Committee Transcripts: Standing Committee on Finance and Economic Affairs - 2000-Feb-03 - Pre-Budget Consultations

Pre-Budget Consultations
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PRE-BUDGET CONSULTATIONS

MENNONITE CENTRAL COMMITTEE ONTARIO

STUDENTS' ADMINISTRATIVE COUNCIL, UNIVERSITY OF TORONTO

CHILD POVERTY ACTION GROUP

ONTARIO CHAMBER OF COMMERCE

ELEMENTARY TEACHERS' FEDERATION OF ONTARIO

PUTTING HOUSING BACK ON THE PUBLIC AGENDA

TORONTO DISASTER RELIEF COMMITTEE

ONTARIO FEDERATION OF AGRICULTURE

CO-OPERATIVE HOUSING FEDERATION OF CANADA

ONTARIO UNDERGRADUATE STUDENT ALLIANCE

CANADA'S RESEARCH-BASED PHARMACEUTICAL COMPANIES

ONTARIO CAMPAIGN 2000

ONTARIO MINING ASSOCIATION

ONTARIO NON-PROFIT HOUSING ASSOCIATION

CONTENTS

Thursday 3 February 2000

Pre-budget consultations

Mennonite Central Committee Ontario
Mr Brian Enns
Mr Evan Heise

Students' Administrative Council, University of Toronto
Mr Liam Mitchell

Child Poverty Action Group
Mr Colin Hughes
Dr Brigitte Kitchen

Ontario Chamber of Commerce
Mr Douglas Robson
Mr Atul Sharma
Ms Carolyn Conner

Elementary Teachers' Federation of Ontario
Ms Phyllis Benedict

Putting Housing Back on the Public Agenda
Mr Alan Redway

Toronto Disaster Relief Committee
Dr David Hulchanski

Ontario Federation of Agriculture
Mr Jack Wilkinson
Mr Ron Bonnett
Mr Bill Mailloux

Co-operative Housing Federation of Canada
Ms Joyce Morris
Mr Michael Shapcott

Ontario Undergraduate Student Alliance
Mr Ryan Parks

Canada's Research-Based Pharmaceutical Companies
Mr Murray Elston

Ontario Campaign 2000
Mr Pedro Barata
Mr Ron Dancey

Ontario Mining Association
Mr Patrick Reid
Mr Peter McBride

Ontario Non-Profit Housing Association
Ms Robin Campbell

STANDING COMMITTEE ON FINANCE AND ECONOMIC AFFAIRS

Chair / Président
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)

Vice-Chair / Vice-Président

Mr Doug Galt (Northumberland PC)

Mr Ted Arnott (Waterloo-Wellington PC)
Mr Marcel Beaubien (Lambton-Kent-Middlesex PC)
Mr David Christopherson (Hamilton West / -Ouest ND)
Mr Doug Galt (Northumberland PC)
Mr Monte Kwinter (York Centre / -Centre L)
Mrs Tina R. Molinari (Thornhill PC)
Mr Gerry Phillips (Scarborough-Agincourt L)
Mr Toni Skarica (Wentworth-Burlington PC)

Substitutions / Membres remplaçants

Mr John O'Toole (Durham PC)

Also taking part / Autres participants et participantes

Mr David Caplan (Don Valley East / -Est L)
Ms Marilyn Churley (Broadview-Greenwood ND)
Mr Rosario Marchese (Trinity-Spadina ND)
Mrs Sandra Pupatello (Windsor West / -Ouest L)

Clerk / Greffier

Mr Tom Prins

Staff / Personnel

Mr David Rampersad, researcher,
Research and Information Services

The committee met at 1004 in room 151.

PRE-BUDGET CONSULTATIONS

The Chair (Mr Marcel Beaubien): Good morning, everyone. It's five after 10. The meeting is supposed to start at 10. I'd like to bring the committee to order.

Mr Gerry Phillips (Scarborough-Agincourt): Mr Chair, before we begin with the first witness, I wonder if I might request the clerk or the research person to provide us with two or three pieces of information. One, yesterday one of the presenters was talking about relative tax levels. I wonder if we mightn't see if we can find the relative tax levels-I know that the ministry produced a chart with tax levels versus other provinces, corporate, sales and all those sorts of things, but also in neighbouring jurisdictions in the US, or as many as we can find.

The Chair: Mainly Michigan?

Mr Phillips: Michigan, Illinois, New York, just three or four, because I think we had kind of conflicting evidence yesterday on the level of corporate taxes in Ontario, taking into account federal and provincial tax.

Secondly, I noticed that at the Premier's conference today there is a document being presented, prepared I gather by provincial governments, on future deficits. It looks like it's a public document, and I wonder if we mightn't get that document.

Thirdly, I think at least two of the economists yesterday indicated they would send us some information, kind of their economic outlook. I just assume we'll get that and circulate it.

The Chair: I'll make an undertaking that as soon as we get that I'll make sure every member gets a copy of it.

Mr Phillips: Do you need a motion on those requests, Mr Chair?

The Chair: I don't think so. It's a reasonable request and we'll follow through with it.

MENNONITE CENTRAL COMMITTEE ONTARIO

The Chair: Our first presenter this morning is a representative from the Mennonite Central Committee. Could you please step forward and identify yourself for the record. On behalf of the committee, welcome.

Mr Brian Enns: Thank you very much. My name is Brian Enns, from the Mennonite Central Committee Ontario. I'm the Queen's Park representative. With me today is Evan Heise, the Toronto regional director.

Mennonite Central Committee is the relief, service and development agency of North American Mennonite and Brethren in Christ churches. MCC seeks to demonstrate God's love through committed men and women who work among people suffering from poverty, conflict, oppression and natural disaster. MCC serves as a channel for interchange between churches and community groups where we work around the world. MCC strives for peace, justice and the dignity of all people by sharing our experiences, resources and faith in Christ.

MCC was born in 1920 in response to hunger and human need caused by war and revolution in Russia and the Ukraine. In 1940 MCC began to grow in response to the agony of World War II. MCC found alternative service opportunities for conscientious objectors during the war, and established relief and refugee programs in Europe at the war's close. In the 1950s and 1960s, MCC programs expanded into Asia, Africa and Latin America.

MCC Ontario administers local programs and coordinates fundraising efforts for overseas work through its five program areas:

Global Neighbours coordinates material aid for disaster relief and administration of relief sales. This program also aims to increase understanding of the causes and realities of global and local poverty, and to nurture faithful responses to these causes.

Newcomer support program: MCC Ontario endeavours to work and walk alongside a variety of people who come to our communities from outside Ontario, especially refugees. The Mennonite New Life Centre of Toronto celebrated its 15th anniversary recently. It now serves approximately 700 people a month from over 70 countries with settlement, advocacy, counselling and language programs.

Peacebuilders program: This program seeks to understand and address issues of violence and approaches to peace in the home, community, and the world. To this end, the Peacebuilders program works at issues of family violence, victim-survivors and perpetrators of violent crime, peacemaking in communities experiencing conflict and the promotion of peace theology and thinking.

Aboriginal Neighbours: This program attempts to make real the fact that First Peoples and our peoples are neighbours. MCC Ontario supported its churches in building relationships with neighbouring aboriginal communities, supported an archival researcher position with the Saugeen Ojibway First Nation, and assisted in providing a violence reduction team in Caldwell First Nation during a period of tension.

We seek to act responsibly in humbly "speaking truth to power," which includes a concern for the public policies of governments, especially in Canada and the United States. With this history and identity, we come to you today to share our experiences and concerns.

The three major concerns that we have are related to housing, the environment, and aboriginal issues.

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Housing: The lack of affordable housing is a major factor in perpetuating homelessness and poverty. Promises of federal money for housing should be matched by provincial funds and a concerted effort to build affordable housing. Emergency housing and shelters, while needed, are not answers. Downloading-also called devolving-social housing to the municipalities and hoping that private builders will fill the void are two policies that have not resolved the lack of affordable housing.

The Golden report on homelessness, commissioned by the mayor of Toronto, understands the political reality that may frustrate any attempts to end homelessness:

"The task force acknowledges too that the prevailing political climate may not seem to favour spending money on housing and support programs, as we recommend. However, our report demonstrates that the problems are solvable and that the solutions are available. On that basis we have a moral obligation to take the actions needed."

Mary's Place, the only general emergency shelter for women in the Waterloo region, helps women who have been forced from their homes and into the street. MCC Ontario's efforts to provide a social network for these women is only a partial solution. Affordable housing is needed to move these women out of the temporary refuge of the shelter. The government should ensure that adequate affordable housing is available to all who need it, as this single step will make the biggest impact on levels of poverty.

MCC Ontario has been involved with Low-German-speaking farm workers in southern Ontario who are a necessary part of our economy. MCC Ontario provides different services and resources to help them, but the families have difficulties in finding affordable housing. MCC Ontario is there to provide part of the social support network for these families but requires the province to work in partnership with us to create incentives to build where the vacancy rates are very low or there is no affordable housing available.

Environment: In order to ensure a sustainable society, we should consume natural resources at a rate that is sustainable. By consuming at this optimal rate, we can preserve the environment for our children. Hence the province's current natural resource policies must be mindful of the future and not dwell on the immediate satisfaction of economic profits. A policy of economic growth that understands growth in terms of profits within the next 10 years will not adequately provide for the proper management of resources.

The Ministry of Transportation should have the environment as a priority. It should encourage the use of public transit and provide funding for the upgrade of public transit. The gas tax could be used toward these goals and should also be used to offset the social and environmental costs of busy highways. The ministry should think in terms of how it can reduce traffic, not how it can redirect it through building more roads.

MCC Ontario has a staff person in Timmins who was involved in one of the Lands for Life round tables. Out of this experience and with his relationship to the First Nations, he is concerned with the Ministry of Natural Resources' dwindling budget. Without adequate funds, the ministry has handed over responsibility for planning and management to industrial users. MCC Ontario sees a need to rebuild the capacity of the Ministry of Natural Resources to meet its legal mandate to manage Ontario's resources.

Aboriginal issues: Jubilee calls for the return of land to its ancestral owners. This has a special significance to Canadians who recognize the importance of aboriginal peoples. Aboriginal issues should be a focus for the province's activities, in coordination with the federal and municipal governments. All parties must renew their activities to help those aboriginal people in urban areas who are experiencing the harsh realities of poverty. The parties should also ensure the fair settlement of land and resource negotiations. It is important for the province to implement programs in collaboration with aboriginal peoples, something that was not done in the Lands for Life deliberations.

MCC Ontario has a relationship with the aboriginal community at Cape Croker. This community has been trying to reach an agreement over resource co-management with the Ministry of Natural Resources for a long time. The ministry has been handing over its responsibilities to private industry or sport fishing and hunting associations. In effect, the ministry has excluded the aboriginal community from decision-making over resource management and increased the participation of groups that will not listen to the aboriginal community. In giving up its responsibilities, the Ministry of Natural Resources prevents a dialogue that is open to all sides of the issue and does not facilitate decisions that are made with the best interests of all people involved. We ask the government to take the necessary steps to ensure there is the financial capacity for the co-management of natural resources with aboriginal communities in Ontario.

The main point that we can take from Dr Mustard's report on early childhood development is that all levels of government and communities must work together. One of the report's conclusions reflects this:

"Society's support for early child development is dependent on the understanding and appreciation among all members of society of the fundamental importance of the early period of human development. To improve the outcomes for all children in their early years, there has to be a willingness to create and support the development and operation of early child development and parenting centres. The involvement of the different sectors of society, both public and private, is crucial for creating the centres and the integration among the different sectors of society to help build what has been described as social capital or social cohesion, which is thought to be a key factor in long-term economic growth and the maintenance of tolerant democratic societies."

This is where the notion of a moral foundation is necessary. The government needs a moral vision to ensure the cohesion of its citizens, especially where the welfare of our children is at stake. This is a cohesion that cannot be created out of economic benefits or prosperity.

Our main reason for highlighting these three concerns-homelessness, the environment and aboriginal issues-is the Jubilee vision. The year of Jubilee has received international attention with its effort to eliminate the national debt of the poorest countries. Jubilee is an ancient Hebrew concept to be practised every 50 years. At that time, Jubilee required people to forgive all debts, return land to its ancestral owners and limit food production to what would feed the family.

Jubilee provides a framework for the priorities and values of all peoples: (1) freedom from the bondage of poverty; (2) equitable distribution of wealth; (3) sustainable environmental practices. We believe these priorities and values can be translated into the policy objectives that we have suggested. Then I go on to list all three that I have mentioned already.

In last year's budget speech, Foundations for Prosperity, Minister Eves stressed the importance of economic growth and imagined "a tomorrow where all Ontarians can benefit and families prosper from the foundations we have created together." What we need to see in Parliament is a critical discussion of what constitutes a "benefit" and what value lies in "prosperity." The desire for more wealth is a means and not an end. Without a moral foundation, "prosperity" will ultimately mean greed and inequality.

The vision of Jubilee provides three goals as an alternative: an end to poverty, redistribution of wealth, and sustainable environmental practices. Through this budget, the government can provide for the good of all Ontarians by allocating resources according to these goals and stating the moral foundation of its policies.

The Chair: We have approximately five minutes for each caucus. I'll start with the government side.

Mr John O'Toole (Durham): Thank you very much for a very interesting perspective on the future of society. I think on an emotive level I probably support most of the concepts in a general moral sense. In a sense of reality, I have some difficulty agreeing with the basic premises. I hope you don't interpret that as being cynical but perhaps, more appropriately, realistic.

I guess the moralizing part of it starts here. I don't disagree with the fundamental building blocks here of housing and environment. On the aboriginal issues, I would leave that for the Superior Court to deal with, as they are now. Once you give them the gold and the trees, I guess the decision has kind of been made. Once they get their hands on the gold, they own it all, and then it's power and money. They will be in the same game as we're in.

One thing struck me. Being the parent of five children, and I believe that's the basic unit of society, I want to ask about page 3 on the Mustard report. You state at the very end that there is a notion that a moral foundation is necessary. As I've stated, I agree with that. Then you say, "The government"-I have some problem with that-"needs a moral vision to ensure the cohesion of its citizens." I don't agree with that totally. I see that as, who is in charge, the state or the individual? That's a higher level order of ideology. Who is responsible for my children, you or me?

Mr Enns: We both are. It doesn't have to be one or the other.

Mr Evan Heise: We are a collective. I don't think that's the right answer, but it's an answer.

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Mr Ted Arnott (Waterloo-Wellington): I'm not sure I have a question. I apologize for being late. It usually takes me about two hours to get here from home and this morning it took about three.

I want to thank you very much for coming in to share your ideas with this committee. The Mennonite Central Committee has an important presence in my riding of Waterloo-Wellington, and I have a profond respect for the work that you do. Certainly the relief that you provided our area when we were struck by a tornado in 1985, and then again 1996, was very much appreciated. You do extraordinary work in the communities that you serve, and I want to thank you for that and thank you for your presentation today.

Mr Doug Galt (Northumberland): If I may, just a quick question. Thank you very much for the presentation. The things you're presenting to us, I think it's motherhood and we generally support it.

I'm just curious on your position on the debt that the country has and what we're giving to our children, which we've created over about three decades, three and a half maybe. It works out to something like, if you divide it out, $10,000 for every man, woman and child in Ontario, and federally it's about $20,000. They're very rough figures and some people would debate those, but it's in that general area. What's your feeling on leaving that for our children? Are we not being responsible to try and get rid of some of that, or do you see that the things you're promoting should be paid for ahead of getting rid of some of that debt on our children as they walk into the workforce?

Mr Enns: No, MCC believes in stewardly economics. I think part of that is taking care of that debt. The Jubilee initiative looks at the debt of all nations in trying to eliminate that, just exactly for the reason that you said, because in the long run it will affect our children. But again, that concept of stewardly economics takes into consideration a lot of other things, not just the debt but also what's happening right now. It's part of it all.

Mr Galt: I think we're almost on the same page.

Mr Phillips: I want to thank you for being here. I do follow the work that your organization does and it's first class. I hadn't planned to ask this question, but I'll follow up on one that was just asked. The Harris government, since it got elected, has added about a $22-billion debt to the province. That's about a 25% increase. At the same time, people making $250,000 a year, a quarter of a million dollars a year, have gotten a tax break worth $500 million a year. So following up on Mr Galt's debt issue, was that a good expenditure of funds, to take the debt up $22 billion but to give people making a quarter of a million dollars a year a tax break worth $15,000 to each of them, worth in total about $500 million a year?

Mr O'Toole: Mr Chair, if I could, I have a point of order: Mr Phillips is making a statement that the debt was added. He should respond to the-

Mr Phillips: Mr O'Toole, I don't think that's a point of order.

Mr O'Toole: -outstanding liability assumed from Ontario Hydro.

Mr Phillips: Mr O'Toole, you're absolutely, totally wrong. You don't know what you're talking about. You've added $22 billion; nothing to do with Hydro. You're going to have to understand your own numbers. If you don't understand that, that's part of the problem.

But to our witnesses from the Mennonite community, again, because Mr Galt raised this, the $22-billion debt: Was it a good public policy, when that debt was going up and we were facing some of these issues you talk about, to also give people making a quarter of a million dollars a year a tax break that was worth about $500 million a year?

Mr Heise: If I could respond briefly, I appreciate what you're saying, but as a representative of the Mennonite constituency in Ontario, in some respects I hesitate to get into partisan politics. There are also some very wealthy Mennonites who have benefited, some of those making a quarter of a million a year. There are also quite a few at the lower end. I think as an organization that is attempting to work with folks at the lower end, we are concerned, and those wealthy Mennonites among us are also somewhat uncomfortable with their own wealth at times and the growing disparity between the rich and the poor. Whatever economic philosophy is adhered to, I think we all want to get to a point where there is some equity and where the poor among us can live lives which are full of pride and self-worth. I'll leave that debate for the two sides.

Mr Phillips: I only raise it because it was raised with you earlier.

The housing issue is an extremely important one. The government made a decision to put social assistance and social housing onto property taxes. That was contrary to their own selected panel that said, "Don't do it." That was the Who Does What panel that said, "Don't do it." My concern is that if we head into a downturn, and there will be a downturn, when you have social assistance and social housing on property taxes it makes for a very difficult decision for local councils to try and deal with a housing or social assistance problem when their only source of revenue is property taxes. As I say, you've pointed out the housing problem. The challenge now is, once that decision has been made, to fix it you have to take it off property taxes and find a source of revenue. Is that part of the solution, in your opinion, that these things should be funded in a different way than property taxes?

Mr Heise: Again, I think we're going to leave that to the researchers here to decide. Our concern in that scenario is that those regions of the province that are very poor somehow have the resources to provide the housing necessary for the very poor in their communities.

The Chair: With that, Mr Phillips, your time is up.

Mr David Christopherson (Hamilton West): Thank you very much for your presentation. I've just got to tell you right off the top, it's nice to start the day dealing with some of the societal issues-challenges, actually-that face us in the context of these pre-budget consultations. By and large, we mostly get financial folks, economists, and those things are important, but at the end of the day, unlike the government, we believe all of that is to serve society. The whole idea of having a healthy economy and a vibrant economy is to ensure that we've got a society where everyone gets to share.

We know from the report that was released by the Centre for Social Justice-you may be familiar with it-the follow-up to The Growing Gap, that the inequities between the very rich and the very poor are growing. There are more poor people than there have ever been before and they're in deeper poverty than they've ever been before. I just refuse to let these consultations on economic issues go by without injecting as much as possible these issues. I think it's great that we've started the day with you making this presentation and putting those issues front and centre.

When we see a government that has a majority control in the biggest province in the country say that the biggest challenge facing us, no matter what, is taxes and that they want to continue to cut taxes that clearly, in every study released, benefit the very wealthy more than anyone else, we have to work twice as hard to make sure that the things that matter to the majority of people get on the agenda and are considered.

To just touch on some of the issues that you've raised, you talked about housing. I know you don't want to be partisan, but to some degree you're stuck in a partisan environment. I appreciate your desire to walk that line carefully. When we talk about housing, as much as I consider it a shameful moment that we had a Minister of Housing who stood up in the Ontario Legislature not that long ago and said, "I'm proud of the fact that our government is getting out of the business of housing," the alternative viewpoint is one that I was proud of, the fact that the NDP government in the early 1990s was the last government in North America that was still willing to commit itself to ensuring that there was affordable housing. Under Harris's Ontario it's almost an oxymoron to say "affordable housing." Now, as a matter of fact, there are no governments in North America, and for the first time ever, certainly in the last 40 years, we have a federal government that doesn't have a housing plan, no housing plan whatsoever. And this problem is only going to be exacerbated. As this idea that tax cuts are going to save us from some potential doom continues to take hold at the national level, I've got to tell you, my hopes of seeing the government change their mind at the federal level are not very strong or optimistic either.

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You talk about the environment; again, so crucial. To talk about long-term planning, if we don't deal adequately with the environmental issues there won't be an economy to worry about because everybody who wants to invest is going to head everywhere but here. Because who wants to work in a province where the health of your children is affected?

Again, these are the boom times, these are the best times going. This is when we ought to be moving the yardsticks forward and instead we're going in the wrong direction. I hearken back to our government in the early 1990s. During the biggest recession we've seen since the dirty `30s, on the environment, we brought in the bill of rights and we were the ones who created the Environmental Commissioner. The position has now been politicized and tainted by virtue of appointing a partisan individual. But we did that during the tough times. It's inexcusable that this government's taking us backwards during the best economic times.

Aboriginal issues-same again. I was pleased that we were the first government that had a formal, signed, government-to-government relationship with the First Nations people of this province-a huge step forward. In saying all of that, one line jumped out at me on page 4, where you say, "This is where the notion of a moral foundation is necessary." We hear a lot from the economists, talking about making sure the fundamentals are in place, and that means interest rates, exchange rates, GDP, all the things that factor into an economic analysis, but at the end of the day this moral foundation and these societal foundations should be the larger priority and everything else should feed into or support that. I'm sure you're aware that we now have more people who are no longer middle class, sliding into poverty, than we've ever had before. If we continue down this road we're just going to see a further erosion of that.

So any comments you'd have as a result of that? I don't really have a question except to thank you again for your presentation, to urge you to continue to speak out. The pendulum will swing back. God help us if the recession happens while Harris is in power, because if we're losing ground on housing, the environment, social services, health and the things that matter to people on a day-to-day basis during an economic boom, what is going to be the plight of those issues if we go into a recession under this kind of government?

The Chair: Thank you, Mr Christopherson. Your time's up. On behalf of the committee, thank you very much for your presentation this morning.

STUDENTS' ADMINISTRATIVE COUNCIL, UNIVERSITY OF TORONTO

The Chair: Our next presenters are from the Students' Administrative Council, University of Toronto. Could you please step forward and state your names for the record, please?

Mr Phillips: Chair, just while that's happening, there was a question raised about the debt increases and I'm wondering if the research staff might provide the committee with that.

The Chair: From 1995-

Mr Phillips: From 1995, because the numbers I have in the budget here show it's gone up $22 billion without Hydro and $33 billion with Hydro.

Mr O'Toole: Mr Chair, on that same point of order: I'm referring to the document Ontario Finances, filed on day one of the hearings. The footnote on page 11 says the provincial direct debt is forecast at $118 billion, up from $109 billion. The increase includes $8.9 billion as a result of the debt equity swap for OPG and Ontario Hydro Services. That's $9 billion of debt accumulated from an unfunded liability from OPG. So I think, Mr Phillips, you and I should possibly talk about this because you were accusing me-

The Chair: Mr O'Toole, I will not get into a debate here. Just a minute. There's been a request-

Interjections.

The Chair: Let's have a bit of order. There's been a request from a member for some information from the research staff. We will get that and we'll continue.

Could you please state your name. Sorry for the disruption.

Mr Liam Mitchell: No problem. My name's Liam Mitchell. I'm the Scarborough chair of the Students' Administrative Council. With me are Paul Kutasi, vice-president of the Students' Administrative Council and Joshua Koziebrocki, university affairs commissioner.

The Chair: Welcome. You have 30 minutes.

Mr Mitchell: Thank you very much. It was our request to the clerk that an overhead projector and screen be made available. Are we to set that up ourselves?

The Chair: We can get it done. Can you proceed without it for the moment?

Mr Mitchell: Sure.

The Chair: It won't take very long.

Mr Mitchell: Great. Good morning, Mr Chairman and the honourable members of this committee. Thank you for providing us with the opportunity to speak with you today about issues that we feel are of the utmost importance, not just to our constituents but to the future development of this province.

Politicians and community leaders have extolled the importance of youth and recognized the role that we will play in the future. That is why it is important to realize the implications of the decisions that you make within the field of education. For it is from this essential foundation that the citizens of this province are created. Education produces people who think about the world around them and are aware of the role they play within society.

In February 1999, the Council of Ministers of Education published a document entitled Public Expectations of Post-Secondary Education in Canada. It stated that the purpose of post-secondary education should be "inspiring and enabling individuals to develop their capabilities to the highest potential level for effective contributions to society, to help shape a healthy, democratic and civil society." Therefore, we must commit ourselves to a high quality of education today to ensure a strong citizenry tomorrow. To do otherwise would endanger our future and challenge Ontario's success.

Education takes on many forms. There is the curricular learning that is the most readily associated with the term "education." Learning from teachers and professors with the aid of many books, often characterized by late nights in the library compiling research, this is an important method of educating students. However, it is only half of the equation, for it is extracurricular activity and, through that, learning that provides students with the opportunity to apply their knowledge and gain new perspective that is essential in the future.

Canadian sociologists Fred Evers and Sid Gilbert have researched the undergraduate experience in Canada. In their book The Bases of Competence: Skills for Lifelong Learning and Employability, they have concluded that the type of skills that employers are looking for are often developed in out-of-classroom activities. These skills include the following competencies: self-management, communications and multi-tasking.

Michael Herrara, a lead recruiter for Ernst and Young at the University of Toronto, states: "When I hire a student, I am not as interested in their marks as I am in what they have done on campus. I am far more impressed by someone who was president of a student group than someone who has straight A's, because I know that the student who was president has a skills set more valuable than what the classroom alone can provide."

It is the topic of extracurricular learning and the need for the government to identify it as a financial priority within education that I would like to address with you today.

If you haven't already been bombarded with cries for a reduction in the current tuition rates, let me assure you that you will be. Students across this province are hitting the debt wall because of massive tuition increases, which have now been compounded by deregulation in some programs. Students are being forced to take part-time and, increasingly, full-time jobs so that they can afford their tuition. This prevents them from participating in campus life. Instead, university has become a drive-through education, where students drive in for a class, receive it, and then drive off to work.

Students are in need of relief, and the Ontario student assistance program is not currently delivering the assistance that its name suggests. Its definition of need is far lower than what most students require to attend post-secondary education. Many students who now receive OSAP still fall short of the money they need to attend university. This has caused many students to amass huge debts. The average student who graduates this year with a four-year degree will have a debt of $28,000 to pay off. In 1998-99, some 14,000 undergraduate students at the University of Toronto borrowed $99 million, with an average loan of $7,000. Compare this to just one year before, when only 12,500 undergraduates required loans. That is an additional $12 million in a one-year period.

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What these figures clearly indicate is that there is needed a new system of grants in this province. Loans only serve to place students under massive debt that many will carry with them for years. This impairs their spending ability, and thus slows the economy of this province. Nobody wants that. Therefore, the next budget should include a new provincial grant for post-secondary education that will allow students to complete their programs without the current debt load we now see. This grant should provide eligible students with a minimum of 10% of their tuition for a maximum of four years and should not be tied to any of the current OSAP requirements.

In addition to the new grants, the province must work to make OSAP a more effective means of aiding students. You can start by removing the recent introduction of new stipulations that include refusing OSAP to those students with bad credit history. You must realize that these are the students most in need of assistance. To exclude them is to remove their opportunity to attend university. In a province that holds universal access to education as essential, how then can we remove somebody's ability to attend due to his or her inability to pay? Instead, this government must be willing to make special allowances that ensure that a few bad decisions don't prevent somebody from receiving an education.

OSAP regulations must also take into account that parents do not always financially support their children through university. The assumption that they will causes many students in need of assistance to be rejected. Therefore, OSAP regulations need to be reviewed so that only a student's income is factored into the equation.

Also, this government's decision to punish institutions with high OSAP default rates is deeply flawed. Universities and colleges have little to do with who gets OSAP, and to punish them leads to many problems. The first is that some universities may refuse to take students from lower-income homes as they therefore could be construed as bad credit risks.

Also, it must be realized that some institutions have higher OSAP usage rates then others. For example, at the University of Toronto at Scarborough, almost half of the students receive OSAP funding. This is largely due to the economic situation of the region. While the U of T at Scarborough, like the rest of the U of T, has a low default rate, other institutions are at threat of being punished by this new OSAP policy. Therefore, OSAP regulations need to take into account that some institutions simply have higher default rates than others because they are in regions that are economically depressed.

As a result of these revisions to its policy, the next budget should include an increase in funds made available to OSAP. We urge the ministry of colleges and universities to work with us and other student groups throughout the province to redesign OSAP so that it is beneficial to all.

The decision by this government to eliminate the fifth year of high school will result in two classes graduating simultaneously in 2003. This situation has been termed the double cohort. The result is that demand for university spaces will almost double. It is expected that some students will attempt to avoid the massive crush of 2003 by fast-tracking through high school and graduating early, while others will prolong their time in high school and graduate a year later. Therefore, the first increase related to the double cohort will be seen in 2002, a mere two years away.

This sudden explosion in demand is really just a preview of what is to come. The Ministry of Finance has forecasted demand for university education to 2015. According to its figures, by 2014 demand will be at the same level as the peak of the double cohort demand.

This growth is caused by a general population increase within the province. As you can see from this graph, that growth will continue into 2015, when the projection ends. Thus, the double cohort provides us with an early glimpse of a general increase.

Therefore, this growth must be addressed now, not only to accommodate current students but also to build for the future. We must ensure that growth occurs with full financial support and with careful thought. However, it must be realized that time is quickly running out, and we must stress the urgency of dealing with the issue of post-secondary education and the growth in post-secondary institutions within this province quickly.

In the last provincial budget this government established the SuperBuild fund. With almost three quarters of a billion dollars, the fund was established to finance capital construction on university and college campuses throughout this province. We applaud the establishment of this fund and note that it is long overdue. However, the fund in its current state does not go far enough to provide the needed growth that is required to meet the demands that are caused by the double cohort.

First, the fund is simply not large enough. At the University of Toronto it has been estimated that $382,055,000 will be needed to house just less than 9,000 undergraduate students and 1,300 graduate students. This is a mere one fifth of the projected increase in demand for university by 2004. To assume that these costs can be paid in small instalments would be foolish. As we have noted earlier, time is quickly running out. With the first students scheduled to arrive in just two years, the money is needed now to ensure that the buildings are ready on time. Therefore, we call upon the government to commit $1 billion this year to the SuperBuild fund and a further $200 million for each of the next two years.

The second problem we find with the SuperBuild fund is its lack of support for non-academic space. The fund's current policy restricts its use to constructing classrooms and labs, but does nothing to provide new student space. As we have argued, it is just as important to provide extracurricular learning as it is to provide classroom-based learning.

Ernst Boyer, the former US commissioner of education, stated, "The effectiveness of the undergraduate experience relates to the quality of campus life and is directly linked to the time a student spends on campus and the quality of their involvement in activities." At the U of T we are in dire need of a new student space on all three campuses with our enrolment rates as they are now. Any future growth will require an even greater increase in space and student services.

It is important that the province commit itself to the value of extracurricular education. To that end, the next provincial budget should include extra money to the SuperBuild fund to assist in the construction of new student spaces. While no information is currently available on the cost to meet the needs of student space, it would be conservative to say that at least $500 million would be required. Therefore, we feel that an additional $250 million should be committed to the SuperBuild fund in the second and third years, for a total of $450 million per year.

Finally, the current call for submissions for the SuperBuild fund stresses that university-college collaborations would receive priority. We applaud integrating college and university programs, but it is important too that each of these institutions retain their distinct character in this period. In a memorandum to the executive heads of provincially assisted post-secondary institutions, the Honourable Dianne Cunningham, the Minister of Training, Colleges and Universities, used language that many interpreted to be a threat that unless universities and colleges integrated, no money would be forthcoming. This may force some institutions to create mismatched linkages between programs in the hope that they will be able to obtain some funding. Therefore, we would urge that in the next call for submissions no priority be given to joint college-university programs. Instead, each submission should be judged on its own basis.

To conclude, allow us again to review our recommendations for the next Ontario budget:

(1) A new provincial grant for post-secondary education should be established that will provide eligible students with up to 10% of their tuition for a maximum of four years and that no tie be made with current OSAP regulations;

(2) As a result of revisions to its policy, the next budget should include an increase for the Ontario student assistance program;

(3) One billion dollars should be committed this year for the SuperBuild fund, with an additional $450 million in each of the next two years, $200 million for academic priorities and $250 million for non-academic needs.

This will lead to a total of $2.65 billion invested in capital growth on university campuses by 2002-03, of which $2.15 billion will go toward academic priorities.

We feel strongly that this is an important time for post-secondary education in the province of Ontario. Growth has not occurred on this scale since the 1960s, when many universities in this province were created. With careful planning and adequate funding, we can recreate post-secondary education so that it reflects the best traditions of the past, with the emergence of new priorities. It is our sincere hope the government will join with us and university administrators in this process.

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Allow us to end by quoting a passage from Ernst Boyer's book, Life Outside the Classroom:

"The college of quality remains a place where the curricular and extracurricular are viewed as having a relationship to each other. At a time when social bonds are tenuous, students, during their collegiate years, should discover the reality of their dependency on each other. They must understand what it means to share and sustain traditions. Community must be built."

Thank you again for this opportunity. We are more than happy to answer your questions at this time.

