Thursday 19 August 1993

Capital Investment Plan Act, 1993, Bill 17


*Chair / Président: Brown, Michael A. (Algoma-Manitoulin L)

*Vice-Chair / Vice-Président: Daigeler, Hans (Nepean L)

*Arnott, Ted (Wellington PC)

Dadamo, George (Windsor-Sandwich ND)

Fletcher, Derek (Guelph ND)

Grandmaître, Bernard (Ottawa East/-Est L)

Johnson, David (Don Mills PC)

*Mammoliti, George (Yorkview ND)

Morrow, Mark (Wentworth East/-Est ND)

Sorbara, Gregory S. (York Centre L)

Wessenger, Paul (Simcoe Centre ND)

*White, Drummond (Durham Centre ND)

*In attendance / présents

Substitutions present/ Membres remplaçants présents:

Cousens, W. Donald (Markham PC) for Mr David Johnson

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

Mathyssen, Irene (Middlesex ND) for Mr Fletcher

Phillips, Gerry (Scarborough-Agincourt L) for Mr Sorbara

Sutherland, Kimble (Oxford ND) for Mr Wessenger

Wiseman, Jim (Durham West/-Ouest ND) for Mr Morrow

Also taking part / Autres participants et participantes:

Ministry of Environment and Energy:

Jackson, Jim, legal counsel

Merritt, Jim, executive director, clean water transition team

Ministry of Finance:

Kagan, Ken, legal counsel

McKendrick, John, senior analyst, fiscal planning branch, treasury board division

Madden, John, assistant deputy minister, office of the treasury

Stewart, Barbara, executive coordinator, treasury board division

Sutherland, Kimble, parliamentary assistant to the minister

Watson, Robert, director, capital markets research branch

Swartz, Brian, legal counsel, Ministry of Transportation

Tomlinson, John, legal counsel, Ministry of Education and Training

Clerk / Greffier: Carrozza, Franco

Staff / Personnel:

Anderson, Anne, research officer, Legislative Research Service

Revell, Donald L., chief legislative counsel

Wernham, Christopher, legislative counsel


The committee met at 1007 in the Humber Room, Macdonald Block.


Consideration of Bill 17, An Act to provide for the Capital Investment Plan of the Government of Ontario and for certain other matters related to financial administration / Loi prévoyant le plan d'investissement du gouvernement de l'Ontario et concernant d'autres questions relatives à l'administration financière.

The Chair (Mr Michael A. Brown): The committee will come to order. The purpose of the committee, of course, this morning is to deal with the clause-by-clause consideration of Bill 17.

Before I do that, I would like to bring members' attention to a number of documents that have been circulated. The first and foremost is really a scheduling document for the two weeks that this committee will be dealing with Bill 40. All members should have that in their possession. You will take note that the beginning time is Monday at 1 pm.

All presenters, anyone who has wished to make a presentation on this bill, have been accommodated on the list. If there are any difficulties that members see, I would ask that they have a look at the proposed schedule and let the clerk or the Chair know at the earliest possible moment, but I do not foresee any great problem with this. But if you do, let me know.

The second thing I think we should have a look at is we do have the summary of recommendations and we'd like to thank the research service for providing that to us, in particular our researcher, Anne Anderson. Members have that, and it will be useful as we go through.

Further to that, we also have a document from research. As you know, there was a question regarding schedule 3 and schedule 4 agencies of the government, and I'm hopeful that this document can clarify that in the minds of members.

I would ask members also, if they do have any amendments that the Chair and the clerk do not presently have, it would be appreciated if we can photocopy them. I think all three caucuses have now provided us with at least their preliminary set of documents.

Mr George Mammoliti (Yorkview): Mr Chair, do we need to move a motion for this agenda, or no?

The Chair: No, that's not necessary. It follows the subcommittee's instructions as much as we can. It's really for information, so that's fine.

Mr Kimble Sutherland (Oxford): Just before we begin, there are two other documents that we'd like to table anyway. One is a change from the document yesterday about the water and sewage plants. The title of that document had indicated plants "owned" by the Ministry of Environment and Energy, and the plants are not owned, they are operated by the Ministry of Environment and Energy. I think some of our municipal friends who own those plants might be upset about that.

Just as a further comment to the discussion yesterday about schedule 3 and 4 agencies, Mr Phillips was correct that the Workers' Compensation Board is a schedule 3 agency. But I'd also like to just table a document here that outlines the differences in what is occurring with the capital investment plan, capital corporations and the Workers' Compensation Board. It outlines in chart form some of the differences in accountability provisions.

The Chair: Do members have a copy of that?

Mr Sutherland: No, they don't. So I'll table that with you and get that distributed.

The Chair: All right. I'll take it those are being distributed at this moment.

Mr Sutherland: Right, thank you.

Mr Drummond White (Durham Centre): I'd just like to make a small point in regard to the proposed agenda in front of us for consideration of Bill 40. I believe that on Monday afternoon I will be representing the ministry rather than the minister, and that a letter to that effect should be brought to the committee this afternoon. That's basically what happened in provincial Parliament in the last week of the session.

I could also mention that I believe that the government statement should be reasonably concise. Members should be able to look forward to a reasonably brief meeting on Monday afternoon, from our standpoint at least.

The Chair: The committee will take note that the parliamentary assistant will be representing the minister on Monday. I would suggest the 2 pm start time for the briefing by the ministry officials. Mr White, you might be able to inform them that they will be able to commence, not necessarily at 2 o'clock, but if in fact we are ready for them before that, I hope that they will be in a position to start their presentations.

Mr White: I am sure they will have taken note.

The Chair: Thank you. Mr Sutherland.

Mr Sutherland: I have one more document to table. This is in response to a question from Mr Cousens. He was asking what information relating to the capital corporations will be in the estimates. There is a detailed response here as to what that information is. We are still waiting; I believe there is one more request for information from a question from Mr Phillips that we're hoping will be here shortly to distribute to members.

Mr Gerry Phillips (Scarborough-Agincourt): I just want to comment on the material handed out today.

Firstly, I'd say that the government is moving very quickly to establish a number of schedule 4 agencies. This will get eight of them established in a matter of about 12 months or so. The president of OPSEU, I think, summarized it pretty well in a public document. He said, "Listen, the purpose of the schedule 4 agencies is to get spending and head count off the books." That's his view, and as opposition and as the public, I think that is one of the clear motivations of it.

Secondly, I still haven't seen where there are any substantive differences between the way WCB's accountability occurs and the way schedule 4 agency accountability occurs. In fact, I'll repeat what I said yesterday and that is, it is literally word for word how a schedule 3 agency is accountable, a schedule 4 agency is accountable.

The reason I raise this is that this bill is going to go ahead, it's going to pass, and we then in the future will hear, "Well, the reason why that road isn't being built is that was a decision made by an independent, arm's-length schedule 4 agency that made that decision and it has the authority to make those decisions," or "The reason why the toll is set at that rate is that the bill provides them with the authority to set that toll," or "The reason why your water rates went up is that there is an independent agency in this province that has the legislative authority to make that decision, and you surely don't expect me, as the minister, to interfere in those day-to-day operations." That's what we hear about WCB.

I want to make sure we all know exactly what we're agreeing to, because if we think the Legislature will in the future have the authority, as I read the act, to agree to the toll rates or agree to the rates -- any public body has the authority to do that -- I don't think it's in the legislation and, as I say, I think we should all understand what we are getting into here and, therefore, the kinds of opportunity the public will have to question and to be a part of those decisions.

That's the only purpose of me raising it yesterday, and in fact one of the objectives of these schedule 4 agencies is to give them the independence. So we can't kind of suck and blow. If that's the objective of the bill, as I read it, then we should all realize that in the future, as I read the bill, they will set the tolls. They will set the rates that they will charge for their process into the water. As I say, they're now an arm's-length, independent agency with that authority to do that.

Mr Sutherland: If I can just respond to that comment, actually you're quite correct that they'll be able to set the toll, but cabinet will still retain the authority to set the policy framework on how the toll will be established. There is still accountability there.

The exact amount of the toll, sure, will be determined, but there will be guidelines and a policy decision made by the government in terms of what the criteria would be for establishing the toll.

Mr Phillips: Just to help me a little bit, how would that differ from the Workers' Compensation Board having the right, for example, to set the rates they charge employers for coverage?

Mr Sutherland: I guess again we come back to the point that we tried to make yesterday in terms of the fact that in these cases of these corporations, the government is still retaining the policymaking decision authority in most of them and that these primarily are the service corporations for carrying out those policies, whereas the Workers' Compensation Board has the ability to establish its own policies and then carry them out as well.


Mr Phillips: I think we should recognize that we're creating an independent agency, and let's not mince words about it. If we want to do that, let's realize that, as I say, they will have authority similar to the Workers' Compensation Board. That's supposedly the merit of this thing. In fact, if you read much of the background material on it, it believes it will be able to proceed more expeditiously than if this were a public body.

Mr Sutherland: Once more, if I could respond to that, let me say again that yes, the establishment of these corporations provides us with more flexibility in terms of how we can actually carry out capital investments, but the policy behind those capital investments, or behind the strategies that the corporations are carrying out, will still be in the hands of the government, the cabinet, and I guess in that respect, the accountability mechanisms of the Legislature and cabinet's accountability to the Legislature. That is a very distinct difference than how the Workers' Compensation Board operates.

Mr Phillips: I just choose to disagree, but that's --

Mr Sutherland: Fair enough.

The Chair: Are there further questions and comments regarding the material that has just been presented to the committee?

Mr Mammoliti: To Mr Phillips as well: My colleague Mr Sutherland talked about accountability and flexibility. I believe that's important in the province for a number of reasons. Setting up these agencies, for me anyway, isn't that bad, and I think I speak for my constituents as well when I say that if this means jobs and if this means a more expedited decision-making process for things like jobs at times like this, then I don't have a problem with it.

I take great exception when a member continually criticizes us and accuses us of smoke and mirrors, and all the things he has said over the last little while about these agencies, especially when time after time we've heard from deputants, from witnesses, that this is a good thing, and if jobs are created from it, then that's what we need right now, and if it's going to expedite it, then that's what we need right now.

I can't understand the logic. On the one hand the member talks about how he would vote in favour of this in the Legislature and how he likes the concept, and on the other hand he's being very negative. I needed to put that on record because I can't understand why Mr Phillips is doing that.

Mr Phillips: If I may respond before we get into clause-by-clause, firstly, let's not mince any words. The province spends $600 million a year on school and hospital capital -- every single year. It's going to hide it. This has no public merit, what's happening there. What we will now show is a $30-million-a-year expenditure and spend $600 million a year, and the public in the future is -- we're adding enormous debt. I'm just saying, listen, let's be honest with ourselves. I think the auditor was very helpful to us the other day when he was here, saying, "Let's disclose that so we don't kid ourselves."

I'm just repeating what Fred Upshaw said in a letter. He said the reason the schedule 4 agencies are being established is to hide spending and to hide head count. That's exactly what he said in a public document.

Mr Sutherland: No, that's not the case, though.

Mr Phillips: I'm sorry, but that's what the president of the Ontario Public Service Employees Union said, who presumably understands this material, who presumably has been involved in it.

Mr Mammoliti: Mr Chair --

The Chair: Order. One member at a time.

Mr Phillips: I'm repeating what the president of OPSEU said. You may say he's wrong, and I understand you can say he's wrong. I'm just saying that's what he said.

The auditor, I think, was very helpful to us the other day in saying that here we are and what we're going to do now is that we're going to take our jails, our correctional institutions, the Metropolitan Toronto East Detention Centre, and we're going to "sell it." So who are we selling it to? We're selling it to ourselves. We're going to show $250 million worth of revenue to the province and then we're going to lease it back. We're going to take our courthouses and we're going to sell those, and then we're going to lease them back. What does that do? It shows $250 million worth of revenue that is a mere paper transaction, and then we take on brand-new lease costs that the public will have to pay in the future.

I'm saying it's like many of the government bills: There is certain merit in them, so the opposition is put in the position where either you say all right -- the merit of these bills is that yes, we can get on and build the highway faster, and I think that's a good idea, and yes, I think we can improve the water system in the province and yes, that is a good idea. But in behind it are some things that we find quite negative and quite offensive.

The member is offended that we raised these in the public interest: my apologies, but I'll continue to do that because there is behind the merits of the bill, some substantial distortions of the financial picture. As a matter of fact, as I say, the auditor, I thought, was very helpful to the committee. I see that both the Conservative amendments and our amendments attempt to address that, and hopefully will improve it.

I'll just say to the government members that some day, when you're looking at the finances of the province, you'll be able to look and say: "Holy God, we did that? We ran up a new debt on school boards' books?" There's only one person responsible, the provincial government, that it's on somebody else's books. That, to me, is not a proper arraying of the public's finances. If the public isn't given the proper arraying of its finances, then it's far more difficult for them to deal with it.

Mr W. Donald Cousens (Markham): Time to get on with the clause-by-clause.

The Chair: Thank you, Mr Cousens. Is there any further discussion on the papers that have been circulated? Then we'll take Mr Cousens's suggestion.

Mr Cousens: It's the only one of the day.


The Chair: I see before me, as I look at the motions, that there are no amendments proposed before section 13, so I'm going to ask the broad question, if that's possible and the committee agrees, are there questions and comments or amendments to sections 1 through 12? I'll give members a moment to have a look at those.

Mr Phillips: I don't know how the committee had planned to deal with this. Because I didn't have a chance earlier, could someone explain the merits of having the Ministry of Environment and Energy responsible for the Ontario Clean Water Agency as opposed to, for example, the Ministry of Municipal Affairs? The reason I raise that is that the testimony over the last couple of days suggests that the Ministry of the Environment --

The Chair: Excuse me, Mr Phillips, which section?

Mr Phillips: I'm on subsection 3(3). The reason I raised it is because of the testimony over the last few days that in some respects the Ministry of Environment could put itself in a position of conflict in that it presumably is responsible for monitoring clean water but also for providing it.

Mr Sutherland: If I could just respond, first of all, I guess you would look at the current situation and, as we pointed out, there are many plants that the Ministry of Environment is already operating. While it is called the clean water agency, it's dealing with the issue of water and sewage. There are tremendous responsibilities from the Ministry of Environment and Energy for both those issues and not in all cases will they be -- at any rate, the ministry has a responsibility for environmental issues. Water and sewage certainly come under that. They already operate plants and they also are already responsible for enforcement.

Mr Phillips: I think, frankly, there's an equal argument to be made for it to go somewhere else, but it's not that crucial.


The Chair: Are there further questions, comments or amendments on sections 1 through 12?

If not, shall sections 1 through 12, inclusive, carry? Carried.

Section 13: I see a government amendment, I see a Liberal amendment and I also see a Conservative amendment, and unless my eyes deceive me, they are similar. Would the parliamentary assistant move the amendment to section 13.

Mr Sutherland: I move that section 13 of the bill be struck out and the following substituted:


"13(1) The Provincial Auditor is the auditor of a corporation.


"(2) The Provincial Auditor or another auditor appointed by the Lieutenant Governor in Council shall be the auditor of the subsidiary corporations of a corporation.

The Chair: Would you like to make a brief explanation of the reason for the amendment?

Mr Sutherland: I think it is one of the amendments the auditor requested. I think everyone, by the fact that all three parties have put it forward, sees the merit in it.

Mr Cousens: Is there any explanation on the part of the government why it would have written it the way it did in the first place? It seems to me as if it's almost an affront to the auditor's involvement and the processes at the public accounts committee, and also a failure on the part of the government to understand the importance of working closely with the auditor. It would have appeared to me that it was almost trying to make a message that you wanted to do things differently.

What happens with this kind of improperly or poorly worded draft that comes out for first reading is that it causes people concerns that maybe they shouldn't have had in the first place. To what extent was this on the government agenda? To what extent was it a mistake? Maybe you could comment on that.

Mr Sutherland: Let me just say that I think the fact we've also come forward with the amendment shows that we are willing to work with the auditor. Ms Stewart will respond to how the original draft came forward.

Mrs Barbara Stewart: The thinking at the time was very much that at this juncture and until we see some of the partnerships that can be and will be put together between the public and private sectors, which is very much at the heart of these corporations, it was difficult to determine exactly what some subsidiaries would look like, how they would be composed etc.

While the intent was very much that an auditor would be appointed for any subsidiary -- there's no question to the merits of having those corporations and subsidiaries audited -- it was purely a question of time about how the subsidiaries would be composed and what the private sector partnership would look like. The intent would be that when subsidiaries came forward for treasury board, for government approval, as they need to in accordance with the bill, the choice of auditor would be made at that time.

Mr Cousens: In comment, I only say that it's the kind of move that isn't advisable. I think there are lessons learned out of these processes. I accept your comments but I also -- having been on public accounts for a long time; I think other members of this committee have as well -- really want to see the proper involvement of the whole audit process which is more -- and as the auditor said it very well the other day, it's not just an annual audit; it's the overview that they have on the way things run and also the intent to make things run better.

