Wednesday 1 March 1995

Pre-budget consultations


*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

Clerk / Greffière: Mellor, Lynn

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

The committee met at 1005 in room 151.


The Chair (Mr Paul R. Johnson): We continue today with our draft proposal that we have before us. You will remember yesterday that we ended on page 17, "Sectoral Issues." I would like to remind the committee members that it's extremely important that we get through this draft proposal today because today is the last day that we're legislated to sit and deal with it. Should we not complete it today, we will have --

Mr Kimble Sutherland (Oxford): A problem.

The Chair: That's right. So let's get things rolling. We'll start with "Sectoral Issues," the middle of page 17. We have one paragraph and then we get into the actual sectors. Are there any comments with respect to the first paragraph?

Mr Jim Wiseman (Durham West): What page are we on?

The Chair: The middle of page 17, "Sectoral Issues." I think the paragraph is very self-explanatory. The first sector is agriculture, and I know that all the committee members have had an opportunity to review this draft proposal prior to coming to the meeting. However, at this point, if anyone would like to raise concerns with respect to this, it would be appreciated.

Mr Gary Carr (Oakville South): A quick question to the researcher: I had gone through and re-read the Ontario Federation of Agriculture report. I was wondering, on the length, because their report was fairly lengthy and ours ended up being a little smaller here, if we incorporated all the issues effectively in their submission. I know they did the oral submission. I just got another copy of the written presentation they sent to all the members, and because they're such a vital part of this province, I wanted to make sure we incorporated everything they put in their written presentation.

Ms Elaine Campbell: Due to time constraints it would be impossible to include absolutely every concern that each sector had. This is a representation of their concerns. There's more in the Summary of Recommendations.

Mr Carr: Okay, thank you.

Mr David Johnson (Don Mills): I just note that the Ontario Federation of Agriculture also expressed concerns with regard to the Agricultural Labour Relations Act and I don't think that's --

Mr Wiseman: They had no problem with the Agricultural Labour Relations Act.

Mr David Johnson: To quote them from their brief:

"The OFA is concerned that this new legislation may have unforeseen consequences which will hinder the competitiveness of the Ontario agrifood industry. In addition to the ongoing development of the ALRA, issues such as workers' compensation and minimum wage adjustments have the potential to greatly influence the economic health of the Ontario farming community."

I don't know where Mr Wiseman is necessarily getting his comments but what I've just read is a quotation from their brief.

Mr Wiseman: It was a comment when asked a question.

Mr David Johnson: This is precisely from their brief. I would suggest that those concerns be included as well.

The Chair: I just remind you, Mr Johnson, that certainly there was the document they gave us but there was also a verbal-visual representation by the OFA and they made some comments with respect to that as well. I think Mr Wiseman or Mr Jamison want to comment.

Mr Norm Jamison (Norfolk): I think it's more appropriate, since the question was asked directly in committee, that the remarks given by the economist with the OFA -- I forget the fellow's name. If you give me a minute, I can look up his comments here. I have them in front of me. His comments were not negative towards Bill 91. As a matter of fact, if we look at his comments that were given here in front of the committee on behalf of the OFA, they were rather neutral on that.

Mr David Johnson: That may be all that it is. When was it given?

Mr Jamison: That was a presentation given to this committee.

Mr David Johnson: Any one individual may choose words appropriately, but the fact remains that the official brief and the official wording of the brief to this committee has expressed the precise words that I have read to you:

"The ALRA considerably extends the bargaining power of agricultural workers. The OFA is concerned that this new legislation may have unforeseen consequences which will hinder the competitiveness of the Ontario agrifood industry."

I don't know how much more specific or clear you can be than that.

The Chair: Thank you, Mr Johnson. I'm just trying to look out for the researcher here and I want to remind you that, yes, we had a lot of written submissions and they all made a lot of comments, written comments, and we also had presentations before the committee. I think that, as a researcher assimilated all the information, a very strong comment made before this committee was something the researcher would have noted. In defence of the researcher, she has a huge pile of information that she's tried to edit and compile into a very precise, concise document.

I respect your raising the issue, Mr Johnson --

Mr David Johnson: I'm sure the researcher would be more than happy to include this comment with the direction of this committee, so if you chose to be helpful to the researcher, Mr Chair, you'd say: "Sure. Go ahead. Put that in there."

The Chair: No, I wouldn't, Mr Johnson. I'd ask the committee whether there was a consensus with respect to that. Mr Carr.

Mr Carr: I was just going to point out that we all know Elaine does a terrific job, but with all due respect, that's what this committee is supposed to do, review that and add to it. I understand that, in the interests of time, she had to pare it all down. Otherwise, we could just have made copies of the Hansard. But I feel strongly, like Mr Johnson does, that what was put in that presentation from the OFA should be in the report.

I understand that it's critical of the government, which may not want it in there for that reason, but certainly their presentation was very clear, and I won't re-read the words Mr Johnson put forward. It may be critical of the government, but I think it should be in there because I think it was part of their presentation and a very important part of their presentation.

Mr Jamison: I just want to read from the presentation of that date. Mr Bradley went on to say:

"The committee's view and advice to the various farm organizations which support it is that collective bargaining and the right to organize is an acceptable arrangement in Ontario, provided in the agricultural instance those rights are exercised in a framework which respects the unique qualities of agriculture."

That's what they had to say here in front of the committee on Bill 91. I believe that's not an overwhelming acceptance, but I believe that, as I said, they've taken the advice of their members on the committee that this is an acceptable way to proceed in that case and they've stated that right here in front of the committee.

I believe that's important. I believe that's precise, what they have said. I believe that's something that should be clearly stated in the report as far as the OFA and labour relations is concerned. Those are not my words. Those are the words of the OFA.

Mrs Karen Haslam (Perth): I tend to be a process person and I like to look at the process here. We've asked a researcher to evaluate in a non-partisan way and to accumulate and to put into a couple of paragraphs a half-hour presentation and questions, and in some cases one paragraph of a half-hour presentation and questions. If we're going to go back through Hansard and pick out every little picayune thing that was said, then I'm going to go back to my office and I'm going to get my Hansard and I'm going to pick out all of these things and I'm going to find someone who says The Common Sense Revolution wasn't thought out well -- the gentleman from COMER. I'm going dig out all these little picayune things that you want to put in this little report.

This is a process that has been set out. I think the researcher has done an admirable job in putting the sectoral pieces together. If this is going to boil down into a pre-election you said, I said, we said, they said, it's a waste of the committee's time. I would rather we looked at this report the way we're supposed to be looking at this report and get on with it.

The Chair: Thank you, Ms Haslam. Mr Wiseman.

Mr Wiseman: Oh, no. I'm just sitting here today.

The Chair: I'm grateful for that, Mr Wiseman.

Mr Wiseman: My chain hasn't been rattled yet, but the Tories are working on it.

The Chair: Thank you. That's appreciated. Mr Johnson.

Mr David Johnson: Well, not attempting to rattle anybody's chain, just bring information, I'm sorry that Ms Haslam has taken the view that she has, because far from being picayune --


Mr David Johnson: -- I think just about anybody in the agricultural field would indicate -- over the din here, Mr Chairman -- that the Agricultural Labour Relations Act was perhaps the most significant event in the agriculture industry over the past year --

Mr Wiseman: That happened yesterday when they had all their funding cut.

Mr David Johnson: Mr Wiseman may be correct in terms of the federal situation earlier this week, but we're not primarily dealing with that. That wasn't part of the input into the process.

What we're dealing with are the presentations and what has taken place over the last year. How can anybody dismiss the Agricultural Labour Relations Act as a picayune event over the past year? It is very significant in terms of the farm industry, and I'm sure those in the agricultural industry would indicate it has a dramatic effect -- some would say positive, some would say negative -- in terms of the health and the wellbeing and the economic competitiveness of the whole agriculture industry.

Mr Jamison, I think, had a more positive comment, that he found a quote from somebody pertaining to the industry in Hansard, and I would say fine. Since this is an important component, put both of them in. I think the quote that Mr Jamison has found is damning with faint praise, frankly. The word "acceptance," as he noted, was very prominent. Some components of the agriculture industry have "accepted" the Agricultural Labour Relations Act. Obviously, they're not overjoyed by it. They chose the words very carefully.

But fine; this is a significant event. Put in the comment that Mr Jamison has indicated. Put in the comment that is right in the brief that I have alluded to. But the major thing is that it's hard to put your finger on something that's more important to the industry, and for us to ignore that act in our report to the minister -- I would say we're not fulfilling our duties.

Mr Sutherland: I'm sure all the good farmers in Don Mills appreciate knowing that the Agricultural Labour Relations Act is the most important issue to impact them in the past year.

Mr Carr: Somebody's got to do it.

Mr David Johnson: There used to be a minister from Don Mills at one point too.

Mr Sutherland: I know. People are still trying to figure that one out.

But the point is, there's no doubt that the changes in terms of the globalization of what occurred at GATT and the change to tariffication from what was already in place is by far the most significant event in the past year to impact farmers and will be the most significant thing to impact farmers for the next five to 10 years as they make adjustments to that.

I know the Tories continue to want to make this Agricultural Labour Relations Act a bigger issue than it really is. If they did some research and looked at what occurred in eight of the nine other provinces that allow agricultural workers to unionize, they would know that the rate of unionization is relatively low, between 3% and 5% of the agricultural workers.

But it's quite interesting. I was at a forum and the local Tory candidate was there and he had a copy of that rural task force report that Mike Harris had put out. The section on the Agricultural Labour Relations Act is very interesting because they talk about this being a very negative thing, and then right down below it, they don't clarify this, but they talk about the Heinz situation in Leamington. Really, what they're trying to imply is that that's an example of the problem of the Agricultural Labour Relations Act.

Unfortunately, what the Tories don't tell people is that food processing has been unionized for many years. In fact, probably food processing was allowed to unionize under the Tory government, and the situation in Leamington has nothing to do with the passage of the Agricultural Labour Relations Act. But the Tories continue to want to try to --

Mrs Haslam: Stir.

Mr Sutherland: Well, yes, that's probably the most appropriate word.

Mrs Haslam: It's not the most appropriate, but I'm a lady.

Mr Sutherland: -- stir things up in rural Ontario by creating these impressions that somehow the Agricultural Labour Relations Act has to deal with the issue of food processing, when it has nothing to do with it.

I think in terms of what we've heard, Mr Johnson has said there's a comment that supports his view. Mr Jamison has clearly shown from the Hansard that there were other comments that indicated they weren't that concerned about the piece of legislation. It would seem to me that the two comments kind of neutralize each other and therefore it isn't quite as important as Mr Johnson would like to imply. The comments about what's happening globally, in terms of the changes to GATT and moving to a tariffication system are the most important things impacting agriculture these days.


Mr Carr: That being the case, and I think Mr Johnson was trying to be practical in putting in Mr Jamison's comments as well, let's put in a little something on the situation with GATT, but for heaven's sake let's not turn the sectoral section into something where we take their presentation, which was well thought out -- I think everyone will agree on that -- well done, and then try to condense it into a couple of lines. If you feel strongly, let's include that as well and expand on it then. If that's as critical as you say, then we can expand on it.

I guess what I'm saying is that as I look at it -- and in all fairness to the researcher, she has to go through all this and condense it -- agriculture is a big, big factor in this province and the report will not do it justice unless we talk about some of these issues. Quite frankly, if we're not prepared to discuss them and put them in and take them out, in the give and take like Mr Johnson said with Mr Jamison's request, then why are we here? If you want to talk about a waste of time, let's just go with what the researcher did, close up shop and we'll all write our dissenting reports and go from there.

I think what Mr Johnson was offering was something that was fairly practical. He wanted one thing in and said let's put Mr Jamison's comments in too to try to get a fair balance. I think that's what we should do.

Mr Jamison: Those comments were not mine; those were read right from Hansard. Those were Mr Bradley's comments, the economist with the OFA.

The Chair: The Chair at this point in time is certainly in the hands of the committee with respect to how they would like changes made to this sector. I've heard two direct opinions with respect to how changes should be made, and what the Chair needs now is a consensus with respect to that. Mr Johnson has asked for an inclusion and Mr Jamison has asked for an inclusion; indeed, now they are included in Hansard for this committee meeting. However, will they be included in the report is the question the Chair asks the committee at this time.

Mr Sutherland: No.

The Chair: I've heard no and I see yes.

Mr Wiseman: It's not one of the recommendations.

The Chair: If there's a motion that any of the committee members would like to place at this time, it would be received graciously by the Chair.

Mr David Johnson: I certainly would move that the comments as outlined by myself and Mr Jamison be included by legislative research in the report.

The Chair: I think the motion is clear. Any comments with respect to that motion?

Mr Wiseman: I'm just reviewing the list of recommendations that the OFA put before us. There are some 19 of them. The Bill 91 OLRA is not one of them; it's not a recommendation that they wanted to see the government of Ontario act on.

They had three recommendations on NISA.

They had a recommendation for "84% coverage under market revenue insurance," a recommendation to "increase the funding allocated to agrifood research," and a recommendation to "take all measures possible to ensure that the Ontario Agricultural Training Institute funding is included as part of the federal government's agrifood strategy" -- well, we know where that one's going to go in terms of what happened on Monday.

They had a recommendation to "adopt a strategy of management skills training for Ontario farmers with OATI's role as a cost-effective coordinator of farm-gate training programs guaranteed by provincial funding."

They had a recommendation to "have Ontario Training Adjustment Board officials work with the Ontario Ministry of Agriculture, Food and Rural Affairs to simplify training investment program guidelines and/or applications procedures for rural-based, small business owners."

The had a recommendation to "recognize OATI's eligibility for funding under OTAB's training" adjustment "trust fund as the agricultural industry's coordinating agency."

They had a recommendation to "make no further cuts to OMAFRA's agricultural and rural services." Well, we know that if the Tories ever got elected it's 20% gone there, but that's a little editorializing here.

They had recommendations:

" -- Establish a combination grant-loan program that will assist farmers in making farm improvements that will benefit the environment.

" -- Increase the funding to the Niagara tender fruit lands program to provide easements for all eligible properties.

" -- Offer conservation easements throughout the province for the protection of agricultural land and privately held lands deemed to be of benefit to society in an undeveloped state.

" -- Immediately renew the order in council providing for the farm property tax rebate program for a further five-year term at a rebate level equal to or greater than $159 million.

" -- Reinstate tax relief to owners for private forests.

" -- Integrate the provincial retail sales tax with a national sales tax modelled on the same principles as the federal goods and services tax.

" -- Continue to work with the federal government to keep tobacco taxation in line with neighbouring jurisdictions so as to eliminate the profits associated with black markets and thus maintain a viable, well-regulated tobacco industry.

" -- Undertake to equalize the rates that farmers pay for electricity across the province, regardless of whether they are Ontario Hydro customers or municipal electric commission customers, and undertake to work to bring about Ontario electrical rates that are more competitive with those offered farmers in neighbouring jurisdictions."

Of the top 19 things that the Ontario Federation of Agriculture thinks are important, this is not one of them.

The Chair: Further discussion on this motion?

Mr Carr: I just wanted to quickly correct Mr Wiseman. In our plan, there isn't a 20% cut to agriculture. The cuts are listed very clearly. What they can do is call 1-800-903-MIKE, get a copy of it and read for themselves. Agriculture is not touched. What we do is we talk about where we will spend, where we will not spend, and you know what? We do it before the election. So I would encourage people to call. Agriculture is not going to be cut.

The Chair: Any further discussion on this motion? Seeing none, Mr Johnson, Don Mills, moved that comments outlined by Mr Johnson, Don Mills, and Mr Jamison be included in the report. All those in favour?

Mr Carr: Can we record this?

The Chair: Sure. All those in favour?

Mrs Elinor Caplan (Oriole): Could I ask for clarification, Mr Chair, of exactly what it is that you're suggesting? My question is, are the quotes that are being requested to be included presently in Hansard?

The Chair: Throughout the duration of this committee they would be included somewhere, Ms Caplan. Yes, they would.

Mrs Caplan: Okay, in Hansard, as far as the presentations that were made before the committee. My position is that I will support inclusion in the report of any quote or statement that was made by a representation or in a presentation that was put before the committee. What I will not support is anybody attempting to put something into the report that was not made in a presentation either in writing or in person before the committee. So I'd like you to clarify for me.

The Chair: Both pieces of information as outlined by Mr Johnson and Mr Jamison are indeed in Hansard.

Mrs Caplan: Then I will support inclusion of both.

The Chair: Once again I would like to ask: All those in favour of the motion?


Caplan, Carr, Kwinter, Johnson (Don Mills).

The Chair: All those opposed?


Abel, Haslam, Jamison, Lessard, Sutherland, Wiseman.

The Chair: The motion is lost. Are there any further comments with respect to agriculture?


The Chair: Order, please. Are there any further comments with respect to the sectoral issue "agriculture"? Seeing none, it would appear that we will have included in our report the paragraph as it stands.

The next sector is "Beverage Alcohol Products and Food Services." Any comments on this sector?

Mr Monte Kwinter (Wilson Heights): I know the researcher had a problem in, how do you condense all of the material that came forward and not deal with every single detail? But in the presentation by the Association of Canadian Distillers, and we go down to the seventh line, they talk about, "Producers and consumers of beverage alcohol products are taxed differently depending on what they produce or consume."

I think it would be useful to just expand that a little bit as to what the problem is, and the problem is this. You have the three major classifications of beverage alcohol: wine, beer and spirits. Regardless of their alcoholic content -- as a matter of fact, if they all have exactly the same alcoholic content -- they're taxed at different levels, spirits being taxed the highest. Their concern was that there seems to be a perception in the general public that somehow or other spirits are more intoxicating or are more dangerous than beer and wine. The point they were making is that alcohol is alcohol is alcohol depending on what quantity you use, but if the alcohol content is the same in all three beverages, they should be taxed the same. I think it would be useful to just have that mentioned so you know what their concern is.


The Chair: It would appear the committee is in agreement with that.

Mr David Johnson: I have no problem with that. I'd just make a comment, because I know you can't get everything into a report, but I found it interesting that although we realize that a great proportion of the value of a bottle of spirits is in taxes, I found it amazing that when the Association of Canadian Distillers made its presentation, I believe it was 87% --

Mr Wiseman: Eighty-three per cent.

Mr David Johnson: -- 83% of the value of a bottle goes in the form of either provincial taxes or federal taxes or environment taxes, and on questioning, it became apparent that they hadn't included property taxes in that 83%. So if you could sort out across the province of Ontario what was an average property tax, it would probably be another 3% or 4% on top of that again, I would guess, bringing the total then up to about 87% or thereabouts of the cost of a bottle going in the form of one tax or another. That's truly an amazing statistic and it's one that is of a great deal of concern to that particular industry. I don't know if there's a place in the report here for it but I just wanted to comment on it because I was rather shocked to hear that number.

The Chair: With respect to clarification, that would be municipal taxes on business establishments?

Mr David Johnson: In terms of wherever they produce.

The Chair: Wherever their business establishments are.

Mr David Johnson: Yes, wherever their business establishments are. They pay property tax in one jurisdiction or another, whether it's in Metro Toronto or some other region, Durham, Peel, York or Ottawa, you name it, but they would be paying property tax wherever they're located.

The Chair: All businesses do, of course.

Mr David Johnson: That's right, all businesses do. I'm not saying they don't.

The Chair: It's not unique to them.

Mr David Johnson: It's not unique to them, but I think what is unique to them is that if you take any other product manufactured in the province of Ontario and add up all of the provincial, federal and municipal taxes, environment taxes etc, it's very doubtful that any other product produced in Ontario, when you add all those taxes in, including property tax, would have 87% of its value in the form of taxes; cars, television sets, you name it.

The Chair: The Chair certainly doesn't want to be out of line and I hear what you're saying. We'll listen to other committee members, but I would just suggest that every business that carries on business in the province of Ontario is affected by that same tax.

Mr David Johnson: I just raise that as a point that was astonishing to me. I realize that the mood here is to progress on, and we need to get through this report today, so I'm not putting that forward as a motion to include that, but I simply raise it as a point that was astonishing to me.

The Chair: It will be included in Hansard most certainly.

Mr David Johnson: This is the highest-taxed product produced in the province of Ontario bar none is my suspicion.

The Chair: The next sector is "Construction" on page 19. There are two paragraphs. Any comments on either of these paragraphs with respect to construction?