The Chair: Thank you very much for your presentation. I'll start with the official opposition. We have approximately three minutes per caucus.

Mr Phillips: I appreciate your presentation.

Tuition has gone from covering roughly 25% of the cost to covering, I understand, about one third of the cost now. Tuition fees have gone up very dramatically. I gather from your recommendations that is not your concern. Your concern is more providing financial support to pay those tuitions. Have I interpreted your brief properly?

Mr Mitchell: We've been concerned with the huge increase that we've seen in tuition across this province. What we feel is that the best course of action is to provide a system where those who can afford it do pay the price but that those who can't afford it be provided with the assistance that's required to ensure that they can attend post-secondary education in this province.

Mrs Sandra Pupatello (Windsor West): Thanks for the time today. I wanted to ask you specifically about tuition and how that's been tied into the deregulation of some of the programs. What is your position? The Liberal position was to re-regulate. What is your comment on the various schools that have those programs and the government's position that there is a rationale to do that because they walk out of the program into very high-paying jobs?

Mr Mitchell: Our position too is to re-regulate. That is what we want to see. That is what we have requested. The student council previous to us made that request to the government. We have again supported that position that there needs to be re-regulation of professional programs. We have seen at the University of Toronto, in particular, the devastating impact of deregulation where really the sky becomes the limit and tuition isn't always in keeping with what students can afford.

As for the argument of future income, we have to deal with the here and now. I fear that it is dangerous that people have to tie their hopes to what can come in the future. The money isn't there then, and the expectation that students can walk out with massive debts I don't think is fair and really stalls both students coming out of universities and the provincial economy as a whole.

Mrs Pupatello: Is there any additional information about employment rates among your students and how that's changed over the years? We know the youth employment rates are increasing since 1995, actually since 1993, and that continues to go up. Given the increase in tuition, greater liability, less reliability on OSAP, deregulation of tuition for some programs and student employment not being sufficient to cover those kinds of debts and loans, are you doing any kind of work on campus that's different to account for the lack of jobs available to your students?

Mr Mitchell: We have not researched that ourselves. We do have, at the University of Toronto, a rather large career centre which has done extensive tracking of students. I don't have that data available, but I'm not aware of any particular trends.

The Chair: With that, we'll turn to the third party.

Mr Christopherson: Thank you very much for your presentation. I was particularly drawn to your comment towards the end, on page 6, where you said that "growth has not occurred on this scale since the 1960s, when many universities in the province were established." I think it's fair to say that, by and large, we've been living off the dividends of the investments that were made in the late 50s, 60s and 70s in our educational institutions and system. Now we need a new reinvestment to keep us back where we were, or eventually the dividends that we're now receiving are just going to peter out and it's going to change the dynamic of our education system from what we originally knew.

I want to ask you two quick questions. Number one is, at a time when the government is constantly saying how important it is for us to ride the wave of the information era, that we've got to catch the wave and we've got to stay on it, and they're cutting back on funding to post-secondary education and increasing tuition fees and denying fiscal opportunities to attend university, as you have outlined, how do you feel about that contradiction in terms of what you're hearing from your government that information and education is the future, period, and yet everything they are doing seems to undermine that very notion?

The second thing is, I'm curious to hear from you what you think your colleagues are feeling and what you feel about the future in terms of jobs. How secure or confident do you feel that there's a place for you in terms of finding employment that will give you adequate income, challenges, the personal fulfillment that obviously you're seeking in making the investment in your education? What about contract work, part-time work? How do you now feel, looking down the road, about the future you are about to enter into vis-à-vis your job?

So, quickly on those two subjects if you could, please.

Mr Mitchell: I guess the second question first. I think there is more optimism that students can find a job, but the requirements to get those jobs have changed greatly. We're all aware, we can see without statistics, that not that many years ago somebody could leave with a high-school education and be secure at work. Then it became that you needed a bachelor's degree. Now people require a master's, a college diploma in addition to a university degree. The requirements to get a job have changed, and that often means investing huge amounts of money into education to get those jobs. So the jobs are out there; the requirements have changed and it has become very costly to the point of burdensome on many students in this province.

As for your first question, you'll have to remind me what it was.

Mr Christopherson: It was about the contradictory messages that information and education is the be-all and end-all, and we all agree that it is, but at the same time the government is cutting the funding that supports the foundation of our post-secondary education system.

Mr Mitchell: One of the interesting things that we've been finding is with ATOP, the advanced technology opportunities program. At the University of Toronto we've had some difficulty, as other universities have, with the promise of getting full funding if we increase space in engineering and computer science programs. What we've been finding is, at this stage anyway, we have not been getting the full funding, that the university has been bankrolling an increase in science and technology programs without the financing to really complete the buildings and to hire the faculty that are required. There's talk about instituting a user fee for computer science programs, which was unthinkable not that long ago.

The important thing to stress too is that priority can't just be on computer science and technology. There is a definable value to the traditional liberal arts education. That needs to be stressed. I note that our Premier has made comments and allusions to: Why do we need somebody with an English doctorate? What is the value of it? There is a value, and I think that needs to be recognized and supported by government.

Mr Christopherson: One of the members of the government said that their kid is getting an education in the liberal arts but they don't expect that to turn into some kind of gainful employment. I was just blown away by that comment.

The Chair: We'll go to the government side. Ms Molinari.

Mrs Tina R. Molinari (Thornhill): Thank you very much for your presentation. It's always good to hear a student's perspective on how you're actually affected by all of the decisions the government makes.

I welcome your comments as well about the Ministry of Colleges and Universities to work with students and other groups. Certainly I work closely with Dianne Cunningham as her parliamentary assistant and I'm always open to having a dialogue with you. Having only three minutes here to make some comments, I invite you to contact my office and arrange a meeting where we can do that.

I just want to comment on the fact that you talk about the debt load. It's a fact that over 50% of students graduate without any student debt at all and enrolments are increasing; in university it's 3.8% and in colleges it's 0.6%. So there is an increased enrolment that students are certainly pursuing. That's good for us, because I believe and the government believes a strong and educated student body will be able to find jobs in the future. We also believe the tuition is a shared responsibility. Part of that responsibility is with the student, and certainly the government shares in that responsibility.

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You talked about some of the issues with respect to the SuperBuild Growth Fund and some of the figures that you've cited of what you feel would be needed. These are numbers that are specific: $450 million each year for two years, $200 million in academic priorities in your recommendation 3. I'd invite you to talk about how those figures came up.

The challenge of any government is trying to take the revenues that are there and distribute them through the various ministries, to try to do that in an equitable way and see what the priorities are. It's difficult. If we had all the money in the world, then certainly we'd be able to invest it into all of the areas where everyone seems to feel they need to go.

The issue about the students coming in in the year 2003, the double cohort or the expanded enrolment, as it's sometimes called, has been an issue of great concern, although some of the educators and those in the secondary level predict that it won't be as critical as it appears to be or as some think it's going to be. Some students will in fact take more than the four years to complete it because of the programs that are necessary, the mandatory ones and the electives, and some would stay half a year or possibly a year longer. You've stated that some would go faster or slower and whatever.

But the SuperBuild Growth Fund is a way of addressing some of those. We're working in co-operation with the colleges and universities to find ways not only to build infrastructure but also for them to find ways of better utilizing the facilities they have. Again, it's a partnership where everyone takes responsibility for the students.

The ideal would be that students who are graduating would be able to find employment. Technically, that's you want. You'd find employment. You'd be able to pay off loans. You'd become contributors to society as a whole. As a government, I think that's the direction we'd like to see it go in. I don't know if there's time to answer the questions, but-

The Chair: No, there's no more time for questions. On behalf of the committee, thank you very much for your presentation.

CHILD POVERTY ACTION GROUP

The Chair: Our next group is representatives from the Child Poverty Action Group. Could you please step forward and state your name for the record. On behalf of the committee, welcome. You have 30 minutes.

Mr Colin Hughes: My name is Colin Hughes. I'm a community worker with the Children's Aid Society of Toronto and a member of the Child Poverty Action Group. With me is Dr Brigitte Kitchen, who is a professor of social work at York University and a founding member of the Child Poverty Action Group. We're going to try and cover a fair bit of territory, so I'll take a walk through this paper. We certainly want to try to have time for discussion and that kind of thing.

I guess the place for us to begin is really with the fact that Ontario does have a booming economy and that unemployment, as we all know, is dropping quite a bit, yet at the same time we have over half a million children who are poor. We've got a phenomenon where child poverty rates haven't budged and poor families are in fact getting poorer. The child poverty rates have doubled since 1989 and have remained at about one in five kids since about 1973-excuse me, 1993. I'm in the wrong decade. The income of the average poor family has dropped, on average, below the poverty line as well. In 1989, the average poor family needed $7,500 to bring them up to the poverty line. By 1997, they needed $8,700 to bring them up to the poverty line. These families are losing ground.

These figures were released recently by Campaign 2000 and were really quite harshly dismissed as being hogwash by our Premier. We recognize that Mr Harris is a politician and that part of his job is to deflect criticism. However, we also recognize there is a certain view of poverty that really tries to define poverty in fairly narrow terms. We think this is quite important, that those terms are in terms of just simple survival and subsistence. From that point of view, the poverty lines that are most commonly used in Canada, which are relative, are viewed as being based on income levels that are too high and are simply dismissed. Now this distinction is really important because the kind of public policies that we pursue are going to be really quite different if we're simply pursuing subsistence living standards versus those that seek to allow families and children to participate in community life and in society.

So our first recommendation is to simply not define the problem of poverty away-I don't think Queen's Park should be defining the problem away-and to recognize that poverty is really about participation, not just subsistence, in our society. We do have a serious child poverty problem, about one in five kids, and what we really need to set out, and where we've been really lagging, is in terms of developing a comprehensive set of family policies in order to address child and family poverty. We're going to try to outline some of the areas that we think are important to examine and to move forward on.

I really have to stress that how we define poverty is important, because the way we define poverty of course is how we will define the problem and what kind of solutions we define. We're really seeing this in a number of areas. We won't really get very effective public policies in areas like health, education, employment programs and so on if all we're shooting for is subsistence. What we really want is participation, and we're saying here that one of the cases in point is Ontario Works. It's kind of contradictory on the one hand to have benefit levels that are really quite low and really oriented around a subsistence level, and then on the other hand to be saying we want participation. It's pretty hard to have both of those, and there is research evidence that strongly suggests that poverty itself has become quite a barrier in terms of that kind of active participation we'd like to see people engaged with in terms of moving forward on training, education, and in terms of jobs.

The reasons are really quite obvious. It's hard to participate if your housing isn't stable. It's hard to participate if you don't have enough food in your household. It's hard to participate if you don't have a telephone. It's hard to participate if you don't have any kind of child care and so on down the line. Again, we really emphasize that point: The kinds of solutions you're going to see are going to be, in part, based on how you really define the problem, and to define it in subsistence terms is really quite self-defeating.

It's worth pointing out that most Canadians do define poverty not in terms of what you need just to survive but in terms of what you need to at least minimally participate in society. That's what the poverty lines are in fact based on, and they are not hogwash.

One of the areas we really need to look at is welfare reform, so our recommendations 2 and 3 really zero in on that area. One of the things that we really think we have to revisit is the whole issue of adequacy in welfare benefits. The fact of the matter is there is terrible, terrible hardship in those communities and those families out there, and time and time again, the cut to welfare that occurred in 1995 is identified as one of the big factors in terms of creating all kinds of family crises and problems for both parents and children. That's certainly the case with the children's aid society. We see it everywhere in Toronto, and I doubt whether there is really a community in Ontario that's untouched by this.

So one of the things we are saying is, take a look at those benefit levels. They really need to be raised. Even in terms of inflation alone, even since the cut which cost a single parent getting full benefits about $3,000 a year, since the cut in 1995, inflation alone has gouged another $700-odd a year in terms of purchasing powers. The cost of living keeps going up on the one hand, rents keeps going up on the other hand, and where are recipients? They're treading water and they're just falling further and further behind in terms of the purchasing power they need to sustain themselves.

The other recommendation is around forming an all-party committee to review Ontario Works and really start to sink your teeth into some of the issues. We identify a number of them here: access to education and training; the effectiveness of community participation; the implications of changes to STEP; the treatment of assets, including the prospect of putting liens on the homes of people who are on social assistance, usually single-parent women who have homes, and so on.

The real underlying problem here is that the reforms to social assistance were moved on in haste. They were pushed through; there wasn't a lot of discussion. If you go out into the community and you talk to people in the field, if you talk to the families, and if you talk to the municipalities, there are some real issues that have to be looked at. So we are urging that the province take a look at those things.

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The fourth recommendation is something that isn't within your bailiwick, so to speak. It is a federal issue, but it is an issue that the province has spoken on, and that is employment insurance. On employment insurance, the province has basically targeted or focused on the issue of premiums and, I believe, called for rollbacks there. I think we really need to shift the focus. In this province only a quarter of the unemployed are covered by employment insurance. That is really pathetic. You have the kind of system where people are paying twice. They are paying once for employment insurance premiums that don't cover enough people and don't cover them adequately, and then paying again. Who is going to pick up the problem that is inevitably going to fall on the social assistance rolls? People have to pay for social assistance. By almost any measure, employment insurance is a far better program than welfare. So we think the province really does have a role in terms of saying, "Come on, let's change the employment insurance system so that people are getting the coverage they deserve." We very much urge you to look at that recommendation.

The other area is to make work pay in terms of minimum wages. It is interesting to note that this is important to families. It's not the only thing that can be done in the labour market, but we really can't afford to fall behind even in terms of the most basic wage levels, which are what the minimum wage constitutes. Since the wage was frozen in 1995, inflation has taken a big bite out. In terms of the loss of purchasing power, it's the equivalent of about three weeks of earnings for a person working full-time. For two parents working at the minimum wage, it would be the equivalent of $1,800 or six weeks of earnings.

The common concern about minimum wage is that it will price people out of work. This has not been the experience in about nine other OECD countries where there was a review and they saw no impact in adult employment. Indeed, when the United States introduced its welfare reforms, they included hikes to their minimum wage, and research has indicated that that does assist in terms of welfare-to-work transitions. The really important point is to recognize that wages play a very important role in terms of families and really have to be capable, or as best they can, of providing support to families.

Complementing that is the need for child benefits. This is the key area in terms of addressing child poverty. Wages alone have never been enough to support families because family sizes can vary. Child income benefits. are really a key strategy in that area in terms of reflecting the size of the family and the costs and responsibilities of having children.

In Ontario the supplement portion of the child benefit has been deducted, dollar for dollar, from welfare. The rationale for this is that taking it from recipients will encourage them to go out and work. We think this is a real problem, even in terms of its own objectives. The real problem is the income floor. It's just too low; it's too deep into poverty. Those are the things that are throwing up barriers. It's not really the so-called welfare wall.

There are other ways that the clawback is problematic just in terms of its own objectives. It provides no benefit and is clawed away from people who are never expected to work. It is clawed back from disabled parents who are on social assistance, from parents with very young children and-this is really quite a problem-it's even clawed back from foster children who live in the community. I don't know why on earth we expect foster children to somehow go to work because they get to keep the child income benefit if they go to work. It just doesn't make sense in terms of its own objectives, and it doesn't make sense in terms of addressing poverty. We are saying that the province should just rescind the clawback. It's not going to cost the province anything; it's federal money. It would be a way of boosting incomes and addressing some of the deepening poverty that is experienced by people who are on social assistance for whatever period of time.

The Ontario child care supplement is another area that we'd like to just quickly speak to. We really would like to point out that the supplement is not child care; the supplement is money redirected from the clawback of the child benefit supplement. Most of the money from the savings from welfare is redirected into the supplement. To call it an Ontario child care supplement is kind of a misnomer. It really won't build a system of child care. It's really not child care at all. It is an employment income supplement, an earned-income supplement. We think it's fine to have an earned-income supplement, but if you're going to have one, it should be paid for through the province and not paid for by taking money from welfare-poor children. And it should also be called that; it shouldn't be called child care, because it just isn't.

The next recommendation is to re-establish Ontario in the field of child care, just as Quebec is doing, and to build our system of licensed quality care. I'm going to skip over these fairly quickly because we do want to have time to talk.

Another area is around child support. We think you need to step up support enforcement, on the one hand, but also to begin to examine and build an Ontario system of assured child support. In other words, the child has to be the focus here, not this stuff on deadbeat parents and everybody else. The child has to be the focus and the province needs to introduce policies that support the child. We're urging you to take a look at that.

Housing is fairly clear: Strengthen rent controls in the Tenant Protection Act, get back into investing in social housing, increase welfare rates. All of these recommendations were made in the Anne Golden report and they really warrant close examination and some action. We need to move on that area.

Post-secondary education: We have two big areas of concern. One is that tuition fees must be lowered over all. We're really concerned that the increase in tuition is going to be a barrier for kids in terms of the growing debt loads that students are graduating with, but also as a deterrent for kids who ever want to see themselves moving ahead and that post-secondary education is a viable option for them. So we would say, look at lowering those tuition fees and also take a look at making access to post-secondary education a welfare-to-work option. That is precluded for single parents, and the fact is that single parents are going to need earnings that are enough to keep them off welfare. The best way for them to do that, in many instances, is to have the education and training to get a good-paying job.

Finally, around tax cuts and revenues, we're in support generally of more progressive tax reforms that benefit low- and modest-income families, but we don't really like across-the-board tax cuts. We're saying you should ensure that the public revenue is there for urgently required investments in decent health, education and family policies.

I would draw your attention, if you haven't seen it-and I'm sure you have; you probably follow these things-to the Ekos research. It was released in December and made it very clear what the public's budget priorities are: investing in social programs to address all these human capital issues such as health care, education and child poverty. Those were ranked as the high priorities, and they're pressing less the tax cuts.

So we would like to talk. I hope that gives you an overview of the issues and recommendations we're making.

The Chair: We have approximately three minutes per caucus, and I'll start with the third party.

Ms Marilyn Churley (Broadview-Greenwood): Thank you very much for your presentation. I'm glad you brought up the incident when the Premier referred to the poverty lines as defined by Campaign 2000 as "hogwash." I think that was quite a shock to many of us who see the face of poverty in our communities every day. It's really important that we get away from spending all our time trying to define just what the poverty line is in terms of dollars, because that takes us away from the real issue, which is that there are more and more kids-I think 50,000 of the people using food banks now are kids. I think that's the correct number.

Mr Hughes: Yes, I think that's in the GTA per month.

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Ms Churley: You couldn't refer to many things here, but what I wanted to ask you specifically about was the downloading, which the government tends to say continuously was revenue-neutral and that it hasn't impacted on services. In terms of the poverty of people, particularly in this city which I represent, and downloading of housing, day care and public health, are you seeing an impact on people's lives in that sense?

Dr Brigitte Kitchen: We see the impact of downloading all around us. I'm a former child welfare worker and Colin comes from the child welfare system. The admission rates to the children's aid societies are up. The shelters are full of families who have lost housing. For the first time, we have never seen such a large number of children who are in shelters right now. Obviously, something is very wrong in the housing sector.

I teach in a school of social work and our students do placements. I'm just appalled when I hear the stories the students come back with. The agencies don't have the resources to meet the increasing demand for services. All we see is this growing, gaping deficit in support for families with children and an ever-increasing need.

Ms Churley: Is it the result of rent decontrol? Is that having an impact on people being able to get housing?

Dr Kitchen: Obviously, one has to make this connection because, as I said, we have never seen such an overflow of families who are now in shelters and who are lining up to get into shelters. I don't have to draw your attention to the effect that has on the future development of children who are uprooted from their communities, who are suddenly separated from their friends and being caged up in a small motel room on the Kingsway and in Scarborough. It's not the ideal situation we know children need for their optimal development.

The Chair: For the government side, Mr Galt.

Mr Galt: Thank you for your thoughtful presentations. I'd first like to make a comment on something I disagree with, and then a question.

The area that I have concern with in your presentation has to do with minimum wage. Being from rural Ontario, the riding of Northumberland, a lot of fruit and vegetable growers, when I tour around, the biggest and strongest message that I come back with is, number one, don't increase minimum wage and, secondly, whatever you do, don't stop the offshore workers from coming because we can't get dependable workers here in Ontario to work on our farms. As the minimum wage goes up, so the cost of their produce goes up, and they're non-competitive then with a lot of the northern states.

There's real concern. It was a big issue in my riding in the campaign of 1995. The farmers were very, very concerned-I can't underline that enough-with the level of minimum wage in Ontario.

The question that I have for you relates more to unemployment insurance. I think it's interesting that you say that only 25% of the people unemployed receive EI. I didn't have that figure before and I think it's interesting. I can see where they come to the end of the year and they're no longer on it. The self-employed entrepreneur does not rate it. What do we do? You've made a recommendation that we lobby the federal government to improve coverage and adequacy, but what would the details be? Should it be a longer period? Should it be more generous? Should self-employed people be included? What are the points we should lobby for?

Mr Hughes: If I could just answer very quickly, if Brigitte has a comment, those are the kind of details, and we won't go into them there, but you're hitting on some of the things. Some of it is the change in the design of the program itself; some of it is to change the nature of work, the kind of work that's available. What I would really urge is that as political leaders you set the direction-the research is really available out there; there's a lot of detailed information on this-and really formulate a position and some options, the point mainly being that Ontarians deserve to be covered and protected by employment insurance. They pay for it.

Dr Kitchen: The problem really arose when the federal government made eligibility for employment insurance much more difficult. The qualifications are now based on the number of hours worked rather than weeks, as we had before. As far as where the money comes from is concerned, there's only one taxpayer. This is the largest province, with the largest population, and we had a fairly volatile labour market. This province had more people who were disqualified from receiving employment insurance because of the volatility in the labour market and, on top of it, the changes to eligibility under employment insurance that the federal government has imposed. So you have a two-way problem here.

The Chair: Thank you very much, Mr Galt. You're out of time. I'll go to the official opposition.

Mrs Pupatello: Thanks for your presentation today. I appreciated the focus on child care in your report. You've noted as well the changes in the educational funding formula and what that's going to mean to current spaces available in the schools. I think many of the boards this year are just hanging on to the programs they have and as we move into the next year we're going to see another huge drop in child care spaces available in the schools. The communities certainly are not picking up the slack to build those spaces, so we're going to have a greater move away from child care spaces.

The workfare failure, in my view, has had a huge amount to do with the lack of child care issues being addressed. You've pointed out a view of being much more like the Quebec style. Are you advocating a $5-a-day-type system or a floor, wage-related fee scale for parents in this submission?

Mr Hughes: I certainly wouldn't oppose that. I think the Quebec model-as one of Canada's large provinces, the fact that they are moving forward-I should point out it wasn't just in child care. They've really put together a package of things for families. It's worth taking a look at. These things have problems, but Quebec is moving forward with a system of supports, the most obvious being the $5-a-day fees.

Could I just quickly tie in a point you're making about child care in schools and downloading? This is an example of an area where there really is a need to take a look at the impact of some of the provincial policies. We talk about that integrating education and child care, the child development component, that it makes sense. Right now the funding formula really is squeezing those programs, and school programs, out of the school system. It makes no sense whatsoever. In fact, it's very cost-effective to be using local community infrastructure in a number of different ways. Part of the Quebec experience has been to work with the schools around after-school care and using some of their facilities.

I think the biggest point there is that Ontario really did play a lead role in the development of child care, in addressing the needs of modern families, and it really has lagged behind. The funding levels have been cut. The system is really quite precarious. We just haven't moved forward at all in that area. The expertise is still there. Much of the infrastructure is still intact-it's reeling but it's still intact. We really can't afford to lose that asset. We have to build on that system and move forward.

The Chair: You've got 30 second left.

Mrs Pupatello: It's interesting that with the failure of workfare, frankly, to ever take off-and that was certainly entirely predicted. The numbers on welfare certainly have dropped. The largest share of those are single parents with kids and it does speak to the fact that those kids are likely in unlicensed day care, which is very troubling, given what we know is the benefit of appropriately regulated, licensed day care. Unfortunately, I don't think we're going to see the results of that for a few years. We'll likely have an opportunity now that we have the testing in grade 3. We'll probably see the kinds of effects that not having appropriate day care is going to mean to our kids.

Thanks for your presentation.

The Chair: On behalf of the committee, thank you very much for your presentation this morning.

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ONTARIO CHAMBER OF COMMERCE

The Chair: Our next presenters this morning are representatives from the Ontario Chamber of Commerce. Could you step forward please and state your names for the record.

Mr Douglas Robson: Good morning, everyone. My name is Doug Robson. I'm the president and COO of the Ontario Chamber of Commerce. With me today is Carolyn Conner, who is the chair of our committee on finance and taxes, and third vice-chairman of the chamber. As people at Queen's Park tend to say, in real life she is vice-president of communications for CIT, which is the successor company of the Newcourt Credit Group. Next to Carolyn is Atul Sharma, who is our chief economist at the chamber.

Thank you all very much for having us here today. Most of you we've talked to on a number of occasions, and we're delighted to have this opportunity to present our recommendations on the 2000-01 budget.

To refresh people's memory, for those who aren't familiar with the Ontario chamber, we're a federation of 155 boards of trade and chambers of commerce throughout the province which represent over 55,000 businesses. We are the largest business association in the province and we've been the voice of business since 1911.

This pre-budget submission outlines a number of areas of interest for the Ontario chamber and for Ontario business, and much more is in here than we can possibly present to you at this time.

We begin with an overview of the fiscal principles the Ontario chamber believes the province must follow. We believe that the government's fiscal and economic goal should be to make Ontario the most competitive jurisdiction in North America. To achieve that goal, we feel that they should be focusing on three critical areas: creating a competitive, fiscal and economic climate; maintaining excellence in education; and investing in and maintaining Ontario's infrastructure. The recommendations are grouped throughout our presentation that way.

First I'll call on our chief economist to take a look at where we think things are in Ontario.

Mr Atul Sharma: Thank you. I'd just like to give an overview of the economy from the Ontario chamber perspective. If you'll recall, about one year ago, when we were sitting here we suggested that there was a need to be prudent and cautious in the outlook because we didn't know where the economy was going. As such, we were looking at a real GDP growth rate, at that time, of about 3.5%. Of course, as we know, the minister gave his update recently, in November, and he indicated that he thought that 1999 would close out at about 5%. We think that 5% is probably on the low end of that range for 1999. We expect the Ontario economy will probably have real GDP growth of about 5.5% to 5.7%. It's quite a turnaround from where we were a few short years ago.

The Ontario chamber forecast for this year, for 2000, is that growth will be 3.5% to 4%, in that range, and though it's less than the growth that we saw in 1999, we feel it's still a prudent but cautious assumption and still indicates healthy growth in the economy.

Many of the economic indicators are pointing in the right direction. Auto sales have been very healthy in 1999 and we expect them to continue to be strong in 2000. Retail sales overall are quite positive. They did have a bit of a bumpy fall in which there was a decline for September or October, but that could really be attributed to the auto sector, where they weren't enough cars to be sold for people who wanted to purchase them. I think that's a good problem to have. Housing starts also appear to be going in the right direction as well. Overall, the fundamentals of the economy seem to be quite strong.

On the employment side, employment in Ontario has been very positive as well. In December the unemployment rate was 5.6%, the same as the month before, and probably the lowest monthly rate since about June 1990. The annual average for 1999 was 6.4% and employment grew by about 173,000 over the previous year. Our expectation is that employment will continue to be strong, that growth will continue, jobs will continue to be created in Ontario, and we expect the unemployment rate to go down to about 6%.

However, with all of that good news there are still some storm clouds on the horizon. One of them, of course, is the potentially overheating US economy. We saw yesterday that Chairman Greenspan raised the federal reserve rate by 25 basis points, which was well within the range of the expected increase of 25 to 50 basis points. However, if there is a serious spike in the US economy, we would be concerned about the negative impacts that would have upon Ontario because of our close relationship to the United States. Canada is expected to follow suit on the rate increase. I believe the Bank of Canada governor will be making his announcement today on what his intentions are, and again it should be within the expected range of about 25 basis points. If we do see some sharp increases in interest rates, that obviously indicates a fear that inflation is getting out of control and that the bank feels it needs to control it, which of course has a dampening impact on the economy.

Canada is in the midst of one of its longest ever expansionary periods. I think it's entering its ninth year. I heard a statistic that as of February 1, the US economy was entering its 108th month of consecutive growth. It's nice to see that; however, we need to be cautious. Given the cyclical nature of the economy, we need to realize that this may come to an end one day and that we need to be prepared for that.

That's just a quick overview of where we think the Ontario economy is at. Even with the storm clouds on the horizon, we believe that Ontario will weather any upcoming storm.

I'll turn it over to Carolyn.

Ms Carolyn Conner: I'd like to take a couple of minutes to give you an overview of some of our recommendations, and I'll turn it over to Atul and Doug to go into some detail on some of the other recommendations.

As in previous years in our submissions, we've based our recommendations on a set of priorities that we feel should govern the formation of the budget. Reflecting the significant moves that the government has made in terms of getting its fiscal house in order, some of those priorities have changed from last year. Our priorities for this year are, first, moving beyond deficit elimination and toward debt reduction; second, improving the business climate in Ontario to make Ontario the most competitive jurisdiction in North America; and third, maintaining the government's strong fiscal position through continued balanced budgets and projected surpluses.

Based on those priorities, as Doug pointed out, we have identified three core areas where we feel action should be taken and that the Ontario Chamber of Commerce has a strong position on. Those areas are investing in Ontario's infrastructure, creating a competitive fiscal climate, and maintaining excellence in education.

Let me start with investing in Ontario's infrastructure. Within this context, I suspect most of the initiatives over the next few years will come out of the SuperBuild fund. The SuperBuild fund is a fund designed, as I understand it, to foster the use of public-private partnerships in infrastructure development and financing.

One of the greatest challenges to the success of public-private partnerships in Canada has been a perceived lack of political commitment to the model. The SuperBuild fund is an excellent example of how to try and do that, but its success will hinge on a strong government commitment to the process. As such, we've outlined some priorities regarding the SuperBuild fund and its operations, the first step being that there must be a clear political message demonstrating the government's commitment to P3 models for infrastructure development and giving the SuperBuild fund the necessary powers and resources to make projects happen in an efficient manner.

The SuperBuild fund should very early on outline its key priorities and specific projects that would be put forth for private sector investment. Clear procedures should be put in place to consult with the private sector to ensure that the best prospective projects are put forward, as well as allowing the consideration of unsolicited proposals. Unsolicited proposals have been a challenge for a number of governments in Canada. To have a procedure to be able to assess those is very important.

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Finally, there should be a clearly defined RFP process that is transparent but flexible enough to allow for private sector creativity. This process needs to be efficient and timely and to allow for a quick turnaround on transactions. One of the keys to the success of the privatization of 407 was a very clearly defined process that was quick turnaround. The private sector understood where the boundaries were and what the rules were.

Within the context of infrastructure development, transportation is a very high priority. While we recognize the government's commitment to revitalizing the Ontario infrastructure, the OCC believes this cannot be done without a comprehensive plan, particularly in the area of transportation. The reality of today's economy is that the modes of transportation-highways, transit, rail, airports, ports-are all interlinked, and investments in one sector affect other sectors, as well as the competitiveness of the economy in general.

The Ontario Chamber of Commerce calls upon the government to initiate a comprehensive, integrated, intermodal plan that would act as a road map for the development of Ontario's transportation needs for the future and would level the playing field for all modes of transportation. Within the context of the province-wide plan, the Ontario government should work with the Greater Toronto Services Board to develop a specific plan targeted at the GTA. The population of five million people in Toronto dictates that you have to have a specific plan, as well as the role of Toronto in the Ontario economy.

I'd now like to turn to our second priority area, which is creating a competitive fiscal and economic climate. The current government has dramatically changed the economic climate in Ontario, and we applaud its initiatives. It's imperative, however, that we not let the momentum wane. Our recommendations in this area are intended to ensure that the momentum of improvement initiated by the government continues and that the business climate becomes the most competitive in North America.

The first issue under this I want to address is a balanced budget. Over the past three years, the Ontario Chamber of Commerce has continually called on the government to accelerate its plan to balance the budget. We've done this based on a concern that an economic downturn could derail the current plan. Having achieved a balanced budget for 2000-01, we cannot allow this to be squandered. Many provinces have faced the prospect of falling back into deficit positions. Ontario cannot do that. As such, it's our recommendation that the Minister of Finance in his 2000-01 provincial budget outline surpluses for the next five years.

The next step in that is the introduction of a comprehensive debt reduction plan. Having achieved a balanced budget, we must address the province's growing debt. The OCC calls on the provincial government to establish a comprehensive plan that will reduce the debt-to-GDP ratio from its current level of about 30% to the more historic level of 15% over the next five years. That 15% represents the level we were at the last time we had a non-deficit budget. Achieving the 15% goal will require strict fiscal discipline and a clear political priority that debt reduction will take precedence over new program spending. The OCC believes the government's current commitment to reduce the debt by $2 billion will not make a significant dent in the overall debt of the province. A more ambitious debt reduction plan should be put in place with specific milestones and initiatives to meet those targets.

The next issue I want to address is the Red Tape Commission. We support the activities of the Red Tape Commission and would recommend that it become more permanent, continuing to eliminate red tape and examining how the government can embrace technology to simplify reporting processes.

Next, let me address choosing a made-in-Ontario tax system. This is something the government has mentioned on several occasions. There has not been a lot of discussion of the actual details on this. If we look in Canada, there are two provinces that you might look to for models. One is Alberta and the other is Quebec. Not wanting to come forth with specific recommendations on how to do a made-in-Ontario tax system, we would simply like to caution that in the government's consideration of a made-in-Ontario tax system, strict care be given so as to not create a large bureaucracy and to not increase the reporting burden on businesses.