The audit has so many more things to it. People who are uninformed about that office really don't fully understand. Therefore, it's one of those lessons I guess that -- it is one of the values of the committee that this change is made, so I support it.

The Chair: Are there further questions or comments regarding Mr Sutherland's amendment to section 13?

If not, shall Mr Sutherland's amendment to section 13 carry? Carried.

Mr Phillips and, I guess, Mr Cousens again have the same or very similar amendment. I haven't read it word for word but it looks mostly the same.

Mr Phillips, would you like to move your amendment to section 13.1?

Mr Phillips: Yes, I'll move amendment 13.1, Mr Chair.

The Chair: You have to read it into the record, Mr Phillips.

Mr Phillips: Oh, I'm new at this.

I move that the bill be amended by adding the following section:

"Books of account

"13.1(1) A corporation and its subsidiary corporations shall cause to be kept books of account and records in relation to those books.

"Management controls

"(2) A corporation shall cause to be maintained in respect of itself and its subsidiary corporations,

"(a) financial and management control systems;

"(b) financial and management information systems;

"(c) appropriate management practices.

"Object of controls

"(3) The books, records, systems and practices referred to in subsections (1) and (2) shall be maintained so as to provide reasonable assurance that,

"(a) corporate assets are safeguarded and controlled;

"(b) corporate transactions comply with the bylaws and this act and, in the case of a subsidiary corporation, with any document by or in accordance with which it is established;

"(c) corporate financial, human and physical resources are managed economically and efficiently and corporate affairs are conducted effectively.

"Internal audit

"(4) A corporation and its subsidiary corporations shall conduct internal audits to assess compliance with the requirements of subsections (1), (2) and (3)."

The Chair: Mr Phillips, do you have an explanation for the reason for moving the amendment?

Mr Phillips: I think we all appreciate what we're doing here, and that is, we're taking some enormous areas of responsibility out of the spotlight of the consolidated revenue fund and out of the estimates process and moving them into these arm's-length agencies. For example, one of them is going to be responsible for managing $80 billion worth of debt. I think we all understand the enormous magnitude of that.

I think anybody who's looked at the way the province keeps its books would say that Ontario's books are probably the least informative of any government now in the country, and certainly versus any private sector company are not particularly informative. I do not blame the NDP for that. They are following accounting rules that are legally permissible. But in terms of helping the public to come to grips with what the state of the province's numbers is, they're less than helpful.

The auditor, I think, gave us good advice the other day of how we can begin to take steps towards that. I think the response can be, "Let's do it all as a package," but (a) that takes time, and (b) we are dealing with legislation now where we can incorporate some relatively straightforward recommendations from the auditor now. As I say, these four corporations are going to manage what will be $100 billion worth of debt very quickly, incredible sums of money, and I think this proposal, as the auditor points out -- he went over the reasons for his proposal, which I support, and, most importantly, provides legislators with an ability to assess the performance of management which a memorandum of understanding would not provide, and that's true. So for those reasons we'd move the motion.

Mr Cousens: It's an excellent motion that Mr Phillips has read into the record. It's seldom that I've seen the Liberal Finance critic do such a superb job of drafting a motion and presenting it so well.

Mr Phillips: Thank you.

Mr Randy R. Hope (Chatham-Kent): Did you copy it off of Don's?

Mrs Irene Mathyssen (Middlesex): You dictated it.

Mr Hope: Who did you copy from?

Mr Cousens: I don't know whether I copied his or he copied mine.

Mr Sutherland: Keep on going: You both copied.

Mr Cousens: No, I think if you can't have --

Mr Hans Daigeler (Nepean): We all have the same adviser.

Mr Cousens: Yes, we all have the same --

The Chair: Order. Mr Cousens is trying to make a very succinct and important point.

Mr Cousens: In fact, I've almost made it. But I wanted, first of all, to begin by congratulating the Liberals for the progress that they've made.

Mr Hope: Let Hansard show that.

Mr Cousens: It's on the record. It's there in the books now and it's going to be read back during the election campaign.

Again, Gerry has explained it very well. A memorandum of agreement has a certain strength and purpose to it. I have a sense as well that these new corporations, when they are established, with the management that is coming into modern business, hopefully the same kinds of rules will apply in government. But you really want to bring some of the practical measurement tactics to bear so that we start accounting for our actions and we start presenting that information in a way which is understandable and that it goes beyond necessarily the traditional way business has been conducted in the province of Ontario.

It is a new form of business. It is a new experiment. So why not, at the very beginning, establish fundamental guidelines that will necessitate the establishment of rules and procedures and methodologies that will ensure an openness and a frankness and public statements on their activities?


I see these amendments, this being one, as being of a number that force accountability and in some way bring in part back to the Legislature the assurance that these agencies will be more than aboveboard. They'll always be aboveboard, and I'm satisfied that, when the auditor has his purview, that will be the case.

Mr Phillips's motion does say it well. The control systems for financial and management control, management information systems, appropriate management practices: I'm satisfied they'll be done, but let's be sure they're done. Our job ends in some respects with the legislation after it receives third reading. We won't have a chance to touch this until the government of the day brings it forward again for future consideration.

So therefore I see value on the part of the taxpayer and the public at large that we bring in those management controls, that we bring in the object of controls, and that again forces certain actions to be done that will give us reasonable assurance that the assets are safeguarded and controlled.

Finally, the internal audit: It's also a part of that ongoing review of your actions. The Human Rights Commission is a classic case of one of the Ontario government's institutions that has not gone well, and until recently some of the very things that we're talking about in this motion have not been in practice. So what you've seen is an organization that's like a ship without a rudder: It's gone all over the lake and hasn't really reached its destination. We are hoping now, if you bring in and support Mr Phillips's motion, that you will not be the rudderless ship that you could be. So I support the motion and am pleased to support what Mr Phillips has also said. I think he said it very well.

Mr Sutherland: First of all, I think we should be careful to not compare apples and oranges. In terms of Mr Cousens making reference to the Human Rights Commission, the Human Rights Commission's mandate, function, operation is significantly different than what is going on with these corporations.

Mr Cousens: But the methodologies, the management, the lack of it --

The Chair: Order.

Mr Sutherland: No, it is significantly different. First of all, let me say that I don't think in this day and age there's much use in setting up a corporation if it's not going to be using these principles here as its main principles for operating. I think any corporation, whether it's public sector, private sector, would want to use these guidelines here.

We have indicated to the auditor, and the ministry and the government have indicated to the auditor, that the types of requests that they've asked for here will be in the memorandum of understanding between the government and the corporations. Those memorandums of understanding are not secret documents. People can ask for them, see them, request them.

There are all kinds of other accountabilities on here in terms of, as we've mentioned earlier, the agencies, boards and commissions committee has the right to look at corporations; public accounts committee, questions there. There's even question period where people can ask questions of the appropriate ministers and the Minister of Finance, so there's a whole host of ways in which accountability can be brought.

So to say that once this legislation is done we're not going to have another chance to scrutinize the activities of the corporations, that's simply not the case. I think Mr Cousens knows, as an experienced legislator here, that there are all kinds of ways to scrutinize the activities, to have accountability.

I will come back again to the comments I've said earlier, that the minister has the ability to issue specific directives. There is obligation among the board to implement those directives, not to just take them under advice but that those directives must be implemented.

There are a whole host of accountability mechanisms that are in place, and we believe that doing this process through a memorandum of understanding -- I again want to repeat, memorandums of understanding are not secret documents. They are accessible, and through that fact people can see and examine the accountability.

There are very strong accountability principles behind the legislation and also in terms of how the actual corporations are going to operate, both with their financial controls, their management systems, practices, human resource practices etc. We believe that the memorandum of understanding is a strong enough accountability link and that there are still many ways for the Legislature to scrutinize and hold the actions of the corporations accountable.

Mr Cousens: I don't accept the premise the government is operating under. I'm satisfied that there are significant parallels between the Human Rights Commission, as an institution that is set up by the government to perform a service, and the methodologies that have not appeared therein: the lack of accountability, the lack of management controls and object of controls, the lack of internal audits, and as the commissioner changes so do the guidelines within that organization change.

Therefore, the Legislative Assembly has lost a tremendous amount of respect for an institution, that one in particular -- and I'll go to others. We have many examples in which the government trusts the system to work perfectly through these memoranda. As Legislative Assembly representatives, the authority that we have continues to be undermined and goes to bureaucrats and civil servants.

What we're seeing here in this kind of amendment is where we in the House have made certain determinations as to what should be part and parcel of these agencies, and see these as important criteria for their organization and management practices. It gives us a chance to be able to say we know that it is going to be done in a certain way rather than by the guidelines that are established through certain memoranda, because we don't have necessarily the insight as to what your memorandum of agreement is going to contain anyway.

If you could say to us with some certainty -- and I don't think you can -- will your memoranda of agreement contain all the points that we've talked about in this amendment? Maybe that would be a simple starting point of more dialogue, but my point, first of all, is that the Human Rights Commission, the Interim Waste Authority and many other types of government agencies and commissions have not had the kind of management practice that we're talking about with this motion. It therefore becomes very important to, I guess, the Liberals and ourselves -- inasmuch as this is Mr Phillips's excellent motion -- that this kind of thinking be imposed upon the agencies.

So may I ask you specifically, since you refer to the memorandum of understanding, will it contain all these points that are referenced in the section 13.1 amendment?


Mr Sutherland: That is the intent. That intent was, I believe, given to the auditor, both verbally and in writing, in terms that it would be part of the memorandum of understanding, which is just to state an agreement between the minister and the chair of the board of the exact corporation.

I do just want to come back again and say that I still think when you're looking at mandates and missions of the Human Rights Commission versus these corporations, you are really comparing apples and oranges. I will only also state that we're constantly reminded, Mr Cousens, about how wonderfully things were managed here for 42 years. The Human Rights Commission was set up in the time of your government and many of the other corporations that we hear complaints about today were set up, the type of practices were established.

We've tried to develop a new way of using schedule 4 agencies by having greater accountability. I know Mr Phillips doesn't see a lot of differences, but we believe schedule 4 agencies and the type of accountability mechanisms, in terms of ministers being able to issue directives and corporations having to implement those directives from the ministers, is a far greater accountability than we've seen with some of the other corporations under different schedules.

Mr Cousens: If you're prepared to put this in a memorandum of agreement, why won't you be prepared to put the same into legislation?

Mr Sutherland: As we've stated earlier and as we stated in response, the auditor is working with several deputy ministers responsible for the corporations and operations to develop a legislative accountability framework. That was the mandate given to the auditor from the public accounts committee, to work to develop that. That process is occurring.

We don't believe that we should pre-empt that process by going to one specific piece of legislation and saying, "This is what the legislative accountability framework process is going to be." There's a process of goodwill on both sides, I believe, to come to a common understanding. We believe that by putting it in the legislation, you're pre-empting that.

The other thing to remember is, of course, that whatever the final outcome of that legislative accountability framework is between the auditor and the government, that will still apply to these corporations. Whatever they finally agree upon will still apply to these corporations afterwards, but we believe we'd be pre-empting that process of developing that framework. Basically, we believe, if you put it into this piece of legislation, what are you saying? That's going to be framework, while there are still discussions going on?

Mr Cousens: I'm saying it would be and I think that if there is nothing within this amendment that specifically bothers you or the government, it just boggles my mind that you're not prepared to accept such basic criteria for good management practices to be part of the bill and to be the way in which these agencies will be conducting their business.

You can't suck and blow, and I think that's what you're doing as a government. When you say the intention may be respected, I have no way of knowing whether or not it will. By virtue of the fact that you are not the minister and that things happen between what is said in a committee and what is finally brought down, and no one's there to supervise it to see that it happens, it therefore becomes all the more important that these kinds of guidelines be brought in early on.

I haven't seen you or anyone on your staff disagree with the points and it therefore, I think, behooves you to show some sense that you really mean what you say and allow it then to become part of the bill. I make the point. It's obvious where the government's going to go. It disappoints me greatly. I think there is a chance to start moving ahead. It's obvious that it's becoming more and more difficult to run government like a business.

Mr Sutherland: Let me say again that we're not rejecting the principles; we agree with the principles. The question is where they should be placed. We believe that placing them in the memorandum of understanding between the minister and the chairman of the board, and the other accountability mechanisms to ensure that they're enforced, provide us with more than sufficient accountability. We accept the principles. The intent is to implement them through the memorandum of understanding. The auditor's office has been informed of that and, I believe, informed of that in writing.

The Chair: Mr Daigeler. I'm sorry. Were you finished, Mr Cousens?

Mr Cousens: I am not doing very well so I am glad to see Mr Daigeler try.

Mr Daigeler: Can we get a copy of this written communication that you're referring to?

Mrs Stewart: Yes. We'll try and provide it this afternoon.

The Chair: Thank you. Mr Phillips.

Mr Phillips: I think Mr Cousens probably summarized it. The government has no intention of supporting it, so it's dead. But the problem with the explanation I hear is: "Well, trust us. We're going to do all this and you just have to trust us on this." I think the opposition is saying, "Well, if you're going to do it all anyway and you agree with it all, let's simply put it in the legislation so that we don't have to rely on -- while we are still negotiating that memorandum of understanding," or blah, blah, blah.

I realize the parliamentary assistant has to say what he has said. It's a tough argument to make because it doesn't make sense. If you're going to do it at all, put it in the legislation. I hear your explanation, I don't accept it, but I think we're probably going to chase ourselves around for a long while on this because it's clear the government isn't going to accept the amendments.

Mr Hope: I was intrigued by Mr Cousens and he does bring up a good point about accountability. I hear him quite often in the Legislature speaking on behalf of constituents and information to constituents. I support the memorandum being put in here and not confined in the legislation for the simple fact that I believe there's an overall role, and the role is for the public auditor to put one clear message out there for everyone so that the consumers, who are the taxpayers out there, can pick up one piece of legislation instead of multiple pieces of legislation and know what the accountability framework is for scheduled facilities, agencies and even the government.

That way it's clearly defined, there's no interpretation, there's no picking from one piece of legislation to another piece of legislation to another piece of legislation.

We wonder why everything is so confused these days. You did an excellent job of confusing the public for 42 years, and five years for the Liberals. I think what we need to do is get things very clear in pieces of legislation, and to start off in here without dealing with the overall problem of public accountability is very misleading to the general public.

Mr Cousens: Is the honourable member suggesting that the memorandum of agreement that would be made is something that would be put in the form of a bill brought to the Legislature and then given legal power, or will it continue to be something that is an arrangement through that former memorandum as an internal document.?

Mr Hope: Do you want me to respond to him?

Mr Sutherland: I can respond to it.

Mr Hope: Okay.

Mr Cousens: I'd like to hear Randy. We might get something out of him.

Mr Sutherland: Let me just say that the memorandum of understanding will be established and it is a document that members of the Legislature can access, and that the public can access it as well if they want to see what's involved with it.

Mr Cousens: That wasn't my question. Is it going to be in the form of a law? Is it going to be in the form of a bill?

Mr Sutherland: No. Memorandums of understanding are not pieces of legislation.

Mr Cousens: But to give it that weight of power, which certainly the auditor raised earlier this week, would you consider putting it in some form other than just an internal document as a memorandum of agreement?

Mr Sutherland: I think the weight of power that the auditor would request is developing a legislative accountability framework that is acceptable to the auditor, and you're not going to have that done with this one piece of legislation. His intent is to have that through all pieces, through the whole government, as Mr Hope was indicating, and that process is being worked upon and will continue to be worked upon.

I'm sure the auditor at some point will say that he wants a deadline established for finalizing that accountability framework and once it's established, again, these corporations will be subject to that accountability framework. If the accountability framework goes beyond what's in the memorandum of understanding, they will be subject to that.

Mr Hope: Just to respond to Mr Cousens, he talks about the memorandum of understanding. I'm talking about a piece of legislation that should be brought forward and I'm surprised the Tories haven't brought it forward, Don. I thought for sure you would bring the public accounts auditing process into the Legislature and introduce it as a Finance critic. Maybe it's just that you haven't been in the portfolio long enough, but I'm sure you will. I think in the overall perspective of it, the public auditor ought to be making major recommendations for the taxpayers of this province to put government in accountability: provincial, municipal, transfer partners, schedules. I believe it is an auditor's responsibility. I'm not an auditor.

Mr Ted Arnott (Wellington): That's what you're voting against.

Mr Hope: I've seen ways --

Mr Jim Wiseman (Durham West): No, we're not.

Mr Hope: No, I'm not. Understand what's going on. You're piecemealing, which the Tories have done for 42 years. It's piecemeal legislation, which has made it very confusing for the general public to find out stuff. You've done an excellent job of confusing the public, and today we're trying to get a grapple on a lot of that stuff. The Liberals, I must say, weren't experts at cleaning things up either.

What we need to do is to bring forward a piece of legislation which talks about everything from provincial to schedules to agencies, so that the general public is well aware of them, and I believe the public auditor's responsibility should be performing that responsibility as an auditor. I hear about corporations. I know a lot of corporations that have a lot of corporate numbers in one corporation. Let's just make sure that when we're talking about the amendment you're bringing forward, it is only a piecemeal process. The only overall process for accountability to the general taxpayers is one piece of legislation that they can refer to, and whatever agency it is, they have it at hand in one piece.