Mr David Johnson: Yesterday, we were talking about the Ontario Home Builders' Association. It was a question that came from the government side about the Ontario Home Builders' projections for the industry over the next few years. There were some projections as high as 60,000, 70,000 homes being built in the province of Ontario, but there was some discussion that the Ontario Home Builders' projections were actually lower, maybe 45,000, 50,000. I just wondered if those data were available, because there seems to be some interest in that. There's a lot of employment involved. If those numbers are available, perhaps legislative research could include them.

The Chair: I'm sure the numbers are, and it would appear the committee members are in agreement.

Ms Campbell: These are housing start figures which the OHBA provided to the committee?

Mr David Johnson: Yes, that's exactly right.

Mr Wiseman: I think it's 45,000 absolute max, which calls into question some figures on page 9 of the report.

The Chair: It appears that everyone's in agreement with that. We'll move on to culture. We have one paragraph at the bottom of page 19.

Mrs Haslam: In other sectors there was some indication in your paragraphs about the business that they are involved in and the elements in the economy that are affected. In this particular instance, there wasn't much, yet the multiplier effect for this particular sector is very, very high, and for the $1.3 million it receives through the film industry the spinoffs were amazing, and none of that is indicated in this particular one. I'd like to see something similar to other sectors whereby you indicate the business part of what they were trying to talk about. This is a rather small paragraph compared to every other sector, but the multiplier is much larger in many cases.

Mr Wiseman: I'm just curious that the OAC asked for a straight-line budget of $43,099,100. What are they currently getting?

Mrs Caplan: Forty-three --

Mrs Haslam: That's it.

Mr Wiseman: They're getting this, or --

Mrs Caplan: That's what they're getting.

Mr Wiseman: So they want a line-item budget.

Mrs Caplan: They asked for a flat line. Don't cut, was their --

Mrs Haslam: They just don't want it to be cut.

Mr Sutherland: A straight line, yes.

Mr Wiseman: Okay, thank you.

Mrs Caplan: I would just expand a little bit on the point that Ms Haslam made. It was the film festival group that particularly made the point about the economic multiplier of their grant, which was about $1.3 million, and I think their impact was about $30 million in economic activity. I think the arts council also gave us indications of the numbers of people who not only were supported but of the economic activity they generated within the economy, and I think that might be an appropriate addition to the paragraph.

The Chair: It appears that everyone on the committee agrees with that. Any further questions on culture? Seeing none, on page 20 we come to the environmental sector, two paragraphs. Is there any discussion on those paragraphs? Seeing none, in the middle of the page we come to the financial sector, and we have two paragraphs on the bottom half of page 20. Ms Campbell would like to make a comment.

Ms Campbell: I'd just like to reiterate something that was said yesterday. I think Mr Johnson made a request to perhaps expand on what the Canadian Bankers Association said on the deficit and debt.

Mr David Johnson: That being, if I can just find it now, there was a quote in the brief from the CBA, the bankers association, "Some Canadians appear to still not understand the link between persistent deficits and job creation; that to create sustainable jobs and growth, we must stop the growth of the debt."

Ms Campbell: I think that's the quote we're including in an earlier section, so that takes care of that.

Mr David Johnson: So then that takes care of that here.

The Chair: Any further discussion on the financial sector? Seeing none, we move on to page 21, and we come to the manufacturing sector. Included under the heading of "Manufacturing" we have "Motor Vehicles" and "Auto Parts," but there are two paragraphs at the top of page 21.


Mr Sutherland: I believe the Ministry of Finance gave some numbers. We have them in percentage figures, the increase here, but if actual numbers of new jobs that have been created in the manufacturing sector last year could be included, that would be great.

Mrs Caplan: The point I would make is that if we're going to do that, I think it's really important, because I also noted that we are not yet at the 1989 job numbers.

Mr Sutherland: Yes, and that's noted in here. That's in the second paragraph.

Mrs Caplan: But that's in percentage terms. I think if you're going to put in the number of jobs created last year, it's important to note that it still remains X numbers of jobs -- I think it's around 200,000 less than what we were adding --

The Chair: So what you would like then is the researcher to find out what that 1.3% is and include that as a number.

Mrs Caplan: Yes, that's exactly right. I don't mind percentage and percentage. If we're going to do numbers, we should have numbers.

The Chair: Yes, that's fine. Ms Campbell.

Ms Campbell: I will go through the two briefs, the Ministry of Finance brief and the CMA brief, to see if I can get the numbers. It may not be possible to get the numbers. That may be the case.

Mrs Caplan: I thought they were in there already.

Ms Campbell: I'm just adding that as a caveat.

Mr Carr: I've got the submission in front of me and the numbers are here. They have done a five-year review and they've put the numbers in here. Unemployment when the government started was 6.3%, to 9.6%. It's point form; they were very clear. It was a five-year review of the government. It said it's appropriate at the end of the government's mandate to review it, and it's boom, boom, boom. Pretty self-explanatory.

The Chair: Is that total jobs or manufacturing jobs?

Mr Carr: They've got it broken down. They've got employment, non-residential construction. They've got residential investment, personal disposable income. For anybody who hasn't read that, that is a well-documented history of the five years.

Mr David Johnson: Just put in what they've got.

Mr Carr: Yes, well, I don't think we'll get it in, because if you read it, it's an overwhelming condemnation of the government's record too. So I guess it won't go in. But I caught it and the reason it is so good is that it is very easy to read. It was point form. So the information is there.

The other point I wanted to make just very quickly is, in the bottom portion, how they talked about the long-term economic prospects. It's also on this page. What they were talking about is the fiscal performance. Let's not put it in in a partisan way, being critical of the government, which they were. Let's just put it in that they are concerned about the fiscal performance in general, not being critical like their submission was; putting the facts in there but just that there was some concern.

The way we've left it, when we talk about long-term economic prospects -- they were very specific on the fiscal problems being faced here in the province of Ontario. So perhaps we could just tighten that up and be a little bit more specific in what we meant by economic prospects -- they were very, very clear that it's the fiscal performance -- and be non-partisan in it. Let's not use their spin, which was critical, but just say they were concerned about the fiscal prospects.

Mr David Johnson: I just wondered, would it be helpful to legislative research if we give you -- there is a page from the CMA brief which I can give you right now.

Ms Campbell: I have a copy of it back in my office.

Mr David Johnson: You have a copy, which does indicate the 66,000 jobs -- actually, 121,000 fewer jobs in manufacturing.

The Chair: Thank you, Mr Johnson, for your comments with respect to the first paragraphs at least of "Manufacturing." Ms Campbell, are you clear in direction?

Ms Campbell: Yes.

The Chair: There are two sections under "Manufacturing." The first one is "Motor Vehicles." Comments or discussion under the heading of "Motor Vehicles"?

Mr Carr: Very quickly, I don't know if at this point anything wanted to be put in. We put in earlier about the number of exports back on page 3, the total exports that the provinces had, the big increase in fact; that this province would be worse off if we didn't have some of the exports. I think in their presentation they talked specifically on their sector and the exports, and I just don't know whether we want to include something.

We talk about the number of jobs, and I just wonder if we could include the number of export-related sales or whatever was in their presentation, just to get a little bit more specific for them. Then when we get to "Auto Parts," we should maybe do that as well. I think they were both very specific in talking about exports, and that is the reason that both of those sectors are doing fairly well.

The Chair: Committee members appear to be in agreement with that. We move on to "Auto Parts," and Mr Carr has already suggested that the export factor be included. Any further discussion?

Mr David Johnson: In terms of the auto parts sector, the comment the manufacturers' association made was a strong recommendation that expenditure reductions be identified, that a tax regime that is competitive with other jurisdictions be put in place which would stimulate economic growth. I don't know if that's reflected in the comments here or not.

The verbiage that Elaine has used says, "It spoke of the erosion of the perception of Ontario as a good place to invest." I'm sure that's true as well, but my suggestion would be that Elaine have another look at the comments. I just read briefly:

"Once the required level of government services is identified and the plan for reduction in expenditures is identified, we need to put in a tax regime (including personal, small business and corporate income taxes, consumption taxes, payroll taxes and other taxes) which is at a minimum competitive with other jurisdictions and which helps to stimulate economic growth."

I think that was a central part of their brief. I'll simply leave it with Elaine, if you can reflect one or two more of those points.

Ms Campbell: The instructions that were provided by the committee on February 16 were to make the "Sectoral Issues" section as sector-specific as possible. That's why you don't see such items included in this particular part. But if it's the committee's wish to put them there, they can certainly be included.

Mr David Johnson: Where would those general comments be placed, then, in that event?

Mr Sutherland: Under "Taxation," with the other general comments in the sections on taxation etc.

Mr David Johnson: Under the categories that we did yesterday?

Mr Sutherland: Yes.

Mr David Johnson: But then the problem there is, most of that is from forecasters, isn't it? The auto parts association is not considered a forecaster.

Ms Campbell: There was a section following "Economic Summaries and Forecasts" dealing with economic and fiscal policies and there was a section there dealing with taxation.

Mr David Johnson: I see. All right. One has to think of all this. This is why I get back to the point that it's too bad, when you have one sector, that it's not all-inclusive.

The Chair: We want to make the document as concise as possible, and certainly as long as we touch on all the subject matter that concerns everyone before the committee and the committee members, then I think that's important, and if we do it in a well-documented way I think that's --

Mr David Johnson: I give up on this one, Mr Chairman, but simply point out that I think that was the focal point, to me, of their deputation. If it could be included somewhere in one of the three sections that we seem to have, whether it's the forecasters' section or the general section that follows the forecasters or the sector-specific, then I think it would be reflective of their views, and perhaps even more so, than the piece that's contained here under "Auto Parts."

Mrs Caplan: Pages 14 and 15 actually have a section on taxation, where witnesses made specific references to taxation. I think it would be appropriate at either the bottom of page 14 or the top of page 15 to add a paragraph on the views of the automotive sector as it related overall to taxation and its recommendation for taxation in the future.

The Chair: We have some amendments to those pages already. I'm not sure if that was something that was included.

Ms Campbell: There were a number of recommendations made yesterday for changes to that particular section of the paper. My concern would be that if we're going to focus on what the auto sector said specifically with respect to the tax regime and expenditure reductions, perhaps we should include everything else, the other sectors as well.

Mrs Caplan: The way that you've done it in the sample was to say where you had a number of sectors that agreed on something like that, where there was a powerful statement that was made by one sector that was a consensus view from a number. I'd have no problem including it in that way, in a more general way, that "While this was stated by the auto sector, it represented or reflected similar views from many of the other sectors."


Ms Campbell: So is it the committee's wish then to add another paragraph to the taxation section on page 15 that will make specific reference to the Automotive Parts Manufacturers' Association and its concerns about the tax regime and expenditure reductions and indicate that this was representative of what other witnesses told the committee?

Mr Sutherland: We have information on those pages. The issue of payroll taxes is dealt with within the section on taxation and the reflection of the sentiments of the different business groups that came before the committee indicating their concern about payroll taxes. That is reflected in there.

Mrs Caplan: To be fair, it wasn't specific to any one tax. The view that I don't see reflected, and I may be missing it and I stand willing to be corrected, is the more comprehensive view on the need for taxes in Ontario to be competitive with its neighbours as it would affect exports. The point they're making that I thought was a good one was the entire tax regime, which would look at all of the taxes and the cumulative effect on competitiveness. The argument that they made in advice to the government was to make sure that your tax rates are competitive with those of your neighbours.

Mr Sutherland: I think we heard the competitors and I thought we had instructed research yesterday to go back, and out of the Canadian Tax Foundation's presentation I believe either Mr Carr or Mr Johnson had requested some further information be put into the report to that effect, on what the tax foundation presented to us. My sense was that they had originally asked for property and corporate, for two of them, and I suggested we should just have the balanced approach, if the information was there, to put that tax information in.

Mrs Caplan: In fairness, the point that I'm trying to make is that if this report is going to be balanced and effectively reflect what we heard -- on page 15, for example, we have the Minister of Health offering those kinds of comparisons -- I think it would be fair either just before that or just after that to say that we did hear a caution from industries and sectors such as auto, saying that the competitiveness of tax rates was very important to business and industry in this province.

Mr Sutherland: That's fine. Sure. I think that's an appropriate comment to put in there.

The Chair: It would appear the committee's in agreement with that. Ms Campbell, are your directions clear?

Ms Campbell: Yes.

Mr David Johnson: That's agreeable.

The Chair: That brings us two thirds down page 22, to "Research and Development." We have a paragraph.

Mr Kwinter: My impression of the deputants who appeared before us was that the presentation made by Dr Fraser Mustard was one of the most compelling and most far-reaching projections of those that we heard. A large part of what he had to talk about had to do with research and development. I know that he is referenced further along under "Social Issues," but I think it would be worthwhile that some of the things that he talked about and where he thought our future was in this area should be included in this section.

Mrs Caplan: Particularly the comments on innovation as they related to R&D.

Mr Sutherland: Just to add, I thought his points about the definition of wealth creation and some comments regarding that -- we don't necessarily need to put the whole chart in here, but he provided some of the chart showing the difference between government and business investments in R&D from different countries and some sense of how we compare with the other areas. I think some point noting those figures would be helpful as well.

The Chair: Any further comments? If not, on page 23 we come to the resource-based sector and we have two large paragraphs. Any comments or discussion with respect to this sector?

Mr David Johnson: Just one minor one: The Ontario mining industry has been noted. One of the comments the mining industry made that may not be reflected, and somebody will tell me if I'm incorrect on this, is they've specifically noted the cost of energy, electricity, in running their industry. This is a heavy burden in their particular industry and they're very concerned about the cost of energy. I think they used the word "monopoly" in there somewhere in their presentation and the need to take action to ensure that the cost of energy doesn't increase. Is there any possible way that could be incorporated here? Is there any other point where that concern might be incorporated? Does legislative research think that might be -- I don't think it's a paragraph.

Mr Sutherland: It could just go in that one sentence, "In spite of...." You could just add "energy costs" in there as one of the other concerns they've raised.

Mr David Johnson: Yes, exactly, something as simple as that.

The Chair: The committee agrees with that. Any additional comments or discussion with respect to this sector? Seeing none, at the bottom of the page and the top of page 24 there is a paragraph that outlines the concerns of the retail sector.

Mr Sutherland: I just wanted to ask Mr Johnson whether he thought we should go into a history of why hydro costs are so high. I'm just kidding.

Mr David Johnson: Can we spend the rest of the morning?

The Chair: No. I think we'll stick with our agenda and deal with the retail sector. Thank you very much, Mr Sutherland. Mr Wiseman, you wanted to make a comment on retail?

Mr Wiseman: No, thanks, not at this point.

The Chair: If there is no discussion, the next sector is the transportation sector, two paragraphs, page 24. Is there any discussion or any comments committee members would like to make with respect to this sector? Seeing none --

Mr Sutherland: Hang on a minute.

The Chair: I'll allow the committee members an opportunity to review these paragraphs.

Mr Sutherland: I know both industries, the trucking and the rail, raised some concerns or their view about how they're taxed compared to some other industries.

Mrs Haslam: And each other.

Mr Sutherland: And each other. I'm just wondering if we should have some of the figures they presented to us noted in there.

Mr Kwinter: I think it might be useful. On the bottom of page 24, they talk about the concerns of the rail companies and they say, "Both systems felt that two particular provincial taxes were materially affecting their cost competitiveness: the locomotive fuel tax and property taxes on railway rights of way."

I think that's a correct statement, but again, I recall in their presentation -- ideally every industry would like to remove all its taxes -- I think their concern was that in an ideal world, yes, remove the tax, but even in an un-ideal world there was a problem and that was that the railways in most cases were there before the abutting users were and they now find that their taxes are impacted by the use of the land that abuts the railway. They use the example that when the SkyDome goes in, suddenly the value of the land that the SkyDome is on reflects on the value of their taxes, and that was a major concern for them, and I think that should be reflected.


Mr David Johnson: To be fully accurate, rather than property taxes, it's the assessment that they're talking about. My understanding is that rail properties are assessed on the basis of adjacent properties.

The Chair: I think that's what Mr Kwinter was just saying.

Mr David Johnson: Except we've been using the terminology "property tax."

Mrs Caplan: It's the assessment which has the impact on property tax, it's not the level of property taxes themselves. I think that's just a clarification point.

Mr David Johnson: That's right. So it's the assessment.

Ms Campbell: So the wording --

Mr David Johnson: You just go back and check their brief. I'm sure their wording will be appropriate, but as the adjacent properties, assessment goes up, apparently their assessment goes up. I'm not sure if it's a one to one; my suspicion is that it is. It's simply assessed on the same basis as the adjacent property.

Mr Wiseman: They're assessed on the same level as the property that is --

Mr David Johnson: That's right. That's adjacent to you.

Mr Wiseman: The railway properties.

Mrs Caplan: But the problem is with the Assessment Act, which has an adverse impact on the property tax affecting the competitiveness of the railways. It's not the property tax itself.

Mr David Johnson: It's not the property tax at all, it's the assessment. It's the problem with the assessment situation.

The Chair: Which ultimately determines their tax.

Mrs Caplan: Although they did say it was the level of their property tax which resulted from the effect of the assessment tax increasing their property tax assessment.

The Chair: If the researcher is clear, that's the most important --

Mrs Caplan: That's what we want to make sure of. Got it?

Ms Campbell: I just want to clarify: In the third line from the bottom then, is it the committee's recommendation that the expression "property taxes" be changed to "assessment"?

Mr David Johnson: Apparently the issue is assessment and if the assessment issue is corrected --

Ms Campbell: Or the reference to "property taxes" in the last line. That last line could --

Mrs Caplan: I would suggest to clarify it that it was the locomotion fuel tax and the assessment of property taxes on railways' rights of way.

Mr David Johnson: You have to allow legislative research some leeway on this. I'm sure when she goes back and looks at the deputations, she'll know exactly what it is. Assessment is actually on property rather than on property taxes. You don't assess property taxes, you assess property.

Mrs Caplan: Or you could say "the assessment and the resulting property taxes."

Mr David Johnson: You could say that, yes.

Mrs Caplan: That would be accurate.

Mr David Johnson: That would be accurate, yes.

The Chair: I'm sure the legislative researcher will find the right semantics with respect to how to phrase this.

Mr Sutherland: Sorry to add one more view on to it. If you remember, what they said was that they were concerned about the change in the regulation under the Assessment Act regarding classification. Before that change, there was a separate classification for rail rights of way. After that change, what occurred was that they were assessed according to abutting or adjacent properties and they really were asking to go back to the separate classification for rail rights of way for taxing.

The Chair: Are you clear on the direction, Ms Campbell?

Ms Campbell: I think so.

The Chair: That makes me very happy. Any further discussion with respect to the transportation sector? Seeing none, that brings us to the utilities sector. We have two paragraphs on page 25.

Any comments or discussion with respect to utilities? Seeing none, then we have concluded this sectoral issues section of this draft document, which now brings us to social issues. We have two pages of paragraphs with respect to social issues. Is there any discussion with respect to this section of the draft document? It would appear that the committee members are happy with the way this section's been drafted by the research officer.

The next section is transfer recipients, on the bottom of page 27. There's an opening statement, and then we deal with some of the direct transfer recipients of provincial dollars. Mr Carr.

Mr Carr: The only comment I wanted to make on that is just that I think everybody who came forward -- the teachers, the trustees, the people from the hospitals -- were all concerned. Again, we don't want to do it in a partisan way because I guess this issue isn't to be taken up in one, but there were very, very grave concerns of what's going to happen when the social contract ends. We touch on it just briefly, just say "the social contract."

I'm wondering if there could be words to the effect that there was concern expressed by all sectors on what's going to happen when the social contract ends, and hopefully that will be such that it isn't partisan, because as you know, the government felt that it had to do that in light of our economic circumstances.

As you know, I asked that question to I think every group that come forward, probably to the point of not wanting to hear me when I said: "The money isn't coming back in the system. The Minister of Finance has said that and sat here and said that. What's going to happen at the end of the social contract?" I didn't get any answers, as you know. Most of them just looked at me and shook their heads. There didn't seem to be any answers when I asked specifically the teachers, "What are your members expecting when the social contract ends?"

I don't think we can leave it just as we did here, just one little line on the social contract. If we could expand it just a little bit to say there was -- I don't know if "concern" is the right word, but there was some apprehension about what will happen at the end of the social contract in all the transfer recipients' presentations, because I think everybody did it, and we won't do it justice if we just leave it to the one little line that was included here.

Ms Campbell: Mr Carr, would you like another phrase added to that particular sentence, just adding to the common themes that emerged and adding as another theme -- pardon my lack of fluidity in speaking this morning -- "Concerns were expressed about the after-effects of the ending of the social contract," or --

Mr Carr: Or just what's going to happen at the end of it, and we can put the date 1996 because it will be a new government that will be dealing with it. I shouldn't say that. A new government if they were to get elected. It's past the mandate of this government, in other words, so the next government's going to have to deal with that, and if we put that in there the way you've worded it there, I think that would be helpful.