Finally, I would like to address the issue of GST-PST harmonization. This issue has not been widely discussed in the political arena for a number of different reasons. Understanding political hesitation, we maintain that business efficiency arguments call for an examination of the potential to combine these two taxes and decrease the administrative burden on businesses. As such, we call on the government to examine the benefits of GST-PST harmonization, coupled with a 1% or 2% rate reduction in the harmonized tax.

I would now like to turn the podium over to Atul, who will discuss some recommendations regarding municipal taxation and user fees.

Mr Sharma: I'll be fairly quick so we'll still have some time for questions at the end.

Our concern on the municipal tax side is that there has been an increase in the discrepancy between residential and industrial taxes through the 20% reduction on the residential education property tax, whereas there has been no corresponding reduction on the commercial-industrial side. When the government originally announced their legislation, they had established ranges of fairness. The point at which we are now, we're kind of stuck and can't move towards those. So we believe that the province should study options that reflect the five principles normally attached to property taxes, and I'll go over those in a second, that will allow the municipalities to move towards the ranges of fairness. The five principles are fairness, efficiency, stability and predictability, accountability and the cost of administration. They are outlined in more detail in the report.

On the user fee business licensing, our concern is that municipalities are using business licensing fees as a revenue stream. They were never intended to be that, and we think that they should be set on a cost-recovery basis. As such, we recommend that where municipalities set business user and licensing fees, they be set on a cost-recovery basis only and that an appeals process be established for unreasonable charges.

I will now turn it over to Doug to talk about the business advisory panel on corporate taxation.

Mr Robson: We applaud the work of the government to improve Ontario's business climate in the last few years. However, we do believe there is more work to be done. Last year, when we made a presentation to the minister, we recommended the business advisory panel on taxation. We've outlined on page 15 a number of bullet points that we think should be parameters to be followed with that panel. We also would like to see it struck. We believe that we should be doing everything we can to make this North America's most competitive economy, and this is an area that really hasn't been tackled yet. We feel that a clear mandate should be outlined, and we think the six bullets that we've put there are quite reasonable objectives. A key thing is that we'd like to get on with it.

If I may move on to our third area of concern, it is maintaining excellence in education. Those of you who were with us here a couple of years ago may recall that we recommended that the government put more stress on early childhood education. Within a few weeks I noticed that the Leader of the Opposition made a number of statements supporting it and a couple of weeks after that the Premier said that funding for pre-kindergarten would not be cut further. There have been more moves on both the leaders' parts to recognize the importance of early childhood education. Of course, we're concerned not just with that but right through to post-graduate studies, including the vital area of apprenticeship, which we've made presentations on here at the Legislature.

More recently we saw the release of Dr Fraser Mustard's report on the earlier study which points out the dramatic benefits to our society's capabilities if our communities make a greater investment in time, attention and money for our youngest. We are currently working with Margaret McCain and Dr Mustard to assist in the implementation of that report, which in their own eyes I think is about a 10- to 15-year project. It's so important to make that investment when people can learn and take advantage of it, and that's why we have an interest in that, which may seem odd to the group here. We just wanted to highlight why we think education is so important and some of the directions in which we should be going in education.

Last, we wanted to thank you all ever so much for having us here. As I've said, our goal is to increase the competitiveness of the province of Ontario, and that has been the entire aim of this submission. With that, I think you may have some questions for us.

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The Chair: We have approximately three minutes per caucus and I'll start with the government side.

Mr Arnott: Very quickly, I want to thank you very much for your presentation. I'm particularly interested in your debt-reduction or paying-down-the-debt proposal. I want to remind you that the government is committed to paying down at least $2 billion of debt over this term of office and is committed to reducing the debt-to-GDP ratio from about 30% down to about 25%. I see these as very minimal goals. Hopefully, we can overachieve those goals. You would agree, I assume?

Mr Robson: Yes, we agree. I think Carolyn may have something to add to that.

Ms Conner: We engaged in a survey over the past few months of leading economists in Ontario, and it was very clear to us that debt reduction is a high priority for economists in the province and that perhaps the $2 billion is not quite enough and that 25% isn't necessarily the ideal target; 15% is a more reasonable percentage to be targeting, recognizing economic growth will take care of some of it and a need to curb back on-

Mr Arnott: Has your organization done any projections or studies as to what kind of surpluses we'd need to run over that five-year period to achieve a reduction of the debt-to-GDP ratio of 15%?

Mr Sharma: We don't have a specific model that we've worked with, but I think it's pretty clear that we would continue to need to have healthy economic growth as well as a fiscal discipline on spending beyond its current commitment.

Mrs Molinari: Part of your presentation talked about the employment outlook and how in Ontario employment is high and everything seems to be moving in that direction. One of the previous presenters we had talked about the employment rate and how people are feeling good about having the job and that they're working, but there still is a fear of how long that is going to last, and will it continue or will it stop? Can you give me some of your feedback on that, please?

Mr Sharma: I think that's correct. There is a bit of what I guess I could call a scar left from the last recession where there was dramatic restructuring in the Ontario economy and from what is generally called downsizing. I think people still are concerned about their future prospects. It's less likely that one person who goes into a company at an entry level will retire from that company, and so that adds a lot of uncertainty to it. While the prospects are good, I think you're absolutely right: There is still some concern out there, and we still need a couple of years of good economic growth to overcome that.

Mrs Molinari: What can governments do to have that outlook be more positive? What is it that we can do?

Mr Sharma: Part of that is setting the right business climate, encouraging growth and working with business to make sure that happens.

The Chair: Thank you very much. I must go to the official opposition.

Mr Phillips: I'm interested in the debt issue as well. I notice from your report here that the debt-to-GDP has actually gone up since Harris became Premier. I noticed in their financial statements that the debt has gone up $22 billion-$30 billion if you include Hydro, but if you exclude Hydro it's gone up $22 billion. The issue for me is what your recommendation is in terms of dealing with it.

The government has already announced its plans for the next four years. They're going to cut taxes by about $5 billion a year and they're going to reduce the debt by about $500 million a year. That's what their commitment is. They've already told Ontario what they're going to do: $5 billion in tax cuts, $500 million on debt reduction.

I'm wondering what the chamber's comment is on that relationship. Is that, in your opinion, the right relationship?

Mr Robson: I think you've seen us a number of times where we don't necessarily agree with the government's goals and objectives. I think Atul and Carolyn have made it pretty clear that 25% is not the right level, in our opinion. In good times you're supposed to get the debt down. You're right, it has gone up. Our view is that the government should be more ambitious about attacking the debt in good times.

Atul, do you have anything to add to that? Carolyn?

Mr Sharma: The government has committed to reducing the taxes and they've committed to education and health care expenditures. Our message is that they shouldn't contemplate spending increases beyond the current committed envelope and they should continue to create a climate where economic growth can continue and put more money down towards the debt, based on the surpluses they have.

Mr Monte Kwinter (York Centre): The premiers are in their annual meeting and they've suggested that unless there are transfers from the federal government to health care they're going to go back into deficit. When you take a look at your projections-and I agree with the intent-when you take a look at all of the things that are happening, do you think it's fiscally possible to do all of these things: to reduce the debt; to deal with your concern about education; health care-which you haven't mentioned but as Premier Mike Harris said today is the number one concern that he sees; plus infrastructure; plus all of the other things that are going on; plus tax cuts?

You've already said that the economy will not grow at the same level next year. You've got the signal that came from the US. As you say, the Bank of Canada is going to announce today that they're going to increase interest rates. All of these things put the ability to maintain this program in jeopardy. What do you have to say about that?

Mr Robson: The first thing we have to say is that most of us would agree that the things you've just talked about mean Ontario is on a roll and it should stay on a roll for some time, with everyone we've talked to and everything we've seen. We realize the pitfalls-I think Atul called it the dark cloud-but as long as we're in that mode, that's why we feel so much attention should be paid to the debt ratio. That's the time to do it. I'll defer to Atul and Carolyn on that. Any other comments?

Ms Conner: I would like to commend you for outlining the challenge that you face, that is the challenge facing all governments in Canada: balancing tax cuts, debt reduction and program spending. In our perspective, debt reduction should have a high priority, perhaps a higher priority than it has under the current program.

Mr Christopherson: Thank you, all. Doug, good to see you again. I just wanted to pick up on what Monte mentioned. It was my understanding actually that Harris is the only Premier who's saying that tax cuts are the number one priority, over and above health. I could be wrong, but that's my understanding of what he's saying. He's the only one who's not saying health care but rather talking tax cuts, which I think puts him clearly out of sync with the balance of Ontario.

On page 17 you spoke about education and you mentioned that "both the Leader of the Opposition and the Premier began speaking on the issue and pre-kindergarten funding was maintained." I'm sure it's just an oversight, Doug, that there wasn't mention of the fact that of course everyone knows the NDP is onside with the idea of early childhood funding, since it was our government that mandated that school boards had to provide it and Harris's government that removed that mandatory aspect. I'm sure it's just an oversight, but I thought I'd backfill that for you.

Mr Robson: Thank you.

Mr Christopherson: You're welcome.

On page 6, at the end, I want to quote directly and then a quick question. "Canada is in the midst of one of the longest post-war expansionary periods. Canada is now in its ninth year of growth. The expansion of course will eventually come to an end. While it may not happen this year or the next, government policy must recognize the cyclical nature of the economy and prepare as much as possible for the eventual economic contraction."

Given your emphasis on debt reduction and the elimination of deficits, were we to go suddenly-and you mentioned further that there are a number of things that could happen that could put us into the ditch big time. If that happened, what would be your priority: maintaining the health care system and the education system or not going into a deficit position? Which would be your priority?

Mr Robson: To be honest with you, it's a hypothetical question and I don't think Carolyn's committee has had a chance to look at it. I would defer to our chief economist and to Carolyn on that.

Mr Christopherson: I'm not trying to play games. I'm just trying to get a sense of how resolute is your belief that there should be no deficit ever versus if we're into a situation where the revenue of the province has dropped so dramatically either you go into a short-term deficit position or you start further hacking away at education and health care. I wondered how resolute you were in that.

Mr Sharma: You will recall that we supported the government's balanced budget legislation. We thought it was a fair approach to the finances because we recognize that there are cyclical problems in the economy. The way the legislation is set up, you can apply the surplus from the previous three years to any deficit situation you have, and if revenues fall below 5%, the conditions are waived. We think that having that three-year rainy day fund should help cover off deficits in future years, should they occur.

Mr Christopherson: That's assuming, of course, that there is surplus to be had and that it hasn't all been given back by virtue of more tax cuts that don't benefit the middle class and the poor, who are the ones who need public health care and public education systems. So it's not necessarily a good solution, and the 5%, as Doug and I debated not long ago on Michael Coren's show, has only been achieved once in the last few decades, and that was in 1992, in the midst of the last recession, during which we were fortunate enough to govern.

Mr Sharma: That is correct. But that is why one of our recommendations was to put forward the five-year surplus plan, so there would be some stability and predictability in the finances, which we could measure the government against.

Mr Christopherson: So is it fair to say-and I don't want to put words in your mouth-that regardless of what mechanism is used, the notion that there shouldn't be any deficit is obviously a very serious high priority for you, but not at the expense of the health care system and the education system, the basic foundations that create quality of life for us in Ontario?

Mr Sharma: I would say there is enough flexibility within the current fiscal framework to cover off any foreseeable downturns in the economy, and enough flexibility to move away from the legislation to cover off any extreme problems in the economy as well.

The Chair: We have run out of time. On behalf of the committee, thank you very much for your presentation this morning.

Mr Robson: I have our document, Ontario in the 21st Century, which many of you already have. If anybody wants one, I would be happy to take it around.

The Chair: If you would leave some on the counter, members will pick them up.

Mr Arnott: Mr Chair, just quickly before the committee adjourns, a point of information: Mr Christopherson, perhaps you haven't had a chance to read the Toronto Star today, but there is an article quoting the Premier of Ontario concerning health care being the number one priority for him at the meeting that is taking place in Quebec City. He is quoted as saying, "I do believe there will be unanimity-the number one challenge is health care and the massive pullout of federal dollars, particularly under the Chrétien Liberal government."

The Chair: This committee will recess until 1 o'clock this afternoon.

The committee recessed from 1203 to 1300.

ELEMENTARY TEACHERS' FEDERATION OF ONTARIO

The Chair: If I could get your attention please, I'd like to bring the committee back to order. Our first presenter this afternoon is the representative from the Elementary Teachers' Federation of Ontario. Could you please step forward and state your name for the record.

Ms Phyllis Benedict: Good afternoon and thank you. I'm Phyllis Benedict. I'm president of the Elementary Teachers' Federation of Ontario. With me today, on my right, is the first vice-president, Susan Swackhammer; my general secretary, Gene Lewis; and executive assistant, Barbara Richter.

The Chair: Welcome on behalf of the committee. You have 30 minutes.

Ms Benedict: The membership of the Elementary Teachers' Federation of Ontario consists of all teachers who teach in Ontario's public elementary schools. The federation also represents a number of educational support personnel.

We're pleased to have this opportunity to appear before the committee today. In addition to our written submission, we are also distributing a research report commissioned by ETFO that documents the impact at the individual school level of the education funding formula. These school-based data were collected and analyzed by Comquest Research and are based on surveys collected from 49% of the public elementary schools.

While ETFO firmly believes that the entire public education system lacks resources to provide the best learning conditions for Ontario's students, the focus of our presentation is on how the funding model fails our elementary students.

The imbalance in funding between elementary and secondary students is historical and is not justifiable. Elementary teachers have looked to government for many years to address the inequities between the two panels and, unfortunately, in designing the new education funding model, the government missed an opportunity to correct this imbalance. Overall, the new funding formula has resulted in fewer teachers at the elementary level, larger class sizes in primary grades, funding cuts to special-needs students at risk and cuts to valuable programs like special education, library, guidance, music, and design and technology.

A good education system has many components, not the least of which is its teachers. When the funding formula limited teachers on the basis of one teacher to every 25 students, and library and guidance on the basis of 1.5 teachers for every 1,000 students, the result was fewer teachers and fewer programs. The increased pupil-teacher ratio has been documented by the Education Improvement Commission's school board profiles. It is also demonstrated through the ETFO school-based research report which shows the PTR increasing from 18.6 in 1998-99 to 19 in 1999-2000. On average, that translates into 1.4 fewer teachers in every elementary school this year despite enrolment increases and it means fewer programs and less teacher time with our students.

Through Bill 160, the government implemented a policy of board-wide class averages: 25 in elementary and 22 in secondary grades. The impact of this policy has resulted in average class sizes in primary grades actually increasing significantly. You will note on page 4 of our brief that since 1997-98, the average class size has increased as follows: junior kindergarten, 19.7 to 22 students; senior kindergarten, 20.2 to 23.1; grade 1, 21.4 to 23.6; and grade 2, 22.1 to 24.2. These increases in primary grades fly in the face of a growing body of class size research that indicates that class sizes of 20 or less are key to student achievement. While many Canadian provinces and American states are making significant investments in class size reduction for primary grades, Ontario is going in the opposite direction.

We know that when some school boards reported difficulty in achieving the average class size of 25, they were advised by the ministry's regional offices to remove from the class size calculations those special-needs students who were integrated into a regular class for only part of a day. That's an artificial manipulation of figures and distorts the classroom reality experienced by both teachers and students. Special education funding drives more students into full or partial integration. When these students are integrated, class sizes should be reduced to enable teachers to give each student the individual attention necessary to support their learning progress.

Another effect of the funding formula's requirements for space allocation in average class size has been an increase in the number of combined grade classes. While combined grade classes have traditionally provided school flexibility in staffing, the new grade-specific curriculum makes teaching these classes extremely challenging. Most combined classes consist of two grades but here in Ontario, especially in northern Ontario, within the French language schools, there are as many as three or four grades in one classroom. Teachers in these classes must prepare more lessons and, again, there is less time to spend with that individual student and students end up taking home more work.

The education funding formula took $197.9 million away from early learners and placed it in a early learning grant to be used for enhanced programming for kindergarten to grade 3 students. This grant is only available if a school board does not offer junior kindergarten. Every board in Ontario was faced with the same decision: Do we enhance programs from kindergarten to grade 3 or do we give four-year-olds an opportunity for an education? School boards should not be placed in this position.

It is increasingly clear that special-needs students are underfunded. Underfunding special education programs hurts younger children disproportionately because learning problems and exceptionality must be identified and addressed as early as possible.

School business officials claim that school boards are spending $100 million more on special education than the formula allocates. The recent Ministry of Education announcement that another $40 million will be allocated to special education is only a very small step forward.

An important component of any education funding formula is the money allocated to children who are at risk due to their socio-economic circumstances. If they receive enhanced programs, help with reading and more individual attention, they have chances for success that they might not have otherwise.

The expert panel on learning opportunities estimates school boards across Ontario spend approximately $400 million on students at risk. The new education funding formula, through the learning opportunities grant, provides only $185 million. ETFO is joining with the EIC in calling on this government to address this situation. Failure to do so will result in high human and financial costs down the road.

The funding model funds pupil spaces, maintenance, renovations and new spaces at a lower level for elementary than for secondary students: 100 square feet versus 130 square feet. This limitation is arbitrary and ignores the space requirement for child-centered learning at the elementary level. The space limitations are forcing school closures, which means that young children are bused to farther schools. The receiving school is often then forced to convert science centres, English as a second language, music or school education-resource rooms into regular classrooms to accommodate the influx of new students. These changes make it difficult to effectively deliver programs and limit the ability to reduce class size.

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ETFO's commitment to early childhood education extends beyond the walls of our own classrooms. High-quality licensed child care is a vital component of early childhood education and services provided to our young children.

Since assuming office in 1995, the Progressive Conservative government has reduced access to quality child care services. The government no longer provides capital funding to build child care space in new schools. The funding formula does not recognize child care space in its accommodation grant. While existing child care programs are initially allowed to stay in schools, many have been pushed out as the funding formula forces school boards to close underused schools. School-based child care programs continue to be at risk of eviction or high rents because of the funding formula.

The undermining of school-based child care contradicts two decades of research and government task force reports which point to the importance of greater, not less, integration of children's services. It is time for the Ontario government to reassess its child care policy and to increase its investment in regulated child care services and provide capital funding to support school-based child care programs.

The funding formula fails the test of adequacy on other fronts as well, including no inflation protection and no provision for emergencies or unforeseen expenditures. Parts of the formula contain no provision for enrolment growth-insufficient funding to meet the current teacher compensation, let alone allow for salary increases in the next round of bargaining. Many teachers have been without salary increases since 1992. Failure to address the compensation issue will create problems in attracting new teachers to the profession at a time of a projected teacher shortage. It will also lead to confrontational bargaining as we head into the next round of school board negotiations.

Claims that the new funding model directed more dollars to the classroom are pure rhetoric. The ETFO school-based survey documents show that there are fewer teachers, increased class sizes and cuts to valuable programs. This federation is calling on the government to seriously review its education funding formula, with particular attention to redressing the historical imbalance between elementary and secondary students.

You will find our list of specific recommendations at the conclusion of our submission. We would now be happy to answer any questions you may have.

The Chair: Thank you very much. We have approximately five minutes for each caucus. I'll start with the official opposition.

Mr Phillips: Thank you very much for your presentation. The first thing that really caught my eye was the increase in the average class size for junior and senior kindergarten and grades 1 and 2. If I am reading this properly, it looks like there is almost a 10% increase in class size. That is contrary to what the government tends to tell us in the Legislature. I have been led to believe that class sizes were going down. What is the cause of this?

Ms Benedict: I believe I mentioned a number of the causes. I know that parents in this province believed, when the number of 25 students in an elementary classroom was inherent in Bill 160, that come September that's what it would be. But indeed we have class sizes in the high 30s and the low 40s because "board average" does not mean there is a cap of 25 students.

Like you, we are very alarmed with the increase, especially in the early primary. Every piece of research points to the fact that lower class size enhances learning opportunities, and the benefits to that student and indeed to the system are long-term. So you have other provinces throughout Canada-British Columbia is taking the lead, for example. You also have many states throughout the United States addressing this concern and putting more teachers into the system to allow for lower class sizes, especially at the primary level. The data we have brought to you today is based on the realities of Ontario's elementary classrooms here in the 1999-2000 school year, because this is the information that came back from the schools.

Mr Phillips: I would think it would come as quite a surprise to the public, because I think they listen to what we hear across the hall in the Legislature. The perception is that class sizes are dropping. The second thing they'll normally say is, "Don't blame us, blame the school boards, because it's not our fault." I gather from your comments that the challenge is that school boards with the resources that are provided-the government now has 100% control over how much money a school board gets; there's no flexibility. Is this a function of the school boards not having the financial resources to reduce the class sizes?

Ms Benedict: I believe that the whole funding formula model and the numbers that are put in the specific lines need to be addressed, and addressed very seriously. As we pointed out in our brief, boards are having to make decisions that they shouldn't have to make, that is, they are having to say, do we take the money and run junior kindergarten programs, knowing the benefits of that, or do we offer some kind of enhancements for kindergarten to grade 3, none of which addresses class sizes? I believe, to point the finger back to the boards, that they are doing the best they can in a very difficult situation.

Mr Phillips: The other area of intense interest to our caucus, among others, I guess, is the special education area, where once again what we hear at Queen's Park, when we're cloistered here away from reality, is, "We, the government, have guaranteed funding for special education." The only problem with that is, they've probably guaranteed it, but it's lower than the school boards, I gather by a substantial amount, were already spending. So it's guaranteed, but guaranteed at several hundred million dollars lower. I wonder if you can comment on that-I know your brief mentions that-just where we are right now in terms of trying to redress that problem, where the government announced special education funding that I believe was $400 million or $500 million lower than school boards were actually spending. Are we back now to funding close to that level, or how much further do we need to move?

Ms Benedict: If we look at some of the data that was brought in through the Education Improvement Commission reviews, boards are currently spending about $100 million above what is in the lines for special education. So while the announcement last week was good news that the government was indeed looking at the problems within special education, $40 million is hardly going to address the problems that currently exist. Even within the funding and the way the boards need to address the special educatin now, as we pointed out in the brief, the attention that our special education students need to have to be successful is virtually impossible when they're sitting in classes where the sizes are too large for the teacher to be able to address those specific needs. Also, many of the other types of resources that traditionally have been there for special education students are not there any more, whether they be human resources as educational assistants or whether they be physical resources for accommodation of those students in the regular classroom. As it stands now, the reality in the classroom for a special education student, is certainly not an optimum learning environment for that student, nor the other students that are around.

The Chair: With that, Mr Phillips, your time has expired. I must go to Mr Marchese.

Mr Rosario Marchese (Trinity-Spadina): Thank you, Ms Benedict, for the presentation. I thank the other panelists for being here.

In my view, what you present to us is critical, because you are in the front lines. Harris and the Minister of Education are relying on the public not to trust you. That's basically what they're hoping will happen, because each time you say something, Harris will want to say: "Oh they're just special interests; it's the unions." He's relying on the public to believe that. You might recall that People for Education presented a survey that they had done, and the minister mocked the facts that I presented as not being facts, merely a survey. "There's nothing to compare it to," the minister said. You now present a survey, to which I'm assuming the minister will say: "It's just another survey; we have nothing to compare it to," yet they present nothing to us so that we can compare your statistical information with theirs. My worry is that they are going to rely on the public saying: "This is nothing to rely on."

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How do you propose to deal with that? Because I have a problem here convincing the Minister of Education and Harris that we've got a real problem. What do you think should be done to have the public listen to the evidence you presented?

Ms Benedict: My immediate response would be that if this government feels that these figures and other studies that other groups do are not truly reflective of the reality in our classrooms, then perhaps a very in-depth, truthful, honest study should be done by the government and we can compare data. That was part of the reason we went to our teachers in the field and asked, "What is the situation in your school?" This is the situation school by school. Numbers are not manipulated. We wanted to have the raw data so that we can say that you are not addressing the needs of our early learners, you are not addressing the needs of our special education students, and indeed your purported number of 25 students in a classroom is not the reality that parents are seeing or teachers are experiencing, and this is not the best learning environment for our students.

Mr Marchese: It seems to me that we just have to continue saying it. I recall, in the questions around special education, the minister saying, "We simply have given what school boards said they wanted." The point was made to them that they were $120 million or so short, and they kept denying that there was a problem of funding, you might recall. The minister continually denied that there was any shortfall and continually said, "We've given them what they wanted." All of a sudden $40 million appears, illustrating that they admit there is a problem, but they can't publicly say that there is so they have to lie about the fact that there is a problem. When it comes to the crunch, they eventually release some money, but it's not enough. My point is that we have to keep at in the way that you are to allow the public to see the facts, and to eventually have the government release some money when we're not sitting in the Legislature, as a way of having them respond.

My other point is that this has been a good economy, and Harris continues to remind us that this is a great economy; it's because of him, obviously. We're so happy that Mike Harris has created this booming economy. There are billions of dollars in this past year-Ernie said that we collected another $1.5 billion. Where is this money going? If in a good economy we cannot reinvest in education and health in particular, when are we going to reinvest? Do you believe the money is there to reinvest in education or do you think somehow it's not there, as some people believe?

Ms Benedict: I do believe the money is there. I do believe there is a way to critically look at and analyze the current funding model, the various generators within the lines, to ensure that all of these programs can be met. Students in Ontario deserve nothing less.

Our publicly funded education system is a cornerstone of democracy. It's something that we have been proud of as people from Ontario and from Canada. We hear the comments from the Minister of Education that she too believes in a strong public education system; however, we know that it takes very significant dollars to fund it, to make it the best. We provide excellent teachers and practitioners in the field in our educational workers. We're willing to do our part, but we have to have the tools with which to do the job.

Mr Marchese: I appreciate, by the way, the comments you've made around the issues of poor children. Poverty is an issue in many pockets of Ontario. Even the Education Improvement Commission talked about that and said that unless we deal with those issues, many of these kids will obviously suffer, and we as a society will suffer if they have problems. They in fact said that we need to improve that funding formula. We have poverty in the city of Toronto and indeed in many other pockets of Ontario as well. We have a great deal of immigrant-related issues, refugee-related issues, and we're not putting enough money to address it. I think it will have calamitous effects to the teachers and to our society if we don't deal with those poverty issues. You talked about having to increase that amount that's there by many millions. I don't know if you have any further comments, but I'm seriously concerned about that and I'm glad you raised it again.

The Chair: I'm sorry to inform you, Mr Marchese, but your time is up.

Mr Arnott: If I'm not mistaken, I thought I heard Mr Marchese use the word "lying" with reference to the government's statements or figures, and I would like to give him the opportunity to withdraw, given that that is unparliamentary language. It's not appropriate-

Mr Marchese: I think I should take it back, Mr Chair. I'll make reference to other language as a way of getting to that-

The Chair: We'll strike it from the record. Thank you. Mrs Molinari.

Mrs Molinari: Thank you, Mr Chair, and thank you very much for your presentation and for your survey.

As a committee, we listen to a number of presentations and we will be doing that throughout the coming weeks. Certainly there are conflicting points and ideas, and that's where the challenge of the government comes in, to take from all of that and then to make the difficult decisions that we need to make to move forward. The money is not endless. The pot is there and there's only so much to go around. That's part of the responsibility of the government, to distribute that. But I thank you for your survey and we will be looking at that along with all of the other presentations that come in.

I have a couple of comments and questions with respect to the funding formula. Your recommendation number 12 is to restore the right of taxation to the local school boards. Now, for years and years it had been stated that the funding formula was not appropriate to provide education for all the students in the province of Ontario in a publicly funded system, where it was directly geared to the level of residential taxation. So those in the rich assessment boards would be getting more dollars for education and those in the poorer assessment boards would be getting much less. That's not equitable. Certainly the funding formula is ever-evolving. It has been evolved over the first implementation of it up until now, and that is something that will be continuously reviewed in order to provide equitable funding for all the students in the publicly funded system in Ontario.

The comments on the square footage for elementary and secondary: In your presentation you state that you believe they should be the same. Well, the secondary panel would disagree. The students in the secondary panel are physically larger. They are older so they're larger and the space they need is greater.

The class sizes issue: There is now an average class size that has to be, according to the legislation, implemented by all the school boards. School boards no longer have the ability to negotiate class size. The ability is minimal and the class sizes can't increase. In the past, class sizes have increased by virtue of negotiations. In contracts, the class sizes have grown in favour of enhanced working conditions, enhanced salaries and so on. As a government, we feel, as you have stated, that smaller class sizes are in fact better for the education of the students, so as a government we've tried to do that.

The capital funding portion: Yes, in some areas-some of the schools are in remote areas-there's a risk of closure, and that's being discussed with the individual schools. One of the problems with the last capital funding allocation was that boards did not have the flexibility of choosing where to build a new school in high-growth areas. There was a priority list put together and it was presented to the government of the day. The government then chose from that list whatever they felt were priorities based on the rest of the province. I recall boards putting together a priority list that had about 10 listed, and they got their number six; they didn't get their number one. How can a body that is detached from the actual school board decide which is the priority, not taking into account the number one priority of the board? The new capital funding formula allows boards to allocate schools in the areas where they feel there is the most growth. So that flexibility is there.

As I've said, if the pot was endless, we could distribute dollars throughout and everyone would have whatever it is they were requesting. I'm not sure that putting more money into certain areas is the answer. This is finance, so we're not curriculum, but if we're talking about education, the curriculum was another area where teachers and everyone within education said something needed to be done. So there are some positive changes that the government has made toward education. It's ever-evolving, and having constant discussions with those who are directly front-line helps us in our decision-making.

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With that-I don't know if I've taken all my time; I wanted to leave some for my colleagues-I thank you for your presentation. I certainly will take your survey and read it intensely.

The Chair: With that, we have taken all the time. On behalf of the committee, I would like to thank you for your presentation this afternoon.

Mrs Molinari: Can I put a question?

Mr O'Toole: Unanimous consent?

Interjections: Agreed.

The Chair: I'm going to keep on going with the agenda. I'm sorry.

Mrs Molinari: Can I have-

The Chair: No, we're done. We're going to the next one.

PUTTING HOUSING BACK ON THE PUBLIC AGENDA

The Chair: The next presenter is the representative of the group Putting Housing Back on the Public Agenda.

Interjections.

The Chair: Could we please have a little bit of order. I think we should maintain some decorum in this committee. We have presenters, and comments should be directed to the Chair. I will not stand for any other comments across the room.

For the record, could you please state your name.

Mr Alan Redway: My name is Alan Redway, Mr Chair. I am a former mayor of the borough of East York and a former Minister of Housing federally. I am here today representing a group of citizens who are anxious to put housing back on the public agenda. I'm one of three co-chairs of that committee. It's a tripartisan committee, if you will, with a former housing minister in Ontario, Mr Sweeney, as one of the co-chairs; a former NDP member of the House of Commons, Marion Dewar, as the other co-chair; and myself. I want to thank you and all of the committee for giving us this opportunity to make a presentation here this afternoon.

There is a growing consensus by the public at large that all governments need to play a role in addressing the affordable housing crisis. We believe the members of this committee are aware of that consensus and also wish government to play a positive role in addressing it, and our remarks are based on that premise.

There are two other factors that have influenced our remarks. One is what we understand to be the financial priorities of the government and the other factor is the desperate situation that more and more low-income, working-poor families of Ontario are finding themselves in. The housing situation is getting worse for these families and not better. We refer you to the Where's Home? report which our group was involved in releasing a few months ago. I've got copies of that report in the event that you haven't seen it or would like to refresh your memories about that. There are two parts to it. Perhaps the clerk would be kind enough to distribute that.

The Where's Home? report shows a number of very significant facts. It shows that rental housing vacancy rates are falling. Even in areas with high vacancy rates, they face rising rents and affordability problems. Rents are rising faster than inflation, and the income of most tenants is actually declining. Tenant affordability problems are growing, and everywhere in Ontario social housing waiting lists are growing as well. Almost one in four tenant households are at risk of homelessness. Rental housing production has actually crashed. The supply of affordable housing in the private sector is diminishing. There were almost 1.5 million overnight stays at homeless shelters last year, and close to 300,000 people rely on food banks every month.

We should also note that the Ministry of Housing's Web site projects that a total of only 450 new rental units will be created this year throughout Ontario, a projection which shows that the private sector is unable to build for the rental market in which most lower-income families are struggling. Despite almost five years of efforts by the government to encourage the private sector to build affordable rental housing by cutting taxes and loosening rent controls, the production of rental housing has declined and many more households are at risk. So the need is great and here are our proposals.

First, in March of last year, the government announced that it was committing $100 million to housing for the homeless. We know that you'll ensure that that money is spent on housing for the homeless and is not redirected to other areas. Of this amount, $45 million has been earmarked for supportive housing. The uptake on that has been very slow, and we don't know how much of this money has been actually spent. Once spent, it's projected that 2,000 people will be housed, a very small number indeed given the need across the province.

In her report, Anne Golden recommended that 5,000 such units should be built in the city of Toronto alone over the next five years. We would like assurances that the remaining phases will be undertaken as quickly as possible so that this money will be actually spent in the year 2000. It would be most unfortunate if actions were taken so that this money did not actually get spent on what it was intended to support.

Secondly, we know that $50 million of the $100 million is earmarked for rent supplement agreements. We would like a commitment that this will be new money and that this will fund additional units. Rent supplement agreements are coming to an end every week, and we understand that more than 3,000 rent supplement units were lost last year and not replaced. We fear that this money might be used for replacement units rather then for an increase in the number of units and we would like assurances that existing money will fund replacement rent supplement units and restore the full level of 16,600 units in Ontario and that this $50 million will be spent to increase the number of rent supplement units beyond the 16,600.