The Chair: Thank you. Are there further questions or comments on Mr Phillips's motion on section 13.1?

If not, shall Mr Phillips's motion carry?

All in favour will say "aye."


I feel a recorded vote coming on. Do the nays have it?

Mr Sutherland: For Mr Phillips's sake.

The Chair: A recorded vote.

All in favour of Mr Phillips's motion?


Mr Arnott, Mr Cousens, Mr Daigeler, Mr Phillips.

The Chair: Opposed?


Mr Hope, Mr Mammoliti, Mrs Mathyssen, Mr Sutherland, Mr White, Mr Wiseman.

The Chair: The motion is lost.

Mr Sutherland: Mr Chair, just before we proceed, we now have the response to Mr Phillips's question, so I'd like to table that with the committee for distribution.

The Chair: That shall be distributed to the members. Thank you, Mr Sutherland.

Section 14: I see two amendments being proposed to section 14, one by Mr Phillips and one by Mr Cousens. Again, they look remarkably similar, if not identical. Mr Phillips, would you like to move your amendment to section 14?

Mr Phillips: I move that section 14 of the bill be amended by adding the following subsections:

"Corporate plan

"(5) A corporation shall submit annually to the minister for his or her approval and recommendation to treasury board a corporate plan that deals with all the businesses and activities of the corporation and of its subsidiary corporations.


"(6) The corporate plan shall contain,

"(a) a statement of the objects of the corporation as set out in this act;

"(b) a statement of corporate objectives for the next five years and for each year in that period and of the proposed strategy for achieving them;

"(c) a statement as to expected performance for the year in which the plan is submitted as compared to its objectives for that year, as set out in the most recent corporate plan;

"(d) the operating and capital budgets of the corporation and its subsidiary corporations for the next fiscal year.

"Substantial change

"(7) If a corporation or its wholly-owned subsidiary proposes to make a substantial change to its business activities in a manner that is inconsistent with its most recent corporate plan, the corporation shall promptly notify the minister in writing of the proposed change and clearly identify the inconsistency.


"(8) The budgets referred to in clause (6)(d) shall deal with all the businesses and activities, including investments, of a corporation and its wholly owned subsidiary corporations and shall be prepared so as to show clearly information relating to their major businesses or activities.

"Approval of budget items

"(9) The minister may approve any item in a capital budget submitted for any fiscal year after the fiscal year for which the budget is submitted."

The Chair: Thank you, Mr Phillips. The Chair has made a small error in that we should have been dealing with your other motion, subsections 14(1) and (2), first, so with the permission of the committee, we'll stand down Mr Phillips's amendment that he just read in until the appropriate time and deal with his amendments to 14(1) and (2). Again, I see that Mr Cousens has a similar motion, so if you would move your other amendment.

Mr Phillips: Subsections 14(1) and (2):

I move that subsections 14(1) and (2) of the bill be struck out and the following substituted:

"Annual report

"(1) A corporation shall, within ninety days after the end of its fiscal year, submit to the minister and the Minister of Finance an annual report on its affairs and the affairs of its subsidiary corporations for that fiscal year.

"Contents of report

"(2) The annual report shall include,

"(a) the financial statements of the corporation and its subsidiary corporations, prepared in accordance with generally accepted accounting principles;

"(b) the Provincial Auditor's report on the financial statements;

"(c) a statement setting out the extent to which the corporation and its subsidiary corporations have met their objectives for the fiscal year as set out in the corporate plan; and

"(d) quantitative information respecting the performance of the corporation and its subsidiary corporations relative to their objectives, prepared so as to show clearly information relating to their major businesses or activities."

The Chair: Do you have an explanation for the reason for your amendment?

Mr Phillips: Again, it goes back to something that actually both our party and the Conservative Party proposed in the pre-budget consultations, and that is that the way the finances of the province are reported is (a) not as useful for the public as it should be, and (b) doesn't conform with normal accounting principles. The accounting profession in the country has been urging strongly governments to change their accounting methods, and some governments have moved, as we heard from the auditor.

The auditor himself, when he was here two days ago, answered the questions we've heard. What the auditor said is that if we incorporate these proposals, these corporations will far more accurately provide to the Legislature the necessary information for the public to deal with the agencies, the capital corporations.

I think someone said to him, "Why not just wait till we revise the whole thing?" and he said, "Here is an opportunity as you proceed with this legislation to incorporate the principles that we're talking about." I think he answered the question of why do it now, because we're dealing with this legislation, because it's clear what should be done, and I gather the government is saying it will do this, but it prefers to do it through other informal means. What I'm saying is, let's take the advice of the Provincial Auditor, who's responsible to the Legislature for ensuring the public gets the right information, and incorporate it in the legislation now.

Mr Cousens: I think everything that was said in the earlier presentation, both by Mr Phillips and myself, applies to this amendment.

Mr Sutherland: I just want to state again that no one is against the principle of having some mechanisms for reporting and ensuring what should be in annual reports. I guess my concern would be, though, that you're really limiting the flexibility when you put it into actual legislation.

I think there are many other mechanisms besides the memorandum of understanding. The minister can at any and all times direct the board on what should be in its annual report, and again, here you've got a situation that at this stage anyway, the auditor has said what he would like in the annual plans. Let's say six months from now the auditor decides he wants more detailed information. Then you're looking at coming back and going through a legislative process to formally establish that in legislation.

Again, I think you have far more flexibility in terms of doing it through the other mechanisms that are available rather than, each time you change that, coming back and reintroducing the legislation and having to use up legislative time to make those amendments necessary.

Also, I come back to state once again, there is a process going on for a legislative accountability framework. I'm sure as part of those discussions the auditor will be talking about annual reports, what should be in annual reports, both of government ministries and of the corporations of the government. I would say there are many processes available, and having it in the legislation is not the only mechanism for ensuring that you have accountability or for ensuring that the contents of this motion are dealt with.


The point is, once it's in legislation you then do limit your flexibility on how you change those reporting mechanisms should you want more information or should changes occur. Given the fact that the legislative agenda always seems to be busy as is, I think all of us would agree that it's not maybe the most effective use of the time to keep bringing back pieces of legislation to amend them all the time to respond to changes in what people see as appropriate reporting mechanisms.

The Chair: Further questions or comments?

Mr Arnott: This discussion is similar to what we experienced over the last amendment, which caused some interesting responses. But I still fail to see how the government will reject this motion as well. I think what the auditor has suggested is a basic minimum requirement for accountability. If the government wishes to enter into the memorandum of understanding with the auditor, which will apply to other crown corporations, other agencies and so on, that's fine. But this is a legislated, basic minimum requirement of accountability which conforms with generally accepted accounting principles and generally accepted business principles that I think the taxpayers would hope to have in these corporations.

So whatever agreement the government may enter into with the auditor that can be superseded if we can find greater accountability mechanisms, we're for that. But this is a basic, minimum accountability mechanism and I feel the government should support it.

Mr Sutherland: I guess I would just say that it's my understanding out of the legislative accountability framework process that what may occur is, once that process has developed that framework -- and I think that was the intent of the public accounts committee; I don't sit on that so someone could correct me if I'm wrong -- then we're going to go ahead and make the changes to the Audit Act to reflect that framework. I guess what we're saying is, that is the piece of legislation to do that to get all the accountability processes put in legislation under the Audit Act, which is what the auditor operates under.

So it's a much better process, we believe, to do it under there, which will apply to all the corporations, than to go through each piece of legislation and then, at the end of the day, find out that the accountability framework is different and then come back and change those pieces of legislation to reflect that.

The Chair: Further questions or comments on Mr Phillips's motion? Shall Mr Phillips's motion carry? All in favour? Opposed? Mr Phillips's motion is lost.

We'll then deal with section 14, as printed, (1) through (4), and then we will take Mr Phillips's second amendment. Question or comments on subsections 14(1) through 14(4)? Shall subsections 14(1) through 14(4) carry? Carried.

Mr Phillips has stood down his other amendment. Mr Phillips, would you like to explain why you entered that amendment into the record?

Mr Phillips: It was part of the package of proposals from the Provincial Auditor. I think we've had a good debate on the previous two, and this one simply follows up on what he would recommend to the Legislature and what we would support as a proper way of reporting for these things.

The Chair: Further questions or comments to Mr Phillips's amendment? Shall Mr Phillips's amendment carry? All in favour? Opposed? It's lost.

Shall section 14 carry? Carried.

Mr Mammoliti: Point of procedure.

The Chair: Yes, Mr Mammoliti?

Mr Mammoliti: I guess just a question to you, Mr Chair, in terms of what we should be doing with the PC motions. They're identical -- exactly alike, to be specific. Do we have to go through them as well, or are they automatically rejected?

The Chair: Well, Mr Mammoliti, Mr Cousens did not move them, so we did not need to deal with them. If he had moved them, I would have had to rule them out of order, because they were identical to a motion that had already been debated.

Mr Mammoliti: Okay, thank you.

Mr Cousens: And I was respectful of the fact that the Liberals had very good motions.

The Chair: Could I have questions or comments? Sections 15 through 32: Questions, comments or amendments, sections 15 through 32, inclusive.

Mr Cousens: One question I have, Mr Chairman, and it has to do with section 27, "Money required to defray the operating costs of a corporation before the 1st day of April, 1994 shall be paid out of the consolidated revenue fund...." One of the issues raised earlier this week as well -- from, I think it was, the OHA -- had to do with the way in which grants that already are being made to hospitals may in fact be reinterpreted to be loans rather than the grants that they were, so therefore, I'm wondering whether or not that is the case and how in fact those grants that have already been given out -- are they going to be transferred over to these agencies or do they just come out of the consolidated revenue fund? You look quizzical.

Mrs Stewart: I'm sorry, Mr Cousens; I didn't hear the beginning of your question.

Mr Cousens: It sort of ties into this section as to what moneys are going to be in the agencies and what moneys really come out of the consolidated revenue fund. The concern that was raised earlier this week was that grants going to hospitals could well be reinterpreted by the government to be loans and then an agreement would have to come out to define the arrangements of those agreements, and then that would become part of one of these agencies.

To what extent is that true, or does it all come out of the consolidated revenue fund?

Mrs Stewart: I'm going to ask a member of the Ministry of Finance to answer your full question. John McKendrick, if you could give some help.

Mr John McKendrick: My name is John McKendrick.

The Chair: And your position.

Mr McKendrick: I'm an analyst with the treasury board division, Ministry of Finance.

I think this section is simply to allow the corporations money to get up and running. I don't think it really has anything to do with hospital loans, that sort of thing.

Mr Cousens: Well, it probably doesn't, but what about those loans that are given to hospitals that aren't loans, that they're receiving now as grants? Will they be reinterpreted as loans?

Mr McKendrick: I'm not sure I understand.

Mr Cousens: We had a presentation earlier this week and they're concerned that moneys that they're receiving now and under the traditional terms of reference would have been given as grants, since this bill is being brought in and has certain retroactivity tied to it, they may have to develop agreements and arrangements with the government to cover those moneys that have already been given to them.

To what extent is that true and to what extent does that affect either the consolidated revenue fund or the funds of the new agencies?

Mr McKendrick: Well, the hospital loans are not affected by this section 27.

Mr Cousens: I know they're not, but it's a place that raises the question, so we'll go back and find the section. The question still stands.

Mr McKendrick: Section 33 is a relevant section for hospital loans. I can give an explanation of that if you want at this time, or perhaps you want to wait till that section comes up.


Mr Cousens: Whatever the Chair decides, as I would defer to his decision. I wouldn't mind hearing it now, though, since I've asked it. I might forget it.

The Chair: We are to be to section 33 relatively shortly, Mr Cousens.

Mr Cousens: If you can remember the question, I'll stand it down until --

The Chair: Thank you. Further questions or comments regarding sections 15 through 32 inclusive?

Mr Cousens: On section 27, how much money do you see coming out of the consolidated revenue fund in its first year?

Mrs Stewart: Mr Cousens, there was a question that you raised -- actually, I believe it was on Monday -- the answer to which was tabled today, which tries to explain the kinds of information that might actually show up in the estimates. Certainly, moneys that will come out of the consolidated revenue fund for the corporations will have to show up in the estimates.

The answer to the question specifically, as to how much, is not yet available in terms -- it will depend very much on revenue streams from corporations undertaking projects that will have alternative financial arrangements. So the precise answer to the question as to how much is yet unavailable.

Mr Cousens: Are there any estimates that would be guidelines? Is the government just going blind on this and just has no sense of what the best case/worst case scenario is?

Mrs Stewart: The government has made some broad estimates that are reflected in the budget plan and the budget that was tabled in this past April.

Mr Cousens: What would those numbers be then?

Mrs Stewart: I don't have those numbers with me.

Mr Cousens: Does the budget document specify what those numbers would be, because it was a $2-billion number that was at the bottom of page 19 in the small print that was really referring to this document, as I recall. Is that what you're referring to or is there another place in which this number is?

Mrs Stewart: The figures you're probably seeing, and indeed in the footnotes, would be the amounts of loans, non-budgetary expenditures that are anticipated for the next three years. For any implications of funding coming from the consolidated revenue fund over the next three years, the figures will not be explicit in the budget. They'll be there aggregated with a number of other figures.

Mr Cousens: Could someone de-aggregate them?

Mrs Stewart: I will ask the question.

Mr Cousens: I just did.

Mrs Stewart: I would have to un-ask that question, to use your expression.

Mr Cousens: Oh God, governments.

Mrs Stewart: We're here to help.

Mr Wiseman: And the cheque's in the mail?

The Chair: Further questions or comments on sections 15 through 32 inclusive?

Shall sections 15 through 32 carry? Carried.

Section 33: I see a government motion. I think, looking at this section, we might deal with subsections 33(1) through (5) before the parliamentary assistant makes his motion.

Mr Hope: It was brought up yesterday, I believe by the Ontario Hospital Association, dealing with the wording under "fiscal year commencing," and it had "fiscal year"; they were saying something about fiscal years. For clarification, I'm just wondering -- legislative counsel is here -- what's the difference between putting on the --

The Chair: Which section are you referring to?

Mr Hope: Subsection 33(3) dealing with about the fourth line from the bottom of 3 where it says "of Health for the fiscal year," and they were saying something about wanting "years" in there, "commencing on the 1st day of April, 1993." This is just for some clarification because they had brought it up as a concern yesterday. I had noted it in my paperwork here and I just wanted some clarification on it.

Mr Sutherland: I'll ask Ms Stewart to provide a clarification. I believe yesterday in the response that I was giving, I wasn't quite interpreting their question correctly.

Mrs Stewart: Thank you for raising it, Randy, so we can clear the record. The intent of the section is purely to address this year's funding which indeed will come from the Minister of Health as it has initially, and therefore it's explicit to the current fiscal year, beginning April 1, 1994, and thereafter. The flow of funds under the loans-based system to hospitals will actually come from the Ontario Financing Authority. Those arrangements would be made directly with the financing authority. So indeed this section 3 refers only to this specific fiscal year.

Mr Phillips: I want to make sure I understand what this does. I'll just give you my interpretation of what I think it does and you can tell me if I'm right or wrong.

Every year the province spends or gives or provides roughly $600 million a year in capital funds for schools, colleges, universities and hospitals -- I've looked at it over a long period of time; it's about $600 million a year -- and anything I've heard from the government is that the government plans to continue to provide at that kind of level for the foreseeable future. Historically, the province has said, "We've spent $600 million a year. We'll show that as an expenditure."

What this plans to do is to continue to spend $600 million a year of provincial money, but rather than the money coming from the province, to say to a school board: "You go borrow the money collectively, you go borrow the $600 million from the Ontario Financing Authority, put it on your books as a loan payable to the Ontario Financing Authority, but tell them not to worry because we're going to repay that whole loan. We have the full obligation for that loan, principal and interest, and we will sign a contract with you that we will repay it. But we don't want it on our books as a debt; we want it over on your books as a debt. We will undertake to repay you that $600 million over 20 years."

The beauty of it is that rather than showing $600 million, we'll show one twentieth of $600 million, presumably $30 million. So in year one, you spend $600 million and show $30 million; year two you spend another $600 million -- you spend $60 million and you build up the debt on someone else's books, which, I think, is convenient. That's how I interpret it, but maybe I'm misinterpreting how this thing is going to work.

Mr Sutherland: Can I just clarify here? Are you referring to subsection 33(3), the one Mr Hope -- are you talking in a broad, general --

Mr Phillips: I'm assuming that the whole section 33 deals with how we're going to flow --

Mr Sutherland: Okay.

Mr Phillips: -- how school boards, hospitals, colleges, universities will get --

Mr Sutherland: I just wanted to be clear whether it was the whole section or the subsection.

Mr Phillips: I think it probably generally refers to the section.