Mr Sutherland: I think Mr Carr's comments are fine in terms of reference being made to that, as many of the presenters did do that.

We also, though, had the Ministry of Finance present figures in terms of some increased numbers of people receiving services -- the number of students in schools, the number of patients in hospitals, long-term care services -- and it would seem to me that some reference to them in this first paragraph would be a good idea, because most of those figures that are referred to involve the transfer payment agencies. So I guess we could have some of that included from what was presented.


Mr Carr: I was just going to see whether it could be done there or specific to the municipalities, because I think what Kimble's getting at is -- let's use hospitals as an example, where what the ministry gave us is the number of people who were being served versus the transfers, patients or whatever. So we could either do it at the beginning or specific to hospitals, because I think universities are doing that. I know colleges are doing that. My college tells me, at Sheridan, the number of students, the increase, and the amount of decreasing dollars and how they're servicing them. So what I would suggest, to be a little bit more specific, is if we'd get it under the categories and use the Minister of Finance figures, I think that would be helpful.

Mr Sutherland: Good.

Ms Campbell: So the committee would prefer to have those numbers appear in the specific sectors.

Mr Carr: Where applicable.

Ms Campbell: Even though those are summarizing the presentations made by the different MUSH sector representatives, you would like to have the figures provided by the minister put under each section.

Mr Sutherland: I have no problem putting it into each sector. I guess that's kind of the reason I suggested it go in the first paragraph, the individual ones, but if the rest of the committee wants it in each sector, that's fine too.

Mr Carr: I can't remember the Minister of Finance figures. I don't know if there were overall figures for all sectors. If there are, that should go in the beginning. Then if there's something specific to universities, we could do that where applicable.

Mr Sutherland: I'm not sure the figures break down specifically: universities, colleges and schools. I think it was an overall number of students in education and that type of thing.

Ms Campbell: I'll review the numbers and see where it's more appropriate to place them.

Mr Sutherland: Okay. Thanks.

The Chair: With respect to the topic "Transfer Recipients," we have all the MUSH sector represented -- municipalities, universities, community colleges, schools, hospitals -- and there are several paragraphs under each of those headings. I would just like to place before the committee any discussion they might have on any of these.

Mr Kwinter: Under "Municipalities," the second paragraph deals with the concerns of the Greater Toronto Area Mayors' Committee. I'm sure members of this committee will remember that the representation on behalf of those mayors was made by Mayor Hazel McCallion of Mississauga. I think in fairness to her we should add one other line.

If you remember her presentation, one of her major concerns, and she expressed it as only Hazel McCallion can, was that if the soon-to-be-appointed, as it's referred to here, GTA -- they had some concerns about it. One of her major concerns, I felt, was that she would be very concerned, and the other mayors would be concerned, if there wasn't some political representation. I think in fairness to her -- and as I say, it's not a political bias of mine, as I have no feeling on it -- she certainly felt strongly that there should be some representation of the mayors in the greater Toronto area on that task force. I think in fairness to her we should acknowledge that she said that.

Mr Sutherland: We probably should footnote the fact that the task force was announced on -- I forget the exact date, but given the timing of when people will be reading this.

The Chair: The committee is in agreement with those two suggestions? I think they're clear.

Mr Carr: A quick question, because one of the major concerns, as we say in the first paragraph, was the need for stable and predictable funding. Where they have specifically talked about that issue, I take it we're going to include -- I know we've done it in some of them, but each sector will include their specific recommendations, then, like we've done with some of them here? If it's not showing, I take it they didn't get specific on that issue, then.

Mr Sutherland: I don't think they did.

Ms Campbell: If the committee feels there's a need for greater detail, I'm certainly willing to --

Mr Carr: No, just the ones that were there, in my memory, some of the actual MUSH sector representatives -- I thought mostly everyone -- had talked about it, and I noticed in some of them we didn't have it, but it's no point. I just wanted to make sure that we did include it in each of the individual ones where they did talk about it, because my recollection is that all of them were talking about the issue. I know we've got it in the beginning, but if we're specific, I think we should include it in the sectors.

Ms Campbell: I may not have been specific enough for your request, but if it's the committee's decision to put in specific concerns about funding, that can be done.

Mr Carr: I was going to say that also includes, although I don't want it to get too long, the same thing on the continued strains of reduced transfers. Again, that was a major theme that came out from all of them. I mean, that was what they were here on, the transfers and the predictability and the stability and the amounts. I just wanted to make sure that we captured that. I think we've done that in reading "Municipalities," but I just want to make sure if we could check and make certain that we don't miss any of that, because their intention in coming, most of them, was to lay out to this committee their concerns regarding what's happening to transfers, because that's where they get the bulk of their money.

I just wanted to make sure we really had that tightened up, because I think what most of the transfer recipients are looking for in terms of the report was from the financial aspect of it, and I think we've done a good job in what I've read here. But if there are any that were missed, I think we should include them because it's very important to them and to the province.

Ms Campbell: I think you'll find that in each of the MUSH sectors there is a reference to funding. It may not be precisely what you would like it to be, but as I said earlier, I'm certainly open to changes.

Mr Sutherland: I was just going to say regarding the specific issues Mr Carr is raising, they all talked about the issue of predictable funding, combined and continued, and about the strains, but I didn't get a sense that we got a lot of specific sector-by-sector comments on that. They said they wanted predictable funding, and of course, as we all know, predictable funding can only be provided to these groups if the province itself has predictable funding and predictable revenues, and that has been shaken a bit over the last few years just because of the economic realities that we have faced. I'm just not sure how much more specific research she's going to be able to get, given that a lot of those comments seemed fairly generalized.

Mr Carr: What I was going to suggest too, because I think this captures it, they did come forward, most of them, if not all of them, and also talk about the fiscal reality that we're under. That's different from even three years ago when I was on this committee, when everybody came forward and said, "Give us more money," and "We want more."

I think if we could even capture in the beginning of this section words to the effect that most of the people who came forward -- I don't know how you want to phrase it -- that the sectors that came forward also recognized the fiscal reality of the province of Ontario, because I don't think I'd be wrong if I stated that's what came forward. Everybody from Richard Johnston with the colleges came forward and said, "We realize we have a financial problem here in the province of Ontario." For the first time in a long time in this committee the groups didn't come forward and say, "Give me more."

I don't know how we could phrase it. I think Elaine could gather some of that, but if we could put something in there that the MUSH sector did in their presentations express the indication that they realize that the province is facing a very tough financial situation and that they recognize that, and Mr Kimble expanded on one of the reasons --

Interjection: Mr Sutherland.

Mr Carr: Oh, sorry. Somebody did that last week, called him Mr Kimble, and I'm doing it again. Sorry, Kimble.

Mr Sutherland: It doesn't bother me.

Mr Carr: I'm sorry, Kim. I've known him five years and I'm calling him the wrong thing at the end. Sorry, Kim.

The Chair: The committee members will be pleased to know that Hansard corrects those errors.

Mr Carr: Do they automatically? Great. I wish they'd correct my other mistakes automatically. I'd be all right.

Mr Wiseman: They'd have to rewrite the whole thing then.


The Chair: Order. Mr Carr.

Mr Carr: I see after five years I still have a lot of friends on the NDP side.

Mrs Haslam: Look again.

Mr Carr: We used to start off here so nice. In the mandate everybody starts off nice and by the end of it everybody's grouchy at each other. But I'll close by just saying that I think that if we put that in there, it would be helpful.


Ms Campbell: Just on the transfer recipients and to review what was discussed and decided upon, the committee would like additional references made in the first paragraph under "Transfer Recipients" to what will happen to the members of the MUSH sector after the social contract ends and state that they recognize the province's fiscal realities.

The committee would also like reference made under each specific heading, if possible, to the number of people receiving services in each sector, and that would be based on some figures that were provided by the Minister of Finance.

Nothing more specific on funding, or is the committee happy with funding references as they are?

The Chair: It would appear that the committee members are happy with that, Ms Campbell. It would appear that's correct. Mr Kwinter.

Mr Kwinter: You anticipated that I had something to say. I'd like to introduce something that maybe we can get some comment on. When we look at the idea of funding of education and particularly the funding of schools, it seemed to me that one of the presentations, and I apologize for not remembering exactly who made it -- it was either the Canadian Manufacturers' Association or the shopping centre people -- somebody certainly in the business sector was complaining about the fact that a company would locate in a particular community and its assessment for the school board would vary depending on the community it's in. They felt that every business in Ontario should sort of have the same yardstick applied to it for what its contribution is to the education component of the assessment.

I think that is something that should certainly be acknowledged or recognized, and it might be useful to put it in a section dealing with schools because it would have an impact if that idea ever received any kind of support. But it was certainly something that has been put out as being one of the reasons for some of our uncompetitiveness, and that, depending on where a particular plant is located, that particular component of its assessment may throw it into a position where it is no longer competitive.

I think it was a concern that was raised. I don't think we covered it earlier, but it might be appropriate. Even though it isn't a school institution that's making the presentation under this sector, it would impact on the financing of schools.

Mr Sutherland: Under the section on taxation we had asked research to do a little more detail in terms of education finance issues. I guess under the section on the assessment of property tax we asked research to go back and do a little more on that specific issue. I'm wondering if that isn't maybe still the most appropriate area to have that comment incorporated because it really is more of an issue of how you're carrying out assessment than of specifically what is going on in the education sector.

Mr Kwinter: I have no problem with that. The only reason I was suggesting that we might consider it is that if it were ever to gain any kind of support and to be implemented, it would have a very definite impact on a lot of schools, both good and bad.

Mr Sutherland: Yes.

The Chair: There's your direction.

Ms Campbell: I'm still not clear whether the committee wants reference to these points made under "Schools" or under "Taxation."

Mr Sutherland: I think it's most appropriate under "Taxation" because we are dealing with the issue of assessment and, as I say, it really is assessment.

The Chair: We have agreement then with respect to that? Any further discussion on this section?

Mr David Johnson: You're talking about the transfer recipients?

The Chair: Yes.

Mr David Johnson: All of them?

The Chair: Yes.

Mr David Johnson: Okay. Because I noticed we were wide-ranging there. Just one little comment on the municipal section. I think it's well done, but there was raised the issue about municipalities being considered more as partners and less as creatures of the province.

I guess the Municipal Act and the structure that's in place clearly indicate that municipalities are creatures of the province and that they get all their authority and take all their direction from the provincial government. Anything they do is with the consent of the provincial government.

That's a fact of life. But in modern society where municipalities are becoming very sophisticated and very able to look after their own affairs, I think both of the presentations, from AMO and from the mayor of Mississauga, commented on the fact that it's time that municipalities were considered more as partners.

The opening comment of the second paragraph on page 28 starts to reflect upon that point, I think, where it says, "The GTAMC presentation spoke of the need for decisions to be made from the grass roots up, not from the top down." I just thought that if we added an extra piece on there, "and that municipalities be considered as partners rather than as creatures of the province," if that would be possible, I think that would be a true reflection of what they were hoping to achieve and what they were hoping to convey to us.

If the committee would consent to that, I see the legislative researcher is more than willing to go along with that.

The Chair: We're not sure about that. I wouldn't want to presume anything from any facial expressions or head nods, Mr Johnson, but we will ask Ms Campbell if the direction is clear with respect to that.

Ms Campbell: Yes, it is.

The Chair: And I would ask the committee members if they're agreeable to that. It would appear so.

Mr David Johnson: Good. Thank you.

The Chair: Any further discussion on transfer recipients? If not, then what this means is that we have concluded our direction to the research officer with respect to at least the draft report that we have in our hand. We now have to give her our very specific recommendations with respect to what we would like the Finance ministry to do. However, Ms Campbell.

Ms Campbell: I'd just like to check a few final things before we proceed. The memo that was handed out to the members yesterday had a number of items that were additional points for consideration.

On page 2 of the memo, at the bottom, there is a heading "Foreign and Domestic Loans." The summary of recommendations from the first week of hearings was distributed on February 15, and one of the headings under the section "Economic and Fiscal Policies" was "Foreign and Domestic Loans."

The following day research staff was asked to include reference to the recommendations under "Foreign and Domestic Loans" in the discussion of the financial sector. The recommendations really weren't that relevant to the financial segment as it will be written in after the comments today. Is it the committee's wish to include those particular concerns under the heading "Provincial Deficit and Debt"?

The Chair: Do we have agreement with respect to that?

Ms Campbell: One final comment: There had been some discussion during the report writing instruction phase about the preparation of an index. There were a number of members who expressed an interest in the preparation of such an item. They felt that it would allow readers of the report easier access to the concerns and recommendations of specific organizations. This memorandum has a rough index attached to it in the appendix.

Members should note that in those sections of the report that dealt with general issues it was not possible to include references to each and every group that appeared. A further complication is the fact that there were often references to abbreviated names of organizations such as "the ministry," "the minister," "the auditor." The way the index was run and as it appears here, it was not possible to catch all of those items. It may appear to be a rather quick and easy process, but it does take time and there will have to be a lot of checks and balances run. My question to the committee is, is it interested in including an index in the final report?

Mr Carr: I thought this looked very good the way it was and I thought that's great, it was able to be done. But if there's more work that has to be done, let's not have you do the work.


Mr Sutherland: Looking on page 1, and I think overall it's very good, you have "Minister of Finance," which I assume obviously is when Floyd was here and did his presentation, then we have "Ministry of Finance" and then we have "Ministry." I was trying to figure out the difference. Does "Ministry" mean ministries other than the Ministry of Finance?

Ms Campbell: That's to indicate the difficulties involved. There were specific references to the Ministry of Finance, then I asked our office staff to plug in the term "Ministry" and they came up with these additional page references, so there would have to be cross-referencing between the full name and the abbreviated name.

Mr Sutherland: Okay. So rather than "Ministry," should that maybe say "Ministries"?

Ms Campbell: It would be changed to "Ministry." It would all fall under Ministry of Finance.

Mr Sutherland: All right. Fine.

The Chair: Maybe the Chair missed something with respect to the index. Are we having an index now? I understand Mr Carr agreed that this is not necessary. Is that right? That's my interpretation of what happened.

Mrs Haslam: You have it. Don't make her go to extra work for what he wanted.

Mr Carr: I thought this was fine, acceptable.

Mrs Haslam: This was adequate for what he was asking for.

Mr Carr: Yes.

Ms Campbell: Another index would have to be run based on the changes that are made. This index is based on the draft report. It is now obsolete, as the Chair says.

Mr Carr: No, that's fine then.

Mrs Haslam: Now we're not having one.

The Chair: Now we're not going to have an index.

Mr Carr: She said it's a lot more work.

Mr David Johnson: It is a lot more work, is it?

Ms Campbell: It depends on how soon the final report is prepared. Time has to be taken to go through the document calling up specific names and it depends on how soon the full document is prepared. We wouldn't want to run it until the full document was prepared. There may not be enough of a time break between the time it has to be sent in --

The Chair: I'll remind all the committee members that we are under time constraints, because we are expected to have this document completed by Monday and all dissenting opinions must be presented to the Clerk by 4 pm on Monday. It's my opinion, and I'm sure the committee members would agree, that we don't want to unduly tax or create a situation that's impossible for the research officer.

Mr David Johnson: Can't we simply leave it with legislative research that if they can meet that deadline and do the index --

The Chair: That sounds like a very fair suggestion, Mr Johnson. If there's time, it'll be done; if there isn't, then we won't have an index.

Mr Sutherland: Just on a point of clarification, I'm not sure on all the time lines between a copy of the report being tabled with the Clerk's office and then the normal publication and binding process. If there's a time lag between the Clerk's office and the binding process, that would give us more time to have the index put in the bound copy, rather than the copy that's just going to the Clerk's office.

Clerk of the Committee (Ms Lynn Mellor): There's a three-week time lag for translation and binding with the agreements that have been originally made by the committee that on Monday, if the Clerk's office receives everything by 4 o'clock, then a copy was to go for translation. I've spoken to the translators and it's a two-week job there, and then we have to look at a week for the printing and binding after the translators have concluded.

Mr Sutherland: Can the index process be done after it's all tabled with the Clerk's office?

The Chair: What are the implications of that, I would ask the research officer?

Mr Sutherland: Just to find more time for them.

Ms Campbell: If we have three weeks from this coming Monday, it should be possible. Of course, the index would have to be translated as well.

Mr Sutherland: If that option can be pursued --

The Chair: Can we leave this as an unknown?

Mr Sutherland: We'll leave it, yes.

The Chair: If it's workable, if it's possible within the time constraints that the research office and the process whereby this becomes a document will allow this to happen, then it will, and if it won't, it won't.

Mr Sutherland: Yes, that's fine.

The Chair: So we're leaving it in the hands of Ms Campbell at this point in time.

Clerk of the Committee: There is a problem with the translation. It wouldn't be simply translating the index that would be with the English version; you'd have to run the program on the French version.

Mr Sutherland: You'd have to have the index referenced to the translated version, yes.

Clerk of the Committee: It creates a major problem.

The Chair: Yes, it's very complicated.

Mr Sutherland: We'll leave it in your hands.

The Chair: I think our direction is clear now, that it may not happen, but it's certainly in your hands. How clear is that? Not very, I suspect.

However, to get back to our agenda here, we have completed the direction with respect to the draft report. Unless Ms Campbell has any further questions with respect to that, then the next step is the recommendations that we want to provide to Ms Campbell from the committee as a whole, understanding, of course, that there will be dissenting opinions from the Liberal caucus and the Progressive Conservative caucus.

I would like to say too that we will be having a subcommittee meeting immediately following our recess for lunchtime, and before we go to lunch, I might add.

Mr Carr, you wanted to raise something?

Mr Carr: Yes. Just to move things along, as you know, we've already laid out a plan that we'll be introducing as part of it, with tax cuts, spending cuts, cutting barriers, cutting the size of government, balancing the budget. I don't think we're going to get agreement, so I don't think we need to go through it here today. Everybody's read it, and if they haven't, they can call 1-800-903-MIKE and get it. What we will be doing is putting that in, so I don't think we need to spend a whole lot of time getting into debate on it here, because I don't think we're going to have agreement on it.

What I would suggest, respectfully, as a result is that for the recommendation sections, the government does its, the Liberals may come in with us on ours -- I doubt it -- and we just submit our recommendations to the minister in the form of a dissenting opinion, formerly known as a minority report.

The Chair: There certainly is an expectation that this committee will make a report that can be presented to both the Finance minister and the House, and I think we must remember that.

Mr Kwinter: I'd like to comment on Mr Carr's statement. It's a little disturbing to me, because I think we have a situation where this is a standing committee of the Legislature. The standing committee of the Legislature is asked to make recommendations. I think what happens is that we have to do it as a committee, make recommendations and hopefully get approval by all parties. There will be issues, undoubtedly, that the official opposition and the members of the third party will not agree with and will want to put in a dissenting report, but I certainly don't think the structure of this committee anticipated that once the report was made, the government would give its recommendations, which would form the main recommendations of the report, and then the other two caucuses would present their dissenting opinions.

First of all, there may be lots of things we can all agree on, so they don't have to be put in a separate report, and only those things where there is disagreement would I think appropriately be in a dissenting report. So I don't think it's appropriate to say, "Let the government make all their recommendations, we'll make ours and the official opposition will make theirs and that will be it."

Mr Sutherland: What we've done the last few years is try and go through and develop as many consensus items on recommendations to the ministry, and then each party submitted its further comments of advice and recommendations.

If I interpret what Mr Carr is saying, he's suggesting that maybe we would not bother spending the time trying to come up with the consensus recommendations in the time we have left and that each of the three parties here represented would submit their reports on advice and that would be attached to the report.

This committee has operated a little differently maybe than others in terms of, once we have the consensus, it's usually been all three parties submitting some further comments that they wanted put in because they couldn't agree on certain issues at the committee. Last year's report formally had two recommendations, I believe, to the Minister of Finance, and then the rest of it was a result of reports submitted by the three parties.

Mr Carr: Maybe I jumped to conclusions. I've sat on this committee for four years and I'm still waiting to hear the first Liberal recommendation, so maybe we can start with the Liberals, if they are prepared to come with a recommendation. Let's hear yours and we'll see if we can agree then.

Mr David Johnson: I don't know exactly where that will leave us, but it'd be interesting to hear those recommendations. Do I understand, Mr Chair, that the idea is now to start discussing what our recommendations should be to the minister as a result of the information that's before us?

