PRE-BUDGET
CONSULTATIONS
ONTARIO PUBLIC SCHOOL TEACHERS' FEDERATION
COUNCIL OF ONTARIO UNIVERSITIES
ONTARIO ASSOCIATION OF INTERVAL AND TRANSITION HOUSES
ONTARIO CHIROPRACTIC ASSOCIATION
CONTENTS
Thursday 12 February 1998
Pre-budget consultations
Ontario Public School Teachers' Federation
Ms Phyllis Benedict
Mr David Lennox
C.D. Howe Institute
Mr William Robson
Ontario Campaign 2000
Ms Laurel Rothman
Mr Domenic Storti
Council of Ontario Universities
Ms Bonnie Patterson
Mr Robert Prichard
Dr Paul Davenport
Ontario Mining Association
Mr Patrick Reid
Mr Peter McBride
Ontario Association of Interval and Transition Houses
Ms Eileen Morrow
Ms Karen Bible
Ontario Chiropractic Association
Dr Jan Kempe
Dr Ione Puchalski
Dr Cynthia Chan
Dr Robert Haig
Dr Pran Manga
STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS
CHAIR / PRÉSIDENT
MR GARRY J. GUZZO (OTTAWA-RIDEAU PC)
VICE-CHAIR / VICE-PRÉSIDENT
MR WAYNE WETTLAUFER (KITCHENER PC)
MR TED ARNOTT (WELLINGTON PC)
MR JOHN R. BAIRD (NEPEAN PC)
MR JIM BROWN (SCARBOROUGH WEST / -OUEST PC)
MR GARRY J. GUZZO (OTTAWA-RIDEAU PC)
MR MONTE KWINTER (WILSON HEIGHTS L)
MR GERRY PHILLIPS (SCARBOROUGH-AGINCOURT L)
MR GILLES POULIOT (LAKE NIPIGON / LAC-NIPIGON ND)
MR E.J. DOUGLAS ROLLINS (QUINTE PC)
MR WAYNE WETTLAUFER (KITCHENER PC)
SUBSTITUTIONS / MEMBRES REMPLAÇANTS
MR DOUGLAS B. FORD (ETOBICOKE-HUMBER PC)
MR TONY MARTIN (SAULT STE MARIE ND)
MRS JULIA MUNRO (DURHAM-YORK PC)
MR TONY SILIPO (DOVERCOURT ND)
ALSO TAKING PART / AUTRES PARTICIPANTS ET PARTICIPANTES
MR DAVID CAPLAN (ORIOLE L)
MS MARILYN CHURLEY (RIVERDALE ND)
CLERK / GREFFIÈRE
MS TONIA GRANNUM
STAFF / PERSONNEL
MR RAY MCLELLAN AND MS LORRAINE LUSKI, RESEARCH OFFICERS,
LEGISLATIVE RESEARCH SERVICE
The committee met at 1001 in room 151.
PRE-BUDGET CONSULTATIONS
ONTARIO PUBLIC SCHOOL TEACHERS' FEDERATION
The Chair (Mr Garry Guzzo): Good morning and welcome. Our first presenter this morning is the Ontario Public School Teachers' Federation. Ms Benedict, please come forward. Welcome. If you wouldn't mind introducing your associates and commencing, we have 30 minutes to use as you wish.
Ms Phyllis Benedict: I would like to introduce to you this morning the first vice-president of the Ontario Public School Teachers' Federation, Stan Korolnek; the general secretary, David Lennox; and our government observer, Vivian McCaffrey.
OPSTF is pleased to have this opportunity to appear before the committee to provide an update of issues of concern to our members that directly affect the quality of public education.
I would like to begin by setting the record straight. While it is indeed true that there is a high level of anxiety among teachers with respect to the government's restructuring and cost-cutting agenda, it is not true that teachers are against change and against educational reforms. While we have some concerns about the implementation of standardized testing, the centralized curriculum and the standardized report cards, we are working at the school level to make these reforms work.
The protest this fall was not about these reforms. It was about the arbitrary removal of school boards' and teachers' right to have a say regarding key working and learning conditions in our schools, and it was about the undermining of the authority and the democratic function of the local school boards.
While we understand the government is more responsive to constructive input during the pre-budget consultations, OPSTF finds it very difficult to proffer recommendations that are not calling upon the government to either reverse key policy decisions or at least slow the pace of them.
The federation's principal concern is the government's cuts to the public services which support children and families. Our attempts are to make the case that cutting education and other social programs in order to fund a cut in provincial income tax rates is resulting in an unravelling of our social fabric and turning Ontario increasingly into a province of haves and have-nots. Our concern that the province is going too far and too fast is shared by the majority of Ontarians, according to public opinion polls conducted as recently as December 1997.
The education sector is in a state of high flux and anxiety. Amalgamations present a significant challenge to school boards and to their employees. The challenge is heightened by the failure of this government to provide details for the new funding formula which will determine the level of programs and staffing effective in September 1998. Further, without the new funding formula, school boards cannot begin to negotiate with their employees, a process which by now should be well under way.
A major component of this government's restructuring of the education sector is to give total control over the level of education spending to the province. While OPSTF agrees that there needs to be reform in education funding to achieve greater equity among the assessment-rich and the assessment-poor school boards, the federation does not support the government's move to totally remove school boards' ability to set tax rates to support elementary and secondary schools. The loss of this taxing power seriously reduces school boards' authority and their ability to make decisions regarding the level of school programs and services.
Recent public opinion polls indicate there is strong support for boards to continue to have taxing power. An Environics poll conducted in December 1997 indicates, "Seven in 10 Ontarians say it is important that their school board be able to raise revenues at the local level." The federation is strongly opposed to cabinet setting property tax rates. With one stroke of a pen the setting of tax rates for education amounting to more than $6 billion has gone from the venue of an open and accountable school board to the secrecy of the closed door cabinet rooms. This amounts to taxation without representation and is totally unacceptable in a democratic society.
The federation recommends that the property taxes be debated and voted on in the Legislature. Loss of any local authority to respond to community needs and wishes will make it virtually impossible for school boards to continue to offer such valuable programs as junior kindergarten and adult education. While the Common Sense Revolution promised to make junior kindergarten an option, local school boards will not likely continue to have this option under the new funding formula. Investment in early childhood education, including junior kindergarten, is supported by research and promoted by the Royal Commission on Learning.
The loss of any control over revenue also places into question the ability of school boards to negotiate in good faith with their employees. If school boards are continually forced to plead inability to pay at the negotiations table, then local collective bargaining becomes impossible. The federation believes the school board should have the authority to raise at least 5% of its budget from discretionary local levy. This recommendation is supported by the Association of Municipalities of Ontario and by the Who Does What panel chaired by David Crombie.
When evaluating current funding levels for education, this committee should keep in mind the extent of fiscal restraint already imposed upon the education sector. As we have outlined previously, we have lived under several years of cost cutting, including the four years prior to the Harris government being elected. Less than inflation rate transfers to school boards in 1992 and the three years of the social contract and the NDP expenditure control program imposed deep cuts to the number of teachers and to programs, as outlined on page 7 of our brief.
Since our presentation to this committee a year ago, OPSTF has conducted two studies to document the impact of cuts to education spending. The first was a survey of classroom teachers, who indicated that schools are finding it increasingly difficult to manage their budgets. Many teachers reported insufficient funds to purchase classroom supplies and equipment. The survey also indicated that public elementary teachers spend annually, on average, $315 of their own funds on school supplies. This translates into a province-wide subsidy of approximately $15.6 million for public elementary schools alone. If the government continues to attack teacher compensation and working conditions and to undermine teacher morale, then teachers will no longer be able or willing to make this kind of voluntary contribution to their classrooms.
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The second survey focused on school fund-raising. Compared to 10 years ago, when OPSTF conducted a similar survey, public elementary schools are not only having to raise larger amounts to support programs and activities, they are also shifting more of their fund-raising proceeds to computer hardware, library resources, textbooks and classroom supplies.
In 1985-86 the average amount public elementary schools raised from fund-raising was $3,550. Ten years later the average amount had increased to $8,540. The latter survey showed that the total amounts raised per school ranged from $500 by a school in the Carleton board with 515 students to $72,175 by a school in Essex county with 592 students. The vast majority of schools surveyed, 71%, raised between $1,000 and $10,000.
Based on the OPSTF survey data, it is estimated that across Ontario public elementary school fund-raising supplemented school budgets by $22.6 million in 1995-96.
The OPSTF fund-raising survey not only points to the fact that public elementary schools are already having to respond to funding shortfalls, it raises issues related to the varying abilities of different schools to raise funds.
Schools in more affluent communities tend to be able to raise larger amounts than those in less advantageous communities. This is already widening the gap among schools with respect to the level of computer technology and software available in schools, and to the quality and quantity of library resources and school supplies.
If school boards receive significantly less money through the new funding model, the gap which already exists among schools will only grow wider. Those children attending schools in less affluent communities will suffer the most.
The public does not support further cuts to education budgets. When reminded that increased spending on education may result in higher taxes or an increased deficit, five in 10 Ontarians approve of the current levels of funding for elementary and secondary schools; four in 10 believe that government should be spending more on education; fewer than one in 10 thinks the government should be spending less.
The new funding model must not be viewed as a crass tool to fund the ill-conceived cut in income tax rates. The funding model will be successful if it addresses inequities without impeding the ability of the larger, urban boards to respond to their unique educational and social needs. The funding model will be successful if it supports a wide range of programs vital to the development of children. These programs include physical education, guidance, library, music and art.
The funding model will be successful if it recognizes that classroom teachers are not islands unto themselves and require a variety of professional and administrative supports to do their jobs. These supports include principals, vice-principals, teaching assistants, educational support personnel, occasional teachers, and secretarial and custodial support. If the new funding model fails to adequately recognize these supports and narrowly defines the classroom, then it will fail to provide quality public education in this province.
The current school board amalgamation process should not be viewed as a means to cut funding away from elementary and secondary schools. Any long-term savings achieved through the amalgamation process must be reinvested in the per pupil grants.
Our brief touches briefly on the issue of child poverty. It seems to make sense that social spending cuts are going to affect poor children the most. It also makes sense to invest as a society in social supports which mitigate the adverse effects of poverty and reduce the incidence of poverty. Unless we take this approach, we will be spending more on health, employment and legal costs to deal with the problems associated with poverty.
OPSTF urges the government to increase the funding allocations to social assistance, social housing and women's shelters. As teachers, we also know that children who come to school hungry and stressed are not ready to learn. Our brief points out that socioeconomic status is a key indicator for academic achievement. It is much more costly to remediate older children who have fallen behind in their academic achievement than to invest in early identification and prevention strategies.
In regard to child care, OPSTF is particularly concerned about this government's approach to that. By downloading 20% of the cost of wage grants for child care staff, resource centres and special needs, the province is placing these programs in jeopardy as municipal governments face budget pressures. By allocating child care funds to the child care tax credit targeted to low-income families, the province is doing nothing more to support the creation or maintenance of quality, licensed child care spaces. By paying 100% of the cost of a voucher and only 80% of regulated child care costs under the Ontario Works program, the province is undermining the regulated child care system and ensuring that most children whose parents participate in the program are relegated to unregulated and often poor-quality care. Thus, those children who could benefit most from quality child care programs will have the least access to them.
The government has also placed school-based child care programs in serious jeopardy. Capital funding for child care space is no longer provided for new schools or for renovating existing school space. It is also expected that the new education funding formula will make it financially difficult for school boards to continue to offer school space to child care programs. Currently, approximately one third of regulated child care spaces is located in schools. Children and families who benefit from the convenience of school-based child care stand to lose significantly from the regressive government policy which is undermining school-based child care.
Securing tenure for school-based child care programs has probably been the most significant policy development for child care in the last decade. School-based child care represents an important first step towards establishing a model of integrated children's services. Instead of moving closer to this model through a series of funding cuts and policy changes, the Harris government is dismantling the fragile basis of integrated services. I refer you to our four recommendations regarding child care on page 15 of our brief.
Finally, since the government has raised the issue in the context of the provincial budget, I would like to turn now to the teachers' pension fund. It is irresponsible of this government to imply, through the budget and subsequently through the finance minister's economic statement in December, that there is a plan to establish an early retirement incentive program for teachers. This committee should be aware that the Ontario Teachers' Federation is fully prepared to enter into formal negotiations regarding improvements to the teachers' pension fund, including a reduction to the current 90 factor which determines the teachers' eligibility to retire. We are fully in agreement that an early retirement option would be an important vehicle to accommodate the entry of younger teachers into the profession. OTF and its affiliates are not interested in a temporary, short-term retirement window, which would be a costly initiative that would only benefit a small number of the plan members. The teachers are committed to negotiating permanent improvements to the plan with our government partner. The OTF proposals would introduce improvement through gains generated by the plan, with no additional funding required by the taxpayers. A settlement would not increase the provincial deficit.
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In conclusion, education is about idealism. Our members would not be in the teaching profession if they did not have optimism about their ability to positively affect the lives of their students. The policies of this government, however, which are tearing away at the financial and social supports for children and which are eroding the foundations of public education, are making it extremely difficult for teachers to sustain that optimism.
Teacher morale is at all-time low in this province. OPSTF urges the government to reassess its policy on tax cuts, which are being implemented at the expense of social programs and public services. The federation urges the government to listen to teachers who are saying that they cannot meet the needs of their children when education budgets are slashed and the classroom is defined to exclude key programs and support services. The federation urges the government to listen to Ontario citizens who, through public opinion polls, are telling the government that it is moving too far and too fast and that they are willing to pay for quality public services such as our public schools.
In closing, I would like to direct you to our recommendations, which are listed in the brief on page 18. Thank you, Chair.
The Chair: Thank you very much, Ms Benedict. We have approximately 10 minutes for questions. I think on day three I'm to start with the government caucus. Are there any questions?
Mr John R. Baird (Nepean): Thank you very much for your presentation. We appreciate the time you took to put it together, and we'll certainly reflect on your list of 13 recommendations and give them some thought.
I did want to talk to you briefly about the early retirement incentives for teachers. I know a good number of teachers in my constituency are concerned about this issue and I know you recently have indicated you're interested in going back to the table to start this process. How likely do you think it is that the Ontario Teachers' Federation would be able to come to an agreement with the government with respect to the $250 million that the government has already committed towards an early retirement incentive for teachers? There could be significant savings if instead of teachers making $65,000 at the top of the grid new teachers were making $32,000 and at the same time assisting those teachers who would like to seek early retirement. How realistic do you expect that would be?
Ms Benedict: Mr Baird, it would depend entirely on the government's commitment to sit down with formal negotiations. We have seen in the past two years that three attempts at informal negotiations have failed miserably. If we enter into formal negotiations, there's a commitment by both sides, the teachers' side and the government's side, to see the process through to an end and not be able to walk away from it.
We have said over again that we appreciate the fact that we would like to make permanent improvements to the teachers' pension fund and to do exactly what the government has been saying now for two years that they wanted to do, which is to rejuvenate the teaching profession. But we would like to see that be able to happen on an ongoing basis, not just on a one-time opportunity that allows only a small number of people to exit at one end and to enter at the other.
You have pointed out the difference in salary between a teacher at the top of the grid and at the bottom of the grid. We would like to see that be enabled to happen on a regular basis, but unfortunately we can't go anywhere until we can sit down and have the government's commitment to sign formal negotiations.
I would like to turn you if I could, please, to my general secretary, who happens to be the pension expert from OPSTF and also sits on the Ontario teachers' pension board.
Mr David Lennox: The key is that school boards, teachers and government are going to be looking in March and April, more April, with regard to staffing for September, and so the critical issue here is if you can get into formal negotiations, you have to have a second commitment from both sides. The second commitment is to get an expedited process, because it's no good to have negotiations end next December when you need them to end for, let's say, the end of April, so people will know what the rules are for May and June.
I think it's critical upon the teachers' side when they enter into it to know that it has to be an expedited process so we can get the success rate that we both want to achieve, so we don't end up having layoffs this fall and so we have teachers who wish to retire get out. That's the other part of the bargain, to get formal negotiations but also to get the government and the teachers, and it takes a commitment on both parts, to get it expedited quickly. Two weeks, three weeks, you can have it done.