Mrs Stewart: If I may, Mr Phillips, essentially, your interpretation is correct. One clarification I would like to make, however, is that the future years' amount of capital investment to be provided will be a specific decision of government each year. You're quite correct that roughly $600 million has been provided in capital assistance to the sector recently. There's no guarantee that in future years that number may be 600 -- it may be 500; it may be 700 -- but your rendition of the balance is essentially correct.

Mr Phillips: If you assume that on those other jurisdictions, on my understanding from a document that actually you may have provided or the staff may have provided, the debt that the province will owe but will not show as provincial debt will be $2.8 billion in five years.

Mrs Stewart: I don't have the paper in front of me, but indeed you do, and those figures relate to how the loan might be amortized, making some assumptions on rates of interest and repayment schedules etc. If those are the figures in the paper, I can only attest to them as being correct.

Mr Phillips: That's fine. Thank you very much.


Mr Wiseman: Just to follow up on that point, does it also not indicate that if you move to this method of financing it's a much clearer picture of when the loans will actually be retired and at what rates? Rather than dumping them into the accumulated debt of the province, we have a very clear structure of what's being paid and what's being retired as the process continues, and there would be significant advantages to this in terms of interest rates and amortization rates, because they'd be able to take advantage of different interest rates. Doesn't it also, doing it this way, create a multiplier that the current climate would allow for greater expansion and a renewal of the infrastructure?

Mrs Stewart: Correct on all counts.

Mr Phillips: If I may, I would disagree with the latter. If you can't afford the debt on your own books, just because it's on someone else's books and you have 100% obligation for it, presumably you can't afford it any easier on someone else's books, can you?

Mr Wiseman: No, that's not the case. That's not the way I read it.

The Chair: Are you asking a question, Mr Phillips?

Mr Phillips: Yes. You were saying that's the benefit of it, that you can spend more money, but if you can't it -- I guess my point is that this is so clearly provincial debt, hidden, or attempted to be hidden, on someone else's books. It's like not disclosing you've got a loan. Someone else has borrowed the money for you, but you've given them a note you owe 100% of it.

Mr Wiseman: No, it's not; no, sorry.

The Chair: Mr Wiseman?

Mr Wiseman: I don't see it in that way, and I guess they can correct me if I'm wrong, but the way I see it is that's it's a much clearer definition of what the money is being used for and what project it's being invested in, and you can't really hide it. I think this issue came up a long time ago when we were looking at that previous bill, and I forget the number of it, back about a year ago about the separation of capital and operating expenses. In my view, it's impossible to hide where the money is being spent, but this gives a very clear indication to the public what the money is being spent on and it allows them to have a better analysis and judgement of it, whether it's appropriate use by school boards, hospitals, commissions, universities and so on.

What I see as being a problem with the way the accumulated debt of the province is now is that there is no clear time frame for retiring that debt in terms of paying that off. I think that's one of the benefits of this.

Mr Hope: Companies do it all the time, Gerry.

Mr Wiseman: If you want to get into what --

Mr Phillips: Are you crazy?

Mr Hope: Don't tell me they don't buy machinery and depreciate it off over 25 years or five years.

Mr Wiseman: Maybe you want to go back and take a look at how some of the --

The Chair: Mr Phillips may want to withdraw that remark.

Mr Phillips: I'm sorry; my fault.

Interjection: Withdraw it, you say?

Mr Phillips: I'm sorry; I didn't mean to say that. I wasn't referring to anyone.

The Chair: Shall subsections 33(1) to (5) carry? Carried.

Mr Sutherland, I see you have an amendment.

Mr Sutherland: Yes, thank you, Mr Chair.

I move that section 33 of the Bill be amended by adding the following subsections:

"Non-application of subsection 121(7) of Education Act.

"(5.1) Subsection 121(7) of the Education Act does not apply in respect of a bylaw passed by a separate school board authorizing it to enter into an agreement whereby the Minister of Education and Training agrees to pay to the board the amount required to meet the principal and interest payments on debentures to be issued by the board in respect of a permanent improvement.


"(5.2) If the Minister of Education and Training agrees to pay to a separate school board the amounts required to meet the principal and interest payments on debentures to be issued by the board in respect of a permanent improvement, subsection 121(7) of the Education Act does not apply in respect of,

"(a) a bylaw passed by the board authorizing temporary borrowing to meet expenditures incurred in respect of the permanent improvement up to the total amount approved by the minister; or

"(b) a bylaw passed by the board authorizing the issuing of the debentures."

The Chair: If I might have an explanation?

Mr Sutherland: Apparently, there is a provision under the Education Act whereby separate school boards have to wait three months before they can proceed with investments of construction. I'm not sure of all the background on it and why that's in there, but what this amendment would do would ensure for these purposes that the separate school boards are on the same basis as public school boards.

The Chair: Further questions, comments.

Mr Cousens: Maybe there could be a better explanation of why that does exist.

Mr Sutherland: Okay. There is a lawyer from the Ministry of Education and Training here, I believe. Maybe they could come forward and introduce themselves and maybe give some explanation. I believe it's Mr John Tomlinson.

Mr John Tomlinson: Yes. My name's Mr Tomlinson. I'm from the legislation branch in the Ministry of Education. As to why that section exists, since we weren't there when it was put in, we don't know for sure, but the best guess is probably that it was to allow separate boards to have a procedure they could go through in order to tell investors that their debentures were sound and could not be legally challenged, because what the legal requirement does is it says to the school board, "Before you can do anything under your borrowing bylaw after you've passed it, you have to publish notice of it in the newspaper for three consecutive weeks, and then you wait for three months." If nobody challenges it in court, then the legislation says that regardless of whether there are any defects in your bylaw, your bylaw is going to be deemed to be legally valid and binding and your debentures are legally good.

So separate boards, which historically didn't have to go to the municipal board to have their debentures approved like public boards do, couldn't say to lenders, "Well, the municipal board has approved our debentures." It had this procedure, though, as an alternative to go through so that it could say to its lenders: "Look, we published, we waited three months, nobody attacked the bylaw. So the legislation says that our debentures are good, and you can rely on that."

Is that sufficient?

Mr Cousens: It's one of those anomalies that really doesn't need to be there any more.

Mr Tomlinson: With these debentures, of course, since the government is paying the interest and principal and the financing authority is in a direct contractual relationship with the school boards and is going to hold on to the debentures, as I understand it, there's really no need for the protection of that provision.

The Chair: Further questions or comments. If not, shall Mr Sutherland's amendment carry? Carried.

Questions, comments or amendments to subsection 33(6)? Shall subsection 33(6) carry? Carried.

Subsection 33(7): Mr Sutherland, you have an amendment.

Mr Sutherland: Yes, I do. I move that subsection 33(7) of the bill be amended by striking out "power to borrow" in the eighth line and substituting "unrestricted power to borrow, with or without security."

The Chair: You would have an explanation.

Mr Sutherland: Yes. Again, this is with respect to hospitals. Apparently, as we know, there aren't consistent bylaws. There are all kinds of different sets of bylaws for different hospitals across the province. Some of the bylaws of different hospitals in their rules of borrowing might prohibit them from entering into some of these agreements with the financing authority unless we made this change. So this ensures that, whatever those bylaws are, the hospitals can still enter into the contractual agreements.

The Chair: Questions or comments?

Mr Mammoliti: This is to the parliamentary assistant. In your opinion, do you think that the number of hospitals around Ontario that have been for years, in essence, asking for capital moneys to do appropriate work on their facilities, to upgrade their facilities, in many cases -- just as an example, to a more appropriate health and safety type of approach -- do you think that this amendment might help a lot of those hospitals in expediting some of that work that they were counting on government funding for in the past?


Mr Sutherland: I can't give you a definite answer because it would depend on the specific bylaws of the specific hospitals that have requests in there in terms of this amendment. In terms of whether the whole bill will, I would certainly hope it would, but as I'm sure you're aware, because I know you have a hospital in your riding -- I have one in mine that's gone through a lengthy process -- there still are ministry approval processes that have to be worked through, but certainly the legislation should help to ensure that more projects could occur, but to say the amendment specifically -- you'd have to look at each hospital's bylaws.

Mr Mammoliti: This would be another avenue, however, for hospitals to take, perhaps?

Mr Sutherland: The intent with all the USH sector -- universities, schools, hospitals -- is to allow us to maintain significant capital investment in tough economic times and declining government revenues. But I don't think the amendment itself, you can say that, because the amendment is referring to individual bylaws of hospitals that may restrict them, and by doing this amendment this will allow them to enter into the agreements with the financing authority.

Mr Mammoliti: But on that basis, the bylaws in many of the hospitals in Ontario would have restricted it.

Mr Sutherland: I'm not an expert on how many are in the hospital sector and how many bylaws it would be, but we've certainly been made aware that there are some and we certainly don't want to do that.

Mr Mammoliti: I don't want to pursue it.

The Chair: Thank you, Mr Mammoliti. Further questions or comments to Mr Sutherland's amendment to subsection 33(7)? Just a small question of clarification from the Chair: "declining government revenues," could we document that? Sorry.

Mrs Stewart: I believe the Treasurer did in the past budget.

The Chair: Shall Mr Sutherland's amendment to subsection 33(7) carry? Carried.

Shall section 33, as amended, carry? Carried.

Questions, comments or amendments to section 34?

Mr Cousens: Is there going to be any kind of comment or response to earlier questions around 30? What point was I going to hear back from the honourable --

Mr Hope: That was in 33.

The Chair: Section 33, we just did it.

Mr Cousens: Was he going to respond to my questions at that point -- when I trusted the Chair?

The Chair: I'm crushed, Mr Cousens. I'm certain I would permit you repeating your question.

Mr Cousens: I don't think I could.

I could go back and start working on it. I am concerned about the definition of the loan and the interpretation thereof and how that applies. I could work on that question again and phrase it in such a way that no one will ever answer it. But if you'd like to leave it the way it was, I'd be pleased to get an answer as best as possible.

The Chair: Is there someone who could --

Mrs Stewart: John McKendrick. Are you in order?

The Chair: Yes, he's in order.

Mrs Stewart: All right. I think, John, if you're clear enough on the question, you might try to repeat it so we're clear on the answer.

Mr Cousens: I'm just being lighthearted.

Mr McKendrick: I think you just want to understand how loans for hospitals are going to work in this year and the next.

Mr Cousens: And as it changes with the new system going in.

Mr McKendrick: Okay, what happens is, for the 1993-94 fiscal year, hospitals will be continuing to receive the money the way they do now in terms of grants, but it will be deemed to be a loan under this act. That is because we didn't have things up and running, the administration in place, at the beginning of the year, so in the legislation we deemed it to be a loan. We will then be entering into agreements to get the loans from the Ministry of Health later on in this fiscal year. Once the Ontario Financing Authority is established, the loans from the Ministry of Health will then be transferred over to the Ontario Financing Authority and then, in subsequent fiscal years, the loans will come directly from the Ontario Financing Authority to the hospitals.

Mr Cousens: So when a hospital gets a grant now, it's being told it's a loan?

Mr McKendrick: Yes, that's right.

Mr Cousens: So what kind of terms are they being given on that loan?

Mr McKendrick: It'll be a 20-year term and it will be at the same interest rates that the provincial government borrows at for 20-year loans.

Mr Cousens: What kind of clarification is being given to the hospitals as to the way that is working? There was some concern as to how that would impact hospital financing.

Mr McKendrick: There should be no negative impact on hospital financing. Once you give a payment to a hospital, there would have been some interpretation as to whether it was a loan or a grant. Because we didn't have time to get loan agreements up prior to this fiscal year and also because we did not want to slow down the cash flow to hospitals, we put this in place, so that construction projects would also not be slowed down.

Mr Cousens: Did you get a letter of intent from the hospitals that would give an indication that they would sign whatever it is that's presented to them?

Mr McKendrick: What we got from hospitals was -- actually, they had originally a joint policy committee between the Ministry of Health, and the Ontario Hospital Association had proposed a similar type of arrangement through a slightly different mechanism. So they were initially quite supportive of the loans-based financing concept. We had some meetings with them around how we would structure it. Those meetings are still ongoing. We had told them that we would be entering into legally binding agreements later on in the year.

Mr Cousens: Does this principle that is being discussed now for hospitals apply as well to other grants that are being given out either to municipalities, universities or school boards?

Mr McKendrick: Basically it applies also to universities, colleges and school boards, not municipalities at this stage. The one other thing I should say is that the loans to hospitals are for only where the share is $1 million and less. If it's $1 million or less, the government's share of the project will continue to come in the form of a grant, and that was something that was also requested by the Ontario Hospital Association.

Mrs Stewart: If I might, John -- sorry. The loans will be for undertakings that are more than $1 million.

Mr McKendrick: Yes. Sorry, I didn't make myself clear.

Mr Cousens: That makes more sense.

There was some concern by the OHA that this procedure -- first of all, they didn't fully understand it. There was some negative reaction to it. You were telling us that that was really unfounded?

Mr McKendrick: All I can tell you is that they initially proposed this joint policy committee between the OHA, and the Ministry of Health proposed the idea to us back in, I believe, 1991. That's where it initially started. We had had discussions with them on how it would work, a number of meetings through 1992 and 1993. So I thought they were quite aware of the process.

Some of the players here were different from whom I had met with, so maybe there were some differences, a changeover in communication.


Mr Cousens: The agreement is going to be signed by hospitals. It sounds like a retroactive system of changing the way -- they've got the money and it's being spent, but then you're going to have them sign it. What kind of commitments are you going to expect them to make in that new agreement that's being drafted? Has it been drafted? Do you know what it's going to say?

Mrs Stewart: If I may, I believe some of the uncertainty expressed by the Ontario Hospital Association -- and I may be speculating -- relates as much to what may happen next year and onward. Indeed, Ken Kagan, who's a lawyer with the Minister of Finance, is currently involved in drafting agreements. Once those agreements are available to member hospitals and to the OHA, they may well see some of their questions clarified. But Ken can tell you a little bit about what those agreements will undertake.

Mr Ken Kagan: My name is Ken Kagan. I'm a lawyer with the Ministry of Finance. The intention is that each hospital will enter into a loan agreement with the Ontario Financing Authority and the Minister of Health.

The Ontario Financing Authority will agree to lend and the hospital agree to borrow the moneys that are required for its capital projects that have been approved by the Ministry of Health. The Ministry of Health will join in as a party to that agreement to agree that it will provide, on an annual basis, an amount equal to the payment that the hospital is required to make under the debentures that it issues to secure the repayment of the loans.

Mr Cousens: What interest is going to be charged on that loan?

Mr Kagan: I can't say at this point. The interest rate hasn't been set, but whatever that interest rate is -- there's a working assumption that the loan will be repaid, for example, amortized over a 20-year time period -- the province will provide the hospital with the identical amount so that it can make its payment on the due date. Whether it's a higher interest rate or a lower interest rate, the province will provide the exact amount.

Mr McKendrick: One thing I can tell you is that the interest rate will be at the province's borrowing rate, so it will be a favourable interest rate.

Mr Cousens: You're confirming that there will be no difference in the interest rate, that it will be a wash transaction, that it will not have an added-on amount.

Mr McKendrick: It will have no negative impact on the hospital.

Mr Cousens: The agreement between the hospitals and the government for this year, have they been drafted yet? Do you know what they're going to look like?

Mr Kagan: They haven't been drafted. We've had discussions about what types of provisions would be necessary.

Mr Cousens: When the money was passed to the hospitals this year, did they understand that? Did they give you an indication that they would sign anything? What was the arrangement that you had? There has to have been some kind of legal preparation for the next stage.

Mr Kagan: When the government announced its intention that it wanted to convert from a grant to a loan-based system and that it was to go into effect as of April 1, 1993, the hospitals and the other recipients, school boards, were informed of that fact, but there was not sufficient time to draw up and enter into the necessary agreements to support that. The intention was and the hospitals were informed that their capital grants would be paid out as capital grants but that those capital grants would be converted into loans for this fiscal year under this legislation, subject to the exceptions, which were that if the capital grants were for $1 million or less, they would stay as a capital grant, and that's what the legislation reflects.

For the next fiscal year, let's say the ministry makes its decision on what the capital grants should be, loan agreements would then be entered into between the Ontario Financing Authority and the hospital for it to borrow those moneys, just as I previously indicated.

Mr Mammoliti: I guess I'll be somewhat specific: I'm having a hard time understanding who would be eligible for these loans. From what the parliamentary assistant had said, if the bylaws in hospitals do not permit hospitals to borrow, for instance, they would not be eligible for these loans. Is that the case?

Mr Kagan: No. The intention is that every hospital and health care facility that's presently receiving capital grants will continue to receive those capital moneys but in the form of a loan instead of a grant. The provision that Mr Sutherland spoke to was to ensure that hospitals will be able to borrow without having to put up the security of their buildings in order to borrow these moneys, because many borrowing bylaws of hospitals contain additional restrictions that were unnecessary because the province is providing them with the moneys to repay. To overcome any legal obstacles so that the hospitals can in fact take the moneys under the loan-based financing program, that provision was inserted.