The Chair: I know this is your first opportunity to be on this committee, Mr Johnson. Just to be helpful to you and to remind the other committee members, we as a standing committee have a job, and our job is to produce a report with recommendations for the Finance minister and for the Legislative Assembly. We do that as much as we can in consensus, the recommendations portion at least. I think we have a consensus on the actual report with respect to which we have just finished giving direction to the research officer.

It's clear now that the recommendations we are going to suggest be in the report, which we will deal with this morning if we have time, and if not, at this afternoon's session, will be recommendations that we will all have to agree with. If we don't, then there will be an opportunity, as you know, for a dissenting opinion with respect to recommendations. However, there is a necessity for this committee to make a report available for the public, the Finance minister and the Legislative Assembly.

Mr David Johnson: All right. I'm prepared to put forward a couple of recommendations which I would think the committee members could perhaps consider. I haven't got these written down, because I was not sure, but verbally I am prepared to --

The Chair: Let me suggest that in the given time we have I'm in the hands of the committee. We can start with the recommendations immediately or we can proceed at 2 pm sharp this afternoon when we will reconvene the committee. Given that we weren't sure where we were going to be with respect to giving recommendations to our research officer today, I would suggest this is probably a good opportunity for us to have some time over the lunch period to collect our thoughts with respect to the recommendations we want to bring forward to the committee. That might be the best thing to do.

We also have to have a subcommittee meeting take place immediately upon recessing this committee this morning. It's just a suggestion from the Chair. I'm certainly in the hands of the committee. Any further comments with respect to that?

Mr Kwinter: I would agree with that.

The Chair: Is everyone in agreement with that? If that's the case then, the Chair will recess this committee and we'll meet at 2 pm sharp to take into consideration the recommendations from all the committee members that we would like to see in the report, and at the end of the day we will know where we have consensus and we will know where we don't. I'll remind everyone that the Clerk must have this report by 4 pm on Monday, and also the dissenting opinions, should there be any and I expect that there will be.

The committee recessed from 1143 to 1412.

The Chair: We are continuing with writing our report, and we are going to take recommendations. I believe we're going to hear from the government first, unless there is any dissenting opinion with respect to that opportunity. Therefore, Mr Sutherland, I'll turn it over to you.

Mr Sutherland: Okay. I think the sense of how we want to proceed is put some recommendations forward. Given that we're trying to find some consensus, some of the recommendations that are being suggested may be of a very general nature, as they have been in the past.

The initial one, and it still seems to me the number one priority, has to be the issue of job creation. So in terms of recommendation to the Finance minister in a general sense, I would suggest the first one we'd like to make is the recommendation to maintain job creation as a priority. Without getting into all the discussion as to how to make job creation the priority, which I think will result in some differing opinions, I would like to make that the first recommendation of the committee.

Mr Kwinter: Just on a point of information, are you going to be suggesting general themes in the recommendation? What I've just heard is what we're going to get?

Mr Sutherland: For the first few I'd like to do that, and then there are some of the actual recommendations made by the presenters that I'd like the committee to endorse.

Mr Kwinter: The point I'm getting at is, is there going to be a formal recommendation that's going to flesh out the job creation recommendation and what might be some of the things that could be done to do it?

Mr Sutherland: We could do that here.

Mr Wiseman: I can volunteer some.

Mr Sutherland: I can put some more points down. I think we can put --

Mr Kwinter: No, no. I'm just asking. Are you just saying the recommendation would be to maintain job creation as a priority, period?

Mr Sutherland: I would put forward "Retain job creation" as the number one priority, actually, in the budget.

Mr Kwinter: I just wanted to know what instruction -- it isn't as if you're saying, "I think we should talk about job creation," and then someone will come up with a recommendation that's been fleshed out or anything.

Mr Sutherland: No, no.

Mr Kwinter: This is it? That's fine.

Mr Sutherland: "Job creation should be the number one priority," is the recommendation I want to suggest as the first one.

Mr Carr: I would agree with that. Obviously I think Kimble's right with this. How we do that, if we get into it, we'll be here all day, but I certainly could agree to the recommendation that the Minister of Finance make job creation, words to that effect, the number one priority in the budget.

Mr Wiseman: We've got unanimity. We should quit now.

Mr Carr: Yes. I didn't think we were going to get anything.

The Chair: Mr Sutherland, would you like to continue? Mr Carr wasn't here and we weren't on Hansard or in camera, but Mr Kwinter suggested that it would be a good idea if the government made its recommendations and then we could have yourself and Mr Kwinter either agree or disagree with the recommendations put forward. I think that probably is the best way to go.

Mr Carr: Perfect.

The Chair: I thank you for that, Mr Kwinter. Mr Sutherland, we'll just turn it back to you until you've run out of recommendations.

Mrs Haslam: What makes you think we're going to run out?

Mr Sutherland: Number two is that the government continue its efforts in deficit reduction.

The Chair: Any comments from Mr Carr?

Mr Carr: No, that's okay.

The Chair: Mr Kwinter?

Mr Kwinter: That's okay.

Mr Carr: That's very good. Just on a point of clarification: When we're doing this, are we doing it in any order of priorities? What I was going to suggest is, let's just make recommendations starting with these -- I'm finding the numbers. But we may get down to something where we say, "No, sorry, that should be headed `Deficit,'" and so on. Can we just make it generic and start with your list and then not worry too much whether number (1) is a priority? Certainly I can agree with "Deficit," so two for two.

Mr Sutherland: I will tell you that I would like to have the first two as (1) and (2) when it actually comes down to it. For some of the other ones there may not be any specific order that we want to follow, but those two should be (1) and (2).

In terms of some of the other recommendations that we heard, I think also we've had several recommendations related to that, reducing the regulation, red tape and paper burden. I would want to have a recommendation that the government continue the efforts to reduce the regulation, red tape and paper burden through implementation of the Clearing the Path initiative and unified reporting mechanisms.

Mr Carr: I would just change it a little bit. I agree with the theme in regulations and red tape. Where I couldn't agree is where it does get a little bit political, saying the continuation of Clearing the Path; if we could make it just a little bit more generic, saying this committee recommends that the government make regulations, red tape, and just take out what they've done.

Mr Sutherland: Okay.


Mr Carr: I know. Well, you've done a good job.

Mr Sutherland: In just trying to make it more specific, though, I think the concept of unified reporting is what most of us have heard as one way of doing that in reducing the overall amount.

The fourth recommendation I want to make at this stage is that the government consider, I'm not sure whether the right tool is levers, mechanisms, whatever, to encourage more investment in research, development, innovation, however we want to put that into an umbrella group, but with the information that Dr Mustard had presented in the sense that the country as a whole tends to be behind in terms of budget-setting, the ministry and the government have to examine that and try and find new mechanisms to help finance more research, development, innovation etc.


Mr Kwinter: If I could have Mr Sutherland just tell me the first four or five words of what he just said.

Mr Sutherland: Oh, okay, sure. The recommendation I want is one that the government examine -- I guess maybe it should be new mechanisms or levers for financing increased research, development, innovation.

Mr Kwinter: That was what I was trying to determine, whether you were just saying they should do it or you had some specific thing they should do.

Mr Sutherland: I don't have any specific recommendation.

Mr Kwinter: No, no, I don't mean that, but what I'm saying is that the government should be proactive. So when you're saying "examining new methods" --

Mr Sutherland: Yes, new ones.

Mr Kwinter: I didn't know exactly where you're --

Mr Sutherland: Yes, sure.

Mr Kwinter: That's fine. I have no problem with that.

The Chair: Mr Carr.

Mr Carr: The same with me.

The Chair: Mr Sutherland. You're doing a wonderful job, by the way.

Mr Sutherland: Let me just go to a couple of others. COCA made a recommendation about the advisory committee on capital spending, I believe, and their request for that, and I think that is a good recommendation. I just don't seem to be able to find it right offhand, but I would like us to incorporate that recommendation.

Mr Carr: What was it?

Mrs Haslam: COCA.

Mr Carr: No, what was the recommendation?

Mr Sutherland: The recommendation was that the government should establish I believe an advisory committee on capital spending. Is that the one?

Ms Campbell: What I have written here is, COCA recommended that construction industry leaders "be involved on a regular and continuing basis with the Ministry of Finance and Management Board Secretariat" in capital planning and the economic needs of the industry.

Mr Sutherland: Oh, okay. I thought there was one specifically just on the actual carrying out of the capital plan or something like that.

Mr Carr: Should it be financing or something?

Mrs Haslam: Isn't it a permanent panel? Excuse me, Mr Chair. I found one that said "a permanent panel of public and private sector leaders to make recommendations to the government...."

Mr Sutherland: Yes.

Mrs Haslam: Is that the one you're talking about?

Mr Sutherland: Yes.

Mrs Haslam: On capital expenditures, emphasize that the construction industry --

Mr Sutherland: An adviser.

Mrs Haslam: Yes. That's the one that I've got.

The Chair: That's in our report.

Mr Sutherland: Oh. Okay.

Ms Campbell: The reading in the report is, "The Council of Ontario Construction Associations went so far as to recommend the creation of a permanent panel of public and private sector leaders that would advise the government on capital expenditures."

Mr Sutherland: Yes. I think I'd adopt that recommendation.

Mr Wiseman: The municipalities will go right through the roof on that.


Mr Wiseman: The municipalities won't like that.

The Chair: Mr Wiseman, you wanted to put something on the record with respect to that?

Mr Wiseman: Yes. I don't think that would be an appropriate recommendation, because the determination of what capital structures and what capital money should be spent should be done by elected officials and I think the municipalities would take a very dim view of a non-elected body usurping some of their rights that they see as being their rights as elected officials. I think we should tread very carefully on that jurisdictional boundary.

Mr Carr: I had more questions on it than anything. Is this for capital spending that the province is doing? Because there are the two points. What Jim is saying is, the transfers that go to capital to the MUSH sector, but there's also the provincial. I guess the concern I would have would be a panel -- presumably that doesn't mean that they're paid for it. It should be non-paying, so there's no cost.

When we say "panel," I'm wondering, to maybe help with some of the concerns of Jim, even if we make it somehow words to the effect of allowing people like COCA, who maybe haven't been involved in the past, to be involved in some of the things like the new structures of financing. Maybe we could word it some way that would take in Jim's concern that they aren't deciding but they're advising on new ways of financing and so on, because I think even municipalities would like to see new ways of financing if they could find them and the people who will come up with the answer will be the people like COCA who will be working with the government and the different ministries to work out how financing will happen on a project like the 407 or something like that. I think it can be worked out, but we can maybe take into consideration some of Jim's concerns, and I'll throw it back to the parliamentary assistant if he has any thoughts on how we could do that.

Mr Sutherland: Let me just say I think the intent of the COCA recommendation was that it would be strictly an advisory panel.

Mr Carr: Yes.

Mr Sutherland: The final decisions would obviously, as they must, still rest with the elected officials, but there was a concern or a sense of having some broader advisory committee. I don't even think their intent was, "Well, we're going to give you advice on this project and not that project." I think it would be setting overall themes, areas, what have you, of what the priorities should be in that way. Really, the intent is as an advisory panel.

Mr Kwinter: In the body of the main report, under "Public/Private Sector Partnerships" -- and I think it was already alluded to -- it says, "The Council of Ontario Construction Associations went so far as to recommend the creation of a permanent panel of public and private sector leaders that would advise the government on capital expenditures."

It would seem to me, and this has already been mentioned, that this would be inappropriate. They would automatically be in a conflict if they were recommending particular capital expenditures when they are going to be, in many cases, bidding on those contracts.

I have no problem at all with that sector being represented so that they can bring their expertise and their input into any decisions that are made, but certainly I would not think that it would be in the best public interest to have them making the decisions on capital expenditures.

Mr Sutherland: My last comments would agree with Mr Kwinter. It's not that they're making the decision; it's an advisory panel, and have it clear in the recommendation that it is meant to be an advisory panel.

The Chair: Having heard all of the concerns raised with respect to this recommendation, how should it read? And is there agreement with that?

Mr Sutherland: I guess what we're asking is that they "establish an advisory panel to provide advice on capital expenditures."

The Chair: Is there consensus on that?

Mr Carr: If I could be helpful with a bit of a compromise, I think what may scare some people, and off the top it scared me a little bit, and I guess Jim and Monte as well, is that once you start saying "panel" -- I wonder if we could word it --

Mr Sutherland: "Advisory committee" then?

Mr Carr: Or even, "The government will look towards people like COCA and other people." I don't know the exact wording for some of the -- if you want to use the words that Monte said, I think it was "best expertise" in what should be done. But I think the concern is that when you start talking panels, then all of a sudden COCA will be on there deciding whether somebody gets capital grants in a particular area and who should get it. I know what you're saying -- that isn't your intent -- but I think we can get a recommendation because if we don't get the wording and get some type of compromise, then we won't get anything.

I don't know if the research assistant could be helpful in the wording, if she got what my drift was: not to make it a panel, not so that they have a final decision, but that we bring business, labour and government together.

The only other concern I would voice on behalf of the ministries is, I take it that with the parliamentary assistant putting this forward -- and I'll ask the question to him, while you think about the wording, Elaine. I take it the ministries themselves agree with this and it's at least been run by them in terms of staff time to participate on a panel and so on. We're in an era where unfortunately a lot of the people and the civil servants are stretched to the limit because of cutbacks in numbers and so on, and to have them get involved in a panel without them approving it too -- I just wondered if anything had been done in terms of the ministries saying, "Yes, that's not a bad idea," or whatever.

Mr Sutherland: I must tell you I really have no idea how the ministries feel about this specific idea. I think the sense of what they were saying is there are all kinds of advice provided now. They were looking for, I think, a more formal mechanism of ensuring that there is this broader input into the decision-making of the capital spending and where the priorities are. They also mention in the recommendation public and private, which would imply that it could be municipal officials advising as well.


Mr Carr: Let's make the wording broad enough to include this.

Mr Sutherland: Sure, it's an advisory committee, that's really the thing. Maybe the word "panel" implies a greater -- like holding hearings, reviewing decisions, whatever, and maybe if we called it an advisory committee rather than panel, we'd overcome that obstacle.

Mr Wiseman: I still have some very serious reservations about this non-elected body. What happens if you don't take their advice? What we created is a special-interest group that is going to be able to exploit and put forward its ideas and then have a platform to say that because it's there and it's supposed to be advising the government, you didn't take its advice and now, you know --

The Chair: If I could offer this, we have many people come before this committee and we won't take everyone's advice absolutely, but we will certainly take their advice in some way.

Mr Wiseman: But with respect to the groups that come before us, they're all very fine people and they all have independent groups and they have independent processes. This one has been set up as an advisory. If we recommend that it be set up as an advisory to the government on these issues, then that elevates them to one status higher than everybody else, in my opinion.

Mrs Haslam: I was just thinking that there are advisory groups already set up in other ministries where you gather together everybody involved in the private enterprise of theatres and you meet with them and they come and advise the minister on some things that are happening in the community and around those particular issues, and you say, "Thank you very much; that's very good information," and you use it accordingly. So there are advisory groups out there. I don't see where this would be perceived as any more important than any advisory group that's already set up out there.

The Chair: I'm looking for that consensus.

Mr Sutherland: I would just continue with the concept of an advisory committee.

Ms Campbell: Could I read something back to the committee and they could make changes if desired?

"The committee recommends that the government establish an advisory committee made up of public, broader public and private sector representatives that would provide input to government decisions on capital expenditures."

Mr Sutherland: I like that wording; I'm very comfortable with that.

Mr Wiseman: I don't like the idea at all.

The Chair: I didn't hear what you said --

Mr Carr: But it was well worded.

Mr Wiseman: It was well worded, but I don't like the idea at all.

Mr Carr: I'll say on the record, Mr Chairman, that she took it and it was well worded. It might not fly, but that was exactly what I was trying to say.

The Chair: Okay, Mr Carr. I think, then, we have some dissenters but generally we have a consensus with respect to this.

Mr Wiseman: I'm going to have to write my own report now.

Mr Carr: Just on that point, if we don't have consensus, I don't think we should push it through.

Mr Wiseman: File me a minority report.

Mr Carr: Monte had some concerns too with that wording.

Mr Kwinter: No, I have no problem with that.

The Chair: No, and as I understand it, you have no concerns, Mr Carr, and Mr Kwinter was agreeable.

Mr Carr: I would have said it like that if I'd thought of it.

The Chair: It would be up to Mr Sutherland to get some consensus among the government members.

Mr Sutherland: I'm willing to put this one to a vote and see where the chips fall.

Mr Carr: Call COCA and tell them they're on too?

The Chair: I'm in the hands of the committee. If you want to make a motion --

Mr Sutherland: I'd like to make a motion that we accept the recommendation as worded by research.

The Chair: Any further discussion? The motion is clear. I'm sure everyone heard it.

All those in favour? All those opposed? No recorded vote -- I didn't hear a recorded vote -- so the motion carries.

Mr Wiseman: I guess I have to write my dissenting report.

Mr Carr: The whole thing will be on interest rates.

The Chair: We'll turn it back over to Mr Sutherland for further recommendations.

Mr Sutherland: I'm not sure exactly how to word the next recommendation, but somehow I would like the government to examine this issue of the workweek or hours of work and overtime. I'm not in a position where I want to give any specific advice to the Minister of Finance or the government on what specifically should occur, but I do think the issue needs to be examined some more.

Mr Kwinter: I'm trying to be helpful. It would seem to me that we have a report and that particular issue is in the report. There's a whole range of things that ideally and hopefully the Minister of Finance will read. I don't think it serves any purpose for us to put things in recommendations that we're not really recommending. I would suggest that if we recommend something, it's a recommendation. There's no reason to comment on something that we've already commented on in the report.

Mr Sutherland: All right, fair enough. I'll accept that.

The Chair: Any further recommendations at this time?

Mr Sutherland: I have one other one that I would like to make, and some of my colleagues may have some recommendations they would like to make. We've had a lot of discussion and heard a lot of presentations regarding the issue of the $50 filing fee. With that thought in mind and with the sense of how much work has been done, I'd like to recommend that the renewal process for the filing fee be a three-year process; in other words, you only have to renew it once every three years.

Mr Kwinter: I would like to speak to the general concept, and I wish I could find it, but someone made mention of the fact that one of the problems and one of the things that puts government operations in disrepute in the business community is when things are charged for no apparent reason and are perceived to be plain cash grabs. Someone said it and I can't remember who it was, but this particular measure falls into that category.

I have no problem with user fees as long as there's a rationale for them. I don't think there should be a user fee on anything that people expect from their government as a right, and they pay their taxes to get some service from the government. I don't think the government should say, "You pay us your taxes and then everything that we provide for you, you're going to have to pay for," because that's double taxation.

If there are services that are provided by the government that cost a relatively substantial amount of money and are only demanded by a relatively small sector of the population, they should be prepared to pay for it. But any kind of user fee or any kind of charge that is implemented that can't be justified in why it is done should not be sort of watered down by saying, "Instead of one year, you can do it in three years." It's either right or it's wrong. If it's right, you charge them $50 every year. If it isn't right, then it doesn't make it any more palatable that you'll do this every three years, because that's really what it is: a cash grab. So let me give you a suggestion.

I would have no hesitation and no problem with saying that every single time you change your registration or change your address or change your offices, you've got to pay a fee, because we've got to do that and that's part of the re-registration. But to tell every business where nothing has happened in the way of a change in their name, a change in their directors, a change in their ownership, "Every year you must send me $50 so that I can" whatever -- I don't know what you're going to do because nothing has happened; there's nothing that you have to do -- is what has created the problem. People are saying: "Why am I paying this $50? Nothing has changed. My company is the same as it has been, my offices are the same, my address is the same." It's a cash grab, and by saying, "We'll make it once every three years," you're not addressing the concerns.

Mr Carr: We've been very clear on this and what I was hoping is we could even go further and recommend that we eliminate it. As you know, the anger that's gone on for this is substantial. We put it in our small business task force report, of which I was co-chair, that if we form the government we'll eliminate that fee.

I don't want to get into speech time, because we've all had many letters on this. It was one of those issues that really twigged business in the whole scheme of things, when you look at what's happened with workers' comp and hydro rates and everything. The amount, the $50, wasn't a great deal but it was the principle of the thing, that there was one more government coming at them, and it generated a tremendous amount of anger. I don't want to get into all the details of that, but we've been very clear that if we form the government it will be eliminated. I'm hoping we could do that, go a little bit further than Kimble wanted and just recommend that we eliminate it.