The Chair: Excuse me. I have to interrupt and move on to the official opposition.
Mr Gerry Phillips (Scarborough-Agincourt): So many questions, so little time. I could pursue a little bit more the pension issue because I think for our committee this is actually a huge issue. In the finances of the province, the government shows expenses this year of $555 million for the teachers' pension, but the government says they actually made cash payments of $1.145 billion. Actually, that was the cash payment into the teachers' pension fund. On our books it's $555 million; the cash payment was $1.145 billion.
That's the answer that the minister gave me in his written response to my question. So there's this $600 million difference between what's on the books, if you will, or the public account or our financial statement, and what looks like cash being put into the fund each year. The minister indicated that the difference between cash payments and what was recorded in our statements over two years was $800 million. In other words, the taxpayers actually put out $800 million more in cash than we show in our financial statements.
I'm having difficulty in understanding where that's going. I think the majority of that is the payments against the unfunded liability, if I'm not mistaken. It's the $500 million that is not being recorded on our books. I realize we may not have time to get into the detail of it today but, in your opinion, what is the number we should be thinking about from a financial point of view in terms of the annual commitment that the province realistically has to the teachers' pension?
Ms Benedict: I'll refer to David for a response to that.
Mr Lennox: There are two commitments that you have already stated, and only two. One is the matching contribution of 8.9% that matches the teachers' contribution and that is annually approximately between $650 million and $700 million. The other point is the unfunded liability. That ranges slightly above $400 million each year and will escalate over the time period to pay off the unfunded liability. So both of those are commitments that the government has to the pension plan. One is the annual ongoing cost and one is the cost that pays for the unfunded liability that was decided back in 1991.
The Chair: Thank you, sir.
Mr Phillips: Is that it?
The Chair: You've got a couple of seconds if you want to use them.
Mr Phillips: Just to the committee, I think it would be valuable if we had that laid out for us, because there is I think about a $500-million to $600-million difference between what I'm told we're paying in cash, if you will, money out, and what's recorded on the books. I'm trying to get the reconciliation of that, but it may not be for you but for the committee to somehow request that from the financial officials before we adjourn.
Mr Tony Martin (Sault Ste Marie): Thank you very much for coming this morning and for such a well-prepared and documented list of concerns re the question of education in the province. I'm going to try and place my comments and question in the context of the committee that you're coming before, the finance and economic committee, as we look towards the budget of this year.
It seems to me, if we're going to invest in the future of this province, that education has to be a fundamental building block, one of the key ingredients in any positive future that we might have together as a community of people. When you look at the list of concerns that you've raised -- small schools being closed, the issue of child poverty, the move away from early identification and prevention programs, the move completely out of the area of junior kindergarten and the very simple response of this government to what they claim is a crisis in education which says that if we put less money into it, we'll fix it -- it seems to me that when you make the statement that this government is going too far, too fast, that really isn't strong enough. My opinion would be that in fact this government is going in the wrong direction, that they're putting their money in the wrong place if they want a future for us collectively, for communities and for families and for children. Would you not agree with that?
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Ms Benedict: I would agree with your premise entirely. We were pointing out that they were moving too far and too fast. We've been accused, as a teaching federation, of not supporting any government initiative when it deals with education. They continually make reference to accountability and to standardized testing and implementation of a standard curriculum. We're definitely not opposed to that but to the rapidity of the change and the lack of supports for the teachers out there.
A good example is that recently, with the new report card, boards trying to make it work had teachers working on computer systems till past midnight each night so that the computer systems could accept the new report structure, and then teachers spending countless hours doing extra secretarial work needed just to implement that one aspect of change. It's good to have a standardized report card, but get all the bugs out of it before it goes to the school and don't already put another burden on overloaded teachers.
Our concerns are great where they're pulling out of things, especially with early childhood and early identification. We will work with this government. We guaranteed smooth transitions into new school boards if they will work with us, and we haven't seen a commitment from their side on that.
The Chair: I'm going to have to interrupt you there. Our time is up. I thank you for coming. We appreciate your submission.
C.D. HOWE INSTITUTE
The Chair: The next presenter is Bill Robson from the C.D. Howe Institute. Welcome.
Mr William Robson: Thank you very much for the opportunity to be here today. It's flattering to be invited and it's also a pleasure right now because it's unusual for a round of pre-budget discussions to get under way with circumstances as promising as they are right now.
Ontario's economy is growing well. Job growth is healthy and consumer and business confidence are high. There are a few shadows being cast by the Asian crisis and the Bank of Canada's reaction to the weak Canadian dollar, but even with those things taken into account, the outlook, certainly for the next year, is good. That's true for Ontarians generally and it's also true I think for the government's fiscal situation.
When the outlook is that positive it suggests that now might be a good time for us to look a little further ahead than we often do in thinking about Ontario's budgetary policies. I want to take my cue here both from recent discussions in the provincial Parliament, and I think in this committee, and from the evolving debate in Ottawa and say a little bit about longer-term programs for debt reduction and the payoffs they offer. In case this seems a little otherworldly at the moment, I will observe my instructions here and leave half the time for questions so that you can drag me back to reality before this session is over.
Let me set the stage for this longer-term discussion by highlighting three things about the current situation.
First, robust economic growth is going to keep provincial finances healthy at least through this year. Tax revenue especially is coming in well above budget projections, as you know.
Second, there are a number of restructurings going on in health, education and the municipal sector. They are going to pre-empt part of that extra fiscal room. They also are a major drain on the government's managerial capacity. Transitions cost money; they require a lot of attention. If those things aren't there, then they can be more painful than they need be. I see this important claim on new revenue and also on time and talent as precluding any new spending programs over the next couple of years.
Third, even with those extra demands taken into account, the government now looks to be about a year ahead of schedule in its quest to eliminate the deficit, so the 1999-2000 fiscal year could well be the one in which Ontario stops adding to its debt.
Most of us would probably agree that it's a good thing if you stop adding to your debt but, as the current debate in Ottawa shows, a good thing is no guarantee that you'll have a good time. The federal government's election program, inasmuch as you could figure it out, involved a good deal of new spending once the budget was balanced. Now they're having a hard time adjusting to a change in public sentiment that says we should pay down some debt, at least as a ranking in the front ranks of priorities. Having failed to think straightforwardly about what fiscal policy should look like in the post-deficit era, they are now involved in a confused and somewhat secretive game. That's too bad because there is a good case for getting debt down and there are also better and worse ways of doing it.
I brought a piece, but unfortunately not enough copies for everyone, that Bill Scarth from McMaster University and I put out late last year, arguing that the federal government should adopt a long-term plan to reduce the debt. As you know, there are a lot of arguments bearing on what the right level of government debt is. It's a hard answer, but our reading of the federal government situation is that a debt target of 20% of Canada's gross domestic product achieved over 20 years makes a lot of sense, and we thought 20-20 was perhaps a good slogan, but that's not our reason for adopting that target and that time frame.
The principal reason is that Canada faces a major demographic shift and we're going to start really feeling it in about 20 years' time. Baby boomers are going to start collecting pensions and their demands on public services, particularly health care, are going to start rising as they get older. There will be proportionately far fewer working-age people to support them by then.
To cushion the blow that this shift would otherwise deal to the living standards of generation X we may at that point want to start letting public debt rise again. You could think of this as kind of like a Keynesian budgetary policy where you're smoothing out economic cycles, except in this case you're looking at a much longer-term transition and thinking about trying to smooth that out, using the government budget. So it's Keynesianism on an intergenerational scale.
The trick here, though, is that we're only going to be in a good position to do that if we pay down some debt first. When you think of the gap between the taxes people pay and the benefits and services they get from government in return, the payoff from that kind of program, cutting Ottawa's debt from where it is now, about 70% of GDP down to 20% of GDP, is huge. For one thing, you save on interest costs. The other thing -- it's a bit more subtle, but because if you're going to maintain a steady ratio of debt to GDP, you can let the debt grow at the same rate as the economy, once you fit that target the budget can move back into a small deficit again.
If you add those two payoffs together, in Ottawa's case the long-term payoff from getting the debt down would be over $6,000 for a family of four in today's money; more in the money of the day, but if you translate it into today's terms, $6,000 for a family of four.
It sounds like an attractive target in that sense. Then there's the question of how to get there. The temptation with any long-term target, and it's true whether you're a family or a business or a government, is to approach it slowly. But there are a number of problems with a slow approach. First, if you pass up the opportunity to make quick progress while the economy is strong at the outset, then you may end up getting stuck trying to make up for it when the economy is weak or abandoning the project.
The second one -- it's a bit like a smoker who decides that he'd like to quit but won't go cold turkey -- you raise doubts about your commitment. For government, doubts about commitment matter because they can affect household and business confidence and they can also raise your borrowing costs.
There is a third and related reason. A slow approach promises that you're going to have a long period of belt-tightening. Then when you get to that final point where suddenly you can switch and let the budget move back into a small deficit, there is a sudden binge of new programs or tax cuts. If you think of a homeowner who anticipates the payoff of a mortgage and starts to let credit card debt run up in advance of that, you may end up in a situation where you're tempted to start the party a little too soon and you never end up actually reaching your target.
Thinking about those arguments or to decide between steady or back-loaded programs or front-loaded programs where you start to make progress quickly, we thought that in terms of Ottawa's situation what we needed was a front-loaded program, a few years of sizeable surpluses to kickstart this decline in the ratio of debt to GDP.
A front-loaded program does two things: It brings some of the payoff in interest savings forward in time so that rather than whittling away, whittling away, whittling away, you can bring in some of the permanent tax cuts or program spending increases you might like to see earlier, and it also allows the government to steer the bottom line gradually towards this small deficit that's compatible with a stable ratio of debt to GDP instead of promising in effect for 20 years to keep the foot on the brake and then, in the 21st year, tromping on the accelerator.
In Ottawa, it seems as though the polling numbers that they are looking at, and also I think Paul Martin's own sense of prudence, are suggesting to him that a few years of healthy debt paydowns would be good budgetary policy. The problem is that there is an election commitment out there to spend half of any projected surplus, and there is also a fair amount of pressure for tax relief. So instead of a clear program in Ottawa, we've got a fair amount of confusion.
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That's enough about Ottawa. What about the real world, where it really matters to people? If we look ahead, and I don't think with excessive optimism, to the situation in fiscal year 1999-2000, the Ontario government is going to be in the same position that Ottawa is in now, also trying to frame some kind of post-deficit policy. I didn't spend all this time talking about Ottawa just to give you something to nag your federal colleagues about, although if you want to do that, I would certainly encourage you. It's just that many of the same considerations that I mentioned in thinking about Ottawa apply to Ontario as well.
Again, when it comes to setting a target, it's hard to nail down a level for the ideal debt, but certainly we have an idea that it would be better to have a lower debt than we do today. A low debt-to-GDP ratio is easier for Ontario to achieve; we're starting at a level of about 30% of GDP instead of Ottawa's 70%. There are also some prudent arguments for Ontario to adopt a lower target than Ottawa.
Aside from pensions, a lot of the impact of an aging population, particularly health services, is going to fall on the provincial budget. Ontario also has quite a large contingent liability in Ontario Hydro. But there is an argument on the other side, which is that Queen's Park makes a lot more important infrastructure investments than the federal government does, and there is a well-known case that says you should finance infrastructure projects with debt so the benefits and the costs of paying for them will be matched over time better than if you expense them all right away.
Just to illustrate, suppose we decided that here in Ontario we should aim for a level of debt that approximately matches our stock of physical assets. I'll be open to correction from anyone who knows more about this than I do, but I'm going to suggest that would justify a debt level of about 10% of Ontario's GDP, so 30% down to 10%, and suppose we were to do that over the same 20-year period that I was talking about in connection with Ottawa. By the end of that period, the payoff, this combined interest savings plus that little extra bonus you get as the budget moves back into deficit, would be about $3,000 for a family of four. Again, that's in today's money. If you wanted to go all the way to zero, the payoff would be a little higher, about $3,500 in today's money. Obviously, that's a lot of money. You can finance a lot of health care and education or some serious tax cuts with that kind of payoff.
How about getting there? We don't know, looking ahead to the year 2000, what the economic environment is going to be like, so the speed that we might start off on that program is going to vary depending on whether we're still growing quite rapidly or whether we've gotten back to something that's a little more typical of long-term experience. Setting aside the cyclical arguments, the same considerations that I was talking about in Ottawa apply to Ontario. If you front-load the program, it brings the payoff from lower interest costs forward in time, and front-loading is credible in a way that back-loading isn't. It allows you to approach that small deficit that's consistent with a stable debt ratio gradually instead of looking forward to some kind of terminal binge that you might want to bring forward in time and abort the program.
The other encouraging thing to note about Ontario's situation is that kickstarting a debt reduction program doesn't involve anything like the same amount of stress that would be true in Ottawa. In Ottawa, to get off to a quick start in reducing your debt from 70% of GDP down to 20%, you need surpluses over the next five or six years of about 2% of Canadian GDP, which is about $20 billion annually. In Ontario, we need to bring our debt down by much less, from 30% to 10%, so you don't need anything like the same kind of surpluses. A front-loaded program here in Ontario that would get us off to a very quick start -- we'd be about halfway there in terms of the debt target in the space of about six years -- would only require us to run budget surpluses that are about two thirds of a per cent of Ontario's GDP. Two thirds of a per cent of GDP is about $3 billion annually in today's money.
Aiming for a zero debt in 20 years would be a little harder. You'd need surpluses of about $7 billion over those first few years. Looking ahead to the end of this decade, it seems as though if we project forward and say, "What if the government was to just collect the same amount of money in taxes relative to the economy as it probably will," and I'm allowing for the final stage of the personal income tax cut, "and what if it allowed program spending to continue to grow in line with population growth and inflation?" we would have budget surpluses that would be more than adequate to get us well on the way to that 10% of GDP target in 20 years' time. In fact, that type of budget surplus would be close to the level we would need to get us to a zero debt target in 20 years' time.
Let me conclude, then, by reminding you that I took the liberty here of describing the situation as we will face it if the budget is balanced in 1999-2000. Before getting to the pleasant task of wrestling with post-deficit priorities, Ontario obviously still needs to balance the budget. There are some transitions to finance, as I mentioned. There is a managerial task here. The government has to pay careful attention to its ongoing operations. It's clearly important that the providers of services are motivated to make sure that the largest share of every dollar spent goes to the front line.
I have to mention here that I continue to be impressed with what Alberta has done with the quality-of-life indicators it publishes related to various government services. I think that's a very good way of promoting public discussion about what program priorities should be, and it provides a very valuable monitor of the quality of front-line services. Clearly, the quality of front-line services is what is going to largely determine the willingness of the public to follow any fiscal strategy.
With careful stewardship on the spending side and continued buoyant revenue growth, Ontario faces the agreeable prospect of a balanced budget by the end of the century. I want to leave the message that we'll be in better shape to deal with the post-deficit world if we have a clearer idea of how big the rewards of debt reduction are and how we should go about winning them. It seems to me the message is that when it comes to the rewards of debt reduction we should think big and we should act fast.
Thank you very much for your attention. Now it's over to you for the reality check.
The Chair: Thank you very much, Mr Robson. We have approximately three or four minutes per caucus and I'll start with the Liberal caucus.
Mr Monte Kwinter (Wilson Heights): Mr Robson, in your presentation you talk about our being in a fiscal dividend period with a balanced budget, and then you call for a provision that there be a small deficit that's compatible with the ultimate debt target. How does that fit with the thrust, I think even of this government, to bring in legislation to prohibit deficits?
Mr Robson: If you had no debt and you wanted to keep it that way, then the budget bottom line would obviously have to be zero all the time. If you decide it's appropriate to have a debt that is, say, 10% of the economy, then as the economy grows you can allow the debt to grow and you can have a small deficit every year. If you think my idea of relating it to the amount of capital spending that you do makes sense, then you're going to be deficit financing as you add to new capital, and that's a fairly standard thing to do.
Looking over this very long time period, if you decide you're comfortable carrying some kind of debt forward, then you can run a deficit every year. But when it comes to getting from here to there, to that longer-term situation where we're with a debt ratio we're comfortable with, it makes sense to try to run a balanced budget, or even some surpluses.