Thirdly, we're also concerned about the planned sale of public housing units. Since these 5,800 single and semi-detached homes house larger families and have very low administrative costs, this sale is really false economy and shouldn't proceed. Further, we fear that this sale is being counted on by the government as a source of funds for rent supplement units. This is not the time to sell off existing social housing stock, particularly when the demand for affordable housing is so great and the government has made no financial commitment to replace the lost units, even with a similar number of rent supplement units.

Tenants who may be able to afford to buy houses as a result of government tax cuts, the 5% down payment and lower interest rates have many other private sector homes available to them without selling public housing units. Further, replacing permanent stock with temporary stock, three- or five-year rental contracts with landlords through rent supplement programs, really doesn't make much sense.

We're also aware that some of the savings from the federal government following the signing of the social housing agreement last fall have gone directly into general revenues. We believe that those savings should always be directed to social housing initiatives, either supporting existing social housing stock or generating new housing.

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In short, we would ask for assurances that existing financial commitments will be honoured and that the funds that have been committed will not be used as a way to finance future announcements.

Finally, we believe that a new commitment should be made in the next budget to increase the amount spent on an increased number of affordable rental units. The sum of $100 million, the same as last year, would be a modest start. If it was entirely devoted to increasing rent supplement units for a single year, it would at best provide 20,000 extra units, assuming the average rent supplement would be $400 per month or $4,800 a year. The number of households paying more than 50% of income for rent in Ontario is now in the order of 300,000. So this amount would only meet 6% or 7% of this very serious need, and then only for a one-year period. Further, in communities like Toronto where the vacancy rate is very low, rent supplement units will be even more expensive and perhaps impossible to secure because the owners have so many other options.

Our group would of course prefer that some of this money were used to construct new affordable housing, but the key point is that a new commitment should be made by the government to secure an increased number of affordable units, given the great and the real and apparent need. We believe that if funds were made available, it would be possible to match them with funds from the federal government so that a more sizeable impact could be felt. The Federation of Canadian Municipalities has called on the federal government to establish an infrastructure program, a request which seems to have met with some support at least in Ottawa. If the Ontario government committed funds in this budget, it would then be in a reasonable position to join in federal-provincial discussions to design the details of this program.

Those are my comments. I'd be pleased to answer any questions and I want to thank you in advance for the opportunity of making this presentation, Mr Chair.

The Chair: Thank you very much for your presentation. We have approximately five minutes per caucus and I'll start with the third party.

Mr Marchese: I want to thank you, Mr Redway, for being here and presenting on behalf of the group, Putting Housing Back on the Public Agenda. I want to acknowledge publicly the work that all of you have been doing. None of you are paid to do this. You are here because of the greater public good and in the protection of the greater public interest. You're not here for yourselves, obviously. It always amazes me that there are people who put a great deal of their time and their lives towards doing something that in your view is important to be done, and it's important to be done by governments.

I'm worried, because you know that in the Reform convention in the past week Mr Long excoriated Mr Clark and accused him of being perhaps a Liberal or not a real Tory. Before I get to some housing questions, aren't you worried about that kind of attack from people like Mr Long?

Mr Redway: Is that really a question?

Mr Marchese: All right, I'll move on to the other questions. I'm a bit worried for you.

Mr Redway: It's a great statement for the public record.

Mr Marchese: It did worry me, I've got to tell you.

You raised many points and the group raises many issues. You've been a minister before. Why do you think this government has an interest in selling off the 5,800 single and semi-detached units that house families at a time when there's a great need? What would motivate a government that I'm assuming understands the problems we have and yet gets rid of something we have as a public asset and says, "We're just going to sell it and make a few bucks"? Is that the motivation or is it something else? Is there something about this government that I don't understand?

Mr Redway: I can't speak for the government; all I can speak for is myself and my own past experience. I must tell you that when I was the Minister of State for Housing in Ottawa, I had my staff examine this very issue because it had been something they had done in Britain. There had been a lot of council housing sold off. There was the question of whether this made some sense here in Canada from the point of view of trying to create some more homeowners out of people who were tenants. We came to the conclusion at that time that it didn't make any sense. Of course, we faced an affordable housing crisis at that time as well, but my perception is-and I think it's based on facts as they now stand-that the actual affordable housing crisis is now much worse because governments at all levels have cut off housing funds now for some time. Actually, since about 1993 there has been virtually no money coming from Ottawa on that. As a result of that, I'm one who believes we're going to have this pressure build up and build up until it explodes. Something's got to be done about it before then or else we're all going to see the hordes at the gates.

Mr Marchese: That's my worry. I just heard Mr Clinton the other day in his state of address remarks where he commented on the fact that they have defeated the deficit, of course through a great deal of sacrifice by cutting a lot of spending, obviously, and have hurt a lot of people in the process. But now, because the economy has turned around for them, and for us in particular, we are in a surplus situation. We've got money. Clinton was saying, "Now that we have a surplus and we've got money, we should be spending." It was a very bold remark to make. If you can't spend in a good economy, when will you spend? You already talked about the well-documented problem we have in housing, that we have a crisis at the moment. If we're not building when we have the money, the crisis can only deepen down the line. Is that not your view? Is there something else?

Mr Redway: Absolutely. I think you've put your finger on it. There are certain things which are in very serious shape financially. Housing is certainly one of them and one of the top priorities as far as I'm concerned. If we cannot put that at the top or near the top of the priority order in a time when the economy is good and when I understand the government is going to have a balanced budget to announce in the next budget, if we can't do it at this time, we're never going to be able to do it, because when the economy turns down again, as it inevitably does-I'm only too aware of that from my past experience in Ottawa-it's impossible to do these things.

Mr Marchese: The government says the private sector needs time. That's why we haven't seen too many houses being built by the private sector. I'm assuming Mr O'Toole or others will say, "We've just got to give them some time." Is that your sense maybe?

Mr Redway: That may be what the government feels will happen, but I have had some rather in-depth experience at trying to get the private sector to build affordable housing. When I was minister in Ottawa, all of the private sector housing associations and individual builders would tell me: "Look, we are not in the business of losing money. We're in the business of making money. We cannot possibly make money by subsidizing low-income families. That's not our role. We understand it's not our role."

The government can try, as it has-and I give them full marks for their efforts-cutting taxes and other measures to try to stimulate the private sector into doing this sort of building, but the private sector is not going to build as long as they think it's going to cost them some money. In addition to that, there's the issue about rent controls. The private sector has told me in the past, and I suspect they feel the same way now, that regardless of what is done with rent controls today, there's no guarantee they wouldn't be introduced tomorrow and therefore that is a big roadblock in having them try anything in the way of rental housing. Now, the rental housing they're talking about is not the kind that the average low-income, working-poor family could afford. Those people need some help. Historically in this country 20% of all Canadians have never been able to pay all of their housing costs. At the moment, without any of the reductions in the number of assisted housing units across the country, we're meeting about a third of that need. But now what we're doing is trying to encourage all levels of government to try to at least meet the need that has been met in the past, and hopefully we'll meet some of the other needs that are still out there and have been for some time.

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Mr O'Toole: Thank you, Mr Redway. I appreciate your perspective and your expertise in the subject area. You've touched on a couple of important issues, but I just want to start from the premise that I recently read an article which stated quite sympathetically that with all the social unrest or uneasiness or restructuring, shelter is the most important single item that could contribute greatly to resolving, individually or collectively, our economic wellbeing. I support from that position, the permanency and other things that flow from that, that there needs to be a strategy. I guess Anne Golden was saying that too. It is a multi-responsibility issue.

I guess we started from a position of seeing what we characterized as a boondoggle of social housing during the prior government outpacing the cost of private sector housing. Arguably, if you use that Keynesian economic theory, in good times you should be accumulating and in bad times you have to spend. So it's quite the reverse of what you said. In good times you should be accumulating for the horizon that's just about to crash. Some of the things that have been said for the record are not exactly as I see them. We're restructuring a strong economy to be prepared; as you mentioned, the tax cuts.

I do want to share my time, so I just want to make one point very carefully. The issue of housing is complicated. You were there probably when the debate started on the devolution of social housing, probably that early. It takes 10 years for anything actually to happen.

Mr Redway: Right.

Mr O'Toole: That recent signing of $196 million and giving us all the liability that goes with it, that's the issue for the province. The next stage is that the municipalities are going to get the liability. Generally governments aren't good managers. That's really the point that's being made. Since 1993, the federal Liberal government since 1993 hasn't put a nickel into it and now they're getting rid of it to us. Do you understand the point? We're into shelter subsidies. That's not bricks and mortar. That's trying to find some way of-

One last point in that supportive housing discussion is that one of the strategy pieces is the review of rent control. The onerous task on the private sector that you described, as long as they're in place or likely to be in place, they're not going to be building them. That's the end of it.

Mr Redway: Rental housing, yes.

Mr O'Toole: Exactly. Why would they when they're not ever going to get paid? So you give it to the actual landlord through some subsidy or something and you're bound to get-look at housing starts, though, and that's an inventory issue which you would know about. We've doubled housing starts. Somehow there's a trickle-down-I hate to use that word-effect so that the repurchased house ends up as a first-time house for someone coming into the market. We've kept a strong economy and low mortgages. That's another way of saying we're providing accessibility to housing. That's the theory that I think is currently under the persuasion of this government, because individual initiative and those other decisions that people make, and providing for those very poor that we all have a collective responsibility for, that's my economic statement. I'm going to leave the rest.

Mr Redway: I wonder if I could just comment on that, Mr O'Toole. I appreciate your comments and I think they're very helpful. First off, on the question of rent control, that issue is one part of the equation as to why the private sector doesn't build, but it's only one part and it's not the entire answer. Even if there was a lead-pipe guarantee that forever and ever there would be no rent controls, you wouldn't help these people at the bottom of the barrel here.

The other thing is that you've emphasized that the government looks at this with the idea of a rent supplement, and that's the focus of my remarks. We appreciate that that's what the government would like to do as far as assisting housing is concerned, and that's what we would like the government to do too.

We do believe there's no reason to discard the idea of new construction forever and we do believe that this government is wise enough and has enough clever minds in it to develop something that isn't a "boondoggle," but at the same time we understand that your focus is on the rent supplement kind of assistance, and that's what our focus is on, to try to assist this committee to encourage the Minister of Finance, the Minister of Housing and the Premier to get some more to help these people at the bottom of the barrel.

The Chair: With that, I must go to the official opposition.

Mr David Caplan (Don Valley East): Mr Redway, thank you for your presentation-a lot of information and a lot of things to cover. One of the areas I wanted to ask you about was in this Where's Home? study. On the second-last page there's a chart called, "Ontario's Rental Housing Unit Needs Versus Cumulative Actual and Projected Rental Production, 1996-2001." This is a calculation done by Canada Mortgage and Housing Corp, a group that you used to oversee as minister.

Mr Redway: Correct.

Mr Caplan: So these are solid numbers, yes?

Mr Redway: Yes, indeed. Absolutely.

Mr Caplan: Eighty thousand units have been required from 1996 to 2001, yet Canada Mortgage and Housing tells us that 6,000 units have been created.

Mr Redway: It surprises me that 6,000 have been created.

Mr Caplan: Yes, it is surprising, given that public housing projects were cancelled.

Mr Redway: But I certainly believe their numbers.

Mr Caplan: So 74,000 units of housing which we need in this province have not been built and yet the problem still continues. You can see very clearly why there's a crisis.

These numbers are solid numbers, and this points to some of the reasons and some of the facts you present. For example, 300,000 people rely on food banks each month. They can't afford their accommodation. They need some help. They're spending more money on their accommodation so they have to rely on the food banks. That's the kind of precarious situation-families are being asked to choose between feeding themselves and housing themselves.

Mr Redway: When you spend 50% or more of your income on rent every month-and that's not net income and it's not just the income of one earner in the family; that's the entire family income and that's the gross income. When you spend that much money on keeping a roof over your head, there's not much doubt that you're going to have to go to a food bank.

Mr Caplan: For food, for transportation, for a telephone, for winter boots for the kids. That's the situation that people have been placed in. In fact, I had the opportunity to ask Mr Clement, the Minister of Municipal Affairs and Housing, what the acceptable maximum was that people should be paying for their accommodation. He told me that in the estimation of this government the maximum is around 30%.

Mr Redway: That's a historic level.

Mr Caplan: Well, that that's an appropriate level. I was looking at the study that you've presented based on the data of Statistics Canada and Canada Mortgage and Housing Corp. Over 50% of Ontarians are spending more than 30% on their accommodation, yet that gap and that crisis continues to grow; about a quarter are spending more than 50%.

Mr Redway: Correct.

Mr Caplan: That's astounding.

Mr Redway: It's a pretty sad picture but it's a historic picture. It's not something that has just started today, but at the same time it's something that we've got to address. If we don't address it, we really are going to have the hordes at the door, in my opinion.

Mr Caplan: It will manifest itself with more people in shelters, which we're already seeing.

Mr Redway: Exactly. In my days as minister, it was the middle class who got excited about lack of affordable housing. I think that time is coming fast with us here at the moment. When the middle class gets excited about this and when it is the middle class who elect governments, then it's going to get some attention for sure. But surely we can do something about dealing with this before it gets to that stage.

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Mr Caplan: The last point, Mr Redway: What I found most compelling about the data that you've presented here is that often there's a perception that this is simply a Toronto problem, but from looking at every community listed here-Barrie; Hamilton; Durham region, where the last member asking questions is from; Windsor, where my colleagues is from; Hamilton-this is clearly across every community in Ontario. No one is untouched by the crisis in housing and affordable housing in this province.

Mr Redway: Absolutely. No question about that.

The Chair: I guess that completes our time. On behalf of the committee, thank you very much for your presentation.

Mr Christopherson: On a point of order, Mr Chair: Just further to the comments that started with Monte and moved to me and then to Ted Arnott with regard to what the Premier was saying at the Premiers' conference, my staff have pulled together from CBC Radio News this morning a transcript of their newscast, and it reads in part: "But Ontario Premier Mike Harris is one exception. `We need more jobs, and the only way to get jobs is through tax cuts and then put money on health,'" he said.

I would interpret that, Ted, to say that he's putting tax cuts as the absolute number one priority, and everything, including health, comes after that.

TORONTO DISASTER RELIEF COMMITTEE

The Chair: Our next presenter is from the Toronto Disaster Relief Committee. For the record, could you please state your name.

Dr David Hulchanski: I am David Hulchanski, a professor at the University of Toronto and a member of the steering committee of the Toronto Disaster Relief Committee.

The Chair: On behalf of the committee, welcome. You have 30 minutes.

Dr Hulchanski: I'm very pleased to have this time with you. You should all have the submission we prepared. It has the cover on it "Homelessness in Ontario."

When I was preparing this, I was reminded of an Ontario budget of a couple of years ago. The finance minister put on the back of the printed version of it a child's drawing and made some reference to it in his speech. You might remember that. That was two or three years ago. So I went to my office wall, and you see on the back cover of this submission my daughter Anna's drawing. It's much better in colour, but this is about a year and a half ago. She was doing some drawing; I was doing some writing. She asked me what I was doing and I said, "I'm working on a book on housing rights." That's a very abstract concept, as you can imagine. Any kind of human right is very abstract. So she said, "Can I do a cover for your book?" I said, "Good idea." She went away and came back half an hour later with this.

Look at this. She drew a line down the page, and on the left side is a very bright and a very happy sun, for some reason wearing glasses, and an apartment building, sort of post-modern, I guess, and a very happy resident next to the apartment building. Of course, next to it is a very unhappy, not very bright sun, a field with no housing, and you can see in there an unhappy person in the field.

My bringing this today is not to brag about my daughter's artistic abilities, but I think the people of Ontario, including the children in Ontario, understand the issue of homelessness much better than we give them credit for. There is one, and only one, common feature that all homeless people share, one problem they all share. Many of them have many problems, but they all share the problem of being houseless. The correct name for this would really be "houselessness," not "homelessness."

You know, and most Ontarians now know, that the homeless person is not the guy you see out on the street begging for money. Yes, that person may or may not be houseless and homeless. Last night in this city, out of the 5,000 people in the shelters, half of them were families; 1,000 were children. These people do not choose to be houseless. They are houseless, and that's what I'm here to speak about today.

I will simply lead you through a couple of pages here, make reference to a few things in here, try not to repeat some of the general things I know you're hearing today on housing, and have some time for a discussion.

The Toronto Disaster Relief Committee was started about a year and a half ago around the very simple observation that was dawning on everybody that if there was a flood or a hurricane or an earthquake or something that caused 100 or 10 or 1,000 people to be houseless, we would immediately put up emergency housing and we would then immediately use all kinds of public money and facilities and so on to see that these people are properly re-housed, permanently re-housed. But that's not happening here, so we have a lot of homeless people, and it wasn't the weather or an earthquake or anything that caused them to become homeless. So we prepared this emergency declaration you see on page 3, in bold type in the middle there, that this indeed is an equal kind of emergency. Something has gone wrong. A number of things have gone wrong so that poverty today-this is the 1990s, and now the year 2000-destitution includes being houseless, not just being poor and having all the struggles associated with being poor. We need to do something now as emergency measures and we're doing some of that. They are very expensive; it's largely a waste of money. You must spend money on emergency measures and know that it's money down the drain and then you quickly want to get into recovery and get out of spending emergency money.

In the city of Toronto we're now spending $100 million, roughly, on emergency shelters and related facilities, and a component of that, about $65 million or $66 million, is from the Ontario government budget, the people of Ontario. This is money that is wasted, frankly. It's necessary, but in the long run it is money simply wasted.

If you turn to page 5, back when Anne Golden held her first focus groups she invited a number of people; there was a room full of us who knew something about housing and social policy. She started off saying, "Boy, the causes of homelessness are complex and the solutions are complex." So when I got my time to say something, I said: "I half agree with you. The causes are indeed complex." There are personal things that happen in people's lives that put them at risk of becoming homeless and then if there isn't enough adequate housing around or they lose their job, enough income, and they can't pay the rent or they need some kind of support services and can't access them, whether it's for mental illness or substance abuse or whatever, yes, they can in today's climate easily become homeless. Every person who is homeless or has been homeless has a personal story, if you will, that is complex. The solutions, though, are not complex, and there are three, as you see on page 5.

One is all homeless people require adequate and appropriate housing they can afford. All homeless people require enough money to live on, income; for example a job, job training, adequate pension or social assistance. Many of the families in the shelters last night were simply there because they lost their jobs, and month after month they became increasingly unable to pay the rent and there they are homeless and phoning the city for help.

Some-remember, only some homeless require support services. There's a claim or a belief among some that 80% of the homeless are mentally ill. Well, that obviously can't be true with all those families. It obviously can't be true with all those children. It is obviously true with some, a minority among all the people who are homeless. Studies show, wherever the studies have been done in North America, that about one third perhaps have some form of mental illness and only a couple per cent have a severe form of mental illness where they are a threat to themselves or to others. Mental illness does not cause homelessness. The majority of people who have a mental illness in Ontario are very well housed. Alcoholism doesn't cause homelessness. The majority of alcoholics in Ontario-some of them are in our best neighbourhoods. They are well housed. Alcoholism by itself does not cause homelessness.

People who are homeless do require housing, enough money to live on, and some of them do require support services. It's very straightforward. It's for a lack of those things that they have now become homeless and those things will get them out of that situation.

We've been arguing for a long time, and will go to the Supreme Court soon, around the issue of homelessness being a serious human rights violation. It's a form of discrimination. This government right now provides nice tax rebates to people who buy a house. First-time buyers get a tax rebate, for example; they can use of their RRSP. We're doing all kinds of things for homeowners in the middle class, yet there are people in our community in need and very little is being done.

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In December 1998, a UN human rights committee reviewed Canada's and Ontario's compliance. Each province and the federal government had to submit reports. You see at the bottom of page 5 that the committee stated in its final report that it "is gravely concerned that such a wealthy country as Canada has allowed the problem of homelessness and inadequate housing to grow to such proportions that the mayors of Canada's 10 largest cities have now declared homelessness a national disaster."

In March of last year, the TDRC submitted another report to the other. There are two main human rights committees at the United Nations, and the second one deals with civil and political rights. Article 6 is the right to life, the right not to be killed, the right not to die under unnatural circumstances. Indeed the committee, hearing evidence, stated: "The committee is concerned that homelessness has led to serious health problems and even to death. The committee recommends that the state party"-Canada and the provinces-"take positive measures required by article 6 to address this serious problem."

We need to do the right thing. We need to know that everyone in the city, everyone in the province, everyone in the country is watching what happens here out of this Legislature, out of our city halls and so on.

Moving along, I want to refer to page 8, about the homelessness disaster in Ontario. As people are noting, it is not limited to Toronto. You heard just now about the 300,000 Ontario households paying over 50% on rent. That doesn't mean these people will automatically become homeless, by no means; it means they are at grave risk of becoming homeless, as we all know. Something happens to their monthly budget, for a couple of months in a row they can't pay the rent, and they're in serious trouble.

I mention Barrie in one of the dot points there. Last year I spoke to a group that the United Way in Barrie had organized. They had a couple of hundred homeless people. They never had homeless people before. There would be the odd one or two alcoholics on the streets in the 1950s and 1960s, that kind of thing, but these days it's a big, serious problem in the large places and the small places throughout the province of Ontario.

Point 8, on page 8, is "Homelessness is Houselessness." The one thing all homeless people have in common is that they are unhoused. That's undeniable.

On page 9, you have some discussion about why the private market can't build. It's pretty obvious why it can't build. Look at the bottom of page 9, the 1996 census. These are household income trends in Toronto. They happen to be somewhat similar for Ontario and the country, that is, that owners have, on average, double the income of renters. Think about that. This was not always the case. Back in the 1960s-I've done the analysis over the last four or five decades-there was about a 20% gap. Homeowners had more money than renters, yes, by about 20% in the 1960s, and now the disparity has grown that much. How can you have one land market, one housing market, and two pools of customers? One pool of customers has half the available income of the other pool. So those with the higher income will always outbid-and there are developers and builders who will always outbid any potential developer or builder for the rental sector. It's just natural. If you get a piece of land and it can be a condo or it can be a rental building, the one that's going to make money today is the condo. Remember, until the early 1970s, we did not have condominiums in Canada or Ontario. It required special legislation that came around in the early 1970s in this province.

Things have changed dramatically, and this explains why the private market cannot build for the 50% of households in the city of Toronto and the 37% of households in Ontario who are renters. The market cannot provide for them.

If you go to page 11 now, "Rental Housing Construction in Toronto," you'll see a 15-year run-and this is from Canada Mortgage and Housing Corp, in fact from the Housing Again study-rental starts as a percentage of total starts. I was a bit surprised it was as high as it was in the past. It fluctuates, of course, because during a recession the ownership sector is flat and during a boom time there's lots of construction in the ownership sector. What has kept the percentage of rental starts up through the years has been the social housing starts. There have never been very many private rental starts over the last 15 years, and now, as you know, we have zero social housing starts.

Look at 1993. That's a peak year. There were in fact 5,834 social housing starts. The federal government ceased new commitments after 1993 for social housing and then the Ontario government did so after 1995. So look at that. In a recession, that represented 81% of all the housing starts. You can say, "Well, that costs us a lot of money." Right, but there are lots of benefits-the jobs, the taxes and so on-that came to the economy and the city, not to mention the housing that is needed. This is needed affordable housing that was provided during that period. Now that number is down to zero, the private rental starts are down to 114, and this province is not doing anything for the 50% of the city's residents who are renters or for the 37% of the province's households who are renters.

Moving along to page 12, the severity of homelessness in our province is directly due to public policy decisions. There is no question about that. Why did we have so many homeless people in the 1990s? We had some in the 1980s but there were so many more in the 1990s, and some of the numbers I've shown you now explain that: because of the income disparity, real incomes of renters in this province are not rising, they're falling; the cost of housing is going up, it's not going down; and there's very little new affordable rental housing construction taking place. That's on the housing side.

On the income side, I've mentioned the falling incomes, there are the lower levels of social assistance and other benefits and there are clearly inadequate support services for people who have a mental illness, who are substance abusers and so on.

We were told in 1995 that the private sector would build the rental housing we need. We now have five years' experience, data for four of the years, and you'll see we've averaged 857 rental units. This is in the province now. In the entire province of Ontario, 47% of Canada, we have been getting 850 units per year of rental housing on average over these last four years. This is a dramatic fall-these are private sector numbers now, not social housing-from the four previous years, and that was even less than the three years previous to that. Those numbers show that they can't build. I'm not pointing any fingers here; it's just not economical for the reasons I just told you. They can't build. They will not be building rental housing in the numbers they used to build because of the dynamics that I've outlined.

We have to say this isn't working, that's all. We tried it and it isn't working and we need to supply the housing that people need.

You'll see in the bottom line on page 12, I added up the number of social housing units provided in the province in the 1988-94 period. That's 40,000 units the federal government and the provincial government provided here. If you want to ask, when an agency has a homeless family who's getting evicted, where they go these days, we don't know. Where did they go in 1988 or 1989-90? There were places to go. There were long waiting lists but they weren't as long and there was new housing coming on stream and there were places for people in dire need to go. That's an annual average of about 5,700 units per year.

On page 13, I simply remind us of the 17,000 social housing units that were approved for development but were prevented from being developed when the government changed in 1995. At the current rate of private rental housing starts, to replace just those 17,000 units, nothing else, that's 20 years. If the private sector manages to keep at the same pace of 850, as it has for the past four years, we're looking for 20 years to see 17,000 private sector rental starts.

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I'm just reminding all of us here, this is the province of Ontario. We are here and you represent all people of the province, including the 37% of the households that are renters. You might have seen the buttons and all of that called the One Per Cent Solution. This is simply a way to summarize that. Indeed, housing support services and enough money to live on for the very tiny minority of people in our province who are destitute in that way is expensive. It's a lot of money to do this, but in the perspective of the budget of this province and the budget of the federal government, it's nothing. It's about 1% more spending phased in over a three- or four-year period.

You see on page 14 the summary. This is very affordable. From the finance department we were able to calculate that this works out to be about 50 cents per taxpayer per day. That's per taxpayer, not per person. So this is a modest amount and it's essentially catch-up spending. It's not asking too much in the end.

I'm here on behalf of the TDRC to ask that you make homelessness in the province a budget priority. If you do something it's not going to put any big dent in the budget or in the deficit to begin making real progress here. We should stop pointing fingers. There's a role for this province to play in housing supply, in more support services and in adequate incomes for those who are at the very bottom of the income scale. Indeed, there is equally a role for the federal government to play and to be much more responsible than they've been right now. But it's both of you.

The city of Toronto has done quite well. We are the first to criticize the city. We have things we want the city to do. They've implemented much but not all of what Anne Golden asked for, but they have just so many resources, as you all know.

I'll be happy to answer any questions.

The Chair: We'll start with the government side and we have about two minutes per caucus.

Mr Arnott: Thank you very much for your presentation. I want you to know the government takes very seriously the recommendations that you've put forward today, and I'm sure the thorough analysis that you've done will be given all due consideration as this report is coming forward.

It's no surprise to any of us here that you're bringing these ideas to the committee. Homelessness is a severe problem in the city of Toronto and, as you've said, it's not just a Toronto problem. There are a number of other communities that are experiencing problems.

You've provided a bit of anecdotal evidence relating to the problems outside the city of Toronto. I just wondered if you could tell us a little bit more and expand perhaps a little bit more on that.

Dr Hulchanski: In Toronto we see people on the streets but they don't really represent what homelessness is; they're the people we see. The vast majority of homeless people we don't see or we don't think are homeless when they walk by us. It's the real down-and-out-looking ones. These dynamics that have caused this in the city are causing it in smaller ways in other parts of the province. Even though vacancy rates might be 5% or 10% in some community, you still need that $300 or $400 or $500 to rent that unit in that community someplace else in the province, and they don't have that money. So the same dynamics apply-I guess that's the answer-throughout the province and indeed throughout the country, even though each province is a little bit different throughout the country.

Mr Arnott: Our previous presentation from Mr Redway, whom I'm sure you know and you're probably working with-

Dr Hulchanski: Yes.

Mr Arnott: -indicated that the province of Ontario is spending about $100 million on the homelessness problem this year. You've said that the total amount of expenditure, including the federal and municipal governments, is $358 million. You're suggesting that everyone double their contribution?

Dr Hulchanski: Yes. The spending on housing by all three levels of government-I don't know if there's a typo in there-is $3.5 billion, in that neighbourhood of $3.5 billion; $2 billion is the feds and then the rest is the provinces and the localities. This is a StatsCan three-government calculation. So it's $3.5 billion.

Mr Arnott: There was a decimal missing.

Dr Hulchanski: Yes.

Mr Kwinter: Mr Hulchanski, I was really impressed with your presentation. I'd just like your response to almost a communications problem. The mayor of Toronto, when he became mayor, when he heard about homelessness, immediately said there were no homeless in North York, because his perception of homeless were street people. I think that is a common perception. The media often go out on homeless cruises. They tour the downtown of the city of Toronto to look at people sitting on grates or sleeping in the subway stations, things of that kind.

I think that you really brought home the issue that these are houseless people and they're not the visible people that you see on the streets. Is that being communicated? Is that being addressed so that people understand what the issue is that we're talking about?

Dr Hulchanski: I think so. What little I see of polls, Canadians and Ontarians understand the issue much better than they used to understand it. But we all have our prejudices and our knowledge and lack of knowledge, and there are many people who still believe it is those few people you see on the streets-they are the face, they are homelessness-and it's not correct, as you say.

Mr Caplan: I have two comments. One is further to Mr Arnott's comments. He would know that Peterborough would be the homeless capital, if you calculated it on a per capita basis, of Ontario. In Sarnia, which you would be familiar with, Mr Chair, the mayor has commissioned his own report. Thunder Bay, Barrie, Hamilton-this is a problem across this great province, and a shame really.

One comment that I've heard government members make is this $100-million figure. Perhaps Dr Hulchanski would want to comment on the fact that this has been monies which were previously federal housing dollars simply being recycled by the province and being announced as somehow a new initiative, yet they were already monies within the housing portfolio, if you will, that have just been transferred from one government to another.

Dr Hulchanski: Any money well spent-that's the catch-is helpful. But we're frank, we're talking $3.5 billion roughly for the entire nation.

Mr Caplan: Of new money?

Dr Hulchanski: Of all three levels of government, phased in over four or five years; 50 cents per taxpayer, per day, roughly, yes.

Mr Caplan: Not recycled dollars?

The Chair: With that, Mr Caplan, I must move to Mr Christopherson.

Mr Christopherson: Thank you, Chair. You always make that sound like such a chore.

The Chair: I couldn't see you there for a moment; I thought you'd disappeared.

Mr Christopherson: Thank you very much for your presentation. You probably noticed that the room went very quiet at a couple of points in your presentation. We've had people come and make presentations on homelessness, but you've taken a unique perspective and offered up a couple of new ways of looking at it, and that's very helpful.

I can't help but be drawn to where you acknowledged that between 1988 and 1994 there were over 40,000 social housing units built. Since this government's taken power there has been zero. I've referred to the time that I think is one of the most shameful moments, and this government was really proud of it, where the Minister of Housing stood up and said with great glee and his chest all puffed up, "This government is proud to announce that we're getting out of the business of housing." That may sound good to some folks who were doing some number crunching somewhere, if that's the only thing that matters, but clearly to thousands, and growing numbers of thousands, of Ontarians this is a disastrous announcement.

You noted that our NDP government had 17,000 rental units on the books ready to go. This government cancelled them. They've done nothing since then. What I wanted to ask you was that if we continue down this road-bearing in mind we did that at a time when the economy was contracting, the worst recession since the 1930s. Yet we were still identifying the socially progressive parts of our economy. They're not just charitable giveaways; they're important parts of building and continuing to build the kind of Ontario that we have historically been.

I want to ask you, if during these booming times the government continues on this track of doing absolutely nothing, where are we going to be five, 10 years out, particularly if the prediction from virtually every economist shows itself, and that is that there will be a recession-not a question of if, but when? Can you give us a sense of what Ontario's going to look like from a housing perspective if we just continue unabated on the road we're going?

Dr Hulchanski: It's a pretty simple picture, with near-zero starts. We're a great province: natural birth rates, migration from elsewhere in Canada and migration from overseas into Ontario. With zero rental housing starts it's just going to cause this problem to become much worse. It's becoming noticeably worse year by year in every part of the province. If we don't turn it around, it'll just be that much more. I don't have any good words; I'm not a poet or something to try to put in some better words, but we can all use our imaginations to see what's happening out there. This is no way for our society to operate, for our kids to walk around the streets and see what they see on the streets and to read what they read in the papers and all that.

The Chair: On behalf of the committee, thank you very much for your presentation.

Dr Hulchanski: If I may, my daughter has offered to submit some artwork, if the finance minister should need it this year. He could give me a call.

The Chair: We'll pass on the comment. Thank you.

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ONTARIO FEDERATION OF AGRICULTURE

The Chair: Our next presenters are from the Ontario Federation of Agriculture. Could you please step forward, gentlemen, and state your names for the record.

Mr Jack Wilkinson: I am Jack Wilkinson, president of the Ontario Federation of Agriculture.

Mr Ron Bonnett: My name is Ron Bonnett, vice-president of the Ontario Federation of Agriculture.

Mr Bill Mailloux: My name is Bill Mailloux, vice-president of the Ontario Federation of Agriculture.

The Chair: Welcome, gentlemen. You have 30 minutes.

Mr Wilkinson: Thank you very much. We are going to just summarize our document. As long as it is put into the record, that is our main concern. I am sure your staff and others will read it at leisure, but we want to leave some time for questions, so we'll try to be brief. I will make a few opening comments, and then both Ron and Bill will make some as well.

The point we are trying to raise attention to, going into this pre-budget consultation, is that in a number of areas in Ontario, in the rural community and obviously in the farm community, there have been numerous places where there have been cutbacks at both the provincial and federal levels, whether it be in schools, transportation, infrastructure, health care or farm income and farm support programs through the Ministry of Agriculture, Food and Rural Affairs. When you have this cumulative impact, people in the countryside are starting to feel like they are under attack, effectively, by the non-farm population.