Mr Mammoliti: So the literally hundreds of hospitals that are currently asking for capital funds to complete a task and that are not even on any priority list, for that matter, this might be a way for those hospitals in Ontario to take advantage of, in this case, something positive for them to perhaps expedite some sort of a decision from government.

Mr Kagan: It's certainly possible. I'm not in a position to say yes or no to that, but the intent is to ensure that all hospitals can --

Mr Mammoliti: But surely you'd be familiar with all of the hospitals in Ontario that are asking for these funds. Would you not be familiar with all these hospitals?

Mr McKendrick: One of the reasons the government decided to move to this loan-based financing was because during periods of fiscal restraint the government tends to cut its capital grants, and moving to this loan-based system will enable the government to maintain its investment in hospitals. So I think some people who might have not received capital grants are now going to be able to receive those moneys in the form of loans in the future.

Mr Cousens: I think the point that I was trying to get to in my questions is that I don't want there to be surprises for those who received the grants which now become loans, and that the terms of the agreement they're now going to have to sign retroactively for money that's already been given them do not contain either guidelines, restrictions or surprises. So that's really the basis of my questions, because I think that you're dealing with many different boards and agencies out there that you're serving, and if you can give me some satisfaction that that is the case, then -- I'm satisfied you're proceeding as best you can and you're under the guidelines of government, but maybe you could just comment on what I've just said.

Mr Kagan: It's my understanding that once the draft agreement is complete, it will be shared with the Ministry of Health and with the Ontario Hospital Association and any other groups that are affected so that they have an opportunity to review it and comment and ask any questions to ensure that there's full comfort in terms of what they enter into.

Mr Hope: Look at it like Leon's, Don: No payment till 1995.

The Chair: Order, Mr Hope.

Mr Cousens: You've been here too long, Randy. Oh, Randolph.

Mr Phillips: I think the concern of the hospital and probably the school boards is that previously they used to get it in the form of grants and now it's in the form of a strange kind of "loan" that the province is obligated to repay. It will not be in the legislation that the obligation to repay the loan occurs; it will be in the agreement. Is that a fair comment?

Mr Kagan: Yes, that's fair.

Mr Phillips: And so the OHA's concern yesterday, I think, was that legislatively there's no protection but the protection will come from -- is there any comfort at all to the hospitals in the legislation?

Mr Kagan: Not in the legislation per se. It would be in the individual loan agreement. It's a legally binding agreement where the Minister of Health signs as a party to that agreement, committing the province to provide those funds, so --

Mr Sutherland: If I may add, too, to clarify, I think that was the problem yesterday when the hospital association was here. They were not clear that it's a three-party agreement with the Ministry of Health being a signatory. Their sense was: "Well, we've got to deal with the financing authority. We've never dealt with this agency, this corporation. We've always dealt with the Minister of Health." I think the fact that it's intended to be a three-party agreement and the Minister of Health is a signatory to that agreement should allay some of the concerns that were expressed yesterday.

The Chair: Thank you. I'm sure that clears up everything.

Mr Mammoliti: I've got to clear this stuff up in my head, anyway. If a hospital wanted to take advantage of this, would it apply -- now, I could be naïve on this one; it might be in the legislation and I haven't read it -- to the financial corporation for this, or would there be instructions from the minister to the corporation to deal with the particular hospital's needs?

Mr McKendrick: The hospitals will apply to the Ministry of Health, as they do now, and once the Ministry of Health has decided on who gets the moneys it will inform the Ontario Financing Authority.

The Chair: Thank you. Now I'm sure that clears everything up. We'll move on to section 34. Thank you, gentlemen. Subsections 34(1) and (2), questions, comments?


Mr Phillips: Is there anything in here that protects the financing authority in terms of the quality of loans that it is asked to assume and the value that's put on them? Who makes that determination?

Mr Sutherland: I'm not quite sure what you're asking for. Are you asking what type of financial analysis is done on the organization or the hospital or the institution?

Mr Phillips: For the purposes of this one, if the minister runs into a little bit of shortfall in revenue, he'll take a bunch of the loans that are outstanding in various areas, transfer them over to the financial authority and say, "Give me the money." That's what this is for: if you need a couple of hundred million dollars, you'll go to ODC or -- I don't know to what bodies. I'm just wondering, who makes the determination on the value of those? Is it some independent auditor?

Mrs Stewart: Each of the proposals for borrowing to provide capital assistance would be assessed by the Ontario Financing Authority. The comment you made, Mr Phillips, about the potential of the minister to have funding come back from loans that were outstanding would not be possible because indeed under the legislation any removal by the Minister of Finance of surpluses in corporations, as an example, would have to take account of the obligations that are outstanding against those, in this case, loans.

The question you've asked in terms of calling back loans, the investors who indeed have purchased ventures related to these kinds of investments would not be very pleased if that were to happen. That would not be contemplated.

Mr Phillips: But isn't the intent of subsection 34(1) that the minister may transfer to the financial authority a loan that is due, payable, to the Minister of Finance? He can say, "I'm going to transfer that over to the authority," or am I misreading 34(1)? What is the intent of 34(1)?

Mrs Stewart: Mr Kagan can tell us that.

Mr Kagan: The purpose of section 34 is to deal with this fiscal year because, as section 33 sets up the provision of that, the grants paid to the various public bodies are converted into loans and those loans are deemed to be loans from the province to the public bodies. The intention of section 34 is to allow the Minister of Finance to transfer those loans to the Ontario Financing Authority, and then the school boards and the hospitals would make their repayments to the Ontario Financing Authority.

Mr Phillips: But the way it's written, can you give me an example of other loans that people or bodies owe to the province that the minister could transfer? I mean, a loan may be due in the year 2000. They say: "I need the money now. I'll transfer it over to the financing authority and get it to give me that money and it'll assume that responsibility." That is not the intent of 34, or would that still be permitted under 34?

Mr Kagan: It's not the intent of section 34.

Mr Phillips: But it would still be permitted under it?

Mr Kagan: It's possible, yes.

Mr Phillips: What is the magnitude of loans outstanding to the province? Is it something that we shouldn't even consider worrying about, or are we talking about hundreds of millions of dollars of loans payable to the province that could be transferred here?

Mr Kagan: I'm not in a position to answer that. I don't have that information. There may be someone else here who could answer that question.

Mr Phillips: It's just my mildly suspicious nature that if you're running short on cash you say, "All right, here are some loans that we can't realize right now."

Mr Sutherland: Maybe we could ask John Madden to come forward. He might be able to give you a response to that.

Mr John Madden: Good morning. My name is John Madden. I'm assistant deputy minister, office of the treasury. My understanding of this section is that although it's permitted, the intention is for the Ontario Financing Authority just to administer these loans, so it would just be a loan administration. You could have a situation, I gather, where the assets would be transferred and cashed out, although that was not contemplated and was not the intention of this section. It would just be straight administration of these loans.

Mr Phillips: And just the school, college, university loans; not other outstanding loans?

Mr Madden: My understanding is that the existing loans also relate to some municipal bodies, if I'm correct -- that's correct. I don't know the size, though, offhand.

Mr Phillips: So it may be a way for the province to raise more cash.

Mr Madden: You could, and it wasn't intended in this section, if you actually sold off the loans, but that's not the intention, to cash out on the loans through the Ontario Financing Authority. All it was intended to do was to strictly administer; centralize the administration for efficiency; just the repayment of those loans.

Mr Phillips: It may be helpful, for me at least, to get some idea of what loans are possible to transfer over into this agency.

Mr Madden: Sure.

Mr Phillips: And the order of magnitude.

Mr Madden: Okay. I don't have those figures in front of me.

Mrs Stewart: We may, I believe, get them for this afternoon.

Mr Phillips: Great, thank you.

The Chair: Further questions or comments on 34?

Shall subsections 34(1) and (2) carry? Carried.

Mr Cousens, you have an amendment numbered 34.1.

Mr White: Are we going to keep going through the lunch-hour?

The Chair: That's a good question to ask, Mr White. Does this committee wish to adjourn now for the lunch-hour or shall we --

Mr Wiseman: Let's just work through till 6 o'clock.

The Chair: I think we should at least finish section 34.

Mr Cousens: I move that the bill be amended by adding the following section:

"Repayment by the province

"34.1 The province of Ontario shall pay to a hospital that enters into a loan agreement under this act the amounts required to meet the principal and interest payments on the loan."

The Chair: Mr Cousens has moved an amendment to section 34 numbered 34.1. I, as the Chair, will have to rule that out of order because it requires the government to spend money, to directly allocate money. That is out of order unless the government itself proposes that amendment.

Mr Cousens: Then, in fulfilling the intent of this motion, is the government prepared to take any such action?

Mr Sutherland: I think the responses to your inquiries beforehand about how the system was going to work in terms of the development of the loans, and I think some of the responses Mr Kagan gave about how the loans are going to be developed and the three-party loan in terms of the financing authority, the Minister of Health and the individual hospital would take care of the concern that was put forward in this amendment.

Mr Cousens: I don't think it does. I think there's also an element there where if there is some way in which there is a guarantee that goes beyond the agreements but is in the legislation, which I think supersedes all agreements, then it gives a sense that the government is truly committed to fulfilling all its obligations and may not at some time try to renege on them.

Mr Sutherland: As I think I said yesterday, and we can get into this discussion again, we're talking about legally binding contracts that are subject to all the provisions of contractual law and all the precedents established about contractual law. If the government did decide to renege on a contractual agreement, then the hospital or institution would have the right to sue the government for whatever damages caused by the government not fulfilling its obligations under the contract.

Mr Cousens: The concern rests; the issue has been made. The whole suggestion that the parliamentary assistant would make that even invokes the possibility that there could be hospitals suing the government and so on is just a further misspending of the public's money. My point is that there is an element here within the suggestions that are brought forward that I see, as much as anything -- I have no doubt that the legal contracts will contain therein the obligation that this amendment would have brought.

I just have the sense that there is a worry out there on the part of those who do business with the government and are looking for certain warrants and assurances that are not otherwise obvious. There is a purpose to this amendment and I think it's simply that.

The Chair: Shall section 34 carry? Carried.

Members may indicate to the Chair if we wish to break for lunch now. That's the appointed time. We can pick this up at 2, unless the members would wish to sit through.

Mr Mammoliti: Why don't we pass 35 to 40? Are there any other amendments?

The Chair: The next amendment's on section 40. I think we should adjourn. We'll start again at 2 o'clock. The committee will be in recess until 2 o'clock.

The committee recessed from 1213 to 1401.

The Chair: The standing committee on general government will come to order. We will be dealing with sections 35 through 39 inclusive. Do we have questions, comments or amendments to sections 35 through 39 inclusive?

Mr Cousens: Mr Chairman, on section 39, maybe someone could tell me what the intent is of those objects.

Mr Sutherland: Regarding section 39?

Mr Cousens: Yes. What are your intentions?

Mr Sutherland: Well, it would seem pretty straightforward to me.

Mr Cousens: Well, help me.

Mr Sutherland: Section 39 is pretty straightforward. We have an Ontario Transportation Capital Corp. Basically, what it's saying is its goal is to develop ways, in conjunction with the financing authority, to finance their projects, to ensure that the projects are carried through, developed, whether it's the 407, to make sure it's constructed, whether it's the subway projects, to ensure that the actual construction and operation of them is carried out.

Mr Cousens: Why would you have that kind of an object in the transportation capital corporation and not in the water agency objects, a similar type of --


Mr Cousens: Hans, don't catch me on that one because they didn't like it when I said human rights has something in common with this. The New Democrats have no sense in being able to separate their logic, so please don't put me in trouble again.

Mr Sutherland: But remember, the Human Rights Commission is a quasi-judicial body, Mr Cousens. We're not setting up quasi-judicial bodies here. There's a big difference.

Mr Cousens: If you want to get into that one, I think you guys have egg all over your bodies, let alone your faces. I'm asking specifically --

Mr Hope: That's how we keep in shape.

Mr Cousens: You'd be good fried in egg. So as we look at the Ontario Clean Water Agency, why is that kind of object not included in there?

Mr Sutherland: I don't have a specific answer. I'm not sure --

Mr Cousens: Section 39 is the set of objects for the transportation capital corporation. What intrigues me is that you can have such wide, far-reaching objects for the transportation agency, but you can't do the same thing for the water.

Mr Hope: Section 39? Didn't we pass that already?

Mr Cousens: Lookit, Randolph --

Mr Sutherland: If I could just comment a bit, though, if we go to section 49, which deals with the clean water agency, it outlines the objects there as well.

Mr Cousens: Why are the objects so different?

Mr Sutherland: One is doing transportation; one is doing water and sewer projects.

Mr Cousens: One is more all-encompassing and one's more restrictive.

Mrs Stewart: Mr Cousens, the intent of the transportation corporation is to focus on financing, so it will be dealing with arranging the financing and arranging with other bodies the development and facilitation of transportation systems. It's not an operational kind of mandate that's being provided to that corporation; it's focused on financing. With the water and sewer corporation it's more explicit in that it talks about the building of works and providing of works, and indeed has an operational role provided in it.

Mr Cousens: So you therefore deliberately removed and excluded such activities within the water agency to separate it from the transportation agency, to remove that possibility whatsoever?

Mrs Stewart: No, actually, the water agency has also the mandate to enter into agreements, so it can undertake a number of activities, but its focus would be more on the operational side than would the transportation corporation's, and that leads to some of the differences in the objects.

Mr Cousens: I don't fully understand it, but I'll leave it for now.

The Chair: Further questions or comments?

Mr Phillips: On section 37, the assets and liabilities, can someone tell us what the magnitude of the assets and liabilities are of the Ontario Municipal Improvement Corp? At March 31, 1992, I think it had roughly $45 million in there. Can anyone assure us that the liabilities we're transferring are offset by real assets?

Mrs Stewart: I believe Robert Watson from the Ministry of Finance can respond to some of that and certainly from the question that was left this morning as well, which has a similar tone.

Mr Robert Watson: I can speak directly to OMIC, sir. Those are loans to municipalities and they are presently in the Ontario Municipal Improvement Corp. That corporation is being dissolved -- I think there's a section that repealed -- so that these assets and liabilities will then go into the Ontario Financing Authority.

Mr Phillips: I know that. My question was, what's the total value of the liabilities? The figures I have are a year old and they show roughly $45 million. Can anyone assure us that the assets will offset the liabilities, or are we transferring some bad debt over to this operation?

Mr Watson: No, those are viable loans with municipalities. In addition, I think in total the amount of the assets and liabilities of the Ontario Municipal Improvement Corp is something in the order of $123 million, of which $43 million are the previous assets of OMIC and the remainder are some municipal and school board assets that remain after the dissolution of the Ontario Education Capital Aid Corp and the Ontario Universities Capital Aid Corp.


Mr Phillips: So $123 million, and that's as of March 31, 1993?

Mr Watson: If I can just check my notes, I'll get back to you on that.

Mr Phillips: Because the $43 million was March 31, 1992, as I recall. The purpose of the question is just to -- my sort of cynical view, I guess, sometimes. I just want to make sure that the corporation's picking up real assets here.

Mr Watson: The amount is $42 million at the end of 1992 for OMIC, and then there's about $39 million -- I'm sorry. It's $85 million outstanding for OMIC as at March 31, 1993.

Mr Phillips: Say that again. Eighty what?

Mr Watson: It's $85.5 million. In addition, there's a further $39 million with respect to the former education capital aid corporation, for a total of about $123 million.

Mr Phillips: Just for comparison, on March 31, 1991, the number was $16 million; in 1992 it went to $44 million; in 1993 it went to $85 million. There's been an enormous buildup of liabilities in this corporation that's now being moved over. But you're assuring us that these are all offset by loans that the auditor would say are going to be repaid?

Mr Watson: There are loan agreements and they are going to be repaid.

Mr Phillips: With the remaining amount of money, the educational --

Mr Watson: When the capital aid corporations acts were repealed, those assets were transferred back to the Ministry of Finance and now they're -- they were put into the Ontario Municipal Improvement Corp, which is now being dissolved. That act is being repealed and those assets and liabilities now are being included for administration purposes into one the Ontario Financing Authority has created. Those assets and liabilities will go into that corporation for administration.

The Chair: Further questions or comments, sections 35 through 39?

Shall sections 35 through 39, inclusive, carry? Carried.

Section 40: Mr Sutherland has a motion regarding clause 40(a).

Mr Sutherland: I move that clause 40(a) of the bill be amended by adding after "maintenance" in the third line "leasing."

The Chair: And the explanation for that change?

Mr Sutherland: Basically, you will see that the actual clause here outlines some of the powers that the capital corporation would be doing. While it may be implied that leasing could be one of them, we thought it was important to add that, just for the purposes of clarity, to understand that this may be one area they may look at in terms of how the deals or how the arrangements are made for construction of highways or for whatever other activities, not only construction of highways but any of the activities that are undertaken.

The Chair: Questions, comments?

Mr Phillips: I'll begin with the whole of section 40. Is it appropriate to deal with that now, or do I have to wait till we deal with 40(a)?