My perspective here was very long term, and over the long term the merit of getting to some kind of low debt ratio that you're comfortable with is that you can run a small deficit, but in terms of getting from here to there, it's important not to anticipate that too much. I think that's the problem that has happened in Ottawa. There is a vision out there of an enormous payoff when the debt comes down, and it's easy to produce those numbers. You crank forward and say, "Look, in 20 years' time we're going to be rolling in dough." But if you start to spend it before you actually see it, then you can get into trouble. So I don't see anything incompatible in the shorter term with running a balanced budget or a budget surplus.
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Mr Phillips: I was very interested in your comments on the quality-of-life indicators. I think that's something the committee should consider. Can you give us some examples of those quality-of-life indicators that you see in the Alberta finances? What are they?
Mr Robson: I didn't bring a copy of it with me, but they pretty much cover the gamut. There are ones related to health, education, the state of the environment, some social indicators that aren't so readily interpretable as being the result of any individual government policy in terms of teenage births and so on. But it seems to me that's a very handy way of getting out front a lot of the things that people generally -- and I think a lot of these things are a matter of concern across the ideological spectrum -- getting those things out front and making sure you're watching them on a year-by-year basis. Clearly it exposes governments to all sorts of risks, but early warning systems are a large part of what good public policy is all about: If you see something moving in the wrong direction, you've got something out there.
People in Alberta could say more about this than I can, but it seems to me that to a considerable extent it establishes a set of indicators that are a little bit less open to the regular partisan problems in terms of interpreting and exactly what information you're going to look at to support your case. Those indicators are out there and people are watching them on a year-by-year basis.
In the case of Ontario, obviously we're having debates right now about issues connected with health care and education, the environment, some of the things that are happening in the municipal sector. If there were a set of indicators that were like that, I think it would be very helpful for us in terms of monitoring how we're doing and maybe helping to shift the debate away from areas where things aren't as bad as we sometimes say and towards areas where there seem to be problems.
Mr Martin: I'm going to try to drag you back to a bit of reality, as I experience and see it, anyway, when I go back home to my constituency and talk to the people I represent and who bring to my office and to me, in various ways, their feelings about what's happening out there and how they feel about the future etc. It's not as good as some might project it to be. Certainly there's lots of anxiety among young people in college and university about their future and how they will participate and if they will in fact be able to participate. Communities feel very vulnerable at the moment re their ability to provide for the people who live within their jurisdiction.
I don't think any of us here, no matter what political stripe you are, don't believe some reasonable balance of debt-to-equity ratio in any enterprise is important and that we need to be accountable and realistic in front of that. You can't spend more than you're getting if it means down the line you're going to be in big trouble.
For the two days I've been sitting at this committee, I've heard suggestions that there are probably two or three different ways to get to a more acceptable level of spending versus revenue. It comes down to choices and underpinning philosophy. For example, does an economy or an economic system serve people and communities or vice versa? If the system begins to cause the kind of trauma that some of us are sensing is out there and are hearing is out there, is that a red flag? Is that an indicator of something happening out there, a quality-of-life indicator that we need to be concerned about?
Trying to boil it down to a specific question, with some of the choices the government of Ontario continues to make, for example, to give a tax break at the expense of some very vital and important services that are now deteriorating to a point where we may lose some of the fundamentals of a good economy into the next century, is that not a problem? We've had people before us here suggest that if we weren't so stuck on the tax break, we could in fact balance our budget even sooner and end up with less debt by doing that. Is that something you have some thoughts about or some concern about or perhaps could enlighten us a bit about here this morning?
Mr Robson: The last time I appeared in front of this committee, I did express ambivalence about this issue of giving your tax cut ahead of balancing the budget. It seems to me that, as a matter of prudence and placing your bet as to where you're going to make the most secure decision, where the payoffs are most certain, paying down debt makes a lot of sense, and then once you have saved some money on interest you're in a position to start paying that out, in a tax cut if that's your preference, if you see some real need on that front, or on programs.
In addressing advice to Ottawa, we spin a little heavier on the tax side, for the reason that one of the biggest problems we now have in Canada is the effective marginal tax rates that face low- and modest-income earners. There are a lot of reasons for that; it has to do with the structure of the tax system and it also has to do with the way the various benefits are clawed back as you start to earn some money. That's a big problem, and some of the barriers you alluded to early in your question arise from that problem, that at low and modest income levels people are keeping far less than half of every additional dollar they earn. In giving advice to the federal government, we tended to argue that when you start saving some money on interest, you ought to pay it out in tax cuts.
Here in Ontario, as I said last time I appeared before this committee, I was nervous about the tax cut. I would have preferred to see more progress on the bottom line first. The big merit of a tax cut from the point of view of the overall economy is, does it have the supply-side effects that originally gave the intellectual backing to the movement for tax cuts, first in the US and then here? If you look at Ontario over the last year and you compare the performance of Ontario's labour market to those of other provinces, you can see a lot of reasons for thinking it did some good. There are more people coming into the labour force now in Ontario than is typically the case elsewhere in the country. There are certainly more new jobs being created. So my nervousness is a little assuaged.
It seems to me, though, addressing the third part of your question, about whether the tax cut was the better thing to do -- I will just remind you again of my point about the very high marginal tax rates that face low- and modest-income Canadian earners. Ontario's tax cut was well geared to addressing that problem because it concentrated its benefits at the low end.
When you're addressing the question of whether we would have been better off investing in some of the spending programs, that's where I come back to these quality-of-life indicators. Education is a debate I've been involved in myself, and one of the things that is enormously frustrating about that is we don't have any such thing. People have defaulted to the view that money is some kind of measure of quality, but there's actually a lot of evidence, when you look around the world or across North America, that money and results simply aren't related to each other in any systematic way.
That is where we need to make more effort to set out what these standards are that we are trying to achieve with our programs. In health, are we monitoring the waiting periods people are experiencing or are we just going by the headlines we see in the paper day by day? Are we monitoring infant mortality and life expectancy? In education, I could mention some indicators as well, but I think across the board one of the problems we have is that we're operating in a vacuum and we need better information on that front.
The Alberta report I mentioned, by the way, is called Measuring Up.
The Chair: We have to move to the government side now.
Mr Ted Arnott (Wellington): Thank you, Mr Robson, for coming in and for your comments. It's always kind of exciting when there's an idea you've been promoting for a while and someone with credibility comes in and reinforces everything you believe and the point you've been trying to make, so thank you very much.
Mr Robson: You're very kind.
Mr Arnott: One of the problems, though, we have in going forward in the direction you've suggested is that we live in a society that craves instant gratification. People who find themselves on the left of the spectrum want the government to spend more instantly to solve every perceived social problem. Some people on the right believe we should cut taxes immediately, whether or not there's a huge debt, because they believe that would generate a positive economic situation. We also have a political system where most governments think in terms of a four- or five-year electoral cycle more than the long term, and what you're suggesting requires long-term fiscal discipline. How do we get around that problem in terms of continuing to promote the need for debt reduction?
Mr Robson: It's a problem that in some sense you can't solve. There will always be pressing needs that come to the fore and are hard for anyone to set aside. I think there's an unfortunate tendency among economists to denigrate the idea that you can draw parallels between government finances and household finances. I think it's entirely appropriate to draw those parallels. A lot of what provincial and municipal governments do by way of service provision is providing services to people that in some sense substitute for the things they might otherwise have to pay for themselves. That's certainly the case in health care and education, a lot of municipal services and so on. How do you pay for them? Obviously you pay for them out of your income. There's a pricetag that's attached.
When it comes to deciding what's the prudent stance, it seems to me that the same sort of considerations that a household faces when it comes time to decide whether to borrow or not apply directly to governments. You can borrow now, but you'll have an interest bill to pay later. It's important, I think, just to convey to people the idea that these are choices that are being made on their behalf; $3,000 per family of four is a number that I think speaks to the average family of four. It's just important to get that message across.
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Sometimes what governments do is at one remove from people's ordinary decisions. They think: "It's the government. It doesn't affect me." But by now we've developed a lot of experience with deficits and debts and taxes and programs that I think has brought home to people the reality that what government does affects them in their daily lives and I think it's appropriate for governments to communicate to people that this is, in effect, part of your life and part of your household budget. We take this much money from you, we provide this much in services. If at the moment you are paying several thousand dollars a year more in taxes than you're getting in programs because of the interest bill, there's an obvious solution to that, and that's to pay the debt down.
Right now, we're seeing some polling numbers that suggest that message resonates with people. It depends how you ask the question. There are certain services people like very much and there are certain tax cuts that are more popular than others, but when you ask people to make those broad choices, I think the option of paying down debt is one that strikes a lot of people as quite sensible.
The Chair: Thank you very much, Mr Robson, for your presentation and your time this morning. We're out of time. I do appreciate it.
ONTARIO CAMPAIGN 2000
The Chair: Our next presenter is Laurel Rothman, Ontario coordinator for Ontario Campaign 2000. Welcome. You have 30 minutes to use as you see fit.
Ms Laurel Rothman: Thank you. I'll ask my associate, who is a partner in Campaign 2000, to introduce himself.
Mr Domenic Storti: Good morning. I'm Domenic Storti. I'm representing the Social Planning of Council of Peel. I'm here to discuss the state of child and family poverty in Peel.
Ms Rothman: I can't help but say it's quite interesting, the contrast between what I think Mr Robson has commented on and perhaps what we will be saying from our network's perspective across Ontario.
Campaign 2000, launched in 1991, is a network of more than 60 national, provincial and community partners dedicated to advancing public awareness about child and family poverty and proposing policy options for government action and complementary strategies for community partners. It was formed with the specific goal of ensuring that the federal government upholds its commitment, undertaken in a unanimous, all-party resolution in the House of Commons in 1989, to end child poverty by the year 2000. Most recently, in recognition of the heightened interest and activities of the provincial governments through the ministerial council on social policy and other channels, Campaign 2000 has broadened its provincial focus. In Ontario, our network of provincial organizations and community partners includes nurses, clergy, social workers, child care organizations and many other local groups.
On December 1, 1997, Campaign 2000 presented its first report card on child poverty in Ontario, which I believe you have before you. It identifies a most disturbing situation, that there are 506,000 children in poverty in Ontario, about a quarter of a million more than there were in 1989 when the federal resolution was agreed upon. This increase is hard to imagine, yet it is about the same size as the city of Windsor or four times the size of the population of North Bay. In any terms, this is a serious change.
Another equally disturbing fact is that the rate of child poverty climbed from 11% to 19.1%, the highest increase in Canada. This dubious distinction is not one that Ontario has traditionally held. While Ontario is, I would say, slowly climbing out of the recession of the early 1990s, the rate of child poverty continues to increase. I won't claim to be an economist, but I certainly am a public educator and social worker engaged and involved with families and services across the province, where I hear this.
In addition to these worrisome facts, it's essential to note that the depth of poverty is also greater; that is, the average income of a poor family as defined by the Statistics Canada low-income cutoff has decreased, even in constant 1995 dollars. In 1989 the average income of a poor family with children was $18,773, by 1995 it had decreased 9% to $17,000, and this average poor family in Ontario was 35% below the cutoff. From another perspective, that average poor family had about $1 available for every $3.54 that the average family with children in Ontario had.
These facts describe the situation for poor children and families in Ontario in 1995, the most recent date for which there are available statistics. The data on 1996, which will soon be available, we certainly expect will demonstrate the full impact of the funding cuts to more than 400,000 children and their families who rely on social assistance. The decrease in social assistance rates of more than 21% in 1995 leaves many poor families more vulnerable than ever.
As the average income of poor families goes down, that gap between the average income of a poor family and the poverty line will most likely widen. Closing that gap, both for individual families and society as a whole, will require a significant public investment, estimated at $2.5 billion.
Coupled with the extensive cuts to children's services, including public health and hospitals, education, child care, resource centres and children's mental health services, these cuts to social assistance have taken a personal toll on families across Ontario. This is not just a Toronto problem. The human cost is indeed high, as was documented in the recent report of the standing committee on social development, where witnesses from across the province emphasized that the cuts to critical services, including mental health, child protection and welfare, children's health and education, will have a cumulative and long-lasting effect.
My colleague is going to talk a little bit about the situation in the region of Peel.
Mr Storti: The Social Planning Council of Peel is an independent, non-profit organization that promotes social justice by facilitating citizen participation in the identification of social issues and in the planning and implementation of collaborative actions through research, public education and community development. One such relevant social issue in the region of Peel is the existence of family and child poverty. Most discussions around poverty tend to focus on Toronto, but few are aware of the extent of this problem in the region of Peel.
Much of the following information I'm going to be presenting is taken from the Social Planning Council of Peel newsletter on preliminary estimates on family and child poverty, which I have submitted, and I think each of you has a copy right now.
Who is poor in Peel? What is most alarming in this day and age is the fact that the number of children age zero to 18 living in poverty in Peel is 27,672, or 11.4%, and that the probability of a child age zero to 18 living in poverty is one in nine. Some may be surprised that the city with the highest child poverty rate is Mississauga, at 12.7%, or 19,273. In terms of poor families, Peel has 21,047 families living in poverty, and once again Mississauga has the highest percentage of poor families in Peel, with 10%, or 14,869. In terms of the type of family, lone-parent families with children are more likely to experience poverty than husband-wife families with children, 36.6% and 8% respectively.
It is worth noting that between 1991 and 1996, the number of poor families in Peel increased by 24.8% and the number of poor children age zero to 18 increased 15.8%. This is a definite sign that the state of family and child poverty in Peel is continuing to grow and will only become worse as we approach the new millennium.
In terms of gender, one in nine females, 10.7% or 45,895 -- that's children and adults -- live in poverty, compared to one in 11 males.
People with limited or no literacy skills are more likely to live in poverty. Adults without a secondary school or post-secondary certificate were almost three times as likely as adults with a university degree to live in poverty in Peel. In fact, according to a report by the Social Planning Council of Peel for the Peel Adult Learning Network, one in five -- that's 21% -- of adults in Peel cannot read or write at an elementary level. Thus, as one can see, family and child poverty is very much a reality in the region of Peel.
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What are some of the indicators, ie, signs of poverty, in Peel? One very clear indication is food bank usage. One of the largest food banks in Peel is Foodpath. From January 1997 to August 1997, an alarming 30,181 people used Foodpath Food Bank. Of these, 13,574 were children, about 24% were working poor and approximately 30% were single parent families.
Another sign is the number of people on waiting lists for affordable housing. As of November 1997, some 9,071 people were on the waiting list for housing. It should be noted that the average waiting list for housing is one to three years, but many have said that this figure could be as high as six years.
For many, access to child care is difficult. Although many poor families are eligible for subsidized child care, the number of subsidized child care spaces available is not enough to meet the demand in the region. As of November 1997, some 5,700 children were on a waiting list for subsidized child care spaces.
When you take all of these factors into consideration, what then are the consequences of poverty on families and children? For one, poor children are at a greater risk of living in poor health even in adulthood. Developmental delay resulting from malnutrition in the earliest stages of a child's life contributes to generational poverty.
The rate of children not in school is twice as high in poor families as it is in families living above the poverty line. Poverty itself is abusive and places people at a higher risk for violence. Poor children are more often exposed to violent family environments.
What can be done to eliminate family and child poverty? As individuals, we can educate ourselves about poverty issues. We can support Campaign 2000 and related initiatives through donation of time or money. We can call or write our local MP or MPPs to urge action to combat family and child poverty.
As elected government members, you have the ability to review policies and programs and to make structural changes that will have long-lasting impacts in the area of child and family poverty. This is where your energy can be focused.
Thus, as one can see, poverty is not a vacuum that exists only in Toronto. Poverty is all around us. Where do we start to deal with poverty in a constructive way? We start with ourselves. We start with our hearts to be more compassionate.
I'm reminded of recent events in Quebec and how the entire country rallied together to help support the residents of Quebec during the ice storm. Just imagine what could be accomplished if all levels of government worked together to eliminate family and child poverty throughout Ontario and Canada.
Ms Rothman: Campaign 2000 believes that a comprehensive life cycle approach is the most effective way to eliminate child poverty. This strategy includes:
Income security delivered through a comprehensive child benefit system that both prevents child poverty and bolsters the living standards of modest income families;
Comprehensive, high-quality, accountable child care and early childhood education services delivered by community-based services and local school boards;
Active job creation strategies that include targets and plans to increase the supply of good jobs, including appropriate measures for youth who are unemployed or often underemployed; and
Concrete proposals to meet the needs of poor families for stable, affordable housing.