As you see on page 4 of the presentation, we have seen a substantial shrinking of provincial government support for agriculture. In general terms, when we deal with real dollars over the last decade, in 1991-92 we had $453 million. When we move to 1998-99, we were down to $296 million. So we have seen a substantial cut. During that same period, expenditures at the provincial government level doubled in all other areas. When you take percentages of what the Ministry of Agriculture, Food and Rural Affairs has, which includes farm income support programs, a host of programs, we have decreased from 1.18% of Ontario government spending in 1987-88 to 0.49% in 1998-99, 10 years later.

It doesn't matter how you slice it. If you're dealing with real dollars, we have seen a substantial withdrawal of resources. That is a major concern to us. It's occurring at exactly the same time when farm incomes have dropped-and Bill Mailloux will be touching on that-because of a collapse in world commodity prices. It is being seen at a time when we think there needs to be an injection and a reinvestment of capital in rural Ontario. In areas like training, technology transfer, where Ontario agricultural has for many years been a leader both in this country and around the world, adopting new technologies-soil conservation, zero tillage and a host of things that have been very well received, intensive pest management systems which have reduced our pesticide use by 50% in the horticulture and tree food industry over the last 10 years, environmental farm plans. All these initiatives came about to a great extent by having a system within OMAFRA to help us adopt new technology, help us learn the new skills and do face-to-face training with farmers.

What is happening, as I am sure you are all aware, is that the closure of all those offices is now taking place, and they will be closed effective April 1. We have had a situation where federal dollars to be used for training have been cut off because of federal-provincial agreements. We have had no money put forward on the rural side for agriculture. We have no environmental program for agriculture. That is federal money which has been cut back as well. So our view-and we'll happily answer questions-is that there is lots of room to step back, take a look at what has happened in rural Ontario and see some areas, see some of our numbers. We think you will agree that there is now an opportunity to reinvest, because we can't continue to carry this on our shoulders without some support. Thank you.

Mr Mailloux: One of the areas we'd like this committee to consider that would certainly benefit farmers-one of the biggest issues, maybe not the biggest but certainly an important issue-is the farm safety nets that are designed to help farmers. The real farm income is down about 50% in the last 10 years, and the net government support has gone down as well for safety nets, by 70% in the last 10 years.

We're recommending that the government of Ontario, as far as safety nets go, immediately adopt the improvements to the AIDA program that was announced by the federal government on November 4. There are some items in there that need to be changed. We'd like to eliminate the link to the net income stabilization account, allow applicants to value their inventories as they do for income tax purposes, eliminate the 18% holdback of program payments and treat farms with major changes in scale or type of operation the same as new farms. Those are just a few that were announced, and there are some other things that we'd like to see changed that would improve that program.

We also recommend that Ontario accelerate the renegotiations of the safety net framework. They're currently attempting to design a safety net program for the future. The agreement they have now with the federal government expires, and we need to work at developing a new program. Some of the things in Ontario that we believe should be in that are NISA, the net income stabilization account program; crop insurance and companion programs such as market revenue and self-directed risk management; as well as farm income disaster programs. Recently, the federal government committed $500 million to a disaster program for the next two years, and we're certainly hoping that Ontario will ante up its share of the 60-40 cost-share.

Another area where we've been looking for some more changes-your government has done some work on it-is the retail sales tax. We're recommending that the government of Ontario exempt at source all farm business purchases from the Retail Sales Tax Act. An effective exemption requires, we feel, three changes. One is to expand the list to farm inputs exempted from RST to parallel those exempted under the GST. Also, we would like to change the question that's asked when an exemption is requested. The current question that's asked is, "Is the item to be used entirely for farm purposes?" We believe that if the item is at least 50% used for farm purposes, it could as well be exempt. An at-point-of-purchase exemption would certainly simplify things for farmers. It's believed that in Ontario the cost of the retail sales tax to farmers is about $37 million. This is quite a bit higher than other jurisdictions, and some of these changes would certainly leave more money in farmers' hands.

Another area is the value-added farming activities. Over the past years, we've attempted to value-add on our farm to get more money for our product, and at the same time we seem to be moving into getting a burden with property tax changes. There are some farmers in our area who have seen their assessment change from about $600 to an industrial rate of $9,000. We believe we need to sit down and have a serious look at this because it is costing farmers some money. We'd like to sit down and establish what is agriculture-value-added and what is commercial.

I think that's all I had, Ron.

Mr Bonnett: Maybe I'll head into some of the issues under the heading of resource management and training. There's quite a detailed explanation in the document about what we're asking for. Under the environmental side, the healthy futures program that was announced addressed a number of the water quality issues, but I think that program might need some tweaking to make it work really well. One of the things we're asking is that there be some recognition of the investments that farmers are already making in such things as environmental farm plans, best management practices and the type of work that is considered as part of the contribution for the levering of funds for healthy futures.

One of the other things, on examining the healthy futures program, is that it's based on forming partnerships, and there could be a case where it's very easy for a farmer within a watershed to form a partnership with a close municipality. They would be part of a partnership and be eligible for funding, but someone who might be far removed from that municipality wouldn't be able to find a partner to get the same kind of support for an environmental initiative and we want the government to take the look at that and see if there are ways to amend the program details so that those types of issues would be addressed.

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One of the other things I wanted to briefly touch on-I know there was some examination of the whole tile drainage loan program and the municipal drain program being considered by the Ministry of Agriculture and Food. One of the questions on the tile drainage loan program was whether there was a need for this program. We actually undertook to contact most of our counties and get some feedback on it. It is still widely utilized by a lot of farmers, and in some areas the banks aren't actually even into loaning for tiles. It depends where you are. In some areas they will consider it; in some areas they won't. So we're still recommending that it be left intact. One of the things we're looking at is having the annual maximum increased to $30,000 from the present $20,000. It hasn't been changed for some time. The other aspect was the funding that the government provides to municipalities for municipal drain programs. I guess the main concern is that there's quite a variation from year to year. We're recommending that there be a multi-year budget put in place so that the unused funds from one year could be rolled into the next year, to try to even out the government expenditures on that. We still feel it's a very important program to have in place.

I guess some of the other items are detailed a little bit more later on. I'd like to leave as much time for questions as possible. I just wanted to touch on the heading of rural infrastructure. Under that heading there are things like health care, schools, child care, transportation and telecommunications. Our recommendations under those topic areas are based on the fact that rural Ontario is not the same as urban Ontario, and there are specific differences that have to be addressed. We've tried to take a look at it and come forward with some specific recommendations as to how to make sure rural residents have access to the same types of things that are somewhat taken for granted by people in urban areas.

The Chair: We have approximately five minutes for each caucus. I'll start with the official opposition.

Mrs Pupatello: Thanks so much for your presentation. I was looking for all the positive comments over the last few years that farmers might have to say about OMAFRA specifically. We remember with interest raising the issue of the closure of field offices in the House not too long ago. Immediately after that question period, the minister sent out a very quick press release saying that this in fact was not the case. We, however, had the data about exactly how many field offices were closing and didn't feel that those offices could be replaced by 1-800 numbers, given the circumstances that farmers find when they need them, in particular in emergency situations. The minister has been on record several times as saying that there has been no government that has been as helpful to farmers as the current government. I'd like your comment on that statement, and as well the importance of the field offices.

Mr Wilkinson: As far as who's the most helpful, I'm fairly young so I wouldn't be able to reach back very far to get into that. Let's put it this way: We see that there's a time period here where clearly more help is needed. When you have a 50% decrease in farm income with a forecast of another 30% next year, where we have the income situation really at a crisis level in many commodities and we see an absolute shrinking of the support to infrastructure on many fronts, it's clear in our mind-we do accept the notion that you need balanced budgets and whatnot and that you have to be reasonable in the expenditure, but our view is we've taken the hits very hard in the farm community on all fronts. There is now an opportunity close at hand where there can be some reinvestment put back in, and we've identified a host of areas where we'd like to see that happen.

The OMAFRA closures in our view is a very serious issue. I think we're willing to accept that there may be cheaper ways to deliver some services and maybe all the bricks and mortar that is currently out there isn't necessary into the future. But we think it's critically important that there still be face-to-face delivery of service. The OMAFRA extension work has been very useful in the past for us adopting new technology, and in fact has been behind many things that happened in a community-more than just the agriculture, but on many fronts: education with consumers; the list of what those offices did is endless. They're going to be desperately missed, and we're going to keep working as an organization with the minister to find some compromise position where we maintain the face-to-face service at some level and in fact are able to keep delivering the extension work into the future. We've met with him once on that issue; we're going to continue to meet and it's a big issue for our county organizations. We hope we'll find a positive resolution to this.

Mrs Pupatello: I guess the big item was that the OFA was not consulted before that announcement of the closure was made. The OFA has historically had a good working relationship with all governments. I suppose it's considered to be some kind of a joke that the best cash crop for a farmer is housing. What that means is that so many are turning over their lands to other types of development.

How are the farmers going to respond in the short term to the changes in land assessment for taxation? I don't know how most of the farmers I know deal with thousands of dollars' increase in property tax in one year. What are you doing now to deal with those issues that I think, Bill, you raised in your discussion?

Mr Mailloux: As far as some of the value-added, there's been a little bit of work done in some of the storage facilities for vegetables and things like that, but the ones we've been getting phone calls on now are family farms that have been processing poultry and things like that. They're increasing dramatically to an industrial rate, and it has quite an effect. We tend to think that if it's a facility where you're processing your own product and doing things to get it to market, it really is a farm activity.

Mr Phillips: The government has kind of already announced its priorities over the next three to four years, the big priorities. The big one is tax cuts. They've announced about $5 billion of tax cuts, and you know that will proceed. That $5 billion is annualized, by the way. It's a $5-billion tax cut every year. It's $2 billion on debt reduction, that's about $500 million a year, and about $2.5 billion on health care. The rest of the spending, they've said they will save one cent for every dollar spent, so they're going to cut the other spending by one cent. They've already told us and they ran on that basis of what they're going to do, so that would be the expectation. That doesn't mean they can't move money around within the remaining budgets, but it's going to be a challenge, perhaps.

Another comment and then a question. I appreciate your comments on the social infrastructure at the back of your report. It's extremely important that we continue to recognize the diversity in Ontario. You mentioned child care, health care, education and one or two other things.

My question is this. So much of the resources that you rely on come jointly from federal and provincial governments. That's always a challenge, I think, because governments perhaps of any political stripe find it convenient to point the finger at the other level of government. You have a couple of recommendations in here of where perhaps this committee can be encouraging a more rapid response by the provincial government when the federal government acts, and perhaps vice versa. Is that a substantial part of your concern over the next couple of years, when you see the revenue coming out of the farm community under a lot of threat?

Mr Wilkinson: Just as an example, on the delay for delivering of cheques on the farm income support programs, we're still trying to get money into people's hands for back as far as 1998. We're moving into spring planting for the year 2000 and, as Bill indicated, there's no umbrella agreement signed. Normally there would be five-year MOUs. They're trying to get a seven-year memorandum. They haven't even got that sorted out. Farmers are literally going into the spring planting with no assurance of any sort of long-term commitment. Granted, those programs are not going to stop immediately, because they tend to carry on even though an agreement hasn't been signed, but it's not the type of security that people want to have in a time period in particular where you've had just an absolute collapse in many areas of commodity prices.

If you're not getting it out of the marketplace, and the income support programs that were put in place to react to a market collapse have got delays and delays, when they come, bankers sometimes aren't very sympathetic. So a program that's announced by the federal minister, as an example, on November 4, that people will have their cheques by Christmas-those cheques still aren't cut and probably won't be cut for a number of weeks. We're not blaming one or the other level of government. All we're insisting on is, would they please act like government and, in fact, adults and get into the room and negotiate an agreement, because the money has been cleared by both levels of government and has gone through cabinet for approval of expenditures, and move those resources into the hands of the farm families that need that. Anywhere we can get assistance on that, on fed-provincial agreements to act expeditiously, we would really appreciate that support.

Mr Phillips: We heard the same comment yesterday from another group. Thank you.

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Mr Christopherson: Thank you for your presentation. Good to see you all again. I would just state that I recently attended a local briefing session of the OFA, and for all the time that I was regional councillor in Hamilton-Wentworth, I have to say that I wasn't aware, until it was put right in front of me, of the huge percentage of our local economy that was driven by farming. Absolutely amazing.

When you think of Hamilton, you tend to think of steel mills and now diversified into health training and health provision, education, etc, but farming is still a huge percentage. It's not just out in the rural areas or out in the parts of the province that we sort of say, geographically, that's farmland, but within a 15-minute drive or less of downtown Hamilton, within the region of Hamilton-Wentworth and within the boundaries of the new city-notwithstanding the goofy way Flamborough is being treated by this government-there's still a huge part of our economy that is farmland.

I have to say I pay a whole lot more attention when I'm thinking home business and not just province-wide business. When the stuff is put right in front of you and you look at the number of jobs, the dollars that are flowed, the amount of money that's brought into the community as a result, there's an incredible amount of money. I agree with my colleagues in the official opposition that for a government who likes to stand up, basically leaving the impression that they are the only ones that care about farmers, when you take a look at the stats, it's quite surprising.

The chart that you have on page 9 shows, starting 1989-90, 1990-91, virtually the same, in around $53 million for agri-food research by the government. We dropped down during the depths of the recession again, the NDP government, but in the depths of the recession there was a recognition that you can't just pull the rug out from underneath the farming community. It dropped, but it only dropped to $48 million.

Now, in the biggest boom that we've ever had in North America, we see the most dramatic drop is under this government during the economic surge, down to about $36 million. Once again, the stats and reality are so different from what the government, and particularly the minister, stand up in the House and say.

What I want to ask you is-and it's going to put you on the spot-being that you run it as a business and this government argues that the trade-offs have been beneficial and fair to virtually everyone in terms of what it costs to implement the tax cut, the wonderful tax cut that's supposed to solve everybody's problems, being business people, has this been a trade-off for you that has worked? In other words, whatever has happened at the end of the day when you look at filling out taxes versus what has happened to your industry, the erosion of provincial support, has this been a fair trade-off?

I'm not trying to twist you into condemning the tax cuts, but I am trying to get a sense from you, because we do get it from health care providers and education providers that everybody likes a tax cut, but this trade-off has not been worth it. I wonder how you feel about that trade-off within the farming community.

Mr Wilkinson: There are a number of places to do tax cuts, and obviously one is on the personal income tax side. One area we're advocating where it would be a real benefit to the farm community is the retail sales tax.

Mr Christopherson: Sales tax, yes.

Mr Wilkinson: It was never intended to be on food. There was never an intent to have a tax on food in this country or in this province. The retail sales tax has been changed somewhat. There have been improvements. To that end, the government of the day needs credit for it. We want it to continue to clean off all those items as applied to agriculture and make them permanent at source point.

When it comes to cuts on the personal income tax, it's always nice to make money before an income tax cut. It gives you a lot of benefit. If you've seen your net income drop from $1.5 billion to a forecast next year of $300 million, the benefit of that tax cut is marginalized by the drop in income, not that there's aren't some individuals making money farming still; there are.

Mr Christopherson: The poor feel much the same way.

Mr Wilkinson: Our view is, we're not going to comment. We're not the government. We're just a lobby organization, even though for the most important community in the country, I might add, in the second-biggest industry, agriculture. Our view is we need some reinvestment. We think the government at some point can probably slow down a little bit on the other front. It may not be easy to convince them, but if you add these up, we're talking reinvestment-not too many cuts, other than on the tax side.

Mr Christopherson: Hear, hear.

Mr Bonnett: Tied into what you were saying, though, is the whole focus of this, that we want some investment in the agricultural industry, and part of the thing that we're doing in the local county areas is trying to get those economic impact studies that you referred to. I think there's been a lack of recognition as to how many jobs are created and how much impact it has on the economy.

Mr Christopherson: Absolutely.

Mr Bonnett: When we're looking at this we're not looking at the issue of tax cut per se; what we're looking at is there's got to be a reallocation to invest in an industry that can actually generate economic activity for the province.

The Chair: Thank you very much, Mr Christopherson.

Mr Wilkinson: Could I just make one very short point?

The Chair: Sure.

Mr Wilkinson: It's important to look at the slip in OMAFRA government expenditures that occurred overall, a growth of government expenditure from $30 billion to $60 billion, and at that time period us dropping from 1.15 to 0.49. It wouldn't be fair now to come in and argue and say everybody should pay equally. We view that we've had a downhill slide for a number of years and have not seen the growth that many other sectors have seen over a time period. So when it comes to reductions, our point of view would be we already gave our pint of blood at the office; there's no need to come around to get another one. In fact, we would like some infusion here.

We can't speak on behalf of the other part of the economy, but we think all the indicators are saying that rural Ontario is in serious problems between the combination of loss of revenue and some of these reductions on all fronts. When there's a cut in health care, it hurts rural Ontario the worst. When there's a cut in schools, it hurts rural Ontario the worst. When you deregulate Hydro, it hurts us the worst. Telephone: It hurts us the worst. On all those fronts we lose a bigger percentage service because we're now not an effective area for big business to move in to make the money on. When you get wiped on all of those to start with and then you have OMAFRA budget cuts, and then you have your income out of the marketplace drop by 75%, this starts to get to be fairly serious very quickly, as you can well imagine.

The Chair: Government side.

Mr Galt: Thanks for your presentation and the very thoughtful package that has been put together here. Your original comment there to Mrs Pupatello-a great politician you should maybe consider to have in the role that you're in. I recognize you when we were on the road in consultation for the intensive farm/nutrient management programs-tremendous information that your organization provided at the various stops, and also to the rural/agricultural community for being so polite at those meetings and bringing forth just excellent information.

I'm thrilled sitting here to find that Mr Christopherson-I think he has been on the road to Damascus-has been converted. It's just wonderful that you've seen the light, the importantance of agriculture.

The reference to the farm that went from some $600 or so in taxes up to some $9,000, I think it should be noted my understanding is that farm was roughly in the neighbourhood of 90 to 100 acres and has a poultry processing plant on it that processes some 15,000 chickens per week. Therefore, if we went to actual value assessment, which the previous governments did not have the intestinal fortitude to take a chance and do, which is about fairness, it becomes very difficult, and I have some empathy for those assessors who are trying to sort out what is a value-added for the farmers versus what is industrial/commercial. The same in my area with apple storage facilities and in other areas of vegetable storage and so on. It's difficult for assessors, and hopefully some of that can be worked out.

Maybe this poultry processing plant handles all the poultry from that farm and should be considered in that sort of area. But you move from town to country, how does an assessor go about that? I think it's something that should be addressed, don't take me wrong.

Just a couple of comments on some of the things that have happened. One of the things that you people lobbied very strongly on was the farm tax rebate, having to apply for it and getting it back. Our government has made the move to separate that out where you don't pay it. You pay 25% on your farm. The other 75% comes through the community reinvestment fund. The opposition would like to say it's all downloaded and the local townships are not getting that 75%, when in fact they definitely are.

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On the retail sales tax, for example, on the building materials, which was brought in on an annual basis, which you people of course appreciated for the building materials for farms, and that was later converted to permanency, and some of the other areas in the retail sales tax. I appreciate the comment you're making here in item number 5 at the bottom of the first page, that there be producer ID cards. Why go through the exercise of paying it and then getting it back? It's creating work for somebody but that is not true work; in my estimation that's a bit of wasted time.

I wanted to comment on the budget, which got down in 1995-96 to $263 million, and that's outside of the actual farm tax rebate, the farm tax rebate that year being $157 million. That budget has moved from $263 million-and I'm quoting right from the actual budget-to the plan this year to spend $365 million. That's an increase of $103 million. Depending on where you look at the roundoff, it may be $102 million; I won't debate that. That's approximately a 40% increase, the largest increase of any of the ministries in the Ontario government. I just point that out while we're here.

We've talked about farm safety nets and the concern there. Certainly the ministry has been working very hard, along with the Premier and the Honourable Ernie Hardeman, to get fair safety net money from the federal government. I haven't been around the ministry much in the last few days, but my understanding is that we're now winning and getting 23%, similar to the 23%-you're shaking your head so I guess I'm right on that. We were at 16%, all the feds would flow in here.

You commented on some of the whole farm relief, that kind of thing. I think our government did exceptionally well with the ice storm that occurred a couple of years ago in eastern Ontario. The money was flowing in within weeks; similarly that year with the hail damage that occurred in my area, and then the problem that we had as it related to the plummeting hog prices at the end of the year and the resulting rolling this out.

The Chair: Mr Galt, I must point out that you've run out of time.

Mr Galt: I was getting around to the question.

The Chair: On behalf of the committee, gentlemen, thank you very much.

CO-OPERATIVE HOUSING FEDERATION OF CANADA

The Chair: Michael Shapcott, manager of government relations, Co-operative Housing Federation of Canada, you have a half-hour for presentation and questions and answers. The question-and-answer period is split among the three parties equally. Thank you for coming.

Ms Joyce Morris: Thank you very much for having us. We appreciate the opportunity to make a pre-budget submission.

The Chair: Would you just put your name in for the record.

Ms Morris: I'm sorry. I'll get there.

On behalf of the 125,000 men, women and children living in non-profit housing co-operatives in Ontario, my name is Joyce Morris and I'm the president of the Ontario council of the Co-operative Housing Federation of Canada. With me today is Michael Shapcott, manager of government relations and communications for the Ontario region. If he's looking surprised, it's because I got his title right.

I live in the New Generation Co-operative in Kitchener and the 30 families who live there find our co-op a really great place to call home. If you were to visit, and every member of this committee is more than welcome to drop by-I'll put the coffee on-you'd think that our co-op looks like a simple but pleasant single-family neighbourhood, well maintained by residents who obviously are proud of their homes.

The 550 co-ops in almost every part of Ontario come in lots of different shapes and sizes-high-rises, townhouses, single-family dwellings-but there is one thing that makes every one of them special: The members who live in the co-op own and manage their homes.

Housing co-ops, much like farm co-ops, credit unions and our other co-op partners, are based on the self-help principle. We work together to operate efficiently as small community-based businesses, yet we also take very seriously our responsibility to provide good-quality homes to low- and moderate-income people. You'll find more information about our housing co-ops in our written submission.

As the government of Ontario prepares for the year 2000 budget, co-op members from all parts of the province have an important message for this committee: Please do not ignore the serious housing crisis facing Ontario. The government has a responsibility to take action to ensure that everyone has a decent place to call home.

We have two concerns we'd like to present to the committee today. The province must ensure, first, that there is enough new affordable housing to meet the needs of all Ontarians; and second, that the province's 250,000 co-op and non-profit households are protected and their ability to manage their home is enhanced as the government moves ahead with its plans to transfer housing administration to the municipalities.

Mr Michael Shapcott: Almost immediately after the election of 1995, the government of Ontario launched into a bold experiment: It stopped funding new affordable housing and cancelled about 17,000 co-op and non-profit housing projects that had been approved for development. The government said they would rely on the private sector to deliver new rental housing in the future. The province's actions came about two years after the federal government also cancelled its funding for new affordable housing. So we had a situation where for the first time in 50 years both senior levels of government in Ontario had abandoned their responsibility to develop affordable housing for lower-income households.

There's no major country in the world where senior levels of government have taken this kind of action. The impact in terms of ending new development was not felt immediately, however, because a number of affordable housing projects that had been approved in previous years were under construction in the pipeline. So for about two or three years after the 1995 decision by the Harris government there were a small number of new projects in the pipeline. However, construction began to dwindle, even as the demand for new affordable housing was growing. By 1999, the province was mired deep in a full-blown housing crisis, the worst one we have seen in decades-no new housing, yet plenty of new demand.

Our co-op members knew that the rental market was getting worse. We wanted to find out exactly how bad things really were so that we could make the case to government for a major reinvestment in housing. So late in 1998, the Co-operative Housing Federation of Canada-Ontario Region joined with the Ontario Non-Profit Housing Association to co-sponsor a major rental housing research project called Where's Home? Earlier today, Mr Redway, deputant on behalf of Putting Housing Back on the Public Agenda, offered copies of that study to you.

The first part of that study was released in May 1999. It took an in-depth look at the rental market in eight communities. Part 2, which was co-sponsored by our Housing Again partners, brought in an additional 13 communities. So, taken together, Where's Home? provides the most comprehensive and current overview of rental housing in Ontario and it makes for grim reading. You'll find background information on Where's Home? in our written submission, and we'd be pleased to provide you with copies if you didn't get a copy earlier.

We think that you'll find it's worth taking the time to discover the real story on rental housing in Ontario. I'd like to cover just a couple of highlights. First of all, rental vacancy rates are dropping in almost all parts of the province. Second, rents are rising faster than the rate of inflation in most parts of the province. Tenant household incomes are stagnant or dropping in most parts of the province. There is little new private rental housing being built and no new non-profit housing being built. More than 3,300 private rent supplement agreements were lost as agreements were cancelled by the province in the years leading up to 1998, and more than 13,400 private rental units were lost as they were converted to condominium or demolished in the years up to 1998.

Ms Morris: The bottom line, ladies and gentlemen: Tenants in Ontario are caught in a double bind. First, they're being squeezed between rising rents and stagnant or falling incomes. Second, the need for rental housing is growing while the supply is in fact collapsing.

Our study reported some shocking findings. More than 615,000 tenant households, almost half of all tenants in Ontario, have affordability problems. More than 300,000 tenant households, about one in four tenants in Ontario, are on the brink of homelessness.

All the trends show that the situation is getting worse. A 1997 report by the Canada Mortgage and Housing Corp projected that Ontario will need 80,000 new rental units in the five years leading up to the year 2001, but the private sector will likely only be able to deliver 6,000 units, leaving the province with a shortfall of 74,000 rental units.

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Perhaps the most startling finding of our study, and the one that was carried in a flood of news reports in every part of our province, was this: The housing crisis is not confined to Toronto, Ottawa, or a couple of big centres. In fact, the percentage of tenant households at risk of homelessness is higher in Sudbury, Kingston, Peterborough and Barrie than it is in Toronto.

Homelessness is the most visible sign of the growing housing crisis. Our study documented an overwhelming increase in homelessness in Ontario in recent years. In the eight communities that were part of the original study, there were almost 1.5 million bed nights in official homeless shelters. There were another 20,000 unofficial bed nights with people sleeping on mats on the floor in makeshift shelters through Out of the Cold programs. Barrie recorded a 1,235% increase in shelter services in the four years leading up to 1998. Peterborough reported a 98% increase, while Peel region had a 41% increase.

There is a human dimension behind these numbers. Kenneth Eckenswiller, a 65-year-old homeless man, froze to death in Centennial Gardens in St Catharines just this last January 11. Dr Stephen Hwang, assistant professor of medicine and an epidemiologist at the F.K. Morrow Inner City Health Research Unit at our own St Michael's Hospital in Toronto, did a detailed study of 9,000 homeless men from 1995 to 1997. He identified more than 200 deaths. That's about three deaths every two weeks. Since homeless men represent only about half of those using shelters in Toronto, and since there are more homeless people now than there were when his study ended in 1997, Dr Hwang has since concluded that the numbers would be expected to be higher today.

Please take a moment to think about the hundreds of homeless deaths, the thousands of homeless people and the hundreds of thousands of tenant households in this province on the brink of homelessness. Is there a single member of this committee who is not alarmed? Is there a single member of this committee who is not prepared to take action to end this scourge and the homeless crisis?

Mr Shapcott: What about the high hopes of the provincial government that the private sector would step into the breach once government funding of affordable housing was ended? We know the private sector has built almost no new housing in recent years. In fact, the downward trend started way back in the early 1970s, well before rent controls were first introduced in Ontario, and it has been going down ever since then. In fact, not only is the private sector not building new affordable rental housing, but it's important to know that Ontario is actually losing a growing amount of the private stock that we currently have.

The November 1999 numbers from Canada Mortgage and Housing Corp show that in Hamilton there were 574 fewer private rental units in 1999 than in 1998. Over the same period, Ottawa lost 520 private units, while Kitchener-Waterloo, Mr Arnott's area, lost 330 units. In these communities, the private rental vacancy rate was very low and rents were rising rapidly. Private market theory would suggest developers would want to build new homes to meet the huge demand and to recover rents. But the private sector didn't build.

Why not? Private developer Mitchell Cohen, in a national television commentary, said: "When our governments abandoned their housing programs several years ago, they hoped that we, the developers, would fill the gap. We haven't, because it just doesn't work. Without government participation, affordable rental housing won't be built because it doesn't make any business sense. Rents that would be affordable won't cover expenses. And that means the communities we will build, like this one, will be condominiums-far out of reach for the people who need housing the most."

Tridel vice-president Jim Ritchie has been quoted as saying, "With today's costs and the price of land, I don't know how you make affordable suites in the downtown core of the city."

Greg Lampert, a private consultant who was hired by the Toronto Homelessness Action Task Force and has been hired on many occasions by the Ontario Ministry of Municipal Affairs and Housing, estimated that it would cost about $130,000 to build a high-rise unit in Toronto and that a landlord would require a monthly "economic" rent of at least $1,300 to cover financing and operating costs and make a reasonable return on investment. But low and even moderate income households in Toronto can only afford market rents of $350 to $750 a month.

The Ontario government has recognized the gap between market rent and economic rents and does offer modest incentives, such as tax breaks, some reduced land prices and less red tape, to private developers to entire them to build affordable housing. Still, almost no private developers are building. Again to Mr Arnott's part of the province, Kitchener-Waterloo developer Lyle Hallman said in a recent interview, "The incentives by the province are not enough."

In addition to the tragic cost in human lives, we also want to say to this committee that homelessness is not cheap for taxpayers. The city of Toronto will spend a total of $96 million this year for emergency hostel services; the province will contribute about $63 million of that amount. Taxpayers, municipal and provincial, are paying an average of $57 per night per homeless person or, for a family of four, $228 a night. That family of four, for $220 a night, is likely to be crammed into a motel room-one room, no privacy, no amenities. Year after year, that is going to increase as the cost of renting rooms and other expenses rise.

In 1995, the Co-operative Housing Federation conducted a study of the finances of a representative sample of our co-op projects across the province. We found that the daily subsidy for a co-op unit occupied by a low-income household ranged from $25 to $43 a day, which is just a fraction of the cost of keeping that same family in a tiny motel room. I want you to keep in mind that one important feature of provincial co-op housing programs is that every year the amount of subsidy decreases until it reaches zero and then there's a partial repayment from the co-op back to the government. While it costs more every year for the government to provide barely adequate shelter for a homeless family, it costs a lot less to provide a decent, affordable home in a non-profit co-op and that amount drops every year.

Our submission to this committee is, it's not hard to see where there's value for taxpayer's money. Co-op housing and other forms of non-profit housing are a bargain compared with welfare motels.

Ms Morris: Although the provincial government announced that it was "getting out of the housing business" in 1995, we want to acknowledge that the province has in fact started to get back into housing. In March 1999, the province announced funding for a limited supportive housing program and also for shelter subsidies. We think this announcement, although meagre when set against the need so clearly demonstrated in our study, Where's Home?, shows a willingness by the province to respond to this growing crisis. We want to encourage the province to take even more bold steps in terms of new funding for new affordable housing.

Municipalities, through their national organization, the Federation of Canadian Municipalities, have called on federal and provincial governments to work with them in developing a new national housing strategy. One proposal calls for housing to be a component of a new municipal infrastructure program with the costs to be shared among all three levels of government. Several municipalities, including Ottawa, London and Toronto, have already created housing funds. The federal government took the first step with its December 17 homelessness strategy. At the same time, federal housing minister Alfonso Gagliano said that a national housing program would be the "next step." He said he would be consulting with his provincial counterparts.

Now it's the time for the province to contribute its fair share towards housing solutions.

Co-op members across Ontario support the One Per Cent Solution, a national campaign that calls on all levels of government to double the amount of money they've been spending on housing and related services. The government of Ontario was spending about $800 million to support social housing in the province before it transferred that cost to the municipalities. This would be an ideal target for the province to aim for in terms of new spending. This would allow the province to fund at least 10,000 new and renovated affordable housing units annually.

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Mr Shapcott: Our concern is not simply for new housing for those who desperately need it, but also to protect our existing stock of affordable housing, so we'd like to make a few comments about that as well.

Currently, there are about as quarter of a million social housing units under provincial administration. Some were developed under provincial programs, some under federal programs and the rest under shared-cost federal-provincial programs. The province is now poised to transfer administration of these homes to newly created municipal bodies across the province.

Most of the households are in community-based non-profits or government-owned public housing projects, but about 21,000 are in housing co-operatives. There are a variety of provincial housing programs with differing rules for differing forms of social housing, but every housing co-op has a legal operating agreement with the government of Ontario. These contracts run for 35 years and they set out the roles and responsibilities of the government and the housing providers.

In 1998, the province started billing municipalities roughly $800 million for the cost of provincial social housing. It was a controversial decision and, quite frankly, it's hard to find anyone who supported the plan. The Association of Municipalities of Ontario didn't support it, co-op and non-profit housing providers opposed the plan, and even Premier Mike Harris and the then housing minister, Al Leach, candidly acknowledged in speeches to municipal leaders that there were serious policy concerns with their transfer plan. Minister Leach even offered that in time the province might reverse its decision if the finances of the province permitted. However, back in 1998, the province's main concern was to balance off other fiscal measures, mainly the transfer up of municipal education spending.

Just as municipal leaders, co-op and non-profit housing providers-all the key housing stakeholders in Ontario-agreed that the provincial-municipal plan was ill-conceived, there was a virtual unanimity that if the province intended to push ahead with the plan it must work closely with stakeholders to reform programs before the transfer takes place to ensure social housing providers are on a more businesslike footing. Everyone has agreed the programs need to be fixed up before administration is transferred. So several years ago the province started a reform process, which was stalled in November 1998.