The Chair: I think perhaps it would be easier to deal with 40(a) initially. We will deal with the whole section following any amendments that may be made.

Further questions or comments to Mr Sutherland's amendment? Shall Mr Sutherland's amendment to clause 40(a) carry? Carried.

Mr Sutherland, do you have another?

Mr Sutherland: I move that section 40 of the bill be amended by adding the following subsections:

"Delegation of power

"(2) Without limiting the powers or capacities of the corporation, for the purpose of carrying out its objects, the corporation may delegate its powers with respect to the collection of tolls and may, in the delegation, provide for their use by the delegate.

"Delegation subject to conditions

"(3) A delegation under subsection (2) shall be in writing and may be subject to such limitations, conditions and requirements as are set out in it.


"(4) In a delegation under subsection (2), the corporation may authorize the delegate to delegate to others the exercise of the delegated power, subject to such limitations, conditions and requirements as the delegate may impose."

The Chair: An explanation for this motion?

Mr Sutherland: Sure. Basically what we're saying is if for example you're looking at the Highway 407 project, as you're aware, there are consortia coming together to look at the project. They may want to have some form of subcontractor or whatever do the actual tolling or collect the tolls on their behalf. This amendment would allow that process to occur.

The Chair: Questions, comments or amendments to Mr Sutherland's motion to section 40?

Mr Arnott: Just a question of clarification. The legislation as it's written, without the government amendment, would preclude a subsidiary or a subcontractor from collecting a toll on behalf of the contractor?

Mr Sutherland: We didn't think it did preclude it, but we thought this was necessary for clarification purposes so there wouldn't be any uncertainty about it.

The Chair: Further questions or comments? If not, shall Mr Sutherland's amendment to section 40 carry? Carried.

Now, section 40, Mr Phillips.


Mr Phillips: I have a couple of concerns. The term "expropriate and use any land" seems on the surface fairly broad, but maybe I don't understand what's in a lot of other bills and maybe this is very common. But as soon as the word "expropriate" appears, I think public bodies start to at least ask questions. I'd like to know whether this is a very normal power or whether this is an extraordinary power and how that power could be used.

I have a similar question, I guess, on "establish" the tolls. I gather what this means is that it will be the sole responsibility of the Ontario Transportation Capital Corp to set its tolls, and it's not subject to any review by any public body. Is that the intent of (c), and if so, are there no appeal mechanisms available for either public jurisdictions or business sectors that may feel the toll rates that have been established are unfair?

Mr Sutherland: Just in terms of clause (b), it's understood that the word "expropriate" is in reference to the Expropriations Act, so it's not giving any more authority than would be available under the Expropriations Act.

With regard to the establishment and collection of tolls, I think, as I said earlier this morning in another discussion about this issue, parameters, criteria of how the tolls will be established are a decision of the government and of the cabinet. The actual amount of the tolls, the capital corporation has that ability to set them. The appeal mechanism would be to the minister.

Mr Phillips: Where would that appeal mechanism be here? Where is that spelled out, the appeal mechanism to the minister?

Mrs Stewart: It's not explicit in the act, but it would be noted in the memo of understanding.

Mr Phillips: Has there been an exchange -- that's quite an important item -- so that it is clear that the final decision on tolls will be the minister's decision?

Mrs Stewart: The final decision on the policy behind tolls. What range the tolls may be would be up to cabinet and the minister representing the corporation there.

Mr Phillips: I thought I understood you to say that the appeals on tolls would be to the minister and that would be in the memorandum of understanding.

Mrs Stewart: Yes, in the normal sense that the public certainly can appeal to the minister with a number of concerns.

Mr Phillips: So if a municipality doesn't like the toll that's been established, the appeal is to the minister and the minister has the authority then to change the tolls?

Mrs Stewart: The minister within cabinet certainly has the authority to establish the framework for tolls and, I would imagine, would have the authority to change the tolls. There's certainly nothing in the legislation that prohibits that, by any stretch.

Mr Phillips: Would it not be normal that you then would say that they recommend tolls to government for final approval, or whatever the right legal definition is? Would that not be normal, to incorporate what you just said?

Mrs Stewart: That's the kind of terminology we use in describing the process but not normally the kind of terminology that would be in legislation, as I understand it.

Mr Phillips: Can someone help me here? The way I read this right now, if I were the corporation I'd say, "We have the final authority to establish the tolls." That's how I would read this. But what you've just said is no, they don't have the final authority to set the tolls; that is subject to approval by the government.

Mrs Stewart: The direction that would come from the minister and from cabinet would be related to proposals that may establish a range within which tolls could be set and certainly establish the purposes and the policy behind the toll. Within that framework, the corporation could set the specific toll, which may vary depending on how the toll was used. For example, if the toll was going to be used to pursue a policy objective of controlling congestion, the actual amount of toll might change, depending on the time of day, and that kind of decision, relating to the establishing of tolls, indeed would be up to the corporation.

Mr Phillips: I think we're playing games with words here, but the way I read this is that the authority has the final decision on the toll. They will set it and there is no appeal mechanism here, as I read it, as opposed to Hydro trying to set its rates and there's an appeal mechanism there.

The Chair: Perhaps legal counsel could be useful.

Mr Donald Revell: If I could just have a minute to consult with Ms Stewart on this, I might be able to resolve the issue, so if I could just have a second.

Mr Brian Swartz: I'm Brian Swartz, solicitor with the Ministry of Transportation.

That section you're talking about has to be read in context with both 16(1) and 47(2). The way the tolls will be established will really be contingent upon the type of financing that is in place on any given project, and that type of financing will differ from project to project, depending on how a financing is structured, whether the Ontario Transportation Capital Corp itself does a bond issue or whether it enters into a joint venture agreement with the private sector.

In any event, the toll level will be predicated upon a traffic and revenue study that's prepared in connection with the project. That study will tell both the financing community as well as the government what the market will bear in terms of sensitivity and what the projections in terms of traffic flow and revenue flow will be at various price levels.

What would happen in terms of a practical application of this section would be a proposal -- and I'll talk about 407, because that's real and it's happening right now. The ministry will be receiving proposals from two consortiums which will, among other things, include desired toll levels. Those proposals will be evaluated and submitted to cabinet.

The direction that we get under 16(1) from the minister will be part of the selection criteria and evaluation criteria, but ultimately cabinet will be approving the recommendation of the ministry and will be approving the framework for establishing the tolls throughout the financing of that project. The framework will be a complicated framework in terms of what the toll levels are going to be at any given time, but basically the mechanism for regulating that will be established in the proposals that come to us.

Mr Phillips: I'll just try to be as practical as I can. In about five years, let's say, the 407 opens up and there is a toll established for trucks and cars and all that sort of stuff. Who approves that toll level, the minister or the agency?

Mr Swartz: Cabinet will approve the framework in advance as part of the agreement for the development of the project, and the framework will set out how tolls are set. There will be a range of tolls. It could be that during rush hour you might want a higher toll to discourage traffic; off-peak hours you might want a lower toll.

Mr Phillips: I understand all of that, but when they say it will be 40 cents a kilometre, is the final approval of that the agency or the minister?

Mr Swartz: No, cabinet would give final approval. Cabinet would set the maximum toll level because there are other implications as well.

Mr Phillips: I'm anticipating that when the toll is set there'll be some hue and cry. I want to know whether the answer is, "I'm sorry, the agency has authority to set that; we give them the framework but they set it," or: "Thank you for your input. They've recommended 40 cents to us. We'll be making the final decision."


Mr Swartz: The final decision is cabinet, and cabinet will set the ceiling.

The Chair: Further questions or comments regarding section 40?

Mr Wiseman: My question actually has a further clarification on what Mr Phillips was just saying.

If cabinet is going to have the final decision, that of course would have to be premised on the decision on the cost of the highway, the recovery rate, the interest charges and all of those factors factored in to make sure that the tolls do not become an increased burden of debt.

If you read the 1988 Auditor General's report from the federal government, there's a bridge in New Brunswick that started at $19 million in 1964, I believe, and now owes $64 million because of this lack of realistic tolls.

Is that the way it will be determined in terms of the suggested rate to cabinet?

Mr Swartz: Every project is going to be different, and in the case of 407, when the traffic and revenue study is complete, it's going to have a comprehensive analysis of what individuals' stated preference of value of time is. Based on that and the traffic figures that are forecasted, it will recommend a level of toll that will generate maximum revenue and traffic.

Having said that, that's going to determine the rate that the facility can be repaid, and the lending community is not going to lend if the revenue is not there to repay it in the time frame that it envisages lending.

I don't know what you're referring to in terms of another project, but it sounds like the revenue wasn't there to satisfy the debt requirements. In this case, unless the projections are bankable, financeable, believable, the financial community is not going to lend unless it's convinced that the revenue, at the toll rate recommended, is achievable.

Mr Wiseman: Have there been any studies done on using, say, toll roads in the United States or so to determine any ratios of car usage to lanes to miles, or would you know that?

Mr Swartz: Yes, there are studies, and we currently have commissioned a study that's ongoing right now which will give us a comprehensive analysis of traffic patterns, of revenue projections and traffic projections for Highway 407 when it's completed. When that report is available, then we will be able to ascertain what a toll level ought to be.

Mr Wiseman: Would all of that information that you're gathering be open to the public to peruse to be able to determine if the number of lanes that are being built is adequate to take care of the flow and that kind of question?

Mr Swartz: At some point. At this stage right now we're currently in the process of undertaking a competition and we are right now evaluating value engineering assessments that were done for the ministry by the two consortiums. What that is is a look at the engineering the ministry has currently done and seeing where savings can be made in terms of the value of engineering it. It involves a number of things, and lanes is one of them, but it's all part of the evaluation process. At the end of the day, the Ministry of Transportation has a commitment to safety and good roads in the province and that's not going to be sacrificed.

Mr Wiseman: Well, here's my fear about the tolls and the roads, and that is that when you get the studies back, you may find that the number of lanes that can be built, given how much it costs to build a mile of road in these days, is fewer lanes than are necessary to carry the traffic but are the maximum number of lanes capable given the financing that's available, and so you have a very big problem. Did you follow that?

Mr Swartz: I understand. On the other hand, you want to build the maximum number of lanes to handle the traffic to avoid congestion and that will improve revenue flow, because on a congested road people won't drive on it if they can't save time and they won't pay the toll. So there's a balancing there that says the best toll road is one with tolls that are affordable that isn't congested.

Mr Wiseman: Supply and demand.

Mr Swartz: Yes.

The Chair: Further questions or comments to section 40? If not, shall section 40, as amended, carry? Carried.

Section 41: We'll deal with subsections (1) and (2). Questions, comments or amendments, subsections 41(1) and (2)? Shall subsections 41(1) and (2) carry? Carried.

Mr Sutherland: I move that subsection 41(3) of the bill be amended by adding after "builder" in the second line "lessee."

This is just another amendment building upon the previous one talking about the ability to carry out leasing.

The Chair: Questions, comments or further amendments? Shall Mr Sutherland's amendment to 41(3) carry? Carried.

Mr Sutherland: I move that subsection 41(4) of the bill be amended by adding after "builder" in the second line "lessee" and after "builder" in the fifth line "lessee."

The Chair: In the fifth line?

Clerk of the Committee (Mr Franco Carrozza): Where it says "fifth" it should be the "last" line.

The Chair: It should be the "last" line.

Mr Sutherland: Okay. Could I move that again? I will withdraw what I just said and try it one more time.

I move that subsection 41(4) of the bill be amended by adding after "builder" in the second line "lessee" and after "builder" in the last line "lessee."

The Chair: Questions, comments? Shall Mr Sutherland's amendment to subsection 41(4) carry? Carried.

Shall section 41, as amended, carry? Carried.

Thanks to the clerk because he can count the lines for us.

Sections 42, 43, 44 and 45: Questions, comments or amendments to any of those sections? If not, shall sections 42, 43, 44 and 45 carry? Carried.

Section 46.

Mr Sutherland: I move that the French version of subsection 46(1) of the Bill be amended by inserting after "environnementales" in the fourth line "de portée générale."

The Chair: An explanation?

Mr Sutherland: Yes. I believe "de portée générale" is equivalent to the word "class" in the French meaning and the purpose of these provisions is to statutorily recognize the existence of the class environmental assessment.

The Chair: Questions, comments?

Mr Cousens: Are there any other areas -- I mean, it's one of those areas where you go by trust. How did you find that mistake? Were you the researcher who went through this and --

Mrs Mathyssen: This is the third time, Don. We've heard this speech three times.

The Chair: Order.

Mr Cousens: It gets better every time, if you'd let me go with it.

Mrs Mathyssen: No, it doesn't.

Mr Cousens: Well, Irene, I have no way of knowing. I don't usually look at the right-hand side of the page, though I'd like to. So in what way are you sure and can you give us some assurance that the French version, except for the amendment you've proposed, plus another one that's forthcoming --

Mr White: Trust me.

Mr Cousens: "Trust me." That's the last thing I want to hear from you guys -- is an accurate reflection of what the English says?

Mr Sutherland: Well, I certainly wasn't the person they relied on. My French is not that good, but I learned a long time ago, a few years ago anyway, that at some point you do have to trust people who know more than you do about a certain area and subject area and I'm relying on the judgement of either the translators or legal or someone who is more bilingual than I am to catch that.


Mr Daigeler: I'll vouch for the skill of the translation. The current texts are "class."

Mr Sutherland: There we go.

Mr Phillips: Good enough for me.

The Chair: Thank you, Mr Daigeler.

Mr Cousens: That's what I was looking for: an honest Liberal.

The Chair: Third-party verification. Thank you, Mr Cousens.

Mr Wiseman: Are you saying, "Trust me," on this one?

The Chair: Shall Mr Sutherland's amendment to subsection 46(1) carry? Carried.

Shall section 46, as amended, carry? Carried.

Section 47: We'll deal with subsection 47(1) first. Questions, comments or amendments to 47(1)? Shall subsection 47(1) carry? Carried. Subsection 47(2).

Mr Sutherland: I move that subsection 47(2) of the bill be struck out and the following substituted:


"(2) Subject to the approval of the Lieutenant Governor in Council, the corporation may make regulations designating as a toll highway,

"(a) any highway, any extension to an existing highway, or any combination of a highway and such an extension, if the highway, extension or combination, as the case may be, is not being used as a highway on the effective date of any such regulation;

"(b) any highway that is not a controlled-access highway that is rebuilt and designated as a controlled-access highway."

The Chair: Any explanation?

Mr Sutherland: I believe this amendment here is to provide further clarification on what highways might be tolled.

Mr Cousens: I compliment the government for having listened. Certainly we've heard from one delegation, and when I was reading through the bill prior to participating in the debate in the Legislature on second reading, my eye stopped on section 47 and I was surprised that 47 really did not reflect, before he just amended it, what was in the announcements by the government. I felt that it was very much a betrayal of the kind of thing that you were conveying.

Mr Wiseman: "Betrayal" is an awfully harsh word.

Mr Sutherland: I'd like to say "oversight."

The Chair: Order.

Mr Cousens: Or a massive, stupid oversight. But I want to compliment whoever it was. Maybe it was the French translation that came across it and realized it said something. But I'm pleased that you've made the change. It takes away one of the concerns I had. I think that there is a reluctant acceptance of tolls, which is another word for tax, and if it's one way of accelerating the construction of new highways where you otherwise might not see them, then the public seems prepared to accept them. I thought the answer by Mr Gilbert the other day also satisfied me that we're going to be forced to at least have some way in which market forces will determine what the rates are going to be.

Notwithstanding all the side issues, it was important for me, at least, and our caucus that you amend section 47 and I'm pleased to see the change that you've made on that.

Mr Phillips: I'm not sure what this means, really. If you're, again, at all sceptical, you'd say the only way you could ever convert, let's say, 401 into a toll road is to rejig it somehow and make sure there's controlled access. So I could define that as rebuilt and designated as a controlled-access road and then convert it to tolls. I can't imagine this precludes many roads from being converted to toll roads in the province and it just clarifies that in order to convert to a toll road you've got to kind of rebuild and control the accesses. I think under (b), 400, 401, 403 could all be toll roads, or am I wrong there?

Mr Sutherland: Maybe we could ask legal counsel for Transportation to comment.

Mr Swartz: All 400-series highways are currently controlled-access highways. That clause is put in there specifically to prevent a controlled-access highway from becoming a toll road, so we could not toll Highway 401 under this legislation. What (b) does is to permit us to extend a controlled-access highway such as Highway 416 south to Highway 401 over an existing highway, which is Highway 16. It's clear that the groups, the Better Roads Coalition of Ontario, would support that type of a project, so we needed language that would protect that.

Mr Phillips: I guess Highway 416 and Highway 403 would be caught under (a), would they?

Mr Swartz: Highway 403 would be caught under (a); Highway 416 wouldn't, because portions of it would be going over an existing highway, where Highway 16 currently is. So it wouldn't be caught under (a). That's why we need (b).

Mr Phillips: What would be other examples in (b) that could be designated as a toll road?