The national child benefit system, developed jointly by the provinces, territories and the federal government, is an important first step towards enhanced income security for poor families. Under the NCBS, as of this July the federal child tax benefit will be enhanced for low-income families with a combined family income of up to $20,921. They'll receive about $1,600 annually for the first child and $1,400 for each additional child. The enhanced child tax benefit will apply to families with incomes up to $25,921.
However, at the same time the provinces and territories will decrease social assistance payments for families with children, while ensuring that these families receive at least the same level of overall income supports from governments. Provinces and territories have committed to reinvest these funds in services to support low-income families with children.
Partners in Campaign 2000, however, have serious concerns about the national child benefit system as it's designed. First, there's not enough committed funding to narrow the depth of poverty significantly. Second, there has been no articulation of a long-term goal or strategy that would assist poor and modest-income families that are perilously close to the poverty line. Third, and quite importantly, the national child benefit focuses too narrowly on the children of the working poor and ignores children whose parents cannot find jobs in their communities and have no choice but to rely on social assistance.
Quite importantly, the national child benefit system does not address the lack of good jobs but in fact does help to sustain low-waged jobs somewhat indirectly.
Campaign 2000 has particular concerns about Ontario's announced plan for reinvestment. In the 1997 budget, the Treasurer announced the creation of a child care tax credit financed by $40 million announced in 1996 and an additional $100 million from the reinvestment strategy. The budget is claiming that the credit will assist 90,000 families with 125,000 children. For 1997, the credit will provide up to $400 per child under the age of seven for families with incomes up to $20,000.
Campaign 2000 notes that tax measures, especially for vulnerable families, do nothing to develop or sustain high-quality child care services that all families, including low- and modest-income families, want and require. That $4,000 credit, for which families will have to spend at least $1,600 per year to qualify, is not sufficient to pay for regulated, accountable child care services for a school-aged child. That average cost in Ontario is about $250 to $350 per month, while the average cost of that service for young children is much higher.
This ill-conceived tax measure will force low- and modest-income families into using unregulated care, which is often of unknown or inconsistent quality. Ironically, many families using unregulated care will not even be able to use the tax credit, because unregulated caregivers often do not claim this income and do not issue receipts to parents. We have some evidence from the federal child care expense deduction that supports the widely held assumption that low-income parents using unregulated care cannot obtain receipts. In 1991, families earning $10,000 to $20,000 did not fully exercise the use of the federal child care expense deduction. In fact, only 36% of the eligible children in this category had families who claimed the deduction. So basically we don't think that low-income families who are forced into unregulated care will even be able to use the tax credit.
Instead, we recommend that Ontario not expand the child care tax credit as it reinvests the additional $50 million that has been estimated from the national child benefit so-called savings. Instead, the province should work with the municipalities to ensure there are additional fee subsidies for eligible parents to use in high-quality, accountable child care programs.
The government should also reinstate full funding for junior kindergarten and reinstitute the provision of that program for all families that wish to use it. It's the most efficient way to provide critical early childhood education experiences that have long-term payoff. As a number of the other witnesses commented, much to my surprise -- including the Ontario Chamber of Commerce -- early childhood education is a wise investment that pays off.
Campaign 2000 also recommends that the government of Ontario undertake what we would call active labour market measures to help decrease child and family poverty. The number of children in families with long periods of unemployment, where at least one parent was unemployed for 27 weeks or more, has more than doubled. Changes to the program now called employment insurance mean that many non-working Ontario parents do not qualify for benefits. Now only one in three unemployed workers in Ontario is eligible for benefits, so many parents are forced on to social assistance.
Other parents find themselves disproportionately in low-wage jobs. Recent data show that approximately 25% of all jobs in the Canadian labour market are below $10 an hour, or about $18,000 per year. The labour market situation for single mothers is alarming. In 1997, more than 36% of single mothers in the labour force were struggling on less than $10 an hour. These are the same people who probably aren't going to be able to use the tax credit and who probably won't have access to licensed child care, since it's either often not available or not affordable.
We contend that dependency and the welfare wall are largely myths that camouflage regressive workfare policies. In fact, the distinction between the working poor and the welfare poor is false; most likely many groups of people find themselves flowing back and forth in both groups during different points in the labour market. The real issue is how to create decent jobs with adequate wages to enable parents to support their children.
We call on the Ontario government to establish targets and develop plans for increasing the supply of good jobs at decent wages, to study local labour markets and to evaluate whether non-standard, poorly paying jobs really do develop into longer-term, secure, better jobs. Where there are shortfalls between the needs of families and the supply of sustainable jobs that provide liveable incomes, then provinces like Ontario, including Ontario, should finance community employment initiatives that create sustainable jobs for families with children.
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As you prepare for the next budget, we urge you to reconsider the underlying propellant of all of your other policies. The tax cut which has benefited upper-income families has often come at the expense of modest- and low-income families and the critical services which they want and require. This is not a direction which enhances the humane yet fiscally responsible communities that most Ontarians want. We urge you to take a U-turn and invest in children and their families. They remain one of the most valuable of Ontario's resources.
The Chair: Thank you very much. We have approximately two minutes per caucus for questioning and we'll start with the NDP caucus.
Mr Martin: You certainly paint a different picture than the previous presenter, as you started out to say. If we're looking for some of the quality-of-life indicators that it was suggested we needed, that he said were missing, it seems to me that you've made an excellent case for a change in approach re this government and some of the people you speak most adequately and eloquently about.
You certainly make a big pitch here today for reinvestment in early childhood education, in day care and that kind of thing. Is there anything else besides that that you think would be important as you look at the communities that you've talked to and in terms of your Campaign 2000 that we should be looking at here re this budget process and something we should be telling this government?
Ms Rothman: Certainly I think we would have no problem saying we think social assistance rates should move towards what they were in 1995. We don't think the situation is so rosy in Ontario, and as I said, many people fluctuate back and forth in and out of the labour market. Sustaining themselves on those reduced public assistance rates is extremely difficult, especially as all the other supports are disappearing, whether it's housing, whether it's quality, reliable child care or other things.
Mr Martin: So then the issue of choices -- and this question may be somewhat rhetorical because you know where I stand on it. When you, as you said, stack up the seemingly only initiative that this government has in place to try and stimulate the economy and create new jobs, which is the tax break, and what you see as a need to invest in the services that particularly poor and moderate-income people need, the choice obviously in your instance would be?
Ms Rothman: Not to continue the tax cut.
Mr Martin: And to reinvest in some of those programs and services.
Ms Rothman: Right, and including taking a serious look at being an active partner again in job creation, good job creation, as I think the Economic Council of Canada talked about in the early 1990s.
Mr Baird: Thank you very much for your presentation. It certainly gives us a lot to think about. I know my colleagues will reflect on what you've had to say.
Maybe just a comment. From reading your report card, from 1989 to 1995, 254,000 to 506,000: That's a terrible record for this province and we've got to do better than that. The number of children on welfare was actually higher than 506,000, which would mean there were children in 1995 on welfare who weren't even counted in the statistics. So I think, if anything, it's probably light. It was probably demonstrably worse than that if you look at the social assistance rates in 1995.
I guess what we've got to do is do the biggest thing. For 69% of children, unemployment was weighing heavily on the fact that they are in poverty. We've got to grow the economy; we've got to do what we can to create an environment for job creation. We know that being an active participant in job creation led to the 506,000 children on welfare. It did not help the situation, and $11-billion deficits hurt the situation. It got demonstrably worse as the deficit went up. We've got to take the opposite approach, to grow the economy.
We can do a number of things: the Healthy Babies, Healthy Children program; the Better Beginnings, Better Futures program; the pre-school speech and language services; nutrition programs.
The tax reduction will take another 30,000 low-income families off the tax rolls, something that the federal government still taxes those families on, but the further 30,000 families won't pay Ontario income taxes any more, which is of further help, as is the $140 million for the national child benefit.
All these programs will help, but the single biggest thing we can do for a child living in poverty is to get their mother or father a job, to get them working again.
Ms Rothman: A decent job, I would add, not a $10-an hour job.
Mr Baird: I talked to one person in my constituency last year who got a part-time job, 15 hours a week working at a restaurant. That wasn't a very good job, but it was a good job for them; they didn't have any job. That person now is working full-time, so it was a good stepping stone.
We know that last month the number of part-time jobs in Ontario went down but the number of full-time jobs went up by 36,000, so we're going in the right direction: fewer part-time jobs and more full-time jobs. So it certainly is a sign in the right direction. Whatever we're doing, we've got to do more, we've got to do better.
I think there is no higher priority than our children, and I guess that's the one message I can certainly agree with you on. A lot of your ideas are worth our reflecting on during the deliberations of the committee, so I appreciate it.
The Chair: I am going to have to interrupt you there and move to the Liberal Party.
Mr Kwinter: Ms Rothman, in your presentation it seems to me that one of the key elements is this idea of creating jobs for these people who are at the very low end of the economic scale so that they can afford to do some of the basic things in looking after their kids. I notice that in your presentation you call upon the government to establish targets and develop plans for increasing the supply of good jobs at decent wages. The government's response has been that governments don't create jobs; the only thing they can do is create the climate for jobs.
We've seen that notwithstanding that the economy seems to be improving, there has been a doubling of the number of children in poverty from the 1989 to the 1995 study. I think, from the figures I've seen, that trend is continuing, notwithstanding that the economy is improving. So there isn't a direct correlation between the economy and what is happening to these children in poverty. Unless someone takes a specific stand to do something about creating those kinds of jobs and programs, it's not going to be solved. Do you have any thoughts on that?
Ms Rothman: Certainly. We've made a number of proposals to the federal government, and now we are developing for the provincial. I think when we talk about active job creation, something to help overcome that statistic of 36% of single mothers in this country earning less than $10 an hour, that includes investment in training and it includes income security so that people can go to post-secondary education to be able to get jobs where they earn more than $10 an hour, and high-quality child care to be able to sustain them in both training and the workforce so we can see a progression for people over time and not this continual maybe getting half a step ahead and falling two steps behind.
So I don't know. At this point, we don't have a plan for a specific job creation program, but I think what we will say from our perspective is that the partner that is missing the most is government.
The Chair: Thank you very much for your presentation and your time here this morning.
COUNCIL OF ONTARIO UNIVERSITIES
The Chair: Our final submission for this morning is the Council of Ontario Universities. The presenter is Ms Bonnie Patterson. Good morning and welcome, Ms Patterson, and if you would introduce your associates. You have 30 minutes.
Ms Bonnie Patterson: Thank you very much, Mr Chair. I am here today as president of the Council of Ontario Universities. I have with me the chair of the Council of Ontario Universities, Professor Robert Prichard, who in another life is also the president of the University of Toronto. We have as well Dr Paul Davenport, who is chair of our government and community relations committee at the council and also is the president of the University of Western Ontario. Our chair will begin our remarks.
Mr Robert Prichard: Chairman and members of the committee, thank you very much for giving us time on your agenda at what is a critically important time for us to have just a few minutes to try to share with you the intensity of our concern that in this spring's budget the provincial government make a commitment to begin reinvesting in a serious way in public higher education for the young people of Ontario. That's our overwhelming concern.
We want to address three points: (1) the need for a reinvestment in public higher education in Ontario; (2) the needs of our students in terms of student financial aid; and (3) the need for Ontario to enhance its capacity for research and development for ideas and innovation.
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I'll deal with the first matter, my colleague Dr Davenport will deal the second, and my colleague Ms Patterson will deal with the third.
We have a brief that we'll put in front of each of you, and in the back of it there are two maps. I'd like to draw your attention to the maps. These are maps you've never seen before. This is a new presentation from the council. The first is a map of the United States of America, which is the green map, and the second is a map of Canada, which is the red map. I'd like to just take you through and indicate what these maps are and what they tell you about support for public higher education in North America today. What the maps are designed to do is show you what's happened over the past 24 months in every state in the United States and in the 10 provinces of Canada with respect to public funding of public higher education.
If you take the Canadian map first, using colour, where white is no change, pink is a small negative change, darker pink is a larger change and dark red is the biggest negative adjustment, you'll see from the map that in provinces like British Columbia or Saskatchewan, there's been no reduction in public support over the last 24 months for public higher education. In Alberta there's been a 1.3% negative adjustment -- that's in the light pink -- or minus 4.2% in Manitoba, slightly darker pink. But where the most severe reduction in public support has taken place, as the map makes clear, is in the province of Ontario, where there has been a reduction in the past 24 months of 15.3% in the public appropriation transferred to universities for the purpose of public higher education at the university level.
The second map, which is in your package, is a map of the United States. This is from the Chronicle of Higher Education, and it was actually the Chronicle's map which inspired us to do the Canadian map. This was the cover story of the Chronicle of Higher Education. It shows what's happened in that same 24 months in the United States. Here, red again means a reduction, and you can see that in Hawaii and in Alaska there have been reductions of minus 3%. In all other states, in all 48 states of the United States apart from the two, Alaska and Hawaii, there have been increases in appropriation. Light green is a modest increase in appropriation; as it gets darker it gets larger, and the dark green, like California, to take an enormously important example, gives you a full sense of the difference between the United States and Canada over this period.
The American average is an increase of over 11%. The Ontario is a reduction of over 15%. What we have seen in these 24 months has been this extraordinary difference develop between Ontario on the one hand, and most of Canada and, more importantly, all of North America on the other hand. It's not about the money. The money is not important except in terms of what it can do.
The reason we come and bring your attention to this is what it is doing to the young people of Ontario and the opportunities for them and what it is doing to the universities in their capacity to contribute effectively in the North American marketplace, in the North American competition. Simply, what it's doing is depriving us of what we so urgently need and what the Premier of Ontario has said we must have, which is to ensure that the young people of Ontario have access to higher education opportunities that are competitive with the best in North America. He has also said, and again we concur in his vision, that we must make sure we can attract and retain the leading minds, the leading researchers, the leading teachers in Ontario's universities.
Those are the two things we can't do under current circumstances, and that's why we ask that you as a committee urge the government to commit itself to beginning to reinvest in our cause, not because we want the money but because we want to serve. We want to serve in being able to do these two critical things: give every young person in Ontario the opportunity to study at levels competitive with the best in North America, an opportunity they are increasingly being deprived of today; and second, to attract and retain the best possible minds for ideas, for teaching, for innovation, for research, something we are rapidly losing ground on, losing ground to the rest of Canada, losing ground ever more rapidly to the rest of North America.
That is what brings us to our recommendation, and I will close my remarks with this. Our recommendation to you is that you urge the government of Ontario to commit itself to raising support for Ontario's universities from its current position as 10th out of 10 among the provinces of Canada simply to the national average. If we can have a reinvestment in public higher education, by bringing us back to the national average, with that foundation and then everything else we can do, we think we can get back in business meeting those two objectives: looking after the legitimate aspirations of the young people of Ontario and looking after the needs of Ontario for ideas and innovation.
I now turn to my colleague Dr Davenport to speak about student aid.
Dr Paul Davenport: Our second issue is protecting student access. I want to say a few words about why access is important. It's important, first of all, because universities are a place of liberal learning, where people develop their values, develop skills, develop qualities that will last them all their lives as productive citizens, as family members, as members of the community. But we are also institutions where people learn skills that have a job-market return. Ontario is in a globally competitive, knowledge-based economy. Our government has ambitious targets with regard to job creation and growth. In the long run we will only fulfil those targets, will only become a prosperous, low-unemployment area if we invest in this knowledge-based economy. There's no other way. All our competitors are doing it. We need to do it too.
Professor Prichard has just shown you how aggressively our competitor to the south, our major international trading partner, is investing in this area. That's why we need to protect student access. We need to make sure that the changes going on now in Ontario's universities do not prevent able, qualified Ontarians from accessing post-secondary education.
This past November we had a summit on Ontario universities that was sponsored by a number of our chancellors, in particular the chancellor of the University of Western Ontario, Peter Godsoe, the chairman and CEO of the Bank of Nova Scotia. There was a broad consensus at that summit on what we need to do with student aid. If you'll allow, we've set it out in our brief, but let me go through it very quickly.