Having said that, I guess the fallback position is, it's better to go longer periods of time. I would hope we would take a look at it. I think the amount of revenue is in the neighbourhood of around $10 million, if I'm not mistaken, but it is almost the final straw to business that really made it angry and upset, and I'm not telling you anything you haven't already heard.

If I could push the parliamentary assistant to go a little bit further and have this committee recommend to the minister that the corporate filing fee be eliminated, then we might be heading down the road and be giving a recommendation that I think would be something that business in this province would want. I would encourage us to go further, go all the way, and say that we would eliminate it and see what the minister does.

Mr Sutherland: Let me give you some more rationale for why we're not putting forward the idea of totally eliminating it but doing it on a three-year cycle. As you will recall with this, as this issue came forward the reason the ministry implemented this is because the filing names, that information, had become very much out of date. I believe it was in the early 1970s when there used to be a filing fee, a regular filing fee, and then I believe it was cancelled some time in the mid-1970s. My understanding is that you can see a sharp decline in the up-to-date nature of the corporate filing information records from the time that fee was taken off in the mid-1970s, not having that information come forward.

In terms of the implementation of the fee and with some potentially facing deregistration or whatever the formal terminology is, my sense is that those records are becoming far more up to date, and so the sense of having to have it done every year isn't there as much as it was when we first implemented it. However, I would suggest to you that with the total elimination you'll get into that same problem again that they got into the last time, when they eliminated in terms of those fees. That's why we're coming forward with the recommendation of having it done once every three years rather than as an annual process, because you will keep up to par that information the ministry requires and many others require.

I want to remind everyone again though, of course, the costs of having to get your business restarted, if for whatever reason you haven't fulfilled your obligations, can be very expensive. Getting yourself reincorporated can be $600 or $700. That is the rationale for going for the three years rather than totally eliminating it, to ensure that the information is being updated on a regular basis rather than just on an annual basis.

Mrs Caplan: Something is terribly wrong if you are suggesting that it costs $50 per company to update those lists. The $50 corporate filing fee is nothing more than a tax grab. It's another way of getting revenues from companies. It adds another layer of red tape and regulatory requirements and paperwork that drives them crazy.

It seems to me that it should be an obligation that when companies change their directors, or their information changes, they should have an obligation to send in that information. It also seems to me that it shouldn't cost the ministry $50 to process that information. I think you could make a very good argument, which people would agree with, that the companies should bear the actual cost of doing that, but frankly and honestly, if it is costing you $50 to update that information for every company, then you don't know how to run the place, because that is absurd.

I think that it is appropriate for us to recommend the elimination of an annual corporate filing fee of $50 and suggest that the Corporations Act require that there be an updating of information -- I think that requirement is already there -- and further, that if you wanted to establish, in my view, a fine for not doing it, then you would have an incentive to making sure it was done. You want to build incentives in to make sure people do let you know when they change that information, but it seems to me that it should be done strictly on a cost-per-service basis.

If you were properly computerized, and I think you're moving in that direction, it doesn't take long, especially if you get into the use of kiosk-type technology, to let somebody just enter that information and have it done and the expense should be minimal to none, frankly. It should not cost $50 to do that.

I think you've heard the message. The fact that you've put forward this proposal at this time as a recommendation to government I think is an acknowledgement from the government caucus that the $50 corporate filing fee is bad policy and it's driving business crazy, and that a recommendation from this committee should be the absolute elimination of the $50 annual corporate filing fee and that the ministry instead look at a strategy for making sure that its lists are updated and that the costs of doing so reflect the actual cost of processing the information, which I think you would find would be minimal.

Mr Carr: I was just going to say, in terms of if I'm sitting in there from the standpoint of businesspersons, say, in my area, I guess they'd say they would want it eliminated. If it isn't, then three years is better than every year. The problem is that in our minority dissenting opinion, whatever we want to call that, and we've already come with our task force report saying we're going to eliminate it, we will be recommending the complete elimination.

Where we couldn't support this recommendation is that we'd be saying to the government on the one hand the compromise of every three years and then recommending that we eliminate it. Unfortunately, as you've probably gathered, we can't agree to it because in the beginning of the report we can't say, "Okay, as a compromise we'll take three years over every year," and then call for its elimination. We've been very clear. It's in our small business task force report, boom, right in there about that.

If we could, the government hopefully -- I will say this -- will move on its own, because it doesn't need the recommendation of this committee to do it, and the budget will move to three years because three years is better than every year. But because it will be in our dissenting opinion report, we couldn't support the three years because we'll be supporting taking it out so that there isn't the annual corporate filing fee, if that helps, just as the rationale of why we wouldn't be able to support this. But I'm hoping the government will move forward because it's better than what is happening right now on an annual basis. We'll be dealing with it in our dissenting opinion.

Mr Sutherland: I guess the only comment I'd want to make is in response to Mrs Caplan's suggestion about having a fine. If you had a fine, then you're going through the enforcement process and the cost of enforcement and extra costs that way are somewhat prohibitive. I think it would end up costing you more than you were receiving.

The Chair: We don't have consensus with respect to this recommendation, so I'm asking the --

Mr Sutherland: We'll deal with it in a different way, then.

The Chair: Thank you, Mr Sutherland. Any further recommendations from the government caucus at this time?

Mr Sutherland: Those were the ones I wanted to have. I don't know if my colleagues have other recommendations.

Mrs Haslam: Mine in particular dealt -- and it can again be in a general way. On page 20 we see the Ontario Arts Council and the Toronto International Film Festival Group brought forward recommendations. While we probably can't be as precise in our recommendations, I would like to indicate some support for the understanding of the value of this particular sector industry and recommend maintaining wherever possible our support, and in a monetary way, for this sector. They came up with an exact dollar amount and I feel it's very inappropriate for us to put that exact amount in, but I do feel we all agreed that the support for the arts and culture community should remain foremost considering the economic reasons and considering the cultural reasons. I wanted to see if we could investigate some sort of recommendation along those general lines.


Mr Carr: The only problem I have with doing that is, as we've said before, once you take somebody out and specifically target them, then other groups -- I'm understanding what you're saying. Let's be perfectly honest: I took a lot of heat because we've called for our cuts. I got a lot of heat even from the Liberals, and I look at the federal budget where they got hit very hard. I was told -- I forget what happened and we don't want to get into it -- that we were terrible in not supporting the arts. Of course, what happened at the federal level was worse than what we propose to do.

Besides that, my big concern is that when you target somebody out and say it's an important factor, which it is, and we all know the numbers in terms of the spinoffs, then if we don't do another sector, we could be in a little bit of trouble. Maybe I'll ask the member to address this, if there's any way she can see that we can address this without making it look like one of the groups that came forward is more special than anybody else, because as you know, in this province the auto sector, agriculture, the arts, there are just so many that make this province what it is. If she has any recommendations, we can do that, and how do we answer the question that by particularly putting forward one group for special status, if I want to use that term, we may be alienating some of the other groups? That's in the form of a question.

Mr Wiseman: Maybe a generic recommendation to the minister that consideration be given to the multiplier effect of investments that on the surface may seem to be minor and unimportant but result in huge returns in terms of jobs and paybacks to the government before any cuts are made, or some kind of phrasing in that respect. That way it's generic and that way it also talks about the impact and the positive nature of a whole host of groups. I know what my colleague is considering. There are multipliers and there are investments that can be made by governments that do have a huge payback and they shouldn't be cut just because that seems to be what's happening, if you follow.

Mrs Haslam: I understand the concern, and you're right about taking a particular entity out. I just know time and time again we seem to deal with the industrial sector more than we think of the arts and culture community as an industrial sector. While they have worked very hard to change that attitude, I think it was very clear when they came before us that while we don't want to single out a specific sector, this is one sector that has a dual edge to it. That's why I wanted to see us in some way show the merit of support to them. I couldn't come up with anything more generic. While I agree a multiplier effect would be good, it could apply to many different sectors and many different areas, depending on what the reports are and what the multipliers are.

I just don't know if the researcher could do anything along those lines. I'm in the hands of the committee. I just feel very strongly about this particular sector and support to a cultural and arts sector, not just because it is an industrial sector, but there is also the aesthetic part of it and too often we look at it as only an aesthetic part and not an economic part, and now we're looking at it as an economic part, but I don't want it just to be an economic argument. There are dual edges to this particular sector. That's all.

The Chair: Certainly the efforts you've made to have this included in the report are recorded on Hansard, but I think Mr Carr has -- there's some merit in what he says with respect to our singling out the one area.

Mrs Haslam: I agree.

The Chair: I guess then it would lead to the question, do we want to put a generic information statement, as Mr Wiseman has suggested?

Mrs Haslam: I can't see it working to what I had in mind, so I'll just pass on it, thank you very much. It was worth a try because I feel very strongly about it.

Mr Jamison: My thought really boils down to something that we haven't broached a lot directly. Just let me preface a little bit by saying that all governments are living in times of real change as far as their economies and their cash flows and what not are being affected, debt and deficit levels and so on. The whole question of deliverance of services is one that -- our society is the kind of society that is based on the services that are delivered and I think governments have to continue to be vigilant to understand that as recently as two days ago a different way of partnership was talked about at the federal level. Provinces are going to still have some regulatory mandate from the federal end as far as what basics the program should include, but again I think it's going to be very important that governments maintain their vigilance in streamlining the delivery process of services.

We haven't really mentioned that a lot here today, but one of the largest costs on government is in fact the delivery of services, whether that be in social assistance, the social services end, the health care end or the services that are delivered through the educational system. That's where the real budgetary pressures are. That's 70% of the provincial budget, so I think maintaining as much of those services -- and in some areas there's pressure to enhance those services ongoing. I believe we should be looking at ways and means of being more efficient in the delivery of what government does.

The Chair: I just want to get some clarification. I've been listening carefully and you've given two, I think, recommendations: One was being more efficient with respect to the delivery of services and the other one was, I heard you say, "maintain the services of 70% of the --

Mr Jamison: That was basically a side note, Mr Chair. Regardless of there being fewer dollars, there continues to be a tremendous pressure out there related to the need for services in particular areas. That's not going to go away, nor will it probably ever go away if you have a growing province.

The Chair: So your specific recommendation is that the government deliver services more efficiently, effectively?

Mr Jamison: I know we have looked in that area, but that we continue to be vigilant in looking at the way services are delivered. I think that's an important factor just in considering that the three major services we normally call services -- education, social services and health care -- account for some 70% of the provincial budget. I think that's something all of us have to recognize is a major challenge to every government.


Mr Carr: The only comment I want to make, because obviously everybody agrees with that statement, is to see if we could be a little bit more specific in something that we could do because that certainly would be the goal. I think all three parties could agree with that, but the other recommendations, while fairly broad, have been a little bit more specific.

I'm just wondering if there's anything we can do to tighten it up, and I'll throw it over to Monte and then I'll maybe come up with a suggestion in a minute. I just think we can maybe tighten that up a little bit. We all agree with the principle, but I don't want to be making recommendations that the minister then has to look at and say, "What does this mean?" He'll probably be saying, "We've been trying to do that." If he's looking at setting up a commission that would look at overall government services and a better way to operate, I don't know if that would be what the member wanted. Presumably each government ministry is doing that. Hopefully we can tighten it up, and I'll see if Monte has any thoughts on it.

Mr Kwinter: I'm in full agreement with Mr Jamison's recommendation. Maybe we can go back to some of the wording we use in the second recommendation, "that the government continue its efforts in eliminating waste, duplication, increasing productivity and making sure that services are delivered in the most cost-efficient and timely manner." Does that do anything for you?

Mr Carr: Yes, that was good. I don't know if we can even go further. Certainly I can agree with that as a minimum. I don't know if we want to get into -- we'd better not; I was just going to say whether we want to get into offering some things like sunset clauses on some legislation or something like that. If not, the way Monte has left it is fine by me.

I'd maybe even go further, that the government should -- or maybe that's another topic; I don't know -- explore some of the provisions for sunset clauses and different things like that, because I think, as everybody realizes, we can't do it the same way. All governments and all parties did it when legislation was put in in 1976, when David was 10 years old, and 20 years later it's still in there. These things have to change.

I would like to be a little bit more specific, if we could, in terms of maybe even offering a suggestion, and I use that sunset clause as an example. If not, certainly the way Monte has worded it may be helpful for the minister.

Mr Jamison: I believe Mr Kwinter's wording is appropriate. I really don't believe that I want to be overly specific to the Treasurer, because I believe that the Treasurer is the person who has to really put forward a budget. But I believe in general terms the report, if it lacked that particular thought in it, would really be missing a major area of provincial budgetary measures. So I tend to agree with Mr Kwinter's wording.

The Chair: I believe we'd like to hear Mr Kwinter's wording again. I don't think the research officer got it verbatim.

Mr Kwinter: I didn't even give it verbatim. I just was speaking. I don't recall exactly what I said, but let me tell you what I think --

The Chair: It would be recorded in Hansard, most certainly.

Mr Kwinter: Yes. Let me tell you what I think I said: "That the government continue its efforts to eliminate duplication, waste, encourage productivity in a timely and efficient manner." I may have said it slightly differently.

Mr Sutherland: Yes. I think you just left out "delivery of services" this time. Increase productivity in it --

Mr Kwinter: Oh. Okay.

The Chair: I think we have agreement then on what the statement was. Research officer, Ms Campbell, are you clear on that?

Mr Carr: I think in that statement what's implied is that working with other levels of government, with the municipalities as an example, is what we're talking about doing. But I don't know if we can get even more specific in terms of trying to eliminate the duplication that's happening now with people like municipalities. I assume when we say "duplication" we mean with other levels of government, both up and down.

The Chair: Mr Jamison was speaking more specifically about --

Mr Jamison: No, that's not what I was indicating. I was talking about our own responsibilities within governance, the delivery of those services. If we want to talk about transfer payments and all of that, that's something that --

Mr Carr: I didn't mean to start something. No, that's fine.

Mr Jamison: Today, I really don't want to do that. What I believe is that we have to focus on what the province does with its tax dollars and continue to try to effectively deliver services in a more efficient way.

The Chair: I think we're clear on that now. Any further recommendations from the government caucus? If not, then we'll go to the official opposition. Mr Kwinter.

Mr Kwinter: Before I make one recommendation, I should say that I'm very pleased with the recommendations that we have got consensus on. It's covered a pretty wide area of concern to us and to others. Having said that, we may have some other recommendations. I have to apologize that our Finance critic is not here and as a result he may have some things that he wants to talk about. But I want to address one very, very key area. It is one that is very sensitive but it is also one that I think goes to the credibility of this committee, and that is the appearance of the Provincial Auditor before this committee and his recommendation.

I have spoken to this issue at length and I think it's necessary that we understand exactly what the issue is. It is not an issue as to whether the government uses the cash payment or the accrual method of accounting. That is absolutely in the purview of the government. They can choose to do it any way they want to. They may get criticism, but that is their choice.

I'm not in any way at this time questioning whether the government is doing one or the other or the merits of one or the other. But you should know that when the auditor audited the provincial public accounts in 1992-93, he "qualified his opinion of the province's financial statements. He felt that the statements, the result of modified cash accounting procedures, did not fairly present expenditures for that fiscal year. He recommended that during the 1993-94 fiscal year the government base its financial statements on the recommendations of the Public Sector Accounting and Auditing Board (PSAAB) of the Canadian Institute of Chartered Accountants."

I'm reading this from our own report. The reason I say that is that he also goes on to say -- or I'm not sure that he did, but maybe the researcher did that. It says, "(His audit of the 1993-94 statements was based on those recommendations)," and: "The Minister of Finance responded to the auditor's recommendations in October 1993. He agreed that government accounting practices could be revised to reflect advances in public sector accounting practices."

The point I'm making is that if this committee had said, "The government has chosen not to go on the accrual basis, has made a commitment that somewhere down the line" -- because later on in the report it said, "Ministry staff would analyse and evaluate the impact of implementation for the year ending March 31, 1994, and strive to introduce change in that fiscal year," and that there might be some difficulty, given the complexity of the task.

The point is that this change has taken place. The government has agreed that: "Yes, we agree with the auditor. We will now report our finances on an accrual basis and we will do it in a way that was recommended not only by the auditor but the PSAAB and the Canadian Institute of Chartered Accountants." I would have every sympathy with the government if it said: "This is a very, very complicated process. It's going to take a lot of time. We need some time to do it." But they've already made that commitment and they've already done it.

We now have a situation where we are facing a budget. The budget decisions are very complicated, but the presentation and the preparation of the budget is a very simple thing, because once you've made the determination of where your revenues and your expenditures are going to be and what your fiscal policy is going to be, the actual presentation of the budget and the preparation of it is not a very onerous task.


Where we have a problem -- and this wasn't just mentioned by the auditor; it was mentioned by several of the presenters to our committee -- is that once the government has made the determination that in fact it is going to adopt a specific procedure in its reporting of the financial state of the province, there should be consistency. It makes no sense, other than maybe political sense, but it makes no sense from an economic point of view to have the government say, "Yes, we are going to be reporting the state of the economy based on an accrual method when we give our statements to the auditor, but in our budget presentations we are not going to do it."

The problem that you have is that the budget is a very important document. All you have to do is look at the events of this week. It was literally reported around the world. It was reported, it took up reams and reams of paper, hours and hours of air time. It is a very important document. When the financial affairs of the government go to public accounts some 15 months down the road, it gets hardly any mention, if any. It's nothing. The budget is important. The pros can read it properly, and the government may say, "Every figure that we have is in there," but it's the point of how is it reported and what is the perception of the people who see that report.

I'm not trying to be difficult or anything else. I don't understand any rationale where the Treasurer of Ontario, the Minister of Finance, would say: "We have agreed to state the financial position of Ontario adopting the recommendations of the PSAAB and the Canadian Institute of Chartered Accountants and also according to the requirements of the Provincial Auditor. We've agreed to do that and report it that way, but" -- for some reason known only to him and his political colleagues -- "we are not prepared to do that in our budget." It doesn't stand up to any kind of rationale other than crass politics, and I'm not trying to bring a political sort of slant to this. How do you justify it when you say, "Here's the way we keep our books, but unfortunately we're not going to report it that way in the budget"?

Again, without trying to be repetitive, if they had said, "We have heard the concerns of the Provincial Auditor, but for reasons that we think are important to us, we are not going to adopt the accrual method of accounting," he could complain and he could say, "I will keep giving you qualified statements," or he could do whatever he wanted to do, and that is not my point; I'm not sort of making a value judgement one way or the other which way the government should be.

But once you've made that determination, and once you say, "This is how we keep our books," not to have consistency in the way you keep your books and the way you present your budget defies any rational explanation. It's like you can't go to the tax department, you can't go to the banks if you're a private citizen and say, "Listen, I keep my books this way, but here's what I'm telling you." It doesn't work that way.

It would seem to me that as a committee, where we've heard this not only from the Provincial Auditor -- and when I say "not only," I don't want to minimize the Provincial Auditor. I'm telling you that here's a man who was given responsibility for guarding the integrity of that document for everybody, and he is calling for a presentation that is in accordance with the way the books of the province are being held.

I am recommending that we recommend to the Treasurer, and to even give it some leeway, that whatever way he keeps the books that are presented to the auditor, the budget should reflect that. If he wants us to go back to the other way, that's his prerogative and he can do it, but to have one accounting method for the public accounts and another accounting method for the presentation of the budget defies any logical rationale.

My recommendation would be -- and again, if this would make it a little more palatable for my colleagues across the room -- to just call on the Treasurer to present a budget that is compatible with the way the books of the province are kept, period. Let him decide how he wants to do it, without using sort of pejorative terms like double bookkeeping and everything else. Just say: Let's have them compatible. The budget should reflect the way you keep the books so that when we compare one with the other, we know what we're comparing. I would make that recommendation.

Mrs Caplan: I'd like to speak to that. I agree substantially with just about everything my colleague said except for two points.

The first point that I feel very strongly about is that the government should not at this point have an option of referring to an all-cash method of accounting. The reason for that is that they made the change because the Provincial Auditor would not attest to the books in the way they were because all-cash accounting is outdated as a method of presenting clear and transparent and understandable books. Cash accounting does not meet generally accepted accounting principles in this day and age for public institutions.

To meet those who would say, "Well, it did not long ago," the answer is, it's true. Times have changed and the standards have evolved. It is also true that not all governments are on an accrual basis now. My colleague Mr Kwinter is quite correct. But everyone is moving in that direction, and I think it would be a foolish step backward for the government of Ontario to not take that next step of making sure the budget was also presented in the way that the Provincial Auditor has suggested the public accounts be tabled.