Mr Swartz: If you had a non-controlled-access highway, which would be a secondary highway, that would be redeveloped as a 400-series highway, then it can conceivably fit under that section.

Mr Phillips: So any existing 400 highway can't be a toll road unless it's extended?

Mr Swartz: That's right.

Mr Phillips: Then only the extension can be tolled?

Mr Swartz: That's right.

The Chair: Further questions or comments? If not, should Mr Sutherland's motion to subsection 47(2) carry? Carried.

Subsections 47(3) and 47(4), questions or comments?

Shall subsections 47(3) and 47(4) carry? Carried.

Mr Sutherland: I move that section 47 of the bill be amended by adding the following subsections:

"Use of tolls

"(5) Any tolls collected in respect of a toll highway designated pursuant to a regulation shall be used only for purposes relating to the toll highway, including its development, design, construction, financing, refinancing, operation, maintenance and repair and any improvement, replacement, alteration or extension of the toll highway.

"When tolls cease

"(6) Tolls shall cease to be imposed or collected in respect of a toll highway when all costs and liabilities relating to the toll highway, including its development, design, construction, operation or any improvement, replacement, alteration or extension, have been paid or otherwise discharged, and all financing or refinancing in respect of the toll highway, has been paid or otherwise discharged.

"Extended definition of `operation'

"(7) For the purposes of subsections (5) and (6), `operation' includes incentive and rate-of-return payments to the designer, developer, builder, lessee or operator of a toll highway."

This amendment, again, is one that I'm sure Mr Cousens will be in support of, because it's one that the better roads coalition was asking for as well.

The Chair: Questions, comments or amendments to Mr Sutherland's amendment to subsections 47(5), (6) and (7)?

Mr Cousens: What's the secret? Sometimes we see the government will listen, and most of the time it doesn't.

Mr Hope: If we told you, it wouldn't be a secret any more.

Mr Cousens: What is it that allows some things to get through their systems and not other things?

Mr Wiseman: The odd time that we agree with you.

Mr Cousens: It seems like a rhetorical question, what the honourable Chairman is saying. I would want an answer. We've had trouble getting answers since September 6.

The Chair: Shall subsections 47(5), (6) and (7), as amended by Mr Sutherland, carry? Carried.

Shall the section, as amended, carry? Carried.

Section 48, questions, comments or amendments?

Shall section 48 carry? Carried.

Section 49, Mr Cousens.

Mr Cousens: I have it here somewhere.

The Chair: Just before we get to you, Mr Cousens, we will do the first part of that if that's all right with you.

Mr Cousens: Whatever you say.

The Chair: Clauses 49(1)(a), (b) and (c): Questions, comments or amendments?

Shall clauses 49(1)(a), (b) and (c) carry? Carried. Now Mr Cousens.


Mr Cousens: I move that the bill be amended by adding the following section:

"(d) facilitating the development and implementation of water and sewage works and services."

The Chair: An explanation for that amendment?

Mr Cousens: This is an objective that I would like to see incorporated into the Ontario Clean Water Agency, inasmuch as it has already been recognized, earlier in the bill, in the Ontario Transportation Capital Corp where, in subsection 39(1), the bill does provide that the transportation capital corporation's "objects include providing financing for transportation programs and projects and facilitating the development and implementation of such programs and projects and facilities and resources related to them."

So what I'm really trying to do is to make it clearer that the agency will in fact be able to work together with the private sector to make significant investments in the province's infrastructure.

I think there are going to be a number of things that happen as we go into the future, and it opens up the legislation to make possible some of the possibilities that we referred to in the presentation by TransCanada PipeLines. The kind of presentation they were making was not specific to their own corporation. I think there could be any number of consortia that would want to take part in this kind of activity. I think there has to be some flexibility that would allow this kind of ongoing development of water and sewage works.

One of the things that comes out is that I think we want to make sure there will be private sector partners wanting to take part in this whole stated goal that the bill is all about, so let's make it clear when we do set the objects. With that in mind, I place this before the committee for consideration and, hopefully, approval.

Mrs Mathyssen: I will just comment briefly. I know Mr Sutherland wants to comment. With all due respect, Mr Cousens, I think the purpose in the object of OCWA is to enable municipalities to build, upgrade and finance their infrastructure. That is the whole purpose. The bill, as it is, meets that objective, so I don't see what this would add, since the purpose is already realized in what we have without this amendment.

Mr Sutherland: Just to add to that, it's our belief that the legislation now allows for joint ventures with the private sector. Even without this amendment, such activities can take place.


Mr Sutherland: I guess I should just add too, yes, provided municipalities are involved as well.

Mr Cousens: Mr Hope just said something as well.

Mr Hope: I didn't say anything.

Mr Cousens: I certainly felt that there was merit in presenting this for the committee's review. I think we want to make sure that every effort is made by the government, as you look to the private sector to be involved, to participate, to make that investment up front, that you don't close doors of opportunity. What you really want to do is keep options open for them to want to take part in government.

That's a hard thing to do. It's an attitudinal thing as much as anything. Sometimes it takes just a little bit of effort and gesture of goodwill to show that there is that spirit that says, "We're prepared to look more seriously at it." I think that the kind of worry I saw coming through the PipeLines representatives, which would probably be reflected in private sector interests as well, is that the government has a tendency maybe -- it's not proven -- within this area to limit its options. What I was seeing this doing was expanding those options and allowing the government at some future opportunity, sooner maybe than later, to look at these possibilities.

Therefore, it becomes a meaningful move for the clean water agency to look at the development and implementation of water and sewer works and services. It may well be that York region or Wellington or Peel or others may decide to do it themselves. Who knows how they could go about it? There are so many ways in which it can be done.

I'm also extremely sensitive to the environmentalists' view that you just can't look very simply at the transportation of water through pipes. That's not the first resort. That becomes something after considerable environmental review and tremendous thought, and I would assume all those environmental issues would be addressed prior to any such move being taken.

Having said that, I still feel comfortable with causing the committee to consider this, and the words that are spoken here might have some way of giving encouragement where it may be needed.

Mr Hope: Now I will say a few words, when we deal with private sector involvement in the supply of water. I understand where you're talking about partnership with the private sector. One of the very fears most of us have is around the pricing of water, the regulation of pricing. You cannot hold communities hostage. We have a hard enough time with larger municipalities holding smaller municipalities hostage over the water issue. That has to be a very important issue.

Expropriation of land: When you're dealing with massive pipelines, like when TransCanada PipeLines was here talking about supplying water, they're not talking about a strip of land like this; they're talking larger land surfaces with diameters of pipes that are -- you talk about the environment later on, digging up land and turning over land. Farmers get very upset when you interrupt their farm land in that nature, and expropriation, so I'm very cautious about that.

Also, one who lives closer to the borders of the United States is worried about how far this export of water or transporting of water will actually go; that is a fear.

Mr Cousens: I think that Mr Hope raises some genuine points. I think the government will always maintain a sense of close monitoring and control over any kind of pricing of water. Certainly that's within the objects of the Ontario Clean Water Agency. But I think you express a concern that everybody has. There's always the fear of being held hostage, and we know water is such a valuable commodity.

Mr Phillips: I actually think Mr Cousens's motion has some merit. I think Ms Mathyssen put her finger on the problem for us: You defined the agency as it was originally thought of. It was like a facility for helping to raise money for municipalities to do their infrastructure. There's another concept of this thing which is much broader, and I think many of the presenters who have come here have talked about it being what I call the Ontario Hydro of water. There's nothing wrong with that. It's looking at it much more broadly, and in fact the minister's note on introducing the Ontario Clean Water Agency says, "Further, the agency will encourage Ontario residents and industries to join the conserver society by using one of the province's most valuable natural resources carefully." I think the minister is seeing OCWA in a much broader context than this bill provides.

I think it's understandable but maybe unfortunate that we didn't deal with this concept in totality. We've dealt with it as a fairly narrowly focused way of potentially new, creative ways of raising money. I have a feeling we'll be back at this some time down the road, in two, three or four years.

I don't know where all this leads other than that I think Mr Cousens's motion doesn't detract from the bill; it adds a little bit of value to the bill. I personally don't have any difficulty supporting it, although I thought Ms Mathyssen's comments were helpful. I think that's how the bill has been presented to us. In fact, it's called An Act to provide for the Capital Investment Plan, not what I think we may be -- if we could start from scratch, we'd be looking at one bill dealing with, how should the province, in totality, try and deal with its challenge on water? So I don't think the amendment detracts from the bill; it adds a little bit to it and I have no difficulty supporting it.


Mr Hope: Just listening to that around conservation, yes, before you go putting pipes in the ground you have to look at the proper efficiency of the water supply that's there and look at the -- we heard that even in the presentations about public knowledge and water conservation. As soon as you put in water meters, let me tell you, water conservation starts to play a big role.

But the other thing I think was very important and which I believe was brought up by one of the staff was about the issue of municipalities and business and government coming as a three-party to do energy conservation around water for a corporation and companies. I know, coming from a rural community, water is a very essential part of the production of food and we are piping water in and out the systems and there's no way of conservation. I find this, as a means of controlling the water supply for the municipality, as a plus. It helps the private sector, it helps the municipality, without having to put more pipes in the ground and make the reservoirs that much bigger, because they can do through energy conservation -- just picking that up from one of the staff in their conversations about some of the projects that have been worked out there.

The Chair: Further questions or comments?

Mr Sutherland: Just to repeat that the intent of the Ontario Clean Water Agency is not to be a policy-making agency. Certainly, I think Mr Phillips is quite right, that some of the recommendations that came forward from the different groups would like to make it somewhat the equivalent of an Ontario Hydro in terms of making the policy and deciding that. But clearly, at this stage, it is not going to be a policymaking agency, and I too agree that Mr Cousens's amendment doesn't detract from the legislation. But again, I don't think it adds because some of the arguments put forward were to ensure that private sector participation can occur. The legislation, we believe, already allows for that involvement to occur, but with the participation of municipalities as well. I don't think it's doing anything new; the legislation already allows that to occur.

The Chair: Further questions or comments on Mr Cousens's amendment? Shall Mr Cousens's amendment to clause 49(1)(d) carry? All in favour? Opposed? It's lost.

Subsection 49(2), questions, comments? Shall subsection 49(2) carry? Carried.

Shall section 49 carry? Carried.

Sections 50 and 51, questions, comments or amendments to sections 50 and 51? Shall sections 50 and 51 carry? Carried.

Section 52, Mr Cousens has an amendment to --

Mr Cousens: To clause (b). You may want to deal with (a).

The Chair: All right. We'll deal with (a); good point, Mr Cousens.

Clause 52(a), questions, comments or amendments? Shall clause 52(a) carry? Carried.

Mr Cousens: Clause 52(b): I move that the bill be amended by adding after the word "expropriate," the words "and convey."

Not a difficult concept as far as what could happen, in that what may well happen is that the agency may wish to convey expropriated land or easement to a private sector partner and to do so there would have to be some clear legislative authority to do that. By just adding the word "convey" it gives the ability to the agency to do that.

The Chair: Further questions, comments?

Mrs Mathyssen: It's my understanding, and correct me if I'm wrong, under the Expropriations Act if land is expropriated and it's not used for the purpose for which it was expropriated, then the first right of purchase goes back to the original owner. So if the land is expropriated and then is not utilized for water or sewer services, then it must go back to the original owner. They must have first rights. I can't see how this adds anything because unless that land is used as expropriated then it goes back, and this conveying -- I have some concerns.

Mr Cousens: In response, if I may, Mr Chairman, the intent here is not to take away any of the purpose for which the land was originally expropriated, and understanding how it has to be used for a particular purpose. In this case it would be for the transportation of water in a pipe of some kind. Instead of it now being under the specific authority of the agency, it allows them to convey that to another body under whose authority they might well cause regulations and other things to be done.

So it allows further action to be done with it. It would still be used for the conveyance of water, but it might well be in the hands of an authority, subbed out to another group, such as if a corporation such as Interprovincial Pipe Line were to have access to it and were to be asked by the province, "Hey look, we know you could run it better than we are able to, and therefore we've got the line, it's there being built, you are now under authority to use it." So they could convey such authority to them. That's really the intent.

Mr Sutherland: It's our understanding or belief that power is already there under the legislation, particularly when you look under section 4 where it gives the agency the power of being a "natural person," that it could do that. So it already could be done.

Mr Cousens: Where do you see it?

Mr Sutherland: Under the abilities, under section 4, that makes a corporation a "natural person" before the law. That would allow it to, for example, convey it or, for a better term, sell it, if they wanted to, for that purpose.

Mr Cousens: It's close to that. That's a better answer.

Mr Wiseman: I'm just a little nervous about the explanation given about the expropriation of land not used for uses that it was expropriated for. The reason for that is because in the north end of my riding there's an awful lot of land that's been expropriated and not used for what it was expropriated for.

It's my understanding that the Ontario government gave itself the power to do whatever it wanted through what's called the Housing Development Act back around 1973, 1974, to be able to use the land for almost whatever it wanted to and to win any of these cases about expropriation in the courts.

If there's somebody out there who can explain to me the status of that and how it might apply to this, then I think I might feel a little more comfortable about the explanation around expropriation of land going back to the original owner than I do right now, because my understanding is that it doesn't necessarily have to happen.

Mr Sutherland: I'm not sure the question you're asking is directly related to what is being proposed as the amendment. Maybe if we can get someone to provide that to you outside of the committee time, we'll certainly try to do that, okay? But I'm not sure it's directly related to the amendment being proposed by Mr Cousens.


Mr Wiseman: Well, I think it does, because I'm a little nervous about allowing something like the words "and convey" in the legislation if I'm not absolutely clear about what it means with respect to expropriation, because there's an awful lot of land that the government of Ontario owns. That needs to be understood and what its status is within the context of this legislation and within the context of that phrase "and convey" because I'm a little uncomfortable.

Mr Sutherland: Maybe we could have the lawyer for the Ministry of Environment and Energy, Jim Jackson, just give his opinion on whether we need the word "convey" there or not.

Mr Jim Jackson: I'm Jim Jackson. I'm a lawyer at the Ministry of Environment. The amendment is unnecessary because the Expropriations Act does permit the conveyance of land to people other than the expropriating authority with the approval of the approving authority.

The new act you mentioned is probably not necessary in order to enable the land to be transferred to another party. We're only required the approval of the original approving authority. In this act, the ministers responsible for the administration of the individual parts of the act under which the corporations are established are the approving authorities.

Mr Wiseman: So it doesn't have to go back to the original owner if it's not going to be used for the purposes it was expropriated.

Mr Jim Jackson: It has to go back to the original owner if the agency is not going to use it, unless the approving authority approves that it go to somebody else; for example, a municipality that was going to be operating the waterworks in the future or a private sector person who was going to be operating the waterworks or sewage works in question in the future.

Mr Wiseman: Okay.

The Chair: Thank you. Further questions or comments regarding Mr Cousens's amendment to 52(b).

Shall Mr Cousens's amendment to 52(b) carry?

Interjections: No.

The Chair: All in favour?

All those opposed?

It's lost.

Shall 52(b) carry? Carried.

Shall 52 carry? Carried.

Section 53.

Mr Hope: There's a question on that one.

The Chair: On which one?

Mr Hope: Section 53.

The Chair: Okay. Section 53, questions, comments or amendments?

Mr Hope: I've just got a question, because I would like clarification from the Ministry of Environment lawyer, Mr Jackson, on what they called the issue of transfer and assets and liabilities, clearly defined on the record, because I've been asking through this hearing process about debt that's been allocated to municipalities and I'm wondering if that is now associated in this part of the legislation.

Mr Jim Jackson: The Ministry of Environment, Her Majesty the Queen in right of Ontario, is represented by the Minister of Environment, and now the Minister of Environment and Energy has entered into many agreements, mainly with municipalities.

Under the agreements, assets were built, sewage and waterworks were established, or money was lent, and there's an agreement to repay the money to the Ministry of Environment. Under those agreements, there are also liabilities, obligations to complete works that are under construction, obligations to continue to operate works that have been constructed.

Those are all being transferred to the agency and those are the assets and liabilities that are being referred to in that section.

Mr Hope: Okay.

The Chair: Further questions, comments or amendments to section 53?

Shall section 53 carry? Carried.

Sections 54 and 55: Are there questions, comments or amendments to sections 54 and 55?

Shall section 54 and section 55 carry? Carried.

Section 56, Mr Hope has an amendment.

Mr Hope: I do? We don't need to. I need unanimous consent, then, that section 56 of the bill be struck out.

The Chair: Thank you, Mr Hope. That amendment is out of order.

Mr Hope: Okay. Then I'd ask everybody just to vote against it.

Clerk of the Committee: You can't do that. You just vote.

Mr Hope: Well, no, I know; I'm just telling my side to vote against section 56. It's a caucus meeting. We're going to vote against that.

The Chair: Questions or comments on section 56?

Mr Cousens: I've never heard this before, but I'd be interested in some explanation on why Mr Hope wishes to do this. I could be somewhat supportive of these initiatives.