We need to give students more funding up front, upfront grants, as we call them, to meet particular needs that they have, students who are parents, who have special needs in other areas. We need to expand work-study programs so that students can earn while they learn. We need to bring in new programs with regard to the experience of our students after graduation. We need to introduce a program of grants and interest relief for students after they graduate, on a means-tested basis, to help out those students who run into difficulty and not force them into default. There's no reason to be forcing many of our students into default; they're a minority of university students, who have a low default rate. It can be lower still if we'll just give them a little help after graduation.
I am hopeful that at the federal level -- I would hope this committee and our Ontario government could support this -- we're moving towards a situation where the major investment university students make in their education will be interest-deductible on their tax forms, just as if they'd borrowed money to invest in a mutual fund. If you borrow money to invest in yourself in our post-secondary system, that should be interest deductible.
Can we afford it? You bet we can. I would just point you to the graphs we have in our brief to you under "Protect Student Access." That first graph shows the extraordinary earning capacity of our graduates. This is the average of all our graduates. This includes all the students in all our faculties. They do very well on average. The second shows you the unemployment rate. You can see that our graduates have over 50% greater average earning capacity, and they have half the unemployment rate. They will get out there and be productive members of society and they will pay back their loans, but you must help them get to university. You must give them the upfront grants they need to get into university and help them with their debts if they run into trouble repaying afterwards. We have some very specific recommendations in our brief to you that will allow us to protect student access.
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Ms Patterson: Let me close with a couple of comments about what we think is the third element of what needs to be renewed in terms of a commitment, and that is to research excellence.
We believe that continuous learning, innovation and idea generation are the foundations of a knowledge-based economy. In that regard, if you take a snapshot back in time and say, "In 1985, where was Ontario in terms of sponsored research funding?" we had approximately 45% of all federally sponsored research, not unusual for a province of our size, nor for the number of institutions and the nature of institutions in the province. A decade later, however, that number has slipped to 35%. When we then look across the country and see where the gains have been, our concern then is to say, what are the key success factors in helping Ontario gain back that share and take its rightful position?
Our main problem is that this decline is leading to an exodus of our world-class researchers from Ontario, from our universities in the province, to other jurisdictions not just in Canada but also other parts of the world. But it's also making it increasingly difficult for us to attract bright, young, talented faculty into Ontario and then keep them. So our third call on you is to urge the government to renew the commitment to research excellence.
The Ontario research and development challenge fund is certainly an important first step to recover the lost ground I have spoken about, and that was announced this past year. But when you look across the country and you look south of the border and you say, "What else is needed?" there are huge gaps. In our brief we have provided several suggestions to you for your consideration. We think most important will be a developed, integrated research policy for the province. We need to close the gap on research and development funding with other jurisdictions with which we compete and, most importantly, create a leading jurisdiction here in Ontario.
Finally, we ask that you think about the adoption of the principle of maximizing federal funding by leveraging all existing and future research policies and in fact research programs to be able to regain share.
These actions are critical to ensure Ontario universities can compete with comparably publicly funded universities in North America and in attracting research funding and high-quality faculty.
Just a final comment before I turn back to the Chair: In the brief we have also included a number of sections on what I guess we could describe as new ways of doing business. We have identified for you I think an impressive array, simple examples, illustrations of where universities in this province are forging new partnerships with industry, where indeed we are developing new relationships and collaborative relationships with colleges and other environments, and examples of the outstanding research that, despite our position in funding, continue today.
So we take this strategy forward. We think it's manageable, doable and, most importantly, absolutely necessary.
We would be happy to take questions.
The Chair: We have approximately five minutes per caucus, and we'll start with the government.
Mr Baird: Thank you very much for your presentation today. It certainly gives us a great deal to think about, as I have said previously.
One thing I took from your chart on education: That's what a 4.5% national unemployment rate will do for you. When economic growth picks up, there's a lot more money for the important things, and as our unemployment rate falls, I can think of no greater priority than investing in young people and in post-secondary education.
I wanted to ask the president of the University of Toronto, Mr Prichard, with respect to the income-contingent loan repayment plan, how much of the solution you think that could be, if the government could be there to ensure that a needy student has the money they need to go to school and is only required to pay it back on a sloped scale as they get income. Do you think that would be a significant part of the solution?
Mr Prichard: If I could make two comments: On your first observation, about the possibilities that a strong economy can create for the members of the community, of course we agree fully with that. The caution I would give you is the matter of cause and effect. I believe the evidence is overwhelming that the jurisdictions with the highest rates of growth of jobs and the lowest rates of unemployment are the ones that have invested most effectively in education, particularly in higher education.
We, like you, wish to get to that point of unemployment rates like 4.5% or lower. Our concern is our ability as a province to get there. As your Premier has said, to make this the best jurisdiction in North America in which to invest, every study known says investments in ideas, in innovation and in higher education are critical determinants of investment, and it's that investment that creates jobs and it's those jobs that reduce unemployment.
I don't think any jurisdiction can take as a strategy, "Once we've got our unemployment low, then we'll invest in research, ideas and education, in intellectual capital, in human capital." It has to be the other way around. In order to get the unemployment rate down, we have to make these investments as an investment in our future. That would just be a difference in interpretation, not a difference as to where we want to end up.
On the specific question of income contingency, I'd prefer, if you don't mind, asking my colleague Dr Davenport to speak to it, as he's not only the Ontario expert on student aid, he's also the chairman, at present, of the Association of Universities and Colleges of Canada and has lead responsibility on the student aid file and is dealing most directly with the government of Canada, as well as the government of Ontario, on our behalf.
Dr Davenport: Mr Baird, there's no question that the loan system is at the heart of accessibility. Yes indeed, we believe in a system that allows graduates to pay back their loans partly on the basis of their income after graduation. We have not been able to get good support from student groups for what I would call a pure ICR -- a pure ICR being a system where the funds you don't pay back are accumulated and they bubble up and can accumulate to very large sums.
What we do have good agreement with our student groups on -- and this is the position that COU would like you to adopt and indeed would like the federal government to adopt -- is a system whereby each year, as the student pays back the loan, there is a kind of means testing and students who are in great difficulty can seek relief through interest relief or even debt reduction year after year after year, so that in that minority of cases that currently result in default -- and I stress with you, it's a relatively low number for the universities -- we can not force our students into default, let them pay back the loans, but give them a hand up.
Yes indeed, income contingency is the right idea. Let's structure it so we get everybody on board, including our student groups.
Mr David Caplan (Oriole): I have a couple of questions for the presenters. I'd just like to pursue the funding information first. Ontario and Canada, as we see there, have experienced a dramatic drop in the support for post-secondary education; the United States, as you've also indicated, a significant increase. Can you give some concrete examples of what that has meant to your universities, to higher education in the province, and how that has affected our competitiveness on the international scale?
Mr Prichard: I'll ask Dr Davenport to give some examples from the University of Western Ontario.
Dr Davenport: Let me be brief. In the last eight years, our full-time employment has fallen by over 22%. We've gone from 3,900 full-time employees to 3,100. What that has meant is that we're not able to hire new professors, we're not competitive in going out and getting the bright young women and men that we need to teach our classes. We're not getting the staffing that we need in a lot of our laboratories, the non-faculty members who provide so much value added to our students in so many areas of the university. We've kept our student numbers up, we've kept our graduating rates up, but we just don't have the people to deliver the quality that Professor Prichard described before. We want to give our students a publicly funded education that is second to none in the world. We've got to get this funding base corrected if we're going to do that.
Mr Caplan: With our leader, Dalton McGuinty, I've been chairing a forum on youth opportunities. We've been going across the province and listening to young people, your future students. They are saying that they don't think they can afford to go to university, to go to college, to get the kind of training they're going to need. I understand that student aid and government support are a part of that, but so are the tuition costs. As I understand it, your position is that you'd like to see a deregulation of tuition fees. At the levels they are at right now, students have sticker shock. They're saying: "We can't even begin to want to go to university. It's just too prohibitive."
How do you reconcile the fact that you're looking at full deregulation of tuition and it can go up to any level, and yet students are saying even at the levels now they're finding that's prohibitive?
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Mr Prichard: The one certainty in this area is that the higher the public investment in our institutions, the lower will be tuition, and the lower our public investment, the higher will be tuition. The reason for this is again that it's not about the money, it's about what the money can do. You want for the people of your riding, as does Mr Phillips, as does Mr Kwinter, as does Mr Guzzo, as does every member of this committee, as do each of us as parents, we all want for our children an education which we believe will equip them to be successful citizens, successful family leaders, to have successful careers. It is simply not possible to do that in the North American context today without adequate resources. There are only two principal ways public universities get those resources. One is through tuition and the other is through public funding. In every jurisdiction on this map that I show you, this relationship between the two is clear and it is explicitly clear.
The best way, I believe, to take the pressure off tuition fee increases, the best way to keep tuition fees as low as possible is to make the necessary investments of public funding into our institutions. If that happens, the tuition fees -- whether regulated or deregulated is not the issue -- will be much more moderate. If we can't have the adequate investments of public funds there will continue to be significant tuition fee increases. Why? Because at the end of the day the most important consideration is not the height of the tuition fee but the quality of experience and training that student gets. That's the most important thing for the young people of Ontario and to that, all the universities and I believe all of you are equally committed. It's just a question of how we fund it. We want to see as much public funding as possible as the foundation, a foundation which is not adequate at present, and then, as necessary, build on that foundation.
Mr Tony Silipo (Dovercourt): Thanks very much for the presentation, particularly for focusing as you've done on these three points. There's obviously a lot more we could be talking about, but I appreciate your coming forward and saying, "If there's nothing else you do, these are the three key areas you need to address."
I want to start with part of the second but really come back to the first one primarily. In the graph you've given us that shows the shift between operating grants and tuition fees, are we getting to the point where if that trend continues, that accessibility becomes not just the ongoing concern it has been but a real barrier? In other words, will the higher level of tuition fees relative to what's happening with respect to provincial grants mean that more and more young people will not be able to go to college or university?
Mr Prichard: My answer to that is there are no absolutes in this. It's all a function of the quality of student aid, so we can't answer that question extracted from the context, which is why, as a council, we are absolutely committed to the principle that we must have in place student aid policies that ensure that every qualified student, every Ontario resident qualified to attend university or college, must be able to attend and complete the program regardless of the financial means available to her from personal resources. It's an absolute principle of social justice that we must be committed to. There can be no ambiguity on the commitment. How we do it -- Dr Davenport has a number of suggestions.
We have been working to the limits of our abilities to press the government of Canada in its budget on February 24 to make a dramatic new investment in the future of young people. The day after that, we will urge the government of Ontario to reconcile its programs with whatever new investments are made federally and to get moving on this. Every one of our institutions is developing programs at the institutional level to strengthen our commitment to our students, because it's an absolutely essential principle of social justice, to which we're all -- I know everybody in this room is committed to it. There's no absolute on the tuition level; the student aid issue is the real issue.
Mr Silipo: We heard from one student organization a couple of days ago. As you say, without getting into a lot of the details of it, there's at least a willingness to try to hammer out a way that could work.
I want to come back to the first point you made and put it into context. I will first of all say that I agree with what you're saying, that what needs to happen at this point in time is an investment by government. I agree very much with the point you made in response to Mr Baird, that that investment is one of the big factors in getting us that low unemployment rate eventually, not the other way around.
The point I wanted to put in front of you is that it seems to me that however the government may want to justify what they've done so far, they actually have not only a choice but an ability to do what you're asking them to do. The figures the government has shown us say that revenues, as they had projected them or as they had underestimated them -- in our view purposefully, or otherwise -- against the reality, is that there's a $2.4-billion difference this year. There's likely, even by conservative estimates, at least a $2-billion difference into the next budget year. So the room is there if the government is willing to take some of that money and say, "We need to, among other things, invest in education, both elementary and secondary and certainly post-secondary."
Dr Davenport: If I may, I want to agree not only that the room is there now, but the room is there in the long run. Last year there was a lead editorial in the Wall Street Journal on the state of Illinois, a study done in the state that showed that for every dollar the state paid in public grants to the University of Illinois, every dollar in state appropriation, what we would call a government grant, the state got back over the lifetime of the student $4 in additional taxes because of the higher incomes. That's the kind of investment you need to make. That's what works in a knowledge-based economy. We can't afford not to make that investment.
Mr Prichard: The other side, the good news -- and it is good news, because it's not easy to balance the budget in Ontario; it's not easy being the Minister of Finance in Ontario -- is that our problem is one of the cheaper ones. To move Ontario's universities to the national average requires a new investment over a number of years, and it can be spread out over a number of years, of only $500 million.
This is not a $3-billion problem; this is not a problem beyond the reach of all of us. This is a problem absolutely manageable and solvable, of, in government terms, relatively modest cost. We've been modest in saying, "Don't try to do it all in one bite; try and do it in a series of two, three, four years of investment." This is in a very manageable category.
I understand Mr Eves and Mr Harris have said, "We will invest selectively in the most important items for the future of the province, and we won't wait until the year 2000 to invest." They invested two years ago; they invested last year. There's a budget this May. We hope you will unanimously urge the government to make yet another investment, in this case an investment in the future of the young people of Ontario, through public higher education.
The Chair: Thank you very much, Professor Prichard, Dr Davenport and Ms Patterson. We're out of time. We thank you for your time this morning and for your presentation.
Mr Prichard: Chairman, we're very grateful for your time.
The Chair: We'll recess until 1:30.
The committee recessed from 1159 to 1332.
ONTARIO MINING ASSOCIATION
The Chair: Our first presenter this afternoon is the Ontario Mining Association, Mr Patrick Reid, president, and Peter McBride, manager, communications. Gentlemen, welcome. Thank you for coming. Please proceed.
Mr Patrick Reid: Thank you, Mr Chairman. It's always a pleasure to be with you and to have some input into the budget-making process. I'd like to mention at the beginning that you will all be receiving an invitation to our annual "Meet the Miners" evening on the last Wednesday of April, the 29th, here in the Legislature, to meet members of the mining industry and to have a chance to chat one on one with the people who are creating and adding to the wealth of the province.
We're going to be relatively brief. We don't have a full laundry list of suggestions; we have four. I'm not going to read this verbatim. We've tried to make our presentation fairly easy to follow.
I will start by commenting that someone once said, "By balancing the budget, we can also avoid future tax increases. In fact, we can look forward to cutting taxes again down the road, even as we start paying down the debt." Our Treasurer also said, "Tax cuts do create jobs," and went on to say that there are four key economic challenges: reducing the burden of debt, keeping interest rates low to support jobs and growth, equipping young people for the future and building an innovative economy. The mining industry in Ontario can help meet all of these four key policy challenges.
Reducing the burden of debt: We are a wealth-creating industry. Annually, there's an estimated $6.6 billion in personal and corporate income tax in Ontario, roughly 106,000 jobs, and $1.5 billion in government revenues provided by the direct and spinoff contributions of Ontario's mining sector.
Keeping interest rates low to support jobs and growth: Annually, the value added in the mining industry is about $184,000 per employee, or almost twice the level for manufacturing as a whole.
Equipping young people for the future: Mining is a knowledge-based industry which supports higher education financially and in kind. There are some points listed: $15 million to York University, the Schulich School of Business; $5 million to the University of Toronto, the Lassonde program in geological and mining engineering; and $1.38 million to Laurentian University for a chair in mineral exploration. Ontario's mining industry invests $3,600 a year per person in training and safety per employee.
Building an innovative economy: Mining is one of the most advanced, knowledge-based, high-tech industries in Ontario and in the world, for that matter. This is an interesting statistic: More than 85% of the mining workforce uses advanced technology, computers etc. We can help build an innovative economy. We invest more than $40 million in pure scientific research and development. About 1,000 people, or 4% or 5% of the workforce, are employed in engineering and scientific research and development positions.
We support many of the government actions that have so far been taken.
Many of you are interested in the current state of the mining industry. You are no doubt aware of the recent press release of Inco in which they have announced that there will be some cutbacks to their workforce. Mining is a cyclical industry, largely dependent on the global economy. We have experienced, unfortunately, low nickel prices, down 34% from the 1995 average. Gold is down 22% from the 1995 average. Copper is down 42% from the 1995 average. I should probably say that you have our Ernst and Young report that we provide every two years. There's also a handout in there that shows the declining metal prices.
