably because I think a lot of people have the attitude that everybody who can go south has got money. I know a lot of people who go south who live in trailer parks. They do not have money. It's just a style of life. Where you and I might live in a $300,000 home and enjoy it, they live in a trailer park and are able to go south.

I also know from talking to a lot in the medical groups, doctors and that tell me that a lot of these people, if they stayed here, would probably cost the health system a heck of a lot more money staying up here than they would by being south because being south keeps them out of trouble. I know people who have emphysema who would be confined to their homes or this sort of thing by staying in this country in the cold weather.

Mr Kwinter: Notwithstanding that you didn't get a mandate to pursue it, is the legal challenge still going on?

Mr Smith: I believe it is. It wasn't our organization that was making the legal challenge. I think it's the Grey Panthers, and I believe they're still going ahead with it.

Mrs Caplan: You refer to regulations that are going to increase seniors' costs by up to 20%. Which regulations were you referring to, just to get it clear on the record?

Mrs Jane Leitch: Our adviser who has helped us with it, John Atto, has estimated that this is what it will probably cost in two years.

Mrs Caplan: Was he specific as to which regulations?

Mrs Leitch: No, I'm sorry, I can't answer that.

Mrs Caplan: That would be helpful, and if you would like to give us a listing and send it in, it will become part of the record. But I would be interested in knowing specifically what new regulations are having that effect on seniors.

Mrs Leitch: These are ones that have come in through the insurance people and I can't --

Mr Smith: We can try to get that for you.

Mrs Caplan: Thank you.

Mr Kwinter: If I could just make another comment in response to one of your concerns about MPPs' pensions, you should be aware that I think all parties have put forward a proposal to change that and I would assume -- I would hope -- that some time before the call of the next election that will be done both at the provincial and the federal levels. Certainly there are talks at the federal level that that will be done very, very shortly, and I would expect and would hope that some time before the next election that will also be implemented in Ontario.

Mrs Leitch: We would applaud that for sure.

Mr Smith: Yes, we realize you are looking at these things. However, we know that the squeaky wheel is the one that gets the oiling, and by the delay in Ottawa this fall, I understand there were 55 more MPs up there who got on this thing because the Prime Minister did not act fast enough to do something. So those are the kinds of concerns we're having. We certainly agree that you're worth the money you're getting and probably more. Some of us do question the pension plan very thoroughly.

Mrs Caplan: One of the concerns I have as we reform the pension plan is that it not end up costing taxpayers more than it's costing them now. Some of the plans being proposed, like shifting to an RRSP, as proposed by Mr Harris, would result in costing the taxpayers significantly more than what they're paying today, and I think that would defeat the purpose of the reforms. I wonder if you would like to comment on that.

Mr Smith: If I may, I've been a local politician. I'm a city alderman in the city of Orillia, and have been for 20 consecutive years.

Mrs Caplan: Good for you.

Mr Smith: I don't get a pension, nor did I ever ask for one. I firmly believe that you should be allowed to pay into a pension. My own belief is that you should pay for it; the taxpayers shouldn't pick up any of it. Nobody dragged us kicking and screaming to the polls, ladies and gentlemen, and I think we'll all agree to that; we went of our own free will, for whatever reasons, and therefore I think we should be able to pick up the cost of it. Certainly it will be a write-off against income tax, and I think that's the way it would be fair. As I say, I've read about the fact that you're not making enough money. I don't really get uptight about that because I think if you give up something to go, you should be paid what you're worth. I won't make any comments on that, being a local politician.

Mrs Caplan: It's very subjective. A lot of people would say they're worth far more than they're really worth to the taxpayer, I would think.

Mr Carr: Thank you very much for your presentation. As has been alluded to, there are a couple of things I think we should do about politicians. First of all, we're going to reduce the number of MPPs by 24% because we think we're overgoverned here. We're going to make it along the same lines as the federal, scrap the pension plan and the tax-free allowances, the reason being that you have to start with yourself. If you don't do it with yourself and start with yourself, the public should rightly be very cynical. In terms of the overall savings, it isn't great, when we're talking about cutting the amount of spending that needs to be cut, but it will send a signal that we mean business. So I thank you for endorsing that and I think it will happen.


I wanted to ask, though, on Bill 173: As you know, I've got many complaints from Red Cross and the VON, that are angry for you people having supported that. I wondered, did you get your membership to endorse it, or was this something that was done in between and you had to do it before your membership could take a vote on it?

Mrs Leitch: You mean for us to be involved?

Mr Carr: To support it.