I want to make it very clear that I support the notion that the Provincial Auditor has an extremely important role to play when it comes to the test of accountability and credibility for the government, that it is important, in my view, that they take his advice on how their books should be presented to public accounts -- and they did that -- and that it is equally important for them to take his advice on how the books should be presented in the budget.

I know the government has said the budget's not a set of books, it's a planning document, and they're quite correct. The budget is a planning document, but it is then compared to the set of books, and if they are presented in two different ways, as the Provincial Auditor said, that is confusing to the public of the province of Ontario.

I think that in the interest of the public, the public interest dictates and says that you must make it as easy for the average person to understand what you're doing as you possibly can, and the reason is that that's the way they will then have confidence in what the government is doing, if it's presented in a way which is clear and transparent and understandable.

What the Provincial Auditor said to you was that you've taken the first step: You've presented your books at public accounts on an accrual basis that meets generally accepted accounting principles. On those grounds, this year he was able to give you an attestation, an unqualified testament to your books, which he did not do the year before when you presented the books in a cash accounting method. This year he's come before this committee and he said you must take the next step. In fact, I'm going to quote him. What he said was: "Tell it like it is. End the confusion."

I don't think you could have heard anything clearer. "Tell it like it is. End the confusion." That's the advice of the Provincial Auditor. In order to do that, with all due respect to my colleague, that means taking the next step and presenting your budget using the accrual method of accounting and generally accepted accounted principles. That's point number one. I think that's good advice to the government and I hope we will include that in the report.


What I would like to see is a recommendation that says the committee very clearly heard the Provincial Auditor say to the government that it must tell it like it is, that it must stop the confusion, that it is in the public interest. That will make them fully accountable and they should do that. That should be the recommendation of this committee, that the coming budget they are going to table in the Legislature should be presented in a way which is compatible with the public accounts and meets the test of generally accepted accounting principles and the test that the Provincial Auditor in the province of Ontario has suggested to the government. As far as I'm concerned, that is absolutely an essential recommendation in this report.

The second point where I would disagree with my colleague Mr Kwinter is that I think it's good politics to do it that way, and I'm going to tell you why. Today people are very cynical about politicians and those of us in public life. They are cynical because they think we don't tell it to them straight, that we don't give them the facts, that we obfuscate wherever possible.

When we discuss complicated issues with them, we have an obligation to do what we can to be as clear, as consistent and as straightforward as we can be. We have an obligation to do everything we can to help the public understand the complex issues of public policy, the complex issues of budgeting, the complex issues of fiscal planning and economic policy. It is good politics to do that because that will help restore the confidence of the people of this province. That will help them to be less sceptical and less cynical about all of us in public life.

It pains me when people hold those of us who have chosen the political arena in low esteem, when they don't respect what we do. I am pleased that so many of my constituents usually end their condemnation of politicians by saying, "Except you, Elinor." It does please me that they say, "We know you."

Mr Sutherland: My constituents say the same thing to me.

Mr David Johnson: It's a hard sell.


Mrs Caplan: I'm making a point of saying this because I hear this all the time, as I'm sure many of you do, that people are very cynical and they're very sceptical.

Mr Wiseman: They don't trust you but they trust me.

Mrs Caplan: The point I'm making is that you could help that and it would not only be good politics, it would be the right thing to do. It would be the right thing to do to help deal with cynicism.

I want to remind you that in the very first throne speech that was tabled by Bob Rae and the NDP government almost five years ago you made a commitment to do everything you could do to address the issue of public cynicism. I say to you that when you thumb your nose at the Provincial Auditor, not only do you betray that promise you made in the throne speech but you betray the people of the province. You raise the level of cynicism, you encourage that scepticism, you allow them to continue to hold governments and politicians in low regard, and that, my friends, is bad politics.

I understand what your problem is when I say that. I understand your problem is that your deficit number will look larger when you use the Provincial Auditor's method of accounting. He says your deficit is not $8.3 billion, it is $10.9 billion or thereabouts -- I must admit I stand to be corrected if I'm off -- and there's a $2-billion gap, approximately, in your deficit number. That would be hard for you to explain, and I think that's what Mr Kwinter was referring to when he said that would be bad politics for you.

But I want you to know that the people don't believe your numbers. They believe the Provincial Auditor and they know what the real number is. Even if they don't know what the real number is, they know that your numbers are not the real numbers. So you have an opportunity and this committee has an opportunity to put in its recommendation, that recommendation to the province, to the Treasurer, to Bob Rae, to make sure that his books comply with the advice of the Provincial Auditor.

I sincerely hope this committee will include that recommendation in its document in a very strongly worded way, because the only way you're going to restore confidence in any of us in public life is if we start to tell it like it is, tell it straight and assure the public that when the Provincial Auditor gives advice we heed that advice.

I've heard what he says, and we've made the commitment that should we be given the opportunity to govern, our books will be kept on an accrual basis, generally accepted accounting principles, and our budget would also be presented in a way which is consistent with those principles. You can do it too.

Mr Sutherland: I must say, though, that I think myself, many of my colleagues and much of the province are waiting for a clear and straightforward fiscal and budget approach from the Liberal Party of Ontario. We're waiting for some fiscal and budgetary policy from the Liberal Party of Ontario. So in terms of talking about this high and mighty stand on being straightforward with the public of Ontario, put some policy out there and then maybe you can take that high and mighty stand, but people are still waiting for that.

I take strong objection too to the comments by Ms Caplan that we're thumbing our nose at the auditor in terms of what is going on here. Let's be very clear about what has occurred. The auditor requested, as a result of the new standards developed by the Public Sector Accounting and Auditing Board and standards he believes in himself, that we change from a modified cash basis to an accrual basis for the public accounts. I want to reiterate here, because Ms Caplan used the term again, referring to the budget as a set of books --

Mrs Caplan: I said it wasn't.

Mr Sutherland: Well, no, you did say it was a set of books today and when we had the actual debates before you referenced it as being a set of books, and I want to repeat what the auditor said, that the budget is not another set of books. The public accounts is the only set of books. He has asked for them to be changed, he acknowledged in his presentation that they have done and Mr Kwinter certainly acknowledged what the ministry and the government did in terms of fulfilling those requests from the auditor.

If I may go back and reiterate some of the other comments that were made, somehow there's some sense that this is our government's attempt to hide something here. We're not in the process of hiding. All the information, all the facts are in the budget document. They're presented there. All the capital expenditures, if you go to page 115, are highlighted in the budget document. The Minister of Finance has given his commitment, and I think everyone would agree that Mr Laughren is certainly a man of great integrity and principle, that he will present a comparison in the budget document of the two different approaches in terms of how the budget could be presented.

If you look at what has occurred over the last few years, you've had the auditor encouraging the Finance minister and his own personal commitment of opening up the budgeting process, of providing more detailed information, and that process has started from day one, from the time he was there. If you go back and look at the history, you know that the Tories had a very, very secretive process. I believe it was only in the mid-1980s, 1987-88, that this committee started holding pre-budget consultations, that the process was opened up a little more, I believe under Mr Nixon. Through what now goes on, it is a far wider and even more open consultation process for initial input. I believe Floyd has continued to provide more detailed information in the budget documents each year.


So you have a process of that continuing. The auditor asked for changes in terms of the public accounts. The Finance minister agreed to his request -- certainly did not thumb his nose at him. He has asked for more detailed information and the Finance minister again has not thumbed his nose at the auditor. He has made a commitment that he will provide a comparison in the budget document. Those things are important to remember.

I also want to reiterate that there are several other provinces with governments of all political stripes that do not present their budget documents in the same accounting fashion as they carry on their public accounts process. So this isn't like something that we've just created for our own sense of how we think things should be done. There is an evolutionary process going on in public finances in terms of reporting mechanisms. I think we've made substantial progress on that and more needs to be done.

However, the other factor that does play into this is the fact that the overseeing umbrella body that folks look to for advice on this, PSAAB, hasn't completed all its efforts on what it thinks the standards are -- certainly in terms of how it addresses operating and in terms of public accounts going to an accrual basis, yes, but in terms of how it deals with the issues of capital and deals with some other issues, they still haven't provided any real advice.

If you want to make a recommendation that says the Minister of Finance should continue to provide more detailed financial information in the budget, I can support that recommendation because I think that's what the Finance minister has been doing year after year after year and has given a strong commitment to do that, but I take strong objection to some of the comments and claims that have been made that the Minister of Finance is thumbing his nose at the Provincial Auditor.

Mrs Caplan: Could I suggest a wording that might be acceptable to you?

The Chair: We have Mr Wiseman and then Ms Caplan and then Mr Johnson.

Mr Wiseman: I just wanted to make one comment on one of the things that Ms Caplan has said and that is about the books. In my riding -- and I have been out and about quite a bit -- I think I have only had one person talk to me about the accounting process that is currently being debated here, but I have had a huge number of people talk to me about the fact that there was no balanced budget in 1990. If you want to talk about what has contributed to the cynicism of political debate in this country, that one single factor comes up time and time again.

Mrs Caplan: And 1989-90 was fully balanced, according to the Provincial Auditor.

Mr Wiseman: No, it wasn't. Not under the accrual basis. Under the accrual basis the deficit was $1 billion out.


The Chair: Ms Caplan, you'll have an opportunity to respond. Mr Wiseman, please continue.

Mrs Caplan: He is not being factual.

The Chair: Ms Caplan, you will be able to point that out when you have your opportunity to speak. Mr Wiseman, please continue.

Mr Wiseman: The fact of the matter is that when I go around my riding and talk to people, and it doesn't matter what political stripe they belong to, they all point to the fact that the claim was made that the budget was balanced in 1990 and in fact it was way out. That is one of the single most ingrained attitudes and items that the public has.

I think it's just a little bit insulting to assume that the public can be fooled like that. They know what was going on. They knew what was going on in 1990. They had a sense and they reacted to it. I would agree with my colleague Mr Sutherland and say let's give the public a little bit more credit than what it's been given here. Let's make sure that when we talk about what leads to cynicism, we don't forget about the so-called balanced budget of 1990.

The Acting Chair (Mr Wayne Lessard): Ms Caplan was next on the list, I guess.

Mrs Caplan: I'll yield to Mr Phillips.

The Acting Chair: All right.

Mr Carr: I think that's Congress.

Mr Gerry Phillips (Scarborough-Agincourt): That's right. The congressperson from Oriole.

Just a comment on the last point: Actually, the Provincial Auditor performs many useful functions. When the government came in, the new NDP government, one of the things it wanted to look at was, how in the world did it happen that when the election was called there was supposed to be a surplus and when all the smoke cleared several months later there was a $3-billion deficit? Like, what happened? So they had the Provincial Auditor look at it, and I appreciate that, because the auditor is independent. I think the people in Ontario have some confidence in the auditor. So he looked at it, and I'd be happy to provide any of you, as I think I may already have done, with his report.

He said several interesting things in there. One thing he said -- and this was in 1991, the Provincial Auditor's report -- the first thing he said was that there's been only one balanced budget in the last 20 years in the province of Ontario, and that was the year ending March 31, 1990.

Mr Wiseman: On a cash basis.

Mr Phillips: This using the auditor's recommendations.


Mr Phillips: No, it's exactly what the Provincial Auditor said. Then the second thing the Provincial Auditor said was: "What happened? Why did there end up a $3-billion deficit?" He said: "Listen. When the budget was prepared," and I'm paraphrasing here, but it's pretty accurate, "it was reasonable to expect there would be a surplus."

Three things happened. One is, revenue dropped by $1.1 billion over what was estimated, and that's about 2% of revenue. I think most business people or most people in their own personal lives, you go through a recession, those things happen, about 2% of revenue.

Then he said, "The second thing is, expenses went up by roughly $1 billion," mainly social assistance, according to the Provincial Auditor.

Then the third thing was that the new government chose to write three things off that weren't due that fiscal year, and that's common. Any new government comes in, it does that. Any person who takes over a new business, they often do that. They wrote off a $200-million teachers' pension payment that was due the following year, moved it up a year. The second thing was they wrote off a loan that was due to the Urban Transportation Development Corp for $400 million and wrote off all of SkyDome for $300 million, $320 million, which was smart. It's good politics to do that, because it allows you to get that all written off, and then SkyDome was subsequently resold for I think $140 million, $150 million.

The reason I go through all of that is, obviously lots of people ask me the same question. How in the world could you have gone from a surplus heading into the election to a $3-billion deficit? I say, here's what the auditor said.

As I think most people know, I have a lot of respect for the Minister of Finance, Mr Laughren, who when asked in the House, "Were people not being straight with you?" said, "No, the ministry officials at the time gave the people of the day their best advice, and it was expected at the time there would be a surplus." Laughren said nobody was lying, that it was just the expectation going in, and the auditor confirmed that, that there was supposed to be a surplus.

I wanted to get that on the record, Mr Chairman.


Mr David Johnson: I'm not sure exactly why we get into these debates about what's happened in the past, but the --

Mr Wiseman: Are you still a rookie?

Mr David Johnson: Still a rookie. But it does irritate me a bit when you hear different pieces of information coming from different angles. So the simplest thing is just to ask the staff to give you the information, and presumably you can trust the information they give, and we did ask that the ministry staff prepare the deficit as it would have been reported on an accrual basis, and they did go back for some period of time.

In 1993-94, of course, we all realized that the reported deficit in the budget, the planning document, was $9.3 billion, but the auditor said it should be $10.8 billion, and I guess that's the way it's now reported. Going back to 1992, it was $12.4 billion. It should have been reported, on an accrual basis, at $12.9 billion.

Now, the year in question, I don't know whether it was 1989 or 1990 --

Mr Sutherland: It was 1989-90.

Mr David Johnson: It was 1989-90. So this is the year that supposedly has either a surplus or a zero deficit and, in actual fact, on an accrual basis, there is a deficit of $1.1 billion according to the --

Mr Wiseman: That was supposed to be the $90-million-surplus year?

Mr David Johnson: Well, 1989-90, I believe, was reported in the planning documents as essentially being a zero deficit year, but in actual fact, had the accrual system been used, as is being recommended here today, there would have been a deficit, according to the Ministry of Finance, of $1.1 billion. So I don't know how one says that there was no deficit in 1989, certainly not on an accrual basis at any rate. So I don't know. Does that put that one to rest or not?


The Chair: Order. Every member will have an opportunity to speak to the issue.

Mr David Johnson: It says right here that in actual fact, every year, unfortunately for the taxpayers of the province of Ontario -- I guess I'm looking at NDP years, I'm certainly looking at Liberal years and I guess I'm looking at the last Progressive Conservative year, and if it went before that I'd be looking at other Progressive Conservative years -- there's been a deficit each and every year. There has been no year when there has been no deficit, so I don't know why we keep arguing that --

Mr Wiseman: They keep saying they balanced the budget.

Mr David Johnson: -- but if it's reported on the basis that some of us are suggesting, an accrual basis, it's clear there's been a deficit of at least $1 billion and more each and every year for the last any number of years. Having said that, and I guess clarified that better, until the next speaker --


Mr David Johnson: Sure. I still don't quite understand. Yes, it was in my question, so if you've got a copy of the answers to my question --

Mrs Haslam: No, no, there's a chart somewhere.

Mr David Johnson: It may have been included somewhere else too, but I found it in the package of the questions that I brought.

The Chair: Every member got a copy of that chart.

Mr David Johnson: Yes, that's what I would have anticipated, Mr Chair. I still don't quite understand, and unfortunately Mr Sutherland has left, why the government doesn't do this. Yes, there's information. We have a planning document on a modified cash basis, and here it is right here. It's the Ontario budget and it's got a lot of pages to it. It's got probably over 100 pages to it, 125 pages to it, and it's chock-full of facts and figures. If one leafs here and leafs there etc, one can find, I suppose, all of the information if you've got a computer and if you've got months and months of time to do it.

But why not? I mean, the auditor -- I'm saying the obvious here, I guess -- is highly respected in the province of Ontario. It's an independent body; he has been appointed to fulfil a very important role. His advice we seek and we respect very deeply. What is the penalty to be paid for accepting his advice on this matter? Why not do what he's suggesting?

Now, I understand there's a little bit of a political penalty because the deficits that come about on the basis of an accrual accounting are higher than those on a modified basis, so I can understand that and maybe this would be an awkward year to do it, but why not at least commit to doing it in the future, after the election sort of thing, if that's the only impediment to doing it? Why not set everything straight so the public accounts and the budget can be compared so that we get the true accounting that the auditor thinks is so important to the people of the province of Ontario and with which I fully agree? Why not do that? Why are we so stubborn? Why do we say: "Sure, all the information's here. Put in more information. Instead of 125 pages, have 150 pages or something"? Well, that's not really the point. The point is that it should be easy for the members of this Legislature and easy for the people of the province of Ontario to get a true reading on the bottom line. That is most difficult in this planning document, this budget, on the present basis.

I would highly endorse a motion that would ask the Minister of Finance again to shift the budget to an accrual basis, as the auditor has recommended. If another government member's going to speak to this, please tell me what is the penalty for doing this? Not sort of why bother, but is it costly to do it, does it create a lot of difficulties? Is it the problem with comparing perhaps the 1995 budget with the 1994 budget? Is that what is the big penalty to be paid? What precisely is the problem? If there isn't a major problem, then I would strongly recommend that the matter be reconsidered and follow the advice of the auditor.

Mr Kwinter: I don't want to belabour this thing, but I really want to put into the record something I think is quite important, to me anyway. I find that the government members are literally -- and I say this with all due respect -- speaking out of both sides of their mouth. They have a different story depending on what the issue is. When they talk about their particular budget and the reason why they are not adhering to the recommendations of the auditor, they say that this is a planning document, that it is not the financial record or the accounts of this, it's a planning document, and as a result it is not under the purview of the auditor and it is being done for that reason. Let us accept that argument.

We have Mr Wiseman talking about how everywhere he goes people talk about the Liberal government's 1990 budget. Let me put some of the facts on the table. First of all, when that budget was tabled, it was, as he said, a planning document. It was a planning document that said, "Over the next 12 months this is what we estimate our revenues and expenditures are going to be," and this was on the basis of the best advice that was given to us by the officials in the Ministry of Finance.

You can say, "Oh well, that's fine," but you already make that argument when you consider that the present government not only has never ever met its target, it has taken the debt of the province of Ontario and more than doubled it.

The other thing that I think they conveniently forget -- and if there is one little bit of information that I'd like to leave you with, it's this -- is that in the course of that planning document time frame, which was from April 1, 1990, to March 31, 1991, when you take a look at the people responsible for that planning period, the government that is in power today was there for six months. They were there October, November, December, January, February, March, and for a good part of September. In fact, they had custody of the store for the six months that they're condemning the previous government for doing.

They made decisions. They could have made them either way. What they did, and I don't blame them -- as my colleague Mr Phillips said, it was good politics. "Let's tie them with everything we can." But don't forget, and I hope viewers will not forget, that during that period, six months, one half of that fiscal period, you had custody of the store. You had the ability to do things and make things happen, and you chose to do them in such a way that you've got take half the responsibility. To fluff it all off and say, "Look at what you guys did," makes no sense, and I say that any fairminded person would look at it and say, "Give me a break."

I'd love to hear a response on that one.

Mr Jamison: The whole question, and it's been made clear by the parliamentary assistant to the Minister of Finance, is that there will be a comparison in the budget of the two systems. The system has been in use for 25 years in budget preparation. We have done what the Provincial Auditor has asked us to do. The Treasurer has indicated very clearly that there will be a comparison between the two methods of accounting and that will come out very clearly in the budget itself, so I don't know what the hoopla is about, really. Moving from one system to another in reporting terms is a difficult situation to do, but we've been able to do that on the actual books of the province, and that's what the auditor wanted to do. I really believe that the parliamentary assistant to the Minister of Finance has indicated clearly that there will be that comparison in the budget as to the two methods of accounting.


I want to make a comment, because I believe that we can dwell on this forever and a day about who did what and what happened. I think the people of Ontario are smart enough to realize that a government sitting with 95 seats in this Legislature, halfway through a mandate that they'd asked for definitely from the people of Ontario, a clear mandate -- calling an election at that time, people now, even today, understand that you knew this economy was in for a real slide. I guess the problem is that none of you ever told the people of Ontario that, and the election results were partly due to really not being clear on the issue of why you called an election that early, with that many members in the House.

The only other question I have is, when the auditor examined the way in which the deficit figures went in that early time, from a plus $90 million to a negative $3 billion -- and it's really a question directly to Mr Phillips -- was that on the cash accrual basis? On which basis was that figure arrived at, that $3 billion? Because again, there has been a certain way of accounting in this province that's taken place for some 25 years. The auditor has asked us to move on the books of the province -- the books, not the budget -- and the Finance minister, when asked about the budget, said he would do a real comparison on the two ways of accounting.