Last November the province signed a social housing transfer deal with the federal government that took on the responsibility for a number of units developed under federal programs. For the federally administered housing stock, plus co-ops and other social housing already under provincial administration, the signing of the federal-provincial social housing transfer agreement suddenly thrust the provincial-municipal transfer into high gear.

Ms Morris: The current plans of the government call for a program review, which has been stalled for 15 months, to be completed by the end of February. Soon after, we have been told, the cabinet will consider legislation to transfer the administration to municipalities. We understand that the legislation will replace current programs and legal operating agreements with new contracts. Frankly, our members are concerned that the government's haste to complete the transfer to municipalities could create serious problems in social housing programs that will affect the financial viability of a quarter of a million homes in Ontario, gentlemen and ladies-mine included.

It makes sense to get the review process right the first time. I'm sure I don't have to tell the members of this committee that it is more expensive in every sense of the word to correct problems months or even years down the line. The best way to ensure the process produces the best results is to ensure that the key stakeholders are working together as full partners in the reform process. Housing co-ops believe that it may be possible to reach consensus on the key issues facing the program review, but not in the pressure cooker atmosphere that's been created by the provincial government. Slow down just a bit and get it right. Save taxpayers and co-op housing members a load of money by preventing costly mistakes. Save municipalities and co-ops from administrative tangles that are inevitable if the process is rushed and flawed changes are imposed by the government.

We have two additional financial concerns regarding the provincial-municipal transfer. First, all the stakeholders-co-op members and municipalities-are concerned about the future liability for capital spending that municipalities and co-ops will be required to share as part of the social housing transfer. For years, going back to previous governments, short-sighted officials have cut the annual spending that goes into capital reserves. These reserves, which build up gradually over years, are used to repair or replace major items such as furnaces, major appliances and roofs. Cutting a few dollars to save some money today simply shifts the liability to the future, when housing providers, and municipalities, will face big bills for capital projects. The choice then will be increasing debt, rapidly increasing rents or perhaps cutting spending on parks to pay for capital repairs in social housing.

The current government, after considerable pressure from housing providers, replaced some of the additional reserves that were held back. But there is still a huge shortfall. In addition, there is a big maintenance backlog in some of the oldest social housing in the province, government-run public housing. This housing has been administered by the province for decades, but arrears in capital spending have been building up. There is no detailed technical audit that pinpoints the unfunded capital liability that the province is forcing municipalities to accept as part of the social housing transfer. A study late last year by Peel region estimated the amount at perhaps $1 billion across the province. It is difficult to determine the exact figure. The provincial government needs to follow through on the recommendation of its own social housing committee, which has called for a detailed study to review the adequacy of social housing reserves and top them up if necessary. Our members also believe that the province should support the initiative of co-op and non-profit sector groups to put in place an investment program to improve the financial performance of the reserve funds and ensure better planning.

Mr Shapcott: Mr Chairman, our final financial concern relates to the provincial-municipal transfer and the details of the federal-provincial social housing transfer. Unlike the province, which is transferring both the cost of social housing along with the administration, the federal government will continue to pay hundreds of millions of dollars annually to the province for more than three decades after it has transferred administration. So the federal government has built two sweeteners into the federal-provincial social housing agreement. The first was a one-time-only signing bonus, as it is called, of $58 million, to be paid by Ottawa to the province. To date, the province has announced that it will allocate $30 million of this amount to provide additional capital reserves, a small but welcome move. But there has been no announcement about the remaining $28 million.

The second financial bonus to the province comes from the calculation of federal housing payments to the province. In simple terms, this year the federal government will be paying the province $525 million to fund federal social housing in Ontario, but the actual cost of administering that housing is only about $440 million. Ontario gets a bonus of $85 million, of which the province, to date, has said it will spend about $50 million on a rental supplement program that has been announced twice but not yet implemented. The plans for the remaining $35 million are unclear. But when you add up the surpluses over the next three decades, the total amounts to hundreds of millions of dollars.

The provincial government must make a clear commitment that every dollar, every penny from the federal government as part of the federal-provincial social housing agreement should flow directly into affordable housing. We'd like to end by suggesting that the province start the ball rolling by matching, dollar for dollar, the surplus funds in the federal-provincial agreement and using that to create a new provincial fund to create desperately needed new affordable housing. Of course, as we have suggested, the province needs to go much further in committing substantial dollars to ease the housing crisis that is sweeping our province.

The Vice-Chair (Mr Doug Galt): Thanks very much for your presentation. We now have time for about one minute per caucus, starting with the third party.

Mr Christopherson: Thank you very much for your presentation. One minute is not a long time.

Ms Morris: We'll talk fast.

Mr Christopherson: I can do that-talk fast and loud-as my colleagues well know.

I just want to underscore everything you've said. I was very active in affordable housing in my municipal days, heading up a regional task force on affordable housing. I followed it closely as an important issue when we were part of government. And if that is not enough, my mother is active in the women's co-op, off Queenston Road in Hamilton. That alone would be enough to keep me interested in co-ops.

Mr Shapcott: One of the leaders of our movement.

Ms Morris: She'll keep you in line.

Mr Christopherson: Absolutely. She loves her co-op. In fact, everyone there-the women's co-op has made such an incredible difference to all their lives. She has been the president of the co-op, she was active in the local federation, so she is into it both as a resident and as an activist in her own right. She is so concerned about this downloading and what it means, and you've touched on it.

I'll underscore the fact that housing being downloaded to municipalities is a disaster. It's going to be up against the increased costs that are now going to be downloaded onto municipalities for public transit. There are environmental issues, there are road repair issues, there are just a whole host of issues. Quite frankly, when anybody who is a community activist looks at the list of things that municipalities are now responsible for, there are so many items that are going to be competing. A good friend of mine, Alderman Andrea Horwath, is on there and is facing these kinds of horrible choices that we shouldn't have to make at the municipal level. We ought to be keeping them here at the provincial level.

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The Vice-Chair: I've been very generous-

Mr Christopherson: Yes, you were.

The Vice-Chair: I've given you a lot of extra time, and I'm sure your mother appreciates your comments too.

Mr Christopherson: Be careful. Don't tangle with my mom.

The Vice-Chair: I was being very complimentary.

Mr Christopherson: I appreciate your discretion.

The Vice-Chair: We now go to the government.

Mr Arnott: On behalf of the government, thank you very much for your presentation. You've provided a unique perspective. There have been quite a number of presentations today on the housing issue, on the homelessness issue, but your point of view has been unique, representing the co-operative movement. I think it's going to be very helpful to the government.

You've identified quite a number of issues and we have certainly some trends that are not going in the right direction. More has to be done to encourage the private sector to build affordable housing. I certainly agree and I think that the role the co-operative housing movement plays in the overall mix is very important too. I don't have any questions but I hope to continue the dialogue.

Mrs Morris: I know you're in our neighbourhood quite often, so let me know when you're down. I'll put the coffee pot on.

Mr Arnott: I'd like to do that. Thank you.

The Vice-Chair: Thank you very much for being so concise. To the Official Opposition.

Mr Caplan: First of all, thank you for your presentation. I thought it was excellent. My question is simply this: The federal-provincial deal provided that any savings that arose-that $525 million the federal government is funding and the $440 million that the provincial government is spending-of that $85 million, everything was supposed to be invested in housing; $50 million is and $35 million is not. In your opinion, is the provincial government in breach of their own agreement that they've made with the federal government?

Mr Shapcott: At this point, there are a couple of problems. We don't know, the government hasn't announced, what they're going to do with certain amounts of that money. Clearly, if the money is going to somehow dribble back into general revenues, that is a breach of the federal-provincial agreement, and it's one we'll certainly take to Ottawa and ask them to hold the province accountable.

The other thing is that a significant chunk of that, the $50 million, is for a program that the government has announced, which may or may not be a useful program but it hasn't yet been implemented. It was announced first in March of last year and then again in November-so until there's an actual program and the real dollars are there.

But if I could also just say, and I know the time is very tight Mr Caplan, a real concern of our organization is that the government might be tempted to use the federal dollars to replace provincial housing dollars, reducing its spending, and by a little bit of financial sleight of hand, will simply move federal dollars in to replace provincial dollars. That's not the spirit of the federal-provincial agreement; it was that federal dollars will be used in addition to provincial dollars already committed. So we'll be vigilant to make sure that doesn't happen.

The Vice-Chair: Thank you, Mr Caplan, for your question and thank you, Michael Shapcott and Joyce Morris, for your presentation. We much appreciated your coming forward.

ONTARIO UNDERGRADUATE STUDENT ALLIANCE

The Vice-Chair: Our next presenter is the Ontario Undergraduate Student Alliance, and Ryan Parks is the executive director. You have 30 minutes for your total presentation and questions and answers, and the question-and-answer time is divided three ways among the three parties.

Mr Ryan Parks: On behalf of the Ontario Undergraduate Student Alliance, I'd like to thank the members of the committee for this opportunity to speak with you today.

OUSA represents 130,000 full- and part-time undergraduate and professional students in Ontario. I will attempt to be as brief as possible with my presentation to allow time for discussion and questions. I do have packages for the members. Included in these handouts is the full text of my presentation, a backgrounder on our organization, an executive summary on our most recent tuition research paper and then two fact sheets, one on student debt and one on the general costs of a university education.

In today's information-based economy, education is critical to both the prosperity of the individual and of the nation. The maintenance of an accessible post-secondary education system that is of high quality is vital if Ontario is to continue to remain internationally competitive.

With this in mind, we believe that the Ontario government must do two things. First, it must adequately fund our universities to allow these centres of knowledge and innovation to keep step with competitors from other parts of Canada and other areas of the world. Second, our government must also support the university students who, through diligent academic study and hard work, are attempting to better both their lives and the circumstances of their communities.

Ontario's students are Ontario's future. We should ensure that financial pressures and constraints do not discourage young people from pursuing a university education. As the Honourable Lieutenant Governor reassured us in this year's throne speech, our current government is committed to ensuring that every qualified and motivated student finds a spot at an Ontario university. This is an ambitious promise and one that Ontario students wholeheartedly support. Unfortunately, at this time, it seems as if government policy may be at odds with government intentions.

Currently Ontario students face two major barriers to a university education: tuition fees and student debt. What the committee will not hear from me today-and I think it's important that I point this out-is that student tuition should be free or that students should abdicate their personal responsibility when it comes to repaying their student loans. What I hope the committee will understand, however, is that the students' requests remain reasonable in an increasingly unreasonable post-secondary environment.

Tuition in this province has been on the rise for quite some time now and certainly no Ontario political party has had a monopoly on tuition increases. During the course of the 1990s, the average undergraduate tuition has risen 134.2%, and although we remain cautiously optimistic, it seems that this trend will continue for the immediate future. In real dollars, tuition has gone from $1,600 in the 1990-91 academic year to $3,872, on average, in this past academic year. Moreover, with the recent deregulation of tuition fees for all professional and graduate programs and for certain undergraduate programs-for example, computer science, engineering, and certain business programs-the cost of tuition in general has risen astronomically. As an example of this, the tuition fees for many medical programs have jumped over 100% in a single year. The year that took place was 1997-98.

These changes have been difficult for students. I should point out that students agree that they receive personal benefit and value from their university education. As a result, we support the concept of shared responsibility. Students are not asking for a free ride but are willing to work hard for their education. It would seem important that this concept of shared responsibility be defined. Well, the Ontario government has done just that. In their recent election literature they state that an appropriate target for student contribution is 35% of the total cost of the student's education. Like that target or not, we have reached it, and at many Ontario universities, we have far surpassed it. In fact, at some universities, such as the University of Western Ontario two years ago, students were contributing 50% to the general operating revenue through their tuition fees. Of course, this number has since been reduced, not because Western has reduced tuition fees but because they have found a way to increase other sources of income. Therein is an example of the problem with percentages. Currently the University of Windsor students contribute 41% of the school's revenue through tuition fees, and Wilfrid Laurier is nearing the 50% mark of student contribution. Clearly, this is a campaign commitment that students would like to see kept by our government.

Tuition levels have been increasing for a long time, yet the effects of these increases on accessibility remain unknown. In recent history there has not been a comprehensive assessment of the effects of rising education costs on the accessibility of a university education. After more than 10 years of continual and significant tuition increases, students believe that it is the government's responsibility to conduct such a study.

Currently the only measure the ministry uses to determine level of accessibility at our universities is that of increasing applications and enrolment. We would assert that this is more a measure of institutional capacity versus shifting demographic patterns than a true measure of accessibility. The question is not whether the universities are filling their classroom seats; the question is, are the universities filling those seats with the same types of people?

If tuition and ancillary fees are increasing dramatically, yet wages for summer jobs and part-time jobs are not, the amount of money that students need to borrow to fund their education will necessarily increase, and increase it has. In 1991 the average amount of an undergraduate student loan was $8,675, but by 1996 the average student debt resulting from the same four-year course of study was $21,000. That's an increase of 41% over a five-year period. It is estimated that this figure has reached $25,000 in 1998 and stands at $28,000 for the current academic year.

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The alarming concern is that there appears to be no secure ceiling on this increasing debt. To put this $28,000 figure in context, the average undergraduate debt upon completion of four years of school at Yale University, one of the United States' most expensive and exclusive universities, is C$18,000.

We are calling on our young graduates to shoulder a very heavy burden. Based on these estimates, a young university-educated couple would start their lives together with $50,000 in debt. To then expect this young family to be active participants in the Ontario economy is, to say the least, optimistic. With an existing $50,000 debt looming, it becomes increasingly difficult to take on additional responsibilities of a mortgage, a car loan, or the costs associated with starting a family. In this instance, we see a significant transfer of debt: the transfer of public debt to private debt. High personal debts can be equally harmful to the economy.

One thing I should point out before I go on is that when I refer to this sample young family, these are students who have studied for four years in an undergraduate program at an Ontario university. I know there are instances, and they are often talked about, where a student, after two years of a certain program, is $27,000 in debt, or after a four-year degree is $50,000 or $60,000 in debt. What we are trying to hit on here is the average student who goes in for a four-year degree in science or in political science or history and comes out from that with these levels of debt.

By advocating for, at the very least, a maintenance of the current tuition levels, we are not suggesting that Ontario's universities have adequate resources to provide high-quality programming. I was a member of the University of Western Ontario's board of governors in 1995-96 when the first wave of cuts hit the post-secondary sector, and the results were devastating. Ontario's universities have been forced to seek other sources of revenue, and the results, as I have mentioned above, have not been good for students. Students have shouldered nearly the entire burden of government cuts to universities.

Although Ontario has the largest population and the greatest wealth of all provinces in Canada, Ontario's universities receive the least amount of public per capita funding. Ontario now ranks 10th out of 10 provinces in per capita government funding of post-secondary education. The results have been crumbling infrastructure and significant reductions in faculty, staff and resources.

Students acknowledge the federal government's responsibility to provide transfer payments to the provinces and know that these have been culled significantly in previous years, but it is our position that the provincial governments cannot rely on this factor as justification for post-secondary education's underfunding. Despite transfer payments being cut to all provinces across the board, Ontario and Quebec are the only provinces that have reduced public education spending in the last three years. It is our opinion that despite fiscal constraints, all provincial governments set funding priorities. In Ontario and Quebec during the last three years, the priority, to this point in time, has not been post-secondary education.

Since 1978, universities' annual operating grants have dropped from close to $10,000 per full-time student to $6,000 per full-time student. Although all public sectors have received cuts in some manner, universities have been hardest hit, and over a much longer period of time. Ontario's spending on universities has dropped from 5.9% to 3.4% of total provincial budget.

We are asking the government to reverse this unfortunate situation and restore government funding to the national average. To put this in dollar terms, it would equate to an increase of $50 per Ontarian. This would seem a sound investment in the continued growth of our economy and education of our society.

Rising tuition levels, student debt, and less than adequate levels of funding are jeopardizing our post-secondary education system. The knowledge and graduates that it produces make up the cornerstone of an innovative and competitive Ontario economy that our government often refers to. Students realize that governments make difficult choices, and we remain available at all times to discuss the effects of these choices. Education is an investment, not an expense. A highly skilled and critically thinking workforce is what Ontario needs, and a sound education policy will deliver it.

We recommend to the committee that Ontario's tuition fees be held at their current levels until such time as a comprehensive study on accessibility to university education can be completed. Upon the completion of this study, if we indeed find that tuition increases have not affected accessibility and we're still seeing the same cross-section of socio-economic backgrounds, then possibly it's time to reassess the current tuition situation, and possibly at that time tuitions could increase further.

Second, we recommend that the government seek out ways to assist in reducing students' debt loads so that students, upon graduation, can more readily participate as full economic actors in the Ontario economy. One of the ways that Ontario can do this is to follow through with the pledge of former Minister of Education David Johnson to reinvest the full savings from the Canadian Millennium Scholarship fund to the best interests of students. For those of you who are unaware, the millennium fund money that comes from the millennium foundation interacts with the loan forgiveness that the Ontario government allows students in such a way that it decreases the overall benefit from both programs for many students. The estimated cost savings to be realized for this, on an annual basis over the 10 years of the foundation's term, is $50 million a year. We're hoping that $50 million a year will be directly re-routed, as promised by Minister Johnson, back into the student assistance plan for the best interests of Ontario students.

Third, we recommend that the government increase per capita public funding of post-secondary education to the national average, at the very least, in order to level the playing field for innovation and knowledge between Ontario and the rest of the country and other areas of the world.

Ultimately, all of us in this room want the same thing. We all want a strong social fabric and a vibrant economy. How we ensure this future, as always, is up for debate. We believe education is an investment, and one that no society should forgo.

I'd like to thank the members of the committee for their time. I'm happy to entertain any questions or to participate in any discussion that arises out of my presentation.

The Vice-Chair: Thank you very much for your presentation. We have about four minutes for each caucus, beginning with the government caucus.

Mrs Molinari: Thank you very much for your presentation. You've highlighted a number of areas here that we agree with; that is, the importance of education for the benefit of society as a whole, for the students and for everyone.

I'm happy to see that you agree with education being a shared responsibility, because we also believe that's the case, that the tuition fee should be shared between the student, the province and, a small portion, the private sector. As to the percentage of that shared responsibility, with our plan and commitment, that will be back to the 35% that it was. You have some figures here from specific universities, and I'm going to ask you how you got those figures and do a little more research on whether that is in fact true, because our commitment is that the student contribution is 35%.

You also talked about some of the deregulated programs and those where the tuition has risen. Those are, I'm sure you would agree, programs that cost more. They are very expensive programs. In order to provide an excellent program, obviously the cost is more and it needs to be taken into account.

I'm going to go through all my questions and then give you an opportunity to respond.

You talk about the increase in enrolment, and in fact enrolment is increasing 3.8% at the university level and 0.6% at the college level. So we're happy to see that the university and college education enrolment is increasing. But you asked, and I quote from your comments: "[The] question is, are the universities filling those seats with the same type of people?" I'll ask you to comment on that in just a few minutes.

You comment that Ontario now ranks 10th in the provinces. If you take into account all of the resources that are available for student assistance-our student assistance program grant, Aiming for the Top, and a number of other programs that we've introduced to assist student aid-you'll find that we actually rank fourth of all the provinces.

The spending for education has in fact increased. It was $350 billion last year and it's going up to $400 billion this year. Also, with the introduction of the SuperBuild Growth Fund, $742 million is being devoted to providing more pupil places.

With the expectation of the expanded enrolment that's coming in the year 2003, we're working together with the colleges and universities to provide student placements for them. It's a partnership. Again, that as well is shared responsibility, where the post-secondary institutions are going to have to look at the way they are servicing and offering the programs and see if they can find ways to be more efficient in doing that. We're looking forward to that.

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I want to assure you that the funding that has come through the millennium fund we are committed to reinvesting into education. The previous minister stated that, and this minister as well has stated that. So all of the savings that would be generated from that are in fact being reinvested in education. I just wanted to confirm that with you.

The Ontario student assistance program has also increased by 30%, so there is more money to be given to students for student assistance in the way of debt. It's important to point out that more than 50% of students graduate without a student debt. For those who do have the debt, the province has introduced a number of programs that will alleviate some of that. One of them is the grant that's provided for students who exceed $7,000, so no student will incur more than a $7,000 debt per year. Anything above that is a grant by the provincial government to assist students.

I will stop now and hopefully there's time-

The Chair: You've gone 15 seconds over. The official opposition.

Mr Phillips: That's the second time we've had an expert witness and the government gives a speech instead of giving you a chance to respond to their questions. Maybe you can respond to some of her questions in response to my comments.

There's no secret that the government has cut its support, its grants, to colleges and universities, and they have told the students to make it up. The government's election document said: "Students aren't paying enough. They're only paying 25% of the cost. We want to get it up to 35%." They've been successful in that, and I think it violates what we had been promised, that it wouldn't go above 35%. I wouldn't mind your answering the question you were asked, or at least responding to the speech you heard. That would be my first question.

Related to that are the challenges that if you say, "Freeze tuition," and the government says, "We're going to have the students pay 35%," if that's frozen they'll say, "We'll freeze our spending, then." I wouldn't mind you responding to those two things.

Mr Parks: Absolutely. The figures at Western essentially are that when you take general tuition revenues and you do a simple calculation with overall operating revenues, it was approximately 50% of the operating revenues of the core budget that could be seen as tuition revenues. The numbers from Laurier and Windsor I received from the student unions there, and the calculations were done in much the same way-a simple equation, including subtraction. That is essentially how I got the 35%.

One very important thing that I would like to address, and I hope I'm not going too far off here, is that the government has introduced the Ontario student opportunity grant program, which is essentially a loan-forgiveness program with a different name. Yes, it has introduced that so no student will have a debt over $7,000 per year, but it introduced it by eliminating the existing loan-forgiveness program that wouldn't have allowed a student to have a debt over $6,000 a year. So in fact the threshold has moved from $6,000 to $7,000 a year with the introduction of the Ontario student opportunity grant program, costing students who are arguably in highest need $4,000 over the course of their university degree. The program was introduced, but it was a reduction in the existing loan forgiveness, and as a result the government has saved significant amounts of money, in excess of $50 million.

When I talked to Helmut Zisser, the head of the student support branch, and said "Why don't we reinvest that $50 million to bring the threshold back down to $6,000?" He said: "Oh, no. That would be way more than all the millennium money we get in a year from the millennium foundation, which would lead me to believe it would be approximately $100 million. So that is essentially one of the very important things that I did want to address.

Did I address adequately your questions?

Mr Phillips: Maybe I could throw another question at you as well. You mention in here-one of the concerns I have is that young people who come from families of modest means will look ahead and say: "I don't think I can run the risk of going to post-secondary." I had a young lady, a single parent, in to see me the other day. She went back to school as everybody said she should, got her BA. She owes $66,000 now. That's a mountain. So she will tell her friends that. My concern is, as I say-I think you refer to it in here-the need for study, but have you any evidence that that may be starting to occur yet?

Mr Parks: Certainly debt aversion is a significant problem. One of the difficulties when saying, "Yes, enrolment is up, so therefore everything must be fine as far as accessibility"-the problem is, how many students are deciding ahead of time, "Wait a minute, I'm not even going to university"? We have to recognize that the university-age demographic is starting to grow now, and we'll see the peak of that just after the double cohort comes through in the next three or four years. So we have an increasing number of university age students. If the number of spots at universities stay the same but the number of university-age students is increasing, obviously there's going to be pressure on the spots and you're going to fill all those seats, but our exact concern is, how many students are debt-averse and saying "I can't even imagine having a $15,000 debt; I can't imagine having a $20,000 debt." That's one of the concerns and that's one of the things we'd like to see a comprehensive study done on.

There have been some studies done by the Centre for Social Concern at York University which talk a little bit about the types of students that are actually in university now, compared to before tuition deregulation. If I can find it quickly, I can respond.

The Chair: With that, your time has expired, Mr Phillips. I'll go to Mr Christopherson.

Mr Christopherson: That's actually perfect. Continue to look, because that was going to be my question, so if you can find it there-keep looking.

While you're doing that: The government continually, when we raise the issue of debt aversion and that people are shying away from going to university not because they don't have the ability but because they don't have the money, points to enrolments, so this piece of information-if you can't find it right now, I know the NDP would certainly be very interested in receiving that, if you could send it to my office. If there are others who want it, they can request it. I didn't realize there were actual studies. But my experience is similar to Gerry Phillips's. The anecdotal evidence I get in my constituency office is that there are people who have the ability who would-it would improve their lives, make a major contribution to our economy and our society, but they can't or won't go, based on that debt. They just don't have the money. Particularly people who may be a little older, and have responsibilities in life-when you add an existing mortgage and other kinds of things and finagle your finances to free up one, if there are two partners, it just stops them cold. So if you've got anything there-

Mr Parks: I did find it. It's actually in a longer version of our tuition paper. You have the executive summary in front of you. A study at York University found that a number of students from families earning less than $20,000 fell from 17% to 10% between the years of 1991 and 1994. That is referenced as written by a man named Carey. The name of the article is "Fees Threaten U of Elite." I can certainly forward this to all the interested parties around the table.

Mr Christopherson: If you would, and if they're doing anything beyond that-because of course there were rising tuitions during that time; there was also a major recession. People didn't have the job security at all to feel comfortable going forward. This is a key thing. If the government's answer is going to be "Enrolments are up"-and studies are starting to show us that there's a shifting dynamic in terms of who, particularly demographically, socioeconomically, meaning there are fewer poor people-we've got a serious, serious problem, because it means that what the government would have called fearmongering is exactly the case. The ability of people who have the skills, the wherewithal, the commitment and the dedication to go to university are not, because of dollars, and it's not supposed to be that way in Ontario. It's never been that way before and it shouldn't be. If we lose that, then how much money is it going to take us, six, 10, 15 years from now, to turn that trend around and how many out of the existing younger generation will have missed their opportunity? It's done nothing for them.

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This is a huge issue. I would urge you, in your capacity, if you are aware that further studies of this nature are being contemplated or thought about, they're worth their weight in gold for those of us who are advocating for a return to, not an expenditure on universities but, as you put it, a reinvestment back into our post-secondary education system.

We've all noted that we're now tenth out of 10 in terms of per-student funding for post-secondary education, which is terrifying in its reality, but also we've had representatives from the teaching profession at the primary, elementary and secondary levels, and we're also now in North America 55th out of 63; 55th out of 63 jurisdictions across North America is where we rate in terms of per-student expenditures.

When you link that to what people have said about health care, about homelessness, about the affordable housing problems, the lack of environmental protection that exists, we're beginning to see that yes, we've got a booming economy-but by and large it's because of the American economy, and in large part within that because of the auto industry, not because of this government's policies-and yet there's a price to be paid. The government doesn't talk about it and unfortunately it doesn't get a lot of media, but the price to be paid is the issues that you're raising today, and all the people who came before you and will come after, as we scratch the surface of these headlines and find out what's really happening in our communities when we find out where the $5 billion to $6 billion per year has come from to pay for this tax cut.

The Chair: That completes your time. On behalf of the committee, thank you very much for your presentation.

CANADA'S RESEARCH-BASED PHARMACEUTICAL COMPANIES

The Chair: Our next presenter is the representative from Canada's Research-Based Pharmaceutical Companies. Could you please step forward. On behalf of the committee, welcome. Could you please state your name for the record.

Mr Murray Elston: I'm Murray Elston, president of Canada's Research-Based Pharmaceutical Companies.

The Chair: You have 30 minutes.

Mr Elston: Is that all? I used to get longer in committees, Mr Chair.

The Chair: We're really managing time here.

Mr Elston: Please give me some direction. I haven't been on this side of the committee Chair, I don't think, ever before.

I appreciate being allowed to make some presentations. Just a note of apology first. We had brought some copies of materials, but we were out, this last little bit, through the magic of communication, trying to make some changes in some errors we spotted. So the materials I have with me are not quite finished yet, but we will give you the finished product when those changes have been made.

I would just like to say that we're pleased to be able to make some presentations today. As you know, our industry has contributed immeasurably to the health and wellbeing of people around the world and of course the people here in Canada as well.

I'm excited to have joined Rx&D, which is the short form for Canada's Research-Based Pharmaceutical Companies, because pharmacology is a leading innovation in medicine. This has not been widely recognized in Canada, yet the new medicines that are available today and those in research and development stand to solve many of our most difficult medical problems. Each of these individual and very personal medical problems are the challenges of the health care system of today.

The recent flu epidemic that has caused overcrowding in ERs across the country could in the future be addressed with effective pharmacological interventions. It is reasonable to predict that one day soon flu will not cause havoc with our lives and our health care system because of the new medicines that our companies have made available today and are making available through research. Through massive company investments over many years, these products are now available to reduce illness and prevent death from flu as well.

This is the story of our industry: discovering innovation to solve health problems for individuals and society.

As a former Minister of Health, I understand the challenge that policymakers have in choosing to invest between so many wonderful and competing and yet worthy needs. I believe that sound public policy must encourage vigorous innovation in all aspects of our society, both in the private and in the public sector.

I will now outline how the research-based pharmaceutical industry is uniquely driving innovation in health care, facilitating health care reform and is poised to be a leading knowledge-based global industry in Canada and particularly in Ontario.

I'd like to begin by giving you some background regarding the association and the industry. Our association is a national one, representing the some 19,600 Canadians who work for about 60 member companies of our association. Each member company shares a single primary objective: to discover new medicines that improve the quality of health care available to every Canadian and help make those products available. Our companies, both large and small, are part of the highly competitive, knowledge-based, global pharmaceutical industry. Many will be surprised to know that 21, or about 35%, of our 60 member companies have head offices in Canada. And yes, we have most of the large multinational companies as members, but we also represent many of our own home-grown biopharmaceutical companies. Thirty-two of the 60 companies that are members of our association have their Canadian headquarters in Ontario and several others maintain a significant presence here. Together, they represent a key part of Ontario's knowledge-based economy.

If I may just go through a few bits of information: They directly employ more than 9,500 people in Ontario; inject $1.5 billion into the Ontario economy annually; invest more than $329 million in R&D annually; have invested $1.56 billion in land, facilities and equipment; have paid more $136 million in provincial taxes; and have invested tens of millions to support the biotechnology industry.

The growth in R&D expenditures in all of our member companies has been dramatic in Canada and in Ontario. Our companies are the largest single funders of medical research in Canada, which may surprise many of you. We funded approximately 42% of all such research in the year 1998. Over the past 11 years, Rx&D companies have invested $2.2 billion in R&D in Ontario, of which $502 million, nearly 23%, has been spent on conducting basic and clinical research in the province's universities and hospitals.

Some of our recent company investments in Ontario include the following: the announcement of a $250 million capital investment by AstraZeneca last year for manufacturing facilities in Mississauga; Glaxo Wellcome's $120 million state-of-the-art integrated research and manufacturing technical centre, which exports half of its output and is an important part of GlaxoWellcome's global works.

As part of an agreement with the government of Ontario in the fall of 1998, our companies committed to investing an additional $100 million in 1999 and 2000 in R&D and in manufacturing infrastructure. I can tell you that we are poised to deliver on that commitment and at the same time working towards insuring that the government also works towards delivering their commitments in this memorandum of understanding.

That memorandum of understanding between the industry and the government has allowed us to develop ongoing partnerships and to develop a place where we can dialogue. Together we have made substantial progress in the direction of improved health care delivery to the people of Ontario. We've opened discussion on the role and great potential of our industry in the economy and through the joint industry and government participation in the drug utilization advisory committee and the industrial policy committee we're progressing on a number of shared concerns.

I'd like to outline the key opportunities and challenges that we collectively face in reaching our shared potential and our recommendations to begin to address these challenges.

First, the opportunities in health policy: Rx&D supports the direction that the Ontario government is taking to improve the fiscal and economic climate within the province. Policies designed to improve productivity, including cutting taxes, streamlining regulatory processes and targeted reinvestment, have all contributed to the province's much improved economic performance since 1995.

A key part of the government's policy is restructuring Ontario's health care system to eliminate waste, duplication, fraud and mismanagement. The savings achieved through this restructuring are being redirected into frontline patient programs. All of these actions are intended to improve the productivity of the health care system. These are excellent initiatives that will improve how our system is organized and managed, but we need to be more innovative and use all of the tools available today to achieve greater productivity.

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What does improving productivity in health care mean? It means that we can do more with the same resources. As an example, the patients only see a physician once to obtain the correct diagnosis and treatment; or the first treatment provided is the best treatment available and there is no need to try less effective treatments; or the treatment offered results in the best possible outcome for that patient; or patients are able to tolerate treatment better with a new therapy than an older product or find it more convenient to use a newer product so that they are able to realize the therapeutic effect through improved patient compliance.

These examples represent improved productivity in health care. We spend less because we do the right thing the first time. In order to achieve these results, we must invest in new technology.

Although the government has committed to increase health care spending in its budget, moving the expenditure in the year 1999-2000 to $20.2 billion-which, in my view, is a long way away from the old days, as I may describe them, when I think it was $8.7 billion-it still appears that this may not be enough to meet the legitimate needs of our aging population, especially if we fail to provide our physicians and nurses with the new ways and means of treating and preventing disease.

The significance of pharmacotherapy as a driver of innovation that, in turn, drives improvement in health care productivity needs to be better understood. This has been recognized by a number of observers, including the Health Services Restructuring Commission and also by Dr Henry Friesen from the Medical Research Council of Canada, who has said:

"The research-based industry has made invaluable contributions in Canada in the past decade.... New therapies which benefit patients worldwide are now being discovered in Canada-new therapies which are causing significant drops in mortality rates and hospitalization for a number of major diseases."