Mr Hope: I'd really love to give you an explanation, but I know Mr Sutherland's back and has been carrying the bill. He's being doing an able job during the process of this week. I'll just turn it back over to him to explain why we are striking out section 56 of the bill.

Mr Sutherland: Okay. On that note, I'm going to ask Jim Merritt from the -- if I get it right -- clean water transition team to come forward and explain.

Mr Cousens: If you want to go further, we'll help you.

Mr Wiseman: Better not go too far; you might get yourself into deep water.

Mr Cousens: I've been in water all my life, something you guys don't know.

The Chair: Order.

Mr Jim Merritt: This section was originally included with the view that the staff of the agency may, from time to time, be called upon to be inspectors under the Ontario Water Resources Act and, in effect, operate in a regulatory mode. Periodically, there had been times when Ministry of the Environment people had to act this way, and because of the close relationship between operating staff as staff of the Ministry of the Environment, there had been perhaps some crossover roles in bringing this in. We've now looked at it and feel that if the Ministry of Environment and Energy does want to, from time to time, have staff of the clean water agency perform an inspection duty on its behalf, the minister may still appoint that person to do that inspection, but it would be clearly done at the minister's request and not at the will of the agency to do those inspections.


The Chair: Further questions or comments on section 56?

Mr Phillips: I think I understand that, but it gets to the point we've raised before, and that is the potential for conflict with the Ministry of Environment being both the supplier of the water and the judge of the quality of it. As they say in the private sector, the product quality people are always separate from the manufacturing people, because they're the judges of the quality. I think your explanation just highlighted the potential conflict. The bill isn't going to change, it's going to go ahead, but when the Ministry of Environment's responsible for running the plants and also for monitoring the quality, there's clearly the potential for conflict. But there it is; that battle has been fought.

The Chair: Further questions or comments on section 56? Shall section 56 carry? All in favour of section 56? All opposed. Section 56 is lost.

Subsections 57(1) through (5): Do members have questions, comments or amendments to subsections 57(1) through (5)? If not, shall subsections 57(1) through (5) carry? Carried.

Mr Phillips: I move that section 57 of the bill is amended by adding the following subsections:


"(6.1) A municipality that objects to a regulation made under subsection (1) may appeal to the Ontario Municipal Board within 30 days after the coming into force of the regulation by filing with the secretary of the board a notice of appeal stating the objection and the reasons for it.


"(6.2) On an appeal to the board, the board shall hold a hearing to which the municipality and the agency are the parties.

"Notice of hearing

"(6.3) The secretary of the board shall notify the parties of the time and date of the hearing at least 10 days before the matter is to be heard.


"(6.4) On deciding the matter, the board may,

"(a) dismiss the appeal; or

"(b) allow the appeal in whole or in part and order the agency to amend the regulation as the board directs."

The Chair: An explanation, Mr Phillips?

Mr Phillips: This came from one of the presenters over the last couple of days. The purpose of this is firstly, as I see one of the opportunities of the agency, to pull together several municipalities on joint projects. I think, as a matter of fact, that's stated in this thing. I think it makes sense that the solution of water problems in many respects probably is across many municipalities. That's never an easy job.

I think there's a risk that some municipalities will be hesitant to enter into these arrangements if the final arbiter of the rates is OCWA, the agency. I think, as I understand the numbers, roughly 80% to 85% of the charge for water in a municipality could come from the section of the cost associated with the agency; in other words, the obtaining and processing of the water as opposed to the distribution of the water. My worry here is that there will be some municipalities, as I say, reluctant to enter into a rational agreement if they are apprehensive that down the road they will be forced into accepting a rate from the agency over which they have no opportunity for appeal. That's the purpose of this, to, I hope, facilitate joint projects by providing some comfort to a municipality that feels that, in some form or other, the agency's not been fair to it and it has no redress. My understanding is that there are similar appeal mechanisms in other regulated areas. I guess the other advantage of this is that, for those of us who are apprehensive about where water rates may be heading over the next little while, there's some comfort for municipalities, that they have some appeal mechanism.

Mrs Mathyssen: I think we have to state very clearly here that, firstly, municipalities are not compelled to enter into agreements. They enter into agreements with OCWA by choice. The Ontario Clean Water Agency will have to be competitive in order to attract the business of municipalities. They will have to provide a competitive program or opportunity. In terms of municipalities being forced, in terms of cost, they go to OCWA; it's not something that's forced upon them.

Secondly, once those contracts are in place, once the municipality contracts with the clean water agency -- or before, actually -- they determine what it's going to cost the municipality. They have various instruments to look at this contract and come to an arrangement. I think that your concerns are not really particularly well founded, since there's no compulsion.

Mr Phillips: If I might respond to that, of course there's no compulsion, but two things: One is that, in many respects, for the really rational decision to be made, it may be that eight or nine municipalities should be involved in it. There may be a couple of municipalities that choose to not be involved because, after all, these are not one-, two-, three-year arrangements. We're talking about, I would think, 50-year arrangements, where a municipality is saying, "This is how we're going to provide our water for 50 years."

My worry is that there will be municipalities that will choose to not participate in this agency because they are apprehensive about the unilateral ability of this agency to set rates down the road. They may be able to see the next five-year agreement without much doubt, but the agency will have to have some flexibility for the next 50 years built into the contract. If you're one of those municipalities apprehensive about whether this is going to be a fair treatment or not, I think you would get a level of comfort to participate in it if you thought there was an appeal mechanism you could go to, if you didn't feel you were being treated fairly by the agency in setting the rates. I understand nobody, zero people have to participate in it, but I'd hate to see two or three municipalities in a geographic area that don't participate in it but should because of their worry about the rate-setting mechanism.

Mr Arnott: If I may add to that in support of what Mr Phillips is saying with respect to his motion, certainly there could be a case where, during the course of this project, two or three municipalities are absolutely essential to the development of the project, two or three that don't wish to participate because of long-term concerns. Municipal government, in many cases, does think in the long term and the extreme long term. It's important to give them a little bit of further clarification and greater certainty, and the appeal mechanism -- going to the Ontario Municipal Board -- does that. The Ontario Municipal Board is very busy with all the statutory obligations it has right now, such that the delays are up to 15 months for hearings, but that's the logical mechanism to go through, I think, and I would support them all.

Mr Sutherland: I guess I'm not quite understanding what the point here is. I mean, all the conditions, in terms of the financing, are all going to be put up front. They're going to know that if they agree to enter into the process or decide not to enter into it in the first place. If it's financed over a 20-year period, once that period's over with, I'm not seeing where the problem is. They know what the costs are up front in terms of where the deal is, so I'm trying to understand the point of this amendment.

Mr Phillips: I'll try once again. I think we're going to see logically down the road, as the solution to municipal water problems, joint cooperation between many municipalities. Any arrangement will likely be long-term, many years -- 20 or 30 years. The arrangement, I suspect, will set out the rates for a two- to three-year period and then will set out the mechanisms for determining them down the road. There will be certain uncertainty on that. Each municipality will think, "I'm not sure what our rates will be; I'm not sure whether we'll be treated fairly in the future."

With this agency having the responsibility in the end to set the rates, without appeal -- once it has set the rates, you pay the rates -- you will not be able to set in the contract the rate you're paying five, six or seven years from now. You may set out some principles but not the rate. I'm worried that we're going to see many municipalities that would participate if they had some feeling that they had some opportunity for an appeal if they were treated unfairly on the rates.

This gets, I guess, to the heart of the legislation where it's a little bit like the tolls that I talked about earlier. There's an awful lot of authority, in this non-elected body, for setting water rates. I think there'll be some elected municipal people who will be apprehensive to turn that final responsibility over to a third party without appeal.


Mr Hope: Mr Phillips does raise a point, but I guess where it is, when you're starting with a new regional water supply system, that is already laid out right in the plans. When you talk about adding water lines and everything else, that's all built into your fiscal plan. For the next 25 years you know what your water rate is, you know what your reserve fund is, you know everything up front. That's already laid out. I know from experience. I went through that in an eight-year battle with the north Kent water system. That is laid out, showing all the capital improvements that are there. They know what the cost of the water is going to be for that year. That is laid out in black and white for them.

I guess I'd have to ask ministry officials, but under our current regional water distribution systems, how is the water rate now set for regional water distribution systems? Do we have that answer?

Mr Sutherland: Maybe we could have Mr Jackson and Mr Merritt comment on this proposed amendment.

Mr Jim Jackson: There are several different ways under which regional water systems are established. One can be issuing, by a director of the Ministry of Environment and Energy under the Ontario Water Resources Act, an order which doesn't come into effect until after there's been an Environmental Assessment Board hearing. That Environmental Assessment Board hearing, among other things, sets the rates. The rates that are set can be varied, but only by an order of the director. The director, whenever he makes an order under the Ontario Water Resources Act, is already subject to an appeal mechanism; there's an appeal to the Environmental Appeal Board.

The other way of establishing regional waterworks is by contract. The contract either provides for a very precise mechanism for establishing the rates and amortization schedule, over a particular period of time, for principal and interest plus the actual operating costs, or it provides for a blended rate that is expressed per unit of water consumed. In that case, the agreements themselves provide for appeals to the Lieutenant Governor in Council.

I note there's a further appeal from the Ontario Municipal Board to the Lieutenant Governor in Council under the Ontario Municipal Board Act. In both of those cases you have an appeal, one to the Environmental Appeal Board and one to the Lieutenant Governor in Council, the ultimate appellate authority from the Ontario Municipal Board.

If the corporation were setting rates that appear not to be following established cost recovery principles, then under section 4 of this bill, the Lieutenant Governor in Council or the minister can give directions to the agency as to how it will set the rates.

The Chair: Questions or comments on Mr Phillips's amendment? If not, shall Mr Phillips's amendment to subsection (6) carry?

All in favour? Opposed? Mr Phillips's amendment is lost.

Subsections 57(6) and (7), questions, comments or amendments? Shall 57(6) and (7) carry? Carried.

Shall section 57 carry? Carried.

Questions, comments or amendments, sections 58 through 68, inclusive?

Shall sections 58 through 68, inclusive, carry? Carried.

Questions, comments or amendments, subsections 69(1) and (2)?

Shall subsections 69(1) and (2) carry? Carried.

Subsection 69(3):

Mr Sutherland: I move that the French version of subsection 163.1(1) of the Municipality of Metropolitan Toronto Act, as set out in subsection 69(3) of the bill, be amended by striking out "municipalité" in the second line and substituting "communauté."

The Chair: Questions or comments on Mr Sutherland's amendment to the French version of subsection 69(3)?

Shall the amendment to subsection 69(3) carry? Carried.

I suppose we actually should consider the English version of 69(3) also.

Shall 69(3) carry? Carried.

Shall section 69, as amended, carry? Carried.

Sections 70, 71 and 72, questions, comments or amendments?

Shall sections 70, 71 and 72 carry? Carried.

Subsections 73(1) through (11), questions or comments? Shall subsections 73(1) through (11) carry? Carried.

Mr Cousens: I move that the bill be amended by substituting subsection 15(2) of the Ontario Water Resources Act by:

"(2) Despite any other act, and upon obtaining all necessary approvals under the Environmental Assessment Act and the Ontario Water Resources Act, the agency, its employees and agents may for the agency's purposes, without consent and without compensation lay, maintain, use, repair, alter or replace the pipes and the appurtenances to them that the agency considers necessary, in, upon, through, over and under any lands."


The Chair: An explanation, Mr Cousens?

Mr Cousens: If I may, there are a couple thoughts that I have. Subsection 73(12) of Bill 17 now does provide that the Ontario Clean Water Agency and its agents, "for the agency's purposes, without consent," may "lay, maintain, repair, alter or replace pipes and the appurtenances" in highways and road allowances, and subsection (3) doesn't make it clear that a municipal franchising bylaw, zoning or conformity with its official plan is not required from the municipality in which the pipe will be located.

Given that the pipes will not necessarily be entirely routed through highways and road allowances, this provision would also be made applicable to lands that are not part of the highway or road allowance after the necessary environmental approvals are obtained. This new provision is really different from what we now have in Bill 17 in at least three ways: The words, "Despite any other act, and upon obtaining all necessary approvals under the Environmental Assessment Act and Ontario Water Resources Act," are inserted at the beginning of the paragraph so that it gives exclusive approval to the authority to act in this regard.

The second difference is that one word is inserted after the word "maintain" and that's the word "use," and it's just a way of saying "maintain, use, repair." It's an application of how the system can be utilized.

Third, the word "lands" replaces the phrase, "highway or road under the jurisdiction and control of any public authority," and it's just more of a generic-type term.

I think it's a rather simple, straightforward amendment and trust it will receive the approval of the members of the committee.

The Chair: Further questions or comments?

Mrs Mathyssen: I'm a little concerned about this one. I'm a little surprised, because I know how important the rights of individual property owners are to Mr Cousens.

I have some concerns about giving the agent the authority without consent and without compensation to lay, use, maintain, alter etc the pipes, but I'd like to hear from counsel, Mr Jackson from the Ministry of Environment and Energy. I hope he can help me on this one.

Mr Jim Jackson: The amendment does appear to make the expropriation provision that is elsewhere in the act unnecessary since it does authorize the use of private property without consent and without compensation. I don't think the agency wants to be able to use private property without consent and without compensation. Normally, of course, it would enter into an agreement with the private property owner and pay an appropriate price, but in the event it can't enter into an agreement, it's prepared to use the expropriation mechanisms that are available under this act and the Expropriations Act.

The other change that restricts it to only doing this after it has obtained all necessary approvals under the Environmental Assessment Act and the Ontario Water Resources Act, that's already provided for in the Environmental Assessment Act and the Ontario Water Resources Act. It's illegal to proceed with an undertaking that needs an approval under that act unless you have an approval, and it's illegal to proceed with the sewage works or waterworks under the Ontario Water Resources Act unless you have the appropriate approval under that act. So that part of the change I don't think adds anything.

Although it's not transparent by looking at this bill, the other acts contain prohibitions in them.

The Chair: Further questions or comments?

Mr Cousens: If I could just comment back, when you read the original section of the bill, it does say there, "The agency, its employees and agents may for the agency's purposes, without consent and without compensation, lay, maintain, repair...."

Mr Jim Jackson: Yes, that's on roads.

Mr Cousens: So then why can it not apply as well to another agency?

Mr Jim Jackson: The Ontario Water Resources Commission and then the Ministry of Environment and Energy have always had the authority to use municipal roads and provincial highways, for that matter, without consent or compensation so that the authority that's building the sewage or waterworks isn't building up artificial costs to buy an interest in land that is already publicly owned which would artificially increase the costs of providing the sewage or the water service. Since it has already been paid for by the residents of the province or the residents of the municipality, it was always felt that there was no need to pay for it twice, for roads.

Mr Cousens: I approve of that as well. It makes good sense. You don't accept the logic then that it can also apply to other things such as this?

Mr Jim Jackson: I don't think it's appropriate for somebody to be able to build sewage works or a water pipeline across anybody's backyard without paying them an appropriate price for the use of their property or the inconvenience they may suffer during the construction, if their own real estate is being used.

Mr Cousens: I think I'm going to, with the permission of the committee, withdraw this amendment on the basis of what has been said, because I think there are some concerns that have been raised that concern me. So I ask the permission of the committee.

The Chair: Mr Cousens has withdrawn his proposed amendment to subsection 73(12). Questions or comments on subsections 73(12) through (50)? Shall subsections 73(12) through and including (50) carry? Carried.

Shall section 73 carry? Carried.

Section 74, questions or comments? Shall section 74 carry? Carried.

Section 75, questions, comments or amendments? Shall section 75 carry? Carried.

Questions or comments on section 76? Shall 76 carry? Carried.

Section 77, questions or comments? Shall section 77 carry? Carried.

Shall the preamble to the bill carry? Carried.

Shall the French translations of the amendments --

Mr Cousens: Any guarantees?

The Chair: Mais oui -- that have been made to the bill carry? Carried.

Shall the bill, as amended, carry? Carried.

Shall the bill be reported to the Legislature? Agreed.

We have completed the committee's work. We'd like to thank the able assistance of the clerk, of the researcher, of legal counsel and certainly of all the ministry people who have had the patience to sit through this process.

Mr Sutherland: Just one more piece of business.

The Chair: Oh, no.

Mr Sutherland: I believe we have the letter that was requested that the ministry sent to the auditor, indicating that we'd be putting some of the proposals out of its recommendations for legislative changes in the memorandum of understanding. I believe we have that now and we'll table that for folks.

Mr Cousens: As you've thanked everybody else, I'd just like to commend the Chair for doing an excellent job in conducting the affairs of this committee.

The Chair: Thank you. We have the letter, which has been circulated. I would also like to thank the members for their indulgence and diligence during this process this week, and would remind all members of the committee that we will be commencing on Monday afternoon at 1 o'clock for the consideration of Bill 40. So thank you very much, and thanks to Hansard and Hansard recording. We'll see everybody Monday.

The committee adjourned at 1549.