That's basically what I have to say, because I think this debate on this particular issue is one that -- being so close to an election, all of us are hoping to exercise that question as much as possible. I have to put it very clearly that that's what I see here today and maybe that's what gives us politicians less than admired stature time and time again.

Mr Phillips: To continue the debate on how we prepared the budget, just to comment on something Mr Jamison said, actually I went back and looked at the pre-budget report of the finance and economic affairs committee before the 1990 budget. For people viewing this, we prepare a report that we submit to the Legislature. I went back and looked at that report prepared by this committee -- different people but by this committee -- and to answer your question, actually the NDP caucus, Mr Rae and the NDP caucus at the time, said in their comments -- as usual there was a minority report from the two opposition parties, and I'm paraphrasing here, but I'd be happy to provide it for you -- that the Liberal government members are reacting to a predicted economic downturn by adopting, I think he used the term "neo-Conservative politics" or something like that.

The point is that at that pre-budget hearing it was predicted there was an economic downturn and the Liberal members, the then government members, were saying: "Listen, there's an economic downturn coming. This budget must reflect that." The NDP caucus at the time pointed that out and said, "We reject that approach." So you may want to look at that, just because I think there's a feeling that somehow or other only the Liberal members knew there was an economic downturn coming and didn't tell anybody. It actually was part of the whole backdrop of the pre-budget hearings that year.

Just to comment on why we've been pushing for the auditor's recommendations, this is now I think the third straight year, if I'm not mistaken, maybe the fourth year, that this committee has put into its report that we should be adopting the auditor's recommendations.

Mr Sutherland: On public accounts.

Mr Phillips: Again I went back -- I don't have it in front of me -- and looked and at least the last two --

Mr Sutherland: On public accounts.

Mr Phillips: Here's the problem: Finally, for the 1993-94 budget -- that's two budgets ago -- the auditor's recommendations were accommodated, but they were accommodated six months after the end of the fiscal year, 18 months after the budget was presented. So the public gets a budget in April or May and then sees the real numbers 18 months later. That took a lot of work, and Mr Sutherland probably knows better than I do how much work it took the ministry officials to go through and change the whole accounting system and get the books all set up properly. No doubt they had to move expenditures from one account to another and account for them in a different way. But all that work took place at some expense, probably some considerable expense, if I'm not mistaken.

Then the same work has to take place for the 1994-95 budget, the one that's just ending in another 31 days, I guess now, and I can only assume and hope that the books are being kept in a way that reflects the auditor's recommendations so that when the auditor gets at the books that close March 31, 1995, he and his team will be able to do their work to audit the statements and provide their comments on them.

It seems really odd to me that the ministry officials are going back and keeping the public accounts, their books, in the old-fashioned way, the pre-auditor's way, and it seems to me we must be spending an awful lot of money keeping two sets of books: the one the auditor will need when the books close and the one that presumably the government's using to put together its budgets. I'd love to know how much that's costing us.

That's one of the reasons we pushed this. It makes no sense for all of those officials to be keeping these two sets of numbers some way or other. If the Minister of Finance is going to put the reconciliation in the budget, presumably all the work's been done. So I'm having real difficulty in knowing why all of the work continues to go on to keep the books on two bases.

If the numbers are all being calculated in a way because they're going to have to be presented in some little table in the budget, if the accounts are being kept in a way that presumably provides continuity -- they must be keeping the public accounts in exactly the same way in 1994-95 and plan for 1995-96 as they did when the books finally closed in 1993-94 -- then it seems logical to me that it would be very easy to present the budget on the basis of the auditor's recommendations.

The political challenge for the government, of course, is that the way the auditor indicates the numbers would come out means the deficit would be somewhere around maybe $2 billion higher than using the old system. That's why we keep pushing it.

As I say, this isn't new. Most of you have been around here now probably three or four years. I think this is at least the third straight year, maybe the fourth year, that we've -- the third straight year we've raised exactly the same issue.


It's a question of credibility. As a matter of fact, when you look at the government financial documents that are prepared for the financial markets, everything has to be footnoted, saying, "Well, that number there is kept on one basis and that number there is kept on another basis," and it hurts, without doubt, our credibility in the financial community. They can figure it out just because this is stuff they work in all the time.

It seems to me that first for our credibility, secondly just in terms of pure out-and-out cost savings of eliminating once and for all these two sets of books and thirdly, frankly --

Mrs Haslam: They're not two sets of books.

Mr Phillips: Well, I know technically -- people may not have heard the comment, "But they're not two sets of books." What one of the government members is indicating is the budget is not the books of the province. That's quite a technical argument.

Mr Sutherland: The auditor said that himself.

Mr Phillips: The public believe that the budget reflects the financial numbers of the province. They would be quite surprised if we were to say, "Well, you should be aware that they're about $2 billion out from the numbers that we will get in the audited statement because this is a planning document that's done in a different way than the books are kept." Technically the budget is not the books of the province, but from the public's perspective it is the -- everybody says it's the single most important, but it's the most important financial document that the public and the Legislature see.

The final point I'd make is the one again that the Provincial Auditor made, which is that the people who deal and make money by understanding the finances of the province have the resources to know the real numbers, so they're not fooled; it's the ones who don't have that wherewithal and the resources that are, namely, the public. I think the Legislature by now has gotten on to the number and can add it up pretty quickly.

I would hope that we could all see our way clear to say that for cost-saving reasons and for full disclosure reasons and for consistency reasons, this budget should be prepared and presented on the basis of the auditor's recommendations and that it should contain a 1994-95 reconciliation on the same basis.

The Chair: Mr Wiseman, did you --

Mr Wiseman: I think I'll pass. I was going to go after Mr Kwinter on some of his observations that were incorrect but I decided not to.

Mrs Caplan: He's absolutely right.

Mr Wiseman: I just changed my mind.

I'd like to take just an opportunity to point out that in 1990 I read this article, in about mid-July 1990, in the newspaper that was talking about the so-called balanced budget of the Liberal government of the day. Underneath it there was an article about how the housing starts had fallen off in July 1990 and that the pressure had finally eased in that area and the housing starts had dropped by a considerable amount. But they also talked about it with respect to the amount of taxes that would not be transferred to the province and then, lo and behold, the election was called and away we went.

My opponent was going around saying that the budget was going to be balanced and everything was fine and I said: "No, you're wrong. You can't possibly be right. There's at least a $750-million shortfall alone in some of the transfers that had been coming in through housing starts. If that's the problem there, then there have got to be other problems somewhere else." So I was already predicting and arguing that there was no way the budget could be balanced or that it was in balance prior to the election of September 1990.

So when you talk about that $3 billion, there were things that we did in January 1991; one of them was to curb spending of all government offices that had not been spent.


Mr Wiseman: I'm talking about the 1990-91 budget that you said we have half ownership of. What I'm saying is that a large part of that deficit had already been accumulated and then we did take actions to prevent it from ballooning, but it was quite difficult given that nothing had been done prior to that and that during the election period also nothing was able to be done. The fact of the matter is that we didn't take over until October -- or was it November? No, October -- and still had to find out how things ran around here.

I just want to point out that most of the deficit's accumulation -- and I think we were pretty quick learners to be able to freeze all budgets of ministries and prevent it from going --

Mrs Caplan: Yes, $10 billion a year later.

Mr Wiseman: Well, Elinor, you're talking about $10 billion. I remember the speech that Sean Conway, your colleague, made on the floor of the Legislature saying, and I can remember the phrase he used, that to get the deficit under $7 billion --

Mr Sutherland: It would have been $7 billion --

Mr Wiseman: Easy. Even if you had been elected, it would have been $7 billion. To do otherwise, there would have been "blood all over the floor." I have to point that out, that Sean Conway, your colleague, made that speech and it's in Hansard.

Mrs Caplan: Year after year, $10 billion.

Mr Wiseman: Maybe the viewers would be interested in --

Mrs Caplan: Do you have a 1-800 number?

Mrs Haslam: A 1-800 number, CALL-JIM.

Mr Wiseman: I don't have a 1-800 number. But to take a look at 1985 until 1990, in 1985, the revenues of the province of Ontario were somewhere in the neighbourhood of $25 billion. By 1990, it was $44 billion.

Mrs Caplan: Never enough for you.

Mr Wiseman: Each year that those revenues increased, if you hadn't spent the money, you would have balanced it over the previous year. So I think you need to take a look at that comment, because I don't agree with it and I'm prepared to argue it.


The Chair: Order, please. Mr Kwinter has indicated he wants to make some further comments. I'd like to remind all the committee members that we have now for over an hour dealt with the recommendation of Mr Kwinter, which we are still dealing with.

Mr Wiseman: Mr Chair, I have a recommendation I'd like to add to the recommendations, if we could get to it.

The Chair: Mr Kwinter, if you would please start your comments.

Mr Kwinter: If I could just get the committee back to where we started with my recommendation, the basis of my recommendation is that the budget reflect the system the government has adopted on how it reports the operating expenditures and revenues of this province and that the budget reflect the same accrual system so that when people take a look at what the projections are in this so-called working planning document, they have a basis of knowing.

My major concern is that notwithstanding that I've heard members say both numbers are going to be in the budget, when the Treasurer stands up -- and I'm prepared to guarantee it right now -- he will declare to the people of Ontario that the deficit of Ontario in the next fiscal period that we are in will be a number based on the modified cash system. He will not be saying, "I should tell you it will be this if we use this system, it will be that if we use the other system." He won't say that. He is going to report a deficit that is going to be based on a system that the government itself has changed. With all due respect to my colleagues across the room, you can stay here from now till next year and tell me it doesn't matter, and I'm saying it does.

Again, I'm saying that I think we have an obligation to make sure the numbers that are presented in the budget are numbers that reflect the accounting system that is currently in place in Ontario. I don't see why that is such a complicated concept to grasp. It is quite simple.

I find it very strange that when we had officials appear before us at our committee and I said to them, "When 12, 15, 18 months down the road you appear at public accounts, can you tell me now that if all of your projections are right, all your assumptions are right, the numbers that have been presented in your documents to us by the Minister of Finance are going to be the numbers you are going to be reporting to public accounts?" they said, "No, those will not be the numbers."


If in February you know that the numbers are wrong -- well, I shouldn't say wrong -- if you know the number is not going to be the number that you're going to be reporting to public accounts, why don't you come clean and tell the people of Ontario, "This is the number," not "Wait until 15 months from now and we'll give you the real number"? That is my concern.

I'm not trying to blame anyone or say, "You did this" or "You did that." I'm just saying it seems to be such a simple concept. All we're saying is, "Tell us the number that eventually will be the number that everybody will see historically." I don't see that as being a difficult thing to agree to or to comprehend. I rest my case.

Mrs Caplan: Could I just add one small point to that? It's an add-on. In making that case, the parliamentary assistant has said that the comparison will be there. It's my view that if you can have a comparison, then in fact you can present the budget in the way in which the Provincial Auditor has suggested you do it and end the confusion.

The fact that you have acknowledged that you're going to do a comparison tells me that it is possible to present the budget in the way in which the Provincial Auditor has not only suggested but recommended very strongly when he appeared before this committee. You can do it. I can't understand why you wouldn't do it when you can do it and the Provincial Auditor has told you that you should do it.

The Chair: I believe the question at this point in time is, do we have consensus with respect to Mr Kwinter's recommendation?

Mr Kwinter: Did I hear someone was going to provide some additional clause to it?

Mrs Haslam: On other things, if we get off these.

Mr Kwinter: Oh, I'm sorry. I misunderstood.

Mrs Haslam: There are other issues that need to be --

Mr Kwinter: I understood there were no more other issues from that side.

Mr Wiseman: Well, that's from them. I've got one.

The Chair: At this point in time, I'd like to get a fuller understanding of whether we have consensus with respect to this recommendation or not. I presume we don't. I see all the government members shaking their heads no. It's not a motion so we don't need to vote on it unless it's put in that form.

Mrs Caplan: It's a motion.

Mr Kwinter: I said that I moved the recommendation. I'm sorry. I thought I did.

The Chair: Okay. I apologize, Mr Kwinter. Could you just repeat your motion one more time for the committee? Then we will vote on your motion.

Mr Kwinter: My motion is that the committee recommend to the government that the budget reflect a consistent approach to how the financial affairs of this province are presented during the budget and that the accrual system that has been adopted by the government be the basis for the budget projections for the next fiscal year.

The Chair: The motion has just been stated and I think is clearly understood.

Mrs Caplan: Actually, I would just suggest -- it's a friendly amendment -- that the recommendation be to the government that it accept the advice of the Provincial Auditor and present its budget in a manner which is consistent with the presentation of public accounts.

The Chair: Everyone has heard the amendment. We have two votes now. One is on the amendment. All those in favour of the amendment? All those opposed? The amendment is defeated.

On the original motion, all those in favour of the original motion? All those opposed? That's defeated.

That means we can now move on to further recommendations.

Mr Phillips: I'm sorry, Mr Chair. Is there any direction then on what we are going to say about the auditor in the report? Does the government just want to ignore it?

Mr Sutherland: Mr Chair, in my original comments I did put forward a suggestion that if we wanted to make a recommendation to the effect that we encourage the Minister of Finance to continue his efforts in providing more detailed financial information in the budget, I'm certainly happy to support a recommendation to that effect.

Mr Phillips: Can we work apple pie in or anything like that?

Mrs Caplan: Motherhood.

Mrs Haslam: Motherhood.

Mr Phillips: I wouldn't say that.

Mrs Caplan: I would.

The Chair: Order.

Mrs Caplan: Fatherhood.

The Chair: Is this a motion?

Mr Sutherland: I'm just putting it forward as --

The Chair: For discussion.

Mr Sutherland: Okay, I'll move it. Why not? I'll move it.

Mrs Caplan: Well, that's a tough one, boy, I can tell you.

Mr Wiseman: What am I voting on?

Mrs Haslam: More information.

Mrs Caplan: Who would object to that? Is anybody going to object to that?

Mr Sutherland: The motion is that the Minister of Finance continue his efforts to provide more detailed financial information in the budget.

Mrs Caplan: Give me a break.

Mrs Haslam: We are.

The Chair: Everyone has heard the motion. Do we have a consensus with respect to that?


The Chair: That's very good to hear. So then that recommendation is accepted by all committee members. Any further recommendations?

Mr Sutherland: Actually there was one more I wanted to come back to, and again I'm not sure whether this one kind of ties into what Mr Kwinter said, but the environmental industries association, I believe it was, had some recommendations. It just related to bringing new technology on stream and a quicker process. I'm trying to decide whether it should be one that goes to the Minister of Finance as a budget issue or whether it then becomes just an overall general regulatory issue and may be covered by one of the other ones. But I think in terms of the growth of green industries in the province of Ontario, whatever we can do to further support and enhance that is a good idea.

The Chair: Further discussion?

Mr Kwinter: Are you bringing that forward as a recommendation?

Mr Sutherland: I would like to bring forward some type of recommendation that would be consistent with what they were putting forward.

Mr Kwinter: If I could comment, we've already addressed similar situations where Ms Haslam was talking about the cultural industries and we decided not to do it, and I would suggest that in your recommendation 4, which was that the government examine new ways of encouraging new research and development, in the broad sense that covers all areas. The minute you start singling out the one, as I say, that's the will of the committee, but we've already discussed the idea that we didn't want to single out ones because that would automatically mean we'd leave others out.

Mr Sutherland: That's fine. I'll accept that.

Mr Carr: I want to talk very briefly on taxes. I won't get into detail and I don't want to be confrontational, because as you know, we've offered a reduction program with which I don't think this committee will agree. But I think we may get agreement from this committee, from what we heard about the taxes and so on, that we can make a recommendation to the Minister of Finance that he not increase any taxes in the budget. I'm wondering if that would fly with the government members.

I'd like to start off and even expand it and say -- and the reason I say this is because we're going to put in tax cuts which we propose in our plan but I know won't go. I would like to also include that it will not increase any taxes or fees, but that may create some problems. As a compromise, I would look for the guidance of the parliamentary assistant that this committee -- and if we want to do it in the form of a motion, and I don't know if I can put the wording as a recommendation the bare minimum that the Minister of Finance not increase any taxes or fees in the upcoming budget. But I would be prepared to compromise if the government can't live with the fees. So I'll turn it over to the parliamentary assistant and see if we can get some consensus.

Mr Sutherland: Rather than saying no tax increases at all, what I would prefer is if we put it forward that any tax changes be done in a revenue-neutral way, in terms that it might be beneficial to do some tax changes but that the overall amount of revenue that the government is expected to collect shouldn't be increasing. I think that still allows the Finance minister some flexibility to respond to some of our other recommendations that they may want to do.

There may be some tax incentives he wants to do to encourage research and development as one of our recommendations, but obviously we still have that goal of reducing the deficit, and there may be some sense that they might want to make some other changes to make the tax system fairer. As we know, every year there are always those one or two items that we don't hear a lot about but that maybe the ministry has had complaints about adjusting or changing that can impact, so if we can word it in the sense of, "Tax changes should be done in a revenue-neutral manner."


Mr Carr: If I could be helpful then, we could just say, "Recognizing the fact that the people of Ontario feel that there's no" -- how should I put this? I'll look for guidance again for our legislative research to put it in other terms. "Recognizing the fact that the people of Ontario have reached the tax saturation point, this committee recommends to the government that we not increase the total revenue of taxes," or words to that effect. Could we do it that way? Is that what you're looking at doing or not?

Mr Sutherland: I don't think Mr Carr meant this, but he said, "not increase the total revenue of taxes." The point is, hopefully, if the economy is picking up, we are going to increase the revenue from existing taxes. It's just a matter of working out some language here, but I think when we say "revenue-neutral" that's usually the terminology that implies you do not want any more overall tax dollars but you may make some shifts.

Mr Carr: I'd have no problem with that although, as you know, the problem we've got is that our revenue doesn't just come from taxes.

Mr Sutherland: Yes.

Mr Carr: Actually, Gerry and I were just talking about that, how people don't realize there are the fees and so on. Can we expand it then and say -- and what you're saying, I understand there can be some shifts -- that the government won't increase any -- however it wants to be worded -- more revenue from the people of the province of Ontario, or whatever.

Mr Sutherland: I guess I would want to stick with the recommendation "that the committee recommends any tax changes be done in a revenue-neutral fashion" and leave it at that.

Mr Carr: Okay, let's turn it over to legislative research and see what she's come up with.

Ms Campbell: Incorporating what both Mr Carr and Mr Sutherland have just said, "Recognizing the people of Ontario have reached a tax saturation point, the committee recommends that any tax or fee changes should be made in a revenue-neutral way."

Mr Carr: That's good.

Mr Sutherland: I'm not keen on this preamble because I understand that some portion of the Ontario population has reached a tax saturation point. I'm not convinced that everybody has reached their tax saturation point.

Mr Carr: What would you suggest?

Mr Sutherland: I'd prefer to leave out the preamble and just, again, come back to, "The committee recommends that any changes in taxes be done in a revenue-neutral manner."

Mr Carr: Holy smokes. I started off, I got it watered down, but I guess it's better than nothing.

Ms Campbell: So you're not including fee changes in the recommendations?

Mr Sutherland: No.

Ms Campbell: It's solely tax changes?

Mr Sutherland: Yes.

Mr Carr: It's really watered down, then.

Mr Kwinter: I was going to ask a question about the fees because she had said "fees" and he had said just "taxes."

The Chair: Ms Campbell, would you like to, just for the benefit of all the committee members and especially the Chair, indicate what this recommendation will say?

Ms Campbell: "The committee recommends that any tax changes be made in a revenue-neutral way."

The Chair: That's very simple and straightforward.

Mr Carr: I just have one quick comment. I again just wanted to say that we will be putting together what we propose in terms of the tax reductions and the reason for that. I don't want to get into the details, but this is a pretty good compromise and, quite frankly, I think the Minister of Finance has already said that when he came here. I think that statement will be very powerful coming from the committee, and hopefully he will take it into consideration. There is a bit of a compromise. It got watered down a little bit but it's certainly better than nothing.

Mr Kwinter: I have a slight, little problem and that is that when you hear that recommendation, it says that if any tax changes are, whatever, "it should be done in a revenue-neutral way." That taxes will come down is not very likely, but it's possible. I would hate to be in a position where there's a recommendation that says if the taxes come down one place, you raise them somewhere else to make it revenue-neutral.

Mr Carr: Let's say "increases."