Mrs Leitch: We certainly did.

Mr Carr: So it was on the ballot at the last meeting.

Mrs Leitch: It was the United Senior Citizens of Ontario that originally went and started forming the alliance, to get other seniors to see if they would be on our side.

Mr Carr: So it wasn't the executive; your membership was involved.

Mrs Leitch: Our membership voted on it. We went to the convention and our membership voted on it.

Mr Carr: The problem I have with that is that you listen to the Premier and the minister saying, "The volunteers won't be there" --

Mrs Leitch: They will.

Mr Carr: Just a second; I know you're very anxious to get on with it.

The problem I have is that people of no political persuasion whatsoever are coming to me, and the seniors are saying to me, "What does this mean?" They're very, very confused. Groups like yours are supporting it, but groups that are well respected like the Red Cross and the VON are not. They were down here en masse very critical of it.

What do you say to the average person out there who is saying, "How can we have this, that the Premier and the government say one thing, United Seniors of Ontario say one thing, yet the Red Cross, well-respected people, are saying something different?" Why is this confusion out there with regard to this bill? Many people are very, very fearful.

Mrs Leitch: It's true, they are. But it's interesting that the people who receive the service are the people who are in favour of having it improved, because we see what's happening. Right now, we have to go to half a dozen different places to get individual service each time. We have to be assessed every time, tell all our history for every different thing. We think if they all get together and work together -- but the big organizations like the Red Cross, Saint Elizabeth and VON have a heavy layer of bureaucracy at the top and they've got a lot to lose. They do not want to join with the others and they are trying to discredit the consumers. I understand, but they're also doing a lot of fearmongering, because I don't think anybody's going to lose a job.

Mr Carr: What they're saying is that the government can't afford many of the services for seniors now and the fear is that we'll lose these volunteers. If people thought there would be -- you're very anxious to get in.

Mrs Leitch: That one really upsets me.

Mr Carr: I'll go through it, because you know where I'm going but other people may not. The problem we've got with this is that everybody believes it should be better coordinated. The problem is, we think the government's going to a bureaucracy to do it to drive these people out. If you think that the people receiving the care believe they're going to get better care by a government agency as opposed to the Victorian Order of Nurses or the Red Cross, you're wrong. Services need to be coordinated. The fear is that this is going to become a government bureaucracy doing it, with all the problems. I want to tell you, if you think that the people receiving the care think the government will do a better job than the people right now, you're wrong. I believe the public does not believe that. What do you think of that?

Mrs Leitch: I think the misconception you have is that the government's going to run it. The government will be out of it more in the new system than they are now. This is going to have boards in communities, local people, receivers of service.

Mr Carr: But you're talking about the bureaucracy. Isn't this creating more bureaucracy?

Mrs Leitch: Those boards are not paid boards.

Mr Carr: But you're talking about the bureaucracy and how we don't have the one coordinated. All of a sudden we're going to have boards involved and so on.

Mrs Leitch: We've got boards now, sir.

Mr Carr: And what about the amount the people receive? How are we going to afford to pay these people if volunteers are doing it now? We just heard there's not enough money. Where's the money going to come from to have now people providing services who are going to be paid?

Mrs Leitch: It's going to save a lot of money if you coordinate all those administrative setups for all those agencies. We've got 120 different single-service agencies in this province. If they all work out of one administration, don't you think that's going to save money?

Mr Carr: Let me follow this. What we're going to do is coordinate all these, but the people who are doing it are doing it for free now, so there are some administration costs.

Mrs Leitch: Nobody's doing it for free. No way.

Mr Carr: I shouldn't say "free." I used the wrong term. What I meant to say is that I believe that people believe the Victorian Order of Nurses and the Red Cross are better in terms of their ability to provide it on a cost basis. I didn't mean free, because obviously the service is provided. But they are better, in terms of setting up the cost, than setting up a government bureaucracy, and then we'll be off into a higher cost.

Mrs Leitch: It's not going to be a government bureaucracy.

Mr Smith: These people are going to be elected locally in the community by their people and they will make up the board, the MSA. It will be peculiar to that particular community, in order to assess and give the services needed, because what you might need in your community and what he may need over in his community are going to be two different ball games. What we're going to try to do is make sure that the money that will be saved, that are now going for administration costs, will be at the front end.

I must say that when we talked to Ruth Grier, one thing she said was, "We're not cutting back, but there's not going to be any more money." The problem is, get what's in adminstration out and make sure. I agree there are some pitfalls that we could fall into, but if we do it right, that money should be up in the front end going to the people it's going to help, and that's the name of the game.