We're looking at a fairly tough 1998, but we believe the future outlook is promising for Ontario mining. Exploration expenditures increased to $190 million in 1997 from around $120 million to $130 million the year before. This is the fourth straight year of increased exploration spending, mining claims held in good standing are at an all-time high and our safety performance continues to improve.
However, and here's where we will get to our recommendations, Ontario is perceived as a high-tax jurisdiction despite recent reductions. High-tax regimes, as we know, lead to brain drain, company relocations to lower tax jurisdictions and loss of investment due to global competition and better tax regimes.
There has been a spate of recent studies that have underlined this theme.
There's one by Behre Dolbear and Co from New York. This study indicates that of 13 jurisdictions examined, the largest government take was in Ontario, where taxes were almost twice the amount received by investors.
Discussion Paper on Proposed Amendments to the Northwest Territories Mining Royalty Regime compared five Canadian jurisdictions and showed that Ontario had the highest combined effective mining royalty and income tax rates.
In a paper from 1995 presented at the prospectors' and developers' conference, in a comparison of a mature mine in Nevada and Ontario, this study indicated that the effective tax rate on net profits was almost 50% in Ontario and about 25% in Nevada, about half as much.
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The recent Survey of Mining Companies Operating in Canada by the Fraser Institute, which was just released last fall, indicates that Ontario rates second behind the Northwest Territories in mineral potential. In other words, we still have vast potential for discovering and developing mines in Ontario. However, we rate sixth in policy potential between Alberta, New Brunswick, Nova Scotia, Manitoba and Quebec. This is largely based on the uncertainty around native land claims. However, we rate first in investment attractive index when you put all of these together.
I can assure you that the people who make the investment decisions in these companies are concerned about the high level of taxation in Ontario. I'm talking about all taxes: corporate, income, indirect taxes and what we refer to as non-profit-based taxes.
Our recommendations are fairly simple. Bill 26, which some of you will remember, provided financial assurance on mine closures. One of the financial instruments that would be available to the mining industry in Ontario was subsection 145(5) of the Mining Act providing for compliance with the corporate financial test in the prescribed manner usually referred to as self-assurance. Unfortunately, even though the act was passed a year and a half ago, no agreement has yet been reached on regulations or protocols surrounding this self-assurance.
We need to provide certainty to the government and to the mining companies by accepting this aspect of financial assurance for mine development and closure. It seems that the civil servants can't agree between the Ministry of Finance and the Ministry of Mines on how to resolve the impasse in making this self-assurance reality. We find it frustrating because we haven't been able to break a logjam and this holdup seems to be frustrating the will of the Legislature, which passed the act in the first place.
Another issue is the Ontario capital tax. I'm sure you're all aware of this. One of the aspects of this is that there is a capital tax in Ontario of about 0.03% which is payable on company revenue whether profitable or not.
We have a particular case that we've outlined here of a small junior mining company. That's one that doesn't have a producing mine and therefore doesn't have a cash flow coming in but is paying tax of almost $10,000, which is 10.5% of its total revenue, in fiscal 1997. This company is spending something like $3 million a year in exploration and providing salaries and wages and has to pay a capital tax of $10,000 that might or might not go to employ somebody else. This capital tax discourages investment in employment in the junior mining sector. We ask that this capital tax for companies in this area be reviewed.
We have some recommendation on hydro-electric costs in Ontario. We found that the freeze on Ontario Hydro average rates is helpful. However, Ontario Hydro remains uncompetitive, with the second-highest industrial electricity rates in Canada. Hydro's poor operating practices have been recently highlighted. We need to ensure the move towards a competitive market in electricity is not dominated by Ontario Hydro. High electricity rates, like high taxes, kill jobs and growth in Ontario.
Finally, the government has indicated in the past that when the budget was being balanced they would look at other tax decreases and reviews. We have indicated that the mining industry is perceived as a high-tax area and thus discourages investment and job creation. So we would like to recommend that you recommend a joint government-industry task force be created to examine all aspects of taxation relating to mining to ensure a competitive tax regime and enhance the industry's ability to contribute socially and economically to Ontario. That is our submission.
The Chair: We have approximately four minutes per caucus and I believe we'll start with the official opposition.
Mr Kwinter: I want to pick up on your comment about Ontario Hydro. I'm sure you know the white paper proposes that Hydro be split up -- not privatized but opened up to competition. People, I gather from your remarks, are not satisfied that they are going to stay as an entity in the generation of electric power, that they're not going to break that up. They're going to open it to competition, but because of their sheer size that competition may be meaningless. The other problem is the stranded debt that is going to have to be factored into hydro rates or electricity rates. Have you taken a look at that and do you have any comments?
Mr Reid: Mr Kwinter, perhaps I could refer that to my colleague, Peter McBride, who spends a lot of time on energy matters. I just preface by saying that the largest industrial users of industrial electricity are mining companies, and when the rates went up in the 1990s by over 30% it cost a lot of people jobs and hurt our competitiveness, so we're vitally concerned.
Mr Kwinter: That's why I raised the question; I'm aware of that.
Mr Reid: I'll ask Mr McBride to respond.
Mr Peter McBride: The way we've looked at this, Hydro keeping all its generation intact isn't going to work. Lessons from other jurisdictions from around the world that have opened up electricity markets to competition have shown you need at least five players in the game to have a true market. If Ontario Hydro stays together as it is, as one generation unit, the interconnects with places like Michigan, Manitoba, Quebec, New York state aren't sufficient to introduce genuine competition into the market as it stands.
The stranded debt question: If we are moving to a competitive market, I think current efforts to predetermine what a stranded debt will be is the wrong way to go. You don't know if a debt's stranded unless the marketplace determines there's not enough revenue to service it. I think there's ample evidence that the Association of Major Power Consumers in Ontario has produced to show that hydro rates could decrease by at least 15% before any kind of impact would show up on stranded debt. If there is stranded debt, it is going to have to be handled and we've been looking at the transmission charge route, similar to a natural gas pipeline.
Mr Phillips: I'm trying to get a feel on the outlook for the industry over the next two to three years. I notice the expenditures over the last two or three years look like they've been going up what looks like not badly. I'm not sure how to measure that. Your financial numbers are only through 1995, but it looked like that was beginning to come along as well. You mention the drop in mineral prices being quite steep. We've had some people here talking about the Asian situation, which may drive prices down as well, even though I suspect not a lot of your Ontario material goes to Asia, that it's impacted by competitors that may have less demand in Asia coming back on customers of Ontario mines.
Could you give us a sense of what this committee should be thinking about in terms of the health of mining over the next two to three years in Ontario.
Mr Reid: I guess my feeling is that every time governments try to help, it doesn't help a lot. I think you have to --
Mr Phillips: I didn't say that. I said, what's the state of the industry?
Mr Reid: I think the state of the industry right now with the low metal prices is going to force a lot of consolidation. I'm an optimist. I think the prices are going to come back. We will be affected by the Asian flu because a lot of our metals and minerals are in fact sold to the Asian market; the bulk probably goes to the United States, but there is considerable. What you can do is really deal with the tax issue. While the exploration budgets are healthy -- that means they're out there looking for new mines to develop in Ontario -- if you look at Canadian companies' exploration expenditures abroad, companies that have exploration budgets of more than $4 million have spent about 70% of their exploration budgets overseas. There is a variety of reasons for that, that the geology is good and so on, but I can tell you from my personal surveys and what is said to me by the senior corporate people that the taxes in Ontario and Canada generally are a large reason why people are in South America or Asia or whatever exploring for minerals.
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Mr Martin: Under the section on Ontario capital tax, you use the example of junior mining companies. I was wondering how many of those there are around any more.
Mr Reid: There are quite a few. I don't have the numbers for Ontario. I have some numbers here that may not directly relate but can help answer, I think. Approximately $8.8 billion was raised from the Canadian equity markets in 1996, accounting for approximately half the global equity finance raised for mining ventures. In 1996 over 100 new mining companies, including foreign companies, were listed on the four Canadian exchanges. In total there are 1,400 mining companies listed on the various Canadian stock exchanges: Montreal, Vancouver, Alberta and Toronto. There are at least 1,400. There's some consolidation and some are not, let's face it, very healthy, but most are still alive.
Mr Martin: Flowing out of that I would ask you the question, because I think it's important as we look at what we're doing here, that some people are raising with me, and that's the question of consolidation, that many of the bigger mining companies own most of the significant operations, that when you talk about competition, you're in competition with yourselves where it concerns decisions about where you'll invest and where you won't invest. There are some further discussions that go on around there.
For example, some folks at Inco found $4.3 billion last year to buy the rights for the proposed $6-billion nickel mine in Voisey's Bay, Labrador, which is slated to be the world's richest low-cost nickel mine early in the next century. Inco is expanding its nickel mine on the South Pacific island of New Caledonia and also expanding its nickel property in Indonesia. Inco is now the world's largest private nickel producer.
They make the argument that where you talk about the need to compete and the high tax regime here in Ontario, which goes to support the communities in which the people who work in your operations live, in fact you're competing with yourselves. How would you respond to that?
Mr Reid: Inco, for instance, has about 25% of the nickel market at the moment worldwide. The Russians, out of Noril'sk, have a huge complex that produces a lot of nickel and they're still, as far as we can gather, not producing it at real cost. The Australians have a number of nickel mines. These mines are all over the world and companies are involved all over the world. To keep in the forefront of the industry, we have to be wherever the mines are found.
What we're exporting is Canadian expertise and technology. We are the leaders in mining technology in the world, and we have the best people, the best-trained, best-educated people. You go around the world anywhere and you will find Canadian and Ontario mining companies. I understand your point, but if it wasn't Inco that was developing, for instance, New Caledonia, it would be a competitor. It might be France, which has nickel interests in Asia, or anybody else.
The Chair: We'll move on to the government caucus.
Mr E.J. Douglas Rollins (Quinte): Thanks for your presentation. One of the questions I would like you to answer if you can is that you're talking about that 0.03% payable for the companies on capital tax.
Mr Reid: Yes.
Mr Rollins: What dollar amount would that amount to as revenue for the province of Ontario?
Mr Reid: I can't tell you that, I'm sorry. When we were taxing everything that moved and didn't move, this was one of those that somebody dreamed up and thought would be an easy hit. It's just another tax. I'm going on the micro here. This particular company raised the issue and we thought it was a pretty --
Mr Rollins: But to put us back into a competitive edge for the rest of the jurisdictions around, not only Canada but the world, we would have to lower taxes a significant amount as far as the mining company was concerned, would we not?
Mr Reid: When we're talking about lowering taxes, we're talking about a levelling of all taxes, not just the mining tax. One of the major problems that seems to be cropping up more and more is the income tax in Canada. Companies whose people have gone to the United States or somewhere else and then been brought back to Canada have been paid in American dollars if they've been in the States or somewhere else. They come back, and they find they have to pay these people at least 30% to 40% more in Canadian dollars to get them to come back to Canada, and some people won't come for that matter. One company that comes to mind, not out of Ontario, moved its head office from Vancouver to Washington state because of taxes.
Mr Baird: I'd just like to follow up on my colleague Mr Rollins and your answer. You mentioned the cumulative total impact of taxation. On page 17 of your document you mention the combined effect of mining royalty and income tax rates. Have the provincial income tax reductions helped growth in your industry and helped job creation, in your judgement?
Mr Reid: It puts more money in the hands of the consumers and the investors and it goes some way to doing it, but more has to be done in terms of the total tax take. What happened in the past few years was that we hit the wall in terms of personal income tax and corporate tax, particularly as applied to other jurisdictions, so governments collectively started doing non-profit taxes like unemployment insurance, workers' comp, all kinds of sales taxes and so on. There is apparently a level that you can't tax. You hit the wall on some taxes and then you start looking for other places to tax like this capital tax, for instance.
The Chair: I'm afraid we're out of time. We appreciate your submissions, and thank you for your time in attending.
Mr Reid: Thank you very much, Mr Chairman and committee members. Time flies when you're having a good time.
ONTARIO ASSOCIATION OF INTERVAL AND TRANSITION HOUSES
The Chair: Our second presenter this afternoon is the Ontario Association of Interval and Transition Houses, Ms Morrow. Good afternoon and welcome. You have 30 minutes. Please proceed.
Ms Eileen Morrow: My name is Eileen Morrow, and I'm the lobby coordinator for the Ontario Association of Interval and Transition Houses. Beside me is Karen Bible, who is vice-president of lobby for the board of directors of OAITH. Karen is going to read our presentation just to introduce you to our concerns, and then we'll answer questions and have a discussion if it's okay with you. Usually we talk so much we don't have time to answer questions, so we've tried to really make it brief today.
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Ms Karen Bible: Thank you and good afternoon. On behalf of OAITH, I'd like to thank the committee for this opportunity to once again come before you to talk about the needs of abused women and their children in Ontario and how they are affected by provincial budget decisions.
This is the third time we've appeared before the committee during this government session, so I won't take up the committee's time explaining the background of the association, except to say that we have been around for 20 years and currently represent 60 members, primarily first-stage emergency shelters for women escaping violence.
We'd like to address two main areas of concern for us today with regard to funding, policy and practice in the area of violence against women prevention strategy.
First, as you know, there have been a number of budgetary decisions made by the government of Ontario which we have repeatedly identified as harmful to abused women and their children. Among those we have found particularly troubling are the cuts to social assistance, legal aid and reductions in first- and second-stage shelter front-line program funding for abused women. The minister responsible for women's issues, for example, estimated in 1995 that the cut to first- and second-stage front-line programs was approximately $9 million. Program funding for second-stage shelters was completely eliminated. These targets for reduction, among other cuts, have influenced abused women to remain with or return to abusers, where they and their children will certainly face more, and often more severe, violence.
Subsequent to reduction and elimination of funding to programs in first- and second-stage shelters and other social supports critical to women's escape from violence, the government of Ontario has undertaken initiatives designed to address some needs of abused women and has in fact increased funding in particular areas of response.
Primarily, most significant funding initiatives have focused on those responses which involve the police and courts, for example, free cell phones linked to 9-1-1, expansion of police victim service programs and crown victim/witness services as well as development and expansion of specialized spousal assault courts in a number of urban areas in Ontario. In many cases, urban centres receiving the expanded victim services have also been those chosen to receive the specialized courts.
Budget allocations to address violence against women by their intimate partners, therefore, have followed a discernible shift during the life of this government -- a shift away from front-line community-based women's services and social program support and towards a police- and court-focused institutional approach to addressing violence against women. It is this shift we are concerned about today.
We are not suggesting that police and court victim services cannot be helpful to women. They arose out of a need for change identified by abused women and women's advocates who had experienced indifference and even revictimization at the hands of police, courts and in other institutional settings. Abused women and women's advocates demanded service support, however, as an addition to the community-based women's services most abused women prefer to use, not as an alternative to them.
We point out what we see as a funding shift in addressing violence against women, not because we oppose better police and court response, which is clearly needed, but because we feel compelled once again to emphasize that most abused women -- 74% according to the Statistics Canada National Survey on Violence Against Women -- do not call the police. Even fewer, therefore, are seen in criminal court.
While we continue to call for more support for women contacting police and court systems, we must also remind you not to forget the majority of women who find social supports and community-based programs such as shelter service their preferred avenue for addressing the violence in their lives. We must remind you that those women, because of cuts to social assistance, legal aid, community counselling programs and shelter services, are receiving less support today from their elected government than they were three years ago. This is totally unacceptable in a province where studies estimate that over 40 women each year will be murdered by a male partner and one in four women in a marital relationship will experience criminal violence from her male partner.
In short, we are asking that the government of Ontario begin to accept that violence against women by intimate partners requires not only a justice system response but also an equality rights and social development response. Budgetary and policy decisions that continue to narrow our response to one form of support for women will fail to provide the comprehensive and diverse network of supports abused women themselves have sought as their answer to this pervasive problem.
The second area we'd like to speak about today concerns the funding support currently left in place for community-based women's shelters, both first- and second-stage shelters. The downloading exercise currently underway with regard to provincial-municipal jurisdictions and funding responsibilities has preserved first-stage emergency shelter funding as a provincial responsibility. This is sometimes referred to by the Minister of Community and Social Services as full funding of shelters, in spite of the fact that all shelters still have to raise 20% of their funding for core services and 100% of their funding for other direct services shelters may provide for women and children.