Unfortunately, in light of these facts, Ontario's health policies continue to support the following elements: the most restrictive provincial formulary in the country; a misunderstanding of the importance of innovation in pharmacology and its role in the improvement of the quality of life in Ontario; the role pharmacology can play in reducing health care system costs through improvement in productivity; and a lack of sufficient involvement in the innovative pharmaceutical industry in the health care policy formulation field. Unless these challenges are addressed, there will continue to be significant and, unfortunately, bad impacts on the health care system in Ontario.

The Ontario drug benefit program was intended to pay for medication for those in need. The plan now lists fewer new innovative products than most other provinces, is among the slowest to make decisions about the listing of a medicine and imposes the most restrictions of any province on the medications that it does list. Restrictive formulary policies do not reduce cost; in fact, placing what are essentially bureaucratic and administrative barriers to the adoption of innovation in health care can only lead to higher costs for the whole system.

Recently, Glaxo Wellcome, together with an independent consulting firm, members of the medical research community and ICES, the Institute for Clinical Evaluative Sciences, completed a study to determine the factors contributing to the growth of the Ontario drug benefit program from 1992 to 1998. Here are some of the salient features:

Women represent the majority of claimants in all categories. In 1998, 61% of all claimants were over 65 and represented about 74% of the costs. There have been significant deliberate policy changes that have contributed to the growth of these programs, including (1) the introduction of the Trillium program, (2) changes to mental health policy, and (3) a transfer of health care from hospitals to the home.

The result of these policy changes is that there has not been substantial growth in the total number of claimants over this period, but the mix of people has changed to those who require more intensive treatments. For example, cardiovascular treatments accounted for 38% of total drug benefit costs in 1998 and cardiovascular treatments accounted for almost half of the increase in the drug benefit program total cost from 1992 to 1998. These medicines have obviously increased lifespan and are essential to keeping people out of the hospital.

Finally, the report also shows how innovative pharmaceutical therapy has facilitated the long-standing Ministry of Health policy to shift care from institutions to the community. Serious mental illness is but one example of how innovative pharmacology has allowed patients to leave hospitals, which, in turn, has allowed these hospitals to be closed or consolidated in Ontario.

Let me, because of time, skip to perhaps enumerating some of my recommendations and when the full presentation is finished, we'll deliver it to the members, but let me just go through the recommendations so that we have some time for questions.

Here are some recommendations around health policy. First, we suggest that the government do the following:

(1) Establish a health policy which promotes prompt and efficient adoption of innovation in order to take full advantage of available technology to improve productivity in the health care system.

(2) Require the Ministry to Health to allocate additional budget, not on the basis of historical base budget adjustments but on the basis of investing in innovation to drive improved productivity. Ontario's drug programs must be funded so that innovative pharmacology is adopted as efficiently and effectively as possible.

(3) Promote the development of an integrated health system.

(4) Include the innovative pharmaceutical industry in health care policy development.

We would love to be a part of the discussions that lead us to make sure that we can formulate how best productivity can be achieved in the system.

I think it's fair to say that when our system was put together several years ago, most people would not look to pharmacology as being at the centre of that system; we are now.

Let me switch just quickly to opportunities in terms of economic policy. We acknowledge some important initiatives that the government has taken to put Ontario back on the road to prosperity and to create a favourable investment climate in order to attract a continued and even greater share of the global pharmaceutical investment. Some of these items are the following: a commitment to reducing the provincial debt; the creation of the Ontario research and development challenge fund to support basic research and the Premier's excellence awards; commissioning of the Dr Heather Monroe-Blum report on Growing Ontario's Innovation System: The Strategic Role of University Research; creation of the investment climate committee, which is a committee jointly with our industry; the leadership of the Honourable Jim Wilson from the Ministry of Energy, Science and Technology to request the development of a strategy for Ontario to fully achieve the economic potential of our pharmaceutical industry; and continued financial support of the health care system.

The important question no doubt for all of us is, how will additional expenditures be made and how will these programs all be integrated into what is happening now? It's clear, if you take a look at the innovative pharmaceutical world, that the challenge is not just local but in fact is global when it comes to having the presence of our industries in Ontario. Everybody is looking to the knowledge-based economy. Everybody is looking for innovation. Everybody is looking for research and development. So how is it that we can perhaps take advantage of that opportunity? Let me specifically get to the following recommendations:

The Ontario government should promote the strengthening and effective enforcement of intellectual property protection with the federal government. While I understand it's a federal field, the results of research and development cannot be maintained for the benefit of the citizens where those developments are found if there is no intellectual property protection.

The government should continue to increase its funding and work to help increase the funding of the federal government on basic biomedical research and development in Ontario, which would make it comparable to a level in competing countries.

Implement the recommendations of the Monroe-Blum report by establishing the Ontario Science, Research and Innovation Council and the Ontario Health Research Council.

Explore tax-related and other opportunities to encourage researchers to stay in Ontario and to attract leading researchers here.

Call on the federal government to streamline the regulatory process and implement further reform of Ontario's submission and approval process for listing on the ODB.

Investigate fair alternatives to Ontario's price freeze on innovative medicines which was imposed in 1993. In the memorandum of understanding, we have undertaken to work with government to find alternatives to that, but that has yet to be tackled.

Finally, change the direction of health care policy in Ontario to promote prompt and efficient adoption of innovation in order to take full advantage of the available technology to improve productivity in our health care system.

All of this will make health care better. All of this will help, we think, to make the economy much better. Thanks, Mr Chairman.

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The Chair: Thank you very much. We have approximately three minutes for each caucus. I'll start with the official opposition.

Mr Kwinter: It's a pleasure to see you, Murray.

Mr Elston: Thank you, Monte.

Mr Kwinter: I just want to comment. You talked about the difference in the allocation of funds to health care. It's now over $20 billion and I think you used the figure of $8 billion or $9 billion.

Mr Elston: About $8.9 billion, $8.7 billion, when I was around.

Mr Kwinter: Just by a quirk in political events, when I was a minister I had Frank Miller, the former Minister of Health and the former Premier of Ontario, reporting to me. If you'll recall, they were in a crisis and they wanted to close all the hospitals. They backed down, but they had announced that they were going to close a bunch of hospitals. When he came to see me one day, I said, "Frank, what was the crisis?" He said, "Our health care budget was at $3.7 billion and it was out of control." So that just tells you how things have changed as we go along.

I appreciate the problem you have with new innovative drugs that don't get on the formulary. I think one of the other problems we have is that there's a duplication in the DQTC in Ontario and federally. What is your reaction if that were consolidated so there was one approval body that would approve pharmaceuticals for everybody in Canada, as opposed to one at the federal level and then it's duplicated again at every provincial level?

Mr Elston: In fact, technically, the federal program actually approves the marketing of product throughout Canada and it's the exercise of listing on the formularies in which the DQTC takes place. It also does some other exercises. But it would have seemed to be more efficient that once you have the safety and efficacy found to be in place by the federal authorities, you could go ahead and list. In fact, that would be quite helpful for us.

Certainly, we find the duplication, and in fact almost the resubmission of the same submission that we put to the federal authorities, to be time-consuming. One of the things it does is that once the product is available for use, it will provide a delay of several months minimum before the people who could take advantage of it, who need it, can actually use it. From our standpoint, that is a delay that should not be allowed to occur.

The whole reason we're into the program in the first place is so that we can have better health outcomes. If we can eliminate the duplications, if we can bring a product that's found to be safe and efficacious on to the market, and to the patents almost coincidentally, that would be a much better outcome for us.

Mr Kwinter: I don't have a lot of time, but what I want to ask you is, 50% of all the drug companies are centred in Ontario. It's a huge bonus for Ontario because of its innovation and its technology and all that. I notice an incredibly big trend to consolidation of the pharmaceutical industries. You had Glaxo, then you had Glaxo Wellcome and they've just now hooked up with-

Mr Elston: Smithkline Beecham.

Mr Kwinter: Smithkline Beecham. I see Pfizer's just made a deal. Do you see that impacting on the product mandates that are given to Canadian companies as a result of this consolidation, and do you see that as a bonus or as a negative?

Mr Elston: Actually, I think initially people would look at it as being negative, but unfortunately what's happening in research and development of pharmaceuticals is that it's becoming very expensive. It will cost upwards of $750 million to bring a product to the market. That requires a certain size to deal with those types of research. They start off with a huge number of molecules that they may be looking at and they eventually eliminate it down and down until out of 10,000 to 30,000 prospects they'll end up with one or two candidates for use, and that expense really needs the size.

Having said that, what it will do I think in Canada is spur on a very active bio-pharmaceutical and bio-technology industry. We've got very skilled researchers. In fact, one of the reasons that Canada has been fortunate enough to hold on to so much research and development during a cutback time in both federal and provincial funding for research has been the quality of the people who are involved in research here, and also, by the way, the increasing research our companies have provided in terms of dollars.

I think there are big advantages for the people because the size of the companies will allow them to continue that very expensive medication search, and the new companies that will be able to occupy some of the areas that have been left vacant by the mergers will provide better coverage for the consumer. So overall, while we are seeing a great deal of change, I think it is going to be for the best.

Mr Christopherson: It's nice to be addressing the best leader the Ontario Liberal Party never had.

Mr Elston: You are being provocative again.

Mr Christopherson: I am complimenting you, Murray. I'm not being provocative. I reserve that for the Tories these days.

There has been some bantering about how health care costs have gone up. There's no question they have been escalating and they have to be checked. In fact, I think our government was the first to really take a stab at that, and it was quite a feat just to reduce growth to about 3% as opposed to the 12% or 13% it was increasing year after year.

But for the average person and the average family out there, whether it is $3.8 billion, $17.4 billion or $20 billion, at the end of the day if you have a family member who is ill-a good friend of mine, Denise Doyle, has gone with family members to meet with the doctor to go over the results of tests. At this point I still don't know what they are, but I can assure you the last thing they care about right now is the macro-costs of the health care system. They want to know that whatever is needed for their dad will be there.

Mr Elston: In fairness-going from three to eight to 20-we are doing a lot of things we never dreamed we could do even 10 years ago, if I may say that. While our usage has been expanding, it has only expanded because we have had the innovative opportunities to deal with problems we could never even dream of dealing with before.

Mr Christopherson: Agreed, no question, but that is a nice segue to a couple of issues. One is to the credit of my colleague beside me, Monte Kwinter, who raises the alternative health care issue in terms of protection and that whole thing. I wouldn't mind hearing how the pharmaceutical community views alternative drugs, natural drugs. Are they doing their own research? Are they remaining neutral, saying "That's somebody else doing their thing"? Are they actually getting into it and doing their own thing or are they opposing it and saying "That's not the way to go"?

Mr Elston: In fairness, it isn't opposed. I think what they are trying to do is find the discipline we are used to requiring for our own medication. So they are looking into it. I can't say that every company is doing that, but a number are looking at the active ingredients that are found in some of the alternative medicines.

I think we are well beyond the time when one group or another claims exclusivity. We are now looking at complimentarity, and everybody is open to getting the understanding necessary to make sure we don't get reactions which are unintended. I think the biggest concern most of us have is getting some more precision, some more knowledge behind what really makes alternative medicines work, as we do with our own products. That is a big part of our activity in clinical trials, for instance.

The Chair: For the government side, Mr Galt.

Mr Galt: Thank you for your interesting presentation. In the beginning, you talked a fair amount about research and development, which is just tremendous. I am glad to see it here. I am curious about where you would be today if free trade had not come in, and also the patent protection legislation in the early 1990s. How much of that would be going on in Ontario and Canada if that weren't in place?

Mr Elston: There is no question that the changes in federal legislation in 1987 and 1993 are major reasons why our research and development have increased. I'm not as sure about the free trade issue, but there isn't any question about the other. With patent protection came the impetus to actually make some discoveries. If you can't protect the labours of the women and men who work in research, and then take advantage of it for purposes of the area in which it was created, then you are going to-

Mr Galt: You also had some negatives from the community: "Why has that particular product been kept up and the price so great?"

Mr Elston: A lot of people think that because there is patent protection, there is only one medication in each line. A number of our companies are competitors. They compete with products. I mentioned the two flu products. Those two products are manufactured and offered by different companies.

Mr Galt: Can I quickly get another question in. It has to do with the drug formulary and new products coming on. Your are saying, "Get the new ones out there." Some of them are horrendously expensive, for example, high blood pressure medicine. But by training, our physicians go to the expensive ones, which they're used to, instead of the cheaper ones, and you have to pay for it. We have gone from $400 million in 1985, when you were there, to something like $1.6 billion now. Where is this going to end? It's almost to the level now of total health care a few years ago, from what I'm hearing. How do we control that to some reasonable extent?

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Mr Elston: In fact, that is a very good question. It's one of the reasons we would like to see health policy integrated across the silo funding. We believe, for instance, that the reason we're spending $1.6 billion now is because we are not hospitalizing as many people. We don't do operations for ulcers. For $200 we solve a problem, just as an example. The same is true for a whole series of other things-asthma. Although we had a very unfortunate incident in this province recently, asthma is better managed now and we've got the opportunity of setting up a regime with compliance and other things that really does help reduce those costs in other parts of the organization.

What I had indicated earlier was that with an integrated look at how the system works, we will find that we are really getting good value for the expenditures made. If those expenditures were not made, my contention is that we probably would have a much bigger bill in the hospitals, we would have a much bigger bill for home care, and we would have much bigger bills because people would be seeing their physicians more often.

In that situation, I think you would make the connection to say we're not making absolute savings because, as we have mentioned with Dave before, we're doing a lot more things that we never even dreamed of doing before, and that's what's making our system expensive. We are always going to try and find a solution to the most recent and pressing problem in medicine, and we're all going to drive to try and find innovation. Our problem is that once we find it, it would seem to me to be a very bad public policy to prevent the people who need it from getting it. That's really what our health system is about. It was designed to let people have access to the treatment they need. We can make it better. We can't, unfortunately, make it cost zero, but it will be less costly to follow the new therapies and the new innovations, in our view.

The Chair: With that, Mr Elston, on behalf of the committee I thank you very much for your presentation. I'm sorry; I have to treat everyone fairly by giving them 30 minutes.

Mr Elston: I understand. Thank you very much. If I may, I'll leave these materials with you, Mr Chair.

ONTARIO CAMPAIGN 2000

The Chair: Our next presenter is on the agenda as a group called Ontario Campaign 2000. Could you step forward and state your name for the record, please.

Mr Pedro Barata: My name is Pedro Barata.

Mr Ron Dancey: I'm Ron Dancey.

The Chair: Welcome, gentlemen. You have 30 minutes.

Mr Barata: My name is Pedro Barata. I am the Ontario co-ordinator of Campaign 2000, which is a provincial partner in Campaign 2000, a national public education movement to build awareness and support for the 1989 House of Commons resolution to end child poverty in Canada by the year 2000. Campaign 2000 has over 70 national, provincial and regional partners across Canada.

In Ontario, Campaign 2000 comprises a network of over 30 provincial and community partners, including nurses, interfaith groups, social workers, labour unions and child care organizations in addition to many local groups across this province.

The new millennium presents an opportunity for renewed hope for families and children in Ontario. The 1990s were a difficult decade for many children and their families, who experienced a devastating recession, crippling public and private sector downsizing, as well as a significant reduction in the level of available public services.

Campaign 2000 recently reported on the impacts of the last decade on children and families through the release of both the national and provincial report cards on child poverty. We found that between 1989 and 1997, child poverty in Ontario grew an astounding 118%. As well, the number of children in two-parent families earning less than $20,000 tripled. When compared to what is taking place in the rest of Canada, Ontario has failed to address the needs of poor children and families in this province. Since 1995, when this government took power, the number of poor children in Ontario increased 6.3% while decreasing 11.1% in the rest of Canada.

It is essential that we move toward rectifying the situation in order to be able to legitimately make the claim that Ontario is indeed one of the best jurisdictions in the world in which to live.

Campaign 2000 urges our national and provincial governments to invest in a comprehensive set of strategies that effectively address child poverty in the areas of family income security, services such as early childhood education and child care, affordable housing and the labour market.

Campaign 2000 believes that a comprehensive, life-cycle approach is the most effective way to eliminate child poverty. We urge the Ontario government to develop an action plan to end child poverty in Ontario that includes clear targets, timetables and monitoring mechanisms.

Clearly, a strategy to address child poverty that focuses exclusively on economic factors without a corresponding strategy focusing on services, housing and income has not proven to be successful. Witness the economic recovery during the second half of this decade that has not brought about widespread benefits and prosperity for all families in Ontario.

In Ontario today, full-time, full-year employment does not guarantee that a family will avoid falling into poverty. Low-, modest- and middle-income families continue to find it difficult to make ends meet. Consider that the number of children in working-poor families has grown 142% since 1989. Even among families who have full-time, full-year employment, the child poverty rate has continued to climb, from 4.7% in 1989 to 8.8% nearly a decade later. That is 189,000 children whose parents are working full-time but who are finding it very difficult to make ends meet.

Good jobs that enable parents to provide adequately for their children are a key component in any strategy to reduce child poverty. However, the jobs available to low-income parents are largely part-time, low-wage, contract or seasonal, and offer few or no benefits. Campaign 2000 has consistently remarked that Ontario needs to seriously consider bettering the opportunities for parents to achieve stability through work by improving the minimum wage.

Currently, a single parent with one child working full- time requires a wage of about $12 per hour in order to reach the poverty line. That represents a wage gap of an additional $5.11 per hour, considering that the current minimum wage is $6.85. Closing this gap is essential in promoting parental stability in the labour market. That way we'll guarantee that every new job this government helps create will indeed be a step in the prevention of poverty in Ontario.

Further compounding the issue, the support for working parents in Ontario has been dramatically eroded. Ontario continues to have the lowest rate of unemployed people receiving employment insurance. In 1997, a mere 25% of the unemployed in Ontario qualified for benefits under EI. This number represents a 47% decline in coverage since 1989, when over half of those unemployed received benefits. For many parents, the increasingly stringent EI eligibility requirements force families onto social assistance rolls. Ontario must play a stronger role in ensuring that Ontarians who are unable to work achieve a greater degree of stability through EI coverage or other programs.

This government must also address the inadequacy of the minimum wage for families by, at the bare minimum, building inflation protection into an improved minimum wage as well as providing parents with other income and service supports.

In the realm of social assistance, the implementation of the Ontario Works Act continues to create problems for municipalities as well as failing to provide adequate supports for parents and children. There should be no question that the 21.6% cut in benefits in 1995 made it much more difficult for families to feed, clothe and house themselves. For example, a lone parent with one child in Ontario is eligible for a maximum of $511 per month for shelter costs, yet an average two-bedroom apartment in Ontario costs between $617 and $881, depending on where you live. Studies have shown that the first thing parents on social assistance budget for is rental costs. The inability of shelter benefits to reflect the cost of living in Ontario results in parents taking money away from their family's food and clothing budgets in order to pay the rent.

Not only are families on social assistance required to live on allowances that are unable to meet their basic needs, but they are also required to participate in Ontario Works programs without the appropriate supports like child care, transportation and equipment costs. In the city of Toronto alone, the full implementation of Ontario Works would require a $133-million investment in licensed child care in order to guarantee the adequate implementation of the program.

To further compound the issue, the Ontario government is deducting the national child tax benefit from families on social assistance. In turn, this benefit clawback is being reinvested into targeted programs where the employment status of the parent acts as a determining factor for eligibility. Thus, the Ontario child care supplement for working families is being funded through this clawback, raising fundamental questions regarding our commitment to children in this province.

Campaign 2000 recommends that the national child benefit should be immediately extended to all low-income families, including those on social assistance. Campaign 2000 also recommends that families on social assistance be entitled to benefit levels and other supports, such as child care and transportation, that reflect the real costs of living in this province.

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In the realm of early childhood education, child care policy in Ontario has traditionally balanced two objectives: employment supports on the one hand and quality early childhood development for children on the other.

There are three main components to the success of quality early childhood education: quality child care, early education programming such as kindergarten as well as supports to supports through extended parental leaves and family resource programs. The Ontario government's investment into the Ontario child care supplement for working families fails to address all of the key components necessary for quality early childhood education. The supplement is a tax measure that does not create much-needed quality child care spaces or kindergarten programs. The supplement also fails to address the needs of parents who want to extend their parental leave in order to make a greater personal investment in the lives of their children.

Campaign 2000 recommends that the government immediately establish an early years program which must include adequately funded, well-staffed, affordable childhood care and education programs for all children three to five and which also provides healthy child development and support to families in all communities; also, establish early education programs for younger children and appropriate programs for school-aged children.

We also recommend that the government revive legislation regarding maternity and parental leave to complement the federal announcement of an extension of employment insurance benefits to parents for up to one year.

Campaign 2000 also urges that the Ontario government assume a leading role in addressing the importance of a comprehensive approach to early childhood education during the development of a national children's agenda in December 2000.

Finally, in the realm of housing, Ontario families are facing a housing crisis in this province as vacancies keep falling and rents continue to increase. In the past decade, rents have risen at double the rate of inflation. The combination of the downloading of social housing and the introduction of the Tenant Protection Act has resulted in a very precarious situation for Ontario's low-income parents. Rental housing is in short supply. In 1988, only 2% of all housing starts in Ontario were rental units, and Toronto, Barrie and Peel had vacancy rates of under 1%. With the scrapping of rent controls, rents in the housing market have ballooned to the point where serious issues related to housing affordability are being played out throughout communities in this province. Today, almost one in four tenants, including families and children, can be considered at risk of homelessness since rental costs consume more than 50% of their pre-tax income.

Social housing is not meeting the needs of families who must contend with rising rents and low market vacancy rates. Ontario is currently experiencing the highest number of people on social housing lists in the past decade. In Toronto alone, there are 40,000 children on waiting lists for affordable housing.

Not surprisingly, municipalities are grappling with growing homelessness as evidenced by the alarming increases in the use of shelters over the past four years. Youth under 18 years of age and children are the fastest-growing group of hostel users. In Toronto, 1,000 children are living in shelters or hostels.

Campaign 2000 recommends that the Ontario government work with the federal government to develop a comprehensive, concrete plan to increase the supply of affordable housing suitable for families.

We also recommend that the government make a commitment that children are entitled to permanent, stable housing and should not be housed in hostels on a semi-permanent basis.

If you refer to your brief, on page 5 we make the recommendation, "The Ontario government should commit to work with the federal government to implement the following benchmarks." We urge you to take a look at those.

On page 6, it's basically a summary of the recommendations I've already presented throughout this brief.

Ron Dancey from the Child Poverty Task Force in Durham region, a partner with Campaign 2000, will now address you.

Mr Dancey: I just wanted to put some meat on the bones of what he was suggesting. It has been suggested that there isn't poverty in the GTA. I would suggest that this brochure, which is for Durham region, argues otherwise and reflects otherwise. We have a wide range in Durham region. It goes from 7% or 8% in the Ajax-Pickering area to 22% in Oshawa. Oshawa has a higher rate because it has more affordable housing on the private market. I'm not talking about social housing. The housing in Oshawa is more affordable, so people on low income move there.

It was suggested to us recently by one of your colleagues, Mr Flaherty, that there wasn't poverty in Durham region, but we have a child nutrition project that is currently feeding 1,000 children every morning and we've got schools lined up to join this.

One other thing, flesh that we wanted to put on the bones, was the social assistance rent costs and frequency of moves. I'm not going to read it to you. It was a survey that we did among people on social assistance. I think the issue that we want to push is that low incomes mean that parents have to be creative in how they're going to find things or shelter for their children.

But I think the moves are the most important part and also argues against what you're trying to do with McCain-Mustard in the Early Years report. If these children are moving constantly, they're constantly losing the friends they made at school A as they move to school B. What we've found is that everybody on social assistance moved at least once in a year; 44% moved once, 27.6% moved at least twice, 15% moved three times and 12% moved four or more times. If they have children, that's got to be devastating for that child trying to develop in his own neighbourhood.

They also didn't move because they weren't very good at finding places. We did compare the rents that they found to Canada Mortgage and Housing low end of market, and we found out that most of the time, if not all the time, these parents were finding places that were lower, but they still couldn't afford to pay the low rent they were finding. And so, as the book says, it's pay the rent or feed the kids, so they ended up moving. But they were adept at finding another place.

One of the other things we handed out was a pledge list. We're trying to get the community aware and involved in helping reduce some of the effects of low income. We're in the process of getting people involved. Like I say, our prime thing is the child nutrition project, which is school breakfasts.

But these are only stopgap measures. They're not real solutions. Parents should be allowed to make their own decisions, and to do that they need money. I think it's also a question of the government providing some leadership, because the effects of poverty are significant on children in how they will function as adults when they join the labour force in 20, 25 years. So if you want to ensure that all our future citizens are able to develop to their full potential-I always say so that my pension will be safe; I'm going to be paid by the children-then we have to cure poverty today so that the children can function the best they can.

Thank you very much for your time.

The Chair: Thank you very much. We have approximately three and a half minutes per caucus. I'll start with Mr Christopherson.

Mr Christopherson: Thank you both very much for the presentation. I would hope that some of this overall is having an impression on the government, because they're hearing enough times now, and over the past few years, what the other side of their economic agenda creates.

The government brags about full-time jobs that are being created. There's the whole issue of how much are they being paid; are there benefits attached to it; what's the duration of that job; what are the real possibilities of getting that contract renewed, if it's a contract job. And now you've also pointed out that there are 189,000 children who are in families where both parents are working.

I can remember somebody making a presentation at a public meeting in my hometown of Hamilton. They came forward and said: "You know, before I was in poverty. Now I'm working, but I'm still in poverty." So the notion that just a full-time job is the answer is not sufficient. That job has to pay enough, it has got to have enough security, it has got to have enough benefits that you can actually maintain a family.

This is startling, when you note that since 1995 the number of poor children in Ontario has increased by 6.3% while it has decreased 11.1% in the rest of Canada. That's an overall figure, I gather, for the rest of the provinces combined?

Mr Barata: Without Ontario included.

Mr Christopherson: Yes. That is frightening, because at this point we see a deterioration of the whole social safety network, and by that I include our health care system and our education system and our post-secondary situation-a continuing deterioration during this boom. They're not going to change their plans-at least they haven't given any indication they're about to-and the only outcome we can possibly see is that this is going to get worse. This can only get worse.

I don't imagine for one second that the people who are in poverty-take these working parents of the 190,000 children, where they're still in poverty. Like the farmers who were here earlier, "When you ask me about a tax cut, I've got to have an income where I'm going to pay taxes and I'll get a tax benefit before I'm even into that discussion." That's about where these folks are. They're really being left on the side of the road as the government continues to drive on by towards their own goals.

If there were just one or two things that you could see your way to focusing this government on, what would they be? What would the one or two key things that would make the most dramatic difference for children in poverty be?

Mr Barata: As we mention in our recommendations, the government did commission the Fraser Mustard study looking at the early years, and that study really fleshed out a lot of things that we contend are in the right direction. We need supports for parents through child care; early childhood education across this province for every parent who needs it. We also need better housing strategies. We need labour market strategies, looking at the minimum wage, for example, and looking at the instability within the labour market, that even though the jobs are full-time they are not addressing the needs of families. In those three areas, we would focus the most attention: early childhood education, the labour market, as well as housing.

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Mr Christopherson: If I've still got time, I've got another question.

The Chair: Very brief; 45 seconds.

Mr Christopherson: All right. I'll take it. You mentioned the minimum wage. This hasn't come up very often yet, a couple of times. The reality is that our minimum wage is now below that of the United States. We always thought of ourselves, on these critical indicators, to be sort of more progressive, and that's not the case. We're falling behind in environmental protection, we're falling behind in some of the labour laws and we've fallen behind in minimum wage. Just the other day, if you heard the president of the United States in his State of the Union address, he was imploring Congress to raise it again. They've already raised it once. It sure didn't dampen the economic boom in the United States, and I don't imagine Clinton would advocate something that would further put a drag on their economy.

How important is the notion of a minimum wage to all of these people in terms of getting it raised to a decent level?

Mr Barata: It's of utmost importance. In conversations with different government officials, we have found that the main strategy this government is relying on to address child poverty is job creation. Over and over again we have the job creation creed, and what you find over and over again is that job creation alone will not solve this problem, because the minimum wage cannot address the needs of parents and families.

Again I have to put this message across: You cannot rely just on the labour market. We need services, we need income strategies and we need early childhood development as well as housing strategies so that we can have a coherent strategy on child poverty. It's not good enough to create jobs without looking at what kinds of jobs are being created, and it's not good enough to say they're full-time jobs without looking at what they pay, what kind of benefits the parents have, what kind of turnaround is on these contracts. All of these factors make a unilateral focus on the labour market very problematic for families. There must be a greater analysis of labour market strategy for this.

Mr Christopherson: Well said. Thank you very much.

Mr O'Toole: I'm a resident of Durham and try to represent the area. I've met with Ron and others and do listen to the discussion, regardless of the motive of the constituent group, and I'm pleased with your presentation today. To keep vigilant on our moral and social obligations, I think that's important. Sometimes these things get distorted, and I understand the importance of keeping it before us or whoever the government is. It's important.

I think there's a strategic difference. Some of this sounds sort of like a canned communication package, but we believe in a fundamentally different kind of approach to the problem. We've had 10 years-I'm not trying to use the cliché of a lost decade-of trying to spend our way out of these things, the highest welfare rates and the highest welfare caseload. There are theories that prove to me in the shorter term that providing those income support things isn't really the solution either.

In my view, it's sort of balanced. This is a generalized statement, but you have to have a healthy economy. This sounds corny, but think of it. You have to have a healthy economy to address the social issues and priorities and/or the environment and/or health and education. Those are the four in a basket there. If you were to listen here for the next week or so, there are 5,000 on that list of priorities, one of which is the next presenter, the mining association. The previous presenter, the agricultural sector, they all want more from you or whoever is going to pay more. That's a balance the government tries to find without taxing everyone. Ultimately, the solution is to reduce the drag on the economy. So our theory is somewhat different: reducing taxes to create jobs, reducing that drag, that dependency.

That gets down to the individual level on the social assistance side as workfare. Everybody fought it. In Durham, I went to several things and they said: "It's very bad. Working is very bad. The jobs aren't high paying and they're not high-technology." But a job is better than no job. That's a starting point. I agree that we need to address some of the issues there, but we're focused on providing the atmosphere for job creation.

The success is there, if you look at the welfare rates declining by almost 500,000 and you look at the employment rate which is the best in over 10 years in Ontario. Yes, there are dislocations within that, families that aren't functioning, families that are wasting their resources somehow and families that need other resources. The world is changing. The skilled jobs are there but the unskilled jobs aren't there. It's a very complex issue.

I suspect you'd have to look at some of the Canada health and social transfer payments as well which have caused some anguish. I'm not trying to just toss it over, even in the EI piece. If you wanted to really look at the income tax rate issue federally, what they call bracket creep, and how that impacts low-income people, there are fewer people paying tax in Ontario than there were five years ago. There are more taxes being paid federally, as of 2000, by the low-income groups because of bracket creep and CPP premiums. We call them job creation killers.

Our strategy is somewhat different. I would like very much to work with you and Ron to see if there are things to make sure it gets to the child. I think if you look at some of the initiatives we've taken, the $2.5 million for the partnerships with the Canadian Living Foundation, the $57 million for Healthy Babies, Healthy Children, the $10 million for investment in foundations, if you look at Learning, Earning and Parenting, those are infusions directly into trying to change circumstances in people's lives.

I appreciate your input. I appreciate the work that Campaign 2000 has done to educate and make us aware-

The Chair: Thank you very much, Mr O'Toole. I'll go to the official opposition.

Mr Caplan: I have a question for the presenters. I just want to say that the last comments are frightening; they are absolutely frightening.

We have a boom, we have a great economy, and in this time I was shocked, I was outraged to learn that the Minister of Municipal Affairs and Housing has directed the sale of up to 5,800 single-family or semi-detached homes across this province that families are living in. In the city of Toronto alone, for example, there is estimated to be about a 22-year waiting list to get into an apartment or a home that is going to be sufficient accommodation for a family with children, and here we have a provincial government directing the sale of these homes where people-families with children-are living.

I would just like to know if you have some comment about that kind of initiative on behalf of government, which is interested in some of these issues as they pertain to children.

Mr Barata: I'm not familiar with that particular initiative, although it is frightening that in a period of supposed incredible economic growth, unprecedented economic growth, we find that the poverty rates in Ontario are still growing while everywhere else in the country they are going down.

I ask you, if we enter another recession, considering that our poverty levels are so high during such an economic boom, what kinds of supports are we going to have in case we do enter a situation of 1991, 1992, 1993? Our child poverty rate in Ontario right now is at around 18%. What's going to happen if we enter into another economic recession and we don't have income supports and we don't have any kinds of programs to help families out?

As it stands right now, a family on social assistance is living below subsistence levels by the most stringent poverty-line standards. That needs to be addressed.

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In terms of housing overall, I think the downloading of housing to the municipalities has left communities scrambling to find spaces to put people who can't afford market rents, because there are no apartments available that they can afford. Right now in Toronto if you go look for an apartment, you might get 50 other applicants. They're not going to give it to you out of the goodness of their own heart; they're going to give it to the person who can most afford it.

Mr Caplan: It's no surprise that increased use of shelters and hostels by families with children is up 123%. You have just an enormous situation as far as economic eviction: 50% of tenants, many with families, don't even contest an eviction. That's something I know the government has said very happily is one of the effects of their so-called Tenant Protection Act. It's remarkable. Where are these people supposed to live? How are they supposed to go to school? How are they supposed to access health services? How are they supposed to get job training if they don't have stable housing? What's going to happen to these children? What's going to happen to the future?

There is a lack of vision, unfortunately, that we're looking at today and next year. Ten years, 20 years down the line this province is going to pay an enormous price for the neglect of the last several years, in a time of tremendous prosperity. It speaks of the priorities of the current regime and the lack of vision that they have for the welfare of all Ontarians.