Mr Carr: So what's going to happen to our Victorian Order of Nurses and Red Cross under this plan?

Mrs Leitch: They're all going to work together. It's starting to come together: They're all going to work together. I worked for the VON for 10 years.

Mr Smith: You may have what Mr Martin down in Ottawa is talking about doing: You may have some senior administrators who are going to take early retirement, but so be it. If we've been top-heavy, that's one of the things, to get that money out to the front end, and that's what I think they're really trying to do.

Mr Carr: Everybody believes that the money going to the individuals in home care is more important than the administration, but I laugh at everybody who says, even about the problem with the school boards, "If we just cut out the administration, we'll be able to have all the money for the programs." Do you honestly, truly believe there's that much money in the administration right now that when the government gets involved in running it, they're going to do a more efficient job than the Red Cross and the Victorian Order of Nurses? I think they're going to be less efficient.

Mrs Leitch: We have no complaints about the service the VON or Saint Elizabeth are giving. I'd like that on the record. No seniors have any complaints about the service they're getting. It's the administration, the double-dipping of the administration costs. It has nothing to do with the services. They will be able to provide adequate and good services just the same, only maybe under a different administration.

Mr Carr: I appreciate your coming here.

Mr Sutherland: It seems very clear that Mr Carr and the Tory colleagues still haven't realized that what the multiservice agencies are about is going from several community agencies to one community agency. In my community, the perfect example is the children's aid societies. You've got community boards and you've got hundreds of volunteers helping out at the children's aid societies, still doing that, but providing one coordinated service.

However, we did have a long debate on MSA, and I want to just raise a couple of other issues.

First of all, to echo Mr Kwinter's comments on MPPs' pensions, my colleague Mr Lessard is one of several members who actually put forward a private member's bill regarding changes to the pension plan. He and myself, anyway, remain optimistic that we will see some changes before the election.

With respect to the insurance issue you raise, I did want to say to you that while your adviser has indicated that the 20% increase is due to changes as a result of Bill 164 --

Mr Smith: Up to 20%.

Mr Sutherland: Up to 20%, okay -- is due to changes in Bill 164, I just want to state on the record -- and we are having the Insurance Bureau of Canada come in next week, so I'm sure we'll discuss this issue again -- that a good chunk of those costs are due to increased claims and frequency of claims as a result of the Ontario motorist protection plan, the plan that was brought in by the Liberal government. I think that's important to get on the record, because Bill 164 is being blamed, but if you look at increases in other provinces you'll see they're just the same or in some cases even higher than what's occurring in Ontario right now. I just wanted to put that point on the record.

With your concerns about the GST, has your organization looked at all at the issue of harmonization of sales taxes, whether that would have any impact on your organization or whether you feel that's more appropriate for your members?

Mrs Leitch: We haven't done that in depth.

Mr Smith: Not in depth. We certainly are aware of it, but we're not sure just how it will be implemented, whether it will make any changes in what has been or whether they'll just move it together and we'll still end up paying the same.

Mrs Leitch: I would like to add that, contrary to the people who made the presentation ahead of us, our organization does not see junior kindergarten as a way to spend money. We think that's one way of addressing the day care system rather than helping children to be better educated. We feel that's not the best use of money.

Mr Sutherland: You did note that in terms of the junior kindergarten, and this government did make it mandatory to offer it. Even before we did that, though, most boards, 85% or 90%, were offering it. And of course now we have the Royal Commission on Learning, which is suggesting that we reinforce the mandate of early childhood education, and one of the ways we help pay for that is the elimination of grade 13; they are suggesting they do that in a neutral-cost way.


Mrs Leitch: The property tax cost was taken away from us, the $600 that we were getting, and it's really difficult when you have no income to make up the difference as the tax rises, because we all know almost two thirds of our taxes go to school boards.

Mr Sutherland: I guess you know we have had the Fair Tax Commission, we have had talk about property tax reform. Is there a specific way you would like to see property tax reform go forward? The Fair Tax Commission talks about changing how we do assessment, and it also talks about other ways of dealing with the property tax issue. Or do you just want them generally reduced, and that'll be fine?

Mrs Leitch: I don't think, by any means, we want to be relieved completely of it, but we would like to see it more equitably distributed. Most of us have come to the point when we think there should be some tax relief for seniors in this respect.

Mr Smith: Also, I think the Fair Tax Commission did come up with some ideas of putting it into a type of income tax or that sort of thing, that everybody would pay their fair share. That certainly, I feel, has some merit.