The absorption of the municipal per diem funding by the province has so far been a positive initiative for abused women's shelters in our association, providing some level of stability for shelter budgeting. Stability of funding and the problems associated with fluctuating per diems have long been an issue for us. At the same time, the stability issue has been paralleled with two other chronic shelter funding problems: inadequacy of funding levels and discrepancy between communities as a result of municipal discretion on per diem levels and policies. These two problems remain.
Clearly adequacy is an issue when safe shelters for women are required to fund-raise for core crisis intervention services. Shelter programs have historically been underfunded and recent cuts have only increased pressures within shelters on staff and community volunteer boards to maintain service levels with reduced resources. Discrepancies in funding between communities in the province also remain as discretionary per diems are absorbed by the province, resulting in fluctuating service provisions depending on historical municipal support or lack of it for abused women in individual communities. This continuing lack of adequate and consistent funding is an unacceptable burden on hard-pressed and dedicated women's shelters struggling to assist women leaving abusive relationships.
Finally, we cannot close without once again challenging the decision of the province of Ontario to eliminate all program funding for second-stage shelters for abused women. These cost-effective and efficient programs have been decimated by that decision, but continue to struggle to provide some minimal support to women now that most of their programs are gone. They continue to seek a meeting and consultation with the Minister of Community and Social Services to plead for funding support. We must add our voices to their call for relief on behalf of the women and children in second-stage shelters who have made the decision to break free and start a new life. We ask that you add your voices to that call as well.
In closing, we'd like to recommend that this committee take a serious look at the implications of the narrow funding focus currently being taken in addressing violence against women in Ontario as well as the need for ensuring adequate funding for women's shelters and restoration of funding support for second-stage shelters in the province.
The Chair: Thank you very much. We have approximately 18 minutes for questions. We'll start with the New Democratic Party.
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Ms Marilyn Churley (Riverdale): Thank you, Mr Chair, for the opportunity to join your committee for a brief period of time today.
I thank you for your presentation. I want to start by asking you a little bit about the budget concerns that you've expressed to some extent in your presentation today. It seems as if you're saying that you're somewhat satisfied -- and I must say I personally like what's happening with the courts, the dedicated court system. I believe what you're saying is that although there's never enough, of course, you're satisfied with what is happening on the justice side of things in that area, but that the difficulty is the cuts and other aspects for the women who never go to the police. For instance, the kinds of services that women who end up in second-stage housing need have been cut.
I just wanted to be really clear and have the committee really clear on that. I know when I raise it with the minister responsible for women's issues the response I often get back is, "We're putting more funding than any other government into women's programs," or whatever. It's very hard to get with her to the bottom of what's really going on, and I think it's important for us here in this committee to be really clear today about what is going on, what funding is adequate for now and that sort of thing and where you see the gap, so that we can make a recommendation to the government.
Ms Morrow: Although we're seeing some funding being directed to the programs, I think we're also seeing a shift. Funding has come out of programs and then funding is going back into other programs. I'm not sure if you do the math on the total new money that's going in, accommodating the cuts that have been made, whether I would agree that more money is going into an agenda to stop violence against women.
Although it's positive to see some of the expansion in some of the programs insofar as women find them helpful -- and I'm not saying that's all that's required, for instance, within the justice system -- I would also say that abused women are finding it extremely difficult right now when they attempt to leave abusive situations and I would assert that their number one problem is financial assistance.
In other words, because of the cuts to the social assistance rates and the difficulty therefore in finding affordable housing and child care and legal support and all the issues they're going to have to address when they make the attempt to leave an abusive situation, many women are finding that in fact they cannot leave. They get to the shelter and then their options are limited at this point. They have always been limited. I don't want to make the statement that things have always been great and now they're terrible. Things have not been good, and now they're much worse.
Women have found it difficult, for instance, because of cuts to adult education programs. When an abused woman is looking at the future to begin again, she's looking at attempting to start again to support her children alone -- she knows that will probably be the case -- to keep herself safe, to find affordable, safe, appropriate housing, to find secure, safe care for her children, and those things all cost money. The supports for her in that temporary period where she is leaving an abusive situation and then trying to set herself up in a new life require public community support, and those supports are not there to that extent.
The majority of women are not in a position where they are ready to call the police, or they fear what will happen in terms of the consequences of calling the police, and they are attempting to use other means. What I'm saying is that we have to support whatever means an abused woman feels will make her successful. She is the expert in terms of what will help her in that situation and what she needs to do to get away from that particular situation with the support of the community. Does that answer your question?
Ms Churley: Yes, it does. I can tell you categorically I've done the math, along with some help from a researcher, and in fact more money hasn't been spent but there has been some shifting. I think it's fair to say that this government is not going to, in the near future anyway, raise welfare rates. It's not going to happen, right?
Given what you just said and looking within the realities under which we exist -- and I'd like to think that every party, regardless, would want to do something about this situation. When we're hearing that there are women who are victims of violence who are sometimes forced to go back to it and that there are gaps in the system which have been made even worse, where the gaps have widened, what practical things can you tell this committee today to bring back to the finance minister and the other ministers responsible that they can do? You can recommend till you're blue in the face that welfare rates be raised again; it's not going to happen right now.
For instance, second-stage housing programs being put in place: Would that help? Should there be designated funds -- because this government has pulled right out of social housing, affordable housing -- for not just shelters but housing for women who are victims of domestic abuse? What? Should there be special programs to deal with some of these problems?
The Chair: Sorry. You're going to have to answer in one word or less, because we're almost out of time.
Ms Morrow: For this party, you mean?
Ms Churley: Yes.
Ms Morrow: I think all those things would help. To make it really brief, if a woman can't move on successfully, with some sort of ease, and nothing is going to be done about those major problems, then the supports have to be in place to assist her and have someone assist her through what is a more difficult process now. Advocates do that.
The Chair: For the government, Mr Baird.
Mr Baird: Thank you very much for your presentation. It certainly gives us something to reflect on as we undertake our deliberations.
I did want to ask you about one issue. You raised it on page 4 and the top of page 5 of your submission. On page 4 you say, "The absorption of the municipal per diem funding by the province has so far been a positive initiative for abused women's shelters in our association, providing some level of stability." You then go on in two places to discuss discrepancies that pre-existed that measure. Could you tell me, is that a discrepancy in the urban-rural-suburban? Where could you say you most noticeably find those discrepancies?
Ms Morrow: Just off the top of my head, without having numbers in front of me, I would estimate it's probably more of a problem within the urban and northern communities, small communities with small municipal budgets. The municipal per diem was a discretionary per diem so that the local social services committee could decide to what extent, up to the maximum allowed by the province, that municipality was willing to pay in a per diem, and then the province would cost-share that 80-20. When the absorption took place, it took place pretty much on a dollar-for-dollar basis, so therefore the province now takes up that 20%, but if that 20% per diem was paid at $30 in community A, but at the maximum of $34.50 in community B, that discrepancy would still remain. A municipal government could decide, and some municipal governments have at some points in the past said, "We're not going to pay the per diem at all any more, because we can't afford it."
Mr Baird: So it's not just a geographic situation; it's also financial. In some areas it would be more or less than other areas?
Ms Morrow: Yes. If the local municipal government decided they couldn't afford the per diem up to the maximum, they would make a decision based on their local municipal budget on how much they would pay for the per diem, and then the province would cost-share that 80-20. As the absorption took place, those discrepancies would remain.
Mr Baird: That's just a discrepancy in the dollar amount, but as well in what they were provided in the first place.
Ms Morrow: The dollar amount will certainly affect the budget of the shelter and to what extent that shelter can provide the services women in the community identify that they need. As you know, in smaller communities it's often more difficult to fund-raise those extra dollars you need because the fund-raising base isn't as large. Although the community may be very supportive, there is a limit to how much they can expand the service to meet the woman's need.
Mr Baird: The second issue I want to ask you about: On pages 2 and 3 you discussed the difference between, for lack of a better word, justice issues and justice funding in this area, and then I think the other words you used are "social support" on the other side.
Ms Morrow: Right.
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Mr Baird: What do you think would be an appropriate balance between these? I've found constituents in my riding on both sides of the issue, some who have said to put more money on the enforcement and judicial side to ensure there are services for victims in the justice system, and then there are others who say that's not the best approach, that you should put it all on the other side. What do you think is the appropriate balance? There seems to be a consensus that you want a balance, that it's the level of balance.
Ms Morrow: Yes, you certainly do need a balance, because I wouldn't choose one over the other. However, I would start by looking at what abused women say, because the general public reacts negatively, of course, as they well should, towards violence against women and they rightly want some effective intervention to happen immediately. They often see that as crime intervention. That sounds likes a very obvious choice and one we would support. But abused women often see it as a much more comprehensive picture in terms of their lives, because they are experiencing the abuse and they are very aware of the experience of the abuse, not just as a criminal act or as a crime under the Criminal Code of Canada.
They experience it as psychologically damaging, they experience it as an impact on their children, they experience it as a financial impact on their lives. They feel the whole gamut of the tactics of abuse, not just the physical violence but the whole net of control tactics that come down over their lives. They begin then to start safety planning and strategizing how they can move out of that violence without consequences to themselves and their children and how they can move forward with their lives. Many abused women will say: "I'm not looking for revenge. I'm looking for accountability within the justice system and consequences and I'm looking for safety. The other thing I'm looking for is to take back my life and to be able move forward with strength and take care of my children and to prevent this from happening in their future."
Most abused women will say that in terms of community services as a whole, the most helpful are counselling and grass-roots women's services, where they feel they're going in a non-judgemental way, where they can tell their story, where they can get options without judgement, where they can get information they can use, because they are intelligent, they can analyse the information and correct inaccurate information to make a decision, and the decision might be, "I'd like to see the police and I'd like something done about this," and it might also be, "I'd like to see a lawyer, I'd like to see the housing registry advocate, I'd like to find out how I can feed my children until I can either get training or a job or some other way of moving forward with my life, so" --
The Chair: Thank you. I'm going to have to interrupt you there. Sorry.
Ms Morrow: See, we talk too much even when we don't want to.
Mr Baird: You're not the only one at this table who does that.
Ms Morrow: Does that answer your question?
Mr Baird: Yes, thank you.
The Chair: The Liberal Party.
Mr Phillips: I appreciate your being here and the service you provide for Ontario. We're trying to get clarity in our minds about the priorities. I'll try and articulate what I think you've said and then you tell me whether I've got it or not. You've indicated that in terms of abused women dealing with the justice system there's been an increase in priority there and that, while never perfect, is better. Then, to me, there are two other areas, rightly or wrongly.
There is the need for abused women to have a safe haven for a period of time. Then I suspect for most there is a need to move on from there -- I guess all don't go into the safe haven anyway -- to establish themselves in the community somewhere else. I'm just trying to get a sense of those two areas. I realize there's counselling and other things. On the shelters, which tend to be your focus, what would be the current situation? Of abused woman who are looking for a safe haven in Ontario, do 99% of them have an opportunity to go somewhere, or is there an acute shortage? Maybe when you're answering, because we might run out of time, you mentioned that you still need to raise 20% of your funding, I gather, in the community.
Ms Morrow: That's a requirement.
Mr Phillips: I'd like some sense, across Ontario, of are we in reasonably good shape in terms of available accommodation, and how difficult is it for the shelters to raise that 20%? Is it something that is holding us back dramatically or are most communities very supportive? All communities are supportive, but are most communities able to fund that?
Ms Morrow: I agree that most communities are very supportive, but right now we have a lot of competition for fund-raised dollars, a lot of needs in the community because of social program cutbacks on federal, provincial and municipal levels. It is harder now to raise the dollar, even though the support is there. As I said, in certain smaller communities it's much more difficult because the money just isn't there although the commitment may be. That is more difficult. Shelters are having to put more energy and time into fund-raising. I hope that's not taking any time away from more important issues within the direct service, but that is certainly something shelters are having to spend more time thinking about and working on.
In terms of women moving on and the availability of the service for them, again it often depends on the community. In some shelters, there is space in the shelter but what is really needed, especially in isolated communities, is transportation and outreach services. The shelter is not always in that woman's community and it may be very difficult to move the children out of their school down the road 75 miles to wherever the shelter is in a brand-new community. Outreach services would be very important and they're not always there so that women can access the shelter, even when there's a space.
In urban communities, particularly in the megacity at this point, it is very difficult for a woman to find a space in a shelter in the larger Toronto area, for example. Women from the Assaulted Women's Helpline will talk about the sinking feeling they get when women call and need space in a shelter, because they know that many times they're not going to be able to find that space the woman needs in the shelter, because the shelters in large urban areas, and particularly in Metro Toronto, are full all the time. In other words, more shelters would be necessary if women are not going to have the financial assistance and the housing stock, the affordable housing, available so that they can move quickly from the shelter into housing or move from their home into housing.
Mr Phillips: Is it a function of shelters not being able to raise their 20% contribution and the provincial money is available, is it that there's not enough provincial money available, or is it a function of something else such as that people are staying longer in shelters than you would like because you cannot find suitable accommodation for them in the community?
Ms Morrow: We're hearing that, that women in urban areas in particular are staying longer because it's more difficult to find them affordable housing, and it's taking longer to put in place the necessary supports women and children need as they're moving through the shelter. Where it may have taken two phone calls to get the appropriate service or a spot on the waiting list or a housing unit, it may be taking more phone calls. It's taking more time for each individual situation to be facilitated, and therefore it takes longer for women to get out of the shelter, and that means it's harder for women to get into the shelter. The system begins to back up because of the increasing difficulty in moving on.
The Chair: Ms Morrow, I'm going to have to interrupt you there. We're out of time, but I thank you for your attendance and for your presentation.
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ONTARIO CHIROPRACTIC ASSOCIATION
The Chair: Our next presenter is the Ontario Chiropractic Association, Mr Kempe, president.
Welcome, and thank you for coming. We have 30 minutes set aside to be used as you see fit. I wonder if you'd introduce your associates, please.
Dr Jan Kempe: My name is Dr Jan Kempe and I'm president of the Ontario Chiropractic Association. The association represents 86% of the some 2,000 chiropractors in the province of Ontario. Our mission statement is to enhance the health and wellbeing of the citizens of Ontario by promoting the art, science and philosophy of chiropractic.
We're governed by the Regulated Health Professions Act; the Workplace Safety and Insurance Act; the Insurance Act and statutory accident benefits schedule, also known as the auto insurance; the Healing Arts Radiation Protection Act; and the Insurance Act and Ontario health insurance plan.
Becoming a chiropractor in Ontario requires a minimum of seven years of post-secondary education: a university bachelor's degree and four years of training in a chiropractic undergraduate course. You'll find further background information in the written brief that we've submitted to you.
Since our time here today is short, allow me to move directly into why we have requested to appear before you, and that is simply this: The health care system is wasting millions of taxpayers' dollars every year, and thousands of Ontarians are suffering unnecessary pain because of it. To prove this point, we have commissioned yet another study which identifies how savings can be realized while increasing patients' access to chiropractic services. I said "yet another study," because governments to date have failed to listen to their own studies, which have come to the same conclusion.
To explain this further, I would now like to introduce who is with me here today. To my right is Dr Ione Puchalski. Next to her is Dr Cynthia Chan, who is a first-year practitioner. Next to Dr Chan is the government affairs consultant, Dr Robert Haig. I would also like to point out that we have a University of Ottawa health economist professor, Dr Pran Manga, who will be available for an in-depth briefing on his findings starting at 3 o'clock, following our appearance here, in room 230 upstairs. Dr Puchalski and Dr Chan will address the human and health care issues very briefly and then Dr Haig will be presenting the economic arguments we would like to bring forward today. I'll turn it over now to Ione.
Dr Ione Puchalski: My role this afternoon is to help us focus on the real reason we're here: the people of Ontario. In order to keep the people in the politics, I would like to use three examples to illustrate what is going on every day in chiropractic offices across Ontario -- not unusual examples, but ones that are occurring daily.