Mr Sutherland: If you want to expand on that -- if we can figure out some wording that isn't trying to imply that -- yes, you're right. I guess the way it's worded does imply that if one comes down, some others have to go up, and we don't want to recommend that that has to occur.

The Chair: I think the point needs to be understood as well that if the economy grows as significantly as it's suggested it will, then the province will undoubtedly receive more revenue through taxation by its job creation.

Mr Kwinter: The point on that is, no one is saying that there is a cap on the amount of money you can get out of taxes. Really, the intent of the recommendation, as I understand it, and Mr Carr can correct me, is that there are to be no new taxes, and if they are new taxes, those taxes shall be revenue-neutral. My only feeling is that as long as it's the increase is revenue-neutral but the decrease isn't. Is that --

Mr Sutherland: Yes. I just don't know how to word that. My sense is, and maybe this is part of the problem of us being caught up in our own lingo and the lingo that people talk about, tax changes being revenue-neutral, in other words, if you make changes, you're not increasing your overall take of taxes.

The Chair: I think it's necessary that the --

Mr Sutherland: Is it better to add what you've said as an explanation just after the recommendation rather than trying to work on the specific wording of the recommendation? Would that be a better approach, just to add in that comment of what the committee means by revenue-neutral?

The Chair: What's very important, I think, here is that before we leave today Ms Campbell understands what it is that --

Mr Kwinter: Well, that's what I was going to say. I'm in Ms Campbell's hands. Perhaps she can tell me whether she has an understanding of what it is we're doing and whether she can put that into language that will accommodate what we want to do.

Ms Campbell: Perhaps I could read what I've interpreted as your last recommendation. "Any new tax increases should be implemented in a revenue-neutral way."

Mr Carr: No, that isn't right.

Mrs Haslam: That's an oxymoron.

Mr Carr: Yes, and I didn't want to give the Minister of Finance any indication that we wanted any increases, because we don't. Maybe it can't be worked out then, I guess.

The Chair: If I can be helpful -- maybe I can -- there may be tax changes, but the outcome of any tax changes should be that they are revenue-neutral.

Mr Kwinter: That creates the same problem. You can reduce taxes and they say, "Well, we're going to raise them somewhere else so it's revenue-neutral."

The Chair: But isn't that what we're saying?

Mrs Haslam: No.

Mr Sutherland: No, no, no. Hang on a minute. If the tax changes, no net increase, okay? Now we've just got to figure out where to put the "decrease," because I don't want to say "no net increase" and then "and decrease" to imply no decrease. But if you put that wording in there, you should come up with something that way, right? "No net increase, but a decrease."

The Chair: I have a sense we all know what we mean but we can't get the language to articulate it.

Mr Kwinter: It may be a little clumsy, but a recommendation that any new taxes shall not increase the overall tax level, period. Then that takes care of those things. Instead of saying revenue-neutral, it takes care of the situation where you get a reverse onus: Because the taxes go down, you then are forced to put them up somewhere else.

The Chair: I think Mr Carr's original intention has been compromised.

Mr Carr: Yes. If it gets into increases, then I think we've lost the whole thing. If we can't work it out, which we don't seem to be able to, I'd just rather not say anything, because I don't want to get into giving the Minister of Finance any indication whatsoever of increasing any taxes. I think if we do that and word it like that, it would come out almost the exact opposite of what I want. I just don't think we can do it.


Mr Kwinter: I think the problem is that the Minister of Finance should have the flexibility to reallocate taxes. I don't think anyone quarrels with that. I think what we might do is remove the word "increases." Just say "Any new taxes." So we're not talking about increasing, but "Any new taxes shall have the effect of being revenue-neutral."

Mr Wiseman: "Any reallocation of taxes should be revenue-neutral."

Mr Kwinter: That's fine too, yes.

Mr Sutherland: "Any reallocation" -- that's a better word.

The Chair: That very simple statement will resolve this?

Mr Kwinter: I don't know. Is that --


Mr Kwinter: Yes? Okay.

The Chair: Hooray from the Chair.

Mr Wiseman: I guess I should have looked up from my article earlier.

The Chair: I presume then we have a consensus with respect to that statement?

Mr Sutherland: Yes.

The Chair: That's very good. Thank you, Mr Carr. Any further recommendations?

Mr Wiseman: Yes, I have an issue that I'd like to throw out on the table at this late hour. The Canadian Federation of Independent Business has written a recommendation to the federal finance and economic affairs committee and I'd like to quote it, because it sets the basis of two recommendations that I'd like to make:

"There are those who have attempted to shift the focus off the access to financing problem by saying that the most important problems for small business are taxes and regulations. There is no doubt that the problems related to high taxes are a serious issue for small firms in this country. However, to suggest that taxation, regulation and paperwork issues are more critical than financing issues is misleading. No doubt most small firms are frustrated by the waste of productive time caused by the endless regulations, forms and inspections they must endure. These problems, however, pale in terms of intensity to any financing problems that firms may face. One is a matter of lost time, the other is a matter of a firm's survival."

The point I'd like to make here is that if we've made a recommendation earlier that jobs are the key issue, and most of us would recognize that the small business community is the driver of small jobs creation, they need to have access to capital and it's my experience in my riding that this is very difficult for them to come by.

I would like to make a recommendation that the Finance minister take steps to improve and increase the accessibility of capital to small businesses. I'm talking about an issue that came up in my riding where a person set up a business, was getting the business, but couldn't get financing at the bank, couldn't get rolling credit and was having a huge problem in the banks trying to get this. There doesn't seem to be a very speedy or helpful mechanism to new businesses that have not been in business for a period of time to get started and we need to address that as a problem, because obviously the banks aren't going to do it.

The second recommendation I'd like to make is that the government of Ontario create an ombudsman to deal with specific problems created by small firms and businesses trying to get credit at banks or having their credit lines and their mortgages withdrawn.


Mr Wiseman: They don't have an ombudsman right now.

The Chair: Thank you for that.

Mr Wiseman: An independent ombudsman, not one that --

Mr Sutherland: I'd like to support Mr Wiseman's first recommendation, maybe worded in the form that the government consider developing new mechanisms that will assist small business in accessing capital, something to that effect. I think Mr Wiseman is quite right in pointing out that issue and very serious problem.

Regarding his second recommendation: While I think I agree with the sentiments he's expressing, because he's saying the banks, I really think that we just can't -- we'd have no authority to do it because banks are unfortunately, or fortunately, federally regulated. Something like that would need to be set up by the federal government in terms of dealing with that issue, but I certainly would like to echo strong support for the intent of his first recommendation and think it's a good one to have included.

Mr Phillips: I don't have a problem with the first one either. Probably the government would say it's doing a lot in the area, but somehow or other it's not seeming to sink in. We did, as we all do, a task force and went around the province talking about jobs, and I think access to financing, particularly among small and medium-sized businesses, was probably the biggest issue. There were other ones that were close to it, but it probably was the biggest issue. So I don't personally have a problem with the first one.

The second one is probably the last thing the public wants us spending money on, more ombudspeople and other people to watch over other people. I think they'd probably rather have us saying to the banks -- even though we don't have direct control over them, they do listen -- as our caucus has done, "We would urge you in the strongest possible terms to work towards helping small and medium-sized businesses to have access to capital."

In fact, the banks would argue right now that they've put a big focus on it the last two or three years, and certainly there appears to be some truth in that. I think every bank has really focused on the small business market, not completely successfully yet. They would argue they're doing it for two reasons. One is the obvious one and that is, there's a lot of anger out there among small and medium-sized businesses. The second one is, if you're in the banking business and you don't have a very strong small and medium-sized business portfolio, you're not in the right area, because that's the growth area. That's where they've got to be.

They're doing it for both of those reasons. Certainly from our view we would continue to encourage them to do that.

As I said, I don't personally have a big problem with the first recommendation. The second one I'd rather accomplish through the normal channels.

The Chair: It would appear to me that we have a consensus on Mr Wiseman's --

Mr Carr: I wonder if I could ask the legislative researcher how we're going to word that. I'm just unclear on how it's going to be worded. Do you know?

The Chair: There are two recommendations and I believe that's the first one. You want two --

Mr Carr: Yes.

Ms Campbell: My understanding of Mr Wiseman's recommendation was that the Minister of Finance take steps to improve and increase access to capital by small businesses.

Mr Carr: And number two?

Ms Campbell: The second was that the government develop new methodologies to help small businesses access capital.

Mr Sutherland: The first one is Mr Wiseman's wording. The second one is the different wording that I had proposed on the same intent.

Ms Campbell: Mr Wiseman's second was that the government create an independent ombudsman to deal with the specific problems of small businesses.

Mr Wiseman: Did I say "the government"?

Mrs Caplan: Yes, you did.

Mr Wiseman: I'm not sure it has to be the government, but I think that some kind of mechanism be available to resolve disputes that arise between large corporations and small business people. The large corporations have the advantage. They have a battery of lawyers that can run things out and bankrupt small business people, and there needs to be some independent arbiter who can come in and settle and solve the problem.

I think that something has to be done about this as an issue because it's becoming much more prevalent. I'm getting more complaints about this kind of uneven heavy-handedness on the part of the financial institutions, with the small businesses not having any kind of clout or any way of defending themselves in the marketplace.

I think we need to seriously try and figure out some way of developing some arbiter and some dispute mechanism. I'm open for suggestions on where we go with this, but I would like a recommendation to the Finance minister to say that this is a major problem and that we need to work on it. If you don't want to go with the idea of an ombudsman, maybe we can change the wording to say that this is a serious issue and some mechanism for dispute resolution needs to be devised.


Mr Carr: I just am not in favour of setting up the ombudsman; it sounds like a great idea. I look at the province of Ontario and the great theory behind setting it up here, which was to oversee what happens with the government and so on. What has happened with that, of course, is that it's become backlogged and everybody's frustrated with that as well. I don't know how many cases you would be getting involved in doing if you had a dispute like that.

If the government's going to get involved in transactions between the private sector and businesses, I just don't think it's workable. First, it would be impossible to have it so that if somebody disagreed -- for example, went to the bank and wanted to get a loan and wasn't given a loan, that somehow they could go to the ombudsman to see if that ombudsman could intervene would be crazy. Second, I don't think the numbers would be that great. Third, the power you'd have to give to that ombudsperson to then get involved and make a decision that was binding on banks, it just couldn't work.

Mr David Johnson: I just found it interesting to catch a little bit last evening on the CBC, I think it was, of the reaction of I think four or five different groups to the budget, and from the east coast they had two businesswomen. I don't know if people saw that report.

Mr Sutherland: I saw it.

Mr David Johnson: I guess Kimble saw it. The point was that we had two business people, a small business making pottery, and it was very interesting to hear their comments. I guess they had received some assistance in the past in terms of setting up this business, which was growing by what, 30% or 40% a year?

Mr Sutherland: I can't recall the details.

Mr David Johnson: It was growing by leaps and bounds. They were exporting. They said they looked at a map of North America and saw how close they were to Boston vis-à-vis where Toronto is, and they're exporting to the United States and Boston and in that area and doing a rip-roaring business. But their point of view, without a doubt, was very clear, that they wanted government to get out of the business of grants, "Lower the taxes, make the taxes competitive and then leave us alone."

Here were two small business ladies, running this organization, doing a fabulous job, creating wealth --

Mr Wiseman: They wouldn't have created it without the banks giving them money.

Mr David Johnson: I'm telling you what their point of view was. That's your point of view.

Mr Wiseman: That was their point of view.

Mr David Johnson: Their point of view was -- and this is clear if you heard the program; this is precisely what they stated -- that they want government to get out of the business of grants, but simply to have a low tax structure which would allow them to be competitive.

I think that's a very common message in the business community. We can fiddle around with ombudsmen, we can fiddle around with grants in some areas and maybe grants in other areas, but the taxpayers and governments do not have nearly enough money, nor will they ever have enough money, to be able to subsidize businesses.

It's interesting what's going to happen with Ontario Bus Industries in Mississauga, where the provincial government has loaned some, what, about $67 million into that --

Mr Carr: I wish we knew.

Mr Kwinter: And they own it.

Mr David Johnson: -- and now we own it, yes.

Mr Sutherland: That's what we forgot to do. We should ask Hazel to run it.

Mr David Johnson: Now the Ontario government owns it and there are liabilities of another $60 million or $70 million, apparently, so the total bill to the taxpayers is in excess of $100 million if all the liabilities come home to roost. What's been gained out of this? I think there are --

Mr Jamison: I seem to recall the same argument on Algoma.

Mr David Johnson: -- some 700 jobs in this bus industry plant and there are now about 100 people, perhaps, who are left. There's no plan to keep it going. That's the problem that's faced when governments start to get into the grant business. It's taxpayers' money. That was exactly the point of view the two women had on the CBC last night, that moneys tend to be frittered away and lost, and why their view was that the money should not be given out, "Keep the taxes low," undoubtedly eliminate regulations.

In Ontario we hear back from many small businesses about the employer health tax, and to the credit of this government there was an initiative in the last budget on the employer health tax, so all new jobs that are created are not subject to the --

Mr Sutherland: Who implemented the employer health tax?

Mr David Johnson: That's what I'm saying -- oh, who implemented it in the first place? Well, who did? Did it have anything to do with my friends in the Liberal Party?

Mr Sutherland: The folks who are straightforward about everything.

Mr David Johnson: What you're trying to say is the Liberal Party, but you just can't get it out. The Liberal Party implemented that. But to the credit of the NDP, it did go a partial way there to encourage jobs, to reduce the employer health tax. I think what we need to do is go a number of steps further.

If you want to create jobs and if you want to help small business, which I think is the whole nub of this conversation, then those are the things they will tell you to do: lower the payroll taxes, the employer health tax, the workers' compensation premiums, Ontario Hydro, any component of their business -- that's not a payroll tax, but it's an important component of their business -- property taxes, that sort of thing, and clear out the regulations and let them get on with their business.

That's really, from my perspective and the perspective of the Progressive Conservative Party, the way we should be headed, that's where we should be focusing all our energies, instead of fiddling around with ombudsmen and things like that.

The Chair: Do you support Mr Wiseman's recommendations 1 and 2? I just wasn't clear.

Mr David Johnson: Unfortunately, I was pulled away because of TTC announcements this afternoon and extra moneys for extra lines and that sort of thing. Is Mr Wiseman's recommendation a loan or is it a grant or what?

Mr Wiseman: No. If I could clarify, what I'm trying to do with the recommendation is to point out that businesses can't even get to the point of complaining about those things if they can't get initial financing to start the business.

Mr David Johnson: Are you talking about a loan or a grant?

Mr Wiseman: I didn't say either one. There might be more innovative ways of doing it other than through government, but what I'm asking in the resolution or the recommendation is that the ministry look at trying to develop a way so that startup companies and small companies can have access to capital, plain and simple. It doesn't necessarily have to be a government initiative; it could be that the government broker some kind of an agreement with banks or trust companies or whatever in order to have some kind of loosening up of the rules and regulations so that companies can at least get started and have access to capital.

Mr David Johnson: If private sector funds can be available, then obviously I'm all in favour of that.

Mr Wiseman: But a lot of the companies that I'm talking about can't even get started to the point where they can complain about these other things, and that's the group I'm interested in.

Mr David Johnson: But if we're talking about another system of government involvement and more government money, some way or another, out of the pockets of the taxpayers, it won't work.

The Chair: That wasn't what the recommendation was.

Mr David Johnson: As long as I can take your word for that --

Mr Kwinter: I would certainly support the first recommendation. On the second one, I mean, we've had a fair amount of discussion. It seemed to me -- and I stand to be corrected -- that there was a proposal on the second recommendation that there be an Ombudsman and a dispute settlement mechanism of some sort to adjudicate these things. I would not support that, and I wouldn't support it for a simple reason: There is a dispute settlement mechanism available. It's called the courts. If there is a situation that requires judicial adjudication, that is available.

To set up something where in a free market economy people make decisions based on whatever their criteria are and to suddenly have some independent source out there saying to a private sector entity, "You have made the wrong decision and we want to sit down with you and show you the error of your ways," would be one of the fastest ways of saying to people, "Don't do business in Ontario, because someone out there, Big Brother, is going to second-guess all of your decisions." Who needs it? I would suggest that may sound like a wonderful idea, but in a practical and a very, very strong economic sense, it would not be a good move, in my opinion.


The Chair: If the Chair has listened carefully, and I think I have, I seem to get the sense that there is a consensus on the first recommendation made by Mr Wiseman but not on the second. Is that what I'm hearing? I see most of the heads of the committee members nodding yes.

Mr Phillips: You have to listen to that carefully.

The Chair: Let the record show that Mr Wiseman's first recommendation has received consensus from the committee members but his second recommendation has not. I think the research officer can work with that information. Am I correct? Okay.

Any further recommendations before the committee this afternoon?

Mr Phillips: This might be the last time we all meet together as a committee, mightn't it, until the election?

The Chair: As a committee, yes.

Mr Phillips: I might just say, Mr Chair, I appreciate the work you've done. I think, all things considered, we've worked relatively well together. We'll be back in the Legislature, but I've a suspicion this committee might not meet again as a committee.

Mrs Caplan: I also think the committee has been very well served, if I may, by the research support. I want particularly to thank Elaine Campbell. Also, the clerk and Hansard have done a fine job for the committee.

The Chair: Ms Campbell would like to just clarify a couple of things before we proceed.

Ms Campbell: I'd just like to read through the recommendations:

(1) The government should maintain job creation as its number one priority.

(2) The Minister of Finance continue his efforts to reduce the deficit.

Mr Sutherland: If I can just say, as a wording proposal, I think all of them can be worded "the government" to do them, because really that's what the committee is recommending.

Ms Campbell: (3) The government continue its efforts to reduce regulation, red tape and paper burden through the continued implementation of the Clearing the Path project and the promotion of unified reporting.

Mr Carr: On a point of order, Mr Chair: I think we wanted that out.

The Chair: Yes, that's right, the mention of Clearing the Path, and that was agreed to.

Mr Carr: And the continuing.

The Chair: No, not the whole line, just the Clearing the Path part.

Ms Campbell: Could I just repeat that?

The Chair: Yes, please, for clarification.

Ms Campbell: "The government continue its efforts to reduce regulation, red tape and paper burden." End of recommendation.

(4) The government consider new mechanisms to encourage increased investment in research and development.

Mr Sutherland: Could I just have one word added, "innovation," as well? I think if you go back again to Fraser Mustard's presentation, that's one of the words.

Mrs Caplan: We need that in there, innovation being important.

Ms Campbell: (5) The government establish an advisory committee made up of public, broader public and private sector representatives who would provide input to government decisions on capital expenditures.

(6) The government continue its efforts to eliminate duplication and waste and its efforts to encourage productivity and the timely and efficient delivery of services.

(7) The Minister of Finance continue his efforts to provide more detailed information in the budget.

Mr Phillips: "Fine effort" or just "efforts"? I'm just kidding.

Ms Campbell: (8) Any reallocation of taxes should be revenue-neutral.

(9) The Minister of Finance take steps to improve and increase access to capital by small businesses.

The Chair: That concludes the recommendations of consensus before this committee.

Mr Phillips: Pretty hard-hitting.

The Chair: We have some housekeeping business to take care of.

Interjection: It would be interesting to see a Liberal minority report in writing. They may have to take a stand on that.

The Chair: Order, please. We have a motion.

Mr Sutherland: I move that upon final approval by the subcommittee, the report be sent for translation and printing; that a copy be forwarded to the minister at the same time as the report is sent for translation, and that the Chair table the report when the final printed document is received with the Clerk of the House if the Legislature has not resumed or in the Legislature if it is sitting when the document is received.

The Chair: Mr Sutherland has presented a motion before the committee. All those in favour of Mr Sutherland's motion? Opposed? Carried.

I want to remind the members of the subcommittee that we will be having a conference call at 11 am on Thursday, March 9, to reaffirm our agreement to the document we've just prepared.

Mr Phillips: Do we still have to have, if we're preparing it, our minority report in on Monday?

The Chair: Monday by 4 pm.

Mrs Caplan: Monday, March 6.

The Chair: Monday, March 6, 4 pm, dissenting opinions, Mr Phillips, must be in to Lynn Mellor's office.

Mr Phillips: I didn't know, this being a little later than we thought, whether that would be --

The Chair: Our dissenting opinions will be going for translation, so they will be in the process that we have set up, and although this will be a little later than we had planned, it is still workable, as I understand it.

Mr Phillips: Good.

The Chair: I would like to thank all the committee members for their cooperation and the research officer, clerk, Hansard and technicians for being so helpful in getting through this process. Thank you very much. This committee stands adjourned until the call of the Chair.

The committee adjourned at 1656.