The Chair: If you have a brief comment, I'll take it.

Mr Barata: I'll make a final comment. This government often mentions that a lot of people are falling off the welfare rolls. Unfortunately, there's no adequate tracking of where it is that they are going. We don't know what kind of jobs they're getting into or whether they're moving back in with a parent or with a family member, or whether they're just ending up at a shelter. There's no tracking of this and yet policy is being designed around all of these issues without any information to be able to evaluate the kinds of impacts that the government is having. I'd like to make that final point.

The Chair: On behalf of the committee, gentlemen, thank you very much for your presentation.

ONTARIO MINING ASSOCIATION

The Chair: Our next presenters are representative from the Ontario Mining Association. Could you please state your names for the record.

Mr Patrick Reid: I'm Patrick Reid. I'm the president of the Ontario Mining Association. I have with me my colleague, Peter McBride, who is our manager of communications and energy services.

The Chair: Welcome on behalf of the committee. You have 30 minutes.

Mr Reid: Thank you very much. We will be brief and hopefully have adequate time for some questions. I'd just like to point out that I think it was Mr O'Toole from Durham West who said that everybody was here asking for more. We're in fact asking for less, less taxes.

Very quickly, the value of mining to Ontario: Something not usually associated with mining, but we are in fact a high-tech industry. We have to be high-tech to compete with the global mining community and if we don't use and develop leading-edge technology, we won't have a mining industry in Ontario or Canada.

The mining industry provides some 25,000 direct jobs with about 106,000 direct and indirect spinoff jobs. I might add that of those 25,000, the mining industry is the highest-paid industrial wage in Ontario. We provide $1.5 billion in government revenues annually. Our productivity is twice the level of manufacturing generally. Our value added is more than $210,000 per employee annually. The industry spends significant money every year in employee safety and training, environmental protection and research and development. In fact, we are the third-safest industry to work in, in Ontario, despite the hazardous areas in which many people work. We have an accident frequency rate of 1.4, which is only bettered, and then only slightly, by hospital workers and the pulp and paper industry.

We are the main economic engine in 50 Ontario communities, including a number in southern and eastern Ontario as well as northern Ontario.

We've heard a lot about prosperity and those who are not enjoying it. The mining industry, despite the boom, has gone through some difficult years. We note that the 1999 Ontario Economic Outlook and Fiscal Review of the government contains plenty of good news: tax reductions, cutting red tape, moving towards a balanced budget, high economic growth, steady increases in new job creation, outlook for economic growth, employment, investment and inflation is under control. However, not all sectors are sharing in the good news and experiencing these positive trends. Unfortunately, mining is one of them.

Mining has gone through a protracted period of soft markets and weak commodity prices. While the prices for some metals have improved recently, particularly nickel and zinc, the gains are not universal, particularly for the gold producers. When companies are not making money, exploration expenditures decrease and this has long-term implications for the future of the mining industry in Ontario.

Exploration expenditures have trailed off from $195 million in 1996 to $184 in 1997, $128 million in 1998 and about $108 million in 1999. A lot of the junior mining companies are in very difficult straits. The prospectors and diamond drill groups are presenting evidence on the long-term implications if these trends continue.

The prospectors and developers represent the junior mining sector. These exploration companies, or companies that are trying to develop their first mine, are making representation to the federal government for a targeted improved flow-through regime. In the past, we did have a comprehensive flow-through regime, and it was the only regional government-assisted development program that ever worked in this country. It wasn't money that went down the drain; it was money that was actually spent in those areas of the country and the province that needed the assistance.

However, we have seen some help at the municipal level, which we appreciate. Government has shown a willingness to help. Hearings on the property tax treatment of vacant business land and facilities were held last year. The goal was to improve fairness and equity in treatment and administration of vacant lands for property purposes. The OMA, on its own and through a broader coalition, participated in these hearings.

We are appreciative of the legislation presented recently, which takes a real-time approach starting in the 2001 tax year, in which property owners receive tax reductions for the actual period of time that a property or a portion of the property is vacant during a tax year; and for the 2000 tax year extends the deadline to submit applications for vacant land provisions to February 29, 2000 from November 1, 1999.

Perhaps you see this as a relatively small tax issue, but its treatment sends the right message.

One of our major concerns is electricity rates. Mining operations spend $250 million annually on electricity. Ontario still has the second-highest industrial rates in the country. The freeze instituted a few years ago on rates is helpful. In theory, as we move to a competitive market in electricity, it should provide companies with a welcome opportunity to better manage energy costs.

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The open marketplace in electricity is scheduled to open November 1, 2000. However, conditions for a competitive market do not exist at this time. Ontario is the only jurisdiction in the world that moved to a competitive market in electricity without splitting up the generating monopoly. Ontario is the only jurisdiction in the world that has moved to a competitive market advocating gross versus net load billing, and this discourages new investment in generating capacity. Ontario Power Generation Inc is using its market dominance. The spectre of electricity rate increases has been raised by the OPGI and we really need a genuine market to be created.

All of you being politicians, the first thing you do-well, the second thing-in the morning is to read the newspapers. You'll see that they were full of the articles about the fact that electricity rates may go up 10% in Ontario.

We are here to ask for less. We have one particular focus, and that is the Ontario mining tax. The Ontario mining tax is paid only by mining companies in Ontario. The present government, not in this election but the previous one, stated in their northern Ontario program, "When the provincial budget is balanced in the fourth year of the Common Sense Revolution plan, we will be in a position to consider tax relief for the mining sector."

Last year, we mentioned at these hearings the establishment of a comparative tax review task force to look into this matter. This task force compared taxes paid by mining companies in Ontario and six other mining jurisdictions in Canada, the United States, Australia and Chile. We tried to pick jurisdictions that had similar mining operations in terms of base metal, gold and were comparable to Ontario.

We can now share with you the work of this task force, which included the Ministry of Northern Development and Mines, with liaison with the Ontario Ministry of Finance. Between us, we commissioned the management consultants PricewaterhouseCoopers to do this survey. It found that, "the corporate tax burden on mining in Ontario is among the highest in the world." The average effective tax rate in Ontario is 45.3% and the average effective tax rate outside of Ontario is 30% to 35%, so a difference of at least 10%.

It finds that the tax burden in Ontario reduces return on investment to 17%, and that's over the life of a mine, while the return on investment elsewhere is 20% and over. The 3% difference indicates a less favourable fiscal climate for a high-risk business such as mining.

It finds that the main contributor to the uncompetitive tax burden in Ontario is the Ontario mining tax, which currently stands at 20%. This, by the way, is over and above the usual corporate income taxes and so on payable at both the federal and provincial levels.

The study recommends therefore reducing the Ontario mining tax to 12%, the same rate as Quebec has, to make Ontario more competitive with other jurisdictions. We ask this committee to support this recommendation and forward it to the Treasurer.

We thank you for your time today and wish you good luck in your work in helping to build a budget for the next fiscal year which will benefit all Ontarians.

The Chair: Thank you very much for your presentation. We have approximately five minutes per caucus. I'll start with the government side, Mr Arnott.

Mr Arnott: Thank you very much for your presentation and for coming back again this year to give us your advice as to what should be in the provincial budget.

You've given us a very direct suggestion on your final page. You said there was a promise made that once the provincial budget was balanced "in the fourth year of the Common Sense Revolution plan, we will be in a position to consider tax relief for the mining sector." Then you've suggested exactly what you think ought to happen. That promise was made to you in the form of a letter, I would guess.

Mr Reid: It was part of the Progressive Conservative policy platform in 1992. When was the first-

Mr O'Toole: It was 1995.

Mr Reid: Time flies when you're having a good time.

Mr Peter McBride: It was part of the northern edition of the Common Sense Revolution.

Mr Arnott: Certainly it's the position of the government that we want to have a thriving mining industry in the province that can return investment to investors and encourage job creation and preserve communities, particularly in the north. I would hope that the treasurer will take a look at your recommendation and hopefully he will be in a position to respond favourably to it. I guess that's what I wanted to say to you. Thank you very much. I don't know if any of my colleagues have questions.

Mr Galt: I'm just curious. In your opinion, if we did move this from 20% to 12%, how many jobs would that create in Ontario?

Mr Reid: I can't give you numbers, but what it would do is improve the investment climate enormously, because people would be able to realize that the existing mines would have more money to reinvest in exploration and development. We see a direct link in doing this, which would be a big signal that mining is welcome and will not be punitively taxed in Ontario. We believe it would give a big boost to the junior exploration business and the diamond drillers. There are a lot of them out of work right now.

Mr Galt: I would think it's something an economist could tell us and it would be valuable information for this government. We're looking to create jobs. If we had some figures there that it would possibly create enough jobs that it would more than pay for itself and would stimulate the economy, similar to the reduction in personal income tax that has generated far more income than is lost-

Mr Reid: That's a good suggestion, Mr Galt. What we'll do is compare what has happened in Quebec, which has the 12% regime. They have a very generous provincial flow-through situation. They are seen by the mining industry as the preferred place to be, partly because of the return on investment.

Mr Galt: That could give more or less a direct comparison?

Mr Reid: I think we could, yes. It might be rough and ready, but it would give us an idea.

Mr Galt: I'm absolutely flabbergasted. Back in the spring of 1994 our government put together a package that predicted we could create 725,000 net new jobs with the reduction in income tax. I'm still surprised that we're right on track, that the economists that long ago-we're talking six years ago-could predict that if we cut the income tax by a certain amount-the opposition goes on about it's the great American economy, but who predicted the American economy in 1994? What a prediction. Come this year, we will be at the 725,000 net new jobs.

Mr Reid: Maybe we should use those economists to get you the answer.

Mr Galt: Maybe so. Anyway, thank you very much.

Mr Kwinter: It's nice to see you again, as always.

I want to raise an issue that I've raised with you before, but I think it's still valid and it's still a puzzle to me. As you know, Pat, I'm involved not in Ontario, but I'm certainly involved with a couple of mining projects in the central Asian republics. The thing that amazes me is that Canada, Ontario, has a reputation for having some of the top geologists in the world, some of the top mining technicians. The geology in Ontario is second to none, and yet there are companies in Ontario that are travelling all over the world. They're going to Chile, they're going to Kurdistan, they're going to all these places because it is a more friendly financial environment for them. It doesn't make any sense that we have this incredible resource that we're blessed with in our geology, with our competence, and yet we can't really exploit it in the finest sense, because of a tax regime that is virtually hostile.

Mr Reid: That's part of it. We have shown and there have been other reports that show you're better off to find a mine in Nevada or somewhere else because you're not as badly taxed.

We are the best miners in the world. We're the safest, we're the most environmentally responsible, we're the best trained, we're the leaders in technology, and all the things that you're saying. But there are two things. One is the tax regime, and the other is red tape and the barriers to getting a project going. You've all heard of Voisey's Bay. You've heard of Dia Met diamonds in the Northwest Territories. These companies have spent millions and millions of dollars doing environmental studies and signing almost in blood that they'd done the best they can. Governments have looked at it and said yes. We had Windy Craggy, where an ore body was expropriated with hardly any kind of due process.

This gives Canada a bad reputation. I was talking to a senior person in one of the companies just this week and he said he had some Americans in his office who said, "We don't mean to tell you your business, but nobody is going to start investing in Canadian mines because of Voisey's Bay and Dia Met." These companies have put millions and millions of dollars in, they follow the steps, and then for what seem to be very arbitrary reasons somebody says: "Uh, sorry. Can't do it." That's probably as big a reason as the tax situation.

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Mr Kwinter: What about the issue of rehabilitation of mines? Is that still an issue for you?

Mr Reid: No. We long ago accepted that we should be providing closure plans when we open and a form of financial insurance to ensure that there are funds there to environmentally and safely close the mines. We are not happy with what we wound up with, but that's sort of over, in a way. We'd like to revisit that at some point but, frankly, there are very few mines opening, so it's not much of a concern. It's a concern as a cost, but it's now a cost of doing business, and it is pretty well all over the world now.

Mr Christopherson: Thank you very much for your presentation. It's good to see you again.

I noted in one of the documents handed out talking about the taxation, the summary notes that Toronto is recognized as the world's financial centre for mining and that the TSE accounted for the lion's share of the estimated $6.3 billion of equity financing that was raised in 1996 as the model year-that's 60% of the world total-and that we ranked second for the destination of capital raised by Canadian mine financing.

Recognizing that it's an important part of the economy, especially in the north, and one that can't be trivialized and shouldn't be, but recognizing that the industry doesn't appear to be on its dying legs, and given the number of presentations we've had today about the crisis that exists in poverty, homelessness, lack of affordable housing, the health care crisis, the education crisis, all those things as they feed into our future ability to compete overall as an economic entity-in fact, one of the presenters today was Alan Redway, the former Tory housing minister, who was here advocating for affordable housing. With the greatest respect, I would put to you, what are the arguments that you feel should prevail to have a tax reduction for your industry over and above all of these other things, given that the reason they are in crisis is because this government chose to give a tax cut that benefits the most wealthy to start with as their overall policy? What arguments would you give to those who see what's happening in health, education, housing, environmental protection, all those things that are so important to the quality of life, that they should be second to you getting a reduction in a tax that you pay?

Mr Reid: Well, Mr Christopherson, let's not talk in abstract terms. Some of your unemployed and some of your poor are people who worked in the mining industry who have either lost their jobs or can't get jobs because of the downturn and the lack of investment ability in Ontario. Some of the people you're talking about are people who either have been working in the mining industry or have been dependent for jobs in the mining industry. So we're talking about the same people.

We're trying to create a climate of investment where people will come in and invest in mining in Ontario in these junior and senior companies, who will hire geologists again, prospectors, diamond drillers, and all the people who supply them, to go out there and find new mines and create more employment. The very process of trying to find a mine creates employment.

I happen to be one who, I must say after a long road, has come to the conclusion that you've got to create wealth before you can distribute it. We're here to say that if you improve the investment climate for the industry by lowering the mining tax, which, by the way, will not cost the government very much at the moment because nobody has been making any money for the last three or four years-so to some extent for a lot it will be symbolic, but the investors out there are going to say, "Gee, if we find something, then we get a return." It's a long answer to your question.

Mr Christopherson: I have to tell you that backed up against some of the other pressures, if you were to hear all the presentations that are being made and some of the crises that exist-and for a lot of the people you're talking about, they also want and need and deserve a decent health care system and an opportunity for retraining, and all those things are expenditures, and when you line up the expenditures-and I understand generating wealth, but the government has already got a booming economy, thanks to the American economy going for them. We're already booming. We are awash in investment money and corporate profits are way up. What's hurting is all of the infrastructure that benefits the vast majority of middle-class and modest-income people.

The notion that somehow further tax cuts, whether they're personal or business, I just have some real difficulty with-not that they shouldn't happen at all. Obviously you have to have an investment climate, but it's a question of what priority at what time. To say that the top priority right now, given the devastation we're seeing in so many important institutions in our province, is a further tax cut for one aspect of our economy, I just have to tell you is a difficult swallow for a lot of us.

Mr Reid: I can understand that, but I think you have to again look at the picture that if you had a producing mine in Ontario where workers in the mine were getting $60,000-plus a year, and the people who were supplying that mine through transportation, through everything from food and rail services and bolting rods and everything else-the spinoffs from mining are tremendous. When you create a job in mining you create about three and a half or four other jobs along the way and that puts people to work. I understand what you're saying. I also understand again a long road, and I'm not prioritizing everything, but governments can't do everything.

Mr Christopherson: I don't think they try to do some of the things they should do.

Mr Reid: I agree there are some things the government should do, but they can't do everything.

The Chair: On that note, we have exhausted our time. On behalf of the committee, thank you very much for your presentation.

ONTARIO NON-PROFIT HOUSING ASSOCIATION

The Chair: Our next presenters are representatives from the Ontario Non-Profit Housing Association. Could you please step forward and state your name for the record.

Ms Robin Campbell: My name is Robin Campbell and I'm the executive director of the Ontario Non-Profit Housing Association.

The Chair: On behalf of the committee, welcome. You have 30 minutes.

Ms Campbell: I very much appreciate the opportunity to speak to the committee about the urgent need for additional provincial funding for affordable housing and to make the case and the plea that this provincial budget include significant funding that will go towards affordable rental housing. Not only do we expect to hear some favourable indications from the province, but of course from the federal government as well in their budget in February.

ONPHA, the Ontario Non-Profit Housing Association, is a membership organization composed of 674 non-profit housing providers representing about 96,000 units of social, non-profit housing in Ontario.

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In my presentation I'd like to make six key points: first, that there is an urgent and growing need for housing action right now; second, that the province has a responsibility to play a lead role both in setting targets and in providing subsidies that will support the development of affordable housing; third, that there is a tremendous opportunity here for creative new partnerships and solutions; fourth, that the province has a particular role in the area of supportive housing, which is housing for people with special needs who cannot live independently without those supports; fifth, that the province has a responsibility and absolutely needs to retain the existing social housing that we have; finally, that I'd just like to give you a few stats which illustrate some of the need issues.

First, in putting into context the need for an affordable housing action plan, until a very few years ago both senior levels of government in Canada took responsibility for funding affordable housing through a whole variety of programs. Over a 50-year period from the Second World War until the cancellation of the non-profit programs by both governments in the mid-1990s, the focus was affordable rental housing. There have been some affordable home ownership programs, but clearly the need has been directed towards the most needy needing rental housing.

Today, all of the G7 countries except Canada have housing policies and programs for affordable rental housing. In the mid-1990s both the federal and Ontario governments cancelled social housing programs. They may have hoped that the private sector would move in to fill the gap; however, I think what's so important to note is that the private sector has not built rental housing even for those with upper incomes, let alone those with low and moderate incomes. Indeed, in 1998 less than 1,200 rental units were built in the entire province, and studies commissioned by the government through the economist Greg Lampert say that no one will build rental housing without significant government assistance.

Many are concerned about the alarming increase in homelessness and the lack of affordable housing. The call for government to act is growing. The time is right now for Ontario and Canada to restore the tradition of funding affordable rental housing.

Now just a few descriptors on the need: A Canada Mortgage and Housing report projected that Ontario would need an additional 80,000 units of rental housing between 1996 and the year 2001 on top of expected targets for new homes and condominiums. In fact, if we don't change this trend, only 6,000 rental units will be built by 2001-the time is too late; that trend has been set-leaving a gap of 74,000 rental units. This shortage means that tenants with lower incomes are competing with those who can afford market rents.

Last year the provincial government took a first step when it committed about $50 million for supportive housing and homelessness initiatives over two years, with a focus on mental illness. Ontario also announced it would redirect $50 million in annual federal savings on social housing towards rent supplements for low-income renters. Of course, the federal government announced its homelessness initiatives just before Christmas.

That is indeed a very important first step, but it's only a very small step. The task before us is to work on the next one, which is to create a federal and provincial affordable housing strategy with significant targets, which will need significant funding.

The groundwork has been laid. The Golden report on homelessness in Toronto set federal and provincial targets for affordable rental housing as well as supportive housing. Last year our association, together with the Co-operative Housing Federation and Housing Again partnership commissioned a study called Where's Home? parts 1 and 2-copies, I believe, are available for you-and they painted a detailed picture of housing needs in 21 Ontario cities and regions.

To complement this, the Federation of Canadian Municipalities is recommending a 10-year federal-provincial infrastructure program. The national targets are to repair 10,000 existing units, build 20,000 new rental units and provide an additional 40,000 rental supplements for low-income households in each of the next 10 years.

There is also a significant role for municipalities but not in providing significant capital subsidies and income-based rent supplement funding. Indeed, the provincial downloading of existing social housing, which is an income-redistribution program, to the municipal tax base was bad public policy.

The two senior levels of government must take primary responsibility for ensuring that housing needs-when you talk about affordable housing, talking about addressing income issues across the province-be addressed in a consistent way across the province, not through the property tax base.

What's the role for the province? Indeed, it must take a lead role. With the signing of the social housing agreement with Ottawa in November, Ontario has agreed to take over responsibility for social housing. But the first important step is that it has a role in setting targets for affordable housing as well as supportive housing.

Doing a business plan and setting targets is an approach very familiar to this government, but I must say we were astonished that the only target for new permanent rental housing set by the provincial government in the business plan is for an additional 65 rental units to be built, on top of the average of 215 units built in low-vacancy areas.

CMHC suggests that we need 16,000 rental units a year, so indeed we need targets and we need a plan. That plan must include the province making a significant funding contribution to meet these targets. No one is suggesting that the province do it alone. The FCM infrastructure proposal calls for both levels of government, federal and provincial, to contribute equally to funding affordable housing.

Anne Golden's report called on the province to allocate $265 million annually for its share in meeting these targets. In contrast, the provincial government has committed to date $50 million annually for rent supplements-indeed, these are dollars coming from the federal government-and about $25 million annually for the next two years for supportive housing.

It's very important to keep the partnerships notion in mind when we're talking about solving this problem. Certainly, keeping the federal government involved is essential. One month after devolving social housing to Ontario, the federal government provided some new funding to address homelessness. This is a very important signal from Ottawa, and we should seize the opportunity in Ontario to ensure an ongoing funding partnership with the federal government. The best way to do this is to commit new federal funding to a social housing infrastructure program, looking to the federal government to match those dollars. The FCM federal-provincial infrastructure proposal has a role for municipalities, mostly in the coordination and planning. In fact, a number of Ontario municipalities are also putting land and funding on the table to generate new affordable housing development.

The non-profit housing provider sector in this province brings an important partnership to the table. We have 25 years of experience. Faith groups, service clubs and other community organizations which are volunteer-led bring an understanding of the needs in their community and links to other social agencies and community services. They bring sweat equity as well as real equity to the table.

Further, in any picture of what is needed to solve the problem, we know that significant public funds are needed and non-profit housing is the only delivery model that guarantees long-term affordability of the housing. The private development industry has always played a role in the construction of social housing in Ontario, but it's possible definitely to see them participating in a variety of innovative ways in the future if we can create some flexible tools. Public policy, however, will need to ensure that the greater the degree of public investment, the longer the guarantee of affordability.

A partner that has not adequately been developed is the financial services sector. Improved regulatory and tax incentive measures for individuals and corporations, as well as new financing mechanisms, open up a broad spectrum of new possibilities. Indeed, instruments such as municipal housing bonds are just one of the many opportunities.

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Partnerships with non-profit organizations or agreements to provide a portion of affordable units may be combined with appropriate subsidies and incentives. In the US and the UK it's a cornerstone of how they support and fund affordable social housing, both through corporate tax credits as well as individual tax credits. It's also a cornerstone of programs in Europe, including France.

I'd like now to speak to the unique role of the province in supportive housing. Anne Golden concluded that the unique mix of housing supports and social services that is found in supportive housing is a provincial responsibility. The government recognized this by retaining some of the supportive housing at the provincial level, although much was devolved to the municipalities. The new $45-million supportive housing initiative for 2,000 people announced last March is another indication of the provincial acknowledgement of their role.

However, supportive housing has also played a critical role in helping the chronically homeless, especially those with mental illness, to get off the streets and stay off the streets. Unfortunately, the province has downloaded this responsibility for permanent housing for the chronically homeless to the municipalities. It's important for the provincial government to recognize the permanent affordable housing solutions for the homeless as a provincial responsibility, as well as to recall that supportive housing serves other groups requiring extra assistance, including the developmentally delayed and the physically disabled.

To speak to targets and numbers, Anne Golden said that we needed at least 14,000 supportive housing units over the next five years. These units were to be permanent housing, not hostels and temporary shelters. It's not known yet how many of the 2,000 spaces announced last March will be for permanent supportive housing, but in any event at least 12,000 more units will be needed. We need to grow in that area.

Of course, retaining the existing affordable stock is as important or needs to be kept in mind as well as expanding the stock. The challenge is to meet the critical need for new affordable housing within the constraints of public funding that the federal and provincial governments will make available, but it will not be possible to make progress if the current amount of social housing is being reduced at the same time. Unfortunately, we see that happening in Ontario.

The provincial government must commit itself to replacing any lost social housing units from its regular provincial housing funding. New initiatives such as the $50-million rent supplement program should be adding to the supply of social housing, not being used to replace previous funding.

There are two key areas of concern at the moment. First is the existing rent supplement program. In the mid-1990s, Ontario had approximately 16,600 rent supplement units in private buildings under contract with the Ontario Housing Corporation. Last year, when we published the Where's Home? report, we noted that over 3,000 had been lost where contracts were not renewed and more scheduled to be eliminated. These should be replaced until the original 16,600 are restored and then we should add as well beyond that. Many people would be surprised to know that the province has been reducing the number of assisted housing units while waiting lists for social housing have been growing.

Second, the recent proposed sale of 5,800 OHC scattered units offers another example. Early information from a number LHAs-local housing authorities-is that these scattered units cost less than half the operating cost of today's rent supplement units in private buildings. In some communities, they're the only family housing available and are probably irreplaceable. In Lanark county, for example, a rural county, there are 88 scattered OHC houses that may be sold. They currently have 230 children living in them. The average monthly operating cost is $159; however, the LHA currently has 77 rent supplement units in private buildings whose average monthly subsidy operating cost is $376. So we see that significant difference. If the families were resettled in private rent supplement units, if indeed three- and four-bedroom units are available, the cost would more than double.

However, the bottom line is that social housing should not be sold until there is a compelling reason, and any units sold should be replaced using current housing funds. New initiatives should not be diverted to replace existing housing. When Minister Tony Clement announced the first 5,000 new rent supplement units from the $50 million promised, he said that Ontario was fulfilling its promise to help the homeless. This promise can only be kept if the provincial government cancels the sale of the 5,800 OHC units and restores the previous rent supplement program to the 16,600-unit level. New rent supplements should be seen as adding to those levels.

Finally, a few statistics. You've already received, I understand, a summary of Where's Home? parts l and 2. It profiled 21 cities and regions, containing housing and income data over the previous 10 years. Indeed, it's probably the most comprehensive housing report in Ontario done in many years.

Of the major findings about tenants and the rental situation, some of the key highlights are:

The situation for tenants in private rental housing is deteriorating as fewer apartments are vacant and rents rise faster than inflation;

Even in communities with moderate to high vacancy rates, rents continue to rise;

Tenant incomes have dropped;

One in four tenant households in Ontario are at risk of homelessness, paying more than half of their income in rent. Almost half of all tenants are paying more than 30% of their income in rent, a sharp increase from the previous census data;

The CMHC annual update on rental markets, released in November, indicates that vacancy rates have declined in most of the 21 cities and regions, and rents increased in all but three;

In contrast to the beginning of the 1990s, the production of rental housing has crashed in recent years, and there doesn't seem to be any indication that the situation will improve without further government action.

The Chair: Thank you very much. We have approximately four minutes per caucus. I'll start with the official opposition.

Mr Caplan: Thank you, Ms Campbell, for your presentation. It touched on a number of areas, and I hope to be able to ask you a few questions about some of what you presented today.

What really struck me, first of all, was that back when Minister Al Leach made changes to the so-called Tenant Protection Act, it was claimed that within two years there would be the production of 10,000 new private rental units. Last year, I think there was something less than 500. This year, the business plan of the ministry is for 65 private rental units. They have a little bit of catching up to get to 10,000; by my figures, a little bit more than 9,000.

That 65, that's a serious number? That's what the ministry projects? That's what they expect the private sector is going to be adding to Ontario's rental housing stock?

Ms Campbell: And that's in low vacancy areas, I understand from the business plan. In creating that number, indeed, the government looked at the trends, and since the budget didn't offer any clear incentives to stimulate the construction of new rental housing, that's probably all that one can expect.

The building industry and the non-profit housing sector are in agreement on this issue, that without real support from senior levels of government to bring down the capital costs for the construction of housing, it is just simply not good business for someone to be in the business of building rental housing, and it will not happen.

Mr Caplan: It's clear that the Harris government agrees with you. Their projection says that's not the case, the mantra that the private sector will provide-obviously, in their own plans they acknowledge that won't happen. Hence the need for government action. I think you're absolutely right.

One of the areas of government action was this $50 million of recycled federal monies to provide rent supplement units. Maybe you could expand a little bit on what that program has meant and how you foresee that rolling out.

Ms Campbell: A rent supplement is an income program that will bridge the difference between what a low-income person can pay as a percentage of their income and what the market rent is. However, in order to realize those targets, there have to be landlords who are willing to make their units available on a rent-supplement basis for low-income housing. If you look at the vacancy rate statistics in the province, they're extremely low in eight key areas, particularly in the GTA. Barrie is another extraordinarily low area, and we can name a number of others.

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What we have found in this situation-and I'll give Peel region as an example-is that they have existing contracts with private landlords. They had about 1,500 rent-supplement units. Due to cancellations, they've actually lost 65% of those units. So it's hard to imagine that where a rental market is heated and tight, someone from the industry is going to be very interested in making those units available on a rent-geared-to-income basis.

We need those rent supplements, but they need to be part of a stacked program. There needs to be an incentive for the construction of new rental units that will result in market rents at a reasonable level, at a market level that's reasonable, and then a low-income person needs a rent supplement to bridge the gap between what they can afford and what the market will produce. But the rent supplement alone will not do that.

Mr Christopherson: Thank you for the presentation. I think you may be the fifth group today that-

Interjection.

Mr Christopherson: No, it's good and bad. It's good that there are enough people active in the affordable housing community who made the effort to be here; it's bad in that every single presentation has pointed out the crisis we're facing in affordable housing.

Just a couple of things, because we don't have a lot of time. My colleague raised the fact that the government talks about how private rental units will take care of the need and fill the gap. We told them at the time that wouldn't happen. Every housing activist said that's not going to happen, and even some of the developers said that's not going to happen. And guess what? It didn't happen, and it's not going to happen for the reasons you've outlined.

The other thing they rest on is the notion of the rent supplements to private. Yet not only do you make the argument that this isn't going to fill the gap, but it's not even cost-effective. You point out the example in Lanark county, for instance, where-this is for the scattered houses that they are going to sell. Right now, the average monthly operating cost is $159, and yet if you go to a private building, the rental supplement is $376 and at the end of the day the public doesn't own anything.

Ms Campbell: Indeed. It's like the argument as to why you should buy a house, not rent it. Those are going to be high-cost subsidies, and at the end of the day you're not building up any equity.

Mr Christopherson: It's an important element because once it's paid for, you've got the maintenance you would have on any building, but beyond that the public owns it. So when one family finally gets themselves up on their feet or for whatever reason moves on, you've still got the unit there for another family that needs a unit.

Their method costs twice as much, gives the taxpayer at the end of the day nothing for their money, and that process is not enough to make up the need that we have in the province. I'd love to hear one of them defend, in that context, why they're so damned proud of staying out of the affordable housing business.

I wanted to ask you, do you know-I didn't see it in the report and I don't recall a figure being mentioned earlier today-roughly how many people are on waiting lists right now across the province?

Ms Campbell: We don't have an exact number because the province no longer keeps those statistics, which is-

Mr Christopherson: Sorry. The province doesn't keep them anymore?

Ms Campbell: It doesn't keep statistics of social housing waiting lists across the province.

Mr Christopherson: Did they used to?

Ms Campbell: Yes, they did.

Mr Christopherson: That's convenient.

Ms Campbell: But in our study, when we gathered the statistics in eight cities, it was 100,000 families. The Golden report did a very careful count in Toronto, and within Toronto, out of the people waiting there were 32,000 children on their waiting list. But those numbers are not collected in any central way at the moment.

It's a point on which we think the government clearly needs not only to set targets but to monitor the need, and there are fairly straightforward ways of doing that.

Mr O'Toole: Thank you very much for your presentation. Mr Christopherson is right: We have had a number of presentations referring to a similar study that I am very impressed to receive and understand. I also support the idea that shelter is an important fundamental in restructuring the individual in society and putting an anchor there; many reports say that. A strategic difference, I guess, was started in about 1992. The first devolution debates were in 1990. The federal Liberal government has just devolved all the liability, finally. Whether Ontario got a good deal will be seen. But we now hold all the liability risk. That is what they have done: They got out of the business. I would like you to comment on that.

More importantly, the province hasn't been in it aggressively. When Mr Christopherson's government was in it, everyone, including the industry, was criticizing them for spending on a per-square-foot basis, and the operating cost-people across the street and first-time homeowners were saying: "What's going on here? Who is paying for what?" And it is paid for by the hardworking taxpayers of Ontario.

What is the appropriate role of owning inventory or, what we have said, the shelter allowance subsidy issue? I'm not looking for the perfect formula here. But that's our theory: We're not going into the bricks and mortar-and neither is the federal government, by the way.

Ms Campbell: I think there is an opportunity to pressure the federal government and a great opportunity for matched programs and infrastructure programs. There is considerable interest.

The position of the government initially was to have a universal shelter allowance program, which was essentially to guarantee that people would not be paying more rent than they could afford. That's a very laudable goal. What we have always said is that if you have a shelter allowance program, you also need to have the supply in hand so there is enough competitiveness in the market so that you are not paying enormously inflated costs for your shelter allowance. In other words, you need some affordable housing stock to attach a rent supplement or a shelter allowance to.

We are certainly saying that supplement programs make a lot of sense, particularly in areas where there are low vacancy rates and you can do that match easily. However, in areas of the province where there is a chronic shortage of rental housing, that has to be matched with incentives to build affordable rental housing.

The other point we would make is that we want to see that relationship between the public investment and the duration of affordability. In other words, if, as the Golden report said, there is a public capital investment of about $40,000 per unit in Toronto, you don't want to see that be a nice windfall 10 years later for a developer-owner who participated in that program. You want to see that ongoing investment attached to some kind of permanency in affordable housing.

The Chair: With that, we are out of time. On behalf of the committee, thank you very much for your presentation.

The committee will reconvene tomorrow morning at 10 o'clock in this room. We are now adjourned.

The committee adjourned at 1800.

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