For example, Lorraine, who could be your sister or your daughter, is 44 years old and has been suffering headaches for 15 years, six to seven days a week, week upon week. Several days most months she has to be hospitalized because of these migraines. Accordingly, she is depressed and has difficulty holding down a job. She has run the gamut of traditional medical evaluation, including CAT scans, MRIs, brain scans and X-rays, to no avail, including all of the medications and various interventions.
Recently, after her first chiropractic treatment, she reported 50% improvement, and within just a few more treatments reported no headaches at all, marked reductions in her sleep disorders and depression, increased activities and even a return to bowling, which she enjoyed. The tragedy is that 15 years ago, Lorraine was receiving chiropractic care. As the patient portion of the fees increased, she withdrew herself for "freer" services.
Another example is Paul, who is a 37-year-old single parent of two currently on disability because of chronic and recurrent severe low back pain, so severe that he frequently has to present himself to emergency for Demerol shots. The traditional medical approaches of physiotherapy and other medical interventions have not only proved ineffective but have very often aggravated the condition.
Recently, when he tried chiropractic, one or two treatments afforded him significant reduction in the problem, but even though the chiropractor had reduced fees for compassionate reasons, he removed himself from care, stating, "I know it would help me, I feel so much better afterwards, but I can't afford it."
Finally, I'd like to bring an example from my own practice, which was in small rural farming community. Like most chiropractors, I had reduced fees for geriatric and hardship cases. Whenever there were particularly difficult seasons in the farming where crops were literally rotting on the fields, you would find patients withdrawing themselves from care, admitting that they needed the care, they wanted to be there, but they were embarrassed by the fee reductions offered. Instead, they would wait until they received compensation from their crop insurance or compensation from the government of Ontario for their losses to render themselves to myself for my services for what they thought was a fair fee for services rendered.
I submit that the people of Ontario shouldn't have to choose their health care according to pride or the ability to pay for it.
Dr Kempe: I'd like to present now Dr Cynthia Chan to make her part of the presentation.
Dr Cynthia Chan: I was 15 years old when I was first inspired to pursue chiropractic as a career. I had studied dance at a high school with a performing arts program, and after a severe fall threatened an upcoming performance, I sought the care of a chiropractor who gave me my first chiropractic spinal adjustment. Needless to say, I was able to perform on stage two weeks later. I became intrigued with the chiropractic treatment: one that is natural, non-invasive, and yet in its simplicity can produce powerful healing effects in the human body.
After completing my pre-chiropractic studies in human biology at the University of Guelph, I began the four-year program at the Canadian Memorial Chiropractic College here in Toronto. In addition to my rotation at the school's walk-in clinic, I completed half of my fourth year clinical internship at the Anishnawbe native health centre, a health care centre designed specifically for the needs of aboriginal people. In 1997, the chiropractic college also started external clinics at Wellesley Hospital, the Donwood rehabilitation centre and the Muki Baum centre for disabled children.
As an intern, I had contact with many people who had turned to chiropractic as a last resort. Most were resigned to living with chronic pain for the rest of their lives without any hope. Many of them had been through several trials of drug therapy, shuttled from one specialist to another. Now that I am no longer an intern and have been a practising chiropractor in the town of Markham for one year, I see the same thing every day in my own clinic, but to a different degree.
It has been proven that emotional and physical stress of any kind can be imprinted in the human body. In some it's in the form of a stomach ulcer, in others it's felt as stiffness in between the shoulder blades, and in others it's manifested as a headache. It appals me that so many of us have become detached from our own bodies. As I frequently say to my patients, most of us know how to take care of our cars more than we do ourselves.
I want my patients to understand when it's important to have surgery or to take medication, and above all the importance of preventative health care. However, understanding is not enough at this point. Chiropractic must become more accessible so patients realize that taking a pill is not the only option.
The bottom line is that chiropractic patients feel healthier. As a graduate of the class of 1997, I am witnessing the momentum of natural health care. As a governing body, you can help make this safe and effective form of health care a viable choice for more Ontarians and save Ontario taxpayers hundreds of millions of dollars, which can be better used for more effective purposes.
It is my duty as a practising doctor of chiropractic to provide the opportunity to as many people to improve their quality of life. Thank you.
Dr Kempe: Dr Haig will present you with the economic arguments and the results of our latest economic study.
Dr Robert Haig: I want to read a couple of statements to you that I think will probably sound familiar.
"We will provide the taxpayers of Ontario with better for less."
"We will root out waste."
"We will continue to make re-investments to give you the health care services you need."
"The ministry's vision...puts the needs of the patient first."
"A balanced budget."
"Improving...access to care."
"Provide access to the appropriate mix of health care professionals."
"Doing better for less."
Those are all quotes from either the Common Sense Revolution, the Ministry of Health business plan or Ontario's health goals. They all make sense. We agree with them. We think the government can in fact attain its objectives here. There is today new economic information about the treatment of back pain and neck pain and headaches that will help to achieve those goals.
Understand that the prevalence and the cost of those conditions is huge. Musculoskeletal disorders and injuries are the second and third most costly categories of health problems. They are the most prevalent chronic health problem. They are the most common cause of long-term disability. They are the most common reason for a visit to a health professional. They are the second most common reason for the use of drugs, of medication, prescription or non-prescription. This is a very large expenditure here.
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The cost in Ontario of treating and managing these patients is $3.4 billion in direct costs to the health care system and an additional $14.7 billion in indirect costs. Just the size of those numbers tells you there is the potential for savings here.
There are two points that I need to make with respect to those savings. The first one is that chiropractic treatment specifically addresses these conditions and has been consistently shown to do so in an effective and cost-effective manner. There are two separate Ontario government reports, the Manga report of 1993 and the Chiropractic Services Review Committee report of 1994, that found that and that recommended increasing access to chiropractic services. There is no question that patients are better off if they have access to chiropractic services. I can tell you with complete confidence that there is not an impartial body that will sit here and tell you otherwise.
The second point is this: Diminishing OHIP funding has meant that the copayment for chiropractic services is too high and is a substantial barrier to access. Chiropractic treatment has been partially paid for by OHIP since 1970, with the patients always paying a user fee. The patients used to pay 17% of that fee; they now pay 65% of the cost. Both of those Ontario studies identify that as a major and an inappropriate barrier to access.
Just as an aside, there's another twist to this financial barrier issue. Attached to the back of our brief you'll find a number of letters from physicians, from medical doctors, to the Minister of Health, urging better funding for chiropractic services so that they are able to refer patients when they need to.
What we haven't had to date and what's been missing is an understanding of how you can increase access without increasing overall health care costs. Everyone understands the fiscal realities of the 1990s. In fact, the economic analysis now shows that improving access to chiropractic services results in decreased overall health care costs.
The Ontario Chiropractic Association has presented the government with proposals that would increase the number of patients seeing chiropractors in Ontario from 10% of the population to 20%. It would double the number of patients going to chiropractors and it would have the effect of allowing them to see chiropractors sooner. Currently, 80% of people who go to chiropractors have had their condition for six months or longer. That obviously means that many of them will have already undergone expensive testing and consultation and treatment procedures that weren't successful, or they wouldn't be at the chiropractor's office.
The proposal involves restoring funding to 75% of the cost. This would require an additional $200 million annually. The increased access that is required comes from a reduction in the patient user fee.
This improved choice and access to chiropractic services, based on very conservative estimates, will save the taxpayers of Ontario more than $1 billion annually. That's made up of two things. It is made up of direct net savings to the Ontario health care system of between $180 million and $570 million. There would be additional indirect savings of between $1.3 billion and $3.8 billion. Those indirect savings are not things that are in your budget, but are things for long-term disability and short-term disability that are paid directly by the taxpayers of the province or by the employers of the province.
Professor Pran Manga is a noted health economist from the University Of Ottawa. He was the principal investigator in the 1993 report commissioned by the Ministry of Health, which concluded that there were potential savings of "hundreds of millions of dollars annually" through the better use of chiropractic services. The findings in that report were later endorsed by the Chiropractic Services Review Committee report, which was a consensus report between the Ministry of Health and the chiropractic association. Dr Manga is a highly qualified, highly respected and experienced health economist. Because of this, the OCA asked Professor Manga to further investigate the specific nature of those savings and to quantify them. That he has done, and that's what is in the report in front of you with the green cover. As with his earlier report, the methodology and the conclusions are supported by his peers. The first endorsement for this most recent report -- and understand this is a very new report -- comes from Dr Philip Jacobs of the faculty of medicine of the University of Alberta.
This is a very thorough and detailed document and it's one that requires more than a few minutes' explanation to understand it thoroughly. This is why, as Dr Kempe has indicated, we have arranged for a full briefing later on. But if I could, I would ask you to turn to the executive summary of that, which is the second page in. I'm not going to read the whole thing to you, but there are a few points I want to make.
His first point speaks to the deterrent effect of existing copayments and the fact that because of that, patients are steered away from chiropractic care towards other management which is "free."
His second and third points basically reiterate the OCA's proposal, which I've said to you.
His fourth point is the summary of savings: "Expenditures to improve access to chiropractic services and the changed utilization patterns it produces will lead to very substantial net savings." You will see here he's talking about direct savings in the range of $380 million to $770 million and indirect savings that follow there.
His fifth point sets out the rationale and the reasons why such substantial savings can accrue.
Look, if you would, at the top of page 2, point (d): "The poor and lower-middle-income groups and the elderly are low users of chiropractic mainly due to the deterrent effect of the high copayments or user fees. Yet the prevalence of neuromusculoskeletal conditions is highest among these socio-economic groups."
Just to finish, I am going to ask you to look at the very bottom, his twelfth point: "Significant reductions of health care costs, improved health outcomes and equitable access to services are all important objectives for the Ontario health care system. Any one would be sufficient reason for the proposed reform in funding for chiropractic services. The fact that this reform meets all three objectives makes the case both urgent and compelling."
Dr Kempe: Mr Chairman, we've attempted to demonstrate that this government can attain its budget projections, it can help change the way that health services are delivered in this province and it can do better for less.
The literature on costing of medical and chiropractic management of pain syndromes demonstrates that payments to chiropractors for their services constitutes about 80% of the cost per episode. In the case of medical management, the payments to medical doctors is only approximately 23% of the cost per episode. In other words, chiropractors don't generate additional costs.
Mr Chairman, that's our presentation. Dr Manga's complete economic document is being provided to you and we are now available for any questions you may have.
The Chair: Thank you very much, Mr Kempe. We have about three minutes per caucus. We will start with the government caucus.
Mr Arnott: I just want to thank you ladies and gentlemen for your outstanding presentation and the effort you put into this. The timing of Professor Manga's report is very helpful for us too. Certainly the projected savings are very, very impressive, anywhere from $380 million at minimum, upwards to three quarters of a billion dollars, something the government must thoroughly assess. I'm certain that the Ministry of Finance officials will be very interested in your report, so I want to thank you very much. I don't think I have any questions.
Mr Rollins: Thank you for the report. I think you've done an excellent job and have shown to us ways that we can make -- how do we get the patient to you first to make that saving happen? If we said, "Okay, fine, we're going to bring you into the loop," how can we get you there to make sure that we haven't wasted the six months, haven't wasted all the drugs and all that on those patients? How do we get them there first?
Dr Kempe: That's pretty simple. There's a massive disincentive for the patient to come to us first now, and that's financial. Put yourself in the shoes of the patient. If you right now had acute lower back pain and a screaming sciatica down your leg and you were told it was going to cost you somewhere between $75 and $100 to see me today and another $200 by the time you were done, you'd probably want to try something else first that's "free." That's certainly what we perceive to be, and my understanding is that that's what Dr Manga perceives to be, the major cause for us coming second.
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Mr Douglas B. Ford (Etobicoke-Humber): Does chiropractic treatment have any effect on sight, hearing or taste? We're talking physically here in different categories.
Dr Haig: When you look at the Ontario health survey data, they tell you that 96% of chiropractic practice is for musculoskeletal things, which is almost all of that. That's where the focus of what we're presenting today is. That's the vast majority.
Mr Ford: I understand that. I just wondered if there was any research on sight, hearing or taste for your treatment.
Dr Haig: I don't know what the research is on that, quite frankly.
Mr Kwinter: Thank you very much. I was very impressed with your presentation. I think you've made the economic case. I understand that you're in negotiations with the Ministry of Health to see if you can get them to see the economies in getting involved in funding chiropractic. Has there been any response to your appeal? What is their position?
Dr Kempe: I had occasion to meet with the government's negotiators this afternoon, as a matter of fact, just before I came here. Certainly the negotiators have no trouble with the concept of doing for less. They do have some trouble with the concept of better. The chief negotiator told me today that the ministry refuses to accept any premise of savings at all, while acknowledging that he hasn't even read the ministry's own reports and their own studies. My retort would be that if they refuse to accept our evidence of savings, perhaps you or some other member of this committee might demand that they submit whatever evidence they have that it doesn't result in savings.
Mr Phillips: To follow up on that, is the process that you negotiate directly with the Ministry of Health or are you part of the total pot, if you will, that they negotiate with the professions? I'm thinking now of the medical doctors and yourselves. Is that all part of one package, or do they negotiate independently with you?
Dr Kempe: No, the medical doctors have completed their negotiations with the government. We negotiate on our own with government-appointed negotiators, attended by some members of the civil service. We don't negotiate directly with the minister, no.
Mr Phillips: I guess what you're saying is that for one profession, the medical doctors, essentially their fees are basically covered almost in totality, and for your organization, over the last several years it has slowly been changed to where an increasing portion is paid for by the patient.
Dr Kempe: That's right.
Mr Phillips: Do you know whether the medical doctors are required to provide the same kind of proof of cost benefit as you've provided here?
Dr Kempe: I'm not aware that the medical doctors have ever been required to demonstrate cost effectiveness or clinical effectiveness, no. As I say, they've finished their negotiations. I'm not aware of any "necessary" service that's not fully funded by OHIP, and you alluded to that in the first part of your question. Certainly our services are about 25% to 33% covered by OHIP and the rest is borne by the patient.
Mr Phillips: What is the rationale for -- where you say, "Listen, if we can prove that it saves you money, why won't you look at it?" how would they respond to that?
Dr Haig: The government negotiators that we're dealing with are focused on the short-term fiscal goals that they have in front of them. It's fair to say that they are not looking at the broader picture. It is a problem that funding is in little silos and is not integrated the way it should be. Somebody needs to take a look at the broader issue of where a proposal like this would fit in.
Mr Martin: I want to follow up a little bit further on that line of questioning. It seems to me that we've been down this road quite a distance. I was on the committee that did the work around the regulated health professions. You folks were there and made your case and we recognized for the first time that what you do is legitimate and all of that. You've come before us with study after study, making the same case you make today. We just don't seem to be able to get anywhere. I just wanted to comment on your better for less actually being more the "less" part than the "better" part that the government seems to be interested in. I would certainly, from my experience -- two and a half years with this government -- agree with that in a very strong way.
There's obviously something else going on here that's blocking your coming on board and being recognized and seen and the government taking advantage of what it is that you have to offer. Is it just the bureaucrats and their not reading your material or their inability to see beyond what they've always seen beyond, to break open the parameters, or is there something else?
Dr Kempe: I'm certainly not aware of what any government official, whether it be a civil servant or in the ministry, is thinking. It baffles me. I've been down this road for 32 years. I had hair when I started this job. It's a really tough question. I don't know what the problem is. I perceive the problem to be largely one of money. If there's more to it than that, nobody has told me that.
Dr Pran Manga: Certainly in the past we've been able to demonstrate that greater access to chiropractic services would improve the health of the Ontario population. We've also been able to demonstrate there will be equitable access, because there's no doubt about that and I'm sure everyone here believes that. But I believe this is the first time we've been able to demonstrate that you'll also save money, both through direct health care costs and of course very massively through the indirect costs of illness and disability.
While we have been down this road before, I don't think we've had the kind of evidence you are now seeing, some literally for the first time in Canada. So in a sense, yes, we've been down this road before but not in the kind of detail and not as convincingly as we are putting it forward to you today.
The Chair: Thank you very much. I'm going to have to interject at this point. Thank you for your presentation and for your time, and acknowledge that in room 230 the discussion will continue.
That concludes the presentations for today. We are adjourned until 9:30 am tomorrow in this room.
The committee adjourned at 1458.