Mr Hope: I'm glad my colleague brought up the OMPP and how that was brought in by the Liberals, because it was the same thing with fair market value. My constituents went absolutely berserk when the Liberals brought it in. Because it was Liberal and most of the councillors were Liberal in my riding in Chatham -- you probably know George, who led the tax coalition. They went absolutely bonkers on fair market value.

As to the issue of the distribution of taxation, I don't think it's so much the $20 fee that has upset my seniors. I think it's fair market value that has really upset my community: how they can spend all their hard-earned money, fix up their house, and then be told this is the value of the house, when they didn't go on vacations, did without things just to make sure their palace was their palace. To find that the Liberal government put it in and our municipal councillors supported it, and then be hit with it -- I haven't heard much about the $20 fee, but I'll tell you, I've heard a lot about fair market value from my seniors.

Mr Smith: Let me tell you, we've heard a lot about the $20 fee. I think the reason is that most seniors, when they're going in for an assessment hearing, have no idea of what they're getting into -- I've been there, so I know what goes on -- and it's an expense they're a little scared of spending; they see it's $20, and that's a lot to some seniors. And they're not even sure what they're getting into. I know of actual cases I've been involved in where the assessment officer has called to see whether he could be of help to the person, and then has turned the information the person has given against them when they come for their hearing, which I think is absolutely disgusting.

Mr Hope: The other part I want to focus on is on page 6, and I have to ask this question: "comparable to all other employed people receiving pensions." As you can see, I'm a little younger.

Mrs Leitch: A little!

Mr Hope: For most people, because of good pension plans that the trade unions have been out there negotiating -- we're now seeing people retire at the age of 49 or 50. I'm one who is going to retire at 49 out of Rockwell International.

Mrs Leitch: Do you expect to get your pension at that age?

Mr Hope: I'll get my pension at 49.

Mrs Leitch: Which we wouldn't.

Mr Hope: I'm just wondering, with what the federal government -- are you sure you don't want to change that to 67? The feds are now saying you may not be eligible for your CPP until you're 67. I'd hate to see the Liberals do that, move it up to 67, because that means we would have to change this for them to collect their pension.

Mr Smith: I have one answer to that. If you and I, sir, went into private industry and set up a pension plan and operated it the way previous federal governments have operated, we'd be behind bars doing hard time, because you are supposed to have money invested to cover those kinds of things. Let me assure you, I was with the Public Service Alliance, I was with the federal government for 29 years, and we a long time ago said to them: "Let us run your pension plan. We'll be able to give all civil servants in the federal government lower mortgage rates and what have you, and we'll make it pay." The problem is, the money has not gone in from previous federal governments. It's been a paper entry, and paper entries aren't worth a darn when it comes to payout.

Mr Hope: I was glad you brought up the unfunded liability, because we heard that issue on WCB. Companies forget to mention the unfunded liability of their pension programs, which is our money that they use to pay that program with.

Mr Wayne Lessard (Windsor-Walkerville): Mr Sutherland took away a little bit of my thunder. I just wanted to let you know that I introduced legislation to reform the MPPs' pension plans a couple of years ago, and I was happy to hear Mr Kwinter say that he hoped this was an issue we could resolve before the next election. I wish I had heard the same hope from Mr Carr, but I didn't. I can only encourage you to keep up the pressure on your respective MPPs to have this issue dealt with.

Mr Jamison: Just out of interest, in your submission you mention that seniors are basically well involved in helping seniors. I'm rather interested in the thrust on recognizing that, recognizing that when you get volunteers -- of course a big question around Bill 173 is volunteers. It's important to explore the avenues, how you assist those volunteers to assist people. That, I believe, is the real issue: giving some kind of recognition to volunteers who are helping seniors and others who are not as capable at that moment in their lives of getting around and getting places they must to ensure their health or whatever.

Mr Smith: We have in our community a recognition for volunteers each year. I think most communities get involved in this. I couldn't buy it when they were saying we were going to lose our volunteers with Bill 173. The complaint I got most, concern from volunteers, was the fact that in some cases -- and I'll give you an example. The Meals on Wheels people were very upset that they were delivering meals to people who really should be paying for them, and when they questioned that, because of the way the system was run, the organization -- and I won't mention it here -- said, "That's just the way we do business." That's what upsets them, because they were in places where the homes were on the lake, and they really didn't think these people needed to have free meals. I think that's important.

The Chair: I thank the United Senior Citizens of Ontario for making your presentation. This committee stands adjourned until 10 am Monday next.

The committee adjourned at 1657.